Mahesh Choudhary vs State Of Rajasthan & Anr

CRIMINAL APPEAL NO. 417 OF 2009 [Arising out of Special Leave Petition (Criminal) No. 6769 of 2007]

MAHESH CHOUDHARY ... APPELLANT

VERSUS

STATE OF RAJASTHAN & ANR. ... RESPONDENTS

JUDGMENT

S.B. Sinha, J.

1. Leave granted.

2. Appellant was a partner of a firm known as M/s Saraswati Exports.

He is also Director of a Company known as `Saraswati Exim Pvt. Ltd.' (for

short, "the company").

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3. M/s S.N.Kapur Exports is a firm registered under the Indian

Partnership Act, 1932 (for short, "firm"). The Complainant Vikram Kapoor

(Respondent No.2 herein) is a partner thereof. The firm was engaged in

manufacturing, selling and export of carpets, mats, etc. It developed various

types of hand knotted new designs of carpets and acquired special skill

therein.

4. Indisputably, the two firms entered into a contract on or about

1.4.2001 in terms whereof, inter alia, the firm agreed to help and assist the

appellant with regard to production, i.e., designing, colouring, dyeing,

finishing, etc. The firm also agreed to provide knowledge and know-how

for the carpet production by the appellant for making their products readily

saleable and more-marketable. The firm for the said purpose was to receive

10% commission on the invoice value of each and every invoice and total

sales made directly or indirectly by the firm.

Some of the clauses of the said agreement are as under:

"9. That the SECOND PARTY shall have an office provided by the FIRST PARTY to carry out supervising of all the work of designing etc. and auditing/checking of account records/books.

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14. That the SECOND PARTY shall have right to auditing, checking of accounts books/records etc., through their auditor at any time and the FIRST PARTY will cooperate in this regard.

15. That if the sum due on account of 10% commission is not paid promptly as soon as the sum due becomes Rs. 3 Lacs, the SECOND PARTY shall on the strength of this agreement alone, file a law suit for the recovery of dues and bringing a stay from the law court of the business and its total activity till the full payment has been made along with 15% interest for the period of delay and full cost of law suit has been cleared and paid in full by the FIRST PARTY.

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23. That the FIRST PARTY has an assurance from SECOND PARTY that sales (export sales of Hand Knotted Carpet) will be done with the help of SECOND PARTY.

24. That the FIRST PARTY is singly taking up to produce only Hand Knotted Carpets without any compromise in execution of quality. Any defective carpets produced by the FIRST PARTY shall be entirely FIRST PARTY's responsibilities.

25. That neither FIRST PARTY nor SECOND PARTY can enter into such agreement with any one else."

4 5. The said agreement continued till 31.3.2003. Indisputably again with

effect from 1.4.2003, another agreement has been entered into by and

between the parties thereto whereby and whereunder it was agreed that the

appellant would pay a sum of Rs.17 lakhs per month to the firm for a period

of two years. It is furthermore not in dispute that whereas the firm claims a

sum of Rs.4,49,85,581/- towards commission payable to it towards export

but only a sum of Rs.3,21,06,910/- has been paid.

6. Inter alia alleging that the appellant herein has committed the

offences of criminal breach of trust and/or of cheating and forgery, on the

premise that he had made sale of about Rs.9 crores in the year 2002-2003

through a sister concern wherefor no commission was paid although the

technical know-how was made available by the firm, a complaint petition

was filed in the court of Judicial Magistrate No. 22, Jaipur City, Jaipur on or

about 13.08.2004.

7. The learned Magistrate directed the officer-in-charge of the

Brahmpuri Police Station to lodge a First Information Report (FIR).

Pursuant thereto or in furtherance thereof, a FIR was lodged. On

completion of investigation, a detailed charge-sheet has been submitted on 5

or about 8.1.2007. In the said charge-sheet, it was, inter alia, opined that no

manipulation in the records has been committed for showing sale of carpet

through the sister concern, stating:

"Even it is assumed that the sale made by Saraswati Exim is the indirect sale of Saraswati Export, yet no commission is payable to Shri Kapoor on the sale of tufted carpets and hand knotted carpets purchased from other firms. No such fact has come into light from the entire records of sale made by Saraswati Export and Saraswati Exim that sale made by Saraswati Export has been shown to be the sale made by Saraswati Exim by committing any manipulation in the records.

