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Karam Chand Thaper v. T.G. Vasanth Gupta - Crl.R.C. 460 of 1993  RD-TN 417 (1 July 2002)
IN THE HIGH COURT OF JUDICATURE AT MADRAS
THE HONOURABLE MR. JUSTICE A.K. RAJAN
Crl.R.C. 460 of 1993
Karam Chand Thaper
& Brothes (Coal Sales)Ltd.,
rep. by its Deputy General Manager .. Petitioner vs.
T.G. Vasanth Gupta .. Respondent This Criminal Revision Petition is filed against the judgment dated 26.3.1993 in C.C.7287 of 1990 passed by VII Metropolitan Magistrate, George Town, Madras-600001, as stated therein.
For Petitioner : Mr. K.Asokan,
for M/s. Rangarajan
For Respondent : Mr. V.T.Narendiran
:O R D E R
This revision is against acquittal.
2. The petitioner was the complainant before the lower Court. He preferred a complaint, under Section 420 I.P.C. against the respondent. The complainant is a firm dealing in papers and the accused is the Managing Director of M/s. Sree Royalaseema Paper Mills Limited who appointed the complainant as the dealer of M/s. Sree Royalaseema Paper Mills Limited. The complainant had paid more than Rs.one crore as advance to M/s. Sree Royalaseema Paper Mills Limited. But they received supply only to the value of Rs.36 lakhs. In July, 1989, the General Manager (Marketing) of M/s. Sree Royalaseema Paper Mills, Mr. Kamesan came to the office of the complainant at Madras and represented that they would supply 300 tonnes of paper by August, 1989. This was confirmed by the respondent through telephone and thereby the respondent induced the complainant to part with a further sum of Rs.40 lakhs. Thereafter, it was known to the complainant that M/s. Sree Royalaseema Paper Mills had already approached B.I.F.R. in July 1989 to declare it as a sick unit. But this fact was concealed by the respondent when he induced the complainant to part with Rs.40 lakhs.
3. Therefore, a private complaint was filed by the complainant; Four witnesses were examined on behalf of the complainant. No witness was examined by the respondent. At that time, on the request of the counsel appearing for the respondent, the Magistrate heard the arguments and found that no prima facie case was made out and hence, discharged the accused. Against that order of discharge under Section 245 Cr.P.C., this revision has been filed.
4. The learned senior counsel Mr. Ashokan, appearing for the complainant submitted that in cases instituted otherwise than on police report, that is, in the case of private complaint, the procedure that is to be followed is the procedure as laid down under Sections 244 to 24 7 Cr.P.C. In any warrant case instituted on a police report, the Magistrate may discharge the accused under Section 239 Cr.P.C., if he finds that the charges made against the accused are "groundless". In the case triable by Court of Sessions, the accused shall be discharged by the Sessions Judge on consideration of the records, if the Sessions Judge considers that there is "no sufficient ground" to proceed against the accused. In so far as the cases instituted otherwise than on police report and where warrant procedure is to be followed, the accused shall be discharged under Section 245(1) Cr.P.C. if upon taking all the evidence, the Magistrate considers, for reasons to be recorded,
"that no case against the accused has been made out which, if unrebutted, would warrant his conviction, the Magistrate shall discharge him. " Nothing in Section 245 (1) prevents the Magistrate from discharging the accused, if for reasons to be recorded, he considers that no case against the accused has been made out. In this case, the Magistrate has not acted according to sub-section 2 of Section 245 Cr.P.C. The Magistrate has passed an order exercising the power under Section 245 (1) Cr.P.C. Only if the Magistrate comes to the conclusion that no case against the accused has been made out, he can discharge the accused. On the other hand, if the evidence already recorded goes unrebutted would warrant a conviction, the Magistrate cannot discharge the accused. From the evidence of the witnesses examined on behalf of the complainant, it cannot be said that it does not warrant a conviction of the accused when the evidence remains unrebutted. Therefore, the order of discharge passed by the is invalid as the Magistrate exceeded his power. It is beyond the scope of Section 245(1) to discharge the accused at this stage. In support of his contention, the learned counsel for revision petitioner relied upon a decision in R.S. Nayak v. A.R. Antulay and another (1986, Supreme Court Cases (Criminal) 25 6. The Supreme Court in that case held as follows:
" ...there is no scope for doubt that the stage at which the Magistrate is required to consider the question of framing of charge under Section 245 (1) is a preliminary one and the test of "prima facie" case has to be applied. In spite of the difference in the language of the three sections, the legal position is that if the trial Court is satisfied that a prima facie case is made out, charge has to be framed."
