— 1 —
HIGH COURT OF MADHYA PRADESH : BENCH AT INDORE
S.B.: HON’BLE MR. S. C. SHARMA, J
MISC. CRIMINAL CASE NO. 6624 / 2016
M/S. COTT BEVERAGES INC.
(ROYAL CROWN COLA INTERNATIONAL DIVISION) USA
AND THREE OTHERS
Vs.
M/S. TRISTAR BEVERAGES PVT. LTD., INDORE
*****
Counsel for the petitioner : Mr. Ravindra Shrivastava, learned senior counsel
appearing with Mr. Trinath and Mr. Vijay
Assudani, learned counsel for the petitioner.
Counsel for the respondent : Mr. Ashok Kumar Singh, Mr. Awanish Sinha,
Mr.Vivek Singh and Mr. Chandra Shekhar
Yadav , learned counsel for the respondent.
Whether approved for reporting : Yes
Law laid down : The criminal proceedings manifestly attended
with malafide and/or where the proceeding is
maliciously instituted with ulterior motive for
wreaking vengeance on the accused and turning
a civil litigation into a criminal litigation,
deserves to be quashed.
Significant paragraph numbers : 34 to 43
ORDER
( 18/06/2018)
The petitioner before this Court has filed this present
petition under Section 482 and Section 397 read with
Section 401 of the Code of Criminal Procedure, 1973 for
quashment of the order passed by the 12th Additional
Sessions Judge, Indore in Criminal Revision No. 641/2015
— 2 —
and for quashment of the complaint filed by the respondents.
02. Facts of the case reveal that petitioner No.1 is a
Company incorporated under the laws of United States of
America, having its registered Office at 1001, 10 th Avenue,
Columbus, GA 31901, USA. The petitioner No.2 is the
Managing Director, petitioner No.3 is Financial Head and
petitioner No.4 is head of Indian operations. Facts of the
case further reveal that petitioner No.1 Company is carrying
on manufacturing of non-alcoholic cold beverage under the
brand name of R. C. Cola and on 09/05/2003 the petitioner
Company informed the complainant that he would get a
commission for each new Bottler who is appointed by the
petitioner No.1 by signing a bottler’s agreement and trade
mark licensing agreement. The document is on record as
Annexure P/1 page 55 of the compilation. It is a letter dated
9/5/2003 and that is the only document in respect of the so-
called agreement between the petitioners and the respondent
No.1. The document on record reflects that the arrangement
between the parties was for a period of 5 years, which is
evident from the opening sentence itself.
— 3 —
03. Further contention of the learned counsel for the
petitioner that a letter was issued on 31/8/2010 to the
complainant and the complainant was informed that the
petitioner Company has paid the entire commission to the
complainant till end of May 2011. Facts further reveal that
on 1/8/2011 official of the petitioner No.1 informed the
complainant that final commission which would cover the
period upto 2011 as per the agreement is being processed
and shall be paid. The document is on record as Annexure P/
3. The complainant vide letter dated 5/8/2011 acknowledged
the receipt of the commission upto a particular date,
however, wanted details of the commission earned on the
supplies to other Indian bottlers since start of business,
stating that the information is required for submission to
Reserve Bank of India (Annexure P/4 Electronic Mail dated
5/8/2011).
04. That the petitioner’s informed the complainant that the
details desired cannot be disclosed as the details relates to
private business transaction between the petitioner No.1
Company and other private persons and the agreement to
— 4 —
pay commission was only for a period of 5 years. It has been
further stated that the complainant did not dispute contents
of the letter dated 5/8/2011 and 10/8/2011 and again issued a
email on 11/8/2011 threatening the petitioner that the act of
the petitioner in not revealing calculation is an offence
(Annexure P/6). The petitioner Company vide email
informed the complainant that all obligations and
relationships between the parties have come to an end and
final payment has also been done.
05. That vide letter dated 9/5/2011 the complainant
accepted the letter of 9/5/2003 and it is evident that the
period of payment of commission started from 1/1/2003 and
ended on 31/12/2007. The complainant also threatened the
petitioner No.1 Company that the complainant shall be
lodging a protest with the U.S. Embassy and with Indian
Merchants / Industries Associations. In the light of the
aforesaid correspondence, the petitioner referred the matter
to their corporate counsel for response and email was sent to
the complainant on 18/11/2011 seeking the contact details of
the complainant therein for further communication.
— 5 —
06. That vide letter dated 5/12/2011 the complainant
responded by providing details of his legal counsel and vide
letter dated 16/11/2011, the legal counsel of petitioner No.1
wrote to the complainant that the entire commission has
been paid for a period of 5 years and the agreement was for
a period of 5 years and the complainant was also asked to
furnish any other document in respect of the agreement
between the parties.
07. The complainant thereafter started alleging
commission of offence u/S. 406 and 420 of the Indian Penal
Code and finally filed a complaint in the matter. After the
complaint was filed in the month of March, 2013 and 3
witnesses were examined by the trial Court, the first witness
was the complainant himself and the other two witnesses
were the employees of the complainant. The complainant in
his statement before the trial Court has categorically stated
that the petitioner Company was paying 10% commission
from the purchases made by the bottlers and the commission
was paid for a period of 5 years, thereafter no such
commission has been paid. Other witnesses namely; Nilesh
— 6 —
Purkar and Prakash Sharma also gave statement before the
trial Court. Before the trial court as the statement of the
complainant nor the independent witnesses could establish a
case against the petitioners, the trial Court on 27/1/2015
dismissed the complaint (Annexure P/15) and against which
a revision was preferred u/S. 397 of the Code of Criminal
Procedure, 1973 and notices were issued on 27/1/2015 and
finally the impugned order has been passed on 4/6/2016.
08. Learned senior counsel argued before this Court that
the revisional Court even though the scope of revision is
quite limited, has held that commission was required to be
paid for 10 years and has also held that ingredients of Sec.
406 and Sec. 420 of the Indian Penal Code are fulfilled and
in those circumstances, the revisional Court has remanded
the matter to the trial Court.
09. Learned senior counsel has argued before this Court
that the impugned order dated 4 June 2015 is contrary to
law, and suffers from grave and serious irregularity and
illegality, causing serious miscarriage of justice arising from
misconception of law as well as perpetuating the abuse of
— 7 —
process of court at the instance of the respondent, which
requires to be interfered with by this Court. The order of the
Magistrate Court was perfectly legal and justified and there
was no legal ground for the revisional Court to upset the
said order. None of the findings and observations given by
the Magistrate Court have been stated to be incorrect by the
revisional Court. The revisional Court, without examining as
to how the complaint discloses the alleged criminal offences
has erred in law in setting aside the Magistrate Court order
dismissing the complaint. The Magistrate Court order
deserves to be upheld and the revisional Court order
deserves to be set aside. It is further submitted that on the
face of the complaint in its entirety, no case even prima
facie, disclosing commission of any cognizable offence such
as section 420 and 406 IPC is made out. The allegations in
the complaint are not only prima facie untrue, but,
unsubstantiated, inherently contradictory and incoherent;
fanciful and concocted, do not constitute even in minimum
basic of the ingredients of the offences alleged under section
420 and 406 IPC. The compliant itself is prima facie abuse
— 8 —
of process of law, is malafide and motivated. Even as for the
allegations in the complaint, which are not admitted, it is
clear that a false and concocted civil dispute, if any, is being
converted into a criminal complaint malafide. It has been
argued that the Court below has failed to appreciate that in
the complaint, the complainant alleged that the complainant
would be entitled to royalty / compensation / commission of
10% of net FOB value of the sale of concentrate effected in
India or South Asia by any bottler or franchisee appointed
by it, and that being induced by the petitioners, the
complainant complainant invested Rs.6 Crores and
established an industry and the brand of the petitioner No. 1
Company in India. It is not the case of the complainant that
upon such purported inducement, the factory so established
was entrusted by the complainant to the petitioner Company
or its officials, rather the admitted position is that the factory
is and continues to be owned and run by the complainant
and the Petitioners have no access or control over it. Thus,
even if the allegations made in the Complaint are taken on
their face value, the setting up of the factory by the
— 9 —
Complainant cannot tantamount to offences of cheating or
criminal breach of trust by the Petitioners. Learned senior
counsel for the petitioner has submitted that the Court below
has failed to appreciate that as per the own case of the
Complainant, the factory set up by the Complainant was
being used by the Complainant for making soft drink /
beverages, therefore, there cannot be said to be any cheating
or entrustment in that regard. He has further submitted that
the Court below failed to appreciate that as per the letter
dated 09.05.2003 annexed by the Complainant alongwith the
Complaint petition, the tenure of the arrangement between
the parties was very clear and that tenure had come to end
with the payment of the last and final commission. As per
the said letter, the complainant was to get a commission for
each new bottler that was appointed by the Petitioner No. 1
by signing a Bottler’s Agreement and Trademark Licensing
Agreement in India, during the 5 year period beginning 1
January 2003 and ending 31 December 2007. This
commission (which was to be an amount of 10% of the net
FOB US Concentrate Price (Selling Price) less any
— 10 —
advertising expenditure / support provided by the Petitioner
No. 1) was to be paid for a 5 year period for a new bottler
appointed in India before 31 December 2007 commencing
with the initial order placed by the bottler. This agreement
was not extended further. It has been argued that the Court
below failed to appreciate that even the Learned Magistrate
had observed in its order that as per the correspondence
exchanged between the parties, in particular as per the letter
dated 9 May 2003, the agreement between the parties was
for a period of 5 years which had already come to an end
and there was no document that even after the expiry of this
tenure, the parties will be continuing with this arrangement.
