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Cr.M.P. No. 1241 of 2016 and

its analogous cases

IN THE HIGH COURT OF JHARKHAND AT RANCHI

Cr.M.P. No. 1241 of 2016

1. Asit C. Mehta Investment Intermediates Ltd.,

represent through its Director

Deena Asit Mehta @ Deena A Mehta

2. Deena Asit Mehta @ Deena A. Mehta

3. Kirit Himatlal Vora, Kriti H. Vora

4. Mangalam Securities

(Sub Broker and Business Associate of petitioner No. 1)

represent through its proprietor Hari Shankar Modi.

5. Hari Shankar Modi .... … Petitioners

Versus

1. The State of Jharkhand.

2. Rajendra Prasad ..... … Opposite Parties

with

Cr.M.P. No. 669 of 2008

1. Asit C. Mehta Investment Intermediates Ltd.,

through Managing Director.

2. Mr. Asit C. Mehta

3. Smt. Deena A. Mehta ..... … Petitioners

Versus

1. The State of Jharkhand.

2. Rajendra Prasad (Advocate)

@ Rajendra Prasad Basaiwala ..... … Opposite Parties

with

Cr.M.P. No. 889 of 2008

Hari Shankar Modi ..... … Petitioner

Versus

1. The State of Jharkhand.

2. Rajendra Prasad (Advocate)

@ Rajendra Prasad Basaiwala ..... … Opposite Parties

--------

CORAM : HON’BLE MR. JUSTICE SANJAY KUMAR DWIVEDI

------

For the Petitioners : Mr. Jitendra S. Singh, Advocate.

: Mr. Onkar Nath Tewari, Advocate.

[in Cr.M.P. Nos. 1241 of 2016 & 669 of 2008]

: None [in Cr.M.P. No. 889 of 2008]

For the State : Ms. Nehala Sharmin, Spl.P.P.

: Mr. Navin Kumar Singh, A.P.P.

: Mr. Jitendra Pandey, A.P.P.

For the O.P. No. 2 : Mr. R.S. Mazumdar, Sr. Advocate.

: Mr. Rishav Kumar, Advocate.

------

21/ 22.02.2024 Heard Mr. Jitendra S. Singh along with Mr. Onkar Nath

Tewari, learned counsel appearing for the petitioners in Cr.M.P. Nos.

1241 of 2016 and Cr.M.P. No. 669 of 2008, Ms. Nehala Sharmin, Mr.

Navin Kumar Singh and Mr. Jitendra Pandey, learned A.P.Ps. for the

State in respective cases and Mr. R.S. Mazumdar, learned senior

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Cr.M.P. No. 1241 of 2016 and

its analogous cases

counsel along with Mr. Rishav Kumar, learned counsel appearing for

the O.P. No. 2.

2. Nobody has responded on behalf of the petitioner in Cr.M.P.

No. 889 of 2008, that’s why, this petition is being heard on merits in

absence of the petitioner.

Cr.M.P. No. 1241 of 2016

3. I n this petition prayer is made for quashing of the entire

criminal proceeding including the order taking cognizance dated

21.01.2016, by which cognizance for the offence under Section 409 of

the Indian Penal Code has been taken against the petitioner Nos. 1 to 3

and Section 120-B of the Indian Penal Code against the petitioner Nos.

4 and 5, in connection with P.C.R. Case No. 192 of 2010 (T.R. No. 387

of 2016), pending in the court of learned Chief Judicial Magistrate,

Dumka.

4. The complaint case was lodged by the O.P. No. 2, alleging

therein that the accused No.1 is a Stock Broker and also a Depository

Participant and the accused No.4 is stock sub broker and associate of

accused No.1 and both of them are engaged in the business of stock

broking of shares with National stock exchange as well as Bombay

stock exchange and they are providing stock broking services through

on line computers system at Dumka through the computer terminals

installed at the office of the accused No.4 at Zila School Road, Dumka

to the clients who are registered with them for the purpose of availing

stock broking services.

It is further stated that accused No.2 is the Managing

Director and accused No.3 is the whole time Director of accused

No.1 and they are in charge of and responsible for the conduct and

day to day affairs of the business of the company accused No.1

and the accused No.5 is the proprietor and person in charge and

responsible for the conduct and day to day affairs of the business

of the accused No.4.

It is further stated that for providing the said stock broking

service to the complainant, the accused persons entered into the

Tripartite agreement with the complainant at Dumka for dealing in

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Cr.M.P. No. 1241 of 2016 and

its analogous cases

the shares with National stock exchange and Bombay Stock

Exchange for which they obtained the signatures of the

complainant on to many printed papers contained in a booklet

including the power of attorney at Dumka which the accused No.5

got it executed by the complainant in favour of accused No.1 and

accordingly the complaint was registered as a client under group

code of the accused No.4 and client I.D. Code No. 116525 and

116526 were allotted to the complainant for cash segment and

derivative segment.

The said tripartite agreement in original is lying either with

the stock broker accused No.1 or stock sub broker accused No.4.

The accused No.5 has provided the specimen copy of the said

tripartite agreement, duly certified by him, to the complainant.

It is further stated that the agreed terms and conditions of

the said tripartite agreement, the complainant placed orders of

purchase of shares and the said order was carried out by accused

persons at Dumka and the remittance was made at Dumka and

accordingly shares of different company were purchased by the

accused persons for the complainant's code No. 116525 and the

purchased shares were kept in the demat account No.

1201320000495114 of the complainant.

It is further stated that on 22.01.2008, the accused persons,

fraudulently and dishonestly violated the terms and conditions of

the tripartite agreement and behaved abnormally and caused

immense loss to the complainant against which apart from the

other notices to the accused, the complainant vide his office

Notice dated 28.01.2008 strictly warned the accused No. 1 and 4

not to make any further transaction (either of buying or selling) in

the account code No. 116525 of the complainant without the

written request of the complainant. The said notice had already

been received by the accused persons.

It is further stated that apprehending the drastic fraudulent

activities of the accused persons, the complainant vide his notice

19.09.2009 revoked the power as dated given earlier to accused

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Cr.M.P. No. 1241 of 2016 and

its analogous cases

No.1 and the same was sent to accused No.1 through fax on

19.09.2009 which was received in the office of the accused No.1

through fax on 19.09.2009 at about 1.09 P.M. The copy of the said

notice dated 19.09.2009 was also sent to accused No. 4& 5

through courier and it was delivered to the accused No.4 on

22.09.2009.

