Bengal Sales Corp.and another vs Poddar Tyres Ltd

V.K. Bali, J. (Oral)

By this order two connected Criminal Misc. Petition Nos. 5192M and 5194M of 1992 shall be disposed of as common questions of law and facts are involved therein. The facts have, however, been extracted from Crl. Misc. No. 5192M of 1992.

Prayer of the petitioners in the present petitions filed by them under Section 482 of the Code of Criminal Procedure is for quashing complaint, Annexure P4, filed by respondentPoddar Tyres Ltd., a Public Limited Company, under Sections 403, 405, 406 and 409 of the Indian Penal Code as also summoning order, Annexure P5.

The facts contained in complaint, Annexure P4, subject matter of quashing in the present petition, would reveal that M/s Poddar Tyres Ltd. filed complaint against the petitioners herein i.e. M/s Bengal Sales Corporation and Ram Niwas Bang, a partner of M/s Bengal Sales Corporation, under Sections 403, 405, 406, 409 read with Section 34 IPC. It is, inter alia, pleaded therein that in order to market the products of the company, different consignee agents were appointed in different States of India and the complainant company appointed accused No. 1 firm as an agent to sell the goods for and on behalf of complainant company for the State of West Bengal, recover sale proceeds and hold them in trust for the complainant company. Accused No. 1 firm was appointed as consignee agent under an consignee agreement for indefinite period. The relevant clauses of the agreement run thus :

"(1) That the Principal hereby appoints the Agent to be their consignee Agent for the State of West Bengal. It is agreed between the parties that the Agent shall operate within the said State as mentioned above.

(2) It is agreed that the Principal will consign the goods to the said Agent from their factory at village & P.D. Jugiana, District Ludhiana.

(3) In consideration of the service which will be rendered by the party of the second part for effecting the sales for and on behalf of the party of the first part, the party of the first part shall pay a commission at the rate of 4% or as decided by the party of the first part from time to time on the next sales realisation.

(4) It is agreed between the parties that the Agent shall sell the goods and remit the sale proceeds maximum within 30 days time from the date of sales of the goods failing which over due interest @ 18% or as decided from time to time will be charged. In no circumstances the party of the second part will use the money received but of sales for his own use."

It is further the case of the complainantrespondent that the agreement continued to be in from 1988 till date and under the agreement the complainant company despatched the goods to the accused firm i.e. tyres and tubes worth lacs of rupees which goods were received by accused firm. In accordance with the consignee agreement, the goods were sold by accused firm for and on behalf of the complainantcompany. It is further the case of the complainant that accused firm received sale proceeds of the goods out of which Rs. 4,97,114.05 Ps. were withheld by the accused. It is withholding of this amount which is alleged to be falling within the mischief of Sections 403, 405, 406 and 409 IPC.

After appreciating preliminary evidence, the Magistrate, before whom the matter came up for hearing, summoned the petitioners under Section 406 IPC.

The solitary but forceful contention of Mr. Goyal, learned Senior Advocate is that it is a pure and simple case of civil liability arising from a written agreement between the parties wherein all consequences of breach have been provided and inasmuch as there is specific clause in the agreement providing 18% interest to be paid by the petitioners, resort could not be made to criminal proceedings. That, in fact, it is argued, is simply with a view to harass the petitioners and force them to pay something to which the petitioners are not liable. It is also the case of petitioners that prior in point of time a civil suit for recovery of Rs. 98,760/ was filed by them against the complainant company on June 4, 1990 and it is only as a matter of counter blast that the present complaint was filed in the year 1991. For his first contention that when the parties enter into a contract and there is allegation of breach of contract giving rise to civil liability, criminal proceedings cannot be resorted to, learned counsel relies on Vijaya Jaya and others v. National Fertilizers Ltd., 1988(1) RCR 515 and Krishan Kumar Bharadia v. State of Haryana, 1989(1) RCR 268.

In this case respondent was served and reply was also filed but no one has chosen to appear on its behalf today. The basic facts contained in the petition and, in particular, agreement and various clauses thereof, as reproduced above, have not been disputed.

After hearing learned counsel for the petitioners and going through the records of the case, this Court is of the considered view that the allegations contained in the complaint at the most result into breach of a contract for which there is an alternative remedy provided to the complainantrespondent. Instead of resorting to civil proceedings, the complainant, however, thought of filing the complaint u/s 403, 405, 406, 409 IPC which, in view of the judgments referred above, was impermissible. As mentioned above, breach of contract i.e. in the facts of the present case, nonrefund of money, is adequately dealt with by burdening the defaulting party with interest of 18%. There was, thus, no warrant at all for launching criminal proceedings against the petitioners. This Court does not wish to express any definite opinion on the issue but it appears that the complaint was filed as an afterthought when the petitioners had already filed civil suit, with a view, perhaps, to harass the petitioners. Continuance of criminal proceedings, thus, against the petitioners in the facts and circumstances, detailed above, would be an abuse of the process of law. The complaint and aftermath of that i.e. summoning order are, thus, quashed and the present petitions are accordingly allowed.