The accused 3 and 4, who are facing criminal Prosecution for offences under Sections 406, 409 and 420 of IPC in CC.NO.10818/2006 on the file of the learned III Metropolitan Magistrate, G.T., Chennai seek to quash the proceedings.
2. The brief facts are as follows:-
The 1st accused Company had entered into a valid agreement dated 15.3.1998 with M/s.Haritha Finance Limited for hiring the machineries and the Petitioners stood guarantee for the 1st accused Company and executed a letter of guarantee dated 15.3.1998. The amount financed was for a total value of Rs.20,61,052/-. Under a scheme of amalgamation, the Company came to be amalgamated with M/s.Harita Finance Limited and came to be known as M/s.Harita Srinivasa Finance Private Limited and the same was approved by this court vide its order dated 31.7.1998 made in CP.No.142/1998. Later the name of M/s.Harita Srinivasa Finance Private Limited was changed to M/s.Harita Finance Limited and now presently known as M/s.TVS Finance and Services Limited.
3. The 1st accused Company has become liable to pay the hire charges and additional finance charges and the complainant Company issued a notice dated 24.2.2003 to the accused calling upon them to pay the outstanding amount of Rs.39,03,368/-. In reply to that, the accused issued a reply notice dated 17.3.2003 through their counsel stating that the 1st accused Company is before the BIFR.
4. Upon expiry of the period for which the machineries were given on hire, the complainant Company had sought for redelivery of the machineries, but the 1st accused Company have not redelivered the same, besides payment of hire charges towards the use of machineries. When the complainant Company visited the premises of the 1st accused Company to ascertain the status of the machineries, they had come to know that a part of the said machineries had been removed and sold by the accused to the third parties without the knowledge and consent of the complainant. It is alleged that the accused with dishonest intention had cheated and played fraud upon the complainant and had caused wrongful loss. It is further alleged that by removing the machineries and selling it to the third parties, the accused had misappropriated the sum so collected and caused wrongful loss to the complainant. Hence, the complaint has been filed.
5. It is the submission of the Petitioners that they are simply the guarantors and they have nothing to do with the day today affairs of the Company. Further, the 1st accused Company had already approached BIFR for rehabilitation and an enquiry under
Section 16 of the Sick Industrial Companies Act (herein after referred to as the Act) was conducted, but the same was negatived as barred by limitation. As against the said order, an appeal is pending before the AAIFR (Appellate Authority for Industrial and Financial Reconstruction).
6. That apart, the complainant Company initiated civil proceedings against the 1st accused Company on the file of the 2nd Assistant Judge, City Civil Court, Chennai in OS.NO.4839/2003 for permanent injunction, restraining 1st accused Company from in any manner interfering with the complainant's right in enforcing the legal rights under the hire purchase agreement dated 15.3.1998. It appears that the said suit has been dismissed. The Petitioners further submitted that the 1st accused Company had already paid a sum of Rs.9,78,711/- out of Rs.14,20,300/-, thus substantial amount has been discharged.
7. Mr.C.S.Danasekaran, the learned counsel for the Petitioners would submit that mere failure to pay the amounts guaranteed to the complainant cannot constitute the offence of cheating and the Petitioners as guarantors have nothing to do with the alleged removal and sale of the machineries. Further, the take over of the M/s.Harita Finance by the complainant Company was not intimated to the accused and no notice was served on them. Hence, the transactions are void and it follows that the guarantee cannot be a continuing guarantee.
8. The learned counsel for the Petitioners would further contend that on the face of the allegations made n the complaint, it does not show any fraudulent and dishonest intention on the part of the Petitioners and mere failure to keep the promise at a subsequent stage, the offence of cheating has not been made out. The learned counsel placed reliance on the decision of the Honourable Supreme Court rendered in the case of Anil Mahajan Vs. Bhor Industries Limited and another [2005-10-SCC-228] and Alpic Finance Limited Vs. P.Sadasivan and another [2001-8-SCC-513] in support of his above said submissions.