It is further stated that the accused No.1, by suppressing so

many important facts, filed an arbitration application before the

National Stock Exchange of India Limited who on its turn without

applying its mind, mechanically started the arbitration proceeding

bearing Arbitration Matter No. FO/K-0146/2008 and illegally

appointed the arbitrator.

It is further stated that the complainant challenged the

power and jurisdiction of the arbitrator as the appointment of the

arbitrator by National Stock Exchange of India Ltd. was patently

illegal, void ab-initio, perverse and contrary to the provision of the

law but the arbitrator illegally made an award of Rs. 1,56,017-64

paisa and signed it on 17.06.2009 and National Stock Exchange of

India Ltd. vide its letter dated 18.06.2009 sent the award to the

complainant with an assertion that if either of the party is not

satisfied with the award, the aggrieved party may approach the

appropriate court with an application for setting aside the award

U/S 34 of the Arbitration & Conciliation Act, 1996 within a period

of three months from the date of receipt of the award.

It is further stated that on one hand the accused persons

have intimated the complainant at Dumka, that they in pursuance

of the Arbitration Matter A.M. No. FO/K-0146/2008 for

realization of the awarded amount worth Rs. 1,56,017.64, have

sold the stock of the complainant to the tune of Rs. 1,56,967.19 on

29th, 30th of September & 1

st

of October, 2009 but on other hand

the accused No.1 & 4 jointly submitted their written statement

duly supported with affidavit on 05.11.2009 before the court of the

learned Sub ordinate Judge, Dumka in Title Arbitration Suit No.

44/2009, in which, they have admitted about non-realization of the

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Cr.M.P. No. 1241 of 2016 and

its analogous cases

awarded amount.

Cr.M.P. No. 669 of 2008

5. I n this petition prayer is made for quashing of the entire

criminal proceeding including the order taking cognizance dated

11.03.2008, by which cognizance for the offence under Sections 409,

420 and 120-B of the Indian Penal Code has been taken against the

petitioners, in connection with P.C.R. Case No. 83 of 2008 (T.R. No.

854 of 2008), pending in the court of learned Judicial Magistrate, 1

st

Class, Dumka.

6. The complaint case was filed by the O.P. No. 2 alleging

therein that the accused No.1 is the registered Stock Broker of stock

exchange with S.E.B.I. and accused Nos. 2 and 3 are the Chairman and

Managing Director of accused No.1 respectively and they are in-charge

and responsible for the conduct and day to day affairs of the accused

No.1.

The accused No.4 is the sub-broker registered with SEBI

and is the associate and franchisee of accused No.1 and accused

No.5 is the proprietor and in-charge and responsible for the

conduct and day to day business affairs of the accused No.4.

Considering the genuineness and financial soundness of the

complainant, the accused No.5 in collusion and connivance with

accused No.2 and 3 assured the complainant that the accused No.1

is the registered member of stock exchange and depository

participant.

The accused persons entered into a tripartite agreement at

Dumka with the complainant to provide stockbroking services to

the complainant for transaction of shares with stock exchange and

accordingly the complainant was registered with accused No.4 at

Dumka. Thereafter, client I.D. Code No.116525 was allotted to the

complainant for cash segment and, client I.D. Code No. 116526

was allotted for future segment and a demat account was opened

in favour of the complainant.

In order to promote their broking business, the accused

persons induced the complainant to invest money in the future

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Cr.M.P. No. 1241 of 2016 and

its analogous cases

segment. The accused No.5 induced the complainant to entrust

some shares of cash segment with accused No.1 as security and

assure the complainant that the security, if deposit by the

complainant shall be kept in a separate account and shall not be

used by the accused persons and reposing faith upon the accused

persons, the complainant entrusted following shares of cash

segment to the accused No.1:

Reliance Communication - 100 pcs

Reliance Capital - 50 pcs

Infosys - 30 pcs

On the basis of instruction slip dated 14.12.2007, the above

mentioned shares were transferred from the demat account of the

complainant to the account of accused No.1 on 22.12.2007.

On 22.01.2008, the accused persons in criminal conspiracy

with each other, intentionally, dishonest and fraudulently sold all

the future segments lying in the Code of the complainant which

were under the custody and control of the accused persons.

On 25.01.2008, the complainant vide notice protested the

fraudulent act of the accused persons but to no avail. The

complainant vide notice dated 28.01.2008 requested the accused

persons to keep the security shares intact but accused persons sold

the entire security shares on 13.02.2008, and misappropriated the

entire amount.

The accused No.5 in criminal conspiracy with accused No.

2 and 3 deceived the complainant and fraudulently and dishonestly

induced the complainant to deliver the shares of cash segment as

security to the accused No.1 and the complainant acted on such

inducement.

Cr.M.P. No. 889 of 2008

7. I n this petition prayer is made for quashing of the entire

criminal proceeding including the order taking cognizance dated

11.03.2008, by which cognizance for the offence under Sections 409,

420 and 120-B of the Indian Penal Code has been taken against the

petitioner, in connection with P.C.R. Case No. 83 of 2008 (T.R. No. 854

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Cr.M.P. No. 1241 of 2016 and

its analogous cases

of 2008), pending in the court of learned Judicial Magistrate, 1

st

Class,

Dumka.

8. The facts of the present case are similar to the facts of the

case of Cr.M.P. No. 669 of 2008, as the same complaint is under

challenge in the present case also.

9. Mr. Jitendra S. Singh, learned counsel appearing for the

petitioners in Cr.M.P. No. 1241 of 2016 submits that the petitioner No.

1 is a company registered under the Companies Act, 1956, which deals

in shares and stocks. He submits that the said company is a SEBI

(Securities and Exchange Board of India) registered stock broker and

depository participant. He further submits that the petitioner No. 2 is

the Managing Director of the petitioner company and petitioner No. 3 is

whole time Director of the said company. He submits that the petitioner

No. 4 is a sub-broker registered with SEBI. He further submits that the

petitioner No. 4, who runs its business under the name and style of M/s

Mangalam Securities, situated at Dumka town. Mr. Singh submits that

in Cr.M.P. No. 669 of 2008, the petitioner No. 1 is a trader company in

share and securities and the petitioner Nos. 2 and 3 are the Managing

Director and Whole Time Director of the petitioner company. He

submits that O.P. No. 2 has demat account with the petitioner company

having Client code No. 116525 to deal in cash segment and also deal in

derivative segment. He submits that the O.P. No. 2 became the client of

the petitioner company to trade in shares and stocks at the stock

exchanges by entering into an agreement. Mr. Singh submits that the

allegations are made in respect of share transaction and for that the

petitioner company has invoked the arbitration clause to resolve the

dispute under the Arbitration and Conciliation Act (as amended). He

submits that the arbitration matter was conducted under the supervision

of National Stock Exchange of India (NSE) and the award dated

18.06.2009 was in favour of the petitioner-company and O.P. No. 2 was

directed to pay a sum of Rs. 1,56,017.64 within a period of one month

from the date of award. He submits that the dispute is already decided

in the arbitration in view of that the case is arising out of a civil dispute,

which cannot be a subject matter of criminal case. Mr. Singh elaborates

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Cr.M.P. No. 1241 of 2016 and

