ALL CARGO MOVERS (I) PVT. LTD. & ORS. v. DHANESH BADARMAL JAIN AND ANR

Citation: [2007] 11 S.C.R. 271

Court: Supreme Court of India

Bench: S.B. SINHA, H.S. BEDI

Case summary

ALL CARGO MOVERS (I) PVT. LTD. & ORS. v. DHANESH BADARMAL JAIN AND ANR.pdf

Judgment text

ALL CARGO MOVERS (I) PVT. LTD. & ORS. v. DHANESH BADARMAL JAIN AND ANR. OCTOBER 12, 2007 [S. B. SINHA AND HARJIT SINGH BEDI, JJ. ) Code ofCriminal Procedure, 1973: ss. I 90 and 482-Exercise ofpower under-Dispute between parties arising out ofa contract ofcarriage-Suit with regard to the said dispute pending before High Court-Criminal complaint filed alleging breach oftrust-Magistrate issuing summons-Petitionfor quashing summons dismissed by High Court-HELD: Breach of contract simplicitor does not constitute an offence-Allegations in complaint petition must also disclose necessary ingredients of the offence-Onfacts, complaint petition does not disclose any averment with regard to ingredients ofoffences u/ss 406 and 420 ! PC-Where duringpendency ofa civil suit, a criminal complaint isfiled, court may, for ascertaining correctness ofallegations, notice, besides the pleadings in the suit, correspondence exchanged between parties and other.

admitted documents-Criminalproceedings shouldnot be encouraged when it is found to be malafide or otherwise an abuse ofprocess of court-Superior Courts while exercising this power should strive to serve ends ofjustice-Impugnedorders setaside-Penal Code, I860ss. 406 and 420-Administration ofCriminal Justice. Respondent no. 1 entered into a contract ofcarriage with the appellant for delivery ofcertain consignments to a company, namely, 'UA', in Kenya. Appellant asked 'MN', its agent in Kenya, to arrange the delivery of the said consignments. The goods said to G have been delivered by the agent or the appellant to the original consignee were allegedly rejected by the latter as being inferior in quality. The goods were then said to have been delivered to another company. Respondent no.

1 issued a notice to the appellant and others stating that they effected delivery ofthe consignments without production of original Bills ofLading and committed a breach of contract ofcarriage and acted in violation thereof. A suit was tiled by respondent no. 1 in this regard in the Bombay High Court. More than a year thereafter, respondent no. 1 filed a criminal complaint against the appellants alleging commission of offence of criminal breach of trust by them for effecting delivery of consignments in connivance and causing criminal misappropriation of valuable property ofthe complainant. The accused filed a petition for quashing the orderissuing summons to them, which was dismissed by the High Court observing that the allegations made in the complaint, prima facie, disclosed the offence ofbreach oftrust. Aggrieved, the accused filed the instant appeal. Allowing the appeal, the Court HELD: 1. 1.

Breach of contract simplicitor does not constitute an offence; Allegations in the complaint petition must disclose the necessary ingredients of the offence. In the instant case, the allegations made in the complaint petition, even ifgiven face value and taken to be correct in its entirety, do not disclose an offence. A bare perusal of the complaint petition would show that it did not contain any averment in regard to the ingredients of the offence under Sections 406 and 420 ofthe Indian Penal Code. [Para 14 and 17] (279-B, C, D; 278-D] 1. 2. Where a civil suit is pending and the complaint petition has been filed after filing ofthe civil suit, the Court may, for the purpose of finding out as to whether the said allegations are prima facie correct, notice the correspondences exchanged by the parties and other admitted documents. Further, the Court may not only take into consideration the admitted facts but may also look into the pleadings in the suit.

