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Dharamdas B. Katira and anr. Vs. O.P. Bhardwaj and anr. - Court Judgment

LegalCrystal Citation
SubjectCriminal
CourtMumbai High Court
Decided On
Case NumberCriminal Writ Petition No. 53 of 1984
Judge
Reported in1985(1)BomCR522
ActsCode of Criminal Procedure (CrPC) , 1973 - Sections 482
AppellantDharamdas B. Katira and anr.
RespondentO.P. Bhardwaj and anr.
Appellant AdvocateV.A. Thorat and ;R.V. Deshmukh, Advs.
Respondent AdvocateK.R. Pandya and P.M. Bhatt, Advs. for respondent No. 1 and ;Manjula Rao, P.P. for respondent No. 2-State
DispositionPetition allowed
Excerpt:
.....liable to be quashed. - - veena commercial corporation not to make payment and in filing a criminal complaint against the petitioners, falsely alleging that his due share of money was not paid to him, clearly exhibited the mala fides of the respondent no. despite the aforesaid commitment, the respondents failed to render accounts in the month of december 1967. the respondents on being asked to render the accounts stated that the transport business was being carried on in nepal and that as and when the money would be received, the accounts would be gone into. when the respondents failed to comply with the demand of the appellant, he filed a complaint. the mere existence of some grounds which would be material in deciding whether the accused should be convicted or acquitted does..........woollen mills (p) ltd. and m/s. veena commercial corporation not to make payment and in filing a criminal complaint against the petitioners, falsely alleging that his due share of money was not paid to him, clearly exhibited the mala fides of the respondent no. 1. according to the petitioners, filing of complaint is a clear attempt on the part of the respondent no. 1 to harass the petitioners and drag them to a criminal court for the recovery of the amounts which the petitioners could not pay as the amounts were not received from the concerned parties and the petitioners had to file a suit for the recovery of the said amounts. the petitioners claim quashing of the criminal proceedings pending against them.5. the learned counsel for the petitioners-accused contends that there were.....
Judgment:

A.D. Tated, J.

1. The petitioners, who are accused in Criminal Case No. 1474/S of 1981 pending before the Metropolitan Magistrate, 23rd Court, Esplanade, Bombay, filed this petition under section 482 Criminal Procedure Code and Article 227 of the Constitution of India for quashing the proceedings against them.

