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Judgment
Heard Mr. Chitranjan Sinha, learned Senior Advocate
for the petitioners, Mr. Jharkhandi Upadhyay, learned Additional
Public Prosecutor for the State and Mr. Sudama Singh, learned
Advocate for opposite party no. 2.
By way of the instant application preferred under
Section 438 of the Code of Criminal Procedure, 1973 (for short
'' Cr.P.C .''), the petitioners have sought for quashing of the order dated
15.03.2012 passed by the learned Chief Judicial Magistrate, Bhabhua
(Kaimur) in Complaint Case No. 1040 of 2011 whereby after taking
cognizance of the offences punishable under Sections 420, 406 and
120-B of the Indian Penal Code (for short '' IPC ''), the petitioners have
been summoned to face trial.
The prosecution case, as per the complaint is that the
complainant had opened an agency in Mohania, namely, Vaishnavi
Tractors, which was dealing with sale of tractors of New Holloand
Fiat (India) Private Limited (for short ''the Company''). During the
course of business, the complainant introduced a company, namely,
A 2 Z which needed tractor in large numbers to the CBU Manager of
''the Company'',namely, Swetaank Bharti. It was decided in the
meeting that an incentive of 4 % amounting to Rs.28 lakhs would be
given to the complainant on the total sale of tractors to the A 2 Z by
''the Company'' which was also confirmed by the Managing Director
of ''the Company'', namely, Stephano Pampalone. On the assurance
given by the other senior officers of ''the Company'', the complainant
got the business connections made between the two pursuant to
which ''the Company'' started selling tractors to the A 2 Z. It is
alleged that the complainant owes an amount of Rs.28 lakh
calculated on the basis of 4 % incentive over the entire sale in regard
to which a letter dated 03.11.2010 under the signature of Swetaank
Bharti was issued by ''the Company'', but the amount was never paid.
The complainant was examined on solemn affirmation
and in course of inquiry conducted under Section 202 of the Cr.P.C.,
two inquiry witnesses, namely, Ashok Kumar Singh and Gopal
Prasad were examined on behalf of the complainant. After holding
the inquiry under Section 202 of the Cr.P.C., vide order dated
15.03.2012, the learned Chief Judicial Magistrate, Bhabhua
summoned the petitioners in respect of offences under Sections 406,
420 and 120-B of the IPC. The aforesaid order, dated 15.03.2012, is
under challenge in the present application.
It is contended by Mr. Chitranjan Sinha, learned Senior
Advocate for the petitioners that ''the Company'' is a juristic person. It
is incorporated under the Indian Companies Act, 1956. It entered into
a dealership agreement with the complainant on 18.03.2009. In the
said agreement, there was an arbitration clause. As the dispute arose
in respect of liability of the complainant, ''the Company'' invoked the
arbitration clause against him and a retired judge of the Delhi High
Court was appointed as the Sole Arbitrator in this regard. Despite
several indulgences granted to the complainant, he failed to appear in
the proceedings before the learned Arbitrator. Hence, the proceedings
were carried out ex parte and, vide order dated 28.04.2014, an Award
in the sum of Rs.19,39,623/- was passed in favour of ''the Company''
and against the complainant. He has submitted that the complainant
has filed the present complaint with ulterior motive. He has
submitted that even if the entire allegations made in the complaint
are accepted, at its face value, none of the ingredients of the offences
for which the petitioners have been summoned would be attracted, as
it is a pure and simple case of money claim.
Mr. Chitranjan Sinha, learned Senior Advocate has
submitted that the present case is duly covered by decision of the
Supreme Court in State of Haryana & Ors. vs. Bhajan Lal & Ors .
[(1992) Supp. 1 SCC 335]. He has submitted that from perusal of the
complaint and the documents, no offence is made out against the
petitioners. According to him, there was no fraudulent or dishonest
intention at any point of time and there was no inducement on the
part of the petitioners. He has submitted that since ''the Company''
has not been made accused, the petitioners cannot be prosecuted in
their individual capacity, as there is no concept of vicarious liability
in criminal law. He has submitted that the complainant has
deliberately suppressed the fact that the dispute between the parties
was referred to the Sole Arbitrator and the learned Arbitrator had
passed an Award in the sum of Rs.19,39,623/- in favour of ''the
Company'' and against the complainant.
