Allowed

Sanjay Gulati v. State of U.P. and Another

Allahabad HC11 Nov 2021A482/2742/2007

Case brief

AI extract

What is this about?

The High Court allowed the application to quash criminal proceedings under Sections 420 and 506 IPC. The court held that the dispute was purely civil and that the complaint did not allege specific acts against the applicant meeting the criminal threshold for cheating or criminal intimidation.

What did the court decide?

The entire proceedings under Complaint Case No. 419 of 2006 are quashed.

Sanjay Gulati Vs State of U.P. and Another — Contract and Commercial Disputes | Allahabad HC (2021)

A.F.R.

Court No. - 92

Case :- APPLICATION U/S 482 No. - 2742 of 2007 Applicant :- Sanjay Gulati Opposite Party :- State of U.P. and Another Counsel for Applicant :- Krishna Kumar Singh Counsel for Opposite Party :- Govt. Advocate

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Hon'ble Subhash Vidyarthi J.

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1. Heard Shri Krishna Kumar Singh, learned counsel for the applicant and learned A.G.A. for the State-respondents and perused the record.

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2. By means of the instant application under Section 482 of the Criminal Procedure Code the applicant-Sanjay Gulati s/o Shri Mahendra Gulati has prayed for quashing of the entire proceedings of Complaint Case No. 419 of 2006 under Section 420, 506 I.P.C. in Police Station Civil Lines, District Moradabad pending in the Court of Civil Judge (Junior Division), Moradabad, Court No. 2.

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3. The facts of the case as borne out from the record are that the complainant Kamal Singh, who has been arrayed as the opposite party No. 2 in the application under Section 482 Criminal Procedure Code, filed a complaint dated 23-06-2005 under Section 156 (3) of the Criminal Procedure Code alleging that he had taken a loan from Syndicate Bank for his business of cycles and had submitted a quotation of “Sandeep Traders, Jail Road, Moradabad”. On

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30.05.2005 a cheque number 757645 amounting to Rs. 30,000/- was issued in the name of Sandeep Traders but Sandeep did not give the goods to the complainant and he said that he will give the same as and when the same will be available and he obtained signatures of the complainant for obtaining payment from the Bank. Thereafter, the second cheque bearing number 054830 dated 09-06-2005 for Rs. 20,000/- was given by the Bank. Sandeep kept on saying that he will give the goods. On 20.6.2005, the complainant went to Sandeep , the complainant accompanied by his brothers Charan Singh, Vipin Bishnoi and Mohit Bishnoi went to Sandeep , when Sandeep said that the entire arrears stood settled and he would not give the goods and threatened the complainant, He has complained that Sandeep wants to usurp the complainant's money fraudulently.

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4 . The statement of complainant was recorded under Section 200 Criminal Procedure Code and the statements of witnesses Charan Singh and Vipin Bishnoi were recorded under Section 202 Criminal Procedure Code and on 17-01-2007, the Additional Chief Judicial Magistrate, Moradabad, Court No. 2 passed an order summoning Sandeep Kumar for being tried for offences under Sections 420, 506 Indian Penal Code.

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5 . Aggrieved by the complaint and the summoning order, the applicant “ Sanjay Gulati s/o Shri Mahendra Gulati” who is the proprietor of “Sandeep Traders” - with which the complainant Kamal Singh was having business relations, has approached this Court by filing the instant application under Section 482 Cr.P.C.

