V. RAVI KUMAR versus STATE, REP. BY INSPECTOR OF POLICE, DISTRICT CRIME BRANCH, SALEM, TAMIL NADU & ORS. on 14 December 2018

1. This appeal is against the final judgment and order dated 20-03-2006 passed by the High Court of Judicature at Madras, inter alia,allowing Criminal Original Petition No.27039 of 2005 filed under Section482 Cr.P.C. and quashing the criminal proceedings being Crime No.54of 2005 against the petitioners before the High Court and also againstthe first accused company, which was not party before the High Court.

2. The appellant, Shri Ravi Kumar carries on business of cottonginning and conversion of cotton into yarn at Salem, Tamil Nadu asproprietor of “SARAVANA YARN TRADERS”.

3. The appellant as proprietor of “SARAVANA YARNTRADERS” entered into transactions with Sri. Rajendran Mills Ltd.,Salem (hereinafter referred to as “the Mill”). The respondent No.2/accused No.2 is the Managing Director of the Mill and the respondentNo.3/accused No.3 Sri Sundaram is its Chairman, respondent No. 4/accused No.4 Sri Sundar is the son of the Managing Director being therespondent No.2/accused No.2 and is in charge of the affairs of theMill. The respondents/ accused Nos.5 to 13 are also responsible foradministering the Mill.

4. In December 2001, the Mill requested the appellant to supplycotton lint to the Mill for conversion of the same into yarn. The appellantand the respondents entered into transactions in 2001. Later, in January2002, a Memorandum of Understanding in writing was executed betweenthe appellant and the Mill.

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A5. The appellant has alleged that pursuant to the Memorandum ofUnderstanding, the appellant supplied 1,03,920 Kgs of cotton lint to theMill for conversion into yarn. The appellant has further alleged thatrespondent No.2/accused No.2 Shri Chokalingam had, from out of thesaid quantity of cotton lint, purchased lint weighing about 47,164 kgs ofthe value of Rs.26,93,289/- on credit basis and the balance which wasBworth Rs.35,26,561.69 had been entrusted to the Mill for conversion intoyarn.

6. According to the appellant, the Mill did not take any step toconvert the lint into yarn in spite of repeated requests. The appellantlater came to know that all the accused had connived with each otherCand in criminal breach of trust sold the entire cotton lint weighing about1,08,920/- kgs of the value of about Rs.62,19,850.50 and appropriatedthe sale proceeds thereof.

7. On 20-05-2004, the appellant lodged a complaint at the EdapadiPolice Station, Salem district against respondents for offences underDSections 420 and 409 read with Section 34 of the Indian Penal Code.

8. As the Police failed to register any case, the appellant invokedSection 156(3) of the Cr.P.C. to seek orders of the learned JudicialMagistrate II, Sankagiri for registration of the complaint.

9. Even after orders under Section 156(3) of the Cr.P.C., the Policedid not register any complaint. Thereafter, the appellant filed a petitionbeing Crl. O.P. No.7715 of 2005 praying for direction on the Inspectorof Police to register a case on the basis of the complaint made by theappellant.

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10. It is stated that since the amount involved exceeded the limitfor invocation of the pecuniary jurisdiction of the local Police Station, theSuperintendent of Police transferred the investigation to the District CrimeBranch and the same was registered as Crime No.54/2005 under Sections420, 409 and 34 IPC on 22-06-2005.

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11. According to the appellant, since the police did not conductthe investigation properly, the appellant was constrained to file Crl. O.P.No.23354 of 2005 in the High Court of Madras for direction on theInvestigation Officer of Crime No.54 of 2005 to arrest the accusedmentioned in the FIR, complete the investigation and file a final report.

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12. By an order dated 29-08-2005, the High Court disposed ofthe criminal original petition by directing the respondent to file a finalReport within three months from the date of receipt of a copy of thesaid order.

13. It is pleaded that as the Police could not complete theinvestigation within three months as directed, it filed CriminalMiscellaneous Petition being Crl.M.P. No.9149 of 2005 in Crl. O.P.No.23354 of 2005 for extension of time, by a further period of six months,for completion of investigation in Crime No.54 of 2005.

