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TMI Blog2012 (7) TMI 1160X X X X Extracts X X X X X X X X Extracts X X X X ..... and the consequent proceedings are being taken in pursuance to the same. It may be pertinent here to mention that presently the investigations of the aforesaid FIR are stayed in terms of the order dated 12.2.2004. Briefly stated, the facts of the case are that the respondent No. 2 filed a complaint under Sections 381/403/406/408/417/420/ 427/500 IPC read with Section 120-B IPC before the learned ACMM, Delhi, against the petitioners in both the petitions. Along with the said complaint, an application under Section 156 (3) Cr. P.C. was also filed. It was alleged in the complaint that the complainant, M/s. Usha Drager Pvt. Ltd. was a private limited company, having its registered office at B-II/ 94, Mohan Co-operative Industrial Estate, Badarpur, New Delhi. It is a Joint Venture Company between Draegerwerk Aktiengesellschaft of Germany and Usha Group of India. It was alleged that the Joint Venture Company is incorporated pursuant to a Joint Venture Agreement dated 9.5.1987 and a foreign collaboration agreement dated 20.2.1990. The newly incorporated company was to engage itself in the business activities of manufacturing and sale of medical equipments and appliances for machines, by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder various sections, is assumed to be correct, even then no offence under various sections, as detailed above, is made out against the petitioners. 4. The petitioners have stated that in the year 1987, a 50-50 Joint Venture Agreement was executed between one Draegerwerk Aktiengesellschaft (hereinafter referred in short as 'Drager AG') and M/s. Usha Services Consultants (P) Ltd. (hereinafter referred in short as 'USCL') and a new company by the name of M/s. Usha Draeger Pvt. Ltd. (hereinafter referred as prayer 'AG') was incorporated. The material terms and conditions of the Joint Venture Agreement, which will have bearing on the present petitions, are as under:- Clause 7 (A) of the said Joint Venture Agreement Drager AG was to make available its know-how to the complainant company. Clause 7 (B) of the Joint Venture Agreement the first batch of the products manufactured by the complainant company under the Drager' know-how are to be reviewed by Drager. Clause 7 (C) of the Joint Venture Agreement the complainant company was liable to bear the expenses for translation of drawings, manufacturing instructions or other information, not ava ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nst Claus Grabowsky, respondent No. 5, and Rakhee Garg, the Company Secretary of the Usha Group of companies, under Sections 403/408/34 IPC. The said complaint was allegedly disposed of by the learned Metropolitan Magistrate, Delhi, who passed an order dismissing the application under Section 156(3) Cr. P.C. observing that it will not be necessary to send the case for investigation by the police. A revision petition was filed against the said order of the learned Metropolitan Magistrate, Delhi, to bring on record the application filed under Section 156(3) Cr. P.C., which was also dismissed. 8. In the meantime, the Draeger Group filed a civil suit bearing C.S. (OS) No. 118/2004 before the High Court of Delhi seeking declaration that the board resolutions dated 26.9.2003 and 22.12.2003 are null and void, On the said suit, a notice was issued by the High Court and the defendants were restrained from taking any decision in regard to the management and functioning of the company. 9. It is alleged that after the dismissal of the first complaint under Section 156(3) Cr. P.C. by the learned Metropolitan Magistrate on 9.6.2004, the Usha Group filed second complaint bearing CC No. 507/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nature of dispute, which was existing at a given point of time between the parties, was a criminal offence or essentially a civil dispute? If it was a civil dispute between the parties, then the complaint which has been registered by way of an FIR deserves to be quashed. If not, then the criminal complaint must continue against the present petitioners and culminate into an appropriate finding. 13. The second point which needs to be considered is as to whether the action by the respondent No. 2 has been initiated against the petitioners with a mala fide intention. In this regard, though the allegation is made that the action was initiated with a mala fide intention but the question to be seen by this Court is as to whether not only averments are made by the petitioners in the petition that there are mala fides on the part of the complainant but they must prima facie bring on record the evidence which establishes that fact. 14. The third point which will arise for consideration is as to whether, even if the averments made in the complaint and the consequent FIR, which is registered against the petitioners, are assumed to be correct, whether the individual offences, as enumerat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... criminal prosecution should be deprecated and discouraged. While no one with a legitimate cause or grievance should be prevented from seeking remedies available in criminal law, a complainant who initiates or persists with a prosecution, being fully aware that the criminal proceedings are unwarranted and his remedy lies only in civil law, should himself be made accountable, at the end of such misconceived criminal proceedings, in accordance with law. One positive step that can be taken by the Courts, to curb unnecessary prosecutions and harassment of innocent parties, is to exercise their power under Section 250 Cr. P.C. more frequently, where they discern malice or frivolousness or ulterior motives on the part of the complainant. 18. In the case of V.Y. Jose Anr. Vs. State of Gujarat Anr.; 2009 I AD (S.C.) 500 = (2009) 3 SCC 78, there was a dispute between the appellants and the respondent No. 2 regarding supply of a machine which would serve a specific purpose of purifying and desalting the dyes to a particular level as indicated by respondent No. 2. Price of the machine was settled at Rs. 17 lakhs plus, out of which advance payment of Rs. 3 lakhs was also made. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the respondent/complainant by way of entrustment. In the first case, it has been held that in a case of partnership firm where, there is no specific terms and conditions settled in the partnership deed itself with regard to the dominion over the property of the partnership, a case under Section 415/ 420 IPC for cheating or Section 403/405 IPC for criminal breach of trust will not be made out. The second case is also on the same lines, though in different language, it lays down that for proving the criminal breach of trust, not only the dominion over the property is to be established but entrustment must also be proved. Correspondingly, one of the main ingredients in an offence of cheating is that there must be dishonest intention at the time of the commission of the offence. If there was no dishonest intention on the part of any of the party at the time when the transaction was entered into and merely because subsequently the transaction has fallen through, as there is a breach of contract, that will not result in commission of an offence of cheating. 