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TMI Blog2012 (12) TMI 476X X X X Extracts X X X X X X X X Extracts X X X X ..... led through its Chairman, that is, respondent no. 2. 2. Petitioners have alleged that the petitioner no. 1 is a Dutch company, having its office at Dr. W. Dreesweg 2, 1185 VB Amstelveen, Netherlands. Petitioner no. 2 is Authorized Representative of petitioner no. 1 and is stationed at Cape Town, South Africa. Respondent no. 3 is a private limited company incorporated under the Companies Act, 1956. Co-accused Mithra Thomas Kanagaratna Dewars (for short hereinafter referred to as accused no. 1) is former Executive Director of respondent no. 3. 3. Petitioner no. 1 is engaged in the manufacturing of a soil stabilizer namely, 'RBI Grade 81'. Petitioner no. 1 is patent holder of the said product. This product is used for strengthening and increasing the load bearing capacity of the roads. In the year 2005 accused no. 1 approached the petitioners with a proposal to produce and market 'RBI Grade 81' in India but talks could not fructify into a business relationship. Later, in the month of July/August, 2006 accused no. 1 informed the petitioners that respondent no. 2 was interested in entering into a business relationship with petitioner no. 1. In order to satisfy himself regarding credit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e void and of no effect: or 10.3.2 Legend Surface Developers, notwithstanding anything to the contrary contained in clause 10.3.1, fails to pay timely any amount due and owing by it to RBI under this agreement, and fails to remedy such breach within a period of 15 (fifteen) days of receipt of written notice requiring it to do so; or 10.3.3 Legend Surface Developers repeatedly breaches any of the material terms and/or conditions of this agreement in such a WP (CRL.)1518/2011 Page 5 of 33 manner as to justify RBI in holding that the Legend Surface Developers‟ conduct is inconsistent with the intention or ability of Legend Surface Developers to carry out the provisions of this agreement; or 10.3.4 an interim order is applied for or made, or a voluntary arrangement approved, or a petition for a bankruptcy order is presented or a bankruptcy order is made against Legend Surface Developers or a receiver or trustee in bankruptcy is appointed of Legend Surface Developers' estate or a voluntary arrangement is proposed or approved or an administration order is made, or a receiver or administrative receiver is appointed or any of Legend Surface Developers' assets or undertaking, or a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cused no. 1 leading to filing of a company petition before the Company Law Board by the accused no.1. Faced with the repeated defaults in the payment of royalty amounts and inter se litigations between the respondent no.2 and accused no.1, petitioner no. 1, vide letter dated 23rd November, 2009 terminated the agreement in terms of Clause 10.3.3 and 10.3.4 of the Patent License, relevant clauses whereof reads as under: Notice of Termination of the Patent License Agreement dated 26 May 2007 1. We write to you in relation to the Patent License Agreement ("the Agreement") dated the 26th of May 2007 concluded between RBI Marketing and yourselves. 2. It has come to our knowledge that not only has Mithra Dewars resigned from the office of Director of Legend, he has also initiated legal action against you (Darayus Nariman) and Legend for oppression and mismanagement and has applied for the appointment of a receiver for taking charge of the business and assets of Legend. 3. Clause 10.3 of the Agreement provides that "RBI shall have the right at its election to terminate this agreement forthwith by notice in writing to Legend Surface Development in the event that:.... (10.3.4) an interi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reliance on the order of Company Law Board, respondent nos. 2 and 3 preferred another application for stay in their suit but the same was dismissed on 31st May, 2010 with the following observations:- "25. It would be worthwhile to take note of the fact that the correspondence between the Plaintiffs and the Defendants on 3rd December, 2009 and 7th December, 2009 reveals that the Plaintiffs have run out of funds and had acknowledged that to take RBI Grade-81 forward in India, requires more funds and Plaintiff No. 1 had recommended to the Defendants, Shivani Oil Exploration Company Ltd. for taking over the manufacturing and marketing rights of RBI Grade 81, for India. In such a situation, Defendant No. 2 was prima facie justified in invoking clause 10.3.3 of Patent License Agreement of 26 May, 2007 to terminate the aforesaid agreement. Having said that, there remains no basis to invoke the negative covenant, especially when, the aforesaid agreement in question was not subsisting. 