Supreme Court of India
VIJAY KUMAR GHAI & ORS.versusTHE STATE OF WEST BENGAL & ORS.
- Citation
- 2022 INSC 326
- Decided
- 22 March 2022
- Disposal
- Appeal(s) allowed
- Bench
- S ABDUL NAZEER
Holding
The complaint failed to disclose any fraudulent or dishonest intention and merely involved a civil breach of contract, so the FIR under Sections 406, 420 and 120B IPC did not prima facie constitute an offence and was quashed under Section 482 of the Code of Criminal Procedure.
Summary
The appellants, directors of Priknit Apparel Ltd, received an investment of Rs 2.5 crore from Respondent No. 2 (SMC Global Securities) in exchange for 2,50,000 equity shares, but failed to launch an IPO as per the memorandum of understanding. The complainant filed a police complaint in Delhi which was dismissed, and subsequently lodged a second complaint in Kolkata, leading to an FIR under Sections 406, 420 and 120B IPC. The High Court refused to quash the FIR, holding that the criminal proceedings were not an abuse of process. On appeal, the Supreme Court examined whether the complaint disclosed a cognizable offence of cheating or criminal breach of trust, and whether the dual complaints amounted to forum‑shopping. It concluded that the allegations reflected a civil breach of contract without any fraudulent or dishonest intention, and therefore did not prima facie constitute an offence; the second FIR was an abuse of process. Consequently, the Court quashed the FIR and allowed the appeal.
Issues considered
- Whether the allegations in the FIR/complaint disclose a cognizable offence under Sections 406, 420 and 120B IPC.
- Whether the complaint merely reflects a civil breach of contract and thus cannot give rise to criminal liability for cheating or criminal breach of trust.
- Whether the filing of two parallel complaints in different jurisdictions amounts to forum‑shopping and abuse of process warranting quashing under Section 482 CrPC.
- Whether the High Court erred in refusing to exercise its inherent power under Section 482 CrPC to quash the proceedings.
Legislation cited
- Code of Criminal Procedure, 1973s. 156(3), s. 401, s. 482
- Companies Acts. 68
- Indian Penal Code, 1860s. 120B, s. 34, s. 405, s. 406, s. 409, s. 420
Subjects
criminal breach of trustcheatingsection 482 CrPCquashing of FIRforum shoppingcivil contract vs criminal offenceIPC sections 406 420 120Babuse of processhigh court jurisdiction
Judgment
884 [2022]REPORTS
SUPREME COURT 1 S.C.R. 884 [2022] 1 S.C.R.
A VIJAY KUMAR GHAI & ORS.
v.
THE STATE OF WEST BENGAL & ORS.
(Criminal Appeal No. 463 of 2022)
B MARCH 22, 2022
[S. ABDUL NAZEER AND KRISHNA MURARI, JJ.]
Code of Criminal Procedure, 1973: s. 482 – Quashing of
complaint – Appellant No. 1 is the Managing Director of the Public
Limited Company and Appellant Nos.2 and 3 are the Directors of
C
the said Company –The company itself has been arrayed as proforma
Respondent No.3 – In January 2008, Respondent No. 2, an
authorized representative of SMC Global Securities Ltd, Delhi
desired to make an investment on its behalf with the appellants –It
was mutually decided between the parties that Respondent No. 2
D will invest an amount of Rs. 2.5 crore with the company in lieu of
which they will be issued 2,50,000 equity shares of the company
(Respondent No. 3) – Subsequently, Respondent No. 2 filed share
application form along with the cheque of Rs. 2.5 crore – An
allotment letter was issued in favour of Respondent No. 2 whereby
2,50,000 shares were issued in lieu of the investment made by him –
E
The proforma Respondentno.3 and Respondent No.2 arrived at an
understanding, regarding the investment made by Respondent No.
2. – Having failed to bring the IPO as per memorandum of
understanding, Respondent No.2 issued a legal notice to the
Appellants, who duly replied to the legal notice denying all the
F allegations contained in the legal notice – Respondent No. 2 filed a
police complaint in New Delhi – Respondent No. 2 filed a second
complaint underss.406, 409, 420, 468,120B and 34 IPC on the basis
of the same cause of action at Kolkata and the same was converted
into FIR under ss.406, 420, 120B IPC –High Court of Calcutta by
impugned judgment dismissed the quashing as well as the revision
G
petition filed by the Appellants – Hence instant appeal – Held: There
can be no doubt that a mere breach of contract is not in itself a
criminal offence and gives rise to the civil liability of damages –
While breach of contract cannot give rise to criminal prosecution,
for cheating, fraudulent or dishonest intention is the basis of the
H
884
VIJAY KUMAR GHAI v. THE STATE OF WEST BENGAL 885
offence of cheating – In the case at hand, complaint filed by the A
Respondent No. 2 does not disclose dishonest or fraudulent intention
of the appellants – In order to attract the ingredients of ss.406 and
420 IPC, it is imperative on the part of the complainant to prima
facie establish that there was an intention on part of the petitioner
and/or others to cheat and/or to defraud the complainant right from
B
the inception – It has to be prima facie established that due to such
alleged act of cheating, the complainant (Respondent No. 2) had
suffered a wrongful loss and the same had resulted in wrongful
gain for the accused (appellant) – In absence of these elements, no
proceeding is permissible in the eyes of law with regard to the
commission of the offence punishable u/s 420 IPC – The impugned C
FIR and proceedings in pursuance of charge sheet against the
appellants for the offences under ss.406, 420,120B IPC quashed –
Penal Code, 1860 – ss.406, 420,120B.
Allowing the appeal, the court
HELD: 1. “Entrustment” of property under Section 405 of D
the Indian Penal Code, 1860 is pivotal to constitute an offence
under this. The words used are, ‘in any manner entrusted with
property’. So, it extends to entrustments of all kinds whether to
clerks, servants, business partners or other persons, provided
they are holding a position of ‘trust’. A person who dishonestly E
misappropriates property entrusted to them contrary to the terms
of an obligation imposed is liable for a criminal breach of trust
and is punished under Section 406 of the Penal Code. Section
420 IPC is a serious form of cheating that includes inducement
(to lead or move someone to happen) in terms of delivery of
property as well as valuable securities. This section is also F
applicable to matters where the destruction of the property is
caused by the way of cheating or inducement. Punishment for
cheating is provided under this section which may extend to
7yearsand also makes the person liable to fine. [Paras 24, 30]
[903-E-F; 905-B-D] G
2. There can be no doubt that a mere breach of contract is
not in itself a criminal offence and gives rise to the civil liability
of damages. While breach of contract cannot give rise to criminal
prosecution for cheating, fraudulent or dishonest intention is the
H
886 SUPREME COURT REPORTS [2022] 1 S.C.R.
A basis of the offence of cheating. In the case at hand, complaint
filed by the Respondent No. 2 does not disclose dishonest or
fraudulent intention of the appellants. [Para 34][907-B-D]
3. Having gone through the complaint/FIR and even the
chargesheet, it cannot be said that the averments in the FIR and
B the allegations in the complaint against the appellant constitute
an offence under Section 405 & 420 IPC, 1860. Even in a case
where allegations are made in regard to failure on the part of the
accused to keep his promise, in the absence of a culpable intention
at the time of making promise being absent, no offence under
Section 420 IPC can be said to have been made out. In the instant
C case, there is no material to indicate that Appellants had any
malafide intention against the Respondent which is clearly
deductible from the MOU dated 20.08.2009 arrived between the
parties. Respondent No. 2 filed a complaint u/s 156(3) Cr.P.C on
06.06.2012, wherein his prayer for registration of an FIR was
D rejected vide order dated28.02.2013 by the MM, Tis Hazari
Court, immediately after which he filed his complaint on 28.03.2013
at P.S Bowbazar, Calcutta. The timeline of filing complaints clearly
indicates the malafide intention of Respondent No. 2 which was
to simply harass the petitioners so as to pressurise them into
shelling out the investment made by Respondent No.2.
