Balco Limited Through Soumya Banerjee vs. State Of Jharkhand

Held

The High Court quashed the criminal proceedings, including the order dated 14.06.2023 passed by the Judicial Magistrate, 1st Class, Jamshedpur, directing the registration of an FIR and investigation. The Court held that the allegations in the complaint revealed a purely civil dispute concerning a money claim and contractual breaches, rather than an offence of cheating. The Court emphasized that for an offence under Section 420 IPC, there must be a dishonest intention to cheat from the very inception, which was not demonstrated in the present case. The judgment noted that the parties had worked together for some time, and disputes arose later, negating the element of deception from the beginning. The Court also took into account that the complainant had already initiated proceedings under the Micro, Small and Medium Enterprises Development Act, 2006, for recovery of the amount, which was still pending. Citing Supreme Court judgments, the Court deprecated the tendency to convert civil disputes into criminal cases to exert pressure for settlement. Allowing the criminal proceedings to continue was deemed an abuse of the process of law. The Court clarified that the pending case under the MSME Act would be decided on its own merits.

Facts

The petitioners, BALCO Limited and its officials, sought to quash a criminal proceeding initiated by Respondent No. 2, Ganesh Kumar Agiwal, proprietor of M/s Vassu Enterprises. The complaint alleged that BALCO Limited, through its officials, engaged the complainant for material handling and other services from 2010-11 onwards. Disputes arose regarding termination of agreements in 2015, detention of machinery worth Rs. 2-3 Crore, and outstanding payments. Despite meetings and agreements to settle claims, including a purported agreement in May 2018 to pay Rs. 15,40,68,631.46 with interest, the complainant alleged non-payment. A GST demand notice for Rs. 2,37,48,427/- and penalty was also issued against the complainant's firm. The criminal proceedings were initiated based on a complaint filed in 2023, which led to the registration of an FIR. The petitioners argued that the dispute was purely civil in nature, involving contractual breaches and money claims, and that the criminal case was an abuse of process.

Key Issues

1. Whether the criminal proceedings initiated against the petitioners, arising from a dispute over contractual obligations and alleged non-payment of dues, constitute an abuse of the process of law, particularly when the allegations do not disclose dishonest intention from the inception and a civil remedy is available and pursued. Petitioner's arguments: The petitioners contended that the entire dispute was civil in nature, stemming from contractual disagreements and financial claims. They argued that there was no deception or dishonest intention from the very beginning, as required for an offence under Section 420 of the Indian Penal Code (IPC). They highlighted that the complainant had previously filed a case under the Micro, Small and Medium Enterprises Development Act, 2006, for recovery of the amount, which was still pending. The petitioners relied on the Supreme Court's pronouncements in cases like *Uma Shankar Gopalika (Supra)*, *A.M. Mohan Versus The State represented by SHO & Anr.*, and *Anand Kumar Mohatta v. State (NCT of Delhi)*, emphasizing that civil disputes should not be converted into criminal cases to exert pressure for settlement. Revenue/State's arguments: The judgment does not record specific arguments made by the State or Respondent No. 2 regarding the criminal proceedings. However, the initial action of the Judicial Magistrate in sending the complaint for FIR registration under Section 156(3) Cr.P.C. indicates a prima facie view that criminal ingredients might be present.