SC and HC Judgments Online at MyNation

Judgments of Supreme Court of India and High Courts

Dr. (Mrs.) Andal Arumugam & Ors vs The State Of Bihar Through The … on 23 August, 2018

IN THE HIGH COURT OF JUDICATURE AT PATNA

Criminal Writ Jurisdiction Case No.449 of 2016
Arising Out of PS.Case No. -263 Year- 2014 Thana -Sri Krishnapuri District- PATNA

1. Dr. Andal Arumugam, Wife of Dr. S Arumugam, Managing Director, R.K.M
Powergen Pvt. Ltd null

2. T.M Singaravel Son of T. Muthurangam, Director, M/s R.K.M. Powergen Pvt.
Ltd.

3. Mr. R. Saravanan S/o Mr. Radhakrishan Chief General Manager, R.K.M Power
Pvt. Ltd

4. J. Mohan Son of Mr. Jegadtheesan General Manager, R.K. M Powergen Pvt.
Ltd. All having office at 14, Dr. Giriappa Road, T. Nagar, P.S. Teynampur,
Chennai 600 017

…. …. Petitioner/s
Versus

1. The State of Bihar through the Director General of Police, Bihar, Patna

2. The Director General of Police, Bihar, Patna

3. Inspector General of Police, Patna

4. The Deputy Inspector General of Police, Patna

5. The Senior Superintendent of Police, Patna

6. The Deputy Superintendent of Police, Sachivalaya, Patna

7. The Officer – in – Charge, Sri Krishnapuri Police Station, Patna

8. Investigating Officer, Sri Krishnapuri Police Station, Patna

9. Mr. Shailendra Pratap Son of Late Sita Ram Lal, Director, Om Astha
Construction Pvt. Ltd., Flat No. 301, Majestik Vishnu, North S.K. Puri, P.S. S.K.
Puri, District – Patna

…. …. Respondent/s
with

Criminal Writ Jurisdiction Case No. 470 of 2016
Arising Out of PS.Case No. -263 Year- 2014 Thana -Sri Krishnapuri District- PATNA

1. K.M. NATARAJ @ K.M. NATRAJAN, Son of K. Umabathi, Deputy General
Manager (Civil), M/s Axon Construction Pvt. Ltd.

2. V.V. Ram, Son of V.B. Venkataraghavan, Authorized Signatory, M/s Axon
Construction Pvt. Ltd. Both having office at First Floor, Western Wing, 14, Dr.
Giriappa Road, T. Nagar, P.S.- Teynampet, Chennai- 600 017

…. …. Petitioner/s
Versus

1. The State of Bihar through the Director General of Police, Bihar, Patna

2. The Director General of Police, Bihar, Patna

3. Inspector General of Police, Patna

4. The Deputy Inspector General of Police, Patna

5. The Senior Superintendent of Police, Patna

6. The Deputy Superintendent of Police, Sachivalya, Patna

7. The Officer- in-Charge, Sri Krishnapuri Police Station, Patna
Patna High Court Cr. WJC No.449 of 2016 dt.23-08-2018 2

8. Investigating Officer, Sri Krishnapuri Police Station, Patna

9. Mr. Shailendra Pratap, son of Late Sita Ram Lal, Director, Om Astha
Construction Pvt. Ltd., Flat No. 301, Majestik Vishnu, North S.K. Puri, P.S. S.K.
Puri, District- Patna

…. …. Respondent/s

Appearance :

(In Cr. WJC No.449 of 2016)
For the Petitioner/s : Mr. Sandeep Kumar, Adv.

Mr. Rabindra Kumar, Adv.

Mr. Rohit Raj, Adv.

For the State : Mr. Mrigendra Kumar, AC to GA-4
For the Respondent no.9: Mr. Ramakant Sharma, Sr.Adv.

Mr. Sheo Narayan Singh, Adv.

(In Cr. WJC No.470 of 2016)
For the Petitioner/s : Mr. Sandeep Kumar, Adv.

Mr. Rabindra Kumar, Adv.

Mr. Rohit Raj, Adv.

For the State : Mr. Manish Kumar, AC to AAG-6
For the Respondent no.9 : Mr. Ramakant Sharma, Sr.Adv.

Mr. Sheo Narayan Singh, Adv.

CORAM: HONOURABLE MR. JUSTICE RAJEEV RANJAN PRASAD
ORAL JUDGMENT
Date: 23-08-2018

Heard learned counsel for the petitioners, learned

senior counsel representing the respondent no.9 as well as learned

counsel for the State.

2. Since both the writ applications are arising out of the

same First Information Report (in short „F.I.R.‟) giving rise to Sri

Krishnapuri P.S. Case No.263 of 2014 registered for the offence

alleged under Sections 406 and 420 of the Indian Penal Code ( in
Patna High Court Cr. WJC No.449 of 2016 dt.23-08-2018 3

short „I.P.C.‟), with the consent of the parties both the matters have

been clubbed together and are being disposed off by this common

judgment and order.