No allegation whatsoever was made against the appellants in the notice. What was contended was negligence and/ or breach of contract on the part of the carriers and their agent. [Para 17 and 18] [279-B, C, D] 1. 3. Criminal proceedings should not be encouraged, when it is found to be mala fide or othenvise an abuse ofthe process ofcourt. A Superior Courts while exercising this power should also strive to serve the ends of justice. The impugned judgment cannot be sustained and is set aside. [Para 17 and 22] [279-F; 281-E] G. Sagar Suri & Anr. v. State ofUP. & Ors. , [2000] 2 SCC 636; Anil Mahajan v. Bhor Industries Ltd & Anr. , (2005} 10 SCC 228; Hira Lal Hari Lal Bhagwati v. CBI, New Delhi, [2003] 5 SCC 257; Hira Lal Hari LalBhagwati v. CBI, New Delhi, [2005} 3SCC 670 and Indian Oil C01poration v. NEPC India Ltd. & Ors. , [2006} 6 SCC 736, relied on. CRIMINAL APPELLATE JURISDICTION: Criminal Appeal No. 1443 of 2007. From the Judgment and final Order dated 19. 01.

2007 ofthe High Court ofGujarat in Miscellaneous Criminal ApplicationNo. 3585of1998. F. S. Nariman and Siddharth Luthra, Sanjiv Sen, RN. Karanjawala, Nandini Gore, Pragya Singh Baghel, Simran Brar and Manik Karanjawala for the Appellant. P. H. Parekh, Lalit Chauhan, Swnit Goel, Arjun Garg, Pallavi (for P. H. Parekh & Co. ), Hemantika Walu and Pinky for the Respondents. The Judgment ofthe Court was delivered by S. B. SINHA, J. 1. Leave granted. 2. The parties hereto entered into a contract of carriage. First Respondent approached the appellants which are companies registered and incorporated under the Indian Companies Act for delivery ofsix consignments valued at US$ 98,715. 29 to the original consignee, MJs. Universal Apparels (EPZ), Mombassa, Kenya. By reason of fax message, Appellants asked their counterparts in Mombassa, Kenya G (Walford Meadows) to confirm delivery ofconsignment asking it to see that the cargo is delivered only against presentation oforiginal Bills of Lading.

The goods in question were said to have been delivered by the agent ofthe petitioner to the original consignee but the same allegedly was rejected on the ground ofbeing inferior in quality. Goods are said to have been delivered to ·Mfs. Fashionette Industries Ltd. Complainant-·· Respondent issued a notice to the accused persons as also the aforementioned Walford Meadows and Mis. Universal Apparels stating· ·· ''That with utter disregard to the procedures and practice prevalent internationally, and being fully conscious ofthe consequences of delivering the consignments without production ofthe Bills of Lading, you Mis. Walford Meadows Ltd. , as agents ofthe Carrier at Mombassa Ltd. effected delivery ofthe consignments covered under the aforesaid original bills oflading to the consignees, mthout their producing the Bills ofLading. That my clients are shocked at your act ofnegligence, which is contrary, violative and in breach ofyour duties under the Contract and Law. " 4.

Negligence was, thus, attributed to the agencies in delivering the cargo Without the original Bill ofLading. It was also alleged that the carriers and their agent have committed a breech ofcani,'ige and acted in violation oftheir contract and obligation. A claim for a sum ofUS$ 84,353. 31 was made. In the said notice, it was stated: ''That you, Mis. Walford Meadows, sent a fax dated 19. 9. 1996 . to Mis Universal Apparels, copy ofwhich was faxed to my clients . by you Mis All Cargo Movers (India) Pvt. Ltd. By the said fax, you Mis Walford Meadows Ltd. have clearly pointed out the procedures to be followed in respect ofThrough. Bills ofLading or House Bills ofLading and have admitted that no cargo should be released to the importer mthout the presentation ofthe original Bills ofLading. That you, Mis. Walford have gone one step further and stated that you had delivered the consignments to Universal Apparels as a favour, since Universal Apparels were your regular · customers etc. etc.

