REPORTABLE IN THE SUPREME COURT OF INDIA

CRIMINAL APPELLATE JURISDICTION

CRIMINAL APPEAL No.………….OF 2009

    (Arising out of SLP (Crl.) No. 6482 of 2006)  

Ravindra Kumar Madhanlal Goenka & Anr.      ..…Appellants

Versus

M/s. Rugmini Ram Raghav Spinners P.Ltd.  .….Respondent

JUDGMENT

Dr. Mukundakam Sharma, J.

1. Leave granted.

2. This  appeal  arises  out  of  the  judgment  and  order  dated  30.08.2006

passed by the Madras High Court in Criminal Original Petition No. 4556

of 2006 whereby the learned Single Judge of the High Court dismissed

the petition filed under Section 482 of the Code of Criminal Procedure

(in short ‘CrPC’) by the appellants for quashing criminal complaint filed

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against  them  by  the  respondents  before  the  Judicial  Magistrate,

Coimbatore,              Tamil Nadu.

3. Facts in brief, as alleged by the appellants, are as follows:  

Ravindera Kumar Madhanlal Goenka – Accused No. 1 ( 1st appellant

herein)  is  the  proprietor  of  M/s.  Ravindera Kumar Madhanlal  having its

office  at  Shri  Ganesh  Complex,  Kothadi  Bazar,  Akola  –  444001,

Maharashtra and is a General Merchant and Commission Agent for various

food items like sugar, jaggery, oil seeds, oil, grains, pulses and cotton etc.  It

was dealing in cotton as commission agent for various persons belonging to

different  places  in  different  states  including  Coimbatore  in  Tamil  Nadu.

The  proprietorship  of  the  1st appellant  is  registered  with  the  Sales  Tax

Department of Maharashtra. Srimathi Ravindra Kumar Madhanlal Goenka –

Accused No. 2 (2nd appellant herein) is stated to be a partner in the firm.

Accused-2 is  a broker cum dealer and Accused-3 his wife,  a partner  and

Accused-4 is  his  sub-broker/agent.  The present  appeal  has  been filed by

Accused-1 (1st appellant) and Accused-2 (2nd appellant).

4. The  respondent  through  his  agents  approached  the  1st appellant  by

personally visiting Akola and ordered cotton bales to manufacture yarn.

The agents had stayed for about 45 days at Akola and after examining

the quality of cotton and after their approval the cotton was transported

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to the respondent for which the respondent offered 1% commission to

the 1st appellant.  The 1st appellant by raising bank loan gave the same to

the    cotton  manufacturers  and  dealers  and  bought  from  them  and

thereafter,  as  requested  by  the  respondent,  transported  the  same  to

Coimbatore.  It was a practice that entire advance amount was to be paid

at the time of ordering cotton.  The respondent after gaining confidence

of the 1st appellant some time used to send even lesser amount than the

actual value of the cotton but even then the 1st appellant used to send

cotton bales over and above the advance amount paid by the respondent.

The  advance  amount  used  to  be  sent  by the  respondent  by telegraph

transfer and every transfer was accounted by both the respondent as well

as 1st appellant.   

5. During  the  course  of  their  business  transaction  the  respondent  had

developed some problem with their two commission agents belonging to

Coimbatore  with  regard  to  the  payment  of  compensation  and  other

expenses.   The appellant  had sent  a fax message on 12.2.2004 to the

respondent  giving  statement  of  accounts  by showing  that  the  amount

lying  with  him is  Rs.  4,74,521/-  and  requested  him to  send  balance

money for sending 100 bales and also requested to send the ‘C’ Form.  In

response  to  the  above  fax,  on  15.02.2004,  the  respondent  sent  a  fax

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stating that the closing balance with the 1st appellant is Rs. 4,76,521/-.

Thereafter, the respondent through his agents requested the 1st appellant

to  send totaling  145  bales  of  cotton  and it  was confirmed by the  fax

messages dated 18.2.2004 of his agent Mr. Srinivas R. Lele wherein he

made specific  request  to  send the 145 bales  after  receiving the entire

amount and also by deducting ½ % commission payable to him.  The 1st

appellant, vide his fax message dated 20.2.004 requested the respondent

to  send  the  remaining  amount  for  lifting  of  145  bales,  which  was

weighed by his new controller and also requested him to settle all  the

amount  by  sending  the  statement  of  account  along  with  the  fax.

