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2006 (7) TMI 575 - SC - Indian LawsWhether existence or availment of civil remedy in respect of disputes arising from breach of contract bars remedy under criminal law? Whether the allegations in the complaint if accepted on face value constitute any offence under sections 378 403 405 415 or 425 IPC ? Held that - Appeal allowed in part. The High Court was justified in rejecting the contention of the respondents that the criminal proceedings should be quashed in view of the pendency of several civil proceedings. The High Court was not justified in quashing the complaints/criminal proceedings in entirety. The allegations in the complaint are sufficient to constitute offences under sections 415 and 425 of IPC. We accordingly allow these appeals in part and set aside the order of the High Court insofar it quashes the complaint under sections 415 and 425. As a consequence the Judicial Magistrate Coimbatore and the Judicial Magistrate Alandur before whom the matters were pending shall proceed with the matters in accordance with law in regard to the complaints filed by IOC in so far as offences under sections 415 and 425 of IPC.
Issues Involved:
1. Whether the existence or availment of civil remedy in respect of disputes arising from breach of contract bars remedy under criminal law. 2. Whether the allegations in the complaint, if accepted on face value, constitute any offence under sections 378, 403, 405, 415, or 425 IPC. Detailed Analysis: Issue 1: Whether existence or availment of civil remedy bars remedy under criminal law The court reiterated principles from previous judgments regarding the exercise of jurisdiction under Section 482 of the Code of Criminal Procedure to quash complaints and criminal proceedings. The principles include: - A complaint can be quashed if the allegations do not prima facie constitute any offence. - A complaint may be quashed if it is a clear abuse of the process of the court. - The power to quash should be used sparingly and with abundant caution. - The complaint should not be quashed merely because it relates to a commercial transaction or breach of contract. The court noted a growing tendency to convert purely civil disputes into criminal cases due to the perception that civil remedies are time-consuming. Such tendencies should be discouraged. The court emphasized that the existence of civil remedies does not bar criminal law remedies if the allegations disclose a criminal offence. In this case, the court observed that IOC had initiated several civil proceedings to safeguard its interests and recover the amounts due. However, this did not preclude IOC from seeking criminal remedies. The court held that the High Court was justified in rejecting the contention that the criminal proceedings should be quashed due to the pendency of civil proceedings. Issue 2: Whether the allegations constitute any offence under sections 378, 403, 405, 415, or 425 IPC Section 378 (Theft) and Section 403 (Dishonest Misappropriation of Property): The court noted that the allegations did not make out the ingredients of theft or dishonest misappropriation of property. The aircrafts and their engines were never in the possession of IOC, and NEPC India could not commit theft or misappropriate its own property. Section 405 (Criminal Breach of Trust): The court analyzed whether the allegations made out a case of criminal breach of trust. It held that criminal breach of trust involves entrustment with property or dominion over property, and subsequent dishonest misappropriation or conversion. In hypothecation, ownership and possession remain with the debtor, and there is no entrustment by the creditor. The court cited the decision in Central Bureau of Investigation v. Duncans Agro Industries Ltd., which held that hypothecation does not involve entrustment. Therefore, the allegations did not make out a case of criminal breach of trust. Section 415 (Cheating): The court held that the essential ingredients of cheating are deception and fraudulent or dishonest inducement. The complaints alleged that NEPC India, with fraudulent intention, induced IOC to resume supply of aircraft fuel by entering into a fresh agreement and undertaking to clear the outstanding amount. The court found that the allegations constituted an offence under section 415 IPC. Section 425 (Mischief): The court held that the essential ingredients of mischief are intention to cause wrongful loss or damage, causing destruction or change in property, and such change diminishing the value or utility of the property. The complaints alleged that NEPC India removed the engines, diminishing the value and utility of the aircrafts and causing loss to IOC. The court found that the allegations constituted an offence under section 425 IPC. Conclusion: The court allowed the appeals in part and set aside the order of the High Court quashing the complaints under sections 415 and 425 IPC. The Judicial Magistrates were directed to proceed with the matters in accordance with law regarding the complaints filed by IOC under sections 415 and 425 IPC.
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