Supreme Court of India
MAHESH CHOUDHARYversusSTATE OF RAJASTHAN & ANR.
- Citation
- 2009 INSC 296
- Decided
- 3 March 2009
- Disposal
- Dismissed
- Bench
- S B SINHA
Holding
The Supreme Court held that the charge‑sheet prima facie discloses offences, so the criminal proceedings cannot be quashed, and dismissed the appeal.
Summary
Mahesh Chaudhary, a partner of a carpet exporting firm, was alleged to have withheld commission payable to another firm under a 10% commission agreement, leading to a complaint of criminal breach of trust, cheating and forgery. A magistrate ordered an FIR and later took cognizance of offences under IPC sections 420, 467 and 468. Chaudhary sought quashing of the criminal proceedings under Section 482 of the CrPC, but the High Court dismissed the application. On appeal, the Supreme Court held that although the commission issue is essentially a civil dispute, the charge‑sheet prima facie discloses the commission of offences, and therefore the criminal proceedings cannot be quashed. The Court found no infirmity in the lower courts' orders and, exercising its power under Article 142 of the Constitution, directed that Chaudhary may be released on bail if he applies within four weeks. The appeal was dismissed.
Issues considered
- The nature of the dispute: whether it is a civil matter that warrants quashing of criminal proceedings under Section 482 CrPC.
- Whether the charge‑sheet prima facie discloses offences under IPC sections 420, 467 and 468.
- The scope and limits of the High Court's inherent power under Section 482 to quash criminal proceedings.
- The authority of the Supreme Court to direct bail under Article 142 of the Constitution.
Legislation cited
- Code of Criminal Procedure, 1973s. 482
- Constitution of Indias. 142
- Indian Penal Code, 1860s. 420, s. 467, s. 468
Subjects
criminal breach of trustcheatingforgerycommission disputecivil disputeSection 482inherent jurisdictionquashing criminal proceedingsbailArticle 142
Judgment
[2009] 3 S.C.R. 1005
;t-.
MAHESH CHOUDHARY A
- v.
STATE OF RAJASTHAN & ANR.
(Criminal Appeal No. 417 of 2009)
MARCH 3, 2009
B
[S.B. SINHA AND ASOK KUMAR GANGULY, JJ.]
1•
Code of Criminal Procedure, 1973:
S.482 - Quashing of criminal proceedings - Power of c
High Court - Discussed - The question involved in the
present case is essentially a civil dispute - Case for imposing
criminal liability not made out - In view of the peculiar facts
'· ... and circumstances of the case and in order to do complete
f justice, certain directions issued - Constitution of India, Article D
142.
The firm in which the appellant was a partner, entered
into an agreement with another firm whereby the latter
firm was to receive 10% commission on the invoice value
of each and every invoice and total sales made directly E
or indirectly by the firm. Alleging that the appellant has
.l. committed the offences of criminal breach of trust and/
or of cheating and forgery by not paying commission to
the firm on the sale of about Rs.9 crores through a sister
concern, a Complaint Petition was filed. The Magistrate F
•
directed the Police to lodge FIR, and it was lodged. The
Magistrate took cognizance of the offences against the
appellant. Thereafter the appellant filed an application
before the High Court for quashing of the order passed
by the Magistrate. It was dismissed. Hence the appeal. G
~
' Dismissing the appeal, the Court
HELD:1. Indisputably, the question as to whether the
complainant was entitled to a higher amount of
1005 H
1006 SUPREME COURT REPORTS (2009] 3 S.C.R.
A commission in terms of the agreement dated 21.2.1973 is
essentially a civil dispute. The complainant in terms of the
said agreement was not only entitled to inspect the --
documents maintained by the accused but also to get the
same audited. It is, therefore, difficult to hold as has
B rightly been opined by the Investigating Officer that a
case for imposing a criminal liability on the accused on
that score has been made out. While saying so, this Court
is not unmindful of the limitations of the court's power
under Section 482 of the Code of Criminal Procedure
c which is primarily for one either to prevent abuse of the
process of any Court or otherwise to secure the ends of
justice. The court at that stage would not embark upon
appreciation of evidence. The Court shall moreover
corisider the materials on record as a whole. [Para 15]
D [1012-H; 1013-A-C]
Kamaladevi Agarwal vs. State of WB. & Ors. (2002) 1
SCC 555; B.Suresh Yadav vs. Sharifa Bee & anr. (2007) 13
SCC 107 and R. Ka/yani vs. Janak C. Mehta & ors. 2008 (14)
SCALE 85, referred to.
