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Judgment
Ashwani Kumar Singh, J—This order shall dispose of Cr.WJC No. 931 of 2015, Cr.WJC No. 1021 of 2015, Cr.WJC No. 316 of 2015, Cr. JC No. 412 of 2015, Cr.WJC No. 423 of 2015, Cr.WJC No. 446 of 2015, Cr.WJC No. 449 of 2015, Cr.WJC No. 420 of 2015, Cr.WJC No. 424 of 2015, Cr.WJC No. 454 of 2015, Cr.WJC No. 864 of 2015, Cr.WJC No. 914 of 2015, Cr.WJC No. 919 of 2015, Cr.WJC No. 977 of 2015, Cr.WJC No. 1002 of 2015, Cr.WJC No. 996 of 2015, Cr.WJC No. 330 of 2015, Cr. WJC No. 686 of 2015, Cr. WJC No. 682 of 2015, Cr. WJC No. 688 of 2015, Cr. WJC No. 789 of 2015, Cr. WJC No. 465 of 2015, Cr. WJC No. 480 of 2015, Cr. WJC No. 525 of 2015, Cr. WJC No. 527 of 2015, Cr. WJC No. 621 of 2015, Cr. WJC No. 534 of 2015, Cr. WJC No. 545 of 2015, Cr. WJC No. 586 of 2015, Cr. WJC No. 533 of 2015, Cr. WJC No. 627 of 2015, Cr. WJC No. 656 of 2015, Cr. WJC No. 653 of 2015, Cr. WJC No. 594 of 2015, Cr. WJC No. 639 of 2015, Cr. WJC No. 626 of 2015, Cr. WJC No. 661 of 2015, Cr. WJC No. 606 of 2015, Cr. WJC No. 607 of 2015, Cr. WJC No. 646 of 2015, Cr. WJC No. 634 of 2015, Cr. WJC No. 631 of 2015, Cr. WJC No. 663 of 2015, Cr. WJC No. 664 of 2015, Cr. WJC No. 702 of 2015, Cr. WJC No. 641 of 2015, Cr. WJC No. 685 of 2015, Cr. WJC No. 644 of 2015, Cr. WJC No. 671 of 2015, Cr. WJC No. 687 of 2015, Cr. WJC No. 774 of 2015, Cr. WJC No. 684 of 2015, Cr. WJC No. 725 of 2015, Cr. WJC No. 723 of 2015, Cr. WJC No. 753 of 2015, Cr. WJC No. 729 of 2015, Cr. WJC No. 726 of 2015, Cr. WJC No. 720 of 2015, Cr. WJC No. 797 of 2015, Cr. WJC No. 743 of 2015, Cr. WJC No. 793 of 2015, Cr. WJC No. 807 of 2015, Cr. WJC No. 832 of 2015, Cr. WJC No. 883 of 2015, Cr. WJC No. 922 of 2015, Cr. WJC No. 453 of 2015, Cr. WJC No. 464 of 2015, Cr. WJC No. 466 of 2015, Cr. WJC No. 477 of 2015, Cr. WJC No. 478 of 2015, Cr. WJC No. 484 of 2015, Cr. WJC No. 547 of 2015, Cr. WJC No. 148 of 2014, Cr. WJC No. 164 of 2014, Cr. WJC No. 241 of 2014, Cr. WJC No. 184 of 2014, Cr. WJC No. 655 of 2014, Cr. WJC No. 676 of 2014, Cr. WJC No. 391 of 2013, Cr. WJC No. 1150 of 2012 and Cr. WJC No. 426 of 2013.
The aforementioned cases involve more or less identical facts and questions of law. In all the writ petitions, the petitioners have prayed for quashing of the First Information Report (for short ''FIR'') of the respective cases in which they have been made accused.
The petitioners are proprietors of different firms involved in the business of custom milling of paddy. The informants are the officers of the Bihar State Food and Civil Supplies Corporation (for short ''Corporation'') which procures paddy, entrusts it to the persons/firms that have capacity for storage and requisite plant and machinery for milling paddy and for its consequent conversion into rice. The Corporation procures paddy, whereafter it is stored in godowns belonging to the Corporation and thereafter, allocated for milling to rice millers like the petitioners. The rice millers, after milling and processing paddy, are required to return the rice in accordance with the terms and conditions of an agreement executed between the parties. The quantity of rice delivered, in relation to the paddy entrusted to the petitioners, for obvious reasons, is less than the paddy supplied to them. The exact quantity of paddy entrusted, the quantity of rice to be returned, the consequence of the failure to report etc. are all enumerated in the instructions, issued from time to time, as also in the agreement that is generally executed between the agency and the rice millers.
As noted above, since the essential facts of all the cases are identical, the facts are being extracted from Cr.WJ.C. No. 931 of 2015. In the aforesaid case, the petitioner seeks quashing of FIR of Madanpur P.S. Case No. 49 of 2015, dated 09.04.2015, registered under Sections 409 and 420 of the Indian Penal Code (for short ''IPC'').
In the aforesaid case, for the year 2012-13, the petitioner was entrusted with 5043.95 quintals of paddy by the Corporation for the purpose of milling and was required to deposit 67% of the custom milled rice (for short ''CMR'') after milling paddy to the Corporation. The CMR was required to be deposited by 31st December, 2013. Despite repeated reminders issued to the petitioner, the petitioner deposited only 1890 quintals of CMR. Upto the lodging of the FIR, 1489.40 quintals of CMR worth Rs. 32,25,486/- were still due from the petitioner. It has been alleged that the petitioner has dishonestly misappropriated and defalcated CMR worth Rs. 32,25,486/- entrusted to it by the Corporation.
On the basis of the abovementioned allegation, the Corporation lodged the aforesaid police case, quashing whereof has been prayed.
For the sake of convenience, the allegations as made in the FIR in its original are being reproduced herein below:--
The details of other police cases, in which, respective petitioners have sought quashing of the FIRs regarding financial years during which paddy was entrusted, the quantity of paddy delivered by the Corporation for milling, the CMR required to be returned by the petitioners, the date by which CMR was to be returned, the quantity of CMR returned, the outstanding CMR alleged to be due against the petitioners and the value of the CMR alleged to have been misappropriated are being given herein below in a tabular form:--
Let it be noted here that the allegations made in the case of the petitioner of Cr. W. J.C. No. 241 of 2014 (Ganpati Food Industries, Pandaul) are somewhat different from the allegations made against the rest of the petitioners whose details have been given hereinabove in the tabular chart. One Sanjay Kumar Sah is the proprietor of the aforesaid Ganpati Food Industries, Pandaul. The informant has alleged that the petitioner had received paddy from the Corporation and as per agreement he had to deliver 67% CMR after milling the paddy. However, he defaulted in delivering any CMR. The petitioner retained paddy worth Rs. 2,95,00000/-. On demand, the proprietor of the firm, Sanjay Kumar Sah, handed over 59 cheques, each of which was for an amount of Rs. 5,00,000/- issued in the name of State Food Corporation, Madhubani to the District Manager of the Corporation. On their presentation before the Bank, all the cheques, issued under the signature of the petitioner, were dishonored. It has been alleged that the petitioner dishonestly misappropriated the paddy entrusted to him for milling, and in order to cheat the Corporation, issued 59 cheques with a false assurance that on presentation they would be honored. In this background, therefore, the petitioner is alleged to have committed offence not only under the IPC, but also under Section 138 of the Negotiable Instruments Act, 1881.
