Allowed

M/S.Jindal India Thermal Power Ltd. v. M/S.Quartz Infra and Engineering Pvt. Ltd.

Orissa HC12 Jan 2024CRLREV/226/2023

Case brief

AI extract

What is this about?

The High Court allowed criminal revisions challenging the refusal to discharge accused companies in a dispute over work contract termination and encashment of bank guarantees. Examining pre-charge evidence alongside an Arbitral Award, the Court found no prima facie case for criminal offence against the accused and discharged them.

What did the court decide?

Impugned order dated 05.04.2023 passed in 1CC Case No.33 of 2017 is set aside; accused persons are discharged under section 245(1) of the Code.

M/S.Jindal India Thermal Power Ltd. Vs… — Civil Procedure and Limitation | Orissa HC (2024)

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IN THE HIGH COURT OF ORISSA AT CUTTACK

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CRLREV No.226 of 2023 : (A) AND CRLREV No.320 of 2023 : (B)

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In the matter of Revisions under section 397 read with section 401 of the Code of Criminal Procedure, 1973 and from an order dated 05.04.2023 passed by the learned Sub-Divisional Judicial Magistrate, Talcher in 1CC Case No.33 of 2017.

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CRLREV No.226 of 2023 (A)

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M/s.Jindal India Thermal Power … Petitioners
Limited & Others
-versus-
…
M/s. Quartz Infra & Engineering Opposite Parties
Private Limited & Others

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CRLREV No.320 of 2023 (B)

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M/s. Sinhotia Metals & Minerals … Petitioners Pvt. Ltd., West Bengal & Others.

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-versus-

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… M/s. Quartz Infra & Engineering Opposite Private Limited Party

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Appeared in this case by Hybrid Arrangement (Virtual/Physical Mode):

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For Petitioners - Mr.S.P. Misra, Sr. Advocate Mr. P.K. Rath, Sr. Advocate, A.K. Dash & A. Mishra, Advocates (In CRLREV No.226 of 2023)

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Page 1 of 27

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CRLREV Nos.226 & 320 of 2023

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- Mr. Rajeet Roy, S.K. Mishra, S. Sourav, T.P. Tripathy & A. Mohanty, Advocates (In CRLREV No.320 of 2023)

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For Opposite Party Mr.Vegesna Subha Raju, (M.D. of O.P.-Company in person)

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CORAM: MR. JUSTICE D.DASH Date of Hearing : 05.12.2023 ::: Date of Judgment :12.01.2024

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D.Dash,J. Since in both these Criminal Revisions as at (A) and (B)

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filed under section 397 read with section 401 of the Code of Criminal Procedure, 1973 (for short, hereinafter called as ‘the Code’), the Petitioners have called in question the legality and propriety of an order dated 05.04.2023 passed by the learned S.D.J.M., Talcher in 1CC Case No.33 of 2017; those were heard together for their disposal by this common judgment.

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2. The Petitioner No.1 of the Revision as at (A) is the Company, namely, M/s. Jindal India Thermal Power Ltd. (shortly stated as M/s.JITPL) arraigned as accused No.1 in the complaint filed by the Opposite Party-Company, namely, M/s.Quartz Infra & Engineering Pvt. Ltd. (in short, M/s. QIEL), whereas the other Petitioners are the Liason Officer & Ex-Director, the Liason Officer, who too have been arraigned as accused persons in the said complaint numbered as ICC No.33 of 2018.

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CRLREV Nos.226 & 320 of 2023

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The Revision as at (B) has been filed by the Company, M/s.Sinhotia Metals & Minerals Private Limited (in short, ‘M/s. SMMPL’) and its two Directors, who too have been arraigned as accused persons in the said complaint numbered as ICC No.33 of 2018.

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3. For the sake of convenience, in order to avoid confusion and bring in clarity, the parties hereinafter have been referred to as their position has been assigned in the complaint petition filed by the Opposite Parties (Complainant), i.e., M/s. QIEL.

