IN THE HIGH COURT OF KERALA AT ERNAKULAM, CRL.MC No.1528/16

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT** ## **THE HONOURABLE MR. JUSTICE RAJA VIJAYARAGHAVAN V** **WEDNESDAY, THE 18TH DAY OF SEPTEMBER 2019 / 27TH BHADRA, 1941** **Crl.MC.No.1528 OF 2016** **CRIME NO.605/2016 OF TOWN EAST POLICE STATION, THRISSUR** ## **PETITIONERS/ACCUSED NOS.1 TO 4:** - **1 JOSEPH SEBASTIAN, DY.MANAGER, PHILIPS INDIA LTD(PHILIPS HEALTH CARE), KRISHNAKRIPA, XI/215A, LAYAM ROAD, KOCHI-682011.** - **2 K.M.RAMKUMAR, TERRITORY MANAGER, PHILIPS INDIA LTD(PHILIPS HEALTH CAR), KRISHNAKRIPA, XI/215A, LAYAM ROAD, KOCHI-682011.** - **3 U.SUNIL, REGIONAL MANAGER, CUSTOMER SUPPORT, PHILIPS INDIA LTD., SUNNY SIDE, 3RD FLOOR, C BLOCK,.NO.8/17,SHAFEE MOHAMMED ROAD, (OFF GREAMS ROAD),CHENNAI-600006.** - **4 R.SUBRAMANIAN, DIRECTOR AND HEAD, CUSTOMER SUPPORT, PHILIPS INDIA LTD, SUNNY SIDE, 3RD FLOOR, C BLOCK, NO.8/17, SHAFEE MOHAMMED ROAD,(OFF GREAMS ROAD), CHENNAI-600006.** ## **BY ADV. SRI.RAJIT** ## **RESPONDENTS/COMPLAINANT:** - **1 P.LALKUMAR, THE SUB INSPECTOR OF POLICE, THRISSUR EAST POLICE STATION, THRISSUR DISTRICT-680018.** - **2 DR.P.V.GOVINDAN NAIR, GOPIKA, SASTHA NAGAR, AYYAPPANKAVU ROAD, THIRUVAMBADY P.O, THRISSUR-680022.** CRL.MC:1528/16 2 **R1 BY SRI.SUMAN CHAKRAVARTHY, SENIOR PUBLIC PROSECUTOR R2 BY ADVS. DR.K.P.SATHEESAN (SR.) SRI.P.MOHANDAS (ERNAKULAM) SRI.S.VIBHEESHANAN SRI.S.K.ADHITHYAN SRI.SABU PULLAN** **THIS CRIMINAL MISC. CASE HAVING BEEN FINALLY HEARD ON 18.09.2019, THE COURT ON THE SAME DAY PASSED THE FOLLOWING:** CRL.MC:1528/16 3 ## **O R D E R ~~~~~~~** The petitioners herein have been arrayed as the accused Nos.1 to 4 in C.C.No.10 of 2019 on the file of the Chief Judicial Magistrate, Thrissur. In the said case, they have been summoned by the learned Magistrate to face charges under Sections 406, 420 r/w Section 34 of the IPC. 2. The aforesaid case arose on a complaint lodged by the 2[nd] respondent before the Station House Officer, Town East Police Station. Crime No. 606 of 2016 was registered on 9.2.2016 for the offence punishable under Section 420 r/w. Section 34 of the IPC. The said complaint was investigated and initially the crime was referred by the police holding that the allegations levelled disclosed only a case of civil nature. It appears that thereafter, further investigation was conducted and a charge sheet was submitted before the learned Magistrate. 3. The petitioners seek to quash the entire criminal proceedings by invoking the powers of this Court under Section 482 of the Cr.P.C. 4. Brief facts of the case necessary to be noticed for deciding this petition are that the 2[nd] respondent, a retired Civil Surgeon, purchased an Ultra Sound Scanning Machine manufactured and marketed by Philips India Ltd. (Health CRL.MC:1528/16 4 Care), for the purpose of using it in the Scan Center run by him at Thrissur in the name and style as “Gopika Scan Centre”. The scanning machine came with the name ‘ENVISOR’ and the purchase was made on 31.07.2005. 5. The 1[st] petitioner is the Deputy Manager and the 2[nd] petitioner is the Territory Manager of Philips India Ltd. and they are stationed in the State of Kerala. The 3[rd] petitioner is the Regional Manager-Customer Support, whereas the 4[th] petitioner is the Director and Head-Customer Support, and they both are based in Chennai. 