Heard Mr. Abhay Singh, learned Senior Counsel for the petitioner in Cr.WJ.C. No. 480 of 2015, Mr. B.K. Singh, learned Senior Counsel for the petitioners in Cr.WJ.C. No. 626 of 2015 and Cr.WJ.C. No. 1150 of 2012, Mr. Akhileshwar Prasad Singh, learned Senior Counsel for the petitioner in Cr.WJ.C. No. 977 of 2015, Mr. N.K. Malhotra, learned Senior Counsel for the petitioners in Cr.WJ.C. Nos. 412, 423, 446, 449, 420, 454, 606 and 607 of 2015, Mr. Ajay Thakur, learned Counsel for the petitioners in Cr.WJ.C. Nos. 148, 164, 241, 184 of 2014 and Cr.WJ.C. Nos. 424, 527, 774, 723, 753, 883 and 547 of 2015, Mr. Ashish Giri, learned Counsel for the petitioner in Cr.W.J.C. No. 931 of 2015, Mr. Ashutosh Ranjan Pandey, learned Counsel for the petitioners in Cr.W.J.C. Nos. 686, 682, 688, 789, 653 and 594 of 2015 and Mr. Sumeet Kumar Singh, learned Counsel for the petitioners in Cr.W.J.C. Nos. 676, 316, 919, 1002, 996, 480, 534, 545, 533, 627, 634, 631, 663, 664, 702, 641, 685, 644 and 743 of 2015. In the remaining writ petitions, learned Counsel appearing for the respective petitioners have adopted the submissions made by the learned Senior Counsel who have addressed the Court in other writ petitions. Mr. Anjani Kumar, learned Senior Counsel being assisted by learned Counsel Mr. Shailendra Kumar Singh has argued in all the writ petitions for the Corporation. The learned Counsel appearing for the State of Bihar have adopted the submissions made by Mr. Anjani Kumar, learned Senior Counsel for the Corporation.
A common argument has been advanced on behalf of the petitioners. It is contended that the aforementioned allegations do not disclose commission of any offence. A bare perusal of the allegations made in the FIRs would disclose the existence of disputes which are purely civil in nature, arising from violation of a contract. It is contended that the allegations made in the FIRs do not disclose any facts which could lead to a conclusion that the paddy entrusted to the petitioners were misappropriated. It is further contended that failure to discharge an obligation under the contract, would not lead to a conclusion that the petitioners were guilty of cheating or misappropriation. Mere breach of contract would not constitute a criminal offence. The FIRs have been instituted to pressurize the petitioners to discharge their alleged liabilities towards the Corporation. It is further contended that in most of the cases, there are agreements, inter-party, which contain an arbitration clause, which clearly and categorically indicate that in case of any dispute, resolution thereof has to be effected by referring the matter to an arbitrator. It is further contended that the Corporation has resorted to multiple proceedings against the petitioners. It has started certificate proceedings against the petitioners for realization of the value of the CMR alleged to be due from the petitioners. Referring to certain clauses of the agreement between the parties, it has been submitted that the financial interest of the Corporation is fully protected in terms of the agreement and the Corporation can recover the loss caused to it, if any, by resorting to remedies available under civil proceeding/arbitration proceeding. It is contended that different proceedings of different nature against the same person for same set of facts would amount to an abuse of process of law. It is also contended that the impugned FIRs are manifestly attended with malafide and have been instituted with ulterior motive for wreaking vengeance on the accused persons.
Reliance for the above proposition is placed upon the decisions of the Supreme Court in Bal Kishan Das Vs. P.C. Nayar, AIR 1991 SC 1531 : (1991) CriLJ 1837 : (1991) 2 SCC 412 Supp , Kailash Verma Vs. Punjab State Civil Supplies Corporation and Another, (2005) 2 JT 420 : (2005) 2 SCC 571 : (2005) 1 SCR 527 , Binod Kumar Vs. State of Bihar, (2014) 4 CCR 507 : (2014) 4 Crimes 305 : (2014) 4 RCR(Criminal) 881 , Joseph Salvaraj A. Vs. State of Gujarat and Others, AIR 2011 SC 2258 : (2011) 7 JT 53 : (2011) 3 RCR(Criminal) 632 : (2011) 6 SCALE 731 : (2011) 7 SCC 59 : (2011) 3 SCC(Cri) 23 : (2011) 8 SCR 815 , Hridaya Ranjan Pd. Verma and Others Vs. State of Bihar and Another, AIR 2000 SC 2341 : (2000) CriLJ 2983 : (2000) 3 JT 604 : (2000) 2 SCALE 694 : (2000) 4 SCC 168 : (2000) 2 SCR 859 : (2000) AIRSCW 2077 : (2000) 3 Supreme 13 , Murari Lal Gupta v. Gopi Singh [(2005) 13 SCC 699] , Ram Biraji Devi and Another Vs. Umesh Kumar Singh and Another, AIR 2006 SC 2035 : (2006) 102 CLT 385 : (2006) CriLJ 2782 : (2006) 11 JT 133 : (2006) 5 SCALE 638 : (2006) 6 SCC 669 : (2006) 3 SCR 329 Supp : (2006) AIRSCW 2543 : (2006) 4 Supreme 217 , Uma Shankar Gopalika vs. State of Bihar and Another(2005) 10 SCC 336 , S.W. Palanitkar and others Vs. State of Bihar and another, AIR 2001 SC 2960 : (2001) CriLJ 4765 : (2001) 9 JT 151 : (2001) 7 SCALE 430 : (2002) 1 SCC 241 : (2001) AIRSCW 4435 : (2001) 8 Supreme 216 , Anil Mahajan v. Bhor Industries Ltd. [(2006) 2 SCC (Cr.) 49] , Thermax Ltd. and Others Vs. K.M. Johny and Others, (2012) CriLJ 438 : (2011) 4 Crimes 179 : (2011) 4 RCR(Criminal) 409 : (2011) 13 SCC 412 : (2011) 11 SCC 412 : (2011) 11 SCC 128 : (2011) 6 UJ 3695 and Dalip Kaur and Others Vs. Jagnar Singh and Another, AIR 2009 SC 3191 : (2009) 9 JT 184 : (2009) 9 SCALE 255 : (2009) 14 SCC 696 : (2009) 10 SCR 264 : (2009) 7 UJ 3292 : (2009) AIRSCW 5117 : (2009) 5 Supreme 368 .
