Refex Refrigerants Ltd. vs Kolane Refrigerants

Gh. Hasnain Masoodi, J.—Inherent powers of this Court u/s 561A Code of Criminal Procedure are sought to be invoked through this

petition, to get the order of Learned Judicial Magistrate (1st Class) Pulwama dated 25.6.2007 in complaint ""M/s Kolane Refrigerants v. T. Anil

Jain and Ors."" quashed, whereby Learned Magistrate has taken cognizance of offence punishable u/s 420 of Ranbir Penal Code and directed

issuance of process against the Petitioners.

The complainant - Respondent herein on 25.6.2007, filed a complaint against the present Petitioners/accused in the court of Judicial Magistrate

(Ist Class) Pulwama, alleging commission of offence punishable u/s 420 & 407 RPC against Petitioners/accused.

The complainant's case was that the complainant has been running a factory at Industrial Complex Lassipora Pulwama and is doing business of

refilling refrigerant gases. The complainant alleged that the Petitioners/accused No. 2 to 4, Directors of the business concern of M/s Refex

Refrigerants Limited, approached the complainant/Respondent in second week of November 2006 at Respondent's factory at Lassipora,

Pulwama and made the complainant to believe that the Petitioners/accused were dealing in import and marketing of refrigerant gases in India. The

complainant alleged that the Petitioners/accused induced the complainant/Respondent that the Petitioner/accused was having business with

complainant's wife at Delhi and persuaded the complainant to enter into a business relationship with him. The Petitioners/accused, it was alleged,

are assured to import refrigerant gases for the complainant from China on the condition that the complainant agreed to finance the purchase of such

gases by opening a letter of credit in favour of the manufacturer of gases from China. The Petitioners/accused are alleged to have made the

complainant to opt for High Sea Sales that did not require the complainant to have any export - import license. The Petitioners/accused are also

said to have further induced the complainant to place an order for 14 ton tanks with the Petitioners/accused and agreed to supply 14 ton tanks at

the price of Rs. 3.00 lacs. The Petitioners/accused by acting in the aforesaid manner are said to have induced the complainant to pay an amount of

Rs. 22.00 Lacs to the Petitioners/accused and to have pursuant to the preplanned conspiracy cheated complainant of the said amount. The

complainant alleged that Petitioners/accused induced him to open a letter of credit for 4500OUSD in favour of M/s Jiangsu Kangtai Flourine

Chemical Co. Ltd. China - CIF Value for purchase of 18000 Kgs of refrigerant gases and also made the complainant to pay an amount of Rs.

3.00 Lacs as full and final payment of 14 ton tanks through a Cross Cheque No. 112355 drawn on Union Bank of India, favouring Refex

Refrigerants Limited, that the Petitioners/accused promised to deliver within 20 days. The complainant is said to have on inducement made further

payment of Rs. 1.30 Lacs through DD No. 520922, on 15th March 2007, to the Petitioners/accused, to be adjusted by the Petitioners/accused

against the sale price of refrigerant gases. It was alleged that the Petitioner/accused were found to have no facility for manufacturing ton tanks nor

to have placed any order for 140 ton tanks for onward supply to the complainant and to have received 18000 Kgs of Refrigerant Gases from

Chennai Customs and to have not made the payment of sale proceeds including the profit amount promised to the complainant. The complainant

alleged that the intention of the Petitioners/accused was fraudulent from the very beginning and that the Petitioners/accused had, . through false

representation, induced the complainant to part with Rs. 22.00 Lacs and thus cheated the complainant.

Learned Judicial Magistrate (Ist Class) Pulwama on receipt of complaint as also documents (Annexure A to K), recorded statement of the

complainant and one witness, and proceeded to make the impugned order, taking cognizance of the offence punishable u/s 420 RPC and directed

issuance of process against the Petitioners/accused.

The order impugned in the present petition is impugned on the grounds that the dispute, if any, between the parties is of civil nature and the

averments made in the complaint even when taken on their face value do not constitute an offence. It is urged that a dispute of pure civil nature

cannot be given color of criminal case. The Petitioners/accused dispute the jurisdiction of the Trial Magistrate to take cognizance of the matter and

proceed against the Petitioners/accused inasmuch as according to the Petitioners/accused the agreements were arrived and executed at Delhi and

not at Lassipora Pulwama as alleged in the complaint. The complaint is said to be intended to harass the Petitioners/accused, who have nothing to

do with the matter in controversy. The Petitioners/accused, while admitting to have business transactions with the Respondent/complainant, have

denied to have committed any offence muchless one cognizance of which has been taken by the Learned Judicial Magistrate (Ist Class) Pulwama.

Heard and considered.

