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Section 406,breach of trust and Quash under S.482


Crl. Rev. No. 20/02

G. Sree Kumar………..Petitioner
Sri Tushar Bhadra……… Respondent.

For the petitioner : Mr. P. Kataki, Advocate
For the respondents : None appears
Date of hearing : 25.3.11
Date of Judgment : 28.4.11

By this application under Section 482 of the Code of Criminal Procedure, 1973, for short, the Code, the petitioner, who was one amongst eight accused in CR Case No. 42/01 pending in the case of Judicial Magistrate, 1st Class, Dimapur, Nagaland, prays for quashing of the said proceeding in C.R. Case No. 42/01.

2. On the basis of the complaint filed by one Sri Tushar Bhadra, the learned trial court, being satisfied after perusal of the complaint petition and examination of the complainant, took cognizance under Section 406/420/34 IPC by an order dated 18.10.01. In the complaint, the complainant made M/s Leafin India Ltd., a non-Banking Finance Company incorporated on 27.3.86 and having 36 branches, as accused No.1, represented by the Managing
Director of the company. The accused No.1 is in the business of leasing and hire –purchase of consumer durables. The accused No.2 in the complaint was the Managing Director of the company. The accused Nos 3 to 7 were the directors and the present petitioner who was the financial controller of the company was arrayed as accused No.8. In the complaint petition, the complainant stated that accused No.1 through the other accused persons released attractive advertisements containing false and incorrect credit ratings during the period 1997 to 1999 to invite short term deposits from the public and in the process collected about Rs. 14 crores all over India, out of which, Rs. 4 crores were generated from the State of Nagaland. After collecting the deposits, the accused persons diverted the funds to benami companies such as Guruveyoor Holdings Ltd, M/s Athigiri Investment Pvt. Ltd and R.C. Holdings Ltd., all registered with the Registrar of Companies, Chennai, in which accused No.2 was the director and authorized signatory, and thereby, misappropriated the deposits. 7,22,174 shares were purchased in Guruveyoor Holdings Ltd. in the year 1997 and valuable properties were acquired in the first and ground floor of a flat measuring about 1790 sq. ft. in each floor at Secunderabad, which came to be sold by accused No.2 on 23.8.99 by under valuing them, for Rs. 11,70,000/- and Rs. 10,00,000/- to accused No.8 and his father, respectively. According to the complainant, the value of the properties transferred would be Rs. 60,00,000/-. It is further alleged that the accused No.1 circulated a fabricated Audit Report dated 1.10.98 and the accused had connived with each other in the aforementioned acts and therefore, the accused are liable to be punished under Section 406/420/34 IPC. Lastly, it is stated that the accused left abandoning their office without making re-payment of the sum of the depositors, including that of the complainant.

3. I have heard Mr. P. Kataki, learned counsel for the petitioner. None appears for the opposite party/complainant. The order dated 30.11.10 would indicate that while on that day, there was no representation on behalf of the petitioner, the learned counsel for the sole opposite party made a submission that he had instructions not to pursue this revision.

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4. Before proceeding further it would be relevant to state that this court by an order dated 18.1.02, while admitting the petition, had suspended the further proceeding of C.R. Case No. 42/01 under Section 406/426/34 IPC pending in the court of learned Judicial Magistrate, 1st Class, Dimapur. However, by an order dated 28.9.10, the interim order was vacated and the records of the trial court which was received by this court, was directed to be sent to the trial court so that the proceeding could continue in the trial court. Accordingly, records were sent back to the trial court vide memo No. 835 dated 4.10.10.

