Supreme Court Quashes Criminal Complaint in Commercial Dispute Between Exide Industries and Supplier

The Supreme Court recently adjudicated a case concerning an alleged criminal breach of trust and intimidation arising from a commercial dispute between Exide Industries Limited (EIL) and its supplier, Ambika Gases. The dispute primarily revolved around a purchase order for Dissolved Acetylene Gas (DA Gas) and its subsequent rate revisions. The appellant, Sachin Garg, who was the Material Head at Exide Industries, challenged the criminal proceedings initiated against him by Ambika Gases.

Background of the Case:

The appellant was responsible for handling purchase orders at EIL’s factory in Haryana. The supplier, Ambika Gases, had been providing DA Gas under a purchase order issued on April 1, 2019. The terms of this order were revised twice—once in July 2019, increasing the rate to Rs.1.65 per unit, and again in December 2019, lowering it to Rs.1.48 per unit.

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Disputes arose when Ambika Gases raised an invoice of Rs.9,36,693.18/- for supplies made in December 2019. The appellant, upon market evaluation, found inconsistencies in the pricing and unilaterally revised the rates, leading to deductions from the invoice. The supplier subsequently filed a complaint in the Chief Judicial Magistrate’s Court, Ghaziabad, accusing Sachin Garg of criminal breach of trust and intimidation.

Petitioner’s Arguments:

The appellant contended that the dispute was purely commercial in nature and did not involve any criminal offense. He relied on past Supreme Court judgments, arguing that:

• The allegations did not satisfy the legal requirements of criminal breach of trust under Sections 405 and 406 IPC.
• The complaint was an attempt to misuse criminal law to settle a commercial dispute.
• The allegations of intimidation were vague and lacked specific details.

Respondent’s Arguments:

The respondent (Ambika Gases) claimed that:

• The appellant dishonestly revised rates after receiving supplies, thereby causing financial loss to the supplier.
• The appellant used threats and abusive language to deter the supplier from seeking payment.
• The criminal case was justified as the actions amounted to fraud and intimidation.

Supreme Court’s Judgment:

The Supreme Court, after analyzing the facts and legal precedents, ruled in favor of the appellant. The Court noted:

• “Such commercial disputes over variation of rate cannot per se give rise to an offense under Section 405 of the 1860 Code without presence of any aggravating factor leading to the substantiation of its ingredients.”
• The complaint did not establish that the appellant had dishonestly misappropriated any property for personal use.
• Allegations of criminal intimidation were vague and lacked substantive proof.
• The High Court failed to apply the legal test for quashing criminal proceedings in commercial disputes.

Accordingly, the Supreme Court quashed the complaint and all related proceedings, stating that “a commercial dispute, which ought to have been resolved through the forum of Civil Court, has been given criminal color by lifting from the penal code certain words or phrases and implanting them in a criminal complaint.”

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This judgment reaffirms the principle that criminal proceedings should not be misused to settle civil disputes and underscores the necessity for courts to scrutinize such cases before issuing summons.

Petitioner Name: Sachin Garg.
Respondent Name: State of U.P & Anr..
Judgment By: Justice Aniruddha Bose, Justice Sanjay Kumar.
Place Of Incident: Ghaziabad.
Judgment Date: 30-01-2024.

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