APPUKUTTAN v. STATE OF KERALA & AJAY PANICKER

## IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT: THE HONOURABLE MR.JUSTICE N.K.BALAKRISHNAN THURSDAY, THE 20TH DAY OF DECEMBER 2012/29TH AGRAHAYANA 1934 Crl.MC.No. 1502 of 2007 ( ) --------------------------ST.23/2007 of J.M.F.C.-II, HARIPAD PETITIONER(S)/1ST ACCUSED:: -------------------------- APPUKUTTAN, AGED 50 YEARS, S/O.SAHADEVAN, RAMANILAYAM, KARUVATTUMKUZHI PATHIYOOR VILLAGE, ALAPPUZHA DISTRICT. BY ADV. SRI.S.SANAL KUMAR COMPLAINANT(S)/STATE & COMPLAINANT:: ------------------------------------ 1. STATE OF KERALA, REPRESENTED BY THE PUBLIC PROSECUTOR, HIGH COURT OF KERALA ERNAKULAM. 2. AJAY PANICKER, AGED 31 YEARS, - S/O.PHALGUNAN, MEENATHERIL VEEDU, CHINGOLI MURI CHINGOLI, ALAPPUZHA DISTRICT REPRESENTING MECIT INFOTECH PVT.LTD., NEW DELHI. BY ADV. PUBLIC PROSECUTOR SMT. JASMINE V.H. FOR R1 BY ADV. SRI.DEVAN RAMACHANDRAN & BY ADV. SRI.K.M.ANEESH & ADV. SRI. NIKHIL FOR R2 THIS CRIMINAL MISC. CASE HAVING BEEN FINALLY HEARD ON 20-12-2012, THE COURT ON THE SAME DAY PASSED THE FOLLOWING: The lower court case No. "S.T.23/2007 of Judicial First Class Magistrate - II, Haripad", occurring in the cause title of final order dated 20-12-2012 in Crl.M.C. No. 1502/2007 is corrected and substituted as "C.C. No. 23 of 2007 of Judicial Ist Class Magistrate Court - II, Haripad" as per order dated 26-2-2013 in Crl.M.A. No. 1812 of 2013 in Crl.M.C. No. 1502/2007". Sd/- Assistant Registrar. ## N.K. Balakrishnan, J. ................................................. Crl.M.C. No. 1502 of 2007 ..................................................... ## Dated: 20-12-2012 ## ORDER The petitioner is the 1[st] accused in S.T. No:23/2007 of Judicial First Class Magistrate - II, Harippad, which was filed alleging offences under sections 120-B, 406, 420, 379, 465, 467 and 471 r/w 34 of IPC. 2. The petitioner is the Secretary of Harippad Government Servants Co-operative Society Ltd. The 2[nd] accused is the President of that Society. Quotations were invited for computerisation of that Society. The complainant submitted the lowest quotation. That was accepted. The computerisation work was to be done by the complainant at a cost of ` 50,130/-. Accordingly, the petitioner and the other accused submitted request to the Joint Registrar of Co-operative Societies (General) for **Crl.M.C. No. 1502 of 2007** **2** sanction to spend Rs.50,130/- from out of the Society's fund. Accordingly, sanction was accorded by the Joint Registrar. A sum of Rs.15,000/- was paid initially. The computerisation work was done by the complainant. The balance sum of Rs.35,130/- was also paid. Thus, according to the petitioner, the entire amount due to the complainant was paid. 3. This complaint was filed alleging that additional work had to be done by the complainant and so some more amount was due. A lawyer notice, Annexure A6, was sent to the petitioner in which it was stated: _"My client submitted its quotation as market promotion venture with a view to develop its software market in Kerala as the first initiative only on business interest my client quoted a nominal amount in the quotation with a view to attract a good market in Kerala. The amount quoted was very meager and even it was not sufficient to meet the expenses of manpower which is directly involved in it. The actual cost of the software would come in the range of Rs.1,25,000/- to_ **Crl.M.C. No. 1502 of 2007** **3** _Rs.1,80,000/- depending upon the features. Accordingly Mr. Ajay Panicker along with the software team at Kerala continuously worked in your Society till March 2003 to automise accounts of your society starting from next financial year. While accepting the quotation of my client there was a specific understanding with your society that in case of any additional work being carried out in addition to the quotation, the same will be charged separately."_ 4. In the notice it was alleged that the society had requested several changes from the approved quotation, even after completing the installation of the software as per the quotation. The complainant demanded the amount which was due for the alleged excess work. That amount was not paid. The learned counsel for the petitioner would submit that a perusal of Annexure A6 - lawyer notice and the complaint would make it clear that the only claim put forward by the respondent/complainant is that the respondent is entitled to get additional amount for the work stated to have been done in excess of the quotation given to **Crl.M.C. No. 1502 of 2007** **4** them. It is incomprehensible how it would attract any offence made mention of in the complaint, the learned counsel for the petitioner submits. 