Lml Limited and Others vs Shri Kailash Narain Rai and Another

G.D. Saxena, J.—Seeking indulgence of this Court under inherent jurisdiction, the petitioners have come up challenging the validity of the order dated 15th February, 2010 passed in Criminal Revision No. 19/08 by the Second Additional Sessions Judge (Fast Track) Datia. By the said order, the learned Sessions Judge has dismissed the revision of the petitioners and uphold the order dated 9th January 2007 of the learned trial Magistrate passed u/s 204 Cr.P.C. upon the complaint of respondent No. 1. It is thus requested to set aside both the impugned orders dated 15th February 2010 and 9th January 2007 passed by the two courts for issuing the process against the petitioners on the complaint and also to quash the complaint of the respondent No. 1 registered by the learned trial Magistrate. The facts as emerged out of the record of the courts below and the complaint of the respondent No. 1 and as per the averments contained in the petition are the petitioner LML Limited is a Public Limited Company incorporated under the Companies Act 1956, having its own Registered Head Office at C-3 Panki Industrial Estate Kanpur U.P. The petitioner No. 1-company was engaged in manufacture of two wheeler scooters and of its components and spare parts from its factory situated at C-6 to C-10 at Panki Industrial Estate Kanpur U.P. For smooth functioning, the company had appointed dealers and sub-dealers for sale of its vehicles as well as parts thereof in various cities in India on the agreed terms and period. Under that policy, the petitioner had appointed the complainant/respondent No. 1 as a dealer in the name and style of "M/s Rai Motors at Datia" for sales, service and spares of LML range of two wheelers. In compliance to the said agreement executed between the company and the dealer, the appointed dealer/ complainant was required to deposit a sum of Rs. 50,000/- (Rs. Fifty Thousand) towards security deposit in the form of a demand draft in favour of LML Limited payable at Kanpur, which shall carry interest @ 12% per annum. This agreement came into force on and with effect from 1/4/09 and the term of the same was for a period of three years commencing from the effective date. As per the duties and obligations assigned in the agreement, the dealer was required from time to time to buy from the company in wholesale such number of scooters as may be offered to it by the company at such prices specified by the Company by making arrangements for payment for the said scooters as per the policy and procedure of the petitioner No. 1 -company. It is alleged that during the period of trade fair held at Gwalior, on the demand of the complainant, the requisite number of two wheeler vehicles were not supplied to the complainant in consequence of which, the respondent No. 1 was compelled to purchase the vehicles from other authorized dealer at Gwalior for making available vehicles to the costumers. The response of the officials on phone was not healthy and satisfactory. Accordingly, a complaint was filed against the petitioner No. 1 -company and its officers on which the learned trial Magistrate took cognizance and issued process.

The submissions of the petitioners are that the relationship between the petitioners-company and the respondent No. 1-complainant is still in existence. So, unless the dealership of the company is in existence, the company is entitled to retain the security amount deposited by the complainant on which the complainant is getting interest regularly from the company. It is contended that there was no such intention to cheat and commit breach of contract. The goods could not be supplied due to supervening factors which were beyond the control of the company, which was the result of illegal strike by workmen in January 2006. The factory re-started its production in April 2006. During this period, there was no production or clearance of two wheelers which was wholly beyond the control of the company and the company became Sick Industrial Undertaking before BIFR from September 2006 till May 2007. It is submitted that the complainant had taken undue advantage of the unavoidable problems and circumstances by filing a complaint on dated 22nd December 2006 on false grounds against the company and its officers. It is submitted that the complainant was well aware of the facts that till the continuity of his dealership with the company, he was not entitled for getting back the security amount. He was also aware of the facts that due to aforesaid circumstances, the company was not in a position to make good the demands of the complainant. Hence, he levied totally false allegations against the company and its employees. The complainant as per terms of the agreement could not avail of the settlement of dispute through Arbitrators at Kanpur. It is submitted that the alternative remedy was available to the complainant but he did not avail of the same and the contract of dealership not having been terminated by the company, the complainant resorted to an illegal and malicious action by circumventing section 22 of the said Act which by itself was not permissible in law. The Learned Counsel for petitioner submitted that in case the complainant suffered any loss despite of depositing the money with the company, the only remedy for the complainant was to pursue the civil claim in the appropriate forum. It is submitted that the company and its officers were always willing and ready for amicable settlement with its authorized selling agents working in various cities for any financial uncomfortable in past bad days of the company. It was also contended that the trial Magistrate had no territorial jurisdiction to entertain the complaint At relevant time of presenting the complaint in criminal court and taking cognizance against the company, the company was sick industry company so the actions against the petitioner No. 1 -company was expressly barred by the provisions contemplated in Section 22 (1) of SIC A, as stated above. The accused company and its officers had no opportunity to raise the grounds as above before the trial Magistrate. It is submitted that the petitioners-company in revision filed raised the grounds above before the leaned revisional court but the revisional court did not consider the legal aspect and confirmed the order of issuance of process for attendance of the accused/ petitioners. Therefore, it is prayed that by allowing the petition, the order of trial Magistrate for issuance of process for attendance of the accused/ petitioners u/s 204 of Cr.P.C. be set aside and the cognizance taken on the complaint be quashed. A series of judgments of the Apex court have been relied upon by the petitioners in support of the submissions put forth above.

