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REPORTABLE

THE SUPREME COURT OF INDIA CRIMINAL APPELLATE JURISDICTION

CRIMINAL   APPEAL NO. 111 OF 2011   

V. Ravi Kumar               …Appellant

VERSUS

State, Rep. by Inspector of Police,  District Crime Branch, Salem,  Tamil Nadu & Ors.          …Respondents

J U D G M E N T

Indira Banerjee, J.

This appeal is against the final judgment and order

dated  20-03-2006  passed  by  the  High  Court  of

Judicature  at  Madras,  inter  alia, allowing  Criminal

Original Petition No.27039 of 2005 filed under Section

482 Cr.P.C. and quashing the criminal proceedings being

Crime No.54 of 2005 against the petitioners before the

High Court and also against the first accused company,

which was not party before the High Court.

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2. The appellant, Shri Ravi Kumar carries on business

of cotton ginning and conversion of cotton into yarn at

Salem,  Tamil  Nadu  as  proprietor  of  “SARAVANA YARN

TRADERS”.

3. The  appellant  as  proprietor  of  “SARAVANA  YARN

TRADERS” entered into transactions with Sri. Rajendran

Mills Ltd., Salem (hereinafter referred to as “the Mill”).

The  respondent  No.2/accused  No.2  is  the  Managing

Director  of  the  Mill  and  the  respondent  No.3/accused

No.3  Sri  Sundaram  is  its  Chairman,  respondent  No.

4/accused No.4 Sri  Sundar is the son of the Managing

Director being the respondent No.2/accused No.2 and is

in  charge  of  the  affairs  of  the  Mill.  The  respondents/

accused  Nos.5  to  13  are  also  responsible  for

administering the Mill.     

4. In December 2001, the Mill requested the appellant

to  supply  cotton lint  to  the Mill  for  conversion of  the

same  into  yarn.   The  appellant  and  the  respondents

entered  into  transactions  in  2001.   Later,  in  January

2002, a Memorandum of Understanding in writing was

executed between the appellant and the Mill.

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5. The  appellant  has  alleged  that  pursuant  to  the

Memorandum of Understanding, the appellant supplied

1,03,920 Kgs of cotton lint to the Mill for conversion into

yarn.   The appellant has further alleged that respondent

No.2/accused No.2 Shri  Chokalingam had,  from out of

the said quantity of cotton lint, purchased lint weighing

about  47,164  kgs  of  the  value  of  Rs.26,93,289/-  on

credit  basis  and  the  balance  which  was  worth

Rs.35,26,561.69  had  been  entrusted  to  the  Mill  for

conversion into yarn.    

6. According to the appellant, the Mill did not take any

step to convert  the lint  into yarn in  spite  of  repeated

requests.  The appellant later came to know that all the

accused had connived with each other and in criminal

breach of trust sold the entire cotton lint weighing about

1,08,920/- kgs of the value of about Rs.62,19,850.50 and

appropriated the sale proceeds thereof.     

7. On 20-05-2004, the appellant lodged a complaint at

the  Edapadi  Police  Station,  Salem  district  against

respondents  for  offences  under  Sections  420 and 409

read with Section 34 of the Indian Penal Code.

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8. As  the  Police  failed  to  register  any  case,  the

appellant invoked Section 156(3) of the Cr.P.C. to seek

orders of the learned Judicial Magistrate II, Sankagiri for

registration of the complaint.

9. Even  after  orders  under  Section  156(3)  of  the

Cr.P.C.,  the  Police  did  not  register  any  complaint.

Thereafter, the  appellant filed a petition being Crl. O.P.

No.7715 of 2005 praying for direction on the Inspector of

Police to register a case on the basis of the complaint

made by the appellant.

10. It is stated that since the amount involved exceeded

the limit for invocation of the pecuniary jurisdiction of

the  local  Police  Station,  the  Superintendent  of  Police

transferred the investigation to the District Crime Branch

and  the  same  was  registered  as  Crime  No.54/2005

under Sections 420, 409 and 34 IPC on 22-06-2005.

11. According to the appellant, since the police did not

conduct  the  investigation  properly,  the  appellant  was

constrained to file Crl. O.P. No.23354 of 2005 in the High

Court of Madras for direction on the Investigation Officer

of Crime No.54 of 2005 to arrest the accused mentioned

in  the  FIR,  complete  the  investigation  and  file  a  final

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report.

12. By  an  order  dated  29-08-2005,  the  High  Court

disposed of the criminal original petition by directing the

respondent  to  file  a  final  Report  within  three  months

from  the date of receipt of a copy of the said order.    

13. It is pleaded that as the Police could not complete

the investigation within three months as directed, it filed

Criminal Miscellaneous Petition being Crl.M.P. No.9149 of

2005 in Crl. O.P. No.23354 of 2005 for extension of time,

by  a  further  period  of  six  months,  for  completion  of

investigation in Crime No.54 of 2005.

