High Court · 2009

IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED:29.06.2009CORAM:THE HONOURABLE MR.JUSTICE ARUNA JAGADEESANCrl.OP.No.28591/2006Crl.MP.No.1/20061.M/s.Anand Agross Limited by its Director A.Suri Babu, Bibi Nagar 508126, Nalgonda District Andhra Pradesh2.Suri Babu, Director, M/s.Anand Agross Limited Andhra Pradesh3.A.Narahari Rao4.A.Babu Rao5.Venkateswar Rao6.Chandrasekara Rao 7.A.Krishna RaoPetitioners VsM/s.TVS Finance & Services Limited Formerly Known as M/s.Harita Finance Limited by its authorised signatory Sai Kumar3, Jaffar Syrang Street, Chennai-1RespondentPrayer:- This Criminal Original Petition is filed to to call forthe records in CC.No.10817/2006 on the file of the III MetropolitanMagistrate, George Town, Chennai-1 and quash the same. For Petitioner:Mr.A.K.MylsamyFor Respondents:Mr.Abdul SaleemORDER The Petitioners are arrayed as accused 1 to 7 inCC.No.10817/2006 on the file of the III Metropolitan Magistrate,George Town, Chennai-1. 2. The Petitioners seek to quash the proceedings inCC.No.10817/2006 on grounds that the promissory note dated27.3.2000 and the hire purchase agreement dated 27.3.2000 weresigned at Hyderabad, representing the 1st Petitioner Company andthus no cause of action arose within the jurisdiction of the courtat Chennai and though the complaint reveals that some part of themachinery was sold by the 1st petitioner without the knowledge and https://hcservices.ecourts.gov.in/hcservices/ permission of the Respondent, since the said offence was committedat Hyderabad, this court has no jurisdiction.3. According to the Petitioners, the court at Chennai hasno jurisdiction to take cognizance of the offence the complaintdoes not disclose the alleged offence under Section 406, 408, 420read with Section 120(b) of IPC and since the arbitrationproceedings are pending, initiation of criminal proceedings is malafide. The Respondent has converted the civil proceedings intocriminal proceedings and the Petitioners 3 to 7 have alreadyresigned from the Office, as Directors in the year 1997 and hence,they have nothing to do with the 1st Petitioner Company.4. The brief facts are as follows:-The 1st Petitioner, which is the private Limited Company,entered into an agreement on 30.3.1994 and 1.8.1994 with theRespondent for taking the plant and machinery on hire for its useand the same was supplied by the manufacturers to the 1st petitionerand the payment was made by the Respondent directly to themanufacturers. To secure the payment, the Petitioners 2 to 7 havecreated equitable mortgage by depositing the original title deedsof the agricultural lands measuring an extent of 9 acres belongingto them. Later, three more hire purchase agreements were enteredinto on various dates and the amounts due and payable under hirepurchase agreement 1 and 2 has been paid from and out of theamounts paid by the Respondent to the Petitioners. The 4th hirepurchase agreement was executed on 27.3.2000. In the said courseof transaction, a sum of Rs.62,68,000/- was due and payable by the1st Petitioner Company towards hire amounts and additional financecharges under the hire purchase agreement dated 4. On account ofthe various defaults committed by the 1st Petitioner, thecomplainant in order to protect their interest had filed anapplication under Section 9 of the Arbitration and ConciliationAct, 1966 before this court seeking for various reliefs as againstthe properties. This court in turn by its order appointed anAdvocate Commissioner to take inventory and symbolic possession ofthe plant and machinery and pursuant thereto, he had takeninventory and symbolic possession of the plant and machinery andfiled his report. Subsequently, the Advocate Commissioner wasdirected to call for offers and sell the plant and machinery to thehighest bidder. In pursuance thereof, the Advocate Commissionercalled for offers and found the highest bidder, but latter backedout for the reason that part of the plant and machinery was foundto be removed from the premises of the 1st Petitioner Company and areport was also filed by the Advocate Commissioner in that regard.By several letters, the 1st Petitioner promised to pay theoutstanding amounts, but they failed to do so. 5. According to the complainant, the accused colluded andconspired with each other and availed various facilities with aclear dishonest intention of cheating and misappropriated the sum https://hcservices.ecourts.gov.in/hcservices/ received from the complainant and caused wrongful loss to them. Itis their further case that they had induced the Respondent to partwith monies/machineries and they neither returned the monies nortransferred the immovable properties as promised. So they havecommitted offences punishable under Sections 420, 406, 409 readwith 120(b) of IPC.6. The main contention of the learned counsel for thePetitioners is that the cause of action arose only at Hyderabad andthe court at Chennai has no jurisdiction to take cognizance of theoffence. He would further contend that the averments made in thecomplaint only go to show that they are of civil nature and itwould be abuse of process of law, if the Petitioners are allowed toface the prosecution and the Petitioners 3 to 7 have alreadyresigned from the Office as Directors and therefore, no prosecutioncan be continued as against those petitioner. 7. At the outset, for the purpose of quashing theproceedings under Section 482 Code of Criminal Procedure, the truthor otherwise of the allegation made in the complaint cannot be goneinto. It is the specific case of the complainant that the entireagreement was signed at Chennai and the payments were made atChennai and the commission of offence also was at Chennai. Thehire purchase agreement entered into between the parties dated27.3.2000 has been executed at Chennai and the same is evidencedfrom the document filed therein and the witnesses have also signedonly at Chennai. Though the promissory note dated 27.3.2000 hasbeen signed at Hyderabad, the attesting witnesses have signed onlyat Chennai and their addresses are only at Chennai. That apart,letter of guarantee was also executed at Chennai. More importantlyin the agreement, it is stated that the courts at Chennai aloneshall have jurisdiction. Admittedly, a part of cause of action hasarisen within the jurisdiction of Chennai and it would be a matterof evidence to decide as to whether the cause of action arose atChennai or at Hyderabad. The complaint cannot be quashed merely onthe said ground.8. It is well settled that mere filing of a civil suit orpendency of the arbitration proceedings by themselves would notabsolve the criminal court from taking cognizance of the complaint,if the averment in the complaint prima facie make out the offenceas alleged. In this case, the allegations made in the complaintdisclose a prima facie case of cheating, misappropriation of amountand breach of trust. The allegations that the Respondent believedthe representation made by the Petitioners and let all their plantand machineries for hire and use and after availing the saidfacilities, the Petitioners failed to pay the amount and sold partof the machineries without the knowledge of the Respondent areprima facie sufficient to constitute the offences alleged asagainst them. Merely because civil proceedings are pending, thecomplaint cannot be quashed. https://hcservices.ecourts.gov.in/hcservices/

