Joy Stephen v. State of Kerala & Others

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** **PRESENT :** **THE HONOURABLE MR. JUSTICE THOMAS P.JOSEPH** **FRIDAY, THE 1ST APRIL 2011 / 11TH CHAITHRA 1933** **Crl.MC.No. 401 of 2011()** **-----------------------AGAINST THE JUDGEMENT/ORDER IN WPC.1797/2011** **.................... (CRIME NO.223/2011 OF KADAVANTHRA POLICE STATION) ....** ## **PETITIONER(S): ACCUSED:** **------------------------------------------** **JOY STEPHEN, S/O.STEPHEN, AGED 48 YEARS, MANAGING DIRECTOR, M/S.POLINSYS IMMIGRATION CONSULTANTS PRIVATE LIMITED, OPP.TO BSNL BHAVAN, KALATHIPARAMBU ROAD, KOCHI-16.** **BY ADVS. SRI.BABU JOSEPH KURUVATHAZHA, SRI.K.I.SAGEER.** **RESPONDENT(S): STATE & COMPLAINANTS:** **-------------------------------------------------------------------** **1. STATE OF KERALA, REP.BY ITS PUBLIC PROSECUTOR, HIGH COURT OF KERALA, KOCHI-31.** **2. THE SUB INSPECTOR OF POLICE, KADAVANTHRA POLICE STATION, ERNAKULAM, KOCHI-20.** **3. CHERIYAN.C.KARIPPAPARAMBIL, DIRECTOR, M/S.CHEMMANUR ACADEMY AND SYSTEMS PVT.LIMITED, 2ND FLOOR, DD MILESTONE, KADAVANTHRA, KOCHI-20.** **4. M/S.CHEMMANUR ACADEMY AND SYSTEMS PVT.LIMITED, 2ND FLOOR, DD MILESTONE, KADAVANTHRA, KOCHI-20, REPRESENTED BY ITS MANAGING DIRECTOR, ANISHA CHERIYAN.** **5. THE ASSISTANT COMMISSIONER OF POLICE, OLD RAILWAY STATION ROAD, NEAR HIGH COURT COMPLEX, KOCHI-18.** **R1 & R2 BY PUBLIC PROSECUTOR SRI. K.J.MOHAMMED ANZAR R3 & R4 BY ADVS. SRI.P.RADHAKRISHNAN** , **SRI.MADHU RADHAKRISHNAN.** **THIS CRIMINAL MISC. CASE HAVING BEEN FINALLY HEARD ON 01/04/2011,THE COURT ON THE SAME DAY PASSED THE FOLLOWING:** **Kss** ## **THOMAS P. JOSEPH, J.** **-------------------------------------Crl.M.C. No.401 of 2011 -------------------------------------Dated this the 1[st] day of April, 2011.** ## **ORDER** This case is filed by the accused in Crime No.223 of 2011 of Kadavanthra Police Station to quash Annexure-K, FIR for offences punishable under Sections 406, 417 and 420 of the Indian Penal Code (for short, “the IPC”). Case is that petitioner who is running M/s.Polinsys Immigration Consultants Pvt. Ltd. recruited students for study abroad through M/s.Chemmanur Academy and Systems Pvt. Ltd. According to respondent No.3 who gave first information based on which FIR was registered petitioner owed `.2,56,777/- as per agreement for the period from 24.08.2009 and 31.12.2010. That amount was not paid and accordingly there was cheating, breach of trust, etc. According to the petitioner, allegations made against him are not correct and at any rate are not sufficient to attract any offence punishable under Sections 406, 417 and 420 of the IPC mentioned in Annexure-K, FIR. Learned counsel referred to Annexure-C, agreement and subsequent developments between the parties and placed reliance on the decisions in the **State of Kerala v. A.Pareed Pillai and another(AIR 1973 SC 326), Hridaya Ranjan Pd. Verma and others v. State of Bihar and another (AIR 2000 SC 2341), Ajay Mitra v. State of M.P. and others (AIR 2003 SC 1069), Glencore India Pvt. Ltd. and others v. Metalman Industries Ltd. and** **Crl.MC No.401/2011** 2 **another (2003 Cri.L.J. 3368), Keshav Kumar Roy v. State of Jharkhand and others (2003 Cri.L.J. 3656), Basanteshwari Prasad v. The State of Jharkhand and another (2003 Cri.L.J. 3809), Shruti Enterprises Ltd. v. State of Bihar & Others (2006 Cri.L.J. 1961)** and **Muralidhar Satpathy v. State of Orissa (2007 Cri.L.J. 2683)** . Learned counsel for respondents 3 and 4 in response contended that investigation is at the preliminary stage and on the facts of the case it is not necessary to quash the FIR as if no case is made out. Learned counsel referred to Annexures-R4(a) and (b) produced by respondents 3 and 4 and to the decision of the Supreme Court in **R.Kalyani v. Janak C. Mehta** ## **and others ((2009) 1 SCC 516)** . 2. Now the matter is at the investigation stage and it is not necessary for me to pronounce judgment on the question whether allegations made against petitioner are true or not. Question for consideration is whether Annexure-K, FIR is liable to be quashed as if allegations are so absurd that nobody could believe it, or those allegations do not make out any offence and hence proceeding with the investigation is an abuse of process of court. In the decision relied on by respondents 3 and 4 in paragraph 15, the following propositions of law are stated: (i) The High Court ordinarily would not exercise its inherent jurisdiction to quash a criminal proceeding and in particular a first information report unless the allegations contained therein, even if given face value and taken to be **Crl.MC No.401/2011** 3 correct in their entirety, disclosed no cognizable offence, (ii) For the said purpose the court save and except in very exceptional circumstances would not look to any document relied upon by the defence, (iii) Such a power should be exercised very sparingly. If the allegations made in the FIR disclose commission of an offence, the court shall not go beyond the same and pass an order in favour of the accused to hold absence of any mens rea or actus reus, and (iv) If the allegation discloses a civil dispute, the same by itself may not be a ground to hold that the criminal proceedings should not be allowed to continue. Guided by the above principles I shall consider whether AnnexureK, FIR is liable to be quashed. 