REPORTABLE
IN THE SUPREME COURT OF INDIA
CRIMINAL APPELLATE JURISDICTION
CRIMINAL APPEAL NO. 142 OF 2021
Kapil Agarwal and others …Appellants
Versus
Sanjay Sharma and others …Respondents
J U D G M E N T
M.R. SHAH, J.
1. Feeling aggrieved and dissatisfied with the impugned judgment and order
dated 08.09.2017 passed by the High Court of Judicature at Allahabad in
Criminal Miscellaneous Writ Petition No. 18308 of 2017, by which the High
Court has dismissed the said writ petition preferred by the appellants herein,
filed under Article 226 of the Constitution of India, for quashing the first
information report registered as Case Crime No. 790 of 2017, under Sections
420/406 IPC, Police Station Loni Border, District Ghaziabad, the original writ
petitioners/accused have preferred the present appeal.
2. The relevant facts necessary for deciding the present appeal are as under:
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That one M/s Varun Beverages Ltd. (for short, ‘VBL’) is a licensed
franchisee of PepsiCo India Pvt. Ltd. and engaged in the manufacture and sale
of carbonated sweetened water, fruit juice, packaged drinking water under the
PepsiCo brand. That in the year 2013, the VBL appointed the firm of the
complainant – Sanjay Sharma as a Distributor in the area of Loni, District
Ghaziabad to sell and distribute the products manufactured by the company.
That in the year 2014, the company terminated the contract of distributorship,
which according to the appellants was due to non-payment of dues by
respondent no.1 herein – original complainant. According to the appellants,
thereafter on reconciliation of accounts and as per the statement of accounts
maintained by the company, after adjusting of all claims and security deposit, a
sum of Rs.9,46,280/- was found to be outstanding upon the complainant,
towards the material supplied to him. The complainant issued a cheque dated
15.09.2014 in favour of the company – VBL. The said cheque was presented
for encashment on 22.09.2014. The same was dishonoured and returned unpaid
by the banker of the complainant due to “insufficient funds”. That thereafter,
due to non-payment after the issuance of the statutory legal notices, appellants
herein filed a criminal complaint under Section 138 of the Negotiable
Instruments Act on 07.11.2014 against R1 and his company Thakur Trading, in
the Court of Chief Judicial Magistrate, Ghaziabad being Complaint Case No.
7652/2014. R1 has been summoned to face the trial. The said complaint is
presently pending for disposal. R1 filed a complaint against one of the officers
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of the company-VBL being FIR No. 1565/2014 dated 15.09.2014 alleging
misappropriation of Rs.6,00,000/- by one of the officers of the company,
namely, Vipul Verma. That after investigation by the police, the investigating
officer submitted a negative final report No. 47/2015 dated 20.01.2015.
2.1 R1 also filed one another case on 09.02.2015 for misappropriation of
Rs.31,12,375/- by the appellants. That thereafter R1 filed a
complaint/application under Section 156(3) Cr. P.C. in the Court of learned
Additional Chief Judicial Magistrate-I, Ghaziabad for issuance of direction to
the Police Station Loni to register FIR against the appellants herein and two
other officers of the company alleging misappropriation of an amount of
Rs.31,12,375/-. The learned Magistrate, instead of directing the police to
register FIR, decided to enquire into the matter by treating the same as a
complaint case. That vide order dated 23.03.2015, the learned Magistrate
treated the application of R1 under Section 156(3) Cr.P.C. as a complaint case
and an opportunity was granted to R1 to record his statement under Section 200
Cr.P.C.
2.2 Feeling aggrieved by order dated 23.03.2015 treating the application
under Section 156(3) Cr.P.C. as a complaint case, R1 filed a criminal revision
application No. 70/2015 before the learned Sessions Court, Ghaziabad. That the
learned Sessions Judge, Ghaziabad allowed the said revision application and
quashed and set aside order dated 23.03.2015 passed by the learned Magistrate
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and remanded the matter back to the learned Magistrate to consider the material
on record and pass speaking order afresh for assigning reasons for considering
application under Section 156(3) Cr.P.C. as a complaint case. That thereafter
the learned Magistrate sought an action report from the concerned police
station. That the concerned police officer submitted the report before the
learned Magistrate on 09.08.2015. That the said proceedings are pending before
the learned Magistrate.