Per contra, the Learned Counsel for the respondent No. 1 denied that the transaction in question is purely of civil nature and this question can be ascertained after investigation. It is submitted that the learned trial Magistrate did not commit any error in taking cognizance upon the complaint after going through the statements recorded under Sections 200 and 202 of Cr.P.C. and the documents filed for taking cognizance u/s 420 of I.P.C. against the company and its officers/employees. As regards protection u/s 22(1) SICA, same is not available for criminal acts of the company or its directors/officers/employees. It is submitted that the powers of inherent jurisdiction vested in Section 482 of Cr.P.C. may be exercised by the High court which is an exceptional provision. It is submitted that in a given case, the contentions raised by the petitioners can not be considered and the petitioners may raise their grievance during the proceedings of trial. Hence, it is stated that quashing of criminal proceedings is not proper especially when prima facie case is made out against the accused. The counsel for respondent No. 1 also contended that in the light of the order dated 18th January 2008 in Misc. Cri. Case No. 1260/2007 and looking to the entire facts and circumstances and the proposition of law laid down by the Apex Court, it would not be appropriate to interfere in the impugned orders because the petitioners have an alternative remedy available and they may contest the criminal proceedings in the trial court. Apart from the above, it is also submitted that the order dated 18th January, 2008 is binding on the parties and the subsequent petition seeking same relief is not maintainable being hit by the principles of res judicata as the objections raised in the case at hand were already considered at earlier point of time by this Court. To support his contention, a series of judgments decided by Apex Court and High Court were relied upon by the Learned Counsel for respondent No. 1/complainant.

I may take up the last contention of the Learned Counsel appearing for the complainant/respondent No. 1 first for consideration that the subsequent petition u/s 482 of Cr.P.C. is not maintainable because same would be tantamount to a re-view of its earlier order dated 18th January 2008 passed by this Court in Misc. Cri. Case No. 1260/2007.

This contention has no force in the light of the observations made in the case of Superintendent and Remembrancer of Legal Affairs, West Bengal Vs. Mohan Singh and Others, and there is no bar to entertain the subsequent petition u/s 482 of Cr.P.C. by this Court.

Keeping the above in mind, let me now consider whether the impugned proceeding is liable to be quashed.

Let me first consider the alleged offence of cheating. It is well-settled that the offence of cheating is established only when all the following ingredients are present :

(a) that the representation made by the accused was false;

(b) that the accused knew that the representation was false at the very time when he made it;

(c) that he made the false representation with the dishonest intention of deceiving the person to whom it was made;

(d) that he thereby induced that person to deliver any property or to do something which would otherwise not have been done or omitted.

The question whether the evidence discloses only a breach of civil liability or a criminal offence u/s 420 of the Penal Code, depends upon whether the complainant in parting with his money acted on the representations of the accused and in belief of the truth thereof and whether those representations when made were in fact false to the knowledge of the accused and whether he had a dishonest intention from the outset.

In Matilal Chakravarty v. King (AIR 1949 Cal 586), it was observed by Harries C.J.:-

In order to constitute an offence u/s 420, it must be shown that the person who parted with the property was cheated and thereby dishonestly induced to deliver the property... to cheat a person there must be a dishonest and fraudulent intent. A person may be deceived quite innocently, but such deception can never amount to cheating. Where, however, a person is deceived knowingly, then the deception might well amount to cheating. A man may be induced to do something on a false representation made to him. If the person making the representation honestly believed the representation to be true, there can be no question of cheating. But if he knew that the representation was false and he made it with a view that the other person should act upon it, then that would amount to cheating.

The offences alleged in the complaint under Sections 420, 405, 406/34 of the Indian Penal Code are all offences having mens rea as one of the essential ingredients thereof. The accused committing the offences must have a guilty mind and as such a juristic person such as a body corporate cannot be prosecuted for the said offences.

In Champa Agency v. R. Chowdhury [1974] CRN 403, the question that arose for consideration was whether a company or a corporate body can be prosecuted for an offence under the Indian Penal Code where mens rea is an essential ingredient. It was held that mens rea is an essential ingredient of the offence of criminal breach of trust including criminal breach of trust by carriers. The accused-petitioner No. 1 being a corporate body cannot be said to have the necessary mens rea and as such it cannot be prosecuted for an offence under the Indian Penal Code. The same view was taken in Sunil Chandra Banerjee v. Krishna Chandra Nath [1949] 19 Comp Cas 46; AIR 1949 Cal 689. It has been held as follows (at page 49 of 19 Comp Cas) :

The bank is a person, but it is a juridical person and not an actual person. The bank is such that it cannot be said to have mens rea requisite for the offence of cheating. The bank as such cannot be punished for cheating because it has no physical body.

