Allowed

Ashwani Kumar and Ors. v. State of Punjab and Anr.

Punjab & Haryana HC16 Jul 2012CRM-M/17873/2008

Case brief

AI extract

What is this about?

The High Court allowed a petition under Section 482 Cr.P.C. and quashed criminal proceedings for cheating and breach of contract, holding that the dispute was civil in nature and mere failure to repay does not constitute criminal offences.

What did the court decide?

Complaint No. 23 dated 18.9.2006 under Sections 406, 420, 506, 34 IPC and summoning order dated 14.8.2007 along with consequential proceedings stand quashed.

Ashwani Kumar and Ors. Vs State of… — Contract and Commercial Disputes | Punjab & Haryana HC (2012)

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Crl.Misc. No.17873 of 2008(O&M)

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IN THE HIGH COURT OF PUNJAB & HARYANA, CHANDIGARH

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Criminal Misc. M No. 17873 of 2008 (O&M) Date of Decision: July 16, 2012

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Ashwani Kumar etc.

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...........Petitioners

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Versus

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State of Punjab and another

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..........Respondents

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Coram: Hon'ble Mrs. Justice Sabina

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Present: Mr.Veneet Sharma,Advocate for the petitioners. Mr. D.S.Paul, Deputy Advocate General, Punjab Mr.Pardeep Rajput, Advocate for respondent No.2.

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Sabina, J.

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Petitioner has preferred this petition under Section 482 of the Code of Criminal Procedure,1973 (Cr.P.C.' in short) seeking quashing of the complaint No.23 dated 18.9.2006 titled as Sublime Chit Fund vs. Ashwani Kumar and others' (Annexure P1) under Sections 406, 420,506,34 of the Indian Penal Code (`IPC' for short) and summoning order dated 14.8.2007 (Annecxure P10) passed by the Judicial Magistrate Ist Class alongwith all consequential proceedings arising therefrom.

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Contends of the complaint (Annexure P1) read as

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under:-

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“ The complainant submits as under:-

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Crl.Misc. No.17873 of 2008(O&M)

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1.That the complainant is a company limited corporated under Indian Companies Act and Sh. Kulwant Singh Nagi is its managing director. The complainant is carrying out a business of finance and having its registered office at hall bazar, Amritsar. The complainant company in the meeting of board of directors held on 20.5.1994, they have authorized to Sh.Kulwant Singh Nagi, Managing Director of company to sign institute and prosecute the present complaint hence is being filed through a legally competent and authorized person.

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That the accused approached the complainant company for availing the financial assistance for promoting his business and after considering the said request of the accused Ashwani Kumar the complainant company by getting the surety of Kewal Kishan who is father of the accused No.1 and Devinder Kumar who is the brother accused No.1, and Devinder Kumar who is the brother accused No.1, the company advanced the loan of Rs.8,40,000/- to Ashwani Kumar accused No.1 on 10.6.2003 the accused persons assured to repay the said amount to the complainant within a short span of time alongwith interest at simple rate of 18% per annum. For having the said financial assistance availed by the accused he executed a voucher dated 10.6.2003, demand promissory note and receipt dated 10.6.2003 letter of acceptance and verification of his signature on demand promissory note being undertaking

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Crl.Misc. No.17873 of 2008(O&M)

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along with one declaration by putting his signatures and thumb impression on the same for the due payment of the said advanced amount along with interest.

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3.That the accused No. 2 and 3 Devinder Kumar and Kewal Kishan gave the surety of Ashwani Kumar and take liability of the repayment of the loan amount received by Ashwani Kumar and also fill the personal statement of surety bond and also signed the declaration and also make thumb mark by Devinder Kumar and Kewal Kishan and on the surety of accused No. 2 and 3 the complainant company advance the amount to accused No.1 and the accused persons received the amount with the connivance of each other.

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That it is pertinent to mention that in the office of the complainant and also in the presence of the complainant the accused persons received the amount the 6 packets of Rs.1000 and 100 currency notes in each packet and four packets of Rs.500 and 100 currency in each packet and 4 packets of Rs. 10,000/- each and the accused No. 1 put Rs. 5 lakh currency in his black bag and the accused No.2 put the Rs.3,00,000/- in a brown coloured polythene bag and accused No.3 put the remaining amount wrapped in a news paper and at that time the complainant deducted Rs.15,120/the first month interest of money and after that the accused persons take away the money to their homes. Total amount Rs. 840000/-.

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That when after a long span of time complainant

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Crl.Misc. No.17873 of 2008(O&M)

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demanded his money back on dated 28.9.2006 that the accused the dilly dallying the matter with false excuses and now on 29.8.2006. They have flatly refused to repay any amount to the complainant. This regard the complainant approached the surety for making the payment both the accused gave the filthy language and abuses to the complainant and also gave the threat to kill the complainant if he demanded his money. And thus violated the terms and conditions of the security documents executed by the accused persons as well as financial discipline of the complainant.