E [Paras 36, 38][908-A-C, G-H]
Uma Shankar Gopalika v. State of Bihar & Anr. (2005)
10 SCC 336; Hridaya Ranjan Prasad Verma & Ors. v.
State of Bihar & Anr. (2000) 4 SCC 168 : [2000] 2 SCR
859; Prof. R.K. Vijayasarathy & Anr. v. Sudha Seetharam
F & Anr. (2019) 16 SCC 739 : [2019] 2 SCR 185; Vesa
Holdings Pvt. Ltd. & Anr. v. State of Kerala & Ors. (2015)
8 SCC 293 : [2015] 4 SCR 27 – relied on.
V.Y. Jose & Anr. v. State of Gujarat & Anr. (2009) 3
SCC 78 : [2008] 17 SCR 588 Murari Lal Gupta v. Gopi
G Singh (2005) 13 SCC 699; K. Jayaram and Ors. v.
Bangalore Development Authority & Ors. 2021 SCC
OnLine SC 1194; Union of India and Ors. v.
Shantiranjan Sarkar (2009) 3 SCC 90 : [2009]
1 SCR 242; K. Jagadish v. Udaya Kumar G.S. & Anr.
H
VIJAY KUMAR GHAI v. THE STATE OF WEST BENGAL 887
(2020) 14 SCC 552; V. Ravi Kumar v. State and Ors. A
(2019) 14 SCC 568 : [2018] 14 SCR 828; Indian Oil
Corporation v. NEPC India Ltd. & Ors. (2006) 6 SCC
736 : [2006] 3 Suppl. SCR 704; A.V. Mohan Rao &
Anr. v. M Kishan Rao & Anr. (2002) 6 SCC 174 : [2002]
1 Suppl. SCR 175; Union of India & Ors. v. Cipla Ltd.
B
& Anr. (2017) 5 SCC 262 : [2016] 7 SCR 523; Krishna
Lal Chawla & Ors. v. State of U.P. & Anr.(2021) 5 SCC
435; T.T. Antony v. State of Kerala & Ors. (2001) 6 SCC
181 : [2001] 3 SCR 942; K. Jayaram and Ors. v.
Bangalore Development Authority & Ors. 2021 SCC
OnLine SC 1194; State of Haryana & Ors. v. Bhajan C
Lal & Ors. 1992 Supp (1) SCC 335 : [1990] 3 Suppl.
SCR 259; R.P. Kapur v. State of Punjab [1960] 3 SCR
388; Inder Mohan Goswami & Anr. v. State of
Uttaranchal & Ors. (2007) 12 SCC 1 : [2007]
10 SCR 847; Indian Oil Corpn. v NEPC India Ltd. &
D
Ors. (2006) 6 SCC 736 : [2006] 3 Suppl. SCR 704;
State of Madhya Pradesh v. Awadh Kishore Gupta &
Ors. (2004) 1 SCC 691 : [2003] 5 Suppl. SCR 672; G.
Sagar Suri & Anr. v. State of UP & Ors. (2000) 2 SCC
636 : [2000] 1 SCR 417; R K Dalmia vs Delhi
Administration [1963] 1 SCR 253; Sudhir Shantilal E
Mehta v. CBI (2009) 8 SCC 1 : [2009] 12 SCR 682 –
referred to.
Case Law Reference
[2008] 17 SCR 588 referred to Para 4.7
F
(2005) 13 SCC 699 referred to Para 4.7
[2009] 1 SCR 242 referred to Para 4.7
(2020) 14 SCC 552 referred to Para 5.2
[2018] 14 SCR 828 referred to Para 5.4
G
[2006] 3 Suppl. SCR 704 referred to Para 5.4
[2002] 1 Suppl. SCR 175 referred to Para 5.4
[2016] 7 SCR 523 referred to Para 9
(2021) 5 SCC 435 referred to Para 11 H
888 SUPREME COURT REPORTS [2022] 1 S.C.R.
A [2001] 3 SCR 942 referred to Para 12
[1990] 3 Suppl. SCR 259 referred to Para 15
[1960] 3 SCR 388 referred to Para 16
[2007] 10 SCR 847 referred to Para 17
B [2006] 3 Suppl. SCR 704 referred to Para 18
[2003] 5 Suppl. SCR 672 referred to Para 19
[2000] 1 SCR 417 referred to Para 20
[1963] 1 SCR 253 referred to Para 25
C
[2009] 12 SCR 682 referred to Para 26
[2019] 2 SCR 185 relied on Para 32
(2005) 10 SCC 336 relied on Para 33
[2000] 2 SCR 859 relied on Para 34
D
[2015] 4 SCR 27 relied on Para 35
CRIMINAL APPELLATE JURISDICTION: Criminal Appeal No.
463 of 2022.
From the Judgment and Order dated 01.10.2019 of the High Court
E of Calcutta at Kolkata in C.R.R. No.731 of 2017.
Dr. Menaka Guruswamy, Sr. Adv., Arandhati Kajju, Yash S. Vijay,
Ms. Shristi Borthakur, Shubham Bhalla, Asheesh Bajpayee, Deepak
Samota, Advs. for the Appellants.
Mrs. Anjana Prakash, Sr. Adv., Anuj Prakaash, Ms. Apurva Jain,
F Prince Jain, Shreyas Jain, Kumar Mihir, Ms. Prachi Gupta, Ranjeet
Kumar, Advs. for the Respondents.
The Judgment of the Court was delivered by
KRISHNA MURARI, J.
G 1. Leave granted.
2. This appeal is directed a gainst the judgment and order dated
01.10.2019 passed by the High Court of Calcutta (hereinafter referred
to as “High Court”) in C.R.R No. 731 of 2017 filed by the appellants
praying for quashing of proceedings being G.R. Case No. 1221 of 2013
H pending before the Court of Learned Chief Metropolitan Magistrate,
VIJAY KUMAR GHAI v. THE STATE OF WEST BENGAL 889
[KRISHNA MURARI, J.]
Kolkata and arising out of Bowbazar Police Station Case No. 168 dated A
28.03.2013 under Sections 420, 406 and 120B of the Indian Penal Code,
1860 (hereinafter referred to as “IPC”). By the said judgment, the High
Court dismissed the prayer for quashing of the proceedings and held
that continuance of criminal proceedings against the present appellant/
accused would not be an abuse of the process of the court.
B
3. Brief facts necessary for the disposal of this appeal are as
under:
3.1 M/s. Priknit Retails Limited a public limited company having
its registered office at BXXV, 539A, 10, Jalandhar, Bye Pass Road,
Ludhiana, Punjab was incorporated in the year 2002 and subsequently C
changed its name to Priknit Apparels in 2007. The company is engaged
in the manufacture and trade of apparels through chain of retail stores
under the brand name and style of Priknit. Appellant No. 1 is the Managing
Director of the Company and Appellant Nos. 2 and 3 are the Directors
of the said Company. The company has been arrayed as proforma
Respondent No. 3. D
3.2 In January 2008, Respondent No. 2 an authorized
representative of SMC Global Securities Ltd, Delhi desired to make an
investment on its behalf with the appellants. It was mutually decided
between the parties that Respondent No. 2 will invest an amount of Rs.
