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REPORTABLE

THE SUPREME COURT OF INDIA

CRIMINAL APPELLATE JURISDICTION

CRIMINAL APPEAL NO. 111 OF 2011

V. Ravi Kumar …Appellant

VERSUS

State, Rep. by Inspector of Police,

District Crime Branch, Salem,

Tamil Nadu & Ors. …Respondents

J U D G M E N T

Indira Banerjee, J.

This appeal is against the final judgment and order

dated 20-03-2006 passed by the High Court of

Judicature at Madras, inter alia, allowing Criminal

Original Petition No.27039 of 2005 filed under Section

482 Cr.P.C. and quashing the criminal proceedings being

Crime No.54 of 2005 against the petitioners before the

High Court and also against the first accused company,

which was not party before the High Court.

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2.The appellant, Shri Ravi Kumar carries on business

of cotton ginning and conversion of cotton into yarn at

Salem, Tamil Nadu as proprietor of “SARAVANA YARN

TRADERS”.

3.The appellant as proprietor of “SARAVANA YARN

TRADERS” entered into transactions with Sri. Rajendran

Mills Ltd., Salem (hereinafter referred to as “the Mill”).

The respondent No.2/accused No.2 is the Managing

Director of the Mill and the respondent No.3/accused

No.3 Sri Sundaram is its Chairman, respondent No.

4/accused No.4 Sri Sundar is the son of the Managing

Director being the respondent No.2/accused No.2 and is

in charge of the affairs of the Mill. The respondents/

accused Nos.5 to 13 are also responsible for

administering the Mill.

4.In December 2001, the Mill requested the appellant

to supply cotton lint to the Mill for conversion of the

same into yarn. The appellant and the respondents

entered into transactions in 2001. Later, in January

2002, a Memorandum of Understanding in writing was

executed between the appellant and the Mill.

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5.The appellant has alleged that pursuant to the

Memorandum of Understanding, the appellant supplied

1,03,920 Kgs of cotton lint to the Mill for conversion into

yarn. The appellant has further alleged that respondent

No.2/accused No.2 Shri Chokalingam had, from out of

the said quantity of cotton lint, purchased lint weighing

about 47,164 kgs of the value of Rs.26,93,289/- on

credit basis and the balance which was worth

Rs.35,26,561.69 had been entrusted to the Mill for

conversion into yarn.

6.According to the appellant, the Mill did not take any

step to convert the lint into yarn in spite of repeated

requests. The appellant later came to know that all the

accused had connived with each other and in criminal

breach of trust sold the entire cotton lint weighing about

1,08,920/- kgs of the value of about Rs.62,19,850.50 and

appropriated the sale proceeds thereof.

7.On 20-05-2004, the appellant lodged a complaint at

the Edapadi Police Station, Salem district against

respondents for offences under Sections 420 and 409

read with Section 34 of the Indian Penal Code.

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8.As the Police failed to register any case, the

appellant invoked Section 156(3) of the Cr.P.C. to seek

orders of the learned Judicial Magistrate II, Sankagiri for

registration of the complaint.

9.Even after orders under Section 156(3) of the

Cr.P.C., the Police did not register any complaint.

Thereafter, the appellant filed a petition being Crl. O.P.

No.7715 of 2005 praying for direction on the Inspector of

Police to register a case on the basis of the complaint

made by the appellant.

10.It is stated that since the amount involved exceeded

the limit for invocation of the pecuniary jurisdiction of

the local Police Station, the Superintendent of Police

transferred the investigation to the District Crime Branch

and the same was registered as Crime No.54/2005

under Sections 420, 409 and 34 IPC on 22-06-2005.

11.According to the appellant, since the police did not

conduct the investigation properly, the appellant was

constrained to file Crl. O.P. No.23354 of 2005 in the High

Court of Madras for direction on the Investigation Officer

of Crime No.54 of 2005 to arrest the accused mentioned

in the FIR, complete the investigation and file a final

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report.

12.By an order dated 29-08-2005, the High Court

disposed of the criminal original petition by directing the

respondent to file a final Report within three months

from the date of receipt of a copy of the said order.