3. The transaction between the parties as stated above is not disputed. Transaction was based on Annexure-C, agreement between petitioner and respondent No.4 executed on 24.08.2009. Its period was to expire by December, 2010. As per the said agreement respondent No.4 was to recruit students for and on behalf of petitioner and, respondent No.4 was to remit amounts collected from the students in the account of petitioner within 24 hours of receipt of the amount. On such deposit respondent No.4 was to be given incentive as stated in Annexure-C, agreement. It is also a clause in the agreement that it was open to either of the parties to terminate the agreement on giving 30 days notice if either of the parties did not comply with the terms and conditions of the agreement. But, so far as the transactions already entered were concerned, parties were bound by the terms and conditions of AnnexureC, agreement. While so, petitioner issued Annexure-D, notice dated 10.11.2010 **Crl.MC No.401/2011** 4 stating that the amount collected from three students (for and on behalf of petitioner) amounting to `.75,000/- was not deposited in the account of the petitioner within 24 hours as stipulated in Annexure-C, agreement and hence petitioner is not desirous to continue the arrangement with respondent No.4. To Annexure-D, notice respondent No.4 issued Annexure-E, reply dated 19.11.2010 ofcourse raising its own contentions as to violation of terms and conditions. But it was not disputed that amounts collected from three students were not deposited in the account of petitioner within 24 hours. Respondent No.4 claimed that for the transactions prior to that, incentive due to respondent No.4 was not paid. In the meantime, for the incentive due to respondent No.4 petitioner had issued a few cheques which were dishonoured and thereon respondent No.4 issued Annexure-F, notice dated 22.11.2010 informing petitioner about dishonour of cheques and demanding payment of the amount. To that notice petitioner issued Annexure-G, reply, dated 02.12.2010 stating that on account of (alleged) breach of the terms and conditions of Annexure-C, agreement by respondent No.4, petitioner has instructed the bank not to make payment and that it is open to respondent No.4 to approach the civil court and realize the amount as claimed by them. 4. While so, respondent No.4 preferred a complaint to the Assistant Commissioner of Police, Ernakulam complaining about the non-payment of the amount as per the cheques in question. It is alleged that the Manager of petitioner appeared before the Assistant Commissioner as per direction issued by that officer and represented that what is involved is a civil dispute and that **Crl.MC No.401/2011** 5 Police has no business to interfere with that. In the meantime apprehending harassment from the Police petitioner approached this Court in W.P.(C) No.1797 of 2011 and this Court by Annexure-I, interim order dated 28.01.2011 directed that “there shall be no action against the Managing Director of the petitioner company on the basis of the complaint which, admittedly, has not led to the repetition of any crime so far”. Thereafter the Writ Petition itself was disposed of by Annexure-J, judgment dated February 2, 2011. In the meantime, respondent No.3 gave first information before respondent No.2 on 29.11.2011 alleging that petitioner by not making payment of the sum of Rs.2,56,776/- has cheated respondents 3 and 4 and committed breach of trust. Based on that, Police registered Annexure-K, FIR as aforesaid. 5. Argument advanced by the learned counsel for petitioner placing reliance on the decisions referred to above is that the dispute involved is a civil dispute as to violation of terms and conditions of Annexure-C, agreement and that cannot give rise to any offence as alleged and particularly when respondent No.3 has no case that at the inception, ie. at the time Annexure-C, agreement was entered into there was any intention on the part of petitioner to cheat respondent No.3 or 4, or commit breach of trust. According to the learned counsel in the absence of such allegation in the first information statement Annexure-K, FIR cannot stand. In Annexure-G, reply petitioner has specifically stated that he does not intend to make payment as per the cheques in question on