2.3 That after a period of approximately two years, R1 lodged the impugned
FIR against the appellants for the offences under Sections 406/420 IPC at Police
Station Loni, District Ghaziabad, dated 4.8.2017. The allegations in the said
FIR are same/similar to the allegations levelled in the application under Section
156(3) Cr.P.C., which is pending consideration before the learned Magistrate
since 2015.
At this stage, it is required to be noted that the said FIR is filed against
Kapil Agarwal, appellant No.1 – Director, Sharad Garg, appellant No.2 – Multi
Unit Manager and Deepak Sharma, appellant No.3 – Sales Head. That
thereafter the appellants approached the High Court under Article 226 of the
Constitution of India being Criminal Miscellaneous Writ Petition No. 18308 of
2017 for quashing the aforesaid FIR being Case Crime No. 790 of 2017, under
Sections 420/406 IPC, Police Station Loni Border, District Ghaziabad. By the
impugned judgment and order, the High Court has refused to quash the FIR
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observing that the impugned FIR, prima facie, discloses commission of
cognizable offence.
2.4 Feeling aggrieved and dissatisfied with the impugned judgment and order
passed by the High Court refusing to quash the FIR being Case Crime No. 790
of 2017, under Sections 420/406 IPC, Police Station Loni Border, District
Ghaziabad, the original accused have preferred the present appeal.
3. Shri K.V. Vishwanathan, learned Senior Advocate appearing on behalf of
the appellants has vehemently submitted that the impugned FIR is an abuse of
process of law to harass the appellants by converting a purely civil dispute into
a criminal case.
3.1 It is submitted that the contents of the FIR show that it has been
registered for recovery of commission and discounts on sale which alleged to
have taken in the regular business transactions place over a period of 15 months
between the parties. Hence, it is a purely contractual dispute on the face of it.
3.2 It is submitted that no civil proceedings have been filed by the
complainant for recovery of the alleged due amount. It is submitted that the
impugned FIR has been lodged solely with a view to arm twist and extort
money from the appellants.
3.3 It is further submitted that there is not even a whisper about the pendency
of the application under Section 156(3) Cr.P.C. pending before the learned
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Magisterial Court, in the FIR. Nor is there any mention of the fact that there is
an ongoing case under Section 138 of the NI Act.
3.4 It is submitted that the police report in respect of Section 156(3)
application has gone against him, R1 has left the earlier proceedings lying
pending for two years without participating in it and has filed a fresh FIR with
the same allegations. It is submitted that the fresh FIR on the same allegations
has been filed only with a view to get the appellants arrested and extort the
money from the appellants.
3.5 Relying upon the decisions of this Court in the cases of G. Sagar Suri v.
State of U.P. (2000) 2 SCC 636 and Jetking Infotrain Ltd. v. State of U.P. (2015)
11 SCC 730, it is submitted that in view of the pendency of the complaint under
Section 138 of the NI Act and the subsequent FIR is a counter-blast to the same,
the present prosecution would be clearly an abuse of process of law and
therefore the impugned FIR deserves to be quashed and set aside.
3.6 Relying upon the decision of this Court in the case of Uma Shankar
Gopalika v. State of Bihar (2005) 10 SCC 336, it is submitted that as the dispute
can be said to be a purely civil dispute, which has been given a criminal colour,
the same deserves to be quashed and set aside.
3.7 It is further submitted that even taking the allegations in the impugned
FIR at the face value, no offence under Sections 406/420 IPC is made out
against the appellants. It is submitted that at best, the impugned FIR alleges that
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R1 entrusted certain monies to the company which the company did not pay to
him at his request. It is submitted that the company – VBL is not even made an
accused and the appellants are joined as an accused in their individual capacity
as Director, Multi Unit Manager and Sales Head. It is submitted that in order to
make out a case under Section 406 IPC against the appellants, there must be an
allegation that R1 entrusted the appellants in their personal capacities, not as
VBL officers, with the relevant commissions/benefits.