13.It is pleaded that as the Police could not complete

the investigation within three months as directed, it filed

Criminal Miscellaneous Petition being Crl.M.P. No.9149 of

2005 in Crl. O.P. No.23354 of 2005 for extension of time,

by a further period of six months, for completion of

investigation in Crime No.54 of 2005.

14. On 22-09-2005 respondent Nos.2 to 13 filed Crl.

O.P. 27039 of 2005 under Section 482 Cr.P.C. in the High

Court for quashing FIR No. 54 of 2005 alleging that the

allegations in the complaint did not prima facie make out

the offences for which the respondents had been

charged.

15.The respondent State filed its counter affidavit to

the aforesaid application under Section 482 Cr.P.C. and

prayed that the said application be dismissed. In the

affidavit in opposition, it was contended that

investigation revealed that the accused persons had

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forged documents using blank letter head, papers and

cheque leaves of the appellant given to him before

entering into business transactions. As such ingredients

of Sections 468, 471, 420, 409 and 120 (b) IPC were to

be found. Furthermore, there was evidence that one of

the accused mentioned in the FIR namely Prasanna

Chakravarthy had deposed about the forged letter

prepared by him on the instruction of Kasi Viswanathan,

Meiyappan, Rajarathinam, and Jayapal.

16.On 18-10-2005, the appellant, as a de facto

complainant, filed an application numbered Crl.M.P.

No.8370 of 2005 for intervention in Crl. O. P.

No.27039/2005.

17.By an order dated 24-11-2005, the High Court

granted the police six months’ time for completing the

investigation in FIR No.54 of 2005 and for filing final

report therein.

18.On 30-11-2005, the High Court referred the matter

to the Conciliation and Mediation Centre for resolution of

the dispute between the parties, in the absence of the

appellant, being the complainant.

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19.The appellant opposed the conciliation proceedings

contending that the offences were non-compoundable

whereupon the case was again referred back to the High

Court for decision on merits.

20.By the impugned order dated 20-03-2006, the High

Court allowed the application under Section 482 Cr.P.C.

observing that the complainant had, without assigning

any reason, withdrawn the first complaint and launched

prosecution by filing a fresh complaint; that the

complaint arose out of a commercial transaction; and

that the complainant would have to approach the Civil

Court for recovering dues if at all arising out of

commercial transaction.

21.The short question in this appeal is whether the

High Court should have quashed the criminal

proceedings being Crime No.54 of 2005 on the grounds

that the appellant had withdrawn an earlier complaint

without assigning reasons; the transactions being

commercial in nature, the ingredients of an offence

under the Sections referred to above were absent; and

that the remedy of the appellant lay in filing a civil suit.

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22.There is no provision in the Criminal Procedure Code

or any other statute which debars a complainant from

making a second complaint on the same allegations,

when the first complaint did not lead to conviction,

acquittal or discharge. In Shiv Shankar Singh v. State

of Bihar and Anr.

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, this Court held:

“18. Thus, it is evident that the law does not

prohibit filing or entertaining of the second

complaint even on the same facts provided the

earlier complaint has been decided on the basis of

insufficient material or the order has been passed

without understanding the nature of the complaint

or the complete facts could not be placed before

the court or where the complainant came to know

certain facts after disposal of the first complaint

which could have tilted the balance in his favour.

However, the second complaint would not be

maintainable wherein the earlier complaint has

been disposed of on full consideration of the case of

the complainant on merit.”

23.As held by this Court in Jatinder Singh and

Others v. Ranjit Kaur

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, it is only when a complaint is

dismissed on merits after an inquiry, that a second

complaint cannot be made on the same facts. Maybe, as

contended by the respondents, the first complaint was

withdrawn without assigning any reason. However, that

in itself is no ground to quash a second complaint.

1 (2012) 1 SCC 130

2 2001 (2) SCC 570

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24.In Pramatha Nath Talukdar and Anr. v. Saroj

Ranjan Sarkar

3

, this Court dealt with the question

whether the second complaint by the respondent should

have been entertained when the previous complaint had

been withdrawn. The application under Section 482

Cr.P.C. was allowed and the complaint dismissed by the

majority Judges observing that an order of dismissal

under Section 203 Cr.P.C. was no bar to the

entertainment of second complaint on the same facts,

but it could be entertained only in exceptional

circumstances, for example, where the previous order

was passed on an incomplete record or a

misunderstanding of the nature of the complaint or the

order passed was manifestly absurd, unjust or foolish or

where there were new facts, which could not, with

reasonable diligence, have been brought on record in

previous proceedings.

