Merino Leathers Pvt. Ltd., a Private Limited Company Registered Under the Provisions of Companies Act, 1956 and Anil Mehta, Managing Director of Accused No. 1 Vs. Wentzel and Schmit Gmbh, a Company Incorporated Under the Federal Republic of Germany Through Proboth Narottamdas Shah and State of Maharashtra - Court Judgment

J.G. Chitre, J.

1. These two applications have been disposed of by common judgment and order.

2. The Petitioners are assailing the correctness, propriety and legality of the order passed by the learned Sessions Judge for Greater Mumbai in Criminal Revision Application No. 13 of 1995 by which she directed the Addl. Chief Metropolitan magistrate 37th court, Esplanade, Bombay, Bombay to hear further the complaint which was filed by Respondent No. 1 in his Court for setting aside the order which has been passed by him on 1.12.1994 by which he discharged the present petitioners.

3. The complaint was filed by Respondent No. 1 alleging that the petitioners committed an offence under Section 420 read with 34 of IPC. Respondent No. 1 alleged that though the petitioners were bound to give him the commission in context with the articles exported for sale to customers residing in Germany, Berlin, Switzerland,he did not pay the said commission amount to the respondent No. 1 (original complainant). He further alleged that without informing the original complaint he dispatched some articles to the customers residing in the said areas who directly ordered for such commodities on account of emergencies. He submitted that the petitioners promised him to pay the amounts which were payable to him on some occasions but did not pay it and, therefore, they committed the offence of cheating. When the said complaint was presented in the trial Court, the trial court issued the process in context with the offence punishable under the provisions of Section 420 read with 34 of IPC.

4. But when an application was moved before the trial Court in view of Section 245 of the Code of Criminal Procedure, 1973 (hereinafter referred to as Code for convenience), the learned Magistrate by passing an order in writing discharged the present petitioners. Respondent No. 1 filed revision application against the said order and the Additional Sessions Judge for Greater Mumbai allowed that application and set aside the order which was passed by the Trial Court and that is the subject matter of challenged in the present petition.

5. Mr. Mundargi, counsel appearing for the petitioners,submitted that the accused is entitled to move the trial Court for discharge at any previous stage of the case and it was so done by the petitioners and the learned trial Court after passing a reasoned order discharged them. He submitted that when that was so, there was no necessity of reversing that order by revisional court, because the material which was placed before the trial court was justifying his order of discharged. Shri Mundargi made reference to the crime in question and submitted that there happens to be no clause which prevents or prohibits the petitioners from entertaining the orders received directly from the customers. He submitted that the respondent No. 1 was entitled to get the commission at 10% only if the order happens to be coming through him. He submitted that at no stage the petitioners denied the liability of paying the amount which was payable to respondent No. 1 during the period when the said agreement was subsisting and was in operation between them. He submitted that the learned Additional Sessions Judge has unnecessarily interfered in the order which was passed by the trial Court in accordance with the provisions of Section 245(2) of the Code and, therefore, the order which has been put to challenge needs to be set aside by allowing this application and issuing appropriate writ.

6. Shri Borkar, counsel appearing for respondent No. 1, submitted that the said agreement in question restricts the petitioners from entertaining the order from the mentioned areas because the customers from the said areas have been introduced by the respondent No. 1 and, therefore, he was entitled to get the commission from those orders. He submitted that some of the customers who were already introduced by the respondent No. 1, booked orders in emergency directly to the petitioners and they without informing the respondent No. 1 dispatched the required commodities to them and, therefore, he caused wrongful loss and wrongful gain to respondent No. 1 dishonestly and thereby committed the offence which has been made punishable by provisions of Section 420 of IPC.

7. Shri Borkar further submitted that initially the learned Magistrate applied his mind and after perusing the material on record issued the process in view of offence punishable under Section 420 read with Section 34 of IPC. Therefore, there was no reason for him to reverse that order by discharging the petitioners. He submitted that the respondent No. 1 should have been given the opportunity of adducing the evidence. But unnecessarily and illegally the said opportunity has been denied to him and the learned trial Court discharged the petitioners for no reasons. He submitted that the Additional Sessions Judge for Greater Mumbai did pass a reasoned order and, therefore, this Court not be pleased to set aside that. He prayed that this petition be dismissed.

