PUNJAB AND HARYANA HIGH COURT
Before :- Vinod K. Sharma, J.
Crl. Misc. No. 53599-M of 2006. D/d. 6.5.2008.
Syngenta India Limited & others - Petitioners
State of Punjab and another - Respondents
For the Respondent No. 2 :- Mr. Sudeep Mahajan, Mr. Anish Batish, Advocates.
Vinod K. Sharma, J. - The petitioners seek the quashing of the complaint Annexure P-10 and order Annexure P-14 passed by the Sessions Judge, Patiala as well as the subsequent proceedings arising therefrom on the ground that no offence, as alleged, is made out and the continuation of proceedings would be nothing but an abuse of the process of the Court.
Petitioner No. 1 is a Company registered under the Companies Act, whereas petitioner No. 2 is its Managing Director while petitioner Nos. 3 and 4 were connected with the affairs of the Company.
2. Complainant-respondent No. 2 alleged that the said Company had floated a scheme under the name and style of 'Super Nova Club' and invited its dealers to become the Members. The Membership offered was in three levels and was to be determined by the sale turn-over of the Company's products. The levels were 'Nova Gold','Nova Silver', and 'Nova Blue'. The Members were to earn Nova points which were encashable by way of gifts and privileges. The Members were given an option to get Novartis Products, Holiday trips, consumer goods to earn/redeem the points. It was also provided in the scheme itself that the Company held no warranty and made no representation about the goods and/or services manufactured/provided by third parties, which were offered as regards to the Members of the Super Nova Club and the company shall not be liable if the goods and/or services are defective/deficient in any manner. In short, Super Nova Scheme was governed by the terms and conditions of the said scheme.
3. Complainant-respondent No. 2 served a legal notice claiming therein that he was entitled to earn/redeem 6500 Super Nova points and it was sought that the same be redeemed within 15 days of the receipt of the notice. It was also mentioned that in case amount of Rs. 16,25,000/- was not paid within a period of 15 days, legal action would be taken in the criminal Court.
4. Notice was replied by petitioner No. 1, wherein the liability to redeem any point was denied.
5. It seems that the report was also made by the respondent to the Senior Police Inspector, Economic Offences Wing, Unit-III, Commissioner of Police Office Compound, Annex. 1 Building, 2nd Floor, Opposite Crawford Market, Mumbai, on which inquiry is said to have been held by the police. It seems that the complainant failed to get any relief from the Police at Bombay and thereafter an FIR was lodged with Police Station, Samana, District Patiala under Sections 406 and 420, IPC.
6. The complainant appeared before the Court of Sub Divisional Judicial Magistrate, Samana, and made a statement that he did not agree with the untraced report of the Police and wanted to proceed with the case. The learned Sub Divisional Judicial Magistrate without recording any other reason returned the file with a direction to investigate the case and further submit the report on or before 26th November, 2005.
On 21st January, 2006 the police again submitted a cancellation report. The complainant again showed his unwillingness to accept the said cancellation report.
7. Vide order dated 23rd February, 2006, learned Sub Divisional Judicial Magistrate came to the conclusion that there was no occasion to send the file again to the Police for further investigation and the FIR was treated as a complaint and notice was sent to the complaint for recording his statement and he was also directed to furnish list of witnesses on 31.5.2006.
8. The complainant thereafter filed a complaint under Sections 406, 420 and 120-B of the Indian Penal code in the Court of Sub Divisional Judicial Magistrate, Samana, which reads as under :-
- "1. That the complainant Bhushan Kumar is sole Prop. of M/s Bharat Pesticides, Near Band Gali, Samana, Tehsil Samana, district Patiala, which is a sub dealer M/s SYNGENTA INDIA Ltd. through main consignment distributor for Punjab accused No. 4.
