Crl.M.C.4860/2015 (C)

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT** ## **THE HONOURABLE MRS. JUSTICE M.R.ANITHA** **TUESDAY, THE 30TH DAY OF MARCH 2021 / 9TH CHAITHRA, 1943** ## **Crl.MC.No.4860 OF 2015(C)** **CC 1413/2014 OF JUDICIAL MAGISTRATE OF FIRST CLASS -1 ,PERUMBAVOOR** ## **PETITIONERS/ACCUSED 1 TO 5** - **1 ROY A VARICATT, S/O.V.T. AUGUSTINE, VARICATT HOUSE, NEAR P & T QUARTER, THODUPUZHA, IDUKKI** - **2 MR.BASIL CYRIL, S/O.M.A.CYRIL FLAT 2A 1, ABAD, LOTUS LAKE APARTMENT, CHILAVANNOOR, KOCHI** - **3 ROY CYRIL S/O.M.C.CYRIL, RESIDING AT M.A.CYRIL ROAD, MOOTHINGAL HOUSE, KARIPPALAM** - **4 DAI ROY, W/O.ROY, VARICATT HOUSE, NEAR P & T QUARTERS, THODUPUZHA, IDUKKI** - **5 PHILDA CYRIL W/O.BASIL CYRIL, FLAT 2A 1, ABAD, LOTUS LAKE APARTMENT, CHILAVANNOOR, KOCHI** **BY ADVS. SRI.VIPIN NARAYAN SRI.M.REVIKRISHNAN SRI.V.C.SARATH** ## **RESPONDENTS/COMPLAINANT AND STATE** - **1 M.M.VARGHESE S/O.MATHAI, MATTUVANCHERRY HOUSE, THAMARACHAL, KIZHAKKAMBALAM** - **2 STATE OF KERALA REPRESENTED BY PUBLIC PROSECUTOR, HIGH COURT OF KERALA, ERNAKULAM** **BY ADV. SRI.DINESH R.SHENOY BY ADV. SRI.SANIL JOSE** **SR.PP SRI.D.CHANDRASEKHARAN** **THIS CRIMINAL MISC. CASE HAVING BEEN FINALLY HEARD ON 30.03.2021, THE** **COURT ON THE SAME DAY PASSED THE FOLLOWING:** Crl.M.C.4860/2015 2 ## **ORDER** **Dated : 30[th] March, 2021** 1. This petition has been filed under Sec.482 Cr.P.C to quash the entire proceedings in C.C.1413/2014 on the file of Judicial Magistrate of First Class-I, Perumbavoor. 2. C.C.1413/2014 has been taken on file by the learned Magistrate upon a private complaint filed by the 1[st] respondent. After taking sworn statement of the complainant and perusing the complaint and documents, the learned Magistrate taken on file the case under Secs. 403, 420, 409, 418 120B and 34 IPC. Bailable warrant was issued to the 1[st] accused and summons was issued to accused Nos.2 to 5. Against which the petitioners/accused came up before this Court. 3. Heard both sides. Lower Court Records were called for and perused. 4. According to the petitioners the entire allegation in Ext.P1 complaint is based upon the financial transaction in between the petitioners and the 1[st] respondent. The allegation in the complaint is that they have induced the 1[st] respondent to enter into a partnership deed and to part Crl.M.C.4860/2015 3 with huge amount promising to conduct gold business in Madagascar. But did not act in accordance with the agreement, thereby cheated the 1[st] respondent. According to them, even if the entire allegations in the complaint are admitted, it would only disclose some civil dispute and the attempt of the 1[st] respondent is to resort to a short cut method and thereby pressurize the petitioners to settle the civil dispute and claims. It is also their contention that there is specific clause in the partnership agreement to invoke the arbitration clause in case of dispute. The petitioners already started gold business in Madagascar and the whole transactions are properly accounted and the 1[st] respondent is fully aware of all those factors. There is nothing to infer any dishonest intention from the part of the respondent and Sec.420IPC would not be attracted. Civil Suit has already been filed as O.S.67/2014 and O.S.116/2015 for realization of the amount. The property of the 2[nd] petitioner has already been attached. Hence the entire proceedings initiated against the petitioners is an abuse of process of law, the learned counsel contends. 5. The learned counsel for the 1[st] respondent on the other Crl.M.C.4860/2015 4 hand, contended that huge amount has been got invested by the petitioners after entrapping the 1[st] respondent in a transaction of purchasing shares of M/s.Cochin Shell Products India Ltd, and thereby gaining trust and confidence of the first respondent/complainant. 1[St] petitioner subsequently introduced petitioners 2 and 3 as experienced jewellers involved in gold business and he was also taken to their business premises and convinced him that on investing funds abroad, there would be 100% profit. It is also his contention that 1[st] accused who is a lawyer, approached the 1[st] respondent with a draft partnership deed and thereby fraudulently and dishonestly persuaded the complainant to join them in executing the partnership deed on 12.12.2012. The partnership was also registered but apart from the registration, the firm never started functioning and no business was conducted. Thereafter the 1[st] respondent was forced to invest money in gold business in Madagascar on various occasion. It is also his contention that the petitioners colluded and