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That the accused persons by false persuasions assurance and promises under inducement received the said amount from the complainant that they will repay the same in a short of time in instalments, but they have failed to repay the said amount and have thus breached the trust of complainant and have committed criminal breach of contract. They have thus misappropriated the amount of the complainant company and had caused a wrongful loss to the complainant and cheated and defrauded the complainant company with malafide and ulterior motives and intentions knowing full well that they are committing a crime to cause loss to complainant and is not going to repay the said amount to complainant. Thus, the accused persons committed offences coverable u/s 406/420/506/34 IPC etc. for which he is liable to be punished and fined according to law.

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Crl.Misc. No.17873 of 2008(O&M)

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That the complainant company is carrying on its business at Amritsar from where that accused borrowed the amount and executed the security documents and offence is also committed by accused at Amritsar within the area of police station kotwali Amritsar hence this Hon'ble Court has got jurisdiction to entertain and try this complaint.”

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Learned counsel for the petitioners has submitted that a perusal of the complaint reveals that no criminal offence was made out in this case. The dispute between the parties was of a civil nature. Learned counsel has further submitted that another complaint filed by the respondent with similar allegations was quashed by this Court vide Criminal Misc. No.13732-M of 2008 decided on 10.12.2008.

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Learned counsel for the respondents has submitted that the criminal proceedings could not be quashed merely on the ground that the dispute was of a civil nature. Learned counsel has placed reliance on Ravindra Kumar Madhanlal Goenka and another vs. M/s Rugmini Ram Raghav Spinners P. Ltd. 2009(3)

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RCR (Criminal) 338 wherein it was held that the criminal proceedings are liable to be quashed under Section 482 Cr.P.C. only when the complaint does not disclose any criminal offence.

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After hearing the learned counsel for the parties, I am of the opinion that the instant petition deserves to be allowed.

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It has been held in State of Haryana vs. Bhajan Lal,

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1992 Supp(1) Supreme Court Cases 335, the Apex Court has held

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Crl.Misc. No.17873 of 2008(O&M)

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as under:-

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“The following categories of cases can be stated by way of illustration wherein the extraordinary power under Article 226 or the inherent powers under Section 482,Cr.P.C. Can be exercised by the High Court 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 chennelised and inflexible guidpelines 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 complainant, 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 no disclose the commission of any offence and make out a case against the accused.

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Crl.Misc. No.17873 of 2008(O&M)

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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 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 specific provision in the Code or the concerned Act, providing efficacious redress for the grievance of aggrieved party.

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(7)Where a criminal proceeding is manifestly attended with mala fide and/or where the proceedings 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. 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

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Crl.Misc. No.17873 of 2008(O&M)

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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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In the present case, a perusal of the complaint reveals that the dispute between the parties is purely civil in nature. The petitioners are alleged to have borrowed money from the complainant and had executed a promissory note and receipt on 10.6.2003. in this regard, Complainant, if aggrieved, could have file a suit for recovery on the basis of promissory note and receipt. However, no criminal offence could be said to have been committed by the petitioners.

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Hon'ble the Apex Court in the case of Anil Mahajan vs. Bhor Industries Ltd. And another (2006) 1 Supreme Court Cases (Cri) 746, it has been held as under:-

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“Reliance has been placed, in that order, on various decisions of this Court holding that from mere failure of a person to keep up promise subsequently, a culpable intention right at the beginning, that is, when he made the promises cannot be presumed. A distinction has to be kept in mind between mere breach of contract and the offence of cheating. It depends upon the intention of the accused at the time of inducement. The subsequent conduct is not the sole test. Mere breach of contract cannot give rise to criminal prosecution for cheating unless fraudulent, dishonest intention is shown at the beginning of the transaction.”

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Crl.Misc. No.17873 of 2008(O&M)

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Thus, as per the above decision, the distinction between the offence of cheating and mere breach of contract has to be kept in mind. Mere use of words that the accused by false pursuasion, assurance and promise had induced the complainant to pay the amount in instalments is not sufficient to constitute the offence of cheating. A perusal of the complaint rather shows that the present case pertains to breach of contract and not a criminal case of offence of cheating. A similar complaint moved by the complainant against Shashi Chhabra and others was quashed by this Court vide order dated 10.12.2008 in Criminal Misc. No. 13732-M of 2008. In the facts and circumstances of the present case, continuation of criminal proceedings against the petitioners would be nothing but an abuse of process of law. The judgment relied upon by the learned counsel for the respondents fails to advance the case of the respondent as it is based on different facts.

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Accordingly this petition is allowed. Complaint No. 23 dated 18.9.2006 titled as `Sublime Chit Fund vs. Ashwani Kumar and others' under Sections 406, 420,506,34 IPC (Annexure P1) and summoning order dated 14.8.2007 alongwith consequential proceedings arising therefrom stand quashed.

( Sabina ) Judge

July 16, 2012

arya

Crl.Misc. No.17873 of 2008(O&M) 10

Ashwani Kumar and Ors. v. State of Punjab and Anr.

Case brief

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Ashwani Kumar and Ors. v. State of Punjab and Anr.

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