- 2. That accused No. 1 is manufacturer of pesticides like TOPICK, RIFIT, NUVAN, CURACRON & others and accused No. 2 P.K. Apte and accused No. 3 S.C. Bhardwaj are its Vice President & General Manager (Sales and Marketing) resp. and are responsible for the conduct and dealings of the above company, accused No. 4 Ashwanjeet Singh Joshan is a partner/director of Modern Pesticides Supply Pvt. Ltd. 73-74, New Grain Market, Near Jalandhar Byepass, Ludhiana (Punjab) to which the complainant is Sub dealer and the member of Super Nova Club.
- 3. That complainant in 1998 became the stockist/dealer at Samana, District Patiala for selling the products of the SYNGENTA INDIA Ltd., company on the request of the company.
- 4. That the company launched a Super Nova Scheme for the dealers of the company to boost/promote the sale of the products as per the said scheme a SYNGENTA SUPER NOVA CLUB was formed and complainant became the member of this club by the company and the name of the complainant was also included in the membership of this club by the company. As per the said scheme dealers are not awarded immediate benefit for the sale in terms of cash, but they are awarded Super Nova Points, which is to be redeemed/encashed after two years. The dealers were awarded with Super Nova Points. The complainant was awarded a membership of super club as a Silver Member of the Club as the sales made by the complainant in the year 1999.
- 5. That as per the Super Nova scheme the company vide letter dated 27.3.2001 awarded 2583 Super Nova Points to the complainant, which are approximately Rs. 6,00,000/- and vide letter dated 30.4.2001, the company have informed the complainant that the dealers can redeem the Super Nova points for the year 1999 in the Ist Quarter of the year 2002 as the scheme 'Super Nova' is to be redeemed after two years. The Super Nova Points of the complainant upto 3.03.2003 are 6500 amounting to Rs. 6,25,000/-. This amount is actually profit earned by the dealer for the sale of the products of the company and further there is commission @ Rs. 30/- per packet, which is Rs. 6,00,000/- for Twenty thousand Packets of pesticides (TOPICK) sold by the complainant, the amount due from the company is Rs. 22,25,000/-. This amount is kept by the company with the dishonest intention and fraudulently.
- 6. That the intention to redeem the Super Nova points after two years is totally mala fide and dishonest to cheat the dealers otherwise there is no reason not to redeem the points in the same year in which these points are earned by the dealer. The company vide letter dated 30.4.2001 informed the complainant that these Super Nova Points are not a simple product scheme, but it is a saving of the dealer. The complainant under a bonafide impression that Rs. 22,25,000/- is in the safe custody of the company, but the intention of the company is dishonest to not to redeem the points/amounts.
- 7. That the above said Super Nova Points were launched by the company with a mala fide and dishonest intention to deceit the dealers with the above said scheme and induces to promote the sale of the company product. The mala fide and dishonest intention of the company to defer the payment/redemption of Super Nova Points is to dishonestly and fraudulently induce the dealer to promote the sale for the company and when the time comes for redemption, the company with mala fide and dishonest intention breaks the relationship with the complainant with the intention not to redeem the Super Nova Points earned by the complainant.
- 8. That when the complainant requested the company to redeem his 6500 Super Nova Points earned by him the complainant upto 31.3.2003 and a commission of Rs. 30/- per bag totalling Rs. 22,25,000/- the company with mala fide and dishonest intention not to make payment to the complainant breaks the relationship with the complainant and the complainant remained under bonafide impression. The company has not made any payment till date.
- 9. That the company launched the above said Super Nova Scheme with a mala fide and dishonest intention to cheat the dealers by assuring that the Super Nova Points will be redeemed after two years, but the company refused to redeem the said point and breaks the relationship thus the company has cheated the complainant.
- 10. That the complainant sent a legal notice on 12.6.2004 through his counsel Mr. Vijay Sharma, Advocate, Chandigarh to the accused Nos. 2 and 3 to which the accused gave reply and seeks some time to sort out some solution of the matter.
