The Supreme Court in a recent Judgement held that criminal prosecution to overcome the bar of limitation in preferring any money claim for payment is unsustainable.
CASE BACKGROUND
In the present case, The FIR was lodged by the complainant stating that the appellant put forth a proposal to do the business of carpets which were to be supplied to Arizona Rugs & Lease Corner Company America. Believing the appellant, the complainant supplied carpets worth US Rs.31,54,674/-. The payment was made only Rs.22,05,819/-. This was despite the fact that the entire payment had been received by the appellant from the American buyer. The balance amount of Rs.9,48,855/- has not been paid till date due to mala fide and mischievous intention. The payment was being lingered on one pretext or the other because of which the complainant had suffered loss. The complainant due to lack of capital was declared as NPA by the bank. This act of receiving the money from the American buyer and not transmitting it to the complainant was a fraud mischievously played by the appellant. The complainant kept demanding the payment and lastly on 26.03.2017 at about 8.00 a.m. the complainant visited the house of the appellant to remind him for the balance payment in the presence of the witnesses. The appellant refused to make the payment, abused the complainant, threatened to kill the whole family and stated that he was ready for litigation. Thus, the offence.
Based on these allegations, charge sheet was submitted on 04.06.2017 under Sections 409, 419, 420, 504 & 506 of the IPC leading to cognizance.
The Appellant filed an application in High Court For quashing the Criminal prosecution and cognizance order which was dismissed. Being aggrieved thereby, the appellant filed an appeal before Supreme Court.
Supreme Court Held that:
The FIR was lodged nearly nine years later in 2017. The complaint does not allege that the appellant had any dishonest intention from the inception of the business relationship to cheat the complainant by not making full payment for the goods supplied or misappropriate any payment received from the American purchaser by breach of trust by dishonest misappropriation. The mere use of words “mala fide” and “mischievous intention” cannot constitute a criminal offence in absence of any imputation of mens rea. Merely stating that the appellant had acted fraudulently and mischievously by retaining the amount stated to have been paid by the American Company and not transferring it to the complainant at best makes out a case for failure to make full payment of the goods supplied and which constitutes a purely civil money claim. We also cannot loose sight of the fact that the FIR has been lodged nearly 9 years later, long after the limitation to file a suit for recovery of money dues had long expired. It therefore very legitimately leads to the inference that the institution of the criminal prosecution was basically to overcome the bar of limitation in preferring any money claim for payment due under a contract for supply of goods. The assertion for breach of trust by failing to pass on the entire payment received from the American Company to the respondent is completely unsustainable from the allegations in the complaint itself.
Further held that the prosecution of the appellant including the order of cognizance are held to be unsustainable and are accordingly set aside.
Read Order here:
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