Indrajit Chatterjee, J@mdashThis is an application under Sections 397/401 read with Section 482 of the Code of Criminal Procedure, 1973 (hereinafter called as the said Code) praying for an order to quash the proceeding being G.R. Case No. 1947 of 2014 arising out of Shakespeare Sarani Police Station Case No. 289 dated 24th August, 2014 under Sections 406, 420 and 120B of the Indian Penal Code (henceforth called as the Code) which was initiated on the basis of a complaint filed by the opposite party No. 2, Simplex Infrastructure Limited (hereinafter called as SIL) and presently pending before the Chief Metropolitan Magistrate, Calcutta. It has also been prayed for that the orders passed by the Learned Chief Metropolitan Magistrate, Calcutta, dated 25 of August, 2014 be quashed and set aside. In the F.I.R. giving rise to the above G.R. Case the de facto complainant that is one Asish Basu, General Manager of SIL has claimed that in the year 2010 two persons namely Ajay Maggu, accused No. 4 and Sudarshan Supe, accused No. 5 came to the registered office of SIL and represented that they are responsible officers of Siemens Limited, a company incorporated under the Companies Act, 1956 having its registered office in Mumbai. They represented that they have secured a tender to construct a power plant at Dahej, Gujarat and if that SIL undertakes to work as sub-contractor under that Siemens then that SIL may earn huge profit. They also allured the officers of SIL that they will advance huge sum of money out of which SIL can complete the work.
2. At first the de facto complainant and the other officials of SIL were not inclined to enter into that contract but when various other officials of Siemens Ltd. namely A.K. Malhotra, accused No. 6, V. Namboodiripad accused No. 7, P.M.S. Bajaj, accused No. 8 and A. Taneja (not accused) started visiting the office of the SIL and represented that as the work to be executed by SIL will actually be from the fund provided by the said Siemens Ltd. as advance to SIL then why SIL should not enter into the agreement. On this background the de facto complainant and other officials of the SIL agreed to enter into the agreement with Siemens Ltd. for working as subcontractor in that Dahej power plant project. The Siemens Ltd. gave adjustable advance of a few crores of rupees as security and it took various bank guarantees from SIL for the aforesaid sum of money. The Siemens Ltd. made a clause in the agreement that after completion of the work on monthly basis the SIL will be entitled for the payment of the work done by it but Siemens could retain a portion of the money payable, which would be paid only after completion of the work.
3. At first this clause was not agreed upon but the accused persons stated that the said money will be also released in favour of SIL but SIL will have to furnish bank guarantees. The officials of Siemens also apprised the de facto complainant and others that such bank guarantees will be a mere formality as they will never enforce such bank guarantees to be executed by SIL as the officials of Siemens apprised that SIL will only give skill and workmanship and entire project will be funded by Siemens Ltd. The work started and when the project was almost complete the officials of Siemens certainly changed their colour and stopped making payments regularly and as a result Rs. 25 crores is due and payable by Siemens to SIL. A meeting was held in June 2014 in between the officials of Siemens including the accused persons and officials of SIL. They assured the officials of SIL that if the de facto complainant company continue with the completion of work then payment should be released immediately. Unfortunately, no payment was made and the de facto complainant and others made telephone to Parvesh Mittal accused No. 1(A-1), S. Krishnamurthy accused No. 2(A-2) and Namit Jetly accused No. 3 (A-3) and others of Siemens Ltd. for money. They stated that if SIL do not complete the work the bank guarantees which are lying with them would be encashed by them and SIL will also not be paid its legal dues which was to the tune of Rs. 25 crores.
4. It has been claimed in the F.I.R. that although SIL has completed the job except tit-bit things, it came to know that one Somnath Datta of Siemens Ltd. came down to Kolkata from Mumbai and is trying to encash the said bank guarantees. It has also been claimed that the de facto complainant company SIL only entered into the contract out of misrepresentation that the entire project will be funded by Siemens Ltd. and now the Siemens is not paying any money and the dues is to the tune of Rs. 25 crores. It has also been claimed as stated above that S. Datta was trying to encash the bank guarantees and it amounts to criminal breach of trust, it has also been claimed that the accused persons entered into criminal conspiracy to cheat SIL in respect of a sum of Rs. 25 crores.
