1. Shri Rahul Garg 2. Shri Vijay Garg v. 1. State of Jharkhand 2
Case Details
IN THE HIGH COURT OF JHARKHAND AT RANCHI Cr. M.P. No. 524 of 2022 ------ 1. Shri Rahul Garg 2. Shri Vijay Garg Versus 1. State of Jharkhand 2. Mr. Uma Shankar Singh .... .... …. Petitioners .... .... .... Opposite Parties CORAM: HON'BLE MR. JUSTICE GAUTAM KUMAR CHOUDHARY For the Petitioners For the State For the O.P. No.2 : Mr. Shubhashis Rasik Soren, Advocate : Mr. S.K.Tiwari, Special P.P. : Mr. Rahul Kumar, Advocate C.A.V. ON 18.01.2023 PRONOUNCED ON 30 /01/ 2023 1. Instant petition has been filed for quashing of F.I.R. of Ramgarh P.S. Case No.309 of 2021 registered under Sections 406, 418, 419, 420, 465, 467, 468, 471, 120B of the Indian Penal Code pending in the Court of Chief Judicial Magistrate, Ramgarh. 2. The prosecution case, in brief, is about a dispute between the sub- contractor (informant) and the petitioners (contractors) over non-payment of amount for the work claimed to be executed. It is alleged that there was an intention to deceive since the inception as necessary approval was not taken from the principal contractor by the petitioners for sub-contract. 3. The informant-Uma Shankar Singh, Director of Universal Agency Ramgarh Pvt. Ltd. (UARPL) lodged F.I.R. on 01.11.2021 against both these petitioners (the Directors of PRL) alleging that IL & FS (Principal Contractor) awarded a contract work, NH-106 to PRL (Contractor). Petitioners on behalf of PRL approached UARPL (informant Company) and on their inducement, investment was made by appointing UARPL as Sub-Contractor. The Directors of PRL (Sub-Contractor) did not provide the copy of main agreement dated 29.07.2016 to the informant Company and the complete copy of the sub- contract agreement dated 12.09.2019 to the informant Company. At the time of signing this sub-contract, the NH Division of Government of India did not grant any permission to Principal Contractor to appoint PRL as Sub- Contractor. The said permission was only granted vide letter dated 22.11.2019. The Directors of PRL induced the informant Company to purchase machinery from its own account and the same was never shown as project expenses under the project. The Directors had issued a defective letter of acceptance which was corrected by letter dated 10.09.2019. The Director of PRL issued a 2 letter of intent dated 14.08.2019 in favour of UARPL which had made substantial investment in the project of Rs.2,65,69,178/-. It is alleged that UARPL received a fake work order on 25.09.2019 from the Directors of PRL, which induced it to invest more in the Company. After some time, despite repeated requests by the informant, PRL refused to make any payment and without the consent of the informant withdrew the substantial amount from the project specific joint facility bank account. The PRL executed Power of Attorney dated 23.05.2020 in favour of informant/opposite party No.2 illegally showing the informant as a Vice President of PRL. When the Company raised its grievances, the Directors of PRL initiated a false case against the informant and his son in order to save itself from being exposed of cheating the informant Company. The Directors of PRL illegally terminated the MoU dated 24.09.2019 and also withdrew the POA dated 23.05.2020 vide e-mail dated 15.01.2021. It is alleged that Directors of the PRL raised bogus claims vide its statement of claims filed on 15.04.2021 in the arbitral proceedings. 4.
Legal Reasoning
critical examination of the same. The offence ought to appear ex facie on the complaint/FIR/charge-sheet and other documentary evidence, if any, on record. For exercise of inherent power the only requirement is to see whether continuance of the proceedings would be a total abuse of the process of the 4 Court. Such power can be exercised as noted in State of Haryana v. Bhajan Lal, 1992 Supp (1) SCC 335 “(7) Where a criminal proceeding is manifestly attended with mala fide and/or where the proceeding is maliciously instituted with an ulterior motive for wreaking vengeance on the accused and with a view to spite him due to private and personal grudge.” 10. The matter for consideration is whether no offence will be made out on the basis of the averments made in the FIR and that it will be an abuse of power of Court? 11. Undisputed fact is that the informant is the director of the company engaged by the petitioners for the sub-contract of the work allotted to it by the principal contractor. Letter of intent was issued on 22.8.2019 and the letter of acceptance was issued by the petitioners company on 10.10.2019. It is claimed by the informant that this was a defective letter of acceptance and again sent correct version of letter of acceptance dated 10.10.2019 by email dated 24.9.2019 by which the value of project work is mentioned as Rs1,74,72,05,500/-. Further letter of intent was issued on 14.8.2019. The main allegation is that while issuing these letters in favour of the petitioner company, necessary approval from the principal contractor was not taken which was only granted on 22.11.2019. On these representations the informant made substantial investments. It is alleged that fake documents have been produced before the arbitral proceeding. Performance security was also not deposited with the principal contractor. Against the bills raised some payments were made and assured to make the remaining payment to be made after some time. Frivolous case was registered against the informant of this case. PRL the petitioner company had no intention to invest its own resources in the project and were only trying to rotate their resources. 12. This Court is of the view that even on taking the allegation made in the FIR as it is, necessary ingredients of the offence is not made out. There is a general statement that forged documents have been filed in the arbitral proceeding, but no specific reference is made to a particular document said to be forged. Further, when the arbitral proceeding is pending with regard to it, how a parallel criminal proceeding can be initiated to test the veracity of those documents. There is no material to show that there was intention of deception 5 from the inception from the very beginning, as admittedly payments were made initially. 13. It has been strenuously argued that there was delay in getting the approval of the sub-contract from the principal contractor. How this delay impacted the informant company to cause wrongful loss to it or in any way being advantageous or financially gainful to the petitioner company, is left to conjecture. There is no statement with regard to the financial loss on account of this. There should be some link or nexus, howsoever tenuous to the allegation and actual commission of the offence of cheating. 