SB Criminal Misc. Petition No.1594/2010 Subhash Modak & Ors. Vs. State of Rajasthan & Anr. (1) IN THE HIGH COURT OF JUDICATURE FOR RAJASTHAN AT JODHPUR. ::: JUDGMENT ::: S.B. Criminal Misc. Petition No.1594/2010 Subhash Modak & Ors. vs. State of Raj. & Anr. Date of Judgment ::
30. May, 2012. HON'BLE MR. JUSTICE SANDEEP MEHTA Mr.Mahendra Singh a/w Mr.Hemant Ballani, for the petitioners. Mr.AR Nikub, PP, for the respondent State. Mr.Rakesh Arora, for the respondent no.2. ... BY THE COURT : Reportable Heard learned counsel for the parties. The instant misc. petition has been filed by the petitioners seeking quashing of the FIR No.258/2010 registered at the P.S. Kotwali, Dungarpur for the offences under Sections 420, 406 and 120B I.P.C. Succinctly stated the facts necessary for the disposal of the instant misc. petition are that the petitioner no.3 Mahindra Gujarat Tractor Ltd. is a company having its registered office at Vadodara. The company is involved in manufacture and sale of tractors, tractor parts and spares. SB Criminal Misc. Petition No.1594/2010 Subhash Modak & Ors. Vs. State of Rajasthan & Anr. (2) The petitioner no.1 is said to be the Manager & Chief Executive Officer of the Company and the petitioner no.2 is said to be working on the post of Senior General Manager of the Company. The respondent no.2 filed a complaint before the C.J.M., Dungarpur on 3.1.2010 against the petitioners and one Lavesh Jain, proprietor of M/s. Shubham Enterprises, Kota authorised distributor of the petitioner no.3 company. It was alleged in the complaint that the respondent no.2 is the proprietor of a proprietorship firm named M/s. Rajeshwari Automobiles. It was further alleged that the complainant firm was allotted a franchise by the firm named, M/s. Shubham Enterprises, Kota, authorised distributor of the petitioner no.3 company. It was also alleged that the complainant in lieu of being granted the franchise, prepared a bank guarantee in the company's favour for a sum of Rs.20 lakhs on 23.10.2008 which was valid till 22.10.2009 and thereafter extended upto 22.10.2010. It was further alleged that a tripartite agreement had been entered into between the parties. It was further stated in the complaint that the complainant received a notice dated 27.9.2010 from the proprietor of Shubham Enterprises on 1.10.2010 as per which the distributor claimed an outstanding amount of Rs.8,30,374/- due to be paid by the complainant to the distributor. The SB Criminal Misc. Petition No.1594/2010 Subhash Modak & Ors. Vs. State of Rajasthan & Anr. (3) notice was given intimating the fact that if the payment of said amount was not made within seven days from the receipt thereof, the same would be made good by enforcing the bank guarantee as per the tripartite agreement. The complainant replied to the notice on 5.10.2010 whereby the claim about the dues was refuted and it was instructed that unless and until the accounts were settled, the bank guarantee should not be encashed. It was also stated in the reply that as per the arbitration clause between the parties, only the arbitrator was empowered to settle the disputes of accounts between the parties. The complainant's further case is that all the accused persons connived together and fraudulently encashed the complainant's bank guarantee on 6.10.2010 without adhering to the conditions of the agreement. The complainant further alleged that the amount of Rs.20 lakhs for which the bank guarantee was prepared was an amount entrusted to the accused persons and the accused persons committed criminal breach of trust by encashing the bank guarantee without any justification. The aforesaid complaint filed by the respondent no.2 was directed to be sent to the police station Kotwali, Dungarpur under Section 156(3) Cr.P.C. where FIR No.258/2010 was registered for offences under Sections 420, 406 and 120B IPC. The instant misc. petition has been SB Criminal Misc. Petition No.1594/2010 Subhash Modak & Ors. Vs. State of Rajasthan & Anr. (4) preferred seeking quashing of the FIR impugned and all proceedings subsequent thereupon. Learned counsel for the petitioner submits that the proceedings of the FIR are illegal and amount to an abuse of process of law. The bank guarantee was inevitable and the company was having an absolute right to encash the bank guarantee for settling its dues. It is submitted that the complainant admittedly was owing a sum of Rs.8,30,374/- to the distributor and, therefore, as per the terms of tripartite agreement, the encashment of bank guarantee for settling the dues was a lawful action. It is submitted that merely because the bank guarantee has been encashed, the use of criminal law for the purpose of prosecuting the holder thereof is impermissible. Placing reliance on the decision of the Hon'ble Apex Court in the case of Mahatma Gandhi Sahakra Sakkare Karkhane. Vs. National Heavy Engg. Coop. Ltd. and another reported in (2007) 6 SCC 470.it is submitted that the invocation of bank guarantee cannot constitute an offence of fraud and cheating. It is further argued that the holder of bank guarantee is entitled to encash the same irrespective of the fact that the disputes are raised about the liability covered by the bank guarantee. Secondly, it is submitted that the