its analogous cases

his argument and submits that on 15.09.2009, the petitioner company

dispatched a letter dated 14.09.2009 to the O.P. No. 2 informing the

O.P. No. 2 to fulfill the aforesaid award. He further submits that the

O.P. No. 2 issued a letter dated 19.09.2009 to the petitioner company

whereby he has revoked the power of attorney. He submits that the said

power was existing for 15 days in view of the agreement after

revocation. He submits that on the instruction of the O.P. No. 2, the

petitioner company stopped transaction with immediate effect from

03.10.2009 as agreed in the agreement. According to him prior to

realization of the alleged award amount by the petitioner company, no

stay or any interim order granted by the learned court nor filing of

Arbitration Suit No. 44 of 2009 was intimated by the O.P. No. 2 to the

petitioners. He further submits that thereafter the O.P. No. 2 filed PCR

Case No. 192 of 2010 before the learned Chief Judicial Magistrate,

Dumka on the alleged Section of Section 409 of the Indian Penal Code.

10. Mr. Singh, learned counsel appearing for the petitioners by

way of referring Clause-1.7.5 of the agreement, submits that arbitration

clause is there and the liquidation is also provided there. By way of

referring Clause-2.1, he submits that the effect of damages or bearing is

describes and he further refers to Sub-Clause-A of Clause-2.1 and

submits that Future trading involved daily settlement of all positions are

there. He refers to Sub-Clause-B of Clause-2.1 and submits that if the

O.P. No. 2 failed to deposit the additional margin by the deadline or if

an outstanding debt occurs in the account, the broker/member may

liquidate a part of or the whole position or substitute securities and the

O.P. No. 2 is liable for any losses incurred due to such close-outs. He

further submits that the O.P. No. 2 has filed a consumer case before the

District Consumer Forum at Dumka, which was dismissed on

28.06.2016. He refers to arbitration award dated 18.06.2009 and

submits that a sum of Rs. 1,56,017.64 was awarded in favour of the

petitioner’s company, against which, the petitioner has moved to

Bombay High Court, which is still pending. On these grounds he

submits that for a civil wrong, maliciously the criminal prosecution has

been launched by the O.P. No. 2 against the petitioners.

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Cr.M.P. No. 1241 of 2016 and

its analogous cases

11. Learned counsel appearing for the petitioners has relied in

the case of Vijay Kumar Ghai & Ors. Versus State of West Bengal &

Ors., reported in (2022) 7 SCC 124, wherein the Hon’ble Apex Court

in paras-27 to 41.3, it has been held as under:-

“27. Section 405IPC defines “criminal

breach of trust” which reads as under:

“405. Criminal breach of trust.—

Whoever, being in any manner entrusted with

property, or with any dominion over property,

dishonestly misappropriates or converts to

his own 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 so

to do, commits “criminal breach of trust”.”

The essential ingredients of the offence of

criminal breach of trust are:

(1) The accused must be entrusted with

the property or with dominion over it,

(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,

(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.

28. “Entrustment” of property under Section

405 of the 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 the terms of an

obligation imposed is liable for a criminal

breach of trust and is punished under Section

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Cr.M.P. No. 1241 of 2016 and

its analogous cases

406 of the Penal Code.

29. The definition in the section does not

restrict the property to movables or

immovables alone. This Court in R.K.

Dalmia v. Delhi Admn. [R.K. Dalmia v. Delhi

Admn., (1963) 1 SCR 253 : AIR 1962 SC

1821] held that the word “property” is used

in the Code in a much wider sense than the

expression “movable property”. There is no

good reason to restrict the meaning of the

word “property” to movable property only

when it is used without any qualification in

Section 405.

30. In Sudhir Shantilal Mehta v. CBI [Sudhir

Shantilal Mehta v. CBI, (2009) 8 SCC 1 :

(2009) 3 SCC (Cri) 646] it was observed that

the act of criminal breach of trust would,

inter alia mean using or disposing of the

property by a person who is entrusted with or

has otherwise dominion thereover. 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.

31. Section 415IPC defines “cheating” which

reads as under:

“415. Cheating.—Whoever, by deceiving

any person, fraudulently or dishonestly

induces the person so deceived to deliver any

property to any person, or to consent that any

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”.”

The essential ingredients of the offence of

cheating are:

1. Deception of any person

2. (a) Fraudulently or dishonestly

inducing that person—

(i) to deliver any property to any person;

or

(ii) to consent that any person shall retain

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Cr.M.P. No. 1241 of 2016 and

its analogous cases

any property; or

(b) intentionally inducing that person to

do or omit to do 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.

32. A fraudulent or dishonest inducement is

an essential ingredient of the offence. A

person who dishonestly induces another

person to deliver any property is liable for

the offence of cheating.

33. Section 420IPC defines “cheating and

dishonestly inducing delivery of property”

which reads as under:

“420. Cheating and dishonestly inducing

delivery of property.—Whoever cheats and

thereby dishonestly induces the person

deceived 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 with

imprisonment of either description for a term

which may extend to seven years, and shall

also be liable to fine.”

34. Section 420IPC 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 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.

35. To establish the offence of cheating in

inducing the delivery of property, the

following ingredients need to be proved:

(i) The representation made by the person

was false.

(ii) The accused had prior knowledge that

the representation he made was false.

(iii) The accused made false

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Cr.M.P. No. 1241 of 2016 and

its analogous cases

representation with dishonest intention in

order to deceive the person to whom it was

made.

(iv) 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.

36. As observed and held by this Court

in R.K. Vijayasarathy v. Sudha Seetharam

[R.K. Vijayasarathy v. Sudha Seetharam,

(2019) 16 SCC 739 : (2020) 2 SCC (Cri)

454] , 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

(ii) the person cheated must be

dishonestly induced to:

(a) deliver property to any person; or

(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 420IPC.

