Choudhary Vs. Stateo Rajasthan & ANR.  INSC 464 (3 March 2009)
SUPREME COURT OF INDIA CRIMINAL APPELLATE JURISDICTION CRIMINAL APPEAL NO. 417
OF 2009 [Arising out of Special Leave Petition (Criminal) No. 6769 of 2007]
MAHESH CHOUDHARY ... APPELLANT VERSUS
Appellant was a partner of a firm known as M/s Saraswati Exports.
He is also Director of a Company known as `Saraswati Exim Pvt. Ltd.' (for
short, "the company").
M/s S.N.Kapur Exports is a firm registered under the Indian
Partnership Act, 1932 (for short, "firm"). The Complainant Vikram
Kapoor (Respondent No.2 herein) is a partner thereof. The firm was engaged in
manufacturing, selling and export of carpets, mats, etc. It developed various
types of hand knotted new designs of carpets and acquired special skill
Indisputably, the two firms entered into a contract on or about
1.4.2001 in terms whereof, inter alia, the firm agreed to help and assist the
appellant with regard to production, i.e., designing, colouring, dyeing,
finishing, etc. The firm also agreed to provide knowledge and know-how for the
carpet production by the appellant for making their products readily saleable
and more-marketable. The firm for the said purpose was to receive 10%
commission on the invoice value of each and every invoice and total sales made
directly or indirectly by the firm.
the clauses of the said agreement are as under:
That the SECOND PARTY shall have an office provided by the FIRST PARTY to carry
out supervising of all the work of designing etc. and auditing/checking of account
3 xxx xxx
the SECOND PARTY shall have right to auditing, checking of accounts
books/records etc., through their auditor at any time and the FIRST PARTY will
cooperate in this regard.
if the sum due on account of 10% commission is not paid promptly as soon as the
sum due becomes Rs. 3 Lacs, the SECOND PARTY shall on the strength of this
agreement alone, file a law suit for the recovery of dues and bringing a stay
from the law court of the business and its total activity till the full payment
has been made along with 15% interest for the period of delay and full cost of
law suit has been cleared and paid in full by the FIRST PARTY.
the FIRST PARTY has an assurance from SECOND PARTY that sales (export sales of
Hand Knotted Carpet) will be done with the help of SECOND PARTY.
the FIRST PARTY is singly taking up to produce only Hand Knotted Carpets
without any compromise in execution of quality. Any defective carpets produced
by the FIRST PARTY shall be entirely FIRST PARTY's responsibilities.
neither FIRST PARTY nor SECOND PARTY can enter into such agreement with any one
The said agreement continued till 31.3.2003. Indisputably again
with effect from 1.4.2003, another agreement has been entered into by and
between the parties thereto whereby and whereunder it was agreed that the
appellant would pay a sum of Rs.17 lakhs per month to the firm for a period of
two years. It is furthermore not in dispute that whereas the firm claims a sum
of Rs.4,49,85,581/- towards commission payable to it towards export but only a
sum of Rs.3,21,06,910/- has been paid.
Inter alia alleging that the appellant herein has committed the
offences of criminal breach of trust and/or of cheating and forgery, on the
premise that he had made sale of about Rs.9 crores in the year 2002-2003
through a sister concern wherefor no commission was paid although the technical
know-how was made available by the firm, a complaint petition was filed in the
court of Judicial Magistrate No. 22, Jaipur City, Jaipur on or about
The learned Magistrate directed the officer-in-charge of the
Brahmpuri Police Station to lodge a First Information Report (FIR). Pursuant
thereto or in furtherance thereof, a FIR was lodged. On completion of
investigation, a detailed charge-sheet has been submitted on 5 or about
8.1.2007. In the said charge-sheet, it was, inter alia, opined that no
manipulation in the records has been committed for showing sale of carpet
through the sister concern, stating:
it is assumed that the sale made by Saraswati Exim is the indirect sale of
Saraswati Export, yet no commission is payable to Shri Kapoor on the sale of
tufted carpets and hand knotted carpets purchased from other firms. No such
fact has come into light from the entire records of sale made by Saraswati
Export and Saraswati Exim that sale made by Saraswati Export has been shown to
be the sale made by Saraswati Exim by committing any manipulation in the
Analyzing the terms of the contract, it was stated that the
complainant did not raise any protest from time to time with regard to the
purported breaches thereof on the part of the appellant and in any event, the
same gives rise to a civil dispute.
