Holding

The complaint primarily reflects a civil dispute and does not disclose any criminal offence; therefore, the High Court’s order quashing the FIR under Section 482 CrPC stands.

Summary

The petitioner, a sub‑contractor, alleged that the respondent company mixed fly ash with gravel, made illegal deductions from its bills and fabricated expert reports, thereby cheating it and committing criminal conspiracy, breach of trust and other offences under the IPC. An FIR was lodged and the investigating officer found a prima facie case, but the petitioner later sought a mandamus order directing the police to file a final report. The respondents filed a petition under Section 482 of the CrPC seeking quash of the FIR. The High Court held that the complaint essentially reflected a civil dispute over measurement of gravel and quashed the FIR. On appeal, the Supreme Court examined whether the allegations disclosed a criminal offence and concluded that they did not, affirming the High Court’s view. The Court also noted that the High Court could have stayed its proceedings until the final report was filed, but dismissed the Special Leave Petition.

Issues considered

Whether the FIR and the accompanying complaint disclose a criminal offence warranting continuation of criminal proceedings.
Whether the High Court was justified in exercising its inherent powers under Section 482 CrPC to quash the FIR.
Whether the High Court should have stayed the quash proceedings pending the filing of the final report.

Legislation cited

Code of Criminal Procedure, 1973s. 482
Indian Penal Code, 1860s. 120(B), s. 196, s. 199, s. 403, s. 406, s. 418

Subjects

Section 482 CrPCquash of FIRcivil disputecontract workscheatingbreach of trustcriminal conspiracycivil vs criminal jurisdiction

Judgment

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lHELAPALLI RAGHAVAIAH A
v.
STATION HOUSE OFFICER AND ORS.

MARCH 19, 2007

[DR. AR. LAKSHMANAN AND AL TAMAS KABIR, JJ.] B

Code of Criminal Procedure, 1973-Section 482-Dispute arising from
civil contract works-Filing of criminal complaint-Quashing of by High
Court-Correctness of-Held: Entire reading of complaint discloses only C
civil dispute between the parties- Thus, order of High Court calls for no
interference.

A Company was engaged in civil contract works. It obtained a contract
for executing work on National Highway. It appointed the complainant as its
sub contractor for carrying out the work of excavating gravel from the p
Company's land and to deliver the same to work site. The complainant was
carrying out its sub-contract. Then it lodged a criminal complaint alleging
that the Company with an intention to cheat the complainant hatched a criminal
conspiracy with others, created a fake report to cause wrongful loss to the
complainant, misappropriated its amount making illegal deductions in the bills
raised and co1o1mitted breach of trust. Criminal case was registered against E
respondent nos 2 to 5 under sections 196, 199, 120 (B), 403, 406 and 418
IPC. Complainant then filed writ petition for direction to the police to file
final report in connection with FIR before the Magistrate. Writ Petition was
disposed of with the direction to the police. Thereafter, the Company filed
petition under section 482 Cr.P.C. for quashing FIR. High Court quashed the F
criminal proceedings holding that the ~ompliant did not disclose any offence
except a civil dispute between parties. Hence, the present SLP.

Dismissing the SLP, the Court

HELD: The complaint made by the petitioner primarily makes out a civil G.
dispute relating to measurement of gravel delivered to the work site, though
an attempt has been made to give the same a criminal flavour. High Court
rightly held that the entire reading of the complaint does not disclose any
offence except a civil dispute between the parties. Therefore, the order of the
High Court impugned in the SLP calls for no interference, though the High
103 II
104 SUPREME COURT REPORTS [2007] 4 S.C.R.

A Court after noticing its earlier order in the Writ Petition could have stayed
its hands till the Final Report was filed in connection with the F.I.R.
(Paras 18 and 19) (108-B, C, DJ

Indian Oil Corporation v. NEPC India Ltd.: (2006] 6 SCC 736 and
Madhavrao Jiwajirao Scindia and Ors. v. Sambhajirao Chandrojirao Angre
B and Ors., (1988) l sec 692, referred to.

CRIMINAL APPELLATE JURISDICTION : Petition For Special Leave to
Appeal (Crl). No. 3030 of2006.

From the final Judgment and Order dated 28.4.2006 of the High Court
C of Judicature of Andhra Pardesh at Hyderabad in Criminal Petition No. 4799
of2005.

R.K. Anand, K. Radhakrishnan, S. Udaya Kumar Sagar and Bina
Madhavan for Mis. Lawyer's Knit & Co. for the Appellant.

D G. Bikshapathy, Abhishek Manu Singhvi, Hanumanth Reddy, Krishna
Reddy, Rajiv Mehta, Raghavachary, Anupam Lal Das, Arunbabh Choudhary,
Pragya Singh Baghel, Amit Sharma and D. Bharati Reddy for the Respondents.