Another test was applied in respect of the prosecution of the body corporate in Adding Machines India (P) Ltd. Vs. State [1987] 1 CHN 359. It was held that in respect of offence where the sentence prescribed is mandatory imprisonment and the court has no discretion to impose any other punishment, such as fine, a company cannot be prosecuted in respect of such an offence.

Now coming to the case, Learned Counsel for the petitioners contended that the allegations in the petition of complaint are patently absurd and inherently improbable and the basic ingredients of the offences alleged are not prima facie made out by the allegations in the complaint and initial evidence produced before the learned trial Magistrate. It has further been contended that the impugned proceeding is frivolous, vexatious and mala fide which would degenerate into a weapon of harassment or persecution if allowed to continue having regard to the veiled object of the lame prosecution. It has further been contended that the dispute is really of civil nature and the present criminal proceedings has been launched with the oblique motive of exerting pressure upon the petitioners to make some concessions and pecuniary benefits to the complainant. It has been contended that further continuance of the impugned proceedings would be an abuse of the process of the court and for the ends of justice, the impugned proceedings should be quashed even at this initial stage.

Controverting the same, Learned Counsel appearing for the respondent No. 1/complainant, submitted that the petition of complaint and the initial deposition prima facie disclose commission of the offences alleged and at this initial stage when only process has been issued the impugned proceedings are not liable to be quashed. As the complaint and the initial deposition prima facie reveal the essential ingredients of the offence alleged; the complainant-opposite party should be allowed to prove the allegations by adducing evidence. It has further been contended that the court cannot at this stage look into the materials produced by the petitioners and annexed with the petition which were not before the learned Magistrate and the consideration of the court is confined only to the question whether the petition of complaint and the initial deposition taken on their face value, without any addition or subtraction, prima facie made out any offence. As the petition of complaint and initial deposition taken on their face value disclose prima facie commission of the offences alleged, the impugned proceedings cannot be quashed at this stage in exercise of the power u/s 482 of Cr.P.C., contends Learned Counsel for respondent No. 1.

In the light of the contentions raised by the parties, it has to be first determined what is the nature and scope of the inherent power of this Court u/s 482 of the Code of Criminal Procedure for quashing a proceeding at this initial stage and what are the materials which the court can look into for exercising such power. Section 482 of the Criminal Procedure Code empowers the High Court to exercise its inherent power to prevent abuse of the process of the court for ends of justice. It is well settled that the exercise of the inherent power to quash the proceeding instituted on complaint is called for only where the complaint does not disclose any offence or is frivolous, vexatious or oppressive. One of the earliest decisions of Hon. Supreme Court on the scope of Section 561A of the old Code (corresponding to Section 482 of the new Code) is the case of R.P. Kapur Vs. The State of Punjab, wherein it was held that the inherent jurisdiction of the High Court can be exercised to quash proceedings in a proper case either to prevent the abuse of the process of any court or otherwise to secure the ends of justice. Ordinarily, criminal proceedings instituted against an accused person must be tried under the provisions of the Code and the High Court would be reluctant to interfere with the said proceedings at an interlocutory stage. It is not possible, desirable or expedient to lay down any inflexible rule which would govern the exercise of this inherent jurisdiction.

Some of the categories of the cases where the inherent jurisdiction to quash proceedings can and should be exercised are:

(i) where it manifestly appears that there is a legal bar against the institution or continuance of the criminal proceeding in respect of the offence alleged. Absence of the requisite sanction may, for instance, furnish cases under this category;

(ii) where the allegations in the first information report or the complaint, even if they are taken at their face value and accepted in their entirety, do not constitute the offence alleged; in such cases no question of appreciating evidence arises; it is a matter merely of looking at the complaint or the first information report to decide whether the offence alleged is disclosed or not;

(iii) where the allegations made against the accused person do constitute an offence alleged but there is neither no legal evidence adduced in support of the case or the evidence adduced clearly or manifestly fails to prove the charge.

In dealing with this class of cases, it is important to bear in mind the distinction between a case where there is no legal evidence or where there is evidence which is manifestly and clearly inconsistent with the accusation made and cases where there is legal evidence which on its appreciation may or may not support the accusation in question. In exercising its jurisdiction u/s 561A (corresponding to Section 482 of the new Code), the High Court would not embark upon an enquiry as to whether the evidence in question is reliable or not. That is the function of the trial magistrate, and ordinarily it would not be open to any party to invoke the High Court''s inherent jurisdiction and contend that on a reasonable appreciation of the evidence the accusation made against the accused would not be sustained. The categories as indicated in this case are not, however, exhaustive.

