Shri Chandra Prakash Agarwal and Another Vs Prithvi Tea Company Pvt. Ltd. and Another

H.N. Sarma, J.@mdashThe petitioners who are arrayed as accused in C.R. Case no. 861 of 2009 pending in the Court of the learned Judicial Magistrate, 1st Class, Silchar has filed this Criminal petition praying for quashing of the entire proceeding in exercise of power u/s 482 of Criminal Procedure Code

2. I have heard Mr. G.N. Sahewalla, learned senior counsel assisted by Mr. P. Bora, learned counsel appearing for the petitioners and Mr. B. Kar Purkayastha, learned counsel appearing for the complaint opposite parties.

3. The complainant (opposite party No. 1) filed the aforesaid complaint case No. 861/2009 alleging inter alia that the complaint purchased the Haticherra Tea Estate of the Hindustan Tea Company by a registered sale deed in the year 2008 and took over the possession thereof. In paragraphs 3, 4, 5 and 6 of the complaint petition, it is alleged as follows :

3. That during 1998 when said Hatticherra and Subong Tea Estate of Hindustan Tea Estate were being run by the partners, an employees gratuity hand was created by allocating fund duly vesting the same with the trustees i.e. accused Nos. 1 & 2 for the purpose of operating Group Gratuity Insurance Scheme with the LICI for the interest of the beneficiaries to cater the need of payment of gratuity to the retired employees of the gardens under the Payment of Gratuity Act and on payment of premium etc. from the said fund, the Life Insurance Corporation of India granted GGCA Mater Policies No. 208598 and 208599 for both Hatticherra & Subong Tea Estates. The said Hindustan Tea Company also appointed the accused No. 1 & 2 as trustees for the purpose of management and operation of the said Group Gratuity with the LICI Calcutta by executing a Deed of Trust and rules framed there-under on 24th January, 1998 wherein the accused No. 1 & 2 also signed as Trustees. Under the aforesaid deed of trust and rules there- under the trustees i.e. the accused No. 1 & 2 took up fullest responsibilities to provide for payment of Gratuity to the beneficiaries, to maintain/prepare receipts and payment account every year ending on 31st March, to appoint auditors and furnish a copy of audited account to the firm and so on. As per the deed, the Trust fund is vested in the trustees and the trustees are only custodian and having authority to operate, manage and control the fund.

4. That the complainant immediately after purchase of Hatticherra & Subong Tea Estate on 21.8.2008 consulted the gratuity files and while scrutinizing the record found that member of beneficiaries (some of which are under final scrutiny) as detailed in the list marked as Annexure-1 were though entitled to receive their gratuity benefit during the period from 1987-2008 from the accused as per legal contract from their gratuity fund with the LICI Calcutta but neither accused Nos. 1 & 2 nor the accused No. 3 paid anything to the beneficiaries till the date of the sale of the gardens i.e. 21.8.2008 from the said employees gratuity fund.

5. That the complainant on good faith therefore made correspondences with LICI and the accused by their letter dated 24.12.2008, 2.1.2009, 9.1.2009, 10.1.2009 and 17.1.2009 and urged upon them to hand over all the original documents as to GGCA policies issued by the LICI, to change the existing trustees of the employees gratuity fund as per resolution of the Board of Directors dated 9.7.2009, to retire from the trusteeship and take other appropriate steps for regularizing the Mater of policies concerning the Employees Gratuity Fund so as to enable the complainant to take up their responsibilities toward smooth operation of the said Gratuity Fund henceforth for payment of Gratuity to the members. But surprisingly all the accused kept mum over the issue and remained unattended to the request of the complainant.

6. That the complainant left no stone unturned to pursue the matter whereupon the UCI supplied copies of their two letters dated 21.4.2005 & 4.11.2008 addressed to the accused on 20.1.2009 and verbally informed the complainant that as the accused asserts that now they are holding the fund not for the employees of Hatticherra & Subong tea estates and as such not in a position to comply with the requests of the complainant, the LICI Calcutta is also unable to change the name of the trustees as asked by the complainant as per resolution of the Board of Directors dated 9.1.2009. It is further informed that Mater Policy No. GGCA 208599 had not been renewed since 1.1.2000 after commencement on 1.1.1998 and inspite of request by the LICI the accused have not taken any step for revival of the policy till date. Regarding Policy No. GGCA 208598, it is also informed that the accused credited no amount nor settled any claim during 2007-08 and for the periods since prior to that and deprived the beneficiaries of both the policies of their genuine claim of gratuity for which the accused were entrusted. For such dishonest overt act of the accused together, the said Employees Gratuity Fund have been misappropriated.