Per contra, Mr. Anjani Kumar, learned Senior Counsel for the Corporation has contended that the paddy was entrusted to the petitioners for milling. The petitioners failed to return huge quantity of paddy or mill the same and deposit the CMR. As the petitioners were in possession of the paddy supplied by the Corporation, their failure to return the CMR, would prima facie indicate the commission of an offence of misappropriation. It is contended that the existence of an agreement, which provides for penalty and interest on the amount due and the resolution of any dispute by resorting to arbitration proceeding would not rule out commission of a criminal offence. A given set of facts may give rise to both civil and criminal liability. It is further contended that the question of entrustment, dishonest intention and misappropriation, being question of fact, would be determined during trial on the basis of evidence and ought not to be adjudicated by this Court at this stage when investigation into the cases lodged against the petitioners is going on. Insofar as regards the decisions cited by the counsel for the petitioners, it is contended that the decisions of the Supreme Court were rendered in those cases on their own peculiar facts and the ratio laid down in those cases would not be applicable to the facts of the present case, especially for the purpose of quashing the First Information Reports. In support of his submission, Mr. Anjani Kumar has placed reliance on the decisions of the Supreme Court in the case of Smt. Nagawwa Vs. Veeranna Shivalingappa Konjalgi and Others, AIR 1976 SC 1947 : (1976) CriLJ 1533 : (1976) 3 SCC 736 : (1976) SCC(Cri) 507 : (1976) SCR 123 Supp , State of Haryana and others Vs. Ch. Bhajan Lal and others, AIR 1992 SC 604 : (1992) CriLJ 527 : (1990) 4 JT 650 : (1990) 2 SCALE 1066 : (1992) 1 SCC 335 Supp : (1990) 3 SCR 259 Supp , Indian Oil Corporation Vs. NEPC India Ltd. and Others, AIR 2006 SC 2780 : (2006) 4 CTC 60 : (2006) 6 JT 474 : (2006) 7 SCALE 286 : (2006) 6 SCC 736 : (2006) 3 SCR 704 Supp : (2006) AIRSCW 3830 : (2006) 6 Supreme 66 , R. Kalyani Vs. Janak C. Mehta and Others, (2009) CLT 272 : (2008) 12 JT 279 : (2009) 1 SCC 516 and Trisuns Chemical Industry Vs. Rajesh Agarwal and others, AIR 1999 SC 3499 : (1999) CriLJ 4325 : (1999) 6 JT 618 : (1999) 5 SCALE 609 : (1999) 8 SCC 686 : (1999) 2 SCR 686 Supp : (2000) 1 UJ 392 : (1999) AIRSCW 3492 : (1999) 8 Supreme 53 .
Mr. Anjani Kumar has further submitted that pursuant to the policy decision of the Government for the financial year 2011-12 procurement of paddy from farmers was to be made in between 15.11.2011 and 30.04.2012. The Corporation was appointed as nodal agency and such procurement was to be made through Primary Agriculture Credit and Cooperative Societies (for short ''PACCS''). Where PACCS were not available, the Corporation was authorized to purchase paddy from the Purchase Centres established in that regard and payment was to be made through account payee cheques. Such procured paddy by PACCS was to be sold to the Corporation. It was further decided that the target was to procure 30 lakh Metric Tonnes paddy for procurement year 2011-12 and milling of paddy was to be made by the rice mills. Similar guidelines were issued by the Government of Bihar for procurement year 2012-13 and 2013-14. He has contended that the Government had fixed the date for deposit of CMR from 15.11.2011 to 15.10.2012, which was extended upto 31.12.2012 for the financial year 2011-12, and with respect to the procurement year 2012-13, CMR was to be deposited in between 15.11.2012 and 13.10.2013, which was extended upto 31.12.2013 and for the procurement year 2013-14, CMR was to be deposited upto 30.09.2014, which was extended upto 31.12.2014. The Corporation entered into the agreement with the Mill owners to deposit CMR within the time limit prescribed by the State. None of the millers protested the time limit and they willingly entered into agreement. However, the millers failed to deposit the CMR after receiving paddy and misappropriated huge quantities of paddy causing wrongful loss to the Corporation for a corresponding gain for themselves. It is further contended that till date over 1500 FIRs have been instituted against the defaulter millers for the financial years 2011-12, 2012-13 and 2013-14. It is further submitted that several officials of the Corporation are also being prosecuted for their alleged involvement in the large scale irregularity/illegality committed in the alleged offence. The State-owned Corporation has sustained a multi-crore loss owing to non-delivery of several lakh quintals of CMR against the paddy released to the rice millers in advance in different districts of the State of Bihar. He has submitted that the allegations made in the FIRs do attract the ingredients of a cognizable offence and, as such, the investigations should not be interdicted at the threshold.
I have heard the learned Counsel for the respective parties and have given my thoughtful consideration to the submissions made by them.
Before examining the respective contentions on merits, it would be appropriate to analyze the legal proposition vis-�-vis the contentions raised by the counsel for the parties.
Sections 406 and 409 IPC prescribe punishment for criminal breach of trust. Section 405 IPC defines the offence of criminal breach of trust, which reads as under :
"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 wilfully suffers any other person so to do, commits "criminal breach of trust"."
A careful reading of Section 405 IPC shows that a criminal breach of trust involves the following ingredients:--
"(a) A person should have been entrusted with property, or entrusted with dominion over property;
(b) That person dishonestly misappropriated or converted to his own use that property, or dishonestly used or disposed of that property or willfully suffered any other person to do so;
(c) That such misappropriation, conversion, use or disposal was in violation of any direction of law prescribing the mode in which such trust was discharged."
The crucial word used in Section 405 IPC is ''dishonestly'', and therefore, it implies the existence of mens rea, that is to say, a guilty mind. Dishonest intention is the gist of the offence. The offence of criminal breach of trust is completed by the misappropriation or conversion of the property dishonestly. The word ''dishonestly'' is defined in Section 24 IPC, which reads as under:--
"24. "Dishonestly" -
Whoever does anything with the intention of causing wrongful gain to one person or wrongful loss to another person, is said to do that thing "dishonestly"."
A person can be said to have dishonest intention if in taking the property it is his intention to cause gain by unlawful means, of the property even if he is not legally entitled to or to cause loss, by wrongful means of property which the person loosing is entitled. The actual intention to convert the illegal or doubtful claim into an apparently legal one makes the action dishonest. The phrases ''wrongful gain and wrongful loss'' have been defined under section 23 IPC, which reads as under:--
"23. "Wrongful gain" -
"Wrongful gain" is gain by unlawful means of property, which the person gaining is not legally entitled.
"Wrongful loss" -
"Wrongful loss" is the loss by unlawful means of property to which the person losing it is legally entitled."
It would be evident from the definition of phrases ''wrongful gain and wrongful loss'' that when the owner is kept out of the property with the object of depriving him of the benefit arising from the possession even temporarily, the case will come within the definition of ''wrongful gain and wrongful loss''.
It would, thus, appear that for the offences punishable under section 406 IPC, the prosecution must prove:--
"(i) that the accused was entrusted with property or with dominion over it; and
(ii) that he (a) dishonestly misappropriated it, or (b) dishonestly converted it to his own use, or (c) used it, or (d) disposed of it in violation of any direction of law prescribing the mode in which such trust was discharged."
Having considered the definition of Sections 23, 24 and 405 IPC, it would be evident that the gist of the offence prescribed under section 406 IPC, is misappropriation done in a dishonest manner. There are two distinct parts of the said offence. The first involves the fact of entrustment, wherein an obligation arises in relation to the property over which dominion or control is acquired. The second part deals with misappropriation which should be contrary to the terms of the obligation which is created.