In Smt. Nagawwa Vs. Veeranna Shivalingappa Konjalgi and Others, , the Apex Court has observed as follows (at page 1948):

The scope of the enquiry u/s 202 is extremely limited-only to the ascertainment of the truth or falsehood of the allegations made in the complaint--

(i) on the materials placed by the complainant before the court;

(ii) for the limited purpose of finding out whether a prima facie case for issue of process has been made out; and

(iii) for deciding the question purely from the point of view of the complainant without at all adverting to any defence that the accused may have. In fact it is well settled that in proceedings u/s 202, the accused has got absolutely no locus standi and is not entitled to be heard on the question whether the process should be issued against him or not.

It has been observed that at this stage the Magistrate has absolutely no jurisdiction to go into any material or evidence which may be produced by the accused. It has been held that the order issuing process may be set aside or the proceedings may be quashed where the allegations made in the complaint are patently absurd and inherently improbable so that no prudent person can ever reach a conclusion that there is sufficient ground for proceeding against the accused. It is, however, necessary to point out that in this case the Supreme Court was really concerned with the scope of the jurisdiction of the Magistrate u/s 202 of the Code and the observations made by the Supreme Court in paragraph 5 of the said decision are to be understood in that background. The said observations are relevant in the context of the exercise of revisional powers of the High Court relating to the correctness, legality or propriety of the order of the Magistrate.

As it appears from paragraph 1 of the said decision, the accused petitioners in that case challenged the order of the Magistrate issuing process u/s 204(1)(b) of the Code and prayed for setting aside the order of the Magistrate. As such the court was called upon to decide as to whether the Magistrate had been right in issuing process or not and as to whether the High Court while exercising its revisional jurisdiction should have interfered with the discretion of the learned Magistrate in issuing process. It does not appear that the matter was at all considered from the angle of the ends of justice or the prevention of the abuse of the process of the court. When the High Court exercises the revisional powers only to ascertain whether the impugned order of the inferior criminal court is legal, proper or correct, the High Court has to consider the matter only in the context of the power and the jurisdiction of the inferior court. But, when the High Court is called upon to exercise its inherent power the scope is more expansive in that the court can quash a proceeding for the ends of justice, even though the order of the Magistrate may be otherwise legal, proper or correct. In this connection, reference may be made to the case of N.C. Nagpal v. State [1979] 2 CHN 198, where it has been observed that in exercising the inherent power, the scope is much more expansive in that this Court can quash a proceeding for the ends of justice or to prevent the abuse of the process of the court. That necessarily means that while exercising inherent power this Court need not confine itself to the propriety, illegality or correctness of the order of the Magistrate and for that matter the materials on which such order was passed.

In Madhu Limaye Vs. The State of Maharashtra, the Hon. Supreme Court pointed out the difference between the revisional jurisdiction of the High Court and its inherent powers under the Code of Criminal Procedure, 1973. u/s 397(1) of the Code, the revisional power has been conferred on the High Court to call for the record of any proceeding before any inferior criminal court for the purpose of satisfying itself as to the correctness, legality or propriety of any finding, sentence or order recorded or passed and as to the regularity of such proceedings of such inferior court. But, apart from the said revisional power "the High Court possessed and possesses, the inherent powers to be exercised ex debito justitiae to do the real and the substantial justice for the administration of which alone the courts exist". It has further held that one such case would be the desirability of the quashing of a criminal proceeding initiated illegally, vexatiously or as being without jurisdiction.

In the case of Hareram Satpathy Vs. Tikaram Agarwala and Others, , the Hon. Supreme Court held as follows:

Now as the Magistrate was restricted to finding out whether there was a prima facie case or not for proceeding against the accused and could not enter into detailed discussion of the merits or demerits of the case and the scope of the revisional jurisdiction was very limited the High Court could not in our opinion launch on a detailed and meticulous examination of the case on merits.

In the case of Drugs Inspector, Palace Road, Bangalore Vs. Dr. B.K. Krishnaiah and Another, , it was held that in quashing a proceeding the High Court has to see whether the allegations made in the complaint petition if proved, make out a prima facie offence and that the accused has prima facie committed the offence. In Delhi Municipality Vs. Ram Kishan Rohtagi, the Supreme Court reiterated this view and held that the proceedings against an accused in the initial stages can be quashed only if on the face of the complaint or the papers accompanying the same no offence is constituted. In other words, the test is that taking the allegations and the complaint as they are, without adding or subtracting anything, if no offence is made out then the High Court will be justified in quashing the proceedings in exercise of its powers u/s 482 of the present Code.