4. It is also contended by the complainant that the accused persons dishonest retained the entire fund of the LICI policies without discharging their duties and by not using the fund for which it was created and thereby the beneficiaries are deprived from getting their legitimate gratuity benefits for a long period and they did not disclose matter nor retired from the trusteeship and thereby committed cheating not only to the beneficiaries but also to the complainant who is the present owner of the garden and thus caused wrongful loss to the complainant and all the beneficiaries of the scheme whose interest they are bound to protect under the trust deed dated 24.1.1998 and the rules framed there under and as such, they committed offence punishable u/s 418 of the IPC.

It is also alleged that the accused persons knowing fully well about their responsibilities under the deed of trust, dishonestly misappropriated the Employees Gratuity Fund, firstly by retaining the fund without utilizing the fund for the purpose for which it was made and secondly, by doing overt act by not paying any gratuity to the employees from the policy in operation and taking no steps for revival of the lapsed policy rather facilitating the policy to be lapsed by not paying the premium. These allegations are reflected in paragraph 8 of the complaint petition.

5. After receipt of the complaint the learned Magistrate made necessary enquiry by examining the complainant on oath and recorded his initial deposition u/s 200, Cr. PC. On perusal of the complaint petition and considering the statements recorded as initial deposition, and having found prima facie case, took cognizance of the offence under Sections 406/418 read with Section 34, IPC and the process was issued to the accused petitioners. Upon receipt of the process, the petitioners have approached this Court by filing the instant petition for quashing of the proceeding.

6. Mr. Sahewalla, learned senior counsel appearing for the petitioners referring to the trust deed dated 24.1.1998 submits that the firm, namely, owner of the tea estate agreed to furnish to the Trustees all the particulars regarding the Members and information as may be in their possession as the Trustees may require for the purpose of effecting the Mater Policy. It is the first hand duty of the owner of the tea estate to furnish this information and without getting such information, the petitioners cannot be made blamed. It is further submitted that in terms of the trust deed, the petitioners are to carry on the business of the trust and in the absence of such information from the owner of the tea estate, the petitioners cannot be held responsible alleging violation of the duty imposed on them. The learned senior counsel further submits that on 18.5.2000 a receiver in respect of the tea estate was appointed and the receiver was impleaded as accused No. 3, that the provisions of Sections 406/418, IPC are not attracted in the present case.

7. On a communication made by the petitioners on 13.7.2010 to the LICI as regards certain queries particularly, the status of the Trustees Fund the LICI replied 13.7.2009 stating that the status of the Trustee''s fund will remain unchanged unless it is changed through a Deed of Variation, though there is a provision in the deed for replacement of the trustees, the same has not been done and the firm recorded in the trust deed dated 24.1.1998 is continuing. In support of his contention, Mr. Sahewalla has relied on the decision of the Apex Court rendered in Pepsi Foods Ltd. and Another Vs. Special Judicial Magistrate and Others, and in Anil Mahajan v. Bhor Industries Ltd, & Anr. (2005) 10 SCC 228 Referring to the aforesaid decisions, learned counsel contended that if the trust deed is interpreted in its proper perspective, and in the absence of any such information provided by the firm/owner of the tea estate the petitioners cannot be held liable and accordingly they cannot be fastened with any criminal liability. He submitted that continuation of the proceeding is an abuse of the process of the Court and hence, liable to be quashed.

8. Mr. B. Purkayastha, learned counsel for the opposite parties, on the other hand referring to the various provisions of the trust deed submits that in fact, the accused No. 1 is also a partner of the firm and he not having been furnished the information as a trustee, objects to such action as an accused and such continuation is permitted to be taken by the accused taking advantage of his two positions i.e. as a trustee and as an accused. It is further contended that as the submission made by the learned senior counsel for the petitioners pertains to factual issues which could be decided only during the course of trial of the proceeding and not in a quashing proceeding and that no case has been made out for exercising the inherent jurisdiction of this Court for quashing the proceeding and the petitioners would get ail opportunities at the time of trial of the case. In support of his contention, the learned counsel has relied upon the decision of the Apex Court rendered in K. Ashoka Vs. N.L. Chandrashekar and Others,

9. I have given my anxious consideration to the rival submission made by the learned counsel for the parties. It is not disputed at the bar that by now the principle to be laid for quashing of a criminal proceeding is fairly settled. A criminal complaint can be quashed if accepting the allegations made in the complaint to be true and no criminal case is made out. A criminal case also can be quashed if the trial Magistrate has no jurisdiction to try the case or there are certain statutory embargo in continuing the proceeding. The principles of quashing proceedings came to be decided by the Apex Court in a number of cases.

