TMI Blog2001 (10) TMI 1150X X X X Extracts X X X X X X X X Extracts X X X X ..... make payment of ₹ 15.00 lacs to it within 15 days or in the alternative refer the disputes and differences to arbitration as per clause 29 of the agreement. Thereafter the parties met and the company offered to supply Ammonium Sulphate to the respondent for the period 1997-98 on certain terms. The respondent rejected the offer finding the terms unreasonable. It is thereafter the respondent filed a complaint on 8.12.1997 alleging offences under sections 406 and 420 read with Section 120B of the Indian Penal Code (IPC) inter alia stating that the accused persons in collusion and connivance of each other with wrongful objects and motive to wrongfully squeeze money/ gratification from the complainant and in their own benefit used the complain-ant wrongly and have cheated the complainant by practising fraud and have acted fraudulently against the complainant and by doing such acts they have committed criminal breach of trust and put the complainant to wrongful loss and have gained wrongfully. The accused persons have also cheated the com-plainant by using the office and godown premises of the complainant on the basis of false assurances given to the complainant and without making ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sappropriation. An act of breach of trust involves a civil wrong in respect of which the person wronged may seek his redress for damages in a civil court but a breach of trust with mens rea gives rise to a criminal prosecution as well. The ingredients in order to constitute a criminal breach of trust are: (1) entrusting a person with property or with any dominion over property (ii) that person entrusted (a) dishonestly misappropriating or converting that property to his own use; or (b) dishonestly using or disposing of that property or willfully suffering any other person so to do in violation (i) of any direction of law prescribing the mode in which such trust is to be discharged (ii) of any legal contract made touching the discharge of such trust. The ingredients of the offence of cheating are: (i) there should be fraudulent or dishonest inducement of a person by deceiving him, (ii) (a) the person so deceived should be induced to deliver any property to any person, or to consent that any person shall retain any property; or (b) the person so deceived should be intentionally induced to do or omit to do anything which he would not do or omit if he were not so deceived; and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 54) SC 724 that in order to constitute the offence of cheating, the intention to deceive should be in existence at the time when the inducement was offered [emphasis supplied] In Irisuns Chemical Industry v. Rajesh Agarwal Ors., [1999] 8 SCC 686 dealing with the effect of existence of arbitration clause in the agreement on criminal prosecution on the ground that civil proceedings are also maintainable, this Court has held that quashing of F.I.R. or a complaint exercising power under Section 482 Cr.P.C. should be limited to a very extreme exception; merely because an act has a civil profile is not enough to stop action on the criminal side. It is further held that a provision made in the agreement for referring the disputes to arbitration is not an effective substitute for a criminal prosecution when the disputed act constitutes a criminal offence. In case of a complaint under Section 200 Cr.P.C. or IPC a Magistrate can take cognizance of the offence made out and then has to examine the complain-ant and his witnesses; if any, to ascertain whether a prima facie case is made out against the accused to issue process so that the issue of process is prevented on a complaint w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rom the point of view of the complainant without at all adverting to any defence that the accused may have. It is also indicated by way of illustration in which cases an order of the Magistrate issuing process can be quashed on such case being where the allegations made in the complaint or the statements of the witnesses recorded in support of the same taken at their face value make out absolutely no case against the accused or the complaint does not disclose the essential ingredients of an offence which is alleged against the accused . Cautioning against issuing of process so that it should not be an instru- ment in the hands of the private complainant as vendetta to harass the person needlessly, this Court in Punjab National Bank Ors. v. Surendra Prasad Sinha, [1993] Supp. (1) SCC 499 has this to say in para 6 :- It is also salutary to note that judicial process should not be an instrument of oppression or needless harassment. The complaint was laid impleading the Chairman, the Managing Director of the Bank by name and a host of officers. There lies responsibility and duty on the magistracy to find whether the concerned accused should be legally responsible for the offe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as they are, it cannot be said even prima facie, that the appellants committed any offence punishable under Section 406 IPC, since the ingredients of that offence were not satisfied. Hence the learned Magistrate committed a serious error in issuing process against the appellants for the said offence. Unfortunately, the High Court also failed to correct this manifest error. It is clear from the allegations made in the complaint and the sworn statements that the appellant no. 1 company entered into an agreement with the respondent no. 2 on certain terms and conditions. It is alleged that the appellant no. 7 went to Patna and contracted respondent no. 2 and induced him to enter into an agreement assuring him of huge profit. At the time of arriving at such an agreement, none of the other appellants either met the respondent no. 2 or induced him to enter into any agreement with a view to cheat him. The agreement was further renewed for a period of one year. It is not the case that there was no supply of goods at all as it has come on record that there was supply of 400 ton of fertilizer, may be it was far less than the required quantity. The allegations made against the appellants othe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... criminal offence satisfying necessary ingredients of an offence, they cannot be allowed to walk away with an impression that no action could be taken against them on criminal side. A wrongful or illegal act such as criminal breach of trust, misappropriation, cheating or defamation may give rise to action both on civil as well as on criminal side when it is clear from the complaint and sworn statements that necessary ingredients of constituting an offence are made out. May be parties are entitled to proceed on civil side only in a given situation in the absence of an act constituting an offence but not to proceed against the accused in a criminal prosecution. Hence before issuing a process a Magistrate has to essentially keep in mind the scheme contained in the provisions of Section 200-203 of Cr.P.C. keeping in mind the position of law stated above and pass an order judiciously and not mechanically or in routine manner. The learned Magistrate, in our view, having regard to the facts stated and the legal position explained above, committed a serious error in issuing the process against the appellants 1 to 6 and 8 for offences under Sections 406,420 and 120-B IPC when the acts all ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .P.C. to pass appropriate order. In the case on hand, we have already stated above that except against the appellant no. 7, no offence was made out against the remaining appellants as the ingredients of offences alleged against them were not satisfied. Unfortu-nately, the High Court failed to exercise jurisdiction under Section 482 Cr.P.C. to correct manifest error committed by the learned Magistrate in issuing proc-ess against the appellants 1-6 and 8 when the alleged acts against them did not constitute offences for want of satisfying the ingredients of the offences. The approach and considerations while exercising power and jurisdiction by a Magistrate at the time of issuing process are to be in terms of Sections 200 to 203 under Chapter XV of Cr.P.C., having due regard to the position of law explained in various decisions of this Court, and whereas while exercising power under Section 482 of Cr.P.C. the High Court has to look at the object and purpose for which such power is conferred on it under the said provision. Exercise of inherent power is available to the High Court to give effect to any order under the Cr.P.C., or to prevent about of the process of any court or other ..... X X X X Extracts X X X X X X X X Extracts X X X X
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