V.R. Dalal & Ors. Vs. Yougendra Naranji Thakkar & ANR.  INSC
988 (16 May
IN THE SUPREME COURT OF INDIA
CRIMINAL APPELLATE JURISDICTION CRIMINAL APPEAL NO. 925 OF 2008 [Arising out of
SLP (Crl.) No. 6351 of 2006] V.R. Dalal & Ors. ...Appellants Versus
Yougendra Naranji Thakkar & Anr. ...Respondents
S.B. SINHA, J :
1. Leave granted.
2. A complaint petition was filed
by the respondent No. 1 herein in the Court of Metropolitan Magistrate, 30th
Court at Kurla. It was registered as Case No. 271/M of 2002; Accused Nos. 1 to
6 thereof were partners of M/s. N.M. Raiji and Company and Accused No. 7 was
its employee. Appellants herein who were arrayed as the Accused Nos. 8 to 13
were partners of another firm known as M/s. Gandhi Dalal and Shah.
The said firm was earlier known as
Dalal and Shah. Out of the said 2 accused, Accused No. 8 Mr. Y.C. Amin has
expired. In the aforementioned complaint petition, allegations were made that
all the accused persons conspired with each other so as to deprive the complainant
from deriving the benefits of a firm by dissolving the firm N.M. Raiji and
Company behind his back.
3. It appears that the firm `M/s.
Gandhi Dalal and Shah' which was constituted with effect from 1.02.2000 was
cancelled from the very inception as the same is said to have not been acted
upon. The name M/s. Gandhi Dalal and Shah was surrendered to the Chartered
Accountants of India. Indisputably, in the complaint petition itself, it has
been accepted that the said M/s. Gandhi Dalal and Shah is no longer in
existence. It has further not been disputed that one Mahendra Thakkar also
signed in the original deed of partnership dated 10.02.2001. In relation to the
cancellation of the said partnership, it is alleged:
"The Complainant states that
they have with some dishonest intention have not prepared any Deed of
dissolution which is mandatory for cancellation of any Deed of partnership.
Merely by canceling Deed on piece
of paper has no meaning in the eyes of law and it is misguiding but in law the
Deed of partnership will remain in force till it is dissolved by deed of
dissolution. The Accused have again played fraud upon the complainant by
misrepresenting him that they have cancelled the Deed of 3 partnership. They
have also filed false documents with Institute of Chartered Accountants in
order to commit fraud."
4. The role of the appellants
herein are said to be that of conspirators.
The complainant stated:
"The Accused persons in
criminal conspiracy with each other intending to kicked out the complainant
from the said firm by adopting intellectual tactics, which is evident from the
conduct and act of the accused. The complainant is putting his full time for
the prosperity of the said firm and he has contributed Lion Share in creating
good reputation and goodwill of the said Firm among the Corporate Sector and
other business communities. The Complainant is not having control over the
income of the firm. In spite of the demand of the Complainant for giving him
accounts of the firm the accused have failed and neglected to do so as such the
complainant is not aware at present exact amount misappropriated by the Accused
persons. The complainant states that it is not only misappropriates but it
amounts to theft of the valuable property of the complainant."
5. The firm M/s. N.M. Raiji and
Company is a firm of chartered accountants. Some business allegedly had been
transferred. It is stated that the accused have committed criminal breach of
trust in respect of income and goodwill of the firm. According to the complainant,
his 4 income from the said firm would have been 5% from the profit of the said
firm which was estimated at 30% wherefrom he has allegedly been deprived, as he
was not made a partner in the new firm.
6. Appellants filed a writ
petition before the Bombay High Court which was marked as Criminal Writ
Petition No. 315 of 2004. A separate writ application was also filed by Accused
Nos. 1 to 7 which was marked as Writ Petition No. 542 of 2003. The said writ
petition was dismissed. The High Court, by reason of the impugned judgment,
dismissed the writ petition filed by the appellants also stating:
"5 Mr. Panikar appearing for
the petitioners, does not dispute that such an order is passed.
However, he submits that the case
of the present petitioners stand on a slightly different footing, although they
are accused in the same criminal case, as far as they are concerned, they are
not the partners of M/s. N.M. Raiji &
Company. This N.M. Raiji and
Company was a partnership firm in which all accused 1 to 7 and the complainant
were partners. The petitioners are partners of distinct firm which is known as
"Dalal & Shah" and later on "M/s Gandhi Dalal &
Shah". In such circumstances, it would not be proper to rely upon the
order passed in the other writ petition. These are disputes between persons,
who are partners, during the course of administration and management of the
business of the firm. It is a purely civil dispute.
Allowing criminal proceeding
according to Shri Panikar would be abuse of process of the court."
7. Mr. Sureshkumar J. Panicker,
learned counsel appearing on behalf of the appellants, would submit that the
dispute between the parties being a civil dispute, if the proceeding is allowed
to continue, it would amount to an abuse of process of law.
8. Mr. Jatin Zaveri, learned
counsel appearing on behalf of the respondents, on the other hand, would
contend that as allegations made in the complaint petition constitute an
offence, this Court should not interfere with the impugned judgment.
9. The short question which arises
for consideration is as to whether the complaint petition given its face value
and taken to be correct in its entirety constitutes an offence.
