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2021 (9) TMI 707 - HC - Indian Laws


Issues Involved:
1. Legality and validity of criminal proceedings under Sections 406, 420, and 120B of the IPC.
2. Distinction between civil disputes and criminal liability.
3. Applicability of Section 482 of the Code of Criminal Procedure for quashing proceedings.

Detailed Analysis:

1. Legality and Validity of Criminal Proceedings:
The petitioners, accused in GR Case No.1524 of 2015, sought quashing of proceedings under Sections 406, 420, and 120B of the IPC. The factual background reveals that the petitioners, partners of Shree Raj Steal Products, ordered CR Coil worth ?24,24,723 from the opposite party No.2. Payment was made partially, with ?16,24,723 remaining unpaid. The opposite party filed a complaint under Section 138/141 of the Negotiable Instruments Act, which was returned for lack of jurisdiction. Subsequently, a complaint under Section 156(3) of the Code of Criminal Procedure was filed, alleging criminal conspiracy and cheating, leading to the registration of the FIR.

2. Distinction Between Civil Disputes and Criminal Liability:
The petitioners argued that the dispute was civil in nature, emphasizing that part payment had been made and there was no fraudulent intention. They cited several Supreme Court judgments, including Vir Prakash Sharma vs. Anil Kumar Agarwal and G. Sagar Suri vs. State of U.P, which establish that non-payment or underpayment does not constitute cheating or criminal breach of trust. The court noted that mere breach of contract does not amount to a criminal offense unless there is fraudulent intent at the inception of the transaction.

3. Applicability of Section 482 of the Code of Criminal Procedure:
Section 482 preserves the inherent powers of the High Court to prevent abuse of process and secure the ends of justice. The court referred to the principles laid down in State of Haryana vs. Ch. Bhajan Lal, identifying circumstances where quashing of proceedings is justified. These include situations where allegations do not disclose a cognizable offense or are inherently improbable.

The court observed that the opposite party No.2 failed to demonstrate fraudulent intent at the inception of the transaction. The petitioners' part payment indicated no initial intention to deceive. The court emphasized that both civil and criminal remedies can coexist but must be pursued based on the nature of the dispute.

Conclusion:
The court concluded that the dispute was essentially civil in nature, arising from a breach of contract, and lacked ingredients of criminal offenses under Sections 406 and 420 IPC. Exercising inherent powers under Section 482, the court quashed the criminal proceedings, allowing the opposite party No.2 to seek remedy in a civil court for recovery of the unpaid amount, subject to the law of limitation.

 

 

 

 

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