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          REPORTABLE

IN THE SUPREME COURT OF INDIA

CRIMINAL APPELLATE JURISDICTION

CRIMINAL APPEAL NO. 1214 OF 2009 (Arising out of SLP (Crl) No. 4278 of 2008)

Rajiv Modi                                                                            ……….Appellant

Versus

Sanjay Jain and Ors.                                                           ……..Respondents

JUDGMENT

H.L. Dattu,J.  

1)   This is an appeal for special leave arises from the judgment and order of  

the Patna High Court in Criminal Miscellaneous Case No. 17815 of 2002  

dated  20.11.2007.  We grant  special  leave  and dispose  of  this  appeal  as  

hereunder.

2)   By the judgment and the order impugned, the High Court in exercise of  

its power under Section 482 of the Code of Criminal Procedure has quashed  

the private complaint filed under Section 200 Cr.P.C.,  on the ground that  

the Judicial  Magistrate,  Patna did not have territorial  jurisdiction to take

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cognizance of the offence alleged under Sections 406, 420 and 120-B of the  

Indian Penal Code.  

3)   The admitted facts are, that, on 1.4.1999 M/s. Dhriti Agro Farms Private  

Limited (DAFPL), a company owned by the appellant, had entered into an  

agreement with Rajasthan Breweries Limited (RBL), a company owned by  

respondent  Nos.  1  and  2.  The  agreement  provides  for  appointment  of  

DAFPL as their C&F Agent for the State of Rajasthan. It also provides the  

payment  that  requires  to  be  made  by  the   appellant  for  supply  of  raw  

materials to the suppliers of the respondents on behalf of the respondents  

and the respondents would supply the finished goods to the appellant for  

sale in Rajasthan.

4)   It is the case of the appellant that he had visited his in-laws in Patna in  

the month of February, 1998 and there the respondents had met him  and  

had projected a lucrative picture of their business and assured the appellant  

the high returns for his investments. The appellant had agreed to become the  

C&F  Agent  of  the  respondent’s  company  for  State  of  Rajasthan.  

Subsequently, the respondents handed over the Letter of Appointment of the  

appellant  at  the  residence  of  his  in-laws  at  Patna.  It  is  the  case  of  the  

appellant, that, pursuant to the agreement it has made several payments for  

supply  of  raw materials  to  different  suppliers  of  the  respondent  but  the  

respondents have not made any payment of the same till date. It is its further

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grievance  that  appellant  though  had  made    repeated  requests  to  the  

respondent to return the money paid, the respondents have not acceded to  

the request so made.  

5)   In  view of  the  inaction  of  the  police  authorities,  the  appellant  was  

constrained to file a private complaint before the Chief Judicial Magistrate,  

inter  alia  alleging commission  of  the  offences  by the  respondents  under  

Sections 406 and 420 read with Section 120-B of the Indian Penal Code.

6)   After recording the statements of the appellant and his witnesses and  

being  convinced  that  a  prima facie  case  has  been  made out  against  the  

respondents, for the offences, under Sections 420, 406 and 120(b) of the  

Indian  Penal  Code,  the  learned  Magistrate  has  taken  cognizance  of  the  

complaint and has issued summons to the respondents.  

7)   Aggrieved by the aforesaid order, the respondents had approached the  

High Court by filing a petition under Section 482 of the Cr.P.C., inter alia,  

requesting the court to quash the proceedings pending before the Judicial  

Magistrate, Patna.  

8)   Before the High Court,  the learned Counsel for the respondents had  

submitted  that,  no  part  of  cause  of  action  arose  within  the  territorial  

jurisdiction of Patna and as such the Judicial Magistrate, Patna could not  

have  taken  cognizance  and  passed  the  impugned  order.  It  was  further  

argued  that  the  appellant  had  also  filed  a  complaint  before  the  Deputy

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Commissioner of Police, Economic Wing, Crime Branch, New Delhi and  

also  before  the  Mehrauli  Police  Station,  New Delhi,  but  when  both  the  

authorities  did  not  respond  to  his  complaint,  he  has  filed  the  present  

complaint  before  the  Judicial  Magistrate,  Patna,  only  to  harass  the  

respondents. It was also submitted that the complainant/appellant  himself  

had  approached  the  respondents  for  execution  of  the  agreement  and  

therefore, a Letter of Appointment was sent to him at his New Delhi address  

and,  therefore,  the  learned  Judicial  Magistrate  has  erred  in  taking  

cognizance  of  the  complaint  and  ordering  issue  of  summons  to  the  

respondents.  

