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PETITIONER: TRISUNS CHEMICAL INDUSTRY

       Vs.

RESPONDENT: RAJESH AGARWAL AND OTHERS       C

DATE OF JUDGMENT:       17/09/1999

BENCH: K.T.Thomas, M.B.Shah

JUDGMENT:

Thomas J.

Leave granted.

     Chairman  of  the appellant company filed a  complaint before  the  Judicial Magistrate of First Class,  Gandhidham (Gujarat) alleging certain offences including the offence of cheating  against another company located at Indore  (Madhya pradesh)  and  its Directors.  The Magistrate forwarded  the complaint  to  the  appellant for investigation as  per  his order  passed  under Section 156(3) of the Code of  Criminal Procedure  (for  short the Code).  The  accused  Directors thereupon  moved the High Court of Gujarat under Section 482 of  the Code for quashing the complaint.  A single Judge  of the  High  Court  quashed the complaint as  also  the  order passed   by  the  Magistrate   thereon.   Complainant   has, therefore,  filed this appeal.  The gist of the complaint is this:   In  the month of October 1996 the accused  Directors approached  him  and offered to supply 5450 metric tones  of Toasted  Soyabean  Extractions for a price of nearly  four and a half crores of rupees.  The rate quoted by the accused was  higher than the market price.  Appellant had to pay the price  in  advance as demanded by the accused.  So the  same was  paid  through  cheques.   But   the  accused  sent  the commodity  which  was of the most inferior and  sub-standard quality.   Complainant produced Xerox copies of the  reports obtained  from  the  laboratory  to  which  samples  of  the commodities  were  sent  for  testing  purposes.   The  said laboratory  has remarked that the commodity was of the most inferior and sub-standard quality. The complainant suffered a  loss  of 17 lakhs of rupees by the aforesaid  consignment alone.  According to the appellant he was induced to pay the price  on the representation that the best quality commodity would   be  supplied  and  the   price  was  paid  on   such representation.   But by supplying the most inferior quality the accused deceived the complainant and thereby the offence was  committed.   The above are the salient features of  the allegations  in  the  complaint.   We have  noted  from  the judgment  of the learned single judge of the High Court that appellants  counsel  in the High Court did not turn  up  to argue  the matter.  Evidently learned judge was deprived  of the advantage of getting appellants version projected.  The deficiency  is seen reflected in the impugned judgment also. Respondents  counsel  in the High Court put forward  mainly two  contentions.  First was that the dispute is purely of a

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civil  nature  and  hence no prosecution  should  have  been permitted,  and the second was that the Judicial  Magistrate of  First Class, Gandhidham has no jurisdiction to entertain the  complaint.  Learned single judge has approved both  the contentions  and quashed the complaint and the order  passed by  the  magistrate  thereon.  On the  first  count  learned single judge pointed out that there was a specific clause in the  Memorandum of Understating arrived between the  parties that  disputes,  if any, arising between them in respect  of any  transaction can be resolved through arbitration.   High Court made the following observations:  Besides supplies of processed  soyabean were received by the complainant company without any objection and the same have been exported by the complainant-company.   The question whether the complainant- Company did suffer the loss as alleged by it are the matters to  be  adjudicated  by the Civil Court and  cannot  be  the subject matter of criminal prosecution."

     Time  and again this Court has been pointing out  that quashment  of  FIR  or a complaint in exercise  of  inherent powers  of the High Court should be limited to very  extreme exceptions  [vide  State  of Haryana vs.  Bhajan  Lal  (1992 suppl.(1)  SCC 335) and Rajesh Bajaj vs.  State NCT of Delhi (1999(3)  SCC  259)].  In the last referred case this  court also  pointed  out  that merely because an act has  a  civil profile  is  not  sufficient to denude it  of  its  criminal outfit.   We  quote the following observations:  It may  be that  the  facts narrated in the present complaint would  as well  reveal a commercial transaction or money  transaction. But  that is hardly a reason for holding that the offence of cheating would elude from such a transaction.  In fact, many a  cheatings were committed in the course of commercial  and also money transactions.

     We  are  unable to appreciate the reasoning  that  the provision  incorporated  in the agreement for referring  the disputes  to  arbitration is an effective substitute  for  a criminal  prosecution  when the disputed act is an  offence. Arbitration  is a remedy for affording reliefs to the  party affected  by  breach  of the agreement  but  the  arbitrator cannot  conduct  a  trial of any act which  amounted  to  an offence  albeit  the  same  act may be  connected  with  the discharge of any function under the agreement.  Hence, those are  not  good  reasons for the High Court to axe  down  the complaint at the threshold itself.  The investigating agency should  have  had the freedom to go into the whole gamut  of the  allegations  and  to  reach a conclusion  of  its  own. Pre-emption of such investigation would be justified only in very  extreme  cases  as indicated in State of  Haryana  vs. Bhajaj  Lal (Supra).  Learned single judge has accepted  the alternative contention advanced by the respondent pertaining to want of jurisdiction for the Judicial Magistrate of First Class,  Gandhidham in respect of the offence alleged in  the complaint.   This  is what the High Court has said  on  that aspect:   Further, there is nothing in the complaint  which shows that any part of the transaction took place within the territories  of the State of Gujarat.  It appears that  even the  supply  of  processed  soyabean was  delivered  to  the complainant-company  at  the  factory itself.  In  my  view, therefore,  Mr.  Shah is right in contending that the  court of  the learned Judicial Magistrate, First Class, Gandhidham ought  not to have taken cognizance of the matter and  ought not to have directed to issue the process.

