Kapil Agarwal and others v. Sanjay Sharma and others (2021) - Inherent jurisdiction under Sec. 482 CrPC

Brief: While allowing the appeal, the bench comprising Justices DY Chandrachud and MR Shah observed that the inherent jurisdiction under Section 482 Cr.P.C. and/or under Article 226 of the Constitution is designed to achieve salutary purpose that criminal proceedings ought not to be permitted to degenerate into weapon of harassment.

DATE OF JUDGEMENT: 01st March, 2021

JUDGES: Hon’ble Mr. Justice Dr. Dhananjaya Y. Chandrachud & Hon’ble Mr. Justice M.R. Shah

PARTIES

• Kapil Agarwal and others (Plaintiff)
• Sanjay Sharma and others (Respondent)

SUBJECT: dissatisfied with the impugned judgment and order dated 08.09.2017 passed by the High Court of Judicature at Allahabad in Criminal Miscellaneous Writ Petition No. 18308 of 2017, by which the High Court has dismissed the said writ petition preferred by the appellants herein, filed under Article 226 of the Constitution of India, for quashing the first information report registered as Case Crime No. 790 of 2017, under Sections 420/406 IPC, Police Station Loni Border, District Ghaziabad, the original writ petitioners/accused have preferred the present appeal.

AN OVERVIEW

(i) M/s Varun Beverages Ltd. (for short, ‘VBL’) is a licensed franchisee of PepsiCo India Pvt. Ltd. and engaged in the manufacture and sale of carbonated sweetened water, fruit juice, packaged drinking water under the PepsiCo brand. That in the year 2013, the VBL appointed the firm of the complainant – Sanjay Sharma as a Distributor in the area of Loni, District Ghaziabad to sell and distribute the products manufactured by the company. That in the year 2014, the company terminated the contract of distributorship, which according to the appellants was due to non-payment of dues by respondent no.1 herein – original complainant. According to the appellants, thereafter on reconciliation of accounts and as per the statement of accounts maintained by the company, after adjusting of all claims and security deposit, a sum of Rs.9,46,280/- was found to be outstanding upon the complainant, towards the material supplied to him. The complainant issued a cheque dated 15.09.2014 in favour of the company – VBL. The said cheque was presented for encashment on 22.09.2014. The same was dishonoured and returned unpaid by the banker of the complainant due to “insufficient funds”. That thereafter, due to non-payment after the issuance of the statutory legal notices, appellants herein filed a criminal complaint under Section 138 of the Negotiable Instruments Act on 07.11.2014 against R1 and his company Thakur Trading, in the Court of Chief Judicial Magistrate, Ghaziabad.

(ii) R1 has been summoned to face the trial. The said complaint is presently pending for disposal. R1 filed a complaint against one of the officers of the company-VBL being FIR No. 1565/2014 dated 15.09.2014 alleging misappropriation of Rs.6,00,000/- by one of the officers of the company, namely, Vipul Verma. That after investigation by the police, the investigating officer submitted a negative final report No. 47/2015 dated 20.01.2015.

IMPORTANT PROVISIONS

Indian Penal Code

• Section 420 - Whoever cheats and thereby dishonestly induces the person deceived to deliver any property to any person, or to make, alter or destroy the whole or any part of a valuable security, or anything which is signed or sealed, and which is capable of being converted into a valuable security.
• Section 406- Whoever commits criminal breach of trust shall be punished with imprisonment of either description for a term which may extend to three years, or with fine, or with both.

Constitution of India

• Article 226 - High Court is empowered to issue directions, orders or writs, including writs in nature of habeas corpus, mandamus, prohibition, quo warranto and certiorari, for the enforcement of a Fundamental Right and for any other purpose.

ISSUES

The issues raised by the parties:

• dissatisfied with the impugned judgment and order passed by the High Court refusing to quash the FIR being Case Crime No. 790 of 2017, under Sections 420/406 IPC, Police Station Loni Border, District Ghaziabad, the original accused have preferred the present appeal.