2.5 crore with the company in lieu of which they will be issued 2,50,000 E
equity shares of Priknit Apparel Pvt. Ltd. Subsequently, Respondent
No. 2 filed their share application form along with the cheque of Rs. 2.5
crore.
3.3 Subsequently, an allotment letter dated 29.03.2008 was issued
in favour of Respondent No. 2 whereby 2,50,000 shares were issued in F
lieu of the investment made by him. The proforma respondent no. 3
company and Respondent No. 2 arrived at an understanding, regarding
the investment made by Respondent No. 2.
3.4 Having failed to bring the I.P.O as per memorandum of
understanding dated 20.08.2009, Respondent No. 2 issued a legal notice G
dated 06.12.2011 to the Appellants, who duly replied to the legal notice
denying all the allegations contained in the legal notice.
3.5 That on 06.01.2012, Respondent No. 2 filed a police complaint
with PS Rajender Nagar, New Delhi and the concerned officer of PS
Rajender Nagar apprised Respondent No. 2 that the complaint does not H
890 SUPREME COURT REPORTS [2022] 1 S.C.R.
A pertain to their jurisdiction and therefore the same ought to be transferred.
On 11.04.2012, Respondent No. 2 filed a complaint with the Economic
Offences Wing (hereinafter referred to as “EOW”) and the said
complaint was transferred to PS Darya Ganj, New Delhi.
3.6 That on 06.06.2012, Respondent No. 2 filed a complaint being
B CC No. 306/1/12 under Section 156(3) of Cr.P.C before the Tiz Hazari
Court, New Delhi for registration of FIR against the Appellants and
their company. On 01.09.2012, Respondent No. 2 also filed another
Complaint No. 190 of 12 before Tis Hazari Court, New Delhi under
Section 68 of the Companies Act read with Section 200 of Cr.P.C which
is pending adjudication.
C
3.7 That the Metropolitan Magistrate (hereinafter referred to as
“MM”), Tis Hazari vide order dated 28.02.2013 observed that the entire
dispute raised by Respondent No. 2 was civil in nature and there was no
criminality involved, thereby turning down the prayer of Respondent No.
2 for registration of an FIR and posted the case for pre-summoning
D evidence with regard to the application under Section 156(3) Cr.P.C
filed by Respondent No.2. It is pertinent to mention here that the order
of the MM, Tis Hazari Court, New Delhi attained finality as it was not
put to further challenge.
3.8 That on 28.03.2013, Respondent No. 2 filed a second complaint
E under Section 406, 409, 420, 468,120B and 34 IPC on the basis of the
same cause of action with the PS Bowbazar at Kolkata, West Bengal
and the same was converted into an FIR bearing No. 168 under Section
406, 420, 120B IPC. A final closure report dated 04.03.2014 was filed
by the concerned Police Station recommending closure of the case since
F the entire dispute was found to be civil in nature.
3.9 That Respondent No. 2 filed a protest petition being GR No.
1221/2013 with the Chief Metropolitan Magistrate (hereinafter referred
to as “CMM”), Kolkata against closure report dated 04.03.2014 and
vide order dated 08.03.2016, the CJM allowed the protest petition and
G directed for further investigation.
3.10 In the meantime, the authorized representative of Respondent
No. 2 made a statement before the MM, Tish Hazari, New Delhi for
withdrawing the complaint case.
3.11 Appellant No. 1 received a notice dated 14.11.2016 under
H Section 41(a) Cr.P.C for appearance before the Investigation Officer
VIJAY KUMAR GHAI v. THE STATE OF WEST BENGAL 891
[KRISHNA MURARI, J.]
(hereinafter referred to as “IO”) at PS Bowbazar, Kolkata. In his reply A
to the said notice, Appellant No. 1 stated that a complaint has already
been filed with the same cause of action before the Tis Hazari Court
and further sought time to produce the documents sought in the notice.
Thereafter, Appellant No. 1 sent a letter with all the relevant documents
required for investigation thereby extending full co-operation to the IO
B
at PS Bowbazar, Kolkata in connection with Case No. 168. The IO PS
Bowbazar, Kolkata sent another notice under Section 41(a) Cr.P.C dated
23.12.2016 to Appellant No. 1 and 2 to appear before him with the relevant
documents.
3.12 That vide order dated 14.02.2017, the CMM, Calcutta took
cognizance of the offence under Section 406, 420, 120B IPC in connection C
with Case No. 168 dated 28.03.2013 corresponding to GR Case No.
1221 of 2013 i.e., protest petition.
3.13 Being aggrieved, Appellants herein filed a quashing petition
being CRR No. 731 of 2017 under Section 482 Cr.P.C seeking quashing
of FIR No. 168 dated 28.03.2013 and also impugned the proceedings in D
GR Case No. 1221 of 2013 by invoking Sections 401 and 482 Cr.P.C.
3.14 That the High Court vide order dated 06.03.2017 issued notice
to the Respondents and stayed further proceeding of criminal case.
Respondent No. 2 filed an application for vacation of the stay order
granted by the High Court but the same was dismissed vide order dated E
24.03.2017 while observing that Respondent No. 2 had also filed a
complaint at Delhi on the same allegations, thus the proceedings at
Calcutta were intended to harass the Appellants.
3.15 However, the High Court vide impugned judgment and order
dated 01.10.2019 dismissed the quashing as well as the revision petition F
filed by the Appellants and observed that in order to exercise the power
under Section 482 Cr.P.C, the only requirement is to see whether
continuance of the criminal proceedings would be a total abuse of the
process of the court and the continuance of the criminal proceedings
against the appellants is in no way an abuse of the process of the court. G
The operative portion of the aforesaid judgment reads as under: -
“In the present case, the allegation in the FIR disclosed the
offences alleged. Moreover, the allegations made in the FIR
disclosed that the petitioner induced the complainant to
purchase share or invest money by willful misrepresentation.
H
892 SUPREME COURT REPORTS [2022] 1 S.C.R.
A It is true that the complaint discloses that there was a
commercial transaction between the parties but at the same
time, it cannot be overlooked that the averments made in the
complaint/FIR prima facie revel the commission of a
cognizable offence.
B Moreover, when the complaint discloses that the commercial
transaction between involve criminal offences, then the
question of quashing the complaint cannot be allowed.”
Contentions on behalf of Appellants
4. Ms. Menaka Guruswamy, learned senior advocate appearing
C on behalf of the appellants has vehemently submitted that Respondent
No.2 indulged in the practice of forum shopping by filing 2 complaints
i.e., a complaint u/s 156(3) Cr.P.C before the Tis Hazari Court, New
Delhi on 06.06.2012 and a complaint which was eventually registered as
FIR No. 168 u/s 406, 420, 120B IPC before PS Bowbazar, Calcutta on
D 28.03.2013. FIR in connection with PS Bowbazar, Calcutta was lodged
during the pendency of the complaint case at Tis Hazari Court, New
Delhi and the said fact was cleverly supressed by Respondent No. 2.
4.1 It was further submitted that initially police submitted a closure
report. However, Respondent No. 2 filed an application under Section
E 173(8) of Cr.P.C for further investigation which was allowed and after
further investigation, charge sheet was filed against the Appellants herein.