E
2. The charge-sheet, prima facie discloses
commission of offences. A fair investigation was carried
out by the Investigating Officer. The charge-sheet is a
detailed one. If an order of cognizance has been passed
F relying on or on the basis thereof by the Magistrate, no
exception thereto can be taken. This Court does.not find
any legal infirmity in the impugned orders. [Para 16] (1015-
--
E-F]
3. Before this Court, it was stated that the appellant
G is ready and willing to get the disputes and differences
between the parties settled. In that view of the matter and
keeping in view the peculiar facts and circumstances of
this case and with a view to do complete justice to the
parties, in exercise of jurisdiction under Article 142 of the
H Constitution of India, it is directed that in the event the
MAHESH CHOUDHARY v. STATE OF 1007
RAJASTHAN & ANR.
rt appellant appears before the Magistrate within a period A
of four weeks and files an application for grant of bail, he
shall be released on bail on such terms and conditions
as the Magistrate may deem fit and proper. In the event,
the appellant files an application for exemption from his
personal appearance, the same may also be considered B
on its own merits. It would be open to the complainant
to consider the offer of the appellant. [Para 17] [1015-G-
-I H; 1016-A-B]
Case Law Reference:
c
(2002) 1 sec 555 referred to Para 15
(2001) 13 sec 101 referred to Para 15
2008 (14) SCALE 85 referred to Para 15
D
t CRIMINAL APPELLATE JURISDICTION: Criminal Appeal
No. 417 of 2009.
From the Judgment and Order dated 10.10.07 of the High
Court of Judicature for Rajasthan at Jaipur Bench, Jaipur in
S.B. Criminal Misc. Petition No. 178 of 2007. E
Jagdeep Dhankar, Sunil Kumar and Aneesh Mittal for the
... Appellants.
L.N. Rao, Siddharth Luttra, Randhir Singh, Braj Kishore F
Mishra, Aparna Jha and Vikram for the Respondent.
The Judgment of the Court was delivered by
S.B. SINHA, J.1. Leave granted.
2. Appellant was a partner of a firm known as Mis G
Saraswati Exports. He is also Director of a Company known
as 'Saraswati Exim Pvt. Ltd.' (for short, "the company").
3. M/s S.N.Kapur Exports is a firm registered under the
Indian Partnership Act, 1932 (for short, "firm"). The Complainant H
1008 SUPREME COURT REPORTS [2009] 3 S.C.R.
A Vikram Kapoor (Respondent No.2 herein) is a partner thereof. ~
-rhe firm was engaged in manufacturing, selling and export of
carpets, mats, etc. It developed various types of hand knotted
new designs of carpets and acquired special skill therein.
4. Indisputably, the two firms entered into a contract on or
B
about 1.4.2001 in terms whereof, inter alia, the firm agreed to
help and assist the appellant with regard to production, i.e.,
designing, colouring, dyeing, finishing, etc. The firm also agreed •l
to provide knowledge and know-how for the carpet production
by the appellant for making their products readily saleable and
c more-marketable. The firm for the said purpose was to receive
1Cl% commission on the invoice value of each and every invoice
arnd total sales made directly or indirectly by the firm.
Some of the clauses of the said agreement are as under:
D ?"
"9. That the SECOND PARTY shall have an office
provided by the FIRST PARTY to carry out
supervising of all the work of designing etc. and
auditing/checking of account records/books.
E xxx xxx xxx
14. That the SECOND PARTY shall have right to
auditing, checking of accounts books/records etc., )
through their auditor at any time and the FIRST
F PARTY will cooperate in this regard.
