Trisuns
Chemical Industry Vs. Rajesh Agarwal & Ors [1999] INSC 351 (17 September
1999)
K.T.Thomas,
M.B.Shah Thomas J.
Leave
granted.
Chairman
of the appellant company filed a complaint before the Judicial Magistrate of
First Class, Gandhidham (Gujarat) alleging certain offences including the
offence of cheating against another company located at Indore (Madhya pradesh)
and its Directors. The Magistrate forwarded the complaint to the appellant for
investigation as per his order passed under Section 156(3) of the Code of
Criminal Procedure (for short the Code). The accused Directors thereupon moved
the High Court of Gujarat under Section 482 of the Code for quashing the
complaint. A single Judge of the High Court quashed the complaint as also the
order passed by the Magistrate thereon. Complainant has, therefore, filed this
appeal. The gist of the complaint is this: In the month of October 1996 the
accused Directors approached him and offered to supply 5450 metric tones of
Toasted Soyabean Extractions for a price of nearly four and a half crores of
rupees. The rate quoted by the accused was higher than the market price.
Appellant had to pay the price in advance as demanded by the accused. So the
same was paid through cheques. But the accused sent the commodity which was of
the most inferior and sub-standard quality. Complainant produced Xerox copies
of the reports obtained from the laboratory to which samples of the commodities
were sent for testing purposes. The said laboratory has remarked that the
commodity was of the most inferior and sub-standard quality. The complainant
suffered a loss of 17 lakhs of rupees by the aforesaid consignment alone.
According to the appellant he was induced to pay the price on the
representation that the best quality commodity would be supplied and the price
was paid on such representation. But by supplying the most inferior quality the
accused deceived the complainant and thereby the offence was committed. The
above are the salient features of the allegations in the complaint. We have
noted from the judgment of the learned single judge of the High Court that
appellants counsel in the High Court did not turn up to argue the matter.
Evidently learned judge was deprived of the advantage of getting appellants
version projected. The deficiency is seen reflected in the impugned judgment
also.
Respondents
counsel in the High Court put forward mainly two contentions. First was that
the dispute is purely of a civil nature and hence no prosecution should have
been permitted, and the second was that the Judicial Magistrate of First Class,
Gandhidham has no jurisdiction to entertain the complaint. Learned single judge
has approved both the contentions and quashed the complaint and the order
passed by the magistrate thereon. On the first count learned single judge
pointed out that there was a specific clause in the Memorandum of Understating
arrived between the parties that disputes, if any, arising between them in
respect of any transaction can be resolved through arbitration. High Court made
the following observations: Besides supplies of processed soyabean were
received by the complainant company without any objection and the same have
been exported by the complainant-company. The question whether the complainant-
Company did suffer the loss as alleged by it are the matters to be adjudicated
by the Civil Court and cannot be the subject matter of
criminal prosecution." Time and again this Court has been pointing out
that quashment of FIR or a complaint in exercise of inherent powers of the High
Court should be limited to very extreme exceptions [vide State of Haryana vs. Bhajan
Lal (1992 suppl.(1) SCC 335) and Rajesh Bajaj vs. State NCT of Delhi (1999(3)
SCC 259)]. In the last referred case this court also pointed out that merely
because an act has a civil profile is not sufficient to denude it of its
criminal outfit. We quote the following observations: It may be that the facts
narrated in the present complaint would as well reveal a commercial transaction
or money transaction.
But
that is hardly a reason for holding that the offence of cheating would elude
from such a transaction. In fact, many a cheatings were committed in the course
of commercial and also money transactions.
We are
unable to appreciate the reasoning that the provision incorporated in the
agreement for referring the disputes to arbitration is an effective substitute
for a criminal prosecution when the disputed act is an offence.
Arbitration
is a remedy for affording reliefs to the party affected by breach of the
agreement but the arbitrator cannot conduct a trial of any act which amounted
to an offence albeit the same act may be connected with the discharge of any
function under the agreement. Hence, those are not good reasons for the High
Court to axe down the complaint at the threshold itself. The investigating
agency should have had the freedom to go into the whole gamut of the
allegations and to reach a conclusion of its own.
Pre-emption
of such investigation would be justified only in very extreme cases as
indicated in State of Haryana vs. Bhajaj Lal (Supra). Learned
single judge has accepted the alternative contention advanced by the respondent
pertaining to want of jurisdiction for the Judicial Magistrate of First Class, Gandhidham
in respect of the offence alleged in the complaint. This is what the High Court
has said on that aspect: Further, there is nothing in the complaint which shows
that any part of the transaction took place within the territories of the State
of Gujarat. It appears that even the supply of
processed soyabean was delivered to the complainant-company at the factory
itself. In my view, therefore, Mr. Shah is right in contending that the court
of the learned Judicial Magistrate, First Class, Gandhidham ought not to have
taken cognizance of the matter and ought not to have directed to issue the
process.
