- 1 - CRL.P No.100887 of 2020 IN THE HIGH COURT OF KARNATAKA, DHARWAD BENCH DATED THIS THE 07TH DAY OF JANUARY, 2025 BEFORE THE HON'BLE MS. JUSTICE J.M.KHAZI CRIMINAL PETITION NO.100887 OF 2020 BETWEEN: 1. M/S. CHANDRA PROTECO LTD., REPRESENTED BY ITS MANAGING DIRECTOR, MR. MUKUL GUPTA S/O. LATE. MOTILAL KESARWANI, AGE: 55 YEARS. 2. MR. ATUL AGARWAL S/O. LATE AJAY KUMAR AGARWAL, AGE: 48 YEARS, DIRECTOR OF CAM RESOURCES AND GPA HOLDER OF MR. MUKUL GUPTA, ON BEHALF OF M/S. CHANDRA PROTECO LTD., 3. MRS. APARNA W/O. MR. MUKUL GUPTA, AGE. 51 YEARS, DIRECTOR M/S. CHANDRA PROTECO LTD., 4. MR. RANJEET GUPTA S/O. LATE MOTILAL KESARWANI, AGE: 65 YEARS, DIRECTOR M/S. CHANDRA PROTECO LTD., 5. MR. ANILESH GUPTA S/O. LATE MOTILAL KESARWANI, AGE: 58 YEARS, DIRECTOR M/S CHANDRA PROTECO LTD., ALL PETITIONERS NO.1 TO 5 ARE R/AT M/S. CHANDRA PROTECO LTD., NEW HAVEN, 1ST FLOOR, 49TH PARSI PANCHAYATH ROAD, NEAR SONA UDYOG, ANDHERI EAST, MUMBAI, (STATE OF MAHARASHTRA)-400069. …PETITIONERS - 2 - CRL.P No.100887 of 2020 (BY SRI M.T. NANAIAH, SR. COUNSEL FOR SRI V. SHIVARAJ HIREMATH, ADVOCATE) AND: 1. THE STATE OF KARNATAKA, BY GANDHINAGAR POLICE, BALLARI, REP. BY ITS STATE PUBLIC PROSECUTOR, HIGH COURT COMPLEX, DHARWAD-580011. 2. M/S. ILIYAASH MINES AND MINERALS PVT. LTD., REPRESENTED BY ITS CHAIRMAN AND MANAGING DIRECTOR, SRI A.R. MOHAMMED ILIYAS, LETTER OF AUTHORITY HOLDER OF MR. MARK MICHAEL, HAVING ITS REGISTERED OFFICE, AT NO.2, 1ST FLOOR, CVG COMPLEX, PARVATHI NAGAR, TALUR ROAD, BALLARI-583103. …RESPONDENTS (BY KUM. RANJEETHA ALAGAWADI, ADVOCATE FOR SRI. S.B. HEBBALLI, ADVOCATE FOR R2; SRI PRAVEENA Y.DEVAREDDYYAVARA, HCGP FOR R1) THIS CRIMINAL PETITION IS FILED UNDER SECTION 482 OF CR.P.C. SEEKING TO QUASH THE ENTIRE PROCEEDINGS IN C.C.NO.1626/2014 PENDING ON THE FILE OF THE PRINCIPAL CIVIL JUDGE (JR.DN.) & JMFC COURT, BALLARI, REGISTERED FOR THE OFFENCES P/U/S 409, 420 R/W 34 OF I.P.C., INSOFAR AS PETITIONERS NOS.1 TO 5 (ACCUSED NOS.1 TO 5 RESPECTIVELY) ARE CONCERN, IN THE INTEREST OF JUSTICE. THIS CRIMINAL PETITION, HAVING BEEN HEARD AND RESERVED ON 06.11.2024, COMING ON FOR PRONOUNCEMENT OF ORDER THIS DAY, THE COURT DELIVERED THE FOLLOWING: - 3 - CRL.P No.100887 of 2020 CORAM: THE HON’BLE MS. JUSTICE J.M.KHAZI CAV ORDER (PER: THE HON'BLE MS. JUSTICE J.M.KHAZI) Petitioners who are arraigned as accused Nos.1 to 5 have filed this petition under Section 482 of Cr.P.C to quash the criminal proceeding initiated against them in C.C.No.1626/2014 on the file of Prl.Civil Judge (Jr.Dn.) and JMFC, Ballari for the offences punishable under Sections 409, 420 r/w Section 34 of I.P.C. 2. In support of the petition, the petitioners have contended that the Magistrate without proper application of mind, in a routine and mechanical manner taken cognizance of the case against the petitioners in the instant case which is purely abusing of the process of law. Respondent No.2 has not exhausted any remedy provided under section 154 (1) and (3) of Cr.P.C and straightaway filed the complaint based on letter of authority and subsequently on 03.02.2015, the investigating officer has sought permission to produce such documents. However, - 4 - CRL.P No.100887 of 2020 the learned Magistrate has not passed any orders in this regard. 