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6 . In the affidavit filed in support of application, the applicant has stated that he owns a shop of cycles and cycle parts and he is running his business in the name of “Sandeep Traders”. The allegations against him are totally false and frivolous and are designed only to harass him. He has already delivered the goods in

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respect of which cheque numbers 757645 and 054830 were issued and the opposite party No. 2 has received the goods and made endorsements of receiving on the bills, a copy whereof has been filed as Annexure No. 3 to the affidavit filed in support of the application under Section 482 Criminal Procedure Code. The applicant has further stated that the complainant-opposite party No. 2 has taken a commercial loan of Rs. 50,000/- from Syndicate Bank, Moradabad and when he failed to deposit the same, the Bank issued a notice for recovery of the amount and in order to take undue advantage and to delay the recovery proceedings, the opposite party No. 2 has filed the complaint. From a perusal of the complaint no offence under Sections 420 and 506 I.P.C. is made out against the applicant- Sanjay Gulati s/o Shri Mahendra Gulati.

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7 . On 12-02-2007, this Court was pleased to pass the following order in this case: -

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“Issue notice to opposite party no. 2 to file counter affidavit within six weeks.

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Learned A.G.A. may also file counter affidavit within the same period.

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Rejoinder affidavit may be filed within two weeks thereafter. List after expiry of the aforesaid period.

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Till the next date of listing, further proceedings in complaint case No. 419 of 2006, Kamal Singh Vs. Sanjay Gulati, pending before Civil Judge (JD), court no. 2, Moradabad against the applicant shall remain stayed.”

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8 . In compliance of the aforesaid order, a notice was issued to the opposite party No. 2, which has not been returned unserved. Even otherwise, when the proceeding of the complaint case is lying stayed since 12-02-2007, it cannot be accepted that the complainantopposite party No. 2 has no knowledge of the filing of the present application under Section 482 Criminal Procedure Code in this

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Court. Still none of the opposite parties has filed counter affidavit or any application for vacation of interim order dated 12-02-2007.

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9 . Shri Krishna Kumar Singh Advocate, learned counsel for the applicant has submitted that all the allegations in complaint are against “ Sandeep ” whereas the complainant had business relations with “ Sandeep Traders ”, of which the applicant- Sanjay Gulati s/o Shri Mahendra Gulati is the proprietor and there is absolute no mention of Sanjay Gulati proprietor of Sandeep Traders in the complaint and the complaint does not disclose commission of any offence by Sanjay Gulati. The applicant-Sanjay Gulati s/o Shri Mahendra Gulati cannot be tried for any offence on the basis of aforesaid complaint.

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10 . The aforesaid submission of learned counsel for the applicant appears to be sound as in the entire complaint, there is no mention of applicant- Sanjay Gulati s/o Shri Mahendra Gulati, who is the proprietor of “Sandeep Traders”. Therefore, the allegations levelled in the complaint, even if the same are to be taken to be true, do not disclose the commission of any offence by Sanjay Gulati s/o Shri Mahendra Gulati, the proprietor of “Sandeep Traders”.

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11 . The learned counsel for the applicant has further submitted that the complainant has already received the goods and he has made an endorsement of receiving of goods on the bills - a copy whereof has been filed as Annexure-3 to the affidavit filed in support of the application under Section 482 Criminal Procedure Code. The complainant-opposite party No. 2 has not filed any counter affidavit disputing the correctness of the endorsement of receiving of goods made on the bills and it should be presumed that the complainantopposite party No. 2 does not dispute its correctness, rather, he admits it by implication. Therefore, the allegations of non delivery of the goods is found to be false on the basis of undisputed material

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available on the record of this Court.

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12. In Rajiv Thapar v. Madan Lal Kapoor , (2013) 3 SCC 330, the Hon'ble Supreme Court has formulated certain steps to determine the veracity of a prayer for quashing under Section 482 Criminal Procedure Code as follows :-

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“30. Based on the factors canvassed in the foregoing paragraphs, we would delineate the following steps to determine the veracity of a prayer for quashment raised by an accused by invoking the power vested in the High Court under Section 482 CrPC:

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30.1. Step one : whether the material relied upon by the accused is sound, reasonable, and indubitable i.e. the material is of sterling and impeccable quality?

