Rohit Singhal vs State of M.P. and Others

Alok Verma, J.—This petition under section 482 of Cr.P.C. is filed for quashment of F.I.R. and the proceedings arising out of Crime No. 544/2011 dated 25.8.2011 under section 406 of IPC registered by Police Station Chimanganj Mandi. Ujjain against the present petitioner. According to the petitioner, he was a Director of Femas Construction Company Ltd. (hereinafter referred to "FCCL" for brevity) which provides integrated Engineering, Procurement, Project Management and Construction Services in Oil, Gas, Infrastructure and Petrochemical Sectors. The FCC was awarded a contract by M/s. Gail India Ltd. (hereinafter referred to as "GAIL" for brevity) for laying of pipeline and other associated works. For the sake of this project, the FCCL required 70 tons pipe layers (cranes). Respondent No. 2 contacted the FCCL and submitted a quotation on 29.4.2010 for providing two numbers of caterpillar 583 machines to the FCCL on rent. The petitioner informed respondent No. 2 who was the Manager of M/s. Mideast Pipeline Products (hereinafter referred to as "MPP" for brevity) by e-mail dated 1.5.2010 specifying their requirement of machineries to be used for the said project. It was specifically informed to MPP that they will require the pipe layers (cranes) having lifting capacity of 70 tons. After further negotiation, in which lifting capacity of cranes was the main criteria, quotation of MPP was accepted by FCCL and work order was issued on 5.5.2010.

In compliance of the said work order (Annexure P-4), MPP delivered two caterpillar machines. The brochure of which is Annexure P-5. When the machine was received by FCCL, it was found that the machine was having lifting capacity of only 40 tons capacity and not 70 tons as required by FCCL. This fact was brought in the notice of MPP by e-mail dated 17.5.2010. As per the condition of the contract, the machine supplied by MPP was to be operated by the operator provided by MPP. However, the operator refused to operate the machine.

Meanwhile, in pursuance of work order issued by FCCL, an advance of Rs. 9,84,242/- was also paid by FCCL to MPP against the rent of the machine.

When the machine could not be utilized in the project, a dispute arose between FCCL and MPP and the matter was referred to Arbitration and Justice S.K. Kataria was appointed as sole arbitrator to adjudicate the dispute between the parties.

While the proceedings before the Arbitrator was pending, respondent No. 2 lodged F.I.R. with Police Station Chimanganj Mandi, Ujjain, which was registered at Crime No. 544/2011 under section 406 of IPC, which is the subject-matter of the present petition.

During the investigation, one machine was seized by the police from the custody of the present petitioner. It is further alleged by the present petitioner that one machine was sent back to MPP through transport.

Challenging the proceedings arising out of the said crime number, the present petition is filed on the ground that the F.I.R. lodged by MPP is abuse of process of law. The proceedings have been initiated only to harass the present petitioner. The dispute is of purely civil nature and no offence under section 406 of IPC is made out. The FCCL had been asking the MPP to take their machines back and refund the deposit, but they did not take any action in this regard. Looking to the facts and circumstances of the case, there can be no mens rea or actus reus attributed to the present petitioner.

Replying the present petition, respondent No. 2 asserted that the machines were taken only after being satisfied by the engineers of both the sides and agreement was signed by them. The machines were not returned even after 20 months of the period of the contract and only one machine was returned back to him after three months. In respect of second machine, respondent No. 2 was assured that the machine would be delivered to him after sometime. However, even after one year, when he did not receive the machine, he went to the yard of the petitioner at Village Dhabla where the machine was not seen. Security officer Omprakash Dhakad used abusive language against him, due to which, respondent No. 2 lodged a report at Police Station Chimanganj Mandi, Ujjain. The police searched the yard of the present petitioner, but the machine was not there. The machine was ultimately seized from Ujjain. Accordingly, by removing the machine from the yard to Ujjain, he committed an offence under section 406 of IPC.

Learned counsel for the petitioner inter alia argues that:

"(i) the present petitioner is a CEO/Director of the Company. No vicarious liability can be cast on the petitioner for the alleged offence committed by the Company under section 406 of IPC.

(ii) that even if averment made in the F.I.R. be taken as correct in their entirety, they did not disclose any offence under section 406 of IPC."

