THE HONOURABLE MR v. TVS Finance and Services Ltd(formerly known as Haritha Finance Ltd)rep by its

IN THE HIGH COURT OF JUDICATURE AT MADRASDATED: 20-02-2008CORAM:THE HONOURABLE MR.JUSTICE R.REGUPATHICrl.O.P.No.11030 of 2006and Crl.M.P.No.2878 of 2006Ravi Srinivasan... PetitionervsTVS Finance and Services Ltd(formerly known as Haritha Finance Ltd)rep by its Executive Saikumar3, Jaffer Syrang Street,Chennai-1... Respondent Prayer: Petition filed under Section 482 Cr.P.C seeking for thereliefs as stated therein.For Petitioner : Ms.R. RevathyFor Respondent : Mr.S. Ashok Kuamr, SC for M/s Anand, Abdul Vinodh Associates ORDER This petition is filed, seeking for a direction to call for therecords relating to C.C.No.3055 of 2006 on the file of the learnedIII Metropolitan Magistrate, George Town, Chennai and quash the same.2. The petitioner is the sole accused in a private complaintwhich was taken as C.C.No.3055 of 2006 on the file of the learnedIII Metropolitan Magistrate, George Town, Chennai for the offencespunishable under Secs.420, 406 and 408 r/w 120(b) IPC. The learnedMagistrate, after taking cognizance of the offence, issued process tothe petitioner/accused to take up the proceedings. Aggrieved againstthat, the present petition to quash the proceedings has been filedbefore this Court.3. The allegation in the private complaint is that thepetitioner is the Managing Director of T.T.G. Industries Limited,that the Industries availed a loan of Rs.12 lakhs under HirePUrchase Agreement No. 710001 dated 2.6.95 and that because of non-payment of principal and interest, the petitioner/accused, being theManaging Director of the Industries, authorised the complainant toadjust the proceeds against the dues payable under the H.P agreementwhereupon, the complainant had adjusted the loan proceeds of Rs.12lakhs and had given credit for the said amount under the HP Agreement.3 (a) It is further alleged that the loan availed by thepetitioner along with interest as on 27.8.2002 is Rs.18,22,572.93 and https://hcservices.ecourts.gov.in/hcservices/ the same has not been paid; therefore the petitioner/accused, withdishonest intention and also to cheat the complainant, availedfinancial facilities and thereby committed cheating, misappropriationand criminal breach of trust. 4. Learned counsel for the petitioner submits that even if theallegations and averments made in the complaint are accepted to betrue, no offence is made out. Since on the one hand the allegationis that the amount of Rs.12 lakhs has been received by thepetitioner/accused with dishonest intention, on the other hand, theadmission at paragraph No.7 of the complaint is that the complainanthad adjusted the entire amount of Rs.12 lakhs against the amount dueunder the HP loan agreement.4 (a) Learned counsel referred to paragraphs 10 and 12 of theprivate complaint, wherein, it has been stated that thepetitioner/accused had misappropriated the sum received towards loanand committed criminal breach of trust and argued that Offences underSecs. 420, 406 and 408 r/w 120(b) IPC may not go together and evenaccepting the allegations made in the private complaint to be true,the offences alleged are not made out or substantiated. Curiously,Sec.120-B IPC has also been included along with the other 3 majoroffences.4 (b) Learned counsel adverted to the contents of the sanctionletter dated 31.3.2000, wherein Rs.12 lakhs is mentioned asadditional finance to the existing finance apart from specificallystating that a new additional loan will be charged at 36% p.a; andrelied upon the endorsement therein which is to the following effect:"I also hereby authorise Haritha FinanceLimited to adjust the loan proceeds against the HPagreement No. 710001 entered into between TTGIndustries Limited and TVS Finance and Services Ltd(now Haritha Finance Ltd)"According to the learned counsel, the aforesaid aspects pointed outby her would go to show that the offences alleged have not beenmade out and therefore, the proceedings may be quashed.4 (c) Learned counsel relied on the decisions reported in AIR1960 SC 866 (R.P. Kapur vs State of Punjab), 1992 Supp (1) SCC 335(State of Haryana vs Bhajanlal) and 2004(2) Supreme 501 (State ofMadhya Pradesh vs Awadh Kishore Gupta and Ors), wherein it has beenheld that, where the allegations in the First Information Report orthe complaint, even if they