Manjit Singh vs State of Punjab

V.M. Jain, J.—This is a petition u/s 482 Cr.P.C. filed by the accused petitioners, seeking quashment of the case bearing FIR No. 122 dated

2.8.2001 under Sections 406/420 IPC, registered in PS City Muktsar on the ground that the matter was already pending adjudication before the

Arbitrator.

The aforesaid FIR was got registered by the District Manager, Punjab State Civil Supplies Corporation, Muktsar (hereinafter referred to as

PUNSUP) against the petitioners. It was alleged in the said FIR that M/s Raman Rice Mills, Muktsar (of which the petitioners are partners) had

agreed to shell paddy of PUNSUP and to deliver the rice after shelling to Food Corporation of India (FCI). It was alleged that agreement was

entered into between the parties in this regard. It was alleged that upto 17.2.1997, M/s. Raman Rice Mills, Muktsar was entrusted 78389 bags of

fine Grade-A paddy against various receipts and that the yield of rice from the find Grade-A paddy was 67% and in this manner, M/s. Raman Rice

Mills was to deliver 33226.85 quintals of Grade-A rice to the FCI till 28.2.1998, which date was extended upto 31.8.1998, on behalf of

PUNSUP. It was alleged that M/s Raman Rice Mills had delivered only 21028.23 quintals of rice to FCI on behalf of PUNSUP. It was alleged

that stocks of paddy entrusted and lying in the premises of M/s Raman Rice Mills was physically verified on 9.7.1998 by the field staff in the

presence of representatives of the said firm. It was alleged that as per the said verification shortage of 22648 bags (of paddy) was found. It was

also reported that the said firm was selling the stocks of the paddy unauthorizedly and was also preparing rice which was not as per the

specifications. It was alleged that in this manner, M/s Raman Rice Mills had deliberately, dishonestly and wilfully mis-appropriated, embezzled and

committed criminal breach of trust by removing 23122 bags of PUNSUP paddy unauthorizedly and had milled unauthorised rice which was not as

per the specifications. It was alleged that the field staff had also reported that M/s Raman Rice Mills, Muktsar had delivered 18 wagons of rice in

the account of M/s Jagjit Rice Mills to the FCI. It was alleged that the total shortage of paddy, which had been embezzled by the said firm, would

come to 16813 bags i.e. 10928 quintals 45 kilograms, valued at Rs.61,25,286/- including the cost of the gunny bags.

The aforesaid FIR was registered by the police, on receipt of a communication from the District Manager, PUNSUP, Muktsar, for the offence

under Sections 406, 420 IPC and the case was under investigation.

In the present petition filed by accused petitioners, seeking quashment of the aforesaid FIR, it has been alleged that no offence u/s 406/420 IPC

was made out, inasmuch as there was an arbitration clause in the agreement arrived at between the parties and that the matter was already pending

before the Arbitrator in this regard and as such the FIR in question may be quashed.

After hearing the Learned Counsel for the petitioners and after perusing the record, in my opinion, no case for quashing the aforesaid FIR is

made out, on the facts and circumstances of the present case.

In Trisuns Chemical Industry Vs. Rajesh Agarwal and others, it was held by the Hon''ble Supreme Court that merely because an act has a civil

profile, was not sufficient to denude it of its criminal outfit. The provision incorporated in the agreement for referring the dispute to arbitration, was

not an effective substitute for criminal prosecution when the disputed act was an offence. The arbitration was a remedy for affording reliefs to the

party affected by breach of the agreement, but the arbitrator could not 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. In the reported case, the complainant had filed a criminal complaint

before the Magistrate, who sent it to the Police u/s 156(3), Cr.P.C. Thereupon, the accused moved the Gujarat High Court u/s 482, Cr.P.C. for

quashment of the complaint. The Gujarat High Court quashed the complaint as also the order passed by the Magistrate thereon. This order was

challenged by the complainant before the Hon''ble Supreme Court; It was under those circumstances that the Hon''ble Supreme Court, after

holding as above, set aside the order passed by the Gujarat High Court.

In M/s Medohl Chemicals and Pharma Pvt. Ltd. v. Biological E. Limited, 2000 (2) RCR (Cri) 122, it was held by the Hon''ble Supreme Court

that there was no ground to quash the criminal proceedings on the ground that civil remedy for breach of contract was available. It was further held

that both civil and criminal remedies could be pursued in diverse situations. Similar view was taken by the Hon''ble Supreme Court, in the cases

reported as Lalmuni Devi v. State of Bihar, 2000(1) RCR (Cri) 228, Kamladevi Agarwal v. State of West Bengal, 2001(4) RCR (Cri) 522 and

M. Krishnan v. Vijay Singh and Anr., 2001(4) RCR (Cri.)405.

In view of the law laid down by the Hon''ble Supreme Court in the above mentioned cases, in my opinion, the FIR in question cannot be

quashed, especially when serious allegations of embezzlement and misappropriation have been levelled against the accused petitioners.

For the reasons recorded above, finding no merit in this petition, the same is hereby dismissed.