15. That ifthe sum due on account of 10% commission
is not paid promptly as soon as the sum due
becomes Rs. 3 Lacs, the SECOND PARTY shall
on the strength of this agreement alone, file a law
G suit for the recovery of dues and bringing a stay
from the law court of the business and its total ..
#
activity till the full payment has been made along
with 15% interest for the period of delay and full
cost of law suit has been cleared and paid in full
H
MAHESH CHOUDHARY v. STATE OF RAJASTHAN & 1009
ANR. [S.B. SINHA, J.]
,.t:- by the FIRST PARTY; A
' 23.
)()()( )()()( )()()(
That the FIRST PARTY has an assurance from
SECOND PARTY that sales (export sales of Hand
Knotted Carpet) will be done with the help of B
SECOND PARTY.
24. That the FIRST PARTY is singly taking up to
produce only Hand Knotted Carpets without any
compromise in execution of quality. Any defective c
carpets produced by the FIRST PARTY shall be
entirely FIRST PARTY's responsibilities.
25. That neither FIRST PARTY nor SECOND PARTY
can enter into such agreement with any one else."
• D
f 5. The said agreement continued till 31.3.2003.
Indisputably again with effect from 1.4.2003, another agreement
has been entered into by and between the parties thereto
whereby and whereunder it was agreed that the appellant would
pay a sum of Rs.17 lakhs per month to the firm for a period of E
•,f
two years. It is furthermore not in dispute that whereas the firm
i
claims a sum of Rs.4,49,85,581/- towards commission payable
l to it towards export but only a sum of Rs.3,21,06,910/- has been
paid.
F
6. Inter alia alleging that the appellant herein has
committed the offences of criminal breach of trust and/or of
cheating and forgery, on the premise that he had made sale of
about Rs.9 crores in the year 2002-2003 through a sister
concern wherefor no commission was paid although the
G
technical know-how was made available by the firm, a
f
complaint petition was filed in the court of Judicial Magistrate
i No. 22, Jaipur City, Jaipur on or about 13.08.2004.
"' 7. The learned Magistrate directed the officer-in-charge of
the Brahmpuri Police Station to lodge a First Information Report H
1010 SUPREME COURT REPORTS [2009] 3 S.C.R.
A (FIR). Pursuant thereto or in furtherance thereof, a FIR was ;;,
lodged. On completion of investigation, a detailed charge-sheet
has been submitted on or about 8.1.2007. In the said charge-
sheet, it was, inter alia, opined that no manipulation in the
records has been committed for showing sale of carpet through
B the sister concern, stating:
"Even it is assumed that the sale made by Saraswati Exim
is the indirect sale of Saraswati Export, yet no commission \
is payable to Shri Kapoor on the sale of tufted carpets and
~
hand knotted carpets purchased from other firms. No such
c fact has come into light from the entire records of sale
made by Saraswati Export and Saraswati Exim that sale
made by Saraswati Export has been shown to be the sale
made by Saraswati Exim by committing any manipulation
D
in the records.
.
8. Analyzing the terms of the contract, it was stated that
the complainant did not raise any protest from time to time with
regard to the purported breaches thereof on the part of the
appellant and in any event, the same gives rise to a civil
E dispute.
9. It was, however, found that different invoices were '
presented to the bank showing different amounts and quantities ~
vis-a-vis the firm, stating:
F "... Thus, partners of Saraswati Export by showing the
amount of commission in the invoices falsely and wrongly
and by deducting the amount of commission from the total
sale value in wrong and false manner have shown the less
sale turnover and consequently, an offence under Section
G 420, 467, 468 IPC is found proved for paying less
commission than the actual due commission to Shri ...
Kapoor and commission of breach of trust. .4
3. Invoice No. 1610/23.4.02 which has been submitted by ...
Saraswati Export with the bank, rate of carpets is shown
H
MAHESH CHOUDHARY v. STATE OF RAJASTHAN & 1011
ANR. [S.B. SINHA, J.]
~
at higher rate and the rate of carpet in the invoice given A
to the complainant is shown lower. Thus, no satisfactory
explanation regarding difference in the sale rate of carpet
in the copies of the above invoices is available on record.