6. It is the case of the 2[nd] respondent that the scanning machine had a warranty period of one year. On the expiry of the said period, a Comprehensive Maintenance Contract was executed between the 2[nd] respondent and Philips India Ltd. The contract was signed by the 3[rd] petitioner. According to the 2[nd] respondent, as per the terms of the Maintenance Contract, he was required to pay a sum of Rs.2,72,217.43/- to Philips India Ltd. and the Company had assured that its Service Engineers would attend to the maintenance calls and would replace the defective parts with brand new ones, if the need arose. The contract used to be renewed every year. During the subsistence of the said contract, the machine became defective in the month of June, 2012. The said fact was immediately brought to the notice of petitioners 1 and 2. The 1[st] petitioner visited the Scan CRL.MC:1528/16 5 Center and replaced the monitor as well as the PC on 7.6.2012. The 2[nd] respondent was assured that the defective parts have been replaced with brand new parts and the equipment would run trouble free. No charges were levied as the machine was covered under the Comprehensive Maintenance Contract. 7. After about three years, i.e., on 21.06.2015, his friend Dr. Rajan, who is a Professor in Radio Diagnostics, visited him. Dr. Rajan was particularly interested in an image taken by the 2[nd] respondent by which, he had detected the presence of a worm from a swelling in the eye lid of a young man. He congratulated the 2[nd] respondent for the clarity of the scan and expressed his desire to see more of such images. While so, they stumbled across images of about 300 patients taken at the Amala Institute of Medical Sciences, Thrissur. This led to the startling revelation that the hard disk, which was replaced in the ENVISOR Machine, was not a brand new one, but was one used in the Amala Institute during the period from 29.07.2010 till 22.08.2011. According to the 2[nd] respondent, instead of replacing the defective hard disk with a new one, a hard disk used in another hospital was installed to gain pecuniary advantage. 8. Stating the above allegations, a complaint was lodged and the Crime was registered on 9.2.2016. On 14.03.2016, instant petition was filed by the petitioners seeking to quash the FIR and all further proceedings. CRL.MC:1528/16 6 9. On 31.12.2016, though there was an interim order of stay, Annexure-M report was filed by the Investigating Officer before the learned Magistrate referring the case as “Civil in Nature”. On 03.04.2018, this Court vacated the interim order and the Investigating Officer was ordered to proceed with the investigation. 10. Meanwhile, the 2[nd] respondent had instituted O.S. No.219 of 2016 before the Court of the Subordinate Judge, Thrissur and in the said suit, an Expert Commissioner was appointed to inspect the scanning machine and to submit a report. A detailed inspection was conducted and it was reported that the replacement hard disk installed on 07.06.2012 was not brand new, but was one used earlier at the Amala Hospital. 11. The police, it appears, took up further investigation and on getting a cue from the report of the Expert Commissioner, proceeded to lay the charge sheet before the learned Magistrate. The case was taken on file as C.C.No.10 of 2019 and the petitioners have been summoned to appear. 12. Sri.Rajit, the learned counsel appearing for the petitioners, submitted that the petitioners have nothing to do with the allegations levelled against them. According to the learned counsel, the only grievance of the 2[nd] respondent relates CRL.MC:1528/16 7 to a scanning machine purchased by him from Philips India Ltd. (Health Care) in the year 2005. After the expiry of the 1[st] year, the 2[nd] respondent entered into a Comprehensive Maintenance Contract, which was extended yearly. Referring to a copy of the Annual Maintenance Agreement, which is produced as Annexure-L, it is urged by the learned counsel that the agreement did not contain a condition that the Company would replace the defective parts with brand new parts. All that was agreed was that the equipment would be kept in good working condition. The learned counsel would point out that the disputes, if any, arising out of the agreement were agreed to be settled by arbitration and in that view of the matter, the