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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 ..... prima facie case is not disclosed for registration of FIR and the consequential investigation. Investigation is yet to commence, pursuant to registration of the FIR, inasmuch as investigating agency has to collect relevant material. In view of the nature of allegations it cannot be said that the case has purely a civil profile. Veracity of the allegations has yet to be verified by the investigating agency by collecting materials during the investigation. Allegations and counter allegations levelled by the parties cannot be gone into threadbare at this initial stage of investigation. Thus at this nascent stage, it would not be proper for this Court to exercise its power under Section 482 Cr.P.C. to quash the FIR, more particularly when complainant (respondent no. 2) has alleged in the FIR that all the accused including the petitioners connived with each other and allured him to enter into the agreement and invest huge amount in the project and when same reached at the advanced stage petitioners terminated the contract and tried to take over the respondent no. 3. - Miscellaneous application is disposed of as infructuous. - W.P. (CRL.) No. 1518/2011 and Crl. M.A. No. 17542/2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er no. 1 and respondent no. 3 on 22nd April, 2007 whereby petitioner no. 1 agreed to grant exclusive rights to respondent no. 3 to use its patented RBI Grade 81 against the payment of royalty @ 12% ex-factory price in addition to the licence fee of Euro 2 million. 4. Subsequently, a Patent Licence Agreement was executed between the respondent no. 3 and petitioner no. 1 on 26th May, 2007. Besides this certain other agreements including confidential Addendum to the agreements were also executed on the same day between the respondent no. 3, Flowds Ltd. and petitioner no. 1, on the instance of respondent no.2. In terms of the agreement it was sole responsibility of respondent no. 3 to manufacture the licensed product, that is, RBI grade 81 by using its own manufacturing and production equipments, infrastructure and employees and supply the licensed products to the customers. Petitioner no. 1 was to only provide reasonable knowhow and training for the transfer of intellectual property to respondent no. 3 as contemplated in the agreement. It also provided minimum royalty. Confidential Addendum envisaged that it would take about 1 years for the plant to be established and the sal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inistrative receiver or administrator or to present a winding-up petition or make a winding-up order, or other similar or equivalent action is taken against or by Legend Surface Developers by reason of its insolvency or in consequence of debt; or 5. Upon execution of agreements, petitioner no. 1 provided technical details and confidential data to respondent no. 3 through the respondent no. 2 and accused no. 1. However, respondent no. 3 could not set up the manufacturing plant due to financial crunch and pay the stipulated royalty that fell due at the end of March, 2009. Instead a request was made for rescheduling the payment schedule, which was acceded to and communicated to the respondent on 8th June, 2009 in the following manner: 1. RECOMMENDATION REGARDING PROPOSED REVISED MINIMUM ROYALTY SCHEDULE After consultation with the co-shareholders and Board of Directors, the proposed revised minimum royalty schedule has been considered favourably in the context of the sustained and committed efforts by legend in bringing the technology to market in India. As a result, Legend s proposal in this regard has been accepted. In conjunction with your proposed minimum royalty schedul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee in bankruptcy is appointed or 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 of any Legend Surface Developers assets or undertaking, or a winding up resolution or petition is passed or presented (otherwise than for the purposes of reconstruction or amalgamation) or any circumstances arise which entitle the court or a creditor to appoint a receiver, administrative receiver or administrator or present a winding-up petition or make a winding-up order, or other similar or equivalent action is taken against or by Legend Surface Developers by reason of its insolvency or in consequence of debt. 4. In view of the abovementioned fact (without referring at this time to your other defaults and reserving our rights to raise the same in an appropriate manner), we serve upon you this notice of immediate termination of the Agreement in terms of clauses 10.3.3 and 10.3.4 of the Agreement. Consequentially, all agreements related to the Agreement also stand terminated forthwith and with immediate effect. 7. Thereafter, petitioner no. 1 filed a suit for injunction C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... themselves are in default, therefore, they cannot legitimately seek enforcement of the negative covenant to restrain third party, i.e., Defendant no. 5. More so, when Plaintiffs have approached this Court after an inordinate delay of four months or so and had thereby permitted Defendant No. 2 to create third party interest in the subject matter of the dispute. 