14. In order to make out a case of cheating, there should be material to make out a prima facie case that accused had fraudulent or dishonest intention at the time of making the promise. Deception is the essence of the offence of cheating which is not in the case of criminal misappropriation. Entrustment and misappropriation are two basic ingredients of the offence of criminal breach of trust. Mere breach of contract is not criminal, unless it was at the same time dishonest and was manifested by some overt act. In every criminal breach of trust a breach of contract is implicit. The determining factor to impute criminality in a particular case is whether the accused proceeded against, had acted dishonestly. The distinction between cheating and breach of contract lies in the intention of the accused at the time when the inducement was made. It has been held in Hridaya Ranjan Prasad Verma v. State of Bihar, (2000) 4 SCC 168 that mere breach of contract cannot give rise to criminal prosecution for cheating unless fraudulent or dishonest intention is shown right at the beginning of the transaction, that is the time when the offence is said to have been committed. It is the intention which is the gist of the offence. From his mere failure to keep up promise subsequently such a culpable intention right at the beginning, that is, when he made the promise cannot be presumed. 15. In the aforesaid facts it is apparent that allegations of forgery are vague and general as no specific document has been referred to said to be forged. Undisputedly the admitted position is that payment of Rs.11,31,38,374/- has been made to the informant, for the work executed which the informant claims to be not as per the agreement. Once there is payment of a large sum, it cannot be said that there was intention of deception from the inception. It has been held in Surendra Nath Pandey v. State of 6 Bihar, (2020) 18 SCC 730 that criminal prosecution cannot be allowed to proceed on the basis of bald and omnibus allegations in the FIR, as the same will constitute an abuse of the process of the court and such prosecution may in all likelihood be abortive and futile. Financial dispute is pending before an arbitral proceeding and the petitioners have instituted a criminal case against the informant. Thus, prima facie case is not made out on the allegations made. Against these background facts, the present case appears to be nothing but abuse of process of Court, to wreck vengeance and bring pressure on the petitioners. Under the aforesaid facts and circumstance, the entire criminal proceeding arising out of Ramgarh P.S. Case No.309 of 2021 is quashed. Criminal Miscellaneous Petition is allowed. (Gautam Kumar Choudhary, J.) Jharkhand High Court, Ranchi Dated the 30th January, 2023 AFR / AKT/Anit
Arguments
It is submitted by the learned counsel on behalf of petitioners that it is a commercial dispute between Sub-Contractor and the informant Company for which the arbitral proceeding is already pending and the present case has been filed to extort money from the petitioners. The petitioners are the Directors of PRL Project and Infrastructure Ltd. having its registered office at New Delhi and this company is registered as MSME Government Contractor in construction of roads and bridges. The F.I.R. is fit to be quashed for the reason that petitioners are neither the parties nor the residents of Jharkhand nor any part of work was to be executed in this State. As a matter of fact, the present case is counter to the F.I.R. No.72 of 2021 registered on 21.02.2021 under Sections 468, 471, 34 of the I.P.C. against the Directors of Universal Agency Ramgarh Pvt. Ltd. namely Uma Shankar Singh and his son Deepankar Singh, by petitioner- Rahul Garg. The informant had filed a petition for quashing of the F.I.R. which was earlier withdrawn. It is submitted that for the same fact, two cases cannot be lodged and the present case is also barred by ratio of (2004)8SCC 100. 5. It is submitted by Sri Rahul Kumar, learned Counsel on behalf of the informant, on the point of territorial jurisdiction that in cases where offences are of criminal misappropriation of property or criminal breach of trust, the place of trial would be where the offence was committed or any part of 3 property which is the subject of the offence was received or retained or was returned or accounted for, by the accused person. The averments made in the FIR make the offence triable by the Court at Ramgarh and there was no defect on this score. 6. It is further submitted that there was an intention of deception from the inception, which will be apparent from the fact that the sub-contract was awarded to the informant without obtaining any approval from the principal contractor. The petitioners invested heavily acting on the said promise suffering immense loss as the work was done by the informant without receiving payment for the executed work. 7. At the outset it is to be noted that objection on the ground of territorial jurisdiction cannot be considered at this stage. The question of territorial jurisdiction comes up for consideration at the stage of inquiry or trial and not at the pre-cognizance stage. It has been held in Trisuns Chemical Industry v. Rajesh Agarwal, (1999) 8 SCC 686 that it is an erroneous view that the Magistrate taking cognizance of an offence must necessarily have territorial Jurisdiction to try the case as well. 8. Second plea of the petitioners that an arbitration proceeding was pending between the parties, cannot by itself be a ground to axe down the criminal case at the inception. This is so because in an arbitral proceeding the criminality, if any, involved, is not adjudicated upon. 9. The power of quashing an FIR where even the investigation has not been concluded and the materials have not been brought on record is an extraordinary power and is to be exercised to prevent gross abuse of the process of Court. It has been held in 2021 SCC OnLine SC 206 Priti Saraf & Anr. Vs State NCT of Delhi & Anr. that in exercise of powers under Section 482 CrPC, the complaint in its entirety shall have to be examined on the basis of the allegation made in the complaint/FIR/charge-sheet and the High Court at that stage was not under an obligation to go into the matter or examine its correctness. Whatever appears on the face of the complaint/FIR/charge-sheet shall be taken into consideration without any