Dismissed

Sourabh Bhardwaj and Anr. v. State of Hp and Ors.

Himachal Pradesh HC1 Dec 2023CRMMO/228/2021

Case brief

AI extract

What is this about?

The High Court of Himachal Pradesh dismissed a petition seeking quashing of an FIR registered for offences of cheating and criminal breach of trust. The court held that the FIR prima facie disclosed cognizable offences and that the High Court cannot quash proceedings merely because a police cancellation report exists or conduct a mini-trial.

What did the court decide?

F.I.R. No. 121 of 2019 cannot be quashed as it prima facie discloses a cognizable offence.

Sourabh Bhardwaj and Anr. Vs State of Hp and Ors. — Corruption | Himachal Pradesh HC (2023)

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IN THE HIGH COURT OF HIMACHAL PRADESH, SHIMLA

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Cr.MMO No. 228 of 2021 Reserved on: 07.11.2023 Date of Decision: 01^st December, 2023

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Sourabh Bhardwaj & another

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....Petitioners

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Versus

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State of Himachal Pradesh& others

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....Respondents

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Coram

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Hon’ble Mr Justice Rakesh Kainthla, Judge. Whether approved for reporting? No

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For the Petitioner : Dr. Malkiat Singh, Ms. Rashmi Parmar and Mr. Rajat Turka, Advocates. For the Respondents : Mr. Parshant Sen, Deputy Advocate General, for respondent No.1 and 2/State. Mr. Pranshul Sharma, Advocate, for respondent No.3.

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Rakesh Kainthla,Judge

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The present petition has been filed for quashing of the

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F.I.R. No. 121 of 2019 dated 05.12.2019 registered at Police Station Parwanoo, for the commission of offences punishable under Sections 420, 408 read with Section 34 of IPC and the consequent proceedings, if any.

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Whether reporters of the local papers may be allowed to see the judgment? Yes

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2 Mr. Vijay Mehra, the informant filed an application

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before the SHO Police Station, Parwanoo stating that the informant was invited to become a 0% shareholder of AGMEHRA at the time of incorporation of the Company. He was appointed as a Director and was assigned the responsibility of managing day to day affairs of the Company. The informant reposed full faith in Mr Sourabh Bhardwaj, accused (petitioner no.1) and allowed him to operate with minimal oversight. It came to the notice of the informant that Mr Sourabh Bhardwaj abused the trust reposed in him by the Management. He cheated and defrauded the Company of lakhs of rupees. He would place orders on various suppliers and take money by misusing his position as a Director. The orders were being placed by him at inflated prices. Mr. Sourabh Bhardwaj appointed his brother-in-law Kailash Chand to a key position without the approval of the Board and without disclosing the relations between him and Kailash Chand. Saurabh Bhardwaj directed him to handle major departments including production and stores. He and Kailash Chand indulged in pilferage of stock. The appointment came to the notice of the informant in July 2019 and when Mr Sourabh Bhardwaj was questioned, he absconded with Kailash Chand.

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As per the preliminary estimates Mr. Sourabh Bhardwaj and Kailash Chand have illegally moved 6% stock of Hydrogen Peroxide (H202) and wipes worth ₹ 2.5 Lakhs from the stockyard of the company. He has also set up parallel businesses in partnership with some suppliers. He placed substantial orders worth ₹ 56.64 Lakhs on PKB Contractors and Pharama Valied, both of whom are his partners. He also placed orders worth ₹58.78 Lakhs in the name of Designtech Solutions, which was run by the same person who was running PKB Contractors. Mr Sourabh Bhardwaj is prohibited from directly or indirectly participating in a business of the same nature as was being conducted by AGMEHRA. He and Kailash Chand have stolen valuable secrets and business models. He is defaming the Company with the intent to move the customers to his business. The police registered the F.I.R. and conducted the investigations.

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The petitioner filed the present petition seeking the quashing of the F.I.R. It was asserted that petitioner no. 1 was one of the Directors of the Company. The informant and his son are the other two Directors. The petitioner looked after the production and operation work of the Company. Petitioner No. 2 was working as a Senior Executive in the store and production