25.In Poonam Chand Jain and Anr. v. Fazru

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, this

Court relied upon its earlier decision in Pramatha Nath

(supra) and held that an order of dismissal of a complaint

was no bar to the entertainment of second complaint on

3 AIR 1962 SC 876

4 (2010) 2 SCC 631

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the same facts, but it could be entertained only in

exceptional circumstances, such as, where the previous

order was passed on incomplete record, or on a

misunderstanding of the nature of the complaint or was

manifestly absurd, unjust or foolish or where there were

new facts which could not, with reasonable diligence,

have been brought on the record in the previous

proceedings.

26.In Poonam Chand Jain (supra) this Court further

held that:-

“...this question again came up for consideration

before this Court in Jatinder Singh v. Ranjit Kaur.

There also this Court by relying on the principle in

Pramatha Nath held that there is no provisions in

the Code or in any other statute which debars a

complainant from filing a second complaint on the

same allegation as in the first complaint. But this

Court added when a Magistrate conducts an

enquiry under Section 202 of the Code and

dismisses a complaint on merits a second

complaint on the same facts could not be made

unless there are “exceptional cirumstances”. This

Court held in para 12, if the dismissal of the first

complainant then there is no bar in filing a second

complaint on the same facts. However, if the

dismissal of the complaint under Section 203 of the

Code was on merit the position will be different.”

27.In M/s Jayant Vitamins Ltd. v. Chaitanyakumar

and Another

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this Court held that in the absence of

5 (1992) 4 SCC 15

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compelling and justifiable reasons, it was not

permissible for the Court to stop investigation by

quashing an FIR.

28.In Zandu Pharmaceutical Works Limited and

Ors v. Mohd. Sharaful Haque and Another

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this

Court referred to State of Haryana and Ors. v.

Bhajan Lal and Ors.

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and summarized and illustrated

the category of cases in which power under Section 482

of the Criminal Procedure Code could be exercised. This

court observed and held:-

"(1) Where the allegations made in the first

information report or the complaint, even if they are

taken at their face value and accepted in their

entirety do not prima facie constitute any offence or

make out a case against the accused.

(2) Where the allegations in the first information

report and other materials, if any, accompanying

the FIR do not disclose a cognizable offence,

justifying an investigation by police officers under

Section 156(1) of the Code except under an order of

a Magistrate within the purview of Section 155(2) of

the Code.

(3) Where the uncontroverted allegations made in

the FIR or complaint and the evidence collected in

support of the same do not disclose the commission

of any offence and make out a case against the

accused.

(4) Where the allegations in the FIR do not

constitute a cognizable offence but constitute only

6 2005 (1) SCC 122

7 (1992) Supp. 1 SCC 335

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a non-cognizable offence, no investigation is

permitted by a police officer without an order of a

Magistrate as contemplated under Section 155(2) of

the Code.

(5) Where the allegations made in the FIR or

complaint are so absurd and inherently improbable

on the basis of which no prudent person can ever

reach a just conclusion that there is sufficient

ground for proceeding against the accused.

(6) Where there is an express legal bar engrafted in

any of the provisions of the Code or the Act

concerned (under which a criminal proceeding is

instituted) to the institution and continuance of the

proceedings and/or where there is a specific

provision in the Code or Act concerned, providing

efficacious redress for the grievance of the

aggrieved party.

(7) Where a criminal proceeding is manifestly

attended with mala fide and/or where the

proceeding is maliciously instituted with an ulterior

motive for wreaking vengeance on the accused and

with a view to spite him due to private and personal

grudge."

29.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 Mridaya Ranjan Prasad Verma and Ors. v.

State of Bihar and Anr.

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, the distinction between mere

breach of contract and cheating, which is a criminal

offence, is a fine one. While breach of contract cannot

give rise to criminal prosecution for cheating, fraudulent or

8 (2000) 4 SCC 168

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dishonest intention is the basis of the offence of cheating.

