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AJAY UBEROI & ANR versus STATE OF HARYANA

High Court of Punjab and Haryana, Chandigarh

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Ajay Uberoi & Anr v. State of Haryana - CM-755-M-1995 [2006] RD-P&H 3171 (16 May 2006)

Crl.Misc.No.755-M of 1995 1

IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH.

CRL.MISC.NO.755-M OF 1995

DATE OF DECISION: DECEMBER 21, 2005.

Ajay Uberoi and another ......Petitioners VERSUS

State of Haryana ......Respondent

CORAM : HON'BLE MR.JUSTICE RAJIVE BHALLA.
Present : Mr.H.N. Mehtani,Advocate for the petitioner.

Mr.Ajay Ghanghas, Deputy Advocate General, Haryana.

....

JUDGEMENT :

Prayer in this petition filed under Section 482 of Cr.P.C. is for quashing of the FIR No.217 dated 23.5.1994 registered under Sections 418/420/421/422 and 120-B IPC at Police Station City, Sonepat.

This petition came up for hearing on 25.9.2002. On a statement made by the State of Haryana, that challan had been presented on 30.5.1995 and charges framed on 30.2.1996, this petition was dismissed on 25.9.2002.

Aggrieved by the aforementioned order, the petitioners filed Crl.Appeal No.1125 of 2003 before the Hon'ble Supreme Court of India. Vide order dated 8.9.2003, the case was remitted to the High Court for a decision afresh, as it was noticed that charges had not been framed.

A brief narrative of the facts would be appropriate.

Pursuant to the enactment of the Haryana Minerals (Vesting of Rights) Act, 1973, minor minerals vested in the State. The Government, invited bids for extraction of sand from the Murthal Zone. Petitioner no.2 preferred a bid on behalf of M/s Himgiri Minerals. The contract to extract sand was awarded to them. An agreement, in Form `L' was executed between M/s Himgiri Minerals and the Government, permitting M/s Himgiri Minerals to mine sand in Murthal Zone upon payment of Rs.84,000/- p.m. Clause 17 of the agreement empowered the Government to recover any amount, due to it as Crl.Misc.No.755-M of 1995 2

arrears of land revenue. The petitioner was awarded a contract for extraction of minor minerals (sand)from within "Murthal zone". They were prevented from extracting sand, by the land owners, as they demanded compensation from the Government before sand was extracted. The petitioners lodged a protest with the Mining Officer, Sonepat informing him of the aforementioned fact. The petitioners were assured that the matter would be resolved. Relying upon this assurance, the petitioners paid instalments upto August 1984. However, thereafter, as the petitioners were still prevented from extracting sand, they stopped payment, of the contracted amount and brought the aforementioned facts to the notice of Mining Officer, Sonepat, vide letter dated 13.8.1984. The respondents, thereafter, cancelled the contract in September/October 1985 and raised a demand, upon the petitioners, for payment of the balance contracted amount. A recovery certificate was issued to recover the amount, as arrears of land revenue. The Collector, Sonepat, forwarded the recovery certificate to the Collector Ghaziabad, for enforcement. Land, building, plant and machinery belonging to M/s Cleamax (India) Pvt. Ltd., were attached and proclamation for sale issued. The petitioners filed a writ petition in the Hon'ble High Court at Allahabad. The writ petition was disposed of on 28.10.1989 and the following order was passed :-

"Heard the learned counsel for the petitioner.

The learned counsel for the petitioner contends that nothing is due against the petitioner and the respondents are trying to harass the petitioner by attaching its property and taking other coercive measures. We think that the authorities cannot be so unreasonable in proceeding against the petitioner. However, if the contentions raised by the petitioner are correct and nothing is due against the petitioner, the authorities shall not harass the petitioner or attach the property of the petitioner or attach the property of the petitioner or take any coercive measure against the Crl.Misc.No.755-M of 1995 3

petitioner.