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4. Facts necessary for the purpose

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The Complainant-Company, M/s.QIEL carries on the activities of civil engineering and providing construction services. The Complainant-Company had undertaken a back to back subcontract work from one M/s. GSR Ventures Private Limited to execute the construction of a boundary wall as well as area grading and leveling work sometime in the month of March, 2010 at the newly constructed 2 X 600 MW Thermal Power Plant of the Company, M/s.JITPL, the accused No.4 situated at Derang known as Derang Power Plant. The Complainant-Company, M/s.QIEL entered into six Civil Engineering Work contracts with the accused-Company-M/s.JITPL sometime between the month of April, 2011 to February, 2012 for construction of peripheral roads and drains, internal roads and drains, security sheds, boundary Page 3 of 27 CRLREV Nos.226 & 320 of 2023

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wall, raw water reservoir extension and execution of balance work left in the Ash Dyke by M/s. GSR Ventures Private Limited for the said Derang Power Plant.

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For the purpose, the Complainant-Company, M/s.QIEL had furnished three bank guarantees for a total sum of Rs.2.72 Crores towards security/ earnest money as per the terms of the contract. In December, 2012 the work relating to the construction of the boundary wall was completed and the work of the construction of the security shed was closed whereas the work pertaining to the remaining four contracts, such as, construction of peripheral roads and drains, internal roads and drains, raw water reservoir extension and execution of the balance work left in the Ash Dyke by M/s. VSR Ventures Private Limited were underway.

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It is stated that the accused-Company M/s. JITPL unilaterally terminated the contract on 31.01.2013 and the bank guarantees furnished by the Complainant-Company, M/s.QIEL to the tune of Rs.2.72 Crores were encashed on 29.01.2013 without prior notice or intimation. The Complainant-Company, M/s.QIEL was then asked to draw up the final bill after measurement of the work done till 31.01.2013 and vacate the premises of Derang Power Plant.

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It is further stated that before terminating the contract, the accused-Company, M/s.JITPL maliciously entered into an

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CRLREV Nos.226 & 320 of 2023

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understanding with the Company, M/s.SMMPL, the accused No.1 sometime in the month of December, 2012 to usurp the work contract from the Complainant-Company, M/s.QIEL at that Derang Power Plant at a much higher rate, compared to one awarded to the Complainant-Company, M/s.QIEL.

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5. The Complainant-Company, M/s.QIEL vehemently objected to the manner of termination of the contract, which is stated to be illegal. It is next said that this accused-company M/s.SMMPL, having entered into the worksite, had illegally kicked out the Complainant-Company, M/s.QIEL beyond the arena, the Complainant-Company, M/s.QIEL was forced to accept the words of the Officer of accused-Company-M/s.JITPL, who assured that upon the assessment of the entire work done at the site and measurement, the final bill would be processed within nine (09) days of the meeting held on 06.02.2013 wherein it was so resolved.

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6. As a follow-up measure, a joint verification of the of work done till 31.01.2013 as well as the measurement of the materials of the Complainant-Company, M/s.QIEL lying in the store at Derang Power Plant was conducted by the Officers of the accused-Company-M/s. JITPL, Officers of another company M/s.Quari and Brown as well as the Officer of the ComplainantCompany, M/s.QIEL. Upon measurement, the details were

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recorded in the Ground Level Books and all the above Officers attested the same by putting their signatures. Accordingly, the final bill of Rs.1.53 Crores was submitted which was duly endorsed by the concerned Officers of accused-Company M/s.JITPL. Subsequently, the Complainant-Company, M/s.QIEL vacated the premises of Derang Power Plant. The accusedCompany, M/s.JITPL, thereafter made payment of Rs.92.25 lacs to the Complainant-Company, M/s.QIEL but did not make further payment of the rest amount of Rs.60.80 lacs as claimed by the Complainant-Company, M/s.QIEL.

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It is stated that despite repeated request for release and payment of the said amount, the accused-Company M/s.JITPL did not pay any heed to the same. So, the ComplainantCompany, M/s.QIEL had to invoke the Arbitration Clause as per the contract.

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7. During the Arbitral Proceeding, the Complainant-

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Company, M/s.QIEL raised the issue of non-payment of the residue amount as above said and further disputed the termination of the contract as well as the encashment of the bank guarantees as illegal. The Complainant-Company, M/s.QIEL on going through the reply of the accused-Company-M/s.JITPL then to his utter surprise learnt that the accused-Company M/s.JITPL has forged and fabricated the documents and in the process

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CRLREV Nos.226 & 320 of 2023

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altered the final bill and the ancillary twenty-nine Level Books containing the measurement of the work in order to show that the final bill stands around Rs.94.88 lacs. It is stated that the accusedCompany-M/s.JITPL had submitted the documents wherein they themselves have contradicted the modified amount arrived at by them and stated that the final bill was to the extent of further reduced amount of Rs.92.25 lacs which has been fully paid.

