2018 (4) TMI 419 - HC - Indian Laws

Mis-utilization of cheques issued - sub-contract - the proceeding has been challenged here on the ground that prima-facie there is no material to take cognizance against the petitioners with regard to commission of aforesaid offences - it is contended that this is purely a civil dispute - Held that - the substance of the grievance is that the cheque book was given after signature with a specific direction to use with regard to payment if required for implementation of contract relating to construction of road but the cheque was used for other purposes than that and efforts were made to encash it and after getting the cheque dishonored, the petitioners company filed complaint under Section 138 of the N.I. Act against the respondent no. 2 /complainant. It is also evident that the complaint under Section 138 of the N.I. Act has been filed by M/s. BVSR Construction Company, therefore, the beneficiary under the alleged act is the company and the petitioners have merely worked on behalf of the company. Prima-facie it appears that it is a dispute with regard to account having nature of civil dispute and the complainant /respondent no 2 without taking recourse to resolve the matter in civil side simultaneously has made efforts to implicate them by setting criminal case into motion. The Apex court in the case of Sharad Kumar Sanghi Versus Sangita Rane 2015 (2) TMI 1117 - SUPREME COURT , has held that when the act is done on behalf of the company and the company has not been arrayed as an accused, no criminal proceedings can be initiated against the representatives / employees of the company unless they are personally responsible for the act. This court is of the considered view that the proceedings against the petitioners on the complaint filed by the respondent no 2 / complainant deserves to be set aside - petition allowed.

Summary

Issues:
Challenge to criminal complaint under Sections 120-B, 409, 420, 467, 468, 471, 500 r/w. Sec.34 of the IPC for quashment.

Analysis:

1. Nature of Dispute and Allegations:
The petitioners, as representatives of a construction company, were accused of misusing cheques meant for construction work, resulting in unauthorized payments and misuse of funds. The complaint was filed under various sections of the IPC.

2. Grounds for Challenging the Proceedings:
The petitioners argued that the matter was a civil dispute related to a contract for road construction. They contended that the complaint was a retaliatory measure for a separate complaint under Section 138 of the Negotiable Instruments Act. Citing the Sunil Kumar case, they asserted that no offense was made out.

3. Representation of Company and Liability:
The petitioners highlighted that the construction company was the actual beneficiary of the alleged fraudulent acts, and as representatives, they should not be held personally liable. They referenced the Sharad Kumar case to support their argument regarding the necessity of involving the company as an accused.

4. Judicial Precedents and Legal Interpretation:
The court analyzed precedents like Sunil Kumar and Sharad Kumar cases to determine the liability of the petitioners. It emphasized that when actions are on behalf of a company without the company being accused, criminal proceedings against representatives are not sustainable.

5. Civil vs. Criminal Nature of Dispute:
The court examined whether the dispute primarily had a civil nature and whether criminal proceedings were initiated without exhausting civil remedies. Reference was made to the GHCL case to emphasize that certain acts, despite being civil wrongs, may not constitute criminal offenses.

6. Decision and Quashing of Proceedings:
After considering the arguments and legal principles, the court concluded that the complaint lacked substance for criminal proceedings against the petitioners. It exercised inherent powers under section 482 of Cr.P.C. to prevent abuse of the court process and ensure justice by quashing the criminal complaint against the petitioners.

This detailed analysis of the judgment from the Madhya Pradesh High Court showcases the legal intricacies involved in challenging a criminal complaint and the importance of distinguishing between civil and criminal disputes while upholding principles of justice and fairness.