Pardeep Kumar vs State of Haryana

P.K. Jain, J.

This petition has been filed under section 482 of the Code of Criminal Procedure (for short ''the Code'') for quashing F.I.R. No. 133 dated 3.10.1994, registered at Police Station Jagadhari, for the offences under section 406/420, I.P.C.

The admitted facts are that on 31.3.1984, the petitioner took a loan of Rs. 25,000/ from the Punjab National Bank, Bilaspur Branch, for the purpose of his business of acid and chemicals vide agreements ''C.1''. This loan was to be repaid by the petitioner in 72 instalments with effect from September 19, 1984. The stock in shop at that time was hypothecated as a security for the repayment of the said loan along with the interest in terms of the said agreement. The petitioner also executed a hypothecation deedAnnexure ''C.2''. Having paid certain instalments for quite some time, the petitioner defaulted. A sum of Rs. 39,552.00 became due from the petitioner to the said Bank as on 17.9.1984 vide copy of the ledgerAnnexure ''C.3''.

On 3.10.1994, the Manager, Punjab National Bank, Bilaspur, wrote a letter to the Superintendent of Police, Yamuna Nagar, stating therein that a loan of Rs. 25,000/ was sanctioned and distributed to the petitioner for the purchase of acid under the scheme, that during inspection, the Bank came to know that the petitioner had disposed of the security stock of acid hypothecated to the Bank without repaying the Bank''s loan, and thus violated the terms of the agreement entered into between the parties, and that this resulted in cheating and defrauding the Bank and also amounted to a breach of trust. A request was made to lodge F.I.R. against the petitioner. On the same day, the Superintendent of Police, Yamuna Nagar, directed the S.H.O. Bilaspur, to register a case and investigate. Accordingly, a case under section 406/420 I.P.C., stands registered at Police Station Bilaspur.

It has been stated by the petitioner that the transaction between the parties was that of a creditor and a debtor, that a transaction of loan does not amount to any offence either of cheating or embezzlement, that the petitioner had been paying instalment in accordance with the terms and conditions of the agreement, and that the dispute is purely of a civil nature. It has been further alleged that the initiation of criminal proceedings is wholly uncalled for and liable to be quashed.

On a notice given to the respondent, it has been stated in reply by the State that the said loan was disbursed to the petitioner for the purchase of stock of acid which was hypothecated to the Bank, that the petitioner failed to utilise the said money for the purpose for which it was given to him and as such committed criminal breach of trust by violating the agreement, that the petitioner had fraudulent and dishonest intention at the time to entering into the said transaction of loan, and that on the basis of the statement of several witnesses recorded under section 161 of the Code, prima facie a case under section 406/420, I.P.C. is made out. It has been further stated that as per record of the Bank, the petitioner has not paid instalments after 18.1.1994 and that the proceedings should not be quashed.

I have heard the learned counsel for the parties and have perused the record.

Shri S.S. Dinarpur, Advocate, learned counsel for the petitioner has argued that even if all the averments in the complaint are taken to be correct, no offence under section 406 or 420, I.P.C, is made out against the petitioner. It has been further argued by the learned counsel that the transaction in question was a transaction of loan, pure and simple between the petitioner and the Bank and the petitioner has been repaying the loan along with interest in instalments. It has been argued that criminal process cannot be misused to coerce the petitioner to make the payment of the balance amount, if any.

On the other hand Shri Krishan Kumar, Advocate, appearing on behalf of the State of Haryana, has argued that the petitioner has not repaid the loan in accordance with the terms and conditions of the agreement, and has misappropriated the stock in trade which was hypothecated to the complainant Bank for the repayment of the loan along with interest. It is, thus, argued by the learned counsel that these facts are enough to constitute an offence under section 406 as well as section 420, I.P.C. It has been also argued by the learned counsel that this Court should not exercise its jurisdiction under section 482 of the Code and leave the petitioner to approach the trial Magistrate to consider all these pleas being sought to be raised before this court.

I have given my careful thought to the respective arguments advanced at the Bar.