and lodged a claim for the value ofthe said · · consignments being the amount they have been debited v. ith you, Mis. All Cargo. " ........ 5. On or about 14. 9. 1996, Mahabir Apparels in a letter addressed to the petitioner company, lodged a statement ofclaiin stating: "PLEASE TREAT THIS AS OUR FORMAL CLAIM FOR RS. 27,87,795/- INVOLVED ON THIS CONSIGNMENT. YOU ARE HEREBY ADVISED TO LOOK INTO THE MATTER AND GIVE US THE EXACT STATUS OF THE ABOVE CARGOES IMMEDIATELY. " 6. Yet again by a fax message dated 19. 9. 1996 sent by Darius B Macharo to the Universal Apparels, it was stated : "The above shipments were realeased and delivered to you without your showing to us the original Bills ofLading. The procedure ofthe through bills oflading or house bills oflading C (illegible) should be released to the importer without presentation ofthe original bill oflading. However, this favour was extended to you because I. You are our regular customer. 2.

To save you for heavy post storage charges which you would ((illegible) you were to wait until you got the original bill from your supplier. 3. You needed the material very urgently as you were out ofstock. We have now been advised by our Principals, All Cargo that your supplier Mahavir Apparels is demanding US Dollar 84,353. 31 from us as we released the goods in absence of the original BIL. (illegible) Please revert now as we have to advise our Principal in India before close of business today. / - In the meantime we are holding all your shipments until this matter. is resolved. " 7. A copy ofthe said fax message was sent to the appellant herein G stating: "CC : All Cargo India, Mumbai. Attn : Vevek Kele We shall come back to you with full details upon receiving reply from Universal Apparels. Cargo was released without Bank Guarantee. " 8.

A bare perusal ofthe aforementioned letters/notices would clearly indicate that no allegation had bten made at the material time that it was 8 the appellant who had caused delivery ofthe goods. 9. It is furthermore not in dispute that a suit has been filed by the respondent herein in the Original Side ofthe Bombay high Court which has been marked as suit No. 1861 of 1997. 10. In the said suit, the following have been arrayed as defendants "l. ACE Lines Ltd. a company Incorporated under Foreign Laws, Having its office at ?. 9 Bis Mere Bathelemy Street, Port Louis, Mauritius. 2. All Cargo Container Lines Ltd. A company incorporated under ;,. _ Foreign laws having its office at 29, Bis Mere, Bathelemy Street, Port Louis Mauritius. . , _,. All Cargo Movers (India) Pvt. Ltd. A company incorporated in India Under the Companies Act, 1956 And having its office at 204, National Insurance Building, Dr. D. N. Road, Bombay -- 400001. 4.

Mis Walford Meadows Limited, A company incorporated under Foreign Laws having its office at 1st American Bank Building, 2nd Floor, No. l Avenue, Mombassa. " ~ 11. Whereas defendant Nos. 1 to 3 are alleged to be inter-related/ sister companies, the fourth defendant is said to be their agent. In the said suit, neither the aforementioned Mis. Walford Meadows Ltd. nor Mis. Universal Apparels have been implicated as parties. Plaintiffin the said suit averred that entrustrnent ofthe six consignments have been made to Mahabir Apparels. The case made out in the plaint by the first -r~ respondents. is as under : "The respective ships carrying the said six consignments sailed from the Port of Bombay on different dates and arrived at Mombassa. The 3rd Defendants addressed 2 fax messages dated 30. 8. 1996 and 2. 9. 1996 to the 4th Defendant specifically instructing them to deliver the said six consignments only against presentation oforiginal Bills ofLading.

The Plaintiffis crave leave to refer to and rely upon the aforesaid correspondence. xxx xxx xxx The plaintiffimmediately addressed a fax dated 11. 9. 1996 to the 3rd Defendant (with a copy to Mis. Harilal Bhawm*) questioning the legality, propriety in giving delivery of the cargo without C production ofthe Bills ofLading. The plaintiffalso pointed out that they had not given any writter1:;. :~mission to give delivery ofthe cargo \\'ithout production ofthe Bills ofLading. The Plaintiffwhilst emphasizing that the m:ttter was very serious informed the 3rd Defendant to inform their Mombassa Agents not to release the goods without production ofthe original Bills ofLading in respect oftheir consignments. Th_e plaintiffcraves leave to refer to and rely upon the said correspondence when produced. 12. The said suit is still pending. More than one year after filing of the said suit, i. e. , on or about 6. 5.

