Criminal Writ Petition No.442 of 2009

9th June, 2009

Petitioner Counsel: Mr. NITEEN PRADHAN,Mr. S. D. KHOT , Mr. M. PRADHAN,Ms. P. H. KANTHARIA
Respondent Counsel: Mr. D. A. NALAWADE,Mr. S. MALIK,Mr. SANTOSH MISHRA,Mr. B. D. CHAUHAN

Cases Cited:
Alpic Finance Ltd. Vs. P. Sadasivan, 2001 ALL MR (Cri) 446 (S.C.)=(2001)3 SCC 513 [Para 5]
Hridaya Ranjan Prasad Verma Vs. State of Bihar, 2000 ALL MR (Cri) 1490 (S.C.)=(2000)4 SCC 168 [Para 5,12]
Vir Prakash Sharma Vs. Anil Kumar Agarwal, (2007)7 SCC 373 [Para 5]
Ajay Mitra Vs. State of M.P., (2003)3 SCC 11 [Para 5]
G. Sagar Suri Vs. State of U.P., (2000)2 SCC 636 [Para 5]
Indian Oil Corpn. Vs. NEPC India Ltd., (2006)6 SCC 736 [Para 5]
Nikhil Merchant Vs. C.B.I., 2009 ALL SCR 199 : (2008)9 SCC 677 [Para 6]
T. Vengama Naidu Vs. T. Dora Swamy Naidu, 2007 ALL MR (Cri) 1141 (S.C.)=(2007)12 SCC 93 [Para 8]
Rajesh Bajaj Vs. State NCT of Delhi, (1993)3 SCC 259 [Para 9]
Trisuns Chemical Industry Vs. Rajesh Agarwal, (1999)8 SCC 686 [Para 9]
State of Punjab Vs. Pritam Chand, Cri. Appeal No.1069/2004, Dt.:-11/2/2009 [Para 9]

JUDGMENT

Smt. RANJANA DESAI, J.:- Rule. Rule made returnable forthwith. Respondents waive service. By consent of the parties, taken up for hearing and final disposal.

2. In this petition filed under Article 226 of the Constitution of India and under Section 482 of the Criminal Procedure Code, 1973 (for short, "the Code"), the petitioner has prayed that First Information Report bearing Crime No.M/01/06 dated 8/2/2006 registered at P. S. Daman (for short, "the said complaint") be quashed and set aside. He has also prayed for certain consequential reliefs.

3. Since the petitioner is seeking quashing of the said complaint, it is necessary to examine its contents. Gist of the said complaint is as follows :

a) The 4th Respondent in the petition is the complainant and is the power of attorney holder of M/s. Century Pulp & Paper Division of M/s. Century Textile & Industries Limited (for convenience, "the complainant company"). M/s. Shiv Ganga Paper Converters Private Limited is the 1st accused in the complaint (for short, "the accused company"). It is a private limited company, having its industrial units at Daman, Kota (Rajasthan) and Rudrapur (Uttaranchal). The 1st accused manufactures note books and, hence, requires paper. The petitioner is the 2nd accused. He is the director of the accused company. The 3rd accused - Arun Kejariwal, the 4th accused - Smt. Usha Kejariwal and the 5th accused - Nikhil Kejariwal are the directors of the accused company. They are related to each other. The 6th Accused - B. K. Mehta and the 7th accused - Vinod Tiwari are the managers of both the units of the 1st accused at Daman. M/s. Narsingh Das & Co. is the authorised dealer of the complainant company.

b) The complainant company entered into an agreement with the accused company to sell to the latter 4000 M.T. of paper over a contractual period beginning from 1/4/2005 and ending on 31/3/2006. As per the agreement, payments were to be made within 30 days of the goods being dispatched, in default of which interest was to be charged.

c) Initially, the accused company was regular in payments. In the first week of January, 2006, instead of depositing three cheques in the Corporation Bank, the accused company deposited only one cheque and other two cheques were deposited later. The balance amount of Rs.1,73,73,212/- was outstanding from the accused company till 22/12/2005 which the accused company ought to have paid before 22/1/2006. As the accused company was not making the payment, the complainant company approached the accused company on 28/1/2006. The petitioner gave an excuse that there were disputes between the directors and he was not able to make any payment. After long pursuation, the 3rd accused i.e. Arun Kejariwal promised to make part payment. He handed over two cheques of Rs.10 lakhs one dated 31/1/2006 and another dated 2/2/2006 and authorization for return of 100 M.T. paper of the value of Rs.35 lakhs. He asked the complainant company to approach the 4th respondent for the outstanding amount. There was express promise to make payment of the dues in the first week of February, 2006. When the complainant approached the 2nd accused, he promised to make the payment in kind by returning 250 M.T. paper from Daman and 100 M.T. paper from Rudrapur (Uttaranchal). On 3/2/2006, he authorised the complainant and M/s. Narsingh Das & Co. to receive the said paper. The value of 350 M.T. paper was about Rs.1,15,00,000/-.