This finding of the Magistrate was not interfered with by the
Revisional Court. He has further submitted that the Court
below failed to appreciate that there was no material or
evidence, brought along with the complaint or by the parties
to establish that the period was extended for 10 years and
that there was a liability to pay the commission till 2014. He
has further submitted that the Court below has failed to
appreciate that the Complainant had referred to an
— 11 —
agreement, but it brought no other agreement on record
other than the Petitioner’s letter dated 09.05.2003 and if
examined from that perspective, the complainant was not
able to make out any case against the Petitioners as there
was no breach of the said agreement. It is submitted that the
Court below has failed to appreciate that as per the
documents annexed by the Complainant with the Complaint
it was evident that it had been consistent and unchallenged
stand of the Petitioner Company [as per email dated
10.08.2011 and 11.08.2011 of the Petitioner in Exhibit F to
the Complaint] that the Complainant was entitled to
commission for 5 years from the first order in respect of any
bottler agreement signed up prior to 31.12.2007 and that the
arrangement therefore terminated by end of May, 2011 with
the 5 year period coming to an end for the first order of
bottler that began prior to December 21,2007. There was no
response mail by the Complainant disputing or challenging
this position of the Complaint. Also, the Complainant has
not stated anything in the complaint petition to demonstrate
that the same was in any manner false or erroneous, except
— 12 —
than stating that the commission was payable till 2014,
which assertion has no basis or foundation.
10. Learned senior counsel for the petitioner has
vehemently argued before this Court that the learned
Magistrate in his order dated 27/1/2015 has categorically
dealt with the letter dated 9 May 2003, and has correctly
interpreted its contents, that the agreement between the
Petitioner No. 1 and the complainant was that the
complainant would be paid commission @ 10% less any
advertising support provided by the Petitioners, on the net
FOB US concentrate price (selling price) on the sale of
concentrate to each bottler for a period of 5 years from the
date of first purchase by such bottler, for each bottler signed
on by the Petitioners between 1 January 2003 and 31
December 2007. The complainant in its letter dated 9
November 2011 has categorically admitted such position,
and has further not raised any dispute or demur when the
same interpretation was reiterated by the Petitioner in its
email dated 10 August, 11 August and 16 August 2011, as
also by the Petitioner No. 1’s legal counsel by email dated
— 13 —
16 December 2011. The above only goes to prove that the
complainant is trying to make out a false case by
afterthought, and that the allegations in the complaint are
false. He has further submitted that even assuming, though
not admitting, there was any non-payment of the
commission amount, the same cannot amount to criminal
breach of trust or cheating. The amount of commission was
to be 10% of the net FOB US Concentrate Price (Selling
Price) less any advertising expenditure / support provided by
the Petitioner No. 1 and not 10% of the amount paid by the
franchisee as erroneously observed. He has further
submitted that the Court below failed to appreciate that there
was no entrustment by the Complainant to the Petitioner of
any property or dominion of property, nor there is any
allegation of any misappropriation of money. Besides, it is
not that the entirety of the 10% amount has to be paid to the
Complainant. Further, the payment had to be only for 5
years. He has further contended that the Revisional Court
has erred in holding that moment any franchisee paid any
amount to the Petitioner No. 1, then automatically 10% of
— 14 —
the amount in it became the property of the Complainant
entrusted to the Petitioner which it has to pay on demand by
the Complainant. He has further submitted that if this
reasoning of the Revisional Court is accepted then any
amount payable by one party to the other would become an
amount entrusted making an offence of criminal breach of
trust. Learned senior counsel has further argued that in the
present case, the complaint nowhere discloses as to what
was entrusted and when it was entrusted, by whom and to
whom. He has further contended that the Revisional Court
has erred in assuming that 10% of the amount paid by the
franchisee to the Petitioner was an entrustment and the
finding of the revisional Court is not at all correct. Firstly,
the complainant has nowhere stated as to what was entrusted
to the Petitioner. Secondly, the amount paid by the
franchisee to the Petitioner cannot be an entrustment by the
complainant to the Petitioner. Thirdly, the amount paid by
the franchisee was the sale price paid by the franchisee to
the Petitioner for the purchase of the concentrates and no
part of it was paid as commission payable to the
— 15 —
Complainant. Fourthly, the Complainant does not say that
there was any privity of contract between the Complainant
and the franchisee, nor does it allege that the payment being
made by the franchisee was under the instructions of the
complainant, nor is the 10% of the amount paid by the
franchisee paid as commission to be paid further to the
Complainant. Fifthly, the commission was to be paid out of
the selling price received after making deductions as per the
letter dated 09.05.2003. There was no entrustment of the
commission. It has been further contended that the Court
below has erred in law in its interpretation of what is
entrustment as required under Section 406 of the IPC. As per
the provision, there has to be entrustment with property, or
with any dominion over property. The observation in the
impugned judgment that by entrustment, it is not necessary
that one person gives property to another and that without
delivery, the property can be entrusted shows the error of
law. He has further argued that for application of Section
405, there has to be entrustment with property or with any
dominion over property by the person who is complaining of
— 16 —
having been offended to the accused. He has further
contended that the Revisional Court failed to appreciate that
in the case of Mr. Robert John D’Souza Ors Vs. Mr.
Stephen Vs. Gomes, it has been held that “it is only after
entrustment is shown, it can be said that there was criminal
breach of trust”. In Para 31 of Indian Oil Corpn. Vs. NEPC
India Ltd., (2006) 6 SCC 736 it has been held that “the basic
and very first ingredient of criminal breach of trust, that is,
entrustment, is missing and therefore, even if all the
allegations in the complaint are taken at their face value as
true, no case of “criminal breach of trust” as defined under
Section 405 IPC can be made out against NEPC India.”
Applying the said principles of law, no case was made out
even if the allegations were to be accepted.
11. Learned senior counsel for the petitioner has
submitted that in a similar case of Binod Kumar Vs. State of
Bihar, reported in (2014) 10 SCC 663, where the allegation
in the complaint pertained to non-payment of money, the
Supreme Court quashed the criminal case on the ground that
no offence was made out under Section 405 or 420 of the
— 17 —
IPC and held as follows:
“18. In the present case, looking at the allegations in
the complaint on the face of it, we find that no
allegations are made attracting the ingredients of
Section 405 IPC. Likewise, there are no allegations as
to cheating or the dishonest intention of the appellants
in retaining the money in order to have wrongful gain
to themselves or causing wrongful loss to the
complainant. Excepting the bald allegations that the
appellants did not make payment to the second
respondent and that the appellants utilized the
amounts either by themselves or for some other work,
there is no iota of allegation as to the dishonest
intention in misappropriating the property. To make
out a case of criminal breach of trust, it is not
sufficient to show that money has been retained by
the appellants. It must also be shown that the
appellants dishonestly disposed of the same in some
way or dishonestly retained the same. The mere fact
that the appellants did not pay the money to the
complainant does not amount to criminal breach of
trust.”
He has argued that in the present case, there is no
iota of allegation as to the dishonest intention in
misappropriating the property or that the Petitioner
had dishonestly disposed of the same in some way
or dishonestly retained the same.
12. Learned senior counsel for the petitioner has argued
before this Court that none of the witnesses have deposed
before the Court as to how and in what manner the
agreement was for 10 years till 2014. In fact, none of the
witness examined at pre-summoning stage are of any
— 18 —
assistance. None of them have deposed anything to make
out any offence. They have only talked about the financial
loss and nothing more. It is argued that as would appear the
Revisional Court has set up a new case for the Complainant,
which is not made out in the complaint petition or in the pre-
summoning evidence stage. He has further argued that it is
settled law that while examining the complaint, the
allegations and the complaint have to be taken the way they
were, without adding or subtracting anything. He has further
argued that the Court has observed that the ingredients of
Section 405, IPC have been fulfilled, and as such, Section
406 IPC may be invoked. However, to prove an offence
under this provision, it has to be proved conjointly beyond
reasonable doubt by the prosecution that there was
entrustment, and that the Petitioners misappropriated the
property and/or converted it to their own use to the
detriment of the Respondent No. 1. If there is no
entrustment, then there cannot be any offence under this
provision. The impugned order clearly states that there was
no delivery of property. However, the Revisional Court
— 19 —
proceeded on an incorrect understanding that Section 405
IPC does not specify that there should be delivery of any
property from one person to the other and criminal breach of
trust can be established without any delivery of property.