14. On 22-09-2005 respondent Nos.2 to 13 filed Crl. O.P. 27039of 2005 under Section 482 Cr.P.C. in the High Court for quashing FIRNo. 54 of 2005 alleging that the allegations in the complaint did not primafacie make out the offences for which the respondents had been charged.

15. The respondent State filed its counter affidavit to the aforesaidapplication under Section 482 Cr.P.C. and prayed that the said applicationbe dismissed. In the affidavit in opposition, it was contended thatinvestigation revealed that the accused persons had forged documentsusing blank letter head, papers and cheque leaves of the appellant givento him before entering into business transactions. As such ingredients ofSections 468, 471, 420, 409 and 120 (b) IPC were to be found.Furthermore, there was evidence that one of the accused mentioned inthe FIR namely Prasanna Chakravarthy had deposed about the forgedletter prepared by him on the instruction of Kasi Viswanathan, Meiyappan,Rajarathinam, and Jayapal.

16. On 18-10-2005, the appellant, as a de facto complainant, filedan application numbered Crl.M.P. No.8370 of 2005 for intervention inCrl. O. P. No.27039/2005.

17. By an order dated 24-11-2005, the High Court granted thepolice six months’ time for completing the investigation in FIR No.54 of2005 and for filing final report therein.

18. On 30-11-2005, the High Court referred the matter to theConciliation and Mediation Centre for resolution of the dispute betweenthe parties, in the absence of the appellant, being the complainant.

19. The appellant opposed the conciliation proceedings contendingthat the offences were non-compoundable whereupon the case wasagain referred back to the High Court for decision on merits.

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A20. By the impugned order dated 20-03-2006, the High Courtallowed the application under Section 482 Cr.P.C. observing that thecomplainant had, without assigning any reason, withdrawn the firstcomplaint and launched prosecution by filing a fresh complaint; that thecomplaint arose out of a commercial transaction; and that the complainantwould have to approach the Civil Court for recovering dues if at allBarising out of commercial transaction.

21. The short question in this appeal is whether the High Courtshould have quashed the criminal proceedings being Crime No.54 of2005 on the grounds that the appellant had withdrawn an earlier complaintwithout assigning reasons; the transactions being commercial in nature,Cthe ingredients of an offence under the Sections referred to above wereabsent; and that the remedy of the appellant lay in filing a civil suit.

22. There is no provision in the Criminal Procedure Code or anyother statute which debars a complainant from making a second complainton the same allegations, when the first complaint did not lead to conviction,Dacquittal or discharge. In Shiv Shankar Singh v. State of Bihar andAnr.[1], this Court held:

“18. Thus, it is evident that the law does not prohibit filing orentertaining of the second complaint even on the same factsprovided the earlier complaint has been decided on the basis ofEinsufficient material or the order has been passed withoutunderstanding the nature of the complaint or the complete factscould not be placed before the court or where the complainantcame to know certain facts after disposal of the first complaintwhich could have tilted the balance in his favour. However, theFsecond complaint would not be maintainable wherein the earliercomplaint has been disposed of on full consideration of the caseof the complainant on merit.”

23. As held by this Court in Jatinder Singh and Others v. RanjitKaur[2], it is only when a complaint is dismissed on merits after an inquiry,Gthat a second complaint cannot be made on the same facts. Maybe, ascontended by the respondents, the first complaint was withdrawn withoutassigning any reason. However, that in itself is no ground to quash asecond complaint.

1(2012) 1 SCC 130H22001 (2) SCC 570

24. In Pramatha Nath Talukdar and Anr. v. Saroj RanjanSarkar[3], this Court dealt with the question whether the second complaintby the respondent should have been entertained when the previouscomplaint had been withdrawn. The application under Section 482 Cr.P.C.was allowed and the complaint dismissed by the majority Judges observingthat an order of dismissal under Section 203 Cr.P.C. was no bar to theentertainment of second complaint on the same facts, but it could beentertained only in exceptional circumstances, for example, where theprevious order was passed on an incomplete record or a misunderstandingof the nature of the complaint or the order passed was manifestly absurd,unjust or foolish or where there were new facts, which could not, withreasonable diligence, have been brought on record in previousproceedings.