3. Petitioners in both the cases have prayed for

quashing of the F.I.R. on the ground that a bare reading of the F.I.R.

without adding or subtracting anything out of it would show that no

case at all is made out for the offences alleged against the petitioners

and a purely civil and commercial dispute has been converted in a

criminal proceeding only to get rid of the liability arising out of the

breach of terms and conditions of the works contract. It is also one of

the grounds pleaded on behalf of the petitioners that it is a malafide

prosecution of the petitioners who are all working in managerial

capacity in the company which had awarded the works contract to a

sub-contractor and the respondent no.9 had obtained a part of the

works contract as a petty contractor.

4. Before this Court would proceed to consider the

submissions advanced on behalf of the petitioners, it would be

necessary to take note of the allegations for which the F.I.R. has been

lodged.

Allegations in the F.I.R.

5. The respondent no.9 is a Director of one Om Astha

Construction Pvt. Ltd. (referred to as the company of the Informant)
Patna High Court Cr. WJC No.449 of 2016 dt.23-08-2018 4

having its office at Plot No.301, Majestik Vishnu, North S.K. Puri,

P.S.-S.K. Puri, District-Patna. He submitted a written complaint to the

Officer In-charge, S.K. Puri Police Station, Patna on 24.07.2014. In

his written complaint, the respondent no.9 wrote as under:-

“To
The Officer In-Charge
Sri Krishnapuri Police Station, Patna
Subject:- Complaint to lodge First Information
Report against accused:- (i) Dr. Andal Arumugam,
Managing Director, Axon Construction Pvt. Ltd.
M.D. R.K.M. Powergen Pvt. Ltd. having office at First
Floor, Western Wing, 14, Dr. Giriappa-Road,
T.Nagar, Chenai-600017, (Tamil-Nadu), (ii) Mr. S.
Subburaj, D.G.M. (Civil), Axon Construction Pvt. Ltd.
1st Floor, Western Wing, 14, Dr. Giriappa Road, T.
Nagar, Chenai-600017, (iii). V.V. Ram (Authorized
signatory) AGM (Civil), Axon Construction Pvt. Ltd.

1st Floor, Western Wingh, 14, Dr. Giriappa Road,
T.Nagar, Chenai-600017, (iv). Mr. Singravel
Director, Axon Construction Pvt. Ltd. 1st Floor,
Wester Wing 14, Dr. Giriappa Road, T.Nagar,
Chenai-600017, (Tamilnadu), (v). Mr. J. Mohan,
Director Axon Construction Pvt. Ltd. First Floor,
Western Wing, 14, Dr. Giriappa Road, T.Nagar,
Chenai-600017, (Tamil-Nadu), (vi). Mr. V. Nand
Gopal, Executive Director (Finance), Axon
construction Pvt. Ltd at First Floor, Western Wingh,
14, Dr. Giriappa Road, T. Nagar Chenai-600017
Patna High Court Cr. WJC No.449 of 2016 dt.23-08-2018 5

(vii). Mr. Sarvanan Chief General Managar (Civil)
R.K.M. Powergen Pvt. Ltd, at-1st Floor, Western
Wingh, 14, Dr. Giriappa Road, T. Nagar, Chenai-
600017, (Tamil Nadu). (Viii). Mr. K.M. Natrajan, S/o
K.M. Umapathi, R/o Mohalla-Linghyadhi, Sipat Road,
Phase-II, Bilaspur, P.S. District-Bilaspur,
(Chhattisgarh) DGM (Civil) Axon Construction Pvt.
Ltd. 1 st Floor, Western Wingh 14, Dr. Giriappa Road,
T. Nagar, Chenai-600017 (Tamilnadu).

FOR COMMITTING CRIMINAL OFFENCES
OF BREACH OF TRUST AND CHEATING
SIR,
I Shailendra Pratap s/o late Sita Ram La, Director,
OM ASTHA CONSTRUCTION PVT. LTD. and is a
registered contractor at-301, Mazestic Vishu, North
Sri Krishna Puri, Boring Road Patna, P.S.-SRI
KRISHNA PURI Patna, District-Patna, State as
follows:-

(i). That I am carrying on my contract-work within
out side Bihar all over India one of my work-site
is at-village-unchhpinda, P.S.-Kharasiya, District-
Jajgir-champa, chatisgarh.

(ii). That accusedno-1 2 entered into sub-contract
agreement at my office at Patna with complainant for
construction work for the Packages got four work
order by accused no-1(a)WONO-AXON/WO/85/2011-
2012on 02.03.2012(b) Letter of Intent on-16.4.2012

(c) WONO-AXON/WO/017/2012-13 on dated-

10.5.2012 (d) WONOAXON/WO/026/(c) WONO-

Patna High Court Cr. WJC No.449 of 2016 dt.23-08-2018 6

AXON/WO/017/2012-2013 on dated-10.5.2012 (d)
WONOAXON/WO/026/2012-2013 on dated-

29.5.2012 thereafter the complainant started
construction work.

(iii). That after getting work-order, complainant
requested accusedno-1 for mobilization advance for
Rs.35,00,000/- Rs.1,00,00,000/-Rs.1,35,00,000/-
(Rs. One crore Thirty Fives lacs) thereafter
accusedno-1 requested complainant to deposit
Advance Bank Guarantees for Rs. 1,35,00,000/-as
security with the accusedno-1 from Patna then only
interest free said mobilization advance would be
released to the complainant.