26. This Court is of the considered view that unless and until, the Plaintiffs are able to satisfy that there was a subsisting agreement, they cannot seek to enforce the negative covenant, as contained in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . and for distribution of the said product. (b) From the very inception, the accused persons were acting in agreement to defraud the complainant and to induce him to invest huge amount of monies so that they could introduce a product which was new to the market requiring substantial fund along with the intention to later oust the complainant in order to carry on the business to his exclusion by employing fraudulent tactics to deceitfully terminate all agreements at a later stage and cornering the complainant in a financial deliberately and knowingly causing wrongful loss to the complainant company and making wrongful gains for themselves. (c) That sometime in early 2006, accused no.1 with dishonest intentions approached Shri Darayus Nariman, the complainant herein, and fraudulently induced him into setting up a company for manufacturing and marketing a soil stabilization product by the name of RBI Grade 81 after obtaining a license from the accused no.2 company. The accused no.2 company is the global license bolder of the patented product and accused no.1 had approached the complainant on the misrepresentation that the accused no.2 company along with accused no.3 were his close a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on to the complainant citing vague and outrageous reasons, leave alone any satisfactory or reasoned explanation. A copy of the Resignation dated 09.11.2009 is annexed hereto and marked as Exhibit-H. it is pertinent to note that at no point earlier had the accused no.1 voiced any of the grievances contained in his resignation dated 09.11.2009. As if the sudden resignation and exit of accused no.1 weren't surprising enough, on 13.11.2009 to the utter shock of the complainant, the accused no.1 filed a false and frivolous petition before the Company Law Board making false, misguided and unsubstantiated allegations of oppression and mismanagement against the complainant, whereas the accused no.1 being the Executive Director was himself responsible for the alleged oppression and mismanagement. However, the malicious and fraudulent intention of the accused persons began to unravel when on 23.11.2009 the accused no.2 company served a notice on the complainant company to terminate the Patent License Agreement under Clause 10.3 on the ground that the said Company Law Board petition had been filed. It is pertinent to notice that in the fortnight prior to tendering his resignation, the accuse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng in conspiracy with each other sought to illegally and fraudulently oust the complainant from the business project, which has been completely funded by the complainant, thereby marking wrongful gains for themselves and causing wrongful loss to the complainant. The chain of events when inter-lined, taking into account the conduct of the accused persons, has led the complainant to believe that the accused persons were in connivance with each other from the very inception and hatched a criminal conspiracy against the complainant with the fraudulent intention that the business be done by them to the exclusion of the complainant. Further, in pursuance of a devious and diabolical scheme and to exert pressure on the complainant the accused no.1 has been contracting all the creditors of the complainant company claiming falsehoods regarding the financial state of the complainant company asking them to recover their dues as they would not be able to do so later. The conduct of the accused persons goes to show that they are attempting to sabotage the business operations of the complainant company in a grossly illegal manner. The accused no.2 company has also been falsely accusing the compl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ectors of respondent no. 3 had started jeoparding the interest of petitioners in the patented product. In order to protect its interest petitioner no.1 was forced to terminate the licence not only for the reason of pendency of litigation before CLB but also for the reason that the respondent no.3 had miserably failed to pay the royalty amounts even as per the scheduled terms. It is further contended that the disputes between the petitioners and respondent nos. 2 and 3 are purely civil in nature arising out of the commercial transactions without an iota of criminality attached thereto. In terms of the rescheduled terms petitioners had agreed to accept royalty of Euro 3,17,96,119/- for the period upto December, 2011 instead of royalty of Euro5,41,00,000/-, payable in terms of the agreements and in the process petitioners had sacrificed more than 2.3 crores Euros. Respondent no.3 paid only a meager amount of Euro 1,34,429/-, inasmuch as, inter se disputes arose between the accused no.1 and respondent no.2, thus, petitioner no. 1 was forced to terminate the Patent License Agreement to protect its interest in the patented product and subsequently entered into a Patent License Agreement ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rebatilata Koley etc. 2011 II AD (SC) 445, Madharvrao Jiwajirao Scindia vs. Sambhajirao Chandrojirao Angre (1982) 1 SCC 466, Inder Mohan Goswani & Anr. vs. State of Uttaranchal & Ors.(2007) 12 SCC 1, Manoj Mahavir Prasad Khaitan vs. Ram Gopal Poddar & Anr. (2010) 10 SCC 673, G. Sagar Suri & Anr. vs. State of UP & Ors. (2000) 2 SCC 636 and Thermax Ltd. & Ors. vs. K.M. Johny & Ors. (2011) X AD 189. 