1998, a complaint petition was filed wherein, inter aila, it was alleged : ''Thereafcer in and subsequent to September, 1996, the complainant was shocked to learn that the accused have delivered away the goods materials of the complainant's above described 6 consigmnents without - presentation ofand securing the original 6 Bills of Lading, which were till with the complainant and not negotiated i. e. paid off by the purchasing party and thus the accused in abetment ofeach other and acting in common concern have committed criminal breach of Trust by causing criminal misappropriation ofthe valuable property ofthe complainant and have committed offences punishable u/s. 407, 34 and 114 ofl. P. Code.

By issuing their said Bills ofLading in acceptance and compliance ofthe complainants invoices, the accused represented, assured and induced the complainant to believe that the complainant's goods material delivered to the accused by the complainant would be delivered by the accused to the receiving party only "TO ORDER" i. e. only on the presentation oforiginal bills ofLading to the party receiving the delivery ofthe goods material. Ifthe accused had not to represented assured and induced the complainant, he would not have risked his gods material ofthe value ofUS$ 98,715. 29 (i. e. Rs. 38,49,896. 31 at dollar rate about Rs. 39/-) to be delivered to the accused. Thus, the accused have in abetment and concert of each other, cheated the complainant and committed offences u/s 420, 34 and 114 ofl. P. Code. " 13. Agent ofthe Kenyan counterpart ofthe petitioner, namely Mis. Walford Meadows Ltd.

against whom allegations have been made that it had delivered the consignments to the assignee without original bills of lading had not been made an accused. 14. A bare perusal ofthe complaint petition would show that it did not contain any averment in regard to the ingredients ofthe offence under Sections 406 and 420 ofthe Indian Penal Code. There is no allegation that it was the petitioner who had delivered the goods. 15. An application for quashing ofthe order issuing summons to the appellant by the learned Metropolitan Magistrate has been dismissed by the High Court of Gujarat by reason of the impugned judgment dated 19. 1. 2007 holding: "Perusing the complaint in light ofthe above arguments and legal propositions, it was clear that the allegations made therein, prima facie, disclosed the offence ofbreach of trust and the important averments were substantiated by the statement on oath of the complainant.

There is no reason to examine the documents and defences of the petitioner at this stage to find out whether the complainant was likely to result in conviction. It is not established though alleged, either that the complainant did not disclose any offence or that the criminal proceedings were a gross abuse ofthe process oflaw, instead, it appears from the record that hearing of the present petition is unduly delayed after grant ofex-parte interim -$ _. ( relief on 1. 9. 1998. Therefore, petition is dismissed, Rule is discharged and interim reliefis vacated with no order as to costs. 16. Mr. P. H. Parekh, learned counsel appearing on behalf of the respondents, has drawn our attention to several documents to show that it had all along been contended by the first respondent that the appellant was also guilty ofviolating the terms ofthe Bill ofLading. ~ 17.

We are ofthe opinion that the allegations made in the complaint petition, even if given face value and taken to be correct in its entirety, do not disclose an offence. For the said purpose, This Court may not only take into consideration the admitted facts but it is also pennissible to look into the pleadings ofthe plaintiff-respondent No. I in the suit. No allegation whatsoever was made against the appellants herein in the notice. What was contended was negligen~e and/or breach ofcontract on the pait ofthe l. '. arriers and their agent. Breach of contract simplicitor does not constitute an offence. For the said purpose, allegations in the complaint petition must disclose the necessary ingredients therefor. Where a civil suit _).