(iv). That the complainant deposited with the
accusedno-1 Advance Bank Guarantees (i) vide BG
No-19/2012 for Rs.35,00,000/-(Rs. Thirty fives lacs)
issued on 19.03.2012 valid for the period 19.03.2012
to 18.03.2013 (ii)BG No-25/2012 for Rs.

1,00,00,000/-(Rs. One crore) issued on 30.05.2012
valid for the period 30.05.2012 to 29.05.2013 Bank
Guarantees have been issued by CANARA BANK,
Patna Main Branch, PATNA, Bihar.

(v) That when complainant deposited Advance Bank
Guarantees for (i). Rs.35,00,000/- + (ii) Rs.1,00,000/-
as security with accused no.1, thereafter the accused
no.-1 issued mobilization-advance for
Rs.1,35,00,000/- to the complainant as per terms of
work order the entire amount of aforesaid
mobilization advance for Rs.1,35,00,000/- have been
Patna High Court Cr. WJC No.449 of 2016 dt.23-08-2018 7

recovered from Running Account Bills of the
complainant by accused no.1.

(vi). That as soon as accused no-1 recovered entire
mobilization advance from the Running Account Bills
of complainant thereafter soon accusedno.-1 had to
refund the bank Guarantees to complainant but in
spite of several request made by complainant
accusedno-1 in place of refunding the same to
complainant, invoked the same illegally.

(vii). That on dated 28.10.2013 illegally accusedno.-
3 suddenly invoked both aforesaid Bank Guarantees
for Rs.35,00,000/- Rs.1,00,00,000/- without giving
any prior notice to complainant with malafide
intention arbitrarily presented both Bank
Guarantees in bank requested Bank for their
encashment in favor of accusedno-1 and then bank
informed on dated-01.11.2013 to the complainant
requesting complainant to deposit Rs.1,35,00,000/-in
the bank within 12 hours. Under the circumstances,
the condition of complainant became very critical
alarming and complainant surprised on illegally
invoking of both bank guarantees by the accusedno-3
which amounts to fraudulently cheating the
complainant his company with dishonest intention
by the accusedno-3.

(viii). That complainant filed Title SuitNo-789/2013
and Hon’ble court of subjudge-6, Patna heard
passed order on 4.01.2014 directing all accused
persons including Canara Bank Patna Main Branch
Patna High Court Cr. WJC No.449 of 2016 dt.23-08-2018 8

to maintain status quo of the Bank Guarantees till
final hearing.

(ix). That accusedno-1 violating said status quo
order of the Hon’le court invoked the BG No-25/2012
for Rs. One crore on 10.5.2014 tried to encase it in
bank illegally.

(x). That complainant trusted upon accused but
accused in lieu of refunding Bank Guarantees to
complainant, invoked the same repeatedly illegally,
fraudulently dishonestly so they have committed
offences of Breach of Trust Cheating.

(xi). That all accused have threatened charged me
illegally to face dare consequences if I would demand
refund of the aforesaid Bank Guarantees with sole
dishonest intention to digest bank guarantees amount
Rs. 1,35,00,000/-by cheating me.

(xii). That all accused have defaced Valuable
security-the Bank Guarantees for their illegal gain
thus accusedno-1to 8 have committed offences of
Breach of Trust, Cheating and they have defaced
Valuable security-the Bank Guarantees.

(xiii). That accused have committed criminal
offences punishable U/S 406 IPC, 420 IPC 477
IPC so all accused are liable to be prosecuted U/S
406 IPC, 420 IPC477 IPC.

(xiv). That from facts stated above it has been
proved that all accused with a view to cheat
complainant invoked bank guarantees illegally in
place of refunding same.

Patna High Court Cr. WJC No.449 of 2016 dt.23-08-2018 9

(xv). That all accused have criminal antecedents
are indulged in antinational activities.

(xvi). That all accused persons are always indulged
associated with antisocial bad and goondas
elements of the locality, society and the country.
You are therefore requested to lodge FIR institute
criminal case against all accused personsno-1to 8 of
the offences punishable under section 406 IPC, 420
IPC and 477 of the Indian Panal Code arrest them
soon and take proper stern action against all accused
persons put them behind the bar and oblige.

Thanking You. Yours faithfully
(Shailendra Pratap)
Director”

Submissions on behalf of the Petitioners

6. While addressing this Court on behalf of the

petitioners, learned counsel submits that the facts disclosed in the

written complaint clearly demonstrate that the respondent no.9 was

working as a sub-contractor of M/S Axon Construction Pvt. Ltd. and

for that purpose he had entered into an agreement for construction

work. The company of which the respondent no.9 is a Director had

got four works order and he had admittedly received mobilization

advance amount of Rs.1,35,00,000/- against the bank guarantees as

security. The mobilization advance was provided interest free and the

respondent no.9 having signed the works contract, upon getting the
Patna High Court Cr. WJC No.449 of 2016 dt.23-08-2018 10

works order had submitted the bank guarantees in terms of the

contract. It is the claim of the respondent no.9 that the entire amount

of the mobilization advance had been recovered from the running

account bills of the complainant by accused no.1 and, therefore,

according to the informant the accused no.1 had to return the bank

guarantees to the complainant/informant but in spite of several

requests made by the informant, the accused no.1, in place of

returning the same to the informant invoked the bank guarantees. The

informant has termed this invocation of bank guarantee as illegal as

according to him it was invoked without giving him any prior notice

and this according to him amounts to fraudulent cheating of the

complainant and his company.