With the above observations, the petition is finally disposed of." After the aforementioned order, the Collector, Sonepat, recalled the recovery certificates, from the Collector, Ghaziabad. Thereafter, on 24.3.1994, nine years after the alleged cancellation of the contract, the Mines Officer lodged the present FIR, which is reproduced hereunder : "From :

Mining Officer,

Department of Mines and Geology,

Sonepat.

To

The Superintendent of Police,]

Sonepat.

S.No.163 dated 24.3.1994.

Subject : Non-payment of Govt.dues by Shri Ajay Oberoi s/o Shri Surendra Nath Obaroi 213-A, Rajouri Garden, New Delhi through cheating and deceitful means.

Shri Ajay Oberoi s/o Sri S.H.Oberoi, Proprietor Himgiri Minerals obtained contract for the quarrying of sand in Murthal Zone in the public auction held on 6.4.1984, for Rs.100,8000/- per year for the period from 5.5.1984 to 31.3.1989.

In relation to this contract, an agreement, on non-judicial stamp paper of Rs.15120/- was also executed. As per the agreement, enclosed, the contractor was obliged to deposit Rs.84,000/- per month on the Ist day of the month as provided in the terms and conditions thereof.

The contractor was operating the mines

continuously. And for some time, he deposited the amount, but later on he stopped making payment of the contract money. The Director of Industries, U/s 16 of the contract, issued notice to the contractor for depositing Rs.7.76,800/- for the period 1.9.84 to 1.12.84. As a result of the failure of the contractor to deposit the demanded sum, the contract was cancelled. This department was Crl.Misc.No.755-M of 1995 4

to recover Rs.9,60,000/- by way of contract money and Rs.59,940/- by way of interest thereon, accrued upto the date of recession of the contract. Repeated notices were issued to the contractor for depositing this amount. But the contractor did not deposit any sum and instead changed his place of residence.

This department issued recovery certificates for execution against the contractor for recovery of the monies, to collector, Delhi and Collector, Ghaziabad, but the amount could not be recovered and the contractor succeeding in avoiding the recovery by changing his place of residence. Registered notices issued by this Office for service upon the contractor at the address given in the agreement were returned un-served. Inspite of all efforts, this office, because of deceitful tactics adopted by the contractor, Ajay Oberoi could not succeed in recovering the aforesaid amount. Sri S.N. Oberoi s/o Sri D.C. Oberoi who is father of Sri Ajay Oberoi, was also a party in this deceitful method, because it was he who had signed, as representative of Himgiri Minerals at the time of biding, and also witnessed for Sri Ajay Oberoi and Sri S.N.Oberoi s/o Sri D.C. Oberoi by deceitful means, have mis-appropriated government money which including the interest comes to about Rupees 20,38,240/-. You are, therefore, requested to take action against Sri Ajay Oberoi s/o Sri Surendra Nath Oberoi and Sri Surendra Nath Oberoi s/o Sri D.C. Oberoi, for causing loss by deceitful means to Department of Industries and Mines and Geology Department,Haryana. According to the information of this office, One factory of Sri Surendra Nath Oberoi under the name and style of M/s Cleamax India, is situated at plot No.22, Industrial Area, Meerut Road, Ghaziabad. This office has also got information that Sri Ajay Oberoi is residing with his father Sri Surendra Nath Oberoi at S.57, Paschim Vihar, New Delhi, This complaint has been lodged by the Director, Mines and Geology Crl.Misc.No.755-M of 1995 5

Department.

Sd/-

N.N. MONGA, MINES OFFICER

DATED : 24.3.1994

Mines and Geology Department

through Distt. Industries Centre, Sonepat A copy of the above is forwarded to the Director, Mines and Geology Department, Haryana, Chandigarh for information.

Sd/-

Mines Officer, Mines and Geology

Department, Sonepat."

