Sanghi Brothers (Indore) Pvt.Ltd vs Sanjay Choudhary & Ors

Sanghi Brothers (Indore) Pvt. Ltd. ..Appellant

versus

Sanjay Choudhary and Ors. ..Respondents

J U D G M E N T

Dr. ARIJIT PASAYAT, J.

1. Leave granted.

2. Challenge in this appeal is to the judgment of a learned Single

Judge of the Madhya Pradesh High Court, Indore Bench allowing the

Criminal Revision Petition filed by the respondents. Challenge in the

Criminal Revision Petition was to the order dated 14.8.2006 passed by

learned Judicial Magistrate, First Class, Indore in Criminal case

No.2114 of 2003. By the said order charges were framed against the

respondents. The learned Judicial Magistrate directed framing of

charge for offence punishable under Sections 420, 406 read with

Section 34 IPC.

3. Background facts as projected by appellant in a nutshell are as

follows:

The appellant-company is a registered company dealing with the

sale of auto vehicles at Indore and respondents are Directors of the

Chetak Construction Ltd. a registered company having its Head Office

at Chetack Chamber, R.N.T. Mark, Indore and accused No.3 is the

Secretary of that company. In the year 1988-89 accused approached the

complainant company for obtaining lease of Tata dumpers and light

commercial vehicles for a specific period on monthly lease rent basis.

Respondents assured complainant company that as per the agreement they

will pay monthly lease rent without any default and to support their

claim, they will also furnish back guarantee for due performance of

the condition of the contract. In view of that proposal, agreements

were executed between the parties on 13.5.1988, 14.11.1988 and

25.3.1989 for delivery of 25 dumpers, 10 dumpers, 20 dumpers and 4

light commercial vehicles and accused persons took the delivery of the

aforesaid vehicles from the complainant and also agreed for payment of

the monthly lease rent for 36 months. For the due performance of

agreement, necessary documents were executed by the accused persons in

favour of the complainant. After some time, complainant came to know

that accused No.4 was unable to pay him lease rent according to the

agreement. Then complainant called accused No.1 and 2 to execute

personal guarantee bonds in favour of the complainant and after some

persuasion, so called personal guarantee bonds were executed by the

accused Nos. 1 and 2 in favour of the complainant for due performance

of the agreement on 6.12.1991. They also gave collateral security in

favour of the complainant of a property belonging to M/s Choudhary

Builders Private Ltd. and also produced board resolution dated

6.2.1990 to the complainant. Complainant was unable to get any rent in

2 time from the accused persons and also found that applicants/accused

in violation of the condition of the agreement have illegally sold

eight vehicles to other parties with ulterior motive, thus committing

criminal breach of trust also and had cheated the complainant. On

these allegations, complainant through its Manager filed a complaint

under Sections 420 and 406 IPC against the respondents. Before the

trial Court, learned trial Magistrate after taking the cognizance

against the accused recorded before charge evidence and on

consideration of before charge evidence by order dated 14.8.2006

ordered for framing of the charge as noted above.

The order framing of charge was questioned before the High Court

in the revision petition. After noticing the stands of the petitioners

before it and the respondent who is the present appellant, the High

Court noted as follows:

"All these cases are distinguishable with the facts of the present case. In the present case, applicants are not praying quashment of the proceedings under the provisions of Section 482 of the Criminal Procedure Code. The applicants/accused came up before this Hon'ble Court against the order of framing of the charge and on the basis of the prima facie evidence recorded before charge and is trying to assail the findings of the trial Court and submits that no charge under Section 420 and 406 IPC is clearly made out against the applicants on the basis of evidence on record and it is also not so unimpeachable that if it is not rebutted then a conviction can be based on it."

The High Court was of the view that framing of charge was not

sustainable.

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4. In support of the appeal, learned counsel for the appellant

submitted that the conclusions of the High Court are clearly

indefensible. It is not a requirement of law that the offence is not

so unimpeachable and if it is not rebutted, conviction can be based on

it.