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department of M/s AGMEHRA Pvt. Ltd. He joined the Company on 01.07. 2017 and worked there till 23.07.2019. The informant issued a certificate to petitioner no.2. Petitioner No. 1, has the technical and operational knowledge and that is why he was appointed as one of the Directors of the Company. When the company started its production in full flow, the petitioner and his son started harassing the petitioner forcing him to leave the company. The informant has not paid the salary of the petitioner since 01.04.2019. The petitioner relinquished his charge on 20.07. 2019. He handed over the entire belongings to the Company Secretary. He resigned from the post of Director on 13.08.2019. The resignation was accepted by the Company. It was agreed that the share and dues of the petitioner no.1 would be paid and an agreement was executed to this effect. The salary of the petitioner was not paid and he served a demand notice for the payment of ₹ 13,80,715/- alongwith simple interest @8% per annum. The petitioner approached the Registrar of the Companies-cumOfficial Liquidator, Himachal Pradesh at Chandigarh to direct M/s AGMEHRA Pvt. Ltd. Company to redress his grievances within 15 days. The present complaint was filed as a counterblast. The contents of the complaint are false. The informant and not the

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petitioner no.1 used to place the orders. Petitioner No.2 was appointed by Raja Mehra, son of the informant. The petitioner never absconded. No stock was removed from the company. No parallel company was established by the petitioner. A false F.I.R. was lodged to escape from the liability. Therefore, it was prayed that the present petition be allowed and F.I.R. be quashed.

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Respondents No.1 and 2 filed a reply to the petition asserting that as per investigation, petitioner no. 2 was appointed as a Store Keeper on 01.07.2017. He resigned from the Company on 20.07.2019 and his resignation was accepted by the Company on 23.07.2019. Petitioner No.1 resigned from the Company on 19.07.2019 and respondent No. 3, accepted his resignation. The allegations were not established due to lack of evidence. A cancellation report was prepared. Therefore, it was prayed that the present petition be dismissed.

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A separate reply was filed by respondent no. 3, reiterating the contents of the F.I.R. It was admitted that a certificate was issued by the informant. It was asserted that the informant was not aware of the activities of petitioner no.2. The petitioner filed a false complaint with the Official Liquidator and

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National Company Law Tribunal to cover up his illegal acts, which was dismissed by the Tribunal on 02.03.2020. Therefore, it was prayed that the present petition be dismissed.

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I have heard Dr. Malkiat Singh assisted by Ms. Rashmi Parmar and Mr. Rajat Turka, learned counsel for the petitioners. Mr. Parshant Sen, learned Deputy Advocate General, for respondents no.1 and 2/State and Mr. Pranshul Sharma, learned counsel for respondent No.3.

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Dr. Malkiat Singh, learned counsel for the petitioner submitted that the F.I.R. was based on false facts. The police have submitted a cancellation report, which shows that the contents of the F.I.R. are false; therefore, he prayed that the present petition be allowed.

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Mr Parshant Sen, learned Deputy Advocate General, for respondents no.1 and 2/State submitted that the F.I.R. clearly shows that the commission of the offences. The competent court is seized of the cancellation report and this Court should not

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usurp its powers. The remedy under Section 482 of Cr.P.C. is extraordinary and is to be exercised sparingly. No such

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circumstances have been established in the present case. Therefore, he prayed that the present petition be dismissed.

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Mr. Pranshul Sharma, learned counsel for respondent no.3 adopted the submissions of the learned Deputy Advocate General and submitted that a protest petition has been filed before the competent Court and the Court is seized of the matter. Therefore, he prayed that the present petition be dismissed.

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The principles of exercising the jurisdiction under Section 482 of Cr.P.C. were laid down by the Hon’ble Supreme Court in Supriya Jain v. State of Haryana , (2023) 7 SCC 711: 2023 SCC OnLine SC 765 wherein it was observed at page 716 :-

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“17. The principles to be borne in mind with regard to the quashing of a charge/proceedings either in the exercise of jurisdiction under Section 397CrPC or Section 482CrPC or together, as the case may be, has engaged the attention of this Court many a time. Reference to each and every precedent is unnecessary. However, we may profitably refer to only one decision of this Court where upon a survey of almost all the precedents on the point, the principles have been summarised by this Court succinctly. In Amit Kapoor v. Ramesh Chander [Amit Kapoor v. Ramesh Chander, (2012) 9 SCC 460 : (2012) 4 SCC (Civ) 687 : (2013) 1 SCC (Cri) 986] , this Court laid down the following guiding principles : (SCC pp. 482-84, para 27)

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“ 27 . … 27.1 . Though there are no limits to the powers of the Court under Section 482 of the Code but the more the power, the more due care and caution is to

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be exercised in invoking these powers. The power of quashing criminal proceedings, particularly, the charge framed in terms of Section 228 of the Code should be exercised very sparingly and with circumspection and that too in the rarest of rare cases.

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27.2 . The Court should apply the test as to whether the uncontroverted allegations as made from the record of the case and the documents submitted therewith prima facie establish the offence or not. If the allegations are so patently absurd and inherently improbable that no prudent person can ever reach such a conclusion and where the basic ingredients of a criminal offence are not satisfied then the Court may interfere.

