Suresh Kyal Vs the State of Jharkhand

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IN THE HIGH COURT OF JHARKHAND AT RANCHI Cr.M.P. No. 1501 of 2019

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Suresh Kyal @ Suresh Kayal, son of Late Atma Ram Kyal, aged about 40 years, Director M/s Saraswati Cellphone Private Limited, opposite Kumar Market, Radium Road, P.O.- GPO & P.S.- Kotwali, Dist.- Ranchi834001 (Jharkhand)

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Pradeep Kumar Kedia, son of Sri Vijay Kumar Kedia, aged about 46 years, Director M/s Saraswati Cellphone Private Limited, R/o Opp. Kumar Market, Radium Road, P.O.- GPO & P.S.- Kotwali, Dist.- Ranchi- 834001 (Jharkhand) ...... Petitioners Versus

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The State of Jharkhand

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M/s Ansh Group through its proprietor Abhishek Sonthalia, aged about 39 years, son of Sri Bishwanath Sontahlia, R/o Gurudrawa Area, H.No. 58, P.O. & P.S.Bistupur, Jamshedpur, East Singhbhum- 831001

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….. Opposite Parties

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For the Petitioners : Mr. Nitin Kr. Rai, Adv. Mr. Gaurav Kaushalesh, Adv. Mr. Shubham Gurung, Adv. For the State : Mr. Anup Pawan Topno , Addl. PP For the opp. party no. 2 : Md. Zaid Ahmed, Adv.

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P R E S E N T

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HON’BLE MR. JUSTICE ANIL KUMAR CHOUDHARY

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By the Court:- Heard the parties.

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This criminal miscellaneous petition has been filed invoking the jurisdiction of this Court under Section 482 of CrPC with a prayer for quashing the entire criminal proceedings including the order taking cognizance dated 23.01.2019 in C/1 Case no. 2496 of 2018 whereby and where under, learned CJM, Jamshedpur, has found prima facie case inter alia against the petitioners for having committed the offence punishable under Sections 114 and 406 of IPC.

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Cr.M.P. No. 1501 of 2019

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The allegation against the petitioners is that the petitioners are the Directors of M/s Saraswati Cell Phone Pvt. Ltd.. The complainant is a mobile phone retailer. In the year 2017, the petitioner no. 1 in capacity of Director of M/s Saraswati Cell Phone Pvt. Ltd., approached the complainant to sell the cell phones of M/s Saraswati Cell Phone Pvt. Ltd. Consequently, the business transaction took place between them. The complainant used to pay money and the petitioners used to supply the cell phones. On 01.06.2017, the complainant, sent Rs. 10,00,000/- for supply of cell phones but the cell phones against such payment, was never supplied. Subsequently, M/s Saraswati Cell Phone Pvt. Ltd. intimated the complainant that the company has been closed and to return the cell phone to the company left with the complainant. The complainant sent back the cell phones worth about Rs. 28,00,000/- and the company promised that Rs. 28,00,000/- and advance of Rs. 10,00,000/- would be returned to the complainant. The petitioners issued the cheque for Rs. 42,66,764/- which was dishonored. The complainant filed a separate case in connection with the dishonor of the cheque. On the basis of the complaint, the statement on solemn affirmation and the statement of the enquiry witnesses, learned CJM, Jamshedpur found the prima facie case for the said offences.

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Learned counsel for the petitioners relying upon the judgment of this court in the case of M/s. Chanduka Hi Tech Steels Pvt. Ltd.,. & Ors. vs. The State of Jharkhand & Anr . dated 08.05.2024 passed in CrMP no. 4211 of 2022, submits that therein this court, relied upon the judgment of the Hon’ble Supreme Court of India in the case of Binod Kumar & Others vs. State of Bihar & Another reported in (2014) 10 SCC 663, paragraph-18 of which reads as under :-

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“18. In the present case, looking at the allegations in the complaint on the face of it, we find that no allegations are made attracting the ingredients of Section 405 IPC. Likewise, there are no allegations as to cheating or the dishonest intention of the appellants in retaining the money in order to have wrongful gain to themselves or causing wrongful loss to the complainant. Excepting the bald allegations that the appellants did not make payment to the second respondent and that the appellants utilised the

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Cr.M.P. No. 1501 of 2019

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amounts either by themselves or for some other work, there is no iota of allegation as to the dishonest intention in misappropriating the property. To make out a case of criminal breach of trust, it is not sufficient to show that money has been retained by the appellants. It must also be shown that the appellants dishonestly disposed of the same in some way or dishonestly retained the same. The mere fact that the appellants did not pay the money to the complainant does not amount to criminal breach of trust.” Emphasis supplied)

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Wherein, the Hon’ble Supreme Court of India reiterated the settled principle of law that in order to make out a case of criminal breach of trust, it is not sufficient to show that money has been retained by the accused persons. It must also be shown that the accused persons dishonestly disposed of the same in some way or dishonestly retained the same. The mere fact that the accused persons did not pay the money to the complainant does not amount to criminal breach of trust.