converted the money in violation of their trust reposed upon them. There is also allegation of advancing amount for the daughter's Crl.M.C.4860/2015 5 marriage of the 1[st] petitioner. In total, according to him, an amount of Rs.75,27,263/- has been obtained from him. A promissory note acknowledging the debt is issued on 13.9.2013. It is also his contention that the 1[st] petitioner executed a Power of Attorney with respect to his property and handed over the title deed and that according to him, was also a fraudulent act since the Power of Attorney was not registered. It is further alleged that on subsequent demand by him, cheque for Rs.75,00,000/- dated 12.9.2014 was issued. But on presentation of the same, it was also bounced for reason of 'funds insufficient'. According to the 1[st] respondent, the criminal prosecution initiated against the petitioners is perfectly legal and proper and no interference is called for. 6. Based on the above rival contentions, the following points arise for consideration. - (i) Whether the dispute between the parties is purely civil and whether any criminal offence is prima facie made out. - (ii) Whether the petitioners have any dominion over the money entrusted. - (iii) Whether there was any dishonest intention from the Crl.M.C.4860/2015 6 ## inception from the part of the petitioners. 7. Point Nos.(i to (iii)) – Annexure-A is the complaint filed by the 1[st] respondent against the petitioners. Paragraph NO.1 itself would go to show that on an approach by the 1[st] petitioner, first respondent/complainant purchased shares of M/s.Cochin Sheel Products India Ltd in Kasargode and invested an amount to the tune of Rs.32,33,958/-. 1[st] respondent has no dispute with respect to that transaction. It is after that, according to him, accused Nos.1 to 3 approached him with a proposal for investment of money in a gold business promising that there would be 100% profit. It is further admitted that a partnership agreement was entered into between the petitioners and the 1[st] respondent as the Managing partner, in the name and style “M/s.Mary Math Enterprises” and that partnership was got registered also on 17.1.2013. A copy of the acknowledgment of Registrar of Firms with respect to “M/s.Mary Matha Enterprises” is produced as document No.9 in the Lower Court Records. It would indicate that the 1[st] respondent took an active role for the registration of the partnership and he is also the Managing Partner as per the partnership Crl.M.C.4860/2015 7 deed. Even the complaint filed by him would show that the investment has been made by him after the formation of the partnership and its registration. In this context, petitioner's counsel placed reliance on **Velji Raghavji Patel v. State of Maharashtra (1965 KHC 667)** wherein it has been held that in order to attract breach of trust under Secs 405 and 409 IPC, investment of dominion over the property is essential. In order to establish entrustment of dominion over property to an accused, the mere existence of that person's dominion over the property is not enough and it is also held that dominion of partner over partnership asset is not an entrustment unless there is special agreement. So in order to find that a person has committed criminal breach of trust, it must be established that he was either entrusted with the dominion over the property which is said to have been converted to his own use and every partner has also dominion over property by reason of the fact that he is a partner. It is also necessary that the prosecution must establish that the petitioners have dominion over the assets of the partnership by any special agreement between the parties. In the absence of any such Crl.M.C.4860/2015 8 special agreement, the fact that a partner receives money belonging to the partnership cannot be said to have received it in a fiduciary capacity or he cannot be held to have been entrusted with dominion over the partnership properties. So there is nothing in Annexure-A partnership indicating that the petitioners received the money belonging to the partnership with a dominion over the money entrusted. So the allegations in the complaint only indicate entrustment of the money by the 1[st] respondent in pursuance of the partnership agreement entered into between the parties without any specific clause to give the petitioners any dominion over the property entrusted in the partnership. Hence prima facie the ingredients under Sec.409 will not be attracted. 