The offence of cheating is defined under section 415 IPC, which reads as under:--
"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"."
The Section consists of two distinct parts, each part dealing with one way of cheating, (i) the first part contemplates where by deception practiced upon a person the accused dishonestly or fraudulently induces that person to deliver a property to any person or to consent that any person shall retain any property, (ii) the second part envisages where by deception practiced upon a person the accused intentionally induces that person to do or omit to do so, 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.
The offence punishable under section 420 IPC reads as under:--
"420. Cheating and dishonestly inducing delivery 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 capable of 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 essential ingredients of Section 420 IPC are:
"(i) cheating;
(ii) dishonest inducement to deliver property or to make, alter or destroy any valuable security or anything which is sealed or signed or is capable of being converted into a valuable security, and
(iii) mens rea of the accused at the time of making the inducement."
It would be evident from the pleadings of the parties that there is no dispute to the fact that the petitioners had received paddy from the Corporation and they were required to mill the rice. There is also no dispute that the petitioners failed to return the contracted quantity of rice. Whether or not their default would be misappropriation punishable under Sections 406 and 409 IPC, is a question of fact, to be adjudicated during trial. The contention of the learned counsel for the petitioners that the dispute in the present case arises from a breach of contract and therefore, the petitioners default would not attract the criminal consequences seems to be logically unsound. A thin line divides criminal breach of trust and civil liabilities arising from breach of contract. There is no absolute rule of law nor can any such rule be laid down that on a given set of facts only civil or criminal consequence would ensue and vice versa. Every case has its own peculiar facts. The mere fact that the petitioners alleged that their default is a mere breach of contract cannot be accepted in the facts and circumstances of the present case.
Another argument advanced on behalf of the petitioners, in support of their plea for quashing the FIRs, is that the agreement provides for other remedies like institution of civil suit and resolution of dispute through arbitration proceeding and, therefore, criminal prosecution is not tenable. This contention is also erroneous. These remedies are civil consequences of the breach of contract and cannot be pressed into service to quash the FIRs. If this argument is to be accepted, then in no case of breach of contract, a criminal prosecution would lie. The arbitration clause enables the parties to seek adjudication of civil consequences of violation of a contract. The arbitration clause does not envisage adjudication of criminal consequences of an alleged breach of contract.
In my opinion, the decision of the Supreme Court in Bal Kishan Das (Supra) and Kailash Verma (Supra), on which reliance has been placed by the learned counsel for the petitioners, do not lay down any absolute proposition of law that existence of an arbitration clause or pendency of an arbitration proceeding would automatically entail in quashing of the FIR. In the aforesaid case, after examining the facts of the case and specifically taking note of the fact that after registration of a case under section 409 IPC, the Vigilance Department dropped the case and that arbitration proceedings were pending for more than 17 years, the Supreme Court quashed the criminal proceeding. The facts of the case of Bal Kishan Das (Supra) cannot be pressed into service in the present case in support of the plea for quashing of the FIRs. It cannot be construed to be a precedent for the proposition that existence of arbitration clause bars filing of FIR for an offence under Sections 406 and 409 IPC.
The facts of Kailash Verma (Supra) also do not lay down any absolute proposition that the existence of an arbitration clause would necessarily oust the right of an aggrieved party to lodge an FIR nor does the aforementioned judgment lay down any absolute rule of law that existence of arbitration clause, would bar criminal proceedings. In Kailash Verma (Supra), the appellant (accused) was discharged by the Chief Judicial Magistrate. The order of the Chief Judicial Magistrate was challenged by the Corporation in revision before the Court of Sessions Judge. The Sessions Judge, after elaborately considering the question raised, upheld the order passed by the Chief Judicial Magistrate. The Corporation filed a further revision before the High Court and the High Court set aside the order passed by the Sessions Judge as well as the order passed by the Chief Judicial Magistrate and the matter was remitted to the trial Court. The order passed by the High Court was challenged before the Supreme Court in appeal. The Supreme Court held that the High Court was not justified in exercising its inherent power under section 482 of the Code of Criminal Procedure (for short ''Cr.P.C.''). It further held that it cannot be said either that there was miscarriage of justice warranting interference by the High Court, and therefore, it set aside the judgment of the High Court. The order of discharge passed by the Chief Judicial Magistrate in favour of the appellant was therefore affirmed by the Supreme Court. While setting aside the order of the High Court, the Supreme Court held that as there was no prima facie evidence to show that the paddy was supplied to the accused and that there was shortage of rice supplied to the Corporation, and the dispute disclosed being civil in nature, the appellant could not be prosecuted.
However, in the cases under consideration before this Court, there are specific allegations of entrustment of paddy and failure of the petitioners to deliver rice and therefore, the judgment of the Supreme Court in Kailash Verma (Supra) cannot be pressed into service by the petitioners to seek quashing of the FIRs in question.
Learned counsel for the petitioners have contended that the dispute involved in the FIRs is of civil nature and none of the acts allegedly committed by the petitioners gave rise to any criminal liability. In support of their submissions they have relied on the decisions of the Supreme Court in Hriday Ranjan Prasad Verma v. State of Bihar (Supra), Murari Lal Gupta v. Gopi Singh (Supra), Ram Birji Devi & Anr. v. Umesh Kumar Singh and Anr. (Supra), S.W. Palanitkar & Ors. v. State of Bihar & Anr. (Supra), Anil Mahajan v. Bhor Industries Ltd. (Supra), Thermax Ltd. v. K.M. Johny (Supra) and Dalip Kaur v. Jagarnath Singh (Supra).
In most of the decisions on which reliance has been placed by the learned counsel for the petitioners, the stage was of post cognizance, but here, in cases under consideration, the petitioners have prayed for quashing of the FIRs at the crucial stage of investigation. Hence, the ratio laid down by the Supreme Court in those cases would not apply to the facts of the cases under consideration before this Court. Moreover, there can be no dispute with the legal proposition laid down in the aforesaid decisions of the Supreme Court that if the complaint discloses only a simple case of dispute between the parties and there is absolute absence of requisite averments to make out a case of cheating, the criminal proceeding can be quashed. However, it cannot be said from the allegations made in the FIRs under consideration that there is absolute absence of requisite averment to make out a case of criminal breach of trust and cheating.
The petitioners have also placed reliance on the decision of the Supreme Court in Uma Shankar Gopalika v. State of Bihar (Supra), wherein the Supreme Court has observed in paragraph 7 as under:--
"7. In our view, petition of complaint does not disclose any criminal offence at all much less any offence either under Section 420 or Section 120-B IPC and the present case is a case of purely civil dispute between the parties for which remedy lies before a civil court by filing a properly constituted suit. In our opinion, in view of these facts allowing the police investigation to continue would amount to an abuse of the process of the court and to prevent the same, it was just and expedient for the High Court to quash the same by exercising the power under Section 482 Cr. P.C. which it has erroneously refused."