are taken at their face value andaccepted in their entirety, do not constitute the offence alleged; insuch cases, no question of appreciating evidence arises; it is amatter merely of looking at the complaint or the First InformationReport to decide whether the offence alleged is disclosed or not.5. Per contra, learned Senior Counsel appearing on behalf ofthe respondent/complainant, submits that the fact remains that thepetitioner/accused borrowed a huge sum of Rs.12 lakhs from thecomplainant as a second loan only for the purpose of clearing theloan already borrowed in the HP loan agreement; that no doubt, the https://hcservices.ecourts.gov.in/hcservices/ loan borrowed has been adjusted towards arrears of the HP agreementloan and that not only the principal but also along with interest ason 27.8.2002 to the tune of Rs.18,22,572.93 has not been paid andstill it is outstanding. In such circumstances, the present loanmust be treated as an independent transaction and it should not beclubbed together with the HP loan transaction. According to him, theentire amount of Rs.12 lakhs towards new loan along with interesthas not been paid and therefore, offence under Sec.420 IPC is madeout; similarly since the present loan has been availed only forthe purpose of clearing the loan under the HP agreement, it must bepresumed that the petitioner obtained the same with dishonestintention. He further submits that inasmuch as the learnedMagistrate has taken cognizance of the case and process has beenissued, it is for the accused/petitioner to approach the learnedMagistrate with all available materials in his favour by way ofdischarge petition and without adopting such a recourse, he straightaway approached this Court. The learned senior counsel relied on adecision reported in (2002)9SCC 709 (Ajay Mehra and Another VsDurgesh Babu and Others), wherein it has been held as follows:"But that stage has not reached in thepresent case. The Magistrate has merely takencogniaznace of the offence and has issuedprocess and therefore at this stage thequestion of consideration of other materialsdoes not arise and the court will have to takea view taking into account the fact that allthe statements made in the complaint as well asthe statement made under Section 202, if takenon their face value, an offence can be said tohave been made out. Applying that standard, itis held that there was no error in takingcognizance of the offence. However, it wouldbe open to the accused while framing charge toargue as to whether the materials do permitframing of a charge"6. Heard the rival contentions of both the parties. At theoutset, it has to be noted that in the complaint, allegations havebeen made with reference to 120-B. It is the specific allegationthat instalments payable towards the loan availed by the Industryunder the HP agreement were not paid and for payment of the same, anew loan of Rs.12 lakhs has been availed by the petitioner in hiscapacity as Managing Director of the same Company and, it isspecifically admitted by the complainant at paragraph 7 of theprivate complaint that the entire amount has been adjusted towardsarrears of the loan under the HP agreement. Separate proceeding hasbeen initiated against the Company for non-payment of the loan underthe HP Agreement.7. Admittedly, the HP loan agreement existed between thecomplainant and the Industry, in which the petitioner is theManaging Director. In the sanction letter for the present loan, anendorsement has been made to the effect that the same is granted foradjusting the arrears towards the loan under the HP agreement. https://hcservices.ecourts.gov.in/hcservices/

8. Such being the admitted factual aspects, it is clear thatthe present loan borrowed has been merged with the HP loan andtherefore availing of the present loan cannot be treated as aseparate transaction. In the light of the same, it cannot becontended that such loan was availed with dishonest intention at theinception. Admittedly, the loan was availed only for the purpose ofclearing the arrears of loan under the HP agreement and thereforethe second loan cannot be categorised to have been borrowed withdeception as the petitioner had no intention to cheat thecomplainant. The allegations made will not even constitutemisappropriation and criminal breach of trust since the act committeddoes not fit in within the