14.  On 22-09-2005 respondent  Nos.2 to  13 filed Crl.

O.P. 27039 of 2005 under Section 482 Cr.P.C. in the High

Court for quashing FIR No. 54 of 2005 alleging that the

allegations in the complaint did not prima facie make out

the  offences  for  which  the  respondents  had  been

charged.   

15. The respondent  State filed its  counter  affidavit  to

the aforesaid application under Section 482 Cr.P.C. and

prayed that the said application be dismissed.   In the

affidavit  in  opposition,  it  was  contended  that

investigation  revealed  that  the  accused  persons  had

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forged documents using blank letter head,  papers and

cheque  leaves  of  the  appellant  given  to  him  before

entering into business transactions. As such ingredients

of Sections 468, 471, 420, 409 and 120 (b) IPC were to

be found.   Furthermore, there was evidence that one of

the  accused  mentioned  in  the  FIR  namely  Prasanna

Chakravarthy  had  deposed  about  the  forged  letter

prepared by him on the instruction of Kasi Viswanathan,

Meiyappan, Rajarathinam, and Jayapal.

16. On  18-10-2005,  the  appellant,  as  a  de  facto

complainant,  filed  an  application  numbered  Crl.M.P.

No.8370  of  2005  for  intervention  in  Crl.  O.  P.

No.27039/2005.

17. By  an  order  dated  24-11-2005,  the  High  Court

granted the police six months’ time for completing the

investigation  in  FIR  No.54  of  2005  and  for  filing  final

report therein.

18. On 30-11-2005, the High Court referred the matter

to the Conciliation and Mediation Centre for resolution of

the dispute between the parties, in the absence of the

appellant, being the complainant.

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19. The appellant opposed  the conciliation proceedings

contending  that  the  offences  were  non-compoundable

whereupon the case was again referred back to the High

Court for decision on merits.  

20. By the impugned order dated 20-03-2006, the High

Court allowed the application under  Section 482 Cr.P.C.

observing that the complainant had,  without assigning

any reason, withdrawn the first complaint and launched

prosecution  by  filing  a  fresh  complaint;  that  the

complaint  arose  out  of  a  commercial  transaction;  and

that the complainant would have to approach the Civil

Court  for  recovering  dues  if  at  all  arising  out  of

commercial transaction.     

21. The  short  question  in  this  appeal  is  whether  the

High  Court  should  have  quashed  the  criminal

proceedings being Crime No.54 of 2005 on the grounds

that the appellant had withdrawn an earlier  complaint

without  assigning  reasons;  the  transactions  being

commercial  in  nature,  the  ingredients  of  an  offence

under the Sections referred to above were absent; and

that the remedy of the appellant lay in filing a civil suit.

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22. There is no provision in the Criminal Procedure Code

or any other statute which debars a complainant from

making  a  second  complaint  on  the  same  allegations,

when  the  first  complaint  did  not  lead  to  conviction,

acquittal or discharge. In Shiv Shankar Singh v. State

of Bihar and Anr.1, this Court held:

“18.  Thus,  it  is  evident  that  the  law  does  not prohibit  filing  or  entertaining  of  the  second complaint  even  on  the  same  facts  provided  the earlier complaint has been decided on the basis of insufficient material or the order has been passed without understanding the nature of the complaint or the complete facts could not be placed before the court or where the complainant came to know certain  facts  after  disposal  of  the  first  complaint which could have tilted the balance in his favour. However,  the  second  complaint  would  not  be maintainable  wherein  the  earlier  complaint  has been disposed of on full consideration of the case of the complainant on merit.”

23. As  held  by  this  Court  in  Jatinder  Singh  and

Others v. Ranjit Kaur2,  it is only when a complaint is

dismissed  on  merits  after  an  inquiry,  that  a  second

complaint cannot be made on the same facts.  Maybe, as

contended by the respondents, the first complaint was

withdrawn without assigning any reason.   However, that

in itself is no ground to quash a second complaint.  

1 (2012) 1 SCC 130 2 2001 (2) SCC 570

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24. In  Pramatha Nath Talukdar and Anr.  v.  Saroj

Ranjan  Sarkar3,  this  Court  dealt  with  the  question

whether the second complaint by the respondent should

have been entertained when the previous complaint had

been  withdrawn.   The  application  under  Section  482

Cr.P.C. was allowed and the complaint dismissed by the

majority  Judges  observing  that  an  order  of  dismissal

under  Section  203  Cr.P.C.  was  no  bar  to  the

entertainment of second complaint on the same facts,

but  it  could  be  entertained  only  in  exceptional

circumstances,  for  example,  where  the  previous  order

was  passed  on  an  incomplete  record  or  a

misunderstanding of the nature of the complaint or the

order passed was manifestly absurd, unjust or foolish or

where  there  were  new  facts,  which  could  not,  with

reasonable  diligence,  have  been  brought  on  record  in

previous proceedings.  

