Criminal Appeal No. 742 Of 2008 Arising Out Of Special Leave Petition (Crl)
No. 2671 Of 2007 With Criminal Appeal No. 743 Of 2008 Arising Out Of
Special Leave Petition (Crl) No. 3844 Of 2007 Suneet Gupta . . .
Appellant Versus Swami Raote & Anr. . . . Respondents
C.K Thakker, J.-
The present appeals are directed
against common judgment and order passed by the High Court of Punjab and
Haryana at Chandigarh in Criminal Miscellaneous Nos. 49200-M of 2003 and
30393-M OF 2004. Both the above petitions were filed by the
respondents-accused under Section 482 of the Code of Criminal Procedure,
1973 (hereinafter referred to as 'the Code') for quashing First
Information Report (FIR) lodged by the appellant herein for offences
punishable under Sections 468, 406 read with 120B of the Indian Penal
3. Short facts giving rise to the
present proceedings are that in 1998, appellant Suneet Gupta entered
into a registered Partnership Firm with one Shashi Kant Mangla in the
name and style of M/s K.M. Agencies. The said Firm was the stockist and
distributor of consumer goods of M/s Johnson & Johnson, a Limited
Multinational Company ('M/s Johnson & Johnson Ltd.' for short).
According to the appellant, partnership of M/s K.M. Agencies had certain
claims over M/s Johnson & Johnson Ltd. on account of freight, octroi
paid for goods returned, display of goods of the company, etc. It is the
case of the appellant that the above claims were duly verified by the
officials of M/s Johnson & Johnson Ltd.
4. In or about March, 2001,
differences arose between the two partners of M/s K.M. Agencies, i.e.
between the appellant herein and Shashi Kant Mangla, the other partner.
The latter, therefore, joined another partnership firm of M/s Mangla
Agencies with Ravi Kant Mangla, Atul Gupta and two others. It is the
allegation of the appellant that Shashi Kant Mangla who was a partner
along with the appellant of M/s K.M. Agencies falsely, dishonestly and
with a view to cheat and defraud the appellant-complainant, mis-represented
before M/s Johnson & Johnson Ltd. that the name of partnership firm of
M/s K.M. Agencies was changed to M/s Mangla Agencies.
On the basis of such representation
Shashi Kant Mangla informed M/s Johnson & Johnson Ltd. that payment
which was required to be made by the Company (M/s Johnson & Johnson
Ltd.) to M/s K.M. Agencies should now be made to M/s Mangla Agencies.
According to the appellant, M/s Johnson & Johnson Ltd. was aware of the
fact that M/s K.M. Agencies and M/s Mangla Agencies were different; M/s
K.M. Agencies, a partnership firm was never dissolved; Suneet Gupta who
was one of the partners of M/s K.M. Agencies continued to remain partner
of the said firm and Mr. Shashi Kant Mangla, one of the partners of M/s
K.M. Agencies had joined another partnership firm of M/s Mangla Agencies
and as such payment which was required to be made by M/s Johnson &
Johnson Ltd. to M/s K.M. Agencies could not be made to M/s Mangla
Agencies and yet such payment was made with a view to deprive M/s K.M.
Agencies and particularly appellant-Suneet Gupta. The
appellant-complainant, in the circumstances, was constrained to issue
legal notice on March 4, 2003 to the respondents herein which was
received by them on March 10, 2003. In the said notice, the complainant
stated that M/s Johnson & Johnson Ltd. was required to pay
Rs.2,73,189.70 to M/s K.M. Agencies but no such payment was made to M/s
K.M. Agencies. It also came to the notice of the complainant that the
amount has been misappropriated by partners of M/s Mangla Agencies and
officials of M/s Johnson & Johnson Ltd. colluded with the partners of
M/s Mangla Agencies and all of them had thus played fraud upon the
The appellant also filed a complaint
before the Director General of Police, Chandigarh on May 2, 2003 and
requested him to direct the police authorities to enquire into the
matter. It appears that necessary inquiry was made, the respondents
submitted their replies, but nothing further was done in the matter. The
appellant, therefore, was constrained to lodge First Information Report
(FIR) No. 266 of 2003 on September 16, 2003, against all the accused for
offences punishable under Sections 468, 406 read with 120B, IPC at
Police Station, Sarabha Nagar, Ludhiana. Police arrested respondent No.