M/s. Gandhi Dalal and Shah
admittedly was constituted as a partnership firm on 1.12.2000. The said
partnership firm was constituted on the premise that four partners of M/s. N.M.
Raiji and Company were representing the firm Dalal and Shah. As indicated
hereinbefore, an outsider was also included therein. Once the said partnership
did not take off and the partnership deed was cancelled as it had never been 6
acted upon, the question of any wrongful act on the part of the appellants did
not arise. It is one thing to say that there exists a dispute amongst the
partners inter se but it is another thing to say that by constituting another
firm wherein two firms would be represented by their respective nominees
together with an outsider would itself indicate an act of conspiracy. Once it
has been accepted as of fact that the said partnership has been cancelled, the
question of relying thereupon for any purpose would not arise.
10. The learned counsel appearing
on behalf of the respondents, however, has drawn our attention to a letter
dated 28.02.2001 addressed by Arun R. Gandhi, Mahendra N. Thakkar, Jayesh M.
Gandhi, Vinay D.
Balse and Sujal A. Shah to
Yogendra N. Thakkar wherein one of the sequence of events was stated to be as
"(3) On getting you letter
dated February 7, 2001, Mr. Arun Gandhi had discussed the matter with Mr.
Mahendra Thakkar on 9th and 10th February, 2001 who had informed that Mr.
Arun Gandhi that he need not worry
about it and that everything would be sorted out by meeting with you, and that
we should go ahead with the signing of the partnership deed (of Gandhi Dalal
& Shah). On that basis, the said partnership deed was signed on 10th
February, 2001, by five signatories. Mr. Mahendra Thakker could not sign on
that day as he had some urgent work to attend."
7 This letter does not take us
anywhere. It merely shows that internal dispute leading to abandonment of the
concept of starting a new firm.
11. Mr. Panicker has relied upon a
decision of this Court in Uma Shankar Gopalika v. State of Bihar and Another
[(2005) 10 SCC 336] wherein it has been held that where the dispute is pure
civil in nature an offence under Section 420 or Section 120B of Indian Penal
Code cannot be said to have been made out.
12. It may be true that in the
event the court finds that the dispute between the parties is civil in nature,
it may not allow the criminal proceedings to go on. But, no law, in our
opinion, as such can be laid down as in a given case both civil suit and
criminal complaint would be maintainable although the cause of action for both
the proceedings is the same.
13. We, however, in this case are
satisfied that the appellants by no stretch of imagination can be said to have
committed an offence particularly when admittedly the new firm has been
cancelled from its 8 very inception. If the new firm has not derived any
income, the question of depriving the claimant therefrom does not arise.
Whether the constitution of the said firm was illegal or mala fide, thus, need
not be gone into as by reason thereof the respondent No. 1 cannot be said to
have suffered any loss.
14. We may notice that as regards
commission of an offence in terms of Section 405 of Indian Penal Code, this
Court in Indian Oil Corpn. v.
NEPC India Ltd. and Others [(2006)
6 SCC 736] held that where the first ingredient of criminal breach of trust,
that is, entrustment is missing, the same would not constitute a criminal
breach of trust.
As regards essential ingredients
of the offence of cheating, it was stated:
"(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
15. The aforementioned ingredients
of Section 420 of Indian Penal Code are also absent in the instant case. [See also
Suryalakshmi Cotton Mills Ltd. v. Rajvir Industries Ltd. and Ors. 2008 (1)
16. When a proceeding is found to
be an abuse of the process of court, this Court in exercise of is jurisdiction
under Article 142 of the Constitution of India may not allow it to continue.
For the said purpose, the fact of the matter can be looked into. It was so done
recently in Sanapareddy Maheedhar and Another v. State of Andhra Pradesh and
Another [2007 (14) SCALE 321] wherein upon noticing a large number of decisions
of this Court, it was held:
"We are further of the view
that in the peculiar facts of this case, continuation of proceedings of CC
No.240/2002 will amount to abuse of the process of the Court. It is not in
dispute that after marriage, Shireesha Bhavani lived with appellant No.1 for
less than one and a half months (eight days at Hyderabad and about thirty days at New
Jersey). It is also not in dispute that
their marriage was dissolved by the Superior Court at New Jersey vide decree
dated 15.12.1999. Shireesha Bhavani is not shown to have challenged the decree
of divorce. As a mater of fact, she married Sri Venkat Puskar in 2000 and has
two children from the second marriage. She also received all the articles of
dowry (including jewellery) by filing affidavit 10 dated 28.12.1999 in the
Superior Court at New Jersey. As on today a period of almost nine years has
elapsed of the marriage of appellant No.1 and Shireesha Bhavani and seven years
from her second marriage. Therefore, Page 0086 at this belated stage, there
does not appear to be any justification for continuation of the proceedings in
CC No.240/2002. Rather, it would amount to sheer harassment to the appellant
and Shireesha Bhavani who are settled in USA, if they are required to come to
India for giving evidence in relation to an offence allegedly committed in
1998-99. It is also extremely doubtful whether the Government of India will,
after lapse of such a long time, give sanction in terms of Section 188
17. For the reasons aforementioned,
the impugned judgment cannot be sustained. It is set aside accordingly. The
summons issued by the learned Magistrate against the appellants is quashed. The
appeal is allowed.
[H.S. Bedi] New Delhi;