- 11. That the complainant has requested so many times to accused persons to redeem the points and for getting his amount (Rs. 22,25,000/-) and also met the accused persons personally on 1.8.2004 for the above said request, to which the accused have refused.
- 12. That the accused Nos. 2 and 3 are the responsible persons/officers of the above said company.
- 13. That the complainant after knowing that he has been cheated by the above said person and company received a big shock and is under mental depression and getting medical treatment from the doctors.
- 14. That all the above said accused in conspiracy with each other have cheated the complainant with preplanned dishonest and mala fide intention.
- It is, therefore, prayed that the above mentioned accused may kindly be summoned and punished according to law."
9. On consideration of the allegations made in the complaint as well as the evidence led by the complainant, the learned Sub Divisional Judicial Magistrate, Samana, came to the conclusion that the basic issue behind the complaint was to recover a sum of Rs. 22,25,000/- from the accused persons which did not constitute any criminal offence and the remedy with the complainant was only to file a suit for recovery, if any, payment has not been made by the accused persons, but no prima facie grounds have been made out to proceed with the complaint. The learned trial Court also came to the conclusion that as it was solely a civil matter the complainant was not maintainable and it was ordered to be dismissed.
10. The complainant-respondent preferred a revision petition against the said order before the learned Sessions Judge, Patiala, who allowed the same. The operative part of the order reads as under :-
- "10. From the perusal of the preliminary evidence on record, I find that in no way it can be held that it is a civil matter simply regarding recovery of amount. Rather preliminary evidence shows that the complainant is making allegations regarding dishonest and mala fide intention of the accused to cheat him. His oral statement is supported by documents. At the time of summoning of the accused the Court is to see whether there are sufficient grounds to summon the accused or not. In the present case, there are sufficient grounds to proceed against the accused. Therefore, I find that the impugned order dated 25.5.2005 passed by the learned trial Court is not as per the law and is set aside. Finding merit in the revision petition, the same is accepted and the case is sent back to the lower Court for making further inquiry into the matter and pass appropriate order. The complainant is directed to appear before the trial Court on 5.9.2006."
12. It may also be noticed that the petitioners besides challenging the order passed by the learned Sessions Judge has sought the quashing of the complaint and subsequent proceedings arising therefrom as in pursuance to the order passed by the learned Sessions Judge, the learned Sub Divisional Judicial Magistrate, Samana, had ordered the summoning of the petitioners to face the trial.
13. Mr. R.S. Ghai, learned senior counsel appearing on behalf of the petitioners, has also challenged the order passed by the learned Sessions Judge on the ground that the same is in violation of Section 401(2) of the Code of Criminal Procedure (hereinafter referred to as the 'Code') as no notice was issued to the petitioners before passing an order which was to the prejudice of the petitioners. Sub-section (2) of Section 401 of the Code reads as under :-
- "No order under this section shall be made to the prejudice of the accused or other person unless he has had an opportunity of being heard either personally or by pleader in his own defence."
14. The contention of the learned counsel for the respondent, therefore, was that the order passed by the learned Sessions Judge is to be treated as one passed under Section 398 of the Code which reads as under :-
- "398. Power to order inquiry - On examining any record under section 397 or otherwise, the High Court or the Sessions Judge may direct the Chief Judicial Magistrate by himself or by any of the Magistrates subordinate to him to make and the Chief Judicial Magistrate may himself make or direct any subordinate Magistrate to make, further inquiry into any complaint which has been dismissed under section 203 or sub-section (4) of Section 204 or into the case of any person accused of an offence who has been discharged :-
- Provided that no Court shall make any direction under this section for inquiry into the case of any person who has been discharged unless such person has had an opportunity of showing cause why such direction should not be made."
16. As already observed above, the revisional order passed by the learned Sessions Judge is not sustainable even on merit being totally a non-speaking order as, the learned revisional Court has given no reason to disagree with the finding recorded by the learned Sub Divisional Judicial Magistrate that the dispute raised in the complaint is purely a civil dispute.