In Madhavrao Jiwaji Rao Scindia v. Sambhajirao Chandrojirao Angre, AIR 1983 SC 709, the apex Court expounded the law regarding the exercise of the inherent jurisdiction under section 482 of the Code by the High Court in such like matter as under:

"The legal position is well settled that when a prosecution at the initial stage is asked to be quashed, the test to be applied by the court is as to whether the uncontroverted allegations as made prima facie establish the offence. It is also for the court to take into consideration any special features with appear in a particular case to consider whether it is expedient and in the interest of justice to permit a prosecution to continue. This is so on the basis that the court cannot be utilised for any oblique purpose and whether in the opinion of the court chances of an ultimate conviction is bleak and, therefore, no useful purpose is likely to be served by allowing a criminal prosecution to continue, the Court may while taking into consideration the special facts of a case also quash the proceedings even though it may be at preliminary stage."

After a review of the entire case law available on the subject and examining the various provisions of the Code and the Constitution of India, their Lordships of the Supreme Court of India in a well known judgment rendered in State of Haryana and others v. Ch. Bhajan Lal and others, AIR 1992 Supreme Court 604, illustrated certain categories of cases wherein a Court in exercise of its powers under section 482 of the Code or in exercise of its extraordinary powers under Article 226 of the Constitution of India can quash a first information report or a complaint. Categories Nos. 1 and 3 read as under:

"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.

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."

Thus, where the allegations made in a complaint, even if they are taken at their face value and accepted in entirety, do no constitute prima facie an offence or make out a case against the accused, the Court is well within its powers to quash the complaint.

Turning to the case in hand, it is not disputed that the petitioner had taken a loan of Rs. 25,000/ from the Punjab National Bank, the complainant in March 1984, which was repayable with interest at the agreed rate in 72 instalments. It is also not disputed that the petitioner has been paying the instalments upto 17th January 1994 and has not paid any amount thereafter. From a bare perusal of the copy of the complaint (Annexure P.1) on the basis of which F.I.R. in question was recorded, reveals that the only allegation made against the petitioner is that he has violated that terms of the agreement entered into between him and the Bank. From this averment, conclusion is being drawn that the same amounts to cheating and defrauding the Bank. This assumption or inference is absolutely erroneous and not sustainable in the eyes of law.

It cannot be disputed that an offence under section 406. I.P.C, is antithesis to an offence under section 420, I.P.C. Even otherwise, dishonest intention is an essential ingredient of both these offences. To constitute an offence under section 406 or section 420, I.P.C., it is for the prosecution to allege and prove that there was dishonest intention to do the particular act on the part of the accused person. If there is no such averment or any evidence in support thereof, no offence thereunder would be constituted. In the case in hand, there is no such averment even regarding any dishonest intention on the part of the petitioner in transacting his business and selling the stock of acid and chemicals in his shop. Moreover, as already stated above, the petitioner had raised this loan only for the purpose of carrying on his business in acid and chemicals. From a bare perusal of the agreement of loan (Annexure C.1) and the hypothecation deed (Annexure C.2), it is evident that no particular item of acid or chemical was hypothecated to the complainantBank. In schedule III to the agreement ''C.1, it specifically mentioned that the nature of the surety is hypothecation of stock in shop. No specific and identified item of acid or chemical was hypothecated to the respondentBank. Still further, the petitioner has been paying the instalments right upto December 1993 and is alleged to have defaulted since January 1994. In these circumstances, the allegations contained in the complaint (Annecure P.1) reveal only a breach of contract, and does not constitute and offence either under section 406 or section 420, I.P.C.

It is well settled that judicial process should not be an instrument of oppression or needless harassment. Criminal proceedings cannot be used as a means of redressing the civil wrongs or for recovery of civil debts in the absence of any provision to that effect. The object of civil procedings is to recover money or any other property or the enforcement of right, whereas the object of criminal proceeding is the punishment for an offence. At the stage of summoning a person as an accused in a case like the persent one, the Court would be circumspect and judicious in exercising dirscretion and should take all relevant facts and circumstances into consideration before issuing process lest it would be an instrument in the hands of a party to coerce a party opposite for the anforcement of a civil liability.

As a result of the above discussion, I hold that assuming all the averments in the complaint (Annexure P.1) correct, no offence under section 406 or section 420, I.P.C, is made out against the petitioner. The liability, if any of the petitioner, as disclosed from the said complaint is civil in nature. The first information report in question recorded on the basis of the complaint (Annexure P.1) is merely an abuse of the process of law and liable to be quashed. Consequently, this petition is allowed The first information report No. 133 dated 3.10.1994, registered at Police Station Jagadhari for the offences under sections 406/420, I.P.C., and the consequent**.