@ A.K. Ritolia Vs. State of Bihar & Anr  Insc 942 (18 September 2007)
Sinha & Harjit Singh Bedi
APPEAL NO. 1250 OF 2007 (Arising out of SLP (Crl.) No.1973 of 2007) S.B. Sinha,
Parties hereto admittedly had been carrying on commercial transactions.
Appellant herein was an authorised dealer of Hindustan Lever Limited. In
connection with the said business transactions, appellant allegedly was
required to deliver to the second respondent Form IX-C prescribed in terms of
Bihar Sales Tax Rules. The Second respondent herein filed a complaint petition
alleging commission of offence under Section 427, 384 and 420/34 of the Indian
Penal Code, inter alia, holding :
it is not out of place to mention here that the company at the time of
agreement so took place between complainant and Hindustan Levar got signed of
the complainant over certain plain and printed papers saying that there are the
formality of the organization, which is required to be fulfilled as such if the
company try to take any advantage from the said papers the same would not be
binding upon the complainant, as the complainant was not made aware from the
contents of the alleged documents and the signatures of the complainant do not
come within the definition of execution.
as per the requirement of the law stipulated by the rule 12 of sub-rule (2)
(sic) of Bihar Finance Act, 1981 it is the obligatory duty of the selling
dealer to furnish a declaration in writing to the purchasing dealer known as
form IX-C obtained from prescribed authority for the exemption of the sales tax
over the turn over of the purchasing dealer.
XXX That the conduct of the accused of this case put complainant in great
inconvenience, mental agony and financial despair and caused damage to his
XXX That the accused always kept proposal before the complainant to continue
business with the company and as the complainant refused to join with them
after 1999 and as such the accused did not supply the said form IX-C to the
complainant only with the mala fide and dishonest intention which caused damage
to the complainant."
Judicial Magistrate, Madhepura, upon examining the complaint on oath and upon
taking statements of the witnesses purported to have found existence of a prima
facie case for taking cognizance under Section 420 of the Indian Penal Code
against the appellants herein. Summons were directed to be issued. They filed
an application for quashing of the said criminal proceedings before the High
Court of Judicature at Patna in terms of Section 482 of the Code
of Criminal Procedure. By reason of the impugned judgment, a learned Single
Judge of the said Court dismissed the said petition opining :
the petitioners were the carrying and forwarding agents of the Company and in
that capacity they perhaps were instrumental in forwarding the articles to the
complainant. They cannot escape from the liability of undergoing criminal
as the Petitioners' contention on the dispute being a civil one is concerned, I
am unable to agree with the assertions since from the facts made out a definite
criminal liability is made out."
Siddarth Luthra, learned counsel appearing on behalf of the appellant in support
of this appeal, submitted that no case for issuance of summons had been made
out even if the allegations contained in the complaint petition are given their
face value and taken to be correct in its entirety.
S.B. Upadhyay, learned senior counsel appearing on behalf of the second
respondent, on the other hand, took us through the entire complaint petition
and contended that from the statements contained in paragraph 14 of the
complaint petition, it is evident that the appellants herein had intention to
cause a wrongful loss to the complainant by practicing deceit within the
meaning of Sections 23, 24 and 415 of the Indian Penal Code. Strong reliance in
this behalf was placed on a decision of this Court in Rajesh Bajaj v. State NCT
of Delhi & Ors. [(1999) 3 SCC 259].
is not in dispute that the appellant is one of the Redistribution Stockiest of
Hindustan Lever Ltd. It is furthermore not in dispute that the parties had been
carrying on commercial transactions for a long time. Till the financial year
1998-99 despite non-supply of Form IX-C prescribed under the Bihar Sales Tax
Rules, the complainant raised no grievance. Only in paragraph 14 of the
complainant petition, a purported statement had been made that the appellant
compelled him to continue the business for the year 1998-99 despite non-supply
of Form IX-C in the earlier years.
Payment of sales tax, admittedly, is governed by the provisions of Bihar Sales
Tax Act and Rules framed thereunder. Rule 14 of the Rules prescribes procedure required
to be taken in the event of non-receipt of Form IX-C. It is not in dispute that
a dealer who had not been supplied with the prescribed form by the supplier may
take recourse to the remedies provided for under the Rules.
Section 23, 24 and 415 of the Indian Penal Code read as under :
23 Wrongful gain "Wrongful gain" is gain by unlawful means of
property which the person gaining is not legally entitled.
loss".--"Wrongful loss" is the loss by unlawful means of
property to which the person losing it is legally entitled.
wrongfully, losing wrongfully.--A person is said to gain wrongfully when such
person retains wrongfully, as well as when such person acquires wrongfully. A
person is said to lose wrongfully when such person is wrongfully kept out of
any property, as well as when such person is wrongfully deprived of property.
24 - Dishonestly Whoever does anything with the intention of causing wrongful
gain to one person or wrongful loss to another person, is said to do that thing
415 - Cheating Whoever, by deceiving any person, fraudulently or dishonestly
induces the person so deceived to deliver any property to any person, or to
consent that any person shall retain any property, or intentionally induces the
person so deceived to do or omit to do anything which he would not do or omit
if he were not so deceived, and which act or omission causes or is likely to
cause damage or harm to that person in body, mind, reputation or property, is said
Explanation,--A dishonest concealment of facts is
a deception within the meaning of this section."
Ingredients of Section 420 of the Indian Penal Code are as under :
Deception of any person;
Fraudulently or dishonestly inducing any person to deliver any property; or
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
The transactions between the parties were for supply of goods.
______ and except supply of Form IX-C other terms and conditions of the
contract had been complied with by them. Per se, supply or non-supply of Form
IX-C of the Bihar Sales Tax Rules had nothing to do with the transactions for
which the parties had entered into a contract. Non- issuance of the said form
ex-facie cannot give rise to commission of any offence. If the appellant or
their principal were obligated to act under a statute and failed to perform
their duties as indicated hereinbefore, as the statute itself provides for a
remedy, ordinarily the same is required to be taken recourse to. In any event,
the second Respondent could have filed a suit for damages.
cannot be any doubt or dispute whatsoever that an offence can be committed even
if the parties had entered into a commercial transaction.
Rajesh Bajaj (supra) this Court held so. But it is equally well settled that
the allegations contained in the complaint petition must, prima facie, show
inducement of the victim by the accused by making a representation. In a case
of this nature, we are of the opinion that no case has been made out to form an
opinion that the appellant had the requisite intention.
The question came up for consideration before this Court recently in Indian Oil
Corporation v. NEPC Indian Ltd. & Ors. [(2006) 6 SCC 736] wherein, upon
consideration of a large number of decisions, it was held :
essential ingredients of the offence of "cheating" are : (i)
deception of a person either by making a false or misleading representation or
by other action or omission, (ii) fraudulent or dishonest inducement of that
person to either deliver any property or to consent to the retention thereof by
any person or to intentionally induce that person to do or omit to do anything
which he would not do or omit if he were not so deceived and which act or
omission causes or is likely to cause damage or harm to that person in body,
mind, reputation or property."
not a case where the appellants can be said to have induced the respondent to
enter into a transaction so as to deceive them with a view to cause unlawful
losses to them and to make unlawful gain for themselves.
For the reasons aforementioned, in our opinion, the High Court has committed an
error in not interfering with the order of the learned Magistrate taking
cognizance of the offence. The impugned judgment cannot be sustained. It is set
aside accordingly. The appeal is allowed. However, in the facts and
circumstances of the case, there shall be no order as to costs.