17. Learned senior counsel appearing on behalf of the petitioners seeks quashing of the complaint and subsequent proceedings arising therefrom in the case on the ground that no criminal liability is disclosed even if the allegations made in the complaint are taken on their face value.
18. Learned senior counsel also contended that the summoning of the petitioners by the learned Sub Divisional Judicial Magistrate in pursuance to the order passed by the learned Sessions Judge was in violation of Section 202 of the Code, as no further inquiry, as envisaged under this Section, was in fact conducted and the summoning order was passed in a mechanical manner.
19. Mr. Sudeep Mahajan, learned counsel appearing on behalf of complaintant- respondent No. 2 has supported the order passed by the learned Sessions Judge on the plea that the said order is, in fact, an order passed under Section 398 of the Code and it was within the competence of learned Sessions Judge to order further inquiry.
20. Learned counsel appearing on behalf of the complaintant-respondent No. 2 by making reference to para 7 of the complaint, contended that the allegations made therein constitute an offence as the complainant was induced to subscribe to the scheme and after having acted on the said scheme on the basis of inducement by the petitioners therein, the petitioners could not back out from the same, thus, there was mala fide and dishonest which constitute an offence. The complaint and the subsequent proceedings, therefore, cannot be quashed by this Court at the initial stage.
21. Learned counsel for the complainant-respondent made reference to the judgment of the Hon'ble Supreme Court in the case of Minu Kumari and another v. State of Bihar and others, 2006(3) RCR(Criminal) 271 : 2006(2) Apex Criminal 473 : (2006)4 SCC 359 to contend that though inherent jurisdiction of the High Court is wide but the same has to be exercised sparingly, carefully and with caution and only when such exercise is justified by the tests specifically laid down in Section 482 of the Code. The said power can be exercised to prevent abuse of process of Court, but should not be exercised to stifle a legitimate prosecution.
22. However, it may be noticed that the Hon'ble Supreme Court in the said case has been pleased to hold that no hard and fast rule can be laid down for exercise of this extra ordinary jurisdiction.
23. Learned counsel for the complainant-respondent by placing reliance on the judgement of the Hon'ble Supreme Court in the case of Sunita Jain v. Pawan Kumar Jain and others, 2008(1) RCR(Criminal) 954 : 2008(1) RAJ 563 : (2008)2 SCC 705, contended that inherent power under Section 482 of the Code can be exercised only in rarest of rare cases.
24. However, this contention of the learned counsel for the respondent cannot be accepted. The Hon'ble Supreme Court in the said judgment had approved its earlier judgment in the case of R.P. Kapoor v. State of Punjab, AIR 1960 SC 866, wherein it was laid down as under :-
- "6...... It is well established that the inherent jurisdiction of the High Court can be exercised to quash proceedings in a proper case either to prevent the abuse of the process of any Court or otherwise to secure the ends of justice. Ordinarily criminal proceedings instituted against an accused person must be tried under the provisions of the Code, and the High Court would be reluctant to interfere with the said proceedings at an interlocutory stage. It is not possible, desirable, or expedient to lay down any inflexible rule which would govern the exercise of this inherent jurisdiction. However, we may indicate some categories of cases where the inherent jurisdiction can and should be exercised for quashing the proceedings. There may be cases where it may be possible for the High Court to take the view that the institution or continuance of criminal proceedings against an accused person may amount to the abuse of the process of the court or that the quashing of the impugned proceedings would secure the ends of justice. If the criminal proceeding in question is in respect of an offence alleged to have been committed by an accused person and it manifestly appears that there is a legal bar against the institution or continuance of the said proceeding the High Court would be justified in quashing the proeeding on that ground. Absence of the requisite sanction, may, for instance, furnish cases under this category. Cases may also arise where all allegations in the first information report or the complaint, even if they are taken at their face value and accepted in their entirety, do not constitute the offence alleged; in such cases no question of appreciating evidence arises; it is a matter merely of looking at the complaint or the first information report to decide whether the offence alleged is disclosed or not. In such cases it would be legitimate for the High Court to hold that it would be manifestly unjust to allow the process of the criminal court to be issued against the accused person. A third category of cases in which the inherent jurisdiction of the High Court can be successfully invoked may also arise. In cases falling under this category the allegations made against the accused person do constitute an offence alleged but there is either no legal evidence adduced in support of the case or evidence adduced clearly or manifestly fails to prove the charge. In dealing with this class of cases it is important to bear in mind the distinction between a case it is where there is no legal evidence or where there is evidence which is manifestly and clearly inconsistent with the accusation made and cases where there is legal evidence which on its appreciation may or may not support the accusation in question. In exercising its jurisdiction under Section 561-A the High Court would not embark upon an enquiry as to whether the evidence in question is reliable or not. That is the function of the trial Magistrate and ordinarily it would not be open to any party to invoke the High Court's inherent jurisdiction and contend that on a reasonable appreciation of the evidence the accusation made against the accused would not be sustained."