2. The respondent No. 1 filed a complaint against the petitioners alleging that on or about 6th July, 1978 both the accused, who are husband and wife, approached him at his office and represented to him that they had contracted to purchase the import licence in the name of their firm M/s. L.D. Traders. They further represented to him that they had already paid Rs. 2,00,000/- for the purchase of a licence for importing 500 Metric Tons of Industrial Crude Palm Oil from Singapore under the said licence. They also represented to him that they had contracted with Hindustan Lever Ltd., Bombay, to sell the said stock of 500 Metric Tons of Industrial Crude Palm Oil at the rate of Rs. 6,700/- per Metric Ton. It is further alleged that the accused gave the respondent No. 1-complainant a very rosy and tempting picture of the entire transaction yielding huge net profits, and pleading their own financial difficulty they induced him to join them to put through the said transaction in a joint venture on 50% basis, that is, on the basis of sharing equally the total investment and also on the same basis to share equally the net profit. According to the respondent No. 1-complainant, on the faith of the said representations made by the petitioners-accused and upon being furnished with a copy of a letter dated 5th July ,1978 addressed by the petitioners to M/s. Veena Commercial Corporation recording the said transaction, the respondent No. 1 accepted the offer of joint venture and recorded the same in this letter dated 7th July, 1978 addressed by him to the petitioners and also paid to the petitioners a sum of Rs. 1,00,000/- by Cheque No. 829657 dated 6th July, 1978 drawn in favour of their firm M/s. L.D. Traders as the respondent No. 1's 50% share of the investment already made by the petitioners. The petitioners thereupon passed a stamped receipt in favour of the firm of the respondent No. 1-complainant, namely, M/s. Bharadwaj and Company, and in that receipt it was recorded that the said sum of Rs. 1,00,000/- was received by the petitioners for the joint venture, the complainant having 50% share in the venture. It was further alleged in the complaint that the petitioners again induced the respondent No. 1-complainant on 24th July, 1978 to part with a further sum of Rs. 1,45,000/- as his further share of the investment in the said joint venture. The complainant paid the amount of Rs. 1,45,000/- by a cheque dated 24th July, 1978 drawn in favour of the petitioners firm M/s. L.D. Traders. The complainant further alleged that as per the joint venture the Industrial Crude Palm Oil was sold to Hindustan Lever Ltd., Bombay, and the petitioners earned huge net profits in the said transaction, amounting to Rs. 4,00,000/-, but they did not refund the amount of Rs. 2,45,000/- towards the investment of the complainant and further amount of profits to the extent of 50%. According to the complainant, the petitioners-accused paid him only a sum of Rs. 1,75,000 by their Cheque No. 219381 drawn on Vijaya Bank Ltd., Mandvi Branch, Bombay. It is further alleged that when demanded, the petitioners gave the complainant a false account orally but avoided to show him the detailed account maintained by them. It was further alleged in the complaint that both the petitioners acted with dishonest and fraudulent intention from the beginning of the whole deal and between 7th July, 1978 and 24th July, 1978 and dishonestly induced the complainant to part with a sum of Rs. 2,45,000/- on false representations. On those averments it was alleged that the petitioners committed offences punishable under sections 420 read with section 114 and section 406 read with section 114 Indian Penal Code. The learned Metropolitan Magistrate issued process against the petitioners for the offences under sections 420 and 406 Indian Penal Code.

3. The case of the petitioners-accused is that the petitioners No. 2, who is the wife of the petitioner No. 1, is the sole proprietor of M/s. L.D. Traders, a company engaged in export and import business. The respondent No. 1 complainant is the proprietor of a firm by name M/s. Bharadwaj and Co. doing the business of import and export. The respondent No. 1 is known to the petitioners, as they have in the past undertaken business ventures jointly in the month of July 1978 M/s. L.D. Traders purchased an import licence by paying a sum of Rs. 5,48,775/- from one Hind Hosiery and Woollen Mills (P) Ltd. having its place business in Ludhiana for importing 500 Metric Tons of Industrial Crude Palm Oil from Singapore. The said quantity of 500 Metric Tons was to be sold to Hindustan Lever Ltd. A firm known as M/s. Veena Commercial Corporation acted as brokers for the purchase of the said import licence. The petitioner No. 1 asked the respondent No. 1 with whom he had earlier transaction in oil, whether he would be interested in investing in the purchase of the said oil. The respondent No. 1 readily agreed and paid to the petitioners a sum of Rs. 2,45,000/- by two cheques dated 6th July, 1978 and 24th July, 1978. It was agreed that the net profits in the said transaction would be shared equally between the petitioners and the respondent No. 1. The Palm Oil was imported and sold to Hindustan Lever Ltd. The petitioner's firm was due to receive in the said transaction a sum of Rs. 10,46,917.75 p. The petitioners firm received Rs. 8,75,000/- only and the petitioner No. 2 filed a suit in this Court against Hind Hosiery and Woollen Mills (P) Ltd. and M/s. Veena Commercial Corporation for recovery of the balance amount of Rs. 1,71,917.75 P. plus interest.

