Full Judgment Text
REPORTABLE
IN THE SUPREME COURT OF INDIA
CRIMINAL APPELLATE JURISDICTION
CRIMINAL APPEAL NO. _________OF 2009
[Arising out of Special Leave Petition (Criminal) No. 3176 of 2008]
STATE OF MAHARASHTRA … APPELLANT
Versus
SAYED MOHAMMED MASOOD & ANR. … RESPONDENTS
J U D G M E N T
S.B. SINHA, J.
1. Leave granted.
2. The State of Maharashtra is before us aggrieved by and dissatisfied
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with a judgment and order dated 3 March, 2008 passed by a Division
Bench of the High Court of Judicature at Bombay in Criminal Writ Petition
No. 2333 of 2007 quashing a First Information Report (“FIR”) lodged by the
respondent No.2 herein at the Cuff Parade Police Station, Mumbai.
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3. The first respondent is the Chairman-cum-Managing Director of M/s
City Limouzines (India) Ltd. (hereinafter called and referred for the sake of
brevity as, “the said Company”). He established the said Company. A
scheme known as “Go/Vehicle on rental basis and earning by sitting at
home” was floated. In terms of the said Scheme, assurances were given to
the people for earning money in easy way. A public advertisement was also
issued in a newspaper. They also issued pamphlets and thereby attracted
huge investments. In terms of the said Scheme, Rs.97,907/- was to be
invested in ‘rent a car’ scheme wherein agreement was executed inter alia
providing that the car would be purchased in the name of investor but would
be used by the Company on rent to others wherefor the investor would
receive a sum of Rs.4,000/- per month for a period of five years. After 60
months, i.e., at the end of the agreement, the investor may take back his car
in proper working condition. It was equally provided that an investor was
entitled to inspect the vehicle given on lease/rent once in three months upon
giving 15 days prior notice.
4. Clauses 4, 8, 10 and 15 of the said agreement read as under:
“4. Inspection: The Lessor is entitled to inspect
the Vehicle given on Lease/rent once in 3 months
by giving 15 days prior notice to the above stated
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address and inspect the vehicle at any of the
offices of the Lessee in India.
xxx xxx xxx
8. Buy Back: The Lessee will have the option
at the discretion of the Lessor/registered owner to
purchase the vehicle at a fair market value upon
mutual consent after the expiry of the agreement.
However, this buyback clause is not to be
construed to be conferring any enforceable right on
the Lessee but the first option to buy the car shall
be that of the Lessee herein.
xxx xxx xxx
10. Completion of contract: Upon successful
completion of the terms of this agreement, the
Lessor shall receive the leased Vehicle in proper
working condition including the tyres and battery
in good condition with normal wear and tear
acceptable depending on the period of use.
xxx xxx xxx
15. Issue of Preference Shares: The Lessee
undertakes to issue redeemable Preference shares
to the Lessor towards the margin money paid
(excluding Insurance & RTO Charges) which will
be held by the Lessor as security for the entire
period of the validity of the agreement being 60
months from the date of issue to ensure smooth
installment payments to the bank and the lease/hire
charges to the Lessor.”
5. The complainant – respondent No.2, pursuant to the said
advertisement, invested a sum of Rs.97,907/-. Indisputably, he was paid
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Rs.4,000/- per month for a period of five years. However, despite demand,
he was not given the car. He was, however, given three post-dated cheques
of ABN Amro Bank amount to Rs. 25,000/-, Rs.20,000/- and Rs.10,000/-
although he had asked for the said amount in cash.
6. In the said FIR, it was inter alia alleged:
“As mentioned above, Directors of the said
Company in their office without listening anything
from me, as per their own wishes making changes
on the document of agreement, when I noticed that
then I enquired about the same in more detail. It is
transpired that the said company by showing false
inducement about big return in various financial
schemes and transferring the motor vehicle in the
name of investor, till date has accepted deposits of
crores of rupees under various schemes from
25000 investors. But I came to know that said
company has purchased motor car only in the
name of 500 investors.