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It is alleged that the bill as well as ancillary documents were forged, manipulated and fabricated and those were relied upon by the accused-Company-M/s.JITPL to deprive the ComplainantCompany, M/s.QIEL of its lawful dues.

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8. The learned Arbitral Tribunal, without delving upon the allegations of forgery, manipulation and fabrication in its award dated 21.02.2017 rejected all such objections and contentions raised by the accused-Company-M/s. JITPL and awarded a sum of Rs.9.71 Crores, which included the entire sum of Rs.1.53 crores of the final bill, to the Complainant-Company, M/s.QIEL by the accused-Company (M/s.JITPL)

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9. Thereafter on 22.03.2017 the Complainant-Company, M/s.QIEL filed four complaints arraigning several persons as accused therein and we are here considered with the complaint petition numbered as 1CC No.33 of 2017 wherein the accused persons are the present Petitioners.

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10. Learned S.D.J.M., Talcher, embarking upon an inquiry under section 202 of the Code, took cognizance of the offences under sections 379/406/420/120-B/34 of the IPC and issued process against these accused persons.

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The accused persons thereafter carried an application under section 482 of the Cr.P.C. to this Court seeking quashment of the proceeding.

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The said prayer was rejected by judgment dated 13.05.2022. The Petitioners having carried the matter further to the Hon’ble Apex Court have been unsuccessful.

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11. The learned S.D.J.M. then sitting over the complaint has recorded the pre-charge evidence tendered from the side of the Complainant-Company, M/s.QIEL. On behalf of the Complainant-Company, its Managing Director gave his evidence and he too has been cross-examined at that stage by the accused persons in exercise of their rights as per law. Thereafter an application filed by these accused persons, for their discharge under section 245(1) of the Code, having been rejected by the impugned order, these Revisions have come to be filed.

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12 . In so far as the complaint petition numbered as 1CC Case No.33 of 2017 is concerned, to be more specific the allegations are that the accused-Companies M/s.JITPL and M/s. SMMPL have misappropriated the properties of the Complainant-Company,

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M/s.QIEL, which were lying in the worksite of Derang Power Plant for their benefits and thereby have made unlawful gain. It is stated that for the purpose, the accused-Companies had colluded and acted in connivance with each other in a concerted manner hatching a criminal conspiracy to oust the ComplainantCompany, M/s.QIEL from the worksite. The accused-Companies have forcibly entered the worksite of Derang Power Plant and took over of the work of the Complainant-Company, M/s.QIEL in a malfide manner behind its back. The accused-Company, M/s.JITPL has also forced the Complainant-Company, M/s.QIEL to sale its materials lying on the worksite to the accusedCompany M/s. SMMPL at a much lower rate than the acceptable and payment towards the same was not made despite demands on several occasions. It is thus stated that the accused persons have dishonestly misappropriated the moveables of the Complainant-Company, M/s.QIEL and have cheated the Complainant-Company, M/s.QIEL while also committing criminal breach of trust; they have colluded with each other to cheat the Complainant-Company, M/s.QIEL so as to cause loss of the property and have, therefore, committed the breach of agreement.

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13 . Heard Mr. S.P. Mishra and Mr. P.K. Rath, learned Senior Counsels for the Petitioners (accused-Company-M/s. JITPL and

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CRLREV Nos.226 & 320 of 2023

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Others) of the Revision as at (A) and Mr. Rajeet Roy, learned counsel for the accused-Company-M/s. SMMPL at length.

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Mr. V.S. Raju, the Managing Director of the Complainant-

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Company, M/s.QIEL, who appeared in person, was also heard.

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I have perused the case records and the notes placed.

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14 . At the outset, at the risk of repetition, it be stated that the impugned order relates to the rejection of the prayer advanced by these accused persons for their discharge under sub-section 1 of section 245 of the Code.