7. Learned counsel submits that the action of the

accused no.1 in the matter of invocation of bank guarantee has been

termed as illegal and fraudulent only ornamentally to bring this case

within the ambit of a criminal offence which may be clearly found

from the narration of the allegations in the written complaint itself. It

is submitted that the allegation of fraudulent invocation of the bank

guarantee is based on the claim of the petitioner that the entire

mobilization advance were recovered from the running account bills

of the complainant/informant, however these are the matters of

dispute arising out of a purely civil and commercial transaction under
Patna High Court Cr. WJC No.449 of 2016 dt.23-08-2018 11

a works contract and only by saying that the entire amount of

mobilization advance was recovered from the running account bills of

the complainant and, therefore, steps taken by accused no.1 to invoke

the bank guarantee was illegal and fraudulent, the respondent no.9

cannot be allowed to give this purely commercial dispute a colour of

criminal proceeding.

8. It is further submitted that the written complaint

itself mentions about the filing of a Title Suit No.789 of 2013 i.e.

much before the lodging of the present F.I.R. It is the allegation of the

respondent no.9 that on 04.01.2014 the learned Sub-Judge-VI, Patna

heard and passed order directing all the respondents including Canara

Bank Patna Main Branch to maintain „status quo‟ of the bank

guarantees till final hearing, but the accused no.1 violating the status

quo order of the learned court invoked the bank guarantee no.25/2012

for rupees one crore on 10.05.2014 and tried to encash it in bank

illegally. It is therefore reiterated by the informant in the written

complaint that the accused in lieu of returning the bank guarantees to

the petitioners invoked the same repeatedly illegally and fraudulently

and, therefore, they have committed offence of breach of trust and

cheating.

9. Learned counsel has submitted that after issuance of

the work order the informant was not carrying on the work as per the
Patna High Court Cr. WJC No.449 of 2016 dt.23-08-2018 12

work schedule. During inspection of site it was found that the work

was lagging behind schedule at all stages of construction, therefore

the informant was cautioned by M/s Axon Construction Pvt. Ltd. and

it was pointed out to the informant that the work is not being done as

per the work schedule. The company of respondent no.9 responded

vide letter dated 21.03.2013 wherein it was agreed that the progress of

the work was not going as per the schedule given due to labour

scarcity but a promise was made by the company of respondent no.9

that it will increase the labour strength and shall catch the schedule in

order to do the work as per the programme.

10. A copy of the letter dated 21.03.2013 written by

one M.N. Singh for and on behalf of the company of respondent no.9

has been enclosed as Annexure-2 to the writ application. It is

submitted that when the informant failed to complete the work as per

the assurance and thereafter suddenly stopped its construction work

without there being any pending dispute, the accused tried to contact

the respondent no.9 but the calls of M/s Axon Construction Pvt. Ltd.

were not attended by respondent no.9, instead, the respondent no.9

filed a Title Suit No.789 of 2013 seeking declaration and mandatory

perpetual injunction declaring that the plaintiff has the absolute right

and title over the two bank guarantees bearing no.(i) BG 19/2012 for

Rs.35,00,000/- and (ii) BG 25/2012 for Rs.1,00,00,000/- and the same
Patna High Court Cr. WJC No.449 of 2016 dt.23-08-2018 13

be returned to the plaintiff and a further prayer was made to restrain

the M/s Axon Construction Pvt. Ltd. and others from invoking the

bank guarantees till the pendency of the suit.

11. It is submitted that the order dated 04.01.2014

passed by the learned Civil Judge, Patna was passed ignoring the fact

that there is an arbitration agreement between the parties which was

not brought to the notice of the leaned Sub-Judge by the informant.

The order of „status quo‟ passed by the learned Sub-Judge was

challenged in this Hon‟ble Court vide CWJC No.10572 of 2015 which

was heard and dismissed vide order dated 08.12.2015 but when the

matter went to the Hon‟ble Supreme Court in S.L.P. (C) No.5430 of

2016, the Hon‟ble Supreme Court vide its order dated 29.02.2016

disposed off the S.L.P. with a direction to the learned Sub-Judge-VI,

Patna to dispose off the petition filed on behalf of the defendants

under Section 8 of the Arbitration and Conciliation Act within a

period of six weeks from the date of production/receipt of the copy of

the order.

12. Learned counsel has relied upon the judgments of

the Hon‟ble Supreme Court in the case of M/S Indian Oil

Corporation Vs. NEPC India Ltd. and others reported in AIR

2006 SC 2780 to submit that there is a tendency to convert purely

civil dispute into criminal cases and such tendency should be
Patna High Court Cr. WJC No.449 of 2016 dt.23-08-2018 14

deprecated. Further relying upon the judgment in the case of Hridaya

Ranjan Prasad Verma Vs. State of Bihar reported in 2000 Cri. LJ

2983 (para 6) learned counsel submits that it has been held by the

Hon‟ble Apex Court that “To hold a person guilty of cheating, it is

necessary to show he had fraudulent or dishonest intention at the time

of making the promise. From his mere failure to keep a promise

subsequently, such a culpable intention right at the beginning i.e.

when he made the promise cannot be presumed.”