7. The following observation made by this

Court in Uma Shankar Gopalika v. State of

Bihar [Uma Shankar Gopalika v. State of

Bihar, (2005) 10 SCC 336 : (2006) 2 SCC

(Cri) 49] with almost similar facts and

circumstances may be relevant to note at this

stage : (SCC pp. 338-39, paras 6-7)

“6. Now the question to be examined by

us is as to whether on the facts disclosed in

the petition of the complaint any criminal

offence whatsoever is made out much less

offences under Sections 420/120-BIPC. The

only allegation in the complaint petition

against the accused persons 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 been paid. … It was

pointed out on behalf of the complainant that

the accused fraudulently persuaded the

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Cr.M.P. No. 1241 of 2016 and

its analogous cases

complainant to agree so that the accused

persons may take steps for moving the

consumer forum in relation to the claim of Rs

4,20,000. It is well settled that every breach

of contract would not give rise to an offence

of cheating and only in those cases 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 accused persons to cheat which is a

condition precedent for an offence under

Section 420IPC.

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-BIPC and the present case is a

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 investigation to continue would

amount to an abuse of the 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

482CrPC which it has erroneously refused.”

38. 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. However, as held by this Court

in Hridaya Ranjan Prasad Verma v. State of

Bihar [Hridaya Ranjan Prasad

Verma v. State of Bihar, (2000) 4 SCC 168 :

2000 SCC (Cri) 786] , 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,

fraudulent or dishonest intention is the basis

of the offence of cheating. In the case at

hand, complaint filed by Respondent 2 does

not disclose dishonest or fraudulent intention

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Cr.M.P. No. 1241 of 2016 and

its analogous cases

of the appellants.

39. In Vesa Holdings (P) Ltd. v. State of

Kerala [Vesa Holdings (P) Ltd. v. State of

Kerala, (2015) 8 SCC 293 : (2015) 3 SCC

(Cri) 498] , this Court made the following

observation : (SCC pp. 297-98, para 13)

“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 offence of cheating or not. In the

present case, there is nothing to show that at

the very inception there was any intention on

behalf of the accused persons to cheat which

is a condition precedent for an offence under

Section 420IPC. In our view, the complaint

does not disclose any criminal offence at all.

Criminal proceedings should not be

encouraged when it is found to be mala fide

or otherwise an abuse of the process of the

court. The 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 an abuse of the

process of the court and the High Court

committed [Maniprasad v. State of Kerala,

2011 SCC OnLine Ker 4251] an error in

refusing to exercise the power under Section

482CrPC to quash the proceedings.”

40. Having gone through the complaint/FIR

and even the charge-sheet, it cannot be said

that the averments in the FIR and the

allegations in the complaint against the

appellant constitute an offence under

Sections 405 and 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 420IPC can

be said to have been made out. In the instant

case, there is no material to indicate that the

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Cr.M.P. No. 1241 of 2016 and

its analogous cases

appellants had any mala fide intention

against the respondent which is clearly

deductible from the MoU dated 20-8-2009

arrived at between the parties.

41. The entire origin of the dispute emanates

from an investment made by Respondent 2,

amounting to Rs 2.5 crores in lieu of which

2,50,000 equity shares were issued in the

year 25-3-2008, finally culminating into the

MoU dated 20-8-2009. That based on this

MoU Respondent 2 filed three complaints,

two at Delhi and one at Kolkata. Thus, two

simultaneous proceedings, arising from the

same cause of action i.e. MoU dated 20-8-

2009 were initiated by Respondent 2

amounting to an abuse of the process of the

law which is barred. The details of the

complaints are as under:

41.1. On 6-6-2012, Respondent 2 filed a

private complaint under Section 156(3)CrPC

with CJM, Tis Hazari Court, Delhi for

registration of FIR against the appellants;

which was withdrawn on 19-9-2016.

41.2. Complaint under Section 68 of the

Companies Act r/w Section 200CrPC filed

before the CMM, Tis Hazari Courts at Delhi;

which is pending.

41.3. On 28-3-2013, a complaint was made

to PS Bowbazar, Central Division, Kolkata

which was eventually registered as FIR No.

168 under Sections 406, 420, 120-B of the

Penal Code, 1860.”

12. Relying on the above judgment, he submits that the facts of

the above case and the facts of the present case are similar in view of

that entire criminal proceeding may kindly be quashed.

13. Learned counsel appearing for the petitioners further relied

in the case of S.K. Goel & Ors. Versus The State of Jharkhand &

Anr., reported in (2023) 3 JCR 569 (Jhr). Paras-14 and 15 of the said

judgment is quoted hereibelow:-

“14. Learned senior counsel submits that the

entire case is arising out of a civil dispute and

for the civil dispute, criminality has been put

into by way of filing the FIR and if the civil

dispute is there, criminal proceeding will not

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Cr.M.P. No. 1241 of 2016 and

its analogous cases

proceed, as has been held by the Hon’ble

Supreme Court in the case of GHCL

Employees Stock Option Trust Versus India

Infoline Ltd., reported in (2003) 4 SCC 505.

Paras-12 and 13 are quoted hereinbelow:-

“12. From a bare perusal of the complaint

and the allegations made therein, we do not

find in any of the paragraphs that the

complainant has made specific allegations

against Respondents 2 to 7. In Para 2 of the

complaint, it is alleged that Respondents 2 to 6

are looking after the day-to-day affairs of the

Company. With whom the complainant or its

authorised representative interacted has also

not been specified. Although in Para 11 of the

complaint it is alleged that the complainant on

numerous occasions met Accused 2 to 7 and

requested to refund the amount, but again the

complainant has not made specific allegation

about the date of meeting and whether it was

an individual meeting or collective meeting.

Similarly, in Para 17 of the complaint, there is

no allegation that a particular Director or

Managing Director fabricated the debit note.

In the entire complaint there are bald and

vague allegations against Respondents 2 to 7.

13. There is no dispute with regard to the legal

proposition that the case of breach of trust or

cheating are both a civil wrong and a criminal

offence, but under certain situations where the

act alleged would predominantly be a civil

wrong, such an act does not constitute a

criminal offence.”

15. He submits that for the similar

facts and circumstances in the case of Angel

Broking Ltd. Versus State of Gujarat,

reported in (2018) SCC Online Guj 3772, it

was found that there is not criminality held

and the penal Sections i.e. 406 and 420 of the

Indian Penal Code were not attracted. Paras-

2.1, 14 and 15 of the said judgment are quoted

hereinbelow:-

“2.1 Complainant No. 2 filed private

complaint with the Chief Judicial Magistrate

Court at Jamnagar, alleging that, respondent

No. 2 was having share trading and demat

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Cr.M.P. No. 1241 of 2016 and

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account with the applicant company. It is

alleged that on account of the recession in the

market, without prior permission of the

respondent No. 2, the complainant company

sold off the shares of complainant at a very

low price, thereby causing loss to the

complainant and to recover such loss, the

applicant company issued false bills for

recovery of an amount of Rs. 2,96,000/-. It is

also alleged in the complaint that the

complainant has mentioned transactions from

08.05.2006 to 22.05.2006, wherein, according

to the complainant, shares were purchased at

high price and were disposed off at a very low

price that too from the account of the

complainant and behind the back of the

complainant.