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15 . The present case has been instituted by the ComplainantCompany and the offences of which cognizance have been taken are triable by following the procedures for trial of the warrant cases. The procedures prescribed for trial of such cases are contained in section 244 to 250 of the Code. In such warrant, case arising upon a complaint instituted otherwise than in a police report when the accused appears or is brought before the Magistrate under section 244 (1) of the Code, the Magistrate is called upon to hear the prosecution and take all such evidence as may be produced in support of the prosecution. In that exercise, the Magistrate may also issue summons to the witnesses also under section 244(2) of the Code on an application by the prosecution. All such evidence would stand as evidence before charge. After such recording of the evidence is over, the Magistrate as ordained under section 245(1) of the Code to

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consider as to whether any case against the accused is made out, which if unrebutted would warrant his conviction. If the Magistrate comes to the conclusion that there is no such case made out against the accused, the Magistrate would discharge the accused. On the other hand, if the Magistrate is satisfied that a prima facie case is made out against the accused, the Magistrate would frame charge under section 246(1) of the Code when the Complainant would get the second opportunity to lead further evidence in support of the charge and so also the accused would then besides leading evidence would get further opportunity to cross-examine the witnesses already examined at the pre-charge stage with further opportunity to cross-examine the witnesses examined during the pre-charge stage.

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Therefore, under section 245(1) of the Code, the Magistrate has the advantage of the evidence led by the prosecution before him under section 244 of the Code. He has to consider whether if the evidence remains goes unrebutted, the conviction of the accused would be warranted. If there is no discernible incriminating materials in the evidence, then the Magistrate would be within its domain to discharge the accused under section 245(1) of the Code.

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16. The Magistrate under sub-section 2 of section 245 of the Code has also the power to discharge the accused at any previous stage of the case, i.e., before such any such evidence is lead.

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However, for discharging an accused under section 245(2) of the Code, the Magistrate has to come to a finding that the charge is groundless. In that exercise no question arises for consideration of the evidence at that stage as no such evidence had by then being taken. The Magistrate can take this decision before the accused appears or is brought before this Court or the evidence is lead under section 244 of the Code and that is what is clearly borne out from the words “at any previous stage of the case” which appear in section 245(2) of the Code which would be obviously before the evidence of the prosecution under section 244(1) of the Code is completed or at any stage prior thereto.

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The accused persons when had earlier carried an application under section 482 of the Code before this Court for quashment of the complaint, which was after the order by which the learned S.D.J.M. had taken cognizance of the offences as afore-stated; the stage was not the present as in our hand. The consideration before the Magistrate at that earlier stage while taking cognizance was as to whether there is sufficient ground for proceeding by issuing process against the accused persons when here the consideration stands as to if as per the evidence let in by the Complainant-Company, a case is made out against the accused persons and that remaining unrebutted, would warrant their conviction.

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17 . In case of Ajoy Kumar Ghose Vrs. State of Jharkhand & Another, (2009) 14 SCC 115 , the Hon’ble Apex Court has held:-

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“41. Before we approach this question, we must note that while Section 245(2) Cr.P.C. speaks about the discharge of the accused on the ground that the charge is groundless, Section 246(1) operates in entirely different sphere. An order under Section 245(2) Cr.P.C. results in discharge of the accused, whereas, an order under Section 246 Cr.P.C. creates a situation for the accused to face a full-fledged trial. Therefore, the two Sections would have to be interpreted in slightly different manner, keeping in mind the different spheres, in which they operate. The words "or at any previous stage of the case" appearing in Section 246 Cr.P.C. would include Section 245 also, where the accused has not been discharged under Section 245 Cr.P.C., while the similar term in Section 246(2) can include the stage even before any evidence is recorded. It cannot, therefore, be held that the words "at any previous stage of the case" as appearing in Section 245 Cr.P.C., would have to be given the same meaning when those words appear in Section 246 Cr.P.C.

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The Bombay High Court, in a decision in Sambhaji Nagu Vs. State of Maharashtra reported in 1979 Criminal Law Journal 390, has considered the matter. While interpreting the words "at any previous stage" under Section 246(1) Cr.P.C., the Learned Single Judge in that case, came to the conclusion that the phraseology only suggested that the Magistrate can frame charge, even before "all" the evidence is completed under Section 244 Cr.P.C. Section 244 Cr.P.C. specifically mandates that as soon as the accused appears or is brought before the Court, the Magistrate shall proceed to hear the prosecution and take all such evidence as may be produced in support of the prosecution.

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Further, Section 245 Cr.P.C. also mandates that “245. When the accused shall be discharged- (1) if, upon taking all the evidence referred to in Section 244 Cr.P.C., the Magistrate considers, for reasons to be recorded, that no case against the accused has been made out which, if unrebutted, would warrant his conviction, the Magistrate shall discharge him.”