initiation of criminal proceedings alleging cheating and breach of trust is unwarranted. At any rate, according to the learned counsel, the ingredients of the offence under Section 406 or 420 of the IPC would not be made out. He would then point out that the machine was initially installed in the year 2005 and it was in the year 2012, the 2[nd] respondent had come up with a complaint. After the equipment was serviced, the machine worked trouble free for about three years. If the hard disk was in any way defective, the equipment would not have run trouble free submits the learned counsel. He would then urge that when the malfunctioning was reported by the 2[nd] respondent in the month of June, 2012, a replacement hard disk was installed for checking its functioning. The machine was kept under observation till 19.07.2012 and during this period, the 2[nd] respondent CRL.MC:1528/16 8 had operated the machine. Later, when the hard disk was sought to be replaced, the 2[nd] respondent objected to the same and the Service Engineer decided not to disturb the configuration. The learned counsel would further urge that the petitioners are senior officers of the Company occupying managerial positions and they have no role to play in the allegations levelled in the complaint. It is urged that initiation of criminal proceedings simultaneously with civil suits is for pressurizing the petitioners to accede to the illegal demands. 13. Dr.K.P. Satheesan, the learned Senior Counsel appearing for the party respondent as instructed by Sri. K. Sudhinkumar, has very strenuously opposed the prayer. It is submitted by the learned Senior Counsel that the 2[nd] respondent had been paying annual maintenance charges of over Rs 2.72 lakhs for the proper upkeep of the machine and by replacing a failed hard disk with a used one, the intention of the petitioners was to defraud the 2[nd] respondent. He would point out that the report of the Advocate Commissioner clearly established that the hard disk, which was found in the ENVISOR Machine, was a used one. The data contained in the hard disk was retrieved by the expert and it was revealed that the hard disk, which was found in the machine, was not the original hard disk, which was supplied at the time of the installation. It was also reported that if a brand new hard disk was used to replace the defective one, it would never contain CRL.MC:1528/16 9 images of the Amala Institute of Medical Sciences. It is contended by the learned Senior Counsel that the allegations in the final report would clearly make out an offence and this Court in exercise of powers under Section 482 of the Cr.P.C. will not be justified in quashing the same. 14. Sri.Suman Chakravarthy, the learned Senior Public Prosecutor, has seriously opposed the prayer of the petitioners. The learned Senior Public Prosecutor contended that the final report was laid after a meticulous investigation and no interference is warranted. 15. In the course of proceedings, the parties were referred to mediation as suggested by the learned counsel appearing for both sides. The petitioners offered to supply a brand new machine worth about Rs.25 lakhs and the said suggestion was put to the party respondent. Though he filed a statement agreeing to the suggestion, later, certain riders were fixed. The parties thereafter drifted apart and the prospects of a mediated settlement faded away. 16. I have considered the submissions advanced and have perused the records. The entire dispute revolves around an ultrasound scanning machine purchased by the 2[nd] respondent from Philips India Ltd. (Health Care), on 31.07.2005. Admittedly, the machine was covered by a warranty for a period of CRL.MC:1528/16 10 one year. After expiry of the warranty period, the parties have entered into a Comprehensive Maintenance Contract. The scanning