Ipca Laboratories Limited vs. The State Of Madhya Pradesh

Held

The Court allowed the petition. Regarding the first issue, it held that the allegations of non-payment of dues by the contractor to the company, even if true, were purely civil in nature and could not form the basis for lodging a criminal case. The Court found that the company had paid its dues and raised legal objections, and the contractor's criminal complaint appeared to be an act of vengeance. The Court also noted that the contract agreement, which was not disputed by the respondent, supported the petitioners' contention that the contractor was responsible for statutory compliance. On the second issue, the Court found that the application under Section 156(3) of CrPC was not supported by an affidavit, violating the mandate of the Supreme Court in Priyanka Shrivastava, and thus the petition was liable to be allowed on this ground alone. Thirdly, the Court held that the JMFC had exceeded its jurisdiction by directing the police not only to lodge an FIR but also to file a chargesheet, as Section 156(3) of CrPC only empowers a Magistrate to order an investigation. Consequently, the FIR and subsequent proceedings were quashed.

Facts

The petitioners, IPCA Laboratories Limited and its office bearers, filed a petition under Section 482 of the Criminal Procedure Code (CrPC) challenging an order dated July 8, 2019, passed by the Judicial Magistrate First Class (JMFC), Indore. This order allowed an application under Section 156(3) of CrPC, directing the registration of a criminal case against the petitioners. Consequently, an FIR was registered at Crime No. 867/2019 under Sections 406, 420, and 120(b) of the Indian Penal Code (IPC). The dispute arose from a contract between IPCA Laboratories and a contractor (respondent no. 2), who allegedly failed to deposit statutory dues for its employees, leading to recovery actions against IPCA. The contractor then filed a private complaint alleging fraud and criminal breach of trust.

Key Issues

1. Whether the averments in the private complaint, alleging non-compliance with law and non-payment of dues amounting to Rs. 37,24,445/- by the petitioner company to the contractor, constitute a criminal offense or a purely civil dispute. (Section 406, 420, 120(b) IPC). 2. Whether the application filed under Section 156(3) of CrPC was maintainable without an accompanying affidavit, as mandated by the Supreme Court in Priyanka Shrivastava (supra). 3. Whether the JMFC exceeded its jurisdiction by directing not only the registration of an FIR but also the filing of a chargesheet under Section 156(3) of CrPC. Petitioner's Arguments: The petitioners argued that the FIR was lodged to pressurize the company and its office bearers, as the dispute was purely civil in nature, arising from a contract. They relied on the contract agreement, specifically clauses 6, 7, 8, and 16, which placed the onus on the contractor to comply with all legal provisions. They also contended that the application under Section 156(3) lacked the mandatory affidavit and that the JMFC had wrongly directed the filing of a chargesheet. Respondent's Arguments: The respondent argued that the complaint contained clear averments of fraud and that the matter required evidence to be led at trial. They also contended that documents filed by the petitioners could not be considered at this stage and were subject to trial.