3.8 It is further submitted that even from the bare perusal of the contents of
the impugned FIR, the essential ingredients of offence of cheating under Section
420 IPC are completely missing. It is submitted that there is no allegation that
the appellants either, (a) deceived R1 by making any false or misleading
representation; or dishonestly concealed some matter from R1; or by any other
act or omission; (b) fraudulently or dishonestly induced R1 to deliver the
cheques allegedly handed over as security, or to agree to entrust the claimed
commissions/benefits to VBL; or to do or omit to do anything which R1 would
not have done or omitted to have done if he were not deceived. Reliance is
placed on the decisions of this Court in the case of Mohd. Ibrahim v. State of
Bihar (2009) 8 SCC 751; in the case of Vesa Holdings (P) Ltd. v. State of
Kerala (2015) 8 SCC 293; in the case of Robert John D’Souza v. Stephen V.
Gomes (2015) 9 SCC 96; and State of Haryana v. Bhajan Lal, 1992 Supp. (1)
SCC 33.
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3.9 It is further submitted that even as per the allegations in the FIR, the
amount is due from the company and not from the appellants. There is no
entrustment or retention personally by any of the appellants. It is submitted that
as held by this Court in the cases of S.K. Alagh v. State of U.P. (2008) 5 SCC
662, Sardar Singh v. State of Haryana (1977) 1 SCC 463 and Maksud Saiyed v.
State of Gujarat (2008) 5 SCC 688, even when a case under Section 406 IPC is
made out against a company, vicarious liability cannot be extended to the
Directors or officers of a company.
3.10 It is submitted that as the main allegations are against the company and
the company had not been made as an accused in the FIR, the same deserves to
be quashed and set aside. Reliance is placed upon the decision of this Court in
the case of Sushil Sethi v. State of Arunachal Pradesh (2020) 3 SCC 240.
3.11 Making the above submissions and relying upon the aforesaid decisions,
it is prayed to allow the present appeal and quash and set aside the criminal
proceedings and FIR being Case Crime No. 790 of 2017, under Sections
420/406 IPC, Police Station Loni Border, District Ghaziabad, as the same is
nothing but an abuse of process of law.
4. The present appeal is opposed by Shri M.C. Dhingra, learned Advocate
appearing on behalf of the respondent – original complainant.
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4.1 It is submitted that as the FIR discloses commission of cognizable
offence, the High Court has rightly refused to quash the FIR, in exercise of
powers under Article 226 of the Constitution of India.
4.2 It is submitted that initially having failed to get the money due and
payable to the complainant, the complainant was constrained to make an
application under Section 156(3) Cr.P.C. before the learned Chief Judicial
Magistrate at Ghaziabad. However, without referring to the allegations of the
offences under Sections 420, 406, 467, 468, 471, 34/120-B IPC, the learned
Magistrate vide a very cryptic order dated 23.03.2015 directed for treating the
application under Section 156(3) as a complaint case under Section 200 Cr.P.C.
Aggrieved, the complainant preferred criminal revision before the learned
Sessions Court, which on 8.7.2015 set aside order dated 23.03.2015 and
remanded the case back to the learned Magistrate to consider the material on
record and decide the complainant’s application under Section 156(3) afresh by
a reasoned order. It is submitted that once again a closure report was submitted
by the very same investigating officer who earlier submitted the closure report.