Therefore, the counsel for the revision petitioner argued that the Magistrate has to apply only the test of "prima facie case." But the Magistrate has weighed the evidence and gave a finding; Such a procedure is not contemplated under the Code. The Magistrate while exercising the power under Section 245 cannot do so. In Antulay's case, it is further observed, "Under the scheme of the Code, there is no scope for the accused to lead defence evidence until the prosecution is closed and the examination of the accused under Section 313 of the Code is over. " Therefore, the counsel for the revision petitioner argued that the stage of adducing rebuttal evidence has not been reached. Therefore, the evidence adduced by the prosecution has not been rebutted at that stage. Under the circumstances, if the evidence on the side of the prosecution makes out a prima facie case, then the Magistrate should not have discharged the accused, but should have framed charges.
5. The counsel also referred to the evidence adduced. The prosecution witness, P.W.1 has stated that during the month of July 1989, the General Manager, Mr. Kamesan of M/s. Sree Royalaseema Paper Mills came to their office at Chennai and stated that if they pay Rs.48 lakhs, the company was ready to supply 300 tonnes of papers. The accused/respondent on the very day confirmed through telephone that he was ready to supply 300 tonnes of paper. Believing this statement made by the respondent, the complainant sent Rs.10 lakhs on 19.7.1989, another Rs.10 lakhs on 31.7.1989, on 12.8.1989, Rs.10 lakhs, and finally on 14.8.1989, Rs.10 lakhs were sent. In all, Rs.40 lakhs was sent. Thereafter, on 17.8.1989, the complainant came to know that M/s. Sree Royalaseema Paper Mills had approached B.I.F.R., even prior to the date on which the respondent confirmed over phone; but this fact that they have approached B.I.F.R. had deliberately been concealed; had it been known to them, they would not have paid Rs.40 lakhs as further advance. When the company has approached B.I.F.R., for declaration as sick industry, the respondent should not have represented to the complainant that they are ready for despatch and enter into a sale agreement. Further, P.W.3 had stated that while Mr.Kamesan was discussing the matter, the respondent telephoned to the complainant and confirmed the statement of Mr.Kamesan. Once again, after consultation, the respondent Mr.Kamesan had represented that if they pay the advance immediately, they would supply 300 tonnes of paper. P.W.4 corroborates that evidence. P.W.4 speaks that the respondent spoke to him over phone while Mr.Kamesan was discussing at Chennai. From the evidence of P.Ws.1 to 4, a prima facie case is made out.
6. Under the circumstances, in the absence of any cross-examination of these witnesses, the Magistrate has no authority to assess the evidence and pass a judgment that no offence was made out and discharge the accused. As held by the Supreme Court in the case of Mahant Abhey Dass v. S.Gurdial Singh (1971 S.C.C.(Criminal) 244),
" Of course, it is another matter, if the allegations are ultimately proved not to be true. "
Therefore, whether ultimately the accused could be convicted or not, is not a matter for consideration at the initial stage where the Court has only to see whether prima facie case was made out. In BSI Limited v. Gift Holdings Private Limited (2000 S.C.C. (Criminal) 538), the Supreme Court held that the ban under Section 22(1) against maintainability of "suit" for recovery of money would not cover prosecution proceedings for the offence under Section 138 of the Negotiable Instruments Act. Therefore, the fact that this company is now under B.I. F.R. does not prohibit prosecution being launched against it. Another case in Kusum Ingots & Alloys Limited v. Pennar Peterson Securities Limited (2000 Supreme Court Cases (Criminal) 546) is also to that effect.
7. The counsel for the respondent argued that since the company has not been added as an accused, the Managing Director alone cannot be an accused. To this, the revision petitioner replied what is complained against the respondent is the offence of cheating which requires a mental element. A corporate body cannot have a mental status. Further, the complaint by the complainant is only against the misrepresentation made dishonestly by the Managing Director who is the respondent herein. Therefore, non-inclusion of the company as an accused does not affect the case of the petitioner. This argument of the counsel for the revision petitioner is acceptable. It is a case of dishonest representation made by the Managing Director and hence, company need not be an accused.