8. Respondent no. 2, on behalf of respondent no. 3, thereafter has filed the present FIR with the Police Station Economic Offence Wing of Delhi Police on 5th October, 2011. In the FIR petitioner no. 1 has been referred as accused no. 2 and petitioner no. 2 as accused no.3. The allegations in the FIR concerning the Petitioners reads as under:- (i) The accused persons having the intention to defraud the complainant from the very inception induced the complainant into parting with his funds and thereafter illegally terminated the Patent License Agreement dated 26.05.2007 in a manner which was unauthorized, illegal and fraudulent, thereby making wrongful gains for themselves by causing wrongful loss to the complainant company to the tune of Rs.50,00,00,000/- (approximately). (ii) All the accused persons named hereinabove a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... other in pursuance of a fraudulent and pre-meditated scheme, designed at defrauding the complainant and diverting the businesses of the company to themselves and seeking to deceitfully usurp the assets of the company, after inducing the complainant to part with huge sums allegedly towards developing the business. (iv) That in order to induce the complainant to pump in more funds after procuring the patent License at the aforesaid exorbitant price, the accused no.1 and accused no.3 in connivance with each other, forwarded to the complainant manufacturing order requests received for the product from other countries via facsimiles dated 16.08.2007 and 17.08.2007. Copies of the facsimiles dated 16.08.2007 and 17.08.2007 are annexed hereto and marked as Exhibit-D (Colly). The complainant was induced into conducting various field trials and pilot projects. Each of these trials cost on an average Rs.20 lakhs, being a total of approx. Rs.2.5. crores. The complainant company successfully completed several trials across the country and all these efforts and achievements were funded by Shri Darayus Nariman, the complainant herein and his companies. At this point it is imperative to note t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cheating the complainant and are now attempting to pressurize the complainant into selling the plant and materials, etc. to them at a price much lower to its market value by employing deceitful tactics. The malicious intent to the accused persons is clearly brought out by the communication dated 26.11.2009 addressed by the accused n.2 company to the State Bank of Hyderabad intimating them of the alleged termination of the Patent License Agreement dated 26.05.2007. That as a consequent of all the aforesaid acts of the accused persons, the State Bank of Hyderabad issued a letter calling upon the complainant to repay the amount of Rs.17.63 Crores advanced under the loan facilities. Furthermore, on 31.12.2009 the accused no.1 approached the complainant company s bank and offered to repay the loan of Rs.17.33 crores in consideration for the transfer of the company s assets of equivalent worth in his favor. The bank communicated this to the complainant vide letter dated 15.01.2010 which is annexed hereto as Exhibit-k. As such, it became clear that the accused persons acting in connivance from the very beginning had never intended to share the profits with the complainant. In fact, acc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reatening the complainant of legal action through its attorneys. It is imperative to note that the said formula was property of the complainant company and has been misappropriated by the accused no.1, since he had dominion and control over the same as it had been entrusted to him in his capacity as Executive Director. As aforementioned the accused no.2 company only communicated with the accused no.1 to the exclusion of the complainant and the complainant as such was never in physical possession of the said formula. A copy of the mail dated 12.01.2010 written by lawyers/attorneys of accused no.2 company threatening the complainant is annexed hereto and marked as Exhibit-L. That it has further come to light that the furtherance of their fraudulent intentions, the accused no.1 along with accused no.2 company has now ordered a plant for the said product to be fabricated at Pune by a Company by the name and style of M/s. Midas Autosoft Engineers Pvt. Ltd. The plant, as per the knowledge of the complainant, is being set up in Bhadurgarh, Haryana and the accused persons are trying to procure orders and projects by converting to their own use the confidential documents belonging to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fact indicates bonafide intentions of the petitioners, inasmuch as, it cannot be said that the petitioners were having fraudulent or dishonest intentions at the time of entering the Patent Licence Agreement with the respondent nos. 2 and 3 or that they had entered into the patent licence agreement with respondent no. 2 with an intention to terminate the same subsequently. Petitioner no. 1 had a right to exploit its patented product, throughout the world. It had entered into an agreement with the respondent no.3 with an intention to make a viable market for the said product in India and reap benefits by way of royalty. However, respondent no. 2 could not complete the project and pay the royalty. It was not a joint venture of the petitioners and respondent no. 2 and 3. It is not the case that petitioners had to render any financial assistance to respondent nos. 2 and 3, which they did not provide and instead terminated the Patent Licence Agreement. Various communications exchanged between the petitioners and respondent nos. 2 and 3 through letters, emails or FAX clearly indicate that the petitioners had rendered whatever assistance was possible to the respondent no.2, inasmuch as, re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... investigating authority and there exists issues, which are disputed and of such magnitude that they cannot be seen in the true perspective without an adequate enquiry, High Court ought not to exercise its inherent power under Section 482 Cr.P.C. to quash the FIR. It is further contended that merely because the disputes pertain to a commercial transaction or have civil flavor, it cannot be said that an offence of cheating cannot be made out. Merely because an act has a civil profile that itself would not denude it of criminal outfit. Reliance has been placed on Rajesh Bajaj vs. State of NCT of Delhi (1999) 3 SCC 259. 