Ajith Gopal Nambiar and Sashi Nambiar v. Jacob Raju and State of Kerala

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT:** ## **THE HONOURABLE MR. JUSTICE RAJA VIJAYARAGHAVAN V** **TUESDAY, THE 20TH DAY OF SEPTEMBER 2016/29TH BHADRA, 1938** ## **Crl.MC.No. 1198 of 2016** ## **-----------------------** **CC 1075/2015 OF JUDICIAL FIRST CLASS MAGISTRATEC COURT -I, PALAKKAD** **....** ## **PETITIONER(S)/ACCUSED:** **---------------------** **1. MR. AJITH GOPAL NAMBIAR, NO.10/3, CUNNINGHAM CRESCENT ROAD, CUNNIGHAM ROAD CROSS, BANGALORE, KARNATAKA-560 052. 2. MR.SASHI NAMBIAR, 2993, 12TH A MAIN, HAL II STAGE, BANGALORE, KARNATAKA-560 038.** **BY ADVS.SRI.M.GOPIKRISHNAN NAMBIAR SRI.P.GOPINATH SRI.P.BENNY THOMAS SRI.K.JOHN MATHAI SRI.JOSON MANAVALAN SRI.KURYAN THOMAS** ## **RESPONDENT(S)/COMPLAINANT:** **--------------------------** **1. MR. JACOB RAJU, 61 YEARS, S/O.MR.K.J.JACOB, MANAGING DIRECTOR, TRANS TECHNO POLYMER PRODUCTION PVT. LTD., ANGAMALY SOUTH, ERNAKULAM-683 541. 2. STATE OF KERALA, REPRESENTED BY PUBLIC PROSECUTOR, HIGH COURT OF KERALA, ERNAKULAM.-682 031.** **R1 BY ADV. SRI.GEORGE JOHNSON R2 BY PUBLIC PROSECUTOR SMT.PUSHPALATHA M.K.** **THIS CRIMINAL MISC. CASE HAVING BEEN FINALLY HEARD ON 11-08-2016 THE COURT ON 20-09-2016, PASSED THE FOLLOWING:** **msv/** **Crl.MC.No. 1198 of 2016 ------------------------** ## **APPENDIX** ## **PETITIONER(S)' ANNEXURES: -------------------------** **ANNEXURE A- TRUE COPY OF THE COMPLAINT IN CC NO.1075/2015 ON THE FILES OF THE HON'BLE JUDICIAL FIRST CLASS MAGISTRATE COURT-1, PALAKKAD.** - **ANNEXURE B- A TRUE COPY OF THE REGISTRATION OF THE COMPANY WITH THE REGISTRAR OF COMPANY.** - **ANNEXURE C- A TRUE COPY OF THE KERALA VALUE ADDED TAX REGISTRATION OF THE COMPANY WITH THE DEPARTMENT OF COMMERCIAL TAXES.** - **ANNEXURE D- A TRUE COPY OF THE CENTRAL EXCISE REGISTRATION OF THE COMPANY WITH THE CENTRAL BOARD OF EXCISE AND CUSTOMS.** - **ANNEXURE E- A TRUE COPY OF THE PANCHAYATH LICENSE OF THE COMPANY ISSUED BY THE KODAMBU GRAMA PANCHAYATH.** **RESPONDENT(S)' ANNEXURE** **-----------------------** ## **NIL** ## **//TRUE COPY//** ## **P.S.TO JUDGE** ## **Msv/** **“CR”** **RAJA VIJAYARAGHAVAN, V., J.** ------------------------------------------ **Crl.M.C. No.1198 of 2016** -----------------------------------------Dated this the 20[th] day of September, 2016 ## **O R D E R** **~~~~~~~~** 1.The petitioners herein are the accused in C.C.No.1075 of 2015 on the file of the Judicial Magistrate of the Ist Class Palakkad. The said case has arisen from Annexure-A complaint filed by the 1[st] respondent herein alleging offences punishable 418, 420, 421, 422 and 424 of the IPC. The aforesaid proceeding is sought to be quashed by invoking the powers of this Court under section 482 of the Code of Criminal Procedure. - 2.In order to appreciate the contentions raised, the allegations in Annexure-A complaint will have to be gone into in some detail. Crl.M.C. No. 1198 of 2016 **-2-** (a) The 2[nd] respondent/de facto complainant is the Managing Director of Techno Polymer Products Pvt. Ltd. The accused on the other hand were the partners of NI Micro Technologies, a business establishment based at Palakkad. (b) On the strength of a purchase order, MS plates manufactured by the 2[nd] respondent, having a value of Rs 6,60,086/- was supplied to the accused. By direct payment in cash, cheques and bank transfers, the petitioners paid a total sum of Rs. 4,80,086/-. A sum of Rs. 1,80,086/- remains unpaid. (c) the 2[nd] respondent on numerous occasions demanded the petitioners to repay the balance amount. By stating various excuses, the petitioners protracted the matter. Finally the 2[nd] respondent and two of his associates went to the business establishment of the petitioners. They found to their Crl.M.C. No. 1198 of 2016 **-3-** dismay that the board of NI Micro technologies had been removed and in its place the board of a concern by name BPL Medical Technologies was put up. On further enquiry he came to understand that the petitioners were indebted to various persons and it is in order to avoid the creditors that the board was removed. The 2[nd] respondent issued a legal notice to the petitioners but the same did not evoke any response. According to the 2[nd] respondent, the act committed by the petitioners amount to offences punishable under sections 418, 420, 421, 422 and 424 of the IPC. - 3.I have heard the learned counsel appearing for the petitioners as well as the 2[nd] respondent. - 4.It is submitted by the learned counsel appearing for the petitioners that a purely commercial transaction has been given the cloak of a criminal offence in disguise. According Crl.M.C. No. 1198 of 2016 **-4-** to the learned counsel, it is evident from the complaint that substantial sums were paid and the mere fact that some amount remains outstanding would not attract the offence alleged. It is pointed out that the 1[st] respondent had no case that the petitioners had any fraudulant or dishonest intention at the inception. Referring to Annexure-B Copy of Registration, Annexure-C Copy of Kerala Value Added Tax Registration , Annexure-D Copy of Central Excise Registration and Annexure-E Copy of Panchayath License , it is forcefully contended that M/s NI Micro Technologies is still functioning in the very same premises and by initiating criminal proceedings, the intention is only to harass the petitioners. 