Supreme Court Restores Criminal Case in Fraudulent Biochemistry Analyzer Sale

The case of Om Prakash Singh vs. State of Bihar & Others revolves around a fraudulent sale of a biochemistry analyzer to Dr. Ira Sinha, leading to a criminal case against the seller. The Supreme Court was called upon to decide whether the Patna High Court erred in quashing criminal proceedings against the accused. The judgment reinstated the criminal case, emphasizing that fraud-related offenses must be fully examined at trial.

Background of the Case

Dr. Ira Sinha purchased a fully automatic biochemistry analyzer, model ‘Echo Plus,’ from M/s Logotech (India) Private Limited in May 2006 for Rs. 7 lakhs. The company, represented by respondents 2 and 3, assured the machine’s efficiency and provided a free three-year warranty.

However, the machine repeatedly malfunctioned, providing inaccurate test results. Despite several repair attempts, the issues persisted. The company representatives suggested that Dr. Ira Sinha exchange it for a superior model, Miura-200, for an additional Rs. 4 lakhs, bringing the total cost to Rs. 11 lakhs. This new machine was installed in July 2007 but also failed to function correctly, causing operational disruptions at Dr. Sinha’s pathology clinic.

Legal Actions Taken

Frustrated by repeated failures and unresponsive customer service, Dr. Ira Sinha lodged an FIR in March 2008, leading to a criminal case against the company under Sections 420 (cheating), 406 (criminal breach of trust), and 384 (extortion) of the Indian Penal Code. However, the Patna High Court quashed this case in 2008.

In 2012, Dr. Ira Sinha discovered that the machine contained duplicate and substandard parts. A third-party service provider, Key Pharma Limited, Delhi, confirmed that the machine’s original components had been replaced. This prompted Dr. Ira Sinha’s husband, Om Prakash Singh, to file another FIR in August 2012, alleging fraud and life threats from the accused.

The Chief Judicial Magistrate, Siwan, took cognizance of the charges, but the accused approached the Patna High Court under Section 482 of the Criminal Procedure Code. The High Court quashed the proceedings again, prompting the appeal to the Supreme Court.

Arguments by the Parties

Petitioner’s (Om Prakash Singh) Arguments

• The accused replaced the original machine parts with substandard ones, affecting the accuracy of medical tests.
• The company misled Dr. Ira Sinha into purchasing another defective machine, causing financial losses.
• The accused threatened the complainant’s family when confronted about the fraud.
• The fresh FIR was based on new evidence (service report confirming duplicate parts), making the High Court’s dismissal incorrect.

Respondents’ (Logotech India) Arguments

• The complaint was a repetition of the 2008 case, which had already been quashed.
• The case was a contractual dispute rather than a criminal offense.
• The allegations of threats were fabricated and aimed at harassing the company.
• Since the purchase was made with informed consent, the charges of cheating and fraud were baseless.

Supreme Court’s Observations

The Supreme Court carefully examined the case, making the following key observations:

• The second FIR was not a repetition of the first, as it was based on new evidence discovered in 2012.
• The service report confirmed that the machine contained duplicate parts, proving fraudulent intent.
• The accused had not addressed the complaints satisfactorily despite receiving Rs. 40,000 annually for maintenance.
• Threats made to the complainant warranted a full trial.

Final Judgment

The Supreme Court ruled in favor of the complainant and:

• Set aside the Patna High Court’s order quashing criminal proceedings.
• Restored the cognizance order of the Chief Judicial Magistrate, Siwan.
• Directed the trial court to proceed with the case on its merits.

Implications of the Judgment

This ruling sets a significant precedent for handling business fraud cases:

• It clarifies that fraud cases based on new evidence cannot be dismissed as repetitive complaints.
• It reaffirms that fraudulently replacing original product parts constitutes a criminal offense, not just a civil dispute.
• It underscores that customer grievances must be taken seriously, especially in the medical sector.
• It prevents accused parties from escaping criminal liability through procedural loopholes.

The judgment strengthens consumer protection and ensures that fraudulent business practices are met with legal consequences.

Petitioner Name: Om Prakash Singh.
Respondent Name: State of Bihar & Others.
Judgment By: Justice Mohan M. Shantanagoudar, Justice N.V. Ramana.
Place Of Incident: Siwan, Bihar.
Judgment Date: 11-07-2018.

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