M/S. Kunstocom
Electronics (I) Pvt. Ltd. Vs. Gilt Pack Ltd. & Anr [2002] Insc 36 (24
January 2002)
D.P.
Mohapatra & P. Venkatarama Reddi P.Venkatarama Reddi, J.
Leave
granted and the appeal heard on merits.
The
respondent herein filed a private complaint in the court of Chief Judicial
Magistrate, Indore, alleging that the appellant
committed an offence of cheating in relation to a transaction of supply of 1500
mt. tons of 'polypropylene brastec' which is a raw material required for
manufacture of HDPE/PP bags. In January 1994 the respondent- Company placed
orders on a German Company named M/s. Kunstoplast Chemic GMBH . for the supply
of 1500 mt. tons of polypropylene brastec through the media of the appellant in
accordance with the price and terms specified in two indents. According to the
appellant, it is a business agent of the German Company, though according to
the respondent, the appellant claimed to be a representative and associate of
the German Company. Pursuant to the deal, an irrevocable letter of credit was
opened in favour of the German Company covering the value of entire quantity of
1500 mt. tons. Out of that quantity, only 50 MTs. were shipped on 09.03.1994
and the letter of credit was encashed to that extent.
The
remaining quantity which was expected to be supplied as per the contract was
not shipped and the correspondence and personal talks with the appellant did
not evoke any positive response. Finally, on 29.4.1994, the appellant-company
informed the respondent that the remaining 1450 mt. tons cannot be shipped due
to some unforeseen circumstances. The appellant requested that the L.C. may be
treated as cancelled. As a result of non-fulfillment of obligation under the
contract, it is claimed by the respondent that it suffered a loss of $ 2,36,250/-
on account of escalation of prices. It is the case of the complainant that on
account of rise in prices during the interregnum, the appellant and the German
company deliberately failed to honour the commitment in order to profit
themselves at the expense of the respondent. It is alleged that the intention
of the accused gathered from the initial representation and the subsequent
conduct proves the deceptive intention from the beginning. According to the
respondent-complainant, the appellant was trying to gain time on one pretext or
the other right from the date of opening the letter of credit in furtherance of
its criminal intention to cheat. The complainant also alleged that it was
induced to believe by the representation of the appellant that the entire
quantity would be supplied within the stipulated period on receipt of
irrevocable letter of credit and on the strength of this representation, the
contract was entered into.
The
appellant's case is that even going by the contents of the complaint and the
statements of the witnesses recorded by the learned Magistrate, no offence of
cheating is made out and it is purely a case of breach of contract arising out
of non-supply of remaining quantity of goods. According to the appellant, there
was no fraudulent or dishonest intention at the time of entering into the
contract nor any deception practised on the contracting party (complainant). It
is also averred that the police before whom the complaint was referred to under
Section 156 (3) Cr.P.C. submitted a report that no offence of cheating was made
out.
Challenging
the legality of the summoning order dated 2.9.1995, the appellant filed an
application under Section 482 Cr.P.C. in the High Court. The petition was
disposed of with the following observations on 15.5.1996:- "Looking to the
contentions as advanced by the counsel for the appellant, at this stage, it is
not a fit case to entertain this petition. However, it is directed that the
learned C.J.M. Indore, where the matter is pending for disposal in accordance
with law on merits, shall consider all the objections raised by appellant in
this petition and shall pass a reasoned order on the same. The appellant, if
aggrieved, by any adverse orders passed against it, shall have right to
challenge the same in accordance with law. With these observations, this
petition is finally disposed of in limini, without notice to the other
side." The appellant then filed objections before the C.J.M., Indore, and sought for dropping the
proceedings. By a reasoned order dated 3.10.1996, the C.J.M., Indore, rejected
the application. The learned C.J.M., held that there were substantial grounds
to make out a prima facie case under Section 420 IPC and it will not be proper
to drop the proceedings at this stage. The C.J.M., Indore, accordingly
re-affirmed the order of his predecessor in issuing the summons to the accused.
Aggrieved
thereby, the appellant once again moved the High Court under Section 482 Cr.P.C.
