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Synopsis

The Supreme Court has said a commercial dispute cannot be given a colour of criminal case by lifting from the penal code certain words or phrases and implanting them in a complaint.

The top court on January 30, 2024 quashed criminal proceedings initiated in Ghaziabad court against the then head of Exide Industries Ltd following a dispute arising out of reconciliation of rates of gas supplied to it from Ambika Gases, saying the dispute, per se, is commercial in nature having no element of criminality.

A bench of Justices Aniruddha Bose and Sanjay Kumar allowed an appeal by Sachin Garg against the Allahabad High Court's order of March 23, 2023 which dismissed a plea to quash the case on the ground that the subject-complaint involved adjudication of disputed questions of facts.

"While it is true that at the stage of issuing summons a magistrate only needs to be satisfied with a prima facie case for taking cognizance, the duty of the magistrate is also to be satisfied whether there is sufficient ground for proceeding," the bench said.

Senior advocate Mukul Rohatgi on behalf of the appellant contended that the complaint made against the appellant does not disclose any criminal offence and at best, it is a commercial dispute, which ought to be determined by a Civil Court. 

The complainant, on the opposite, stated detailed description of the offending acts need not be disclosed at the stage at which the appellant wants invalidation of the complaint. 

In the case, the bench said, "We are satisfied that the allegations made by the complainant do not give rise to the offences for which the appellant has been summoned for trial. A commercial dispute, which ought to have been resolved through the forum of Civil Court has been given criminal colour by lifting from the penal code certain words or phrases and implanting them in a criminal complaint," the court said.

The court found the Magistrate here failed to apply his mind in issuing summons and the High Court also failed to exercise its jurisdiction under Section 482 of the Criminal Procedure Code to prevent abuse of the power of the Criminal Court.

"It is true that the appellant could seek discharge in course of the proceeding itself before the concerned Court, but here we find that no case at all has been made out that would justify invoking the machinery of the Criminal Courts. The dispute, per se, is commercial in nature having no element of criminality," the bench said.

Going through the offences alleged, the bench pointed out the complainant, in his initial deposition, has not made any statement relatable to criminal intimidation. 

The complainant contended the appellant in any event has got the right to apply for discharge and the petition of complaint does not suffer from the defect of not having made out any offence at all. 

"It would also be evident from the petition of complaint the dispute between the parties centred around the rate at which the assigned work was to be done. Neither in the petition of complainant nor in the initial deposition of the two witnesses (that includes the complainant) the ingredients of the offence under Section 405 of the 1860 Code surfaced. Such commercial disputes over variation of rate cannot per se give rise to an offence under Section 405 of the 1860 Code without presence of any aggravating factor leading to the substantiation of its ingredients," the bench said.

The court also did not find any material to come to a prima facie finding that there was dishonest misappropriation or conversion of any material for the personal use of the appellant in relation to gas supplying work.

"The said work was done in course of regular commercial transactions. It cannot be said that there was misappropriation or conversion of the subject property, being dissolved acetylene gas which was supplied to the factory for the purpose of battery manufacturing at EIL. The dispute pertains to the revision of rate per unit in an ongoing commercial transaction. What has emerged from the petition of complaint and the initial deposition made in support thereof that the accused-appellant wanted a rate variation and the entire dispute arose out of such stand of the appellant. On the basis of these materials, it cannot be said that there was evidence for commission of offence under Section 405/406," the bench said.

The court also noted in the allegation of criminal intimidation no particulars have been given. "Both in the complaint petition and the initial deposition of one of the witnesses, there is only reproduction of part of the statutory provision giving rise to the offence of criminal intimidation. This would constitute a mere bald allegation, short of any particulars as regards to the manner in which threat was conveyed," the bench said. 

The appellant also argued that the complaint should not have been entertained without arraigning the principal company as an accused. 

The bench said it would not dilate on this issue, except holding that the complaint case cannot be rejected at the nascent stage on the sole ground of not implicating the company. But otherwise, there were reasons for quashing the complaint and the summons, it said.