K. Srinivas vs State of Andhra Pradesh

By this petition u/s 482, Cr.P.C., K. Srinivas, the petitioner is challenging the proceedings in C.C. No. 6/95 on the file of J.F.C.M., Narasapur initiated against him for the offences punishable u/s 420 and 406, I.P.C. The said proceedings have been initiated by the Inspector of Police, Bolaram on the complaint preferred by one J. Willaiamson, Asst. Manager, Mould Teck Plastics Ltd., Ameerpet, Hyderabad.

On the complaint given by the Asst. Manager, Mould Teck Plastics Ltd., a case in Cr. No. 14/94 under Sections 420 and 406, I.P.C. has been registered against the petitioner herein who is the Managing Director of M/s. Shayamalamba Industries Pvt. Ltd., Ramnagar, Hyderabad. The case has been investigated and the charge-sheet has been filed and the same has been taken on file as C.C. No. 6/95 by the Munsiff Magistrate, Narsapur. Copy of the said charge-sheet has been filed along with the petition. As seen from the charge-sheet, the case of the prosecution in brief, is as follows :

The petitioner-accused and the defacto-complainant, on behalf of their respective companies, entered into an understanding that the complainant should provide HDPE granules (raw-material) to the accused for the purpose of moulding plastic containers as per the specifications of the complainant and the accused return the finished products to the complainant and the accused is entitled to raise the bill as per the agreed rates for carrying out the job work entrusted to him by the complainant. As per the said understanding/agreement, the factory of the complainant supplied raw-materials after obtaining permission from the Central Excise Department from June, 1993. The accused also returned the finished goods regularly and submitted the raw-materials'' account from September, 1993. The complainant contends that on verification, the accused was found holding raw-material nearly 7.5 metric tons and actually as per the Central Excise Challan, the raw-materials withheld by the accused is about 8 metric tons and the complainant requested the accused to return the remaining raw-materials worth Rs. 3.5 lakhs and thus, it is alleged, the accused cheated and committed criminal breach of trust and thus, committed offences punishable under Sections 420 and 406, I.P.C.

It may be stated here that on behalf of the petitioner-accused herein Crl. M.P. No. 427/97 was filed for discharge of the accused before the trial Court on the ground that there are no grounds to frame charges against the accused. The learned Magistrate after hearing both sides, dismissed that petition by his order, dated 24-6-1996. Thereafter, the accused has come up with this petition for quashing the said proceedings.

The learned Counsel for the petitioner submits that the dispute between the parties is one of civil nature and initiation of criminal proceedings on such a civil dispute is sheer abuse of process of the Court on the part of the complainant and even if the allegations in the charge-sheet are accepted to be true, the offences under Sections 420 and 406, I.P.C. could not be made out against the petitioner herein, that the police have joined hands with the defacto complainant in harassing the petitioner and as such, the proceedings are mala fide and therefore, the proceedings are liable to be quashed.

The learned Counsel for the petitioner-accused further contends that on settlement of accounts, the complainant himself is liable to pay a sum of Rs. 79,000/- to the petitioner-accused for the cost of the raw-material procured by him at the instance of the complainant for being used in the manufacture of the moulds and supplied to him. The learned Public Prosecutor, on the other hand, submits that though the offence u/s 420, I.P.C. is not made out from the allegations in the charge-sheet there is ample material on record to prosecute this accused for the offence u/s 420, I.P.C.

The question now is whether there are any justifiable grounds to interfere and quash the criminal proceedings initiated against this petitioner-accused in C.C. No. 6/95 by this Court under inherent powers under S. 482, Cr.P.C. ?

It is well settled that, ordinarily, criminal proceedings must be tried under the Criminal Procedure Code, and the High Court would be reluctant to interfere at the thereshold or interlocutory stage. But, there are situations where inherent jurisdiction u/s 482, Cr.P.C. to quash the criminal proceedings can and should be exercised. While the conditions on which and the circumstances in which the High Court may interfere in criminal proceedings, at the threshold have, advisedly, not been legislatively or judicially delineated or defined with a mathematical precision, it is not difficult to spell out from decided cases broad guidelines in dealing with a challenge to such proceedings at the initial stage, even though it is well-settled that these principles are not of universal application and as always, each case has to be decided on its own merits.

The Apex Court in State of Haryana and others Vs. Ch. Bhajan Lal and others, , has mentioned certain categories of cases mentioned below by way of illustration wherein the extraordinary power under Art. 226 or inherent powers u/s 482, Cr.P.C. can be exercised by the High Court either to prevent abuse of the process of any Court or otherwise, to secure the ends of justice. 1) Where the allegations made in the first information report of 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 FIR do not disclose a cognizable offence, justifying an investigation by police officers under S. 156(1) of the Code except under an order of Magistrate within the purview of S. 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 or make out a case against the accused.