5.The learned counsel appearing for the 2[nd] respondent would counter the contentions of the petitioners and would submit that the allegations in the complaint clearly make out an offence under section 420 of the IPC. Crl.M.C. No. 1198 of 2016 **-5-** According the learned counsel, it is obvious from the deliberate act of the petitioners in closing down their earlier business and in putting up the board of BPL Medical Technologies, that their intention was to deceive the creditors which included the 1[st] respondent. Referring to a catena of judgements of this Court as well as the Apex Court, it was forcefully contended that the mere fact that the transaction may also give rise to a civil claim is no reason to prempt initiation of criminal proceeding if the allegations makes out an offence under the Indian Penal Code. It is persuasively urged that the element of deception practised by the petitioners is clearly evident and that this is not a fit case where the extraordinary powers of this Court is to be exercised to quash the proceedings . - 6.I have considered the rival submissions and have perused the materials on record. Crl.M.C. No. 1198 of 2016 **-6-** 7.The legal position is well - settled that when a prosecution at the initial stage is sought to be quashed, the test to be applied by the Court is, as to whether uncontroverted allegations as made in the complaint establish the offence. This Court has to refrain from analysing the materials which are yet to be adduced and seen in their true perspective. The inherent jurisdiction of this Court under S.482 of Cr.P.C. should not be exercised to stifle a legitimate prosecution. In a catena of cases, this Court has reiterated that the powers of quashing criminal proceedings should be exercised very sparingly and quashing a complaint in criminal proceedings would depend upon facts and circumstances of each case. 8. In the light of the well - settled principles, it is to be seen whether the allegations in the complaint filed against the petitioners would disclose the offence under Section 420 of the IPC. Crl.M.C. No. 1198 of 2016 **-7-** 9.The ingredients required to constitute an offence of cheating have been succinctly laid down in **Ram Jas v. State of U.P.** [(1970) 2 SCC 740], wherein it was held as follows: - (i) there should be fraudulent or dishonest inducement of a person by deceiving him; (ii)(a) the person so deceived should be induced to deliver any property to any person, or to consent that any person shall retain any property; or (b) the person so deceived should be intentionally induced to do or omit to do anything which he would not do or omit if he were not so deceived; and (iii) in cases covered by (ii)(b), the act or omission should be one which causes or is likely to cause damage or harm to the person induced in body, mind, reputation or property." ( **Hridaya Ranjan Prasad Verma and Ors. v. State of Bihar and Anr.** [(2000) 4 SCC 168]. Crl.M.C. No. 1198 of 2016 **-8-** 10.Distinction between mere breach of contract and cheating would depend upon the intention of the accused at the time of alleged inducement. If it is established that the intention of the accused was dishonest at the time when he made a promise and entered into a transaction with the complainant to part with his property or money, then the liability is criminal and the accused is guilty of the offence of cheating. On the other hand, if all that is established is that a representation made by the accused was subsequently not been kept, criminal liability cannot be foisted on the accused and the only right which the complainant acquires is the remedy for breach of contract in a Civil Court. Mere breach of contract cannot give rise to criminal prosecution for cheating unless fraudulent or dishonest intention is shown at the beginning of the transaction. (See **International Advanced Research Centre for Powder Metallurgy and New Materials** Crl.M.C. No. 1198 of 2016 **-9-** **( ARCI ) and Others V Nimra Cerglass ( P ) Ltd and Anothe** r [ 2016 (1) SCC 348 ]) 11.In **Alpic Finance Limited v. P. Sadasivan and Another** [2001 (3) SCC 513], criminal prosecution was instituted alleging offences _inter alia_ under Section 420 of the IPC for failure to clear the amount due in pursuance to sale of certain dental chairs which were financed by the appellant. It was held as under in paragraph Nos. 10 and 11 of the judgment. 