4. Thereafter the petitioners received a summons from the Court of the Metropolitan Magistrate and thereupon they learnt that the respondent No. 1 filed a criminal case against them. According to the petitioners, the respondent No. 1 falsely alleged that the petitioners approached him at his office and induced him to part with Rs. 2,45,000/-. They also alleged that the respondent No. 1 falsely stated in the criminal case that he had received only Rs. 1,75,000/- in the transaction. According to the petitioners, besides the amount of Rs. 1,75,000/- they also made payments of Rs. 20,000/-, Rs. 1,00,000/- and Rs. 50,000/- by their cheques dated 14th September, 1979, 11th November, 1978 and 4th October, 1978 respectively. Thus, a total sum of Rs. 3,45,000/- was paid to the respondent No. 1. That sum included the repayment of the initial investment of Rs. 2,45,000/- and Rs. 1,00,000/- towards the profits. The petitioners submitted that they did not receive the full amount due to them in the said transaction but they had only received Rs. 8,75,000/-. It was submitted that in addition to the premium the petitioners had to pay Rs. 56,182/- for octroi and clearing. They had also to incur expenses on account of brokerage amounting to Rs. 40,000/-, on account of dock delivery amounting to Rs. 5,000/- and on account of miscellaneous expenses Rs. 10,000/-, totalling Rs. 6,59,957/-. After deducting the said amount of the premium they were left with the amount of Rs. 2,15,000/- approximately. They retained Rs. 15,000/- for probable legal expenses for the recovery of the balance amount, and approximately calculated the profits at Rs. 2,00,000/-, and out of the said amount they paid Rs. 1,00,000/- to the respondent No. 1 towards profits over and above his initial investment of Rs. 2,45,000/-. The petitioners submit that the respondent No. 1, instead of co-operating with them in the recovery of the dues, obstructed the petitioners from making the recoveries by writing letters to Hind Hosiery and Woollen Mills (P) Ltd. and M/s. Veena Commercial Corporation asking them not to make further payments to the petitioners. They further aver that the act of the respondent No. 1 in asking Hind Hosiery and Woollen Mills (P) Ltd. and M/s. Veena Commercial Corporation not to make payment and in filing a criminal complaint against the petitioners, falsely alleging that his due share of money was not paid to him, clearly exhibited the mala fides of the respondent No. 1. According to the petitioners, filing of complaint is a clear attempt on the part of the respondent No. 1 to harass the petitioners and drag them to a Criminal Court for the recovery of the amounts which the petitioners could not pay as the amounts were not received from the concerned parties and the petitioners had to file a suit for the recovery of the said amounts. The petitioners claim quashing of the criminal proceedings pending against them.