In Dhanalakshmi Vs. R. Prasanna Kumar and Others, , the Hon. Supreme Court again considered the nature and scope of the powers of the High Court u/s 482 of the Code and observed as follows:

Section 482 of the Code of Criminal Procedure empowers the High Court to exercise its inherent powers to prevent abuse of the process of court. In proceedings instituted on a complaint exercise of the inherent power to quash the proceedings is called for only in cases where the complaint does not disclose any offence or is frivolous, vexatious or oppressive. If the allegations set out in the complaint do not constitute the offence of which cognizance is taken by the Magistrate, it is open to the High Court to quash the same in exercise of inherent powers u/s 482. It is not, however, necessary that there should be a meticulous analysis of the case before the trial to find out whether the case would end in conviction or not. The complaint has to be read as a whole. If it appears on a consideration of the allegations, in the light of the statement on oath of the complainant that the ingredients of the offence/offences are disclosed, and there is no material to show that the complaint is mala fide, frivolous or vexatious, in that event there would be no justification for interference by the High Court.

In State of Karnataka Vs. L. Muniswamy and Others, , the Hon. Supreme Court has held that in the exercise of the wholesome power u/s 482, the High Court is entitled to quash a proceeding if it comes to the conclusion that allowing the proceedings to continue would be an abuse of the process of the court or that the ends of justice require that the proceedings ought to be quashed. For the purpose of determining whether there is sufficient ground for proceeding against an accused, the court possesses comparatively wider discretion in the exercise of which it can determine the question whether the material on the record, if unrebutted, is such on the basis of which a conviction can be said reasonably to be possible.

In Madavrao Jiwaji Rao Vs. Sambhajirao Chandrojorao Angre (AIR 1998 SC 709), the Hon. Supreme Court had similarly held that 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. The Apex Court has further observed that it is also for the court to take into consideration any special features which appear in a particular case to consider whether it is expedient and in the interest of the justice to permit a prosecution to continue. This is so on the basis that the court cannot be utilised for any oblique purpose and where in the opinion of the court chances of an ultimate conviction are 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 proceeding even though it will be at a preliminary stage.

In State of Haryana Vs. Bhajanlal (1992 Supp (1) 335), the Supreme Court mentioned by way of illustration seven categories of cases which are by no means exhaustive, in which the High Court would be justified in quashing the criminal proceedings at the initial stage. One of them is where a criminal proceeding is manifestly attended with mala fides and or where the proceeding is maliciously instituted with an ulterior motive for wreaking vengeance on the accused and with a view to spite him due to private and personal grudge. It has been specifically observed by the Supreme Court that it is not possible to lay down any precise, clearly defined and sufficiently channelised and inflexible guidelines or rigid formulae and to give an exhaustive list of the myriad kinds of cases where such power should be exercised.

In Chandrapal Singh and Others Vs. Maharaj Singh and Another, , it was observed by the Hon. Supreme Court as follows:

... Chagrined and frustrated litigants should not be permitted to give vent to their frustration by cheaply invoking the jurisdiction of the criminal court. The complainant herein is an advocate. He lost in both courts in the rent control proceedings and has now rushed to the criminal court. This itself speaks volumes. Add to this the fact that another suit between the parties was pending from 1975. The conclusion is inescapable that invoking the jurisdiction of the criminal court in this background is an abuse of the process of law and the High Court rather glossed over this important fact while declining to exercise its power u/s 482.

Reference may be made to a next decision of the Apex Court in Bal Kishan Das Vs. P.C. Nayar (1991 AIR SCW 1353). In this case, an application for quashing made by the accused on the ground that the liability is of a civil nature was rejected by the High Court on the ground that reading the complaint petition, it cannot be said that the essential ingredients of Section 406 of the Indian Penal Code, have not been alleged. This could ultimately be a matter to be thrashed out in the trial. When the matter went to the Apex Court, the Hon. Supreme Court in a short judgment held as follows :

After hearing counsel for both the parties and perusing the documents, we are of the opinion that this matter is purely of a civil nature. As pointed out earlier there were arbitration proceedings and further the matter is pending for more than 17 years. Having regard to all the circumstances, particularly that the matter is purely of a civil nature, we feel that it is a fit case in which the proceedings taken by the Chief Judicial Magistrate are to be quashed. Accordingly, the entire proceedings now pending on the file of the Chief Judicial Magistrate, Ganjam, are quashed. The appeal is accordingly allowed.

This, decision shows that there, is no hard and fast rule, no strait-jacket formula, no rigid test laid down by the Hon. Supreme Court which must invariably apply to every application u/s 482 of the Criminal Procedure Code. In this case, on consideration of documents and all the circumstances the Apex Court quashed the proceeding on the ground that the dispute was purely of a civil nature even though there were allegations in the complaint as to the ingredients of the offence. This decision also shows that in exercise of the inherent power u/s 482, the High Court may also take into consideration all the attending circumstances appearing from the materials placed before it in order to ascertain whether the impugned proceeding is fit to be quashed.

