Supreme Court Quashes FIR Against Manager of Sri Lankan Company

A bench of Justices Pankaj Mithal and S V N Bhatti held a mere civil dispute had been given the colour of an offence of cheating and criminal breach of trust.

"We are of the view that the continuation of the FIR against the appellant is an abuse of the process of law, and at best, the non-payment of the sale price could be a civil dispute between the appellant and M/s Oswal Overseas," the bench said.

According to the FIR, in March 2012, the appellant, Ashok Kumar Jain, had directly contacted the complainant, given him his visiting card, and seen the samples of the work being done by him.

Further, the appellant also enquired from the complainant from whom he was purchasing the goods of sarees. After 2-3 days, he came to the office of the complainant and demanded other samples; the appellant had asked the complainant to prepare goods and informed that he would make the payments in 60 to 90 days; and the appellant had assured and given trust for making timely payments, stating that he had his own house in Chennai and had good contacts with political persons.

The court noted that as per the FIR, the goods were to be exported out of India. Since the complainant did not possess an import/export license, the appellant had asked him to export the goods through M/s Oswal Overseas. Accordingly, from October 16, 2013 to March 05, 2014, the complainant had exported sarees worth Rs 34,71,344 through Vikrambhai, owner of M/s Oswal Overseas to the appellant.

"We have perused the FIR and are convinced that the inducement is an explanation to contradict the documents through which exports have been completed. In the circumstances of this case, by referring to inducement, the continuation of investigation/prosecution into the offence of cheating and breach of trust would amount to an abuse of the process of law. Further, what begs the question is whether such non-payment of the sale price can be an offence of criminal breach of trust and cheating at the hands of the second respondent. The answer is clearly no," the bench said.

The complainant claimed that the appellant, after appropriating the goods exported, had not paid the sale price of Rs 34,71,344. M/s Oswal Overseas was the exporter, and the primary liability for the goods entrusted lay with the appellant, he argued.

The complainant had treated the Director/Partner of M/s Oswal Overseas as a witness to bring home the accusation of breach of trust and cheating.

"We do not want to hold a mini trial and observe whether such an effort, either in the course of the investigation by the police or finally in the prosecution, will bring home the charges. In the documents filed, which is a true copy of the invoices and the payment receipt made by the appellant, the appellant is shown as the consignee and M/s Oswal Overseas is the exporter," the bench said.

The court found the entrustment was made to M/s Oswal Overseas by the complainant and not to the appellant.

It might be true that the appellant is yet to discharge the sale price of the subject export. The complainant, by referring to an oral arrangement of inducement, tries to plead a case contrary to the documents through which the final “entrustment” of the exported goods happened in Sri Lanka, the court said.

It finally allowed the appeal and set aside the Gujarat High Court order and quashed the FIR.