5. It has been claimed in this application for quashing of the proceeding on the ground that this F.I.R. is an abuse of process of law only with a view to prevent the payment of bank guarantees which had already been invoked by the company, that the dispute is purely commercial and civil in nature, the banks and the company are parties to the bank guarantees and that the Opposite party No. 2 has committed breach of the terms and conditions of the said agreement with a mala fide intention and has misled the police by registering the F.I.R. It has also been claimed that at best it may be a case of breach of a contract of guarantee to which O.P. No. 2 is not a party and it is purely a civil matter rather than a criminal matter.
6. Regarding the order (Annexure-P3) dated 25 of August, 2014 as passed by the Learned Chief Metropolitan Magistrate, Calcutta, in which the Learned Magistrate was pleased to stop the encashment of unconditional bank guarantee to the tune of Rs. 18,33,41,947 crores it was argued that it is totally devoid of any merit.
7. On behalf of the petitioners it has been submitted by Mr. Ratnanko Banerjee that actually no criminal proceeding can lie in this case as it involves a commercial transaction. It is also his submission that the bank guarantee cannot be a subject matter of a criminal proceeding under Section 406 of the Code. It is also his submission by taking me to page 58 of the application to show that there is no prima facie material to attract the provisions of Section 420 of the Indian Penal Code (hereinafter called as the said Code). It is also his submission that ''SIL'' did not entrust the bank guarantee to Siemens India Limited and as such, there cannot be any case under Section 406 of the said Code. It was further submitted by Mr. Banerjee that admittedly Siemens India Limited was the contractor for a power project and SIL was the sub-contractor. He further submitted that one arbitration proceeding being Arbitration Petition L-1316 of 2014 was filed before the Hon''ble Bombay High Court by SIL and in that arbitration proceeding, the same bank guarantee was the subject. It may not be out of place to mention that in that arbitration proceeding Rs. 29,42,93,621/- has been claimed to be as the security amount given by SIL.
8. He took me to the F.I.R. to say that there is no ingredient to cover Section 406 of the said Code.
9. The learned senior advocate appearing on behalf of the petitioners submitted that the dispute between the parties is basically a civil dispute and criminal jurisdiction should not have been invoked. It was further submitted that the bank guarantee was executed to the tune of Rs. 47 crores and odd at the behest of SIL by different bankers as mentioned in the running page 179 of this application. It was further submitted by him that Siemens Limited is the beneficiaries but SIL cannot claim any interest over those after the bank guarantees were executed. He pointed out that even after the F.I.R. the SIL approached the Civil Court on 27th August, 2014, by filing the arbitration proceeding whereas the F.I.R. was lodged on 14th August, 2014.
10. It was his further submission that ''SIL'' lost before the learned Single Judge of Bombay High Court, in Arbitration Petition (L) 1316 of 2014 as well as before the Appellate Forum in Appeal (L) No. 120 of 2015 and on S.L.P. is pending before the Apex Court wherein as per order dated 15.05.2015 the Court clearly directed, "It is hereby made clear order and judgment will not give a handle to the bank to sit on the bank guarantees". It was his further submission that as the bank guarantee is a contract between the banker and Siemens Limited there is no question of entrustment to cover this case under Section 406 of the Indian Penal Code. He also took me to different ingredients of entrustment as made out in Section 405 of the Indian Penal Code.
11. Mr. Banerjee, learned senior counsel appearing on behalf of the petitioners took me to different facets of Section 405 of the Indian Penal Code and his thrust was that the elements cannot apply in the present case as there was no entrustment.
12. He submitted that the bank guarantees were issued by the banks at the instance of SIL and the role of SIL ended when the bank guarantees were issued. He further submitted that in a bank guarantee there are some elements;
1) There must be one application by the applicant, here in this case the ''SIL'' to the banks.
2) Acceptance by those banks, (in the instant case, there were such acceptance).
3) The beneficiaries are to be named in the applications which were duly done and;
4) That the banks will open the bank guarantees in favour of the beneficiaries.
He submitted that bank guarantee is one independent contract between the bank and the beneficiaries.
13. He took me to pages 58-59 of the petition to convince this Court that Somnath Datta, being one employee of Siemens Limited, did not do any wrong even if he tried to encash those bank guarantees, duly instructed by his employer.