11. By placing reliance on Trisuns Chemical Industry vs. Rajesh Aggarwal Ors. (1999) 8 SCC 686, it is further contended that interference with the investigation is the exception limited to extreme cases. It is further contended that the reliability or genuineness of the allegations in the FIR have not to be looked into at the nascent stage of investigation by the High Court in exercise of its powers under Section 482 of the Cr.P.C. Reliance has also been placed on Mahavir Prashad Gupta Anr. vs. State of NCT of Delhi Ors. (2000) 8 SCC 115. As regards, correspond ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... laced on DLF Housing Construction (P) Ltd. vs. Delhi Municipal Corporation Ors. (1976) 3 SCC 160, State of Bihar vs. P.P. Sharma 1992 Supp (1) SCC 222 and Maksud Saiyed vs. State of Gujarat Ors. (2008) 5 SCC 668. It is contended that the present petition does not fall within any of the tests laid down in State of Haryana s case (supra). 13. I have considered the rival contentions of the parties and have perused the entire record carefully. In Bhajan Lal s case (supra), Supreme Court has held as under: In the backdrop of the interpretation of the various relevant provisions of the Code under Chapter XIV and of the principles of law enunciated by this Court in a serious of decisions relating to the exercise of the extraordinary power under Article 226 or the inherent powers under Section 482 of the Code which we have extracted and reproduced above, we give the following categories of cases by way of illustration wherein such power could be exercised either to prevent abuse of the process of any court or otherwise to secure the ends of justice, through it may not be possible to lay down any precise, clearly defined and sufficiently channelized and inflexible guidelines or rig ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ivil proceedings are different from a criminal proceeding, the mere fact that the complaint relates to a commercial transaction or breach of contract, for which a civil remedy is available or has been availed, is not by itself a ground to quash the criminal proceedings. The test is whether the allegations in the complaint disclose a criminal offence or not . Supreme Court has further observed thus it is necessary to take notice of a growing tendency in business circles to convert purely civil disputes into criminal cases. This is obviously on account of a prevalent impression that civil law remedies are time consuming and do not adequately protect the interests of lenders/creditors. Such a tendency is seen in several family disputes also, leading to irretrievable break down of marriages/families. There is also an impression that if a person could somehow be entangled in a criminal prosecution, there is a likelihood of imminent settlement. Any effort to settle civil disputes and claims, which, do not involve any criminal offence, by applying, pressure though criminal prosecution should be deprecated and discouraged . 15. In Saroj Kumar Sahoo s case (supra) Supreme Court held as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ANU/SC/0155/1999: 1999 CriLJ 1833. 16. In Sanapareddy Maheedhar Seshagiri s case (supra) Supreme Court has held, thus, while deciding a petition filed for quashing FIR or complaint or restraining the competent authority from investigating the allegations contained in FIR or complaint or for stalling the trial of the case, the High Court should be extremely careful and circumspect. If the allegations contained in FIR or complaint disclose commission of some crime, then the High Court must keep its hands off and allow the investigating agency to complete the investigation without any fetter and also retrain from passing order which may impede the trial. The High Court should not go into the merits and demerits of the allegations simply because the petitioner alleges malus animus against the author of FIR or the complainant. The High Court must also retrain from making imaginary journey in the realm of possible harassment which may be caused to the petitioner on account of investigation of FIR or complaint. Such a course will result in miscarriage of justice and would encourage those accused of committing crimes to repeat the same. 17. There is no gainsaying that powers of High ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of making promise or representation. In absence of intention at the time of making initial promise, no offence under Section 420 of the Indian Penal Code can be said to have been made out. In this case, it has been alleged in the FIR that respondent no.2 was induced to enter into agreement and invest money in the venture with dishonest intention by the accused persons, in collusion with each other, including the petitioners. A holistic reading of FIR will not show that prima facie case is not disclosed for registration of FIR and the consequential investigation. 19. Investigation is yet to commence, pursuant to registration of the FIR, inasmuch as investigating agency has to collect relevant material. In view of the nature of allegations it cannot be said that the case has purely a civil profile. Veracity of the allegations has yet to be verified by the investigating agency by collecting materials during the investigation. There are allegations and counter allegations levelled by the parties, which cannot be gone into threadbare at this initial stage of investigation. Whether the petitioners were having any fraudulent or dishonest intention at the time of inception of the contr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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