d) On 6/2/2006, the complainant went to Daman to receive 250 M.T. of paper from the units of Bhimpore, Nani Daman. The complainant learnt that there are number of creditors of the accused to whom the accused had not made payment. The complainant contacted the 6th accused, that is, B. K. Mishra, General Manager of the accused company for delivery of paper. However, he refused to give delivery by saying that he will not accept the order of the 2nd accused. When the 2nd accused was contacted on phone, he replied that he had never consented for delivery of paper.

e) The complainant learnt that the accused who are from one family and who claim to be directors of the accused company had diverted all their funds in benami transactions since last few months. They had purchased properties in the name of their relatives at Faridabad - Gurgaon Road and formed another company by name M/s. Aastha Agriculture Private Limited in Gauhati (Assam). The 5th accused had wound up all his Daman units and shifted to Kota with his family.

f) Though there was no business and the accused had not paid money to the suppliers, the accused purchased large quantity of paper. They made the complainant believe that they had purchased crores of rupees worth paper. Just to avoid payment and to make a show that they had honest intentions, the accused gave authorization dated 3/2/2006 to receive 250 M.T. paper which was not honoured by them. They diverted their funds and formed another company. All the accused are thus party to a criminal conspiracy. They have committed offence under Section 420 read with Section 120-B of the Indian Penal Code (for short, "the IPC").

4. The said complaint was registered under Section 420 read with Section 120-B of the IPC at P.S. Daman against the petitioner and five other accused.

5. We have heard Mr. Pradhan, learned counsel appearing for the petitioner. He submitted that a purely civil dispute has been given the colour of a criminal offence. He submitted that this is a dispute about goods sold and delivered and payments allegedly not received for the same. Criminal law could not have been set into motion on these facts. Mr. Pradhan submitted that, after filing of the said complaint, on 20/6/2006, the complainant-company has filed a suit in the Delhi High Court, which is pending adjudication. The civil suit must, therefore, be allowed to be prosecuted and the criminal complaint ought to be quashed. In support of his submissions, learned counsel relied on the judgments of the Supreme Court in Alpic Finance Ltd. Vs. P. Sadasivan & Anr., (2001)3 SCC 513 : [2001 ALL MR (Cri) 446 (S.C.)]; Hridaya Ranjan Prasad Verma & Ors. Vs. State of Bihar & Anr., (2000)4 SCC 168 : [2000 ALL MR (Cri) 1490 (S.C.)]; Vir Prakash Sharma Vs. Anil Kumar Agarwal & Anr., (2007)7 SCC 373; Ajay Mitra Vs. State of M.P. & Ors., (2003)3 SCC 11; G. Sagar Suri & Anr. Vs. State of U.P., (2000)2 SCC 636 and Indian Oil Corpn. Vs. NEPC India Ltd. & Ors., (2006)6 SCC 736.

6. Learned counsel then urged that, in fact, the complainant-company and the accused had settled the dispute. He drew our attention to the annexures to the petition. He pointed out that on 8/5/2006, a pursis came to be filed in the Court of Chief Judicial Magistrate, Daman, which stated that the accused had accepted the liability and consented to give delivery of 227 M.T. of paper and, in the circumstances, the complainant-company consented that "the prosecution may be disposed of, even though the civil liability is not affected". Learned counsel pointed out that this pursis is signed by the advocate for the accused and advocate for the complainant-company. It is also signed by Mr. Pradeep Gupta for M/s. Narsingh Dass & Co., who is the authorized dealer of the complainant-company. The pursis is also signed by the 3rd accused. On the same day, affidavit came to be filed by the 3rd accused, inter alia, stating that 227 M.T. of paper is to be delivered to the complainant-company and, he had decided to honour the challan issued by the petitioner. Mr. Pradhan drew our attention to order dated 8/5/2006 passed by I/C. Chief Judicial Magistrate, Daman, in which he has observed that all the parties to the pursis have admitted the contents and they have also agreed to the compromise agreement. Learned Magistrate has further recorded that all the applications are disposed of in terms of pursis (Ex-18). Pursis (Ex-18) is signed by the advocate for the complainant-company and the 3rd accused. Learned counsel submitted that in view of the settlement, this court should quash the complaint as its continuance will be a futile exercise. In this connection, he relied on the Supreme Court's judgment in Nikhil Merchant Vs. C.B.I. & Anr., (2008)9 SCC 677 : [2009 ALL SCR 199].