26. Reference was also made by the learned counsel for the complainant- respondent to the judgment of the Hon'ble Supreme Court in the case of Divine Retreat Centre v. State of Kerala and others, 2008(2) RCR(Criminal) 373 : 2008(2) RAJ 441 : (2008)3 SCC 542. This judgment deals with the power of the High Court with regard to change of investigating agency and thus is not relevant to the present case.
27. Learned counsel appearing on behalf of the complainant-respondent also contended that a criminal complaint cannot be quashed merely because the complaint spells out a civil wrong also. In support of this contention, reliance was placed on the judgment of the Hon'ble Supreme Court in the case of Lal Muni Devi (Smt.) v. State of Bihar and others, 2001(1) RCR(Criminal) 228 : (2001)2 SCC 17, wherein the Hon'ble Supreme Court has been pleased to lay down as under :-
- "It is true that if the complaint does not make out an offence it can be quashed. However, it is also settled law that facts may give rise to a civil claim and also amount to an offence. Merely because a civil claim is maintainable does not mean that the criminal complaint cannot be maintained. In this case, on the facts, it cannot be stated, at this prima facie stage, that this is a frivolous complaint. The High Court does not state that on facts no offence is made out. If that be so, then merely on the ground that it was a civil wrong the criminal prosecution could not have been quashed."
- "The High Court appears to have been impressed by the fact that as the nature of the dispute was primarily of a civil nature, the appellant was not justified in resorting to the criminal proceedings. Accepting such a general proposition would be against the provisions of law inasmuch as in all the cases of cheating and fraud in the whole transaction there is generally some element of civil nature. The proceedings could not be quashed only because the respondents had filed a civil suit. If mere pendency of a suit is made a ground for quashing the criminal proceedings, the unscrupulous litigants apprehending criminal action against them would be encouraged to frustrate the course of justice and law by filing suits with respect to the documents intended to be used against them after the initiation of criminal proceedings or in anticipation of such proceedings. Such a course cannot be the mandate of law.
- In a criminal court the allegations made in the complaint have to be established independently, notwithstanding the adjudication by the civil Court. Had the complainant failed to prove the allegations made by him in the complaint, the respondents were entitled to discharge or acquittal but not otherwise.
- Where factual foundations for the offence have been laid down in the complaint, the High Court should not hasten to quash criminal proceedings merely on the premise that one or two ingredients have not been stated with the details or that the facts narrated reveal the existence of commercial or money transaction between the parties. The revisional or inherent powers for quashing the proceedings at the initial stage can be exercised only where the allegations made in the complaint or the first information report do not prima facie disclose the commission of an offence or the allegations are so absurd and inherently improper that on the basis of which no prudent person could have reached a just conclusion that there were sufficient grounds in proceeding against the accused or where there is an express legal bar engrafted in any provisions of the Code or any other statute to the institution and continuance of the criminal proceedings or where a criminal proceeding is manifestly actuated with mala fide and has been initiated maliciously with the ulterior motive for wrecking vengeance on the accused and with a view to spite him due to private and personal grudge. The impugned judgment being contrary to the settled position of law is thus not sustainable."