5. The learned counsel for the petitioner submits that in the course of automation work the Society, mentioned above, could understand that the complainant has no expertise in software development and he was not able to complete the computerization work and automation work. Since the work mentioned in the quotation was not completed, the project completion certificate could not be given. it is further contended. It is also stated that the petitioner has no knowledge about computer application and does not know as to what is a source code and its applicability and therefore the allegation that the accused/petitioner withheld the source code is unacceptable. But the complainant alleges that the development of software was completed. The petitioner contends that the expert opinion obtained by the Society is **Crl.M.C. No. 1502 of 2007** **5** that the software development was not complete and the system was in fact in disuse and disarray. 6. The learned counsel for the petitioner submits that the allegations made in different paragraphs of the complaint, namely paragraphs 8, 9 etc would only show that the amount due to the complainant for the excess work done was not paid, which would only give rise to a cause of action for a suit for realisation of money. In paragraph 13 of the complaint it was stated that the source code belonging to the complainant was installed in the computer of the petitioner's Society. But later the complainant and his staff members were not allowed to enter the office and that the Compact Disc which contained the source code was illegally retained by the accused without the consent of the complainant. 7. But the learned counsel for the petitioner submits that the petitioner does not know anything about the computer or the source code and so simply by alleging that **Crl.M.C. No. 1502 of 2007** **6** source code was retained by the petitioner, the complainant wanted to give a colour of reality to the case of criminal breach of trust or cheating alleged in the complaint. So many other allegations are also seen made in the complaint which on the face of it do not appear to be correct, the learned counsel further submits. Computer source code means the listing of programmes, computer commands, design and layout and programme analysis of computer resource in any form. The learned counsel for the petitioner would also submit that as per section 106 of the Cooperative Societies Act no suit, prosecution or other legal proceedings shall lie against any officer or the Government for anything which is in good faith done or purporting to be done under the provisions of the Co-operative Societies or the Rules or the Bye-laws. The fact that the petitioner, as the Secretary of the Society, is an officer defined under the Act is not disputed. 8. In support of that submission the petitioner has **Crl.M.C. No. 1502 of 2007** **7** also relied upon the decision of this Court in **Rekha and Others v. Vinodan T.S. and Another 2009 (3) KHC 477** where it was held: _“If the alleged action of the petitioners was to realise the amount due to the society and that too in their capacity as officers of the society as pointed out by the learned counsel appearing for petitioners, Section 106 of Co-operative Societies Act will grant immunity to first petitioner from prosecution.”_ 9. It is also contended that the dispute mentioned in this complaint is actually between the Society and a person other than a member of the Society with whom the Society has or had business transactions and as such it would be a dispute within the meaning of section 69(1)(f) of the Cooperative Societies Act. Hence, according to the petitioner, it is only a dispute which has to be adjudicated under section 100 of the Co-operative Societies Act. 10. Sri. Nikhil, the learned counsel appearing for the complainant/respondent, submits that the question whether the source code was installed in the computer system of the Society and whether it was retained or not are matters to be **Crl.M.C. No. 1502 of 2007** **8** gone into at the time of trial. It is further submitted that the conduct of the petitioner in not allowing the complainant or his staff members to have access to the computer would also show dishonest intention on the part of the accused. In this connection, the petitioner also relies