is pending and the complaint petition has been filed one year after filing ofthe civil suit, we may for the purpose offinding out as to whether the said allegations are prima facie cannot notice the correspondences exchanged by the parties and other admitted documents. It is one thing to say that the Comt at this juncture would not consider the defence of the accused but it is another thing to say that for exercising the inherent jurisdiction ofthis Court, it is impermissible also to look to the admitted documents. Criminal proceedings should not be encouraged, when it is found to be mala fide or otherwise an abuse ofthe process ofthe Court. -< Superior Courts \Vhile exercising this power should also strive to serve ~ the ends ofjustice. 18. In G. Sagar Suri & Anr. v. State of UP. & Ors. , [2000] 2 SCC 636, this Court opined : "8. Jurisdiction under Section 482 ofthe Code has to be exercised with great care.

In exercise ofits jurisdiction the High Court is not to examine the matter superficially. It is to be seen ifa matter, which is essentially ofa civil nature, has been given a cloak ofcriminal offence. Criminal proceedings are not a short cut ofother remedies available in law. Before issuing process a criminal court has to exercise a great deal of caution. For the accused it is a serious matter. This Court has laid certain principles on the basis ofwhich the High Court is to exercise its jurisdiction under Section 482 of the Code. Jurisdiction under this section has to be exercised to prevent abuse ofthe process ofany court or otherwise to secure the ends ofjustice. 19. Therein also, having regard to the fact that a criminal complaint under Section 138 ofthe Negotiable Instruments Act had already been pending, a criminal complaint under Section 406/420 was initiated which was found to be an abuse of the due process oflaw. 20. In Anil Mahajan V. Bhor Industries Ltd. & Anr.

, [2005] 10 SCC 228, this Court held : "8. The substance of the complaint is to be seen. Mere use ofthe expression "cheating" in the complaint is ofno consequence. Except mention ofthe words "deceive" and "cheat" in the complaint filed before the Magistrate and "cheating" in the complaint filed before the police, there is no averment about the deceit, cheating or fraudulent intention ofthe accused at the time ofentering into MOU wherefrom it can be inferred that the accused had the intention to deceive the complainant to pay. According to the complainant, a sum ofRs. 3,05,39,086 out ofthe total amount ofRs. 3,38,62,860 was paid leaving balance ofRs. 33,23,774.

We need not go into the question ofthe difference of the amounts mentioned in the complaint which is much more than what is mentioned in the notice and also the defence of the accused and the stand taken in reply to notice because the complainant's own case is that over rupees three crores was paid and for balance, the accused was giving reasons as above-noticed. The additional re~n for not going into these aspects is that a civil suit is pending inter se the parties for the amounts in question. " 21. In Hira Lal Hari Lal Bhagwati v. CBI, New Delhi, [2003] 5 SCC 257, this Court opined: "It is settled law, by a catena ofdecisions, that for establishing the offence of cheating, the complainant is required to show that the accused had fraudulent or dishonest intention at the time ofmaking promise or representation. From his making failure to keep promise subsequently, such a culpable intention right at the beginning that is at the time when the promise was made cannot be presumed.

It is seen from the records that the exemption certificate contained B necessary conditions which were required to be complied with after importation ofthe machine. Since the GCS could not comply with it, therefore, it rightly paid the necessary duties without taking advantage ofthe exemption certificate. The conduct of the GCS clearly indicates that there was no fraudulent or dishonest intention ofeither the GCS or the appellants in their capacities as officebearers right at the time ofmaking application for exemption . As there was absence ofdishonest and fraudulent intention, the question ofcommi_tting offence under Section 420 of the Indian Penal Code does not arise. " {See also Hira Lal Hari Lal Bhagwati v. CBI, New Delhi, [2005] 3 SCC 670 and Indian Oil Corporation v. NEPC India Ltd. & Ors. , [2006] 6 sec 736}. 22. For the reasons aforementioned, the impugnedjudgment cannot be sustained. It is set aside accordingly.

Appeal is allowed and the order taking cognizance against the appellant is set aside. RP. Appeal allowed.