Allowed

Raja Bhadra v. the State of Jharkhand and Another

Jharkhand HC3 Oct 2023Cr.M.P./1492/2012

Case brief

AI extract

What is this about?

The High Court quashed criminal proceedings initiated by a distributor against vehicle suppliers for alleged cheating and breach of contract, holding the dispute to be civil in nature due to lack of fraudulent intent at the transaction's inception.

What did the court decide?

The entire criminal proceeding, including the order taking cognizance dated 05.12.2011 in connection with C/1-2807 of 2011 pending in the Court of learned Judicial Magistrate, Ist Class, Jamshedpur, i

Raja Bhadra Vs the State of Jharkhand and… — Contract and Commercial Disputes | Jharkhand HC (2023)

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IN THE HIGH COURT OF JHARKHAND AT RANCHI

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Cr.M.P. 1492 of 2012

Raja Bhadra

…… Petitioner

Versus

1.The State of Jharkhand

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Amit Kumar Singh

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…… Opp. Parties

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CORAM: HON'BLE MR. JUSTICE SANJAY KUMAR DWIVEDI For the Petitioner : Mr. Rishi Pallava, Advocate For the State : Mr. Shailesh Kr. Sinha, A.P.P. For the O.P. No.2 : Mr. Parambir Singh Bajaj, Advocate

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10/Dated: 03/10/2023

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Heard Mr. Rishi Pallava, learned counsel for the petitioner and Mr. Shailesh Kr. Sinha, learned counsel for the State and Mr. Parambir Singh Bajaj, learned counsel for the O.P. No.2.

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This petition has been filed for quashing the entire criminal proceeding including order taking cognizance dated 05.12.2011 in connection with C/1-2807 of 2011 pending in the Court of learned Judicial Magistrate, Ist Class, Jamshedpur.

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The complaint case has been filed alleging therein that in the 2nd week of January, 2010 accused no. 4 namely Subhendra Bhattacharjee came at Jamshedpur and met with the complainant advising him to take distributorship of Vibgyor Allied Industries Limited.

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It was further alleged that accused no. 3 namely, C.E.O. of Vibgyor Allied Industries Limited, Vibgyor vehicles and accused no. 4 namely, Subhendra Bhattacharjee advised the complainant to open office and showroom for selling of Vibgyor vehicles at Adityapur, District-Seraikella Kharsawan and both of them assured the complainant that the complainant will earn huge profit in this business and upon such assurances, the complainant agreed to take distributorship of Vibgyor Allied Industries Limited and accordingly, the complainant opened a showroom at Adityapur.

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It was further alleged that on 24.03.2010, an agreement was executed between the company namely Vibgyor Allied Industries Limited and complainant for distributorship of Vibgyor vehicles and in the said agreement C.E.O. of Vibgyor Allied Industries Limited and Subhendra Bhattacharjee (accused no. 3 and 4) put their respective signatures on the said agreement wherein it was agreed that the complainant will deposit Rs. 5,00,000/- through cheque no. 477225 of Bank of Baroda as a security deposit.

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It was further alleged that on 24.05.2010, the complainant deposited Rs. 10,27,000/- in the account of Vibgyor Allied Industries Limited in HDFC Bank and thereafter, 26 pieces of motorcycles of 150CC of different colour was sent to the complainant for selling the vehicles.

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It was further alleged that on 20.08.2010 a consignment agreement was executed between the complainant and Vibgyor Allied Industries Limited signed by authorized signatory and in terms of para-3 of the said agreement accused persons assured the complainant to return the defected vehicles but, they did not complied with the terms of the agreement.

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It was further alleged by the complainant that the company did not appoint any dealer or sub dealer within the territory of Jharkhand State although the complainant was performing all acts of his distributorship for selling of the vehicles supplied by the Vibgyor Allied Industries Limited but, 18 vehicles were defective and were not of good quality and there were several technical defects in the vehicle as a consequence of which the vehicles were not saleable in the market. The aforesaid fact was informed by the complainant to the Vibgyor Allied Industries Limited but, neither the defects were removed nor the vehicles were returned by the Vibgyor Allied Industries Limited as a consequence of which the complainant sent emails dated 20.07.2010 for winding up the business relationship with the company namely, Vibgyor Allied Industries Limited and requested to return the defective vehicles.

