1) By this application under section 482 of the Code of Criminal Procedure, 1973 (hereinafter referred to as “the Code”), the applicants seek quashing of the complaint being Criminal Case No.826 of 2009 lodged by the respondent No.2 herein alleging commission of the offences punishable under sections 406, 420 and 114 of the Indian Penal Code.
2) The respondent No.2 herein lodged the above referred complaint against the applicants herein stating that he is a dealer of dyes and chemicals as well as the sole selling agent and distributor of different companies as a wholesale agent of dyes and chemicals. That the applicants herein formed a company called Himachal Fibres Limited and were obtaining goods on credit and, thereafter, not returning the amount and thereby committing cheating and criminal breach of trust. It was the case of the respondent No.2-complainant that the accused used to often come to their office and inform them that they (the accused) are purchasing chemicals and dyes from various companies and that they wanted to purchase dyes from them (the complainant), pursuant to which, the complainant informed them that dyes would be delivered to them subject to the condition that they have to make payment thereof through cheques. As the accused were ready and willing to make payment through cheques, the complainant, placing trust in them, started sending goods to them. In connection with the goods supplied by the complainant, the accused had given cheques drawn on Canara Bank to the complainant, which were presented before the Bank on various occasions; however, all the cheques came to be returned. When they talked with the accused in this regard, they had given a vague reply. It was the case of the complainant that the accused had obtained goods worth Rs.78,86,236-00 from the complainant and were not paying the amount in respect thereof. The complainant had, therefore, issued R.P.A.D. notice to the accused for payment of the amount and had made a number of telephone calls and written several letters, however, the accused had not given any reply. According to the complainant, the accused had taken goods on loan worth crores of rupees from several persons and had cheated and misappropriated the same, and that they were not making payment in respect of the goods to any person. It was further stated that the complainant had instituted a summary suit in the City Civil Court at Ahmedabad, wherein a decree had been passed for a sum of Rs.1,35,65,326-00. That earlier the address of the accused at Delhi were shown as 24, Community Center, East of Kailash, New Delhi- 110005. However, upon going to serve the decree upon the accused, the office was found to be closed as they had shifted to other premises. After carrying out search at Delhi for several days from business people in the neighborhood, they had been able to locate the accused and the accused had, on the contrary, asked the complainant as to how he was able to obtain their address. When the complainant called upon the accused to return the amount, they had gathered together and abused him and were in the process of attacking him, whereupon the complainant had left the place. It was alleged that the accused have cheated the complainant and have committed criminal breach of trust in respect of crores of rupees and, as such, the complainant was required to be lodged the complaint for the offence punishable under sections 406, 420 and 114 IPC.
3) Mr. Apurva Kapadia, learned advocate appearing on behalf of the applicants-original accused No.1, 2 and
3 drew the attention of the court to the plaint of Summary Suit No.2236 of 2005 instituted by the complainant against Himachal Fibres Limited to point out that in the said plaint, it was the case of the complainant that one Jay Chemicals Industries Limited had supplied dyes to the defendant-Himachal Fibers Limited through the complainant under a direct billing arrangement and authority was given to the plaintiff- complainant to collect payment of bills from the defendant Company. As per the understanding between Jay Chemicals Industries Limited, the plaintiff had paid all the amount of bills raised by Jay Chemicals Industries Limited, in all, amounting to Rs.78,86,236/- being the cost of dyes supplied to the defendant. The amount payable towards the dyes supplied to the defendant remained outstanding and unpaid. The defendant company has issued twelve cheques for the aggregate amount of Rs.6,36,364/- by way of part payment during the period August 2000 to September 2001 in favour of the plaintiff towards discharge of their debts, however, the said cheques came to be dishonoured due to insufficient funds. Mr. Kapadia submitted that thus, the cheques issued by the company relate to the period August 2000 to September 2001, whereas the applicants herein came to be inducted as Directors of the company on 23rd September 2006 and, as such, were nowhere in the picture at the relevant time when the offences are alleged to have been committed. It was further submitted that apart from the fact that no role has been attributed to the applicants herein insofar as the alleged offence is concerned, the entire transaction between the parties is of civil nature and, as such, the complaint in question is required to be quashed and set aside qua the applicants herein.