8. The counsel appearing for the respondent submitted that since the offence alleged under Section 420 I.P.C. which requires proof of mens rea, but the complaint does not disclose any mens rea; therefore, the offence under Section 420 I.P.C. cannot be said to have been made out by the complainant. The counsel for the respondent further submitted that between the respondent and the complainant, there is a running account for more than one year and therefore, the question of mens rea or cheating cannot be made out. The counsel appearing for the revision petitioner replied that the offence of cheating is confined only to the representation made in July 1989 after which date they parted with Rs.40 lakhs on four different dates. The complaint is not against the earlier advances paid by the complainant, but it is restricted only to the representation made in pursuance of which Rs.40 lakhs was sent. Counsel for the respondent further submitted that the respondent did not get any benefit personally by such representation. Even assuming that the company applied for B.I.F.R., there is no legal requirement that they must inform the fact that they approached to B.I.F.R. to all its creditors. Therefore, the offence under Section 420 I.P.C. is not made out against the respondent. Further, there was no intention at all of cheating or deceiving the complainant. In support of his argument, he referred to Ex.P.12, a letter dated 17.11.1989 written by the respondent to the complainant whereby, they informed the fact that they approached B.I.F.R. Further, he referred to Ex.P.13 which proves that M/s. Sree Royalaseema Paper Mills made supply even after their application to B.I.F.R. Therefore, it is purely a business transaction between the parties and gives rise only to a civil liability. Therefore, no criminal prosecution can be initiated against the respondent. In support of his contention, he relied upon the decision in State of Kerala v. A.P. Pillai (A.I.R. 1973, Supreme Court 326), wherein it was held that, "To hold a person guilty of the offences of cheating, it has to be shown that his intention was dishonest at the time of making the promise. Such a dishonest intention cannot be inferred from the mere fact that he could not subsequently fulfil the promise."
Therefore, the counsel submitted that the mere fact that M/s. Sree Royalaseema Paper Mills could not fulfil the promise by itself does not amount to an offence of cheating, punishable under Section 420 I.P. C. Further, the learned counsel relies upon a decision in Hridaya Ranjan Pd. Verma & Others v. State of Bihar & Another (2000 (2) Crimes 72 (SC), where the Supreme Court has held,
" Mere breach of contract cannot give rise to criminal prosecution for cheating unless fraudulent or dishonest intention is shown right at the beginning of the transaction,.....it is necessary to show that he had fraudulent or dishonest intention at the time of making the promise. " Therefore, the counsel for the respondent submitted that the learned Magistrate was right in discharging the respondent herein as no case was made out.
9. The case of the complainant is that, but for the representation made when Mr.Kamesan came to Madras and but for the confirmation made by the respondent over phone during the conversation between Mr. Kamesan and the representative of the complainant, the complainant would not have parted with Rs.40 lakhs of rupees. Had the fact that M/s. Sree Royalaseema Paper Mills already petitioned for a scheme to B.I.F. R., was known, they would not have given Rs.40 lakhs of money, knowing full well that the company is already a sick company. Therefore, the respondent induced the complainant falsely representing that they can supply 300 tonnes of paper concealing the fact that the company has already applied for B.I.F.R. for a declaration that it is a sick company; that made the complainant to part with Rs.40 lakhs. The concealing of the fact is a misrepresentation and falsehood within the meaning of cheating under Section 420 I.P.C. Therefore, the act of the respondent in concealing the fact that it is a sick company and thereby inducing the complainant to part with the money amounts to offence punishable under Section 420 I.P.C. In the absence of any rebuttable evidence and in the absence of any cross-examination of the witnesses already examined by the prosecution, each and every word that is spoken to by P.Ws.1 to 4 has to be taken as evidence.
10. A reading of the evidence of P.Ws.1 to 4 clearly makes a prima facie case against the respondent. If this evidence remains unrebutted, a conviction can be sustained. The mere fact that ultimately the accused may be acquitted is not a ground to discharge the accused exercising the power under Section 245(1) Cr.P.C. Therefore, at that stage, the Magistrate has no power to assess the evidence and pass a judgment. Therefore, the act of the Magistrate in assessing the evidence and rendering a judgment holding that some evidence cannot be believed in the absence of corroborative evidence. The Magistrate has no right to conclude, especially in the absence of cross-examination that there was no whisper of any telephone call either by P.W.3 or P.W.1 and to hold that absolutely there is no proof to say that the accused made any such promise; such a conclusion can be arrived at only after cross-examining the witness or examining the defence witnesses; that is by way of rebuttal evidence. Therefore, before adducing rebuttal evidence, the Court has to take the evidence on record as a whole. It cannot doubt the statement made in evidence. Therefore, applying the test laid down by the Supreme Court in Antulay's case, the power of the Magistrate under Section 245(1) is only to see whether a prima facie case has been made out. For that, he has to take the evidence as it is and arrive at a conclusion. Applying this test, the order passed by the Magistrate does not appear to be within the scope of Section 245(1) Cr.P.C. Therefore, the order of the Magistrate is liable to be set aside as it is not warranted for the Magistrate to weigh or assess the evidence. Therefore, the order of discharge is liable to be set aside and accordingly, it is set aside. Revision Petition is allowed. 1.7.2002
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VII Metropolitan Magistrate,
George Town, Chennai,
through the Chief Metropolitan
Magistrate, Egmore, Chennai.
A.K. RAJAN, J.
Crl.R.C.460 of 1993
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