It was, however, found that different invoices were presented to
the bank showing different amounts and quantities vis-`-vis the firm, stating:
partners of Saraswati Export by showing the amount of commission in the
invoices falsely and wrongly and by deducting the amount of commission from the
total sale value in wrong and false manner have shown the less sale turnover 6
and consequently, an offence under Section 420, 467, 468 IPC is found proved
for paying less commission than the actual due commission to Shri Kapoor and
commission of breach of trust.
Invoice No. 1610/23.4.02 which has been submitted by Saraswati Export with the
bank, rate of carpets is shown at higher rate and the rate of carpet in the
invoice given to the complainant is shown lower. Thus, no satisfactory
explanation regarding difference in the sale rate of carpet in the copies of
the above invoices is available on record. However, in comparison to the annual
sale turnover of Saraswati Export, difference of total sale value of US $
34096.00 of the above one bill and difference amount 2005 US $ is ignorable,
but it is proved that Shri Mahesh Chaudhary by making the false entry in the
invoices has saved the commission of 200.5 US $ payable to Shri Kapoor and has
not paid the same to Shri Kapoor against which offence punishable under Sections
420, 467, 468 IPC is found proved."
The learned Chief Judicial Magistrate took cognizance of the
offences against the appellant by an order dated 9.1.2007. Appellant thereafter
filed an application for quashing of the said order before the Rajasthan High
Court which has been dismissed by reason of the impugned judgment.
Mr. Jagdeep Dhankar, learned Senior Counsel appearing on behalf of
the appellant, would submit:
7 i) The
transaction in terms of the aforementioned agreement dated 21.2.1973 having continued
upto 31.3.2003 and a sum of Rs.3,21,06,910/- having been paid by way of
commission to the firm, the charge-sheet even if given face value and taken to
be correct in its entirely does not constitute offences punishable under
Sections 420, 467 and 468 of the Indian Penal Code.
observations made in the charge-sheet against the appellant being related to
about 200 US $ only, it is absurd to think that the appellant would commit such
any event, the disputes and differences between the parties being pertaining to
breach of contract resulting in civil dispute, the same should be directed to
be resolved through arbitration or any other dispute resolution mechanism.
Mr. L.N. Rao, learned Senior Counsel appearing on behalf of the
respondent, on the other hand, would contend:
Appellant illegally and wrongfully diverted the business to its sister concern
and, thus, cheated the respondent No.2 of a huge amount of commission.
8 ii) In
any event, a charge-sheet having been filed upon arriving at a finding that the
accused had committed an offence of forgery in respect of invoices, which are
valuable security, this Court should not interfere with the impugned order.
The principle providing for exercise of the power by a High Court
under Section 482 of the Code of Criminal Procedure to quash a criminal
proceeding is well known. The court shall ordinarily exercise the said
jurisdiction, inter alia, in the event the allegations contained in the FIR or
the Complaint Petition even if on face value are taken to be correct in their
entirety, does not disclose commission of an offence.
It is also well settled that save and except very exceptional
circumstances, the court would not look to any document relied upon by the
accused in support of his defence. Although allegations contained in the
complaint petition may disclose a civil dispute, the same by itself may not be
a ground to hold that the criminal proceedings should not be allowed to
continue. For the purpose of exercising its jurisdiction, the superior courts
are also required to consider as to whether the allegations made in the FIR 9
or Complaint Petition fulfill the ingredients of the offences alleged against
Indisputably, the question as to whether the complainant was
entitled to a higher amount of commission in terms of the agreement dated
21.2.1973 is essentially a civil dispute. The complainant in terms of the said
agreement was not only entitled to inspect the documents maintained by the
accused but also to get the same audited. It is, therefore, difficult to hold
as has rightly been opined by the Investigating Officer that a case for
imposing a criminal liability on the accused on that score has been made out.
While saying so, we are not unmindful of the limitations of the court's power
under Section 482 of the Code of Criminal Procedure which is primarily for one
either to prevent abuse of the process of any Court or otherwise to secure the
ends of justice. The court at that stage would not embark upon appreciation of
evidence. The Court shall moreover consider the materials on record as a whole.