In the abovementioned case, the Supreme Court has taken the view that since the complaint does not disclose any offence, the proceeding is liable to be quashed under Section 482 Cr. P.C. However, the same is not the situation in the cases under consideration. In cases under consideration, there is no denial to the facts that paddy was given to the mill owners without taking rice from them. According to the agreements/understandings between the parties, the mill owners had to provide 67% CMR in return to the Corporation against the paddy received by them. The mill owners defaulted in returning the CMR, as a result of which, the Corporation sustained a huge loss. It is a clear case in which the petitioners were entrusted or had exercised dominion over the paddy belonging to the Corporation and further they had unlawfully retained the same. In the face of said allegations in the FIRs, it cannot be said that the FIRs filed by the corporation are shorn of necessary allegations to prima facie attract the ingredients of criminal breach of trust punishable under Sections 406 and 409 IPC.
In the matter of Binod Kumar and ors. (Supra), a decision on which the petitioners have placed reliance, the question before the Supreme Court was whether the charges under Section 406 IPC for allegedly retaining the bill amount payable by the appellant to respondent No. 2 was liable to be set aside. In the aforementioned case, the dispute related to non-payment of bill amount of Rs. 34,505/- pertaining to a contract executed by the respondent No. 2. The contract was entered into between respondent No. 2 and K.S.S. College on 04.09.1990 for the construction of building of K.S.S. College, Lakhisarai, a constituent unit of Tilka Manjhi Bhagalpur University. According to the second respondent, since money and material requisites were not given to him in time, the work was not completed within the stipulated period. The University vide letter dated 09.05.1995 informed respondent No. 2 that his contract is terminated and all his dues including final bill, earnest money and security deposit, etc. will be released after consultation with the College Development Committee. The University Engineer vide letter dated 04.06.1996, addressed to the Principal of the College, informed that payment of Rs. 48,505/- is payable to the contractor, but the respondent was paid Rs. 14000/- vide cheque as per direction of the College Development Committee and balance amount of Rs. 34,505/- was not paid to him. Aggrieved by the said non-payment of the entire amount, respondent No. 2 filed criminal complaint in the Court of Sub-Divisional Judicial Magistrate, Lakhisarai for criminal breach of trust. After the cognizance was taken and the matter reached the stage of framing of charge, an application for discharge was filed before the learned Sub-Divisional Judicial Magistrate, Lakhisarai. Learned Sub-Divisional Judicial Magistrate, Lakhisarai dismissed the said petition and directed the appellant to remain present in Court for framing charges under Sections 406 and 120-B IPC. The appellant filed a petition under Section 482 Cr.P.C. before the High Court for quashing of the said order. The High Court dismissed the petition. Aggrieved by the same, the appellant moved before the Supreme Court. After taking into consideration the facts and circumstances of the case, the Supreme Court held that the essential ingredients of dishonest misappropriation and cheating are missing and hence the prosecution of the appellant under Section 406 and 120-B IPC was quashed.
The facts narrated hereinabove would make it evident that in the aforementioned case, there was no entrustment. The dispute related to retention of bill payable to a contractor on execution of a contract work. There also existed a dispute relating to execution of contract work. The facts of the case of Binod Kumar (Supra) were quite distinct from the facts of the cases under consideration before this Court. Further, in Binod Kumar (Supra) the stage at which the matter was considered by the Supreme Court was the stage of framing of charge. Here in the cases under consideration the prayer of the petitioner is to quash the FIRs, which are still under investigation. In my view, the law laid by the Supreme Court in the aforesaid case cannot be pressed into service to the facts of the present case for the purpose of quashing the FIRs in question.
I also find that the facts of the case of Joseph Salvaraja (Supra) are also not identical to the facts of the present case and hence the ratio laid down by the Supreme Court in that case would be of no help to the petitioners of the present case
The legal position with regard to exercise of inherent jurisdiction under Section 482 Cr. P.C. or extraordinary jurisdiction under Article 226 of the Constitution by the High Court is by now well-settled.
It has been held by the Supreme Court in Onkar Nath Mishra and Others Vs. State (NCT of Delhi) and Another, (2008) 2 CLT 718 : (2008) CriLJ 1391 : (2008) 1 DMC 265 : (2008) 1 JT 20 : (2007) 14 SCALE 403 : (2008) 2 SCC 561 : (2008) 1 UJ 107 , that in the commission of the offence of criminal breach of trust, two distinct parts are involved. The first consists of the creation of an obligation in relation to the property over which dominion or control is acquired by the accused. The second is a misappropriation or dealing with the property dishonestly and contrary to the terms of the obligation created.
In Jaikrishnadas Manohardas Desai and Another Vs. The State of Bombay, AIR 1960 SC 889 : (1960) 3 SCR 319 , it has been held by the Supreme Court in paragraph 4 as under: -
"4. ... to establish a charge of criminal breach of trust, the prosecution is not obliged to prove the precise mode of conversion, misappropriation or misapplication by the accused of the property entrusted to him or over which he has dominion. The principal ingredient of the offence being dishonest misappropriation or conversion which may not ordinarily be a matter of direct proof, entrustment of property and failure in breach of an obligation to account for the property entrusted, if proved, may in the light of other circumstances, justifiably lead to an inference of dishonest misappropriation or conversion. Conviction of a person for the offence of criminal breach of trust may not, in all cases, be founded merely on his failure to account for the property entrusted to him or over which he has dominion, even when a duty to account is imposed upon him, but where he is unable to account or renders an explanation for his failure to account which is untrue, an inference of misappropriation with dishonest intent may readily be made."
(Underlining mine for emphasis)
Further, in Bhaskar Lal Sharma and Another Vs. Monica and Others, (2014) AIRSCW 1586 : (2014) CriLJ 1848 : (2014) 3 JT 101 : (2014) 2 SCALE 394 : (2014) 3 SCC 383 , a three-Judge Bench of the Supreme Court considered the question regarding making out of a case under Section 406 IPC. In the aforementioned case, in complaint petition, it was alleged that the appellants (Parents-in-law of respondent) were entrusted or had exercised dominion over the property belonging to the respondent and further that the appellants had unlawfully retained the same. After examining the aforesaid allegations while dismissing the appeal and directing the trial to be completed expeditiously, it observed in paragraph 12 as under:--
"12. Insofar as the offence under Section 406 of the penal code is concerned, it is clear from the averments made in paras 16, 18, 24, and 29 of the complaint petition that it has been alleged that the appellants were entrusted or had exercised dominion over the property belonging to the respondent and further that the appellants had unlawfully retained the same. The statements in para 6 of the complaint also alleges retention of cash and other gifts received by the respondent complainant at the time of her marriage to the Appellant 2- accused. In the face of the said averments made in the complaint petition, it cannot be said that the complaint filed by the respondent is shorn of necessary allegations to prima facie sustain the case of commission of the offence under Section 406 by the appellants."