The transactions between the Petitioner No. 1 and the
complainant was governed by the terms of the letter dated 9
May 2003, and the said agreement had expired by passage
of time, and no other term could be read into the agreed
terms between the parties. The Court has failed to take note
of the terms of the agreement governing payment of
commission. In support of the above, reliance has been
placed by the learned counsel for the petitioner on the
following judgments :
Jaswantrai Manilal Akhaney v. State of Bombay, AIR 1956 SC 575
Ramaswamy Nadar v. State of Madras, AIR 1958 SC 56
Sadhupati Nageswara Rao v. State of Andhra Pradesh, (2012) 8
SCC 547
Satyendra Nath Mukherji v. Emperor, 3 ILR [1947] 1 Cal 97
State of Gujarat v. Jaswantlal Nathalal, AIR 1968 SC 700
Lake v. Simmons, 4 1927 AC 487
Madhavrao Scindia v. Jiwajirao Angre, (1988) 1 SCC 692
Bairo Prasad v. Laxmibai, 1991 Cr LJ 2535 (MP)
13. Learned senior counsel for the petitioner has argued
before this Court that the Court below failed to appreciate
— 20 —
that the Complainant had alleged “non disclosure of the
statement of account and the same leads to cheating and
criminal breach of trust and reflects mala-fide intention on
the part of the accused Company” in Para 21 of the
Complaint. He has argued that the Revisional Court has set
up a new case that the statement of accounts were required
to be revealed so that the Complainant could ascertain that it
has been made the complete payment of the commission
amount or not. He has further that as per the complaint
petition it is not the grievance of the Complainant that it has
not been paid full commission so long it was paid the
commission for the period till May 2011, rather the
grievance was that it had not been paid commission from
June, 2011. Also, in the letter dated 05.08.2011 the only
reason stated by the Complainant for seeking the accounts is
that the details “may be required to submit to Reserve Bank
of India” and not because it had any grievance regarding the
commission amount paid. Besides, there was no right under
any of the agreements that the Complainant would be
entitled to the details of accounts from the Petitioner. He
— 21 —
has further contended that the Court below has failed to
appreciate that non disclosure of accounts cannot be treated
as criminal breach of trust and / or cheating or any other
offence as there were confidential information and the
Complainant had no right to seek that information. He has
further submitted that the Revisional Court did not
appreciate the fact that the Complainant wanted disclosure
of accounts only for submission before the authorities, and
that the complaint has been formulated clearly by way of
after-thought and as an arm-twisting measure. The
Complainant has not averred in the complaint that even up
to June 2011 it had not received the entirety of the
commission. The details of the concentrate sales were being
asked by the complainant on the pretext that it is required
for submission to the Reserve Bank of India any time on
demand (see Exhibit F to complaint). Hence the reasoning
given in the impugned order that the production of such
details of business would have helped the complainant to
calculate whether it has received the entire 10% amount or
not is erroneous, beyond the averments made in the
— 22 —
complaint, and contrary to the own communication issued
by the complainant annexed to the complaint.
14. Learned senior counsel further submitted that the
Court has erred in concluding that the allegations make out
an offence of cheating. It is stated that the allegations made
in the Complaint do not make out an offence of cheating.
The ingredients of offence of cheating as held by the
Hon’ble Supreme Court in the case of Vir Prakash Sharma
Vs. Anil Kumar Agarwal reported in (2007) 7 SCC 373 are
as follows:
(i) Deception of any persons;
(ii) Fraudulently or dishonestly inducing any person to deliver
any property; or
(iii) To consent that any person shall retain any property and
finally intentionally inducing that person to do or omit to do
anything which he would not do or omit.
He has argued that in the present case, no act of
inducement on the part of the Petitioner or any
accused person has been alleged by the
Complainant or that the Complainant had been
induced to deliver any property to the Petitioner.
15. Learned senior counsel for the petitioner has placed
reliance upon the judgment delivered in the case of Thermax
— 23 —
Ltd. Vs. K.M. Johny reported in (2011) 13 SCC 412, para
37 of the aforesaid judgment reads as under :
“37. It is settled law that the essential ingredient for
an offence under Section 420, which we have already
extracted, is that there has to be dishonest intention to
deceive another person. We have already quoted the
relevant allegations in the complaint and perusal of
the same clearly shows that no such dishonest
intention can be seen or even inferred inasmuch as the
entire dispute pertains to contractual obligations
between the parties. Since the very ingredients of
Section 420 are not attracted, the prosecution initiated
is wholly untenable. Even if we admit that allegations
in the complaint do make out a dispute, still it ought
to be considered that the same is merely a breach of
contract and the same cannot give rise to criminal
prosecution for cheating unless fraudulent or
dishonest intention is shown right from the beginning
of the transaction. Inasmuch as there are number of
documents to show that the appellant Company had
acted in terms of the agreement and in a bona fide
manner, it cannot be said that the act of the appellant
Company amounts to a breach of contract.”
He has argued that in the present case, no allegation
has been made that the Petitioner or any accused
person had an intention to cheat the respondent
from the very inception.
16. Learned senior counsel for the petitioner has placed
reliance upon the judgment delivered in the case of Anil
Mahajan Vs. Bhor Industries Ltd [2005(10) SCC 228] ,
paragraph 8 of the aforesaid judgment reads as under :
“8. The substance of the complaint is to be seen. Mere
use of the expression ‘cheating’ in the complaint is of
no consequence. Except mention of the words
— 24 —
‘deceive’ and ‘cheat’ in the complaint filed before the
Magistrate and ‘cheating’ in the complaint filed
before the police, there is no averment about the
deceit, cheating or fraudulent intention of the accused
at the time of entering into MoU wherefrom it can be
inferred that the accused had the intention to deceive
the complainant to pay.”
17. Learned counsel for the petitioner has submitted
that as regards, the offence of cheating, there was neither
allegation or material or evidence of inducement on the part
of the Petitioner or delivery of property to the Petitioner or
that the Petitioner had an intention to cheat the Respondent
from the very inception. He has further argued that the
grievance regarding appointment of M/s. Iceberg Foods Ltd.
as master bottler during continuation of agreement behind
the back of the Complainant is also completely misplaced
and cannot amount to a criminal offence. Firstly, there is no
material placed on record that any exclusive right was given
to the Complainant. Secondly, the agreement was also not
placed on record to show that the appointment of M/s
Iceberg was during the continuation of the agreement with
the Complainant. Thirdly, the CRISIL report relied upon by
the Complainant shows that Iceberg was appointed as
franchisee and not as master bottler. Fourthly, the
— 25 —
correspondences on record would show that the
Complainant was aware about M/s Iceberg in 2009 itself and
that the Complainant was getting commission on the
purchases being made by Iceberg. Lastly, grant of master
bottler license to M/s Iceberg cannot amount to a criminal
offence of criminal breach of trust and cheating. He has
further submitted that the impugned order has further
observed that the provisions of Section 420 IPC has been
established, without any reasoning or finding that the
ingredients of the provision has to be proved beyond
reasonable doubt. He has further contended that the
complaint does not contain any averment that there was a
deception of the Complainant by the Petitioners, as a
consequence of which the Complainant delivered any
property to the Petitioners, and thus the Revisional Court
could not return any finding to such effect. The facts are to
the contrary. The Revisional Court failed to appreciate that
even assuming but not admitting that any amount was due or
payable, if at all, yet a mere breach of a contract does not
amount to cheating. He has further submitted that there is
— 26 —
also nothing contained in the complaint to the effect that the
Petitioners had fraudulent or dishonest intention at the time
of making the alleged promise, breach of which is being
claimed, and thus the Revisional Court could not return any
finding to such effect. He has further contended that there is
also no averment in the complaint by the complainant that
the Petitioners had mala-fide intention to cheat the
complainant at the time of entering into the agreement as
borne from the letter dated 9 May 2003. The observation of
the Revisional Court that such intention if known at the time
of entering into the contract would have no legal standing is
not at all correct. It is not essential that such intention should
be known to the complainant at the time of entering into the
contract, rather it has to be alleged and shown that the
accused had such intention from the very beginning at the
time of making the promise. In support of the above, learned
senior counsel has placed reliance upon the following
judgments :
1.V. Y. Jose v. State of Gujarat, (2009) 3 SCC 78
2. Dalip Kaur v. Jagnar Singh, (2009) 14 SCC 696
3. Hridaya Ranjan Prasad Verma v. State of Bihar, (2000) 4 SCC
168
4. Indian Oil Corpn. v. NEPC India Ltd., (2006) 6 SCC 736
— 27 —
5. Anil Mahajan v. Bhor Industries Ltd., (2005) 10 SCC 228
6. Suresh Yadav v. Sharifa Bee, (2007) 13 SCC 107
18. Learned senior counsel for the petitioner has argued
before this Court that the Court below has failed to
appreciate that the alleged expenditures made by the
Complainant to the tune of Rs. 10.33 crores would not
constitute as cheating by the Petitioner. The expenditure by
the Complainant in setting up of the factory or purportedly
towards travelling, boarding cannot also be treated as
handing over of any property to the Petitioner. Hence, the
basic ingredients of cheating were not made out in the
complaint. He has further argued that the order of the
Learned Magistrate clearly stated the evidence and the facts
on the basis of which the complaint was dismissed, and
stated that the allegations did not prima facie establish the
offences. He has further argued that the learned Magistrate
had categorically stated that the complaints made by the
Complainant arise out of business dealings and the
associated contracts, and the Complainant is at liberty to
approach the Commercial Courts for adjudication of its
disputes. He has further contended that the Complainant
— 28 —
initiated the complaint after nearly two years since the issues
were dealt and closed by the Petitioners, as an afterthought
and act of vengeance. He has further argued that the disputes
as raised are purely commercial and contractual in nature
and in support of the same, reliance was placed on the
following judgments :
Joseph Salvaraj A. v. State of Gujarat, (2011) 7 SCC 59
Thermax Ltd. v. K. M. Johny, (2011) 13 SCC 412
19. Learned senior counsel further submitted that
applying the principles in the case of Rajesh Thapar vs
Union of India, reported in (2013) 3 SCC 330 and followed
in the case of Prashant Bharti Vs. State (NCT of Delhi),
reported in (2013) 9 SCC 293, where the following steps
were delineated to determine the veracity of a prayer for
quashment raised by an accused by invoking the power
vested in the High Court under Section 482 CrPC:
“30.1. Step one: whether the material relied upon by
the accused is sound, reasonable, and indubitable i.e.