definitions therefor. Since the accusedis the only person in the case, Sec.120-B IPC also will not getattracted at all. The Hon'ble Supreme Court in the case law reportedin (2006) 6 SCC 736 (Indian Oil Corporation vs NEPC India Ltd),expressed its opinion as follows:"However, there is a growing tendency inbusiness circles to convert purely civildisputes into criminal cases. This isobviously on account of a prevalent impressionthat civil law remedies are time consuming anddo not adequately protect the interests oflenders/creditors. Such a tendency is seen inseveral family disputes also, leading toirretrievable breakdown of marriages/families.There is also an impression that if a personcould somehow be entangled in a criminalprosecution, there is a liklihood of imminentsettlement. Any effort to settle civildisputes and claims, which do not involve anycriminal offence, by applying pressure throughcriminal prosecution should be deprecated anddiscouraged" The Apex Court further held as follows:The Principles relating to exercise ofjurisdiction under Section 482 of the Code ofCriminal Procedure to quash complaints and criminalproceedings which are relevant for the presentpurpose are:(i) A complaint can be quashed where theallegations made in the complaint, even if theyare taken at their face value and accepted intheir entirety, do not prima facie constitute anyoffence or make out the case alleged against theaccused.For this purpose, the complaint has to beexamined as a whole, but without examining themerits of the allegations. Neither a detailedinquiry nor a meticulous analysis of the material https://hcservices.ecourts.gov.in/hcservices/ nor an assessment of the reliability orgenuineness of the allegations in the complaint,is warranted while examining prayer for quashingof a complaint.(ii) A complaint may also be quashed whereit is a clear abuse of the process of the court,as when the criminal proceeding is found to havebeen initiated with mala fides/malice forwreaking vengeance or to cause harm, or where theallegations are absurd and inherently improbable.(iii) The power to quash shall not, however,be used to stifle or scuttle a legitimateprosecution. The power should be used sparinglyand with abundant caution.(iv) The complaint is not required to verbatimreproduce the legal ingredients of the offencealleged. If the necessary factual foundation islaid in the complaint, merely on the ground thata few ingredients have not been stated in detail,the proceedings should not be quashed. Quashingof the complaint is warranted only where thecomplaint is so bereft of even the basic factswhich are absolutely necessary for making out theoffence.(v) A given set of facts may make out: (a)purely a civil wrong; or (b) purely a criminaloffence; or (c) a civil wrong as also a criminaloffence. A commercial transaction or acontractual dispute, apart from furnishing acause of action for seeking remedy in civil law,may also involve a criminal offence. As thenature and scope of a civil proceeding aredifferent from a criminal proceeding, the merefact that the complaint relates to a commercialtransaction or breach of contract, for which acivil remedy is available or has been availed, isnot by itself a ground to quash the criminalproceedings. The test is whether the allegationsin the complaint disclose a criminal offence ornot. 9. Having regard to the abundant factual details available andthe aforesaid case law of the Apex Court, I am of the considered viewthat the offences alleged in the complaint have not beensubstantiated and the dispute being purely of a civil nature, thepresent proceedings against the petitioner will be an abuse ofprocess of Court. Accordingly, the proceedings against the https://hcservices.ecourts.gov.in/hcservices/ petitioner in C.C.No.3055 of 2006 on the file of learned IIIMetropolitan Magistrate, George Town, Chennai are quashed. However,the respondent/complainant are at liberty to proceed against thepetitioner in the manner known to law. 10. Net result, the petition is allowed. Consequently, theconnected M.P is closed.Sd/-Asst. Registrar./true copy/Sub Asst. Registrar.srTo1.The III Metropolitan Magistrate, George Town, Chennai2.Do the Chief Magistrate, Egmore, Chennai.+ 1 CC to Mr.Anand Advocate SR NO.9375+ 1 CC to Mr. Rugan & Arya Advocate SR NO.9085 Crl.O.P.No.11030/2006KGK(CO)JJM(02.04.08)