9)   The High Court by the impugned order has quashed the proceedings  

pending before the learned Magistrate primarily on the ground that no cause  

of action arose within the territorial jurisdiction of Chief Judicial Magistrate  

at Patna, and while elaborating on this issue, the Court has also observed  

that  although there is  an allegation that the respondents had induced the  

appellant to part with huge amount of money, but no such inducement was  

made at Patna or the appellant parted with any part of his money at Patna or  

the respondents were required to account for any property at Patna or any  

agreement was executed within the jurisdiction of Patna and even if it is  

accepted  that  the  Letter  of  Appointment  was  handed  over  by  the  

respondents to the appellant at Patna, it does not constitute any part of cause

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of action. Aggrieved by the said order, the appellant is before us in this  

appeal.

10)The issue before us is, whether the High Court under Section 482, Cr.P.C  

was  justified  in  quashing the  complaint  on the  ground that  no  cause  of  

action  has  arisen  in  Patna  in  respect  of  the  alleged  offences  under  the  

provisions of IPC.

11)The  Learned  Counsel  for  the  appellant  would  submit,  that,  the  

cognizance stage and the trial  stage are two different aspects of criminal  

jurisprudence and under the Code, there is no territorial restriction for any  

Magistrate to take cognizance of an offence although at the stage of trial,  

the said issue may become relevant in view of the provisions of Chapter  

XIII of the Code. The Counsel would also assert that section 177 of the  

code relating to the jurisdiction of the criminal courts do not trammel the  

powers of any court to take cognizance of the offence and thus, would apply  

to section 190 and 200 as well. It is contended that a part of cause of action  

did arise in Patna as in the complaint filed by the complainant/appellant, it  

was specifically asserted that the appointment of the appellant’s company as  

C&F Agent of the respondent’s company was agreed upon in Patna. It was  

the respondents who approached the appellant for the said agreement on his  

short  stay  at  his  in-laws  in  Patna.  Therefore,  the  High  Court  was  not  

justified in holding that the Judicial Magistrate did not have the jurisdiction

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to take cognizance in the matter as no cause of action arose in Patna and has  

erred in quashing the proceedings pending before the Judicial Magistrate by  

exercising its inherent power under Section 482 of Cr.P.C.

12)In order to appreciate the jurisdictional  aspect,  it  would be relevant to  

discuss the meaning of the expression “cause of action”. This Court has laid  

down  that  the  cause  of  action  is  a  fundamental  element  to  confer  the  

jurisdiction upon any Court and which has to be proved by the plaintiff  to  

support his right to a judgment of the court. It is relevant to take note of  

what was stated by this court in State of Bombay v. Narottamdas Jethabhai,  

1951 SCR 51. In this case, it is observed, that, the jurisdiction of the courts  

depended in civil cases on a “cause of action” giving rise to a civil liability,  

and  in  criminal  cases  on  the  commission  of  an  offence,  and  on  the  

provisions made in the two Codes of Procedure as to the venue of the trial  

and other relevant matters.  

13)In the case of  State of Madras v. V.P. Agencies, AIR 1960 SC 1309, it  

was stated that:

       “Now the cause of action, has no relation whatever  to  the  defence  which  may  be  set  up  by  the  defendant, nor does it depend upon the character of  the  relief  prayed  for  by  the  plaintiff.  It  refers  entirely to the grounds set forth in the plaint as the  cause of action, or,  in other words, to the media  upon which the plaintiff asks the court to arrive at  a conclusion in his favour.”

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14)In the case of Gurdit Singh v. Munsha Singh, (1977) 1 SCC 791,  

this Court held that:  

      “The expression “cause of action” has sometimes  been  employed  to  convey  the  restricted  idea  of  facts or circumstances which constitute either the  infringement or the basis of a right and no more. In  a wider and more comprehensive sense, it has been  used to denote the whole bundle of material facts  which a plaintiff must prove in order to succeed.  These are all those essential facts without the proof  of which the plaintiff must fail in his suit.”  