20. Both these authorities have been referred to on account of the fact that in the instant case, the entire thrust of the res ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cial Judicial Magistrate; 2000 I AD (S.C.) 447 : 2000 (2) SCC 363 in which the Apex Court has clearly laid down that the High Court will be well within its right to quash the criminal proceedings in exercise of its power under Section 482 Cr. P.C. to prevent the abuse of the processes of law. 21. I feel that all these parameters which have been laid down by the Apex Court in the judgments of M/s. Pepsi Foods Ltd. (supra) as well as in M/s. Indian Oil Corporation (supra) and V.Y. Jose's case (supra) are fully satisfied by the petitioners in the instant case, because the dispute between the complainant and the petitioners, who are forming parties of two groups of the joint venture are essentially having civil dispute because of the attempt of both the parties to control the Joint Venture Company and accordingly, the complaint as well as registration of the FIR deserves to be quashed. So far as the question of mala fides of the complainant in getting the FIR registered are concerned, no doubt the petitioners have made these allegations but I feel that the petitioners have not been able to produce any prima facie evidence in terms of the judgment of State of Bihar Vs. P.P. Sharm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... there is no entrustment Thus, even if the petitioner company or its nominees converts the property for their own use they would do so with full rights over the property. Hence the requirements of Section 403 IPC, in my view, prima fade are not met in this case. 26. Sections 405 and 406 IPC defines the offence of Criminal Breach of Trust . It is a well settled principle that before a person can be said to have committed criminal breach of trust within the meaning of Section 405 of IPC, it must be established that the accused was either entrusted with the property or entrusted with the dominion over the property which he is said to have converted to his own use or disposed off in violation of direction of law, etc. Further the petitioners herein were the Directors of the Joint Venture Company on behalf of the Draeger Group, one of the groups forming the joint venture. If that be so, they could not be said to be entrusted with the property in question or it could not be said that they were given dominion over the property as being the Directors, that was a natural thing to flow from the discharge of their duties. Accordingly, the petitioners cannot be charged for the offence unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on who takes his instructions from another in the performance of his work and acts accordingly. He is not bound to obey the orders of the principal and is not subject to his control or supervision. 29. The Hon'ble Supreme Court of India further held in Shivnarayan Laxminarayan Joshi Ors. Vs. State of Maharashtra, 1980 (2) SCC 465 as under:- ....Director of a company is not only an agent but is in the position of a Trustee. Being so, he has dominion and control over the assets which come into his hands as a trustee . Thus, the aforesaid analysis of the allegations cannot be said to be prima facie constituting the offence with which he was charged. 30. So far as Sections 417, 419 and 420 IPC are concerned, there must be dishonest intention at the inception of delivery or retention of property is the gist of the offence and in absence thereof there can be no offence of cheating. The Hon'ble Supreme Court has held in Sukhdeo Jha Utpal Vs. The State of Bihar; AIR 1957 SC 466 as under:- On charge of cheating, the fact that the accused made a false representation with the knowledge, that it was false and that he had a dishonest intention to induce the person de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the Directors, who were away from India, with the officials of the Joint Venture Company posted in India, to commit an offence. 35. Similarly, Section 500 IPC is not applicable in the present case as the essential ingredients of this section are (1) making or publishing any imputation concerning any person, (2) such imputation must have been made by words, by signs or by visible representations and (3) such imputation must have been made with the intention of harming the reputation of the person concerning whom it is made. In the present case, the complainants have failed to place any material on record to prove that the petitioners herein had by any means made or published anything with the intention or knowledge of harming the reputation of the complainants. 36. Thus, a superficial analysis of the averments made in the complaint or the FIR, in the light of the aforesaid sections, will clearly show that even if the allegations are considered on its face value and are assumed to be correct, even then no offences under various sections pertaining to theft, breach of trust, cheating, defamation or the criminal conspiracy is made out. Moreover, in the light of the facts of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... proceedings. 39. Similarly, in another judgment titled CBI Vs. Duncans Agro Industries Ltd., Calcutta; AIR 1996 SC 2452, the Apex Court has observed as under:- After giving our careful consideration to the facts and circumstances of the case and the submissions made by the respective counsel for the parties, it appears to us that for the purpose of quashing the complaint, it is necessary to consider whether the allegations in the complaint prima facie make out an offence or not. It is not necessary to scrutinize the allegations are likely to be upheld in the trial. Any action by way of quashing the complaint is an action to be taken at the threshold before evidences are led in support of the complaint. For quashing the complaint by way of action at the threshold, it is, therefore, necessary to consider whether on the face of the allegations, a criminal offence is constituted or not. 40. In the instant case, the learned Magistrate, in its impugned order, has observed that this is a matter which cannot be investigated by the complainant and, therefore, it directed the registration of the FIR against the petitioners. I find this reasoning of the learned Magistrate totally i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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