14. He took me to the order of the learned Chief Metropolitan Magistrate, Calcutta, dated 25th August, 2014 to convince this Court that on a plain reading of the said order this Court will be convinced that there was no application of mind and the learned Magistrate just endorsed ''allowed'' and as such, there was no application of mind. It was also his contention that in such a case the Magistrate would not have restrained the bank.
15. Mr. Banerjee took me to the ingredients of the elements of cheating as defined in Section 415 of the Indian Penal Code.
16. He further submitted that there must be one guilty mind of the accused persons since the beginning to attract the provisions of Section 420 of the Code.
17. On this point he cited two decisions of the Apex Court as reported in (2005) 10 SCC 228 (Anil Mahajan Vs. Bhor Industries Ltd. & Anr.) (a three-Judge Bench decision) and
18. He further submitted by taking me to page 221 of the petition to convince this Court that the total amount of contract was Rs. 216 crores and odds, as per the de facto complainant as made out in the F.I.R., only Rs. 25 crores is due and as such, there were part payments which is clear from pages 58-59 of the petition.
19. Regarding the roles of the employees of the Company to attract any criminal offence, Mr. Banerjee cited two decisions of the Apex Court as reported in
20. It was further submitted by the Counsel that this court may bear in mind the decision of the apex court referred to below to appreciate the power of this court granted under Section 482 of the Cr.P.C. (2009) 4 SCC 443 (Mahesh Chaudhary vs. The State of Rajasthan) stated thus: wherein the Hon''ble Apex Court proceeded to say,
"11. The principle providing for exercise of the power by a High Court under Section 482 of the Code of Criminal Procedure to quash a criminal proceeding is well known. The Court shall ordinarily exercise the said jurisdiction, inter alia, in the event the allegations contained in the F.I.R. or the complaint petition even if on face value are taken to be correct in their entirety, does not disclose commission of an offence." Ld. Counsel also relied upon another decision of that Hon''ble Court as reported in
a. The High Court ordinarily would not exercise its inherent jurisdiction to quash a criminal proceeding and, in particular, a first information report unless the allegations contained therein, even if given face value and taken to be correct in their entirety, disclosed no cognizable offence.
b. For the said purpose the Court, save and except in very exceptional circumstances, would not look to any document relied upon by the defence.
c. Such a power should be exercised very sparingly. If the allegations made in the F.I.R. disclose commission of an offence, the Court shall not go beyond the same and pass an order in favour of the accused to hold absence of any mens rea or actus reus.
d. If the allegation discloses a civil dispute, the same by itself may not be a ground to hold that the criminal proceedings should not be allowed to continue.
21. Mr. Banerjee, learned senior counsel appearing on behalf of the petitioners took me to different facets of Section 405 of the Indian Penal Code and his thrust was that the elements cannot apply in the present case as there was no entrustment.
22. He reiterated that the bank guarantees were issued by some banks at the instance of SIL and the receipt of Simplex ended when the bank guarantees were issued. He further submitted that in a bank guarantee there are some elements;
1) There must be one application by the applicant, here in this case the Simplex to the banks.
2) Acceptance by the bank who is issuing the bank guarantees.
3) The beneficiaries are to be named in the applications to be submitted to the bank which were duly done and;
4) That the banks will open the bank guarantees in favour of the beneficiaries.
23. Thus, he concluded that neither there was any element of entrustment nor there was any element of cheating and as such, this proceeding is to be quashed.
24. It was submitted by Mr. Debasish Roy, learned advocate appearing for the respondent No. 2 that this Court is only to see whether there is any reasonable belief that the offence alleged was committed and if this Court is satisfied regarding this reasonable belief then the Officer-in-Charge having jurisdiction has power to register a case.
25. He further submitted that as per auditor''s report which was conveyed by the other side, accordingly, Rs. 12 crore was in due as on August 31, 2014. It was the question of Mr. Roy that what prompted the other side to encash the bank guarantee of more than that amount. It was also his argument that why the retained bank guarantee was encashed. He concluded his argument by saying that the bank guarantee was definitely in the custody of accused persons and ought not to have been encashed.
26. At the midst of argument, Mr. Roy, learned Advocate appearing on behalf of SIL (opposite party No. 2) cited several decisions of the Apex Court regarding the power of this Court as regards quashing of the proceeding under Section 482 of the Code of Criminal Procedure (hereinafter called as the Code). The citations are given below:-
1.