7. Learned counsel submitted that in any case, the petitioner had resigned from the directorship of the accused-company on 30/12/2005. He drew our attention to an order passed by the Company Law Board, New Delhi, (for short, "the CLB"), dated 16/1/2009. He submitted that the CLB has accepted that the petitioner has resigned from the directorship of the accused-company. The CLB has observed that he shall continue to be on the Board of the accused-company till the accounts are settled. It is observed that the petitioner was able to make out its case of oppression and mis-management resulting in gross-misappropriation of funds and stocks despite the CLB's orders and, therefore, he shall not be liable for any default subsequent to the date of intimation of disassociation with the affairs of the accused-company. Learned counsel submitted that, therefore, in any event, from the date of the petitioners resignation i.e. 30/12/2005, the petitioner cannot be held responsible for any mismanagement or offence committed by the accused-company. Mr. Pradhan submitted that this is therefore a fit case where this court should in exercise of its power under Article 227 of the Constitution of India and Section 482 of the Code quash the said complaint.

8. We have also heard Mr. Nalawade, learned counsel appearing for the 1st respondent i.e. Union Territory of Daman and Diu. Mr. Nalawade submitted that it is well settled that a complaint can be quashed only if on the face of it, it does not disclose any offence. Learned counsel submitted that in this case, the said complaint clearly discloses the offence of cheating and, therefore, it cannot be quashed. Mr. Nalawade submitted that on the said complaint, learned Magistrate has passed an order under Section 156(3) of the Code for inquiry and investigation. Relying on the judgment of the Supreme Court in T. Vengama Naidu Vs. T. Dora Swamy Naidu & Ors., (2007)12 SCC 93 : [2007 ALL MR (Cri) 1141 (S.C.)], learned counsel submitted that the FIR is to be taken at its face value for adjudging the same. Where investigation is in progress and the police has not submitted a report to the Magistrate, the FIR can be quashed only if there appears to be no offence spelt out in the complaint. At the stage of investigation, the High Court cannot examine the nature of transaction or whether any offence was actually committed by the accused or not. The High Court cannot quash the FIR, at this stage, by examining the nature of the transaction. Learned counsel drew our attention to the affidavit-in-reply filed by Mr. D. M. Jadhav, HCB, attached to the Daman Police Station wherein it is stated that there are number of cases relating to bouncing of cheques registered against the accused. It is also stated that two similar cases have been filed in Surat and Ahmedabad, and one by Tamil Nadu Print Paper Mills in Chennai Court against the accused-company. He submitted that in the circumstances no case is made out for quashing the said complaint.

9. We have also heard Mr. Malik, learned counsel appearing for the 4th respondent. He submitted that this is not a case where the complaint does not make out any offence at all. He submitted that an offence under Section 420 of the IPC is clearly made out. Learned counsel submitted that the contention that the dispute is of civil nature is totally misconceived. He submitted that no settlement was ever arrived at between the accused-company and the complainant-company and Narsingh Dass had no authority to settle the dispute. Learned counsel relied on the judgments of the Supreme Court in Rajesh Bajaj Vs. State NCT of Delhi & Ors., (1993)3 SCC 259; Trisuns Chemical Industry v. Rajesh Agarwal & Ors., (1999)8 SCC 686 and an unreported judgment of the Supreme Court in State of Punjab Vs. Pritam Chand & Ors. in Criminal Appeal No.1069 of 2004, dated 11/2/2009 and submitted that the petition deserves to be dismissed.

10. Before we go to the cases cited by Mr. Pradhan, it is necessary to refer to the petitioner's case that he had resigned from the accused company. Mr. Jadhav, the investigating officer has stated in his affidavit that the petitioner has written a letter on 3/2/2006 in his capacity as the director of the accused company. He has signed the said letter as a director. The complainant has in his affidavit also stated so. Prima facie, this conduct of the petitioner militates against his case that he had resigned from the accused company. His case of resignation, therefore, cannot be accepted at this stage. It requires to be investigated.

