R.K. Kothari and Others vs Joshi Pharma and Another

G.B. Singh, J.—This is a petition u/s 482 Code of Criminal Procedure for quashing the proceedings against the Petitioners in criminal complaint case pending in the Court of the Judicial Magistrate, Lucknow.

M/s. Jintan Clinical Thermometer Company (India) Pvt. Bombay manufactures Clinical Thermometers. R.K. Kothari Petitioner No. 1 is its Chairman and Deepak R. Kothari and B.R. Kothari Petitioners No. 2 and 3 are Managing Director and Director respectively of the said Company. M/s. Joshi Pharma (hereinafter referred to as the Firm) is a partnership Firm and deals in such Thermometers. It carries on its business at Lucknow. The Firm entered into an agreement with M/s. Jintan Clinical Thermometer Company (hereinafter referred to as the Company) for supply of Clinical Thermometers somewhere in the year 1977 and deposited a sum of Rs. 2500/- with the Company as security money. In pursuance of that agreement the Company supplied Thermometers. Two consignments were, according to the complainant, sub-standard. The Firm, therefore, returned those consignments with the request to replace the Thermometers. These consignments were worth Rs. 5706-96 Paise. It appears that the Company neither replaced the Thermometers nor refunded the security deposit. The Firm, therefore, filed a complaint against the Petitioners alleging that they have committed criminal breach of trust punishable under Sections 405, 406 and 409 IPC. It appears that the learned Magistrate after recording evidence under Sections 200 and 202 Code of Criminal Procedure summoned the accused Petitioners. They, therefore, filed the present petition for quashing the criminal proceedings started on the aforesaid complaint alleging that they could not replace the Thermometers due to lay off and the dispute between the parties is of civil nature and they have not committed any offence of criminal breach of trust. It has also been alleged by them that necessasy ingredients of the offences under Sections 406 and 409 IPC have not been disclosed in the complaint.

It was argued by the learned Counsel for the Petitioners that the complaint does not disclose any prima facie case, the dispute between the parties is of civil nature and the complaint has been filed to terrorise them without disclosing the necessary ingredients of the offence alleged. The learned Counsel for the Firm opposite party No. 1, on the other hand, argued that the facts disclosed in the complaint constitute the offences under Sections 406 and 409 IPC and the proceedings are not liable to be quashed. After having heard the parties Counsel I am of the opinion that the contention of the learned Counsel for the Petitioners must prevail.

It has been held in R.P. Kapur Vs. The State of Punjab, that where the allegations in the complaint, even if they are taken at their face value and accepted in their entirety, do not constitute the offence alleged, the inherent jurisdiction of the High Court should be exercised to quash the criminal proceedings started on such a complaint. Similarly in Superintendent and Remembrancer of Legal Affairs, West Bengal Vs. Mohan Singh and Others, , it has been laid down that where the first information report does not make out any case prima facie against the accused and the proceedings are long drawn out, the High Court may quash the proceedings to prevent the abuse of the process (sic) the ends of justice. In Hari Prasad Chamaria Vs. Bishun Kumar Surekha and Others, Hari Prasad Chamaria intending to start business advanced a large amount to Bishun Kumar Surekha and other Respondents having full faith in them for the same. The Respondents started business in their own name and refused to render accounts or return money to the Appellant. The point involved was whether the Respondents could be held criminally liable u/s 420 IPC. It was held in this case at page 354 that:

We find that the complaint does not disclose the commission of any offence on the part of the Respondents u/s 420 IPC. There is nothing in the complaint to show that the Respondents had dishonest or fraudulent intention at the time the Appellant parted with Rs. 35,000/- there is also nothing to indicate that the Respondents induced the Appellant to pay them Rs. 35000/- by deceiving him. It is further not the case of the Appellant that a representation was made by the Respondents to him at or before the time he paid the money to them and that at the time the representation was made, the Respondents knew the same to be false. The fact that the Respondents subsequently did not abide by their commitment that they would show the Appellant to be the proprietor of Drang Transport Corporation and would also render accounts to him in the month of December might create civil liability for them, but this fact would hot be sufficient to fasten criminal liability on the Respondents for the offence of cheating.

