Deciding Authority : Supreme Court
Date of Judgement : 28/01/2000
Bench : S. SAGHIR AHMAD & D. P. WADHWA
Facts : The First Information Report (FIR No. 517 dated August 17, 1997) was filed against seven persons including the two appellants by Mr. P.K. Sen Gupta (respondent No. 2), General Manager, M/s. Phoenix International Finance Ltd., NOIDA (for short, the ’Finance Company’). He al-leged that Ashwani Suri, G. Sagar Suri (the first appellant) and Sukhvinder Singh contacted his company on telephone in the first week of June, 1996 with intention to cheat and commit fraud on him. They had stated that they along with Shalini Suri, Shama Suri (the second appellant), Charaujit Singh and M.L. Kampani were the Directors of M/s. Ganga Automobiles Ltd. and that they would come later for a meeting personally. They had also told that their company Ganga Automobiles Ltd. was doing good business and that if complainant’s company could give a loan of Rs. 50,00,000 (Rupees fifty lakh only) to M/s. Ganga Automobiles Ltd. the loan would be repaid with interest by September 13,1996. The complainant then alleged that the “above said accused persons turn by turn continued visiting the applicant’s office” for making request for grant of loan. Relying on their persuasion but without realising their mala fide and fraudulent intentions, the Finance Company gave Rs.50,00,000 by means of cheque No. 375453 dated June 19, 1996 drawn on the Punjab & Sindh Bank, New Delhi. Complainant then said “the -accused persons issued two cheques to the applicant company for repayment of above said money bearing No. 08-4049 and 84450 both dated 13.9.96 for rupees fifty lakhs towards payment of principal sum and Rs. 86625 towards payment of interest respectively and drawn on Corporation Bank”, When these cheques were presented for payment, these were returned dishonoured with the remarks that sufficient funds were not available. The Finance Company again contacted the accused persons many times on telephone as well as by writing letters and asked them to make payment but they failed to do so and even started avoiding the complainant. However, the accused persons again came to the office of the Finance Company on January 2, 1997 and asked the Finance Company six months further time for the payment of the amount as they said “a mishappening took place with them as a result of which they are suffering financial constraint”. The complainant said he believed their wordings and the accused again issued two cheques on July 2,1997 for Rs. 5o,86,625 towards principal and Rs. 9,40,008 towards interest. This time these cheques were drawn on the Grindleys Bank, Connaught Place, New Delhi and again when presented for payment were returned dishonoured with the endorsement “insufficient funds”. Complainant thus said in his report that the aforesaid acts of the accused persons were fraudulent and committed with the common object to cheat the Finance Company. They did not want to refund the money in any way. He, therefore, requested for legal action against the accused persons, On the basis of the First information Report, the Police registered the case against seven persons, namely, Ashwani Suri, G. Sagar Suri (the first Appellant), Sukhvinder Singh, Shalini Suri, Shama Suri (the second appellant), Charanjit Singh and M.L. Kam-pani. After theinvestigation, the Police submitted charge sheet dated June 4,1998 in thecourt of the Chief Judicial Magistrate against four persons, namely, G. Sagar Suri (the first petitioner) Shama Suri (the second petitioner), Ashwani Suri and Shalini Suri describing all of them as Directors of M/s. Ganga Automobiles Ltd. It was stated in the charge sheet that investigation was still pending against charanjit Singh, M.L. Kampani and Mukender Singh.
During the course of investigation, statement of the complainant was again recorded on march 25,1998 by the Investigating Officer. Now his version was different. He said that in the first week of June 1996 Ashwani Kumar Suri and Mukender Singh contacted his company with the intention to cheat and play fraud. They told him that they and Shalini Suri, Shama Suri, Charanjit Singh and M.L. Kampani were the Directors and arranged conversation with them over the telephone. Ashwani Suri and Mukender Singh then said that they would come later. Complainant said they stated that they would refund the entire amount with interest by September 13, 1996 and thereafter they kept on visiting the Finance Company turn by turn and kept on requesting for the loan for their company M/s. Ganga Automobile Ltd. which they said was running a good business and that their company would earn more profit if a loan of Rs. 50,00,000 was given to their company. Relying on these fraudulent promises and without knowing their malafide intention, an amount of Rs. 50,00,000 by means of cheque was given to them after completing necessary formalities. For repayment of the loan, the accused issued two cheques towards principal and interest. These cheques When presented for payment were returned dishonoured. The Finance Company then contacted the accused persons of the Ganga Automobiles Ltd., telephoned them and also wrote letters asking to refund the money. The accused, however, failed to refund the money and started “hiding” themselves and avoided any contact.