13. Further reliance has been placed on the judgment

of the Hon‟ble Apex Court in the case of Hotline Teletubes and

Component Ltd. Vs. State of Bihar reported in 2005 SCC (Cr,)

1515 to submit that in the offences of criminal breach of trust and

cheating, it is essential requirement is that since the very inception of

contract between the parties, there must be an intention to cheat. The

Hon‟ble Apex Court has held where the case appears to be a purely of

civil nature and no criminal offence is disclosed the prosecution being

gross abuse of process of law is liable to be quashed. Learned counsel

has relied upon the judgments of the Hon‟ble Supreme Court in the

case of Anil Mahajan Vs. Bhor Industries reported in 2006 1 SCC

(Cr.). 746 and in the case of State of Haryana and Ors. Vs. Bhajan

Lal and others reported in 1992 Suppl. 1 SCC 335 wherein the

Hon‟ble Apex Court has laid down principles on which the Court can
Patna High Court Cr. WJC No.449 of 2016 dt.23-08-2018 15

quash the criminal proceeding. Relevant paragraph 102 has been

referred to in course of hearing. Lastly learned counsel has relied upon

the judgments of the Hon‟ble Apex Court in the case of Inder Mohan

Goswami Anr. Vs. State of Uttaranchal Ors. reported in

(2007) 12 SCC 1 and in the case of Prashant Bharti Vs. State of

NCT of Delhi reported in (2013) 9 SCC 293.

14. It is also submitted that the F.I.R. was lodged

maliciously by the informant just to escape from his liability which he

owes towards M/S Axon Construction Pvt. Ltd. It is submitted that the

disputes between the parties were subject to an on-going Arbitration

Proceeding when the F.I.R. was lodged without disclosing the fact

that an arbitration proceeding had already begun by that time. The

petitioners also submit that they are not even remotely connected with

M/S Axon Construction Pvt. Ltd. It is submitted that though the F.I.R.

was lodged in the year 2014, but the petitioners have no knowledge

about such lodgment of F.I.R. as they all reside in Chennai. It is only

recently when the petitioners were taken by surprise finding that some

police personnel had approached them for their arrest then they came

to know about the present case. It is also submitted that the even

though the F.I.R. was lodged in the year 2014, till date no charge-

sheet has been filed.

15. Learned counsel for the petitioners has also pointed
Patna High Court Cr. WJC No.449 of 2016 dt.23-08-2018 16

out from the records of Cr.W.J.C. No.470 of 2016 that through

supplementary affidavit filed on behalf of the petitioner it has been

brought on record that dispute between the parties was referred to the

sole Arbitrator namely Hon‟ble Justice P. Shanmugam, a retired Judge

of Madras High Court and the Arbitrator had decided the said issue

between the parties and awarded a sum of Rs.3,14,89,868/- along with

cost of Rs.4,87,683/- in favour of the petitioners and against the

informant.

16. Referring to the judgment of this Hon‟ble Court in

CWJC No.2027 of 2011 (M/s Reliance Industries Ltd. Vs. Nilu Rai)

learned counsel submits that in the said case this Court has held that if

Arbitration Clause is there in the agreement and the dispute can be

resolved through the mode of Arbitration and in case of petition under

Section 8 of the Arbitration and Conciliation Act, 1996 is filed, it

would be only the arbitration proceeding which would be

maintainable. A complete copy of the award dated 07.09.2016 passed

by the Hon‟ble Mr. Justice (Retd.) P. Shanmugam has been brought

on record.

17. From the materials available on the record

particularly a copy of the order dated 19.10.2016 passed in Civil

Miscellaneous Jurisdiction Case No.1156 of 2016 by the learned

Single Judge of this Court which is attached as Annexure-C to the
Patna High Court Cr. WJC No.449 of 2016 dt.23-08-2018 17

counter affidavit of respondent no.9 in Cr.WJC No.470 of 2016 it has

been pointed out that after disposal of S.L.P by the Hon‟ble Supreme

Court, the learned Sub-Judge, Patna passed an order dated 04.06.2016

directing the company of the informant to appear before the Arbitrator

at Chennai, but the said order was challenged before this Court in the

aforesaid Civil Miscellaneous Jurisdiction Case No.1156 of 2016

which was heard on 19.10.2016 and on that day while issuing notice

to respondent nos.1 to 9 the operation of the order dated 04.06.2016

was stayed. It is submitted that the materials available on the record

shows that even before 19.10.2016, the learned Arbitrator had already

disposed of the arbitration case taking note of the non-appearance of

the company of the informant despite opportunities granted to them to

appear and contest the arbitration proceeding. The award of the

learned Arbitrator also shows that due to failure of the company of the

informant to complete the work new contractors were engaged on

14.06.2013, subsequently the company of the informant had filed two

civil suits namely Title Suit No.789 of 2013 and Money Suit No.1171

of 2014 in February, 2014. In those two suits the company of these

petitioners had filed an application under Section 8 of the Arbitration

and Conciliation Act, 1996 on 07.03.2014 and since there was no

interim order against arbitration proceeding, by invoking clause 28 of

the agreement, the matter was referred by the claimant to the
Patna High Court Cr. WJC No.449 of 2016 dt.23-08-2018 18

Arbitrator. The arbitration had commenced with notice to the parties

dated 24.03.2014.