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In Section 246 Cr.P.C. also, the phraseology is "if, when such evidence has been taken", meaning thereby, a clear reference is made to Section 244 Cr.P.C. The Bombay High Court came to the conclusion that the phraseology would, at the most, mean that the Magistrate may prefer to frame a charge, even before all the evidence is completed. The Bombay High Court, after considering the phraseology, came to the conclusion that the typical clause did not permit the Magistrate to frame a charge, unless there was some evidence on record. For this, the Learned Single Judge in that matter relied on the ruling in Abdul Nabi Vs. Gulam Murthuza reported in 1968 Criminal Law Journal 303.

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The similar view seems to have been taken in T.K. Appu Nair Vs. Earnest reported in AIR 1967 Madras 262 and in re. M. Srihari Rao reported in AIR 1964 Andhra Pradesh 226. The similar view has been expressed in P. Ugender Rao & Ors. Vs. J. Sampoorna & Ors. reported in 1990 Criminal Law Journal 762, where it has been expressed that previous stage is a stage, after recording some evidence. It is neither a stage before recording any evidence at all nor a stage after recording the entire evidence, but is in between. The interpretation, thus, placed on words "at any previous stage of the case", occurring in Section 246(1) Cr.P.C. also appears to be more in consonance with the order of the Sections numbered in the Code and also with the heading given to Section 246 Cr.P.C., viz., "Procedure where accused is

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not discharged". The very heading of the Section even indicates that it would come into play only after the matter is examined in the light of Section 245 Cr.P.C. and the accused is not discharged thereunder. Therefore, it is incumbent upon the Magistrate to examine the matter for purposes of considering the question whether the accused could be discharged under Section 245 Cr.P.C. and it is only when he finds it otherwise, he could have resort to Section 246 Cr.P.C.

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The Learned Single Judge in this ruling has also noted another ruling by the same High Court in Abdul Nabi Vs. Gulam Murthuza reported in 1968 Criminal Law Journal 303 (cited supra). We, therefore, find that consistently, the view taken by the High Court is that there would have to be some evidence before the charge is framed. In the last mentioned case of P. Ugender Rao & Ors. Vs. J. Sampoorna & Ors. reported in 1990 Criminal Law Journal 762, there is one incorrect observation in respect of a decision of this Court in Cricket Association of Bengal & Ors. Vs. State of West Bengal & Ors. reported in 1971 (3) SCC 239 (cited supra) to the effect that the Magistrate cannot discharge the accused before recording any evidence, whatsoever, under Section 244 Cr.P.C. We have not been able to find out such an expression in the aforementioned case of Cricket Association of Bengal & Ors. Vs. State of West Bengal & Ors. (cited supra). That was a case under old Section 253(2), which is pari materia to the present Section 245(1). On the other hand, the Court has very specifically stated therein that Section 253(2) gives ample jurisdiction to the Magistrate to discharge the accused in the circumstances mentioned therein and the order of discharge can be passed at any previous stage of the case. It is further stated in Para 13 that sub-Section (1) under those circumstances will not operate as a bar to the

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exercise of jurisdiction by the Magistrate under subSection (2). Since we have found error in the above mentioned judgment, we have mentioned so.

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However, the ruling in Cricket Association of Bengal & Ors. Vs. State of West Bengal & Ors. (cited supra) also supports our earlier finding that the Magistrate has the power to discharge the accused, even before any evidence is recorded and thus, an application for discharge at that stage is perfectly justifiable. However, insofar as Section 246(1) Cr.P.C. is concerned, we are of the clear opinion that some evidence would have to be there for framing the charge.

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There is only one judgment of the Andhra Pradesh High Court in Verendra Vs. Aashraya Makers reported in 1999 Criminal Law Journal 4206, which has taken the view that the Magistrate can frame the charge even without any evidence having been taken under Section 244 Cr.P.C. We do not think that is a correct expression of law, as the right of the accused to cross-examine the witnesses at the stage of Section 244(1) Cr.P.C. would be completely lost, if the view is taken that even without Ajoy Kumar Ghose vs State of Jharkhand & Anr. on 18 March, 2009 Indian Kanoon - http://indiankanoon.org/doc/1735221/ 11 the evidence, a charge can be framed under Section 246(1) Cr.P.C.

