Gupta Vs. Anil Triloknath Sharma & Ors  INSC 718 (28 April 2008)
C.K. THAKKER & AFTAB ALAM
REPORTABLE CRIMINAL APPEAL NO. 742 OF 2008 ARISING OUT OF SPECIAL LEAVE
PETITION (Crl) No. 2671 OF 2007 WITH
CRIMINAL APPEAL NO. 743 OF 2008 ARISING OUT OF SPECIAL LEAVE PETITION (Crl) No.
3844 OF 2007 SUNEET GUPTA . . . Appellant Versus SWAMI RAOTE & ANR. . . .
Respondents C.K Thakker, J.
1. Leave granted.
2. The present appeals are directed against common judgment and order passed
by the High Court of Punjab and Haryana at Chandigarh in Criminal Miscellaneous
Nos. 49200-M of 2003 and 30393-M OF 2004. Both the above petitions were filed
by the respondents-accused under Section 482 of the Code of Criminal Procedure,
1973 (hereinafter referred to as 'the Code') for quashing First Information
Report (FIR) lodged by the appellant herein for offences punishable under
Sections 468, 406 read with 120B of the Indian Penal Code (IPC).
3. Short facts giving rise to the present proceedings are that in 1998,
appellant Suneet Gupta entered into a registered Partnership Firm with one
Shashi Kant Mangla in the name and style of M/s K.M. Agencies. The said Firm
was the stockist and distributor of consumer goods of M/s Johnson &
Johnson, a Limited Multinational Company ('M/s Johnson & Johnson Ltd.' for
short). According to the appellant, partnership of M/s K.M. Agencies had
certain claims over M/s Johnson & Johnson Ltd. on account of freight,
octroi paid for goods returned, display of goods of the company, etc.
It is the case of the appellant that the above claims were duly verified by
the officials of M/s Johnson & Johnson Ltd.
4. In or about March, 2001, differences arose between the two partners of
M/s K.M. Agencies, i.e. between the appellant herein and Shashi Kant Mangla, the
other partner. The latter, therefore, joined another partnership firm of M/s
Mangla Agencies with Ravi Kant Mangla, Atul Gupta and two others. It is the
allegation of the appellant that Shashi Kant Mangla who was a partner along
with the appellant of M/s K.M. Agencies falsely, dishonestly and with a view to
cheat and defraud the appellant-complainant, mis- represented before M/s
Johnson & Johnson Ltd.
that the name of partnership firm of M/s K.M. Agencies was changed to M/s Mangla Agencies.
On the basis of such representation Shashi Kant Mangla informed M/s Johnson
& Johnson Ltd. that payment which was required to be made by the Company
(M/s Johnson & Johnson Ltd.) to M/s K.M. Agencies should now be made to M/s
Mangla Agencies. According to the appellant, M/s Johnson & Johnson Ltd. was
aware of the fact that M/s K.M. Agencies and M/s Mangla Agencies were
different; M/s K.M. Agencies, a partnership firm was never dissolved; Suneet
Gupta who was one of the partners of M/s K.M.
Agencies continued to remain partner of the said firm and Mr. Shashi Kant
Mangla, one of the partners of M/s K.M. Agencies had joined another partnership
firm of M/s Mangla Agencies and as such payment which was required to be made
by M/s Johnson & Johnson Ltd. to M/s K.M.
Agencies could not be made to M/s Mangla Agencies and yet such payment was
made with a view to deprive M/s K.M. Agencies and particularly appellant-Suneet
Gupta. The appellant-complainant, in the circumstances, was constrained to
issue legal notice on March 4, 2003 to the respondents herein which was
received by them on March 10, 2003. In the said notice, the complainant stated
that M/s Johnson & Johnson Ltd. was required to pay Rs.2,73,189.70 to M/s
K.M. Agencies but no such payment was made to M/s K.M. Agencies. It also came
to the notice of the complainant that the amount has been misappropriated by
partners of M/s Mangla Agencies and officials of M/s Johnson & Johnson Ltd.
colluded with the partners of M/s Mangla Agencies and all of them had thus
played fraud upon the complainant.
