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 24signatures 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