4.2 It was vehemently submitted that the complaint filed in PS
Bowbazar was the exact reproduction of the complaint filed in New
Delhi with the only difference being the place of occurrence. In the
F complaint lodged at Delhi, the place of occurrence was shown to be the
office at New Delhi and in subsequent complaint at Calcutta, the place
of occurrence was changed to its office at Calcutta.
4.3 It was further submitted that the allegations contained in the
FIR are purely contractual disputes of civil nature but Respondent No. 2
has given a criminal colour to it and that breach of contract does not
G
come within the purview of cheating as defined in IPC. In addition to it,
it was submitted that the transaction in question between the parties as
revealed from the F.I.R was purely a sale transaction or what may be
called as a commercial transaction, therefore the question of cheating
does not arise at all.
H
VIJAY KUMAR GHAI v. THE STATE OF WEST BENGAL 893
[KRISHNA MURARI, J.]
4.4 It was further submitted that there are no allegations in the A
complaint filed by the Respondent No. 2 about the Appellants having
fraudulent or dishonest intentions at the time of making the representation.
4.5 It was also further submitted that the High Court failed to
appreciate that the two allegations recorded in the complaint against the
Appellants being belated allotment of shares to the complainant company B
and the Appellant No. 1’s failure to bring out an IPO are clearly
commercial disputes with no element of criminality.
4.6 It was further submitted that the High Court failed to appreciate
that a mere failure to keep a promise does not create any presumption
of a dishonest intention amounting to a criminal breach of trust under C
Section 409 IPC or cheating under Section 420 IPC.
4.7 Heavy reliance was placed on the decisions of this Court in
V.Y.Jose & Anr. Vs. State of Gujarat & Anr.1, Murari Lal Gupta Vs.
Gopi Singh 2; K. Jayaram and Ors. Vs. Bangalore Development
Authority & Ors.3; Union of India and Ors. Vs. Shantiranjan Sarkar4. D
Contentions on behalf of Respondents
5. Mrs. Anjana Prakash, learned senior advocate appearing on
behalf of the Respondents has vehemently submitted that the allegations
contained in the complaint disclosed all the ingredients of the alleged
offences and moreover, the criminal proceedings have not been initiated E
with mala fide intention and that the complaint case filed before the
magistrate of Tis Hazari Court was not decided on merit and as such the
complainant cannot be barred from making a fresh complaint.
5.1 It was further submitted that the complaint at Kolkata had
been filed only after the prayer u/s 156(3) Cr.P.C was rejected by the F
Delhi Court on 28.02.2013 in order to avail legal remedies available and
when the Calcutta Court on 08.03.2016 allowed further investigation,
the Respondent in order to avoid multiplicity of proceedings, withdrew
the complaint in Delhi on 09.09.2016.
5.2 It was further submitted that it is an established proposition of G
law that two complaints can co-exist simultaneously if the scope of two
1
(2009) 3 SCC 78
2
(2005) 13 SCC 699
3
2021 SCC OnLine SC 1194
4
(2009) 3 SCC 90 H
894 SUPREME COURT REPORTS [2022] 1 S.C.R.
A complaints are different. Reliance in support of the contention was placed
on the judgment of this Court in K. Jagadish Vs. Udaya Kumar G.S. &
Anr.5, wherein it was reiterated that two remedies ie. civil and criminal
are not mutually exclusive but can co-exist since they essentially differ
in their context and consequence.
B 5.3 It was also submitted that the established principle of quashing
is that at the stage of cognizance all that a Court is required to see if
prima facie an offence is made out and courts should restrain itself from
throttling legitimate prosecutions at the threshold and the law should be
allowed to take its course. Substantiating the same, it was submitted that
the complainant has made a specific allegation that on inducement of
C
the accused persons, he had parted with 2.50 crore on a false promise
that they would be allotted shares in the company. On 29.02.2008, a
false statement was made by the accused persons that the complainant
had been allotted the shares, whereas it transpired that the resolution
about the allotment of shares was taken only on 23.03.2009 that is one
D year later.
5.4 Strong reliance was placed on the decisions of this Court in V.
Ravi Kumar Vs. State and Ors.6; Indian Oil Corporation Vs. NEPC
India Ltd. & Ors.7; A.V. Mohan Rao & Anr. Vs. M Kishan Rao &
Anr.8; K. Jagadish (Supra).
E
6. We have carefully considered the submissions made at the Bar
and perused the materials placed on record.
7. Predominantly, the Indian Judiciary has time and again reiterated
that forum shopping take several hues and shades but the concept of
F ‘forum shopping’ has not been rendered an exclusive definition in any
Indian statute. Forum shopping as per Merriam Webster dictionary is:-
“The practice of choosing the court in which to bring
an action from among those courts that could properly
exercise jurisdiction based on determination of which
G court is likely to provide the most favourable outcome”
5
(2020) 14 SCC 552
6
(2019) 14 SCC 568
7
(2006) 6 SCC 736
8
(2002) 6 SCC 174
H
VIJAY KUMAR GHAI v. THE STATE OF WEST BENGAL 895
[KRISHNA MURARI, J.]
8. The Indian judiciary’s observation and obiter dicta has aided in A
streamlining the concept of forum shopping in the Indian legal system.
This Court has condemned the practice of forum shopping by litigants
and termed it as an abuse of law and also deciphered different categories
of forum shopping.
9. A two-Judge bench of this Court in Union of India & Ors. Vs. B
Cipla Ltd. & Anr.9 has laid down factors which lead to the practice of
forum shopping or choice of forum by the litigants which are as follows:-
“148. A classic example of forum shopping is when litigant
approaches one Court for relief but does not get the desired
relief and then approaches another Court for the same relief. C
This occurred in Rajiv Bhatia Vs. Govt. of NCT of Delhi and
Others10. The respondent-mother of a young child had filed a
petition for a writ of habeas corpus in the Rajasthan High
Court and apparently did not get the required relief from that
Court. She then filed a petition in the Delhi High Court also
for a writ of habeas corpus and obtained the necessary relief. D
Notwithstanding this, this Court did not interfere with the order
passed by the Delhi High Court for the reason that this Court
ascertained the views of the child and found that she did not
want to even talk to her adoptive parents and therefore the
custody of the child granted by the Delhi High Court to the E
respondent-mother was not interfered with. The decision of
this Court is on its own facts, even though it is a classic case
of forum shopping.
149. In Arathi Bandi v. Bandi Jagadrakshaka Rao & Ors.11
this Court noted that jurisdiction in a Court is not attracted F
by the operation or creation of fortuitous circumstances. In
that case, circumstances were created by one of the parties to
the dispute to confer jurisdiction on a particular High Court.
This was frowned upon by this Court by observing that to
allow the assumption of jurisdiction in created circumstances
would only result in encouraging forum shopping. G
9
(2017) 5 SCC 262
10
(1999) 8 SCC 525
11
(2013) 15 SCC 790 H
896 SUPREME COURT REPORTS [2022] 1 S.C.R.
A 150. Another case of creating circumstances for the purposes
of forum shopping was World Tanker Carrier Corporation v.
SNP Shipping Services Pvt. Ltd. and others12 wherein it was
observed that the respondent/plaintiff had made a deliberate
attempt to bring the cause of action namely a collision between
two vessels on the high seas within the jurisdiction of the
B
Bombay High Court. Bringing one of the vessels to Bombay
in order to confer jurisdiction on the Bombay High Court
had the character of forum shopping rather than anything
else.