machine malfunctioned in the month of June, 2012 and this was brought to the notice of the manufacturer. From the records, it appears that on 7.6.2012, the PC and Monitor were replaced. The system was kept under observation till 19.07.2012 and since it was found working trouble free, the job card was closed. The delivery notes reveal that the monitor, the PC and the display processor were replaced. It is on 21.06.2015 that Dr.Rajan, a friend of the 2[nd] respondent, had occasion to visit him and it was while they were scanning for previous images that they stumbled upon certain images, which related to certain scans taken at the Amala Institute of Medical Sciences. The grievance of the 2[nd] respondent is that the hard disk, which was replaced, was not a brand new one, but was one used earlier at the Amala Hospital. This conclusion of the 2[nd] respondent is clearly corroborated by the report of Dr.Mrinalini, who has been cited as CW2 in the final report. From the comprehensive maintenance contract, a copy of which is produced as Annexure-L, what is undertaken by the Company is that they would provide two planned maintenance calls and corrective maintenance calls as and when required. It does not appear from the Maintenance Contract that the Company had undertaken that it would replace the defective parts with brand new parts. Furthermore, clause (9) of the agreement provides for arbitration and it specifically states that the CRL.MC:1528/16 11 disputes, if any, arising out of the agreement can be settled through arbitration. 17. Furthermore, from the sequence of events, it appears that the Customer Support Engineer had undertaken the repair in the month of June, 2012. The images of Amala Institute of Medical Sciences were detected in the hard disk in the month of June, 2015. The 2[nd] respondent has no case that the machine had shown any defects from 2012 to 2015. 18. The question is whether, in the facts of the instant case, the offence under Section 406 or 420 of the IPC is made out. ## 19. Section 405 of the Indian Penal Code reads as under: “Section 405.- Criminal breach of trust.- Whoever, being in any manner entrusted with property, or with any dominion over property, dishonestly misappropriates or converts to his own use that property, or dishonestly uses or disposes of that property in violation of any direction of law prescribing the mode in which such trust is to be discharged, or of any legal contract, express or implied, which he has made touching the discharge of such trust, or willfully suffers any other person so to do, commits "criminal breach of trust". 20. A careful reading of Section 405 shows that the ingredients of a criminal breach of trust are as under: CRL.MC:1528/16 12 “i) A person should have been entrusted with property, or entrusted with dominion over property; ii) That person should dishonestly misappropriate or convert to their own use that property, or dishonestly use or dispose of that property or willfully suffer any other person to do so; and iii) That such misappropriation, conversion, use or disposal should be in violation of any direction of law prescribing the mode in which such trust is to be discharged, or of any legal contract which the person has made, touching the discharge of such trust.” 21. In other words, entrustment is an essential ingredient of the offence. A person, who dishonestly misappropriates property entrusted to him contrary to the terms of an obligation imposed is liable for a criminal breach of trust and is punished under Section 406 of the Penal Code. In view of the absence of any specific terms in the maintenance agreement, it cannot be said that the petitioners had misappropriated or converted to their own use the hard disk in violation of any direction of law prescribing the mode in which the trust imposed on them or that they had acted in violation to any legal contract. 