1969 P Cr (PLP)

Let me now consider the question of territorial jurisdiction. Every crime is essentially local which means that the offender is ordinarily to be tried in the Court within whose jurisdiction the offence has been committed. This is provided under section 177 of the Cr. P. C. In the present case it is the prosecution's own stand that the agreement Exh. P. A. was executed at `Dhirkot' in Tehsil Bagh, District Poonch ; that the house had to be con structed at a place known as `Galli', also in Tehsil Bagh and the amount of Rs. 1,408 alleged to have been paid, was so paid in that area. It was, however, alleged by the complainant at the bar that he paid Rs. 5 to the accused at Muzaffarabad. This could not be traced either in the complaint or in his statement before the issuance of summons or in his statement after the examination of the accused on 7‑5‑1967. Therefore, in the light of this evidence it is clear that the offence was committed within the territorial jurisdiction of the Magistrate 1st Class at Bagh. This Tehsil being situate in the District of Poonch, the A. D. M., Muzaffarabad had no territorial jurisdiction to hear the case. It was held in A I R 1949 Mad. 3 and A I R 1951 All. 428 that offence of cheating may be tried either at the place where fraud was practised or at the place where the deprivation of property took place. On the basis of these authorities Mr. Yasin contended that since Rs. 5 were paid by him to the accused at Muzaffarabad, the Court here had jurisdiction to try the accused. Being conscious of the counter‑assertion that said payment was alleged in order to clothe the Court at Muzaffarabad with legal competence, he argued that if it were so, he could have equally pleaded the payment of a bigger sum at Muzaffarabad. It may be so, but as it is not anywhere stated in the evidence or the complaint that this amount of Rs. 5 was paid in Muzaffarabad, I need not give a finding about its truth or otherwise so far as the jurisdictional question is concerned. In his statement recorded after the examination of the accused under section 242, Cr. P. C., the complainant for the first time says that the only payment made by him personally to the accused was of Rs. 5 paid at the hotel of one Miskeen Shah. Assuming, for the sake of argument, that Rs. 5 were in fact paid by the petitioner to the accused at the hotel of some Miskeen Shah, there is still no mention that this hotel is situate in Muzaffarabad. Therefore, in my opinion, the trial Court was justified in holding that it had no territorial jurisdiction in the matter. When the counsel, in the course of his arguments, was con fronted with this state of law and the Courts views thereon, he suggested that this Court may send the complaint to the Magistrate 1st Class, Bagh for trial as his was then the Court of competent jurisdiction. Such a course has sometimes been adopted by some Courts. For instance in A I R 1946 Cal. 459 the accused were required to execute a bond for appearance in the proper Court. This course I would not follow because I am also in agreement with the views of the trial Court that the dis pute between the parties is essentially of a civil nature and that a civil Court of competent jurisdiction is the proper forum to adjudicate between the parties. The trial Court has also held that the complainant may file a suit in a civil Court, if he so desires. Probably by this, the trial Court meant that the dispute was of a civil nature. I have given my earnest consideration to this aspect of the case. As stated earlier, the dispute between the parties is as to whether the parties completed their part of the contract or not. The complainant's case is that the accused left the work incomplete while he received a payment in excess of the amount stipulated in the contract by Rs.

