http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 1 of 4  

CASE NO.: Appeal (crl.)  1250 of 2007

PETITIONER: Anil Ritolla @ A.K. Ritolia

RESPONDENT: State of Bihar & Anr

DATE OF JUDGMENT: 18/09/2007

BENCH: S.B. Sinha & Harjit Singh Bedi

JUDGMENT: J U D G M E N T

CRIMINAL APPEAL NO. 1250 OF 2007 (Arising out of SLP (Crl.) No.1973 of 2007)

S.B. Sinha, J.

1.      Leave granted. 2.      Parties hereto admittedly had been carrying on commercial  transactions.  Appellant herein was an authorised dealer of Hindustan Lever  Limited.  In connection with the said business transactions, appellant  allegedly was required to deliver to the second respondent Form IX-C  prescribed in terms of Bihar Sales Tax Rules.  The Second respondent herein  filed a complaint petition alleging commission of offence under Section 427,  384 and 420/34 of the Indian Penal Code, inter alia, holding : "That it is not out of place to mention here that the  company at the time of agreement so took place  between complainant and Hindustan Levar got  signed of the complainant over certain plain and  printed papers saying that there are the formality of  the organization, which is required to be fulfilled  as such if the company try to take any advantage  from the said papers the same would not be  binding upon the complainant, as the complainant  was not made aware from the contents of the  alleged documents and the signatures of the  complainant do not come within the definition of  execution.

That as per the requirement of the law stipulated  by the rule 12 of sub-rule (2) (sic) of Bihar Finance  Act, 1981 it is the obligatory duty of the selling  dealer to furnish a declaration in writing to the  purchasing dealer known as form IX-C obtained  from prescribed authority for the exemption of the  sales tax over the turn over of the purchasing  dealer.

XXX                             XXX                      XXX

That the conduct of the accused of this case put  complainant in great inconvenience, mental agony  and financial despair and caused damage to his  business reputation.

XXX                             XXX                      XXX

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 2 of 4  

That the accused always kept proposal before the  complainant to continue business with the  company and as the complainant refused to join  with them after 1999 and as such the accused did  not supply the said form IX-C to the complainant  only with the mala fide and dishonest intention  which caused damage to the complainant."

3.      A Judicial Magistrate, Madhepura, upon examining the complaint on  oath and upon taking statements of the witnesses purported to have found  existence of a prima facie case for taking cognizance under Section 420 of  the Indian Penal Code against the appellants herein.  Summons were  directed to be issued.  They filed an application for quashing of the said  criminal proceedings before the High Court of Judicature at Patna in terms  of Section 482 of the Code of Criminal Procedure.  By reason of the  impugned judgment, a learned Single Judge of the said Court dismissed the  said petition opining : "Admittedly, the petitioners were the carrying and  forwarding agents of the Company and in that  capacity they perhaps were instrumental in  forwarding the articles to the complainant.  They  cannot escape from the liability of undergoing  criminal proceedings. So far as the Petitioners’ contention on the dispute  being a civil one is concerned, I am unable to  agree with the assertions since from the facts made  out a definite criminal liability is made out."

4.      Mr. Siddarth Luthra, learned counsel appearing on behalf of the  appellant in support of this appeal, submitted that no case for issuance of  summons had been made out even if the allegations contained in the  complaint petition are given their face value and taken to be correct in its  entirety.  5.      Mr. S.B. Upadhyay, learned senior counsel appearing on behalf of the  second respondent, on the other hand, took us through the entire complaint  petition and contended that from the statements contained in paragraph 14 of  the complaint petition, it is evident that the appellants herein had intention to  cause a wrongful loss to the complainant by practicing deceit within the  meaning of Sections 23, 24 and 415 of the Indian Penal Code.  Strong  reliance in this behalf was placed on a decision of this Court in  Rajesh Bajaj  v. State NCT of Delhi & Ors. [(1999) 3 SCC 259].   6.      It is not in dispute that the appellant is one of the Redistribution  Stockiest of Hindustan Lever Ltd.  It is furthermore not in dispute that the  parties had been carrying on commercial transactions for a long time.  Till  the financial year 1998-99 despite non-supply of Form IX-C prescribed  under the Bihar Sales Tax Rules, the complainant raised no grievance.  Only  in paragraph 14 of the complainant petition, a purported statement had been  made that the appellant compelled him to continue the business for the year  1998-99 despite non-supply of Form IX-C in the earlier years.   7.      Payment of sales tax, admittedly, is governed by the provisions of  Bihar Sales Tax Act and Rules framed thereunder.  Rule 14 of the Rules  prescribes procedure required to be taken in the event of non-receipt of Form  IX-C.  It is not in dispute that a dealer who had not been supplied with the  prescribed form by the supplier may take recourse to the remedies provided  for under the Rules. 8.      Section 23, 24 and 415 of the Indian Penal Code read as under : Section 23 \026 Wrongful gain "Wrongful gain" is gain by unlawful means of  property which the person gaining is not legally  entitled. "Wrongful loss".--"Wrongful loss" is the loss by  unlawful means of property to which the person  losing it is legally entitled.