the material is of sterling and impeccable quality?
30.2. Step two: whether the material relied upon by
the accused would rule out the assertions contained in
the charges levelled against the accused i.e. the
material is sufficient to reject and overrule the factual
assertions contained in the complaint i.e. the material
is such as would persuade a reasonable person to
dismiss and condemn the factual basis of the
— 29 —
accusations as false?
30.3. Step three: whether the material relied upon by
the accused has not been refuted by the
prosecution/complainant; and/or the material is such
that it cannot be justifiably refuted by the
prosecution/complainant?
30.4. Step four: whether proceeding with the trial
would result in an abuse of process of the court, and
would not serve the ends of justice?
30.5. If the answer to all the steps is in the affirmative,
the judicial conscience of the High Court should
persuade it to quash such criminal proceedings in
exercise of power vested in it under Section 482
Cr.P.C. Such exercise of power, besides doing justice
to the accused, would save precious court time, which
would otherwise be wasted in holding such a trial (as
well as proceedings arising therefrom) especially
when it is clear that the same would not conclude in
the conviction of the accused.”
Learned senior counsel further submitted that
present criminal complaint deserves to be quashed
entirely as it meets all the four principles laid down
in the said case in favour of the Petitioner.
20. Learned senior counsel for the petitioner has submitted
that while it is evident from the complaint as well as the
pre-summoning evidence that no case is made out against
the Petitioner or any of its officials, it is stated that the
Petitioner has suppressed a large number of documents,
primarily being the emails exchanged between the
Complainant and the Petitioner. Had the complainant
disclosed those documents, then it would have been all the
— 30 —
more clear to the Courts below that the complaint rightly
deserved to be dismissed. Since the Petitioner is also
invoking the jurisdiction of this Court to prevent abuse of
the process of court, the Petitioner urges that these
correspondences of impeachable character be also looked
into. Besides, the complainant should not be permitted to
suppress relevant documents and initiate criminal
proceedings on that basis as it has been held by the Hon’ble
Supreme Court in the case of Dalip Singh vs State of UP
reported in (2010) 2 SCC 114, that a party suppressing
material facts or placing twisted facts before the Court is not
entitled to any reliefs.
21. Learned senior counsel for the petitioner has submitted
that the Petitioner No. 1 had issued a letter dated 31 August
2010 to the complainant, the contents of which were never
questioned, wherein the Petitioner had referred to the letter
of 09.05.2003 and stated that the Petitioner No. 1 is
obligated to pay a commission to the complainant on all
orders placed by M/s. Iceberg Foods until May 14, 2011, the
date represents the 5th anniversary of the first order shipped
— 31 —
to M/s. Iceberg Foods. The Petitioner No. 1 further stated
that in addition to the $21,686.50 USD accrued in
commissions until the end of 2008 and in accordance with
the terms of the 9 May 2003 letter, an additional $40,414.08
USD in commissions for 2009 had been accrued. The
Petitioner No. 1 sought for proper banking details to pay the
commission immediately to the complainant. The Petitioner
No. 1 further stated that commissions for 2010 at the end of
the year will be accrued and will be paid to the complainant
accordingly in January, 2011, and that the commissions for
2011 will be accrued after 14 May 2011 to properly account
for all orders placed until 14 May 2011., and further that the
Petitioner No. 1 will pay the last and final commission
payment in June 2011. Further, the Complainant had only
annexed letters of August 2011, ending with letter of 11
August 2011. The Complainant had not revealed the
correspondences of November and December 2011, which
letters when looked into would make the position very clear
and also show that the Complainant had not only accepted
that it was only entitled to commission for 5 years period in
— 32 —
terms of 09.05.2003 letter, but also the Petitioner had given
a detailed reply on 16 December 2011, to which the
Complainant had not given a reply, nor submitted any
document to substantiate its claim towards any commission
amount being allegedly due, rather it filed the present
complaint case more than a year later. The following
documents have been referred by the learned senior counsel:
i. In the letter of 9 November 2011, the complainant accepted
the letter of 9 May 2003, and that as per the said letter, the
period of payment of commission started on 1 January 2003
and ended on 31 December 2007, and also that the 10%
commission should be paid till 5 years from the first supply.
ii. In view of accusations of improper and illegal behavior
made by the complainant, the matter was referred to the
corporate counsel of the Petitioner No. 1 for response.
iii. The legal counsel for the petitioner addressed an email dated
18 November 2011 to the complainant seeking the contact
details of the complainant’s attorney for further
communication. The legal counsel also asked the
complainant to provide any documentation which it had to
substantiate its claim.
iv. By letter dated 5 December 2011, the complainant
responded by providing details of its legal counsel and also
forwarded some emails exchanged in 2009 – 2010.
v. By letter dated 16 December 2011, the Petitioner No. 1’s
legal counsel wrote to the complainant’s counsel and the
complainant that the commission had been paid to the
Complainant for five years on the concentrate orders placed
— 33 —
by Iceberg Foods Ltd., which began in May 2006, and
ceased in May 2011, that is 5 years later, and no additional
payments were due. The complainant was also asked if it
had any other documents to the contrary, as otherwise no
further compensation was due to the Complainant. As
regards providing of detailed information with respect to
sale of concentrates in India, it was clarified that there were
no audit rights granted under the 9 May 2003 letter, so the
complainant could not ask for the details of the business,
which was a private business information. Accordingly, it
was informed that if the complainant did not disclose any
additional substantive documentation, the issue would be
considered closed by the Petitioner No. 1. The complainant
or its counsel have not replied to the said e-mail nor given
any further information or documentation to substantiate its
claim.
22. Learned senior counsel for the petitioner has submitted
that it is clear from the reading of the Complaint and the
documents annexed along with the complaint, that not only
the Complaint is an attempt to create pressure on the
Petitioner to extract money but the entire complaint is
tainted with malice and is a clear abuse of process of court.
He has further contended that it is settled law that a
complaint may also be quashed where it is a clear abuse of
the process of the court and the criminal proceeding is found
to have been initiated with mala-fide or to cause harm.
— 34 —
23. Learned senior counsel for the petitioner has submitted
that it is a settled law that where in the given facts, at best,
purely a civil wrong is made out and pertains entirely to a
commercial transaction / contractual dispute, the
Complainant ought not to have invoked the criminal
proceedings against the Petitioner by giving it a cloak of a
criminal offence, inspite of the fact that the allegations do
not make out any offence. He has drawn the attention of this
Court towards paras 13 and 14 of Indian Oil Corpn.(supra),
wherein the apex Court has held as under:
“13. While on this issue, it is necessary to take notice
of a growing tendency in business circles to convert
purely civil disputes into criminal cases. This is
obviously on account of a prevalent impression that
civil law remedies are time consuming and do not
adequately protect the interests of lenders/creditors.
