Shiv Jatia vs. Gian Chand Malick

2024 INSC 142 Non­Reportable  IN THE SUPREME COURT OF INDIA CRIMINAL APPELLATE JURISDICTION  CRIMINAL APPEAL NO.776 OF 2024   Shiv Jatia            … Appellant versus Gian Chand Malick & Ors. … Respondents with CRIMINAL APPEAL NO.777 OF 2024 J U D G M E N T ABHAY S. OKA, J. FACTUAL ASPECTS 1. The appellant in Criminal Appeal no.776 of 2024 is the st accused no.2 in the complaint filed by the 1   respondent­ complainant   under   Section   200   of   the   Code   of   Criminal Procedure,   1973   (for   short,   ‘the   Cr.PC’)   alleging   the commission of offences under Sections 420, 406, 467, 468 and 472 read with Section 120­B of the Indian Penal Code, 1860 (for short, ‘the IPC’) and Section 13 of the Essential Commodities Act, 1955.   The appellants in Criminal Appeal Signature Not Verified no.777 of 2024 are the accused nos.1, 4 and 5 in the same Digitally signed by Anita Malhotra Date: 2024.02.23 18:02:12 IST Reason: Complaint.   The   appellants   in   these   two   appeals   filed   a Criminal Appeal no.776 of 2024 etc.     Page 1 of 16 petition under Section 482 of the Cr.PC before the High Court of Punjab and Haryana at Chandigarh for quashing the said th complaint and for quashing the summoning order dated 16 July 2013 passed on the said complaint.  The High Court, by th the impugned judgment dated 25   August 2014, dismissed the said petition. rd On 23  September 2002, under the Liquified Petroleum 2. Gas   (LPG)   Distributorship   Agreement   (for   short,   ‘the Distributorship Agreement’), the accused no.1 – M/s.Energy Infrastructure   (India)   Limited   (for   short,   ‘the   accused nd company’) appointed the 2   respondent­accused no.7 (Arun Sharma,   Proprietor   of   M/s.Arshya   Max   Agencies)   as   a distributor for distribution of LPG cylinders in the areas of nd Panchkula and Chandigarh.  The 2  respondent, on behalf of the accused company, purported to execute a Point of Sale th agreement on 7  March 2003 (for short, ‘the POS agreement’) st by   which   he   purported   to   appoint   the   1   Respondent­ complainant as a sales outlet (Point of Sale) in the town of Dhanas   to   sell   MaxGas   to   the   consumers.     By   the   POS nd agreement,   the   2   respondent   agreed   to   pay   a   flat   rate st commission   per   cylinder   sold   by   the   1   respondent­ complainant.  A demand draft in the sum of Rs.74,900/­ was st issued   in   favour   of   the   accused   company   by   the   1 respondent­complainant. rd 3. The   accused   company   addressed   a   letter   dated   3 nd March 2004 to the 2  respondent alleging serious lapses in Criminal Appeal no.776 of 2024 etc.     Page 2 of 16 nd customer   services   rendered   by   the   2   respondent,   which allegedly caused a big dent in the reputation of the accused company.  Various instances of lapses in service were set out in the said letter.  The accused company also stated that the nd st 2   respondent had illegally supplied the cylinders to the 1 respondent­complainant   beyond   the   assigned   territory   in Punjab.  It was specifically stated in the said letter that the st name of the 1  respondent­complainant was not reflected in the records of the accused company as a Point of Sale.  The nd accused company alleged that, thus, the 2  respondent had committed   a   breach   of   the   Distributorship   Agreement. Another allegation in the said letter was that a cheque issued nd by the 2  respondent had been dishonoured.   st A   private   complaint   was   filed   by   the   1   respondent­ 4. th complainant on 17   July 2004 before the Illaqa Magistrate, Chandigarh.  The allegation in the said complaint is that the nd 2  respondent, along with accused nos.5 and 6, approached st the 1  respondent­complainant and disclosed that they were involved in the business of manufacturing and selling LPG. st The 1   respondent­complainant has relied upon the alleged information   furnished   by   the   three   accused   and   their representations.     There   is   an   allegation   that   the   accused st allured   the   1   respondent­complainant   to   join   hands   with them and relinquish his old venture of supplying LPG in the st market.     The   1   respondent­complainant   alleged   in   the th complaint that while the POS agreement was executed on 7 March 2004, he paid a sum of Rs.74,900/­ to the accused Criminal Appeal no.776 of 2024 etc.     Page 3 of 16 company by way of a demand draft.   It is alleged that the accused company encashed the said demand draft.  Further st allegation   in   the   complaint   is   that   the   1   respondent­ complainant paid the security deposit for 360 empty cylinders at   the   rate   of   Rs.700/­   per   cylinder   to   the   accused   and received the cylinders/refills.   Based on the assurance that the accused company will supply at least 600 refills against st 300   empty   cylinders   in   a   month,   the   1   respondent­ complainant made investments to purchase trucks, engage staff, take telephone connections, etc.  