5. The learned Counsel for the petitioners-accused contends that there were regular business transactions between the parties and the amounts exchanged between them but the respondent No. 1 in his complaint to the learned Metropolitan Magistrate did not disclose that the parties had earlier business transactions between them. He submitted that the petitioners as per the agreement between the parties had invested the amount for the purchase of the Palm Oil and the sale thereof to Hindustan Lever Ltd., and on recovering the part of the amount due in the transaction the petitioners paid a substantial amount to the respondent No. 1 and thereby he received back his initial investment and also part of the profits. He submitted that the petitioners could not pay the remaining amount, as they had to file a suit for recovering the remaining amount from the concerned parties. He submitted that taking into consideration the above nature of the business transaction between the parties, by no stretch of imagination could it be said that the petitioners wanted to cheat the respondent No. 1 since the beginning of the transaction and with that intention they induced the respondent No. 1 to part with the amount of Rs. 2,45,000/-. According to him, there was no fraudulent or dishonest intention on the part of the petitioners when they asked the respondent No. 1 as to whether he wanted to join them in the venture. He submitted that this was not the first and the only transaction in which the parties joined in the business venture. They had even earlier jointly purchased goods and the transaction was carried out for earning profits. He submitted that on the facts disclosed in the complaint and also in the affidavit filed by the respondent No. 1 in reply no criminal offence was disclosed. According to him, the dispute between the parties was purely of civil nature and the respondent No. 1 in order to coerce and harass the petitioners approached the Criminal Court and as such the criminal proceedings were not maintainable. In support of his contention he relied on the decision of the Supreme Court in Hari Prasad Chamarla v. Bishun Kumar Surekha and others, : 1974CriLJ352 . In that case the appellant filed a complaint against the respondents on the allegations that the appellant was running business at Samastipur in Bihar and Calcutta, that the respondents were known to the appellant and he had full faith in them, that the appellant wanted to start some business and in that connection talked to the respondents, and that the respondents then stated that they would start transport business under the name and style of Drang Transport Corporation. It was further alleged in the complaint that the respondents further stated that the appellant would be the proprietor of the said Corporation and the respondents would work as his agents. On 2nd January, 1967 the appellant paid Rs. 35,000/- to the respondents in Samastipur. In March 1967 when the appellant went to Calcutta he found that the respondents were doing transport business, but the appellant was not shown as the proprietor of that business. When the appellant remonstrated with the respondents, the respondents stated that they were trying to get Drang Transport Corporation registered and they would show the name of the appellant as the proprietor thereof. The respondents also agreed to settle the business accounts in the month of December every year. Despite the aforesaid commitment, the respondents failed to render accounts in the month of December 1967. The respondents on being asked to render the accounts stated that the transport business was being carried on in Nepal and that as and when the money would be received, the accounts would be gone into. The appellant thereafter asked for the refund of his money. When the respondents failed to comply with the demand of the appellant, he filed a complaint. On the said complaint, process for the offence under section 420 I.P.C. was issued against the respondents. The respondents approached the High Court under section 561-A of the Code of Criminal Procedure, 1898 (section 482 of the Code of Criminal Procedure, 1973). The High Court was also of the view that the case of the appellant was based upon contract. Mere breach of the contract, in the opinion of the High Court, could not give rise to the criminal prosecution. The appellant had a remedy in the Civil Court and he could not be allowed to fight the matter in Criminal Court. On such finding, the High Court quashed the criminal proceedings. Against the said order of the High Court the complainant approached the Supreme Court in appeal. On hearing the Counsel for the appellant, their Lordships of the Supreme Court found that no case was made out against the respondents under section 420 I.P.C. They observed that even after assuming the correctness of all the facts and averments made in the complaint, no offence under section 420 I.P.C. was disclosed. Their Lordships at pages 302 and 303 of the report observed as follows :-

'There is nothing in the complaint to show that the respondents had dishonest or fraudulent intention at the time the appellant parted with Rs. 35,000. There is also nothing to indicate that the respondents induced the appellant to pay them Rs. 35,000 by deceiving him. It is further not the case of the appellant that a representation was made by the respondents to him at or before the time he paid the money to them and that at the time the representation was made the respondents knew the same to be false. The fact that the respondents subsequently did not abide by their commitment that they would show the appellant to be the proprietor of Drang Transport Corporation and would also render accounts to him in the month of December might create civil liability for them, but this fact would not be sufficient to fasten criminal liability on the respondents for the offence of cheating.'

6. The learned Counsel for the petitioners accused also relied on the decision of the Supreme Court in Superintendent and Remembrancer of Legal Affairs, West Bengal v. Birendra Chandra Chakravarty : 1974CriLJ341 . In that case the appeal was preferred to the Supreme Court against the acquittal of the respondent by the High Court of the charge under section 409 I.P.C. While dismissing the appeal, at pages 291 and 292 of the report their Lordships of the Supreme Court observed as follows :---

'We, however, think that it is not possible to fasten criminal liability, beyond reasonable doubt, upon the respondent before the right and the title to the Bansdroni properties is properly established by Smt. Saila Bala Devi by means of a civil suit. We think that the High Court was correct in coming to the conclusion, having regard to all the facts and circumstances of the case, that a dispute of an essentially civil nature had to be decided between Smt. Saila Bala Devi and the respondent before any question of criminal liability could be satisfactorily adjudicated upon.'