It needs to be pointed out at the outset that after the Petitioners/accused succeeded in getting the record summoned from the court of Learned

Judicial Magistrate (Ist Class) Pulwama, they played a game of hide and seek with the Court. The counsel for the Petitioners/accused has not

appeared to prosecute the matter. The petition was dismissed for non-prosecution on 16th of May 2008 and thereafter on 29th of July 2008 the

order dated 16.5.2008, dismissing the petition for want of prosecution, was recalled. On 25th of September 2008, the record was summoned,

which has been retained till date. The counsel for the Petitioners/accused, thereafter, again absented himself from the proceedings. Though the

petition was formally admitted for hearing on 20.3.2009, the Petitioners continued to stay away from the proceedings and avoid prosecution of the

matter. There was no representation for the Petitioners on 24.4.2009, 10.7.2009, 13.8.2009, 26.8.2009, 4.11.2009, 19.11.2009, 23.12.2009

and 9.3.2010, when the petition was listed before the Bench. The petition, for the obvious reasons, cannot be dismissed in default. The only option

left with the Court, in the circumstances, is either to helplessly adjourn the matter date after date and allow it to clog the system or dispose it of on

merits.

In my opinion, it would be appropriate to dispose of the matter on merits rather than allow it to be deferred endlessly.

The inherent powers available to the Court u/s 561-A of Code of Criminal Procedure are to be exercised only to prevent abuse of process of

the Court or secure the ends of justice or to give effect to an order under the Code. No doubt, the inherent powers, vested in this Court, are an

inalienable attribute of the position this Court hold with respect to the courts subordinate to this Court, yet the powers are to be exercised rarely,

sparingly and with utmost circumspection. It would be apt to extract hereunder the following observations made by the Supreme Court in case

Som Mittal Vs. Govt. of Karnataka, :

In a catena of decisions this Court has deprecated the interference by the High Court in exercise of its inherent powers u/s 482. It has been

consistently held that the power u/s 482 must be exercised sparingly, with circumspection and in rarest of rate cases. Exercise of inherent power

u/s 482 of the Code of Criminal Procedure is not the rule but it is an exception. The exception is applied only when it is brought to the notice of the

Court that grave miscarriage of justice would be committed if the trial is allowed to proceed where the accused would be harassed unnecessarily if

the trial is allowed to linger when prima facie it appears to Court that the trial would likely to be ended in acquittal. In other words, the inherent

power of the Court u/s 482 of the Code of Criminal Procedure can be invoked by the High Court either to prevent abuse of process of any Court

or otherwise to secure the ends of justice.

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We may observe that despite this Court consistently held in catena of decisions that inherent power of the High Court should not be exercised

according to whims and caprice and it has to be exercised sparingly, with circumspection and in the rarest of rare cases, we often, come across the

High Court exercising the inherent power u/s 482 of the Code of Criminal Procedure in a routine manner at its whims and caprice setting at naught

the cognizance taken and the FIR lodged at the threshold committing grave, miscarriage of justice. While it is true that so long as the inherent

power of Section 482 is in the Statute Book, exercise of such power is not impermissible but it must be noted that such power has to be exercised

sparingly with circumspection and in the rarest of rare cases, the sole aim of which is to secure the ends of justice. The power u/s 482 is not

intended to scuttle justice at the threshold.

In the petition in hand, the main plank of case set up by the Petitioners/accused is that the dispute if any between the parties is of pure civil

nature and Learned Trial Magistrate, by taking cognizance of the offence punishable u/s 420 RPC on the complaint of the Respondents, has given

color of an offence to a simple and pure business transaction. It is insisted that the complaint and the material submitted therewith when taken on its

face value does not disclose commission of offence punishable u/s 420 RPC, by the Petitioners/accused. The order dated 25.6.2007 is thus said to

amount to abuse of process of court and warrant interference u/s 561-A Code of Criminal Procedure. The next ground urged in the petition is that

the business transaction between the parties having shaped up at Delhi, the Court, at Pulwama had no jurisdiction to entertain the complaint

muchless take cognizance of the offences, alleged in the complaint and issue process against the Petitioners/accused. It is vehemently disputed and

denied that the Petitioners/accused visited the Respondent/complainant at Lassipora Pulwama and entered into business transaction, as alleged in

the complaint and also admitted in the petition. The third and last ground urged in the petition is that the complaint is aimed at harassment of the

Petitioners/accused and coerce the Petitioners/accused to yield to the demands made by the Respondent/complainant and settle the dispute, on his

terms.