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In this respect, learned counsel for the petitioners, also relies upon the judgment of this court in the case of Manoj Kumar Jayaswal & Ors. vs. The State of Jharkhand & Anr . dated 25.07.2023 passed in CrMP no. 221 of 2022, wherein this court relied upon the judgment of the Hon’ble Supreme Court of India in the case of Ravinranatha Bajpe vs. Mangalore Special Economic Zone Ltd. & Ors. reported in 2021 SCC OnLine SC 806 , paragraph no. 24 of

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which reads as under:-

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24. In the case of Sunil Bharti Mittal (supra), it is observed by this Court in paragraphs 42 to 44 as under:

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“(iii) Circumstances when Director/person in charge of the affairs of the company can also be prosecuted, when the company is an accused person

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42. No doubt, a corporate entity is an artificial person which acts through its officers, Directors, Managing Director, Chairman, etc. If such a company commits an offence involving mens rea, it would normally be the intent and action of that individual who would act on behalf of the company. It would be more so, when the criminal act is that of conspiracy. However, at the same time, it is the cardinal principle of criminal jurisprudence that there is no vicarious liability unless the statute specifically provides so.

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43. Thus, an individual who has perpetrated the commission of an offence on behalf of a company can be made an accused, along with the company, if there is sufficient evidence of his active role coupled with criminal intent. Second situation in which he can be implicated is in those cases where the statutory regime itself attracts the doctrine of vicarious liability, by specifically incorporating such a provision.

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44. When the company is the offender, vicarious liability of the Directors cannot be imputed automatically, in the absence of any statutory provision to this effect. One such example is Section 141 of the Negotiable Instruments Act, 1881. In Aneeta Hada v. Godfather Travels & Tours (P) Ltd., (2012) 5 SCC 661, the Court noted that if a group of persons that guide the business of the company have the criminal intent, that would be imputed to the body corporate and it is in this backdrop, Section 141 of the

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Cr.M.P. No. 1501 of 2019

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Negotiable Instruments Act has to be understood. Such a position is, therefore, because of statutory intendment making it a deeming fiction. Here also, the principle of “alter ego”, was applied only in one direction, namely, where a group of persons that guide the business had criminal intent, that is to be imputed to the body corporate and not the vice versa. Otherwise, there has to be a specific act attributed to the Director or any other person allegedly in control and management of the company, to the effect that such a person was responsible for the acts committed by or on behalf of the company.” (Emphasis supplied)

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and submits that since there is no allegation against the petitioners of having committed any offence in their individual capacity, hence, no offence is made out against the petitioners.

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It is next submitted that even if the allegations against the petitioners are considered to be true in their entirety, still the offence punishable under Sections 406 or 114 of the IPC, is not made out against the petitioners. It is next submitted the entrustment of money is to M/s Saraswati Cell Phone Pvt. Ltd and there is no specific allegation against the petitioners of dishonest misappropriation of any property. It is then submitted that M/s Saraswati Cell Phone Pvt. Ltd. has already issued the cheque for the amount and for dishonor of which, a case has been instituted, hence, it cannot be said that the petitioners have committed criminal misappropriation of the property, hence, it is submitted that the prayer as prayed for in this criminal miscellaneous petition be allowed.

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Learned Addl. P.P. and learned counsel for the opp. party no. 2, the other hand, vehemently oppose the prayer of the petitioners and submits that there is direct allegation against the petitioners of being entrusted with mobile handsets worth Rs. 28,00,000/besides Rs. 10,00,000/- as advance and the very fact that the same has not been returned, goes to show that the same is sufficient to constitute the offence of criminal misappropriation of the property by the petitioners; being the Directors of the said company, hence, it is submitted that this criminal miscellaneous petition being without any merit be dismissed.

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Having heard the submissions made at the Bar and after going through the materials available in the record, this court finds that

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Cr.M.P. No. 1501 of 2019

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it is the admitted case of the complainant that business transactions were going on between the petitioners and the complainant. There is no allegation against the petitioners of committing any dishonest misappropriation of the entrusted property rather it is the admitted case that the company namely M/s Saraswati Cell Phone Pvt. Ltd., issued the cheque of Rs. 42,00,000/- in discharge of the amount due and payable to the complainant.

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Under such circumstances, this court is of the considered view that even if the allegations against the petitioners are considered to be true in their entirety, still neither the offence punishable under Sections 406 nor the offence punishable under Sections 114 of the IPC is made out against the petitioners, hence, continuation of this criminal case against the petitioners will amount to abuse of process of law. Therefore, this is a fit case where the entire criminal proceedings including the order taking cognizance dated 23.01.2019 in C/1 Case no. 2496 of 2018 be quashed and set aside.

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Accordingly, entire criminal proceedings including the order taking cognizance dated 23.01.2019 in C/1 Case no. 2496 of 2018 is quashed and set aside.

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