SMT. CHANDRA KANTA TANEJA v. THE STATE OF BIHAR

therein by Sri S.P. Mishra, Judicial Magistrate, First Class, Patna, whereby he has taken cognizance of offence under Section 420 I.P.C. against all the accused persons including the petitioner. One Jitendra Singh, the complainant, impleaded herein as O.P. No.2, filed the aforesaid complaint case inter alia stating that he is a business man dealing in Iron and Steel materials under the trade name of M/s. Mahaveer Iron Stores and his shop is located in Bari Path, Patna and that M/s. Brothers Pharma (P) Limited (hereinafter referred to as “the Company”) is a medicine manufacturing Company and sometime in June 1999 invited application from the public for - 2 - appointment of distributors for their products for the territory of Patna and other places for stocking and dispatching their products. It is said that the complainant in connection with distributorship came into contract with accused Sanjeev Ranjan who introduced himself as the Resident Director of the Company and the local address furnished was “Shristi” Road No.23, Krishna Nagar, Patna. The said Sanjeev Ranjan also declared himself to be fully empowered in the matter of selection of distributors on behalf of the Company and as such discussed all the terms and conditions for appointment of distributors and having expressed his satisfaction an agreement dated 20.7.1999 was entered into between the Company through Sanjeev Ranjan designated as Resident Director on the one hand and M/s. Mahaveer Iron Stores through the complainant on the other and thereby he was given distributorships of Patna and other areas. Under the agreement it was agreed that the Company would deliver and supply their goods to the complainant and will also make proper arrangement for dispatch of the same under the instructions of the Company to their area stockists and in return the complainant would receive freight, carriage and repacking charges besides 5% commission over all monthly sales as also the expanses incurred towards stationery, telephone, postal bills etc. would be reimbursed. Prior to the execution of the agreement, the complainant was required to deposit Rs.2,00,000/- towards security which was refundable to the complainant with 14% interest thereupon and accordingly Rs.1,79,000/- was given through bank draft and the balance Rs.21,000/- was given by cash for which a receipt dated - 3 -

10.9.1999 was granted by the said Sanjeev Ranjan. Notwithstanding the execution of the agreement and the terms and conditions therein the Company did not dispatch its goods to the complainant for a long time and for this complainant approached the said Sanjeev Ranjan on several occasions but no satisfactory reply was available and the complainant finding the conduct of the Company deceptive and apprehensive he demanded the return of the security deposit with 14% interest thereupon. Several reminders evinced no response whereupon legal notice was sent on 11.6.2001 claiming refund of the security deposit. A second legal notice also evinced no reply whereupon the complainant went to Jaipur and met the accused persons and demanded return of the security deposit which had been handed over to the said Sanjeev Ranjan but the Managing Director of the Company denied having received the amount and refused to return the same. On inquiry from the Bank the complainant came to know that the amount of draft had been credited to the account of the supplier Company on

12.8.1999. It also transpired on enquiry that the draft in question had fraudulently and dishonestly been transferred to the account of one Jagdamba Sales which is the C & F Agent of the Company wherein the amount was deposited. The grievance of the complainant was that the aforesaid deposit instead of being entered into his account had been deposited illegally in the name of another customer under a conspiracy in order to misappropriate the amount. The submission on behalf of the petitioners who claim to be - 4 - the Directors of the Company is that no business transaction had been entered into between the Company and the complainant and the said Sanjeev Ranjan who had represented himself as authorized representative of the Company and had entered into agreement on behalf of the petitioners had no concern whatsoever with the Company and the complainant without verifying the bonafides and credentials of the said Sanjeev Ranjan had entered into the agreement and had also paid the security money to him. It was further submitted that the criminal liability attached with the action of Sanjeev Ranjan cannot be shifted on the Directors of the Company since there was no apparent nexus or connection between the Company and Sanjeev Ranjan. The further submission of the learned counsel for the petitioners is that there is no post of Resident Director in the Company and as such for any crime or transaction entered into between the complainant and the said Sanjeev Ranjan acting as Resident Director of the Company had no legal sanction and the petitioners could not be held liable for the same. It was further submitted that the petitioners apart from being ladies are living in Jaipur and were sleeping Directors of the Company and had no role to play in or concern with the day to day activities of the Company. It was finally submitted that the Company is primarily a small scale industry manufacturing medicines and primarily deals with bulk supply of drugs and medicines to Government of India, Ministry of Defence and Ministry of Health and does not have much have private trade except a few distributors in a few States and in those cases the distributors - 5 - themselves manage their dealers and marketing set up. It was also submitted that M/s Jagdamba Sales was the duly appointed C & F Agent of the Company for the State of Bihar and the draft in question having been received from them was credited to their account with the Company in lieu whereof medicines worth Rs.1,79,000/- were supplied to Jagdamba Sales against the draft received from them. Opposing the submissions of the learned counsel for the petitioners, it was submitted by the learned counsel for O.P. No.2 that the facts and the circumstances whereunder the complainant had been duped would clearly show how a fraud had been committed to misappropriate the amount of Rs.2,00,000/- of the complainant. It was also submitted that from the very initial stage the intention of the accused was fraudulent or dishonest as a modus operandi to cheat the complainant which would be apparent from the fact that the draft handed over to Sanjeev Ranjan had been deposited in the account of M/s. Jagdamba Sales and medicines worth Rs.1,79,000/- was supplied to the said M/s. Jagdamba Sales. From perusal of the complaint petition or even the statement on S.A. of the complainant which have been appended as Annexures-1 and 2 respectively, it does not appear that the complainant had verified the bonafides of the said Sanjeev Ranjan before entering into the agreement and/or handing over the draft and cash totalling Rs.2,00,000/- . That apart, whatever fraud had been committed from the allegations made in the complaint petition as also the statement of the complainant on S.A., it would appear that all actions leading to the - 6 - entering into agreement and handing over a security deposit is directed against Sanjeev Ranjan and the petitioners herein had no role to play therein. Specially an inducement is not one of the ingredients to make out an offence under Section 420 I.P.C. Mere allegation of fraud or cheating in the complaint is not sufficient for taking cognizance of the offence under Section 420 I.P.C. Even if the allegations of the complainant as made out in the complaint petition and his statement on S.A. are to be accepted at their face value, it would appear that the alleged deceit arises out of the breach of business contract which is a purely civil transaction and does not create any criminal liability. In view of the discussions made above, I am of the opinion that the cognizance taken against the petitioners herein would be an abuse of the process of the court. Accordingly, the cognizance taken against the petitioners not being tenable in law is hereby quashed and the application is allowed. (Abhijit Sinha,J) Patna High Court, Patna. Dated: The 15th day of May, 2009. Pradeep Srivastava/A.F.R.