     It  is  an erroneous view that the  Magistrate  taking

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cognizance  of an offence must necessarily have  territorial jurisdiction  to try the case as well.  Chapter XIII of  the Code  relates  to  jurisdiction of the criminal  courts  in enquiries  and  trials.  That chapter  contains  provisions regarding  the place where the enquiry and trial are to take place.    Section  177  says   that  every  offence   shall ordinarily  be  inquired  into and tried by a  Court  within whose  local jurisdiction it was committed. But section 179 says  that  when an act is an offence by reason of  anything which  has been done and of a consequence which has  ensued, the  place  of enquiry and trial can as well be in  a  court within whose local jurisdiction such thing has been done or such consequence has ensued..  It cannot be overlooked that the  said provisions do not trammel the powers of any  court to  take  cognizance of the offence.  Power of the court  to take cognizance of the offence is laid in Section 190 of the Code.  Sub-sections (1)& (2) read thus:  (i) Subject to the provisions  of  this  Chapter, any Magistrate of  the  first class,  and  any  Magistrate of the second  class  specially empowered  in  this behalf under sub-section (2),  may  take cognizance of any offence

     (a)   Upon  receiving  a   complaint  of  facts  which constitute such offence;

     (b) Upon a police report of such facts;

     (c)  Upon  information received from any person  other than  a police officer, or upon his own knowledge, that such offence has been committed.

     (ii)  The  Chief Judicial Magistrate may  empower  any Magistrate  of  the  second class to take  cognizance  under sub-section  (1)  of  such  offences   as  are  within   his competence to inquire into or try.

     Section  193  imposes  a restriction on the  court  of sessions  to  take cognizance of any offence as a  court  of original  jurisdiction.   But any Magistrate of the  First Class  has  the power to take cognizance of any offence,  no matter   that   the  offence   was  committed   within   his jurisdiction  or  not.   The only restriction  contained  in Section 190 is that the power to take cognizance is subject to  the provisions of this Chapter. There are 9 Sections in Chapter  XIV most of which contain one or other  restriction imposed  on the power of a first class magistrate in  taking cognizance of an offence.  But none of them incorporates any curtailment  on  such  powers  in  relation  to  territorial barrier.   In the corresponding provision in the old Code of Criminal  Procedure  (1898) the commencing words  were  like these:   Except  as hereinafter provided. Those words  are now replaced by Subject to the provisions of this chapter. Therefore,  when there is nothing in Chapter XIV of the Code to  impair the power of a judicial magistrate of first class taking  cognizance  of  the offence on the strength  of  any territorial  reason  it is impermissible to deprive  such  a magistrate  of the power to take cognizance of an offence of  course, in certain special enactments special provisions are  incorporated  for  restricting   the  power  of  taking cognizance  of  offences falling under such acts.  But  such provisions  are protected by non-obstante clauses.  Any  way that  is  a  different matter.   The  jurisdictional  aspect becomes  relevant only when the question of enquiry or trial arises.   It is therefore a fallacious thinking that only  a

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magistrate having jurisdiction to try the case has the power to take cognizance of the offence.  If he is a Magistrate of the  First Class his power to take cognizance of the offence is  not impaired by territorial restrictions.  After  taking cognizance  he may have to decide as to the court which  has jurisdiction  to  enquire into or try the offence  and  that situation  would reach only during the post cognizance stage and  not  earlier.  Unfortunately, the High  Court,  without considering any of the aforesaid legal aspects rushed to the erroneous  conclusion that the judicial magistrate of first class,  Gandhidham  has no power to take cognizance  of  the offences  alleged  merely because such offences could  have been  committed outside the territorial limits of the  State of  Gujarat.  Even otherwise, without being apprised of  the fuller conspectus a decision on the question of jurisdiction should  not  have been taken by the High Court at a  grossly premature  stage as this.  For all the aforesaid reasons  we are  unable  to  concur  with the  impugned  judgment.   We, therefore,  quash  it.  Learned counsel for the  respondents invited  our  attention  to the fact that  all  the  accused persons  arrayed in the complaint are residing at Indore  in Madhya   Pradesh   and  he   apprehends  that   revival   of investigation  in the case would most probably embroil  them in a miserable position if they are arrested.  We considered that aspect in the view we now take and we also foresee such a  plight  for  the  accused.   To  alleviate  any  possible hardship  for  the respondents we direct that if any of  the respondents  is  arrested  in   connection  with  the  above complaint,  he  shall be released on bail by  the  arresting officer   on  execution  of  a  bond  to  his  satisfaction. However,  such  arrested person shall be bound to report  to the  investigating  officer at the place and time  specified for the purpose of interrogation.

     The appeal is disposed of in the above terms.