REPORTABLE

IN THE SUPREME COURT OF INDIA

CRIMINAL APPELLATE JURISDICTION

CRIMINAL APPEAL NO. 1578  OF 2008 (Arising out of SLP (Crl.) No.  1339 of 2007)

Sanghi Brothers (Indore) Pvt. Ltd. ..Appellant  

versus

Sanjay Choudhary and Ors. ..Respondents              

J U D G M E N T

Dr. ARIJIT PASAYAT, J.

1. Leave granted.

2. Challenge in this appeal is to the judgment of a learned Single

Judge of the Madhya Pradesh High Court, Indore Bench allowing the

Criminal Revision Petition filed by the respondents.  Challenge in the

Criminal Revision Petition was to the order dated 14.8.2006 passed by

learned Judicial Magistrate, First Class, Indore in  Criminal case

No.2114 of 2003.  By the said order charges were framed against the

respondents.   The  learned  Judicial  Magistrate  directed  framing  of

charge  for  offence  punishable  under  Sections  420,  406  read  with

Section 34 IPC.

3. Background facts as projected by appellant in a nutshell are as

follows:

The appellant-company is a registered company dealing with the

sale of auto vehicles at Indore and respondents are Directors of the

Chetak Construction Ltd. a registered company having its Head Office

at  Chetack  Chamber,  R.N.T.  Mark,  Indore  and  accused  No.3  is  the

Secretary of that company. In the year 1988-89 accused approached the

complainant  company  for  obtaining  lease  of  Tata  dumpers  and  light

commercial vehicles for a specific period on monthly lease rent basis.

Respondents assured complainant company that as per the agreement they

will pay monthly lease rent without any default and to support their

claim, they will also furnish back guarantee for due performance of

the condition of the contract. In view of that proposal, agreements

were  executed  between  the  parties  on  13.5.1988,  14.11.1988  and

25.3.1989 for delivery of 25 dumpers, 10 dumpers, 20 dumpers and 4

light commercial vehicles and accused persons took the delivery of the

aforesaid vehicles from the complainant and also agreed for payment of

the  monthly lease rent for 36 months. For the due performance of

agreement, necessary documents were executed by the accused persons in

favour of the complainant. After some time, complainant came to know

that accused No.4 was unable to pay him lease rent according to the

agreement.  Then  complainant  called  accused  No.1  and  2  to  execute

personal guarantee bonds in favour of the complainant and after some

persuasion, so called  personal guarantee bonds were executed by the

accused Nos. 1 and 2 in favour of the complainant for due performance

of the agreement on 6.12.1991.  They also gave collateral security in

favour of the complainant of a property belonging to M/s Choudhary

Builders  Private  Ltd.  and  also  produced  board  resolution  dated

6.2.1990 to the complainant. Complainant was unable to get any rent in

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time from the accused persons and also found that applicants/accused

in violation of the condition of the agreement have illegally sold

eight vehicles to other parties with ulterior motive, thus committing

criminal breach of trust also and had cheated the complainant. On

these allegations, complainant through its Manager filed a complaint

under Sections 420 and 406 IPC against the respondents. Before the

trial  Court,  learned  trial  Magistrate  after  taking  the  cognizance

against  the  accused  recorded  before  charge  evidence  and  on

consideration  of  before  charge  evidence  by  order  dated  14.8.2006

ordered for framing of the charge as noted above.  

The order framing of charge was questioned before the High Court

in the revision petition. After noticing the stands of the petitioners

before it and the respondent who is the present appellant, the High

Court noted as follows:

“All these cases are distinguishable with the facts of the present case. In the present case, applicants are not praying quashment of the proceedings under the provisions of Section  482  of  the  Criminal  Procedure  Code.  The applicants/accused came up before this Hon’ble Court against the order of framing of the charge and on the basis of the prima facie evidence recorded before charge  and is trying to assail the findings of the trial Court and submits that no charge under Section 420 and 406 IPC is clearly  made out against the applicants on the basis of evidence on record and  it  is  also  not  so  unimpeachable  that  if  it  is  not rebutted then a conviction can be based on it.”

The High Court was of the view that framing of charge was not

sustainable.

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4. In  support  of  the  appeal,  learned  counsel  for  the  appellant

submitted  that  the  conclusions  of  the  High  Court  are  clearly

indefensible. It is not a requirement of law that the offence is not

so unimpeachable and if it is not rebutted, conviction can be based on

it.  