The allegation is that st apart   from   the   sum   of   Rs.74,900/­,   the   1   respondent­ complainant   paid   a   sum   of   Rs.2,10,000/­   to   the   accused company.   It is alleged that the accused company supplied st only   250   to   300   refills   to   the   1   respondent­complainant against the assurance of 600 refills.  It is further alleged that th from 5  March 2004, the accused company stopped supplying st LPG refills to the 1   respondent­complainant.   It is alleged that the accused company did not take delivery of the empty cylinders   and   failed   to   refund   the   security   deposit. th st Notwithstanding the letter dated 17  May 2004 sent by the 1 respondent­complainant, no action was taken by the accused company.     Therefore,   the   allegation   is   that   the   accused company committed a breach of trust by not refunding the security deposit and not accepting the empty cylinders from st the 1  respondent­complainant.  It is alleged that there was a common intention on the part of the accused company and st other   accused   to   play   fraud   upon   the   1   respondent­ Criminal Appeal no.776 of 2024 etc.     Page 4 of 16 complainant.  It is alleged that due to the non­supply of refills st by the accused company, the reputation of the 1  respondent­ complainant has been adversely affected.   The appellant in the   Criminal   Appeal   no.776   of   2024   was   arraigned   as   an accused   in   the   capacity   of   the   Managing   Director   of   the st accused company. The 1   appellant in the Criminal Appeal nd rd no.777   of   2024   is   the   accused   company.   The   2   and   3 appellants have been described in the complaint as “liable officers” of the accused company as per the averments made in the complaint.  They are the accused nos.4 and 5. 5. The   learned   Judicial   Magistrate,   First   Class, Chandigarh, from 17th November 2004 onwards, recorded the st statements   of   the   1   respondent­complainant   and   other th witnesses. After examining the witnesses, on 15   December 2011, the learned Magistrate held that for proper adjudication of the case, it was necessary to send the complaint to the jurisdictional   police   station   for   investigation   in   accordance with Section 202 of the Cr.PC.  According to the case made out by the appellant, a report under Section 202 of the Cr.PC was never submitted by the Police, and without waiting for the said report, the learned Magistrate passed the summoning th order on 16   July 2013 for the offences punishable under Sections 420, 406, 467, 468 and 472 read with Section 120­B of the IPC and Section 13 of the Essential Commodities Act, th 1955.     By   the   impugned   judgment   and   order   dated   25 August 2014, the High Court dismissed the quashing petition by holding that disputed questions of fact were involved in the Criminal Appeal no.776 of 2024 etc.     Page 5 of 16 petition,   which   can   be   dealt   with   only   after   recording evidence. SUBMISSIONS 6. The learned senior counsel appearing for the appellant pointed   out   that   sub­section   (1)   of   Section   202   of   Cr.PC provides that if an accused resides at a place beyond the area where the learned Magistrate exercises his jurisdiction, the issue of process shall be postponed by directing that a police officer or any other person should make an investigation.  An option is available to the learned Magistrate to inquire into the case himself.   He submitted that from the record of the Trial Court called for by this Court and from the affidavit filed rd by  the   3   respondent­Union  Territory   of  Chandigarh,  it  is established that the report under Section 202 of the Cr.PC was not received by the Court before passing the order of summoning.  The Police forwarded no such report.  He urged that in view of sub­section (1) of Section 202 of the Cr.PC, as the individual accused were admittedly residing outside the territorial   jurisdiction   of   the   learned   Magistrate,   without compliance   with   Section   202   of   the   Cr.PC,   the   order   of summoning could not have been passed.  He submitted that the three accused were the residents of New Delhi.  He, thus, submitted that the summoning order was completely illegal. He submitted that the accused company is a limited company nd th which   never   authorised   the   2   respondent­7   accused   to execute the said agreement on its behalf.  He submitted that Criminal Appeal no.776 of 2024 etc.     Page 6 of 16 in any case, on the plain reading of the complaint, there is no allegation   against  the   appellants   about  the   commission   or omission   of   any   acts   which   constitute   any   offence.     He submitted   that,   reading   the   complaint   as   a   whole,   it   is apparent   that   no   case   was   made   out   to   issue   a   process against the appellants.  He pointed out that the High Court has not considered the case on merits.   st 7. The   learned   senior   counsel   appearing   for   the   1 respondent­complainant   submitted   that   though   the   Police report under Section 202 of the Cr.PC may not have been on record, but it cannot be said that the Police had not prepared any such report.   