The High Court disposed of the petition as follows :- "This matter is pending
from 1996. This is a petition u/s 482 Cr.P.C. for dropping the proceedings of
the private complaint. The appellant has come up against the issue of the
process. This petition is disposed of with the observation that the applicant
shall have right to raise all the grounds at the time of framing charge."
It is against this order that the present SLP has been filed.
Mr. Shanti
Bhushan, learned senior counsel appearing for the appellant, vehemently
protested against the stance of the High Court in refraining from giving a
verdict on merits, despite its earlier order. The learned counsel then took us
through the complaint and the statement of the law Officer of the
respondent-Company and submitted that they do not disclose an offence of
cheating within the meaning of Section 415. The learned counsel sought to draw
support from certain decisions of this Court. The learned senior counsel Mr.
R.R. Misra, for the respondents, contended that there is no case for
interference as the High Court has given liberty to the appellant to raise the
relevant objections at the time of framing the charges. That apart, it is
submitted that it is pre-mature to hold that the appellant did not cheat the
respondents and that it is purely in the nature of civil claim. The relevant portions
of the complaint were referred to and it was submitted that no error has been
committed by the learned C.J.M., in taking the cognizance and issuing the
process to the accused.
The
High Court in our opinion was not justified in declining to exercise its
jurisdiction and adjudicating the matter on merits. On an earlier occasion when
the appellant moved the High Court, the High Court directed the C.J.M., Indore,
to consider the objections raised by the appellant and to pass a reasoned
order. Thereafter, the C.J.M., Indore, passed
an order overruling the objections and decided to proceed with the case. When
the appellant approached the High Court again against the speaking order passed
by the C.J.M., the High Court once again declined to decide the petition on
merits, but left it to be raised before the trial court at the time of framing
the charge. Raising the very same objections at the time of framing the charge
would practically be an empty formality as the trial court had already taken a
definite view in the matter. The High Court in passing the impugned order has
virtually ignored the spirit behind the direction given and observations made
in the earlier order. There is no hard and fast rule that the objection as to cognizability
of offence and maintainability of the complaint should be allowed to be raised
only at the time of framing the charge. Such was not the intention of the High
Court in passing the order dated 15.5.1996. In any case, we have the authority
of the judgment of this Court in the case of Ashok Chaturvedi and others vs. Shitul
H. Chanchani and another [1998 (7) SCC 698] to hold that the determination of
the question as regards the propriety of the order of the Magistrate taking
cognizance and issuing process need not necessarily wait till the stage of
framing the charge. G.B. Pattanaik, J. speaking for the Court observed thus:-
"This argument, however, does not appeal to us inasmuch as merely because
an accused has a right to plead at the time of framing of charges that there is
no sufficient material for such framing of charges as provided in Section 245
of the Criminal Procedure Code, he is debarred from approaching the court even
at an earliest (sic earlier) point of time when the Magistrate takes cognizance
of the offence and summons the accused to appear to contend that the very
issuance of the order of taking cognizance is invalid on the ground that no
offence can be said to have been made out on the allegations made in the
complaint petition. It has been held in a number of cases that power under
Section 482 has to be exercised sparingly and in the interest of justice. But
allowing the criminal proceeding to continue even where the allegations in the
complaint petition do not make out any offence would be tantamount to an abuse of
the process of court, and therefore, there cannot be any dispute that in such
case power under Section 482 of the Code can be exercised." It may be that
in a given case it would be more appropriate and proper to raise objections of
this nature at the time of the charge-framing, but this is not a case of this
nature, especially looking at the observations made in the earlier order of the
High Court dated 15.5.1996. We are, therefore, inclined to set aside the
impugned order of the High Court and remit the matter back to the High Court
for fresh disposal of the petition - M.Cr.C. No. 4193 of 1998 for a decision on
merits expeditiously. As the High Court declined to express any view on the
crucial question whether the alleged offence has been made out, we do not
consider it appropriate and proper to undertake the task of deciding the
question which the High Court ought to have decided.
The
Criminal Appeal is accordingly allowed and the matter will now go back to the
High Court for disposal in the light of the observations made above. There
shall be no order as to costs.
J.
(D.P. Mohapatra)
J.
(P. Venkatarama
Reddi) January 24, 2002.
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