5. Learned counsel for the respondents on the other hand submitted

that the background facts have been rightly taken note of by the High

Court to conclude that the framing of charge was not sustainable. It

was pointed out that there was no intention of committing the alleged

fraud as has been rightly held by the High Court. Part of the amount

has  been received and sale of vehicle was permitted and the bank

guarantee was also encashed. Even if it is conceded that there was

breach of contract at some point of time that was remedied because of

the  permission  to  sell  vehicles  and  by  encashment  of  the  bank

guarantee. The whole agreement was retrieved. In order to constitute

fraud there must be some mental evil design. There is no question of

any seminal intent as there was civil dispute and the same has been

taken note of by the High Court, more particularly, with reference to

the allegations.  

6. By way of reply learned counsel for the appellant submitted that

because of huge dues the appellant had the right of repossession which

could  have  been  exercised  w.e.f.  6.1.1990  and  on  8.2.1990  four

personal bank guarantees were given by the respondents. Since that was

not adequate, additional security was required and same was furnished

by offering property security which was not owned by the respondents.

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This could be known only after the letter of the bank was received.

The intention was very clear, because it was aimed at preventing the

appellant from exercising the right of re-possession. It is not a case

where the High Court conceded that there was no offence made out.

Charges were framed and therefore the High Court should not have by

the impugned order aborted the whole trial. The  High  Court  is  wrong

in stating that there was no allegation of any criminal intention at

the initial stage. It is pointed out that this aspect was explicitly

stated in the complaint.  

7. In  State of Maharashtra and Ors. V.  Som Nath Thapa and Ors.

(1996 (4) SCC 659) this Court observed as follows:

“Let  us  note  the  meaning  of  the  word  ‘presume’.  In Black’s Law Dictionary it has been defined to mean “to believe  or  accept  upon  probable  evidence”.  (emphasis ours). In Shorter Oxford English Dictionary it has been mentioned  that  in  law  ‘presume’  means  “to  take  as proved until evidence to the contrary is forthcoming”. Stroud’s Legal dictionary has quoted in this context a certain judgment according to which “A presumption is a probable consequence drawn from facts (either certain, or proved by direct testimony) as to the truth of a fact alleged”. (Emphasis supplied). In Law Lexicon by P Ramanath Aiyar the same quotation finds place at p. 1007 of 1987 Edn.

32. The  aforesaid  shows  that  if  on  the  basis  of materials  on  record,  a  court  could  come  to  the conclusion that commission of the offence is a probable consequence; a case for framing of charge exists. To put it differently, if the court were to think that the accused might have committed the offence it can frame the  charge,  though  for  conviction  the  conclusion  is required  to  be  that  the  accused  has  committed  the offence. It is apparent that at the stage of framing of a charge, probative value of the materials on record cannot be gone into; the materials brought on record by the  prosecution  has  to  be  accepted  as  true  at  that stage.”

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8. Sections  227,  239  and  245  deal  with  discharge  from  criminal

charge.  In State of Karnataka  v. L. Muniswamy (1977 (2) SCC 699) it

was noted that at the stage of framing the charge the court has to

apply its mind to the question whether or not there is any ground for

presuming the commission of offence by the accused. (Underlined for

emphasis). The Court has to see while considering the question of

framing the charge as to whether the material brought on record could

reasonably  connect  the  accused  with  the  trial.  Nothing  more  is

required to be inquired into. (See Stree Atyachar Virodhi Parishad v.

Dilip Nathumal Chordia (1989 (1) SCC 715) and State of West Bengal v.

Mohd. Khalid (1995 (1) SCC 684).  

9. In  R.S.  Nayak v.  A.R.  Antulay (1986  (2)  SCC  716)  this  Court

referred to Sections 227 and 228 so far as they are relatable to

trial. Sections 239 and 240 are relatable to trial of warrant cases

and 245(1) and (2) relatable to summons cases.     

10. After  analyzing  the  terminology  used  in  the  three  pairs  of

sections it was held that despite the differences there is no scope

for doubt that at the stage at which the court is required to consider

the question of framing of charge, the test of a prima facie case to

be applied.  

11. The present case is not one where the High Court ought to have

interfered with the order of framing the charge. As rightly submitted

by  learned  counsel  for  the  appellant,  even  if  there  is  a  strong

suspicion about the commission of offence and the involvement of the

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accused, it is sufficient for the court to frame a charge. At that

stage, there is no necessity of formulating the opinion about the

prospect of conviction. That being so, the impugned order of the High

Court cannot be sustained and is set aside.   The appeal is allowed.  

 ...............................J.      (Dr. ARIJIT PASAYAT)  

    ...............................J.           (Dr. MUKUNDAKAM SHARMA)

New Delhi  October 3, 2008

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