Ray Construction Limited and Others vs The State of Karnataka and Others

P.D. Waingankar, J.—The petitioners who are accused Nos. 1 to 4 in C.C. No. 145/2013 on the file of the Prl. Senior Civil Judge and JMFC, Hosapete have filed this petition to quash the proceedings.

The parties are referred to their rank before the Magistrate. The petitioner Nos. 1 to 4 are referred to as accused Nos. 1 to 4 and the respondent No. 2 is referred to as complainant during the course of order.

The brief facts which gave rise to this petition are as under:

The accused No. 1 is a Company of which the accused Nos. 2, 3 and 4 are the Managing Director, Executive Director and Vice-President respectively. Accused No. 1 - Company had undertaken a contract for civil work from JSW Steels Ltd., Torangallu in Sandur Taluk of Ballari District such as construction of building, roads, equipment, foundation etc., The accused No. 1-Company in turn entrusted the said work to the complainant, who is the Managing Director of M/s. Rachana Okay Infra Tech Private Ltd., by means of sub-contract. Three work orders were issued by the accused-Company to the complainant in respect of separate jobs. The work was carried out by the complainant-Company. However, dispute arose between the parties as to the payment of the amount for the work carried out by the complainant. The complainant put forth a bill for Rs. 3,72,19,929/-. The accused declined to pay the same amount on the ground that they are not liable to pay that much of amount. Both the parties went on corresponding with each other in respect of payment of the amount for the work carried out. The accused have given their own explanation and the reasons for declining to pay the bill amount claimed by the complainant by writing series of letters. When the complainant could not recover the amount for the work carried out from the accused-Company, the complainant filed a private complaint before the Magistrate at Hosapete for the offences punishable under Sections 417 and 420 read with Section 34 of IPC against the accused Nos. 1 to 4. The Magistrate took cognizance of the offences, issued process and thereby C.C. No. 145/2013 came to be registered. Since the dispute is in respect of the payment of the amount arising out of a contract entered between the complainant and accused, the remedy is to approach the Civil Court for recovery. But the complainant filed a complaint just to build pressure on the accused to pay the amount. Thus, according to the accused the filing of the complaint for recovery of the amount due in relation to the contract work is nothing but abuse of process of the Court. Therefore, they have filed the petition to quash the proceedings.

I have heard both the learned counsel appearing for the accused and the complainant. Perused the records.

It is not in dispute that the accused-Company had undertaken the contract work from JSW Steels Ltd., Torangallu in Sandur Taluk of Ballari District. It is also not in dispute that the accused-Company in turn entrusted the work to the complainant by way of sub-contract. The accused No. 1 issued three work orders in favour of the complainant. It is the case of the complainant that after the completion of the work, the bills were placed before the accused No. 1-Company for payment of the amount. The accused No. 1 raised objections to the bills on various grounds. Ultimately, the accused No. 1-Company did not agree to pay the bill amount as claimed by the complainant. The correspondence entered between the parties in that regard is placed on record. Ultimately, the accused No. 1-Company declined to make the payment. Therefore, the complainant filed a complaint against the accused for the offence punishable under Sections 417 and 420 read with Section 34 of IPC. In other words, the allegations made in the complaint are that the accused cheated the complainant with a dishonest intention right from beginning. Of late, the complainant-Company filed a suit in O.S. No. 350/2014 on the file of Prl. Senior Civil Judge and JMFC, Hosapete against the accused for recovery of the amount of Rs. 3,72,19,929/- as could be seen from the copy of the plaint produced by the accused. From the reading of the averments made out in the complaint, it is obvious that the suit is in respect of payment of the amount for the work carried out for which the complaint is filed against the accused. The complainant was issued with three work orders dated 01.11.2010, wherein the description of the work, quantity of the work, rate and total amount is very clearly specified. It is suffice to say that the terms and conditions are contained in the work order itself. If there is any dispute between the parties as to the payment of amount, it is purely civil dispute for which rightly the complainant has filed a suit for recovery of the amount. I do not find any dishonest intention on the part of the accused right from the inception of the contract so as to cheat the complainant merely because the bill amount is not paid. The dispute started after completion of the work entrusted to the complainant by the accused-Company. The dispute is purely in respect of the payment of the amount. The averments made out in the complaint taken at their face value do not make out the ingredients of offences under Sections 417 and 420 of IPC. There is neither cheating nor dishonest intention on the part of the accused while entrusting the work to the complainant. In a decision reported in Binod Kumar Vs. State of Bihar, , the Hon''ble Supreme Court in the head notes A and B held as under:

"(a) Code of Criminal procedure, 1973 Section 482 - Quashing the complaint/FIR - Enquiry into probability, reliability or the genuineness of the allegations - Not required - However, growing tendency in business circles to convert purely civil disputes into criminal cases taken notice of.

(b) Indian Penal Code, 1860 - Sections 405 and 406 and Section 420 - Claim of respondent No. 2 not paid - parties already availing civil remedies - Basic essential ingredients of dishonest misappropriation and cheating missing in the case - No case made out under sections 405 or 420 - Non-payment of claimed amount does not amount to criminal breach of trust."

The dispute in question is purely contractual dispute for which the remedy lies in civil law. Of course, the scope of civil proceedings is different from the criminal proceedings. It is also true that mere fact that the complaint relates to a commercial transaction for the period of contract, for which a civil remedy is available or has been availed is not by itself a ground to quash the criminal proceedings. Ultimately, the test is whether the allegations in the complaint disclose the criminal offence or not. Thus having regard to the allegations made out in the complaint and that the dispute between the parties being a civil dispute for which the suit is already filed, the continuation of the criminal proceedings is nothing but abuse of process of the Court. The criminal proceedings are initiated just to pressurize the accused to fulfil the demands for payment of money put forth by the complainant. Therefore, this is a fit case to exercise the discretion under Section 482 of Cr.P.C. and quash the proceedings. Accordingly, I pass the following:

(i) The criminal petition is allowed.

(ii) The proceedings in C.C. No. 145/2013 on the file of the Prl. Senior Civil Judge and JMFC, Hosapete initiated against the petitioners are hereby quashed.