However, the respondent by return fax disputed the 1st appellant’s claim

and  allegedly  made  some false  statement.  Again,  the  1st appellant  by

another  fax  requested  the  respondent  to  send  the  remaining  balance

including the late fee in accordance with the terms and conditions.  The

second condition in the invoice was that 24% interest would be levied

upon accounts  remaining unpaid  30 days from the date of  dispatched

goods.  The 1st appellant claimed late fee interest in accordance with the

above  terms.   However,  the  respondent  did  not  make  such  payment.

Some further dispute arose between the parties.  

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6. Subsequently, the 1st appellant approached the Akola Police for filing a

complaint.  However, the same was not entertained and registered stating

that the transaction was purely commercial and civil  in nature and the

business  disputes  cannot  be  resolved  by criminal  prosecution.   In the

meanwhile,  the respondent  filed a complaint  under  Section  200 CrPC

before the Judicial Magistrate No. 1 at Coimbatore for offences u/s 406,

420 and 384 of the Indian Penal Code (in short ‘IPC’.  The court vide

order dated 2.8.2004 issued an order directing the Thudiyalur Police to

register a case under Section 406, 420 and 384 IPC and submit their final

report  within  3  months.   The  case  was  registered  on  21.8.2004  after

receipt of the court order on 9.8.2004. Subsequently, the respondent also

filed a private complaint under Section 190 and 200 Cr.PC for offences

punishable under Sections 120-B, 406, 420 and 384 IPC by implicating

the 2nd appellant, who is the wife of the 1st appellant and one Srinivasa

Lele who is the agent of the respondent.  The Judicial Magistrate No. 1

at Coimbatore  on the basis  of  such complaint  issued summons to  the

appellants to appear before the court on 17.2.2006.   

7. Aggrieved by the aforesaid order of the learned Judicial Magistrate No.

1, the appellants approached the High Court for quashing the criminal

proceedings against them by filing Criminal Original Petition No. 4556

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of 2006 which was dismissed by the High Court.  The High Court held

that a perusal of allegations mentioned against the accused show that a

prima facie case is made out but only the trial court may have to look

into the defence materials  produced by the appellants  and admittedly,

there was business transaction wherein 900 bales of cotton were already

dispatched  but  100  bales  of  cotton  were  yet  to  be  dispatched.

Accordingly, the High Court refused to quash the proceeding.  

8. Aggrieved by the said order of the High Court, the present SLP has been

preferred. It is the case of the appellant the no criminal proceeding can

be  initiated  as  the matters  are  essentially civil  in  nature  and business

disputes cannot be resolved by criminal prosecution. It is the case of the

appellant that 1st appellant at the request of the respondent procured 145

bales and kept for long time with the dealers place and as the respondent

failed  to  make  payment  despite  for  waiting  long  duration,  the  1st

appellant had stored the 145 bales of cotton in the Central Ware House at

Akola on 18.03.2004 by paying regular rent and it was being extended

from time to time and still the bales procured for him is remain at Central

Ware House, Akola. It was contended that had the respondent paid the

entire amount for the 145 bales, the 1st appellant could have dispatched

the bales to the respondent. It is the case of the appellant that the entire

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amount  had  already  been  invested  in  procuring  bales  for  him  by

investing additional amount of another Rs. 10 lakhs by raising bank loan

by the 1st appellant. Hence, there was no cheating or fraud played by the

1st appellant. In view of the same it was contended that it was an alleged

breach of contract that’s also only at the last stage of the performance of

the agreement which was due to dispute of payment of the entire advance

amount.  In  view  of  this,  the  High  Court  ought  to  have  quashed  the

criminal proceedings initiated by the respondents.