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30.2. Step two : whether the material relied upon by the accused would rule out the assertions contained in the charges levelled against the accused i.e. the material is sufficient to reject and overrule the factual assertions contained in the complaint i.e. the material is such as would persuade a reasonable person to dismiss and condemn the factual basis of the accusations as false?

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30.3 Step three : whether the material relied upon by the accused has not been refuted by the prosecution/complainant; and/or the material is such that it cannot be justifiably refuted by the prosecution/complainant?

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30.4. Step four : whether proceeding with the trial would result in an abuse of process of the court, and would not serve the ends of justice?

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30.5. If the answer to all the steps is in the affirmative, the judicial conscience of the High Court should persuade it to quash such criminal proceedings in exercise of power vested in it under Section 482 CrPC. Such exercise of power, besides doing justice to the accused, would save precious court time, which would otherwise be wasted in holding such a trial (as well as proceedings arising therefrom) specially when it is clear that the same would not conclude in the conviction of the accused.”

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(emphasis supplied by me)

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13. In the case in hand, the material relied upon by the accused particularly the receipt of goods (annexure-3) has not been refuted by the complainant and this Court finds that the proceeding with the trial would result in an abuse of the process of law and would not serve the ends of justice.

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14 . The learned counsel for the applicant has next submitted that even as per the complaint-allegations, the complainant was in business relations with “Sandeep Traders” and his grievance is regarding non payment of certain amount due in business transactions. He has submitted that the dispute of non payment of any amount payable towards consideration of sale of goods is a dispute of purely civil nature, for which the appropriate remedy lies in the civil court, namely filing a suit for recovery of money as provided under Section 57 of Sale of Goods Act, 1930. In this regard, he has placed reliance on a judgement of this Court in the case of Surya Pratap Singh Vs. State of U.P. and another reported in 2015 8 ADJ 580 . The relevant portion of the aforesaid judgment is contained in paragraph Nos. 62 and 63, which are being reproduced below:-

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“62. In the light of facts and circumstances stated above and law settled by Hon'ble Apex Court in the decisions of Hridaya Ranjan Prasad Verma (supra), Alpic Finance Ltd. (supra), S.W. Palanitkar and Others (supra), Uma Shankar Gopalika (aupra), Devendra Kumar Singla (supra), Anil Mahajan (supra), Neelu Chopra and Another (supra), Paramjeet Batra (supra), Arun Bhandari (supra), G. Sagar Suri and Another (supra) and by this Court in M/s Rohit Stationary Centre (P) Ltd. & Others (supra), this Court is of the considered view that complaint does not disclose any criminal offence at all, much less, any offence either under Section 406 I.P.C. or Section 420 I.P.C. and present case is purely a case of civil dispute between the parties, based on various commercial transactions during course of business, for which remedy lies before the Civil Court by filing of appropriate suit, subject to permissibility of limitation for filing the same.

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In the circumstances, this Court is of further view that by filing of criminal complaint a dispute of purely civil nature is given a cloak of criminality with intention to pressurize the applicant and his wife to bring them to his own terms and to enforce obligations arising out of breach of contract touching commercial transactions instead of approaching Civil Court with a view to realize money at the earliest, as such by allowing continuance of complaint and consequential proceedings relating to it would amount to abuse of process of court and to prevent the same it is just and expedient in the interest of justice to quash the same by exercising inherent power of this Court under Section 482 Cr.P.C. ”

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15 . Learned counsel for the applicant has taken the Court through the entire allegations in the complaint which indicate that the complaint is regarding non delivery of goods even after making payments and on certain arguments having occurred when he demanded the goods and he has alleged that “ Sandeep wants to usurp his money fraudulently ”, which is purely a case of civil dispute between the parties, based on various commercial transactions during course of business, for which remedy lies before the Civil Court by filing of appropriate suit. By filing a criminal complaint, a dispute of purely civil nature has been given a cloak of criminality and as such by allowing continuance of complaint and consequential proceedings relating to it would amount to abuse of process of court and to prevent the same it is just and expedient in the interest of justice to quash the same by exercising inherent power of this Court under Section 482 Cr.P.C.