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27.3 . The High Court should not unduly interfere. No meticulous examination of the evidence is needed for considering whether the case would end in conviction or not at the stage of framing of charge or quashing of charge.

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27.4 . Where the exercise of such power is absolutely essential to prevent patent miscarriage of justice and for correcting some grave error that might be committed by the subordinate courts even in such cases, the High Court should be loath to interfere, at the threshold, to throttle the prosecution in the exercise of its inherent powers.

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27.5 . Where there is an express legal bar enacted in any of the provisions of the Code or any specific law in force to the very initiation or institution and continuance of such criminal proceedings, such a bar is intended to provide specific protection to an accused.

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27.6 . The Court has a duty to balance the freedom of a person and the right of the complainant or prosecution to investigate and prosecute the offender.

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27.7 . The process of the court cannot be permitted to be used for an oblique or ultimate/ulterior purpose.

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27.8 . Where the allegations made and as they appeared from the record and documents annexed therewith predominantly give rise to and constitute a “civil wrong” with no “element of criminality” and does not satisfy the basic ingredients of a criminal offence, the court may be justified in quashing the charge. Even in such cases, the court would not embark upon thecritical analysis of the evidence.

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27.9 . Another very significant caution that the courts have to observe is that it cannot examine the facts, evidence and materials on record to determine whether there is sufficient material on the basis of which the case would end in a conviction; the court is concerned primarily with the allegations taken as a whole whether they will constitute an offence and, if so, is it an abuse of the process of court leading to injustice.

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27.10 . It is neither necessary nor is the court called upon to hold a full-fledged enquiry or to appreciate evidence collected by the investigating agencies to find out whether it is a case of acquittal or conviction.

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27.11 . Where allegations give rise to a civil claim and also amount to an offence, merely because a civil claim is maintainable, does not mean that a criminal complaint cannot be maintained.

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27.12 . In the exercise of its jurisdiction under Section 228 and/or under Section 482, the Court cannot take into consideration external materials given by an accused for reaching the conclusion that no offence was disclosed or that there was the possibility of his acquittal. The Court has to consider the record and documents annexed therewith by the prosecution.

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27.13 . Quashing of a charge is an exception to the rule of continuous prosecution. Where the offence is even broadly satisfied, the Court should be more inclined to

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permit a continuation of prosecution rather than its quashing at that initial stage. The Court is not expected to marshal the records with a view to deciding the admissibility and reliability of the documents or records but is an opinion formed prima facie.

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27.14 . Where the chargesheet, reported under Section 173(2) of the Code, suffers from fundamental legal defects, the Court may be well within its jurisdiction to frame a charge.

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27.15 . Coupled with any or all of the above, where the Court finds that it would amount to abuse of process of the Code or that the interest of justice favours, otherwise it may quash the charge. The power is to be exercised ex debitojustitiae i.e. to do real and substantial justice for administration of which alone, the courts exist.

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***

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27.16 . These are the principles which individually and preferably cumulatively (one or more) be taken into consideration as precepts to exercise extraordinary and wide plenitude and jurisdiction under Section 482 of the Code by the High Court. Where the factual foundation for an offence has been laid down, the courts should be reluctant and should not hasten to quash the proceedings even on the premise that one or two ingredients have not been stated or do not appear to be satisfied if there is substantial compliance with the requirements of the offence.”

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Similar is the judgment in Gulam Mustafa v. State of

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Karnataka, 2023 SCC OnLine SC 603, wherein i t was observed:-

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“26. Although we are not for verbosity in our judgments, a slightly detailed survey of the judicial precedents is in order. In State of Haryana v. Bhajan Lal, 1992 Supp (1) SCC 335 , this Court held:

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“102. In the backdrop of the interpretation of the various relevant provisions of the Code under Chapter XIV and of the principles of law enunciated by this Court in a series of decisions relating to the exercise of the extraordinary power under Article 226 or the inherent powers under Section 482 of the Code which we have extracted and reproduced above, we give the following categories of cases by way of illustration wherein such power could be exercised either to prevent abuse of the process of any court or otherwise to secure the ends of justice, though it may not be possible to lay down any precise, clearly defined and sufficiently channelised and inflexible guidelines or rigid formulae and to give an exhaustive list of myriad kinds of cases wherein such power should be exercised.

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(1) Where the allegations made in the first information report or the complaint, even if they are taken at their face value and accepted in their entirety do not prima facie constitute any offence or make out a case against the accused.

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(2) Where the allegations in the first information report and other materials, if any, accompanying the FIR do not disclose a cognizable offence, justifying an investigation by police officers under Section 156(1) of the Code except under an order of a Magistrate within the purview of Section 155(2) of the Code.

