Praveen Gangil @ Neelu vs. M/S Parag Traders Thr. Proprietor Rajesh Aadwani

Held

The Court held that the applicant, by being a broker, could not be held criminally liable for the non-supply of goods by the seller. The Court noted that the complainant had not alleged specific duties or liabilities of a broker in the complaint or in the statements recorded. The Court referred to the definition of 'agent' under Section 2(5) of the CGST Act, 2017, which includes a broker. However, it distinguished the role of a broker from that of a commission agent, citing a Bombay High Court judgment. A broker is merely an intermediary who gets brokerage and whose duties cannot be equated with a commission agent who handles the goods and payment. In the absence of specific allegations regarding the duties and liabilities of a broker in the complaint, no prima facie case was made out against the applicant warranting cognizance of the offense under Section 420 of the IPC. Consequently, the order taking cognizance against the applicant was set aside, and the applicant was discharged.

Facts

The respondent, M/s Parag Traders, filed a complaint under Section 420 of the Indian Penal Code against the applicant, Praveen Gangil, and M/s Manglam Seeds Company through its proprietor, Arun Sharma. The respondent alleged that the applicant, acting as a broker, along with Arun Sharma, persuaded the respondent to deposit Rs. 4,70,000/- in the account of M/s Manglam Seeds Company for the supply of chicken feed. The amount was deposited on November 14, 2018. Subsequently, the chicken feed was not supplied, and the respondent was informed that the goods were mortgaged with a bank and had been utilized for personal use. The respondent later learned through a newspaper that the warehouse contents were being sold by the bank. The applicant's contention was that he was merely a broker and had no legal liability for the non-supply of goods by the seller, M/s Manglam Seeds Company. The trial court had taken cognizance of the complaint against the applicant.

Key Issues

1. Whether the applicant, by being a broker, can be held criminally liable for the non-supply of goods by the seller, M/s Manglam Seeds Company, under Section 420 of the IPC? (Question of law) Arguments: Petitioner (Applicant): The applicant argued that he was merely a broker, and the transaction was between the respondent and M/s Manglam Seeds Company. The amount was deposited into the company's account, and the supply was to be made by co-accused Arun Sharma. Therefore, the applicant had no legal liability for the non-supply. Respondent (Complainant): The respondent contended that the applicant, as a broker, was responsible for ensuring the supply of chicken feed, as the respondent agreed to pay the amount solely based on the applicant's assurance. The respondent also pointed out that the goods in the warehouse were mortgaged due to non-payment of bank dues by Arun Sharma.