Counsel for the petitioner contends that a perusal of the facts, narrated hereinbefore, particularly the facts narrated in the FIR, and the pleadings in the written statement, do not disclose the commission of an offence. Even if, the facts narrated in the FIR are accepted to be true, they disclose a civil dispute, arising from the alleged breach of a contract. The FIR specifically recounts the failure of the petitioners to pay monthly lease money.

The petitioners are accused of violating the terms and conditions of the contract, by failing to pay the amount due, thus, disclosing a civil dispute. The failure of the petitioners to pay the contracted amount, can in no circumstance, be categorised as an an offence under Section 420 of the Indian Penal Code.

Even otherwise, the petitioners were justified in declining to pay, as they were prevented from extracting sand, and the Government failed to redress their grievances, thus, leading to a frustration of the contract.

It is further contended that, as per Clause 17 of the contract, the Government was empowered to effect recovery, of any amounts, due from the petitioners, as arrears of land revenue. In exercise of these powers, the Collector, Sonepat, issued a recovery certificate, which was forwarded to the Collector, Ghaziabad for execution. Properties belonging to M/s Cleamax (India) Pvt.Ltd., were attached but subsequently withdrawn and the recovery certificates not proceeded any further. The failure of the government to recover amounts from the petitioner, cannot be cause sufficient to alter the nature of the dispute and lodge an FIR, 10 years after the execution of the contract.

The last argument raised by the counsel for the petitioners is that Crl.Misc.No.755-M of 1995 6

after the respondent exhausted its civil remedy and were unable to recover any amount from the petitioners, they lodged the FIR, in order to exert pressure on the petitioners that also 9 years after the alleged breach of contract.

Counsel for the petitioner has placed reliance upon the following judgements :-

Trilok Singh and others V. Satya Deo Tripathi, AIR 1979 S.C.

850, Suresh V. Mahadevappa Shivappa Danannava and another, 2005(2) RCR 29, S.P. Bajaj V. State of Haryana, 2003(1) RCR (Criminal) 583, Hridaya Ranjan Pd. Verma and others V. State of Bihar and another, 2000 (2) RCR (Criminal) 484, Alpic Finance Ltd. V. P. Sadasivan, 2001(1) RCR (Criminal) 756, Sardar Amrik Singh V. State of Uttar Pradesh, 2002(4) RCR (Criminal) 131, U.Dhar V. State of Jharkhand, 2003(2) RCR (Criminal) 659, Rameshwar Dass Garg and others V. Punjab National Bank, 2003(3) RCR (Criminal) 171, Basanteshwari Prasad V. State of Jharkhand, 2003(3) RCR (Criminal) 696, Lala Ram V. State of Rajasthan 2003(4) RCR (Criminal) 796.

Counsel for the respondent, on the other hand contends that a perusal of the FIR, discloses the commission of an offence by the petitioners.

At the time of auction, S.N. Oberoi petitioner no.2 signed the bid sheet on behalf of the firm. A sum of Rs.2,52,000/- i.e. 25% of the bid amount and Rs.84,000/- as a monthly instalment was deposited by him. The bid was accepted and the mining contract awarded. An agreement and Form `L' was executed between M/s Himgiri Minerals and State of Haryana for the period commencing 5.5.1984 and expiring on 31.3.1989. Petitioner no.1 Ajay Oberoi signed the agreement as a sole proprietor of M/s Himgiri Minerals and petitioner no.2 signed as a witness. As the petitioners failed to pay the contract money, notice under Clause 16 of the agreement was issued on 21.12.1984, requiring them to deposit a sum of Rs.5,76,800/-, failing which the contract would be terminated and the security forfeited. Despite the aforementioned notice, the petitioners failed to pay the instalments due and the contract was terminated on 1.5.1985. The possession of the Murthal Sand Zone was taken back from the petitioner on 25.5.1985 and, therefore, an amount of Rs.10,19,940/- alongwith Crl.Misc.No.755-M of 1995 7

interest @12% p.a., on delayed payment, was recoverable from the petitioners.