upon the decision taken by the Society for computerization and pursuant to that decision the Joint Registrar (General) of the Co-operative Society was requested to allot a total sum of Rs.78,997/- which was inclusive of Rs.63,997/- - the value of the hardware and Rs.15,000/- - the value of the software. It was after obtaining the consent of the Joint Registrar (as evidenced by Annexure A3) the quotation was invited and the work was entrusted to the complainant. Therefore, according to the petitioner, since these actions are done as per the decision of the Directors of the Cooperative Society and after obtaining the requisite sanction from the Joint Registrar, the contention that there was dishonest intention on the part of the petitioner cannot be **Crl.M.C. No. 1502 of 2007** **9** sustained. 11. Mr. Nikhil, the learned counsel appearing for the respondent/complainant relied upon the decisions of the Delhi High Court in **Microsoft Corporation v. Deepak Raval - MIPR 2007 (1) 0072** , **Microsoft Corporation v. Kiran and Anr. - MIPR 2007 (3) 0214** , **Microsoft Corporation v. K. Mayuri and Ors. -MIPR 2007 (3) 0027** . The aforesaid decisions of the Delhi High Court are all relating to violation of copyright where damages were awarded to the party who complained of violation of copyright. Here, it is not a suit for damages on the ground of violation of copyright and as such those decisions can have no application to the facts of this case. 12. The decisions of the Supreme Court in **State of Kerala v. Pareed Pillai and Another - (1972) 3 SCC** **661** has been referred to here. That was a case where it was found that there was no cogent evidence to show that the accused did not have the intention to fulfill their **Crl.M.C. No. 1502 of 2007** **10** promise to supply coconut oil tins at the time of making the representation and as such the offence of cheating against the accused was held, not proved. In **Anil Kumar Bose v. State of Bihar - (1974) 4 SCC 616** , it was held that failure on the part of the concerned employee perform their duties to observe the rules of procedure laid down in the duty Chart in a proper manner may be an administrative lapse on their part and may be, at the highest, a case of an error of judgment or breach of performance of duty which per se, cannot be equated with dishonest intention. It was held that Mens rea is one of the essential ingredients of the offence of cheating under Sec. 420 I.P.C. 13. The learned counsel Sri. Nikhil would submit that this is only a petition filed under Sec. 482 of Cr.P.C. to quash the proceedings and so if the allegations set out in the complaint constitute the offence of which cognizance was taken by the Magistrate, it is not open to this Court to quash the same in exercise of the inherent powers under **Crl.M.C. No. 1502 of 2007** **11** Sec. 482. It is also argued that it is not for this Court to make a meticulous analysis of the case to find whether the case would end in conviction or not . If it appears on a consideration of the allegations that the ingredients of the offence are disclosed and that there is no material to show that the complaint is malafide, frivolous or vexatious, this court would not be justified in ordering quashment of the charge or the cognizance taken. The learned counsel has also relied upon the decision of the Supreme Court in **Hamida v. Rasheed – 2008 1 SCC 472,** Following the decision of the Supreme Court in **Madhu Limaye v. State of Maharashtra – AIR 1978 SC 47 and State v. Navjot Sandhu – (2003) 6 SCC 641** . Ratio decided in these decisions is to the effect that the power under Sec. 482 is not to be resorted to if there is a specific provision in the Code to redress the grievance of the aggrieved party; that it should be exercised very sparingly, to prevent abuse of process of any court or otherwise to secure the ends of **Crl.M.C. No. 1502 of 2007** **12** justice and it should not be exercised as against the express bar of the law engrafted in any other provision of the Code. 14. Relying on the decision of the Supreme Court in **Monica Kumar and Another v. State of Uttar Pradesh and Others (2008) 8 SCC 781,** it is argued by Sri. Nikhil, the learned counsel for the respondent/complainant that if the ingredients which establish the commission of the offence of misconduct exists, then the prosecution cannot fail merely because there was an animus of the complainant or the prosecution against the accused. Allegations of mala fides may