2018 (9) TMI 2024 - HC - Indian Laws

Completion and commissioning of the project including commissioning of the 3(three) Power Generating Units - It is the contention of the petitioners that since the project was commissioned in July, 1996, the defect liability period for M/s SPML in the project expired after 18(eighteen) months i.e., in January, 1998 as per terms of the contract and after expiry of the said defect liability period. i.e., the warranty period - HELD THAT - In the instant petition, it is noticed that the charge-sheet is submitted against the accused persons namely, 1. Sri S. K. Sethi, Managing Director, M/s SPML, Kolkata 2. Sri Anil Sethi, Director, M/s SPML, Kokata, 3. Sri Pulok Deb, the then Chief Engineer(Power), Itanagar, 4. Sri Tomi Ete, the then Superintending Engineer (Civil), Itanagar, 5. Sri K. Kumaravel, Director of M/s Beacon Neyrpic, Chennai, 6. Sri S. R. Krishnan, Director of M/s Kartik Steels, Chennai and 7. Dr. J.D. Sharma, Director AHEC, Roorke, Uttaranchal. The aforesaid list of the accused persons mentioned in the charge-sheet shows that not only the persons connected to the affairs of the M/s SPML Infra ltd., but other connected company executives and engineers of the Govt. of Arunachal Pradesh are roped into the alleged act of criminal conspiracy amongst themselves in the supply of sub-standard runner turbines and receiving the substandard runner turbines which were not in conformity with the specified standard as it has come to light, after thorough investigation into the FIR. Therefore, it is not the case concerning the petitioners or their company namely, M/s SPML Infra ltd. only, but the other responsible persons concerned thereto, for which it is not factually possible to segregate only the petitioners case. This Court is of the considered opinion that it is pre-mature at the present stage of the case to say conclusively as to whether there was any fraudulent, dishonest and deceitful intention or act on the part of the petitioners acting on behalf of the company M/s SMPL Infra ltd., within the meaning of Sections 415/418/420 of the IPC in the backdrop of facts alleged, where departmental engineers and turbine manufacturing company were also allegedly involved in criminal conspiracy for wrongful gain and thereby causing wrongful loss to the Govt. of Arunachal Pradesh and further, when contractual disputes are still subject of adjudication in two arbitral proceedings. When the allegations of criminal conspiracy and cheating are made against the petitioners in their individual capacity, although they are officials of M/s SMPL Infra ltd., at the present stage of the proceeding, this Court is restrained from considering their defence version. Petition dismissed.

Summary

Issues Involved:
1. Quashing of Criminal Proceedings under Section 482 CrPC.
2. Allegations of supplying substandard materials.
3. Contractual disputes and arbitration.
4. Criminal liability versus civil liability.
5. Role of various parties in the alleged conspiracy.

Detailed Analysis:

1. Quashing of Criminal Proceedings under Section 482 CrPC:
The petitioners sought to quash the proceedings of G.R Case No.05/2000/294 under Sections 120B/420 IPC, pending in the Court of Judicial Magistrate, First Class, Tawang, Arunachal Pradesh, and the FIR registered as Jang P.S. Case No.05/2004. They argued that the disputes were purely contractual and civil in nature, and converting them into criminal liability was an abuse of the legal process.

2. Allegations of Supplying Substandard Materials:
The respondents alleged that the petitioners' company supplied substandard runner buckets for the Nuranang Hydel Power Project, which did not conform to the specifications in the contract. The National Test House, Kolkata, found discrepancies in the chemical composition of the materials, which led to frequent damage of the turbines. A team from Bharat Heavy Electricals Ltd. (BHEL) also reported substandard materials and poor quality of casting.

3. Contractual Disputes and Arbitration:
The petitioners contended that the disputes were already being adjudicated by an Arbitral Tribunal, which passed an award on 05.11.2016. They argued that the disputes were purely civil, relating to the discharge of contractual obligations, and were being resolved through arbitration. They emphasized that the criminal charges were brought as a tactic to convert civil disputes into criminal liability.

4. Criminal Liability versus Civil Liability:
The petitioners argued that the allegations in the FIR and charge-sheet pertained to contractual disputes and did not constitute a criminal offence. They cited precedents where the Supreme Court held that civil disputes should not be converted into criminal cases unless there was clear evidence of fraudulent or dishonest intention at the time of making the contract. The respondents, however, maintained that the petitioners' company acted with malafide intention to cheat the Government of Arunachal Pradesh.

5. Role of Various Parties in the Alleged Conspiracy:
The charge-sheet named multiple accused, including directors of the petitioners' company and other officials from related companies and the Government of Arunachal Pradesh. The court noted that the case involved allegations of a criminal conspiracy among various parties, and it was not feasible to segregate the petitioners' case from the others. The court emphasized that the role of each accused needed to be examined through the trial process.

Conclusion:
The court dismissed the petition to quash the criminal proceedings, stating that the allegations of criminal conspiracy and cheating needed to be adjudicated by the trial court. The court refrained from expressing any opinion on the merits of the case and emphasized that the trial court should expedite the disposal of the criminal case, which had been pending since 2004. The inherent jurisdiction of the High Court under Section 482 CrPC was not exercised in this instance, as the court found that the matter required a thorough examination of evidence and facts during the trial.