Dismissed

Kec International Limited v. Logic Eastern India Private Limited and Ors.

Bombay HC19 Jul 2013WP/67/2011

Case brief

AI extract

What is this about?

The High Court dismissed a writ petition challenging the dismissal of a cheating complaint. The court held that the dispute arose from a commercial agreement with an arbitration clause, and the lack of evidence of deception meant it was a civil matter, not a criminal offence. Criminal proceedings were dismissed.

What did the court decide?

Criminal complaint under Section 420 IPC was dismissed; Writ Petition dismissed; Rule discharged.

Kec International Limited Vs Logic Eastern… — Contract and Commercial Disputes | Bombay HC (2013)

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IN THE HIGH COURT OF JUDICATURE AT BOMBAY CRIMINAL APPELLATE JURISDICTION

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rpa

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CRIMINAL WRIT PETITION NO.67 OF 2011

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KEC International Limited .. Petitioner Vs.

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Logic Eastern India Pvt. Ltd. & Ors. .. Respondents

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Mr. V. B. Pande, Advocate for the Petitioner. Mr. R. P. Jawanjal, Advocate for Respondent Nos. 1 to 4. Mr. A. R. Patil, A.P.P. for Respondent No. 5 – State.

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CORAM : K. U. CHANDIWAL, J.

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DATED : JULY 19, 2013.

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P.C. :

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Rule made returnable forthwith.

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2 Heard at length.

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3 The dismissal of complaint by the learned Metropolitan Magistrate 29^th Court Dadar Mumbai by order dated 18^th April, 2009 and confirmation of the same by the learned Additional Sessions Judge at Mumbai is challenged.

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4 The writ petitioner (RPG Cables initially, now

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merged with KGC International Limited) had agreement with respondents M/s. Logic Eastern India Private Limited dated 15^th December, 2002 in respect of providing expertise and having sufficient capability in router technology based equipment. The agreement was branded as a “License and Technology Development Agreement”. Clause XI of the said agreement provided term of its validity for a period of three years following the date on which RPGCL shall commence the sale of the specific products on a commercial scale which date shall be notified forthwith in writing by RPGCL to LE. Clause XII provides termination of the agreement. Clause XIII deals with effects of termination. At the end, the agreement deals with Clause XIV (14) about dispute resolution which reads as under:

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“ 14. Dispute Resolution :

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Any and all disputes between the Parties arising out of or in connection with this Agreement will, so far as is possible, be settled amicably between the Parties, and the Parties undertake in good faith to use all reasonable endeavours to settle any such dispute.

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In the absence of such a settlement within 30

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days of receipt of a notice by either Party from the other of any dispute (or such longer period of time as agreed by the the Parties), any and all disputes arising out of or in connection with this Agreement shall, upon receipt of a notice by either Party from the other, be submitted to arbitration under the Arbitration and Conciliation Act, 1996. The venue of arbitration shall be Mumbai.”

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5 There was constant correspondence between the

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managing director of writ petitioner and the representatives of respondent – accused annexed with the petition.

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6 The tenor of documents coupled with the agreement illustrate the parties could not sail well and cheques were expected to be issued by respondent – accused, however, the respondent – accused in the personal meeting expressed their inability to make good the payment as sought by the writ petitioner–company. The meeting details were confirmed on 13^th February, 2007, by Shri Gupta of writ petitioner to Vinit Wadhwa (respondent). Clause 4 of the letter reads as under:

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“4. I have handed over a document which requires to be reviewed and signed off as an orderly method of exit and closure of our Agreement with you. Pls let me know if any changes are required so that we have a sign off LATEST by Mar 31,2007.”

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7 The correspondence also illustrate Mr. Gupta expecting respondent to keep paying the amounts of money each month as the respondent used to release salary it would amount to movement in the account of respondent continuously.

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8 Thus, the record illustrate the agreement had a life span of three years from 15^th December,2002 to 15^th December, 2005. Criminal complaint filed before the learned Metropolitan Magistrate is dated 29^th November, 2007.