Learned counsel for the Corporation has rightly relied upon the decisions of the Supreme Court in Trisuns Chemical Industry (Supra) in this regard. In the aforementioned judgment, the Supreme Court has held that quashing of FIR or a complaint in exercise of inherent power of the High Court should be limited to very extreme exceptions. Merely because an act has a civil profile is not sufficient to denude it of its criminal outfit. The provision incorporated in the agreement for referring the disputes to arbitration is not an effective substitute for a criminal prosecution when the disputed act is an offence. The Supreme Court has further held that arbitration is a remedy for affording reliefs to the party affected by breach of the agreement but the arbitrator cannot conduct a trial of any act which amounted to an offence albeit the same act may be connected with the discharge of any function under the agreement. Hence, those are not good reasons for the High Court to axe down the complaint at the threshold itself. The Supreme Court held that the investigating agency should have had the freedom to go into the whole gamut of the allegations and to reach a conclusion of its own.
In Pratibha Rani Vs. Suraj Kumar and Another, AIR 1985 SC 628 : (1985) CriLJ 817 : (1985) 1 Crimes 614 : (1985) 155 ITR 190 : (1985) 1 SCALE 458 : (1985) 2 SCC 370 : (1985) 3 SCR 191 , the question arose before the Supreme Court that when civil as well as criminal remedy is available to the party, can criminal prosecution be completely barred. In the aforementioned case, the accused contended that the dispute was of civil nature and no criminal prosecution would lie. After discussing the facts of the case, the Supreme Court held in paragraph 21 as under:--
"21. ...There are a large number of cases where criminal law and civil law can run side by side. The two remedies are not mutually exclusive but clearly coextensive and essentially differ in their content and consequence. The object of the criminal law is to punish an offender who commits an offence against a person, property of the State for which the accused, on proof of the offence, is deprived of his liberty and in some cases even his life. This does not, however, affect the civil remedies at all for suing the wrong deer in cases like arson, accidents, etc. It is an anathema to suppose that when a civil remedy is available, a criminal prosecution is completely barred. The two types of actions are quite different in content, scope and import..."
(Underlining mine for emphasis)
The same view was again reiterated with added emphasis in the case of Indian Oil Corporation Vs. NEPC India Ltd. and Others, AIR 2006 SC 2780 : (2006) 4 CTC 60 : (2006) 6 JT 474 : (2006) 7 SCALE 286 : (2006) 6 SCC 736 : (2006) 3 SCR 704 Supp : (2006) AIRSCW 3830 : (2006) 6 Supreme 66 , where the Supreme Court in paragraph 12 held as under:--
"12. ... The Principles, relevant to our purpose are:--
(i) a complaint can be quashed where the allegations made in the complaint, even if they are taken at their face value and accepted in their entirety, do not prima facie constitute any offence or make out the case alleged against the accused. For this purpose, the complaint has to be examined as a whole, but without examining the merits of the allegations. Neither a detailed inquiry nor a meticulous analysis of the material nor an assessment of the reliability or genuineness of the allegations in the complaint, is warranted while examining prayer for quashing of a complaint.
(ii) A complaint may also be quashed where it is a clear abuse of the process of the court, as when the criminal proceeding is found to have been initiated with mala fides/malice for wreaking vengeance or to cause harm, or where the allegations are absurd and inherently improbable.
(iii) The power to quash shall not however, be used to stifle or scuttle a legitimate prosecution. The power should be used sparingly and with abundant caution.
(iv) The complaint is not required to verbatim reproduce the legal ingredients of the offence alleged. If the necessary factual foundation is laid in the complaint, merely on the ground that a few ingredients have not been stated in detail, the proceedings should not be quashed. Quashing of the complaint is warranted only where the complaint is so bereft of even the basic facts which are absolutely necessary for making out the offence.
(v) A given set of facts may make out:(a) purely a civil wrong; or (b) purely criminal offence; or (c) a civil wrong as also a criminal offence. A commercial transaction or a contractual dispute, apart from furnishing a cause of action for seeking remedy in civil law, may also involve a criminal offence. As the nature and scope of a civil proceeding are different from a criminal proceeding, the mere fact that the complaint relates to a commercial transaction or breach of contract, for which a civil remedy is available or has been availed, is not by itself a ground to quash the criminal proceedings. The test is whether the allegations in the complaint disclose a criminal offence or not."
(Underlining mine for emphasis)
Recently in Vijayander Kumar and Others Vs. State of Rajasthan and Another, (2014) AIRSCW 1197 : (2014) 2 SCALE 217 : (2014) 3 SCC 389 , a three-Judge Bench of the Supreme Court held that a given set of facts may make out a civil wrong as also a criminal offence and only because civil remedy may also be available to the informant/complainant that itself cannot be a ground for quashing the criminal proceeding. It further held that the real test is whether the allegations in the complaint discloses a criminal offence or not.
Since the writ petitioners seek quashing of respective FIRs lodged against them, the question before this Court is whether the FIRs can be quashed under Article 226 of the Constitution of India at the threshold when the matter is still under investigation. In my opinion, the FIRs under consideration do attract ingredients of a cognizable offence. There is allegation of dishonest misappropriation of paddy in huge quantity. Though the rice millers were under obligation to return the rice to the extent of 67% of the paddy supplied to them, in several cases, either no CMR was returned at all or there was huge shortfall in returning CMR. This Court would take judicial notice of the fact that the Corporation has sustained loss of multi-crores due to non-delivery of several lakh quintals of CMR against the paddy released to the rice millers in advance in almost all the districts of the State of Bihar. The paddy was given to the rice millers without taking rice from them. It is a matter of concern as to how an offence of identical nature could happen throughout the State of Bihar. There is also an allegation of conspiracy in many of the FIRs under consideration. It has been brought to the notice of the Court that many officials of the Corporation are also being prosecuted for their alleged involvement in siphoning off huge public money.
The scope and power of the High Court to quash an FIR either in exercise of powers conferred under Section 482 Cr.P.C. or under Article 226 of the Constitution of India has been explained by the Supreme Court in a series of decisions. It has consistently held in State of West Bengal and Others Vs. Swapan Kumar Guha and Others, AIR 1982 SC 949 : (1982) 1 CompLJ 217 : (1982) CriLJ 819 : (1982) 1 SCALE 38 : (1982) 1 SCC 561 : (1982) 3 SCR 121 , Madhavrao Jiwajirao Scindia and Others Vs. Sambhajirao Chandrojirao Angre and Others, AIR 1988 SC 709 : (1988) CriLJ 853 : (1988) 1 Crimes 780 : (1988) 1 JT 279 : (1988) 1 SCALE 261 : (1988) 1 SCC 692 : (1988) 2 SCR 930 , Mrs. Rupan Deol Bajaj and another Vs. Kanwar Pal Singh Gill and another, AIR 1996 SC 309 : (1996) CriLJ 381 : (1995) 4 Crimes 171 : (1995) 7 JT 299 : (1995) 5 SCALE 670 : (1995) 6 SCC 194 : (1995) 4 SCR 237 Supp , Janata Dal Vs. H.S. Chowdhary and Others, AIR 1993 SC 892 : AIR 1992 SC 892 : (1993) CriLJ 600 : (1992) 3 Crimes 199 : (1992) 5 JT 213 : (1992) 2 SCALE 338 : (1992) 4 SCC 305 : (1992) 1 SCR 226 Supp , G. Sagar Suri and Another Vs. State of U.P. and Others, AIR 2000 SC 754 : (2000) 100 CompCas 613 : (2000) CriLJ 824 : (2000) 2 CTC 107 : (2000) 1 JT 360 : (2000) 1 SCALE 271 : (2000) 2 SCC 636 : (2000) 1 SCR 417 : (2000) AIRSCW 296 : (2000) 1 Supreme 322 , and Ajay Mitra Vs. State of M.P. and Others, AIR 2003 SC 1069 : (2003) CriLJ 1249 : (2003) 1 JT 418 Supp : (2003) 1 SCALE 487 : (2003) 3 SCC 11 : (2003) 1 SCR 622 : (2003) AIRSCW 592 : (2003) 2 Supreme 602 , that the court, under its extraordinary or inherent powers, can neither intervene at an uncalled for stage nor it can soft-pedal the course of justice at a crucial stage of investigation. It has further held that the power of quashing the criminal proceedings has to be exercised very sparingly and with circumspection and that too in the rarest of rare cases and the court cannot be justified in embarking upon an inquiry as to the reliability of the genuineness or otherwise of the allegations made in the FIR or complaint and the extraordinary and inherent powers of the Court do not confer an arbitrary jurisdiction on the court to act according to its whims and caprice.