The appellant also filed a complaint before the Director General of Police,
Chandigarh on May 2, 2003 and requested him to direct the police authorities to
enquire into the matter. It appears that necessary inquiry was made, the
respondents submitted their replies, but nothing further was done in the
matter. The appellant, therefore, was constrained to lodge First Information
Report (FIR) No. 266 of 2003 on September 16, 2003, against all the accused for
offences punishable under Sections 468, 406 read with 120B, IPC at Police
Station, Sarabha Nagar, Ludhiana. Police arrested respondent No. 3 Devinder
Sabharwal, Anil Triloki Nath Sharma and Vivek Bhatnagar. Respondent Nos. 1 and
2 herein as also Surrinder Mohan, proprietor of M/s Key Ess Associates obtained
anticipatory bail from the Sessions Court.
Other three accused persons, namely, Shashi Kant Mangla, Ravi Kant Mangla
and Atul Gupta, all partners of M/s Mangla Agencies were denied anticipatory
bail by the learned Additional Sessions Judge. During the pendency of their
bail applications before the High Court, however, the prosecution made a
statement that the presence of those three accused was not required in the case
and consequently their bail petitions became infructuous. Meanwhile, the
respondents herein filed Criminal Miscellaneous Nos. 49200/2003 and 30393/2004
in the High Court of Punjab & Haryana under Section 482 of the Code for
quashing FIR registered against them.
5. The appellant also stated that a detailed inquiry was made by the Police.
It collected the entire evidence and found that prima facie case was made out
against the accused persons and accordingly charge-sheet was submitted on May
13, 2004 against accused persons, namely, Devinder Sabharwal, Vivek Bhatnagar,
Anil Triloki Nath Sharma and Swami Raote. Swami Raote evaded arrest and hence
proceedings under Section 82 of the Code were initiated against him. The
prosecution put Shashi Kant Mangla, Ravi Kant Mangla and Atul Gupta, partners
of M/s Mangla Agencies in Column No.2 while Surrinder Mohan was made a
prosecution witness. The prosecution then moved an application under Section
190 read with Sections 239 and 240 of the Code for summoning Shashi Kant
Mangla, Ravi Kant Mangla and Atul Gupta as accused persons for trial.
6. The High Court vide the impugned order dated August 1, 2006, allowed both
the petitions and quashed FIR lodged by the appellant. It is this order which
is challenged by the appellant in the present appeals.
7. Notice was issued by this Court on April 27, 2007, counter-affidavit and
affidavit-in-rejoinder were thereafter filed and the matters were ordered to be
posted for final disposal. That is how the matters are before us.
8. We have heard the learned counsel for the parties.
9. The learned counsel for the appellant contended that the High Court was
wholly in error in quashing FIR lodged by the appellant.
It was submitted that from the allegations levelled in the FIR prima facie
case for offences punishable under Sections 468, 406 read with 120B, IPC had
been made out.
According to the learned counsel, what is seen at this stage is whether on
the basis of the allegations made in the complaint, prima facie case has been
made out against the accused and not whether trial against them would
ultimately result in conviction of the accused. It was the case of the
appellant in the complaint that two partnership firms of M/s K.M. Agencies and
M/s Mangla Agencies were distinct, different and independent of each other. So
far as M/s K.M. Agencies is concerned, there were only two partners, the
appellant and Shashi Kant Mangla.
Shashi Kant Mangla became one of the partners of other partnership firm as
well, i.e. of M/s Mangla Agencies. But the appellant-complainant had nothing to
do with the other partnership firm, (M/s Mangla Agencies). Dues of M/s K.M.
Agencies which were to be paid by M/s Johnson &
Johnson Ltd. could not, in the circumstances, be diverted to the other
partnership firm with which the appellant-complainant had no connection
whatsoever. All the partners of M/s Mangla Agencies and all the officials of
M/s Johnson & Johnson Ltd. were aware of this fact and yet in collusion
with each other and with a view to deprive M/s K.M. Agencies in general and the
appellant-complainant in particular, payment was made by M/s Johnson &
to M/s Mangla Agencies. Thus prima facie all the accused had committed
offences mentioned in the FIR and the High Court should not have quashed it.
The High Court was also not right, submitted the counsel, in holding that it was
a civil dispute and there was abuse of process of law on the part of the
complainant in initiating criminal proceedings. It was submitted that apart
from civil liability, the accused persons had committed crimes and on the basis
of allegations in the FIR, and on investigation being made, the police
authorities found substance in the allegations of the complainant and
charge-sheet was submitted. It was, therefore, submitted that the appeal
deserves to be allowed by setting aside the order passed by the High Court by
directing the respondents to face criminal proceedings.