108. The case of the accused is, that he completed the construction of the house as per agreement but when he demanded payment of the money, the complainant instead of making him payment brought this complaint against him so as to deprive him of his labour charges. If it had been the case of the complainant that the accused had done no work at all although he had received payment, then it might have been a different thing, because iii that case mens rea may perhaps have been assumed from conduct. But his own case is that the accused completed part of the contract. In his detailed statement on 7‑5‑67, he has stated that, according to his estimate, the accused had yet to carry out work to the extent of Rs. 525 when he went away. Thus on his own admission the accused had performed major part of the contract. This version is consistently denied by the accused whose assertion has already come on record. Another interesting aspect of tile case is that according to the complainant himself the only payment made by the complainant personally to the accused was Rs. 5 ; the rest of the amount is alleged to have been paid to the accused by one Mohammad Amir Khan P. W. 2 and what is important, not in the presence of the complainant. The complainant's case is, that he deposited this amount with Mohammad Amir Khan P. W. at the suggestion of the accused. According to the complainant, only Rs. 100 or Rs. 150 were paid in his presence to another `Mistari' who was working with the complainant. Apart from this solitary amount, the complainant has no personal knowledge about the payment of the rest of the money to the accused. Mohammad Amir Khan has appeared as a witness. He is a shop keeper. According to this witness Rs. 500 were paid by him to the accused about five to ten days after the execution of Exh. P. A. ; the second instalment of Rs. 500 was paid when the construction of walls bad been completed and Rs. 300 was paid after the roof had been laid. According to this witness, the labour cost of the work left unfinished would come to from Rs. 300 to Rs.

400. He further alleges that he got receipts of this money from the accused but these receipts have not been produced in the Court. He further alleges that he had told the complainant about the existence of these receipts. In this connec tion it is important to note that in the agreement Exh. P. A. it is expressly stipulated :‑ "If I left the work unfinished, then I will be responsible to refund the entire amount received by me." It means the parties have convenanted that in case of default on the part of the accused, the penalty to be incurred by him was to refund the entire amount which meant that the work done by him was to be treated as free of any charges by way of penalty. The questions that have now to be considered are :‑ (i) If in any contract a particular remedy is agreed upon by the contracting parties in case of breach of contract by one of them, why shouldn t that remedy alone be considered available to such an aggrieved parties? (ii) Even otherwise, whether in a case of this type, a civil Court would not be the appropriate forum. As the agreement shows, the complainant by having accepted, the position that in case of partial default on the part of the accused he shall be entitled to a refund of the entire money paid by him has impliedly waived his right, if any, of resorting to criminal prosecution against the defaulter. The question, there fore, arises as to whether a person can waive his right to pro secute a person in a criminal Court. This agreement is not hit by section 28 of the Contract Act because it does not absolutely restrict the complainant from resorting to a Court of justice. In the view that I have taken, it only prevents him from resorting to a criminal Court. I have now to see whether it is hit by section 23 of the Contract Act. It lays down that all agreements which are opposed to public policy are void. What is meant by the term public policy? It has been defined as :‑ "That principle under which freedom of contract for private dealings is restricted by law for the good of the community." In Egerton v. Brownlow it was defined as :‑ "That principle of the law which holds that no subject can lawfully do that which has a tendency to be injurious to the public or against the public good." At the same time Burrough, J. in the case of Richardson v. Mellish said :‑ "Public Policy is a very unruly horse and when once you get astride it, you never know where it will carry you." Public Policy, therefore, means any act the allowing of which would be against the general interests of the community. This policy has evolved itself with the growth of organised, society. Certain standards in the domain of morality, used in its widest sense, have assumed sanctity on account of their acceptance by the general community. Therefore, any agreement which would destroy these standards or adversely affect the development of society or its organisation have to be viewed from this angle and it is here that the principle of public policy is born. Agreements which tend to prevent the course of justice have, for that reason, been rightly described as being generally opposed to public policy. Here we may cite with benefit the famous latin maxim Ubi Jus, ibid remedium i.e. where there is a right there must also be a remedy. The administration of justice is the most important feature of the modern state and it is this aspect which largely and distinctively distinguishes it from the days of Jungle Law. If, therefore, by agreement, a party considering himself aggrieved, is deprived of seeking his remedy in a Court of Justice, such agreement whether express or implied must be considered as being against public policy. But an agreement express or implied which does not absolutely deprive an aggrieved person of seeking redress from a Court of justice but only debars him from launching criminal proceedings cannot be considered as being necessarily against public policy. Distinction has been made in this connection between compound able and non‑compound able cases as also between cases com poundable without the permission of the Court and those compoundable with such permission. In A I R 1930 P C 100, a case under sections 465, 467, 193 and 194 of the Penal Code (all offences being non‑compoundable) Sir Binod Mitter delivering the judgment of the Court held :‑ "If it is an implied term of a reference to arbitration of a civil dispute or an ekrarnama that the criminal complaint already filed would not be further proceeded with, then the consideration of the reference or the ekrarnama, as the case may be, is unlawful and the award of the ekrarnama is invalid quite irrespective of the fact whether any prosecution in law had been started or not." Before this ruling there had been some decisions by the High Courts in the sub‑continent wherein such agreements were interpreted as having barred the complainant from going to the criminal Courts. One of them is reported as A I R 1928 Cal.