Aggrieved by the order of termination, the petitioner filed an appeal under Rule 47 of the Punjab Minor Minerals Concession Rules, 1964, which was dismissed on 6.8.1985. It is, thus, contended that petitioners no.1 and 2 hatched a conspiracy to deprive the Government of its legitimate dues, payable under the contract. The petitioners are, therefore, guilty of committing an offence under Sections 418,420,421,422 read with Section 120-B of IPC. It is further contended that the petitioners after deriving full benefit from the contract, failed to pay the contracted amount and evaded its payment by acting in a deceitful manner and, thus, are guilty. It is, however, not denied that proceedings for recovery of the contract amount were initiated against the petitioners. It is, however, alleged that as the petitioners continued to change their residence, they could not be traced. The last argument raised by the counsel for the respondent is that as the final report has been filed under Section 173 of the Cr.P.C., this Court should not quash the FIR and the proceedings emanating therefrom in view of judgment of the Hon'ble Supreme Court reported as State of Bihar and another Vs. P.P.Sharma and another, JT 1991(2) SC 147.

I have heard learned counsel for the parties and perused the record.

Before proceeding to adjudicate the matter in hand,it would be appropriate to examine the law obtaining on the present controversy. It would be appropriate to refer a judgement of the Hon'ble Supreme Court, reported as Hridaya Ranjan Prasad Verma and others V. State of Bihar and another, 2002(2) RCR (Crl.) 484, wherein the distinction between a breach of contract and the offence of cheating has been set out, relevant extract of which reads as follows :-

"In determining the question it has to be kept in mind that the distinction between mere breach of contract and the offence of cheating is a fine one. It depends upon the intention of the accused at the time of inducement which may be judged by his subsequent conduct but for this subsequent conduct is not the Crl.Misc.No.755-M of 1995 8

sole test. 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, that is the time when the offence is said to have been committed. Therefore, it is the intention which is the gist of the offence. To hold a person guilty of cheating it is necessary to show that he had fraudulent or dishonest intention at the time of making the promise. From his mere failure to keep up promise subsequently such a culpable intention right at the beginning that is, when he made the promise cannot be presumed."

Another judgement namely; G.V. Rao V. L.H.V. Prasad and others, 2000(2) RCR (Crl.) 290, by the Hon'ble Supreme Court of India, may also be referred to. Relevant extract of which reads as follows :- "This part speaks of intentional deception which must be intended not only to induce the person deceived to do or omit to do something but also to cause damage or harm to that person in body, mind, reputation or property. The intentional deception presupposes the existence of a dominant motive of the person making the inducement. Such inducement should have led the person deceived or induced to do or omit to do anything which he would not have done or omitted to do if he were not deceived. The further requirement is that such act or omission should have caused damage or harm to body, mind, reputation or property.

As mentioned above, Section 415 has two parts.

While in the first part, the person must "dishonestly" or "fraudulently" induce the complainant to deliver any property; in the second part, the person should intentionally induce the complainant to do or omit to do a thing. That is to say, in the first part, inducement must be dishonest or fraudulent. In the second part, the inducement should be intentional. As observed by this Crl.Misc.No.755-M of 1995 9

Court in Jaswantrai Manilal Akhaney V. State of Bombay, AIR 1956 SC 575 Crl. L.J. 1611:1956 SCR 483, a guilty intention is an essential ingredient of the offence of cheating. In order, therefore, to secure conviction of a person for the offence of cheating, "mens rea" on the part of that person, must be established. It was also observed in Mahadeo Prasad V. State of West Bengal, AIR 1954 SC 724 : 1954 Cr.L.J. 1806, that in order to constitute the offence of cheating, the intention to deceive should be in existence at the time when the inducement was offered."

Thus, in order to prima facie establish the ingredients of an offence of cheating, as distinguished from a mere breach of contract the complainant is required to prima facie establish : i) The accused has dishonestly or fraudulently induced the complainant to deliver any property.

ii) The accused has intentionally induced the complainant to do or omit to do a thing.

iii) Inducement must be dishonest or fraudulent and intentional, and should be in existence at the time when inducement was offered i.e. at the inception of the transaction;

iv) A guilty intention is an essential ingredient of the offence of cheating.

v) Mens rea on the part of accused must be established.