Such a tendency is seen in several family disputes
also, leading to irretrievable breakdown of
marriages/families. There is also an impression that if
a person could somehow be entangled in a criminal
prosecution, there is a likelihood of imminent
settlement. 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.
He has also drawn attention of this Court towards Para
8 of the judgment delivered in the case of G. Sagar
Suri Vs. State of U.P.(supra), and the Hon’ble Supreme
Court in paragraph 8 has held as under :
‘8. … It is to be seen if a matter, which is essentially
— 35 —
of a civil nature, has been given a cloak of criminal
offence. Criminal proceedings are not a short cut of
other remedies available in law. Before issuing
process a criminal court has to exercise a great deal of
caution. For the accused it is a serious matter. This
Court has laid certain principles on the basis of which
the High Court is to exercise its jurisdiction under
Section 482 of the Code. Jurisdiction under this
section has to be exercised to prevent abuse of the
process of any court or otherwise to secure the ends of
justice.’
24. Learned senior counsel for the petitioner has submitted
that the Revisional Court failed to appreciate that the
Complaint does not ascribe any specific role to any of the
individual accused persons and how each one of them are
being accused of the offence alleged, nor is there any
allegation of common intention and common object. In
absence of any provision of vicarious liability for the
offences of the Company on the persons allegedly in charge
of the Company, the present complaint also does not
disclose any offence against the Petitioner No. 2, 3 and 4 in
particular and they cannot be proceeded against on the basis
of general and bald allegations. He has further stated that in
a similar case, Hon’ble the Supreme Court in the case of
GHCL Employees Stock Option Trust Vs. India Infoline
Ltd., (2013) 4 SCC 505 had quashed the complaint case
— 36 —
against the Managing Director, Company Secretary and
other Directors of the Company and had observed as
follows, and the same observations would also apply to the
present case also :
“12. From a bare perusal of the complaint and the
allegations made therein, we do not find in any of the
paragraphs that the complainant has made specific
allegations against Respondents 2 to 7. In Para 2 of
the complaint, it is alleged that Respondents 2 to 6 are
looking after the day-to-day affairs of the Company.
With whom the complainant or its authorized
representative interacted has also not been specified.
Although in Para 11 of the complaint it is alleged that
the complainant on numerous occasions met Accused
2 to 7 and requested to refund the amount, but again
the complainant has not made specific allegation
about the date of meeting and whether it was an
individual meeting or collective meeting. Similarly, in
Para 17 of the complaint, there is no allegation that a
particular Director or Managing Director fabricated
the debit note. In the entire complaint there are bald
and vague allegations against Respondents 2 to 7.”
25. Learned senior counsel for the petitioner has submitted
that the Revisional Court did not disclose any reason for
acting as a Court of Appeal while exercising its revisional
jurisdiction and proceeding to re-appreciate the pleadings
and evidence placed before and already examined in detail
by the Learned Magistrate. He has further contended that the
Revisional Court had proceeded to take it upon itself to re-
appreciate only those documents disclosed by the
Complainant with its revision petition, without considering
the written submission of the Petitioners. He has further
contended that the revisional Court’s scope of re-
— 37 —
appreciating evidence is very limited, especially when the
Trial Court, which is empowered to appreciate the pleadings
and evidence, has done so. The impugned order also does
not contain any finding that the order of the Learned
Magistrate was grossly erroneous or that there was any
perverse finding of fact, to justify the attempt of the
Revisional Court to re-appreciate the evidence. Learned
senior counsel to bolster his submissions has placed reliance
upon the following judgments :
Bindeshwari Prasad Singh v. State of Bihar, (2002) 6 SCC 650
Kailash Chand Agrawal v. State of U.P., 1996 Cri LJ 927
26. Learned senior counsel for the petitioner has submitted
that apart from the aforesaid, the primary duty for assailing
any order in any criminal action on any legal or factual
ground falls within the exclusive action of the State
respondent. It is well settled that when a revisional Court is
approached by a private party, the Court should refrain from
interfering except when there is a glaring legal defect of a
serious nature resulting in a grave failure of justice. There is
no finding to this effect in the impugned order so reasons
whereof the Revisional Court had proceeded to entertain the
revision petition of the Respondent No. 1. In support of the
above, he has placed reliance on the following judgments :
— 38 —
Jagannath Choudhary v. Ramayan Singh, (2002) 5 SCC 659
Akalu Ahir v. Ramdeo Ram, (1973) 2 SCC 583
Manijan Bibi v. N. Mangi Singh, 1988 Cr LJ 1438
He has further contended that the learned Revisional
Court proceeded on an erroneous and misplaced basis. He
has further argued that the revisional Court also failed to
appreciate that the transactions between the Petitioner No. 1
company and the Complainant is wholly civil in nature and
has no criminality in it, and that the Petitioners Nos. 2 to 4
are officials of the Petitioner No. 1 company, and in absence
of any specific averments or proof beyond reasonable
doubts, such officials cannot be made personally liable. He
has further contended that mere breach of contract
simpliciter does not constitute an offence and the allegations
in the complaint petition must disclose the necessary
ingredients therefor. He has further contended that the
complaint by the respondent is a misuse of process of
criminal court and has been instituted maliciously with
ulterior motive. His further contention is that the impugned
order has been passed in a mechanical manner and is illegal,
improper and untenable in the law, and discloses non-
— 39 —
application of mind. To bolster his submissions, reliance
has been placed on the following judgments :
Ashfaq Ahmed Quereshi v. Namrata Chopra, JT 2014 (5) SC 142
Vinod Raghuvanshi v. Ajay Arora, (2013) 10 SCC 581
B. Suresh Yadav v. Sharifa Bee, (2007) 13 SCC 107
27. Learned senior counsel for the petitioner has
submitted that in the impugned order, the Revisional Court
has observed that the ingredients of Section 34, IPC has
been fulfilled, yet no discussion or reasoning appears in the
impugned order on the alleged common intention or
collusion between the Petitioners or how it existed or
resulted in commission of any alleged act. The complaint
did not contain any averment to the effect that there was a
pre-arranged plan between the Petitioners herein, or a prior
concert between the Petitioners to commit any alleged act,
or that a common intention existed at a time prior to alleged
commission of the acts, or that it was proved beyond
reasonable doubt by the prosecution that actual participation
for committing the alleged acts was done with a common
intention at a prior concert, and thus the Revisional Court
could not have given any finding to such effect. As such,
— 40 —
the impugned order is unreasoned and non-speaking. He
has placed reliance upon the following judgments :
Suresh Sakharam Nangare v. State of Maharashtra, 2012 (9) SCC
249
Ramashish Yadav v. State of Bihar, (1999) 8 SCC 555
Shyamal Ghosh v. State of West Bengal, (2012) 7 SCC 646
Mrinal Das v. State of Tripura, (2011) 9 SCC 479,
Jai Bhagwan v. State of Haryana, AIR 1999 SC 1083
28. Learned senior counsel for the petitioner has submitted
that the Court below has erred in law in observing that
criminal proceedings are maintainable even if civil remedy
is available. He has contended that the grievances raised in
the complaint were for recovery of money and is purely a
dispute of a civil nature. His further contention is that a
matter which is essentially or purely of a civil nature should
not be given a cloak of a criminal offence as criminal
proceedings are not a shortcut of other remedies available in
law. He has further contended that it is imperative for the
Criminal Court to exercise a great deal of caution before
issuing process. It is also a well settled position that criminal
proceedings should not be used for settling scores or for
pressurizing parties to settle civil disputes. He has further
submitted that the inherent power under Section 482 Cr.P.C.
— 41 —
entitles this Court to quash the proceeding when it comes to
the conclusion that allowing the proceeding to continue
would be an abuse of the process of Court or that the ends of
justice require that the proceeding ought to be quashed. His
further contention is that the Court proceeding ought not to
be permitted to degenerate into a weapon of harassment or
persecution. Any order of a Magistrate summoning the
accused must reflect that there was application of mind, and
thus the Magistrate has to record his satisfaction with regard
to the existence of a prima facie case on the basis of specific
allegations made in the complaint supported by satisfactory
evidence and other material on record. To bolster his
submission, learned counsel has placed reliance upon the
following judgments :
G. Sagar Suri and another v. State of UP Ors., (2000) 2 SCC 636
Mohammed Ibrahim Ors Vs. State of Bihar Ors., (2009) 8
CCC 751
GHCL Employees Stock Option Trust Vs. India Infoline Ltd.,
(2013) 4 SCC 505
Chandra Ratnaswami Vs. K.C. Palanisamy Ors., (2013) 6 SCC
740Learned counsel has contended that in the light of the
judgments referred by him, the impugned order dated 4 June
2015 is contrary to law, and suffers from grave and serious
— 42 —
irregularity and illegality causing serious miscarriage of
justice arising from misconception of law as well as
perpetuating the abuse of process of court at the instance of
the Respondent, which requires to be interfered with by this
Court. Even otherwise to meet the ends of justice and to
prevent abuse of process of court, the impugned order as
well as the complaint proceedings deserves to be quashed by
this Court in exercise of its inherent power.