In State of West Bengal and Others Vs. Swapan Kumar Guha and Others, the Hon. Supreme Court has similarly held that in appropriate cases, the court may take into consideration the relevant facts and circumstances of the case. While considering the question whether a first information report giving rise to investigation by the police should be quashed, the Hon. Supreme Court observed in paragraph 65 as follows ( AIR 1982 SC 972 and at page 153 of 53 Comp Cas) :

In considering whether an offence into which an investigation is made or to be made, is disclosed or not, the court has mainly to take into consideration the complaint or the first information report and the court may in appropriate cases take into consideration the relevant facts and circumstances of the case. On a consideration of all the relevant materials, the court has to come to the conclusion whether an offence is disclosed or not

It would appear from paragraph 67 of the above judgment (at page 154 of 53 Comp Cas) that the court took into consideration not only the allegations in the first information report but also the other materials which were contained in the affidavit filed by the parties as also an article published in the newspaper Business Standard dated November 16, 1980. A copy of the said article was enclosed with an affidavit filed on behalf of the State. It would further appear from paragraph 49 (at page 139 of 53 Comp Cas) of the judgment that the copies of the correspondence between the State Finance Minister, the Union Finance Minister and the Deputy Governor of the Reserve Bank of India which had been disclosed by an affidavit filed on behalf of the Reserve Bank of India were also taken into consideration by the Hon. Supreme Court. In this connection, reference may be made to the judgment of the Calcutta High Court in Sanchaita''s case. The decision in the case of Madhav Rao Jiwaji Rao Scindia, (supra), would also suggest that the High Court may take into consideration materials placed before it which were not before the Magistrate to consider whether it is expedient and in the interest of justice to permit a prosecution to continue and whether the court is sought to be utilised for any oblique purpose and whether chances of ah ultimate conviction are bleak.

In the case of N.C. Nagpal [1979] 2 CHN 198, it has been held that, while exercising inherent power for quashing a proceeding, the court can look into the materials besides those which were before the learned Magistrate for issuing process. The court made the following observation:

While setting aside an order of a Magistrate issuing process in exercise of the revisional jurisdiction this Court has to confine itself to the materials from which he obtained satisfaction that there were sufficient grounds to issue process against the accused; and those materials necessarily will be the statement of the complainant and the witnesses recorded u/s 202. The High Court exercises revisional powers only to ascertain whether the impugned order of the inferior criminal court is correct, legal or proper and the fact that the record can be and is called for from the concerned court is only indicative of the fact that materials from which the inferior court obtained satisfaction to pass the order were required to be looked into for such ascertainment But, in exercising inherent power, the scope is much more expansive in that the court can quash a proceeding for the ends of justice or to prevent an abuse of the process of the court. That necessarily means that while exercising inherent powers the court need not confine itself to the propriety, legality or correctness of the order of the Magistrate and for that matter the materials on which such order was passed.

To cite an example. On the basis of a complaint and examination of the complainant u/s 200, the Magistrate issues process against an accused. Against such issuance of process the accused invokes the jurisdiction of this Court for exercising both revisional and inherent powers. While so invoking, the accused produces incontrovertible materials before this Court to indicate that previously a complaint was filed on the same allegations which after trial ended in acquittal in his favour and contends that the prosecution is barred u/s 300 of the Code. In such a case, if the materials placed before the Magistrate disclose an offence this Court by exercising revisional power cannot set aside the order, which is proper, correct and legal. But, in such a case, this Court fails in its duty if it does not exercise its inherent power to quash the proceeding relying on the further materials placed before it regarding the previous complaint. The position, therefore, is clear that while exercising inherent power for quashing a proceeding the court can look into materials, besides those which were before the learned Magistrate for issuing process". The court has further observed "... while exercising its inherent power for quashing a proceeding in which process has only been issued, this Court can look into and rely upon materials, besides those on which process was issued, which can be translated into admissible and relevant evidence, but it should not embark upon an enquiry in which an appreciation of the materials may be necessary to support or dislodge the accusation.

In Harnath Mukherjee Vs. State [1988] 2 Cri 694, a Division Bench of the court quashed a criminal proceeding relating to offences of criminal trespass, intimidation and theft on the ground of complete suppression of the fact of delivery of possession of the suit premises to the petitioner by the court bailiff in execution of the writ of delivery of possession issued by a competent civil court which makes the allegations of trespass, intimidation and theft untenable. In that case, the court relied upon the certified copy of the writ of delivery of possession and the bailiffs return which were produced by the petitioners. Relying upon the same the court has held that the proceeding was a mala fide one based on suppression of a material fact and that the court had been sought to be utilised for an oblique purpose and the chances of an ultimate conviction were bleak and further continuance of the impugned proceeding would be a mere abuse of the process of the court and on that ground quashed the impugned criminal proceeding against the petitioners. Similarly, this Court quashed a criminal proceeding u/s 448/427 of the Indian Penal Code, on the ground of suppression of materials within the knowledge of the complainant in the case of Ashutosh Sarkar v. Nathuram Das alias Rajah [1990] C Cr Lr 174 (Cal). Relying upon the materials produced by the petitioners the court held that if these materials were disclosed in the complaint the court would have been slow to issue process. When the materials have been suppressed before the court, the High Court to prevent the abuse of the process of the court can interfere and quash the proceedings as the court would not have issued process against the accused if the said materials were disclosed.

