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M/S Cott Beverages Inc (Royal … vs M/S Tristar Beverages Pvt Ltd … on 18 June, 2018

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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

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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.

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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

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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.

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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

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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

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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

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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

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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

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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

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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

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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

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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

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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

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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

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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

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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

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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

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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

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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

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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

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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

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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

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‘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

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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

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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
740

Learned 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 gSA

2- 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;kA

3- 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;kA

4- 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
India

Dear 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’

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