A perusal of the facts, narrated hereinbefore, particularly the facts pleaded in the FIR and the written statement, in my considered opinion do not reveal the commission of any offence, much less a prima facie offence of cheating.

In order to constitute an offence of cheating an essential ingredient is an intentional, dishonest inducement at the inception of the transaction. In the absence of any prima facie legal evidence, to establish or infer such intention an offence of cheating cannot be said to have been committed. The FIR and the report under Section 173 Cr.P.C. must by some Crl.Misc.No.755-M of 1995 10

legal evidence,prima facie disclose such facts as would lead to an inference of intentional dishonest inducement at the inception of the transaction. The absence of such facts or prima facie evidence would entail the quashing of the FIR and all subsequent proceedings emanating therefrom.

A careful perusal of the FIR and the written statement reveal that the primary refrain in the FIR, is the failure of the Government to recover its money and the apparent success of the petitioner in evading his alleged liability. In my considered opinion, the dispute disclosed in the FIR, as also the facts narrated therein, even if accepted to be true do not disclose the commission of any offence, under the provisions of the Indian Penal Code and merely reveal the existence of a civil dispute.

The FIR and the record are devoid of any evidence that would prima facie suggest that the petitioners harboured a guilty intention,while putting forth their bid or executing the contract. A circumstance pleaded, is the evasion by the petitioners, of their obligation to pay the contracted amount.

Another circumstance, pressed into service to prima facie establish a guilty intention is that petitioner no.2 participated in the bid but the agreement was signed by petitioner no.1. From this fact, it is sought to be argued that the petitioners harboured a dishonest/fraudulent intention at the inception of the contract. I am unable to accept the aforementioned contention. There is no bar in law and no such bar has been brought to my notice that a representative of a firm or a company cannot bid on behalf of a firm/company. The fact that petitioner no.2 participated in the bid, whereas petitioner no.1 signed the agreement would not lead to any inference of a dishonest intention. Petitioner no.1 is the sole proprietor of M/s Himgiri Minerals and, therefore, rightly signed the agreement, vide which the contract was awarded. As to how, the above acts, attributed to the petitioners would constitute an offence of cheating is beyond comprehension.

The petitioner was awarded a contract to extract sand. The petitioner failed to pay the contracted monthly money and, thereafter,the Government was unable to recover the amount despite initiation of proceedings Crl.Misc.No.755-M of 1995 11

to recover the amount as arrears of land revenue. These facts in my considered opinion are insufficient to constitute an offence of cheating. The mere fact that a person owes money to the Government, dispute's his liability and the Government is unsuccessful in recovering the alleged amounts cannot be utilised to alter a civil dispute into a criminal one. The dispute, in the present case is a civil dispute, arising from the breach of a contract. Recovery of public funds or government dues cannot be effected, by altering a civil dispute into one entailing criminal liability. Criminal proceedings have serious consequences for a person arraigned as an accused.

Furthermore, Clause 17 of the contract provides a remedy to the Government to recover any amounts due, as arrears of land revenue. The Government, in the exercise of its rights under the contract, approached the Collector, Sonepat, for issuance of a recovery certificate, which was duly issued. The property of a firm run by the petitioners was attached but subsequently, the Collector, Sonepat, at whose behest, the Collector, Ghaziabad, had ordered attachment and sale withdrew the aforementioned orders.

Another significant aspect of the matter merits notice. The violation of the contract allegedly occurred in 1984. However, the FIR was lodged on 23.5.1994, after a lapse of about ten years. During this period, the respondents availed of their remedy provided under Clause 16 of the contract, which ended in failure. The failure of the Government, to recover its dues would, in no manner, convert this civil dispute into a criminal one.