11. Reliance placed by Mr. Pradhan on the CLB's order dated 13/3/2009 is also misplaced. It is pertinent to note that before the CLB, the petitioner who is the 2nd accused had alleged mismanagement of the accused company by accused 3 to 5. It is an internal matter between the directors. Obviously, the complainant company could never have participated in the proceedings before the CLB. The order shows that accused 3 to 5 admitted that the petitioner was not involved in the affairs of the company since November, 2005. It is in these circumstances inter alia on the concession made by accused 3 to 5 that the CLB observed that the petitioner shall not be liable for any defaults subsequent to the date of intimation of disassociation with the affairs of the accused company. At this stage, the petitioner cannot be absolved of the allegations made against him on the basis of this order.

12. We shall now refer to the cases cited by learned counsel. In Hridaya Ranjan Prasad Verma's case (supra), the Supreme Court was concerned with a petition filed for quashing of the complaint under Section 482 of the Code. In that case, the appellants had agreed to sell land to the 2nd respondent. A cheque in the sum of Rs.11,00,000/- was given to the appellants by the respondents. The appellants executed a registered sale deed and delivered possession of the land. The cheques given by the respondents bounced. The appellants made requests to the respondents for payment of the amount. The respondents avoided to make the payment. The appellants lodged a complaint under Sections 406, 420 and 120-B of the IPC. On the facts before it, the Supreme Court observed that the ingredients of intentional deception on the part of the accused at the beginning of the negotiations had not been expressly stated or indirectly suggested in the complaint. Case of dishonest intention was not made out. While quashing the complaint, the Supreme Court stated what should be kept in mind while determining the question whether offence of cheating is disclosed. Following are the relevant observations of the Supreme Court.

"15. 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 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."

13. In G. Sagar Suri's case, a Finance Company had lodged a complaint against the appellants and others alleging that as directors of an Automobile Company they had taken a short-term loan of Rs.50 lakhs from the Finance Company. The cheques drawn by them towards repayment were dishonoured by the bank. A criminal complaint under Section 138 of the Negotiable Instruments Act was pending. A complaint was filed by the Finance Company inter alia, alleging that the 1st appellant had got the loan with dishonest intention and mis-representation. On facts, the Supreme Court found that in the complaint nothing was said as to what was the mis-representation, what role was played by the appellants and how the Finance Company was duped. All members of the family including the parents of the Managing Director were roped in. A complaint under Section 138 of the Negotiable Instruments Act was pending. In the affidavit, the Finance Company admitted that the appellants were not the directors of the company who had taken the loan. The Supreme Court came to a conclusion that there was an attempt to rope in all the members of the family in the complaint and the complaint was filed with a view to getting back the amount advanced by browbeating and terrorizing the appellants with criminal prosecution. It is against the backdrop of these facts while quashing the complaint the Supreme Court observed that criminal proceedings are not a short cut for other remedies available in law and the High Court has to examine whether matter which is essentially of a civil nature has been given a cloak of criminal offence.

14. In Alpic Finance's case, the appellant was a non-banking financial company carrying on business of leasing and hire purchase. The 1st respondent was the Chairman and founder Trustee and the 2nd respondent i.e. the wife of the 1st respondent was also a trustee of the trust. The respondents entered into lease agreement with the appellant whereby the appellant agreed to finance the respondent for purchase of dental chairs. As per the agreement, the respondents were liable to pay rentals quarterly and the appellant company was to have exclusive right, title and interest in the dental chairs till the hire purchase amount was paid. The appellant made the payment and the respondents bought dental chairs. According to the appellant, the respondents were not regular in making payments. Certain cheques were dishonoured by the bank. It was their case that certain chairs were found missing and, hence, the respondents had committed offences under Sections 420, 406 and 423 read with Section 120-B of the IPC. The Supreme Court observed that the appellant's case was that the respondents had failed to discharge their contractual obligations. It was noticed that in the complaint, there was no allegation of fraud or dishonest intention or that the chairs were obtained by any fraudulent inducement or by wilful misrepresentation. On facts, the Supreme Court concluded that it was difficult to discern an element of deception in the whole transaction, whereas it was palpably evident that the appellant had an oblique motive of causing harassment to the respondent by seizing the entire articles through magisterial proceedings.