321. The petitioner in this case had executed an agreement in favour of the Government whereby he had taken the responsibility of recovering the grass rent of a village payable to the Government and to deposit the same into the Government treasury on a date to be fixed by the Chief Commissioner. It also provided that in case he failed to deposit the grass rent within the time fixed by the officer, it would be realised from him or from his sureties as arrears of revenue. On his failure to deposit the rent, he was prosecuted under section 409 of the Penal Code. The High Court acquitted him and ruled :‑ "Reading this Kabuliyat it seems to me to be quite clear that the Moujadar was justified in thinking that if by any chance he failed to deposit the grass‑rent realized by him, the penalty would be that the amount would be recovered from his sureties or himself by a certain procedure and that the Kabuliyat did not contemplate his being criminally prosecuted for failure to deposit the amount realized . . . . . . In view of the terms of Kabuliyat it seems to me that it is not open to the Government to prosecute the petitioner in the criminal Court for failing to deposit the money he has realized." There is another case which has a striking similarity with the present case. It is reported as A I R 1937 Oudh

331. In this case the proprietor and the manager of a certain firm entered into an agreement that if the manager committed any embezzlement, the sum so embezzled would be realized from him ; in case it could not be so realized, then the proprietor could recover it from the Manager's sureties. It was also agreed that in case there was any dispute in respect of accounting or in respect of any sum alleged to have been embezzled, it would be decided by arbitra tion. After sometime dispute arose between the parties but the proprietor instead of resorting to arbitration, went straight to a criminal Court with a complaint under section 408, P. C. which, it may be noted, is also a non‑compoundable offence. Nanavatty, J. after considering both A I R 1928 Cal. 321 and A I R 1930 P C 100 held :‑ "This clearly shows that the parties contemplated that in the event of any difference of opinion arising out of wrong entries or mistakes in the account books of the firm or due to any alleged act of misappropriation by the manager of the firm, such differences or disputes would be settled by arbitration of the arbitrator selected by them and would not be made the subject‑matter of criminal prosecution . . . . Every offence of criminal breach of trust involves a civil wrong in respect of which the complainant may seek his redress or damages in the civil Court. But every breach of trust in the absence of mens rea cannot legally justify a criminal prosecution." After holding that the agreement did not contemplate his bring criminally prosecuted the learned Judge relying upon A I R 1928 Cal. 321 came to the conclusion that this aspect of the agreement went to the roots of the case and justified him in interfering with the findings of the lower Court. He, therefore, acquitted the accused. The law with regard to compoundable offences is far more clear and categorical and the fact that a case is compoundable with the permission of the Court should not make any substantial difference. The present non‑applicant has been prosecuted under section 420 of the Penal Code which is an offence compoundable with the permission of the Court. In A I R 1941 Rang. 231 a prosecution had been originally launched under sections 325 and 326, P. C. It was compounded with the permission of the Court and it was, therefore, assumed that the case was under section 325 only. An agreement was arrived at between the parties whereby an ekrarnama was executed and as a consequence the criminal case was compounded. In a suit brought later for the recovery of the amount provided for in the ekrarnama, the agreement was attacked as being hit by section 23 of the Contract Act. Discus sing the Privy Council ruling cited above, it was held :‑ "In the Privy Council case where this sort of agreement was set up against public policy, one of the offences was a non‑compoundable offence. These cases, therefore, are not authorities for the proposition that in a case of com poundable offence or of an offence which may be com pounded with the leave of the Court, an agreement arrived at between the complainant or the prosecutor on the one hand and the accused or another person closely interested in the welfare of the accused on the other, is against public policy and accord ingly void. When an offence is a compoundable one and the Legislature thinks fit to allow a composition of the offence without reserving the Court's control over the parties' decision, there does not seem to be any ground whatever for thinking that an agreement relating to such composition is against public policy and where, as in this ease, the offence is one which may be compounded with the leave of the Court, such agreement arrived at between such persons cannot be in a worse position, for the composition is to be sanctioned by the Court which is in a position to safeguard the interest of justice in the matter before it. Nothing transpires on the record to show that the facts and circumstances which led to the conclusion of the agreement between the applicant and the respondent may be regarded as amounting to coercion on the part of the applicant against the respondent. For these reasons, in my opinion, the agreement is valid and binding on the parties." A I R 1942 Mad. 173 and A I R 1942 Mad. 662 (1) are two conflicting rulings in the same case. In the first one Somayya, J. held that parties can compound a compoundable offence without the permission of the Court where no prosecution had been launched but when the same case came before a Division Bench ultimately, they took a different view. In this case defendant No. 1 had borrowed a certain amount from the plaintiff on the security of alleged cases of marketable goods, namely condensed milk and an ayurvedic medicine put up separately in bottles. The loan was not repaid and the plaintiff decided to sell these goods. When the packages were opened for the purpose of sale it was found that they contained stones, husk, sawdust, and waste paper etc. It was thus a clear case of cheating and when the plaintiff moved to lodge a criminal prosecution, a compromise was affected. As a result, an agreement was executed by defendant No. 1 and also signed by his two relatives defendants Nos. 2 and 3 undertaking to pay a sum of Rs. 2,