8. The learned counsel for the petitioners would also vehemently contend that the allegation in the entire complaint would not make out any dishonest intention from the inception from the part of the petitioners and it is very much necessary to attract an offence under Sec.420 IPC. As pointed out earlier, the complaint begins with a transaction of investment of money to the tune of Crl.M.C.4860/2015 9 Rs.32,33,958/- by the first respondent/complainant by the purchase of shares of a Company in the name and style M/s.Cochin Shell Products India Ltd, in Kasargode. It is thereafter that the partnership agreement was executed in between them. The learned counsel placed reliance on **S.W.Palanitkar and Others v. State of Bihar and Another ((2002) 1 SCC 241)** paragraph 23 is relevant in this context to be extracted which reads as follows : “Many a times, complaints are filed under Section 200 Cr.P.C by the parties with an oblique motive or for collateral purposes to harass, to wreck vengeance, to pressurize the accused to bring them to their own terms or to enforce the obligations arising out of breach of contract touching commercial transactions instead of approaching civil courts with a view to realise money at the earliest. It is also to be kept in mind that when parties commit a wrongful act constituting a criminal offence satisfying necessary ingredients of an offence, they cannot be allowed to walk away with an impression that no action could be taken against them on the criminal side. A wrongful or illegal act such as criminal breach of trust, misappropriation, cheating or defamation may give rise to action both on civil as well as on the criminal side when it is clear from the complaint Crl.M.C.4860/2015 10 and sworn statement that necessary ingredients of constituting an offence are made out. Maybe parties are entitled to proceed on civil side only in a given situation in the absence of an act constituting an offence but not to proceed against the accused in a criminal prosecution. Hence before issuing a process, a Magistrate has to essentially keep in mind the scheme contained in the provisions of Sections 200-203 CrPC keeping in mind the position of law stated above and pass an order judiciously and not mechanically or in a routine manner.” 9. In this case case also, on going through the complaint what could be gathered is that the grievance of the complainant is with regard to the deposit of amount in pursuance of the partnership agreement entered into between them and the failure of the petitioners to return the money. **S.W.Palanitkar's** case would further laid down a proposition that the dishonest intention to cheat should exist from the beginning and mere failure to keep a promise subsequently cannot be presumed as an act leading to cheating. 10. The complaint Annexure-A would reveal that the amounts have been deposited by the 1[st] respondent in pursuance of the partnership agreement between the parties. The copy of Crl.M.C.4860/2015 11 the partnership agreement produced as Annexure-B would clearly show that the main object of the firm is to do business in countries outside India along with oversees partners which are permitted by the law of that country and also to carry on such other business or businesses as may be agreed upon by the parties from time to time. So the starting of gold business at Madagascar and investment of money in the said business by the first respondent/complainant _prima facie_ seems to be in pursuance of the terms of the agreement. Though the 1[st] respondent would contend that no business was started at Madagascar, the learned counsel for the petitioners brought my attention to the documents produced before the Civil Court from the side of the petitioners to prove the transaction of the partnership. But at this stage I am not expected to evaluate the documents produced from the side of defence. But it is admitted in the complaint itself that O.S.67/2014 and O.S.116/2015 have been filed by the 1[st] respondent for realisation of the amount from the petitioners. 11. The learned counsel placed reliance on **Anand Kumar Mohatta and Another v. State (NCT of Delhi), Department of** Crl.M.C.4860/2015 12 **Home and Another ((2019) 11 SCC 706).