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It was further alleged in the complaint petition that on 21.07.2010 a meeting was held between the complainant and the officials of Vibgyor Allied Industries Limited in which certain terms and conditions mentioned thereunder were not complied with and thus, the complainant have made huge investment amount of approximately Rs. 16,80,000/- in this business by way of expenses for payment of rent for the showroom, labour charges and other expenses.

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It was further alleged that inspite of complying with all the terms and conditions made in the agreement dated 24.03.2010, the accused persons committed criminal breach of trust and inspite of sending email dated 18.01.2011. 19.01.2011 sent by the officials of Vibgyor Allied Industries Limited in which the company has assured the complainant for settlement of the amount but, they failed to do so and infact as many as 18 vehicles as well as some parts are lying with the complainant and on account of technical defects in the vehicles, the same are lying in the showroom and lying in the godown and as a consequence of which the complainant has suffered loss to the extent of Rs. 60,18,000/- due to negligent act of Vibgyor Allied Industries Limited and even after return of the vehicle and spare parts the complainant will be entitled to get approximately Rs. 8,00,000/-.

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It was further alleged that thereafter a legal notice dated 12.08.2011 was sent by the complainant but, an evasive reply to the legal notice was given by the accused persons and thus, on the basis of the aforesaid allegations the complainant alleged that under the conspiracy and with dishonest intention the accused persons executed agreement and compelled the complainant to invest huge amount by giving distributorship and trying to grab the total amount of Rs. 24,80,000/-.

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On the basis of the aforesaid allegation the complaint case being C/1-2807 of 2011 was filed by the complainant in the Court of learned Chief Judicial Magistrate at Jamshedpur on 17.09.2011.

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Mr. Rishi Pallava learned counsel for the petitioner submits that the case is arising out of a commercial transaction and for that agreement was entered into between the petitioner and O.P. No.2 for supply of motorcycle of Vibgyor Allied Industries Limited. He submits that O.P. No.2 was appointed as distributor in the district of Seraikella-Kharsawan. He further submits that 26 motorcycles have been handed over to the O.P. No.2 for sale. He submits that allegations are made that some of the motorcycle was defective for that complaint case has been filed. He submits that in the solemn affirmation O.P. No.2 has admitted that the case has been filed for violation of terms and conditions of the agreement. He submits that every contract cannot be subject matter of criminal proceeding. He relied in the case of Kunti v. State of U.P., (2023) 6 SCC 109. He relied paras 9 to 12 of the said judgment which is quoted here-in-below:-

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9. However, we do not find the need to engage with the grounds as urged, because a perusal of the record in no uncertain terms reflects the dispute as being of a civil nature. This Court recently, in Sarabjit Kaur v. State of Punjab [Sarabjit Kaur v. State of Punjab, (2023) 5 SCC 360] , observed that : (SCC p. 363, para 13)

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“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.”

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10. A two-Judge Bench of this Court in ARCI v. Nimra Cerglass Technics (P) Ltd. [ARCI v. Nimra Cerglass Technics (P) Ltd., (2016) 1 SCC 348 : (2016) 1 SCC (Cri) 269] , while deliberating upon the difference between mere breach of contract and the offence of cheating, observed that the distinction depends upon the intention of the accused at the time of the alleged incident. If dishonest intention on the part of the accused can be established at the time of entering into the transaction with the complainant, then criminal liability would be attached.

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11. In Vijay Kumar Ghai v. State of W.B. [Vijay Kumar Ghai v. State of W.B., (2022) 7 SCC 124 : (2022) 2 SCC (Cri) 787] , one of us, (Krishna Murari J.) observed in reference to earlier decisions as under : (SCC pp. 139-40, paras 24-25)

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“24. This Court in G. Sagar Suri v. State of U.P. [G. Sagar Suri v. State of U.P., (2000) 2 SCC 636 : 2000 SCC (Cri) 513] observed that it is the duty and obligation of the criminal court to exercise a great deal of caution in issuing the process, particularly when matters are essentially of civil nature.

