Full Judgment Text
REPORTABLE
IN THE SUPREME COURT OF INDIA
CRIMINAL APPELLATE JURISDICTION
CRIMINAL APPEAL NO. 925 OF 2008
[Arising out of SLP (Crl.) No. 6351 of 2006]
V.R. Dalal & Ors. …Appellants
Versus
Yougendra Naranji Thakkar & Anr. …Respondents
J U D G M E N T
S.B. SINHA, J :
1. Leave granted.
2. A complaint petition was filed by the respondent No. 1 herein in
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the Court of Metropolitan Magistrate, 30 Court at Kurla. It was
registered as Case No. 271/M of 2002; Accused Nos. 1 to 6 thereof were
partners of M/s. N.M. Raiji and Company and Accused No. 7 was its
employee. Appellants herein who were arrayed as the Accused Nos. 8 to
13 were partners of another firm known as M/s. Gandhi Dalal and Shah.
The said firm was earlier known as Dalal and Shah. Out of the said
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accused, Accused No. 8 Mr. Y.C. Amin has expired. In the
aforementioned complaint petition, allegations were made that all the
accused persons conspired with each other so as to deprive the
complainant from deriving the benefits of a firm by dissolving the firm
N.M. Raiji and Company behind his back.
3. It appears that the firm ‘M/s. Gandhi Dalal and Shah’ which was
constituted with effect from 1.02.2000 was cancelled from the very
inception as the same is said to have not been acted upon. The name
M/s. Gandhi Dalal and Shah was surrendered to the Chartered
Accountants of India. Indisputably, in the complaint petition itself, it has
been accepted that the said M/s. Gandhi Dalal and Shah is no longer in
existence. It has further not been disputed that one Mahendra Thakkar
also signed in the original deed of partnership dated 10.02.2001. In
relation to the cancellation of the said partnership, it is alleged:
“The Complainant states that they have with
some dishonest intention have not prepared any
Deed of dissolution which is mandatory for
cancellation of any Deed of partnership.
Merely by canceling Deed on piece of paper
has no meaning in the eyes of law and it is
misguiding but in law the Deed of partnership
will remain in force till it is dissolved by deed
of dissolution. The Accused have again played
fraud upon the complainant by misrepresenting
him that they have cancelled the Deed of
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partnership. They have also filed false
documents with Institute of Chartered
Accountants in order to commit fraud.”
4. The role of the appellants herein are said to be that of conspirators.
The complainant stated:
“The Accused persons in criminal conspiracy
with each other intending to kicked out the
complainant from the said firm by adopting
intellectual tactics, which is evident from the
conduct and act of the accused. The
complainant is putting his full time for the
prosperity of the said firm and he has
contributed Lion Share in creating good
reputation and goodwill of the said Firm among
the Corporate Sector and other business
communities. The Complainant is not having
control over the income of the firm. In spite of
the demand of the Complainant for giving him
accounts of the firm the accused have failed
and neglected to do so as such the complainant
is not aware at present exact amount
misappropriated by the Accused persons. The
complainant states that it is not only
misappropriates but it amounts to theft of the
valuable property of the complainant.”
5. The firm M/s. N.M. Raiji and Company is a firm of chartered
accountants. Some business allegedly had been transferred. It is stated
that the accused have committed criminal breach of trust in respect of
income and goodwill of the firm. According to the complainant, his
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income from the said firm would have been 5% from the profit of the
said firm which was estimated at 30% wherefrom he has allegedly been
deprived, as he was not made a partner in the new firm.
6. Appellants filed a writ petition before the Bombay High Court
which was marked as Criminal Writ Petition No. 315 of 2004. A
separate writ application was also filed by Accused Nos. 1 to 7 which
was marked as Writ Petition No. 542 of 2003. The said writ petition was
dismissed. The High Court, by reason of the impugned judgment,
dismissed the writ petition filed by the appellants also stating:
“5 Mr. Panikar appearing for the petitioners,
does not dispute that such an order is passed.
However, he submits that the case of the
present petitioners stand on a slightly different
footing, although they are accused in the same
criminal case, as far as they are concerned, they
are not the partners of M/s. N.M. Raiji &
Company. This N.M. Raiji and Company was a
partnership firm in which all accused 1 to 7 and
the complainant were partners. The petitioners
are partners of distinct firm which is known as
“Dalal & Shah” and later on “M/s Gandhi Dalal
& Shah”. In such circumstances, it would not
be proper to rely upon the order passed in the
other writ petition. These are disputes between
persons, who are partners, during the course of
administration and management of the business
of the firm. It is a purely civil dispute.
Allowing criminal proceeding according to Shri
Panikar would be abuse of process of the
court.”
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7. Mr. Sureshkumar J. Panicker, learned counsel appearing on behalf
of the appellants, would submit that the dispute between the parties being
a civil dispute, if the proceeding is allowed to continue, it would amount
to an abuse of process of law.
8. Mr. Jatin Zaveri, learned counsel appearing on behalf of the
respondents, on the other hand, would contend that as allegations made
in the complaint petition constitute an offence, this Court should not
interfere with the impugned judgment.
9. The short question which arises for consideration is as to whether
the complaint petition given its face value and taken to be correct in its
entirety constitutes an offence.
