Shyam Kumar Shrivastava v. The State

IN THE HIGH COURT OF JUDICATURE AT MADRASDATE: 22.1.2008.CORAMTHE HON'BLE MR.JUSTICE M.JEYAPAULCrl.O.P.No.32369 of 2007 andM.P.Nos.1 and 3 of 20071. Shyam Kumar Shrivastava2. Sudeep Shrivastava3. Sandeep Shrivastava4. P.S.Salian5. Prem Kumar Saraogi6. MadhusudanPetitioners(Accused 1 to 6)vs. 1. The State rep by Sub Inspector of Police, Central Crime Branch/I, Egmore, Chennai 600 008. 2. Thaika Ahmed NubailRespondents(1st respondent & Complainant)Criminal Original Petition filed under section 482 Cr.P.C.to call for the records in Crime No.401 of 2007 on the file ofthe Sub Inspector of Police, Central Crime Branch/I, Egmore,Chennai and to quash the same. For petitioners : Mr.R.Shanmugasundaram, Senior Counsel for Mr.R.MuraliFor R1 : Mr.Hasan Mohamed Jinnah, Govt. Advocate (Crl. Side)For R2 : Mr.P.Jayaraman, Senior Counsel for Mr.K.SakthivelORDERThe petition is filed seeking quashment of the criminalproceedings in Crime No.401 of 2007 on the file of the SubInspector of Police, Central Crime Branch/I, Egmore, Chennai. https://hcservices.ecourts.gov.in/hcservices/

2. Petitioners 1 to 4 are the Directors of M/s.DeccanMinerals Private Limited. Petitioners 5 and 6 are the Directorsof M/s.Vidarbha Mining Private Limited and Goldstar MetalSolutions Private Limited. 3. The private complaint given by the second respondentreferred under section 156(3) of the Code of Criminal Procedureby the XIV Metropolitan Magistrate, Egmore, Chennai andregistered in Crime No.401 of 2007 would read as follows:-During the month of September 2004, A1 to A3 approached thecomplainant and represented that they were owners of certainmines and they intended to lease out the said mines to thesecond respondent for raising iron ore and selling the same.Believing the representation of the accused to be true, thecomplainant and the accused entered into an agreement on1.10.2004 for development of the mines and sales of the ironores from the said mines in collaboration with the accusedcompany by name Deccan Minerals Private Limited. Thecomplainant paid a sum of Rs.1,75,00,000/= on 23.9.2004 andRs.25,00,000/= on 15.12.2004 to the accused company as securitydeposit and irrevocable power of attorney was given for tenyears to the complainant company on 15.12.2004 by the accusedcompany. The complainant started extracting iron ore from theabove mines by engaging workers, having invested a total sum ofRs.8,00,00,000/= for extracting and raising iron ore. Within ashort span of time, the accused started giving trouble to thecomplainant by preventing the complainant from extracting ironore from the said mines. A memorandum of understanding wasentered into between the accused and the complainant on5.9.2005. But, the complainant, all of a sudden on 13.1.2007,with an evil intention to cheat and defraud the complainant,obstructed the mining operation carried on by the complainant,with the help of goondas. Though the complainant questioned theillegal activities of the accused, A2 to A6 came down to thecompany of the complainant on 7.4.2007 and threatened thecomplainant that they would do away with the life of thecomplainant. All the accused, with an evil intention to defraudand cheat the complainant, induced the complainant to part withhuge money and committed criminal breach of trust. They havecommitted offences punishable under sections 406, 420 and 506(ii) of the Indian Penal Code. 4. The petition seeking quashment is filed by the accusedon the following grounds:- https://hcservices.ecourts.gov.in/hcservices/ a) During the course of business, there were breach ofagreements entered into between petitioners 1 to 3 and thecomplainant. A sole arbitrator was appointed by the High Court,Mumbai in A.P.No.259 of 2005 to resolve the dispute betweenpetitioners 1 to 3 and the complainant. As a consensus wasreached and all the disputes were resolved by executing amemorandum of understanding dated 5.9.2005, the complainantstarted removing ores in the mines belonging to the area of thefirst petitioner illegally and therefore, the petitionerscancelled the memorandum of understanding by their letter dated13.1.2007. Even as against the cancellation of the agreementsand the memorandum of understanding, the complainant has raisedcivil dispute before the High Court, Mumbai in Chamber SummonsNo.1637 of 2006. This is an attempt made