In L.V. Jadhav Vs. Shankarrao Abasaheb Pawar and Others, AIR 1983 SC 1219 : (1983) 2 Crimes 470 : (1983) 2 SCALE 175 : (1983) 4 SCC 231 : (1983) 3 SCR 762 , the Supreme Court held that the Courts power is limited only to examine as to whether the allegations are patently absurd and inherently improbable so as to no prudent person can reach to a just conclusion and that there is sufficient ground for proceeding against the accused. But the Court, at that stage, cannot go into truth or falsity of the allegation.
In State of U.P. Vs. O.P. Sharma, (1996) 2 AD 111 : AIR 1996 SC 2983 : (1996) CriLJ 1878 : (1996) 2 JT 488 : (1996) 2 SCALE 356 : (1996) 7 SCC 705 : (1996) 2 SCR 236 , the Supreme Court has indicated that the High Court should be loath to interfere at the threshold to thwart the prosecution, exercising its inherent power under Section 482 of the Cr. P.C. or under Article 226 or 227 of the Constitution of India, as the case may be, and allow the law to take its own course.
While dealing with the contours of inherent power under Section 482 Cr. P.C. to quash a criminal proceeding, in Padal Venkata Rama Reddy @ Ramu Vs. Kovvuri Satyanarayana Reddy and Others, (2011) 3 Crimes 161 : (2011) 8 JT 646 : (2011) 8 SCALE 128 : (2011) 12 SCC 437 : (2011) 9 SCR 623 , the Supreme Court after an exhaustive consideration of the principle governing the exercise of said power as laid down in its earlier decisions held that the said power should not be exercised to stifle a legitimate prosecution. In the aforementioned judgment it observed "when exercising jurisdiction under Section 482 of the Code, the High Court would not ordinarily embark upon an inquiry whether the offence in question is reliable or not or whether on reasonable appreciation of it accusation would be not sustained that is the function of the trial court. The scope and exercise of power under Section 482 and the categories of cases whether the High Court may exercise its power under it relating to cognizable offences to prevent abuse of the process of any court or otherwise to secure the ends of justice were set out in detail in Bhajan Lal (supra). The powers possessed by the High Court under Section 482 are very wide and at the same time the power requires great caution in its exercise. The Court must be careful to see that its decision in exercise of this power is based on sound principles. The inherent power should not be exercised to stifle a legitimate prosecution. It would not be proper for the Court to analyze the case of the complainant in the light of the probabilities in order to determine whether conviction would be sustainable or on such premise arriving at the conclusion that the proceedings are to be quashed."
In Homi Rajvansh Vs. State of Maharashtra and Others, (2014) 4 SCALE 190 , a three Judge Bench of the Supreme Court reiterated that the inherent power under Section 482 Cr. P.C. and the extraordinary power under Article 226 of the Constitution of India should be exercised sparingly with great care and caution. In the aforementioned decision in paragraph 19 it held as under: -
"19. Though the High Court possesses inherent powers under Section 482 of the Code, these powers are meant to do real and substantial justice for the administration of which alone it exists or prevent abuse of the process of the court. This Court, time and again, has observed that extraordinary power should be exercised sparingly and with great care and caution. The High Court would be justified in exercising the said power when it is imperative to exercise the same in order to prevent injustice."
(Underlining mine for emphasis)
In Mrs. Rupan Deol Bajaj and another Vs. Kanwar Pal Singh Gill and another, AIR 1996 SC 309 : (1996) CriLJ 381 : (1995) 4 Crimes 171 : (1995) 7 JT 299 : (1995) 5 SCALE 670 : (1995) 6 SCC 194 : (1995) 4 SCR 237 Supp , the Supreme Court held in paragraph 23 that "at the stage of quashing an FIR or complaint the High Court is not justified in embarking upon an enquiry as to the probability, reliability or genuineness of the allegations made therein."
In R.P. Kapur Vs. The State of Punjab, AIR 1960 SC 866 : (1960) CriLJ 1239 : (1960) 3 SCR 388 , the Supreme Court held that quashing of a criminal proceeding was permissible only on following three grounds:--
"(i) Where it manifestly appears that there is a legal bar against the institution or continuance of the criminal proceeding in respect of the offence alleged. Absence of the requisite sanction may, for instance, furnish cases under this category.
(ii) Where the allegations in the First Information Report or the complaint, even if they are taken at their face value and accepted in their entirety, do not constitute the offence alleged; in such cases no question of appreciating evidence arises: it is a matter merely of looking at the complaint or the First Information Report to decide whether the offence alleged is disclosed or not.
(iii) Where the allegations made against the accused person do constitute an offence alleged but there is either no legal evidence adduced in support of the case or the evidence adduced clearly or manifestly fails to prove the charge. In dealing with this class of cases it is important to bear in mind the distinction between a case where there is evidence which is manifestly and clearly inconsistent with the accusation made and cases where there is legal evidence which on its appreciation may or may not support the accusation in question. In exercising its jurisdiction under S. 561-A the High Court would not embark upon an enquiry as to whether the evidence in question is reliable or not. That is the function of the trial magistrate, and ordinarily it would not be open to any party to invoke the High Court''s inherent jurisdiction and content that on a reasonable appreciation of the evidence the accusation made against the accused would be sustained."
Similarly, in Nagawwa''s case (supra), it was held that the Magistrate while issuing process against accused must satisfy himself as to whether the allegation in complaint petition on being proved would ultimately end in the conviction of the accused. It was held that the order of magistrate issuing process against accused could be quashed only under the following circumstances:--
"(1) Where the allegations made in the complaint or the statements of the witnesses recorded in support of the same taken at their face value make out absolutely no case against the accused or the complaint does not disclose the essential ingredients of an offence which is alleged against the accused.
(2) Where the allegations made in the complaint are patently absurd and inherently improbable so that no prudent person can ever reach a conclusion that there is sufficient ground for proceeding against the accused.
(3) Where the discretion exercised by the Magistrate in issuing process is capricious and arbitrary having been based either on no evidence or on materials which are wholly irrelevant or inadmissible; and (4) Where the complaint suffers from fundamental legal defects, such as, want of sanction, or absence of a complaint by legally competent authority and the like."