Kamaladevi Agarwal vs. State of W.B. & ors. [(2002) 1 SCC 555], this Court
"7. This Court has consistently held that the revisional or inherent
powers of quashing the proceedings at the initial stage should be exercised
sparingly and only where the allegations made in the complaint or the FIR, even
if taken it at the face value and accepted in entirety, do not prima facie
disclose the commission of an offence.
and controversial facts cannot be made the basis for the exercise of the
furthermore observed that the High Court should be slow in interfering with the
proceedings at the initial stage and that merely because the nature of the
dispute is primarily of a civil nature, the criminal prosecution cannot be
quashed because in cases of forgery and fraud there would always be some
element of civil nature.
Court in B.Suresh Yadav vs. Sharifa Bee & anr. [(2007) 13 SCC 107] opined
For the purpose of establishing the offence of cheating, the complainant is
required to show that the accused had fraudulent or dishonest intention at the
time of making promise or representation. In a case of this nature, it is permissible
in law to consider the stand taken by a party in a pending civil litigation. We
do not, however, mean to lay down a law that the liability of a person cannot
be both civil and criminal at the same time. But when a stand has been taken in
a complaint petition which is contrary to or 11 inconsistent with the stand
taken by him in a civil suit, it assumes significance. Had the fact as
purported to have been represented before us that the appellant herein got the
said two rooms demolished and concealed the said fact at the time of execution
of the deed of sale, the matter might have been different. As the deed of sale
was executed on 30.9.2005 and the purported demolition took place on 29.9.2005,
it was expected that the complainant/first respondent would come out with her
real grievance in the written statement filed by her in the aforementioned
suit. She, for reasons best known to her, did not choose to do so."
in R. Kalyani vs. Janak C. Mehta & ors. [2008 (14) SCALE 85], this Court
laid down the law in the following terms:
Propositions of law which emerge from the said decisions are:
High Court ordinarily would not exercise its inherent jurisdiction to quash a
criminal proceeding and, in particular, a First Information Report unless the
allegations contained therein, even if given face value and taken to be correct
in their entirety, disclosed no cognizable offence.
the said purpose, the Court, save and except in very exceptional circumstances,
would not look to any document relied upon by the defence.
Such a power should be exercised very sparingly. If the allegations made in the
FIR disclose commission of an offence, the court shall not go beyond the same
and pass an order in favour of the accused to hold absence of any mens rea or
the allegation discloses a civil dispute, the same by itself may not be a
ground to hold that the criminal proceedings should not be allowed to continue.
10. It is
furthermore well known that no hard and fast rule can be laid down. Each case
has to be considered on its own merits. The Court, while exercising its
inherent jurisdiction, although would not interfere with a genuine complaint
keeping in view the purport and object for which the provisions of Sections 482
and 483 of the Code of Criminal Procedure had been introduced by the Parliament
but would not hesitate to exercise its jurisdiction in appropriate cases. One
of the paramount duties of the Superior Courts is to see that a person who is
apparently innocent is not subjected to persecution and humiliation on the
basis of a false and wholly untenable complaint."
The charge-sheet, in our opinion, prima facie discloses commission
of offences. A fair investigation was carried out by the Investigating Officer.
charge-sheet is a detailed one. If an order of cognizance has been passed
relying on or on the basis thereof by the learned Magistrate, in our 13
opinion, no exception thereto can be taken. We, therefore, do not find any
legal infirmity in the impugned orders.
We, however, must place on record that before us Mr. Dhankar
stated that the appellant is ready and willing to get the disputes and
differences between the parties settled. In that view of the matter and keeping
in view the peculiar facts and circumstances of this case and with a view to do
complete justice to the parties, we, in exercise of our jurisdiction under
Article 142 of the Constitution of India, direct that in the event the
appellant appears before the learned Magistrate within a period of four weeks
from date and files an application for grant of bail, he shall be released on
bail on such terms and conditions as the learned Magistrate may seem fit and
proper. In the event, the appellant files an application for exemption from his
personal appearance, the same may also be considered on its own merits.
be open to the complainant to consider the offer of the appellant.
Subject to the aforementioned directions, the appeal is dismissed.
.....................................J. [S.B. Sinha]
.....................................J. [Asok Kumar Ganguly]
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