3 Devinder Sabharwal, Anil Triloki Nath Sharma and Vivek Bhatnagar.
Respondent Nos. 1 and 2 herein as also Surrinder Mohan, proprietor of
M/s Key Ess Associates obtained anticipatory bail from the Sessions
Court. Other three accused persons, namely, Shashi Kant Mangla, Ravi
Kant Mangla and Atul Gupta, all partners of M/s Mangla Agencies were
denied anticipatory bail by the learned Additional Sessions Judge.
During the pendency of their bail applications before the High Court,
however, the prosecution made a statement that the presence of those
three accused was not required in the case and consequently their bail
petitions became infructuous. Meanwhile, the respondents herein filed
Criminal Miscellaneous Nos. 49200/2003 and 30393/2004 in the High Court
of Punjab & Haryana under Section 482 of the Code for quashing FIR
registered against them.
5. The appellant also stated that a
detailed inquiry was made by the Police. It collected the entire
evidence and found that prima facie case was made out against the
accused persons and accordingly charge-sheet was submitted on May 13,
2004 against accused persons, namely, Devinder Sabharwal, Vivek
Bhatnagar, Anil Triloki Nath Sharma and Swami Raote. Swami Raote evaded
arrest and hence proceedings under Section 82 of the Code were initiated
against him. The prosecution put Shashi Kant Mangla, Ravi Kant Mangla
and Atul Gupta, partners of M/s Mangla Agencies in Column No.2 while
Surrinder Mohan was made a prosecution witness. The prosecution then
moved an application under Section 190 read with Sections 239 and 240 of
the Code for summoning Shashi Kant Mangla, Ravi Kant Mangla and Atul
Gupta as accused persons for trial.
6. The High Court vide the impugned
order dated August 1, 2006, allowed both the petitions and quashed FIR
lodged by the appellant. It is this order which is challenged by the
appellant in the present appeals.
7. Notice was issued by this Court
on April 27, 2007, counter-affidavit and affidavit-in-rejoinder were
thereafter filed and the matters were ordered to be posted for final
disposal. That is how the matters are before us.
8. We have heard the learned counsel
for the parties.
9. The learned counsel for the
appellant contended that the High Court was wholly in error in quashing
FIR lodged by the appellant. It was submitted that from the allegations
levelled in the FIR prima facie case for offences punishable under
Sections 468, 406 read with 120B, IPC had been made out. According to
the learned counsel, what is seen at this stage is whether on the basis
of the allegations made in the complaint, prima facie case has been made
out against the accused and not whether trial against them would
ultimately result in conviction of the accused. It was the case of the
appellant in the complaint that two partnership firms of M/s K.M.
Agencies and M/s Mangla Agencies were distinct, different and
independent of each other. So far as M/s K.M. Agencies is concerned,
there were only two partners, the appellant and Shashi Kant Mangla.
Shashi Kant Mangla became one of the partners of other partnership firm
as well, i.e. of M/s Mangla Agencies. But the appellant-complainant had
nothing to do with the other partnership firm, (M/s Mangla Agencies).
Dues of M/s K.M. Agencies which were to be paid by M/s Johnson & Johnson
Ltd. could not, in the circumstances, be diverted to the other
partnership firm with which the appellant-complainant had no connection
whatsoever. All the partners of M/s Mangla Agencies and all the
officials of M/s Johnson & Johnson Ltd. were aware of this fact and yet
in collusion with each other and with a view to deprive M/s K.M.
Agencies in general and the appellant-complainant in particular, payment
was made by M/s Johnson & Johnson Ltd. to M/s Mangla Agencies. Thus
prima facie all the accused had committed offences mentioned in the FIR
and the High Court should not have quashed it. The High Court was also
not right, submitted the counsel, in holding that it was a civil dispute
and there was abuse of process of law on the part of the complainant in
initiating criminal proceedings. It was submitted that apart from civil
liability, the accused persons had committed crimes and on the basis of
allegations in the FIR, and on investigation being made, the police
authorities found substance in the allegations of the complainant and
charge-sheet was submitted. It was, therefore, submitted that the appeal
deserves to be allowed by setting aside the order passed by the High
Court by directing the respondents to face criminal proceedings.