151. Another form of forum shopping is taking advantage of
C a view held by a particular High Court in contrast to a
different view held by another High Court. In Ambica
Industries v. Commissioner of Central Excise (2007) 6 SCC
769 the assesse was from Lucknow. It challenged an order
passed by the Customs, Excise and Service Tax Appellate
D Tribunal (the CESTAT) located in Delhi before the Delhi High
Court. The CESTAT had jurisdiction over the States of Uttar
Pradesh, NCT of Delhi and Maharashtra. The Delhi High
Court did not entertain the proceedings initiated by the
assessee for want of territorial jurisdiction. Dismissing the
assessee’s appeal this Court gave the example of an assessee
E affected by an assessment order in Bombay invoking the
jurisdiction of the Delhi High Court to take advantage of the
law laid down by the Delhi High Court or an assessee affected
by an order of assessment made at Bombay invoking the
jurisdiction of the Allahabad High Court to take advantage
F of the law laid down by it and consequently evade the law
laid down by the Bombay High Court. It was said that this
could not be allowed and circumstances such as this would
lead to some sort of judicial anarchy.
155. The decisions referred to clearly lay down the principle
G that the court is required to adopt a functional test vis-à-vis
the litigation and the litigant. What has to be seen is whether
there is any functional similarity in the proceedings between
one court and another or whether there is some sort of
subterfuge on the part of a litigant. It is this functional test
12
H (1998) 5 SCC 310
VIJAY KUMAR GHAI v. THE STATE OF WEST BENGAL 897
[KRISHNA MURARI, J.]
that will determine whether a litigant is indulging in forum A
shopping or not.”
10. Forum shopping has been termed as disreputable practice by
the courts and has no sanction and paramountcy in law. In spite of this
Court condemning the practice of forum shopping, Respondent No. 2
filed two complaints i.e., a complaint u/s 156(3) Cr.P.C before the Tis B
Hazari Court, New Delhi on 06.06.2012 and a complaint which was
eventually registered as FIR No. 168 u/s 406, 420, 120B IPC before PS
Bowbazar, Calcutta on 28.03.2013. ie., one in Delhi and one complaint
in Kolkata. The Complaint filed in Kolkata was a reproduction of the
complaint filed in Delhi except with the change of place occurrence in
order to create a jurisdiction. C
11. A two-Judge bench of this Court in Krishna Lal Chawla &
Ors. Vs. State of U.P. & Anr.13 observed that multiple complaints by the
same party against the same accused in respect of the same incident is
impermissible. It held that Permitting multiple complaints by the same
party in respect of the same incident, whether it involves a cognizable or D
private complaint offence, will lead to the accused being entangled in
numerous criminal proceedings. As such he would be forced to keep
surrendering his liberty and precious time before the police and the courts,
as and when required in each case.
12. The legality of the second FIR was extensively discussed by E
this Court in T.T. Antony Vs. State of Kerala & Ors.14. It was held that
there can be no second FIR where the information concerns the same
cognisable offence alleged in the first FIR or the same occurrence or
incident which gives rise to one or more cognizable offences. It was
further held that once an FIR postulated by the provisions of Section 154
of Cr.P.C has been recorded, any information received after the F
commencement of investigation cannot form the basis of a second FIR
as doing so would fail to comport with the scheme of the Cr.P.C. The
Court further held that barring situations in which a counter-case is filed,
a fresh investigation or a second FIR on the basis of the same or
connected cognizable offence would constitute an “abuse of the statutory G
power of investigation” and may be a fit case for the exercise of power
either under Section 482 of Cr.P.C or Articles 226/227 of the Constitution
of India
13
(2021) 5 SCC 435
14
(2001) 6 SCC 181 H
898 SUPREME COURT REPORTS [2022] 1 S.C.R.
A 13. A two-Judge bench of this Court in K. Jayaram and Ors.
Vs. Bangalore Development Authority & Ors.15 observed:
“16. It is necessary for us to state here that in order to check
multiplicity of proceedings pertaining to the same subject-
matter and more importantly to stop the menace of soliciting
B inconsistent orders through different judicial forums by
suppressing material facts either by remaining silent or by
making misleading statements in the pleadings in order to
escape the liability of making a false statement, we are of the
view that the parties have to disclose the details of all legal
proceedings and litigations either past or present concerning
C any part of the subject-matter of dispute which is within their
knowledge. In case, according to the parties to the dispute,
no legal proceedings or court litigations was or is pending,
they have to mandatorily state so in their pleadings in order
to resolve the dispute between the parties in accordance with
D law.”
14. The genesis of the present appeal originates from the impugned
order pronounced by the High Court whereby the High Court dismissed
the application filed under Section 482 as well as 401 Cr.P.C. Taking
that into concern, it is necessary to advert to the principles settled by
judicial pronouncements laying down the circumstances under which
E
High Court can exercise its inherent powers under Section 482 Cr.P.C.
15. This Court in the widely celebrated judgment of State of
Haryana & Ors. Vs. Bhajan Lal & Ors. 16 considered in detail the
scope of the High Court powers under Section 482 Cr.P.C. and/or Article
226 of the Constitution of India to quash the FIR and referred to several
F judicial precedents and held that the High Court should not embark upon
an inquiry into the merits and demerits of the allegations and quash the
proceedings without allowing the investigating agency to complete its
task. At the same time, this Court identified the following cases in which
FIR/complaint can be quashed:
G “102. (1) Where the allegations made in the first information
report or the complaint, even if they are taken at their face
value and accepted in their entirety do not prima facie
constitute any offence or make out a case against the accused.
15
2021 SCC OnLine SC 1194
H 16
1992 Supp (1) SCC 335
VIJAY KUMAR GHAI v. THE STATE OF WEST BENGAL 899
[KRISHNA MURARI, J.]
(2) Where the allegations in the first information report and A
other materials, if any, accompanying the FIR do not disclose
a cognizable offence, justifying an investigation by police
officers under Section 156(1) of the Code except under an
order of a Magistrate within the purview of Section 155(2) of
the Code.
B
(3) Where the uncontroverted allegations made in the FIR or
complaint and the evidence collected in support of the same
do not disclose the commission of any offence and make out
a case against the accused.
(4) Where the allegations in the FIR do not constitute a C
cognizable offence but constitute only a non-cognizable
offence, no investigation is permitted by a police officer without
an order of a Magistrate as contemplated under Section
155(2) of the Code.
(5) Where the allegations made in the FIR or complaint are so
D
absurd and inherently improbable on the basis of which no
prudent person can ever reach a just conclusion that there is
sufficient ground for proceeding against the accused.
(6) Where there is an express legal bar engrafted in any of
the provisions of the Code or the Act concerned (under which
a criminal proceeding is instituted) to the institution and E
continuance of the 21 proceedings and/or where there is a
specific provision in the Code or the Act concerned, providing
efficacious redress for the grievance of the aggrieved party.
(7) Where a criminal proceeding is manifestly attended with
mala fide and/or where the proceeding is maliciously instituted F
with an ulterior motive for wreaking vengeance on the accused
and with a view to spite him due to private and personal
grudge.”