The grounds urged in the petition make it necessary to revisit though briefly the allegations set out in the complaint. The

Respondent/complainant alleged that the Petitioners accused nursed a deceitful and fraudulent intention from the very beginning and motivated by

such an intention, induce him to believe that the Petitioners/accused shall supply ton tanks to the Respondent/complainant and also pass(sic) the

profit at the particular rate from the proceeds of High Sea Sale for purchase of Refrigerant Gases, to the Respondent/complainant and that the

Respondent/complainant, acting on such inducement, made payment of Rs. 22.00 Lacs through various Instruments, detailed in the complaint, to

the Petitioners/accused. The Respondent/complainant further alleged that the Petitioners/accused neither had any facility for manufacturing 14 ton

tanks, they promised to supply to the Respondent/complainant nor did make any supply and as a matter of fact and that the Petitioners/accused

did not pay the amount due to the Petitioners/accused on account of investment and profit in connection with High Sea Sales purchase of

Refrigerant Gas, made by the Respondent/complaint through the Petitioners/accused. The allegations made in the complaint were supported by the

statement of the complainant as also his witness recorded by the Learned Trial Magistrate and the documents appended to the complaint. The

material thus prima facie discloses commission of offence punishable u/s 420 RPC by the Petitioners/accused as all the necessary elements of the

offence of cheating were expressly alleged in the complaint. The Learned Trial Magistrate has thus acted within four corners of law while taking

cognizance of the offence punishable u/s 420 RPC, alleged in the complaint, and directed issuance of process against the Petitioners/accused. Only

because the allegations set out in the complaint would also give rise to a civil action, is not to persuade this Court to hold the order taking

cognizance of an offence on the complaint as abuse of process of court.

In Lalmuni Devi v. State of Bihar and Ors. 2000 IX AD (S.C.) 562, where in exercise of inherent powers in a criminal complaint alleging

commission of offence punishable u/s 419, 420, 467 & 120B IPC, was quashed on the ground that the complaint spelt out civil wrong and

continuance of criminal proceedings would be abuse of process of court. The Supreme Court observed:

There could be no dispute to the proposition that if the complaint does not make out an offence it can be quashed. However, it is also settled

law that facts may give rise to a civil claim and also amount to an offence. Merely because a civil claim is maintainable does not mean that the

criminal-complaint cannot be maintained. In this case, on the facts, it cannot be stated, at this prima facie stage, that this is a frivolous complaint.

The High Court does not state that on facts of no offence is made out. If that be so, then merely on the ground that it was a civil wrong the criminal

prosecution could not have been quashed. 9. In our view, the Order of the High Court cannot be maintained and is accordingly set aside.

In Maratt Rubber Ltd v. J.K. Marattukalam 2000 VII AD (S.C.) 34, it has been held that scrutiny and weighing with the material by the High

Court that pertain to civil proceedings between the parties was certainly in excess of the inherent jurisdiction, conferred on the High Court and the

High Court exceeded its jurisdiction in quashing criminal proceedings.

The principle was reiterated in Kamaladevi Agarwal Vs. State of West Bengal and Others, , where the Magistrate issued process in a

complaint, alleging commission of offence u/s 465, 467, 468, 471 & 120B IPC and the High Court quashed the complaint, basically, on the

ground that a civil case is pending between the parties before a superior court and therefore it would not be proper to try the matter. Supreme

Court held:

This Court has consistently held that the revisional or inherent powers of quashing the proceedings at the initial stage should be exercised

sparingly and only where the allegations made in the complaint or the FIR, even if taken it at the face value and accepted in entirety, do not prima

facie disclose the commission of an offence.

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Criminal prosecution cannot be thwarted at the initial stage merely because civil proceedings are also pending. After referring to judgments in

State of Haryana and others Vs. Ch. Bhajan Lal and others, , Rajesh Bajaj Vs. State NCT of Delhi and Others, this Court in Trisuns Chemical

Industry v. Rajesh Agarwal and Ors. 1999(8) SCC 687 held:

Time and again this Court has been pointing out that quashing of FIR or a complaint in exercise of the inherent powers of the High Court should be

limited to very extreme exceptions [vide State of Haryana v. Bhajan Lal 1992 Supp(l) SCC 335 and Rajesh Bajaj Vs. State NCT of Delhi and

Others, ,

In the last referred case this Court also pointed out that merely because an act has a civil profile is not sufficient to denude it of its criminal outfit.

We quote the following observations: (SCC p.263, para 10)

It may be that the facts narrated in the present complaint would as well reveal a commercial transaction or money transaction. But that is hardly

a reason for holding that the offence of cheating were committed in the course of commercial and also money transaction.

The court, after making review of catena of judicial pronouncements on the subject, observed:

In view of the preponderance of authorities to the contrary, we are satisfied that the High Court was not justified in quashing the proceedings

initiated by the Appellant against the Respondents. We are also not impressed by the argument that as the civil suit was pending in the High Court,

the Magistrate was not justified to proceed with the criminal case either in law or on the basis of propriety. Criminal cases have to be proceeded

with in accordance with the procedure as prescribed under the Code of Criminal Procedure and the pendency of a civil action in a different court

even though higher status and authority, cannot be made a basis for quashing of the proceedings.

The law laid down by the Supreme Court is squarely applicable to the present case. The challenge to the impugned order cannot succeed

merely because alleged occurrence has civil dimensions as well.

In the circumstances and for the reasons discussed above the petition is without any merit and liable to be dismissed. The petition is,

accordingly, dismissed. The Trial Magistrate is directed to proceed further in the matter in accordance with law.

Record be sent down.

Parties to appear before the Trial Magistrate on 26th of April 2010.