30. On a consideration of the matter, I find force in the contentions raised by the learned senior counsel for the petitioners.
31. It cannot be disputed that when breach of trust is committed, it cannot be said to be a civil wrong, but criminal offence. However, when the allegations made in the complaint are one which are predominantly of civil wrong and constitute no criminal offence, the continuation of proceeding in such cases would be nothing, but misuse of the process of the Court. In the present case, the reading of the complaint in its totality shows that it is a civil wrong and the ingredients of criminal offence are totally unwarranted. The Hon'ble Supreme Court in the case of Thelapalli Raghavaiah v. Station House Officer and others, 2007(2) RCR(Criminal) 374 : 2007(2) RAJ 28 (SC) has been pleased to lay down as under :-
- "17. Mr. Singhvi referred to and relied on a decision of this Court in Madhavarao Jiwajirao Scindia & Ors. v. Sambhajirao Angre & Ors., 1988(1) RCR(Crl.) 565 : 1988(1) SCC 692, where this Court had occasion to observe that though a case of breach of trust may be both a civil wrong and a criminal offence but there would be certain situations where it would predominantly be a civil wrong and may or may not amount to a criminal offence. It was also observed that when a prosecution at the initial stage is asked to be quashed, the test to be applied by the Court is to whether the unconverted (uncontroverted ?)allegations as made prima facie established the offence.
- 18. We have carefully gone through the complaint made by the petitioner, and are convinced that the same primarily makes out a civil dispute relating to measurement, though an attempt has been made to give the same a criminal flavour. The High Court rightly held that the entire reading of the complaint does not disclose any offence except a civil dispute between the parties."
- "(i) Where the uncontroverted allegations made in the complaint/FIR, even if taken on face value and accepted in entirety, do not prima facie make out the alleged offence against the accused.
- (ii) Where such allegations are so absurd and inherently improbable so that no prudent person could reach a conclusion that there was any sufficient ground for proceeding against the accused.
- (iii) Where the allegations were so vexatious and frivolous so as to amount to abuse of process of court.
- (iv) Where these were manifestly attended by a mala fide grudge or oblique purpose or personal vendetta prior to lodging of complain/FIR and subsequently also if accompanied by other attendant circumstances.
- (v) Where the allegations disclosed nothing but a transaction of a purely civil nature like breach of contract.
- (vi) An FIR/complaint/criminal proceedings was not able to be quashed merely because of pendency of any civil litigation between the parties on the same subject matter or because the transaction gave rise to both civil and criminal liability provided it disclosed some offence giving rise to criminal liability."
34. It is further to be noticed that a distinction has been drawn between 'breach of contract' and commission of an offence. Breach of contract only gives a civil remedy to the party to enforce the terms of the contract. However, that does not constitute any criminal offence. In order to attract a criminal offence against a person, the ingredients of offence have to be disclosed and merely by mentioning that the breach has been committed with mala fide intention cannot constitute an offence.
35. In the present case, if the allegations made in the complaint are taken into its totality, the claim of the complainant-respondent is that under the scheme floated by the petitioners, he was entitled to certain benefit, which was not released to him. Therefore, the learned Sub Divisional Judicial Magistrate was perfectly justified in dismissing the complaint filed by the complainant-respondent holding that it was purely a civil dispute and no criminal offence is made out.
36. In view of what has been stated above, the complaint and subsequent proceedings arising therefrom are nothing but misuse of the process of the Court.
37. This petition is, accordingly, allowed. The complaint and subsequent proceedings arising therefrom are ordered to be quashed.