Submissions of the Informant

18. By filing a response the respondent no.9 has

contested the present writ application. Learned senior counsel

representing the respondent no.9 submits that the M/S Axon

Construction Pvt. Ltd. and M/s R.K.M. Powergen Ltd. both are sister

concern and so far as allegations contained in the F.I.R. are concerned

same have been found true in course of investigation. In paragraph 4

of the counter affidavit filed on behalf of the respondent no.9 it is

stated that presently Sri Kameshwar Sharma, Sub-Inspector Of police

has been investigating the case. However, it is also stated that the

Deputy Superintendent of Police has supervised the case and it has

been found true and the same has been confirmed by the S.P., City,

Patna. In course of argument, however it has been informed to this

Court that the investigation of the case is still going on.

Stand of respondent nos.1 to 5

19. A counter affidavit has also been filed on behalf of

the respondent nos.1 to 5 in which it is stated that after lodging of the

F.I.R. matter was handed over to the named A.S.I., but after their

transfer Sri Kameshwar Sharma was deputed for investigation of the

case and he is the present investigating officer (I.O.). He had received
Patna High Court Cr. WJC No.449 of 2016 dt.23-08-2018 19

warrant of arrest against all the accused persons and had gone to

Chennai to execute warrant of arrest where he had arrested the

accused no. 1 in her office with the help of local police of Teynampet

P.S. Chennai, but she was released by the police inspector of the local

police station. In paragraph 11 of the counter affidavit it is stated that

the police is taking steps to conclude the investigation of the case

within a reasonable time.

CONSIDERATION

20. Having heard learned counsel for the parties and on

perusal of the records, this Court finds that the entire written

complaint giving rise to the present F.I.R. only shows that according

to the informant he was carrying the contract work for which accused

no.1 and 2 had entered into sub-contract agreement for construction

work for the packages, four work orders were issued which are duly

referred in the written complaint and what is apparent from the

uncontroverted materials available on the record is that when the

company of the informant was not able to match the construction

work with the work schedule, M/S Axon Construction Pvt. Ltd. was

pursuing with the company of the informant to complete the work.

Annexure-„2‟ is a document which has been enclosed with the writ

application and has not been controverted by the respondent no.9,

therefore the contents of Annexure-„2‟ which is a letter written by and
Patna High Court Cr. WJC No.449 of 2016 dt.23-08-2018 20

on behalf of the company of the informant are noted herein for a ready

reference:-

” To
The Deputy General Manager (e)
ACPL Uchpinda.

Sir,
As per present condition we agree that the progress
of CWPH-I is not going as per schedule given due to labour scarcity
in Holi Festival. Further I promise you that we will increase the
labour strength to 150 (minimum) to catch the schedule and do the
work within promished time. We will try to prepond the target date to
30th April as per your programme. Once again assure your office that
we will complete all CWPH civil work with all specification as per
drawing within May 5 th 2013.

Thanking you Yours Faithfully
(M.N. Singh)
Sir,
As per above statement by Mr. M.N.

Singh, it is understood that he given promise by this
company that he will finish the complete work of CW
Pump House by target deadline date of May 5 th-
2013″.

21. This is the beginning of the dispute between the

parties. The Company of the informant was allegedly not able to

complete the work, dispute seems to have arisen and the company of

the informant filed Title Suit bearing No.789 of 2013. The following

reliefs were prayed in the title suit:-

Patna High Court Cr. WJC No.449 of 2016 dt.23-08-2018 21

“(a) A decree and order may kindly be passed
in favour of the plaintiff declaring that the
plaintiff has absolute right and good title on the
Bank Guarantees details furnished in schedule-
1(i) (ii) of this plaint.

(b). An order may kindly be passed directing
the defendants No-1 to 7 to refund or to close the
Bank Guarantees, release and return back the
Bank Guarantees to the plaintiff the details
furnished in schedule-1 (i) (ii) at the foot of this
plaint.

(c). That pending the hearing and final
disposal of the suit, defendants no-1 to 7 and their
servants agents may be restrained by an order
of injunction of this Hon’ble Court from dealing
with and invoking Bank Guarantees details
furnished in schedule -1 (i) (ii) of this suit and
further defendant no.-10/bank be restrained by an
order injunction from honoring the illegal
invocation of the aforesaid Bank Guarantees in
case /if it is invoked by the defendants no 1 to 7
illegally till the pendency of this suit here.

(d). Such other relief/reliefs may be granted to
the plaintiff as the nature and circumstances of
the case may require and as this Hon’ble court
may deem fit and proper in the ends of justice.

(e). Attachment before judgment.

(f). Receiver may be appointed.”