2.
3.
4.
5.
6.
7.
8.
9.
10. State of Orissa Vs. Ujjal Kr. Bardhan (2012) 4 SCC 574 : (2012) 2 SCC (Crl.) 506
11.
27. He further submitted by taking this Court to the judgments referred to above to convince this Court that the inherent power granted under Section 482 of the said Code is a very special power granted to this Court but it is to be exercised very sparingly with diligence and it was also his argument that when investigation is at its cradle, it should not be stopped by an order of the Court.
28. He further submitted that if there is any ingredient in the F.I.R. as to any criminal liability the hands of the investigating agency should not be fettered by an order of quashing of the proceedings by exercising inherent jurisdiction of this Court.
29. He further took me to the judgments referred to above to convince the Court that the investigating agency has enough power to take up the investigation if there is any violation of criminal law.
30. He also took me to Section 157 of the Code to show that if any information is received otherwise, an Officer-in-Charge of a police station has reason to suspect the commission of an offence which he is empowered under Section 156 of the Code to investigate and he shall forthwith send a report of the same to the Magistrate.
31. He also took me to a Single Bench decision of the Rajasthan High Court as delivered in Criminal Misc. Petition No. 1594/2010 (Subhas Modak & Ors. Vs. State of Rajasthan & Anr.) that is item No. 9 of Page 12 to convince this Court that in a case of encashing bank guarantee to the tune of Rs. 20 lacs by the other side without giving any notice will attract the provisions of Sections 406/420 of the Indian Penal Code and as such the learned Single Judge declined to quash the proceeding pending before the investigating agency.
32. Mr. Roy also took me to the F.I.R. to show that on a plain reading of the F.I.R. the offence under Sections 406 and 420 of the Indian Penal Code has very much come into the picture and as such the hands of the investigating agency should not be fettered. He also took me to the pages 77 and 78 of the affidavit-in-opposition to submit that the opposite party No. 2 was only informed regarding encashment of the bank guarantee after the same was encashed and no notice was given prior to encashing the bank guarantee.
33. He also took me to page 83 of the affidavit-in-opposition wherefrom it transpires through the letter dated 22nd September, 2014 of Siemens, extracting the report of its auditor, that Rs. 121,926,568.44/- was payable to Simplex Infrastructure Limited as on 31st August, 2014 and as per his argument that in such a case encashing of bank guarantee without prior notice contains sufficient element of cheating and criminal breach of trust.
34. It was submitted by Mr. Amarta Ghosh, learned advocate appearing on behalf of the State that the investigating officer had conducted the investigation till December 12, 2014 and the case dairy will reveal that there may be a reasonable belief that the accused persons had committed such mischief. It was his further submission that when the accused persons were examined regarding the encashment of the bank guarantee the accused persons started dilly dallying with the matter. He cited a decision reported in
35. In reply it was submitted by Mr. S.K. Kapur learned Senior Advocate appearing on behalf of the petitioners with the permission of the Court that the bank guarantee is the subject-matter of this case. He argued that on 21.08.2014 ''Siemens'' issued the demand letter and on 22.08.2014 ''Siemens'' invoked all the bank guarantees. But, on 24.08.2014 at 07:55 p.m., that too on a Sunday the F.I.R., was lodged by Ashis Basu, the General Manager of Simplex. It was his further submission that on the next day that is 25.08.2014 at 09:36 a.m. one letter was issued to the bank by the O.C., Shakespeare Sarani P.S., which was also signed by the I.O. asking Indusland bank not to pay the bank guarantee and that on that very date the Chief Metropolitan Magistrate, Calcutta, also allowed the prayer of the I.O. and blocked the bank guarantee which was to the tune of Rs. 18 crore. It was further submitted by him that as per F.I.R. the main ingredient is the misappropriation but the said misappropriation even if the F.I.R. is believed in toto was made before the contract was made. He further argued that the bank guarantee was given by Indusland bank and thus the guarantee was not given by Simplex as claimed in the F.I.R. It was his further submission that as soon as the bank guarantee was issued the persons at whose instance it was issued has nothing to say. He took me to Section 91 and 92 of the Evidence Act to convince this Court that where terms of a contract is in question no evidence shall be given to prove the terms of such contract except the documents itself and that when the terms of any contract have been proved no evidence of any oral agreement or statement shall be admitted in evidence in between the parties.