All aspect of above mentioned schemes are
in existence only on paper but in reality not even a
single scheme is in force as per the scheme shown
on the document. I also came to know that apart
from the above mentioned office of the company at
Bombay, and other places said company has office
on rental basis and Sayyed Masood Jamadar, in
collusion with other directors of the Company,
induces people for making investment and amount
invested by people is being utilized for other
purpose, other than the original purpose and is
being utilized personally or for some other
purposes. The said company on the internet at its
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website namely www.citylimouzines.com &
www.city-money.com has projected the said
company as bearing ISO-9001-2000 certification
and inducing common poor people to invest
money in the said company and thereby cheating
the people. If immediate legal action is not taken
against the said company then there will be huge
financial loss to ordinary investors. Since
Directors of the said company threatened investors
whenever investors go to ask back money
therefore, rein of fear against them is created.
Above mentioned persons namely Sayyed
Mohammad Masood Jamadar and Geeta Razzaki
and other persons have collusively established City
Limouzines Ltd. Company and through that
company several other companies are established
and through them false inducement is given and
financial investments is accepted from the people
and misappropriation of the same on large scale is
done and defrauded citizens and Government.”
7. The respondent No.1 filed a writ petition before the Bombay High
Court praying for quashing the said FIR.
The Division Bench of the High Court keeping in view the various
clauses in the agreement entered into by and between the complainant and
the said Company opined that although the investor might have been entitled
to the car at the end of the period of five years, but as there has been no
intention to defraud him at the time of inception of execution of the
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agreement and the dispute between the parties revolved on interpretation of
the clauses of the agreement, no offence under Sections 406, 420 and 120B
of the Indian Penal Code has been made out, stating:
“13. At the cost of repetition we may mention
that the facts in the present case are not at dispute
at all that the investment made by each of the
consumers to the tune of Rs.97,907/- and in return
they received Rs.2,40,000/-. The only question
which remained was whether the investors were
entitled to the car at the end of the period of five
years or not. There has been no intention to
defraud at the time of inception of execution of the
agreement. There can be made several
interpretations of the clauses in the agreement if
the agreement is taken as a whole. It is a well
accepted principle of interpretation that while
interpreting clause of agreement, whole of the
agreement has to be taken into consideration.
Applying the principles laid down by the various
judgments of the Supreme Court hereinabove
referred, we do not think that in the facts and
circumstances of the case an offence of cheating is
made out.”
The High Court, however, in its judgment only considered the case
from the point of view of Section 420 of the Indian Penal Code and not
Sections 406 and 120B thereof.
8. Mr. T.K. Viswanathan, learned Senior Counsel appearing on behalf of
the State would contend that having regard to the well settled principle of
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law that the High Court does not quash an FIR save and except sparingly
and in rarest of rare cases, the impugned judgment is not sustainable.
9. Our attention in this behalf has been drawn to various grounds taken
in this Appeal to contend that the investigation so far conducted reveals that
a large number of illegalities have been committed by the said Company
including the violation of the provisions of Section 45(1A) of the Reserve
Bank of India Act.
10. Ms. Bindu K. Nair, learned counsel appearing on behalf of the
respondent, on the other hand, would take us through the FIR, agreement
entered into by and between the parties, Lessee’s covenants therein as also
other documents to contend that no offence can be said to have been made
out either under Section 406 of the Indian Penal Code or Section 420
thereof. It was urged that as no car was purchased in the name of the
respondent No.2, there was no property and, thus, there was neither any
question of any entrustment thereof nor any misappropriation. The
complainant himself having redeemed the merging money in terms of the
provisions of the agreement, the ingredients of the offence of Section 406 of
the Indian Penal Code cannot be said to have been made out. Drawing our
attention to the definition of ‘cheating’ as contained in Section 415 of the
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Indian Penal Code, the learned counsel would contend that neither there was
any inducement nor deception having been made and pursuant to the
agreement no property having been delivered in favour of the accused by the
complainant nor there was any act of omission on his part which caused or
likely to cause any damage to the property, the question of commission of
any offence under Section 420 of the Indian Penal Code does not arise.
11. The legal position in regard to exercise of jurisdiction by the High
court for quashing of an FIR is now well settled. It is not necessary for us to
delve deep thereinto as the propositions of law have recently been stated by
this Court in R. Kalyani v. Janak C. Mehta [(2009) 1 SCC 516] in the
following terms:
“15. Propositions of law which emerge from
the said decisions are:
( 1 ) The High Court ordinarily would not
exercise its inherent jurisdiction to quash a
criminal proceeding and, in particular, a first
information report unless the allegations
contained therein, even if given face value and
taken to be correct in their entirety, disclosed
no cognizable offence.