be relevant while judging the correctness of the allegations or while examining the evidence. In the aforesaid decision it was held that the mere fact that the complainant was guilty of malafides would be no ground for quashing the proceedings. It was held in that decision : _“If the complaint which is made is correct and offence has been committed which will have to be established in a court of law, it_ **Crl.M.C. No. 1502 of 2007** **13** _is of no significance that the complainant is a person who0 is inimical or that he is guilty of malafides. If the ingredients which establish the commission of the offence or misconduct exist, then the prosecution cannot fail merely because there was an animus of the complainant or the prosecution against the accused. Allegations of mala fides may be relevant while judging the correctness of the allegations or while examining the evidence. But the mere fact that the complainant is guilty of mala fides. If the ingredients which establish the commission of the offence or misconduct exist, then the prosecution cannot fail merely because there was an animus of the complainant or the prosecution against the accused. Allegations of mala fides may be relevant while judging the correctness of the allegations or while examining the evidence. But the mere fact that the complainant is guilty of mala fides, would be no ground for quashing the proceedings._ _**(See State of Maharashtra v. Ishwar Piraji Kalpatri, Zandu Pharmaceutical Works Ltd. v. Mohd., Sharaful Haque, State of Bihar v. J.A.C. Saldanha and State of Orissa v. Saroj Kumar Sahoo)** . There may be some exceptions to the said rule but we are not concerned with such a case._ The learned counsel for the petitioners would submit that as observed by the Supreme Court in the decisions cited supra there may be some exceptions to the said Rule which are relevant to the facts of this case. It is true that this Court need not embark upon a roving enquiry as to the reliability or acceptability of the allegations made in the complaint. But the learned counsel for the petitioner would submit that the allegations in the complaint itself **Crl.M.C. No. 1502 of 2007** **14** would unfold the unacceptability of the case of the complainant since on going through the complaint it can be seen that the grievance of the complainant is that the amount due as per the contract or agreement entered into between the parties was not paid. Much stress was made by Mr. Nikhil, the learned counsel for the respondent/complainant that the main grievance of the complainant is regarding the non-returning of the Source Code which was installed in the Computer System of the petitioner herein. But the learned counsel for the petitioner submits that every effort was made by the petitioner to find whether there was any such Source Code. It is contended by the accused that the computer was not properly installed and so it could not be put into operation and the hardware is practically in disuse. There was no case for the complainant that any 'intellectual property' of the complainant was committed theft of or was illegally retained by the accused. As of now it is stated that the **Crl.M.C. No. 1502 of 2007** **15** hardware is practically in disuse and that it is not being used at all by the Co-operative Bank of which the petitioner was/is the Secretary. The contention that it was dishonestly retained or that any 'wrongful loss' was caused to the complainant cannot be accepted. It may be true that the complainant must have suffered loss but it cannot be said that it was a 'wrongful loss' as is defined in Sec. 23 of the Indian Penal Code so as to contend that there was wrongful gain to the accused or wrongful loss to the complainant and as such it cannot be said that there was a dishonest intention and if so it cannot be said that the accused has committed cheating. Though it may appear that these are matters to be considered at the time of trial, on a proper understanding of the allegations made by the parties, it could be discerned that there are no sufficient materials to put the accused to trial . The accused was only the Secretary of the Co-operative Bank. It cannot be said that the accused had any dishonest intention to cause **Crl.M.C. No. 1502 of 2007** **16** wrongful loss to the complainant or wrongful gain to himself. If any amount was due from the Bank, that was a matter for which the complainant could have resorted to the remedy available through civil court or such other