25. In Poonam Chand Jain and Anr. v. Fazru[4], this Court reliedupon its earlier decision in Pramatha Nath (supra) and held that anorder of dismissal of a complaint was no bar to the entertainment ofsecond complaint on the same facts, but it could be entertained only inexceptional circumstances, such as, where the previous order was passedon incomplete record, or on a misunderstanding of the nature of thecomplaint or was manifestly absurd, unjust or foolish or where therewere new facts which could not, with reasonable diligence, have beenbrought on the record in the previous proceedings.

26. In Poonam Chand Jain (supra) this Court further held that:- “...this question again came up for consideration before this Courtin Jatinder Singh v. Ranjit Kaur. There also this Court by relyingon the principle in Pramatha Nath held that there is no provisionsin the Code or in any other statute which debars a complainantfrom filing a second complaint on the same allegation as in thefirst complaint. But this Court added when a Magistrate conductsan enquiry under Section 202 of the Code and dismisses a complainton merits a second complaint on the same facts could not bemade unless there are “exceptional cirumstances”. This Courtheld in para 12, if the dismissal of the first complainant then thereis no bar in filing a second complaint on the same facts. However,if the dismissal of the complaint under Section 203 of the Codewas on merit the position will be different.”

3AIR 1962 SC 876

4(2010) 2 SCC 631

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A27. In M/s Jayant Vitamins Ltd. v. Chaitanyakumar andAnother[5] this Court held that in the absence of compelling andjustifiable reasons, it was not permissible for the Court to stopinvestigation by quashing an FIR.

28. In Zandu Pharmaceutical Works Limited and Ors v. Mohd.BSharaful Haque and Another[6]this Court referred to State of Haryanaand Ors. v. Bhajan Lal and Ors.[7]and summarized and illustrated thecategory of cases in which power under Section 482 of the CriminalProcedure Code could be exercised. This court observed and held:- “(1) Where the allegations made in the first information report orCthe complaint, even if they are taken at their face value andaccepted in their entirety do not prima facie constitute any offenceor make out a case against the accused.

(2) Where the allegations in the first information report and othermaterials, if any, accompanying the FIR do not disclose a cognizableDoffence, justifying an investigation by police officers under Section156(1) of the Code except under an order of a Magistrate withinthe purview of Section 155(2) of the Code.

(3) Where the uncontroverted allegations made in the FIR orcomplaint and the evidence collected in support of the same doEnot disclose the commission of any offence and make out a caseagainst the accused.

(4) Where the allegations in the FIR do not constitute a cognizableoffence but constitute only a non-cognizable offence, noinvestigation is permitted by a police officer without an order of aFMagistrate as contemplated under Section 155(2) of the Code.(5) Where the allegations made in the FIR or complaint are soabsurd and inherently improbable on the basis of which no prudentperson can ever reach a just conclusion that there is sufficientground for proceeding against the accused.

G(6) Where there is an express legal bar engrafted in any of theprovisions of the Code or the Act concerned (under which acriminal proceeding is instituted) to the institution and continuance 5(1992) 4 SCC 15

62005 (1) SCC 122

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of the proceedings and/or where there is a specific provision inthe Code or Act concerned, providing efficacious redress for thegrievance of the aggrieved party.

(7) Where a criminal proceeding is manifestly attended with malafide and/or where the proceeding is maliciously instituted with anulterior motive for wreaking vengeance on the accused and witha view to spite him due to private and personal grudge.”

29. There can be no doubt that a mere breach of contract is not initself a criminal offence, and gives rise to the civil liability of damages.However, as held by this Court in Mridaya Ranjan Prasad Vermaand Ors. v. State of Bihar and Anr.[8], the distinction between merebreach of contract and cheating, which is a criminal offence, is a fineone. While breach of contract cannot give rise to criminal prosecutionfor cheating, fraudulent or dishonest intention is the basis of the offenceof cheating. In this case, in the FIR, there were allegations of fraudulentand dishonest intention including allegations of fabrication of documents,the correctness or otherwise whereof can be determined only duringtrial when evidence is adduced.