by the complainant tocorner the petitioners by invoking the criminal jurisdiction. b) The complaint, even if it is taken at its face value andaccepted in its entirety, does not constitute any offence ormake out a case as against the petitioners. The entire cause ofaction arose at Maharashtra and the learned MetropolitanMagistrate at Chennai has no jurisdiction to issue any directionunder section 156(3) of the Code of Criminal Procedure. Therehas been a delay of seven months in registering the FIR. Thecomplaint has been lodged with a mala fide intention to wreakvengeance and to cause harm to the petitioners. Since the HighCourt, Mumbai has not granted any interim relief to thecomplainant in the suit filed for attachment of mines and forinjunction, the complainant has converted the civil dispute intoa criminal case. The alleged threat wielded by the petitionersat Chennai is a figment of the imagination of the complainant.The petitioners have sought for quashment in the above facts andcircumstances. 5. The short point that arises for consideration is whetherthe complaint reflects commission of cognizable offenceswarranting reference under section 156(3) of the Code ofCriminal Procedure by the learned Metropolitan Magistrate. 6. Learned Senior Counsel for the petitioners wouldvehemently submit that the entire dispute between thepetitioners and the second respondent relates to mining rights.The parties had also resorted to civil forum seeking relief.The civil dispute has been mischievously converted into acriminal case just to punish the petitioners against the spiritof the judgment of the High Court of Mumbai. In a catena ofcases, this court has held that a civil dispute between theparties cannot be dragged to the criminal court abusing theprocess of law. https://hcservices.ecourts.gov.in/hcservices/

7. Learned Government Advocate (Criminal Side) would submitthat the investigation could not be proceeded further on accountof stay granted by this court. 8. Learned Senior Counsel appearing for the secondrespondent would submit that all the allegations constitutingthe offence of cheating have been clearly set out in thecomplaint. Further, the threat wielded by the petitioners to doaway with the life of the second respondent has been alleged inthe complaint. The second respondent has sufficient material tosubstantiate the evil design of the petitioners to cheat thesecond respondent who are adopting the very same modus operandias against some other companies also, he would further contend.9. The complaint discloses a serious charge of cheating asagainst the petitioners. The second respondent has alsodetailed about the misrepresentation made to him to enter intoan agreement with the petitioners. The inducement made by thepetitioners to the complainant to part with huge money and thecriminal breach of trust committed by the petitioners have beenunambiguously stated in the complaint. Further, it is found thatthere is a specific allegation that petitioners 2 to 6 came downto Chennai and threatened the complainant that they would doaway with his life on being questioned by the complainant aboutthe illegal activities of the petitioners. The aforesaiddetails found in the complaint reflects unerringly theallegation of commission of various offences by the petitioners.10. The fact remains that on account of certain disputebetween the petitioner and the second respondent who enteredinto an agreement for raising ores and for sale of the same, amemorandum of understanding was entered into between theparties. A civil dispute was also raised before the High Courtof Mumbai by the second respondent challenging the cancellationof the agreements and the memorandum of understanding enteredinto between the parties. The question that arises forconsideration is whether in such circumstances, the secondrespondent can invoke the criminal jurisdiction to book thepetitioners for various criminal offences. 11. The Supreme Court in M/S.MEDCHL CHEMICALS AND PHARMAPRIVATE LIMITED v. M/S.BIOLOGICAL E.LIMITED (AIR 2000 SC 1869)has held that a complaint cannot be quashed merely on the groundthat a civil remedy is available for the complainant. 