10. Per contra, learned Senior Counsel for the respondent nos. 2 and 3 has vehemently contended that the allegations in the FIR clearly make out a, prima facie, case of cheating against the petitioners. At this nascent stage, the averments made in the FIR have to be taken at their face value, inasmuch as, their controverted version has not to be seen by the High Court in exercise of its extraordinary jurisdiction under Section 482 Cr.P.C. At this stage, Court has not to go into the merits and demerits of the case levelled in the FIR nor has to consider the resultant possible harassment of the petitioners. Reliance has been placed on Sanapareddy Maheedhar Seshagiri and Anr. vs. State of Andhra Pradesh and Anr. (2007) 13 SCC 165. By placing reliance on State of Orissa and Anr. vs. Saroj K ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... respondent nos. 2 and 3 collusion between the accused no. 1 and petitioners is further evident from the fact that petitioner no. 1 has granted licence to a company which accused no. 1 has joined after resigning from the respondent no. 3. 12. Learned Additional Standing Counsel has also opposed this petition. It is contended that from the facts alleged in the FIR a, prima facie, case under Section 420 read with Section 120-B IPC was made out against the petitioners, as right from the inception of the contract they were in collusion with accused no. 1 and in furtherance thereto had induced respondent nos. 2 to make substantial investments without any intention of performing their obligations under the licence agreement. It is further contended that the malafide intentions are also depicted from the fact that soon after terminating the contract petitioners entered into the Patent Licence Agreement with another company for the same products on 7th January, 2010, inasmuch as, in the said agreement the Clause with regard to termination of agreement due to filing of the petition for winding up etc. was worded differently. It is further contended that the petitions under Articles 226 and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a police officer without an order of a Magistrate as contemplated under Section 155(2) of the Code. (5) Where the allegations made in the FIR or complaint are so absurd and inherently improbable on the basis of which no prudent person can even reach a just conclusion that there is sufficient ground for proceeding against the accused. (6) Where there is an express legal bar engrafted in any of the provisions of the Code or the concerned Act (under which a criminal proceeding is instituted) to the institution and continance of the proceedings and/or where there is a specific provision in the Code or the concerned Act, providing efficacious redress for the grievance of the aggrieved party. (7) Where a criminal proceeding is manifestly attended with mala fide and/or where the proceeding is maliciously instituted with an ulterior motive for wreaking vengeance on the accused and with a view to spite him due to private and personal grudge." 14. In Indian Oil Corporation (supra), Supreme Court has observed thus "A given set of facts may make out: (a) purely a civil wrong; or (b) purely a criminal offence; or (c) a civil wrong as also a criminal offence. A commercial transacti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) v. State of Bihar MANU/SC/0061/1963: 1964CriLJ1. It would not be proper for the High Court to analyse the case of the complainant in the light of all probabilities in order to determine whether a conviction would be sustainable and on such premises arrive at a conclusion that the proceedings are to be quashed. It would be erroneous to assess the material before it and conclude that the complaint cannot be proceeded with. When an information is lodged at the police station and an offence is registered, then the mala fides of the informant would be of secondary importance. It is the material collected during the investigation and evidence led in court which decides the fate of the accused person. The allegations of mala fides against the informant are of no consequence and cannot by themselves be the basis for quashing the proceedings. (See: Dhanalakshmi v. R. Prasanna Kumar MANU/SC/0159/1989 : 1990 CriLJ 320, State of Bihar v. P.P. Sharma MANU/SC/0080/1996, Rupan Deol Bajaj v. Kanwar Pal Singh Gill MANU/SC/0080/1996 : 1996 CriLJ 381, State of Kerala v. O.C. Kuttan MANU/SC/0119/1999 : 1999 CriLJ 1623, State of U.P. v. O.P. Sharma MANU/SC/0778/1996 : 1996 CriLJ 1878, Rashmi Kumar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fence has been disclosed or not would depend on the facts and circumstances of each particular case. At the same time, the allegations made in the FIR have to be taken on its face value to find out as to whether any offence is disclosed or not. In case facts of the case discloses purely civil disputes, FIR can be quashed but if the case has civil profile with criminal element High Court shall be reluctant to quash the FIR. The inherent jurisdiction of High Court can be exercised to quash the FIR in a proper case either to prevent the abuse of the process of Court or otherwise to secure the ends of justice. 18. Cheating has been defined in Section 415 IPC and it says that:- "Whoever, by deceiving any person, fraudulently or dishonestly induces the person so deceived to deliver any property to any person, to the consent that any person shall retain any property, or intentionally induces the person so deceived to do or omit to do anything which he would not do or omit if he were not so deceived, and which act or omission causes or is likely to cause damage or harm to that person in body, mind, reputation or property, is said to "cheat"." A bare perusal of this provision makes it cl ..... X X X X Extracts X X X X X X X X Extracts X X X X
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