** That was a proceedings under Sec.482 Cr.P.C initiated by the appellant/accused for quashing the proceedings. The facts of the case would go to show that pursuant to an agreement of the accused who is the owner of the property and the developer for construction of flats, developer paid interest fee security money to the owner/accused which was liable to be returned to the developer after handing over of constructed area to the accused/owner. But the agreement was subsequently frustrated but the money was retained by the accused even after the frustration of the agreement. In the said context it was held that money was neither misappropriated nor converted by accused dishonestly for his own use nor disposed of in violation of direction of law or contract and hence it was held that the retention of money by the accused will not constitute an offence under Sec.406 and it had a contours of a civil dispute. In the present case also, the admitted case of the first respondent/ complainant throughout the complaint is the deposit of amount by him in pursuance of the partnership agreement with the petitioners and the partnership Crl.M.C.4860/2015 13 agreement expressly provides for starting business outside India along with oversees partners. After having executed such a partnership agreement with the petitioners and investing money for the business, the 1[st] respondent cannot be heard to contend about any misappropriation of funds or cheating. 12. The learned counsel for the petitioners also placed reliance on **Mohammed Ibrahim and Others v. State of Bihar and Another ((2009) 8 SCC 751)** wherein it has been held that when disputes are essentially of civil nature and has been filed as criminal complaints there is a duty cast upon the criminal Courts to check the abuse of process and the criminal Court should ensure that criminal proceedings are not misused for setting scores or pressurizing parties to settle civil disputes. It has also been found therein that civil disputes in some cases may also contain ingredients of criminal offence and such disputes have to be entertained notwithstanding they are also civil disputes. 13. The learned counsel for the first respondent placed reliance on **Keynote Capitals Ltd. (M/s.), Mumbai and Anr. v. State of Kerala and Anr. [2020 (5) KHC 434]** . The Crl.M.C.4860/2015 14 allegation against the petitioners in that case was that they received deposits with intention to cause unlawful loss to the depositors and in that decision it has been held that when the transaction is not transparent and without any statutory authority intended to cause unlawful loss to various depositors and canvassed deposits under the guise of shares by constituting a Limited Company by accused themselves, it would prima facie reveal the deception played on the de facto complainant and others. It was in that context it was held that mere existence of civil liability will not itself take away the criminal liability arising out of the transaction and hence the court was not inclined to quash the Final Report filed u/s.173(2) Cr.P.C. So the fact situation of that case has no application in the present case since the first respondent has no such case as against the petitioners. 14. On evaluating the averments in the complaint it can very well be concluded that the entire averments in the complaint is with regard to a partnership agreement entered into between the parties and investments of money by the complainant in pursuance of the partnership arrangement and Crl.M.C.4860/2015 15 subsequent dispute between the partners with regard to the financial dealings in between them. There is also averment in the complaint regarding advance of money to the marriage of the daughter of the 1[st] petitioner to the tune of Rs.22,18,500/ and non payment of the same also has been included in the complaint to allege the misappropriation and cheating. Though the complainant alleges that no gold business as alleged in Madgascar has been commenced and money has been syphoned by the petitioners for their own use in view of the partnership agreement which actually has been presented for incorporation by the 1[st] respondent himself would not enable the 1[st] respondent to make such allegation. It is true that there is a contention for the 1[st] respondent that the Power of Attorney was not registered and the purposes for which it has been entrusted with him cannot be fulfilled without registration etc. But the entrustment of the title deed itself would prove _bona fides_ of the petitioners. There is also allegation of execution of promissory note by the petitioners in favour of the 1[st] respondent and also execution of cheque though found to be bounced by reason of 'insufficiency of funds'. Crl.M.C.4860/2015 16 All those transactions between the parties would only prima facie reveal the civil nature of the transaction existing between the parties. 