M/s Sarbi Petroleum & Chemicals Pvt. Ltd. v. M/s Caltex Lubricants India Ltd.

IN THE HIGH COURT OF JUDICATURE AT MADRASDATE: 3.3.2008.CORAMTHE HON'BLE MR.JUSTICE M.JEYAPAULCrl.O.P.No.6514 of 2007,M.P.No.1 of 2007andM.P.No.1 of 20081. M/s.Sarbi Petroleum & Chemicals Pvt. Ltd., 9, Moonstone Apartments, 65/E, Linking Road, Santacruz (W), Mumbai 400 054. 2. Rajiv Bhatnagar, Director, M/s.Sarbi Petroleum & Chemicals Pvt. Ltd., 9, Moonstone Apartments, 65/E, Linking Road, Santacruz (W), Mumbai 400 054.Petitioners vs. M/s.Caltex Lubricants India Ltd.,Gold Crest, 54-55, North Usman Road, T.Nagar, Chennai 600 017. RespondentCriminal Original Petition filed under section 482 Cr.P.C. tocall for the entire records relating to C.C.No.6626 of 2006 pendingon the file of the learned XVII Metropolitan Magistrate, Saidapet,Chennai and quash the same. For petitioners : Mr.R.Krishnamurthy, Senior Counsel for Mr.A.A.MohanFor respondent : Mr.Yashod Vardhan for Mr.R.Sunilkumar https://hcservices.ecourts.gov.in/hcservices/ ORDERThe petition is filed by accused 1 and 2 in C.C.No.6626 of 2006pending on the file of the learned XVII Metropolitan Magistrate,Saidapet, Chennai seeking quashment of the aforesaid proceedings. 2. The petitioners are facing the case in C.C.No.6626 of 2006for offences punishable under sections 403, 406, 417, 418, 420, 426,427 of the Indian Penal Code. 3. The sum and substance of the complaint lodged by therespondent as against the petitioners which was taken on file by thelearned XVII Metropolitan Magistrate in C.C.No.6626 of 2006 is asfollows:-The complainant is a Company registered under the Companies Act.The complainant and the first accused Company entered into anagreement for manufacturing blending and filling lubricants and otherlubricant products. The complainant supplied all the raw materialsand packing materials to the accused who was required to blend andpack the lubricants at their plant. The accused are entitled toservice charges as per the terms of the aforesaid agreement. Thematerials supplied to the accused by the complainant are theproperties of the complainant. The agreement expired on 31.3.2003.No manufacturing operations for the complainant was carried on at theplant of the accused subsequent to the said date. The complainantasked the accused to return all the stocks and lubricants supplied bythe complainant to them. But, the accused, have not returned thestocks and lubricants as on date. The accused deceived and defraudedthe complainant and misappropriated most of the materials for theirown use in violation of the legal contract. The complainantprovisionally values the materials of the complainant with thecustody of the accused at Rs.27,76,504.69. The accused claim thatthere were some outstanding dues to them towards their servicescharges and excise duty. The complainant agreed to pay theoutstanding dues of Rs.3,69,539/= on return of the materials worthRs.27,76,504.69 by the accused. Therefore, the accused are liable tobe punished for the offences punishable under sections 403, 406, 417,418, 420, 426 and 427 of the Indian Penal Code. 4. The learned XVII Metropolitan Magistrate, Saidapet, Chennai,having come to the conclusion that there is prima facie case tocharge the accused, took the case on file in C.C.No.6626 of 2006. 5. The accused/petitioners would contend that no delivery ofgoods suo motu by the accused is contemplated in the agreement. Theexcise duty payable on the goods manufactured by the first accusedwas also on the account of the complainant. Apart from the servicecharges of Rs.3,69,539/=, the complainant is liable to pay as per theagreement, a sum of Rs.1,88,824/= towards the excise duty paid by the https://hcservices.ecourts.gov.in/hcservices/ accused. Subsequently, due to the deluge in the State of Mumbai on26/27th July 2005, the oils and other input products and packingmaterials kept in the stores of the factory of the accused werecompletely washed away or contaminated with water or drained out ordamaged. A sham proceedings have been initiated using the criminallaw just to pressurise the accused to fulfil the illegal motive ofthe complainant. It is purely a civil commercial transaction andtherefore, only civil forum will have to decide the dispute betweenthe complainant and the accused. 6. Learned Senior Counsel appearing for the petitioner wouldsubmit that a commercial transaction of civil nature has been given acriminal colour abusing the process of law. There is also anarbitration clause in the agreement entered into between thecomplainant and the accused. The accused unambiguously admitted inthe reply given by them to the complainant that they retained thegoods as a lien for the charges and the excise duty borne by theaccused. Even otherwise, no prima facie case was made out as againstthe accused to charge them for the aforesaid offences. 7. Learned Senior Counsel appearing for the complainant wouldvehemently submit that the complaint, as such, reflects commission ofoffence by the accused as alleged by the complainant. The illintention and the idea to misappropriate the materials of thecomplainant are reflected in para 17 of the affidavit filed alongwith the petition seeking quashment. The accused had taken anatrocious stand at this distance of time that all the goods had beenwashed away in the deluge which battered the City of Mumbai.Further, he would submit that though there was a commercialtransaction between the accused and the complainant, the criminalcourt has every authority to entertain a complaint which reflectscommission of crime. 8. As per the Blending and Filling agreement dated 1.4.2001entered into by and between the complainant and the accused, thecomplainant supplied oil and packing materials for the purpose ofblending and filling. There is an arbitration clause in the saidagreement to resolve the disputes or differences arising between thecomplainant and the accused during the course of the commercialtransaction. The accused is entitled to service charges as per thesaid agreement. He is also entitled to any excise duty paid for thematerials supplied to the accused. 