10. Learned counsel for the contesting respondents supported the order
passed by the High Court. It was submitted that the dispute is of a civil
nature. It was a dispute between two partnership firms and initiation of
criminal proceedings was only with a view to use pressure against the accused
so that they will be constrained to enter into some settlement with the
complainant. As per settled law, a court of law cannot be used as a means to
pressurize the opposite party so that he may accede to the demand of the
complainant. The High Court was convinced that on the facts and in the
circumstances of the case, no criminal proceedings could have been initiated
and hence, quashed the proceedings which cannot be said to be illegal or
contrary to law. It was, therefore, submitted that the appeals deserve to be
11. On behalf of respondent No. 4, an affidavit is filed by PPS, Dy.
Superintendent of Police, Sarabha Nagar, Ludhiana stating therein that the
matter involved determination of complicated points of facts and law which
could not have been gone into by the High Court in a writ petition. It was
stated that detailed inquiry by PPS, Dy. Superintendent of Police, Sarabha
Nagar, Ludhiana revealed that there was prima facie case of commission of
offences punishable under Sections 468, 406 read with 120B, IPC. Some accused
were arrested also. In the circumstances, the High Court could not have aborted
the proceedings as has been done.
12. Having heard the learned counsel for the parties and having considered
the rival contentions, in our opinion, it cannot be said that the High Court
was wrong in quashing criminal proceedings. It is clear from the case put
forward by the appellant himself that virtually the proceedings were 'civil' in
nature. There were two partnership firms, one M/s K.M. Agencies, consisting of
appellant and Shashi Kant Mangla and the other of M/s Mangla Agencies wherein
Ravi Kant Mangla (one of the partners of M/s K.M. Agencies) was a partner.
It was the case of Shashi Kant Mangla that M/s K.M. Agencies was no more in
existence and it had changed its name from M/s K.M. Agencies to M/s Mangla
Agencies and all the transactions of M/s K.M. Agencies would thereafter be
dealt with by M/s Mangla Agencies. Obviously, therefore, payments which were to
be made to M/s K.M. Agencies should be made to M/s Mangla Agencies. It also
appears that M/s Johnson &
Johnson Ltd. was informed which changed the Code from M/s K.M. Agencies to
M/s Mangla Agencies. It is further clear that though payments were made in
June-July, 2001 by M/s Johnson & Johnson Ltd. to M/s Mangla Agencies, a
notice through an advocate was issued by the complainant only on March 4, 2003,
i.e. after substantial period about two years. A complaint was made to Director
General of Police, Chandigarh by the complainant in May, 2003. The record
further reveals, as stated by respondent Nos. 1, 2 and 3 in the counter-
affidavit, that it was contended by the accused that the matter was civil in
nature and based on commercial transactions and there was a dispute between the
parties and as such there was no element of mens rea. It was also submitted by
the accused that the complainant, with an ulterior motive and mala fide
intention, used pressure tactics and was harassing them in connivance with
local police and filed a complaint on May 2, 2003. The police authorities were
convinced about the nature of dispute and after seeking legal opinion from
District Attorney closed the proceedings. Subsequently, however, the
complainant 'after making cosmetic changes in the earlier complaint' and using
undue influence filed FIR No. 266 of 2003 on September 16, 2003 for commission
of offences punishable under Sections 468, 406 read with 120B, IPC. According
to the accused, it was motivated and the police authorities obliged the
complainant by helping him.
13. The High Court, in our opinion, rightly considered the facts in their
proper perspective and observed that the dispute related to settlement of
accounts between principal and its agent; the principal being M/s Johnson &
Johnson Ltd. and the agent being M/s K.M. Agencies (earlier) and M/s Mangla
Agencies (later). The High Court also noted that it was M/s K.M. Agencies which
informed the principal i.e. M/s Johnson & Johnson Ltd. that M/s K.M. Agencies had closed its business and the business was
thereafter continued by M/s Mangla Agencies and all drafts be issued in favour
of M/s Mangla Agencies. The High Court took note of the fact that even the complainant
had informed the principal that there was dispute between the partners of M/s
Agencies and hence no payment should be made to M/s Mangla Agencies till the
dispute was finally resolved between the parties. That, however, does not give
rise to criminal liability and entitle the complainant to initiate criminal
proceedings, particularly when M/s Johnson & Johnson Ltd. substituted in
the Company record name of M/s Mangla Agencies in place of M/s K.M. Agencies.
The resultant effect of substitution of name was that whatever sums were due to
M/s K.M. Agencies were considered to be due to M/s Mangla Agencies.