In this case, in the FIR, there were allegations of

fraudulent and dishonest intention including allegations of

fabrication of documents, the correctness or otherwise

whereof can be determined only during trial when

evidence is adduced.

30.Exercise of the inherent power of the High Court

under Section 482 of the Criminal Procedure Code would

depend on the facts and circumstances of each case. It is

neither proper nor permissible for the Court to lay down

any straitjacket formula for regulating the inherent power

of the High Court under Section 482 of the Cr.P.C.

31.Power under Section 482 Cr.P.C. might be exercised

to prevent abuse of the process of law, but only when, the

allegations, even if true, would not constitute an offence

and/or were frivolous and vexatious on their face.

32.Where the accused seeks quashing of the FIR,

invoking inherent jurisdiction of the High Court, it is wholly

impermissible for the High Court to enter into the factual

arena to adjudge the correctness of the allegations in the

complaint. Reference may be made to the decision of this

Court, inter alia, in State of Punjab v. Subhash Kumar

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and Ors.

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and Janata Dal v. H.S. Chowdhary and

Ors.

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33.In Vesa Holdings (P) Ltd. and Anr. v. State of

Kerala and Ors.

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, this Court observed:

“12. The settled proposition of law is 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.”

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 a ground to quash

a criminal proceeding. The real test is whether the

allegations in the complaint disclose the criminal

offence of cheating or not.”

34.In Vesa Holding (P) Ltd. (supra), this Court found

that there was nothing to show that at the very inception

there was any intention on behalf of the accused persons

to cheat, which was a condition precedent for an offence

under Section 420 IPC. The complaint was found not to

disclose any criminal offence at all.

35.It is well settled that a judgment is a precedent for

the issue of law which is raised and decided. Phrases and

sentences in a judgment are to be understood in the

context of the facts and circumstances of the case and

9 (2004) 13 SCC 437

10 (1992) 4 SCC 305

11(2015) 8 SCC 293

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the same cannot be read in isolation.

36.As observed above, every breach of contract does

not give rise to an offence of cheating. The language and

tenor of Vesa Holdings (P) Ltd. (supra), particularly,

the observation that breach of contract would give rise to

an offence of cheating only in those cases where there

was any deception played at the very inception, is to be

understood in the context of the facts of that case and

accordingly construed. The phrase “in those cases where

there was any deception played at the very inception”

cannot be read out of context. This is not a case of

breach of contract simplicitor but there are serious

allegations of forgery of documents, use of blank letter-

head, papers and cheque leaves of the appellant.

37.In this case, it cannot be said that there were no

allegations which prima facie constitute ingredients of

offences under Sections 420, 409 and 34 of the Indian

Penal Code in complaint. There were clear allegations of

fraud and cheating which prima facie constitute offences

under Section 420 of the Indian Penal Code. The

correctness of the allegations can be adjudged only at the

trial when evidence is adduced. At this stage, it was not

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for the High Court to enter into factual arena and decide

whether the allegations were correct or whether the same

were a counter-blast to any proceedings initiated by the

respondents.

38.In Jatinder Singh (supra), this Court clearly held

that if dismissal of the complaint was not on merit, but on

default of the complainant, moving the Magistrate again

with a second complaint on the same facts is

maintainable. But if the dismissal of the complaint under

Section 203 of the Code was on merits, the position could

be different.

39.The failure to mention the first complaint in the

subsequent one is also inconsequential as held, in effect,

in Jatinder Singh (supra). Mentioning of reasons for

withdrawal of an earlier complaint is also not a condition

precedent for maintaining a second complaint. In our

considered opinion, the High Court clearly erred in law in

dismissing the complaint, which certainly disclosed an

offence prima facie. At the cost of repetition, it is

reiterated that it was not for the High Court to enter the

factual arena and adjudicate the merits of the allegations.

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40. The appeal is, therefore, allowed and the impugned

order of the High Court quashing the complaint is set

aside. The first respondent shall proceed with further

investigation in accordance with law.

.................................J.

(R. BANUMATHI)

.................................J.

(INDIRA BANERJEE)

NEW DELHI

DECEMBER 14, 2018