THE HON'BLE SRI JUSTICE S. RAVI KUMAR CRIMINAL PETITION No.8388 of 2012 Date:28.08.2014 Between:
M/s. Dhanalaxmi Bank Ltd., Rep by its M.D. & Director Sri Jaya Kumar, P.G and others.
. Petitioners.
AND The S.H.O., Malakpet Police Station, rep by its Public Prosecutor, High Court of A.P., Hyderabad and another.
. Respondents.
The Court made the following :
THE HON'BLE SRI JUSTICE S. RAVI KUMAR CRIMINAL PETITION No.8388 of 2012 ORDER:
This petition is filed to quash First Information in Crime No.382/2012 of Malakpet Police Station registered for offences under Sections 406, 420 & 506 read with Section 34 IPC.
2. Heard both sides.
3. Second respondent herein filed a complaint before VII Additional Chief Metropolitan Magistrate, Hyderabad alleging that the accused have entered into Service Provider agreement in connection with Marketing, Sourcing and Allied Activities with the complainant on 17-02-2011 and in pursuance of the said agreement, complainant did business to a tune of Rs.5 crores approximately and as per the terms, the accused are liable to pay an amount of Rs.7,29,245/-, but the said amounts were not paid for which, complainant got issued a legal notice and the accused received it on 04-09-2012 and paid an amount of Rs.3,00,000/- and promised to pay the balance within 10 days, but not paid and all the accused, with an intention to deceive complainant, had entered into agreement and thereby, committed offences under Sections 420 & 406 IPC. When complainant personally approached and requested for payment of amount due to him, the accused abused him in vulgar language and threatened with dire consequences and thereby, committed offence under Section 506 IPC read with 34 IPC. The learned VII Additional Chief Metropolitan Magistrate, Hyderabad forwarded this complaint to S.H.O., Malakpet, which in turn registered it as F.I.R.No.382/2012. Questioning the same, present petition is filed.
4. Advocate for petitioners submitted that even if the allegations in the complaint are taken as true without contraverting, no offence is made out against the petitioners. He submitted that the entire complaint relates to payment of alleged amount due to the complainant and there is no material attracting any of the offences alleged. He submitted that a plain reading of complaint would disclose that the lis is purely of civil nature and no criminal offence is made out much less offences of Sections 420, 406 & 506 IPC. He further submitted that the petitioners are not signatories to the agreement, dated 17-02-2011, referred to in the complaint. He submitted that there was no contract or interaction between the complainant and the petitioners. He further submitted that even the legal notice, dated 29-08-2012, was not addressed to none of the petitioners and only designation of first petitioner is mentioned in that notice. He submitted that a rejected monitory claim has been converted into a criminal offence by abusing process of law and therefore, F.I.R is liable to be quashed. He further submitted that though Section 34 of IPC is also incorporated in the complaint, no allegation or averment like meeting of minds to attract the ingredients of Section 34 IPC is made in the complaint. He submitted that the third petitioner is nothing to do with the transaction and he is not concerned with the credits branch of the bank.
He submitted that for attracting an offence of Section 420 IPC, there must be dishonest intention at the inception, but from a reading of the complaint, no such allegations are made out. He submitted that even the legal notice was initially sent to wrong address to Malakpet and it was returned with an endorsement that “no such office is there in the Malakpet” and then notice was again addressed to Ameerpet address and the same was received, but the complainant again showing the address of Malakpet got the complaint forwarded to Malakpet Police intentionally. He submitted that even the entire complaint allegations are accepted as true, it would only amount to breach of contract or promise, which do not attract any criminal offence. He further submitted that when the agreement was not entered by the petitioners, the question of inducement, which is a primary requirement for an offence of cheating does not arise. He submitted that there is no entrustment and no misappropriation or inducement therefore, ingredients of Section 406 IPC are not attracted.
He submitted in the complaint, it is alleged that the complainant approached the petitioners, but he has not given the details, where he approached and where he met them. He submitted that the first petitioner is a bank and its office is in Kerala and the third petitioner is in-charge head of the first petitioner bank and his office in Road No.12, Banjara Hills and no details are given the place where, he met the petitioners and where petitioner was threatened. He submitted that, ingredients of 506 IPC are also not attracted. He submitted that to put the higher officials of bank under pressure to meet the demands of the complainant, this kind of procedure is adopted and which would amount to clear abuse of process of Court, therefore, F.I.R., is liable to be quashed.
5. On the other hand, Advocate for second respondent submitted that the agreement is signed on behalf of the bank i.e., first petitioner and the case is now only at the F.I.R stage and all these aspects cannot be considered in a 482 petition and unless a proper investigation is conducted, the truth will not come out. He further submitted that the petitioners negotiated with complainant at their Hyderabad Office and there, he was threatened. He submitted that jurisdiction aspect is not a ground to quash the proceedings and if the S.H.O., Malakpet has no jurisdiction, they have to transfer the F.I.R to the police station having jurisdiction, but on that ground proceedings cannot be quashed.
6. Now the point that would arise for my consideration in this petition is whether F.I.R in Crime No.382/2012 of Malakpet Police Station is liable to be quashed or not?