Patna High Court Cr. WJC No.449 of 2016 dt.23-08-2018 22

22. It is also an admitted position that interim order of

status quo was passed on 04.01.2014 which was challenged up to the

Hon‟ble Apex Court wherein taking note of the submissions made on

behalf of the present petitioners Hon‟ble Apex Court directed the

learned Sub-Judge-VI, Patna to decide the application made under

Section 8 of the Arbitration Act in T.S.No.789 of 2013 and the

injunction application on their respective merit in accordance with law

after affording an opportunity to the parties preferably within six

weeks from the date of production of the order.

23. During this period, the company of these

petitioners had invoked clause 28 of the agreement and Hon‟ble

Justice P. Shanmugam (Retd.) of the Madras High Court had

proceeded with the arbitration matter, notice was issued to the

company of the informant, but the company of the informant wrote to

the learned Arbitrator not to proceed with the arbitration matter, this

Court finds that there was no order of restraint by any court of

competent jurisdiction against initiation of Arbitration Proceeding.

The learned Arbitrator took note of the fact that even after receipt of

notice instead of putting appearance the informant had been asking the

learned Arbitrator not to proceed with the matter. As the arbitration

proceeding continued after considering Section 8 application under

Arbitration and Conciliation Act, 1996, even the learned Sub-Judge-
Patna High Court Cr. WJC No.449 of 2016 dt.23-08-2018 23

VI, Patna passed an order directing the company of the informant to

participate in the on-going arbitration proceeding. Once the learned

Sub-Judge passed the order dated 04.06.2016 under Section 8 of the

Arbitration and Conciliation Act, 1996, the company of the informant

was obliged to participate in the arbitration proceeding, but instead of

participating in the arbitration proceeding the informant allowed the

arbitration to proceed and final award to be passed on 07.09.2016.

Ultimately when Civil Miscellaneous Case No.1156 of 2016 filed by

the company of the informant challenging the order dated 04.06.2016

was taken up for final disposal, the learned co-ordinate Bench of this

Court dismissed the same with a cost of Rs.20,000/- to be paid by the

company of the informant to M/S Axon Construction Pvt. Ltd. On the

conduct of the company of the informant, the learned co-ordinate

Bench in paragraph 28 of the judgment dated 21.06.2018 (wrongly

shown as 20.06.2018) recorded as under:-

“28. Before I part with this judgment, I am
constrained to comment upon the conduct of the
petitioner. The petitioner asserted in his main
application that the entire document of work order
containing the arbitration agreement which bore the
signature of the petitioner’s authorized
representative as produced by the respondent before
the Court below was forged and fabricated. The plea
has been taken on the basis of location of seals and
Patna High Court Cr. WJC No.449 of 2016 dt.23-08-2018 24

signatures of the Notary Public at different places on
the certified copy of the agreement. This plea has
been deliberately taken to mislead this Court, since
the petitioner, in Court’s view, deliberately
suppressed the fact that an FIR was registered by the
company against the respondents, to which the said
work orders were annexed as annexures. The
suppression by the petitioner, in the Court’s opinion,
is deliberate. Further, the petitioner in his rejoinder
to the application filed under Section 8(1) of the Act
had not disputed the existence of Clause 28 of the
work orders, rather a plea was taken that Clause 28
was for settlement of dispute between the parties and
the same had no concern at all with the bank
guarantee no.25/2012 for sum of Rs.1,00,00000/-
and bank guarantee no.19/2012 for sum of
Rs.35,00,000/-.”

24. The arbitration award mentions that the contracts of

the company of the informant were terminated vide letter dated

11.07.2013 for the alleged breach of term and of the contract and till

then only Rupees twenty lacs were adjusted against the running

account bills and, therefore, the company of the informant was liable

to refund the mobilization advance amount. It is apparent from the

materials available on the record which are uncontroverted materials

that the arbitration proceeding had begun on 19.03.2014, the company
Patna High Court Cr. WJC No.449 of 2016 dt.23-08-2018 25

of the informant had raised its objection before the Arbitrator on

24.05.2014 and on 07.07.2014, but those objections were rejected by

the learned Arbitrator vide order dated 26.07.2014. It is at this stage

when the written complaint was lodged on 24.07.2014 when the

objections of the company of the informant before the learned

Arbitrator were being heard and disposed off.

25. This Court finds that whatever be the allegations

and counter allegations and claims those are all with regard to the

breach of terms and conditions of the contract and both the parties had

come out with their case in the Title Suit and the arbitration

proceeding which were going on from much before lodging of the

present F.I.R. In the written complaint the informant has claimed that

the entire mobilization advance has already been adjusted whereas it

is the stand of M/s Axon Construction Pvt. Ltd that the informant‟s

company had submitted a running bills of Rupees twenty lacs and,

therefore, the bank guarantee was to be invoked in order to get back

the mobilization advance after termination of contract. Without going

into the merits of the contentions of the parties as regards their

respective claims, this Court can easily come to a conclusion that the

nature of the allegations are in the nature of a purely civil and

commercial dispute and the same cannot be allowed to be converted

in a criminal proceeding.