36. He further submitted that in the F.I.R. it was written that allurement was that the bank guarantees will be a formality and those will not be enforced. He further contended that the bank guarantee is the obligation of bank to pay and it is unconditional. He further submitted that when before the Bombay High Court one application was filed regarding arbitration matter this story misappropriation as claimed in the F.I.R. was not mentioned. As regards the Single Bench decision of the Rajasthan High Court as passed in Criminal Misc. Petition No. 1594 of 2010
37. In that decision the Court relied upon the decision of the Apex Court as reported in
38. It was further argued by Mr. Kapur in reply that the judgments referred to by the learned lawyer of the Opposite Party No. 2 have no doubt set out the principle but the facts of such cases cannot match with the fact before this Court. Thus, he submitted that those decisions cannot be made applicable in the instant case. He reiterated that in the instant case there was no entrustment about which much was argued. It was further argued by Mr. Kapur that the learned Chief Judicial Magistrate, Calcutta had no authority to direct the bank not to give payment in respect of the bank guarantee now in question before this Court. He cited the Division Bench decision of Bombay High Court as reported in
39. He also relied upon the decision of the Apex Court as reported in
40. He also cited a latest decision of the Hon''ble Apex Court as reported in
41. In that case before the floor of the Apex Court nothing was shown that at the very inception there was any intention on behalf of the accused persons to cheat which is a condition precedent for an offence under Section 420 of the Code and as such the Apex Court quashed the proceeding. He also cited another decision of the Apex Court as reported in
42. In all those decisions the Apex Court has laid down the guiding principle in exercising the discretionary power granted to the High Court under Section 482 of the Cr.P.C. I have taken note of the principle decided by the Apex Court and the other case decided by the Hon''ble Single Bench of Rajasthan High Court.
43. The case before this Court is regarding fraudulent act on the part of the accused persons to encash the bank guarantee which is the basis to attract Section 420 of the Code and criminal breach of trust also regarding such bank guarantee. At present only one bank guarantee is due to be encashed by the Siemens and it is to the tune of Rs. 25 crore.
44. On scrutiny of the F.I.R. it appears that the alleged misrepresentations were made in the year 2010 that is before the contract was executed. As per Section 91 of the Evidence Act, evidence of terms of contracts, grants and other dispositions of property reduced to form of document no evidence shall be given in proof of the terms of such contract. Section 92 of the said Act has excluded evidence of oral agreement or statements. Thus, what happened prior to the contract or agreement cannot be brought before the court again. The contract was executed in the year 2010 and everything went well in between the two companies. The rough weather surfaced only in the year 2014 and the F.I.R. was lodged in a hot haste even on a Sunday and the investigation agency jumped into action more promptly and the main intention of the SIL was to stall the encashment of the last bank guarantee. The bank guarantee is a contract between the banker and the beneficiary. As soon as the person creates a bank guarantee his job is finished. It is the duty of the bank to comply with the instruction and now the role is in between the banker and the beneficiary.
45. It cannot be said that the money was entrusted to ''Siemens''. The money was actually in custody of the bank and as such claim of the F.I.R. maker that there was entrustment of money through those bank guarantees in favour of ''Siemens'' cannot be considered to be one good illustration of entrustment in the commercial world. The Apex Court in its decision reported in
46. As regards the allegations under Section 420 of the Code, I like to say the ingredients of that section, (1) - deception by any person, (2) - fraudulent or dishonestly entrusting any person to deliver any property; or (3) - to consent that any person shall retain any property and finally (4) intentionally inducing that person to do or act to do anything which they were not supposed to do or supposed to omit to do.
47. It is also settled position of law that the intention to cheat must be there at the very inception of the transaction or contract as the case may be. Thus, there must be one ''guilty mind'' as soon as a person enter into the contract or otherwise to cheat a person. In the instant case before us the contact was executed in the year 2010 and everything was going on smoothly till 2014. Now, the question is whether there was any ''dirty mind''. The fact reveals that the F.I.R. was filed just to stop ''Siemens'' from encashing the back guarantees. There may be disputes between the parties as regards the works done or bill adjustments but that cannot come in the arena of the criminal court unless it can be ascertained from the fact that there was any element of cheating on the part of the accused persons. Nothing has been proved to establish prima facie that the officials of Siemens had prior intention to defraud the SIL. It was just a commercial transaction.