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9 It is a matter of record, that the writ petitioner has exhausted its remedies under civil law by initiating arbitration proceedings, in which the respondents have yet to file appearance. In proceedings under Section 138 of the Negotiable Instrument Act, 1881 for cheque bouncing of Rs.20,00,000/(Rs. Twenty Lacs only), initiated by writ petitioner conviction is

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recorded against the respondents. The learned counsel says, without legal authority, the technology is used by the Respondents, which amounts to cheating.

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10 The learned counsel for the writ petitioner has placed reliance to the Judgments in the matter of :

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(a) Rajesh Bajaj V/s. State NCT OF Delhi & Ors. 1(b)M/s. Indian Oil Corpiration V/s. M/s. NEPC India Ltd. & Ors.² (c) Surinder Kumar Batra & Ors. V/s. State of Punjab of learned Signal Judge of State of Punjab dated 15^th January, 2013, (d) Central Bureau of Investigation, SPE, SIU (X), New Delhi V/s. Duncans Agro Industries Ltd., Calcutta³ and (e) Jaikrishandas Manohardas Desai & Anr. V/s. State of Bombay⁴

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The principle highlighted in the reported

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Judgments, will not carry context to the issue at hand. The basic

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situation vis-a-vis criminality in the mind of the respondents

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while entering into the agreement dated 15^th December, 2002 at

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3 Supreme Court Cases 259.

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AIR 2006 Supreme Court 2780.

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AIR 1996 Supreme Court 2452.

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AIR 1960 Supreme Court 889 (V 47 C 154).

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Mysore needs to be evaluated.

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11 The crux of postulate is the intention of respondent

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who induced the writ petitioner to act on representation. However, no sch inducement is surfing. In Indian Oil's matter Supreme Court has discussed principles relating to exercise of powers by High Court and in para 10 observed as under:

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“10. 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. Such a tenancy is seen in several family disputes also, leading to irretrievable break down of marriages/families. 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. In G. Sagar Suri V. State of U.P. [2000(2) SCC 636], this Court observed:

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“It s to be seen if a matter, which is essentially of civil nature, has been given a cloak of criminal offence.

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Criminal proceedings are not a short cut of other remedies available in law. Before issuing process a criminal court has to exercise a great deal of caution. For the accused it is a serious matter. This Court has laid certain principles on the basis of which High Court is to exercise its jurisdiction under Section 482 of the Code. Jurisdiction under this Section has to be exercised to prevent abuse of the process of any court or otherwise to secure the ends of justice.”

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While no one with a legitimate cause or grievance should be prevented from seeking remedies available in criminal law, a complainant who initiates or persists with a prosecution, being fully aware that the criminal proceedings are unwarranted and his remedy lies only in civil law, should himself be made accountable, at the end of such misconceived criminal proceedings, in accordance with law. One positive step that can be taken by the courts, to curb unnecessary prosecutions and harassment of innocent parties, is to exercise their power under section 250 Cr.P.C. more frequently, where they discern malice or frivolousness or ulterior motives on the part of the complainant. Be that as it may.”

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12 The primary impression reading clauses of the agreement illustrate, the dispute was to be resolved by

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arbitration. Parties were well conversant with the terms as Clause XII provides termination. Effects after termination are demonstrated at Clause XIII. The correspondence referred to above swing to the direction of a civil blend than to indicate any criminality, misappropriation or deception on the part of the respondents. If the respondents are selling the product as canvassed by the writ petitioner, it was after termination arrived at between the parties. If it is prior thereto, it will be subject to accounts. The entire agreement primarily does not impress that Development product to be exclusive property of the writ petitioner.

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13 The contractual obligation were reciprocal between the parties. Acceptance of Rs. 4.73 crores by the respondents from the writ petitioner flowing in several documents may be correct, however, non performance of part of contract by respondent, as stated earlier could be a civil wrong which remedy the writ petitioner has exhausted by initiating proceedings under arbitration. There was communication between the parties as seen in the communications. Part payments are started. Failure to release part payment, will not

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amount to cheating as there was no basic element of deception in the entire transaction. Writ petition is dismissed. Rule discharged.

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(K. U. CHANDIWAL, J.)

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Kec International Limited v. Logic Eastern India Private Limited and Ors.

Case brief

What is this about?

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Kec International Limited v. Logic Eastern India Private Limited and Ors.

Case brief

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