It is
an erroneous view that the Magistrate taking cognizance of an offence must
necessarily have territorial jurisdiction to try the case as well. Chapter XIII
of the Code relates to jurisdiction of the criminal courts in enquiries and
trials. That chapter contains provisions regarding the place where the enquiry
and trial are to take place. Section 177 says that every offence shall
ordinarily be inquired into and tried by a Court within whose local jurisdiction
it was committed. But section 179 says that when an act is an offence by reason
of anything which has been done and of a consequence which has ensued, the
place of enquiry and trial can as well be in a court within whose local
jurisdiction such thing has been done or such consequence has ensued.. It
cannot be overlooked that the said provisions do not trammel the powers of any
court to take cognizance of the offence. Power of the court to take cognizance
of the offence is laid in Section 190 of the Code. Sub-sections (1)& (2)
read thus: (i) Subject to the provisions of this Chapter, any Magistrate of the
first class, and any Magistrate of the second class specially empowered in this
behalf under sub-section (2), may take cognizance of any offence (a) Upon receiving
a complaint of facts which constitute such offence;
(b)
Upon a police report of such facts;
(c)
Upon information received from any person other than a police officer, or upon
his own knowledge, that such offence has been committed.
(ii)
The Chief Judicial Magistrate may empower any Magistrate of the second class to
take cognizance under sub-section (1) of such offences as are within his
competence to inquire into or try.
Section
193 imposes a restriction on the court of sessions to take cognizance of any
offence as a court of original jurisdiction. But any Magistrate of the First
Class has the power to take cognizance of any offence, no matter that the
offence was committed within his jurisdiction or not. The only restriction
contained in Section 190 is that the power to take cognizance is subject to the
provisions of this Chapter. There are 9 Sections in Chapter XIV most of which
contain one or other restriction imposed on the power of a first class
magistrate in taking cognizance of an offence. But none of them incorporates
any curtailment on such powers in relation to territorial barrier. In the
corresponding provision in the old Code of Criminal Procedure (1898) the
commencing words were like these: Except as hereinafter provided. Those words
are now replaced by Subject to the provisions of this chapter.
Therefore,
when there is nothing in Chapter XIV of the Code to impair the power of a
judicial magistrate of first class taking cognizance of the offence on the
strength of any territorial reason it is impermissible to deprive such a
magistrate of the power to take cognizance of an offence of course, in certain
special enactments special provisions are incorporated for restricting the
power of taking cognizance of offences falling under such acts. But such
provisions are protected by non-obstante clauses. Any way that is a different
matter. The jurisdictional aspect becomes relevant only when the question of
enquiry or trial arises. It is therefore a fallacious thinking that only a
magistrate having jurisdiction to try the case has the power to take cognizance
of the offence. If he is a Magistrate of the First Class his power to take
cognizance of the offence is not impaired by territorial restrictions. After
taking cognizance he may have to decide as to the court which has jurisdiction
to enquire into or try the offence and that situation would reach only during
the post cognizance stage and not earlier. Unfortunately, the High Court,
without considering any of the aforesaid legal aspects rushed to the erroneous
conclusion that the judicial magistrate of first class, Gandhidham has no power
to take cognizance of the offences alleged merely because such offences could
have been committed outside the territorial limits of the State of Gujarat. Even otherwise, without being
apprised of the fuller conspectus a decision on the question of jurisdiction
should not have been taken by the High Court at a grossly premature stage as
this. For all the aforesaid reasons we are unable to concur with the impugned
judgment. We, therefore, quash it. Learned counsel for the respondents invited
our attention to the fact that all the accused persons arrayed in the complaint
are residing at Indore in Madhya Pradesh and he apprehends
that revival of investigation in the case would most probably embroil them in a
miserable position if they are arrested. We considered that aspect in the view
we now take and we also foresee such a plight for the accused. To alleviate any
possible hardship for the respondents we direct that if any of the respondents
is arrested in connection with the above complaint, he shall be released on
bail by the arresting officer on execution of a bond to his satisfaction.
However,
such arrested person shall be bound to report to the investigating officer at the
place and time specified for the purpose of interrogation.
The
appeal is disposed of in the above terms.
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