In the case of R.P. Kapur Vs. The State of Punjab, the Apex Court laid down the principles that even if the allegations of the complainant in the petition taken at its face value to be true and correct, no criminal case is made out and in such case, the proceeding can be quashed. Another prospect about quashing of proceedings has been parted out in the case of State of Punjab Vs. Kasturi Lal and Others, by the Apex Court as follows:

Exercise of power u/s 482 of the code in the case of this nature is the exception and not the rule. The section does not confer any new powers on the High Court. It only saves the inherent power which the court possessed before the enactment of the code. It envisages three circumstances under which the inherent jurisdiction maybe exercised, namely: (i) to give effect to an order under the code, (ii) to prevent abuse of the process of court, and (iii) to otherwise secure the ends of justice. It is neither possible nor desirable to lay down any inflexible rule which would govern the exercise of inherent jurisdiction. No Legislative enactment dealing with procedure can provide for all cases that may possibly arise. Courts therefore have inherent powers apart from express provisions of law which are necessary for proper discharge of functions and duties imposed upon them by law. That is the doctrine which finds expression in the section which merely recognizes and preserves inherent powers of the High Courts. All Courts, whether civil or criminal, process, in the absence of any express provision, as inherent in their constitution, all such powers as are necessary to do the right and to undo a wrong in course of administration of justice. While exercising powers under the section, the Court does not function as a Court of appeal or revision. Inherent jurisdiction under the section though wide has to be exercised sparingly, carefully and with caution and only when such exercise is justified by the tests specifically laid down in the section itself. It is to be exercised ex debito justitiae to do real and substantial justice for the administration of which alone Courts exist. Authority of the Court exists for advancement justice and if any attempt is made to abuse that authority so as to produce injustice, the Court has power to prevent such abuse. It would be an abuse of process of the Court to allow any action which would result in injustice and prevent promotion of justice. In exercise of the powers Court would be justified to quash any proceeding if it finds that initiation/continuance of it amounts to abuse of the process of Court or quashing of these proceedings would otherwise serve the ends of justice. When no offence is disclosed by the complainant, the Court may examine the question of fact. When a complaint is sought to be quashed, it is permissible to took into the materials to assess what the complainant has alleged and whether any offence is made out even if the allegations are accepted in toto.

Same view was reiterated by the Apex Court in Zandu Pharmaceutical Works Ltd. and Others Vs. Md. Sharaful Haque and Others, In the sald case, the Apex Court in paragraph 8 has held that when a complaint is sought to be quashed, the Court has to exercise its powers sparingly and to stop the abuse of the process of the Court.

10. Referring to earlier cases decided by the Apex Court in the case of State of Haryana and others Vs. Ch. Bhajan Lal and others, the Apex Court laid down some principles which are'' of course, not exhaustive, for quashing of the criminal case, reiterating that such powers should be sparingly exercised and that too in the rare of the rarest cases. The Apex Court laid down the following principles for quashing of a criminal case:

1. Whether 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. Whether the allegations made in the First Information Report and other materials, if any, accompanying the F.I.R. do not disclose a cognizable offence, justifying an investigation by police officers under Sections 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 F.I.R. 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 u/s 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 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 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 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.

11. In the case of Pepsi Foods Ltd. v. Special Judicial Magistrate (supra), the Apex paragraph 28 has held as follows:

Summoning of an accused in a criminal case is a serious matter. Criminal law cannot be set into motion as a matter of course. It is not that the complainant has to bring only two witnesses to support his allegations in the complaint to have the criminal law set into motion. The order of the Magistrate summoning the accused must reflect that he has applied his mind to the facts of the case and the law applicable thereto. He has to examine the nature of allegations made in the complaint and the evidence both oral and documentary in support thereof and would that be sufficient for the complainant to succeed in bringing charge home to the accused. It is not that the Magistrate is a silent spectator at the time of recording of preliminary evidence summoning of the accused. The Magistrate has to carefully scrutinize the evidence brought on record and may even himself put questions to the complainant and his witnesses to elicit answers to find out the truthfulness of the allegations or otherwise and then examine if any offence is prima facie committed by all or any of the accused.