From the above, it is clear that while considering whether allegations in the complaint and the initial deposition and the documents relied upon by the complainant prima facie establish the offence alleged the court is not bound to accept allegations which are even opposed to common sense and broad probabilities. In appropriate cases the High Court may look beyond the complaint and initial deposition of the complainant and his witnesses and the documents relied on by the complainant and take an overall view of all the surrounding and related facts and circumstances on the basis of the materials placed before it in order to ascertain whether the impugned proceedings are lame, frivolous, vexatious or mala fide commenced with a veiled object and whether the proceedings are likely to degenerate into a weapon of harassment and persecution so as to call for interference by the court. Because of the special features in a case, if the court is of the opinion that chances of an ultimate conviction are bleak and no useful purpose is likely to be served by allowing a criminal prosecution to continue, the court while taking into consideration the special facts of a case may quash the proceeding even though at a preliminary stage. The court may also quash a proceeding if the dispute is of civil nature and there is suppression of material facts which, if disclosed, would make the prosecution untenable. The categories of cases in which the High Court can invoke its inherent powers u/s 482 of the Criminal Procedure Code to quash the proceeding as catalogued in some of the Supreme Court decisions are merely illustrative and not exhaustive. There is no hard and fast rule, no strait-jacket formula and no rigid rest which must apply to every application u/s 482. Every case is to be decided in the context of its peculiar facts and circumstances and the predominant concern of the court is to secure the ends of justice and to prevent an abuse of the process of the court (see Muniswamy''s case). Though the court may look into the uncontroverted and incontrovertible documents placed before it in order to decide whether the continuation of the criminal proceeding would be an abuse of the process of the court, it cannot embark upon a detailed enquiry by thorough appreciation of evidence which can be done at the stage of trial.

The undisputed facts prima facie show after perusal of the complaint and statement of complainant recorded u/s 200 of Cr.P.C. as well as Kamleshrai, brother of complainant u/s 202 of Cr.P.C. that the firm named ''M/s Rai Motors Datia was authorized sales dealer from 1st April 1999 date of complaint. Agreement of appointment of authorized sales dealership was executed by the complainant and authorized signatory on behalf of the company on 21st October 1999 and subsequently on 8th September 2005 for period of five years. As per terms of agreement the complainant had deposited Rs. 50,000/- (Rs. Fifty thousand) by way of security. As per terms of agreement for supply of two wheeler vehicles manufactured by the company on oral invoice or written invoice and on depositing the sale price, the requisite vehicles were delivered to the authorized sales agents. If the vehicles as per requirement for which the selling price is deposited are not supplied to the dealer in that case the remaining amount sent by the authorized dealer was to be adjusted in future deal. The company during the period in question on request of the complainant despite deposit of sufficient money did not deliver the requisite number of two wheeler vehicles to the complainant, the authorized selling agent. On contact on phone, the responsible officer/servant did not response properly. The company neither delivered the requisite two wheeler vehicles nor returned the amount of deposit with the company, nor tendered the agreed interest to the complainant. As a result, the complainant instead of choosing the civil recourse, adopted the easy way of filling the complaint against the company. It is well known fact that the company was due to labour problems arose became sick unit and from March 2006 to April 2007, the production of motor vehicles was adversely affected. For theses reasons the supply in market by the petitioners-company was stopped. During the period when the company became Sick Industrial Undertaking, a scheme for revival and rehabilitation of its business was before the BIFR under the Sick Industrial Companies (Special Provisions) Act 1985. It is stated that the complainant had taken undue advantage of these unavoidable problems and circumstances and filed a complaint on 22nd December 2006 against the company and its officers. He has roped all the appellants in a criminal case without their specific role or participation in the alleged offence with the sole purpose of settling his dispute with the Company by any hook or crook after initiating the criminal prosecution against the Chairperson, Directors and Senior Managerial Personnel of petitioner No. 1 -Company, who did not have any concern in the claims of the complainant. There is also no specific allegation with regard to their role. No ingredients of Section 420 of I.P.C. is made out against the accused. In the light of the law laid down by the Apex Court and the factual aspects of the present scenario, it appears that neither the trial Magistrate nor the revisional court dealt with a case in a proper manner.