The alleged violation of the contract took place in the year 1984, whereas the FIR was lodged in the year 1994. There is no explanation forthcoming from the respondent, whether in the FIR or in the written statement for this inordinate delay, in complaining of the alleged offence committed by the petitioners.

The facts narrated herein before and the contents of the report under Section 173 of the code of Criminal Procedure as also the averments in the written statement, in my considered opinion, disclose a civil dispute. The Crl.Misc.No.755-M of 1995 12

fact that an individual owes money to the Government, would not clothe his civil default with criminal liability. If that were so, all recoveries would be converted into criminal offences. In the facts and circumstances of the present case, I am of the considered opinion that the dispute being purely civil in nature, does not prima facie disclose the commission of an offence and, thus, the present FIR and the report under Section 173 of the Code of Criminal Procedure are liable to be quashed.

Taking into consideration the aforementioned facts in their entirety, a perusal of the contents of the FIR, even if taken to be true, do not reveal any criminal culpability on the part of the petitioners.

At this stage, it would be appropriate to refer to the principles that govern the exercise of powers under Section 482 of Cr.P.C., as regards the quashing of an FIR/criminal proceedings. As laid down by the Hon'ble Supreme Court in State of Haryana V. Bhajan Lal and others, 1992 Supp. (1) SCC 335, an FIR can be quashed :

(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 officer 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 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.

Crl.Misc.No.755-M of 1995 13

(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 concerned Act (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 the concerned Act, 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.

In view of the facts of the present case and the principles of law, laid down in the judgements referred to hereinbefore, I am of the considered opinion, that the present is a fit case, in which this Court should exercise its powers under Section 482 Cr.P.C., for quashing the FIR as also all the subsequent proceedings emanating therefrom. A perusal of the allegations levelled in the FIR, even if accepted to be correct, do not constitute any prima facie offence. Furthermore, the uncontroverted allegations in the FIR, merely disclose the existence of a civil dispute, which is sought to be altered into a criminal dispute. The FIR has been lodged 10 years after the execution of the contract and more than 9 years after the alleged violation thereof. The registration of the FIR and all subsequent proceedings emanating therefrom are an abuse of the process of law and thus, are liable to be quashed.

Before parting with the judgement, it would be appropriate to notice a contention raised by the counsel for the respondent namely; that as police has submitted a final report under Section 173 of Cr.P.C., this Court should desist from exercising its powers under Section 482 of Cr.P.C. For the above contention, counsel has relied upon a judgement of the Hon'ble Supreme Court reported as State of Bihar and another Vs. P.P. Sharma and another Crl.Misc.No.755-M of 1995 14

(supra).

A perusal of the aforementioned judgement reveals that the observations of the Hon'ble Supreme Court as regards exercise of powers under Section 482 of the Cr.P.C., to quash proceedings after the filing of a report under Section 173 of the Cr.P.C., do not set down any absolute rule.

that under no circumstances can the High Court quash proceedings once a report under Section 173 of the Cr.P.C. has been filed. No such absolute rule of law is laid down in the aforementioned judgement. The powers of the High Court, under Section 482 of the Cr.P.C. are to be exercised, sparingly and depending upon the facts and circumstances of each case. The filing of a report under Section 173 of the Cr.P.C. is not necessarily a bar to the exercise of powers under Section 482 of the Cr.P.C. to quash FIR and proceedings emanating therefrom.

In view of what has been stated above, the present petition is allowed. The FIR No.217 dated 23.5.1994 registered under Sections 418/420/421/422 and 120-B of the Indian Penal Code at Police Station, Sonepat, the report under Section 173 of the Cr.P.C. and all subsequent proceedings emanating therefrom are quashed.

21.12.2005 ( RAJIVE BHALLA )

GS JUDGE

Crl.Misc.No.755-M of 1995 15


Copyright

Reproduced in accordance with s52(q) of the Copyright Act 1957 (India) from judis.nic.in, indiacode.nic.in and other Indian High Court Websites

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