Prem Chand Goyal vs Monika India

S.C. Malte, J.

The accused/petitioner has filed this petition under Section 482 of the Code of Criminal Procedure and sought the quashing of the complaint Annexure P1 and order Annexure P9 by which the accused were summoned by the trial Court.

Annexure P1 is the copy of the complaint. It is filed by respondent No. 1 against the petitioner as accused No. 1 in that complaint. The respondent had entered into an agreement with the business establishment M/s Vinay Industries which was a sole proprietorship concern of accused No. 1 at the relevant time when the said agreement dated 2.4.1984 was executed between the parties. As per that agreement, accused 1 as proprietor of M/s Vinay Industries agreed to supply to the petitionerfirm synthetic waste which was to be imported by accused 1 from Taiwan. At a later stage the terms of the agreement between these two persons, would be referred by me to the extent these are material. The accused 1 accordingly imported the synthetic waste. However, the delivery of that synthetic waste was held up by the Customs Department on the issue of payment of the charges known as ''CVD'' and the custom duty. The accused 1 raised a contention regarding the legality of the demand of the said charges by the Customs Department. The admitted position is that accused 1 had filed a writ petition in the Supreme Court and challenged the demand raised by the Customs Department. In the course of hearing of that writ petition, an interim order was passed by the Supreme Court to the effect that on furnishing the security to the tune of Rs. 92 lacs, in the shape of Fix Deposit Receipts (FDRs) and after furnishing the surety in respect of such amount, the said stock of the synthetic waste shall be released by the Customs Department. It appears that since the respondentfirm was the ultimate purchaser of the said synthetic waste, it, at the request of respondent 1 came forward to comply with the condition of furnishing surety in terms of the interim order passed by the Supreme Court. It is contended that the respondentfirm pledged the Fix Deposit Receipts as mentioned in the complaint; on the implied assurance by the petitioner (accused 1) that he will faithfully prosecute the writ petition in the Supreme Court to its ultimate logical end. The surety in terms of the interim order of the Supreme Court was thus submitted in 1985. The matter was pending in the Supreme Court for a considerable long span.

The contents of the complaint indicate that at a later stage the other two accused also joined as partners to accused 1, and thus the sole proprietorship business came to be transformed into partnership firm. Further allegations are that accused 2, who by that time had joined as a partner to accused 1 on 21.8.1993 asked respondentfirm to give him Rs. 20 lacs for payment towards the customs duty. He is said to have then threatened that if the respondentfirm do not pay that amount, he would withdraw the writ petition pending in the Supreme Court, and thereupon the Custom Authorities will immediately start recovery of the dues as demanded by them. The complaint further indicates that amount of Rs. 20 lacs was later on deposited by accused 1 with the Custom Department. In the complaint there is also an allegation that on 23.8.1994 all the three accused along with two other persons trespassed in the house of one Sanju Goyal of respondentfirm and thereupon the employees of the respondent/firm pressed the demand for Rs. 20 lacs and threatened that failing to fulfil the demand, the writ petition shall be withdrawn. Ultimately on 8.9.1994 the above mentioned writ petition filed in the Supreme Court was withdrawn at the instance of a statement made by accused 2. In result the CVT and the custom duty as originally demanded by the Customs Department has become recoverable against the import of synthetic waste mentioned above, and the Customs Department have taken steps to recover that amount by encashing the FDRs mentioned above. The respondentfirm has, therefore, a grievance that the petitioner accused has thus caused a wrongful loss to the petitioner to the tune of Rs. 92 lacs. A complaint under various sections of the IPC was thus filed in the Court of Judicial Magistrate Ist Class, Ludhiana. The trial Court recorded the evidence before the charge. Thereafter he considered the material before him, and ordered that the accused should be proceeded against under Sections 406 and 420 read with Section 120B IPC. The accused were accordingly summoned. Against that order dated 31.3.1995 this petition is filed.

The contention raised on behalf of the petitioner is that, taken at best, the alleged breach is a breach of the terms of the agreement that may give rise to civil liability, and there are absolutely no ingredients to spell out offence under Section 406 or 420 IPC.

On the other hand, on behalf of the respondentfirm my attention was invited to certain terms of the agreement entered into by these parties at the time of import of the synthetic waste. It was contended that the writ petition in the Supreme Court was being contested by the petitioner as a proxy for the respondentfirm and as such the respondent was the person who would be benefited if the writ petition had been contested and taken to the logical end by decision. It was submitted that the petitioner by withdrawing the writ petition has thus defrauded the respondentfirm and thereby caused wrongful loss to the respondent.

In order to appreciate the submissions by both the sides, it would be necessary to reproduce the terms of the agreement entered into by the parties. One of the terms was as follows :

"All the expenses will be taken into consideration such as Custom duties, freight, octroi, cartage, bank charges, interest, demurrage charges and clearance charges, while computing the cost, except the Court expenses with regard to CVD and Custom duties which are demanded in excess by the Custom Deptt."

