By means of this petition under Section 482 of Criminal Procedure Code (hereinafter referred to 'Cr.P.C.'), petitioner Ashik Rameshchandra Shah, who is the Managing Director of petitioner no.2-M/s Ashik Woolen Mills Limited and Director of petitioner no.3-M/s Devi Knittings Limited has prayed to quash the charge-sheet (Annexure-3 to this petition) submitted by Central Bureau of Investigation (hereinafter referred to as the 'CBI') for the offences under Section 120-B read with Sections 420, 467, 468, & 471 of Indian Penal Code (in short the 'IPC') and Section 13 (2) read with Section 13(1)(d) of Prevention of Corruption Act, 1988 along with three other co-accused persons, namely, S.C. Mahajan, Ashok Kumar Vig and Deepak Kumar Somaddar, who occupied the post of General Manager, British India Corporation Ltd., Kanpur (in short 'BIC') at the relevant time.
Brief facts for deciding this petition are that on the basis of an information dated 14.01.2005, a case was registered against S.C. Mahajan, General Manager, BIC, Kanpur, M/s Devi Knitting Ltd., Mumbai (in short 'DKL') and M/s Ashik Woolen Mill Ltd., Mansa, Gujarat (in short 'AWM'). It was alleged that during 2002-03, DKL and AWM supplied substandard yarn to Cawnpore Woolen Mills, Kanpur (in short 'CWM') and New Egerton Woolen Mills, Dhariwal, which are the units of BIC, Kanpur, a Government of India Company, with connivance of Sri S.C. Mahajan, the then General Manager of the CWM, Kanpur have caused a huge wrongful loss to the tune of Rs.1,29,19,625/- to the BIC, Kanpur. During investigation, it was found that apart from S.C. Mahajan, Sri Ashok Kumar Vig the then General Manager (Technical) of BIC and Sri D.K. Somaddar, the then General Manager, CWM, Kanpur were responsible for causing huge wrongful loss to the BIC by abusing their official position. During investigation, it was found that yarn supplied by the aforesaid company, of which the petitioner no.1 was the General Manager, was found substandard. From the investigation, it has been revealed that supply was made in more than one lot. The first lot was supplied on 23.10.2002 as per invoice dated 19.10.2002 of AWM having total weight of yarn as 10,565.80 Kg. As per procedure bulk test was done on sample taken from the receipt yarn by the quality control department on 24.10.2002 and it was found to be substandard as per Test Report No.T/31 dated 24.10.2002 with a remark that yarn received under lot of 1011 does not resemble with the sample. The information about the defect in the received yarn was given to the then CMD of BIC, Sri K.S. Duggal, who ordered for inquiry as to whether the yarn can be used or not? The then General Manager, Sri S.C. Mahajan vide letter dated 04.12.2002 replied that the yarn received was substandard but did not suggest for its rejection in spite of the fact that it did not resemble with the sample. It was also stated in the charge-sheet that on earlier occasion due to supply of sub-standard yarn, the process has been initiated to black list the company owned by petitioner no.1. It was further found during investigation that due to connivance of the then General Manager defective and sub-standard yarn had been taken and consumed, and almost 95% payment was made to the Company though the yarn received ought to have been rejected.
I have heard Sri Nandit Srivastava, learned counsel for the petitioners and Sri Rishad Murtaza, learned Special Public Prosecutor and Sri Bireshwar Nath, learned counsel for the CBI.
It has been contended by learned counsel for the petitioners that it is purely a case of civil nature. It is a business transaction, therefore, the cognizance taken in this matter is not justified and the charge-sheet is liable to be quashed. It was further submitted that the yarn which was reported to be substandard was found to be useable as per report. It was further submitted that none of the companies of which the petitioner no.1 was the Managing Director was ever declared as black listed company. It was further submitted that the contents contained in the charge-sheet are not supported with the documentary evidence, therefore, this petition deserves to be allowed being a business transaction and the dispute may be settled only in civil court and criminal prosecution is an abuse of process of law.
Contrary to it, learned counsel appearing on behalf of CBI contended that this petition is pending since 2009. In this case, charges have already been framed and eight witnesses have been examined during trial. Trial is in progress and the application for discharge has been dismissed on 08.01.2009 by a reasoned order.
It is well settled proposition of law that where a wrong makes out a 'civil wrong' and also a 'criminal offence'. In such a situation, the mere fact that civil remedy is available or has been availed, is not by itself a ground to quash the criminal proceedings. In M/s Indian Oil Corporation Vs. M/s NEPC India Ltd.; AIR 2006 SC 2780, their Lordships of Supreme Court have observed as under:
"A complaint can be quashed where the allegations made in the complaint, even if they are taken at their face value and accepted in their entirety, do not prima facie constitute any offence or make out the case alleged against the accused.
For this purpose, the complaint has to be examined as a whole, but without examining the merits of the allegations. Neither a detailed inquiry nor a meticulous analysis of the material nor an assessment of the reliability or genuineness of the allegations in the complaint, is warranted while examining prayer for quashing of a complaint."
It was further observed:
"A given set of facts may make out : (a) purely a civil wrong; or (b) purely a criminal offence; or (c) a civil wrong as also a criminal offence. A commercial transaction or a contractual dispute, apart from furnishing a cause of action for seeking remedy in civil law, may also involve a criminal offence. As the nature and scope of a civil proceedings are different from a criminal proceeding, the mere fact that the complaint relates to a commercial transaction or breach of contract, for which a civil remedy is available or has been availed, is not by itself a ground to quash the criminal proceedings. The test is whether the allegations in the complaint disclose a criminal offence or not."
In the case, in hand, the allegations against the petitioners are that they are in connivance with the Managing Director of BIC cause substantial losses to government owned company, hence it could not be said that the dispute raised is purely of civil nature and required to be quashed being an abuse of process of law.
In view of above, I do not find any substance in the petition and the same is liable to be dismissed.
Keeping in view the aforesaid discussion made hereinabove and the material available on record, the petition lacks merit and is accordingly dismissed.
Dated: 25.02.2014 akverma