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The right of cross-examination is a very salutary right and the accused would have to be given an opportunity to cross-examine the witnesses, who have been offered at the stage of Section 244(1) Cr.P.C. The accused can show, by way of the cross-examination, that there is no justifiable ground against him for facing the trial and for that purpose, the prosecution would have to offer some evidence. While interpreting this Section, the prejudice likely to be caused to the accused in his losing an opportunity to show to the Court that he is not liable

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to face the trial on account of there being no evidence against him, cannot be ignored.

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Unfortunately, the earlier cases of the same Court, which we have referred to above, were brought to the notice of the Learned Judge. Again, the Learned Judge has not considered the true impact of the clause "at any previous stage of the case", which could only mean that even with a single witness, the Magistrate could proceed to frame the charge.

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18 . The provision is intended only to filter private complaints and protect the accused from harassment. The test then of ‘prima facie’ case has to be applied which means a case established by prima facie evidence which in turn means evidence sufficient in law to raise a presumption of fact in question unless rebutted. The Magistrate is required to consider the evidence with a view to framing prima facie case for conviction.

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Keeping in mind, the allegations arising from out of the contracts entered into between the parties in case of execution of the works, it has to be borne in mind that simply because the Complainant relates to commercial transaction or breach of contract for which the civil remedy is available and being so available has been availed of; that itself is no ground to discharge the accused. The test is whether the evidence recorded at the precharge stage discloses a prima facie case to presume that the accused persons are guilty of commission of the offences and the question of conviction would finally be decided on threadbare

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examination of the evidence as would stand recorded in the fullfledged trial applying the tests of reliability and acceptability. Under section 245(1), the Magistrate has the advantage of the evidence led by the prosecution before him under section 244 of the Code and he has to consider whether if the evidence remains unrebutted the conviction of the accused would be warranted. If there is no incriminating material in evidence, then the Magistrate proceeds to discharge the accused under section 245(1) of the Code.

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19 . In the case of Union of India Vrs. Prafulla Kumar Samal & Another ; (1979) 3 SCC 4 ; the Hon’ble Apex Court has held that the words used in the context ‘not sufficient ground for proceeding against the accused show that the Judge cannot be assumed to be a Post Office to frame the charges at the instruction of the prosecution, and application of judicial mind to the facts of the case is necessary to determine whether a case has been made out by the prosecution for trial. In determining this fact, it is not mandatory to drive into the pros and cons of the matter by the Court.

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There is a major distinction as regards discharge of an accused from a warrant case instituted upon a police report and a warrant case instituted upon a private complaint filed under section 200 of the Code.

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20 . In order to address on the question of the legality and propriety of the impugned order, it is found that in the touchstone of the above settled legal base, the learned S.D.J.M. has refused to discharge the accused persons under section 245(1) of the Code.

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21 . The narration of the facts constituting the commission of offences are the followings:-

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On 29.01.2013 when four numbers of contracts awarded in favour of complainant company were illegally terminated, Three Bank Guarantees worth of Rs.2.72 crores were encashed without notice to the complainant’s company and on 07.02.2013, when the properties of the complainant worth of Rs.9.8 crores were taken away and controlled and there was restraint upon the Company for their entry into the campus and prior to 30^th January, 2013, illegal award of the said two numbers of contracts works out of four numbers of contract works to accused M/s.SMMPL who were allowed their free entry into the JITPL campus as well as complement sites in that campus before officially intimating the termination of contract to the Complainant-Company.

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22 . First of all, it is stated that firstly the offence was committed on 29.01.2013 when the contracts were terminated and the Bank guarantees worth of Rs.2.72 crores were encashed; on 07.02.2013 the accused-Company, M/s.JITPL seized the properties of the Complainant-Company, M/s.QIEL whose entry to the campus was

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restrained and on 30.01.2013 when the accused-Company M/s. JITPL awarded two contract works out of the four to the accusedCompany M/s.SMMPL.

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Further narrations stand that the accused-Company M/s.JITPL being hand in gloves with two of its Liaison Officers and one of whom was an Ex-Director unilaterally terminated the four contracts and suddenly encashed the Bank Guarantees. It is next stated that accused-Company-M/s.JITPL in collusion with those above two accused persons illegally misappropriated the bank guarantees worth Rs.2.72 crores for no justifiable reason breaching the trust of the Complainant-Company, M/s.QIEL which it had reposed on the accused-Company-M/s.JITPl. It is also stated that the dominance of the accused-Company M/s.JITPL was misused by willful coercive action in rejecting the contract encashing and misappropriating the amount covered under the Bank Guarantees and allowing the accused-Company-M/s.SMMPL and its two Directors to do the work at the site where the ComplainantCompany, M/s.QIEL was executing the work without waiting for the resolution of the dispute in terms of the Arbitration clause in place in the contract executed between the Complaint-Company and the accused-Company-M/s.JITPL.