In State of Haryana & Others v. Bhajan Lal and Others (Supra), certain parameters have been pointed out in paragraph 102 by the Supreme Court under which prosecution launched in a complaint or FIR may be quashed in exercise of jurisdiction under Section 482 of the Code. It reads as under:--
"102. In the backdrop of the interpretation of the various relevant provisions of the Code under Chapter XIV and of the principles of law enunciated by this Court in a series of decisions relating to the exercise of the extra-ordinary power under Article 226 or the inherent powers Under Section 482 of the Code which we have extracted and reproduced above, we give the following categories of cases by way of illustration wherein such power could be exercised either to prevent abuse of the process of any Court or otherwise to secure the ends of justice, though it may not be possible to lay down any precise, clearly defined and sufficiently channelised and inflexible guidelines or rigid formulae and to give an exhaustive list of myriad kinds of cases wherein such power should be exercised.
(1) Where the allegations made in the First Information Report or the complaint, even if they are taken at their face value and accepted in their entirety do not prima-facie constitute any offence or make out a case against the accused.
(2) Where the allegations in the First Information Report and other materials, if any, accompanying the F.I.R. do not disclose a cognizable offence, justifying an investigation by police officers Under Section 156(1) of the Code except under an order of a Magistrate within the purview of Section 155(2) of the Code.
(3) Where the uncontroverted allegations made in the FIR or complaint and the evidence collected in support of the same do not disclose the commission of any offence and make out a case against the accused.
(4) Where, the allegations in the F.I.R. do not constitute a cognizable offence but constitute only a non-cognizable offence, no investigation is permitted by a police officer without an order of a Magistrate as contemplated under Section 155(2) of the Code.
(5) Where the allegations made in the FIR or complaint are so absurd and inherently improbable on the basis of which no prudent person can ever reach a just conclusion that there is sufficient ground for proceeding against the accused.
(6) Where there is an express legal bar engrafted in any of the provisions of the Code or the concerned Act (under which a criminal proceeding is instituted) to the institution and continuance of the proceedings and/or where there is a specific provision in the Code or the concerned Act, providing efficacious redress for the grievance of the aggrieved party.
(7) Where a criminal proceeding is manifestly attended with mala fide and/or where the proceeding is maliciously instituted with an ulterior motive for wreaking vengeance on the accused and with a view to spite him due to private and personal grudge."
After laying down seven parameters in paragraph 102, relating to exercise of extra-ordinary power under Article 226 of the Constitution or inherent powers under Section 482 Cr.P.C. for quashing of the FIR, either to prevent abuse of the process of the Court or otherwise to secure ends of justice, the Supreme Court held in paragraph 103 as under:--
"103. We also give a note of caution to the effect that the power of quashing a criminal proceeding should be exercised very sparingly and with circumspection and that too in the rarest of rare cases; that the Court will not be justified in embarking upon an enquiry as to the reliability or genuineness or otherwise of the allegations made in the F.I.R. or the complaint and that the extraordinary or inherent powers do not confer an arbitrary jurisdiction on the Court to act according to its whim or caprice."
While arguing the matters, the learned Counsel for the petitioners have tried to draw my attention towards several documents annexed to the writ petitions in support of their defence. In my opinion, for the purpose of quashing of FIR it would not be proper for this Court to look into the defence documents. In this regard, it would be apt to quote paragraph 18 of the decision of the Supreme Court in Ravindra Kumar Madhanlal Goenka and Another Vs. Rugmini Ram Raghav Spinners P. Ltd., AIR 2009 SC 2383 : (2009) CriLJ 2852 : (2009) 13 JT 203 : (2009) 6 SCALE 162 : (2009) 11 SCC 529 : (2009) 6 SCR 27 , which is as under:--
"18. ...While entertaining a petition under Section 482 CrPC, the materials furnished by the defence cannot be looked into and the defence materials can be entertained only at the time of trial. It is well settled position of law that when there are prima facie materials available, a petition for quashing the criminal proceedings cannot be entertained. The investigating agency should have had the freedom to go into the whole gamut of the allegations and to reach a conclusion of its own. Pre-emption of such investigation would be justified only in very extreme cases."
Thus, from the aforementioned decisions of the Supreme Court, it stands well settled that if the facts stated in the FIR or complaint petition would make out the ingredients of the offence alleged therein, the High Court either in exercise of its extraordinary power under Article 226 of the Constitution of India or its inherent power under Section 482 Cr.P.C. would not quash the proceeding merely because the same have attributes to a civil dispute. It would further be evident from the decisions of the Supreme Court referred to hereinabove in the case of Indian Oil Corporation v. NEPC India Ltd. (Supra) and R. Kalayani v. Janak C. Mehta (Supra) that the nature and scope of civil proceedings is entirely different from the criminal proceedings. The mere fact that the allegations relate to a commercial transaction or breach of contract for which civil remedy is available or has been availed is not a ground to quash the criminal proceedings.
Considering the facts of the cases under consideration and the decisions of the Supreme Court referred to hereinabove, I am of the firm view that the FIRs in question cannot and should not be quashed. The FIRs of the aforementioned cases are nascent documents, averments of which would take tangible shape only after the process of investigation in these cases is complete. On appraisal of the allegations made in the FIRs under consideration, I am unable to hold that they do not disclose the commission of any cognizable offence, or that they merely disclose a breach of contract, or that existence of an arbitration clause, or pendency of a certificate proceeding or arbitration proceeding, ousts the jurisdiction of the investigating agency to investigate the offences alleged. The hazy picture presented by the allegations made in the FIRs would be rendered more and more clear when all the incriminating materials unfold during investigation. Even the names and other details of the culprits involved in the crime would be fully revealed only after the investigation culminates. In my opinion, if before all material facts are unearthed by the investigating agency and the FIRs are nipped in the bud, there cannot be greater injustice.
Given the quantity and magnitude of the multi-crore paddy scam and loss caused to the exchequer, a thorough probe with fairness and without inordinate delay is the need of the hour. The investigating agency must exhibit sensitivity to pilferage of public money. It must unravel the modus operandi adopted for swindling public money, identify the characters involved and the beneficiaries of the scam, unveil the criminal conspiracy, and the role ascribed to each conspirator.
Looking at the magnitude of the offence, the Superintendents of Police concerned are directed to personally supervise and monitor the investigations of the cases in which there is allegation of dishonest misappropriation of paddy. The Superintendents of Police would be at liberty to direct further investigation in terms of clause (8) of Section 173 Cr.P.C. in the cases in which investigation has been completed and reports under clause (2) of Section 173 Cr.P.C. have been submitted, in order to unravel and unveil the conspiracy leading to the State-owned Corporation sustained huge losses.
In view of the discussions made hereinabove, the writ petitions are dismissed.
It is made clear that nothing stated herein shall be construed to be an expression of opinion on the merits of the controversy. The petitioners would be at liberty to raise all the pleas raised in the present writ petitions before the trial Court at the appropriate stage.
The Registry is directed to send a copy of the order to all the Superintendents of Police of the State of Bihar at their respective official e-mail addresses.