10. Learned counsel for the
contesting respondents supported the order passed by the High Court. It
was submitted that the dispute is of a civil nature. It was a dispute
between two partnership firms and initiation of criminal proceedings was
only with a view to use pressure against the accused so that they will
be constrained to enter into some settlement with the complainant. As
per settled law, a court of law cannot be used as a means to pressurize
the opposite party so that he may accede to the demand of the
complainant. The High Court was convinced that on the facts and in the
circumstances of the case, no criminal proceedings could have been
initiated and hence, quashed the proceedings which cannot be said to be
illegal or contrary to law. It was, therefore, submitted that the
appeals deserve to be dismissed.
11. On behalf of respondent No. 4,
an affidavit is filed by PPS, Dy. Superintendent of Police, Sarabha
Nagar, Ludhiana stating therein that the matter involved determination
of complicated points of facts and law which could not have been gone
into by the High Court in a writ petition. It was stated that detailed
inquiry by PPS, Dy. Superintendent of Police, Sarabha Nagar, Ludhiana
revealed that there was prima facie case of commission of offences
punishable under Sections 468, 406 read with 120B, IPC. Some accused
were arrested also. In the circumstances, the High Court could not have
aborted the proceedings as has been done.
12. Having heard the learned counsel
for the parties and having considered the rival contentions, in our
opinion, it cannot be said that the High Court was wrong in quashing
criminal proceedings. It is clear from the case put forward by the
appellant himself that virtually the proceedings were 'civil' in nature.
There were two partnership firms, one M/s K.M. Agencies, consisting of
appellant and Shashi Kant Mangla and the other of M/s Mangla Agencies
wherein Ravi Kant Mangla (one of the partners of M/s K.M. Agencies) was
a partner. It was the case of Shashi Kant Mangla that M/s K.M. Agencies
was no more in existence and it had changed its name from M/s K.M.
Agencies to M/s Mangla Agencies and all the transactions of M/s K.M.
Agencies would thereafter be dealt with by M/s Mangla Agencies.
Obviously, therefore, payments which were to be made to M/s K.M.
Agencies should be made to M/s Mangla Agencies. It also appears that M/s
Johnson & Johnson Ltd. was informed which changed the Code from M/s K.M.
Agencies to M/s Mangla Agencies. It is further clear that though
payments were made in June-July, 2001 by M/s Johnson & Johnson Ltd. to
M/s Mangla Agencies, a notice through an advocate was issued by the
complainant only on March 4, 2003, i.e. after substantial period about
A complaint was made to Director
General of Police, Chandigarh by the complainant in May, 2003. The
record further reveals, as stated by respondent Nos. 1, 2 and 3 in the
counter-affidavit, that it was contended by the accused that the matter
was civil in nature and based on commercial transactions and there was a
dispute between the parties and as such there was no element of mens rea.
It was also submitted by the accused that the complainant, with an
ulterior motive and mala fide intention, used pressure tactics and was
harassing them in connivance with local police and filed a complaint on
May 2, 2003. The police authorities were convinced about the nature of
dispute and after seeking legal opinion from District Attorney closed
the proceedings. Subsequently, however, the complainant 'after making
cosmetic changes in the earlier complaint' and using undue influence
filed FIR No. 266 of 2003 on September 16, 2003 for commission of
offences punishable under Sections 468, 406 read with 120B, IPC.
According to the accused, it was motivated and the police authorities
obliged the complainant by helping him.
13. The High Court, in our opinion,
rightly considered the facts in their proper perspective and observed
that the dispute related to settlement of accounts between principal and
its agent; the principal being M/s Johnson & Johnson Ltd. and the agent
being M/s K.M. Agencies (earlier) and M/s Mangla Agencies (later). The
High Court also noted that it was M/s K.M. Agencies which informed the
principal i.e. M/s Johnson & Johnson Ltd. that M/s K.M. Agencies had
closed its business and the business was thereafter continued by M/s
Mangla Agencies and all drafts be issued in favour of M/s Mangla
Agencies. The High Court took note of the fact that even the complainant
had informed the principal that there was dispute between the partners
of M/s K.M. Agencies and hence no payment should be made to M/s Mangla
Agencies till the dispute was finally resolved between the parties.
That, however, does not give rise to criminal liability and entitle the
complainant to initiate criminal proceedings, particularly when M/s
Johnson & Johnson Ltd. substituted in the Company record name of M/s
Mangla Agencies in place of M/s K.M. Agencies. The resultant effect of
substitution of name was that whatever sums were due to M/s K.M.
Agencies were considered to be due to M/s Mangla Agencies.