3. In the absence of any complaint under Section 154 and direction under Section 156(3) of Cr.P.C, there is total violation of directions issued by the Hon'ble Supreme Court in Lalitha Kumari's case. Under section 200 of Cr.P.C, the Magistrate taking cognizance of the offence on complaint shall examine upon oath, the complainant and his witnesses if any, and the substance of such examination shall be reduced in writing and shall be signed by the complainant, witnesses and also the Magistrate. In the instant case, on the same day of filing the complaint, the learned Magistrate has referred it to the concerned police for investigation and charge sheet is filed, cognizance is taken. Therefore, the procedure contemplated under Section 200 Cr.P.C is not followed. Affidavit in support the complaint as required under Section 156(3) of Cr.P.C is not filed. The learned Magistrate has also not issued direction under Section 156 (3) of Cr.P.C to the concerned police to investigate. - 5 - CRL.P No.100887 of 2020 4. Admittedly, the petitioners are residing at a place beyond the local restriction of the Magistrate, but the Magistrate has not conducted any enquiry as required under Section 202 of Cr.P.C. Complainant/respondent No.2 is holder of letter of authority of his principal, Mr. Mark Michael. Therefore, he is not having any authority or locus standi to file the complaint. The cause of action for the alleged offences did not arise within the jurisdiction of the learned Magistrate. Therefore, prima facie the complaint suffers from locus standi, lack of cause of action and jurisdiction for the Magistrate to entertain it. The complaint clearly indicates that it is a civil dispute for recovery of the amount due which is given a colour of criminal offence and for this reason, also, the petition is liable to be quashed and hence the petition. 5. In support of the petition, the accused have relied upon the following decisions: (i) Mrs.Priyanka Srivastava and Anr. Vs. State of UP and others (Priyanka Srivastava)1 1 2015 (6) SCC 287 - 6 - CRL.P No.100887 of 2020 (ii) Abhijit Pawar Vs. Hemant Madhukar Nimbalkar & Anr. (Abhijit Pawar)2 (iii) Binod Kumar & Ors Vs. State of Bihar and Anr. (Binod Kumar)3 (iv) Ramdev Food Products Pvt.Ltd Vs. State of Gujarat (Ramdev Food Products)4 (v) N.Bharath Reddy Vs. C.Sunil Kumar (Bharath Reddy)5 (vi) Sampanna Mutalik Vs. State of Karnataka (Sampanna Mutalik)6 (vii) Balagangadhar C.V Vs. State of Karnataka (Balagangadhar)7 6. After due service of notice, respondent No.2 has appeared through counsel. 7. Learned HCGP representing the State/ respondent No.1 and learned counsel for complainant/respondent No.2 submitted oral objections stating that complainant - M/s Iliyaash Mines and Minerals Private Limited, represented by its Chairman and Managing Director Sri A.R.Mohammed Iliyas is the letter 2 2017 (3) SCC 528 3 2014 (10) SCC 663 4 (2015) 6 SCC 439 5 LAWS(KAR) 2023-10-104 (Crl.P.No.8076/2023) 6 Kar LJ 2024 (2) 219 (Crl.P.No.5788/2023) 7 LAWS(KAR) 2024-7-34 (Crl.P.No.10341-10708/2023) - 7 - CRL.P No.100887 of 2020 of authority holder of Mr. Mark Michael, having its registered office at Ballari. In his capacity as the letter of authority holder of Mr.Mark Michael, complainant is competent to file complaint against the accused persons. 8. During July 2011, Mark Michael met the President of accused No.1 Sri Mukul Gupta at Mongolia. Shri Mukul Gupta persuaded Mark Michael to join his organisation for better prospects. For this reason, Mark Michael left his employment at Gerald Metals, Switzerland and accepted the proposal made by accused No.1 with effect from 15.8.2011, through MOU written to commence from a start date in October 2011 and signed the MOU on 04.05.2011. He was agreed to pay salary of US dollars 23,000/- and monthly business expenses shall be reimbursed and to commence the service effective from 15.08.2011. 