Santosh Kumar vs The State Of Bihar & Anr.

The present application has been filed under Section 482 of the Code of Criminal Procedure, 1973 (in short Cr.P.C.) for quashing the order dated 13.07.2016 passed by the learned Judicial Magistrate 1^st Class, Sheikhpura, in connection with Sheikhpura P.S. Case No. 42 of 2015, whereby cognizance has been taken of the offence punishable under Section 406 of the Indian Penal Code (in short I.P.C.), and for quashing the consequential criminal proceedings arising therefrom.

The prosecution case, in brief, is that the petitioner, Santosh Kumar, was engaged as an outsourcing contractor for providing manpower to the Electricity Department under an agreement executed with the South Bihar Power Distribution Company Ltd. (in short SBPDCL). The petitioner was entrusted with the responsibility of supplying manpower for the operation and maintenance work of the Electricity Supply Division, Sheikhpura.

It is alleged that, pursuant to the agreement dated 22.07.2013, the petitioner was required to provide 18 operators and 6 field staff for the Electricity Supply Division, Sheikhpura, for a period of three years. The remuneration of the operators and field staff was fixed at Rs. 6,000/- and Rs. 5,000/- per month, respectively, and the petitioner was entitled to commission in accordance with the terms of the agreement.

It is further alleged that the Electricity Department had made payments to the petitioner towards the remuneration of the deployed workmen through cheques, including cheque bearing No. 537021 dated 27.08.2014 for Rs. 1,38,000/-, cheque bearing No. 558922 dated 20.10.2014 for Rs. 6,28,320/- and cheque bearing No. 568977 dated 20.10.2014 for Rs. 4,92,111/-. However, the petitioner allegedly failed to disburse the remuneration to the workmen despite having received the aforesaid amounts, thereby causing financial hardship to the persons engaged for the work of electricity department.

On the basis of a written report lodged by the Executive Engineer, Electric Supply Division, Sheikhpura, Sheikhpura P.S. Case No. 42 of 2015 was instituted on 13.02.2015 against the petitioner for the alleged offence under Section 406 of the Indian Penal Code. Upon completion of the investigation, the police submitted chargesheet whereafter learned Judicial Magistrate 1^st Class, Sheikhpura, took cognizance of the offence under Section 406 of the I.P.C. vide order dated 13.07.2016.

Mr. Bhola Prasad, learned counsel appearing on behalf of the petitioner submits that the impugned order dated 13.07.2016, whereby cognizance has been taken under Section 406 of the I.P.C., is unsustainable in the eyes of law, as the allegations made in the first information report do not satisfy the essential ingredients of the alleged offence.

It is submitted that the entire transaction arises out of a contractual arrangement for supply of manpower to the Electricity Department. The petitioner was engaged as an outsourcing contractor, and the terms and conditions of the agreement governed the respective obligations of the parties. Any alleged default in payment of remuneration to the workmen would, at best, give rise to a contractual or monetary dispute and cannot, in the absence of necessary ingredients of criminal breach of trust, be converted into a criminal prosecution.

Learned counsel further submits that the materials brought on record do not disclose that the petitioner had dishonestly misappropriated any property or dishonestly converted any property to his own use. The mere allegation of non-payment of remuneration, in the absence of the requisite criminal intent and other essential ingredients, is insufficient to attract the provisions of Section 406 of the I.P.C.

It is further contended that the continuation of the criminal proceeding would amount to an abuse of the process of the Court, particularly when the dispute emanates from a contractual arrangement and the criminal law has been set in motion without a legally sustainable foundation. Accordingly, learned counsel prays that the application be allowed and the entire criminal proceeding, including the order taking cognizance, be quashed.

Mr. Kumar Priya Ranjan, learned counsel appearing on behalf of opposite party No. 2, the SBPDCL, submits that the petitioner was engaged as an outsourcing contractor under an agreement for providing manpower to the Electricity Supply Division, Sheikhpura. In terms of the agreement, the petitioner was responsible for disbursing the remuneration to the workmen deployed by him.

Mr. Kumar Priya Ranjan, learned counsel by referring to averments made in the counter-affidavit filed on behalf of the opposite party No. 2 submits that the present application is not maintainable on account of the fact that petitioner has byepassed the remedy available to him under Section 397 of the Cr.P.C. by filing a revision application before the learned Sessions Judge, Sheikhpura but instead, he has directly approached this Court under Section 482 of the Cr.P.C.

It is further submitted that the department had released the requisite amounts towards payment of remuneration, but the petitioner allegedly failed to make payment to the concerned workmen in-spite of receiving the same. Such conduct on the part of the petitioner resulted in financial hardship to the workmen and gave rise to the allegations, forming the basis of the criminal proceeding.

Learned counsel further submits that the petitioner cannot avoid his responsibility merely by describing the dispute as contractual in nature, particularly when the allegations relate to the alleged failure to disburse amounts, already received for payment of the workmen. Accordingly, the prayer for quashing the cognizance order and the consequential criminal proceeding is opposed.

Mr. Ashok kumar Singh, learned Additional Public Prosecutor appearing on behalf of the State opposes the prayer for quashing and submits that the allegations made in the FIR disclose the commission of a cognizable offence under Section 406 of the I.P.C. On account of the fact that the petitioner, despite receiving the amounts towards payment of remuneration of the deployed workmen, allegedly failed to disburse the same. It is contended that the allegations disclose a prima facie case of criminal breach of trust and that the defence of the petitioner cannot be examined in detail at this stage.