16. This Court in R.P. Kapur Vs. State of Punjab17 summarized
categories of cases where inherent power can and should be exercised G
to quash the proceedings:-
(i) Where it manifestly appears that there is a legal bar against
the institution or continuance e.g. want of sanction;
17
(1960) 3 SCR 388 H
900 SUPREME COURT REPORTS [2022] 1 S.C.R.
A (ii) Where the allegations in the first information report or
complaint taken at its face value and accepted in their
entirety do not constitute the offence alleged;
(iii) Where the allegations constitute an offence, but there is no
legal evidence adduced or the evidence adduced clearly or
B manifestly fails to prove the charge.
17. This Court in Inder Mohan Goswami & Anr. Vs. State of
Uttaranchal & Ors.18 observed:-
“27. The powers possessed by the High Court under Section
482 of the Code are very wide and the very plenitude of the
C power requires great caution in its exercise. The court must
be careful to see that its decision in exercise of this power is
based on sound principles. The inherent power should not be
exercised to stifle a legitimate prosecution. The High Court
should normally refrain from giving a prima facie decision in
D a case where all the facts are incomplete and hazy; more so,
when the evidence has not been collected and produced before
the court and the issues involved, whether factual or legal,
are of such magnitude that they cannot be seen in their true
perspective without sufficient material. Of course, no hard
and fast rule can be laid down in regard to cases in which the
E High Court will exercise its extraordinary jurisdiction of
quashing the proceedings at any stage”
18. In Indian Oil Corpn. v NEPC India Ltd. & Ors.19, a two-
judge Bench of this Court reviewed the precedents on the exercise of
jurisdiction under Section 482 of the Code of Criminal Procedure 1973
F and formulated guiding principles in the following terms:
“12. … (i) A complaint can be quashed where the allegations
made in the complaint, even if they are taken at their face
value and accepted in their entirety, do not prima facie
constitute any offence or make out the case alleged against
G the accused. For this purpose, the complaint has to be
examined as a whole, but without examining the merits of the
allegations. Neither a detailed inquiry nor a meticulous
18
(2007) 12 SCC 1
19
H (2006) 6 SCC 736
VIJAY KUMAR GHAI v. THE STATE OF WEST BENGAL 901
[KRISHNA MURARI, J.]
analysis of the material nor an assessment of the reliability A
or genuineness of the allegations in the complaint, is
warranted while examining prayer for quashing of a
complaint.
(ii) A complaint may also be quashed where it is a clear abuse
of the process of the court, as when the criminal proceeding B
is found to have been initiated with mala fides/malice for
wreaking vengeance or to cause harm, or where the
allegations are absurd and inherently improbable.
(iii) The power to quash shall not, however, be used to stifle
or scuttle a legitimate prosecution. The power should be used C
sparingly and with abundant caution.
(iv) The complaint is not required to verbatim reproduce the
legal ingredients of the offence alleged. If the necessary
factual foundation is laid in the complaint, merely on the
ground that a few ingredients have not been stated in detail, D
the proceedings should not be quashed. Quashing of the
complaint is warranted only where the complaint is so bereft
of even the basic facts which are absolutely necessary for
making out the offence.
(v) ..” E
19. A two-Judge Bench of this Court in State of Madhya Pradesh
Vs. Awadh Kishore Gupta & Ors.20 made the following observation :-
“11. The powers possessed by the High Court under Section
482 of the Code are very wide and the very plenitude of the
power requires great caution in its exercise. Court must be F
careful to see that its decision in exercise of this power is
based on sound principles. The inherent power should not be
exercised to stifle a legitimate prosecution. High Court being
the highest Court of a State should normally refrain from
giving a prima facie decision in a case where the entire facts
G
are incomplete and hazy, more so when the evidence has not
been collected and produced before the Court and the issues
involved, whether factual or legal, are of magnitude and
cannot be seen in their true perspective without sufficient
20
(2004) 1 SCC 691 H
902 SUPREME COURT REPORTS [2022] 1 S.C.R.
A material. Of course, no hard and fast rule can be laid down
in regard to cases in which the High Court will exercise its
extraordinary jurisdiction of quashing the proceeding at any
stage.
In proceeding instituted on complaint, exercise of the inherent
B powers to quash the proceedings is called for only in a case
where the complaint does not disclose any offence or is
frivolous, vexatious or oppressive. If the allegations set out
in the complaint do not constitute the offence of which
cognizance has been taken by the Magistrate, it is open to
the High Court to quash the same in exercise of the inherent
C powers under Section 482 of the Code.”
20. This Court in G. Sagar Suri & Anr. Vs. State of UP & Ors.21
observed that it is the duty and obligation of the criminal court to exercise
a great deal of caution in issuing the process, particularly when matters
are essentially of civil nature.
D
21. This Court has time and again cautioned about converting
purely civil disputes into criminal cases. This Court in Indian Oil
Corporation (Supra) noticed the prevalent impression that civil law
remedies are time consuming and do not adequately protect the interests
of lenders/creditors. The Court further observed that:-
E
“13. …any effort to settle civil disputes and claims, which do
not involve any criminal offence, by applying pressure through
criminal prosecution should be deprecated and discouraged.”
22. At the outset, Respondent No. 2/Complainant alleged that the
F Appellants were responsible for the offence punishable under Section
420, 405, 406, 120B IPC. Therefore, it is also imperative to examine the
ingredients of the said offences and whether the allegations made in the
complaint, read on their face, attract those offences under the Penal
Code.
23. Section 405 of IPC defines Criminal Breach of Trust which
G
reads as under: -
“405. Criminal breach of trust.—Whoever, being in any
manner entrusted with property, or with any dominion over
21
H (2000) 2 SCC 636
VIJAY KUMAR GHAI v. THE STATE OF WEST BENGAL 903
[KRISHNA MURARI, J.]
property, dishonestly misappropriates or converts to his own A
use that property, or dishonestly uses or disposes of that
property in violation of any direction of law prescribing the
mode in which such trust is to be discharged, or of any legal
contract, express or implied, which he has made touching the
discharge of such trust, or wilfully suffers any other person
B
so to do, commits “criminal breach of trust”.
The essential ingredients of the offense of criminal breach of
trust are:-
(1) The accused must be entrusted with the property or
with dominion over it, C
(2) The person so entrusted must use that property, or;
(3) The accused must dishonestly use or dispose of that
property or wilfully suffer any other person to do so
in violation,
D
(a) of any direction of law prescribing the mode
in which such trust is to be discharged, or;
(b) of any legal contract made touching the
discharge of such trust.
24. “Entrustment” of property under Section 405 of the Indian E
Penal Code, 1860 is pivotal to constitute an offence under this. The
words used are, ‘in any manner entrusted with property’. So, it extends
to entrustments of all kinds whether to clerks, servants, business partners
or other persons, provided they are holding a position of ‘trust’. A person
who dishonestly misappropriates property entrusted to them contrary to
F
the terms of an obligation imposed is liable for a criminal breach of trust
and is punished under Section 406 of the Penal Code.
25. The definition in the section does not restrict the property to
movables or immoveable alone. This Court in R K Dalmia vs Delhi
Administration22 held that the word ‘property’ is used in the Code in a
much wider sense than the expression ‘moveable property’. There is no G
good reason to restrict the meaning of the word ‘property’ to moveable
property only when it is used without any qualification in Section 405.
22
(1963) 1 SCR 253 H
904 SUPREME COURT REPORTS [2022] 1 S.C.R.
A 26. In Sudhir Shantilal Mehta Vs. CBI23 it was observed that
the act of criminal breach of trust would, Interalia mean using or disposing
of the property by a person who is entrusted with or has otherwise
dominion there over. Such an act must not only be done dishonestly but
also in violation of any direction of law or any contract express or implied
relating to carrying out the trust.