15)In the case of State of Rajasthan v. Swaika Properties, (1985) 3 SCC 217,  

it was observed that:

       “The ‘cause of action’ means every fact which, if  traversed, it would be necessary for the plaintiff to  prove in order to support his right to a judgment of  the court.”

16)In the case of ONGC v. Utpal Kumar Basu, (1994) 4 SCC 711, this Court  

held that:

       “It is well settled that the expression “cause of  action”  means  that  bundle  of  facts  which  the  petitioner must prove, if traversed, to entitle him to  a judgment in his favour by the Court. Therefore,  in determining the objection of lack of territorial  jurisdiction  the  court  must  take  all  the  facts  pleaded  in  support  of  the  cause  of  action  into  consideration  albeit  without  embarking  upon  an  enquiry as to the correctness or otherwise of the  said facts. In other words the question whether a  High Court has territorial jurisdiction to entertain a  writ petition must be answered on the basis of the  averments  made  in  the  petition,  the  truth  or  otherwise  whereof  being  immaterial.  To  put  it

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differently,  the  question  of  territorial  jurisdiction  must  be  decided  on  the  facts  pleaded  in  the  petition.”  (Para 6)

17)In the case of Bloom Dekor Ltd. v. Subhash Himatlal Desai, (1994) 6  

SCC 322, it was observed that:  

        “By “cause of action” it is meant every fact,  which, if traversed, it would be necessary for the  plaintiff to prove in order to support his right to a  judgment of the Court, (Cooke v. Gill, (1873) 8 CP  107). In other words, cause of action is a bundle of  facts which it is necessary for the plaintiff to prove  in order to succeed in the suit.” (Para 28)

18)In Rajasthan High Court Advocates' Assn. v. Union of India, (2001) 2  

SCC 294, this Court stated that:  

                 “The expression “cause of action” has acquired a  judicially-settled  meaning.  In  the  restricted  sense  cause of action means the circumstances forming  the  infraction  of  the  right  or  the  immediate  occasion  for  the  action.  In  the  wider  sense,  it  means  the  necessary  conditions  for  the  maintenance  of  the  suit,  including  not  only  the  infraction of the right,  but the infraction coupled  with the right itself. Compendiously the expression  means every fact which it would be necessary for  the  plaintiff  to  prove,  if  traversed,  in  order  to  support  his  right  to  the  judgment  of  the  Court.  Every  fact  which  is  necessary  to  be  proved,  as  distinguished from every piece of evidence which  is  necessary  to  prove  each  fact,  comprises  in  “cause of action”. It has to be left to be determined  in each individual  case as to where the cause of  action arises.” (Para 17)

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19)In the case of Y. Abraham Ajith v. Inspector of Police, (2004) 8 SCC  

100, this Court said that:

       “The expression “cause of action” is generally  understood to mean a situation or state of facts that  entitles a party to maintain an action in a court or a  tribunal; a group of operative facts giving rise to  one or  more bases  for sitting;  a factual  situation  that entitles one person to obtain a remedy in court  from another person. In Black’s Law Dictionary a  “cause of action” is stated to be the entire set of  facts  that  gives rise  to an enforceable  claim; the  phrase  comprises  every fact,  which,  if  traversed,  the  plaintiff  must  prove  in  order  to  obtain  judgment.  In  Words  and Phrases  (4th  Edn.),  the  meaning attributed to the phrase “cause of action”  in  common  legal  parlance  is  existence  of  those  facts,  which  give  a  party  a  right  to  judicial  interference on his behalf.” (Para 17)

20)In Halsbury’s Laws of England (4th Edn.) it has been stated as follows:

                  “Cause of action has been defined as meaning  simply a factual situation, the existence of which  entitles  one  person  to  obtain  from  the  court  a  remedy  against  another  person.  The  phrase  has  been held from earliest time to include every fact  which  is  material  to  be  proved  to  entitle  the  plaintiff  to  succeed,  and  every  fact  which  a  defendant would have a right to traverse. ‘Cause of  action’  has  also  been  taken  to  mean  that  a  particular act on the part of the defendant which  gives the plaintiff  his cause of  complaint,  or  the  subject-matter  of  grievance  founding  the  action,  not merely the technical cause of action.”