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(3) Where the uncontroverted allegations made in the FIR or complaint and the evidence collected in support of the same do not disclose the commission of any offence and make out a case against the accused.

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(4) Where the allegations in the FIR do not constitute a cognizable offence but constitute only a non-cognizable offence, no investigation is permitted by a police officer without an order of a Magistrate as contemplated under Section 155(2) of the Code.

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(5) Where the allegations made in the FIR or complaint are so absurd and inherently improbable on the basis of which no prudent person can ever reach a just conclusion that there is sufficient ground for proceeding against the accused.

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(6) Where there is an express legal bar engrafted in any of the provisions of the Code or the concerned Act (under which a criminal proceeding is instituted) to the institution and continuance of the proceedings and/or where there is a specific provision in the Code or the concerned Act, providing efficacious redress for the grievance of the aggrieved party.

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(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.

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103. We also give a note of caution to the effect that the power of quashing a criminal proceeding should be exercised very sparingly and with circumspection and that too in the rarest of rare cases; that the court will not be justified in embarking upon an enquiry as to the reliability or genuineness or otherwise of the allegations made in the FIR or the complaint and that the extraordinary or inherent powers do not confer an arbitrary jurisdiction on the court to act according to its whim or caprice .”

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(emphasis supplied)

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It was laid down in CBI v. Aryan Singh, 2023 SCC OnLine

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SC 379, that the High Court cannot conduct a mini-trial while exercising jurisdiction under Section 482 of Cr.P.C. The allegations are required to be proved during the trial based on evidence led before the Court. It was observed:

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“10. From the impugned common judgment and order passed by the High Court, it appears that the High Court has dealt with the proceedings before it, as if, the High Court was conducting a mini-trial and/or the High Court was considering the applications against the judgment and order passed by the learned Trial Court on conclusion of the trial. As per the cardinal principle of law, at the stage of discharge and/or quashing of the criminal proceedings, while exercising the powers under Section 482 Cr. P.C., the Court is not required to conduct the mini-trial. The High Court in the common impugned judgment and order has observed that the charges against the accused are not proved. This is not the stage where the prosecution/investigating agency is/are required to prove the charges. The charges are required to be proved during the trial on the basis of the evidence led by the prosecution/investigating agency. Therefore, the High Court has materially erred in going in detail in the allegations and the material collected during the course of the investigation against the accused, at this stage. At the stage of discharge and/or while exercising the powers under Section 482 Cr. P.C., the Court has very limited jurisdiction and is required to consider “whether any sufficient material is available to proceed further against the accused for which the accused is required to be tried or not”.

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11. One other reason pointed by the High Court is that the initiation of the criminal proceedings/proceedings is malicious. At this stage, it is required to be noted that the investigation was handed over to the CBI pursuant to the directions issued by the High Court. That thereafter, on conclusion of the investigation, the accused persons have been charge-sheeted. Therefore, the High Court has erred in observing at this stage that the initiation of the criminal proceedings/proceedings is malicious. Whether the criminal proceedings was/were malicious or not, is not required to be considered at this stage. The same is required to be considered at the conclusion of the trial. In any case, at this stage, what is required to be considered is a prima facie case and the material collected during the course of the investigation, which warranted the accused to be tried.”

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14 . It is apparent from these judgments that power under Section 482 of Cr.P.C. can be exercised to prevent the abuse of the process or secure the ends of justice. The Court can quash the F.I.R. if the allegations do not constitute an offence or make out a

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case against the accused. However, it is not permissible for it to conduct a mini-trial to arrive at such findings.

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It was specifically mentioned in the FIR that the petitioners being the Directors were entrusted with the stock, which was removed. The petitioners placed orders on inflated prices on behalf of the Company and they received money from the suppliers. They have stolen the trade secrets of the Company.

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These allegations clearly show that the petitioners being the Director were entrusted with the property of the Company and they have misappropriated the same. Therefore, prima facie an offence punishable under Section 408 of IPC is made out against the petitioners based on the F.I.R.

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It is submitted that the police did not find any material to support the contents of the F.I.R. and have presented a cancellation report, therefore, the F.I.R. should be cancelled. These submissions cannot be accepted. A cancellation report has been filed before the competent Court of law and the learned Court is seized of the same. It is for the learned Magistrate to decide whether the investigation was conducted properly or not and whether any offence is made out based on an investigation or not. Learned Magistrate has to decide if F.I.R. is to be cancelled or the cognizance is to be taken. This Court is not concerned with the result of the investigation but with the contents of the F.I.R. to determine whether any cognizable offence is made out based on the allegations contained in the F.I.R. or not.

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