On the other hand, learned counsel appearing on behalf
of the complainant has submitted that the complainant had no
knowledge about the arbitration proceedings going on against him
and, thus, he did not appear and the award has been passed by the
learned Arbitrator against him ex parte. He has submitted that as a
matter of fact, the petitioners have cheated the complainant to tune of
Rs.28 lakh, which was promised to be paid by ''the Company'' to the
complaint by way of incentive for facilitating sale of tractors to the A
2 Z. He has submitted that allegations made in the complaint clearly
attract the ingredients of the offence alleged. Hence, the summoning
order cannot be held to be bad.
I have heard learned counsel for the parties and perused
the materials available on record.
The complaint is based on the alleged commitment to
pay incentive to the complainant. The case of the petitioners is that
no such commitment was ever made to the complainant. It has also
been submitted that the complainant had no role to play in the said
transactions pertaining to sale of tractors to the A 2 Z. It would be
evident from the record that the complainant had entered into a
dealership agreement dated 18.03.2009 with ''the Company'' for sale
and purchase in the region of district Bhabhua, Bihar. There is no
mention of payment of incentive to the complainant in case of direct
sale of tractors by ''the Company'' to customers in the dealership
agreement. The allegation is made on the basis of oral assurance
given to the complainant. The dealership agreement contains clause
of arbitration. ''The Company'' had invoked the arbitration clause by
way of a notice and a retired judge of the Delhi High Court had been
appointed as a Sole Arbitrator to adjudicate upon the dispute between
''the Company'' and the complainant. The learned Arbitrator, vide
Award dated 28.04.2014, decided the dispute in favour of ''the
Company'' and against the complainant and an Award in the sum of
Rs.19,39,623/- was passed in favour of ''the Company''.
Learned Senior Advocate appearing for the petitioners
has rightly submitted that the complainant deliberately suppressed
the facts about the arbitration proceedings in the present case.
Evidently, the complaint has been lodged maliciously with ulterior
motive to avoid the payment of the award amount. Moreover, the
basic ingredients of the relevant Sections of the IPC under which
cognizance has been taken, are also not satisfied. The offence of
criminal breach, as alleged, is not made out. Apart from the mens
rea, dishonest misappropriation or dishonest use is not prima facie
made out from the facts narrated in the complaint.
Even if, there is any dispute between the parties, the
same would amount to breach of contract. It is a settled position in
law that every breach of contract does not give rise to the offence of
cheating. In order to establish the offence of cheating, it is required to
establish deception at the very inception of the transaction. The
complainant has not produced any document or any evidence to
suggest deception by the petitioners. Mere averments saying that the
petitioners had agreed to give incentive to the complainant would not
be sufficient and cannot form basis for summoning order.
Furthermore, the case of the complainant is that the tractors were
sold directly by ''the Company'' to the A 2 Z. In absence of ''the
Company'' being named in the complaint, no case against the
petitioners of the present case for vicarious liability can be fastened.
It is well settled position in the IPC that save and except provisions
specifically provided, the IPC does not contemplate any vicarious
liability on the part of a party, who is not charged directly for
commission of an offence. Thus, in absence of ''the Company'' being
made an accused in the complaint, the prosecution of the petitioners,
who are alleged to be office bearers of ''the Company'' would be
impermissible.
In view of the discussions made above and in the light
of the principles relating to exercise of the jurisdiction under Section
482 of the Cr.P.C. to quash the complaint as laid down in the State of
Haryana vs. Bhajan Lal (Supra ), in the considered opinion of this
Court, the instant application deserves to be allowed. Accordingly,
the impugned order, dated 15.03.2012, passed by the learned Chief
Judicial Magistrate, Bhabhua (Kaimur) in Complaint Case No. 1040
of 2011 and the entire criminal proceedings arising from the said
complaint, are hereby quashed.
The application stands allowed.