These observations show that where the allegations simply disclose a civil liability and do not constitute any offence, the persons complained against cannot be proceeded against and be held criminally liable.

In Mukhlal Rai v. Emperor (1926) CriLJ 949 (Patna) it has been held that where a sum of money is advanced as part of a contract and not by way of trust, a dispute arising out of a breach of the contract is one of a civil nature and no criminal action lies.

In view of the observations made in these cases it is clear that if the allegations made in the complaint do not make out a prima facie case and the dispute between the parties arising out of the contract is of civil nature and no criminal liability is disclosed, the criminal proceedings on the basis of such a complaint cannot be allowed to continue otherwise it would be an abuse of the process of the Court.

In the present case though Sections 405, 406 and 409 IPC have been given in the complaint, it may be mentioned that Section 405 IPC defines criminal breach of trust and does not lay down any offence. It is Section 406 IPC which makes the criminal breach of trust punishable and if this criminal breach of trust is committed by a public servant or a banker, merchant, broker, attorney or agent etc. then it is punishable u/s 409 IPC. As observed in Mukhlal Rai v. Emperor, (Supra) where the sum of money is advanced as part of a contract, it is not by way of trust. In the present case the security deposit was made in pursuance of the contract and it was not given by way of trust. The return of consignments and claim of refund of the price of the consignments returned also do not create any trust about their price. Thus, no offence of criminal breach of trust can be said to have been committed in the present case. It may also be mentioned here that apart from creation of trust by entrustment there should be dishonest misappropriation or conversion to his own use of the property or the money. In the present case there is ho allegation in the complaint that there has been dishonest misappropriation or conversion of the goods or money. Mere non-refund of the security deposit or non-replacements of goods when a dispute has arisen about the goods supplied cannot necessarily lead to the inference that it amounts to dishonest misappropriation or conversion to own use. There is no clear case in the complaint what kind of obligation was'' created in respect of the money and goods and how they have been dealt with contrary to the terms of the obligation. It may also be added that every breach of trust does not amount to criminal breach of trust unless there is mens rea or criminal intention. Thus if there is no case of mens rea or criminal intention the prosecution for criminal breach of trust cannot be justified. Thus, the complaint does not contain necessary facts constituting the offence of criminal breach of trust punishable under Sections 406 and 409 IPC.

The learned Counsel for the complainant opposite party in order to show that his complaint contains necessary ingredients for the offence under Sections 406 and 409 IPC referred to Jaswantrai Manilal Akhaney Vs. The State of Bombay, . It bas been held in this case that if the Managing Director of a bank entrusted with securities owned by the pledgor disposes of these securities, against the stipulated terms of the contract entered into by the parties with the intention of causing loss to the pledgor and wrongful gain to the bank there can be no question but that the Managing Director has necessary mens rea required by Section 405 IPC. These observations do not help the learned Counsel for complainant opposite party much. The reason is that this case is distinguishable on facts from the present case. Moreover, in the present case there is no allegation that the security deposit has not been refunded and the goods have not been replaced with an object to cause wrongful gain to the accused and wrongful loss to the complainant and, thus, the requisite mens rea is present in the case. In this case also it was observed if there is no mens rea or if other essential ingredients of an offence are lacking, the same facts may not sustain a criminal prosecution, though a civil action may lie. These observations instead of helping the learned Counsel for the complainant opposite party help the Petitioners to a great extent. The reason is that there also necessary allegations to constitute the offence under Sections 406 and 409 IPC are wanting and, thus, on the basis of such a complaint it cannot be held that there is a prima facie case against the accused for the aforesaid offences. The contention of the learned Counsel for the complainant opposite party No. 1 cannot, therefore, be accepted.

After having carefully considered all the aspects of the matter, I am of the opinion that this petition must be allowed.

The petition is accordingly allowed and the criminal proceedings initiated on the basis of the complaint are quashed.