48. We can refer here the decision of the Apex Court as reported in
49. It may be noted that the story of alleged misrepresentation made by the officers of ''Siemens'' who are now the petitioner before this court was not disclosed before the Bombay High Court when the Arbitration Proceeding was started at the behest of SIL. That arbitration proceeding was filed before the lodging of the present F.I.R. and naturally I can say that in the F.I.R. there has been embellishment or exaggeration. Thus, I am satisfied that the ingredients of Section 420 of the Code cannot be attracted in the present case before the floor of this court even if the F.I.R. is believed in toto. I am not unmindful of the fact that this court must be very cautious in quashing a proceeding by exercising its discretions granted under Section 482 of the Cr.P.C. This inherent power has to be exercised sparingly and that too in the rarest of rare cases. It is to be exercised ex debito justitiae, to do real and substantive justice. In exercising this discretion the court must bear in mind the fact before it and will also consider whether the proceeding pending investigation may be allowed to continue or whether it will be an instrument of oppression for the accused persons at the hands of complainant party through the investigating agency or that it will be a misuse of criminal process to put undue pressure. In civil dispute, it is true, that dispute arising from breach of contract may be tackled both by the Civil Court and also by the Criminal Court but no Court can allow one criminal case to continue when the matter could have been resolved by the Civil Court particularly when the criminal intention cannot be derived either from the documents or from the circumstances.
50. I cannot shut my eyes to a recent decision of the Apex Court as reported in
51. I cannot be unmindful in respect of the decision of the Apex Court as reported in (2005) 10 SCC 228 (Anil Mahajan Vs. Bhor Industries Ltd. and another) , wherein the Apex Court held that fraudulent and dishonest intention must be shown to be existing from the very beginning of the transaction and mere failure to give the promise at a subsequent stage cannot be termed as an offence of cheating. It was further held that mere use of word ''cheating'' in the complaint would not sufficient and the Court must look into the substance of the complaint and will consider whether it pertains to a civil case of breach of contract or a criminal case under Section 420 of the I.P.C.
52. I am also to consider the decision of the Apex Court as cited by Mr. Ghosh, appearing on behalf of the State
53. Thus, on scrutiny of the record, with special emphasis to the F.I.R., the decisions of the Apex Court, other High Courts and of this Court, I am of the considered view that in the instant case before this Court there is no element of cheating or criminal breach of trust. It is by and large a settled law that court should not ordinarily interfere with a criminal proceeding at the preliminary stage but this settled law has an exception and that is if it appears from the materials on record that a criminal proceeding was set into motion in a dishonest and unjust manner and continuance of the same will be an abuse of the process of the court.
54. It is bounden duty in the interest of justice that the High Court in exercise of its inherent power must put an end to such vexatious and oppressive proceeding. The official of SIL had tried to coerce the official of Siemens so that out of pressure they may give some undue financial favour to the Simplex Infrastructure Limited (SIL) and to do real and substantial justice I like to quash the criminal proceeding being Shakespeare Sarani P.S. case No. 289 dated 24th of August, 2014 (GR case No. 1947 of 2014 of the Chief Metropolitan Magistrate, Calcutta).
55. Before I part with this record I must say that the investigating officer of this case had no authority to instruct the bank not to disburse the amount involved in the bank guarantee as in the instant case before this court there is no element of fraud either in the F.I.R. or can be derived from the circumstances. It is the settled law that the bank is liable to pay to the beneficiary the amount mentioned in the bank guarantee unless fraud is proved. I can rely upon two decisions of the Apex Court as reported in
56. This being so the order of the learned Chief Metropolitan Magistrate, Calcutta dated 25.08.2014 passed in that GR case vide which he allowed the prayer of the IO to stop paying of the bank guarantee in question is also cannot be supported and as such that order is also set aside.
57. Thus, this application under Section 482 of the Cr.P.C. succeeds on contest but without costs.
58. This court hereby quash the criminal proceeding being Shakespeare Sarani P.S. case No. 289 dated 24th of August, 2014 (GR case No. 1947 of 2014 of the Chief Metropolitan Magistrate, Calcutta).