8. Analyzing the terms of the contract, it was stated that the complainant

did not raise any protest from time to time with regard to the purported

breaches thereof on the part of the appellant and in any event, the same

gives rise to a civil dispute.

9. It was, however, found that different invoices were presented to the

bank showing different amounts and quantities vis-`-vis the firm, stating:

"...Thus, partners of Saraswati Export by showing the amount of commission in the invoices falsely and wrongly and by deducting the amount of commission from the total sale value in wrong and false manner have shown the less sale turnover 6

and consequently, an offence under Section 420, 467, 468 IPC is found proved for paying less commission than the actual due commission to Shri Kapoor and commission of breach of trust.

3. Invoice No. 1610/23.4.02 which has been submitted by Saraswati Export with the bank, rate of carpets is shown at higher rate and the rate of carpet in the invoice given to the complainant is shown lower. Thus, no satisfactory explanation regarding difference in the sale rate of carpet in the copies of the above invoices is available on record. However, in comparison to the annual sale turnover of Saraswati Export, difference of total sale value of US $ 34096.00 of the above one bill and difference amount 2005 US $ is ignorable, but it is proved that Shri Mahesh Chaudhary by making the false entry in the invoices has saved the commission of 200.5 US $ payable to Shri Kapoor and has not paid the same to Shri Kapoor against which offence punishable under Sections 420, 467, 468 IPC is found proved."

10. The learned Chief Judicial Magistrate took cognizance of the offences

against the appellant by an order dated 9.1.2007. Appellant thereafter filed

an application for quashing of the said order before the Rajasthan High

Court which has been dismissed by reason of the impugned judgment.

11. Mr. Jagdeep Dhankar, learned Senior Counsel appearing on behalf of

the appellant, would submit:

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i) The transaction in terms of the aforementioned agreement

dated 21.2.1973 having continued upto 31.3.2003 and a sum of

Rs.3,21,06,910/- having been paid by way of commission to the

firm, the charge-sheet even if given face value and taken to be

correct in its entirely does not constitute offences punishable

under Sections 420, 467 and 468 of the Indian Penal Code.

ii) The observations made in the charge-sheet against the

appellant being related to about 200 US $ only, it is absurd to

think that the appellant would commit such an offence.

iii) In any event, the disputes and differences between the parties

being pertaining to breach of contract resulting in civil dispute,

the same should be directed to be resolved through arbitration

or any other dispute resolution mechanism.

12. Mr. L.N. Rao, learned Senior Counsel appearing on behalf of the

respondent, on the other hand, would contend:

i) Appellant illegally and wrongfully diverted the business to its

sister concern and, thus, cheated the respondent No.2 of a huge

amount of commission.

8 ii) In any event, a charge-sheet having been filed upon arriving at

a finding that the accused had committed an offence of forgery

in respect of invoices, which are valuable security, this Court

should not interfere with the impugned order.

13. The principle providing for exercise of the power by a High Court

under Section 482 of the Code of Criminal Procedure to quash a criminal

proceeding is well known. The court shall ordinarily exercise the said

jurisdiction, inter alia, in the event the allegations contained in the FIR or

the Complaint Petition even if on face value are taken to be correct in their

entirety, does not disclose commission of an offence.

14. It is also well settled that save and except very exceptional

circumstances, the court would not look to any document relied upon by the

accused in support of his defence. Although allegations contained in the

complaint petition may disclose a civil dispute, the same by itself may not

be a ground to hold that the criminal proceedings should not be allowed to

continue. For the purpose of exercising its jurisdiction, the superior courts

are also required to consider as to whether the allegations made in the FIR 9

or Complaint Petition fulfill the ingredients of the offences alleged against

the accused.

15. Indisputably, the question as to whether the complainant was entitled

to a higher amount of commission in terms of the agreement dated

21.2.1973 is essentially a civil dispute. The complainant in terms of the

said agreement was not only entitled to inspect the documents maintained

by the accused but also to get the same audited. It is, therefore, difficult to

hold as has rightly been opined by the Investigating Officer that a case for

imposing a criminal liability on the accused on that score has been made

out. While saying so, we are not unmindful of the limitations of the court's

power under Section 482 of the Code of Criminal Procedure which is

primarily for one either to prevent abuse of the process of any Court or

otherwise to secure the ends of justice. The court at that stage would not

embark upon appreciation of evidence. The Court shall moreover consider

the materials on record as a whole.