800. Rs. 750 was paid in advance and a promissory note was executed for Rs. 2,

050. The plaintiff then brought a suit to recover this amount and the defendant pleaded that the agreement was in violation of public policy as provided in section 23 of the Contract Act. The Division Bench held that it was so and accepted the appeal of defendants 2 and

3. The learned Judges held :‑ "The basis of the decision of Somayya, J. is that no criminal proceeding had been instituted. He considered that in these circumstances the parties were at liberty to compound. This is contrary to the provisions of section 345, Cr. P. C. which expressly prohibits the compounding of the offences of cheating without the leave of the Court. Notwithstanding that no prosecution is launched offence remains. What defendants 2 and 3 did was to execute a negotiable instrument in consideration of the payee undertaking not to prosecute a person who had committed a criminal offence which could not be compounded without the Court sanction. The consideration for the note so far as defendants 2 and 3 were concerned was manifestly unlawful and therefore the promissory note cannot be enforced against them." So far as the rights of the plaintiff were concerned, they were not affected by this judgment because the decree had been passed against all the 3 defendants. Defendant 3 alone had gone to appeal to the High Court, which declared the agreement void only as against defendants 2 and

3. Thus the decree was allowed to remain in tact as against defendant No. 1 who was a party to the agreement. It appears that the learned Judges were influenc ed in their favour by the fact that the plaintiff had insisted as a condition for the non‑launching of the criminal proceedings that defendants 2 and 3 join with defendant No. 1 in the execution of the promissory note while in this case there is no third party involved. Again, the contention of the learned Judges that in a case compoundable with the permission of the Court any com position outside the Court, when criminal prosecution may not have been launched, is illegal in the absence of permission by the Court, is to my humble mind open to serious doubt. It would be like putting the cart before the horse. All procedural law is meant to advance and not to impede the ends of justice. Suppose there is a fight between two persons `A' and `B' and `A' inflicts a grievous injury with a stick on the arms of `B', thus committing an offence under section 325, Penal Code. Suppose the relatives intervene or suppose they are two real brothers and they compromise and do not lodge a report with the police or a complaint with a Magistrate. Would we then hold that they must first either file a complaint or a report with the police and drag themselves to the Court, make them present an application for composition before the Magis trate and it is only when the Magistrate is pleased to pass an affirmative order would the composition be considered complete, binding and legal? I for my humble self would not subscribe to such a conclusion and I think that the law never intended it to be so in fact the power given to the Magistrate under section 345 in offences which are compoundable with the per mission of the Court has not been given with any vindictive purpose. The idea is not to harass the parties or to invest the Magistrate with an arbitrary power exercisable at his sweet will. It has been done partly to protect the weak against the strong, the ultimate and golden end in view of all laws and partly to weigh the compromise in the scales of public policy. Therefore, section 345 only refers to cases which are pending in a Court and cannot be deemed to refer to cases about which neither has a complaint been launched in a Court nor a report lodged with the Police. Somayya, J. discussing this aspect of the case stated :‑ "The question therefore reduces itself to this. Where the matter has not reached the criminal Court, is there any rule of public