B
27. Section 415 of IPC define cheating which reads as under: -
“415. Cheating. —Whoever, by deceiving any person,
fraudulently or dishonestly induces the person so deceived
to deliver any proper-ty to any person, or to consent that any
C person shall retain any property, or intentionally induces the
person so deceived 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, is said to
“cheat”.”
D
The essential ingredients of the offense of cheating are:
1. Deception of any person
2. (a) Fraudulently or dishonestly inducing that person-
E (i) to deliver any property to any person: or
(ii) to consent that any person shall retain any property;
or
(b) intentionally inducing that person to do or omit to do
F anything which he would not do or omit if he were no 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.
28. A fraudulent or dishonest inducement is an essential ingredient
G of the offence. A person who dishonestly induces another person to
deliver any property is liable for the offence of cheating.
29. Section 420 IPC defines cheating and dishonestly inducing
delivery of property which reads as under: -
23
H (2009) 8 SCC 1
VIJAY KUMAR GHAI v. THE STATE OF WEST BENGAL 905
[KRISHNA MURARI, J.]
“420. Cheating and dishonestly inducing delivery of property. A
—Whoever cheats and thereby dishonestly induces the person
de-ceived to deliver any property to any person, or to make,
alter or destroy the whole or any part of a valuable security,
or anything which is signed or sealed, and which is capable
of being converted into a valuable security, shall be punished
B
with imprisonment of either description for a term which may
extend to seven years, and shall also be liable to fine.”
30. Section 420 IPC is a serious form of cheating that includes
inducement (to lead or move someone to happen) in terms of delivery of
property as well as valuable securities. This section is also applicable to
matters where the destruction of the property is caused by the way of C
cheating or inducement. Punishment for cheating is provided under this
section which may extend to 7 years and also makes the person liable to
fine.
31. To establish the offence of Cheating in inducing the delivery
of property, the following ingredients need to be proved:- D
1. The representation made by the person was false
2. The accused had prior knowledge that the representation
he made was false.
3. The accused made false representation with dishonest E
intention in order to deceive the person to whom it was
made.
4. The act where the accused induced the person to deliver
the property or to perform or to abstain from any act which
the person would have not done or had otherwise committed. F
32. As observed and held by this Court in the case of Prof. R.K.
Vijayasarathy & Anr. Vs. Sudha Seetharam & Anr.24, the ingredients
to constitute an offence under Section 420 are as follows:-
i) a person must commit the offence of cheating under Section
415; and G
ii) the person cheated must be dishonestly induced to;
a) deliver property to any person; or
24
(2019) 16 SCC 739 H
906 SUPREME COURT REPORTS [2022] 1 S.C.R.
A b) make, alter or destroy valuable security or anything
signed or sealed and capable of being converted into
valuable security. Thus, cheating is an essential
ingredient for an act to constitute an offence under
Section 420 IPC.
B 33. The following observation made by this Court in the case of
Uma Shankar Gopalika Vs. State of Bihar & Anr.25 with almost similar
facts and circumstances may be relevant to note at this stage:-
“6. Now the question to be examined by us is as to whether
on the facts disclosed in the petition of the complaint any
C criminal offence whatsoever is made out much less offences
under Section 420/120-B IPC. The only allegation in the
complaint petitioner against the accused person is that they
assured the complainant that when they receive the insurance
claim amounting to Rs. 4,20,000, they would pay a sum of Rs.
2,60,000 to the complainant out of that but the same has never
D
been paid. It was pointed out that on behalf of the complainant
that the accused fraudulently persuaded the complainant to
agree so that the accused persons may take steps for moving
the consumer forum in relation to the claim of Rs. 4,20,0000.
It is well settled that every breach of contract would not give
E rise to an offence of cheating and only in those cases of
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 that there was intention on behalf of the
F
accused person to cheat which is a condition precedent for
an offence under 420 IPC.
“7. In our view petition of complaint does not disclose any
criminal offence at all much less any offence either under
Section 420 or Section 120-B IPC and the present case is a
G
case of purely civil dispute between the parties for which
remedy lies before a civil court by filing a properly constituted
suit. In our opinion, in view of these facts allowing the police
25
H (2005) 10 SCC 336
VIJAY KUMAR GHAI v. THE STATE OF WEST BENGAL 907
[KRISHNA MURARI, J.]
investigation to continue would amount to an abuse of the A
process of court and to prevent the same it was just and
expedient for the High Court to quash the same by exercising
the powers under Section 482 Cr.P.C which it has erroneously
refused.”
34. There can be no doubt that a mere breach of contract is not in B
itself a criminal offence and gives rise to the civil liability of damages.
However, as held by this court in Hridaya Ranjan Prasad Verma &
Ors. Vs. State of Bihar & Anr.26, the distinction between mere breach
of contract and cheating, which is criminal offence, is a fine one. While
breach of contract cannot give rise to criminal prosecution for cheating,
C
fraudulent or dishonest intention is the basis of the offence of cheating.
In the case at hand, complaint filed by the Respondent No. 2 does not
disclose dishonest or fraudulent intention of the appellants.
35. In Vesa Holdings Pvt. Ltd. & Anr. Vs. State of Kerala &
27
Ors. , this Court made the following observation:-
D
“13. It is true that a given set of facts may make out a civil
wrong as also a criminal offence and only because a civil
remedy may be available to the complainant that itself cannot
be ground to quash a criminal proceeding. The real test is
whether the allegations in the complaint disclose the criminal
E
offence of cheating or not. In the present case, there is nothing
to show that at the very inception there was any inception on
behalf of an accused person to cheat which is a condition
precedent for an offence u/s 420 IPC. In our view, the
complaint does not disclose any criminal offence at all.
Criminal proceedings should not be encouraged when it is F
found to be mala fide or otherwise an abuse of the process of
the courts. Superior courts while exercising this power should
also strive to serve the ends of justice. In our opinion, in view
of these facts allowing the police investigation to continue
would amount to anabuse of the process of the court and the
G
High Court committed an error in refusing to exercise the
power under Section 482 Cr.P.C to quash the proceedings.”
26
(2000) 4 SCC 168
27
(2015) 8 SCC 293 H
908 SUPREME COURT REPORTS [2022] 1 S.C.R.
A 36. Having gone through the complaint/FIR and even the
chargesheet, it cannot be said that the averments in the FIR and the
allegations in the complaint against the appellant constitute an offence
under Section 405 & 420 IPC, 1860. Even in a case where allegations are
made in regard to failure on the part of the accused to keep his promise, in
the absence of a culpable intention at the time of making promise being
B
absent, no offence under Section 420 IPC can be said to have been made
out. In the instant case, there is no material to indicate that Appellants had
any malafide intention against the Respondent which is clearly deductible
from the MOU dated 20.08.2009 arrived between the parties.
37. The entire origin of the dispute emanates from an investment
C made by Respondent No. 2, amounting to Rs. 2.5 crores in lieu of which
2,50,000/- equity shares were issued in the year 25.03.2008, finally
culminating into the MOU dated 20.08.2009. That based on this MOU
respondent No. 2 filed three complaints, two at Delhi and one at Kolkata.
