Ajay Kumar v. The State of Jharkhand

: Mr. R. N. Sahay, Sr. Advocate Mr. Yashvardhan, Advocate : Mr. Vineet Kr. Vashistha, Spl. P.P. : None ------ P R E S E N T HON’BLE MR. JUSTICE ANIL KUMAR CHOUDHARY By the Court:- Heard the parties.

2. Though notice has validly been served upon the opposite party No.2 yet no one turns up on behalf of the petitioner in spite of repeated calls.

3. This Criminal Miscellaneous Petition has been filed invoking the jurisdiction of this Court under Section 482 of the Code of Criminal Procedure with a prayer to quash and set aside the order taking cognizance dated

27.06.2022 whereby and where under the learned Judicial Magistrate-XIII, Ranchi has taken cognizance for the offences punishable under Sections 406, 420, 34 of the Indian Penal Code and the entire criminal proceedings arising out of Complaint Case No.5643 of 2022 which is now pending in the court of learned Judicial Magistrate-XIII, Ranchi. 1 Cr. M.P. No.4705 of 2022

4. The brief facts of the case is that the complainant entered into a franchise agreement with M/s. Lifestyle Venture of which the petitioner is the Director and the complainant paid franchise fee of Rs.40,300/- but the petitioner failed to abide by the terms and conditions of the said agreement by not providing experienced staffs and not supplying the premium product on discounted rate and also did not provide telemarketing or call centre support nor ensured the appearance of the celebrities at the time of inauguration of the said salon.

5. Learned counsel for the petitioner draws the attention of this Court to page-4 of the supplementary affidavit dated 15.02.2024 and submits that it has been mentioned therein that the matter has been settled between the parties and the complainant/opposite party No.2 has categorically mentioned therein that due to some misunderstanding, he filed the Complaint Case No.5643 of 2022 and he is ready to withdraw the complaint. It is next submitted that the allegations against the petitioner are all false. Drawing attention of this Court towards the Memorandum of Understanding entered into between the complainant and the accused persons of the case, learned counsel for the petitioner submits that therein no assurance was ever made by the petitioner to ensure presence of any celebrity at the time of inauguration of the said salon. The dispute between the parties is basically a civil dispute. Learned counsel for the petitioner further relies upon the judgment of the Hon’ble Supreme Court of India in the case of Sarabjit Kaur vs. State of Punjab & Another reported in (2023) 5 SCC 360 paragraph-13 of which reads as under:- “13. A breach of contract does not give rise to criminal prosecution for cheating unless fraudulent or dishonest intention is shown right at the beginning of the transaction. Merely on the allegation of failure to keep up promise will not be enough to initiate criminal proceedings. From the facts available on record, it is evident that Respondent 2 had improved his case ever since the first complaint was filed in which there were no allegations against the appellant 2 Cr. M.P. No.4705 of 2022 rather it was only against the property dealers which was in subsequent complaints that the name of the appellant was mentioned. On the first complaint, the only request was for return of the amount paid by Respondent 2. When the offence was made out on the basis of the first complaint, the second complaint was improved version making allegations against the filed with appellant as well which was not there in the earlier complaint. The entire idea seems to be to convert a civil dispute into criminal and put pressure on the appellant for return of the amount allegedly paid. The criminal courts are not meant to be used for settling scores or pressurise parties to settle civil disputes. Wherever ingredients of criminal offences are made out, criminal courts have to take cognizance. The complaint in question on the basis of which FIR was registered was filed nearly three years after the last date fixed for registration of the sale deed. Allowing the proceedings to continue would be an abuse of process of the court.” (Emphasis supplied) and submits that a breach of contract does not give rise to criminal prosecution for cheating unless fraudulent or dishonest intention is shown right at the beginning of the transaction and in this case there is no such allegation against the petitioner.

6. Learned counsel for the petitioner next relies upon the judgment of the Hon’ble Supreme Court of India in the case of Vijay Kumar Ghai & Others vs. State of West Bengal & Others reported in (2022) 7 SCC 124 paragraph-38 of which reads as under:- “38. There can be no doubt that a mere breach of contract is not in itself a criminal offence and gives rise to the civil liability of damages. However, as held by this Court in Hridaya Ranjan Prasad Verma v. State of Bihar [Hridaya Ranjan Prasad Verma v. State of Bihar, (2000) 4 SCC 168 : 2000 SCC (Cri) 786] , the distinction between mere breach of contract and cheating, which is criminal offence, is a fine one. While breach of contract cannot give rise to criminal prosecution for cheating, fraudulent or dishonest intention is the basis of the offence of cheating. In the case at hand, complaint filed by Respondent 2 does not disclose dishonest or fraudulent intention of the appellants.” (Emphasis supplied) and submits that a mere breach of contract is not in itself a criminal offence and gives rise to the civil liability of damages and in this case also, the allegations, at best, give rise to a cause of action to a civil remedy but certainly 3 Cr. M.P. No.4705 of 2022 the offence punishable under the penal provisions of Indian Penal Code is not made out.