7. The learned Counsel for the respondent No. 1-complainant in support of his contention that the learned Metropolitan Magistrate was right in issuing process against the petitioners-accused for the offences under sections 420 and 406 I.P.C. relied on the decision of the Supreme Court in Devendra Nath Bhattacharyya and others v. State of W.B. and another, : 1972CriLJ1037 . In that case the Calcutta High Court in this revisional jurisdiction dismissed the revision filed against the dismissal of the complaint under section 203 of the Code of Criminal Procedure, 1898, and against that decision an appeal was filed before the Supreme Court. Their Lordships of the Supreme Court upheld the decision of the Calcutta High Court and, at page 1039 of the report, declared the law thus :---

'7. It has to be remembered that an order of dismissal of a complaint under section 203, Criminal Procedure Code has to be made on judicially sound grounds. It can only be made where the reasons given disclose that the proceedings cannot terminate successfully in a conviction. It is true that the Magistrate is not debarred, at this stage, from going into the merits of the evidence produced by the complainant. But, the object of such consideration of the merits of the case, at this stage, could only be to determine whether there are sufficient grounds for proceeding further or not. The mere existence of some grounds which would be material in deciding whether the accused should be convicted or acquitted does not generally indicate that the case must necessarily fail. On the other hand, such grounds may indicate the need for proceeding further in order to discover the truth after a full and proper investigation. If, however, a bare perusal of a complaint or the evidence led in support of it show that essential ingredients of the offence alleged are absent or that the dispute is only of a civil nature or that there are such patent absurdities in evidence produced that it would be a waste of time to proceed further, the complaint could be properly dismissed under section 203, Criminal Procedure Code.'

8. The learned Counsel for the respondent No. 1 complainant also relied on the decision of the Supreme Court in Jaikrishnadas Manohardas Desai and another v. State of Bombay, : [1960]3SCR319 . In that case Their Lordships of the Supreme Court at page 891 observed as follows :----

'Direct evidence to establish misappropriation of the cloth over which the appellants had dominion is undoubtedly lacking, but to establish a charge of criminal breach of trust, the prosecution is not obliged to prove the precise mode of conversion, misappropriation or misapplication by the accused of the property entrusted to him or over which he has dominion. The principal ingredient of the offence being dishonest misappropriation or conversion which may not ordinarily be a matter of direct proof, entrustment of property and failure in breach of an obligation to account for the property entrusted, if proved, may in the light of other circumstances, justifiably lead to an inference of dishonest misappropriation or conversion. Conviction of a person for the offence of criminal breach of trust may not, in all cases, be founded merely on his failure to account for the property entrusted to him, or over which he has dominion, even when a duty to account is imposed upon him, but where he is unable to account or renders an explanation for his failure to account which is untrue, an inference of misappropriation with dishonest intent may readily be made.'

9. Bearing in mind the law declared by the Supreme Court in the decisions relied on by the learned Counsel for the parties and referred to above, it is necessary to examine the facts of the present case and to see whether the dispute between the parties is purely of a civil nature, and it does not involve the ingredients necessary for proving the offence under sections 406 and 420 I.P.C. It is not disputed, on the other hand it is admitted, that the parties were having business transactions since before the transaction in question. They earlier also had joint ventures like the present one. The petitioners as per the agreements between the parties did purchase the Palm Oil and it was sold to Hindustan Lever Ltd. and they received a total sum of Rs. 8,75,000/-. The respondent No. 1-complainant does admit that he has received Rs. 1,75,000/- from the petitioners. His grievance is that he did not receive the remaining amount of Rs. 1,00,000/- on account of part of initial investment and his share of profits. According to the petitioners, besides the payment of Rs. 1,75,000/- they made further payment of Rs. 20,000/-, Rs. 1,00,000/- and Rs. 50,000/- by cheques. Thus the total payment of Rs. 3,45,000/- was made. The respondent No. 1 in his affidavit in reply admits that he has received the payments of Rs. 20,000/-, Rs. 1,00,000/- and 50,000/- as per the cheques referred to by the petitioners in their petition, but according to him he received those payments on account of some other transactions between the parties. According to him, the amount of Rs. 1,00,000/- by cheque dated 11th November, 1971 and the amount of Rs. 50,000/- by the cheque dated 4th October, 1978 were received towards the transaction in respect of Greaves International and the amount of Rs. 20,000/- by cheque dated 14th September, 1979 was received by the respondent No. 1 firm in the account of the goods sold and recovered directly by the respondent No. 1 to the petitioners in full and final settlement of that account.