15. The learned counsel for the petitioners also placed reliance on **Prof. R.K.Vijayasarathy and Another v. Sudha Seetharam and Another ((2019) 16 SCC 739)** , wherein it has been held that in cases where there is prima facie absence of ingredients of offence and there is attempt to make a civil dispute with a criminal nature despite absence of ingredients necessary to constitute criminal offence, the invocation of power under Sec.482 Cr.P.C is found to be justified. That was also a case in which appellant instituted civil Suits for recovery of amount and thereafter filed complaint alleging commission of offence under Secs 405, 415 and 420 alleging that the money entrusted was for his benefit and not returned on demand. 16. According to the learned counsel for the petitioners, the process of initiating criminal proceedings against the petitioners is also an abuse of process of law. The wives of the petitioners 1 & 2 have also been arraigned as accused 4 & 5. The _mala fides_ of the first respondent is Crl.M.C.4860/2015 17 explicit on arraigning the wives of the accused No.1 & 2 as accused 4 & 5. Actually, they have no connection at all with the business transaction of the petitioners. In the complaint, there is allegation with respect to the 4[th] accused (wife of the 1[st] accused) alleging that 1[st] and 4[th] accused approached him for financial aid in connection with the marriage of the daughter and the amounts so advanced as per their request is stated as Rs.22,18,500/-. It is further alleged that accused 4 & 5 received amount on behalf of their husbands while they were at abroad. But no date or the amount availed also have not been specified. So accused 4 & 5 have been arraigned in the complaint without any material prima facie to attract the ingredients of the offence. So that would strengthen the contention of the learned counsel for the petitioners that the wives are arraigned as accused to pressurize them in effecting payment of amount. 17. The learned counsel for the respondent also placed reliance on **Ismail C.A. v. Sakkeer Hussain & Anr. [2017 (2) KHC 861]** in the aspect of admissibility of judgment in one proceedings and its relevancy in another proceedings Crl.M.C.4860/2015 18 only if Secs 40, 41, 42 or 43 of the Evidence Act is attracted. But in that case an FIR was registered based on a private complaint filed U/S 190 Cr.Pc which was forwarded u/s 156(3) Cr.P.C. to Police. Offences U/S 17 of Kerala Money Lenders Act ,1958 and offences U/S 468 and 469 IPC are also involved. It has also observed that investigation is only started and no conclusion is possible before the conclusion of investigation. 18. In this case, the judgments of the civil courts seem to have been produced from the side of the petitioners only to show the pendency of the civil proceedings against the petitioners and the civil nature of the transaction between the parties. No reliance is palced on those judgments by this Court in the disposal of this case also. Based on the above I conclude that first respondent could not prima facie establish, any dishonest intention from the inception and that the petitioners have any dominion over the money deposited in view of the registered partnership agreement executed between them. Further that the dispute between the parties is civil in nature and criminal proceedings has been initiated arraiging the wives of petitioners 2 and 3 Crl.M.C.4860/2015 19 with mala fides to pressurize them to effect the payment. Hence ends of justice demands that the entrie proceedings in C.C.1413/2014 on the file of Judicial Magistrate of First Class-I, Perumbavoor to be set aside. 19. In the result, Cr.M.C allowed and all proceedings in C.C.1413/2014 on the file of Judicial Magistrate of First Class-I, Perumbavoor is set aside. Sd/- ## **M.R.ANITHA, Judge** Mrcs/24.3. Crl.M.C.4860/2015 20 ## APPENDIX ## ANNEXURES **ANNEXURE P1 ANNEXURE A- TRUE COPY OF THE C.M.P NO.1681/2014 FIED BY THE 1ST RESPONDENT BEFORE THE JUDICIAL FIRST CLASS MAGISTRATE -I, PERUMBAVOOR, DATED 9.10.2014** **ANNEXURE P2 ANNEXURE B- TRUE COPY FO THE PARTNERSHIP DEED BETWEEN PETITIONERS 1 TO 3 AND THE 1ST RESPONDENT DATED 12.12.2012** |**ANNEXURE P3**|**ANNEXURE C- TRUE COPY OF THE PLAINT FILED BY**| |---|---| ||**THE 1ST RESPONDENT AS O.S.NO.67/14 BEFORE THE**| ||**COURT OF THS SUBORDINATE JUDGE, PERUMBAVOOR.**| |**ANNEXURE P4**|**ANNEXURE D- TRUE COPY OF THE ORDER OF**| ||**ATTACHMENT IN I.A.NO.1277/2014 IN**| ||**O.S.NO.67/2014 OF THE COURT OF THE SUB JUDGE,**| ||**PERUMBAVOOR 5.2.2015**| |**ANNEXURE P5**|**ANNEXURE E- TRUE COPY OF THE PLAINT FILED BY**| ||**THE 1ST RESPONDENT AS O.S.116/2015 BEFORE THE**| ||**HON'BLE DISTRICT COURT (VACATION COURT),**| ||**ERNAKULAM.**| |**ANNEXURE P6**|**ANNEXURE F- TRUE CPY OF THE ATTACHMENT**| ||**SCHEDULE IN I.A.NO.2955/15 IN O.S.NO.116/2015**| ||**BEFORE THE HON'BLE DISTRICT COURT, (VACATION**| ||**COURT), ERNAKULAM.**|