14. Having examined the relevant documents

on record, the Court comes to the conclusion

that the transfer of shares which took place on

National Stock Exchange by the applicant

company on behalf of the respondent No. 2 is

in response to the due course of its business

and inconformity with the agreement between

the parties. The Criminal case therefore,

registered subsequently appears to be an

afterthought with a view to overcome the

liability of the respondent No. 2, which has

arisen out of the transactions. It is also found

that though under the agreement clause, the

remedy to resolve the dispute is made,

including filing a complaint with the SEBI, the

respondent No. 2 has not resorted to such

remedy and has thought it fit criminal

proceedings, which in the opinion of the

Court, is clear abuse of process of law.

15. The perusal of the criminal complaint,

suggest that on the very same day, learned

Magistrate has passed order under Section

156(3) of Cr.P.C. directing registration of the

F.I.R. Contents of the complaint do not reveal

any specific role of any of the applicants No. 2

to 5 so as to attract provisions of Sections 406,

408 and 420 of the I.P.C. There is no

allegations to suggest that any of the

applicants had misrepresented before the

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Cr.M.P. No. 1241 of 2016 and

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complainant so as to influence her decision to

enter into the transaction. In fact, there is no

allegation that the complainant had ever met

the applicants in connection with any of the

share transactions. The principles of vicarious

liability cannot be invoked in the facts of the

present case.”

14. R elying on the above judgment, he submits that the said

case is also arising out of the mechanism of selling with regard to such

dispute and in view of that the FIR itself was quashed by this court.

15. O n the above grounds, learned counsel appearing for the

petitioners submits that the entire criminal proceedings may kindly be

quashed.

16. Per contra, Mr. R.S. Mazumdar, learned senior counsel

appearing for the O.P. No. 2 draws the attention of the court to paras-5,

21, 27, 28 and 29 of Cr.M.P. No. 669 of 2008 and submits that the facts

mentioned therein are wrong and by suppressing the material facts, the

present Cr.M.P. has been filed. By way of referring the document

brought on record by way of filing the additional counter affidavit

contained in Annexure-A, he submits that the Arbitration Case No.

ARBA No. 166 of 2008 was already disposed of by the Bombay High

Court on 23.04.2008, wherein the present Cr.M.P. was filed on

13.05.2008 and there is averment in paras-5, 21, 27, 28 and 29 of

Cr.M.P. No. 669 of 2008 that the said arbitration proceeding is pending

before the Bombay High Court. He further submits that on this ground

itself, the Cr.M.P. is fit to be rejected.

17. T o buttress his argument, he relied in the case of Amar

Singh Versus Union of India & Ors., reported in (2011) 7 SCC 69,

where in paras-60 to 62, the Hon’ble Supreme Court has held as

follows:-

“60. In the last noted case of Dalip

Singh [(2010) 2 SCC 114 : (2010) 1 SCC

(Civ) 324 : JT (2009) 15 SC 201] , this Court

has given this concept a new dimension

which has a far-reaching effect. We,

therefore, repeat those principles here again:

(SCC pp. 116-17, paras 1-2)

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Cr.M.P. No. 1241 of 2016 and

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“1. For many centuries Indian society

cherished two basic values of life i.e. ‘satya’

(truth) and ‘ahimsa’ (non-violence). Mahavir,

Gautam Buddha and Mahatma Gandhi

guided the people to ingrain these values in

their daily life. Truth constituted an integral

part of the justice-delivery system which was

in vogue in the pre-independence era and the

people used to feel proud to tell truth in the

courts irrespective of the consequences.

However, post-independence period has seen

drastic changes in our value system. The

materialism has overshadowed the old ethos

and the quest for personal gain has become

so intense that those involved in litigation do

not hesitate to take shelter of falsehood,

misrepresentation and suppression of facts in

the court proceedings.

2. In the last 40 years, a new creed of

litigants has cropped up. Those who belong

to this creed do not have any respect for

truth. They shamelessly resort to falsehood

and unethical means for achieving their

goals. In order to meet the challenge posed

by this new creed of litigants, the courts have,

from time to time, evolved new rules and it is

now well established that a litigant, who

attempts to pollute the stream of justice or

who touches the pure fountain of justice with

tainted hands, is not entitled to any relief,

interim or final.”

However, this Court is constrained to observe

that those principles are honoured more in

breach than in their observance.

61. Following these principles, this Court

has no hesitation in holding that the instant

writ petition is an attempt by the petitioner to

mislead the Court on the basis of frivolous

allegations and by suppression of material

facts as pointed out and discussed above. In

view of such incorrect presentation of facts,

this Court had issued notice and also

subsequently passed the injunction order

which is still continuing.

62. This Court, therefore, dismisses the

writ petition and vacates the interim order

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Cr.M.P. No. 1241 of 2016 and

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and is not called upon to decide the merits, if

any, of the petitioner's case. No case of

tapping of telephone has been made out

against the statutory authorities in view of

the criminal case which is going on and

especially in view of the petitioner's stand

that he is satisfied with the investigation in

that case.”

18. O n the same line, he further relied in the case of Umesh

Kumar Yadav Versus State of U.P., reported in 2022 SCC OnLine All

655. Paras-15, 16 and 18 to 22 is quoted hereinbelow:-

15. Since, the applicants have not

approached this Court with clean hands and

filed false affidavit before this Court that the

matter has been compromised, therefore, he

does not deserve any indulgence by this

Court.

16. The courts of law are meant for imparting

justice between the parties. One, who comes

to the court, must come with clean hands and

no material facts should be concealed. I am

constrained to hold that more often the

process of the court is being abused by

unscrupulous litigants to achieve their

nefarious design. I have no hesitation in

saying that a person, whose case is based on

falsehood, has no right to approach the

court. He/she can be summarily thrown out at

any stage of the litigation. The judicial

process cannot become an instrument of

oppression or abuse or a means in the

process of the Court to subvert justice, for the

reason that the Court exercises its

jurisdiction, only in furtherance of justice.

18. The Courts have, over the centuries,

frowned upon litigants, who, with intent to

deceive and mislead the courts, initiated

proceedings without full disclosure of facts.