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16 . The learned Counsel for the applicant has next submitted that besides the fact that there is absolutely no allegation against the applicant-Sanjay Gulati s/o Shri Mahendra Gulati proprietor of Sandeep Traders, the allegations do not make out ingredients of offence of cheating which is provided under Section 415 I.P.C. as follows:-

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“Whoever, by deceiving any person, fraudulently or dishonestly induces the person so deceived to deliver any property to any person, or to consent that any person shall retain any property, or intentionally induces the person so deceived to do or omit to do anything which he would not do or omit if he were not so deceived, and which act or omission causes or is likely to cause damage or harm to that person in body, mind, reputation or property, is said to "cheat".”

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Explanation,--A dishonest concealment of facts is a deception within the meaning of this section.”

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17 . The learned counsel for the applicant has placed reliance on a judgement of this Court in the case of Lourence D” Souza Vs. State

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of U.P. and another reported in 2017 (2) ALJ 156 in which this Court has explained the essential ingredients of the offence of cheating in the following words:-

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“The essential ingredients of the offence of cheating are as follows: -

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(I) Deceiving or making of false representation. (II) dishonest inducement to deliver property or to make, alter or destroy any valuable security or anything which is sealed or signed or is capable of being converted into a valuable security and (III) "mensrea" or fraudulent or dishonest intention of the accused at the time of making the inducement or false representation.”

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18 . From a perusal of the record it is evident that the opposite party no. 2 claims that he was doing business with the applicant since long and in a routine manner the instant business transaction was also made. 'Mens rea' or the guilty mind, at the time of making inducement is a necessary ingredient of the offence of cheating. Therefore, it cannot be said that there was any dishonest intention on the part of accused/applicant at the time when the parties entered into the transaction. On the basis of allegations made in the complaint, it cannot be said that Section 420 of I.P.C. is attracted in the present case.

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19 . In the case of I nternational Advanced Research Centre for Powder Metallurgy and New Materials (ARCI) and Others Versus Nimra Cerglass Technics (P) Ltd. and Others, (2016) 1 SCC 348, the Hon'ble Supreme Court has explained the definition of cheating as under: -

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"The making of a false representation is one of the essential ingredients to constitute the offence of cheating under Section 420 I.P.C.. In order to bring a case for the offence of cheating it is not merely sufficient to prove that a false representation had been made. It is further necessary to prove that the representation was false to the knowledge of the accused and was made in order to deceive the complainant. If it is established that the intention of the accused was dishonest at the very time when he made a promise and entered into a transaction with the complainant to part with his property or money, then the liability is criminal and the accused is guilty of the offence of

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cheating but further that established that a representation was made by the accused has subsequently not been kept, criminal liability cannot be foisted on the accused and the only right which the complainant acquires is the remedy for breach of contract in a civil court. Mere breach of contract cannot give rise to criminal prosecution for cheating and criminal liability should not be produced in disobedience of civil nature."

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20 . In Anil Mahajan vs. Bhor Industries Ltd. & Anr. (2005)

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10 SCC 228 , the Hon'ble Supreme Court has drawn a distinction between a breach of contract and cheating in the following words:-

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"6. ........A distinction has to be kept in mind between mere breach of contract and the offence of cheating. It depends upon the intention of the accused at the time of inducement. The subsequent conduct is not the sole test. Mere breach of contract cannot give rise to criminal prosecution for cheating unless fraudulent, dishonest intention is shown at the beginning of the transaction.”

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According to the Hon'ble Apex Court:-

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The substance of the complaint is to be seen. Mere use of the expression "cheating" in the complaint is of no consequence. Except mention of the words "deceive" and "cheat" in the complaint filed before the Magistrate and "cheating" in the complaint filed before the police, there is no averment about the deceit, cheating or fraudulent intention of the accused at the time of entering into MOU wherefrom it can be inferred that the accused had the intention to deceive the complainant to pay.”