Again the accused came to the office of the Finance Company on January 2,1997 and wanted six months further time for them to make repayment. Complainant then said .that the money of the Finance Company had been blocked and since there were financial constraints he was again compelled to believe the accused who gave two cheques dated July 2, 1997. These cheques were also returned dishonoured when presented for payment. The complainant then stated that the accused persons had committed this fraudulent act with common consent with the intent to cheat and grab the money of the Finance Company. Again he confirmed the contents of the First information Report lodged by him. Before lodging of the First Information Report for offences under Section 406/420 IPC, the complainant, P.K. Sengupta, had already instituted a complaint under Section 138 of the Negotiable Instruments Act in the Court of the Additional Chief Judicial Magistrate, Ghaziabad. He had named eight accused, namely, (1) M/s. Ganga Automobiles Ltd., (2) Ashwani Suri, Managing Director, (3) Shalini Suri, w/o Ashwani Suri, (4) G. Sagar Suri, Director, (5) Shama Suri w/o G. Sagar Suri, (6) Mukender Singh, (7) Charanjit Singh and (8) M.L. Kampani, the accused 4 to 8 also being shown as Directors of M/s. Ganga Automobiles Ltd. In this complaint the case set out is that accused 2 to 8 came to the office of the Finance Company in the month of June 1996 and wanted loan for M/s, Ganga Automobiles Ltd. for Rs, 50,00,000 which they promised to repay with interest. On their representations the Finance Company gave them a loan of Rs. 50,00,000 by means of a cheque after the accused executed promissory note and agreement to repay the principal amount with interest by September 13, 1996. By getting this loan M/s. Ganga Automobiles Ltd. started earning profits after investing the amount in its business. The accused issued two cheques for repayment of the principal amount and the interest. Both these cheques when presented for payment were returned dishonoured.
Judgement : In the circumstances of the case in hand conclusion is inescapable that invoking the jurisdiction of criminal court for allegedly having com-mitted offences under Sections 406/420 IPC by the appellants is certainly an abuse of the process of law. In the counter affidavit filed on behalf of the complainant it is now admitted that none of the two appellants is a Director of Ganga Automobiles Ltd. Only in respect of the first appellant it is stated that he is the authorised signatory of that company and that in fact he had signed the cheques which were returned dishonoured. Apart from making the omnibus statement that the first appellant with dishonest intentions and misrepresentations got loan of Rs. 50,00,000 from the complainant company for Ganga Automobiles Ltd. there is nothing said as to what were those misrepresentations and how the complainant company was duped. The only part attributed to the second appellant is that the first appellant along with Ashwani Suri, Managing Director and Mukender Singh, Director approached the complainant in June, 19% and had represented that they and Shalini Suri, Shama Suri (Appellant No. 2), Charanjit Singh and M.L. Kampani were the Directors of Ganga Automobiles Ltd. There is nothing stated in the counter affidavit about the role, if any, played by the second appellant. A complaint under Section 138 of the Negotiable Instruments Act has already been filed by the complainant. There is no allegation of any corrupt practice by any of the accused as if they duped the Finance Company in parting with the amount of Rs. 50,00,000, As normally understood business of a finance company is to invite deposits, pay interest on that and also to give loans and earn interest. A finance company also advances short term loans. In that case it is essentially a commercial transaction. After first two cheques were dishonoured two cheques were again issued, which again were dishonoured resulting in filing of complaint under Section 138 of the Negotiable Instruments Act. None of the respondents has been able to explain as to why offences under Sections 406/420 IPC were not added in the complaint filed under Section 138 of the Negotiable Instruments Act and why resort was had to filing of a separate First Information Report. Certain motive has been attributed to the investigating officer but we think we need not go into that. There is also no answer as to why investigation against three other directors was still stated to be pending when same role is assigned to all the accused. In the FIR it is Sukhvender Singh, who first approached the complainant, but later it is Mukender Singh. There is no answer as to why there are two different names. as to who are the Directors of Ganga Automobiles Ltd. could have been easily found by the complainant after going through the records of Registrar of Companies and also about its status. As noted above, in the subsequent statement by the complainant he does not assign any role to the first appellant. The allegation that in the first instance three persons contacted the complainant company, who told the complainant of other Directors with whom the complainant conversed on telephone appears to be rather improbable.
We agree with the submission of the appellants that the whole attempt of the complainant is evidently to rope in all the members of the family particularly who are the parents of the Managing Director or Ganga Automobile Ltd. in the instant criminal case without regard to their role or participation in the alleged offences with a sole purpose of getting the loan due to the Finance Company by browbeating and tyrannising the appellants of criminal prosecution. A criminal complaint under Section 138 of the Negotiable instruments Act is already pending against the appellants and other accused. They would suffer the consequences if offence under Section 138 is proved against them. In any case there is no occasion for the complainant to prosecute the appellants under Sections 406/420 IPC and in his doing so it is clearly an abuse of the process of law and prosecution against the appellants for those offences is liable to be quashed, which we do.
Held : Appeal Allowed .
By Tejasv Anand , IVth Year, AMITY LAW SCHOOL,DELHI.
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