( 2 ) For the said purpose the Court, save and
except in very exceptional circumstances,
would not look to any document relied upon by
the defence.
( 3 ) Such a power should be exercised very
sparingly. If the allegations made in the FIR
disclose commission of an offence, the Court
shall not go beyond the same and pass an order
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in favour of the accused to hold absence of any
mens rea or actus reus.
( 4 ) If the allegation discloses a civil dispute,
the same by itself may not be a ground to hold
that the criminal proceedings should not be
allowed to continue.”
Yet again in Mahesh Choudhary vs. State of Rajasthan & Anr. [2009
(4) SCALE 66], this Court stated the law thus:
“13. The principle providing for exercise of the
power by a High Court under Section 482 of the
Code of Criminal Procedure to quash a criminal
proceeding is well known. The court shall
ordinarily exercise the said jurisdiction, inter alia,
in the event the allegations contained in the FIR or
the Complaint Petition even if on face value are
taken to be correct in their entirety, does not
disclose commission of an offence.”
We may also notice that in State of Maharashtra v. Mohd. Sajid
Husain Mohd. S. Husain [(2008) 1 SCC 213], this Court laid down the law
in the following terms:
“14. The learned counsel would submit that
prima facie the girl was above 16 years and she
being a consenting party and having been getting
consideration, no case under Section 376 IPC has
been made out and, thus, this Court should not
interfere with the impugned judgment.”
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12. There cannot be any doubt or dispute whatsoever that a simple breach
of contract or a case involving pure civil dispute would not attract the penal
provisions contained in the Indian Penal Code either under Section 406 or
Section 420 thereof.
13. Had the dispute between the parties rested in the aforementioned
premise, probably we would not have interfered with the judgment of the
High Court; but then, our attention has been drawn to certain evidences
which have surfaced during investigation and disclosed before us by the
State in the grounds stated in this Memo of Appeal.
We may notice a few of them:
“cc) Because preliminary findings shows that
public at large especially middle class and
lower class people have invested their hard
earned money and or money received at the
time of their VRS or amount received from
insurance companies after casualty of their
legal heirs, are likely to be cheated by the
inducement of “Rosy picture” shown by the
company with respect to motor vehicle
scheme. Because as soon as influx of
investors stops the company will stop
payment to the old investors, as the
company does not have any type of business
which generates fair legal income/profit.
xxx xxx xxx
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ff) Because another witness has stated in his
statement dated 03/10/07 that he has
invested Rs.1,07,000 for Maruti Omni in the
month of January 2005 immediately after
the agreement he has received three post
dated cheques of Rs.4000/- each from CLIL.
Company has taken Rs.25,630/- for RTO &
Insurance Charges but has not purchased a
vehicle in his name.
xxx xxx xxx
ii) Because another witness in his statement
dated 17/11/07 that he is running Travelling
Business in the name as “Amey Tourist.”
He owns Maruti Esteem Car No. MH-01-
JA-6710 and the same is being used for his
business purpose. Neither he has given his
said m/v to CLIL nor has invested money in
C.L.I.L. An enquiry has been made with
Shri Arun Potade because CLIL data on first
mirror image shows this car as one which is
from their scheme as Indica and registered
in the name of Smt. Jayshree Devgude (File
no. 15971 of CLIL).
jj) Because another witness has stated in his
statement dated 19/11/07 that he had Kinetic
Honda Scooter No. MH-01-E-6343 in his
name but due to rusting/damage he had
scraped the said m/v. He does not know
anything about CLIL. An enquiry has been
made with Shri Deepak R. Kalwar because
CLIL data on first mirror image shows that
Maruti Omni Car No. MH-01-E-6343 has
been registered in the name of one Smt.
Asha Thakur (file no.- 1738 of CLIL) and
enquiry with RTO revealed that the vehicle
No. MH-01-E-6343 is Kinetic Honda
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Scooter and registered in the name of
Deepak Kalwar.”
14. The allegation made in the FIR and the materials collected during
investigation, in our considered opinion, should be allowed to be taken to its
logical end.
15. We must, however, acknowledge that Ms. Nair has cited the following
decisions for our consideration.
i.