19. In Chandra Shashi v. Anil Kumar

Verma, (1995) 1 SCC 21, Apex Court held as

under:

“To enable the courts to ward off

unjustified interference in their working,

those who indulge in immoral acts like

perjury, prevarication and motivated

falsehoods have to be appropriately dealt

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Cr.M.P. No. 1241 of 2016 and

its analogous cases

with, without which it would not be possible

for any court to administer justice in the true

sense and to the satisfaction of those who

approach it in the hope that truth would

ultimately prevail. People would have faith in

courts when they would find that (truth alone

triumphs) is an achievable aim there; or (it is

virtue which ends in victory) is not only

inscribed in emblem but really happens in the

portals of courts”

20. In Buddhi Kota Subbarai (Dr.) v. K.

Parasaran, (1996) 5 SCC 530), Apex Court

held as under:

The course adopted by the applicant is

impermissible and his application is based on

misconception of law and facts. No litigant

has a right to unlimited drought on the court

time and public money in order to get his

affairs settled in the manner as he wishes.

Easy access to justice should not be misused

as a licence to file misconceived or frivolous

petitions. After giving our careful

consideration to the submissions made at the

bar as well as those contained in the

memorandum of the application, we are of

the opinion that this application is

misconceived, untenable and has no merits

whatsoever. It is accordingly dismissed.

21. In Arunima Baruah v. Union of

India, (2007) 6 SCC 120, Supreme Court

held that it is trite law that to enable the

Court to refuse to exercise its discretionary

jurisdiction suppression must of material

fact. Material fact would mean material for

the purpose of determination of the lis. It was

further held that a person invoking the

discretionary jurisdiction of the court cannot

be allowed to approach it with a pair of dirty

hands. In Prestige Lights Limited v. State

Bank of India, (2007) 8 SCC 449, Apex Court

held as under:

“It is well settled that a prerogative

remedy is not a matter of course. In

exercising extraordinary power, therefore, a

Writ Court will indeed bear in mind the

conduct of the party who is invoking such

jurisdiction. If the applicant does not disclose

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Cr.M.P. No. 1241 of 2016 and

its analogous cases

full facts or suppresses relevant materials or

is otherwise guilty of misleading the Court,

the Court may dismiss the action without

adjudicating the matter. The rule has been

evolved in larger public interest to deter

unscrupulous litigants from abusing the

process of Court by deceiving it. The very

basis of the writ jurisdiction rests in

disclosure of true, complete and correct facts.

If the material facts are not candidly stated

or are suppressed or are distorted, the very

functioning of the writ courts would become

impossible.”

22. In K.D Sharma v. Steel Authority of

India Limited, (2008) 12 SCC 481, Supreme

Court held that no litigant can play “hide

and seek” with the courts or adopt “pick and

choose”. To hold a writ of the court one

should come with candid facts and clean

breast. Suppression or concealment of

material facts is forbidden to a litigant or

even as a technique of advocacy. In such

cases the Court is duty bound to discharge

rule nisi and such applicant is required to be

dealt with for contempt of Court for abusing

the process of the court.”

19. He further refers to para-15 of the Cr.M.P. No. 669 of 2008

and submits that on 21.01.2008, there was a debit balance of Rs.

35,621.00 in the account of the O.P. No. 2 and after the lunch the debit

balance stood in the account of the O.P. No. 2 to the tune of Rs.

3,45,307.88, for that the petitioner-company has already issued a notice

to the O.P. No. 2 on 27.01.2008, wherein the arbitration Case No.

ARBA No. 166 of 2008 was said to be filed before the Bombay High

Court to recover Rs. 3,45,307.88 along with Rs. 25,000/- as legal cost.

He further submits that on 14.02.2008, it has been stated that they had

sold margin / securities share and appropriated the amount to the tune

of Rs. 1,90,611/- and further on 18.02.2008 [Annexure-F to the counter

affidavit], a demand letter of Rs. Rs. 3,45,307.88 was issued. He

submits that if the amount of Rs. 1,90,611/- has already been recovered,

as such, there was no occasion for the petitioner company to made a

demand to the tune of Rs. 3,45,307.88, as such, Rs. 1,90,611/- is

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Cr.M.P. No. 1241 of 2016 and

its analogous cases

misappropriated by the petitioner-company and for that demand, the

petitioner company has already filed an arbitration case before the

Bombay High Court.

20. I n view of that he submits that the entrustment is there and

there is violation by the petitioner company as well the others. To

buttress his argument, he relied in the case of MNG Bharateesh Rdddy

Versus Ramesh Ranganathan, reported in 2022 SCC OnLine SC

1061, where in paras-20 to 23, it has been held as follows:-

20. Section 405 of the IPC deals with

criminal breach of trust and reads as follows:

“405. Criminal breach of trust -

Whoever, being in any manner entrusted with

property, or with any dominion over property,

dishonestly misappropriates or converts to

his own use that property, or dishonestly uses

or disposes of that property in 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

willfully suffers any other person so to do,

commits “criminal breach of trust”.”

21. The offence of criminal breach of trust

contains two ingredients : (i) entrusting any

person with property, or with any dominion

over property; and (ii) the person entrusted

dishonestly misappropriates or converts to

his own use that property to the detriment of

the person who entrusted it.

22. In Anwar Chand Sab

Nanadikar v. State of Karnataka

6

a two-judge

bench restated the essential ingredients of the

offence of criminal breach of trust in the

following words:

“7. The basic requirement to bring home

the accusations under Section 405 are the

requirements to prove conjointly (1)

entrustment, and (2) whether the accused was

actuated by the dishonest intention or not

misappropriated it or converted it to his own

use to the detriment of the persons who

entrusted it. As the question of intention is

not a matter of direct proof, certain broad

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Cr.M.P. No. 1241 of 2016 and

its analogous cases

tests are envisaged which would generally

afford useful guidance in deciding whether in

a particular case the accused had mens rea

for the crime.”

23. In Vijay Kumar Ghai v. State of West

Bengal

7

another two-judge bench held that

entrustment of property is pivotal to

constitute an offence under section 405 of the

IPC. The relevant extract reads as follows:

“28. “Entrustment” of property under

Section 405 of the 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 dishone stly

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.”

21. Relying on the above judgment, he submits that the two of

the ingredients with regard to the criminal breach of trust is made out,

i.e. entrustment and dishonest misappropriation.