15. In Ajay Mitra's case, the complainant bottling company had entered into bottling agreements with M/s. Cadbury Schweppes Beverages India Private Limited (for short, "M/s. Cadbury"). The agreements were to continue for a term of five years. Either party could terminate them at the end of initial term by giving the other party the prescribed notice. One Atlantic Industries (a member of Coca Cola Group of industries) purchased trademarks of M/s. Cadbury upon which the bottling agreements between M/s. Cadbury and the complainant were assigned to Atlantic Industries. Atlantic Industries gave a notice to the complainant that the bottling agreement shall not be renewed. The complainant then filed a complaint against M/s. Cadbury, Coca Cola India and some of its officers (appellants i.e. accused 7 to 11 being some of them) alleging that it is M/s. Cadbury who had approached the complainant and a memorandum of understanding was signed between the two. The complainant was asked to discontinue its brand "Sprint" by M/s. Cadbury. The complainant invested money and modernized its plant to the satisfaction of M/s. Cadbury and thereafter bottling agreement was entered into between the two. It was alleged that Coca Cola India has adopted unfair trade practices and has made wrongful gain. According to the complainant, all the accused had cheated it. Offences were registered against the accused under Section 420 read with Section 34 and Section 120-B of the IPC. The High Court refused to quash the FIR. On facts, the Supreme Court came to a conclusion that the appellants were not in picture when the complainant spent money on its plant on the basis of agreement entered into with M/s. Cadbury, therefore, there was no intention on their part to deceive the complainant. The Supreme Court observed that a guilty intention is an essential ingredient of the offence of cheating. The Supreme Court came to a conclusion that the allegations made in the complaint even if they are taken at their face value and accepted in their entirety do not disclose the commission of any offence. It is in these circumstances, that the Supreme Court quashed the complaint.

16. In Vir Prakash's case, the parties had entered into a contract of sale and purchase of goods. The appellant had issued two cheques which had bounced. The complainant filed a complaint alleging offences under Sections 406, 409, 420 and 417 of the IPC against the appellant. The High Court refused to quash the complaint. The Supreme Court noted that the allegations in the complaint did not disclose the ingredients of criminal breach of trust. No act of inducement on the part of the appellant had been alleged. The Supreme Court further noted that there were some vague unpalatable allegations about the subsequent conduct of the appellant. It is in this context, while quashing the complaint the Supreme Court observed that the dispute between the parties was essentially a civil dispute and that non-payment or underpayment of the price of the goods by itself does not amount to commission of an offence of cheating or criminal breach of trust.

17. In Indian Oil Corporation's case (IOC), the IOC had entered into a contract with the NEPC (India) Limited agreeing to supply aircraft fuel. According to the appellant, the respondent committed default in making payment. Complaint was filed under Sections 378, 403 and 425 of the IPC. The High Court quashed the complaint. The Supreme Court held that High Court was not justified in quashing the complaint in its entirety because the allegations in the complaint are sufficient to constitute offences under Section 415 (cheating) and 425 (mis-chief). While allowing the appeal partly the Supreme Court reiterated the following principles :

(i) A complaint can be quashed where the allegations made in 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 the case alleged against the accused.

For this purpose, the complaint has to be examined as a whole, but without examining the merits of the allegations. Neither a detailed inquiry nor a meticulous analysis of the material nor an assessment of the reliability or genuineness of the allegations in the complaint, is warranted while examining prayer for quashing of a complaint.

(ii) A complaint may also be quashed where it is a clear abuse of the process of the court, as when the criminal proceeding is found to have been initiated with mala fides/malice for wreaking vengeance or to cause harm, or where the allegations are absurd and inherently improbable.

(iii) The power to quash shall not, however, be used to stifle or scuttle a legitimate prosecution. The power should be used sparingly and with abundant caution.

(iv) The complaint is not required to verbatim reproduce the legal ingredients of the offence alleged. If the necessary factual foundation is laid in the complaint, merely on the ground that a few ingredients have not been stated in detail, the proceedings should not be quashed.

Quashing of the complaint is warranted only where the complaint is so bereft of even the basic facts which are absolutely necessary for making out the offence.

(v) A given set of facts may make out : (a) purely a civil wrong; or (b) purely a criminal offence; of (c) a civil wrong as also a criminal offence. A commercial transaction or a contractual dispute, apart from furnishing a cause of action for seeking remedy in civil law, may also involve a criminal offence. As the nature and scope of a civil proceeding are different from a criminal proceeding, the mere fact that the complaint relates to a commercial transaction or breach of contract, for which a civil remedy is available or has been availed, is not by itself a ground to quash the criminal proceedings. The test is whether the allegations in the complaint disclose a criminal offence or not.