25. In  Poonam Chand Jain and Anr. v. Fazru4,  this

Court relied upon its earlier decision in Pramatha Nath

(supra) and held that an order of dismissal of a complaint

was no bar to the entertainment of second complaint on

3 AIR 1962 SC 876 4 (2010) 2 SCC 631

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the  same  facts,  but  it  could  be  entertained  only  in

exceptional circumstances, such as, where the previous

order  was  passed  on  incomplete  record,  or  on  a

misunderstanding of the nature of the complaint or was

manifestly absurd, unjust or foolish or where there were

new  facts  which  could  not,  with  reasonable  diligence,

have  been  brought  on  the  record  in  the  previous

proceedings.

26. In Poonam Chand Jain (supra) this Court further  

held that:-  

“...this  question  again  came up for  consideration before this Court  in  Jatinder Singh v.  Ranjit  Kaur. There also this Court by relying on the principle in Pramatha Nath held that there is no provisions in the Code or in any other statute which debars a complainant from filing a second complaint on the same allegation as in the first complaint.  But this Court  added  when  a  Magistrate  conducts  an enquiry  under  Section  202  of  the  Code  and dismisses  a  complaint  on  merits  a  second complaint  on the same facts  could  not  be made unless there are “exceptional cirumstances”.   This Court held in para 12, if the dismissal of the first complainant then there is no bar in filing a second complaint  on  the  same  facts.   However,  if  the dismissal of the complaint under Section 203 of the Code was on merit the position will be different.”  

27. In M/s Jayant Vitamins Ltd. v. Chaitanyakumar

and Another5 this Court held that in the absence of 5 (1992) 4 SCC 15

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compelling  and  justifiable  reasons,  it  was  not

permissible  for  the  Court  to  stop  investigation  by

quashing an FIR.

28. In  Zandu Pharmaceutical  Works Limited and

Ors  v.  Mohd.  Sharaful  Haque  and  Another6 this

Court  referred  to  State  of  Haryana  and  Ors.  v.

Bhajan Lal and Ors.7 and summarized and illustrated

the category of cases in which power under Section 482

of the Criminal Procedure Code could be exercised.  This

court observed and held:-  

"(1)  Where  the  allegations  made  in  the  first information report or the complaint, even if they are taken  at  their  face  value  and  accepted  in  their entirety do not prima facie constitute any offence or make out a case against the accused.

(2)  Where  the  allegations  in  the  first  information report  and other  materials,  if  any,  accompanying the  FIR  do  not  disclose  a  cognizable  offence, justifying an investigation by police officers under Section 156(1) of the Code except under an order of a Magistrate within the purview of Section 155(2) of the Code.

(3) Where the uncontroverted allegations made in the FIR or complaint and the evidence collected in support of the same do not disclose the commission of  any offence and make out  a  case  against  the accused.

(4)  Where  the  allegations  in  the  FIR  do  not constitute a cognizable offence but constitute only

6 2005 (1) SCC 122  7 (1992) Supp. 1 SCC 335

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a  non-cognizable  offence,  no  investigation  is permitted by a police officer without an order of a Magistrate as contemplated under Section 155(2) of the Code.

(5)  Where  the  allegations  made  in  the  FIR  or complaint are so absurd and inherently improbable on the basis of which no prudent person can ever reach  a  just  conclusion  that  there  is  sufficient ground for proceeding against the accused.

(6) Where there is an express legal bar engrafted in any  of  the  provisions  of  the  Code  or  the  Act concerned  (under  which  a  criminal  proceeding  is instituted) to the institution and continuance of the proceedings  and/or  where  there  is  a  specific provision in the Code or Act concerned, providing efficacious  redress  for  the  grievance  of  the aggrieved party.

(7)  Where  a  criminal  proceeding  is  manifestly attended  with  mala  fide  and/or  where  the proceeding is maliciously instituted with an ulterior motive for wreaking vengeance on the accused and with a view to spite him due to private and personal grudge."

29. There  can  be  no  doubt  that  a  mere  breach  of

contract is not in itself a criminal offence, and gives rise to

the civil  liability of damages.  However,  as held by this

Court  in  Mridaya Ranjan Prasad Verma and Ors. v.

State of Bihar and Anr.8, the distinction between mere

breach  of  contract  and  cheating,  which  is  a  criminal

offence, is a fine one.  While breach of contract cannot

give rise to criminal prosecution for cheating, fraudulent or 8 (2000) 4 SCC 168

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dishonest intention is the basis of the offence of cheating.