9. Prior to the institution of the criminal proceedings asagainst the accused, the complainant issued notice dated 21.3.2005informing the accused about his failure to return the materialssupplied to them. Of course, the complainant also has stated thereinthat the accused were trying to deceive and defraud the complainantby misappropriating the stocks of the complainant. A reply was sentby the accused on 15.4.2005 claiming the job charges payable by the https://hcservices.ecourts.gov.in/hcservices/ complainant to the accused and the excise duty borne by the accused.The accused have clearly stated in the counter that the goods of thecomplainant are lying in their factory, of course, at the entire riskas to the cost and consequences of the complainant. The complainantgave a reply stating that the complainant was prepared to pay a sumof Rs.3,69,539/= towards job charges payable to the accused. But,they have not admitted the remaining claim of Rs.1,90,000/= towardsthe excise duty alleged to have been paid by the accused. 10. The accused have in no uncertain terms admitted that thecomplainant is the owner of the materials supplied to the accused asper the aforesaid agreement. The accused have also stated before theprosecution was initiated by the complainant that the entire stocksupplied by the complainant are lying in the factory of the accused.But, the accused have claimed lien over the stock left with theaccused towards the job charges and the excise duty payable by thecomplainant to the accused. 11. Of course, the accused have taken a stand in the quashpetition that subsequent to the correspondence between the partiesprior to the initiation of the criminal proceedings, there was adeluge at Mumbai on 26/27th July 2005 and the stock of thecomplainant as well as the valuable materials of the accused storedin the factory premises were washed away or contaminated with wateror drained out or damaged.12. The court will have to see what was the concrete stand takenby the accused before the complaint was lodged by the complainant asagainst the accused. The above discussion would reflect that theaccused had admitted the storage of the materials supplied by thecomplainant to the accused at the factory premises of the accused.The accused have claimed only lien over the stock of the complainant.But, the alleged subsequent development will not have a bearing onthe complaint lodged as against the accused alleging criminal breachof trust, misappropriation and cheating. 13. The above referred commercial transactions between thecomplainant and the accused would go to show that there is a seriousdispute between the complainant and the accused as to the excise dutypayable by the complainant to the accused. The accused has claimedlien over the stock of the complainant for the alleged outstandingdues payable by the complainant to the accused. These disputes arefound to be only civil in nature which will have to be placed beforethe arbitrator concerned or before the civil forum as the case maybe. 14. It is not the case where the accused completely denied theentitlement of the complainant over the stock stored in the premisesof the factory beforeever the complaint was lodged as against theaccused. The ownership of the complainant over the stock in the https://hcservices.ecourts.gov.in/hcservices/ premises of the accused was admitted. The litigative issues involvedin the commercial transaction between the complainant and the accusedare (1) whether the accused are entitled to reimbursement of theexcise duty alleged to have been borne by them; and (2) whether theaccused have got a right of lien over the stock of the complainantstored at the premises of the accused. Such a civil dispute cannotbe the basis for a criminal complaint. 15. The learned counsel appearing for the complainant referredto an authority reported in INDIAN OIL CORPORATION v. NEPC INDIA LTD.((2006) 6 SCC 736) wherein the Honourable Supreme Court has observedas follows:-"A given set of facts may make out: (a)purely acivil wrong; or (b)purely a criminal offence; or(c)a civil wrong as also a criminal offence. Acommercial transaction or a contractual dispute,apart from furnishing a cause of action for seekingremedy in civil law, may also involve a criminaloffence. As the nature and scope of a civilproceeding are different from a criminalproceeding, the mere fact that the complaint civilremedy is available or has been availed, is not byitself a ground to quash the criminal proceedings.The test is whether the allegations in thecomplaint disclose a criminal offence or not."Even in a commercial transaction, a criminal offence may also becommitted by the parties to the transaction. Just because there is abreach of contract in a commercial transaction and civil remedy isavailable, the complaint which discloses a criminal offence cannot bethrown out. 16. In this case, it is found that no criminal offence wascommitted by the accused. But, the complaint has been draftedincorporating the ingredients for the offences of criminal breach oftrust, misappropriation and cheating. But, in a case where no primafacie case is made out, the complaint drafted incorporating all theingredients of the criminal offence cannot stand the legal scrutinyas otherwise, there will be miscarriage of justice. 17. In view of the above, the court finds that the entirecriminal proceedings in C.C.No.6626 of 2006 on the file of thelearned XVII Metropolitan Magistrate, Saidapet, Chennai are quashedand the petition stands allowed accordingly. The connectedMiscellaneous Petitions stand closed.sd/-Asst.Registrar/true copy/ Sub Asst.Registrar https://hcservices.ecourts.gov.in/hcservices/ ssk. ToXVII Metropolitan Magistrate, Saidapet, Chennai +1 cc To Mr.A.A.Mohan, Advocate, SR.11489+1 cc To Mr.R.Sunil Kumar, Advocate, SR.11955Crl.O.P.No.6514/2007tm [co]gkg/10.3