18. In Trisun's case, the case of the appellant company was that the accused directors approached him and offered to supply 5450 metric tons of soyabean extracts for a price of nearly four and half crores of rupees. The sum was paid through cheques. The accused sent goods of inferior and substandard quality. The complainant suffered loss of Rs.17 lakhs. According to the appellant, he was induced to pay the price on the representation that the best quality commodity would be supplied. On such representation, the price was paid. But by supplying inferior quality, the accused deceived the complainant. The High Court inter alia found that there was an arbitration clause in the memorandum of understanding. The High Court held that whether the complainant company suffered a loss or not is a matter to be adjudicated by the civil court and not by the criminal court. The High Court observed that the disputes can be resolved through arbitration. The High Court quashed the complaint. The Supreme Court set aside the High Court's order and observed as under :

"Quashing of FIR or complaint in exercise of the inherent powers of the High Court should be limited to very extreme exceptions. Merely because an act has a civil profile is not sufficient to denude it of its criminal outfit. The provision incorporated in the agreement for referring the disputes to arbitration is not 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. Preemption of such investigation would be justified only in very extreme cases."

19. In Rajesh Bajaj's case, the appellant company was a manufacturer and exporter of garments. The 5th respondent approached the complainant for purchase of readymade garments and induced the appellant to believe that the 5th respondent would pay the price of the said goods on receiving the invoice. The appellant believed the complainant and dispatched the goods. But the 5th respondent did not pay the entire outstanding amount. According to the appellant, he came to know later that the respondent had similarly duped several persons to the tune of Rs.10 crores. According to the appellant, the 5th respondent induced him to believe that he was a genuine dealer but actually his intentions were not clear. The High Court quashed the complaint on the ground that the allegations disclose purely a commercial transaction where seller did not pay the balance purchase price and that there was nothing in the complaint to indicate that the accused had dishonest or fraudulent intention at the time of export of goods.

20. The Supreme Court set aside the High Court's order. The Supreme Court observed that it is not necessary for the complainant to state in so many words that the intention of the accused was dishonest. The Supreme Court observed that the complainant had stated in the body of the complaint that he was induced to believe that the respondent would honour payment on receipt of invoices, and the complainant later on realized that the intention of the respondent was not clear. This would prima facie make out a case for investigation. The Supreme Court observed that the crux of the postulate is the intention of the person who induces the victim and not the nature of transaction. We may quote the relevant observation of the Supreme Court.

"It may be that the facts narrated in the present complaint would as well reveal a commercial transaction or money transaction. But that is hardly a reason for holding that the offence of cheating would elude from such a transaction. In fact, many a cheatings were committed in the course of commercial and also money transactions."

21. In our opinion the above judgments make it clear that whether a complaint discloses a criminal offence or it involves only a civil dispute depends on facts and circumstances of each case. A complaint may have civil profile but it may also have overwhelming criminal overtones. In such case, a criminal court cannot shut its doors to it. Because a complaint involves a commercial transaction, it cannot be inferred that it contains a civil dispute if ingredients of a criminal offence are present. It is trite that in several commercial transactions, criminal offences are committed. A case involving a simplicitor dispute about quality and quantity of the goods received and the amount of price to be paid could well be described as a civil dispute in a given set of circumstances. But where ingredients of cheating or some such offence are evident from a bare reading of the complaint, its criminal nature must be acknowledged. Dishonest intention is a hallmark of a criminal complaint. Dishonest intention must be present at the inception of the offence. It must be expressly stated or indirectly suggested in the complaint. It is possible that in a given case, the complainant may later on realize that the intention of the accused was not honest at the inception. It may become evident on account of the subsequent conduct of the accused. In such cases, investigation is necessary. But subsequent conduct is not the sole test to determine whether a complaint has civil or criminal profile. It can support the case of the complainant that the accused had dishonest intention at the inception of the offence. Where there is an attempt to use a criminal complaint to harass or terrorize a party with a view to forcing it to settle a purely civil dispute such complaint should not be allowed to be prosecuted. That would amount to abuse of the process of the court. Criminal complaint which is bereft of ingredient of an offence cannot be allowed to be used as a tool to cut short time consuming civil procedure. At the same time, it must be remembered that the complainant does not have to state verbatim the ingredients of the offence alleged. Basic facts which disclose offence need to be stated. Presence of an alternative remedy is not a good enough reason for throwing the complaint overboard if it discloses criminal offence, because the alternative forum may not be able to conduct a trial and convict the accused of the offence. A complaint can be quashed where the allegations made in the complaint, even if they are taken at their face value and accepted in their entirety do not prima facie constitute any offence. For this purpose, the complaint has to be examined as a whole, but without examining the merits of the allegations. A complaint may be quashed where it is a clear case of abuse of the process of the court or is initiated with mala fides. The power to quash the complaint should not be used to stifle a legitimate prosecution. This power should be used sparingly and with abundant caution.