30. Exercise of the inherent power of the High Court under Section482 of the Criminal Procedure Code would depend on the facts andcircumstances of each case. It is neither proper nor permissible for theCourt to lay down any straitjacket formula for regulating the inherentpower of the High Court under Section 482 of the Cr.P.C.

31. Power under Section 482 Cr.P.C. might be exercised to preventabuse of the process of law, but only when, the allegations, even if true,would not constitute an offence and/or were frivolous and vexatious ontheir face.

32. Where the accused seeks quashing of the FIR, invoking inherentjurisdiction of the High Court, it is wholly impermissible for the HighCourt to enter into the factual arena to adjudge the correctness of theallegations in the complaint. Reference may be made to the decision ofthis Court, inter alia, in State of Punjab v. Subhash Kumar and Ors.[9]and Janata Dal v. H.S. Chowdhary and Ors.[10]

8(2000) 4 SCC 168

9(2004) 13 SCC 437

10(1992) 4 SCC 305

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A33. In Vesa Holdings (P) Ltd. and Anr. v. State of Kerala andOrs.[11], this Court observed:

“12. The settled proposition of law is that every breach of contractwould not give rise to an offence of cheating and only in thosecases breach of contract would amount to cheating where thereBwas any deception played at the very inception.”

13. It is true that a given set of facts may make out a civil wrongas also a criminal offence and only because a civil remedy maybe available to the complainant that itself cannot be a ground toquash a criminal proceeding. The real test is whether theCallegations in the complaint disclose the criminal offence of cheatingor not.”

34. In Vesa Holding (P) Ltd. (supra), this Court found that therewas nothing to show that at the very inception there was any intentionon behalf of the accused persons to cheat, which was a conditionDprecedent for an offence under Section 420 IPC. The complaint wasfound not to disclose any criminal offence at all.

35. It is well settled that a judgment is a precedent for the issue oflaw which is raised and decided. Phrases and sentences in a judgmentare to be understood in the context of the facts and circumstances of thecase and the same cannot be read in isolation.E

36. As observed above, every breach of contract does not giverise to an offence of cheating. The language and tenor of Vesa Holdings(P) Ltd. (supra), particularly, the observation that breach of contractwould give rise to an offence of cheating only in those cases wherethere was any deception played at the very inception, is to be understoodFin the context of the facts of that case and accordingly construed. Thephrase “in those cases where there was any deception played at thevery inception” cannot be read out of context. This is not a case ofbreach of contract simplicitor but there are serious allegations of forgeryof documents, use of blank letter-head, papers and cheque leaves of theGappellant.

37. In this case, it cannot be said that there were no allegationswhich prima facie constitute ingredients of offences under Sections420, 409 and 34 of the Indian Penal Code in complaint. There were

clear allegations of fraud and cheating which prima facie constituteoffences under Section 420 of the Indian Penal Code. The correctnessof the allegations can be adjudged only at the trial when evidence isadduced. At this stage, it was not for the High Court to enter intofactual arena and decide whether the allegations were correct or whetherthe same were a counter-blast to any proceedings initiated by therespondents.

38. In Jatinder Singh (supra), this Court clearly held that ifdismissal of the complaint was not on merit, but on default of thecomplainant, moving the Magistrate again with a second complaint onthe same facts is maintainable. But if the dismissal of the complaintunder Section 203 of the Code was on merits, the position could bedifferent.

39. The failure to mention the first complaint in the subsequentone is also inconsequential as held, in effect, in Jatinder Singh (supra).Mentioning of reasons for withdrawal of an earlier complaint is also nota condition precedent for maintaining a second complaint. In ourconsidered opinion, the High Court clearly erred in law in dismissing thecomplaint, which certainly disclosed an offence prima facie. At thecost of repetition, it is reiterated that it was not for the High Court toenter the factual arena and adjudicate the merits of the allegations.

40. The appeal is, therefore, allowed and the impugned order ofthe High Court quashing the complaint is set aside. The first respondentshall proceed with further investigation in accordance with law.

Ankit Gyan

Appeal allowed.

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