He submitted that by the Distributorship nd Agreement,   the   accused   company   had   appointed   the   2 respondent as its distributor of LPG cylinders.  Therefore, the nd 2   respondent   was   competent   enough   to   execute   an agreement on behalf of the accused company in favour of the st 1  respondent­complainant.   He submitted that the security deposit   amount   had   gone   to   the   account   of   the   accused company.  He submitted that the ingredients of the offences alleged were made out on a plain reading of the complaint. nd Whether the 2   respondent was empowered to execute the said agreement on behalf of the accused company can be decided only after evidence is adduced.   He also submitted that on a plain reading of sub­section (1) of Section 202 of the Cr.PC,   it   was   not   necessary   for   the   learned   Magistrate   to appoint a Police Officer to carry out the investigation.   The learned Magistrate had the jurisdiction to conduct an inquiry Criminal Appeal no.776 of 2024 etc.     Page 7 of 16 himself   as   specifically   provided   under   sub­section   (1)   of Section 202 of the Cr.PC.   He submitted that the learned st Magistrate   recorded   the   statements   of   the   1   respondent­ st complainant and two other witnesses.   The 1   respondent­ complainant,   also   produced   documents   in   support   of   the complaint.  He submitted that the recording of the evidence of three witnesses and consideration of the documents by the learned Magistrate constitutes an inquiry under sub­section (1) of Section 202 of the Cr.PC.  He would, therefore, submit that the High Court has rightly held that this is a case where st the  1   respondent­complainant,  should   be   allowed  to   lead evidence. The issues raised by the appellant can be decided only after the evidence is adduced. CONSIDERATION OF SUBMISSIONS 8. In   this   case,   there   is   no   dispute   that   some   of   the accused,   including   three   of   the   appellants,   were   residing outside the territorial jurisdiction of the Court of the learned st Magistrate before whom the complaint was filed by the 1 respondent–complainant.   Sub­section (1) of Section 202 of rd the Cr.PC was amended with effect from 23   June 2006 by the Act No.25 of 2005.  Sub­section (1) of Section 202 of the Cr.PC, as amended, reads thus:  “202.   Postponement   of   issue   of process.— (1)   Any   Magistrate,   on   receipt   of   a complaint of an offence of which he is authorised to take cognizance or which has   been   made   over   to   him   under Criminal Appeal no.776 of 2024 etc.     Page 8 of 16 section 192, may, if he thinks fit,   and shall, in a case where the accused is residing at a place beyond the area in which   he   exercises   his   jurisdiction, postpone  the   issue  of  process  against the accused, and either inquire into the case himself or direct an investigation to be made by a police officer or by such other person as he thinks fit, for the purpose   of   deciding   whether   or   not there   is   sufficient   ground   for proceeding:  Provided   that   no   such   direction   for investigation shall be made,—  (a) where it appears to the Magistrate that the offence complained of is triable exclusively by the Court of Session; or  (b) where the complaint has not been made   by   a   Court,   unless   the complainant and the witnesses present (if   any)   have   been   examined   on   oath under section 200. ” (emphasis added) The   portion   starting   from   “and”   and   ending   with   “his rd jurisdiction” was added with effect from 23  June 2006.  The requirement   of   postponing   the   issue   of   the   process   was rd introduced on 23  June 2006 which is applicable only when one of the accused stays outside the jurisdiction of the court. The   said   requirement   is   held   to   be   mandatory.     The mandatory requirement of postponing the issue of the process because the accused was residing at a place beyond the area where the learned Magistrate exercises his jurisdiction was not applicable when the complaint was filed in 2004.   The Criminal Appeal no.776 of 2024 etc.     Page 9 of 16 rd mandate introduced with effect from 23  June 2006 was not applicable on the date of filing of the complaint.  We are not examining   whether   the   amended   provision   will   apply   to   a rd complaint filed before 23   June 2006 in which the order of rd issue of process has been passed after 23  June 2006.   th 9.   We   may   note   here   that   when   the   order   dated   15 December  2011, calling  for  the report  from  the concerned Police Station under Section 202 of the Cr.PC was passed, the learned Magistrate had already recorded the evidence of the st 1   respondent­complainant   and   two   witnesses–S.C.Mahto (CW­1) and Rajiv Kumar (CW­3).   