However, in comparison to the annual sale turnover of
Saraswati Export, difference of total sale value of US $ B
34096.00 of the above one bill and difference amount
2005 US $ is ignorable, but it is proved that Shri Mahesh
Chaudhary by making the false entry in the invoices has
saved the commission of 200.5 US $ payable to Shri
Kapoor and has not paid the same to Shri Kapoor against c
which offence punishable under Sections 420, 467, 468
IPC is found proved."
..t 10. The learned Chief Judicial Magistrate took cognizance
of the offences against the appellant by an order dated
9.1.2007. Appellant thereafter filed an application for quashing D
of the said order before the Rajasthan High Court which has
been dismissed by reason of the impugned judgment.
11. Mr. Jagdeep Dhankar, learned Senior Counsel
appearing on behalf of the appellant, would submit: E
(i) The transaction in terms of the aforementioned
( agreement dated 21.2.1973 having continued upto
31.3.2003 and a sum of Rs.3,21,06,910/- having
been paid by way of commission to the firm, the
charge-sheet even if given face value and taken to F
be correct in its entirely does not constitute
offences punishable under Sections 420, 467 and
468 of the Indian Penal Code.
(ii) The observations made in the charge-sheet against G
..""' the appellant being related to about 200 US$ only,
it is absurd to think that the appellant would commit
such an offence.
(iii) In any event, the disputes and differences between
H
1012 SUPREME COURT REPORTS [2009] 3 S.C.R.
A the parties being pertaining to breach of contract
resulting in civil dispute, the same should be
'
directed to be resolved through arbitration or any
other dispute resolution mechanism.
12. Mr. L.N. Rao, learned Senior Counsel appearing on
B
behalf of the respondent, on the other hand, would contend:
(i) Appellant illegally and wrongfully diverted the
business to its sister concern and, thus, cheated the
respondent No.2 of a huge amount of commission.
,..
\J
(ii) In any event, a charge-sheet having been filed upon
arriving at a finding that the accused had committed
an offence of forgery in respect of invoices, which
are valuable security, this Court should not interfere ~
D with the impugned order. ~
13. The principle providing for exercise of the power by a
High Court under Section 482 of the Code of Criminal
P~ocedure to quash a criminal proceeding is well known. The
co.urt shall ordinarily exercise the said jurisdiction, inter alia, in
E 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.
,,
14. It is also well settled that save and except very
F exceptional circumstances, the court would not look to any
document relied upon by the accused in support of his defence.
Although allegations contained in the complaint petition may
disclose a civil dispute, the same by itself may not be a ground
to hold that the criminal proceedings should not be allowed to
G
continue. For the purpose of exercising its jurisdiction, the
superior courts are also required to consider as to whether the t
~
allegations made in the FIR or Complaint Petition fulfill the
ingredients of the offences alleged against the accused.
15. Indisputably, the question as to whether the complainant
H
MAHESH CHOUDHARY v. STATE OF RAJASTHAN & 1013
ANR. [S.B. SINHA, J.]
~
was entitled to a higher amount of commission in terms of the A
agreement dated 21.2.1973 is essentially a civil dispute. The
complainant in terms of the said agreement was not only
entitled to inspect the documents maintained by the accused
but also to get the same audited. It is, therefore, difficult to hold
as has rightly been opined by the Investigating Officer that a B
case for imposing a criminal liability on the accused on that
4' score has been made out. While saying so, we are not
unmindful of the limitations of the court's power under Section
482 of the Code of Criminal Procedure which is primarily for
one either to prevent abuse of the process of any Court or c
otherwise to secure the ends of justice. The court at that stage
would not embark upon appreciation of evidence. The Court
shall moreover corisider the materials on record as a whole.
..f In Kamaladevi Agarwal vs. State of WB. &ors. [(2002) 1
SCC 555], this Court opined: D
"7. This Court has consistently held that the revisional or
inherent powers of quashing the proceedings at the initial
stage should be exercised sparingly and only where the
allegations made in the complaint or the FIR, even if taken E
it at the face value and accepted in entirety, do not prima
facie disclose the commission of an offence. Disputed and
controversial facts cannot be made the basis for the
exercise of the jurisdiction."