The Judgment of the Court was delivered by

E ALTAMAS KABIR, J. I. On 21st June, 2005, the petitioner herein
lodged a First Information Report with the Kovur Police Station in. Nell ore
District against the private respondent Nos. 2, 3, 4 and 5 herein alleging
commission of offences under Sections 196, 199, I20(B), 403, 406 and 418
Indian Penal Code.
F 2. The complaint in short is that Raghava Infrastructure Private Ltd. was
_,
a Private Limited Company engaged in doing civil contract works. Soma
Enterprise Limited is also doing civil contract works having its corporate
office at 14, Avenue-4, Banjara Hills, Hyderabad.and its site office near Saibaba
Temple, Kovur, adjacent to National Highway-5. It was stated that the
G respondent No. 3 was one of its Directors. The Respondent Nos. 4 and 5 are
the Project Manager and Materials Engineer of the Company.
"\

3. It was alleged in the complaint that Soma Enterprise Limited who
obtained a contract for executing work on the Nellore Bypass Road on
National Highway-5, appointed the complainant as its sub-contractor for
H excavation and transportation of gravel for the formation- of embankment of
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THELAPALLIRAGHAVAIAHv. STATION HOUSEOFFICER[ALTAMAS KABIR,J.] l 05

1
Nellore Bypass Road on National Highway-5 from Km 172.840 to 178.200 from A
!st June, 2002 onwards. The agreed rate of remuneration was Rs.27/- per cubic
meter for the first kjlometer and Rs.4/- per cubic meter for each kilometer
thereafter.

4. It was alleged that from the month of August, 2002 to December, 2002
Soma Enterprise Limited started mixing fly ash with the gravel purportedly in B
keeping with instructions received. On account of such mixing of fly ash with
the gravel, Soma Enterprise' Ltd. began deducting various amounts from the
-f
complainant's bills. According to the complainant, despite repeated protests,
Soma Enterprise Limited did not pay any heed and continued to mix fly ash
with the gravel supplied by the complainant and also continued to deduct
amounts from the complainant's bill, in order to cause unlawful loss to the
c
complainant and unlawful gain for itself.

5. It is alleged that the Director of Soma Enterprise Ltd. assured the
complainant that he would disburse the amount pertaining to the quantity of
gravel by adopting the best suitable method for arriving at the volumetric D
bifurcation of gravel and fly ash from the mix. According to the complainant,
he continued to execute the work entrusted to him as per the aforesaid
. assurance .

6. It was alleged in the complaint that a sum ofRs.5.72 lakhs had been
deducted from the bill for the month of February, 2003 alone. It was also the E
complainant's case that he had requested the J:?irector and Project Manager
to count the number of tippers of gravel being supplied and dumped by the
complainant in the stock yard for payment purposes, but the Director did not
agree to such a method.

7. The further coi:nplaint is that although the complainant continued to F
supply the gravel in terms of the sub-contract, the Director changed his stand
and asked the complainant to prove that the formula by which they were
deducting the amount for fly ash was wrong. On that basis the complainant
approached the Geo Marine Consultants Private Limited, Indira Nagar, Chennai,
and had the gravel and fly ash tested. A report was prepared by the Managing G
Director, but the same was not accepted by Soma Enterptise Ltd. Consequently,
the complainant approached the IIT Madras and got the mixed tested at the
Department of Ocean ;Engineering, UT, Madras, through Professor Dr. S .
.,i
Narasimha Rao, who was of the view that although 33.3% of fly ash is mtxed
with gravel there will not be any increase in the volume of gravel soil.
According to the complainant, as a counter-blast and with an intention to H
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106 SUPREME COURT REPORTS [2007] 4 S.C.R.

A cheat the complainant, Soma Enterprise Ltd had hatched a criminal conspiracy
with IIT, Chennai Professors S.R. Gandhi and Dr. G.R. Dodagoundar and i,.

created a fake report to cheat the complainant and cause wrongful loss to him.
On tbe basis of the aforesaid complaint, the complainant requested the police
authorities to investigate into the facts and to try the case accordingly for
having hatched the criminal conspiracy and cheated the complainant and also
B misappropriated the amount of the complainant by making illegal deductions
in aggregate of28% in all bills and committed breach of trust too by willfully
making the complainant to suffer irreparable loss.
,...
8. On the basis of the said complaint a case Cr. No. 83 of 2005 was
registered in Kovur Police Station on 21st June, 2005, under Sections 196, 199,
c 120(8), 403, 406 and 418 Indian Penal Code and the original First Infomiation
Report alongwith the original complaint was submitted to the Judicial
Magistrate, 1st Class, Kovur.