7. Point:- The main basis for the complaint is the service provider agreement, dated 17-02-2011. According to complainant, he has to get Rs.7,29,245/- from the bank as per the terms of the agreement and as the bank failed to pay that amount, it committed breach of trust and also cheated him. Here admittedly, the agreement is signed by Chief Manager of Dhanalaxmi Bank Limited of their office at Ameerpet. The Chief Manager, who signed the agreement, is not an accused and only the bank represented by its Managing Director and the Head of the Finance Department of the bank and in-charge head of the bank at Hyderabad are figured as accused. Now it is the submission of the Advocate for petitioners that there is no vicarious liability for a criminal offence, unless statute specifically provides for it like N.I Act providing specific provision for the offences committed by the companies. He further submitted that though Section 34 IPC is also mentioned in the complaint, it cannot be taken as automatically, unless there are allegations and material supporting meeting of minds of the accused persons. He further submitted that even for Section 34 IPC that can be applied to the remaining accused when there is common intention with the prime accused. He submitted in MAHARASHTRA STATE ELECTRICITY DISTRIBUTION COMPANY LIMITED AND ANOTHER vs.
DATAR SWITCHGEAR LIMITED AND ANOTHER
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, Hon’ble Supreme Court quashed the proceedings on the ground that vicarious liability will be attracted only when it is specifically provided in the statute. In that case, Hon’ble Supreme Court held as follows:-
“It is trite law that wherever by a legal fiction the principle of vicarious liability is attracted and a person who is otherwise not personally involved in the commission of an offence is made liable for the same, it has to be specifically provided in the statute concerned. Neither Section 192 IPC nor Section 199 IPC incorporate the principle of vicarious liability, and therefore, it was incumbent on the complainant to specifically aver the role of each of the accused in the complaint.”
8. As rightly pointed out by learned Advocate for petitioners, there cannot be a vicarious liability in respect of criminal offences, unless statute specifically provide for such liability. Here the offences alleged against the petitioners are under IPC and in the Indian Penal Code, there is no provision making liable the employees under the principle of vicarious liability. Admittedly, petitioners have not personally entered into any agreement with the complainant. As rightly pointed out by Advocate for petitioners even if the entire allegations in the complaint are taken as true, without contraverting, no criminal offence is made out and the claim of second respondent is purely a civil claim namely; breach of contract or promise.
9. I n U. DHAR AND ANOTHER vs. STATE OF JHARKHAND AND ANOTHER
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, Hon’ble Supreme Court in a similar set of facts taking cognizance by the Magistrate Court was held incorrect. In that case, the Hon’ble Supreme Court observed the words “dishonestly” and “misappropriation” are the necessary ingredients to attract offence of Sections 406 & 420 IPC and these ingredients are not attracted, where a contractor having received payment for works completed and failed to pay his sub-contractor. Here in our case, it is the contention of the complainant that as per the Service Provider Agreement, he did business to a tune of Rs.5 crores approximately and he did not receive his commission from the bank as per the terms of the agreement. So it is a purely a breach of contract or breach of promise, which is a civil liability and there is no entrustment of property or misappropriation, which are the main requirements of Section 406 IPC.
10. One of the contentions of the Advocate for petitioners is that learned Magistrate without applying mind, mechanically forwarded the complaint and that is another ground to quash the F.I.R. To support his argument, he has referred to two Supreme Court decisions in MAKSUD SAIYED vs. STATE
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O F GUJARAT AND OTHERS a n d ANIL KUMAR AND OTHERS vs. M.K. AIYAPPA AND ANOTHER
[4]
. In the above two decisions, Hon’ble Supreme Court quashed proceedings, where the Magistrates forwarded the complaints for investigations, without applying mind. In the first decision (3 supra), when charges are levelled against directors of the company under the principle of vicarious liability and without putting forth requisite statutory provision, forwarding the complaint for investigation under Section 153 (3) Cr.P.C was held as incorrect by observing that Magistrates should have examined correct statutory provision as to vicarious liability of directors and without following such principles ordering police investigation is not correct.
11. In the second decision (4 supra), when a private complaint was filed against public servant referring it to police for investigation without examining whether the sanction is required or not was held as incorrect. As rightly pointed out by Advocate for petitioners when the basis for allegations in the complaint is the agreement, dated 17-02- 2011, the learned Magistrate ought to have examined as to the role of these petitioners for execution of such agreement and the allegations levelled against them in connection of such agreement, but the learned Magistrate mechanically forwarded the complaint even without examining whether the vicarious liability can be fastened to the petitioners in the absence of specific statutory provision. To attract offences under Sections 406 & 420 IPC, there must be specific allegations like entrustment and misappropriation for attracting Section 406 IPC, dishonest inducement for Section 420 IPC. When the petitioners are not signatories to the agreement, which is the basis for the complaint, the alleged inducement or cheating cannot be accepted on vague and omnibus allegations. Even with regard to 506 IPC except making a very vague statement that the petitioners have threatened him with dire consequences, no details like where it happened and when it happened is not whispered in the complaint. As rightly pointed out by Advocate for petitioners when the first and second petitioners are not residents of this place and they belong to Kerala and the details of the place, where the alleged threatening occurred is very much material. On a close scrutiny of the entire material on record, I am of the view that even if the allegations in the complaint are taken as true, no offence is made out against the petitioners and the remedy of the petitioners, if any, is of civil nature and therefore, continuing such proceedings would amount to clear abuse of process of Court as such the proceedings are liable to be quashed.
12. For these reasons, Criminal Petition is allowed and the F.I.R in Crime No.382/2012 of Malakpet Police Station is hereby quashed.
13. As a sequel, miscellaneous petitions, if any, pending in this Criminal Petition, shall stand disposed of.
Date:28.08.2014 mrb
JUSTICE S. RAVI KUMAR
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(2010) 10 Supreme Court Cases 479 2003 Supreme Court Cases (Cri) 490 (2008) 2 Supreme Court Cases (Cri) 692 (2013) 10 Supreme Court Cases 705