22. With regard to the arbitration, he submits that if the

criminality is made out even if the arbitration clause is there, the

criminal case can be maintained and he relied in the case of Priti Saraf

Versus State (NCT of Delhi), reported in (2021) 16 SCC 142, where in

paras-31 to 34, it has been held as follows:-

“31. In the instant case, on a careful reading

of the complaint/FIR/charge-sheet, in our

view, it cannot be said that the complaint

does not disclose the commission of an

offence. The ingredients of the offences under

Sections 406 and 420IPC cannot be said to

be absent on the basis of the allegations in

the complaint/FIR/charge-sheet. We would

like to add that whether the allegations in the

complaint are otherwise correct or not, has to

be decided on the basis of the evidence to be

led during the course of trial. Simply because

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Cr.M.P. No. 1241 of 2016 and

its analogous cases

there is a remedy provided for breach of

contract or arbitral proceedings initiated at

the instance of the appellants, that does not

by itself clothe the court to come to a

conclusion that civil remedy is the only

remedy, and the initiation of criminal

proceedings, in any manner, will be an abuse

of the process of the court for exercising

inherent powers of the High Court under

Section 482CrPC for quashing such

proceedings.

32. We have perused the pleadings of the

parties, the complaint/FIR/charge-sheet and

orders of the courts below and have taken

into consideration the material on record.

After hearing the learned counsel for the

parties, we are satisfied that the issue

involved in the matter under consideration is

not a case in which the criminal trial should

have been short-circuited. The High Court

was not justified in quashing the criminal

proceedings in exercise of its inherent

jurisdiction. The High Court has primarily

adverted on two circumstances,

(i) that it was a case of termination of

agreement to sell on account of an alleged

breach of the contract and;

(ii) the fact that the arbitral proceedings

have been initiated at the instance of the

appellants.

Both the alleged circumstances noticed by the

High Court, in our view, are unsustainable in

law. The facts narrated in the present

complaint/FIR/charge-sheet indeed reveal the

commercial transaction but that is hardly a

reason for holding that the offence of

cheating would elude from such transaction.

In fact, many a times, offence of cheating is

committed in the course of commercial

transactions and the illustrations have been

set out under Sections 415, 418 and 420IPC.

33. Similar observations have been made

by this Court in Trisuns Chemical

Industry v. Rajesh Agarwal [Trisuns

Chemical Industry v. Rajesh Agarwal, (1999)

8 SCC 686 : 2000 SCC (Cri) 47] : (SCC p.

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Cr.M.P. No. 1241 of 2016 and

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690, para 9)

“9. We are unable to appreciate the

reasoning that the provision incorporated in

the agreement for referring the disputes to

arbitration is an effective substitute for a

criminal prosecution when the disputed act is

an offence. Arbitration is a remedy for

affording reliefs to the party affected by

breach of the agreement but the arbitrator

cannot conduct a trial of any act which

amounted to an offence albeit the same act

may be connected with the discharge of any

function under the agreement. Hence, those

are not good reasons for the High Court to

axe down the complaint at the threshold

itself. The investigating agency should have

had the freedom to go into the whole gamut

of the allegations and to reach a conclusion

of its own. Pre-emption of such investigation

would be justified only in very extreme cases

as indicated in State of Haryana v. Bhajan

Lal [State of Haryana v. Bhajan Lal, 1992

Supp (1) SCC 335 : 1992 SCC (Cri) 426] .”

34. So far as initiation of arbitral

proceedings is concerned, there is no

correlation with the criminal proceedings.

That apart, the High Court has not even

looked into the charge-sheet filed against the

second respondent which was on record to

reach at the conclusion that any criminal

offence as stated is prima facie being made

out and veracity of it indeed be examined in

the course of criminal trial.”

23. So far as the facts of Cr.M.P. No. 1241 of 2016 is

concerned, he opposed the quashing on the ground that on 28.01.2008,

the petitioner company stopped any further transaction in the account of

O.P. No. 2 and by letter dated 14.02.2008, the margin / security share

was sold to the tune of Rs. 1,90,611/- and on 01.07.2009, the sole

arbitrator passed an award and directed the O.P. No. 2 to pay a sum of

Rs. 1,56,017.64 within a period of one month from the date of award,

against that the O.P. No. 2 has filed a suit, the petitioner company has

filed the reply stating that the O.P. No. 2 is liable to pay a sum of Rs.

1,56,017.64, however, the said amount has already been recovered by

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Cr.M.P. No. 1241 of 2016 and

its analogous cases

the petitioner company, which has been substantiated by the letter dated

08.10.2009, which is contained in Annexure-G to the counter affidavit

filed on behalf of the O.P. No. 2 in Cr.M.P. No. 669 of 2008. He

submits that in spite of that a further demand was made to the tune of

Rs. 3,45,307.88. He further submits that in light of Section 36 of the

Arbitration and Conciliation Act, if the award is not enforced, the

person in favour of whom the award is there, may move before the

competent civil court, however, the petitioner company has not invoked

the said clause. He further submits that the O.P. No. 2 has filed a suit

before the learned court at Dumka, wherein prayer is made for payment

of the said amount. On these grounds, learned senior counsel appearing

for the O.P. No. 2 submits that the criminality is made out and if the

criminality is made out, both the civil and criminal cases can be

maintained.

24. Learned A.P.Ps. appearing for the State in respective cases

jointly submit that it appears from the record that the allegations are

there and if the criminality is made out, the civil as well as criminal

case both can be maintained.

25. I n reply to the argument of learned counsel appearing for

the O.P. No. 2, Mr. Onkar Nath Tewari, learned counsel appearing for

the petitioners submits that the case is arising out of an agreement and

he took the court to the several clauses of the said agreement, which is

contained in Annexure-3 of Cr.M.P. No. 1241 of 2016 and by way of

referring clause 1.6 submits that the steps of the member shall be

governed by the Rules and Regulations of the SEBI. By way of

referring Clause-1.7.2.1 he submits that O.P. No. 2 has read the entire

agreement. By way of referring Clause-1.7.2.2 he submits that the O.P.

No. 2 is responsible. By way of referring Clause-1.7.2.4 he submits that

the said clause speaks of client is liable to pay the initial margins,

withholding margins, special margins or such other margins. By way of

referring Clause-1.7.5 he further submits that the company is authorized

to liquidate or close out. He further refers to Clause-1.7.13 and submits

that the arbitration clause is there. He further refers to Clause-1.7.23

and 1.7.25 of the agreement and submits that these are in favour of the

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Cr.M.P. No. 1241 of 2016 and

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petitioners and the case is arising out of a civil nature in that view of the

matter, the entire criminal proceeding may kindly be quashed.