29. Learned counsel for the petitioner has placed reliance
upon the judgment delivered by the apex Court in the case
of Binod Kumar and others Vs. State of Bihar and another
reported in (2014) 10 SCC 663; the judgment delivered by
the Kerala High Court in the case of N. T. Muraleedharan
Vs. State of Kerala reported in 2012 Cri LJ (NOC 1) 1 and
the judgment delivered by the Gauhati High Court in the
case of Md. Jahirul Maulana @ Jahirul Islam Vs. The State
of Assam and others (Cr. Petition No. 234/2016, decided
on 12/7/2016) and his contention is that in the first place the
so-called agreement which was a business arrangement
between the parties was for a period of five years only and
— 43 —
they have paid 10% commission to the complainant. He has
stated that they have paid the entire commission and even if
it is presumed for a moment that commission has not been
paid, it is purely a civil dispute and the complainant shall
certainly be free to file Civil Suit as held by the learned
Magistrate, who has dismissed the complainant at the first
instance after recording the statement of the witnesses.
Reliance has also been placed upon the judgment delivered
in the case of State of Haryana Vs. Bhajanlal reported in
1992 SCC (Cri) 426 and a prayer has been made for
quashment of criminal proceedings.
30. On the other hand, learned counsel for the respondent
has argued before this Court that the scope of interference
by this Court u/S. 482 of the Code of Criminal Procedure,
1973, is quite limited and whether the petitioner has
committed an offence or not, can be looked into by the trial
Court after the evidence is brought on record by both the
parties. He has vehemently argued before this Court that
there was a business arrangement between the parties and as
per the agreement between the parties dated 9/5/2003,
— 44 —
initially the period was 5 years starting from 1/1/2003 and
ending on 31/12/2007, however, it was extended by another
agreement. He has fairly stated that there is no further
agreement on record but the exchange of email between the
parties establishes that when the agreement was extended. It
has been argued before this Court that the complainant is
required to furnish details of the Foreign Exchange received
by him to Reserve Bank of India and in those circumstances,
request was made to the petitioner to furnish all details in
respect of their agreement post December 2007 period. He
has stated that respondent No.1 has invested huge sums, 6
crores, in establishing plant at Hyderabad and petitioner
No.1 has entered into various agreements with other bottlers
in the country. Respondent No.1 has been subjected to great
financial loss. Reliance has been placed upon the judgment
delivered by the apex Court in the case of Bhushan Kumar
and another Vs. State (NCT of Delhi) and another reported
in (2012) 5 SCC 424 and it has been argued that the powers
of the High Court u/S. 482 of the Code of Criminal
Procedure, 1973 are quite limited. Heavy reliance has been
— 45 —
placed upon paragraph 17 of the aforesaid judgment and the
same reads as under :
17) In Dy. Chief Controller of Imports Exports vs.
Roshanlal Agarwal Ors. (2003) 4 SCC 139, this Court, in
para 9, held as under:
9. In determining the question whether any process is
to be issued or not, what the Magistrate has to be satisfied is
whether there is sufficient ground for proceeding and not
whether there is sufficient ground for conviction. Whether
the evidence is adequate for supporting the conviction, can
be determined only at the trial and not at the stage of inquiry.
At the stage of issuing the process to the accused, the
Magistrate is not required to record reasons. This question
was considered recently in U.P. Pollution Control Board v.
Mohan Meakins Ltd.(2000) 3 SCC 745 and after noticing the
law laid down in Kanti Bhadra Shah v. State of W.B. (2000)
1 SCC 722, it was held as follows: (SCC p. 749, para 6)
6. The legislature has stressed the need to record
reasons in certain situations such as dismissal of a complaint
without issuing process.
There is no such legal requirement imposed on a
Magistrate for passing detailed order while issuing
summons. The process issued to accused cannot be quashed
merely on the ground that the Magistrate had not passed a
speaking order.
31. Reliance has also been placed upon the judgment
delivered by the apex Court in the case of Rajesh Bajaj Vs.
State of NCT Delhi and others reported in (1999) 3 SCC
259, again a case in which the scope of Sec. 482 of the Code
of Criminal Procedure, 1973 has been considered by the
apex Court.
32. Reliance has also been placed upon the judgment
delivered by the apex Court in the case of Mahesh
— 46 —
Choudhary Vs. State of Rajasthan reported in (2009) 4 SCC
439. Learned counsel has referred to paragraphs 14 and 16
of the aforesaid judgment. It was a case for quashment of
the FIR. A prayer has been made for dismissal of the
complaint.
33. Heard learned counsel for the parties at length and
perused the record. This matter is being disposed of at the
admission stage itself with the consent of the parties.
34. Facts of the case reveal that the a complaint was
preferred u/S. 200 of the Code of Criminal Procedure, 1973
before the ACJM, Class I, Indore by the respondent M/s.
Tristar Beverages Pvt Ltd., The averments made in the
complaint in respect of Sec. 406 of the Indian Penal Code
finds place in paragraphs 14, 17, 19, 20 and 21. Aforesaid
paragraphs reads as under :
14. That the accused company appreciated the
earnest effort and marketing skill provided by the
complainant for entering and establishing accused brand R.C.
Cola and accordingly in 2004 agreement was exchanged
between the complainant company and accused No.1. There
were clear understanding of extending the agreement for 10
years whereby the accused No.1 company agreed to grant
licence to complainant company to use their brand name and
make them master bottle for a term of 10 years and also
offered 10% commission to any of concentrate sales effected
in India and South Asia by franchisee or bottler appointed by
the complainant company.
— 47 —
17. That the accused company paid the commission
on the basis of their own estimate and without providing any
account of such purchase by the bottlers in India. The
complainant company vide their various correspondence
sought details of purchase by different bottler and the
calculation on the basis of which the commission were paid
till June 2011 and suddenly thereafter, stopped by the
accused.
19. That the complainant Company vide their email
dated 16th May 2009 apprised the accused no.1 the efforts
made by the complainant in establishing the RC cola brand in
India and investment made in making the brand recognisable
and popular in public eyes. Hereto annexed and marked
herewith as Exhibit-D is the copy of Email dated 16/5/2009.
20. That the complainant vide e-mail dated
06/8/2011 duly requested the accused company to provide
figures regarding sale of concentrate by the accused company
to the bottlers in India for which the commission / royalty
was paid to the complainant. The complainant sought
partywise details of such concentrate sold by the accused
company to different bottlers in India. Hereto annexed and
marked herewith as Exhibit E is the copy of email dated
6/8/2011.
21. That the accused no. 1 company vide the letter dated
10/8/2011 stated that they cannot disclose business statement
as the same are private / confidential matter of the accused
company. The complainant says and submits that the
complainant as master bottlers are entitled to 10% of total
sale effected by the accused no.1 company. The complainant
has every right to seek statement of account regarding sale of
concentrate to any other bottler in India and South Asia. The
non disclosure on the part of the accused company regarding
sales figure is totally arbitrary, illegal and devoid of merits
inasmuch as the complainant company is entitled to 10% of
commission on total sale figure by the accused company and,
therefore, the complainant company would not be able to
reconcile their account unless the entire sales figures are
received and accounted for. Since the commission being the
percentage of the total sales it is incumbent upon the accused
company to provide details of sales figure to the complainant
company. The complainant company states that non
disclosure of the statement of account leads to cheating and
breach of trust and reflect malafide intention on the part of
the accused company and for which the accused No. 1, 2, 3
and 4 are liable to be prosecuted under 406 of IPC. Hereto
annexed and marked herewith as Exhibit F is the copy of
Email dated 10/8/2011.
35. The allegations in respect of Sec. 420 of the Indian
— 48 —
Penal Code are spelt out in paragraphs 22, 23, 24, 25, 26 and
28. Aforesaid paragraphs reads as under :
22. That the complainant say and submit that the contract
for Royalty/commission for 10 years as agreed between the
parties for the services rendered by the complainant company
in establishing the brand RC Cola in Indian and other South
Countries market and as per the terms of the agreement it
expires in 2014 however accused no. 1 company through
accused No. 2, 3 4 with malafide intention and to deprive
the complainant of the legitimate dues suddenly and abruptly
contrary to the terms of agreement and understanding reached
between the parties stopped paying royalty from June, 2011
onwards. The malafide acts on the part of the accused
amounts to cheating, misappropriations of Royalty amounts,
and breach of trust and for which the accused No. 1, 2, 3 4
are liable to be prosecuted under Section 406, 420 read with
Section 34 IPC.
23. That the complainant say and submit that to their
shock and utter dismay of the complainant company it was
found during perusal of CRISL report by the Director of the
complainant company is that Accused have appointed M/s.