9. Though Mark Michael received 15 days payment in the month of August 2011, subsequently no payment have been made giving various excuses. Upto the month - 8 - CRL.P No.100887 of 2020 of 2013, a sum of US dollars 1,60,000/- was due. Things got worse from the first quarter of 2013 and both Mark Michael and accused No.1 realised that this cannot continue further. Therefore, Mark Michael was invited to Mumbai on 24.05.2013 and after discussion a settlement as on 25.5.2013 was entered into between them. According to the same, the accused agreed to pay US dollars 1,55,530/- and it is signed by Mark Michael and accused No.2. Both agreed that there would be no default as per the schedule as evidenced by the exchange of the email and reminders. However, once again, the accused have failed to act upon the said agreement and discharge their obligation. 10. Therefore, without any other alternative Mark Michael handed over the matter to the complainant to recover the amount due by which of letter of authority dated 04.11.2013 and MOU for settlement and undertaking dated 10.11.2013 were executed in favour of the complainant. Accused Nos. 1 to 6 are aware that complainant is the letter of authority holder representing - 9 - CRL.P No.100887 of 2020 Mark Michael to collect the outstanding money due from them. Accused No.2 has also executed Minutes of meeting and Settlement understanding dated 10.11.2013 agreeing that the complianant shall represent Mark Michael and shall be authorised to collect the amount due. However, accused No.2 has utterly failed to adhere with the said stipulation and conditions and its obligations there under, only with a oblique motive to deceive the complainant and to create a misunderstanding between the complainant and Mark Michael. 11. Accused Nos.1 to 6 assured Mark Michael of better services in accused No.1/company. Due to the false promise by the accused, Mark Michael has sustained heavy loss. He has lost his valuable job in the reputed company. The accused No.2 has committed an offence of criminal conspiracy with a dishonest intention to cheat the complainant. They induced Mark Michael to enter into the agreement and failed to fulfil the same. Even though the accused have sent reply to the legal notice, admitting the contract between the parties and sought time to pay the - 10 - CRL.P No.100887 of 2020 amount due, they have failed to do so, and thereby they have committed the offences punishable under Sections 120-B, 409 and 420 of I.P.C and hence, the complaint. 12. Based on the complaint, the trial Court has referred the same to the concerned police for investigation. After detailed investigation, the police have filed charge sheet. The trial Court has taken cognizance. The earlier petition filed by the petitioners under Section 482 Cr.P.C is dismissed. The accused have appeared before the trial Court and secured bail. In the light of the prima facie material on record, this petition is not maintainable and pray to dismiss the same. 13. Heard arguments of both sides and perused the record. 14. Thus, it is the definite case of the complainant that on the persuasion of Shri Mukul Gupta, the Managing Director of accused No.1/company, Mark Michael joined the said organisation on the terms and conditions specified in Memorandum of Understanding dated 04.05.2011 - 11 - CRL.P No.100887 of 2020 commencing from a start date in October 2011, but the services of Mark Michael to be effective from 15.08.2011. As per the said Memorandum of Understanding, the accused persons were required to pay a sum of US dollars 23,000/- per month and also reimburse the monthly business expenses. After a sum of US dollars 1,60,000/- became due, it was decided between the parties that the services of Mark Michael to come to an end and as per the Separation and Settlement agreement dated 25.5.2013, the accused persona agreed to pay a sum of US dollars 1,55,530/-. 