Therefore, after recording the evidence of the three witnesses, the learned Magistrate was   not   satisfied   that   the   material   on   the   record   of   the complaint,   including   the  testimony   of   the  three  witnesses, was sufficient to pass the summoning order.  That is why the learned Magistrate had called for the report under Section 202 of the Cr.PC. 10. Initially, some controversy was raised as the order dated th 17   December   2012,   passed   by   the   learned   Magistrate, records that a report was received.  Therefore, we called for a soft copy of the record of the complaint.  The record reveals th that the report referred to in the order dated 17  December 2012 was submitted by the Police, seeking two more months to file the report.  It is an admitted position that on record of the complaint, the report made by the Police under Section 202   of   the   Cr.PC   was   not   received.     In   any   case,   Shri Criminal Appeal no.776 of 2024 etc.     Page 10 of 16 Kanwardeep   Kaur,   IPS,   Senior   Superintendent   of   Police, th Union Territory of Chandigarh, in the affidavit filed on 24 October 2023, categorically stated that the Police did not file th the report under Section 202 of the Cr.PC till 16  July 2013, when   the   summoning   order   was   issued   by   the   learned Magistrate. After recording the evidence of the three witnesses and 11. perusing the documents on record, the learned Magistrate passed the order calling for the report under Section 202 of the Cr.PC. He postponed the issue of the process. The learned Magistrate ought to have waited until the report was received. He had an option of conducting an inquiry contemplated by sub­section (1) of Section 202 of the Cr.PC himself due to the delay on the part of the Police in submitting the report.  But, he did not exercise the said option. For issuing the order of summoning,   the   learned   Magistrate   could   not   have   relied th upon   the   same   material   which   was   before   him   on   15 December   2011   when   he   passed   the   order   calling   for   the report under Section 202 of the Cr.PC.   The reason is that, obviously, he was not satisfied that the material was sufficient st to pass the summoning order. It is not the case of the 1 respondent­complainant   that   when   the   learned   Magistrate th passed   the   order   dated   16   July   2013,   there   was   some additional   material   on   record.     At   least,   the   order   of   the learned Magistrate does not say so.  The order does not even th consider the earlier order dated 15   December 2011 calling for the report under sub­section (1) of Section 202 of the Criminal Appeal no.776 of 2024 etc.     Page 11 of 16 Cr.PC.  The order issuing process has drastic consequences. Such orders require the application of mind.   Such orders cannot   be   passed   casually.     Therefore,   in   our   view,   the learned Magistrate was not justified in passing the order to issue a summons.  12. Therefore, an order of remand is warranted. But, we cannot overlook that the complaint subject matter of these th appeals   was   filed   on   17   July   2004,   and   the   order   of th summoning   was   passed   nine   years   thereafter,   i.e.   on   13 August 2013.  The complaint is nearly twenty years old; even the   summoning   order   was   passed   eleven   years   ago. Therefore, we allowed the learned senior counsel appearing for the parties to address us on merits.  We may note that the High   Court   has   not   recorded   cogent   reasons   for   not entertaining the prayer for quashing the complaint.  The only reason given by the High Court is that there were disputed questions   of   fact,   and   therefore,   the   controversy   can   be decided only after evidence is recorded.  13. We have perused the averments made in the complaint st and   examined   the   documents   relied   upon   by   the   1 respondent­complainant.     The   first   document   is   the rd Distributorship   Agreement   dated   23   September   2002 nd executed   by   the   accused   company   in   favour   of   the   2 respondent­Arun Sharma, in his capacity as the Proprietor of M/s.Arshya Max Gas.  Under the said agreement, the accused nd company   appointed   the   2   respondent   as   its   exclusive Criminal Appeal no.776 of 2024 etc.     Page 12 of 16 distributor confined to the territory specified in Annexure–A to the agreement.   The territory was limited to Panchkula and Chandigarh.   Clause 1 of the said agreement clearly states nd that   the   2   respondent   accepted   the   appointment   as   an exclusive distributor of the accused company in the territory as   defined   in   Annexure­A.     Taking   the   said   agreement   as correct, there is no clause in the agreement which allows the nd 2   respondent to appoint anyone as a sales outlet (Point of Sale) on behalf of the accused company. Now, we come to the POS agreement relied upon in the 14. complaint. A photocopy of the agreement is placed on record. The   agreement   is   purportedly   executed   on   behalf   of   the nd accused   company   by   the   2   respondent,   showing   his designation   below   his   signature   as   the   Proprietor   of M/s.Arshya Max Gas.   