The Apex Court also did not approve the finding of the High Court that;

It cannot be said at this stage that the allegations in the complaint are so absurd and inherently improbable on the basis of which no prudent man can even reach a just conclusion that there exits no sufficient ground for proceeding against the accused.

The other case relied on by Mr. Sahewalla is Anil Mahajan v. Bhor Industries Ltd & Anr. (supra). That was a case about requirement of necessary allegation that is required to be made in the complaint against the charge of cheating and in the absence of relevant facts and merely use the word "cheating" by referring Section 420, IPC would be serve the purpose.

12. Referring to the case reported in K. Ashoka v. N.L. Chandrashekar & Ors. (supra) as relied on by Mr. Purkayastha, I find that it has much relevance to the present case. The Apex Court in paragraph 14 held as follows;

It is now a well-settled principle of law that the High Court in exercise of its inherent jurisdiction u/s 482 of the Code may quash a criminal proceeding inter alia in the event the allegations made in the complaint petition even if they are taken at their face value and accepted in their entirety does not disclose commission of a cognizable offence. Some of the principles which would be attracted for invoking the said jurisdiction have been laid in Indian Oil Corporation Vs. NEPC India Ltd. and Others, , are :

(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 if found to have been initiated with male fides/malice for wreaking vengeance or to cause harm, or where the allegations are absurd and inherently improbable.

(iii) The power of 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 details, 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; or (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 beach 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.

13. In the backdrop of the aforesaid principles of law justifying quashment of a complaint petition at the threshold, it is found that considering the averments, some of which have been indicated in the first part of the judgment, it cannot be said that accepting that no criminal case has been made out in the complaint accepting the statements to be true and correct. Though the petitioner seems reliance on the trust deed and the letter written by them making some queries to the LICI on 13.7.2009 and the reply thereof by the LICI, those letters are not yet produced before the learned trial Court. Otherwise also, the trust deed discloses that is irrevocable one and the petitioner No. 1 is also one of the owner of the tea estate. Accordingly, the submission of Mr. Purkayastha that as the failed to furnish necessary particulars and information of the owner of the firm, he could not take necessary action and this situation by a single person in two different capacities is difficult to reconcile.

14. It is also noteworthy that in the trust deed the sums in cash and other assets retained by the Trustees in the surplus or any other account as provided for in the Rules and the Master Policy to be issued by the Corporation shall constitute the funds of the Fund and the Trustees shall hold and employ the said funds according to declaration in the trust deed and the Rules, the Trust fund shall be vested in the Trustees, the Trustees shall have the entire custody, management and control of the Fund and shall decide ail differences or disputes which may arise so under presence or under the Rules. It is further provided that the Trustees shall provide for the payment of gratuity on termination of service, on death or retirement of the member or otherwise as provided in the Rules of the Scheme. Regarding investment of the fund money, it is stated in clause 25 of the trust deed.

15. From the terms and conditions of the trust deed, it is prima facie found that the Trustees are liable for management and control of the trust fund and are also required to provide the members of the Fund with necessary financial relief as per their requirement. From the above facts, it is alleged that the petitioners have failed to do so in furnishing necessary documents and information which are disputed question of facts. The petitioners prima facie cannot absolve themselves from their responsibilities under the trust deed by putting their gun on the shoulder of the firm/owner of the tea estate for not furnishing necessary information. However, all these matters are to be decided by the leaned trial court after hearing both the parties and on taking necessary evidence. At this stage, perusal of the other documents not filed before the trial magistrate is are not permissible.

16. In view of the above discussions, find no merit in this criminal petition which is accordingly dismissed. The interim order passed on 30.6.2009 stands vacated.

17. It is made clear that whatever observations made in this judgment, those are made for the purpose of deciding the quashing petition and shall not have any effect in deciding the proceeding pending before the learned trial Court. It is also made clear that the petitioners shall be entitled to make necessary defense at the trial and to produce evidence in their support.