Anshu Agarwal vs State Of U.P. & Another

Heard Sri Dinesh Varun, learned counsel for the applicant, Sri Sapan Kumar Singh, learned counsel for O.P. No.2 and the learned A.G.A.

This application under Section 482 Cr.P.C has been filed for quashing the proceedings of Complaint Case No.635/2008, under Sections 417/419/420/406 IPC, P.S. Cantt., Gorakhpur, pending in the court of Judicial Magistrate, Court No.3, Gorakhpur.

The O.P. No.2 filed the above complaint against the applicant, alleging that the complainant carries business as Shiva Enterprises, Azad Chowk, Rustampur, Shivpur Colony, Gorakhpur; "Natures Essence" is a New Delhi-based company, whose cosmetic products are distributed in the State by "Legend Marketing Enterprises, Lucknow as a super distributor, i.e., the applicant, retail distribution is performed by Narendra Pratap Mishra, an authorized representative of the Natures Essence Company. The applicant entered into a contract with the complainant / O.P. No.2 in which the former was to sell the product of the Natures Essence to the complainant. The complainant as per the agreed terms and conditions, handed over a blank cheque no.01401274 (Account no.9753) as security and Rs.15,000/- as D.D No.798801, as advance payment, resulted in the supplies of the product to the complainant. It was alleged that whenever bills were raised by the applicant / super distributor, the complainant used to ensure timely payments but on 7.8.2007, it was brought to the notice through communication that complainant had made purchases from applicant to the tune of Rs.272599/-, out of which cheque / DD / cash payments were made only to the tune of Rs.2,56,834/-, i.e., an amount of Rs.15765/- was outstanding against the applicant. By letter dated 7.8.2007, it was intimated to the applicant that after discount and rate difference and other adjustments, Rs.35743/- is outstanding against him, a sum of Rs.24978/- was due to the complainant, applicants were repeatedly addressed for payment of the same, but there was no response. The complainant also intimated the aforesaid fact to the General Manager of the Natures Essence on 7.8.2007, but again of no consequence. In December, 2007, the applicant is alleged to have intimated the complainant that some time be granted to him to wipe off the outstandings, prior to this the complainant had requested the applicant to either pay Rs.24978/- or goods worth the same be tendered or in the alternative the blank cheques and the DD be handed over to him. But as neither the blank cheque nor the DD nor the outstandings of Rs.24978/- was paid, on the contrary, it was refused, same was misappropriated with an oblique motive, the complaint came to be filed on 24.5.2008.

The complainant / O.P. examined himself along with his witnesses in support of the allegations. The learned Magistrate after considering the complaint, statements and other materials, proceeded to summon the applicant under order dated 15.6.2009 for offences under Sections 417/419/420/406 IPC.

It is submitted by learned counsel for the applicant that on the uncontroverted allegations, no offence is made out, liability if any, is civil0 prosecution being an abuse of the process of law, is liable to be quashed.

Learned counsel for O.P. No.2 and the learned A.G.A have opposed the submission.

The complaint reflects that there was a trading relationship between the applicant / accused and O.P. No.2 / complainant as the applicant is the proprietor of M/s Legend Marketing Enterprises, Lucknow and the complainant / O.P. No.2 is a dealer, at Gorakhpur. The complainant / O.P. No.2 while taking the dealership of the cosmetics, goods distributed by the applicant is alleged to have tendered a blank cheque as security and a DD of Rs.15000/- as advance payments to the applicant. So far nonpayment of dues to the complainant / O.P. No.2 is concerned, same does not attract any criminality as the issue of non-payment gives rise to a civil liability. It is not the case of the complainant / O.P. No.2 that any fraud or deception was practised by the applicant at the time of transaction. Thus, no offence under Section 417/420 IPC is made out. Since there is no allegation of personation by the applicant, no offence under Section 419 IPC too is made out. Criminality is sought to be assigned on the ground that the cheque / DD tendered to the applicant as a security have not been returned, but the records reveals that the cheque no.0140724 dated 14.12.2006 for Rs.17412/- was presented by the applicant before its bankers which came to be dishonoured on account of "insufficient funds" on 27.12.2016, followed by a statutory notice under Section 138 of the N.I. Act on 10.1.2017, which became a basis for lodging of a complaint by the applicants against O.P. No.2, which after contest, resulted in a judgement of conviction on 19.1.2011 under Section 138 of the N.I. Act as against the complainant / O.P. No.2 who was sentenced to 2 years imprisonment along with a fine of Rs.5000/- and a default sentence of 3 months under judgement dated 19.1.2011. It further appears from the record that a compromise on affidavit was arrived at, in appeal on 4.3.2011 as the complainant admitted that at the stage of appeal he had received the amount due under the cheque, which is duly sworn and verified disposing of the criminal appeal in terms of the compromise on 18.6.2011, wherein the conviction / sentence under Section 138 of the NI Act was set aside and the appeal was decided in terms of the compromise on 8.6.2011, certified copy of which is Annexure-7 to this application.

The Apex Court in a recent decision in Amanullah and Anr. vs. State of Bihar and others, 2016 (6) SCC 699, delineated the following steps to determine the veracity of a prayer for quashment raised by an accused by invoking the power vested in the High Court under Section 482 Cr.P.C on the basis of defence document:- Step one: whether the material relied upon by the accused is sound, reasonable, and indubitable i.e. the material is of sterling and impeccable quality?

Step two: whether the material relied upon by the accused would rule out the assertions contained in the charges levelled against the accused i.e. the material is sufficient to reject and overrule the factual assertions contained in the complaint i.e. the material is such as would persuade a reasonable person to dismiss and condemn the factual basis of the accusations as false?

Step three: whether the material relied upon by the accused has not been refuted by the prosecution/complainant; and/or the material is such that it cannot be justifiably refuted by the prosecution/complainant?

Step four: whether proceeding with the trial would result in an abuse of process of the court, and would not serve the ends of justice?

Step five: If the answer to all the steps is in the affirmative, the judicial conscience of the High Court should persuade it to quash such criminal proceedings in exercise of power vested in it under Section 482 CrPC. Such exercise of power, besides doing justice to the accused, would save precious court time, which would otherwise be wasted in holding such a trial (as well as proceedings arising therefrom) specially when it is clear that the same would not conclude in the conviction of the accused."

The defence document is in the form of a certified copy of the judgement dated 8.6.2011 in Criminal Appeal No.09/2011 (Annexure-7), wherein the judgement of conviction / sentence under Section 138 of the NI Act against the applicant was set aside on a compromise executed between the parties which remain uncontroverted.

On above materials, refusal to return the tendered cheque would not attract an offence under Section 406 IPC.

The Apex Court in the case of Amit Kapoor vs. Ramesh Chandra (2012) 9 SCC 460 has held that on uncontroverted allegations, if no offence is made out or a civil liability is clothed with criminality, such prosecution is liable to be quashed.

This Court is satisfied that on both the above counts, application is liable to succeed and prosecution to be quashed.

The application is allowed. The proceedings of Complaint Case No.635/2008, under Sections 417/419/420/406 IPC, P.S. Cantt., Gorakhpur, pending in the court of Judicial Magistrate, Court No.3, Gorakhpur are quashed.