8. Both Shri Mundargi and Shri Borkar interpreted the judgments of this Court Single Bench in the following cases:-

(1) Gurudev Singh v. Nari Tekchand, and Sudarsan Chits (India) Limited v. Nari Tekchand Anandani and Anr. and M.V. Velayudhan, the Director of Sudarsan Chits (India) Ltd., and D.C. Mishra, The former Director Sudarsan Chits (India) Ltd., and Anr. v. Nari Tekchand Anandani and Anr., reported in 1981 Bom C.R. 966;

(2) Louis D. Piedade Lobo v. Mahadeo Vishwanath Parulekar and Ors., reported in 1984 C.L.J. 513.

9. Shri Mundargi placed reliance on the judgment of this Court in the matter of Arvind Rajaram Naik v. Damayanti Dashrath Tandel and Anr. 1998 (5) LJ 703, and the judgment of the Supreme Court in the matter of Ashok Chaturvedi and Ors. v. Shitul H. Chanchani and Anr., reported in JT 1998 (5) 452.

10. Shri Mundargi submitted that the learned Additional Sessions Judge committed the mistake in interpreting the judgment of this Court Single Bench in the matter of Gurudev Singh v. Nari Tekchand, and Sudarsan Chits (India) Limited v. Nari Tekchand Anandani and Anr. (supra). He submitted that nowhere the learned Single Judge observed that the Magistrate is not entitled to discharge the accused at any stage if such Court stands moved for discharge of the accused. He submitted that the learned Additional Sessions Judge was mislead in interpreting the observations of the Single Bench which support the case of the petitioners. Shri Mundargi submitted that if the said agreement is read as it is, and the complaint is read as it is, it does not show that a prima facie case for the offence punishable under Section 420 read with 34 of IPC is made out. Therefore, when the material was placed before the trial Court and the trial Court was moved for discharge, the trial Court has done the correct thing in discharging the petitioners by passing an order in writing, a well reasoned order.

11. Shri Mundargi pointed out the observations of the Supreme Court in the matter of Ashok Chaturvedi and Ors. v. Shitul H. Chanchani and Anr., (supra) wherein the Supreme Court had held that an accused is not debarred from approaching the Court earlier than framing of charge. Where allegations do not make out any offence, power under Section 482 can be exercised. In the said case since no offence was made out, High Court was in error in not invoking the powers under Section 482 of the Code.

12. Repelling the submissions advanced by Shri Mundargi, Shri Borkar submitted that both the complaint and the said agreement if read together, make out a prima facie case for the offence punishable under Section 420 read with Section 34 of IPC and when that was done and when already a process was issued there was no occasion for the learned trial Judge to take action for discharging the accused.

13. If the said agreement is read carefully and the allegations made in the complaint are read neatly, it makes out a prima facie case that the complainant dodged the situation and made the allegations utilising the said document and other documents in his favour. The said agreement nowhere debars the petitioners from entertaining the customers directly even from the areas mentioned in the said agreement. Apart from that, the petitioners nowhere denied the liability of paying the rightful commission to the original complainant - the respondent No. 1. There happens to be a dispute between them whether the respondent No. 1 happens to be entitled to get the commission or not in respect of the said agreement which was in existence between them. It is true that Shri Borkar made a submission that the petitioners unilaterally informed respondent No. 1 that the said agreement was not surviving between them. May that be, but that would not by itself amount to an offence which has been indicated by Section 415, 420 IPC.

14. Breach of every agreement cannot lead to a conclusion that the person who has committed the breach of agreement has committed the offence which has been indicated by Section 415, 417 or 420 of IPC. The means rea has to be seen. Dishonest intention has to be seen. Actions non facit reum, nisi mens sit rea. The act is not to be seen simplicitor but the intention behind it has to be seen. So far as the offence of cheating as indicated by Section 415 of IPC is concerned, the Court is bound to consider whether there has been a false promise given by the alleged accused and relying on that false promise, the complainant had been put to loss or injury as indicated by provisions of Sections 415, 417 and 420 of IPC. While doing so, the Court has to take into consideration also the words 'fraudulently', 'wrongful gain', 'wrongful loss', 'dishonestly', etc. What has to be seen at least is whether the act false within the jurisdiction of civil court or whether it is an offence which is triable by a criminal Court. There is a thin line of demarcation between the breach of contract simplicitor, and the offence of cheating resulting from the breach of contract. If the act of the breach of contract coupled without mens rea does not satisfy the ingredients as indicated by provisions of Section 415, 417 and 420 of IPC, the Court has to restrain itself from proceeding further.