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Facts further narrated are practically the follow up actions to the above that the accused-Company-M/s.JITPL inducted the accused-Company-M/s.SMMPL and its authorized agents, the two

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Directors into the worksite and allowed them to do the jobs remaining incomplete which is stated to be in order to cheat and defraud the Complainant-Company, M/s.QIEL.

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The other allegations remain with regard to illegal utilization of the materials worth of Rs.91.80 lacs belonging to the Complainant-Company, M/s.QIEL.

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But then interestingly it is stated that the ComplainantCompany, M/s.QIEL was forced to agree to sale the materials worth of Rs.91.80 lacs to the accused-Company-M/s.JITPL and thereafter part payment towards the same being made, rest amount of Rs.38.80 lacs was not paid despite several approaches.

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23 . It would be profitable at this stage to indicate that the Arbitral Proceeding stood concluded by passing of the award on 21.02.2017. The learned Arbitral Tribunal awarded a sum of Rs.9,71,06,938/- to be paid by the accused-Company-M/s. JITPL to the Complainant-Company with interest @18% per annum from the date of the award till actual payment. As per the order finally passed on 27.09.2023 by the Hon’ble Apex Court in SLP(C) No.19380 of 2023; the awarded amount has been paid and the full and final satisfaction to that effect has been recorded by the Executing Court on 19.10.2023 in the Execution Proceeding No.158 of 2017. Thus, the accusd-Company, M/s.JITPL has paid all the dues of the Complainant-Company of more than Rs.17.00 crores as

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per the determination in the Arbitration Proceeding and subsequent final order of the Hon’ble Apex Court.

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24 . Admittedly, the Complainant-Company, M/s.QIEL during the recording of the evidence at the pre-charge stage has not tendered any documentary evidence in admitting any of those into evidence. In the Arbitral Proceeding no finding as regards the termination of the contract or encashment of the bank guarantees as tainted with mala fides or for the purpose of misappropriation has been given.

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25 . At paragraph 763 of the award, the learned Tribunal has stated the following:-

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“The meeting dated 06.02.2013 took place after the termination of Contract. It was a Tripartite Agreement. The Respondent at best was working as a facilitator. It has not undertaken any vicarious liability to pay to the contractor any amount in the event the new agency namely M/s. Sinhotia failed and/or neglect to pay any amount towards the price of the Precast Tiles. The Tribunal is unable to agree with the submissions of the Claimant that the Respondent has made itself liable to pay the said amount in terms of the contract as new agency was introduced by the Respondent to the Claimant and the sale of materials took place only to benefit in advance their own works. The Claimant has not brought on record any material to show that the Respondent had undertaken any such responsibility. The rights and liabilities of the parties in the opinion of the Tribunal are contained in the minutes of meeting dated 06.02.2013 only.”

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26 . The learned Tribunal at paragraphs 758 to 764 of its award has expressed its disagreement with the aforementioned contention of the Claimant therein, i.e., M/s.QIEL that by reason thereof accused-Company, M/s. JITPL had undertaken any liability/responsibility to monitor all the payments.

¶154

The contention of the Claimant, i.e., the ComplainantCompany, M/s.QIEL was that the accused-Company-M/s.JITPL had taken the responsibility to monitor all payment transaction and that had undertaken the contractual obligation to see that the new entity (accused-Company-M/s.SMMPL) pay the entire bill amount to it.

¶155

27 . In the minutes of the meeting dated 06.02.2023, it finds mention that the Complainant-Company, M/s.QIEL expressed their unwillingness to complete the work in other area as work in raw water reservoir and Ash Dyke had been uploaded.

¶156

28 . The Managing Director of the Complainant-Company, M/s.QIEL in his evidence at the pre-charge stage has admitted that there was a clause for termination of his contract, i.e., Clause No.12.4 and that as per the said contract, the date of completion of aforesaid contract was scheduled to be on or before 28.02.2012 and that the said contract works were not completed by that date. He has again admitted that on 02.02.2013 he had issued one letter whose contents he admits to one Mr.Ashok Kumar Jain, Vice President (Head Civil), accused-Company-M/s.JITPL and therein

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he has not mentioned the name of any of the Officers of the accused-Company-M/s.JITPL to have restrained him in any manner.