9. It is also well settled that when the averments in thecomplaint prima facie make out a case, this court cannot quash thecomplaint, merely because one or two ingredients of the avermentshave not been stated in detail.10. The Hon'ble Supreme Court in the case of Rajesh BajajVs. State NCT of Delhi and Others (1999-SCC-Cri-401) has held asfollows:-"11. The crux of the postulate is the intention of theperson who induces the victim of his representation andnot the nature of transaction which would becomedecisive in discerning whether there was commission ofoffence or not. The complainant has stated in the bodyof the complaint that he was induced to believe thatthe Respondent would honour payment on receipt ofinvoices, and that the complainant realised later thatthe intentions of the Respondent were not clear. Healso mentioned that the Respondent after receiving thegoods had sold them to others and still he did not paythe money. Such averments would prima facie make out acase for investigation by the authorities."11. The learned counsel for the Petitioners strenuouslycontend that since the Respondent could not succeed in thearbitration proceedings, they have launched the criminalProsecution with a view to harass the Petitioners and achieve whatthey could not achieve in the civil proceedings. As far as thiscontention is concerned, the averments made in the complaint primafacie show the criminal intention on the part of the accused fromthe inception and their subsequent conduct that in spite of thesymbolic possession taken by the Advocate Commissioner, thePetitioners have sold a part of the plant and machinery without theknowledge of the Respondent would attract the offence of criminalbreach of trust. Further on representation made by the Petitioners,the Respondent has hired the plant and machinery to thePetitioners, after making payments to the manufacturers and allowedthem to avail the said facility. But, in spite of it, thePetitioners have failed to make the payments and they are allegedto have misappropriated the amounts to their use.12. It is contended that the Petitioners 3 to 7 havealready resigned in the year 1997 and so criminal proceedings asagainst them cannot be continued. The question as to whether theyhave executed the letter of guarantee when they were in-charge ofthe Company as Directors is to be gone into by letting in evidenceand the same should be decided only at the time of trial. Thiscomplaint cannot be quashed at this stage. It is for theRespondent to prove the involvement of the Petitioners and thecomplicity in the commission of offence at the trial. The said factalso cannot be decided at this stage. https://hcservices.ecourts.gov.in/hcservices/

13. On going through the allegations made in the complaint,it is seen that there is nothing wrong on the part of thecomplainant to have resorted to lodge a complaint against thePetitioners for having not paid the amount and dishonestly sold thepart of the plant and machinery and misappropriated the sum totheir use, which are not disputed by the Petitioners. The only pleataken on the part of the Petitioners is that they are of civilnature and no criminal offence is attracted. There does not seem tobe any ambiguity or irregularity in the registration of the case onthe complaint given by the Respondent. This court does not find anyvalid or tangible reason to cause interference into theregistration of the case and this Criminal Original Petition isdevoid of merits and deserves to be dismissed.14. In view of the above said reasons, this CriminalOriginal Petition is dismissed, as devoid of merits.Consequently, the connected MP is closed. 29.06.2009After pronouncement of the order in this Criminal OriginalPetition on 29.06.2009, the learned counsel for the Respondent hasprayed this court to direct the court below to expedite the trialand dispose of the matter, expeditiously. Considering the saidsubmissions, the court below is directed to expedite the trial anddispose of the matter, within a period of three months from thedate of receipt of a copy of this order. Sd/- Asst.Registrar/true copy/ Sub Asst.RegistrarSrcmTo:1. The III Metropolitan Magistrate, George Town, Chennai.2. -do- Thro' The Chief Metropolitan Magistrate, Egmore, Chennai.3. The Public Prosecutor, High Court, Madras +1 cc to Mr.A.K.Mylsamy & Associates, SR.No.27832+1 cc to M/s.Anand,Abdul & Vinodh Associates, SR.No.27063 Order in Crl.OP.No.28591/2006KSJ {CO}TP/17.7.2009.