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 3 of 4  

Gaining wrongfully, losing wrongfully.--A person  is said to gain wrongfully when such person retains  wrongfully, as well as when such person acquires  wrongfully. A person is said to lose wrongfully  when such person is wrongfully kept out of any  property, as well as when such person is  wrongfully deprived of property. Section 24 - Dishonestly  Whoever does anything with the intention of  causing wrongful gain to one person or wrongful  loss to another person, is said to do that thing  "dishonestly". Section 415 - Cheating  Whoever, by deceiving any person, fraudulently or  dishonestly induces the person so deceived to  deliver any property to any person, or to consent  that any person shall retain any property, or  intentionally induces the person so deceived to do  or omit to do anything which he would not do or  omit if he were not so deceived, and which act or  omission causes or is likely to cause damage or  harm to that person in body, mind, reputation or  property, is said to "cheat". Explanation,--A dishonest concealment of facts is  a deception within the meaning of this section."

9.      Ingredients of Section 420 of the Indian Penal Code are as under : i)      Deception of any person; ii)     Fraudulently or dishonestly inducing any person to deliver any  property; or     iii)    To consent that any person shall retain any property and finally  intentionally inducing that person to do or omit to do anything which  he would not do or omit. 10.     The transactions between the parties were for supply of goods.   Admittedly, ______ and except supply of Form IX-C other terms and  conditions of the contract had been complied with by them.  Per se, supply  or non-supply of Form IX-C of the Bihar Sales Tax Rules had nothing to do  with the transactions for which the parties had entered into a contract.  Non- issuance of the said form ex-facie cannot give rise to commission of any  offence.  If the appellant or their principal were obligated to act under a  statute and failed to perform their duties as indicated hereinbefore, as the  statute itself provides for a remedy, ordinarily the same is required to be  taken recourse to.  In any event, the second Respondent could have filed a  suit for damages.   There cannot be any doubt or dispute whatsoever that an offence can  be committed even if the parties had entered into a commercial transaction.   In Rajesh Bajaj (supra) this Court held so. But it is equally well settled that  the allegations contained in the complaint petition must, prima facie, show  inducement of the victim by the accused by making a representation.  In a  case of this nature, we are of the opinion that no case has been made out to  form an opinion that the appellant had the requisite intention. 11.     The question came up for consideration before this Court recently in  Indian Oil Corporation v. NEPC Indian Ltd. & Ors. [(2006) 6 SCC 736]  wherein, upon consideration of a large number of decisions, it was held : "The essential ingredients of the offence of  "cheating" are : (i) deception of a person either by  making a false or misleading representation or by  other action or omission, (ii) fraudulent or  dishonest inducement of that person to either  deliver any property or to consent to the retention  thereof by any person or to intentionally induce  that person to do or omit to do anything which he  would not do or omit if he were not so deceived  and which act or omission causes or is likely to  cause damage or harm to that person in body,

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 4 of 4  

mind, reputation or property."

       It is not a case where the appellants can be said to have induced the  respondent to enter into a transaction so as to deceive them with a view to  cause unlawful losses to them and to make unlawful gain for themselves. 12.     For the reasons aforementioned, in our opinion, the High Court has  committed an error in not interfering with the order of the learned Magistrate  taking cognizance of the offence.  The impugned judgment cannot be  sustained.  It is set aside accordingly.  The appeal is allowed.  However, in  the facts and circumstances of the case, there shall be no order as to costs.