Delhi High Court Quashes FIR Seeking 'Unlawful Recovery Of Money' In A Purely Commercial Matter

The Delhi High Court on Monday reaffirmed that the criminal justice delivery mechanism cannot be misused to seek recovery of money under the garb of Cheating and Criminal Breach of Trust. While quashing an FIR registered against a Gujarat-based exporter for non-payment of dues arising out of a shipping service agreement, a Single Bench of Justice Suresh Kumar Kait said, "Keeping in view the facts and circumstances of this case and the law discussed above, the registration of FIR in question in Delhi is an abuse of the process of law. I have no hesitation to record here that the Investigating Agency and Court should not be made an instrument of compelling a party to come to a place far away from his own place, to submit to the jurisdiction of a Court which actually has none. Therefore, continuance of the criminal proceedings will lead to harassment of the petitioner which is not acceptable in law." The Rohini North Police Station had booked Ramesh Boghabhai Bhut under Section 406 (Criminal Breach of Trust) and 420 (Cheating) of IPC. It was alleged that when the Petitioner-accused was asked to clear his dues as against the shipping services provided by the Respondent, he flatly refused to pay and stated that no amount is liable to be paid. The Petitioner on the other hand had argued that since the goods were not shipped within the contractual timeline, he is not liable to make payment for the services. He further submitted that the Respondent was trying to enforce a decree of money recovery, wherein such decree does not exist, through the criminal mechanism. Justice Kait in his judgment has strongly objected to such practice of registration of FIR in purely commercial matters and quashed the FIR. He noted that there was an agreement between the parties, however, there was delay on account of the Respondent-complainant due to which the Petitioner had incurred loss and had thus not paid the total amount. In view thereof it was held that the FIR is without jurisdiction whereby the Respondent had attempted to seek unlawful recovery of money in a purely commercial matter. Reliance was placed on VY Jose & Anr. v. State of Gujarat & Anr., 2009 (3) SCC 78, where it was held as follows, "Even in a case where allegations are made in regard to failure on the part of the accused to keep his promise, in absence of a culpable intention at the time of making initial promise being absent, no offence under Section 420 of the Indian Penal Code can be said to have been made out. A matter which essentially involves dispute of a civil nature should not be allowed to be the subject matter of a criminal offence, the latter being not a shortcut of executing a decree which is non-existent." The Petitioner had also raised the issue of territorial jurisdiction and submitted that the territorial jurisdiction of a court with regard to criminal offence would be decided on the basis of place of occurrence of incident and not on the basis where complaint was filed or the FIR registered. As per the Petitioner, the case, if any, would fall within the territorial jurisdiction of the Courts in Gujarat. Concurring with this submission, the Court noted that the transaction between the parties in relation to transaction of goods took place in Gujarat, the representations and meeting took place in Gujarat, the goods were shipped from Gujarat, bill of ladings were released from Gujarat, the invoices were raised by the entity based out of Gujarat and thus, the jurisdiction of such invoices were subject to the court of Gujarat. It held, "It is trite that an inquiry and trial with respect of an offence shall be conducted by the Court within whose local jurisdiction occurrence in question is said to have taken place and thereby cause of action has arisen. Section 178 and Section 179 of Cr.P.C. are merely exceptions to this principle enumerated in Section 177, and their scope should not be enlarged on analogous consideration." Section 177 stipulates that every offence shall ordinarily be inquired into and tried by a Court within whose local jurisdiction it was committed. It has following exceptions: Section 178: When it is uncertain in which of several local areas an offence was committed, it may be inquired into or tried by a Court having jurisdiction over any of such local areas. Section 179: When an act is an offence by reason of anything which has been done and of a consequence which has ensued, the offence may be inquired into or tried by a Court within whose local jurisdiction such thing has been done or such consequence has ensued. The High Court has held, "for the application of Section 179, the primary consequence should be considered in determining jurisdiction and not any secondary consequence. If the primary consequence completes the offence, the mere fact that there is a more remote consequence will not make Section 179 ...

Delhi High Court Quashes FIR Seeking 'Unlawful Recovery Of Money' In A Purely Commercial Matter

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Delhi High Court Quashes FIR Seeking 'Unlawful Recovery Of Money' In A Purely Commercial Matter

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