14. The High Court, in the
observed as under;
"This is really a case of one
partner trying to drag the principal company into a criminal litigation
to recover dues which the principal had paid to the other partner. The
dispute and the relationship inter se has become a tripartite one.
Suneet Gupta had a dispute with Shashi Kant Mangla but instead of
tackling him he got lodged F.I.R. No. 266 dated September 16, 2003
registered at Police Station Sarabha Nagar, Ludhiana, under Sections
468/406/120-BIPC to pressurize the petitioners to settle the matter. It
is not a clear cut and direct case in which any contractual relationship
between Suneet Gupta with the company has been breached. Indeed Suneet
Gupta had no direct relationship with the company. It was M/s K.M.
Aencies of which he was one of the partners which had developed
contractual relationship and later in June/July, 2001, M/s Mangla
Agencies got substituted in place of M/s K.M. Agencies. Suneet Gupta
either ignored this development or remained oblivious of it for nearly 2
years. The first notice was issued after passage of long time on March
4, 2003. This notice was clearly to drag the company into the inter se
dispute between two partners."
15. The Court proceeded to
state;"The complaint of Suneet Gupta and the steps taken by the police
have clearly converted a tri-partite civil dispute into a criminal one
and have involved the managers of the principals in a dispute between
the partners of the firm."
16. The High Court, therefore,
concluded that the steps taken by the complainant Suneet Gupta were in
clear abuse of process of law and accordingly allowed both the
17. By passing the impugned order
and quashing criminal proceedings, in our opinion, the High Court has
neither committed any error of law nor of jurisdiction which deserves
interference in exercise of power under Article 136 of the Constitution.
18. Our attention has been invited
by the learned counsel for the accused to several decisions of this
Court. In our opinion, however, it is not necessary to refer to those
decisions since we are of the view that the High Court was right in
quashing criminal proceedings.
19. We may, however, refer to one
aspect. Learned Counsel for the appellant strenuously relied upon an
order of this Court in State of Punjab v. Dharam Vir Singh Jethi,
1994 SCC (Cri) 500. In that case, charge-sheet was submitted by Police
and thereafter FIR was quashed by the High Court.
20. In the light of the said fact,
this Court observed;
"Heard learned counsel for the State
as well as the contesting respondent. We are afraid that the High Court
was not right in quashing the First Information Report on the plea that
the said respondent had no role to play and was never the custodian of
the paddy in question. In fact it was averred in the counter-affidavit
filed in the High Court that the said respondent had acted in collusion
with Kashmira Singh resulting in the latter misappropriating the paddy
in question. At the relevant point of time the respondent concerned, it
is alleged, was in overall charge of the Government Seed Farm, Trehan.
This allegation forms the basis of the involvement of the respondent
concerned. The High Court was, therefore, wrong in saying that the
respondent concerned had no role to play. A specific role is assigned to
him, it may be proved or may fail. In any case, pursuant to the First
Information Report the investigation was undertaken and a charge-sheet
or a police report under Section 173(2) of the Code of Criminal
Procedure was filed in the court. If the investigation papers annexed to
the charge-sheet do not disclose the commission of any crime by the
respondent concerned, it would be open to the court to refuse to frame a
charge, but quashing of the First Information Report was not
21. In our opinion, however, the
ratio laid down in the above case will not apply to the facts of the
case. As already indicated in the earlier part of the judgment, FIR was
lodged by the complainant on September 16, 2003 and immediately within
less than a month, the accused invoked the jurisdiction of the High
Court under Section 482 of the Code by filing petitions on October 12,
2003. At that time, challan was not filed in the Court. It was after a
substantial period of about seven months that on May 13, 2004,
charge-sheet was filed by the police authorities. Moreover, in Dharam
Vir Singh, the accused was shown to be in possession of property and
later on misappropriated it. The High Court, however, quashed the
proceedings inter alia observing that the accused was never the
custodian of paddy and was not in charge of the Government Seed Farm
which was factually incorrect. In the light of factual scenario, this
Court set aside the order of the High Court quashing criminal
22. In the case on hand, the High
Court was right in coming to the conclusion that a civil dispute pure
and simple - between the parties was sought to be converted into a
criminal offence only by resorting to pressure tactics and by taking
police help which was indeed abuse of process of law and has been
rightly prevented by the High Court.
23. For the foregoing reasons, in
our view, the order passed by the High Court is in consonance with law
and requires no interference. The appeals deserve to be dismissed and
are, accordingly, dismissed.
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