In  this  case,  in  the  FIR,  there  were  allegations  of

fraudulent and dishonest intention including allegations of

fabrication  of  documents,  the  correctness  or  otherwise

whereof  can  be  determined  only  during  trial  when

evidence is adduced.  

30. Exercise  of  the  inherent  power  of  the  High  Court

under Section 482 of the Criminal Procedure Code would

depend on the facts and circumstances of each case.  It is

neither proper nor permissible for the Court to lay down

any straitjacket formula for regulating the inherent power

of the High Court under Section 482 of the Cr.P.C.

31. Power under Section 482 Cr.P.C. might be exercised

to prevent abuse of the process of law, but only when, the

allegations, even if true, would not constitute an offence

and/or were frivolous and vexatious on their face.

32. Where  the  accused  seeks  quashing  of  the  FIR,

invoking inherent jurisdiction of the High Court, it is wholly

impermissible for the High Court to enter into the factual

arena to adjudge the correctness of the allegations in the

complaint.   Reference may be made to the decision of this

Court, inter alia, in State of Punjab v. Subhash Kumar

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and Ors.9  and  Janata  Dal  v.  H.S.  Chowdhary  and

Ors.10

33. In  Vesa  Holdings  (P)  Ltd.  and  Anr.  v.  State  of

Kerala and Ors.11, this Court observed:

“12.  The  settled  proposition  of  law  is  that  every breach of contract would not give rise to an offence of  cheating  and  only  in  those  cases  breach  of contract would amount to cheating where there was any deception played at the very inception.”  

13. It is true that a given set of facts may make out a civil  wrong as also  a criminal  offence and only because  a  civil  remedy  may  be  available  to  the complainant that itself cannot be a ground to quash a criminal proceeding.   The real test is whether the allegations  in  the  complaint  disclose  the  criminal offence of cheating or not.”

34. In Vesa Holding (P) Ltd. (supra), this Court found

that there was nothing to show that at the very inception

there was any intention on behalf of the accused persons

to cheat, which was a condition precedent for an offence

under Section 420 IPC.  The complaint was found not to

disclose any criminal offence at all.

35. It is well settled that a judgment is a precedent for

the issue of law which is raised and decided.  Phrases and

sentences  in  a  judgment  are  to  be  understood  in  the

context of the facts and circumstances of the case and 9 (2004) 13 SCC 437 10 (1992) 4  SCC 305 11(2015) 8 SCC 293

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the same cannot be read in isolation.

36. As observed above, every breach of contract does

not give rise to an offence of cheating. The language and

tenor  of  Vesa Holdings (P)  Ltd.  (supra),  particularly,

the observation that breach of contract would give rise to

an offence of cheating only in those cases where there

was any deception played at the very inception, is to be

understood in the context of the facts of that case and

accordingly construed.  The phrase “in those cases where

there was any deception played at  the very inception”

cannot  be  read  out  of  context.   This  is  not  a  case  of

breach  of  contract  simplicitor  but  there  are  serious

allegations of forgery of documents, use of blank letter-

head, papers and cheque leaves of the appellant.

37. In this case, it cannot be said that there were no

allegations  which  prima  facie constitute  ingredients  of

offences under Sections 420, 409 and 34 of the Indian

Penal Code in complaint.   There were clear allegations of

fraud and cheating which prima facie constitute offences

under  Section  420  of  the  Indian  Penal  Code.  The

correctness of the allegations can be adjudged only at the

trial when evidence is adduced.  At this stage,  it was not

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for the High Court to enter into factual arena and decide

whether the allegations were correct or whether the same

were a counter-blast to any proceedings initiated by the

respondents.   

38. In  Jatinder Singh  (supra),  this Court clearly held

that if dismissal of the complaint was not on merit, but on

default of the complainant, moving the Magistrate again

with  a  second  complaint  on  the  same  facts  is

maintainable. But if the dismissal of the complaint under

Section 203 of the Code was on merits, the position could

be different.

39. The  failure  to  mention  the  first  complaint  in  the

subsequent one is also inconsequential as held, in effect,

in  Jatinder  Singh  (supra).   Mentioning  of  reasons  for

withdrawal of an earlier complaint is also not a condition

precedent  for  maintaining a  second complaint.    In  our

considered opinion, the High Court clearly erred in law in

dismissing  the  complaint,  which  certainly  disclosed  an

offence  prima  facie.    At  the  cost  of  repetition,  it  is

reiterated that it was not for the High Court to enter the

factual arena and adjudicate  the merits of the allegations.

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40. The appeal is, therefore, allowed and the impugned

order  of  the  High  Court  quashing  the  complaint  is  set

aside.   The  first  respondent  shall  proceed  with  further

investigation in accordance with law.  

.................................J. (R. BANUMATHI)

.................................J. (INDIRA BANERJEE)

NEW DELHI DECEMBER 14, 2018