forum. ## 15. It was held by the Hon'ble Supreme Court in **G. Sagar Suri and another v. State of U.P. and Others – (2000) 2 SCC 636;** _“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 this Section has to be exercised to prevent abuse of the process of any court or otherwise to secure the ends of justice”._ 16. It was held by a three Judge Bench of the Supreme Court in **State of Karnataka v. M. Devendrappa and Another – (2002) 3 SCC 89** that it is neither possible nor desirable to lay down any inflexible **Crl.M.C. No. 1502 of 2007** **17** rule which would govern the exercise of inherent jurisdiction. It was held that inherent jurisdiction may be exercised to give effect to an order under the Code, to prevent abuse of process of Court and otherwise to secure the ends of justice. It was held that the court has inherent power as are necessary to do the right and to undo a wrong in course of administration of justice. It was held in **Central Bureau of Investigation v. A. Ravishankar Prasad and Others (JT 2009 (6) SC 589)** . In **Devendra and Others v. State of Uttar Pradesh (JT 2009 (8) SC 120)** while dealing with the question whether a pure civil dispute can be subject matter of a criminal proceeding under Sections 420, 467, 468 and 469 I.P.C., a two-Judge Bench of the Apex Court observed that the High Court ordinarily would exercise its jurisdiction under Section 482 of the Code if the allegations made in the First Information Report, even if given face value and taken to be correct in their entirety, do not make out any offence. In **Sushil** **Crl.M.C. No. 1502 of 2007** **18** ## **Suri v. Central Bureau of Investigation and another -** **(JT 2011 (5) SC 480** ; the Apex Court considered the scope and ambit of the inherent jurisdiction of the High Court and made the following observations in para 16 (pg. 715 of the Report: _“16. Section 482 Cr.P.C. itself envisages three circusmtances under which the inherent jurisdiction may be exercised by the High Court namely (i) to give effect to an order under Cr.P.C. (ii) to prevent an abuse of the process of court; and (iii) to otherwise secure the ends of justice. It is trite that although the power possessed by the High Court under the said provision is very wide but it is not unbridled. It has to be exercised sparingly, carefully and cautiously, ex debito justititiae to do real and substantial justice for which alone the Court exists. Nevertheless, it is neither feasible nor desirable to lay down any inflexible rule which would govern the exercise of inherent jurisdiction of the Court. Yet, in numerous cases, this Court has laid down certain broad principles which may be borne in mind while exercising jurisdiction under Section 482 Cr.P.C. Though it is emphasised that exercise of inherent powers would depend on the facts and circumstances of each case, but the common thread which runs through all the decisions on the subject is that the Court would be justified in invoking its inherent jurisdiction where the allegations made in the complaint or charge-sheet, as the case may be taken at their face value and accepted in their entirety do not constitute the offence alleged”._ As has been held in **Sagar Suri's case** cited Supra - the dispute is essentially of a civil nature which has been given **Crl.M.C. No. 1502 of 2007** **19** a clock of criminal offence by introducing certain words so as to attract the offence of cheating . But that by itself is no reason to hold that the dispute involved in this case would become a criminal offence of cheating. 17. In the light of what has been stated above, I find that the dispute is of civil nature and as such the prosecution against the petitioner, who is only a Secretary of the Co-operative Bank, would be an abuse of process and as such further proceedings in S.T. 23 /2007 of J.F.C.M. II, Harippad has to be quashed,. In the result, this petition is allowed. Further proceedings in S.T. 23/2007 on the file of the J.F.C.M.II Harippad shall stand quashed. _Dated this the 20th day of December, 2012._ Sd/-N.K. Balakrishnan, Judge ## **ani.** ## **/true copy/** ## **P.S. to Judge** **Crl.M.C. No. 1502 of 2007** **20** "S.T. No. 23/2007" occurring in line 1 of first paragraph, lie 5 of 17th paragraph and line 2 of last paragraph of the final order dated 20-12-2012 in Crl. M.C. No. 1502/2007 is corrected and substituted as "C.C. No. 23/2007" vide order dated 26-02-2013 in Crl.M.A. 1812/2013 in Crl. M.C. 1502 of 2007. **Sd/- Assistant Registrar.**