Alpic Finance Ltd. vs. P. Sadasivan & Anr. [(2001) 3 SCC 513]
ii. Radha Ballav Pal & Anr. vs. Emperor [AIR 1939 Calcutta 327]
iii. Velji Raghavji Patel vs. The State of Maharashtra [AIR 1965 SC
1433]
iv. Vir Prakash Sharma vs. Anil Kumar Agarwal & Anr. [(2007) 7
SCC 373]
v. All Cargo Movers (India) Private Limited & Ors. vs. Dhanesh
Badarmal Jain & Anr. [(2007) 14 SCC 776]
vi.
New India Insurance Co. Ltd. vs. Sadanand Mukhi & Ors. [(2009)
1 SCALE 252]
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vii. U. Dhar & Anr. vs. State of Jharkhand & Anr. [(2003) 2 SCC 219]
viii. Uma Shankar Gopalika vs. State of Bihar & Anr. [(2005) 10 SCC
336]
In Alpic Finance Ltd. (supra) the dispute was found to be of pure civil
nature.
In Radha Ballav Pal & Anr (supra) , the Calcutta High Court looked to
the policies and schemes floated by the Company to opine that in the fact of
the said case no case has been made out for convicting the appellant therein.
But the matter having reached the High court after a judgment of conviction
was recorded, all the materials were brought on record by the parties by that
time.
In Velji Raghavji Patel (supra), it involved a question of dealing with
the assets of a partnership firm by a partner.
In Vir Prakash Sharma (supra), this case primarily revolved around
bouncing of a cheque.
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In Dhanesh Badarmal Jain (supra), the court found only a civil
liability on the part of the accused and opined that it was at best a case of
interpretation of agreement, stating
“ 16 . We are of the opinion that the allegations
made in the complaint petition, even if given face
value and taken to be correct in its entirety, do not
disclose an offence. For the said purpose, this
Court may not only take into consideration the
admitted facts but it is also permissible to look into
the pleadings of Respondent 1-plaintiff in the suit.
No allegation whatsoever was made against the
appellants herein in the notice. What was
contended was negligence and/or breach of
contract on the part of the carriers and their agent.
Breach of contract simpliciter does not constitute
an offence. For the said purpose, allegations in the
complaint petition must disclose the necessary
ingredients therefor. Where a civil suit is pending
and the complaint petition has been filed one year
after filing of the civil suit, we may for the purpose
of finding out as to whether the said allegations are
prima facie correct, take into consideration the
correspondences exchanged by the parties and
other admitted documents. It is one thing to say
that the Court at this juncture would not consider
the defence of the accused but it is
another
thing to say that for exercising the inherent
jurisdiction of this Court, it is impermissible also
to look to the admitted documents. Criminal
proceedings should not be encouraged, when it is
found to be mala fide or otherwise an abuse of the
process of the court. Superior courts while
exercising this power should also strive to serve
the ends of justice.”
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Sadanand Mukhi & Ors. (supra) involved a pure civil dispute dealing
with the compensation and insurance policies in the Motor Vehicle Claims
Tribunal (MACT).
Similar was the position in Uma Shankar Gopalika (supra) wherein it
was stated:
“….It is well settled that every breach of
contract would not give rise to an offence of
cheating and only in those cases breach of contract
would amount to cheating where there was any
deception played at the very inception. If the
intention to cheat has developed later on, the same
cannot amount to cheating. In the present case it
has nowhere been stated that at the very inception
there was any intention on behalf of the accused
persons to cheat which is a condition precedent for
an offence under Section 420 IPC.”
Hence the petition of complainant did not disclose any criminal
offence at all much less any offence either under Section 420 or Section
120B of the Indian Penal Code. It was purely civil in nature.
16. We have, however, no doubt in our mind that the Investigating Officer
shall conduct the investigation fairly and impartially and shall allow the
company to carry on its business without any hindrance whatsoever. If any
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books of account or other documents are required, the Investigating Officer
subject to just exceptions may take the xerox copies thereof duly certified by
the accused as also an undertaking that, as and when called upon, they would
produce the said books of account in a court of law.
Subject to the aforementioned directions, the Investigating Officer
shall carry out the investigation in accordance with law.
17. We, therefore, are of the opinion that in the peculiar facts and
circumstances of this case and particularly in view of the materials which
have surfaced during investigation, the impugned judgment cannot be
sustained. It is set aside accordingly. The appeal is allowed with the
aforementioned directions.
……………….…..………….J.
[S.B. Sinha]
..………………..……………J.
[Deepak Verma]
New Delhi;
August 4, 2009