10. The facts in the present case have to be appreciated in the light of the various decisions of this Court. When somebody suffers injury to his person, property or reputation, he may have remedies both under civil and criminal law. The injury alleged may form basis of civil claim and may also constitute the ingredients of some crime punishable under criminal law. When there is dispute between the parties arising out of a transaction involving passing of valuable properties between them, the Crl.M.C. No. 1198 of 2016 **-10-** aggrieved person may have right to sue for damages or compensation and at the same time, law permits the victim to proceed against the wrongdoer for having committed an offence of criminal breach of trust or cheating. Here the main offence alleged by the appellant is that respondents committed the offence under S.420 IPC and the case of the appellant is that respondents have cheated him and thereby dishonestly induced him to deliver property. To deceive is to induce a man to believe that a thing is true which is false and which the person practicing the deceit knows or believes to be false. It must also be shown that there existed a fraudulent and dishonest intention at the time of commission of the offence. There is no allegation that the respondents made any willful misrepresentation. Even according to the appellant, parties entered into a valid lease agreement and the grievance of the appellant is that the respondents failed to discharge their contractual obligations. In the complaint, there is no allegation that there was fraud or dishonest inducement on the part of the Crl.M.C. No. 1198 of 2016 **-11-** respondents and thereby the respondents parted with the property. It is trite law and common sense that an honest man entering into a contract is deemed to represent that he has the present intention of carrying it out but if, having accepted the pecuniary advantage involved in the transaction, he fails to pay his debt, he does not necessarily evade the debt by deception. 11. Moreover, the appellant has no case that the respondents obtained the article by any fraudulent inducement or by willful misrepresentation. We are told that respondents, though committed default in paying some installments, have paid substantial amount towards the consideration. 12.It is obvious from a reading of Annexure-A complaint that the transaction revolves around the sale of MS plates by the 1[st] respondent to M/s NI Micro technologies of which the petitioners, allegedly are the partners. In the complaint, however, the petitioners are arrayed in their Crl.M.C. No. 1198 of 2016 **-12-** capacity as partners of BPL Medical Technologies Pvt Ltd, Palakkad. Obviously, no transaction has been entered into between the 1[st] repondent and M/s BPL Medical Technologies Pvt. Ltd. All that is borne out from the complaint is that the petitioners after effecting payment of about 4,80,000/- out of the total value of Rs.6,60,086/for the MS plates, shut down their business and placed boards of a concern by name M/s BPL Medical Technologies Pvt. Ltd. for the purpose of evading payment to the petitioners. It is also borne out from the complaint that the 1[st] respondent became aware of the fraudulant intention of the petitioners on 10/03/2014 , on which day, he along with his associates had occassion to visit the business premises of the petitioners and had noticed the erection of boards in the said premises. There is no mention anywhere in the complaint that the petitioners had an intention to deceive the 1[st] respondent at the very Crl.M.C. No. 1198 of 2016 **-13-** inception when the contract was entered into. The subsequent conduct of the petitioners in not effecting the balance amount due towards the consideration of the materials sold, in the absence of other materials, cannot amount to the offence of cheating. I also find it difficult to believe the version of the 1[st] respondent that the business was shut down, particularly in view of Annexures-B to E produced by the petitioners before this Court. Those materials clearly belies the version of the 1[st] respondent that M/s NI Micro Technologies no longer function in the same premises. True, those documents would reveal that no substantial business is being transacted but that would not help the 1[st] respondent to contend that the intention to deceive was entertained by the petitioners at the inception itself. 13.In **G. Sagar Suri and Anr. v. State of U.P. and Ors.** [(2000) 2 SCC 636], the Apex Court had opined as Crl.M.C. No. 1198 of 2016 **-14-** ## follows: Jurisdiction under Section 482 of the Code has to be exercised with great care. In exercise of its jurisdiction the High Court is not to examine the matter superficially. It is to be seen if a matter, which is essentially of a civil nature, has been given a cloak of criminal offence. Criminal proceedings are not a short cut of other remedies available in law. Before issuing process a criminal court has to exercise a great deal of caution. For the accused it is a serious matter. This Court has laid certain principles on the basis of which the High Court is to exercise its jurisdiction under Section 482 of the Code. Jurisdiction under this section has to be exercised to prevent abuse of the process of any court or otherwise to secure the ends of justice. 14.In the facts of the present case, in my view, the allegations in the complaint do not constitute the offence alleged and continuation of the criminal proceeding is not just and proper and in the interest of the justice, the same is liable to be quashed. Crl.M.C. No. 1198 of 2016 **-15-** Accordingly, this petition is allowed. All further proceedings against the petitioners now pending as C.C. No.1075 of 2016 on the file of the Judicial Magistrate of the I[st ] Class , Palakkad are quashed. **Sd/RAJA VIJAYARAGHAVAN, V. JUDGE** Ps/17/9/16