10. The learned Counsel for the respondent No. 1-complainant took me through the extract of accounts filed as Exs. 3 and 4 and submitted that the account in respect of Greaves International was squared as the extract of accounts showed Rs. 9,49,384/- on the debit side and the same amount on the credit side. He also pointed out that the amount of Rs. 1,00,000/- which the petitioners-accused allege to have been paid to the respondent No. 1-complainant by cheque dated 11th November, 1978, was credited to the account of the petitioners relating to Greaves International. There is a credit entry of Rs. 1,00,000/- received by cheque, but the date mentioned therein is 13th November, 1978. The petitioners had received Rs. 4,00,000/- in the transaction in question by cheque dated 25th October, 1978. The learned Counsel for respondent No. 1-complainant contends that this being the first payment received by the petitioners in the transaction they were not expected to make any payment before that date. Accepting it to be correct, the payment made by cheque dated 11th November, 1978, which appears to have been credited by the respondent No. 1 to the account of the petitioners concerning Greaves International, may be towards that transaction. It is a matter to be considered on evidence whether the payment of Rs. 1,00,000/- by cheque dated 11th November, 1978 was towards the transaction in question or towards the earlier transaction concerning Greaves International. It is pertinent to note that the extract of account Ex. 3 shows that this amount of Rs. 1,00,000/- was credited to the account of the petitioners in the transaction with Greaves International, and in order to square the account the amount of Rs. 1,00,000/- was debited to his account.

11. I tried to understand the account Ex. 3 with the help of the learned Counsel for the respondent No. 1-complainant, but he was not able to explain as to how and on what basis the amount of Rs. 1,00,000/- was debited to the account of the petitioners-accused at Ex. 3. On considering the various dealings between the parties, I find that the dispute between the parties is purely of a civil nature. There could not be, and there does not appear to be, any dishonest or fraudulent intention at the commencement of the dealings between the parties. The petitioners could not recover the whole of the amount, and, therefore, they had to file a suit against Hind Hosiery and Woollen Mills (P.) Ltd. and M/s. Veena Commercial Corporation for the recovery of the remaining amount of Rs. 1,75,000/-. A copy of the plaint in that suit is on record. The suit was instituted on 2nd November, 1981 and the complaint was filed on 25th August, 1981 and the summons was received by the petitioners on 5th November, 1981. It is pertinent to note that the respondent No. 1 addressed a letter dated 1st May, 1980 to M/s. Veena Commercial Corporation and sent a copy thereof to Hind Hosiery and Woollen Mills (P.) Ltd., Ludhiana, and therein he asked them to hold up the amount of Rs. 1,50,000/- which was due from them to the petitioners. He also informed them that the amount was due to him and that the account should be settled and the amount should be paid to him. It clearly shows that the dispute between the parties was clearly of a civil nature, and in order to recover the amount the respondent No. 1 not only sent the letter referred to above to M/s. Veena Commercial Corporation and Hind Hosiery and Woollen Mills (P) Ltd. but also instituted criminal proceedings. The forum of Criminal Court cannot be allowed to be used for coercing the parties to a purely civil transaction to settle the account and to repay the amount. To allow the respondent No. 1 to continue the prosecution will serve no purpose but would be waste of time of the Court and the harassment of the petitioners, as the dispute between the parties is purely of a civil nature.

12. In the result, I allow the petition and quash the criminal proceedings in the trial Court. The rule is made absolute.


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