5. Mr. Kataki, learned counsel appearing for the petitioner has submitted that the petitioner being only a financial controller of the company, he has no role to play in the affairs of the company. According to him, in the complaint petition, there is no specific averment in respect of the participation by each of the accused person. It is also his contention that the complainant had not indicated the amount and the nature of investment made by him and the complainant only made omnibus and sweeping allegations. The learned counsel submits that in absence of any overt act attributed to the petitioner in respect of the allegation of criminal breach of trust as well as cheating, the learned trial court committed manifest illegality in taking cognizance of the offence under the aforesaid sections of law against the petitioner. According to him, the averments made in the complaint are totally indefinite in their nature and though expressions of cheating and criminal breach of trust had been freely used, yet there is no concrete allegations against the petitioner suggesting commission of any offence. He has emphatically urged that allegations made in the complaint taken at the face value does not make out any case against the petitioner and furthermore, the complaint does not disclose the essential ingredients of an offence which is alleged against him. In view of the aforesaid, he has pleaded that this court should exercise inherent powers under Section 482 of the Code and quash the complaint so far as it relates to the petitioner. In order to strengthen his argument, the learned counsel has placed reliance on two decisions of the Apex Court-one, in the case of M.N. Ojha & Ors. –Vs- Alok Kumar Srivastava & anr, reported in (209) 9 SCC 682 and the other, in the case of Shakson Belthissor –Vs- State of Kerala & anr., reported in (2009) 14 SCC 466, wherein the principles relating to exercise of jurisdiction to quash complaints under Section 482 of the Code, have been stated. It is further submitted by him that the complaint does not disclose
that any criminal act was done in furtherance of any common intention. The learned counsel drew my attention to a letter dated 18.3.2000(Annexure-5) to the revision petition issued by the father of the petitioner to the Commissioner of Police, Hyderabad, on the subject of non-payment of matured deposits by M/s Leafin India Ltd, requesting registration of a case under Sections 406 and 420 IPC. From the aforesaid letter, the counsel for the petitioner wanted to show that even the petitioner was not made payment of the matured amount by the company.

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6. The principles relating to exercise of jurisdiction under Section 482 of the Code to quash complaints and criminal proceedings have been stated and re-iterated by the Apex Court in large number of cases including in M.N. Ojha (Supra) and Shakson Belthissor (Supra). The broad principles which emerges are : (a) 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 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. (b) 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. (c) 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.
(d) The complainant 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. (e ) 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. (f) For the said purpose the Court, save and except in very exceptional circumstances, would not look to any document relied upon by the defence. (g) Where there is an express legal bar engrafted in any of the provisions of the Code or the Act concerned (under which a criminal proceeding is instituted) to the institution and continuance of the proceedings and/or where there is a specific provision in the Code or the Act concerned, providing efficacious redress for the grievance of the aggrieved party.

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7. These principles, though illustrative, provide sufficient guidelines in exercise of power under Section 482 of the Code while considering each case on its merits.

8. A perusal of the complaint would indicate that the complainant does not state a primary fact, given the circumstances of the case, which is, when and what amount he had deposited. There is also no mention about when the amount had matured and when the amount was refused to be paid. There is also no averment in the complaint petition suggesting that the
petitioner is also involved in the decision making process of opening and closing of a branch. The complaint is also silent with regard to participation of the petitioner so as to attract the provision of Section 34 IPC.

9. The allegations of diversion of fund is also lacking in material particulars. Purchase of shares of another registered company by a company, per se, cannot be said to give rise to an offence punishable under the law. Similarly, sale and purchase of property by and between accused No.2 and the petitioner, do not constitute ingredients of Section 406/420 IPC as far as the complainant is concerned.

10. It is also to be noted that the Audit Report dated 1.10.98, which is alleged to be a fabricated document, is circulated by the accused No.1, who is represented by the Managing Director of the company. No overt act is attributed to the petitioner either in preparation or in circulation of the aforesaid Audit Report. Similar is the position with regard to not making re-payment of the sum of the depositors. There is no allegation in the complaint petition that the petitioner is also responsible for management and conduct of the operation of the company to make out a case against him.

11. Thus, reading the complaint as a whole, it is clear that the complaint petition does not make out a case under Section 406/420/34 IPC against the petitioner and as such permitting the continuance of the proceeding against the petitioner will not be in the interest of justice.

12. The petitioner, though had prayed for quashing of the proceedings in CR Case No. 42 of 2001 pending in the court of Judicial Magistrate, First Class, Dimapur, the learned Counsel for the petitioner, during the course of his submissions, has limited his prayer to the petitioner only. The other accused persons are also not before this Court challenging the proceedings. This court has examined the allegations made in the complaint vis-à-vis the petitioner and as such the question of quashing of the complaint as a whole cannot and does not arise. However, for the reasons hereinbefore mentioned, the CR Case No. 42/01 pending in the Court of Judicial Magistrate, First Class, Dimapur shall not be proceeded with against the petitioner. So far as the petitioner is concerned, CR Case No. 42/01 shall be deemed to have been quashed. With regard to the other accused persons, the learned trial court is to proceed in accordance with law. 13. In the result, the revision is allowed to the extent indicated above.


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