22. Insofar as the offence of cheating alleged against the petitioners is concerned, it would be profitable to have a glance at Section 415 of the IPC, which reads as under: CRL.MC:1528/16 13 “Section 415. Cheating.- Whoever, by deceiving any person, fraudulently or dishonestly induces the person so deceived to deliver any property to any person, or to consent that any person shall retain any property, or intentionally induces the person so deceived to do or omit to do anything which he would not do or omit if he were not so deceived, and which act or omission causes or is likely to cause damage or harm to that person in body, mind, reputation or property, is said to "cheat". ## 23. In other words, there should be materials to show that: - i. there should be fraudulent or dishonest inducement of a person by deceiving him; - ii. (a) the person so induced should be intentionally induced to deliver any property to any person or to consent that any person shall retain any property, or (b) the person so induced should be intentionally induced to do or to 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) above, the act or omission should be one which caused or is likely to cause damage or harm to the person induced in body, mind, reputation or property.” ## 24. Section 420 of the IPC reads as under: “Section 420. Cheating and dishonestly inducing deliver of property.- 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 CRL.MC:1528/16 14 capable to being converted into a valuable security, shall be punished with imprisonment of either description for a term which may extend to seven years, and shall also be liable to fine.” The ingredients to constitute an offence under Section 420 are as under: - i) A person must commit the offence of cheating under Section 415; and - ii) The person cheated must be dishonestly induced to - (a) deliver property to any person; or (b) make, alter or destroy valuable security or anything signed or sealed and capable of being converted into valuable security. 25. In other words, cheating is an essential ingredient for an act to constitute an offence under Section 420 of the IPC. The condition necessary for an act to constitute an offence under Section 415 of the IPC is that there was dishonest inducement by the accused. In the case on hand, a Comprehensive Maintenance Contract was entered into between the parties and on an evaluation of the materials, there are no materials to indicate that the petitioners had dishonestly induced the 2[nd] respondent to deliver any property to them. I am firm in my mind that the ingredients necessary to constitute the offence are clearly not made out from the face of the complaint. The 2[nd] respondent has already approached the Civil Court and if it is found that he has sustained any damages, CRL.MC:1528/16 15 he can realize compensation for the same. He could have approached the Arbitrator instead of dragging the petitioners to the criminal court. 26. The jurisdiction under Section 482 of the Cr.P.C. has to be exercised with care. In the exercise of its jurisdiction, a High Court can examine whether a matter which is essentially of a civil nature has been given a cloak of a criminal offence. Where the ingredients required to constitute a criminal offence are not made out from a bare reading of the complaint, the continuation of the criminal proceeding will constitute an abuse of the process of the court. (See **R.K. Vijayasarathy and Ors. vs. Sudha Seetharam and Ors** .[1] ). 