9. Per contra, the learned counsel for the Respondent would contend that mens rea to cheat the complainant cannot be gone into at the initial stage and it is a matter for evidence. He placed reliance on the decision of this court rendered in the case of Meena R.Sampath, Managing Director, Sri Venkatesan Paper and Boards Limited Vs. State by Inspector of Police, District Crime Branch, Dindigul and another [2005-5-CTC-533], wherein it was observed that if the contention of the Petitioner's side that they had no mens rea to cheat the complainant is accepted, then in all the cases, where the deposits are made and subsequently the parties are cheated, the defence would come forward with a plan stating that they had no intention to cheat and therefore, the criminal proceedings could not be proceeded with.
10. In yet another decision, this court in the case of Terry Gold India Limited by its Joint Managing Director D.Vinodh Singh and others Vs. TVS Finance and Services Limited by its Executive Legal Saikumar and others [2008-1-MLJ-Crl-782], has held that merely because the allegation in the complaint apparently shows the dispute as one of civil nature, it cannot be quashed and the test applied is to ascertain as to whether the allegations made out a criminal offence or not.
11. In the complaint, the Respondent has made allegations against the Petitioners making factual foundations for the offences as alleged in the complaint. The Honourable Supreme Court in Rajesh Bajaj Vs State of NCT of Delhi and others [JT-1999-2-SC-112] has observed:-
"It may be that the facts stated narrated in the previous complaint would as well reveal a commercial transaction or money transaction. But, that is hardly a reason for holding that the offence of cheating would elude from such a transaction."
In fact, many cheating were committed in the course of commercial and also money transactions. One of the illustrations set out under
Section 415 of IPC (illustration 'b') is worthy of notice now, which reads as under:-
"(b) A, by putting a counterfeit mark on an article, intentionally deceives Z, into a belief that this article was made by a certain celebrated manufacturer, and thus dishonestly induces Z to buy and pay for the article. A cheats."
12. The crux of the postulate is the intention of a person who indues the victim of his representation and not the nature of transaction which would become decisive in discerning whether there was commission of offence or not. The complainant has stated in the body of the complaint that it was induced to believe that the Petitioners would honour payment and that the complainant realised later that the intention of the Petitioners and other accused were not clear. It is also mentioned that the accused have sold them to third parties without the knowledge and consent of the complainant Company and such averments would certainly prima facie make out a case.
13. Right from the case of R.P.Kapur Vs. State of Punjab [AIR-1960-SC-866], the Honourable Supreme Court had held that revisional or inherent powers for quashing the proceedings at the initial stage can be exercised only where the allegations in the complaint or the FIR, even if taken at their face value and accepted in their entirety do not prima facie disclose the commission of an offence, or where the uncontroverted allegations made in the FIR or complainant do not disclose the commission of any offence against the accused or the allegations are so absurd and inherently improper that on the basis of which no prudent person could have reached a just conclusion that there were sufficient grounds in proceeding against the accused or there is an express legal bar engrafted in any provisions of the code or any other statute to the institution and continuance of the criminal proceedings or where a criminal proceedings is manifestly activated with mala fide and has been initiated maliciously with the ulterior motive for wrecking vengeance on the accused and with a view to spite him due to private and personal grudge.
14. Applying the aforesaid test, it cannot be said that the complaint filed by the Respondent did not disclose the commission of offences as stated or there existed any other circumstances which can be made the basis for quashing the proceedings. In fact, allegations made in the complaint required adjudication and the complaint could not be quashed at the threshold. The contentions raised by the Petitioners may be canvassed before the learned Magistrate.
15. In view of the aforesaid discussions and reasons, the impugned complaint cannot be quashed and this Criminal Original Petition is liable to be dismissed and accordingly, it is dismissed. Consequently, the connected MP is closed.
Srcm To:
1.The III Metropolitan Magistrate, G.T. Chennai
2.The Public Prosecutor, High Court, Madras