Admittedly, neither any Director nor any officer of the accused company has signed the same.  The said agreement does not contain anything to show that the nd accused   company   had   authorised   the   2   respondent   to execute the said agreement. There is no such recital.  In the st complaint as well as in the deposition of the 1  respondent– complainant, it is stated that in February and March, 2003, nd accused   no.7   (2   respondent)   and   accused   nos.4   and   5 approached   him   for   involving   him   in   their   business   and appoint him as their Point of Sale for the area of Chandigarh and its surroundings.  It is stated that the accused company and   other   accused   (except   accused   no.7)   had   appointed respondent no.7 as the sole distributor in Chandigarh.  In his Criminal Appeal no.776 of 2024 etc.     Page 13 of 16 st nd deposition, the 1  respondent­complainant stated that the 2 st respondent provided empty cylinders to the 1   respondent­ complainant on payment of a security deposit of Rs.700/­ per cylinder. Thus, the empty cylinders were not provided by the st accused company. The 1   respondent–complainant deposed nd that the POS agreement was executed by the 2  respondent– nd accused   no.7,   and   he   identified   the   signature   of   the   2 respondent.   Only one thing is relevant in his evidence: he claims that a demand draft of Rs.74,900/­ was issued in the name   of   the   accused   company   and   was   encashed   by   the accused   company.     There   is   a   specific   averment   in   the complaint that the appellant­accused no.2 was the Managing Director of the accused company.  Very general allegations are made in the complaint by referring to the “accused” without explicitly referring to any particular accused. But, the claim is that the money was taken by the accused company and the st agreement   was   executed   in   favour   of   the   1   respondent– complainant by the accused company, which was signed by nd the 2  respondent, who was neither an Officer nor a Director of the accused–company.  It is not the case in the complaint nd that   the   2   respondent   was   authorised   by   the   Board Resolution   of   the   accused   company   to   sign   the   POS st agreement   with   the   1   respondent–complainant.   The Distributorship Agreement executed by the accused company nd did   not   authorise   the   2   respondent   to   execute   the   POS agreement on behalf of the company.  Moreover, it is not the st case that the 1   respondent complainant handed over the Criminal Appeal no.776 of 2024 etc.     Page 14 of 16 demand draft to any of the directors of the accused company. nd It was apparently handed over to the 2   respondent. The deposit of the demand draft in the account of the accused company will, at the most, give rise to civil liability. Even the st empty   cylinders   were   provided   to   the   1   respondent­ nd complainant by the 2   respondent against the deposit. The accused company had no role in this. There is no contractual st relationship   between   the   accused   company   and   the   1 respondent­complainant. In fact, the entire dispute is of a civil nature arising out 15. of   a   commercial   transaction.   Therefore,   in   our   considered view, taking the complaint and documents relied upon by the st 1  respondent–complainant as correct, no case was made in st the   complaint   or   in   the   evidence   of   the   1   respondent   to proceed against the appellants.  The evidence of CW­3 (Rajiv nd th th Kumar) shows that he has stated that the 2 , 5   and 6 respondents   in   the   Criminal   Appeal   of   accused   no.2   had st approached   the   1   respondent–complainant   and   had represented that the accused company is a limited company and   accused   nos.2   to   4   are   its   Directors.     There   is   no allegation  that the accused company was  involved, in any nd manner, with the transaction between the 2   accused and st the   1   respondent–complainant.     Hence,   continuing   the complaint against the appellants will amount to an abuse of the process of law. Therefore, a case is made out for quashing the complaint as against the appellants. Criminal Appeal no.776 of 2024 etc.     Page 15 of 16 16. Hence,   the   Appeals   must   succeed.     The   impugned th judgment dated 25  August 2014 is set aside insofar as the appellants are concerned.   The complaint bearing Criminal th Complaint no.128 dated 17  July 2004 pending in the Court st of   Judicial   Magistrate,   1   Class,   Chandigarh   is,   hereby, quashed only insofar as the appellants are concerned.   The complaint will proceed against the rest of the accused.  The other accused can raise appropriate defences at the time of framing charge or Trial.   The Appeals are partly allowed on the above terms with no order as to costs.                  ….…………………….J.                   (Abhay S. Oka) …..…………………...J.           (Ujjal Bhuyan) New Delhi; February 23, 2024. Criminal Appeal no.776 of 2024 etc.     Page 16 of 16