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21 . In the entire complaint, there is no allegation that the alleged Sandeep had fraudulently or dishonestly induced the complainant to deliver any property by deceiving the complainant. Further the complaint does not make out the commission of offence of criminal intimidation, which is defined under Section 503 I.P.C. as follows:-

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“503. Criminal intimidation.--Whoever threatens another with any injury to his person, reputation or property, or to the person or reputation of any one in whom that person is interested, with intent to cause alarm to that person, or to cause that person to do any act which he is not legally bound to do, or to omit to do any act which that person is legally entitled to do, as the means of avoiding the execution of such threat, commits criminal intimidation.”

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22 . In the entire complaint there is no allegation of any threat

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having been extended by the applicant, or by the alleged Sandeep, to the complainant and any injury to his person, reputation or property, or to the person or reputation of any one in whom that person is interested, with intent to cause alarm to that person, or to cause that person to do any act which he is not legally bound to do, or to omit to do any act which that person is legally entitled to do. Therefore, this Court is of the considered opinion that the essential ingredients of the offence punishable under Sections 420 and 506 IPC are not made out from a bare perusal of the complaint, besides the fact that the entire complaint does not make any mention of the name of the complaint namely viz. Sanjay Gulati.

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23. In a recent pronouncement reported in 2021 SCC Online SC 873, Geo Varghese Vs. State of Rajasthan , the Hon’ble Supreme Court held as under:-

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“35. The scope and ambit of inherent powers of the Court under Section 482 CrPC or the extra-ordinary power under Article 226 of the Constitution of India, now stands well defined by series of judicial pronouncements. Undoubtedly, every High Court has inherent power to act ex debito justitiae i.e., to do real and substantial justice, or to prevent abuse of the process of the Court. The powers being very wide in itself imposes a solemn duty on the Courts, requiring great caution in its exercise. The Court must be careful to see that its decision in exercise of this power is based on sound principles. The inherent power vested in the Court should not be exercised to stifle a legitimate prosecution. However, the inherent power or the extraordinary power conferred upon the High Court, entitles the said Court to quash a proceeding, if it comes to the conclusion that allowing the proceeding to continue would be an abuse of the process of the Court, or the ends of justice require that the proceeding ought to be quashed.”

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36. The following observations made by this Court in the case of State of Karnataka v. L. Muniswamy 7 may be relevant to note at this stage:—

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“ The whole some power under Section 482 CrPC entitles the High Court to quash a proceeding when it comes to the conclusion that allowing the proceeding to continue would be an abuse of the process of the Court or that the ends of justice require that the proceeding ought to be quashed. The High Courts have been invested with inherent power, both in civil and criminal matters, to achieve a salutary public purposes. A Court proceeding ought not to be permitted to degenerate into a weapon of harassment or persecution. The Court observed in this case that ends of justice are higher than

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the ends of mere law though justice must be administered according to laws made by the legislature.”

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24 . In view of the aforesaid facts and the legal position, this Court is satisfied that allowing the proceedings to continue would be an abuse of the process of the court and the ends of justice require that the proceedings ought to be quashed. In the light of sub clause 30.3 and 30.4 of Rajiv Thapar (supra), the application under Section 482 Criminal Procedure Code deserves to be allowed. Accordingly, the present application under Section 482 Criminal Procedure Code is allowed . The entire proceedings of Complaint Case No. 419 of 2006 under Section 420, 506 IPC at Police Station Civil Lines, District Moradabad pending in the Court of Civil Judge (Junior Division), Moradabad, Court No. 2 are hereby quashed.

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Order Date :- 11.11.2021 Jaswant

Sanjay Gulati v. State of U.P. and Another

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What is this about?

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Sanjay Gulati v. State of U.P. and Another

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