22. We shall now proceed to examine the said complaint in the light of the above principles. We, however, make it clear that we have not examined the merits of the allegations and all observations made by us are prima facie observations made while deciding whether if allegations made in the complaint are taken at their face value, they prima facie constitute any offence or not.

23. The facts disclose that there was an agreement to supply paper between the complainant company and the accused company and initially the accused company was making regular payments. This agreement is dated 2/4/2005. The balance amount of Rs.1,73,73,212/- was outstanding from the accused till 22/12/2005 which ought to have been paid before 22/1/2006. The accused avoided to make the payment. These facts by themselves may create an impression that this is a civil dispute. But read in the context of other facts they prima facie disclose a criminal offence. Accused 3 to 5 are closely related. It is clearly stated in the complaint that though there was no business and the accused had not paid money to the suppliers, the accused purchased large quantity of paper. They made the complainant believe that they had purchased crores of rupees worth paper and to avoid payment and to make a show of their so-called honest intention the petitioner issued an authorization dated 3/2/2006 on the basis of which the complainant was to receive the paper back. The authorization was not honoured. The averment that the accused purchased the paper though they had no business and had not paid their suppliers; that they made the complainant believe that they had purchased paper worth crores of rupees prima facie make out a case of dishonest intention at the inception of the offence. In our opinion, averments made in the complaint expressly state that the accused had mala fide intention at the inception of the offence and at any rate they indirectly suggest so.

24. The averment pertaining to the authorization issued by the petitioner which was not honoured is equally important. It is stated in the complaint that when the complainant went to Daman and met the 6th accused-the Manager of the accused company for delivery of paper, he refused to abide by the authorization. When he contacted the petitioner on phone, the petitioner stated that he had never consented for return of papers. The subsequent conduct of the accused in issuing authorization which was not honoured, of not paying the suppliers; of diverting their funds in benami transactions, etc. fortify the complainant's case that the accused had dishonest intention at the inception of the offence. Though subsequent conduct is not the sole test to determine whether there is dishonest intention, it is not irrelevant (Hridaya Ranjan's case). In Rajesh Bajaj's case, the Supreme Court has made it clear that it is not necessary for the complainant to state in so many words that the intention of the accused was dishonest. If the complainant states in the complaint that he was induced to believe that the accused would make the payment and later on he realized that the intention of the accused was not clear, it is a matter for investigation. The present case is clearly covered by this observation.

25. It is also stated in the said complaint that the accused who come from one family have diverted their funds in Benami transactions. They have purchased properties in the names of their relatives in Faridabad-Gurgaon Road and formed another company by name M/s. Aastha Agricultural Private Limited in Gauhati. The 5th accused has shifted to Kota with his family after winding up the units in Daman. All these facts stated in the said complaint will have to be read together. The said complaint has to be read as a whole (Indian Oil Corporation's case). Case of intention to cheat is prima facie supported by these facts averred in the said complaint.

26. Assuming that the facts stated in the said complaint would as well reveal a commercial or money transaction, that is hardly a reason for holding that the offence of cheating would elude from it when ingredients of offence are so clearly stated in the said complaint (Rajesh Bajaj's case).

27. We are informed that a civil suit is filed by the complainant in the Delhi High Court. It is argued that the said complaint must be quashed on this ground. In Indian Oil Corporation's case, the Supreme Court has made it clear that a commercial transaction or a contractual dispute, apart from furnishing a cause of action for seeking remedy in civil law may also involve a criminal offence. As the nature and scope of a civil proceeding is different from a criminal proceeding, the mere fact that the complaint relates to a commercial transaction or breach of contract, for which a civil remedy is available or has been availed, is not by itself a ground to quash the criminal proceedings. The Supreme Court has clarified that the test is whether the allegations in the complaint disclose a criminal offence or not. We have already stated that the said complaint discloses a criminal offence. Pendency of a civil suit would not therefore persuade us to quash the said complaint. Besides, in Trisun's case, the Supreme Court has made it clear that an alternative civil remedy is not an effective substitute for a criminal prosecution where the disputed act is an offence. This submission is, therefore, rejected.