Iceberg Ltd. on their Master Bottler during continuation of
Agreement of Master Bottler with the Complainant
Company. It is found that the accused No. 1 company behind
the back of complainant company has already appointed M/s
Iceberg Food as the master bottler and granted right in favour
of said Iceberg Foods Ltd. contrary to the terms of agreement
executed between the complainant and the accused No. 1
Since the master bottlers agreement and licence with regard
to RC Cola has already granted to complainant way back in
2004 the accused No. 1 does not have right to further transfer
the same right till 2014 to any other bottlers. Hereto annexed
and marked herewith as Exhibit – G is the copy of CRISIL
report.
24. That the complainant say and submit that accused No.
1 had granted exclusive right in favour of the complainant
way back in 2004 for 10 years the efforts, services,
investments, expertise provided by the complainant company
in eastablishing RC Cola brand in India and other Countries
of South East Asia. The accused No. 1 company had no right
transfer the licence already granted to the complainant to M/s
Iceberg Food Ltd. within the period of valid Agreement with
the Complainant Company.
25. That the complainant say and submit that accused has
committed offences under Section 420 IPC in as much as the
accused No. 1 induced the complainant to develop market for
— 49 —
RC Cola brand in India and other South Asia Countries and
to invest huge amount of money by setting up the 1st factory
for production of their product and establishment of the said
brand and also to made huge investment by way of travelling
boarding conveyance and communication charges.
26. That the complainant was to receive 10%
compensation/royalty on the entire sales value for 10 years
from 2004 however suddenly and abruptly and at the back of
compalainant company the right of master bottler and the
commission charges were stopped prematurely and licence
were granted to M/s Iceberg Food Ltd. during the
continuation of agreement between the complainant and
accused No. 1 and thereby the Accused No. 1, 2, 3 4 have
not only committed offence under Section 420 IPC but also
offence under Section 406 of IPC.
The statement of complainant is also very material.
Statement of complainant is reproduced as it is, as under :
Witness No……01……..for……… ifjoknh lk{; /kkjk
200 n-iz-l-…..Deposition taken the ……2404-
2013 day of ………..Witness’s apparent
age…….29 o kZ States of affirmation……..My
name is………fo’kky Son of, D/o, W/o…………Jh
dkarhizlkn ijljkeiqfj;k Occupation-O;kikj
address vkdsZV flYoj 56] lsdaM Q~ykSj U;w iykfl;k]
bankSj
ifjoknh dFku %1- esjh daiuh dk uke Vªk;LVkj oscjstsl izk- fy- gSA eSa
mDr daiuh esa Mk;jsDVj ds ij ij inLFk gwWA esjh daiuh
lkQ~V fMªaDl ckVfyaXl dk dk;Z djrh gSA gekjh daiuh ,oa
vU; xzqi bl dk;Z esa o”kZ 1977 ls dk;Zjr gSA gekjh daiuh
dk dk;Z iwjs Hkkjr esa gSA daiuh dk dk;Z iwjs Hkkjr esa gSA
daiuh us cksMZ jsT;qys’ku ikl djds eqs ifjokn yxkus gsrq
vf/kd`r fd;k gSA2- dkWV csojstsl ¼vkj-lh-dksyk½ ds ,e-Mh Qkafll
ykefiz;k vkSj Qk;usal gsM ukFku ysuh vkSj bafM;k daVªh gsM
d`”.k eksgu us gesa muds czkaM ¼vkj-lh-dksyk½ dks ekdsZV esa
pykus gqrq izLrko fd;kA bl gsrq gesa bafM;k ,oa lkmFk
— 50 —
,sf’k;u ns’kksa ds fy;s ekLVj ckWVyj fu;qDr fd;kA bl gsrq
mUgksus gesa ,d QsDVªh Mkyus ds fy;s dgkA bl gsrq geus
djhc 7 djksM+ :i;s [kpZ dj QsDVªh Mkyh mlds i’pkr
mUgksus gesa vU; QzsapkbZl j[kus ds fy;s Hkh dgkA mDr ekLVj
ckWVyj gsrq geus cktkj esa foKkiu] bosUV~l] vU; xfrfof/k;kWa
vius [kpksZ ls lapkfyr dhA geus Jhyadk] usiky ,oa vU;
,sf’k;kbZ ns’kks esa tkdj [kpkZ fd;kA3- vkjksihx.k ds }kjk bl dk;Z ds ,ot esa gesa mijksDr
leLr ckVylZ dks fu;qDr djus ds mijkar tks Hkh O;ogkj
QszUpkbZthp dk dkV csojstsl ls gksxk mldk 10 izfr’kr
gekjh daiuh dks feyuk FkkA mDr O;ogkj isVs gesa dkWV
csojstsl us ikap o”kZ rd 10 izfr’kr jkf’k dh vnk;xh dh
fdUrq vpkud fcuk fdlh dkj.k n’kkZ;s gesa mDr 10 izfr’kr
jkf’k dk Hkqxrku djuk can dj fn;kA ftldh lwpuk
vkjksihx.k }kjk eqs ugh nsus ij esjs }kjk fujarj mijksDr
dk;Z fd;k tkrk jgkA ftlls eqs djhc 10-33 djksM+ :i;s
dk vkfFkZd uqdlku gqvkA rRi’pkr esjs }kjk vkjksihx.k ls
vusdks ckj laidZ dj mijksDr 10 izfr’kr dh jkf’k dh ekaxuh
fd;s tkus ij u rks mijksDr jkf’k dh vnk;xh dh vkSj u gh
mldk fglkc fn;kA4- tc geus mDr 10 izfr’kr ds Hkqxrku ckcr~ foØ;
O;ogkj dh tkudkjh pkgh rks mUgksus foØ; O;ogkj n’kkZus ls
badkj dj fn;kA gekjs }kjk vU; tkudkjh gkfly ij ;g
ektqe iM+k fd vkjksfix.k }kjk fcuk lwpuk fn;s fdlh vU;
daiuh dks uohu ekLVj ckWVyj fu;qDr dj fn;k x;k gSA bl
izdkj vkjksihx.k }kjk gekjh daiuh dks /kks[kk nsdj
djksM+ksa :i;s dk uqdlku igqpka;k gSA U;k;ky; ls vkxzg gS
fd og mDr rhuksa vkjksihx.k ,oa diuh ds fo:) mfpr
naMkRed dk;Zokgh dj gesa U;k; fnyk;saA
36. The complaint is based upon the communication dated
9/5/2003 which is allegedly an agreement between the
parties. The so-called business arrangement reflects that it
was for a period of five years starting from 1/1/2003 and
ending on December 31, 2007. The business arrangement
— 51 —
dated 9/5/2003, reads as under :
May 9, 2003
M/s. Vishal Parasrampuria,
Tristar Beverages Pvt. Ltd.,
Arcade Silver 56,
2nd Floor, New Palasia,
Indore 452 001
IndiaDear Vishal
As per our discussion please be advised that for a 5 year
period beginning January 1, 2003 and ending December 31,
2007 for each new bottler we sign to our standard RC/Royal
Crown Bottler’s Agreement and Trademark License
Agreement in India, we will pay you a commission on our
concentrate sales to said bottlers.
The commission to be paid will be 10% of the new F.O.B.
U.S. Concentrate price – that is our selling price less any per
unit advertising support we provide. You will be paid only
after we have been paid in full for the concentrates. The
commission you will be paid for each bottler will be for a 5
year period commencing with the initial order placed by the
bottler. This commission will not apply to concentrates
purchased by Tristar Beverages Pvt. Ltd., or its subsidiary
companies.
In closing, allow me to thank you and your family for the
assistance you have and continue to provide in our entry into
India.
Very truly yours,
Jerry M. Smith
President
37. The learned Judge before whom the complaint was
filed, after taking into account the business arrangement
between the parties and the statement of witnesses, has
arrived at a conclusion that no offence in the light of the
— 52 —
business arrangement between the parties is made out in the
matter. He has also held that no ingredients for constituting
an offence under Sec. 406 of the Indian Penal Code is made
out nor any offence is made out u/S. 420 of the Indian Penal
Code. He has also held that the complainant shall be free to
take recourse to the civil proceedings. After the complaint
was dismissed, a revision was preferred and the revisional
Court has held that the ingredients of Sec. 406 and Sec. 420
of the Indian Penal Code are made out.
38. Sec. 405, 406 and 420 of the Indian Penal Code reads
as under :
405. Criminal breach of trust.–Whoever, being in any manner
entrusted with property, or with any dominion over property,
dishonestly misappropriates or converts to his own use that
property, or dishonestly uses or disposes of that property in
violation of any direction of law prescribing the mode in which
such trust is to be discharged, or of any legal contract, express or
implied, which he has made touching the discharge of such trust,
or wilfully suffers any other person so to do, commits “criminal
breach of trust”.