It is submitted that as the learned Magistrate did not pass any order on the
closure report and kept the application under Section 156(3) under consideration
for long, much to the agony of the complainant craving justice, the complainant
was constrained to file the impugned FIR, making serious allegations against
the company and its officers – appellants herein. It is submitted that, however,
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the police arrayed the appellants as an accused for the offences under Sections
420/406 IPC, although the facts therein disclosed commission of offences under
Sections 467, 468, 471 IPC for forging complainant’s blank cheque No. 038611,
out of five blank cheques lying with the company as security and sought to
encash it but could not succeed as the cheque was dishonoured. It is submitted
that the company owed Rs.31,12,375.06 towards commission to be paid to the
complainant – respondent which was lying in trust with it, but did not pay to
him and thus by cheating him also committed breach of trust. It is submitted
that in the FIR, it was also alleged that on demanding money they extended
threats to get him killed and therefore the impugned FIR also discloses
commission of an offence under Section 506 IPC as well.
4.3 Now so far as the submission on behalf of the appellants that there is an
unexplained delay of two years in lodging the impugned FIR, it is submitted
that as such there is no delay in registration of the FIR. It is submitted that
delay is a mixed question of fact and law and a plea of defence. It can be
explained at the trial. It is submitted that belated registration of FIR is always
not fatal to the prosecution in every case as it is explainable at the trial. It is
submitted that it is not a thumb rule to quash FIR for delayed registration, which
can be explained at the trial.
4.4 Now so far as the submission on behalf of the appellants that FIR could
not be registered during the pendency of the application under Section 156(3)
10
Cr.P.C. on the same set of allegations, it is submitted that Section 210 Cr.P.C.
leaves no doubt that FIR under Section 154 Cr.P.C. can be registered during the
pendency of the complaint case on the very same set of facts/allegations. It is
submitted that quashing of FIR will lead to demolition of complaint under
Section 156(3) Cr.P.C. pending consideration before the learned Magistrate.
4.5 It is further submitted that despite the fact that the FIR discloses
commission of offences under Sections 467, 468, 471, 34/120-B IPC also, the
police have registered FIR under Sections 420/406 IPC only. It is submitted
that the trial Court can add charges under Sections 467, 468, 471, 34/120-B IPC
in exercise of powers under Section 216 Cr.P.C. at any time before rendering
judgment.
4.6 Now so far as the submission on behalf of the appellants for nondisclosure of the pending application under Section 156(3) Cr.P.C. in the FIR is
concerned, it is submitted that it is a settled law that FIR is not an
encyclopaedia. It is submitted that even otherwise non-mentioning of the
pendency of the complaint under Section 156(3) Cr.P.C. does not prejudice the
appellants in any manner. It is submitted that even otherwise as per Section 210
Cr.P.C., the proceedings before the Magistrate during pendency of the
investigation by the police in the FIR are required to be stayed by the learned
Magistrate. It is submitted that the subsequent registration of FIR on the very
same set of allegations, as in the pending complaint, does not confront any law.
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4.7 Now so far as the submission on behalf of the appellants that the
company is not joined as an accused in the FIR is concerned, it is submitted
that, as such, police ought to have included the company as an accused with the
appellants in the FIR. It is submitted that the appellants named in the FIR have
not disputed that they are principal functionaries of the company and had been
responsible for the operations of complainant’s dealership in all respects. It is
submitted that the appellants cannot draw any benefit for absence of company
as their co-accused. Company can be arrayed as an accused by the police in the
chargesheet after collecting evidence. It is submitted that even if by any chance
the police omit to do so, the trial Court has powers under Section 319 Cr.P.C. to
summon the company to stand trial as co-accused.
4.8 It is further submitted that the accused did not get immunity for the
offence committed by them merely because they have made complaint against
the complainant under Section 138 NI Act. It is submitted that otherwise all
cross criminal cases would be rebuffed if such contention is accepted.
4.9 It is further submitted that as such the appellants have acknowledged
through emails as also through duly signed hard copies that Rs. 34,50,418/- is
payable to the respondent by way of commission, incentives and discounts etc.
This amount was retained by the appellants and the company in trust upon
conclusion of the dealership. The company and the appellants have not paid the
said amount and thereby have cheated the respondent and also committed
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breach of trust. It is submitted that the appellants are now speciously disputing
the said acknowledgement. It is submitted that merely because the
acknowledgements through emails and hard copies are now disputed by the
appellants, it will not result in quashing the FIR.