9. The Investigating Officer took up the investigation and found a
D prima facie case against the accused but as nothing further was done the
petitioner filed Writ Petition No. 21594 of 2005, inter alia for a writ in the nature
of Mandamus on the Sub-Inspector of Police, Kovur Police Station, District
Nellore, to file the Final Report in connection with FIR No. 83 of2005 before
•,
the Additional Judicial Magistrate, 1st Class, Kovur. The Writ petition was
disposed of on 7th October, 2005, at the admission stage directing the Sub-
E Inspector of Police, Kovur Police Station, to file the Final Report before the
Magistrate concerned, if the investigation had been completed, within four
weeks from the date of receipt of a copy of the order.

10. Soon after the aforesaid order of the High Court, the respondents
Nos. 2 and 5 filed Crl. P. No. 4799 of 2005 before the Andhra Pradesh High
F
Court under Section 482 of the Code of Criminal Procedure for quashing the
aforesaid F.l.R. No. 83 of2005 ofKovur Police Station, District-Nellore. A,

11. The said petition came up for hearing and disposal on 28th April,
2006. On a consideration of the complaint the High Court observed that the
G complaint did not disclose any offence except a civil dispute between the
parties. Holding the impugned proceedings to be unsustainable, the H.igh
Court quashed the same. In passing the order quashing the impugned
proceeding, the High Court took note of the earlier order of the High Court
in W.P. No. 21594 of2005, directing the police authorities to file a Final Report t-
in connection with F.l.R. No. 83 of 2005 of Kovur Police Station.
H
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THELAPALLIRAGHAVAIAHv. STATIONHOUSEOFFICER[ALTAMA~KABIR,J.] 107

12. Mr. R.K. Anand, learned Senior Advocate, appearing for the A
complainant/petitioner submitted that having noticed the earlier order passed
in W.P. No. 2 I 594 of 2005, the High Court should have stayed its hands in
the quashing proceedings till the Final Report was filed in respect of the very
same F.I.R. under challenge in the quashing proceedings. He also urged that
a clear case of cheating and criminal breach of trust emerges from the complaint, B
as was found by the Investigating Officer, and the High Court erred in
quashing the proceedings thus preventing the investigating agency from
carrying out its investigation into the complaint and filing its report.

13. In support of his submission Mr. Anand referred to and relied on
a decision of this Court in Indian Oil Corporation v.· NEPC India Ltd., C
reported in [2006) 6 SCC Page 736, wherein it was held that where civil remedy
is availed of in disputes arising from a breach of contract, remedy under the
criminal Jaw also is not barred, if the allegations also disclose a criminal
offence.

14. Certain other decisions on the same lines were also cited which only D '
reiterates the same proposition.

15. Appearing for the respondents, Mr. Abhishek Singhvi, learned Senior
Advocate, urged that he had no quarrel with the decisions cited by Mr.
Anand, but that the same had no application to the facts of this case. He
emphasised the fact that the contract between the parties commenced in 2002 E
and till 2004 no objections regarding criminal intent on the part of the
respondents was ever raised. He also empha~ised that the nature of the work
entrusted to the petitioner was to excavate gravel from the respondent's land
and to deliver the same to the work site. There was no entrustment involved,
and the allegations in the complaint made out a purely civil dispute relating F
to measurement of the gravel delivered to the work site.

16. Even on the question of alleged fabrication of documents, Mr.
Singh vi submitted that the same related to opinion of experts in the field who
were professors working in 1.1.T. Chennai, and were experts in Civil Engineering.
Wild allegations of criminal conspiracy had been leveled against them by the G
petitioner.

17. Mr. Singhvi referred to and relied on a decision of this Court in
Madhavrao Jiwajirao Scindia & Ors. v. Sambhajirao Chandrojirao Angre
& Ors., reported in [1988] I SCC page 692, where this C~mrt had occasion to H
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108 , SUPREME COURT REPORTS [2007] 4 S.CJt
/

A observe that though a case of breach of trust may be both a civil wrong and
a criminal offence but there would be certain situations where it would pre-
dominantly be a civil wrong and may or may not amount to a criminal offence.
It was also observed that when a prosecntion at the initial stage is asked to
be quashed, the test to be applied by the Court is as to whether the
B uncontroverted allegations as made prima facie established the offence.

18. We have carefully gone through the complaint made by the petitioner,
and are convinced that the same primarily makes out a civil dispute relating
to measurement, though an attempt has been made to give the same a criminal
flavour. The High Court rightly held that the entire reading of the complaint
C does not disclose any offence except a civil dispute between the parties.

19. We, therefore, see no reason to interfere with the order of the High
Court impugned in this Special Leave Petition, though the High Court after
noticing its earlier order dated 7th October, 2005, in Writ Petition No. 21594
of2005, could have stayed its hands till the Final Report was filed in connection
D with F.I.R. 83 of2005 ofKovur Police Station.

20. The Special Leave Petition is accordingly dismissed.

NJ. SLP dismissed. '··