15. As per the Minutes of the Meeting and Settlement Understanding dated 10.11.2013, the complainant shall represent Mark Michael to collect the amount of US dollars 1,55,530/- as per the tranches. When the accused persons failed to settle the amount, the complainant has chosen to file the complaint. 16. At the outset the accused have contended that the complainant has not filed any affidavit in support of - 12 - CRL.P No.100887 of 2020 the application under Section 156 (3) of Cr.P.C to refer the complaint for investigation, as per the directions given in Priyanka Srivastava'case. It is relevant to note that the Priyanka Srivastava decision was rendered on 19.03.2015, whereas the present complaint is filed on 20.09.2014. Therefore, question of following the said direction would not arise. Moreover the complainant has not sought for referring the case for investigation, Magistrate has exercised its power under Section 156(3) as provided under Section 190 of Cr.P.C. Therefore, on the ground that the directions in Priyanka Srivastava are not followed, the criminal proceedings against the petitioners cannot be quashed. 17. The accused persons have not only failed to honour the Memorandum of Understanding between the parties entered into in the month of May 2011, after the remuneration payable to Mark Michael fell due, they have entered into Separation and Settlement agreement dated 25.05.2013. The accused persons have also not honoured - 13 - CRL.P No.100887 of 2020 this agreement. Therefore, there is clear intention on the part of the accused persons to cheat Mark Michael. 18. As per the Minutes of Meeting and Settlement Understanding dated 10.11.2023, the complainant is entitled to represent Mark Michael and is authorised to collect the amount due to him. Consequently, he is empowered to file the complaint. When the learned Magistrate has referred the complaint to the concerned police for investigation, there is proper compliance of Section 156 (3) of Cr.P.C. The directions given in Lalitha Kumari's case is that in case of cognizable offence, the police officer is bound to register the case. However, where the complaint does not disclose cognizable offence, a preliminary enquiry is necessary. This situation would arise when a complaint is filed directly to the concerned police. However, when the jurisdictional Magistrate referred the complaint for investigation under Section 156(3) CrP.C, the concerned police are bound to investigate and submit the report. Therefore the question - 14 - CRL.P No.100887 of 2020 of exercising discretion is not available to the concerned police. 19. So far as conducting preliminary enquiry under Section 202 of Cr.P.C is concerned, this situation arises when the Magistrate is not convinced about the commission of the offence. However, when the learned Magistrate is convinced about the commission of the offence, there is no need to conduct enquiry under Section 202 of Cr.P.C. In the present case, since the complaint is referred for investigation under Section 156(3) of Cr.P.C, the learned Magistrate had no occasion to conduct enquiry under Section 202 Cr.P.C. 20. After thorough investigation, the concerned police filed charge sheet against the petitioners. In the light of the case made out against the petitioners, this Court is of the considered opinion that it is not a case for questioning the criminal proceedings initiated against the petitioners. In the result, the petition fails and accordingly the following: - 15 - CRL.P No.100887 of 2020 ORDER (i) Petition filed by the petitioners/accused Nos.1 to 6 under Section 482 of Cr.P.C is hereby dismissed. (ii) Send a copy of this order to the trial Court, forthwith. SD/- (J.M.KHAZI) JUDGE RR CT: UMD