[Explanation [1].–A person, being an employer 3[of an
establishment whether exempted under section 17 of the
Employees’ Provident Funds and Miscellaneous Provisions Act,
1952 (19 of 1952), or not] who deducts the employee’s
contribution from the wages payable to the employee for credit to
a Provident Fund or Family Pension Fund established by any law
for the time being in force, shall be deemed to have been entrusted
with the amount of the contribution so deducted by him and if he
makes default in the payment of such contribution to the said
Fund in violation of the said law, shall be deemed to have
dishonestly used the amount of the said contribution in violation
of a direction of law as aforesaid.][Explanation 2.–A person, being an employer, who deducts the
— 53 —
employees’ contribution from the wages payable to the employee
for credit to the Employees’ State Insurance Fund held and
administered by the Employees’ State Insurance Corporation
established under the Employees’ State Insurance Act, 1948 (34 of
1948), shall be deemed to have been entrusted with the amount of
the contribution so deducted by him and if he makes default in the
payment of such contribution to the said Fund in violation of the
said Act, shall be deemed to have dishonestly used the amount of
the said contribution in violation of a direction of law as
aforesaid.]
406. Punishment for criminal breach of trust.–Whoever
commits criminal breach of trust shall be punished with
imprisonment of either description for a term which may extend to
three years, or with fine, or with both.
420. Cheating and dishonestly inducing delivery of property.
–Whoever cheats and thereby dishonestly induces the person
deceived to deliver any property to any person, or to make, alter or
destroy the whole or any part of a valuable security, or anything
which is signed or sealed, and which is capable of being converted
into a valuable security, shall be punished with imprisonment of
either description for a term which may extend to seven years, and
shall also be liable to fine.
39. The reasoning given by the revisional Court in respect
of an offence u/S. 406 of the Indian Penal Code is
erroneous. The complainant nowhere discloses as to what
was entrusted, when it was entrusted and by whom and to
whom it was entrusted. The interpretation given by the
revisional Court in respect of what is entrustment, as
required u/S. 406 of the Indian Penal Code is erroneous. The
statutory provision provides that there has to be entrustment
with property, or with any dominion over property. The
revisional Court has failed to appreciate the law laid down
— 54 —
by the apex Court in the case of Mr. Robert John D’Souza
Ors Vs. Mr. Stephen Vs. Gomes (supra) and also the
judgment delivered in the case of Indian Oil Corpn. Vs.
NEPC India Ltd., (supra). Mere alleged non payment of
money will not amount to an offence u/S. 405 or Sec. 420 of
the Indian Penal Code, as held by the apex Court in the case
of Binod Kumar Vs. State of Bihar (supra). In the present
case, there is no iota of allegation as to dishonest intention
in misappropriating the property or that the petitioner had
dishonestly disposed of the same in some way or dishonestly
retained the same. There was an agreement / letter dated
09/05/2003 which was in respect of payment of some
commission and the revisional Court has travelled beyond
the letter dated 09/05/2003 and has erroneously arrived at a
conclusion that there was a breach of trust.
40. This Court has carefully gone through the averments
made in the plaint, the alleged agreement executed between
the parties and the same reveals that the only document
which is in respect of the agreement and which has been
reproduced by this Court, dated 09/05/2003, was exclusively
— 55 —
for a period of 5 years. The complainant himself has
admitted that he has received commission for a period of 5
years and the dispute, if any, is in respect of the period
beyond 5 years. If the averments made in the complaint are
accepted in toto, even then they do not make out an offence
of cheating, keeping in view the judgment delivered by the
Hon’ble Supreme Court in the case of Vir Prakash Sharma
Vs. Anil Kumar Agarwal (supra). The plaint averments does
not reveal that there was an intention to cheat the
complainant from very inception and, therefore, again
keeping in view the judgment delivered in the case of
Thermax Ltd. Vs. K.M. Johny (supra) no case is made out in
respect of cheating. Even if the allegations are looked into
and the complainant is able to make out a case of dispute,
the same shall be merely a breach of contract and the same
cannot give rise to criminal prosecution for cheating unless
fraudulent or dishonest intention is shown right from the
beginning of the transaction. Not only this, mere use of
expression of cheating in the complaint is of no
consequence, as held by the apex Court in the case of Anil
— 56 —
Mahajan Vs. Bhor Industries Ltd (supra).
41. The present case is a classic example of turning a pure
civil dispute into a criminal litigation. The complaint, if any,
is arising of business dealing and business transaction and
the complainant is certainly at a liberty to approach the
commercial courts for adjudication of dispute, as held by the
apex Court in the case of Joseph Salvaraj A. Vs. State of
Gujarat (supra) and Thermax Ltd. Vs. K.M. Johny (supra).
The present case is an effort to settle the dispute and claims
which do not involve any criminal offence by applying
pressure through prosecution and deserves to be deprecated,
as held by the apex Court in the case of Indian Oil Corpn.
Vs. NEPC India Ltd., (supra). The complainant has gone to
the extent in impleading the petitioner Company, the Head
of the Company and all senior Officers of the Company as
accused persons and the complaint does not ascribe any
specific role to any of the accused individual persons as to
how they are liable for offences mentioned in the complaint.
In almost similar circumstances, Hon’ble the Supreme Court
in the case of GHCL Employees Stock Option Trust Vs.
— 57 —
India Infoline Ltd., (supra) has granted relief to the
Managing Director and other senior members of the
Company. Though it has been vehemently argued by the
learned counsel for the complainant that a petition u/S. 482
of the Code of Criminal Procedure, 1973 is not at all
maintainable and the scope is quite limited and this Court
should not interfere with the impugned order. This Court, as
a pure commercial dispute has been converted into a
criminal dispute, the officers of the multinational Company
who have got no role to play, have been impleaded as
respondents, their prosecution is not going to serve any
purpose, is of the opinion that the present case, is a fit case
for invoking the powers vested u/S. 482 of the Code of
Criminal Procedure, 1973, as held by the apex Court in the
case of Rajesh Thapar vs Union of India (supra) and
Prashant Bharti Vs. State (NCT of Delhi) (supra),
42. Hon’ble the apex Court in the case of State of Haryana
Vs. Bhajanlal reported in (1992 CrLJ 527) in paragraph
108, has held as under :-
“108. In the backdrop of the interpretation of the various relevant
provisions of the Code under Chapter XIV and of the principles of law
— 58 —
enunciated by this Court in a series of decisions relating to the exercise
of the extraordinary power under Article 226 or the inherent powers
under Section 482 of the Code which we have extracted and reproduced
above, we give the following categories of cases by way of illustration
wherein such power could be exercised either to prevent abuse of the
process of any Court or otherwise to secure the ends of justice, though it
may not be possible to lay down any precise, clearly defined and
sufficiently channelised and inflexible guidelines or rigid formula and to
given an exhaustive list of myriad kinds of cases wherein such power
should be exercised.
1. Where the allegations made in the First Information Report or 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 a case
against the accused.
2. Where the allegations in the First Information Report and other
materials, if any, accompanying the F.I.R. do not disclose a cognizable
offence, justifying an investigation by police officers under Section 156
(1) of the Code except under an order of a Magistrate within the purview
of Section 155(2) of the Code.
3. Where, the uncontroverted allegations made in the FIR or
complaint and the evidence collected in support of the same do not
disclose the commission of any offence and make out a case against the
accused.
4. Where, the allegations in the F.I.R. do not constitute a cognizable
offence but constitute only a non-cognizable offence, no investigation is
permitted by a police officer without an order of a Magistrate as
contemplated under Section 155(2) of the Code.
5. Where, the allegations made in the F.I.R. or complaint are so
absurd and inherently improbable on the basis of which no prudent
person can ever reach a just conclusion that there is sufficient ground for
proceeding against the accused.
6. Where there is an express legal bar engrafted in any of the
provisions of the Code or the concerned Act (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
concerned Act, providing efficacious redress for the grievance of the
aggrieved party.
7. Where a criminal proceeding is manifestly attended with malafide
and/or where the proceeding is maliciously instituted with an ulterior
motive for wreaking vengeance on the accused and with a view to spite
him due to private and personal grudge.”
43. In light of the aforesaid judgment delivered by the
apex Court, it can safely be gathered that it is a fit case for
— 59 —
quashment of the order passed by the revisional Court as
this Court has arrived at a conclusion that allowing the
proceeding to continue would be an abuse of the process of
the Court and, therefore, to meet the ends of justice and to
prevent the abuse of process of the Court, the complaint as
well as the proceedings and the order passed by the
revisional Court deserves to be set aside and is accordingly
set aside. The order dated 04/06/2016 is hereby quashed.
The petition preferred u/S. 482 of the Code of Criminal
Procedure, 1973 stands allowed and disposed of.
(S. C. SHARMA)
JUDGE
KR
Digitally signed by Kamal Rathor
Date: 2018.06.18 16:24:13 +05’30’