4.10 Making the above submissions and submitted that as the FIR discloses
commission of cognizable offences, the same may not be quashed at the
threshold in exercise of powers under Article 226 of the Constitution of India.
It is submitted that as held by this Court in catena of decisions that the power
under Article 226 of the Constitution and/or under Section 482 Cr.P.C. to quash
the FIR at the threshold is required to be exercised sparingly. It is submitted
that it is not a fit case to exercise the power under Article 226 of the
Constitution to quash the FIR when the FIR discloses commission of cognizable
offences.
5. We have heard the learned counsel for the respective parties at length.
It is the case on behalf of the appellants that as on the same allegations,
the private respondent-complainant has filed an application under Section
156(3) Cr.P.C., which is pending before the learned Magistrate, the impugned
FIR with the same allegations and averments would not be maintainable, and
therefore, the FIR lodged with the police station Loni Border, District
Ghaziabad deserves to be quashed and set aside. The aforesaid cannot be
accepted for the simple reason that Code of Criminal Procedure permits such an
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eventuality of a complaint case and enquiry or trial by the Magistrate in a
complaint case and an investigation by the police pursuant to the FIR. At this
stage, Section 210 Cr.P.C. is required to be referred to, which reads as under:
“210. Procedure to be followed when there is a complaint case and police
investigation in respect of the same offence – (1) When in a case instituted
otherwise than on a police report (hereinafter referred to as a complaint case),
it is made to appear to the Magistrate, during the course of the inquiry or trial
held by him, that an investigation by the police is in progress in relation to the
offence which is the subject- matter of the inquiry or trial held by him, the
Magistrate shall stay the proceedings of such inquiry or trial and call for a
report on the matter from the police officer conducting the investigation.
(2) If a report is made by the investigating police officer under section 173 and
on such report cognizance of any offence is taken by the Magistrate against
any person who is an accused in the complaint case, the Magistrate shall
inquire into or try together the complaint case and the case arising out of the
police report as if both the cases were instituted on a police report.
(3) If the police report does not relate to any accused in the complaint case or
if the Magistrate does not take cognizance of any offence on the police report,
he shall proceed with the inquiry or trial, which was stayed by him, in
accordance with the provisions of this Code.”
Thus, as per Section 210 Cr.P.C., when in a case instituted otherwise than
on a police report, i.e., in a complaint case, during the course of the inquiry or
trial held by the Magistrate, it appears to the Magistrate that an investigation by
the police is in progress in relation to the offence which is the subject matter of
the inquiry or trial held by him, the Magistrate shall stay the proceedings of
such inquiry or trial and call for a report on the matter from the police officer
conducting the investigation. It also provides that if a report is made by the
investigating police officer under Section 173 Cr.P.C. and on such report
cognizance of any offence is taken by the Magistrate against any person who is
an accused in the complaint case, the Magistrate shall inquire into or try
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together the complaint case and the case arising out of the police report as if
both the cases were instituted on a police report. It also further provides that if
the police report does not relate to any accused in the complaint case or if the
Magistrate does not take cognizance of any offence on the police report, he shall
proceed with the inquiry or trial, which was stayed by him, in accordance with
the provisions of Cr.P.C.
Thus, merely because on the same set of facts with the same allegations
and averments earlier the complaint is filed, there is no bar to lodge the FIR
with the police station with the same allegations and averments.
6. However, at the same time, if it is found that the subsequent FIR is an
abuse of process of law and/or the same has been lodged only to harass the
accused, the same can be quashed in exercise of powers under Article 226 of the
Constitution or in exercise of powers under Section 482 Cr.P.C. In that case, the
complaint case will proceed further in accordance with the provisions of the
Cr.P.C.
6.1 As observed and held by this Court in catena of decisions, inherent
jurisdiction under Section 482 Cr.P.C. and/or under Article 226 of the
Constitution is designed to achieve salutary purpose that criminal proceedings
ought not to be permitted to degenerate into weapon of harassment. When the
Court is satisfied that criminal proceedings amount to an abuse of process of
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law or that it amounts to bringing pressure upon accused, in exercise of inherent
powers, such proceedings can be quashed.