ANALYSIS OF THE JUDGEMENT

1. Shri K.V. Vishwanathan, learned Senior Advocate appearing on behalf of the appellants has vehemently submitted that the impugned FIR is an abuse of process of law to harass the appellants by converting a purely civil dispute into a criminal case.
2. It is submitted that the contents of the FIR show that it has been registered for recovery of commission and discounts on sale which alleged to have taken in the regular business transactions place over a period of 15 months between the parties. Hence, it is a purely contractual dispute on the face of it.
3. It is submitted that no civil proceedings have been filed by the complainant for recovery of the alleged due amount. It is submitted that the impugned FIR has been lodged solely with a view to arm twist and extort money from the appellants.
4. It is further submitted that there is not even a whisper about the pendency of the application under Section 156(3) Cr.P.C. pending before the learned Magisterial Court, in the FIR. Nor is there any mention of the fact that there is an ongoing case under Section 138 of the NI Act.
5. It is submitted that the police report in respect of Section 156(3) application has gone against him, R1 has left the earlier proceedings lying pending for two years without participating in it and has filed a fresh FIR with the same allegations. It is submitted that the fresh FIR on the same allegations has been filed only with a view to get the appellants arrested and extort the money from the appellants
6. In view of the pendency of the complaint under Section 138 of the NI Act and the subsequent FIR is a counter-blast to the same, the present prosecution would be clearly an abuse of process of law and therefore the impugned FIR deserves to be quashed and set aside. It is submitted that as the dispute can be said to be a purely civil dispute, which has been given a criminal colour, the same deserves to be quashed and set aside.
7. In order to make out a case under Section 406 IPC against the appellants, there must be an allegation that R1 entrusted the appellants in their personal capacities, not as VBL officers, with the relevant commissions/benefits.
8. It is submitted that there is no allegation that the appellants either, (a) deceived R1 by making any false or misleading representation; or dishonestly concealed some matter from R1; or by any other act or omission; (b) fraudulently or dishonestly induced R1 to deliver the cheques allegedly handed over as security, or to agree to entrust the claimed commissions/benefits to VBL; or to do or omit to do anything which R1 would not have done or omitted to have done if he were not deceived.
9. It is further submitted that even as per the allegations in the FIR, the amount is due from the company and not from the appellants. There is no entrustment or retention personally by any of the appellants. Even when a case under Section 406 IPC is made out against a company, vicarious liability cannot be extended to the Directors or officers of a company.
10. It is submitted that as the main allegations are against the company and the company had not been made as an accused in the FIR, the same deserves to be quashed and set aside. Making the above submissions and relying upon the aforesaid decisions, it is prayed to allow the present appeal and quash and set aside the criminal proceedings and FIR being Case Crime No. 790 of 2017, under Sections 420/406 IPC, Police Station Loni Border, District Ghaziabad, as the same is nothing but an abuse of process of law.
11. It is submitted that delay is a mixed question of fact and law and a plea of defence. It can be explained at the trial. It is submitted that belated registration of FIR is always not fatal to the prosecution in every case as it is explainable at the trial. It is submitted that it is not a thumb rule to quash FIR for delayed registration, which can be explained at the trial
12. It is submitted that quashing of FIR will lead to demolition of complaint under Section 156(3) Cr.P.C. pending consideration before the learned Magistrate.
13. It is submitted that even otherwise non-mentioning of the pendency of the complaint under Section 156(3) Cr.P.C. does not prejudice the appellants in any manner.
14. It is submitted that the appellants cannot draw any benefit for absence of company as their co-accused. it is submitted that, as such, police ought to have included the company as an accused with the appellants in the FIR. It is submitted that the appellants named in the FIR have not disputed that they are principal functionaries of the company and had been responsible for the operations of complainant’s dealership in all respects. It is submitted that even if by any chance the police omit to do so, the trial Court has powers under Section 319 Cr.P.C. to summon the company to stand trial as co-accused.
15. It is further submitted that the accused did not get immunity for the offence committed by them merely because they have made complaint against the complainant under Section 138 NI Act.
16. It is further submitted that as such the appellants have acknowledged through emails as also through duly signed hard copies that Rs. 34,50,418/- is payable to the respondent by way of commission, incentives and discounts etc. The company and the appellants have not paid the said amount and thereby have cheated the respondent and also committed breach of trust. It is submitted that the appellants are now speciously disputing the said acknowledgement. It is submitted that merely because the acknowledgements through emails and hard copies are now disputed by the appellants, it will not result in quashing the FIR.
17. It also further provides that if the police report does not relate to any accused in the complaint case or if the Magistrate does not take cognizance of any offence on the police report, he shall proceed with the inquiry or trial, which was stayed by him, in accordance with the provisions of Cr.P.C

CONCLUSION

The impugned FIR is nothing but an abuse of process of law and can be said to be filed with a view to harass the appellants. When the impugned FIR is nothing but an abuse of process of law and to harass the appellants-accused, we are of the opinion that the High Court ought to have exercised the powers under Article 226 of the Constitution of India/482 Cr.P.C. and ought to have quashed the impugned FIR to secure the ends of justice. Consequently, due to the above mentioned reasons, the present appeal is allowed. The impugned criminal proceedings/FIR registered as Case Crime No. 790 of 2017, under Sections 420/406 IPC, with the police station Loni Border, District Ghaziabad are hereby quashed and set aside on the aforesaid grounds.

The Supreme Court makes it clear that they have not expressed anything on merits on the allegations made by respondent no.1 against the appellants as the proceedings in the form of 156(3) Cr.P.C application are pending before the learned Magistrate. The learned Magistrate shall now proceed further with the said application, in accordance with law and on its own merits. Respondent No.1 may proceed further with the said proceedings, if he so chooses and is advised.

Consequently, as per the observations mentioned above, the present appeal is allowed by the Supreme Court.

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