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This Court has time and again cautioned about converting purely civil disputes into criminal cases. This Court in Indian Oil Corpn. [Indian Oil Corpn. v. NEPC India Ltd., (2006) 6 SCC 736 : (2006) 3 SCC (Cri) 188] noticed

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the prevalent impression that civil law remedies are time consuming and do not adequately protect the interests of lenders/creditors. The Court further observed that : (Indian Oil Corpn. [Indian Oil Corpn. v. NEPC India Ltd., (2006) 6 SCC 736 : (2006) 3 SCC (Cri) 188] , SCC p. 749, para 13)

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‘13. … Any effort to settle civil disputes and claims, which do not involve any criminal offence, by applying pressure through criminal prosecution should be deprecated and discouraged.’ ”

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12. Having regard to the above well-established principles and also noting that the present dispute is entirely with respect to property and more particularly buying and selling thereof, it cannot be doubted that a criminal hue has been unjustifiably lent to a civil natured issue.”

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On these grounds, he submits that even if the case is there that

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is civil in nature for that criminal proceeding cannot be subject matter of such dispute.

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On the other hand, Mr. Shailesh Kumar Sinha, learned counsel

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for the State submits that it appears that the learned court has taken cognizance pursuant to that complaint case.

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Mr. Parambir Singh Bajaj, learned counsel for the O.P. No.2 submits that defective motorcycles were supplied and the O.P. No.2 was appointed as a distributor. He submits that since the defective motorcycles have been supplied the case of cheating is made out from the very inception. He submits that in the solemn affirmation in para 3 it has been disclosed that out of 26 motorcycles 18 motorcycles were defective. He submits that if criminality is made out, the criminal and civil cases can go simultaneously. To buttress this argument, he relied in the case of “Priti Saraf and Anr. Vs. State of NCT of Delhi & Anr.” reported in 2021 AIR (SC) 1531 (para 32). On these grounds, he submits that this Court may not quash the entire criminal proceeding.

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In view of above submissions of the learned counsel for the parties and looking into the complaint petition, it appears that there was an agreement of distributorship between the petitioner and the O.P. No.2 for sale of motorcycles of Vibgyor Allied Industries Limited. In the solemn affirmation in para 4 the complainant has admitted that for violation of terms and conditions of the agreement the case has been lodged. If defective motorcycles were

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there remedy is otherwise. It is an admitted fact that for violation of terms and agreement the case has been filed. Every breach of contract does not give rise of criminal prosecution as has been held by the Hon’ble Supreme Court in several judgments and has been considered recently in the case of Kunti (supra). Thus it appears that for civil wrong criminal case has been filed.

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The judgment relied by the learned counsel for the petitioner in the case of “Priti Saraf” (supra ) is not in dispute. It is well settled that if criminality is made out criminal and civil proceeding can go simultaneously. However, if the criminality is not made out to allow the proceeding will amount the abuse of process of law.

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In the case of “Priti Saraf” (supra) the allegation was with regard to property which was mortgaged with the State Bank of Patiyala. The allegations were that the second respondent hatched the conspiracy with broker Ashok Kumar to cheat and defraud the complainant and further misappropriate the amount paid by the complainant as part of the deal and in that background the said order was passed by the Hon’ble Supreme Court and the fact of the present case is otherwise, in that view of the matter the said

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judgment is not helping the O.P. No.2. 11. In view of above facts, reasons and analysis, the entire criminal proceeding including order taking cognizance dated 05.12.2011 in connection with C/1-2807 of 2011 pending in the Court of learned Judicial Magistrate, Ist Class, Jamshedpur, is quashed.

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If any civil proceeding is there that will be decided in accordance with law without being prejudice by this order.

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This petition stands allowed and disposed of. Pending I.A, if any, stands disposed of. Interim order is vacated.

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( Sanjay Kumar Dwivedi, J.)

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Satyarthi/A.F.R.

Raja Bhadra v. the State of Jharkhand and Another

Case brief

What is this about?

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Raja Bhadra v. the State of Jharkhand and Another

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