Virendra Prakash Gupta and Another vs State and Another

G.B. Singh, J.—This is a petition u/s 482 Code of Criminal Procedure to quash the proceedings, pending in the Court of Chief Judicial Magistrate, Lucknow, on the basis of a complaint for offences u/s 406 and 409 IPC, filed by U.P. State Electricity Board, opposite party No. 2, against the Petitioners.

Virendra Prakash Gupta and Mahendra Kumar Iain, Petitioners are partners/properietors of M/s. Shyam Enterprises, Swarup Nagar Kanpur. The State Electricity Board invited tenders in the year 1978 for re-rolling of rail pieces, joist pieces etc. into Angles and Flats. The Petitioners submitted then-tender dated 6-11--1978 in that connection. Their tender was accepted and a Deed of Agreement, Annexure-1 was executed in that connection on 16-1-1979. The Petitioners were accordingly permitted to collect scrap 30 metric tons from different Storages of the Electricity Board for re-rolling into Angles and Flats. The Petitioners collected the aforesaid scrap but could not complete re-rolling of the entire scrap in time. They partly supplied Angles and Flats weighing 13.125 metric tons, whereas they had to give 300 metric tons finished goods in accordance with the terms of the Agreement. Some correspondence took place between the parties thereafter but the balance could not be supplied by the Petitioners. U.P. State Electricity Board, therefore, filed complaint against the Petitioners for offences under Sections 406 and 409 IPC, alleging that they have dishonestly mis-appropriated and converted the scrap to their own use. On the basis of that complaint, the Petitioners were summoned for these offences by the Chief Judicial Magistrate, Lucknow, by an order dated 10-5-1982. The Petitioners thereafter filed the present petition for quashing the aforesaid proceedings initiated on the basis of the complaint.

Heard learned Counsel for the Petitioners as well as learned Counsel for U.P. State Electricity Board and the State. The point argued by the learned Counsel for the Petitioners is that the complaint does not make out any case against the Petitioners and as such the proceedings initiated on the basis of the complaint arc liable to be quashed. There is much force in this contention.

The facts are not much in dispute. The Petitioners filed affidavit in support of their application u/s 482 Code of Criminal Procedure, giving out all necessary details. The U. P. State Electricity Board, opposite party No. 2, filed counter affidavit thereto. If they are read together alongwith the Agreement, Annexure-1 and Complaint, Annexure-?, it becomes undisputed that the opposite party No. 2 supplied 300 metric tons of scrap, namely, Rail pieces, Joist piece etc. and the price of that scrap was assessed at Rs. 1500/- per metric ton. The value of this scrap, thus, according to the Agreement came to Rs. 4.5 lacs and the Petitioners deposited a Bank Gurantee of Rs. 4.5 lacs in the shape of security towards the price of the same. It is also undisputed that there was part delivery of finished goods and the rest could not be supplied by the Petitioners and their prayer for extension of time was refused by the U.P. State Electricity Board It has also become undisputed that thereafter the U.P. State Electricity Board enchased the said Bank Gurantee of Ks. 4.5 lacs and there is an admission to this effect in para-14 of the counter affidavit. It is provided in para-4 of the Deed of Agreement, Annexure -1, that in case of short delivery of finished material to the Board, the recovery was to be made towards the cost of scrap at the rate of Rs. 1500/- per metric ton of scrap from the security submitted by the Firm. It seems that the U. P. State Electricity Board relying upon this clause, realized the price of the scrap from the security submitted by the Petitioners. After this realization of the price of the scraps supplied, the property in goods passed to the Petitioner and, thus, the transaction amounted to sale. In a case of sale where the property on goods passes to the purchaser, he cannot be held liable for an offence u/s 406 or 409 IPC because one cannot misappropriate his own property. Thus, the dispute between the parties which is to be resolved is of civil nature and the same shall be decided in the Arbitration proceedings as the matter has undisputedly been referred to Arbitrator and the matter is pending before him since long.

5 It is true that the view where remedy under civil law is available, Section 406 IPC is in-applicable cannot be accepted. The reason is that a criminal prosecution is not completely barred merely because the civil remedy is available; Criminal law and Civil law can run side by side. But the facts of the present case clearly show that the necessary ingredients of offences under Sections 406 and 409 IPC namely misappropriation or conversion with dishonest intention is absent. There was no question of misappropriation of the scrap till the Petitioners were pressing for extension of time for supply of the remaining finished goods. Thereafter the opposite party No. 2 realised its price by encasing the Bank Guarantee. When the complainant encashed the Bank Guarantee furnished by the Petitioners equivalent to the price of the scrap supplied, the transaction of sale became complete and the question of misappropriation of the scrap did not arise Thus, a necessary ingredient for the offences under Sections 406 and 409 IPC is absent in the present case and prosecution initiated on the basis of the complaint, is liable to be quashed.

It was argued by the learned Counsel for the U.P. State Electricity Board that allegations made in the complaint alone should be taken into account while disposing of the present petition and if they are taken as correct, case for the offences u/s 406 and 409 IPC is made out and as such the proceedings cannot be quashed. In support of this argument, he placed reliance upon Pratibha Rani v. Suraj Kumar 1985 Supreme Court Cases (Crl.) 180. In my opinion this contention cannot be accepted in the circumstances of the case. Since the parties have filed affidavit and counter affidavit relating to the facts involved, they can be taken into account alongwith the complaint for the disposal of the petition, u/s 482 Code of Criminal Procedure. In the complaint, the opposite party No. 2 has not given all the necessary facts. They have come out in the affidavit and counter affidavit and the petition can undoubtedly be decided on the basis of the admissions or undisputed facts. Thus, the complaint alone cannot be made sole basis for disposal of the petition in the special circumstances of the case.

It has been held in Hukum Chand Gupta v. Arvind Gautam 1981 L L J 157, that ordinarily this Court does not interfere at an interlocutory stage with criminal proceedings pending in a subordinate court but where the allegations in the complaint and the material on record, taken on their face value, do not make out an offence, interference has to be done in the interest of justice. These observations clearly show that alongwith the complaint material on record can also be taken into account on its face value and if they do not make out an offence, interference can be made in the interest of justice, u/s 482 Code of Criminal Procedure.

It has been held in State of Gujarat v. Jaswantlal Nathalal 1968 Cri LJ 803 (SC) that a mare transaction of sale cannot amount to an entrustment. It has been further held that where the Government sells cement to its Contractor solely for the purpose of being used in connection with the construction work the circumstances does not make the transaction anything other than sale. The Government his no dominion over the cement supplied and it cannot be held that there has been a breach of trust.

In Mafizul Islam Mia Vs. K.P. Sinha, , the Contractor had to execute contract on behalf of the Government and latter issued material to Contractor to execute work. It was held that the material issued to the Contractor became his property and if he did not use the property issued for work it did not amount to misappropriation and there is no offence u/s 406 IPC. It was further held that in such a case there can be only Civil liability.

The observations made in these cases when considered alongwith the facts of the present case and the terms of the agreement, it becomes evident that after refusal to extend time for supply of finished goods and realization of the price of the scrap by encashing the Bank Guarantee, the transaction amounted to sale and thus, there could he no misappropriation to constitute offence under Sections 406 and 409 IPC.

The petition, therefore, succeeds. It is accordingly, allowed. The proceedings commenced on the basis of the complaint, Annexure-1, and the order dated 10-5-1982 summoning the Petitioners for offences under Sections 406 and 409 IPC are quashed.