petitioners no.1 and SB Criminal Misc. Petition No.1594/2010 Subhash Modak & Ors. Vs. State of Rajasthan & Anr. (5) 2 are the directors of the company incorporated under the Companies Act and as such, for the offences committed by the company, they cannot be held vicariously liable because there is no concept of vicarious liability in relation to the offences committed by a company under the Indian Penal Code. It is submitted that there is no specific allegation of the complainant in his complaint as regards the role played by the petitioners no.1 and 2 and, thus, the FIR impugned to their extent deserves to be quashed. Per contra, learned counsel for the complainant submitted that the bank guarantee was valid till 22.10.2010 and under a false pretext that the bank guarantee would not be renewed, the accused encashed the bank guarantee 15 days before the expiry date. It is submitted that the bank guarantee has been encashed under the written instructions of the petitioner no.1 and, therefore, he cannot escape from the liability. It is submitted that the highest case of the accused as per the notice dated 27.9.2010 was that there existed a liability of Rs.8,30,374/- against the complainant. It is submitted that though the complainant disputed the said liability, despite that, in order to fraudulently deprive the complainant from the whole amount of the bank guarantee, the same was encashed on the basis of the instructions issued by the petitioner no.1. SB Criminal Misc. Petition No.1594/2010 Subhash Modak & Ors. Vs. State of Rajasthan & Anr. (6) Referring to the letter dated 6.9.2010 issued by the petitioner no.1 to the Branch Manager, Bank of Baroda, Dungarpur, he submits that the intention of the accused was definitely to defraud and commit criminal breach of trust and, therefore, he submits that the allegations made in the complaint ex-facie disclose the necessary ingredients of the offence for which the same has been registered and, therefore, no interference is called for by this Court in exercise of its inherent jurisdiction for quashing of the proceedings of the FIR. Learned public prosecutor has supported the arguments advanced by the complainant's counsel and submits that the investigation has almost reached to the conclusion and prima-facie evidence for proving the petitioners' guilt has been collected by the investigation officer. He, therefore, contends that the FIR impugned is not liable to be quashed by exercising the powers under Section 482 Cr.P.C. On consideration of the arguments advanced at bar and upon going through the material available on the record, it is evident that so far as the petitioner no.3 is concerned, its prosecution cannot be called into question because the whole of the bank guarantee for a sum of Rs.20 lakhs has been encashed by the accused against the alleged SB Criminal Misc. Petition No.1594/2010 Subhash Modak & Ors. Vs. State of Rajasthan & Anr. (7) liability of Rs.8,30,374/-. The bank guarantee was expiring on 22.10.2010 and notice had been issued on 27.9.2010 to the complainant for making good the amount of Rs.8,30,374/-. The notice period was of seven days. The complainant claims to have received the notice on 1.10.2010. The instruction to encash the bank guarantee was issued by the petitioner no.1 on 6.9.2010 i.e. Much before the notice issued to the complainant and ultimately, the bank guarantee was encashed upon his instructions on 29.9.2010. There is no material on the record of the case by which it can be inferred that the complainant was not agreeable to extend the bank guarantee. The fact that the notice was issued by the distributor to the complainant on 27.9.2010 and even before the receipt of the notice, the bank guarantee has been encashed i.e. on 29.9.2010 is sufficient proof of the intention of the accused to cheat the complainant. Thus, without any doubt, the necessary ingredients of the offences under Sections 406 and 420 IPC are disclosed against the petitioner no.1 who is the signatory of the letter whereby the instruction was issued to the Bank for encashing the bank guarantee. So far as the petitioner no.2 is concerned, there is no allegation or material available on the record for holding that he was directly or vicariously responsible for the SB Criminal Misc. Petition No.1594/2010 Subhash Modak & Ors. Vs. State of Rajasthan & Anr. (8) offences for which the FIR has been registered. Thus, the prosecution of the petitioner no.2 R.M. Mahadevan cannot be permitted to be continued on the strength of the decision and guidelines issued by the Hon'ble Apex Court in the case of Maharashtra State Electricity Distribution Company Limited and another. vs. Datar Switchgear Limited and others. reported in (2010) 10 SCC 479.Resultantly, whilst upholding the FIR impugned to the extent of the petitioners no.1 and 3, the proceedings of the FIR qua the petitioner no.2 Shri R.M. Mahadevan are liable to be quashed. The upshot of the above discussion is that this misc. petition succeeds in part and whilst the FIR impugned and subsequent proceedings are quashed qua the petitioner no.2, the same shall continue so far as the petitioners no.1 and 3 as well as the other accused are concerned. Stay petition also stands disposed of. (SANDEEP MEHTA), J.
S.Phophaliya