4) The application was vehemently opposed by Mr. Suren M. Shah, learned advocate for the respondent No.2, who denied that the transaction between the parties is entirely of civil nature. It was submitted that the civil court has passed a decree in favour of the respondent No.2 in Summary Suit No.2236 of 2005, however, the applicants herein under one pretext or the other, have not paid any amount in satisfaction of the said judgment and decree. It was submitted that it is not true that all the events alleged in the complaint have happened prior to the year 2006 and that the cheques issued by the company were never signed by any of the applicants. The transaction between the parties took place continuously from the year 2001 till the date of filing of the suit and the criminal complaint and that the cheques were signed by the then Managing Director of the Company known as Himachal Fibres Limited. It was submitted that the applicants herein, being the Directors of the said Company, are answerable for the debt of the Company. It was submitted that the disputed transaction took place from the year 2000 up to the date of filing of the suit, that is, in the year 2005 and that the applicants herein have acknowledged the debt and the liability to pay the amount as per the accounts maintained by the respondent. It was, accordingly, urged that the offence as alleged in the complaint has in fact been made out against the applicants herein and, as such, there is no warrant for exercise of powers under section 482 of the Code.
5) In the backdrop of the facts and contentions noted hereinabove, as noticed earlier, the allegations made in the complaint are mainly to the effect that the applicants herein have committed cheating and criminal breach of trust on the ground of non-payment of the dues of the respondent No.2. The dues sought to be recovered are pursuant to the decree passed by the trial court in the above referred summary suit whereby a sum of Rs.1,35,65,326/- has been decreed in favour of the respondent No.2. It has been pointed out by the learned advocate for the applicants that the applicants herein had filed an application for setting aside the ex-parte decree before the City Civil Court, but did not succeed. The order of the City Civil Court came to be challenged before this Court in Civil Revision Application No.253 of 2010, wherein this court had granted interim relief in terms of paragraph 13(B) of the said application. However, the court had observed that if the proceeding comes to an end before BIFR, it is open for the respondent to initiate action/proceeding against the applicant therein for recovering the amount in accordance with law.
6) A perusal of the complaint shows that the applicants herein are alleged to have committed the offences punishable under sections 406, 420 and 114 of the Indian Penal Code. From the averments made in the complaint, it appears that the same relate to cheques issued in the year August 2000 to September 2001. A perusal of the Form No.32 maintained under the relevant provisions of the Companies Act reveals that the applicants herein have been appointed as Directors of the Company, viz. Himachal Fibres Limited, from 23rd September 2006. Under the circumstances, it is apparent that at the relevant time when the transaction in question took place, the applicants herein were not in charge of the affairs of the Company and were unknown to the Company. Moreover, it is also not the case of the respondent No.2 that the applicants herein, at the relevant time, were Directors of the company. According to the respondent No.2, the applicants herein, being the Directors of the Company, are liable for the acts of the Company. It is settled legal position that insofar as criminal offences are concerned, there is no vicarious liability of the Directors of a Company unless the statute specifically provides for making them vicariously liable. In the present case, the offences alleged are under sections 406 and 420 IPC. There is no provision in the Indian Penal Code which makes the Directors of the Company vicariously liable for the offences committed by the Company. Besides, section 406 IPC envisages entrustment of property and dishonest misappropriation of the same. In the facts of the present case, undisputedly, at the relevant time when the goods were supplied, the applicants herein were not the Directors of the Company and as such, there is no question of entrustment of any property to the applicants and, consequently, no question of misappropriation of the same so as to constitute an offence under section 406 IPC. As regards section 420 IPC, the same envisages cheating and dishonestly inducing the person deceived to deliver any property to any person. In the facts of the present case, at the relevant time when the goods were supplied to the company, the applicants herein were nowhere in the picture and, as such, there was no question of the applicants cheating or dishonestly inducing the respondent No.2 herein to deliver the goods in question to them. Under the circumstances, neither of the offences alleged, viz. under section 406 or 420 IPC would be attracted insofar as the applicants herein are concerned.
7) Moreover, as noted hereinabove, the respondent No.2 had already instituted a civil suit against the Company, which came to be decreed in favour of the said respondent. In the aforesaid premises, this court is of the view that the present proceedings are apparently an abuse of the process of the court inasmuch as the same appear to have been instituted by way of a short cut to recover the amount in question, which could otherwise, be recovered by execution of under the decree in question. This is, therefore, a fit case for exercise of powers under section 482 of the Code so as to prevent an abuse of the process of court.
8) For the foregoing reasons, the application succeeds, and is, accordingly, allowed. The impugned complaint being Criminal Case No.826 of 2009, pending in the Court of the learned Metropolitan Magistrate, Court No.13, Ahmedabad, is hereby quashed and set aside qua the present applicants. Rule is made absolute accordingly.
(HARSHA DEVANI,J.) Vahid