27. In exercise of this wholesome power, the High Court is entitled to quash a proceeding if it comes to the conclusion that allowing the proceeding to continue would be an abuse of the process of the Court or that the ends of justice require that the proceeding ought to be quashed. The saving of the High Court's inherent powers, both in civil and criminal matters, is designed to achieve a salutary public purpose which is that a court proceeding ought not to be permitted to degenerate into a weapon of harassment or persecution. In a criminal case, the veiled object behind a lame prosecution, the very nature of the material on which the structure of the prosecution rests and the like would justify the High Court in 1 [ 2019 (3) SCALE 563] CRL.MC:1528/16 16 quashing the proceeding in the interest of justice. (See **State of Karnataka v. L. Muniswamy[2]** ). 28. Having considered all the relevant facts, I am of the view that the continuance of the criminal proceedings against the petitioners herein is a sheer abuse of process. In the result, this petition is allowed. Annexure-M final report and all further proceedings pursuant thereto now pending against the petitioners as C.C.No.10 of 2019 on the file of the Chief Judicial Magistrate, Thrissur are quashed. SD/- **RAJA VIJAYARAGHAVAN V., JUDGE** ps/17/9/2019 2 (1977) 2 SCC 699 CRL.MC:1528/16 17 ## **APPENDIX** ## **PETITIONER'S/S EXHIBITS:** |**ANNEXURE A**|**ANNEXURE A CERTIFIED COPY OF COMPLAINT PETITION**| |---|---| ||**NO.102/GL/PTN/TE/16**| |**ANNEXURE B**|**CERTIFIED COPY OF FIR IN CRIME NO.605/2016 OF THE**| ||**THRISSUR EAST POLICE STATION**| |**ANNEXURE C**|**TRUE COPY OF CUSTOMER SATISFACTION REPORT SIGNED BY**| ||**THE 2ND RESPONDENT ON 08.06.12 AND 19-7-12**| |**ANNEXURE D**|**TRUE COPY OF THE DELIVERY NOTES OF MONITOR AND PC NOS**| ||**804925135 AND 805925524 DATED 6-6-12 AND 5-6-12**| |**ANNEXURE E**|**TRUE COPY OF JUDGMENT IN APPEAL NO.105 OF 2015 OF**| ||**HON'BLE KERALA STATE CONSUMER DISPUTES REDRESSAL**| ||**COMMISSION**| |**ANNEXURE F**|**TRUE COPY OF THE LAWYER NOTICE DATED 11.08.2015**| |**ANNEXURE G**|**TRUE COPY OF THE REPLY NOTICE ISSUED BY THE COMPANY**| ||**DATED 24.08.2015**| |**ANNEXURE H**|**TRUE COPY OF SUMMONS DT 15-2-2016 ISSUED BY THE 1ST**| ||**RESPONDENT TO THE 2ND PETITIONER**| |**ANNEXURE I**|**TRUE COPY OF THE STATEMENT OF THE PETITIONERS DATED**| ||**19.02.2016 BEFORE THE 1ST RESPONDENT.**| |**ANNEXURE J**|**TRUE COPY OF THE REFER REPORT FILED BY THE**| ||**INVESTIGATING OFFICER DATED 31.12.2016.**| |**ANNEXURE K**|**TRUE COPY OF THE REMAND REPORT FILED BY THE**| ||**INVESTIGATING OFFICER BEFORE THE CHIEF JUDICIAL**| ||**MAGISTRATE COURT, THRISSUR.**| |**ANNEXURE L**|**TRUE COPY OF THE ANNUAL COMPREHENSIVE MAINTENANCE**| ||**AGREEMENT ENTERED INTO BETWEEN THE DE FACTO**| ||**COMPLAINANT AND THE COMPANY.**| |**ANNEXURE M**|**TRUE COPY OF THE FINAL REPORT SUBMITTED BY THE**| ||**THRISSUR TOWN EAST POLICE STATION.**| CRL.MC:1528/16 18 **ANNEXURE N COPY OF THE RESOLUTION AUTHORISING ANNEXURE O THE OFFER LETTER SENT BY THE PHILIPS COMPANY EVIDENCING THE SAID FACT. ANNEXURE P COMMUNICATION ISSUED BY THE IMA DATED 2.3.2019.** **COMPLAINT FILED BY THE 2ND RESPONDENT BEFORE THE ANNEXURE Q DISTRICT MEDICAL OFFICER AS EVIDENCED BY THEIR LETTER DATED 6.6.2019.** ## **' - RESPONDENTS ANNEXURES:** **ANNEXURE-R2(A):- TRUE COPY OF THE COMMISSION REPORT SUBMITTED IN THE COURT OF THE SUBORDINATE JUDGE, THRISSUR BY THE ADVOCATE COMMISSIOENR APPOINTED IN O.S. NO.219 OF 2006 SUBMITTED ALONG WITH THE EXPERT REPORT OF PROFESSOR C.P.MRUNALINI, PROFESSOR ELECTRONICS DEPARTMENT, THRISSUR GOVERNMENT ENGINEERING COLLEGE AS PER ORDERS OF THE COURT DATED 27.10.2017.** **ANNEXURE-R2(B):- TRUE COPY OF THE INSPECTION REPORT PREPARED BY SRI.M.PREMKUMAR (M.TECH.) (RETD. GENERAL MANAGER, KELTRON) TO IRIA (INDIAN RADIOLOGICAL AND IMAGING ASSOCIATION) STATE BRANCH. ANNEXURE-R2(C):- TRUE COPY OF THE REPORT SUBMITTED TO IMA PEPS BY DR.K.V.SANKARAN, RETD. CIVIL SURGEON.** **ANNEXURE-R2(D):- TRUE COPY OF THE FINAL REPORT FILED BY THE INVESTIGATING OFFICER DATED 21-01-2019 OF THRISSUR EAST POLICE STATION.** //TRUE COPY// P.A. TO JUDGE