M/s. Gandhi Dalal and Shah admittedly was constituted as a
partnership firm on 1.12.2000. The said partnership firm was constituted
on the premise that four partners of M/s. N.M. Raiji and Company were
representing the firm Dalal and Shah. As indicated hereinbefore, an
outsider was also included therein. Once the said partnership did not
take off and the partnership deed was cancelled as it had never been
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acted upon, the question of any wrongful act on the part of the appellants
did not arise. It is one thing to say that there exists a dispute amongst the
partners inter se but it is another thing to say that by constituting another
firm wherein two firms would be represented by their respective
nominees together with an outsider would itself indicate an act of
conspiracy. Once it has been accepted as of fact that the said partnership
has been cancelled, the question of relying thereupon for any purpose
would not arise.
10. The learned counsel appearing on behalf of the respondents,
however, has drawn our attention to a letter dated 28.02.2001 addressed
by Arun R. Gandhi, Mahendra N. Thakkar, Jayesh M. Gandhi, Vinay D.
Balse and Sujal A. Shah to Yogendra N. Thakkar wherein one of the
sequence of events was stated to be as under:
“(3) On getting you letter dated February 7,
2001, Mr. Arun Gandhi had discussed the
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matter with Mr. Mahendra Thakkar on 9 and
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10 February, 2001 who had informed that Mr.
Arun Gandhi that he need not worry about it
and that everything would be sorted out by
meeting with you, and that we should go ahead
with the signing of the partnership deed (of
Gandhi Dalal & Shah). On that basis, the said
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partnership deed was signed on 10 February,
2001, by five signatories. Mr. Mahendra
Thakker could not sign on that day as he had
some urgent work to attend.”
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This letter does not take us anywhere. It merely shows that
internal dispute leading to abandonment of the concept of starting a new
firm.
11. Mr. Panicker has relied upon a decision of this Court in Uma
Shankar Gopalika v. State of Bihar and Another [(2005) 10 SCC 336]
wherein it has been held that where the dispute is pure civil in nature an
offence under Section 420 or Section 120B of Indian Penal Code cannot
be said to have been made out.
12. It may be true that in the event the court finds that the dispute
between the parties is civil in nature, it may not allow the criminal
proceedings to go on. But, no law, in our opinion, as such can be laid
down as in a given case both civil suit and criminal complaint would be
maintainable although the cause of action for both the proceedings is the
same.
13. We, however, in this case are satisfied that the appellants by no
stretch of imagination can be said to have committed an offence
particularly when admittedly the new firm has been cancelled from its
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very inception. If the new firm has not derived any income, the question
of depriving the claimant therefrom does not arise. Whether the
constitution of the said firm was illegal or mala fide, thus, need not be
gone into as by reason thereof the respondent No. 1 cannot be said to
have suffered any loss.
14. We may notice that as regards commission of an offence in terms
of Section 405 of Indian Penal Code, this Court in Indian Oil Corpn. v.
NEPC India Ltd. and Others [(2006) 6 SCC 736] held that where the first
ingredient of criminal breach of trust, that is, entrustment is missing, the
same would not constitute a criminal breach of trust.
As regards essential ingredients of the offence of cheating, it was
stated:
“(i) deception of a person either by making a
false or misleading representation or by other
action or omission (ii) fraudulent or dishonest
inducement of that person to either deliver any
property or to consent to the retention thereof
by any person or to intentionally induce that
person 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.”
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15. The aforementioned ingredients of Section 420 of Indian Penal
Code are also absent in the instant case. [See also Suryalakshmi Cotton
Mills Ltd. v. Rajvir Industries Ltd. and Ors. 2008 (1) SCALE 331]
16. When a proceeding is found to be an abuse of the process of court,
this Court in exercise of is jurisdiction under Article 142 of the
Constitution of India may not allow it to continue. For the said purpose,
the fact of the matter can be looked into. It was so done recently in
Sanapareddy Maheedhar and Another v. State of Andhra Pradesh and
Another [2007 (14) SCALE 321] wherein upon noticing a large number
of decisions of this Court, it was held:
“We are further of the view that in the peculiar
facts of this case, continuation of proceedings
of CC No.240/2002 will amount to abuse of the
process of the Court. It is not in dispute that
after marriage, Shireesha Bhavani lived with
appellant No.1 for less than one and a half
months (eight days at Hyderabad and about
thirty days at New Jersey). It is also not in
dispute that their marriage was dissolved by the
Superior Court at New Jersey vide decree dated
15.12.1999. Shireesha Bhavani is not shown to
have challenged the decree of divorce. As a
mater of fact, she married Sri Venkat Puskar in
2000 and has two children from the second
marriage. She also received all the articles of
dowry (including jewellery) by filing affidavit
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dated 28.12.1999 in the Superior Court at New
Jersey. As on today a period of almost nine
years has elapsed of the marriage of appellant
No.1 and Shireesha Bhavani and seven years
from her second marriage. Therefore, Page
0086 at this belated stage, there does not appear
to be any justification for continuation of the
proceedings in CC No.240/2002. Rather, it
would amount to sheer harassment to the
appellant and Shireesha Bhavani who are
settled in USA, if they are required to come to
India for giving evidence in relation to an
offence allegedly committed in 1998-99. It is
also extremely doubtful whether the
Government of India will, after lapse of such a
long time, give sanction in terms of Section 188
Cr.P.C.”
17. For the reasons aforementioned, the impugned judgment cannot be
sustained. It is set aside accordingly. The summons issued by the
learned Magistrate against the appellants is quashed. The appeal is
allowed.
………………………….J.
[S.B. Sinha]
..…………………………J.
[H.S. Bedi]
New Delhi;
May 16, 2008