This condition clearly indicates that among other expenses which the respondentfirm undertook, included the CVD and Custom duties. The only exception was in respect of the expenses incurred in the Court while contesting the demand made by the Customs Department. The net result, therefore, was that the disputed amount in respect of CVD and Custom duties was an amount for which the respondentfirm was undoubtedly interested in the result of the writ petition which has been filed by accused 1. In the context of that, it cannot be forgotten that the ultimate beneficiary of the decision of the Court would be the respondentfirm though the writ petition was being contested by the petitioner (accused). All the same, it is to be found out as to whether the ingredients of the offence would be spelt out because of the subsequent move by the petitioner. In order to appreciate that aspect, it would be necessary to refer to clause 4 of the agreement entered into by the parties. It is as follows :

"To avoid any misunderstanding or confusion at some later stage, it is hereby stipulated that although at the present stage, the CVD which is approx, Rs. 11/ per kg., is not applicable in terms of interim Court orders as well as per decision of Appellate Collector of Customs, New Delhi in the case of M/s Oswal Woollen Mills, Ludhiana, on the consignments being imported by the Seller, which the Seller, in turn has agreed to pass on to the Buyer, but in case, at some later stage, any such liability occurs and any duty is required to be paid by the Buyer as the same will be nothing but a part of the cost and for this purpose, the Buyer has undertaken to stand guarantee in any manner directed by the Court or the Bank to the effect that in case any such duty becomes payable at any stage, the same will be exclusive liability of the Buyer and not that of the Seller by virtue of this Agreement."

This term also clearly indicates that the buyer (respondentfirm) was to undertake the liability in respect of the payment raised by the Customs Department. The net result, therefore, is that the respondentfirm was deeply interested in the result of the writ petition filed by accused 1 in the Supreme Court.

In the context of the aforesaid condition, it may be recalled that the respondentfirm had deposited number of FDRs as indicated above, and thus complied with the conditions for getting the release of the synthetic waste which was detained by the Customs Department. It is contended that the deposit of the FDRs of the huge amount by way of security was on an implied assurance that the petitioner was to contest the writ petition in the Supreme Court and thus protect the interest of the respondentfirm in respect of its liability to the CVD and custom duties.

It was further submitted on behalf of the respondent that the deposit of FDRs by way of security while getting the synthetic waste released was also by way of entrustment at the instance of the accused, and, therefore, though the physical custody of those FDRs is with the Customs Department, it is, by legal fiction, with the accused in view of the view of the terms of the agreement mentioned above. The counsel for the petitioner, on the other hand, has brought my attention to the ingredients of the offence and contended that none of the ingredients of the offence has been spelt out.

In order to appreciate the rival contentions it is necessary to consider the definition of the term "criminal breach of trust". Section 405 IPC defines it. The first ingredient is that property in any manner is entrusted with or has a dominion over property. The FDRs in this case had been entrusted by respondent 1 to the Customs Department. It may be noted that the petitioner was neither entrusted with the property in any manner nor did he have dominion over the property. One can be said to have dominion over the property if one is in position to dominate the appropriation of that property. In this case, by giving the security in the terms of FDRs, the respondentfirm has stood a sort of surety to the amount that would be due to the Customs Department. It would be altogether different that the question of liability to the Customs Department was a matter under consideration before the Supreme Court. But for the reason alone it cannot be said that, in terms of Section 405 IPC, these FDRs have been in any manner entrusted with the accused, or that he had dominion over the property so as to decide the course of appropriation of those receipts. The course of appropriation in this case was certain to the extent that these FDRs can be utilized for the purpose of meeting the liability of custom duties and CVD. Only the question of liability was contingent upon the decision of the Supreme Court. Withdrawal of the writ petition in the Supreme Court, in which the question of liability would have been decided either in favour or against the petitioner is not enough to spell out offence of criminal breach of trust. The claim made by the respondent is that it furnished security on the basis of the terms of the agreement referred above. All the same, it cannot be forgotten that even as per the terms of the agreement the ultimate liability of the CVD and the custom duties was on the respondentfirm. If the respondentfirm now feels that it had been put to a huge loss because of the withdrawal of the writ petition in the Supreme Court, it is altogether a different matter, which may be agitated in the civil Court. The term of the agreement as such clearly indicate that respondentfirm has accepted the possibility of any decision, including the liability as demanded by the Customs Department. The terms of the agreement only contemplated the possibility of saving from such liability. This, in my opinion, the ingredients of Section 405 IPC are not spelt out on plain reading of the complaint.

This takes me to the question whether offence under Section 420 IPC can be spelt out. For that one has to consider Section 415 IPC which defines the term ''cheating''. The ingredients of cheating are (i) fraudulent or dishonest inducement so as to deceive, (ii) Delivery of the property by such persons, (iii) or an inducement to do or omit to do anything which one would not do or omit to do if not so decided, (iv) such deception caused damage or harm. The definition of cheating clearly indicates that the element of fraudulent or dishonest intention should be present at the time when the person deceived is induced to deliver property or to do or to omit to do anything which he otherwise would not have done. When respondent 1 stood surety by depositing FDRs with the Customs Department, obviously there was no fraudulent or dishonest intention at that time. About nine years thereafter, the events took turn when the petitioner withdrew the above referred writ petition in the Supreme Court. In the set of circumstances, it cannot be said that cheating in terms of Section 415 IPC was committed.

Thus, on plain reading of the complaint it clearly appears that none of the ingredients of the offence in respect of which summons was issued, was spelt out. The trial Court, however, did not take into consideration these aspects. He did not undertake the exercise to ascertain whether the offence has been spelt out in terms of the definition given in the Indian Penal Code. In the result, petition is allowed. The order dated 31.3.1995 passed by the Additional Chief Judicial Magistrate, Ludhiana, is hereby set aside and the complaint stands quashed.