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21)This Court in the case of Alchemist Ltd. v. State Bank of Sikkim, (2007)  

11 SCC 335, it was held that:

       “From the aforesaid discussion and keeping in  view the ratio laid down in a catena of decisions by  this  Court,  it  is  clear  that  for  the  purpose  of  deciding  whether  facts  averred  by  the  appellant- petitioner would or would not constitute a part of  cause of action, one has to consider whether such  fact  constitutes  a  material,  essential,  or  integral  part of the cause of action. It is no doubt true that  even if a small fraction of the cause of action arises  within the jurisdiction of the court, the court would  have  territorial  jurisdiction  to  entertain  the  suit/petition.  Nevertheless  it  must  be  a  “part  of  cause of action”, nothing less than that.” (Para 37)

22)It is evident from the above decisions, that,  to constitute the territorial  

jurisdiction,  the  whole  or  a  part  of  “cause  of  action” must  have  arisen  

within the territorial jurisdiction of the court and the same must be  decided  

on the  basis  of the averments  made in the complaint  without embarking  

upon an enquiry as to the correctness or otherwise of the said facts.  

23)The next question is, whether a court can take cognizance of the offence  

after examining the complaint filed by the complainant wherein, prima facie  

whole or a part of cause of action seems to have arisen.  

24)In Union of India v. Adani Exports Ltd., (2002) 1 SCC 567, this Court  

observed:  

        “It is seen from the above that in order to confer  jurisdiction  on  a  High  Court  to  entertain  a  writ  petition  or  a  special  civil  application  as  in  this

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case,  the  High Court  must  be  satisfied  from the  entire  facts  pleaded  in  support  of  the  cause  of  action that those facts do constitute a cause so as to  empower the court to decide a dispute which has,  at least in part, arisen within its jurisdiction. It is  clear from the above judgment that each and every  fact pleaded by the respondents in their application  does  not  ipso  facto  lead  to  the  conclusion  that  those facts give rise to a cause of action within the  court’s  territorial  jurisdiction  unless  those  facts  pleaded are such which have a nexus or relevance  with  the  lis  that  is  involved  in  the  case.  Facts  which have no bearing with the lis or the dispute  involved in the case, do not give rise to a cause of  action so as to confer territorial jurisdiction on the  court concerned.” (Para 17)

25)In the case of Satvinder Kaur v. State (Govt. of NCT of Delhi), (1999) 8  

SCC 728, it is stated that:  

            “If the FIR, prima facie, discloses the commission  of an offence, the court does not normally stop the  investigation, for, to do so would be to trench upon  the lawful power of the police to investigate into  cognizable  offences.  It  is  also  settled  by  a  long  course  of  decisions  of  this  Court  that  for  the  purpose of exercising its power under Section 482  CrPC to quash an FIR or a complaint,  the High  Court would have to proceed entirely on the basis  of  the  allegations  made  in  the  complaint  or  the  documents accompanying the same per se; it  has  no  jurisdiction  to  examine  the  correctness  or  otherwise of the allegations.” (Para 4)

26)This Court in the case of V.C. Shukla v. State through CBI, 1980 Supp  

SCC 92, it was observed that :

      “it is the duty of the court to apply its judicial mind  to the materials and come to a clear conclusion that

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a prima facie case has been made out on the basis  of which it would be justified in framing charges.”  (Para 8)

27)Also in the case of Liverpool & London S.P. & I Assn. Ltd. v. M.V. Sea  

Success I,(2004) 9 SCC 512, it was observed that:

       “Whether a plaint discloses a cause of action or not  is  essentially  a  question  of  fact.  But  whether  it  does or does not must be found out from reading  the plaint itself. For the said purpose the averments  made in the plaint in their entirety must be held to  be  correct.  The  test  is  as  to  whether  if  the  averments  made  in  the  plaint  are  taken  to  be  correct in their entirety, a decree would be passed.”  (Para 139)

       “In ascertaining whether the plaint shows a cause  of  action,  the  court  is  not  required  to  make  an  elaborate  enquiry  into  doubtful  or  complicated  questions  of  law  or  fact.  By  the  statute  the  jurisdiction of the court is restricted to ascertaining  whether  on  the  allegations  a  cause  of  action  is  shown.” (Para 151)

28)In Vijai  Pratap Singh v. Dukh Haran Nath Singh,1962 Supp (2) SCR  

675, this Court held that:

       “If the allegations in the petition, prima facie, show  a cause of action, the court cannot embark upon an  enquiry whether the allegations are true in fact, or  whether the petitioner will  succeed in the claims  made by him. By the statute, the jurisdiction of the  court  is  restricted to ascertaining whether  on the  allegations  a  cause  of  action  is  shown:  the  jurisdiction does not extend to trial of issues which  must fairly be left for decision at the hearing of the  suit.” (Para 9)

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29)In view of the above principles, the Court on basis of the averments made  

in the complaint, if it is prima facie of the opinion that the whole or a part of  

cause of action has arisen in its jurisdiction, it can certainly take cognizance  

of the complaint. There is no need to ascertain that the allegations made are  

true in fact.

30)The  only  question,  which  remains  to  be  considered,  is,  whether  the  

Judicial  Magistrate,  Patna had the  jurisdiction  to  take cognizance  of  the  

complaint?  

31)It  is  argued  that  the  appointment  of  the  appellant’s  company as  C&F  

Agent of the respondent’s company was agreed upon in Patna and the Letter  

of Appointment was also delivered at the address of the in-laws house of the  

appellant in Patna and therefore, it can be said that part of cause of action  

prima facie appears to have arisen in Patna. Therefore, Judicial Magistrate,  

Patna was justified in taking cognizance complaint and issuing process to  

the respondents.  

32)In view of the above, in our considered opinion, the High Court has erred  

by  going  into  merits  of  the  case  and  deciding  doubtful  or  complicated  

questions of law and fact while invoking its powers under Section 482 of  

Cr.P.C. This is not the fit case where the High Court could have exercised  

its inherent powers under section 482 of the Code.

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33)The cardinal principle’s which requires to be kept in view while invoking  

powers under Section 482 of Cr.P.C. has been stated in the case of State of  

H.P. v. Pirthi Chand, (1996) 2 SCC 37, where in this Court has observed  

that:

                  “When the court exercises its inherent power  under Section 482, the prime consideration should  only be whether the exercise of the power would  advance  the  cause  of  justice  or  it  would  be  an  abuse of the process of the court.” (Para 13)

                  “It is thus settled law that the exercise of inherent  power  of  the  High  Court  is  an  exceptional  one.  Great  care  should  be  taken  by  the  High  Court  before  embarking  to  scrutinise  the  FIR/charge- sheet/complaint.  In  deciding  whether  the  case  is  rarest of rare cases to scuttle the prosecution in its  inception,  it  first  has  to  get  into  the  grip  of  the  matter  whether  the  allegations  constitute  the  offence. It must be remembered that FIR is only an  initiation to move the machinery and to investigate  into cognizable offence. After the investigation is  conducted (sic concluded) and the charge-sheet is  laid, the prosecution produces the statements of the  witnesses recorded under Section 161 of the Code  in support of the charge-sheet. At that stage it is  not the function of the court to weigh the pros and  cons  of  the  prosecution  case  or  to  consider  necessity  of  strict  compliance  of  the  provisions  which are considered mandatory and its effect of  non-compliance. It would be done after the trial is  concluded. The court has to prima facie consider  from the  averments  in  the  charge-sheet  and  the  statements  of  witnesses  on the record in  support  thereof whether court could take cognizance of the  offence on that evidence and proceed further with  the  trial.  If  it  reaches  a  conclusion  that  no  cognizable  offence  is  made  out,  no  further  act

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could  be  done except  to  quash the  charge-sheet.  But only in exceptional cases, i.e., in rarest of rare  cases of mala fide initiation of the proceedings to  wreak  private  vengeance,  the  court  may  embark  upon  the  consideration  thereof  and  exercise  the  power.” (Para 12)

34)In view of the above discussion, we allow this appeal and set aside the  

impugned order  passed by the High Court.  The trial  court  is  directed to  

proceed with the complaint.  

35)  We make it clear that the observations made by us in the course of our  

judgment is  only for the purpose of  disposal  of criminal appeal  and the  

same need not be taken as any expression on the merits of the case.  

                                                                                     …………………………………J.                                                                                        [TARUN CHATTERJEE]

                                                                                     …………………………………J.                                                                                        [ H.L. DATTU ] New Delhi, July 14, 2009.