28. We have examined the said complaint in the light of judgments cited by both sides and come to the conclusion that the said complaint cannot be quashed. We are unable to accept Mr. Pradhan's contention that judgments cited by him cover the present case. In Hridaya Ranjan's case, on facts, the Supreme Court came to a conclusion that the case of presence of dishonest intention at the inception was not made out expressly or indirectly in the complaint. Such is not the case here. We have already dealt with this issue. Hence, this judgment is not applicable to the present case.

29. In G. Sagar Suri's case, the facts were gross. There was an attempt to rope in members of a family which was severely commented upon by the Supreme Court. There was an attempt to browbeat the accused to recover loan amount. The complaint was bereft of particulars of dishonest intention. This judgment cannot be applicable to the present case because the said complaint contains the necessary particulars. Similarly, in Alpic Finance's case, the complaint was silent about dishonest intention or fraud. On facts, the Supreme Court noticed that there was an oblique motive of causing harassment to the accused. Facts of Alpic Finance's case are not comparable to the facts which are before us. Hence, the said judgment does not cover the present case.

30. In Ajay Mitra's case, the Supreme Court noticed that the appellants/accused were not in the picture when the offence was committed and therefore the essential ingredient of guilty intention was lacking. In this case, prima facie, the accused were on the scene right from the beginning. Hence, reliance placed on this judgment is mis-placed. Similarly, in Vir Prakash's case, the Supreme Court was of the view that the allegations in the complaint did not disclose the ingredients of criminal breach of trust. There were vague allegations of subsequent conduct. In this case, as already stated by us the said complaint sets out all the particulars with sufficient clarity. It is, therefore, not possible for us to apply the ratio of this judgment to the present case.

31. This takes us to the case of the petitioner that the said complaint deserves to be quashed in view of the settlement between the parties. It is not possible for us to accept the case of settlement because the complainant is seriously disputing the alleged settlement. It is stated in the petition that on 8/5/2006, since the dispute was settled the 3rd accused filed an affidavit before the Chief Judicial Magistrate, Daman, stating that he was aware about his liability as per the agreement and he will respect it. It is further stated that on 8/5/2006, the representative of the complainant-company Mr. Pradeep Gupta executed a pursis in the court saying that since the accused had accepted the liability "the prosecution may be disposed, even though civil liability is not affected". Copy of the affidavit and pursis are annexed to the petition. Prima facie, it is difficult to accept this story. The complainant has filed affidavit denying this story. As stated by him, the pursis is not signed by the petitioner. It is stated to be signed by the 3rd accused. According to the complainant, he had not given authority to Mr. Pradeep Gupta to file a pursis on behalf of the complainant company. In such circumstances, the compromise theory cannot be accepted.

32. In Nikhil Merchant's case, the Supreme Court observed that in case of a dispute which has overtones of a civil dispute with certain criminal facets, if there is compromise between the parties, the FIR can be quashed because the continuance of the same would be a futile exercise. There can be no dispute about this proposition and if the parties had, in fact, settled their disputes, we would have considered the prayer for quashing the said complaint. But, since there is a serious dispute about the petitioner's contention that there was any compromise, and it is alleged that the person who allegedly signed the pursis had no authority to do so, in our writ jurisdiction, we are unable to decide whether there was compromise or not. Consequently, prayer for quashing cannot be entertained. Nikhil Merchant's case does not help the petitioner.

33. Before closing, we must refer to the judgment of the Supreme Court in T. T. Vengama Naidu's case. The appellant therein had filed a private complaint against the respondents which was sent for investigation under Section 156(3) of the Code. Criminal case was registered under Sections 464, 423, 420 read with Section 34 of the IPC. Investigation was in progress. On a petition filed under Section 482 of the Code, the High Court quashed the complaint. The High Court considered whether offence at all, was committed. The Supreme Court set aside the High Court's order by observing that whether offences were made out could not have been examined by the court at that stage as the investigation was pending. The court has only to see whether ingredients of the offence are present or not. In this case, the investigation is in progress. This is not a case where if the allegations made in the said complaint are taken at their face value, they do not prima facie disclose any offence. Ingredients of cheating are very much present. It is not possible to hold, at this stage, that the said complaint is filed with mala fide intention to wreak vengeance. Power under Section 482 cannot be used to stifle a legitimate investigation based on facts prima facie indicating commission of an offence such as those which are averred in the said complaint. In the circumstances, bearing in mind the principles laid down by the Supreme Court in a long line of judgments that power of quashing a complaint under Section 482 of the Code has to be used sparingly and with great care and caution and in exceptional cases where the complaint is bereft of the ingredients of the offence alleged, we reject the petition.

Ordered accordingly.