Thus, learned Additional Public Prosecutor accordingly urges that the criminal proceeding should be allowed to proceed, in accordance with law, by dismissing the present application.

Heard rival submissions so advanced on behalf of the contesting parties and perused the documents and materials on record.

The petitioner in the case, at hand, is an outsourcing contractor and proprietor of firm namely Subham Constructions. His firm entered into an agreement with SBPDCL through its Executive Engineer, Electric Supply Division, Sheikhpura, to supply manpower. The agreement was executed on 22.07.2013, pursuant to which the petitioner was to supply 18 operators and 6 field staffs for a period of 3 years, commencing from 22.07.2013. All these outsource employees are to work under the supervision, guidance and direction of Assistant Electric Engineer/Junior Engineer as per the requirement relating to the work of Electricity Supply Division, Sheikhpura.

The agreement executed between the petitioner and the SBPDCL is appended with the First Information Report and perusal of which clearly reflects that the petitioner was to supply the manpower to the concerned officers of the Electricity Supply Division, Sheikhpura, who are to take work from those employees as per the requirement, and for all the remaining purposes viz. their remuneration, upkeep and disciplinary control, the firm of the petitioner would be responsible. The Clause 4, 5, 6 and 8 of the agreement dated 22.07.2013 executed between the parties indisputably show and prove that:-

The aforesaid stipulations as made in the agreement does not leave an iota of doubt that the Executive Engineer, Electricity Supply Division, Sheikhpura as well as Assistant Engineer and Junior Engineer are only to take work from the manpower so supplied by the petitioner firm. They will have no administrative or disciplinary control over the such outsource employee. For payment and other related matter the petitioner firm would solely be responsible and liable towards its outsource employees.

In these circumstances, lodging of F.I.R. by the Executive Engineer, against the petitioner for not making payment of remuneration to the outsource employee, in-spite of having taken payment from the SBPDCL, appears to be untenable in law specifically in view of the terms of the stipulations made in the agreement, which do not sanction such action on the part of the Executive Engineer.

Further, the offence under Section 406 of the I.P.C. is not made out against the petitioner as basic elements as described under Section 405 of the I.P.C. is not attracted. Section 405 of the I.P.C. lays down:-

The offence under Section 405 of the Indian Penal Code is made punishable under Section 406 which reads as follows :-

Thus, for Section 406 of the Indian Penal Code to get attracted, there must be a criminal breach of trust in terms of Section 405 of the Indian Penal Code. The essential ingredients for invoking Section 405 of the Indian Penal Code are enumerated hereunder :-

As per Black’s Law Dictionary, the definition of the term “Entrustment” means to give (a person), responsibility for something, usually after establishing a confidential relationship.

In the context of Section 406 of the I.P.C. proceedings of any criminal prosecution may be quashed if the complaint or F.I.R., even if taken at the face value, does not disclose the essential ingredients of the offence. A clear absence of allegations regarding entrustment or dishonest misappropriation can be a ground for quashing.

The Hon’ble Supreme Court in the case of Anand Kumar Mohatta & Anr. vs. State (N.C.T. of Delhi), Department of Home and Anr., as reported in (2019) 11 SCC 706, emphasized the need to ascertain if the facts make out an offence under Section 406 of the I.P.C.

Section 406 of the I.P.C prescribes the punishment for the offences of criminal breach of trust. This provision plays a crucial role in upholding fiduciary relationship and ensuring accountability for the misappropriation of property entrusted to another. Criminal breach of trust, as defined under Section 405 of the I.P.C, is a nuanced offence, requiring a careful examination of the elements of entrustment, dishonest misappropriation and the violation of legal or contractual duties.

In this backdrop of the factual legal conspectus discussed hereinabove for the dispute between the employer and its outsource employees, the third party i.e., SBPDCL has no right to lodge criminal prosecution against the petitioner, if the outsource employees will have any sort of grievance against its employer, they could have raised the dispute with the employer or service provider for not making payment in-spite of taking work from them.

The nature of dispute between the parties is essentially a kind of inter se dispute between the employer and its employee, in which the SBPDCL being a third party, has no locus standi to initiate any criminal prosecution on behalf of the outsource employees, specifically, in terms of the provisions as contained in agreement dated 22.07.2013, wherein there is complete lack of authority in favour of the Executive Engineer, Electricity Supply Division, Sheikhpura, for such legal action to be taken against the petitioner.

Thus, order dated 13.07.2016 passed by the learned Judicial Magistrate 1^st Class, Sheikhpura, in connection with Sheikhpura P.S. Case No. 42 of 2015 being unsustainable in the eyes of law, is fit to be set aside.

Consequently, thus, order dated 13.07.2016 passed by learned Judicial Magistrate 1^st Class, Sheikhpura, in connection with Sheikhpura P.S. Case No. 42 of 2015, taking cognizance for the offences under Section 406 of the I.P.C., against the petitioner, is hereby quashed and set aside as well as all the criminal proceedings emanating therefrom are also quashed and set aside qua the petitioner.

Accordingly, this application stands allowed.

All pending interlocutory application(s), if any, stands disposed of.