15. When the complaint is presented, the Court after applying its judicial mind thinks of issuing process against such an accused. But if an application is made to it in view of provisions of Section 245(2) of the Code, the Court gets added advantage of looking towards additional material which has been placed before it in view of the submissions advanced by the lawyer of such an accused. These things are absent when the complaint is presented before the Court and the Court is called on to consider the allegations made in the complaint for the purpose of coming to a conclusion whether it should take the cognizance of the complaint and should issue process against such indicated accused. The criteria is changed at these two stages. The Court may get the advantage of the proper interpretation of the documents which happen to be annexed to the complaint. In the present case, it appears to be the same.

16. The complaint if seen as it is, is embodying the allegations according to the view point of respondent No. 1 - the original complainant. It appears from the complaint if read as it is that the petitioners were forbidden from entertaining any direct order from the area mentioned in the agreement. The argument which has been advanced by the counsel appearing for respondent No. 1 gets a significance if the complaint is read as it is which indicates that the petitioners did not inform the complainant about the transactions transacted by them with other persons. One may get the picture that the petitioners were not ready in pay any amount to the complainant - the respondent No. 1. But that is not so as it has been demonstrated by Shri Mundargi that at some stages the petitioners did pay sum substantial amount to the respondent No. 1 (original complainant). Does it mean that after transacting with the respondent No. 1 for some time, after entertaining the orders received directly from such area from concerned customers, the petitioners raised their hands for disclaiming the claim of respondent No. 1 - the original complainant. Such added advantage might have been available to the learned trial Court when it passed the order which has been set aside by the Additional Sessions Judge for Greater Mumbai.

17. The Supreme Court has held that there is no bar for entertaining such a plea of discharge if made by the accused at later stage as indicated by the observations made by the Supreme Court in the case of Ashok Chaturvedi and Ors. v. Shitul H. Chanchani and Anr., (supra). In the matter of Madhavrao Jiwaji Rao Scindia and Anr. v. Sabhajirao Chandrojirao Angre and Ors., etc., reported in : 1988CriLJ853 the Supreme Court held in clear terms that the legal position is well settled that when prosecution at the initial stage is asked to be quashed, the test to be applied by the Court is as to whether the uncontroverted allegations, as made, prima facie establish the offence. It is also for the Court to take into consideration any special features which appear in a particular case to consider whether it is expedient and in the interest of justice to permit a prosecution to continue. This is so on the basis that the Court cannot be utilised for any oblique purpose and where in the opinion of the court chances of an ultimate conviction are bleak and, therefore, no useful purpose is likely to be served by allowing a criminal prosecution to continue. In such cases the Court may while taking into consideration the special facts of a case also quash the proceedings even though it may be at preliminary stage.

18. In the present case it is the demand of the respondent No. 1 for getting money in respect of the others which were entertained by the petitioners directly from the areas mentioned in the said agreement. It is the allegation of the complainant - respondent No. 1 that while entertaining those orders, the petitioners did not inform him about them. On the contrary, it is the contention of the petitioners that the said agreement did not debar them from entertaining such direct orders from the customers even from the areas mentioned in the said agreement. It is also the contention of the petitioners that the said agreement was terminated by them and thereafter there was no contractual relations between them. Even as submitted by Shri Mundargi, the petitioners are ready for making the payment to the complainant as his lawful claim and in fact some payments have been made prior to the filing of the complaint in question. All this clearly leads to one conclusion that it is a civil dispute and nothing more than that. A civil dispute, the dispute arising out of the breach of contract cannot be permitted to be taken to the criminal court unless the transactions are showing by themselves the commission a crime which is the subject mater of adjudication of the criminal courts. Already there are number of criminal case pending in almost every Court. Therefore, whenever such applications are moved calling on the court to decide whether it should continue with hearing of the prosecution or not, the Court should exercise their discretion of removing the cases which pertain to the domain of the adjudication of civil courts and nipping out the cases filed in civil court for oblique purpose.

19. The Additional Sessions Judge lost the sight of all these important facets of the matter and, therefore, landed in error of dislodging the order passed by the trial Court as contemplated by Section 245(2) of the Code. The learned Additional Sessions Judge failed in noticing that the said order was not an order of few sentences but was a reasoned order. When it is so, the Additional Sessions Judge should not have disturbed that by setting it aside.

20. Thus, this Court will have to exercise the jurisdiction and power conferred on it in view of Section 482 of the Code as well as in view of Article 226 of the Constitution of India. Thus, a writ of certiorari stands issued and the impugned order which is put to challenge stands set aside and corrected. The petitioners are exonerated from the said prosecution. They need not appear before the trial Court. Bonds, if any, furnished by them stand discharged.