7. Learned counsel for the petitioner next relies upon the judgment of the Hon’ble Supreme Court of India in the case of Mitesh Kumar J. Sha vs. State of Karnataka & Others reported in (2022) 14 SCC 572 paragraph-39 of which reads as under:- “39. It was also observed : (Indian Oil Corpn. case [Indian Oil Corpn. v. NEPC India Ltd., (2006) 6 SCC 736 : (2006) 3 SCC (Cri) 188] , SCC pp. 748-49, para 13) “13. While on this issue, it is necessary to take notice of a growing tendency in business circles to convert purely civil disputes into criminal cases. This is obviously on account of a prevalent impression that civil law remedies are time consuming and do not adequately protect the interests of lenders/creditors. … There is also an impression that if a person could somehow be entangled in a criminal prosecution, there is a likelihood of imminent settlement. Any effort to settle civil disputes and claims, which do not involve any criminal offence, by applying pressure though criminal prosecution should be deprecated and discouraged.” and submits that in the case of Indian Oil Corporation vs. NEPC India Ltd. & Others reported in (2006) 6 SCC 736, the Hon’ble Supreme Court of India took notice of a growing tendency in business circles to convert purely civil disputes into criminal cases under an impression that if a person could somehow be entangled in a criminal prosecution, there is a likelihood of imminent settlement and submits that this is exactly a case of civil nature.

8. Learned counsel for the petitioner further relies upon the judgment of a co-ordinate Bench of this Court in the case of M/s Usha Martin Limited vs. The State of Jharkhand & Another passed in Cr.M.P. No.690 of 2022 dated

29.07.2022 and submits that in the facts of that case it was observed that in case the solemn process of Court is sought to be abused by a person with some oblique motive, the court has to thwart the attempt at the very threshold and to 4 Cr. M.P. No.4705 of 2022 quash the entire criminal proceeding. Hence, it is submitted that the order taking cognizance dated 27.06.2022 whereby and where under the learned Judicial Magistrate-XIII, Ranchi has taken cognizance and the entire criminal proceedings arising out of Complaint Case No.5643 of 2022 which is now pending in the court of learned Judicial Magistrate-XIII, Ranchi, be quashed and set aside.

9. Learned Spl.P.P. appearing for the State on the other hand submits that since undisputedly there is a compromise between the parties and the dispute certainly, has a civil flavor and it is apparent that the opposite party No.2, consequent upon compromise, has lost interest, hence, the State has no serious objection for quashing and setting aside the order taking cognizance dated

27.06.2022 whereby and where under the learned Judicial Magistrate-XIII, Ranchi has taken cognizance and the entire criminal proceedings arising out of Complaint Case No.5643 of 2022 which is now pending in the court of learned Judicial Magistrate-XIII, Ranchi.

10. Having heard the rival submissions made at the Bar and after carefully going through the materials available in the record, it appears that the genesis of the occurrence is the alleged non-performance of his part of the contract by the petitioner which he was supposed to perform in view of the memorandum of settlement arrived at between the petitioner in capacity of the Director of his company and the complainant. It is also apparent that the matter has been settled between the parties as is evident from the agreement kept at page-4 onwards of the supplementary affidavit and definitely the dispute has a civil flavor. 5 Cr. M.P. No.4705 of 2022

11. Under such circumstances, this Court is of the considered view that the continuation of the order taking cognizance dated 27.06.2022 whereby and where under the learned Judicial Magistrate-XIII, Ranchi has taken cognizance and the entire criminal proceedings arising out of Complaint Case No.5643 of 2022 which is now pending in the court of learned Judicial Magistrate-XIII, Ranchi, will amount to abuse of process of law and this is a fit case where the order taking cognizance dated 27.06.2022 whereby and where under the learned Judicial Magistrate-XIII, Ranchi has taken cognizance and the entire criminal proceedings arising out of Complaint Case No.5643 of 2022 which is now pending in the court of learned Judicial Magistrate-XIII, Ranchi, as prayed for by the petitioner, be quashed and set aside.

12. Accordingly, the order taking cognizance dated 27.06.2022 whereby and where under the learned Judicial Magistrate-XIII, Ranchi has taken cognizance and the entire criminal proceedings arising out of Complaint Case No.5643 of 2022 which is now pending in the court of learned Judicial Magistrate-XIII, Ranchi, as prayed for by the petitioner, is quashed and set aside.

13. In the result, this Cr.M.P. stands allowed. (Anil Kumar Choudhary, J.) High Court of Jharkhand, Ranchi Dated the 21st of February, 2024 AFR/ Animesh 6