6.2 As held by this Court in the case of Parbatbhai Aahir v. State of Gujarat
(2017) 9 SCC 641, Section 482 Cr.P.C. is prefaced with an overriding provision.
The statute saves the inherent power of the High Court, as a superior court, to
make such orders as are necessary (i) to prevent an abuse of the process of any
Court; or (ii) otherwise to secure the ends of justice. Same are the powers with
the High Court, when it exercises the powers under Article 226 of the
Constitution.
7. Applying the law laid down by this Court, referred to hereinabove, to the
facts of the case on hand, subsequent FIR filed by the respondent – original
complainant can be said to be an abuse of process of law and the same to be
bringing pressure on the accused, which can be demonstrated from the
following facts:
i) cheque no. 038611 was presented for encashment and the same came to
be dishonoured by the banker of the complainant due to “insufficient funds”;
ii) that the company – VBL served statutory legal notices upon the
complainant under the provisions of the Negotiable Instruments Act;
iii) that thereafter complaint under Section 138 of the Negotiable Instruments
Act has been filed by the company against the respondent-original complainant
on 7.11.2014;
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iv) that thereafter, after a period of three months, respondent no.1 filed an
application under Section 156(3) Cr.P.C. seeking registration of FIR against the
appellants herein, i.e., in the month of February, 2015;
v) the learned Magistrate declined to order registration of FIR, but decided
to inquire into the matter by treating the same as complaint case and granted
respondent no.1 – original complainant an opportunity of recording solemn
affirmation under Section 200 Cr.P.C. (order dated 23.03.2015). Order dated
23.03.2015 came to be set aside by the learned Sessions Judge vide order dated
8.7.2015 and the matter was remanded to the learned Magistrate with directions
to pass a speaking order. The same is pending before the learned Magistrate;
vi) that thereafter after a period of two years, R1 lodged the impugned FIR
against the appellants with police station Loni Border, District Ghaziabad with
the similar contents and allegations which were levelled in the application under
Section 156(3) Cr.P.C. In the FIR, the date of occurrence of the offence has
been shown as 26.07.2017;
vii) it appears that R1 is not proceeding further with his application under
Section 156(3) Cr.P.C., which is pending before the learned Magistrate since
last five years;
viii) in the FIR, neither there is any reference to the application under Section
156(3) Cr.P.C. which is pending before the learned Magistrate, nor there is a
reference of the complaint under Section 138 of the NI Act.
Under the circumstances, the impugned FIR is nothing but an abuse of
process of law and can be said to be filed with a view to harass the appellants.
8. We are not expressing anything on merits whether, any case is made out
against the appellants for the offences alleged in 156(3) Cr.P.C. application as
the same is pending before the learned Magistrate and the learned Magistrate is
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to take call on the same. Therefore, when the impugned FIR is nothing but an
abuse of process of law and to harass the appellants-accused, we are of the
opinion that the High Court ought to have exercised the powers under Article
226 of the Constitution of India/482 Cr.P.C. and ought to have quashed the
impugned FIR to secure the ends of justice.
9. In view of the above and for the reasons stated above, the present appeal
is allowed. The impugned criminal proceedings/FIR registered as Case Crime
No. 790 of 2017, under Sections 420/406 IPC, with the police station Loni
Border, District Ghaziabad are hereby quashed and set aside on the aforesaid
grounds. We make it clear that we have not expressed anything on merits on the
allegations made by respondent no.1 against the appellants as the proceedings in
the form of 156(3) Cr.P.C application are pending before the learned Magistrate.
The learned Magistrate shall now proceed further with the said application, in
accordance with law and on its own merits. Respondent No.1 may proceed
further with the said proceedings, if he so chooses and is advised.
10. With these observations, the present appeal is allowed.
………………………………J.
[Dr. Dhananjaya Y. Chandrachud]
New Delhi; ……………………………….J.
March 01, 2021. [M.R. Shah]
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