Patna High Court Cr. WJC No.449 of 2016 dt.23-08-2018 26

26. Further the allegation of the informant is that after

the „status-quo‟ order was passed on 04.01.2014 the accused persons

attempted to invoke the bank guarantee in violation of the order of

this Court, again this Court finds that there is a specific provision

under the Code of Civil Procedure in terms of Order XXXIX Rule 2-

A which is to be invoked for such allegations and those allegations

may be tested by the Court which had granted the order of status quo

after following the procedures established under law by allowing the

parties to adduce their respective evidences. On this mere allegation,

again the criminal proceeding cannot be launched.

27. This Court has noted hereinabove the various

judgments on which reliance has been placed on behalf of the

petitioners. Taking note of the ratio of those judgments and what has

been held in the case of Inder Mohan Goswami Anr. Vs. State of

Uttaranchal Ors. reported in (2007) 12 SCC 1 in paragraph 23

and 37 which read as under:-

“23. This court in a number of cases has laid down
the scope and ambit of courts_ powers under section 482
Cr.P.C. Every High Court has inherent power to act ex
debito justitiae to do real and substantial justice, for the
administration of which alone it exists, or to prevent
abuse of the process of the court. Inherent power
under section 482 Cr.P.C. can be exercised:

(i) to give effect to an order under the Code;
Patna High Court Cr. WJC No.449 of 2016 dt.23-08-2018 27

(ii) to prevent abuse of the process of court, and

(iii) to otherwise secure the ends of justice.

37. In Indian Oil Corpn. v. NEPC India Ltd., this
court again cautioned about a growing tendency in
business circles to convert purely civil disputes into
criminal cases. The court noticed the prevalent
impression that civil law remedies are time consuming
and do not adequately protect the interests of
lenders/creditors. The court further observed that _any
effort to settle civil disputes and claims, which do not
involve any criminal offence, by applying pressure
through criminal prosecution should be deprecated and
discouraged.”

this Court finds that the ratio of those judgments

would be fully applicable in the facts and circumstances of the present

case. This Court sitting in its writ jurisdiction under Article 226 of the

Constitution of India, at this stage, has only considered the

contentions of the petitioners as to whether without adding or

subtracting anything out of written complaint the F.I.R. may be

sustained. This Court finds that no case at all is made out under

Sections 406 and 420 of the Indian Penal Code. None of the

ingredients of those Sections are present in the facts of this case.

28. For the reasons mentioned hereinabove, this Court

is of the considered opinion that the present F.I.R. has been lodged at

Patna against these petitioners only in order to harass them as they are
Patna High Court Cr. WJC No.449 of 2016 dt.23-08-2018 28

senior officers of the company M/S R.K.M. Powergen Private Limited

and M/S Axon Construction Pvt. Ltd., the written complaint does not

mention even remotely the act and omission of the accused persons-

petitioners which may constitute a criminal offence. It is a purely civil

and commercial disputes between the parties. In the opinion of this

Court, the manner in which the investigating agency has proceeded to

lodge the F.I.R. which does not disclose commission of a cognizable

offence and in the name of investigation went up to Chennai to arrest

the accused in the nature of the allegation compels this Court to say

that the respondent no.9 being a local person got the F.I.R. lodged at

Patna and have been able to pursue with the police authorities this

matter so far to compel the petitioners to settle their purely civil

claims and to get rid of his liabilities under the arbitration award

which is nothing but sheer harassment to these petitioners. This Court

would therefore have no hesitation in recording that on the face of the

materials available on the record which are all uncontroverted

materials and successfully passed the four steps test laid down by the

Hon‟ble Supreme Court in the case of Prashant Bharti (supra) and

the ratio of the judgment of the Hon‟ble Apex Court in the case of

Inder Mohan Goswami (supra), Indian Oil Corporation (supra) and

other judgments referred here-in-above , the present F.I.R. is liable to

be quashed and this malafide prosecution has to be brought to an end
Patna High Court Cr. WJC No.449 of 2016 dt.23-08-2018 29

to otherwise secure the ends of justice. The F.I.R. being Sri

Krishnapuri P.S. Case No.263 of 2014 under Sections 406 and 420 of

the Indian Penal Code is hereby quashed.

29. While parting with this brief, this court would

make it clear that no part of the observations of this Court in the

present order shall be construed as an opinion on merit of the claim of

the parties and those shall not be considered in the civil disputes and

in the matters arising out of arbitration proceeding between the

parties.

30. Both the writ applications are allowed accordingly.

(Rajeev Ranjan Prasad, J)
Arvind/-

AFR/NAFR AFR
CAV DATE N/A
Uploading Date 27.08.2018
Transmission 27.08.2018
Date

Leave a Reply

Your email address will not be published. Required fields are marked *

Copyright © 2021 SC and HC Judgments Online at MyNation
×

Free Legal Help, Just WhatsApp Away

MyNation HELP line

We are Not Lawyers, but No Lawyer will give you Advice like We do

Please read Group Rules – CLICK HERE, If You agree then Please Register CLICK HERE and after registration  JOIN WELCOME GROUP HERE

We handle Women Centric biased laws like False Sectioin 498A IPC, Domestic Violence(DV ACT), Divorce, Maintenance, Alimony, Child Custody, HMA 24, 125 CrPc, 307, 312, 313, 323, 354, 376, 377, 406, 420, 497, 506, 509; TEP, RTI and many more…

MyNation FoundationMyNation FoundationMyNation Foundation