26. I n view of the above submissions of learned counsel

appearing for the parties, the court has gone through the materials on

record in all the cases. It is an admitted position that the petitioner

company and the petitioners are dealing with the shares and also

registered with the SEBI. The O.P. No. 2 joined the hand as client of

investment in the year 2006 and thereafter his account was being

regularly operated by the said company in view of the demat account

for that code was provided to the O.P. No. 2. Admittedly second amount

quoted in the argument of learned counsel appearing for the petitioners

as well as O.P. No. 2 was liquidated by the company for that the dispute

arose.

27. I n paras-5, 21, 27, 28 and 29 of Cr.M.P. No. 669 of 2008, it

has been disclosed that the arbitration case number ARBA No. 166 of

2008 is pending before the Bombay High Court, wherein the present

case is filed before this court on 13.05.2008. The document brought on

record, as contained in Annexure-A, in the additional counter affidavit

filed by the O.P. No. 2 clearly suggests that the said arbitration case was

disposed of on 23.04.2008 itself, thus it is crystal clear that suppressing

that fact, the present case has been filed.

28. In para-1 5 of the Cr.M.P. No. 669 of 2008, it has been stated

that Rs. 35,621.00 was the debit balance in the account of the O.P. No.

2, whereas on 22.01.2008, it was stated that post lunch debit balance in

the account of the O.P. No. 2 is shown to the tune of Rs. 3,45,307.88,

for that the petitioner-company has already issued a notice to the O.P.

No. 2 on 27.01.2008 and for that amount itself, arbitration Case No.

ARBA No. 166 of 2008 was filed for recovery of the said amount

before the Bombay High Court. On 28.01.2008 contained in Annexure-

D, the O.P. No. 2 issued a letter to stop any further transaction in the

account of O.P. No. 2. The document available on record in Annexure-E

dated 14.02.2008 speaks that the margin/security shares to the tune of

Rs. 1,90,611/- was already sold by the petitioner company. However, by

letter dated 18.02.2008 contained in Annexure-F, the demand was made

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Cr.M.P. No. 1241 of 2016 and

its analogous cases

to the tune of Rs. Rs. 3,45,307.88. In view of that, it is crystal clear that

the amount of Rs. 1,90,611/- was misappropriated by the petitioner-

company and the petitioners are the Managing Director and the whole

time Director of the said company.

29. Further in P.C.R. Case No. 192 of 2010 (T.R. No. 387 of

2016), which is the subject matter of Cr.M.P. No. 1241 of 2016, the O.P.

No. 2 has already filed a suit before the learned competent court at

Dumka, in which, the reply was filed by the petitioners, contained in

Annexure-H by the petitioners stating therein that the petitioner is

entitled to recover Rs. 1,56,017.64, whereas by Annexure-G, the share

of the O.P. No. 2 has already been sold to the tune of Rs. 1,56,017.64,

as such, the same was already realized in terms of the sole arbitration

award and in reply in the said suit, it was stated by the petitioner

company that Rs. 1,56,017.64 is liable to be recovered by the company.

30. Thus, it is crystal clear that the intention of the petitioner

company was not up to the mark and clearly a case of entrustment and

cheating is made out, however, that can only be decided by the learned

court in the trial, where the matter is still pending.

31. Quashment of cognizance / proceeding, commercial

transaction and imitation of arbitral proceedings are not material.

Simply because there is remedy provided for the breach of contract for

arbitral proceeding initiated at the instance of the petitioner, that does

not by itself clothe the court to come to the conclusion that the civil

remedy is only the remedy and the initiation of a criminal proceeding is

an abuse of the process of the court for exercising inherent powers for

quashing such proceedings. This aspect has been clearly dealt with by

the Hon’ble Supreme court recently in the case of Priti Saraf & Anr.

(Supra). There is no doubt that there is an arbitration clause in the

agreement as how the petitioner company and the petitioners have

suppressed the things and even deducting the amount of Rs. 1,90611/-

as has been dealt (Supra). Thus if such a disputed question of fact is

there, the High court is not required to rove into and come to a

conclusion that this is a case of civil nature.

32. S o far as the judgment relied by Mr. Singh, learned counsel

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Cr.M.P. No. 1241 of 2016 and

its analogous cases

appearing for the petitioners in Cr.M.P. Nos. 1241 of 2016 and 669 of

2008, in the case of Vijay Kumar Ghai (supra) and also in the case of

S.K. Goel & Ors. (supra), the court is in agreement that if civil nature

of proceeding is there, the High Court is required to interfere. Rather

the High Court is having the larger responsibility on the shoulder to

took the things in between the lines if a case is maliciously filed,

however, the facts of the present case clearly suggests that this is not a

case to exercise power under Section 482 Cr.P.C. In view of that those

judgments relied by Mr. Singh, learned counsel appearing for the

petitioners are not helping the petitioners.

33. Th e way, in which, the suppression is made in filing the

Cr.M.Ps. further restrained this court considering that the truth

constituted an integral part of the judicial delivery system which was

invoked in the pre-independence era and the people used to keep

brought the said truth in the courts irrespective of the consequence and

this aspect has been dealt elaborately by the Hon’ble Supreme Court in

the case of Amar Singh (Supra) as well as Allahabad High Court in the

case of Umesh Kumar Yadav (Supra).

34. The offence of criminal breach of trust consists of two

ingredients entrusting any person in a property or with any domain of

the property and the person entrusted dishonestly misappropriates or

coverts it to its own use that property to the adjustment of person who

entrusted into.

35. In the facts of the present case in spite of the adjustment of

the amount, the said was claimed in the arbitration proceeding and in

spite of the disposal of the arbitration proceeding, it has been stated in

the petition that the said arbitration proceeding is pending. Further in

the reply filed by the petitioners in reply to the suit filed by the O.P. No.

2 before the learned court, it has stated that Rs. 1,56,017.64 is required

to be recovered, wherein the said amount has already been recovered by

way of selling the shares, contained in Annexure-G of the counter

affidavit filed by the O.P. No. 2 in Cr.M.P. No. 1241 of 2016.

36. I n view of the above facts, reasons and analysis, the court

finds that these are not the case to exercise the power under Section 482

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Cr.M.P. No. 1241 of 2016 and

its analogous cases

Cr.P.C. to quash the entire criminal proceedings.

3 7. Accordingly, all these petitions are dismissed. Pending I.A.,

if any, stands dismissed.

38. I t is made clear that the trial court shall proceed in the

matter in accordance with law without being prejudiced by this order,

as this order has been passed considering the parameters of Section 482

Cr.P.C.

(Sanjay Kumar Dwivedi, J.)

Amitesh/-

[A.F.R.]