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CASE NO.: Appeal (crl.)  742 of 2008

PETITIONER: SUNEET GUPTA

RESPONDENT: ANIL TRILOKNATH SHARMA & ORS

DATE OF JUDGMENT: 28/04/2008

BENCH: C.K. THAKKER & AFTAB ALAM

JUDGMENT: J U D G M E N T REPORTABLE

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.

1.              Leave granted.   2.              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 Code (IPC). 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.

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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 complainant.   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

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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

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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

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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 two years.  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

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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 circumstances,  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

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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 petitions. 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

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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  permissible."

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  proceedings. 22.             In the case on hand, the High Court  was right in coming to the conclusion that a  civil dispute \026 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.