14. The High Court, in the circumstances, observed as under;
"This is really a case of one partner trying to drag the principal
company into a criminal litigation to recover dues which the principal had paid
to the other partner. The dispute and the relationship inter se has become a
tripartite one. Suneet Gupta had a dispute with Shashi Kant Mangla but instead
of tackling him he got lodged F.I.R. No. 266 dated September 16, 2003
registered at Police Station Sarabha Nagar, Ludhiana, under Sections
468/406/120-BIPC to pressurize the petitioners to settle the matter. It is not
a clear cut and direct case in which any contractual relationship between Suneet
Gupta with the company has been breached. Indeed Suneet Gupta had no direct
relationship with the company. It was M/s K.M. Aencies of which he was one of
the partners which had developed contractual relationship and later in
June/July, 2001, M/s Mangla Agencies got substituted in place of M/s K.M. Agencies. Suneet Gupta either ignored this development or remained oblivious
of it for nearly 2 years. The first notice was issued after passage of long
time on March 4, 2003. This notice was clearly to drag the company into the
inter se dispute between two partners."
15. The Court proceeded to state;
"The complaint of Suneet Gupta and the steps taken by the police have
clearly converted a tri-partite civil dispute into a criminal one and have
involved the managers of the principals in a dispute between the partners of
16. The High Court, therefore, concluded that the steps taken by the
complainant Suneet Gupta were in clear abuse of process of law and accordingly
allowed both the petitions.
17. By passing the impugned order and quashing criminal proceedings, in our
opinion, the High Court has neither committed any error of law nor of
jurisdiction which deserves interference in exercise of power under Article 136
of the Constitution.
18. Our attention has been invited by the learned counsel for the accused to
several decisions of this Court. In our opinion, however, it is not necessary
to refer to those decisions since we are of the view that the High Court was
right in quashing criminal proceedings.
19. We may, however, refer to one aspect.
Learned Counsel for the appellant strenuously relied upon an order of this
Court in State of Punjab v. Dharam Vir Singh Jethi, 1994 SCC (Cri) 500. In that
case, charge-sheet was submitted by Police and thereafter FIR was quashed by
the High Court.
20. In the light of the said fact, this Court observed;
"Heard learned counsel for the State as well as the contesting
We are afraid that the High Court was not right in quashing the First
Information Report on the plea that the said respondent had no role to play and
was never the custodian of the paddy in question. In fact it was averred in the
counter-affidavit filed in the High Court that the said respondent had acted in
collusion with Kashmira Singh resulting in the latter misappropriating the
paddy in question. At the relevant point of time the respondent concerned, it
is alleged, was in overall charge of the Government Seed Farm, Trehan. This
allegation forms the basis of the involvement of the respondent concerned. The
High Court was, therefore, wrong in saying that the respondent concerned had no
role to play. A specific role is assigned to him, it may be proved or may fail.
In any case, pursuant to the First Information Report the investigation was undertaken
and a charge-sheet or a police report under Section 173(2) of the Code of
Criminal Procedure was filed in the court. If the investigation papers annexed
to the charge-sheet do not disclose the commission of any crime by the
respondent concerned, it would be open to the court to refuse to frame a
charge, but quashing of the First Information Report was not permissible."
21. In our opinion, however, the ratio laid down in the above case will not
apply to the facts of the case. As already indicated in the earlier part of the
judgment, FIR was lodged by the complainant on September 16, 2003 and
immediately within less than a month, the accused invoked the jurisdiction of
the High Court under Section 482 of the Code by filing petitions on October 12,
2003. At that time, challan was not filed in the Court. It was after a
substantial period of about seven months that on May 13, 2004, charge-sheet was
filed by the police authorities. Moreover, in Dharam Vir Singh, the accused was
shown to be in possession of property and later on misappropriated it. The High
Court, however, quashed the proceedings inter alia observing that the accused
was never the custodian of paddy and was not in charge of the Government Seed
Farm which was factually incorrect. In the light of factual scenario, this
Court set aside the order of the High Court quashing criminal proceedings.
22. In the case on hand, the High Court was right in coming to the
conclusion that a civil dispute pure and simple - between the parties was
sought to be converted into a criminal offence only by resorting to pressure
tactics and by taking police help which was indeed abuse of process of law and
has been rightly prevented by the High Court.
23. For the foregoing reasons, in our view, the order passed by the High
Court is in consonance with law and requires no interference. The appeals
deserve to be dismissed and are, accordingly, dismissed.