F
It was furthermore observed that the High Court should be
slow in interfering with the proceedings at the initial stage and
that merely because the nature of the dispute is primarily of a
civil nature, the criminal prosecution cannot be quashed
because in cases of forgery and fraud there would always be
some element of civil nature. G
~
" This Court in B.Suresh Yadav vs. Sharifa Bee & anr.
[(2007) 13 sec 107] opined as under:
"13. For the purpose of establishing the offence of H
1014 SUPREME COURT REPORTS [2009] 3 S.C.R.
A cheating, the complainant is required to show that the
accused had fraudulent or dishonest intention at the time
of making promise or representation. In a case of this
nature, it is permissible in law to consider the stand taken
by a party in a pending civil litigation. We do not, however,
B mean to lay down a law that the liability of a person cannot
be both civil and criminal at the same time. But when a
stand has been taken in a complaint petition which is ..
contrary to or inconsistent with the stand taken by him in a
civil suit, it assumes significance. Had the fact as
c purported to have been represented before us that the
appellant herein got the said two rooms demolished and
concealed the said fact at the time of execution of the deed
of sale, the matter might have been different. As the deed
of sale was executed on 30.9.2005 and the purported
demolition took place on 29.9.2005, it was expected that ~
D
the complainanUfirst respondent would come out with her
real grievance in the written statement filed by her in the
aforementioned suit. She, for reasons best known to her,
did not choose to do so."
E Recently in R. Kalyani vs. Janak C. Mehta & ors._[2008
(14) SCALE 85], this Court laid down the law in the following
terms:
"9. Propositions of law which emerge from the said
F 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
G 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.
H
MAHESH CHOUDHARY v. STATE OF RAJASTHAN & 1015
( ANR. [S.B. SINHA, J.]
~ (3) Such a power should be exercised very sparingly. If the A
allegations made in the FIR disclose commission of an
offence, the court shall not go beyond the same and pass
an order in favour of the accused to hold absence of any
mens rea or actus reus.
8
(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 .
10. It is furthermore well known that no hard and fast rule
can be laid down. Each case has to be considered on its c
own merits. The Court, while exercising its inherent
jurisdiction, although would not interfere with a genuine
complaint keeping in view the purport and object for which
the provisions of Sections 482 and 483 of the Code of
Criminal Procedure had been introduced by the Parliament D
but would not hesitate to exercise its jurisdiction in
appropriate cases. One of the paramount duties of the
Superior Courts is to see that a person who is apparently
innocent is not subjected to persecution and humiliation on
the basis of a false and wholly untenable complaint." E
16. The charge-sheet, in our opinion, prima facie discloses
commission of offences. A fair investigation was carried out by
f. the Investigating Officer. The charge-sheet is a detailed one. If
an order of cognizance has been passed relying on or on the
F
basis thereof by the learned Magistrate, in our opinion, no
exception thereto can be taken. We, therefore, do not find any
legal infirmity in the impugned ord~rs.
17. We, however, must place on record that before us Mr.
-
Dhankar stated that the appellant is ready and willing to get the G
,.
,_ disputes and differences between the parties settled. In that
view of the matter and keeping in view the peculiar facts and
circumstances of this case and with a view to do complete
justice to the parties, we, in exercise of our jurisdiction under
H
1016 SUPREME COURT REPORTS (2009] 3 S.C.R.
A Article 142 of the Constitution of India, direct that in the event "'-
the appellant appears before the learned Magistrate within a
period of four weeks from date and files an application for grant
of bail, he shall be released on bail on such terms and
conditions the learned Magistrate may seem fit and proper. In
B the event, the appellant files an application for exemption from
his personal appearance, the same may also be considered
on its own merits. It would be open to the complainant to
consider the offer of the appellant.
18. Subject to the aforementioned directions, the appeal
C is dismissed.
G.N. Appeal dismissed.
...'
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