9. The scope of  power under Section 482 CrPC has been explained in a

series  of  decisions  by  this  Court.  In  Nagawwa v.  Veeranna

Shivalingappa  Konjalgi [1976  (3)  SCC  736],  it  was  held  that  the

Magistrate  while  issuing  process  against  the  accused  should  satisfy

himself as to whether the allegations in the complaint, if proved, would

ultimately end in the conviction of the accused. It was held that the order

of  Magistrate  issuing  process  against  the  accused  could  be  quashed

under the following circumstances: (SCC p. 741, para 5)

“(1)  Where  the  allegations  made  in  the  complaint  or  the statements  of  the  witnesses  recorded  in  support  of  the  same taken at their face value make out absolutely no case against the  accused or  the complaint  does  not  disclose  the  essential ingredients of an offence which is alleged against the accused;

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(2) Where the allegations made in the complaint are patently absurd and inherently improbable so that no prudent person can ever  reach  a  conclusion  that  there  is  sufficient  ground  for proceeding against the accused;

(3) Where the discretion exercised by the Magistrate in issuing process is capricious and arbitrary having been based either on no  evidence  or  on  materials  which  are  wholly  irrelevant  or inadmissible; and

(4)  Where  the  complaint  suffers  from  fundamental  legal defects, such as, want of sanction, or absence of a complaint by legally competent authority and the like.”

10. In  State  of  Haryana v.  Bhajan  Lal [1992  Supp.  (1)  SCC  335],  a

question came up for consideration as to whether quashing of the FIR

filed against the respondent Bhajan Lal for the offences under Sections

161 and 165 IPC and Section 5(2) of the Prevention of Corruption Act

was proper and legal. Reversing the order passed by the High Court, this

Court  explained  the  circumstances  under  which  such  power  could  be

exercised.  Apart  from reiterating  the  earlier  norms laid  down by this

Court, it was further explained that such power could be exercised where

the allegations made in the FIR or complaint are so absurd and inherently

improbable on the basis of which no prudent person can ever reach a just

conclusion  that  there  is  sufficient  ground  for  proceeding  against  the

accused.  However,  this  Court  in  Rupan Deol  Bajaj v.  Kanwar  Pal

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Singh Gill [1995 (6) SCC 194] held (at SCC p. 209, para 23) that “at the

stage of quashing an FIR or complaint the High Court is not justified in

embarking  upon  an  inquiry  as  to  the  probability,  reliability  or

genuineness of the allegations made therein”.

11. In  Pratibha Rani v.  Suraj Kumar [1985 (2) SCC 370], the question

arose that when the civil as well as the criminal remedy is available to a

party, can a criminal prosecution be completely barred. In this case, the

matter related to the stridhan property. The complainant alleged that her

husband, father-in-law and other relatives misappropriated her jewellery

and other valuable articles entrusted to them by her parents at the time of

marriage. The complainant alleged that these dowry articles were meant

for her exclusive use and that the accused misbehaved and maltreated her

and ultimately he turned her  out  without  returning the dowry articles.

The accused filed a criminal miscellaneous petition under Section 482

for quashing the criminal proceedings and the High Court quashed the

same. The accused contended that the dispute was of a civil nature and

no criminal prosecution would lie. Under that circumstance, this Court

held in para 21 at pp. 382-83 as under:

“21. There are a large number of cases where criminal law and civil  law  can  run  side  by  side.  The  two  remedies  are  not

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mutually  exclusive  but  clearly  coextensive  and  essentially differ  in  their  content  and  consequence.  The  object  of  the criminal law is to punish an offender who commits an offence against a person, property or the State for which the accused, on proof of the offence, is deprived of his liberty and in some cases  even  his  life.  This  does  not,  however,  affect  the  civil remedies  at  all  for  suing  the  wrongdoer  in  cases  like  arson, accidents, etc. It is an anathema to suppose that when a civil remedy  is  available,  a  criminal  prosecution  is  completely barred. The two types of actions are quite different in content, scope and import.”

12. This Court in the case of Indian Oil Corpn. v. NEPC India Ltd. [2006

(6) SCC 736], at page 747 has observed as under :  

“12. The principles  relating  to  exercise  of  jurisdiction  under Section  482  of  the  Code  of  Criminal  Procedure  to  quash complaints  and  criminal  proceedings  have  been  stated  and reiterated by this Court in several decisions. To mention a few —Madhavrao  Jiwajirao  Scindia v.  Sambhajirao  Chandrojirao Angre,  State of Haryana v.  Bhajan Lal,  Rupan Deol Bajaj v. Kanwar  Pal  Singh  Gill,  Central  Bureau  of  Investigation v. Duncans  Agro  Industries  Ltd.,  State  of  Bihar v.  Rajendra Agrawalla,  Rajesh  Bajaj v.  State  NCT  of  Delhi,  Medchl Chemicals  & Pharma (P)  Ltd. v.  Biological  E.  Ltd.,  Hridaya Ranjan Prasad Verma v.  State of Bihar,  M. Krishnan v.  Vijay Singh and Zandu Pharmaceutical Works Ltd. v. Mohd. Sharaful Haque.. The principles, relevant to our purpose are:

(i) A complaint can be quashed where the allegations made in the complaint,  even if  they are taken at  their  face value and accepted  in  their  entirety,  do  not  prima  facie  constitute  any offence or make out the case alleged against the accused.      For this purpose, the complaint has to be examined as a whole,  but  without  examining  the  merits  of  the  allegations. Neither  a  detailed  inquiry  nor  a  meticulous  analysis  of  the

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material nor an assessment of the reliability or genuineness of the allegations in the complaint, is warranted while examining prayer for quashing of a complaint.

(ii) A complaint may also be quashed where it is a clear abuse of the process of the court, as when the criminal proceeding is found  to  have  been  initiated  with  mala  fides/malice  for wreaking vengeance or to cause harm, or where the allegations are absurd and inherently improbable.

(iii) The power to quash shall not, however, be used to stifle or scuttle  a  legitimate  prosecution.  The  power  should  be  used sparingly and with abundant caution.

(iv) The complaint  is  not  required to verbatim reproduce the legal ingredients of the offence alleged. If the necessary factual foundation is laid in the complaint, merely on the ground that a few ingredients have not been stated in detail, the proceedings should not be quashed. Quashing of the complaint is warranted only where the complaint is so bereft  of even the basic facts which are absolutely necessary for making out the offence.

(v) A given set of facts may make out: (a) purely a civil wrong; or (b) purely a criminal offence; or (c) a civil wrong as also a criminal  offence.  A commercial  transaction  or  a  contractual dispute,  apart  from furnishing  a  cause  of  action  for  seeking remedy in civil law, may also involve a criminal offence. As the nature and scope of a civil proceeding are different from a criminal proceeding, the mere fact that the complaint relates to a  commercial  transaction  or  breach  of  contract,  for  which  a civil remedy is available or has been availed, is not by itself a ground to quash the criminal proceedings. The test is whether the allegations in the complaint disclose a criminal offence or not.”

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13. The appellant has placed reliance on a decision of this Court in the case

of  Uma Shankar Gopalika v. State of Bihar [2005 (10) SCC 336], at

page 338, wherein this Court has observed as follows  :  

“7. In  our  view petition  of  complaint  does  not  disclose  any criminal  offence  at  all  much  less  any  offence  either  under Section 420 or Section 120-B IPC and the present case is a case of purely civil  dispute between the parties for which remedy lies before a civil court by filing a properly constituted suit. In our  opinion,  in  view  of  these  facts  allowing  the  police investigation  to  continue  would  amount  to  an  abuse  of  the process  of  court  and  to  prevent  the  same  it  was  just  and expedient for the High Court to quash the same by exercising the powers under Section 482 CrPC which it has erroneously refused.”  

14. In the abovementioned case, this Court has taken the view that when the

complaint  does  not  disclose  any  criminal  offence,  the  proceeding  is

liable to be quashed under Section 482 CrPC. However, the same is not

the situation in the present case. There is no denial of the fact that though

900 bales of cotton was already dispatched, but 100 bales of cotton are

yet to be dispatched. The defence raised by the appellant  hereinabove

can  be  urged  and  proved  only  during  the  course  of  trial.  While

entertaining a petition under Section 482 CrPC, the materials furnished

by the defence cannot be looked into and the defence materials can be

entertained only at the time of trial. It is well settled position of law that

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when there are prima facie materials available, a petition for quashing

the criminal proceedings cannot be entertained. 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.

15.While considering the facts of the present case, we are of the considered

opinion that the present  case is  not one of those extreme cases where

criminal prosecution can be quashed by the court at the very threshold.

A defence case is pleaded but such defence is required to be considered

at a later stage and not at this stage.  The appellants would have ample

opportunity to raise all the issues urged in this appeal at an appropriate

later stage, where such pleas would be and could be properly analysed

and scrutinized.

16.In  view  of  the  aforesaid  position,  we  decline  to  interfere  with  the

criminal proceeding at this stage.  The appeal is consequently dismissed.

       ………………………..J.                      [S.B. Sinha]

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  ...………………………J.            [Dr. Mukundakam Sharma]

New Delhi, April 13, 2009

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