¶161

It has also been admitted by him that on 14.02.2013 he had issued one letter to accused Sunil Kumar Agrawal, the Liaison Officer and Ex-Director of the Accused-Company-M/s.JITPL wherein he had not indicated the role of the accused persons in selling the materials of the Complainant-Company, M/s.QIEL. Rather he admits to have written that he was asked to sale those materials. As per his evidence, he had handed over the Bank Guarantees to the accused-Company-M/s.JITPL for performance of the contract. He also admits to have filed no such document in any way hinting at the conspiracy as alleged to have been hatched by the accused persons.

¶162

29 . It would also be pertinent to state here that the evidence of the said Managing Director of the Complainant-Company, M/s.QIEL is to the effect that when the work was in full swing, the accused-Company-M/s.JITPL in collusion with the accusedCompany-M/s.SMMPL terminated the contract, encashed the bank guarantees and obstructed the Complainant-Company, M/s.QIEL to enter the worksite and by then the accused-Company M/s. JITPL had already inducted the accused-Company-M/s.SMMPL to start construction utilizing the materials of the ComplainantCompany.

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It is, however, next stated that meeting had been convened by the accused-Company, M/s.JITPL inside the premises of JITPL for settlement of the dispute. In the said meeting, accusedCompany, M/s.JITPL along with with other accused persons agreed to pay for entire stock of sand and pre cast tiles as per the rate already mentioned amounting to Rs. 91.80 lacs. However, they have only paid Rs.53,00,000/- and remaining Rs.38.8 lacs was not paid despite several demand and they also denied to pay the said amount. He has accordingly stated that they misappropriated the said amount for their own purpose and illegal gain. His evidence is that the learned Arbitration Tribunal being approached; in its award the claim with respect to sand and pre cast tiles has been declined citing that the contract is a tripartite agreement. So it is said that the complaint petition was filed.

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30 . Having led the evidence as above at the pre-charge stage, the Complainant-Company, M/s.QIEL has expressed not to lead any further evidence at that stage and thus with such evidence has urged before the Court to proceed further by framing charge against the accused persons.

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31 . The learned S.D.J.M. having narrated the allegations and going through the Arbitral Award has expressed its agreement with the view of the learned Tribunal with such termination of contract by the accused-Company-M/s.JITPL at that stage appears

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to be illegal. So, it is not on the basis of any evidence taken on record at the pre-charge stage.

¶173

32 . It is next stated that, therefore, the accused persons need to prove their stand with regard to such termination of the contract and encashment of bank guarantees by adducing evidence which is not the relevant consideration to weigh in mind for the purpose. It has further stated that the amount in full has not been paid to the Complainant-Company. The views taken above are not deriving any support from the evidence recorded at the pre-charge stage. The evidence laid by the Complainant-Company, M/s.QIEL under section 244 of the Code as above even upon their acceptance in entirety do not make out a prima facie case against the accused persons in the direction of commission of offences so as to stand charged. All these do not appear to impute criminality upon the accused persons for their said actions giving rise to a dispute which having been raised in arbitration proceeding has been final followed by award of the amount which has been satisfied in entirety as per the final order of the Hon’ble Apex Court. This Court thus taking the evidence as available which have been referred to and touched upon on their face value and accepting all those as such records that no prima facie case against the accused persons for any of those offences is made out so as to frame charge for the noted offences in placing the accused persons to fullfledged trial.

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33 . In the wake of all the aforesaid, it is held that the order impugned in these Revisions is liable to be set aside. Accordingly, impugned order dated 05.04.2023 passed in 1CC Case No.33 of 2017 by the learned S.D.J.M., Talcher is set aside and the accused persons are discharged under section 245 (1) of the Code.

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34 . Resultantly, both the Revisions stand allowed. No order as to cost.

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S/d-
(D. Dash)
Judge
True Copy
P.A.

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Signature Not Verified

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Digitally Signed Signed by: HIMANSU SEKHAR DASH Reason: Authentication Location: OHC Date: 30-Jan-2024 15:48:35

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M/S.Jindal India Thermal Power Ltd. v. M/S.Quartz Infra and Engineering Pvt. Ltd.

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M/S.Jindal India Thermal Power Ltd. v. M/S.Quartz Infra and Engineering Pvt. Ltd.

Case brief

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What the court decided

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