4) Where, the allegations in the FIR do not constitute a congnizable offence but constitute only a non-cognisable offence, no investigation is permitted by a police officer without an order of a Magistrate as contemplated u/s 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 proceedings 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.

It is also necessary for Courts to exercise caution in dealing with allegations before a criminal Court which also raise disputes between the parties, of civil nature. for which the aggrieved party must, ordinarily, invoke the aid of the civil process and reasonably preclude the possibility of a more convenient forum of a Criminal Court may have been, mala fide, selected by an aggrieved person in preference to a profix and costly civil process with a view to have expeditious settlement of a bona fide dispute or to twist the tail of the accused for the settlement more favourable to the party, seeking the aid of the criminal process. In view of the increasing over-flow of matters from the civil side to the criminal side, such fears could not be said to be imaginary.

The Apex Court in Sardar Trilok Singh and Others Vs. Satya Deo Tripathi, quashed the proceedings before the Criminal Court holding that "it is a well settled principle of law that the allegations relating to a bona fide civil dispute, even assuming the facts to be substantially correct, should be quashed in exercise of the Court''s inherent powers."

In the context of the above said principles, and in the face of the allegations in the complaint, and the material placed before the Court, I am fully satisfied that the proceedings in the Court below are liable to be quashed.

The allegation against the accused, as seen from the charge-sheet, is that the accused failed to account for 7.5/8 metric tons of raw-materials supplied to the accused as per the understanding/oral agreement for the purpose of moulding the plastic containers and delivering the finished products and retaining the said quantity of raw-materials worth Rs. 3.5 lakhs and that the accused failed to account for the same and pay the value of the same. On the basis of the said allegation in the charge-sheet, the learned Magistrate has taken the case on file for the offences under Sections 420 and 406, I.P.C. The essential requirements to constitute an offence u/s 420, I.P.C. are : 1) Cheating, dishonest inducement to deliver property or to make, alter or destroy any valuable security or anything which is sealed or signed and is capable of being converted into valuable security. There is no averment in the charge-sheet that on account of cheating or dishonest inducement on the part of the accused, the raw-material was delivered by the complainant to the accused. On the other hand, it is specifically averred that in pursuance to the agreement between the parties, the raw-material was supplied to the accused for moulding and delivery of finished plastic goods. Thus, the raw-materials were supplied to the accused under an agreement between the parties. There may be breach of contract between the parties as alleged by the complainant that the accused failed to account for the raw-materials supplied to him. Therefore, the dispute between the parties is purely a civil litigation arising out of breach of contract and failure to account for the alleged raw-materials supplied to the accused. The allegations in the charge-sheet do not constitute an offence u/s 420, I.P.C.

The other offence u/s 420, I.P.C. relates to criminal breach of trust. Criminal breach of trust has been defined in Section 403, I.P.C. To constitute the offence of criminal breach of trust, the necessary ingredients are : (1) entrustment of property or dominion over property, (2) such entrustment must be in trust, (3) dishonest mis-appropriation or dishonest conversion to one''s own use by the receiver of the property, (4) violation of the law prescribing the modes in which the trust is to be discharged or violation of legal contract touching the discharge of the trust. As seen from the averments in the charge-sheet, none of these ingredients have been made out, it is no doubt true that the accused is entrusted with the raw-material but it was not on account of trust or safe custody, but it was only in pursuance of an agreement between the parties for preparation of finished plastic goods. If the accused failed to supply the finished goods and retained the raw-materials, he would be liable only for breach of contract and for failure to account for the raw-materials supplied to him. Therefore, taking the allegations in the charge-sheet, as they are, without adding or subscribing anything, the alleged offences under Sections 420 and 406, could not be made out. The dispute is purely civil in nature. A case of breach of trust is both a civil wrong and a criminal offence. On a consideration of the facts in this case, it is predominantly a civil wrong and the ingredients of the criminal offence are wanting. Therefore, the criminal proceedings initiated against the petitioner-accused have to be quashed. The defacto complainant is at liberty to take out steps on civil side, if he is so advised.

For the fore-going reasons, the petition is allowed and the criminal proceedings initiated against this petitioner-accused in C.C. No. 6/95 on the file of the J.F.C.M., Narasapur are quashed, to prevent the abuse of process of the Court by the defacto complainant.

Petition allowed.