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2017 (4) TMI 1400 - HC - Indian LawsWhether a civil liability can be converted into a criminal liability? - If it is done so could it be construed as abuse of process of Court? Held that - A civil liability cannot be converted into a criminal liability and that therefore the charge sheet filed as against the petitioners can be quashed on the ground that the allegations made in the charge sheet even if they are taken at their face value and accepted in their entirety do not prima facie constitute any offence or make out a case against the petitioners. The charge sheet also deserves to be quashed on the ground of abuse of process of Court as the criminal proceedings initiated by the prosecuting agency is manifestly attended with malafide with an ulterior motive for wreaking vengeance on the petitioner. Petition allowed.
Issues Involved:
1. Whether the petitions to quash the charge sheet and discharge the petitioner from the criminal case are maintainable. 2. Whether the allegations against the petitioners constitute a criminal offense or are purely civil in nature. 3. Whether the procedures under the CBI Manual were followed before registering the FIR. 4. Whether the petitioners were involved in a criminal conspiracy to cheat MMTC Ltd. 5. Whether the petitioners committed the offenses of cheating, falsification of accounts, and criminal misconduct. Detailed Analysis: 1. Maintainability of Petitions to Quash the Charge Sheet and Discharge the Petitioner: The court examined the maintainability of the petitions filed under Section 482 of the Code of Criminal Procedure to quash the charge sheet and discharge the petitioner. It was noted that the powers conferred under Section 482 are to prevent abuse of process and to secure the ends of justice. The court referred to the principles laid down by the Supreme Court in various cases, including *State of U.P. Vs. K.K. Gupta* and *State of M.P. Vs. S.B. Johari*, which state that the High Court can exercise its inherent powers to quash proceedings if the allegations made do not constitute an offense or if there is an abuse of process. 2. Nature of Allegations - Criminal or Civil: The court observed that the dispute arose from a Memorandum of Understanding (MOU) dated 02.04.2008 between MMTC Ltd. and M/s. Shiv Sahai & Sons. The entire dispute was based on this contract, and the court noted that there was a growing tendency to convert purely civil disputes into criminal cases. The court referred to the Supreme Court's observations in *Indian Oil Corporation vs M/S NEPC India Ltd.* and *Binod Kumar Vs. State of Bihar*, which emphasized that civil liability cannot be converted into criminal liability. The court found that the allegations were essentially civil in nature and related to a business transaction under the MOU. 3. Compliance with CBI Manual Procedures: The court scrutinized whether the procedures under the CBI Manual were followed before registering the FIR. It was noted that the CBI Manual mandates a preliminary enquiry before registering a regular case. The court found that no preliminary enquiry registration report was filed, and the procedures enunciated in Chapters 8 and 9 of the CBI Manual were not followed. The court referred to the decision in *MCR. Vyas v. Inspector of Police*, which emphasized the mandatory nature of following CBI Manual procedures. 4. Allegations of Criminal Conspiracy to Cheat MMTC Ltd.: The court examined the allegations of criminal conspiracy under Section 120B IPC. It was noted that the prosecution failed to provide substantial evidence to prove that the petitioners conspired to cheat MMTC Ltd. The court found inconsistencies in the FIR and the charge sheet, particularly regarding the involvement of Mr. S. Gurusamy, who was initially named in the FIR but later excluded from the charge sheet. The court concluded that no concrete evidence was available to indict the petitioners for criminal conspiracy. 5. Offenses of Cheating, Falsification of Accounts, and Criminal Misconduct: The court analyzed the charges under Sections 420, 477A IPC, and Section 13(2) r/w 13(1)(d) of the Prevention of Corruption Act, 1988. It was observed that the petitioners were not public servants, and hence the charges under the Prevention of Corruption Act were not applicable. The court also found that the allegations of cheating and falsification of accounts were not substantiated by evidence. The court referred to the Supreme Court's decision in *B.Suresh Yadav V Sharifa Bee and Anr.*, which held that for an offense of cheating, it must be shown that the accused had fraudulent or dishonest intention at the time of making the promise or representation. Conclusion: The court allowed the petitions, quashed the charge sheet in C.C.No.3 of 2014 against Mr. N.P. Agarwal, and set aside the impugned order dated 04.08.2015, thereby discharging Mr. Ganesh Agarwal from the case. The court concluded that the entire transaction was civil in nature and that the criminal proceedings were an abuse of process.
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