5. Learned counsel for the respondents on the other hand submitted

that the background facts have been rightly taken note of by the High

Court to conclude that the framing of charge was not sustainable. It

was pointed out that there was no intention of committing the alleged

fraud as has been rightly held by the High Court. Part of the amount

has been received and sale of vehicle was permitted and the bank

guarantee was also encashed. Even if it is conceded that there was

breach of contract at some point of time that was remedied because of

the permission to sell vehicles and by encashment of the bank

guarantee. The whole agreement was retrieved. In order to constitute

fraud there must be some mental evil design. There is no question of

any seminal intent as there was civil dispute and the same has been

taken note of by the High Court, more particularly, with reference to

the allegations.

6. By way of reply learned counsel for the appellant submitted that

because of huge dues the appellant had the right of repossession which

could have been exercised w.e.f. 6.1.1990 and on 8.2.1990 four

personal bank guarantees were given by the respondents. Since that was

not adequate, additional security was required and same was furnished

by offering property security which was not owned by the respondents.

4 This could be known only after the letter of the bank was received.

The intention was very clear, because it was aimed at preventing the

appellant from exercising the right of re-possession. It is not a case

where the High Court conceded that there was no offence made out.

Charges were framed and therefore the High Court should not have by

the impugned order aborted the whole trial. The High Court is wrong

in stating that there was no allegation of any criminal intention at

the initial stage. It is pointed out that this aspect was explicitly

stated in the complaint.

7. In State of Maharashtra and Ors. V. Som Nath Thapa and Ors.

(1996 (4) SCC 659) this Court observed as follows:

"Let us note the meaning of the word `presume'. In Black's Law Dictionary it has been defined to mean "to believe or accept upon probable evidence". (emphasis ours). In Shorter Oxford English Dictionary it has been mentioned that in law `presume' means "to take as proved until evidence to the contrary is forthcoming".

Stroud's Legal dictionary has quoted in this context a certain judgment according to which "A presumption is a probable consequence drawn from facts (either certain, or proved by direct testimony) as to the truth of a fact alleged". (Emphasis supplied). In Law Lexicon by P Ramanath Aiyar the same quotation finds place at p. 1007 of 1987 Edn.

32. The aforesaid shows that if on the basis of materials on record, a court could come to the conclusion that commission of the offence is a probable consequence; a case for framing of charge exists. To put it differently, if the court were to think that the accused might have committed the offence it can frame the charge, though for conviction the conclusion is required to be that the accused has committed the offence. It is apparent that at the stage of framing of a charge, probative value of the materials on record cannot be gone into; the materials brought on record by the prosecution has to be accepted as true at that stage."

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8. Sections 227, 239 and 245 deal with discharge from criminal

charge. In State of Karnataka v. L. Muniswamy (1977 (2) SCC 699) it

was noted that at the stage of framing the charge the court has to

apply its mind to the question whether or not there is any ground for

presuming the commission of offence by the accused. (Underlined for

emphasis). The Court has to see while considering the question of

framing the charge as to whether the material brought on record could

reasonably connect the accused with the trial. Nothing more is

required to be inquired into. (See Stree Atyachar Virodhi Parishad v.

Dilip Nathumal Chordia (1989 (1) SCC 715) and State of West Bengal v.

Mohd. Khalid (1995 (1) SCC 684).

9. In R.S. Nayak v. A.R. Antulay (1986 (2) SCC 716) this Court

referred to Sections 227 and 228 so far as they are relatable to

trial. Sections 239 and 240 are relatable to trial of warrant cases

and 245(1) and (2) relatable to summons cases.

10. After analyzing the terminology used in the three pairs of

sections it was held that despite the differences there is no scope

for doubt that at the stage at which the court is required to consider

the question of framing of charge, the test of a prima facie case to

be applied.

11. The present case is not one where the High Court ought to have

interfered with the order of framing the charge. As rightly submitted

by learned counsel for the appellant, even if there is a strong

suspicion about the commission of offence and the involvement of the

6 accused, it is sufficient for the court to frame a charge. At that

stage, there is no necessity of formulating the opinion about the

prospect of conviction. That being so, the impugned order of the High

Court cannot be sustained and is set aside. The appeal is allowed.

...............................J. (Dr. ARIJIT PASAYAT)

...............................J. (Dr. MUKUNDAKAM SHARMA)

New Delhi October 3, 2008

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