To substantiate the first argument, learned counsel for the petitioner placed reliance on the judgment of Hon''ble Supreme Court delivered in the case of S.K. Alagh Vs. State of U.P. and Others, , in which, Hon''ble Supreme Court held that under sections 34, 146 to 149 of IPC does not cast vicarious liability on the party, not directly charged for commission of the offence. The Hon''ble Supreme Court has observed in para 20 of the judgment as under:

"20. We may, in this regard, notice that the provisions of the Essential Commodities Act, Negotiable Instruments Act, Employees'' Provident Fund (Miscellaneous Provision) Act, 1952 etc. have created such vicarious liability. It is interesting to note that section 14A of the 1952 Act specifically creates an offence of criminal breach of trust in respect of the amount deducted from the employees by the company. In terms of the explanations appended to section 405 of the Indian Penal Code, a legal fiction has been created to the effect that the employer shall be deemed to have committed an offence of criminal breach of trust. Whereas a person in-charge of the affairs of the company and in control thereof has been made vicariously liable for the offence committed by the company along with the company but even in a case falling under section 406 of the Indian Penal Code vicarious liability has been held to be not extendable to the Directors or officers of the company. (See Maksud Saiyed Vs. State of Gujarat and Others, ."

In this regard, learned counsel also cites the judgment of Hon''ble Supreme Court delivered in the case of Maharashtra State Electricity Distribution Co. Ltd. and Another Vs. Datar Switchgear Ltd. and Others, .

To substantiate the second argument, learned counsel for the petitioner has placed reliance on the judgment of Hon''ble Supreme Court delivered in the case of Dalip Kaur and Others Vs. Jagnar Singh and Another, , in which, it was held that ingredients of cheating, fraudulent and dishonest intention must exist from the very inception when the promise or representation was made. Non-refund of amount of advance which results in simply a breach of contract, does not constitute cheating or criminal breach of trust.

As against this, learned counsel for respondent No. 2 argues that the machine was unnecessarily kept by the present petitioner, even after they disclosed that the machines were of lower capacity and not of any use to them. To deceive respondent No. 2, the machine was removed from the site where, the work was going on and it was finally seized by the police from the premises of the present petitioner.

Counsel for the petitioner argues that they kept the machine only to make sure that the amount of the advance be returned by respondent No. 2. They have no intention of misappropriating the property.

Taking the second argument of learned counsel for the petitioner first into consideration, I find that from the averment made in the F.I.R. which is Annexure P-1, no offence under section 406 of made out. The averments made in the F.I.R. may be reproduced below:

From this, it is apparent that the informant was under the impression that the machine was sold by the petitioner to someone else. However, the machine was seized, as per the property seizure memo, from the premises of FCCL, Agar Road, Police Station Chimanganj Mandi, Ujjain. It is clear that the machine was kept in possession of the present petitioner. It is undisputed that one machine was returned back to respondent No. 2. However, second machine was kept only to compel respondent No. 2 to repay the amount of advance. Taking this factor into consideration, it is clear that the nature of the dispute was purely civil. There was no dishonest intention on the part of the present petitioner to misappropriate the property belonging to respondent No. 2. On this point the principle laid down by Hon''ble Supreme Court in the case of Dilip Kaur and others (supra), is applicable in this case and as such, no case under section 406 of IPC is made out from the averment in the FIR.

Coming to the first argument, it is apparent that all the correspondence were handled by one Pradip Kumar Chelar on behalf of FCCL. The contract was also entered into by the Company and not by the petitioner in individual capacity and, therefore, listing only the present petitioner as accused and without arraying the Company and other officers as accused, the vicarious liability cannot be fasten on the present petitioner.

Accordingly, I find that the present F.I.R. is an abuse of judicial process. The dispute between the petitioner and respondent No. 2 is of purely civil nature. As such, I find that this petition deserves to be allowed. Consequently, the present petition is allowed. The F.I.R. (Annexure P-1) arising out of Crime No. 544/2011 registered at Police Station Chimanganj Mandi, Ujjain under section 406 of IPC and the proceedings arising therefrom before the Court of JMFC, Ujjain in Criminal Case No. 5090/2013 are hereby quashed. The present petitioner is discharged from the charge under section 406 of IPC.