policy preventing the parties from compounding offences specified in section 345 (2), Criminal Procedure Code? The fact that after the matter has reached the Court, leave of the Court is necessary does not, in my opinion, solve the difficulty. Is the offence of cheating of such a nature that an agreement to compound it before the matter reaches the Court is illegal and void? Suppose the parties desire to compound an offence of cheating involving a few rupees. Is it necessary for them to file a complaint, place the agreement before the Court and then alone compound it? That means that a com plainant who is no longer desirous of prosecuting must file a complaint; else the agreement which he enters into by which he secures reparation for the pecuniary loss sustained by him will be invalid. Both parties agree that there should be no prosecution ; yet the complainant must launch the prosecution and then seek the permission of the Court ; thus breaking the agreement. The whole thing is reduced to a farce. How are the public interests so much involved as to prevent the parties from adjusting the matter. Extreme cases on both sides of the line may be put. But after giving the matter my best consideration, I hold that in the case of offences specified in section 345(2), Criminal P. C., the matter may be lawfully com pounded before it goes to Court." On deeper consideration of both the rulings I would rather prefer to fellow the judgment of Somayya, J. than the one given by the Division Bench. Now it is quite clear that this agreement does not stipulate launching of any criminal prosecution because refund of the money or the complainant's right to recover the same amount is a civil liability on the part of the non‑applicant creating a civil right in favour of the complainant in the sense that on failure of the non‑applicant to refund the amount, the complainant can recover it through a Court and certainly it would be a civil Court only. With the additional fact that the petitioner is an Advocate of more than 12 years standing who himself drafted this agreement whereas the accused is a semi‑literate villager which brings to the fore‑front the inequality of the contracting parties, I think the petitioner in this case should be held to have impliedly waived his right of launching criminal prosecution against the non‑applicant and therefore, I accordingly hold so. Even otherwise it is a fit case for a civil Court to decide. The questions involved are essentially of a civil nature such as the quantum of work the accused was required to put in; the quantum of work that the accused has actually put in; the labour cost of tile work thus completed ; the labour cost of the work left undone and the payments actually made to the accused. There have always been cases where the aggrieved party tried to side‑track civil Courts and took their disputes of civil nature to criminal Courts, generally for the sake of convenience or speedy justice but were ultimately directed to the civil Courts. It was field in A I R 1963 All. 818 by Justice Young:- "Too often do persons with claims, often doubtful, take criminal proceedings in the hope that the defendant will pay the amount claimed, rather than face a criminal charge. To use the criminal Courts for enforcing a civil claim is highly improper; it may almost amount to blackmail." Similarly it was held in A I R 1925 Lah. 289 (2) :‑ "Parties should not be encouraged to resort to the criminal Courts in cases in which the point at issue between them is one which can more appropriately be decided by a civil Court and the tendency on the part of litigants to do so should be checked by criminal Courts who should be on their guard against lending their aid to such procedure." I, therefore, also hold that the dispute between the parties is of a civil nature and the petitioner may, if so advised, seek his remedy in a civil Court of competent jurisdiction. I, therefore, reject this petition. Petition rejected.