Thus, two simultaneous proceedings, arising from the same cause of
D action i.e. MOU dated 20.08.2009 were initiated by Respondent No. 2
amounting to an abuse of the process of the law which is barred. The
details of the complaints are as under:-
1. On 06.06.2012, Respondent No. 2 filed a private complaint
u/s 156(3) Cr.P.C with CJM, Tis Hazari Court Delhi for
E registration of fir against the Appellants; which was
withdrawn on 19.09.2016.
2. Complaint u/s 68 of the companies act r/w section 200 crpc
filed before the CMM, Tis Hazari Courts at Delhi; which is
pending.
F 3. On 28.03.2013, a complaint was made to the P.S Bowbazar,
Central Division, Kolkata which was eventually registered
as FIR No. 168 u/s 406, 420, 120B IPC, 1860.
38. Respondent No. 2 filed a complaint u/s 156(3) Cr.P.C on
06.06.2012, wherein his prayer for registration of an FIR was rejected
G vide order dated 28.02.2013 by the MM, Tis Hazari Court, immediately
after which he filed his complaint on 28.03.2013 at P.S Bowbazar,
Calcutta. The timeline of filing complaints clearly indicates the malafide
intention of Respondent No. 2 which was to simply harass the petitioners
so as to pressurise them into shelling out the investment made by
Respondent No. 2.
H
VIJAY KUMAR GHAI v. THE STATE OF WEST BENGAL 909
[KRISHNA MURARI, J.]
Malafide intention of Respondent No. 2 is culled out from following A
facts:-
1. At the time of filing of complaint dated 31.03.2013 at PS
Bowbazar, Respondent No. 2 did not disclose about the
filing of two complaints at Delhi against the appellants.
2. After filing of closure report by the IO Bowbazar PS dated B
04.03.2014, Respondent No. 2 filed a protest petition before
the CMM, Kolkata where the material fact of two
complaints was completely suppressed.
39. In the complaint no. 306/1/2012 dated 06.06.2012 registered
before the MM, Tis Hazari Court, New Delhi, Respondent No. 2/ C
complainant stated that:-
“(c) That, thereafter Mr. Vijay Kumar Ghai and Mr. Mohit
Ghai started visiting the office of the complainant company
every now and then in order to persuade the complainant
company to invest in their company. It is pertinent to mention D
herein that they stated the complainant company that the retail
business of the apparels under the PRIKNIT brand through a
network of exclusive brank outlets was witnessing a growth..”
10. That it is submitted that this court has jurisdiction to try
and entertain the matter as the complainant company is E
situated within the jurisdiction of this court. Moreover, all
the business activities/transactions are being regulated and
controlled at Delhi. Furthermore, the complaints filed by the
complainant company are lying before the concerned police
station, which also falls within the jurisdiction of this Hon’ble F
Court.”
This clearly demonstrates that the jurisdiction has been created in
Delhi as the Appellants used to visit Respondent No. 2 in order to persuade
them to invest in their company and special emphasis can be laid on the
fact that Respondent No. 2 himself accepted/agreed to the fact that all
G
the transactions took place in Delhi. Therefore, registering a complaint
in Kolkata is way of harassing the appellant as a complaint has already
been filed in Delhi with all the necessary facts, apart from the jurisdictional
issue at Kolkata.
H
910 SUPREME COURT REPORTS [2022] 1 S.C.R.
A 40. The MM, Tis Hazari while dismissing the application under
Section 156(3) Cr.P.C categorically observed that:-
“….In case the complainant had suffered any loss on account
of the same, the necessary civil remedy lied in the form of
damages, compensation and recovery. In case of breach of
B any term or condition of the contract, the necessary
proceedings for injunction or specific performance can be
initiated. But that by itself would not mean that the accused
had misappropriated the amount of complainant for a year.
There is nothing to show any conversion or misappropriation
of money as the shares had been allotted subsequently. The
C
parties have themselves agreed on clauses as to failure to
honor their commitments providing for levy of interest on
delayed payments.
There is no prima facie element of deception or dishonest
inducement or misappropriation or conversion or entrustment
D
or forgery in this case.
There is no requirement of police interference in this case.
Even otherwise, the evidence in the present case is well within
the reach of the complainant itself and it is well aware of the
identity of accused persons and no investigation of technical
E
nature is required which could warrant police intervention.
The necessary record is withing the possession of the
complainant itself and the same can always be proved on
record by examining the witnesses. There is no necessity of
any custodial interrogation at this stage and nothing
F identifiable is to be recovered from anyone.
In these circumstances, I do not deem it appropriate to exercise
my discretion and get the FIR registered against the accused
persons, especially when there is no necessity for police
interference. The present application under Section 156(3)
G Cr.P.C is thus dismissed.”
41. It is pertinent to mention that Application under Section 156(3)
Cr.P.C filed before the MM, Tis Hazari Court, Delhi was dismissed and
there was no further challenge against the same. Instead, Respondent
No. 2 chose to file a complaint with the same cause of action in Bowbazar
H
VIJAY KUMAR GHAI v. THE STATE OF WEST BENGAL 911
[KRISHNA MURARI, J.]
PS, Calcutta and to further clarify, the Complaint filed in Bowbazar PS A
was the exact reproduction of the complaint filed before Tis Hazari Court,
New Delhi with the only difference or what may be termed as
‘Jurisdictional improvement’ being in point (c) of the facts. It is reproduced
in bold below:-
“(c) That, thereafter Mr. Vijay Kumar Ghai and Mr. Mohit B
Ghai started visiting the office and regional office of the
complainant company every now and then in order to persuade
the complainant company to invest in their company...”
10. That the facts mentioned above clearly disclose the
commission of cognizable offences under Sections of the C
Indian Penal Code mentioned herein. That the accused
persons approached the regional office too to persuade the
head office for the aforesaid purposes therefore the cause of
action also arose the local jurisdiction.”
42. The order of the High Court is seriously flawed due to the D
fact that in its interim order dated 24.03.2017, it was observed that the
contentions put forth by the Appellant vis-à-vis two complaints being
filed on the same cause of action at different places but the impugned
order overlooks the said aspect and there was no finding on that issue.
At the same time, in order to attract the ingredients of Section of 406
E
and 420 IPC it is imperative on the part of the complainant to prima
facie establish that there was an intention on part of the petitioner and/or
others to cheat and/or to defraud the complainant right from the inception.
Furthermore it has to be prima facie established that due to such alleged
act of cheating the complainant (Respondent No. 2 herein) had suffered
a wrongful loss and the same had resulted in wrongful gain for the F
accused(appellant herein). In absence of these elements, no proceeding
is permissible in the eyes of law with regard to the commission of the
offence punishable u/s 420 IPC. It is apparent that the complaint was
lodged at a very belated stage (as the entire transaction took place
from January 2008 to August 2009, yet the complaint has been
G
filed in March 2013 i.e., after a delay of almost 4 years) with the
objective of causing harassment to the petitioner and is bereft of any
truth whatsoever.
43. In view of the above facts and circumstances, the impugned
order dated 01.10.2019 passed by the High Court is set aside. The
H
912 SUPREME COURT REPORTS [2022] 1 S.C.R.
A impugned FIR No. 168 dated 28.03.2013 and proceedings in the file of
CMM, Kolkata, West Bengal in pursuance of charge sheet dated
14.02.2017 against the appellants for the offences under Section 406,
420, 120B IPC stands quashed.
44. As a result, appeal stands allowed.
B
Devika Gujral Appeal allowed.
C
D
E
F
G
H
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