In Kamaladevi Agarwal vs. State of W.B. & ors. [(2002) 1 SCC 555],

this Court opined:

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"7. This Court has consistently held that the revisional or inherent powers of quashing the proceedings at the initial stage should be exercised sparingly and only where the allegations made in the complaint or the FIR, even if taken it at the face value and accepted in entirety, do not prima facie disclose the commission of an offence. Disputed and controversial facts cannot be made the basis for the exercise of the jurisdiction."

It was furthermore observed that the High Court should be slow in

interfering with the proceedings at the initial stage and that merely because

the nature of the dispute is primarily of a civil nature, the criminal

prosecution cannot be quashed because in cases of forgery and fraud there

would always be some element of civil nature.

This Court in B.Suresh Yadav vs. Sharifa Bee & anr. [(2007) 13 SCC

107] opined as under:

"13. For the purpose of establishing the offence of cheating, the complainant is required to show that the accused had fraudulent or dishonest intention at the time of making promise or representation. In a case of this nature, it is permissible in law to consider the stand taken by a party in a pending civil litigation. We do not, however, mean to lay down a law that the liability of a person cannot be both civil and criminal at the same time. But when a stand has been taken in a complaint petition which is contrary to or 11

inconsistent with the stand taken by him in a civil suit, it assumes significance. Had the fact as purported to have been represented before us that the appellant herein got the said two rooms demolished and concealed the said fact at the time of execution of the deed of sale, the matter might have been different. As the deed of sale was executed on 30.9.2005 and the purported demolition took place on 29.9.2005, it was expected that the complainant/first respondent would come out with her real grievance in the written statement filed by her in the aforementioned suit. She, for reasons best known to her, did not choose to do so."

Recently in R. Kalyani vs. Janak C. Mehta & ors. [2008 (14) SCALE

85], this Court laid down the law in the following terms:

"9. Propositions of law which emerge from the said decisions are:

(1) 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 correct in their entirety, disclosed no cognizable offence.

(2) For the said purpose, the Court, save and except in very exceptional circumstances, would not look to any document relied upon by the defence.

12 (3) 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.

(4) 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.

10. It is furthermore well known that no hard and fast rule can be laid down. Each case has to be considered on its own merits. The Court, while exercising its inherent jurisdiction, although would not interfere with a genuine complaint keeping in view the purport and object for which the provisions of Sections 482 and 483 of the Code of Criminal Procedure had been introduced by the Parliament but would not hesitate to exercise its jurisdiction in appropriate cases. One of the paramount duties of the Superior Courts is to see that a person who is apparently innocent is not subjected to persecution and humiliation on the basis of a false and wholly untenable complaint."

16. The charge-sheet, in our opinion, prima facie discloses commission of

offences. A fair investigation was carried out by the Investigating Officer.

The charge-sheet is a detailed one. If an order of cognizance has been

passed relying on or on the basis thereof by the learned Magistrate, in our 13

opinion, no exception thereto can be taken. We, therefore, do not find any

legal infirmity in the impugned orders.

17. We, however, must place on record that before us Mr. Dhankar stated

that the appellant is ready and willing to get the disputes and differences

between the parties settled. In that view of the matter and keeping in view

the peculiar facts and circumstances of this case and with a view to do

complete justice to the parties, we, in exercise of our jurisdiction under

Article 142 of the Constitution of India, direct that in the event the appellant

appears before the learned Magistrate within a period of four weeks from

date and files an application for grant of bail, he shall be released on bail on

such terms and conditions as the learned Magistrate may seem fit and

proper. In the event, the appellant files an application for exemption from

his personal appearance, the same may also be considered on its own merits.

It would be open to the complainant to consider the offer of the appellant.

18. Subject to the aforementioned directions, the appeal is dismissed.

.....................................J. [S.B. Sinha] 14

.....................................J. [Asok Kumar Ganguly]

NEW DELHI;

MARCH 03, 2009