In Muhammad Ibrahim Haji Moula Baksh v. T.C.R. Naitghton (AIR 1941 Sind 198), the complainant, on high hopes being held out by the Managing Director of a business, entered into partnership with him and invested a large sum of money. The complainant had at all times access to the business books and also participated in the management of the business. The high hopes held out by the Directors were not fulfilled and the business ended in considerable loss. On a charge of cheating by the complainant against the accused, it was held that no offence of cheating was committed.

Recently, in Thermax Limited and others Vs. K.M. John and others (2011) 13 SCC 412, the Apex Court held:-

the complaint must disclose relevant material ingredients of Sections 405, 406, 420 read with Section 34 IPC. If there is a flavour of civil nature, the same cannot be agitated in the form of criminal proceeding. If there is huge delay and in order to avoid the period of limitation, it cannot be resorted to as a criminal proceeding.

It is settled law that the essential ingredient for an offence u/s 420, which we have already extracted, is that there has to be dishonest intention to deceive another person. We have already quoted the relevant allegations in the complaint and perusal of the same clearly shows that no such dishonest intention can be seen or even inferred inasmuch as the entire dispute pertains to contractual obligations between the parties. Since the very ingredients of Section 420 are not attracted, the prosecution initiated is wholly untenable. Even if we admit that allegations in the complaint do make out a dispute, still it ought to be considered that the same is merely a breach of contract and the same cannot give rise to criminal prosecution for cheating unless fraudulent or dishonest intention is shown right from the beginning of the transaction. Inasmuch as there are number of documents to show that the appellant Company had acted in terms of the agreement and in a bona fide manner, it cannot be said that the act of the appellant Company amounts to a breach of contract.

Though Respondent 1 has roped all the appellants in a criminal case without their specific role or participation in the alleged offence with the sole purpose of settling his dispute with the appellant Company by initiating the criminal prosecution, it is pointed out that Appellants 2 to 8 are the ex-Chairperson, ex-Directors and senior managerial personnel of Appellant 1 Company, who do not have any personal role in the allegations and claims of Respondent 1. There is also no specific allegation with regard to their role.

Apart from the fact that the complaint lacks necessary ingredients of Sections 405, 406, 420 read with Section 34 IPC, it is to be noted that the concept of "vicarious liability" is unknown to criminal law. As observed earlier, there is no specific allegation made against any person but the members of the Board and senior executives are joined as the persons looking after the management and business of the appellant Company.

The entire analysis of the complaints with reference to the principles enunciated above and the ingredients of Sections 405, 406, 420 read with Section 34 IPC clearly show that there was inordinate delay and laches, the complaint itself is inherently improbable and contains the flavour of civil nature and taking note of the closure of earlier three complaints that too after thorough investigation by the police, we are of the view that the Magistrate committed a grave error in calling for a report u/s 156(3) of the Code from the Crime Branch, Pune.

In view of those infirmities and in the light of Section 482 of the Code, the High Court ought to have quashed those proceedings to safeguard the rights of the appellants. For these reasons, the order passed by the Judicial Magistrate, First Class, Pimpri in CC No. 12 of 2002 on 20-8-2007 and the judgment of the High Court dated 11-1-20081 in Criminal Writ Petition No. 1622 of 2007 are set aside. The complaint filed by Respondent 1 herein is quashed.

As discussed above, in the present case, except vague allegations lacking in material particulars, there is nothing in the complaint to constitute the offence of conspiracy to which the accused are alleged to be parties. Where the accusations are based on documents, the documents themselves must be produced and mere oral evidence will not be sufficient. There is not even oral evidence about the basic facts from which conspiracy may be inferred. It is not enough for the complainant to merely allege that the offence has been committed. The complainant is required to produce the evidence before the Magistrate at least for the purpose of satisfying the Magistrate that the allegations are not empty accusations but that sufficient evidence is there in support of the accusations which will be proved in course of trial. In R.P. Kapur''s case (supra), while laying down the categories of the cases in which the proceeding should be quashed at the initial stage, the Hon. Supreme Court pointed out that there may be a category of cases in which even though the allegations made against the accused do constitute an offence alleged, there is either no legal evidence adduced in support of the case or evidence adduced clearly or manifestly fails to prove the charge.

Thus, the special features and the related facts and circumstances as referred to above would manifestly show that the allegations in the complaint are patently absurd and inherently improbable and that the complainant has failed to make out a prima facie case. The dispute is of civil nature and the impugned criminal proceeding appears to be frivolous, vexatious and mala fide initiated with the oblique motive of exerting pressure upon the petitioners to pay a huge amount of money and make other concessions for the alleged loss suffered by the complainant. Further, continuation of the proceeding would be an abuse of the process of the court and for the ends of justice the impugned proceeding should be quashed. The petition is, therefore, allowed and the impugned criminal proceeding against the petitioners is quashed, however, with no order as to costs.