12. The Supreme Court in TRISUNS CHEMICAL INDUSTRY v.RAJESH AGARWAL (AIR 1999 SC 3499) has observed as under:-"We are unable to appreciate the reasoning https://hcservices.ecourts.gov.in/hcservices/ that the provision incorporated in theagreement for referring the disputes toarbitration is an effective substitute for acriminal prosecution when the disputed act isan offence. Arbitration is a remedy foraffording reliefs to the party affected bybreach of the agreement but the arbitratorcannot conduct a trial of any act whichamounted to an offence albeit the same actmay be connected with the discharge of anyfunction under the agreement. Hence, thoseare not good reasons for the High Court toaxe down the complaint at the thresholditself. The investigating agency should havehad the freedom to go into the whole gamut ofthe allegations and to reach a conclusion oftis own. Pre-emption of such investigationwould be justified only in very extreme casesas indicated in State of Haryana V. BhajajLal (1192 AIR SCW 237 : AIR 1992 SC 604 :1992 Cri LJ 527)"13. In the instant case, it is true that an arbitrator wasappointed and on account of some amicable settlement, amemorandum of understanding was entered into between theparties. But, that cannot be a ground to quash the criminalproceedings when the investigation has just begun for thecharges of criminal breach of trust, cheating and criminalintimidation effectively alleged in the complaint. 14. Only in a case where the complaint is bereft ofmaterial particulars necessary for making out the offence, thecourt may think in terms of quashing the complaint. 15. The complaint, as stated earlier, makes out, primafacie, commission of offences by the petitioners. Therefore, itis not fair to quash the very complaint even before theinvestigation reaches its logical end. 16. Of course, the court should not permit the prosecutionwithout any basis against innocent persons as instrument ofharassment or to mount pressure on the accused to toe the lineof the complainant. But, the court should not throw away thecomplaint when serious charges are levelled in the complaint andthe same requires thorough investigation. 17. This court in PURUSHOTHAMAN,S. v. ASSOCIATED TRADINGCORPORATION PRIVATE LIMITED ((2006) 1 MLJ (Crl.)589) has heldthat for a breach of contract or for non-compliance of the terms https://hcservices.ecourts.gov.in/hcservices/ of conditions of memorandum of understanding, no criminalprosecution can be launched. In the instant case, it is foundthat though there is civil dispute between the petitioners andthe second respondent, specific allegation of cheating, breachof trust and criminal intimidation have been set out in thecomplaint. Therefore, the ratio laid down in the aforesaidauthorities does not apply to the facts and circumstances ofthis case. 18. In a commercial transaction, criminal proceedings wereinitiated to intimidate and harass the accused in order to getback the dues at a faster phase. Such an attitude of thecomplainant was deprecated and the criminal proceedings werequashed in M/S.BELLARY STEELS AND ALLOYS LIMITED v. M/S.MANTAKRAF (INDIA) PRIVATE LIMITED ((2006) 1 MLJ (CRL.) 264. 19. The Supreme Court in INDER MOHAN GOSWAMI v. STATE OFUTTARANCHAL (2007(5) CTC 614), has held that initiation ofcriminal proceedings based on a dispute of purely civil innature amounts to abuse of the process of court. It is foundthat breach of contractual obligations in the said case hasgiven rise to the initiation of criminal proceedings. But, inthe instant case, apart from the civil dispute between theparties, cogent allegation of cheating, criminal intimidationand breach of trust have been alleged. 20. It is found that the investigation has been stopped ata nascent stage. The serious charges levelled against thepetitioners will have to be thoroughly probed into by theinvestigating agency. 21. In view of the above, the petition seeking quashmentstands dismissed. Miscellaneous Petition No.1 of 2007 forinterim stay is also dismissed vacating the stay alreadygranted. As the main criminal original petition seekingquashment has been dismissed, Miscellaneous Petition No.3 forvacating the stay stands closed. ssk. Sd/Asst.Registrar/true copy/Sub Asst.Registrar https://hcservices.ecourts.gov.in/hcservices/ To1. The Sub Inspector of Police, Central Crime Branch/I, Egmore, Chennai 600 008.2. The Public Prosecutor, High Court, Madras.+ 2 ccs to Mr. R. Murali, Advocate SR No. 2396 and 2368+ 1 cc to Mr. K. Sakthivel, Advocate SR No. 2174 ORDER IN Crl.O.P.No.32369/2007NG(CO)SR/29.1.2008