account of (alleged) breach of terms and conditions of the agreement by respondent No.4 and that it is open to respondent No.4 to approach the civil court and recover the amount. **Crl.MC No.401/2011** 6 6. No doubt mere breach of the contract cannot amount to an offence punishable under Section 420 of the IPC or cheating as defined as under Section 415 of the IPC. But it is not as if merely because there is a breach of contract it cannot give rise to any offence as alleged in the present case. That is a matter which has to depend on the facts of the case. It is seen that at a time when Annexure-C, agreement was to expire by efflux of time by December, 2011 petitioner issued Annexure-D, notice on 10.11.2010 alleging breach of terms and conditions on the part of respondent No.4. It is however seen that on 04.11.2010 (at a time when period of Annexure-C was to expire by efflux of time in December, 2010) parties entered into Annexure-R4(a), agreement whereby the period of agreement was extended subject to certain terms and conditions in Annexure-C that instead of respondent No.4 making weekly invoices, it will give monthly invoices. In Annexure-R4(a), agreement it was specifically agreed by both sides all pending payments till 01.11.2010 shall be released immediately. Annexure-R4(a), agreement is not disputed by either side. According to respondent No.4 pursuant to the understanding contained in Annexure-R4(a), agreement that all payments till 01.11.2010 are to be paid by both sides immediately, respondent No.4 made two payments on 08.11.2010 and 13.11.2010. Though learned counsel for petitioner admitted receipt of payment on 08.11.2010 he claimed that at the time petitioner issued Annexure-D, notice on 10.11.2010 petitioner had no information about deposit of amount in his account by respondent No.4 on 13.11.2010. It is also contended by learned counsel that payments allegedly made by respondent No.4 are in respect of the amount due to petitioner and referred to in Annexure-D, notice. But it is seen **Crl.MC No.401/2011** 7 that cheques were issued on 05.11.2010. 7. Going by the terms of Annexure-R4(a), agreement both sides were liable to pay the amount due to the other till 01.11.2010. According to the petitioner, all payments due to respondent No.4 till 01.11.2010 have been made but this is disputed by counsel for respondent No.4 who says that it was for the said payment that petitioner issued cheques dated 05.11.2010 which ultimately ended in dishonour. These disputes are to be decided by the officer who investigated the case. Though petitioner claimed that he learnt that amount was due to him from respondent No.4 only after Annexure-R4(a) and thereon issued Annexure-D, notice that contention cannot prima facie be accepted since Annexure-R4(a) refers to the amounts due to both parties and payable by the other. Annexure-R4(a) shows that petitioner was aware that amount was due to him from respondent No.4. That means, even after Annexure-R4(a), petitioner received certain payments from respondent No.4 but when it came to payment of amount due to respondent No.4, he instructed his bank not to honour the cheques. There is force in the contention of respondent No.4 that but for the promise made by petitioner in Annexure-R4(a), it would not have paid the amount to the petitioner. **Crl.MC No.401/2011** 8 8. Having regard to the circumstances stated above and in particular Annexure-R4(a), agreement dated 04.11.2010 by which both sides agreed to pay the amount due to the other, allegation of respondent No.4 that pursuant to that agreement amount due to the petitioner were paid on 08.11.2010 and 13.11.2010 and while so, petitioner issued Annexure-D, notice and instructed the Bank not to make payment as per the cheques he had issued, I am unable to say at this stage that at the threshold the prosecution has to be thrown out as if allegations are false or that the allegations do not make out a case which is to be investigated. I must bear in mind that the Police is in the course of investigation and primarily it is their responsibility to look into the allegations including the contention of petitioner before reaching any conclusion whether offences as alleged are made out. That being the function of the Police it is not necessary for me to pronounce verdict on the respective contentions raised by the parties in this proceeding. I make it clear that I have not expressed any opinion either way on the merit of the case set up by respondent No.3 in Annexure-K, FIR or the contention raised by the petitioner. I also make it clear that the Investigating Officer shall with an open mind consider the rival contentions and conclude whether offences alleged are made out. With the above directions and observations this Criminal Miscellaneous Case is dismissed. **THOMAS P.JOSEPH, Judge.** **cks**