# LEE KUN HEE & ORS v. STATE OF U.P. & ORS

- **Citation:** [2012] 4 S.C.R. 287
- **Court:** Supreme Court of India
- **Decided:** 2012-02-01
- **Case number:** Criminal Appeal No. 304 of 2012
- **Bench:** Asok Kumar Ganguly, Jagdish Singh Khehar
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/lee-kun-hee-ors-v-state-of-u-p-ors-28402
- **Pages:** 55

## Headnote

Penal Code, 1860 - ss. 2, 403, 405, 415, 418, 420 and
A
B
423 r/w ss. 1208 and 34:
c
Territorial jurisdiction of courts in India - Agreement
between intermediary buyer (based abroad) and seller (based
in Delhi, India) to purchase certain products which were to be
further transferred by the intermediary buyer to ultimate
beneficiary (foreign company, based in Dubai) - Upon supply D
of the product, the ultimate beneficiary was to issue a Bill of
Exchange in favour of the intermediary buyer who was to
further endorse the same to the seller towards payment of
goods which were supplied by the seller from Ghaziabad -
Ultimate beneficiary not honouring its commitment under the
E
bill of exchange - Issuance of legal notice by seller to the
ultimate beneficiary - However, the ultimate beneficiary not
making payment - Criminal complaint by seller ulss. 403,
405, 415, 418, 420 and 423 r/w ss. 1208 and 34 before the
Magistrate at Ghaziabad against appellants-the ultimate
F
beneficiary and the foreign parties (officials allegedly
connected with the offence) - Summoning order ulss. 403,
405, 420 and 423 r/w ss. 1208 and 34 - Challenged by the
appellants on the ground that courts in India had no
jurisdiction to entertain the criminal complaint filed by the
G
seller against the appellants - Held: The competent court at
Ghaziabad has the jurisdiction to entertain the complaint in
the matter uls. 179, 181(4) and 182 Cr.P.C. - The factum of
287
H
288
SUPREME COURT REPORTS
(2012] 4 S.C.R.
A supply of goods from Ghaziabad (in India) to Dubai (in the
United Arab Emirates), as an essential component of the
offences allegedly committed by the accused, is relatable to
the words "anything which has been done" used in s. 179 -
Since the complainant-seller allegedly held the bill of
B exchange at Ghaziabad in India, the consequence emerging
out of the said denial of encashment of the bill of exchange,
'ensued' at Ghaziabad in India - Bill of exchange issued by
the ultimate beneficiary was received and is allegedly being
held by seller at Ghaziabad in India - Ultimate beneficiary by
C a letter denied its liability towards seller under the bill of
exchange and the said response on behalf of ultimate
beneficiary was received by seller at Ghaziabad in India -
Thus, it cannot be said that the actions attributed by the seller
to the appellants have no connectivity to territorial jurisdiction
0
in India - Submission of the appellants about their foreign
nationality, their residence outside India, and the fact that they
were not present in India when the offence(s) was/were
allegedly committed, of no consequence - They would not be
protected uls. 2 - Code of Criminal Procedure, 1973 - ss. 179,
181 and 182 - Jurisdiction.
E
Summoning order u/ss. 403, 405, 420 and 423 r/w ss.
1208 and 34 - Challenge to -
On the ground that the
appellants- ultimate beneficiary and the foreign parties
(officials allegedly connected with the offence) were not privy
F to contract/agreement thus, could not be proceeded against
for breach of the agreement - Held: Pleadings prima facie
demonstrate connectivity of the appellants with the
foundational basis expressed in the complaint - One of the
accused also supported the accusation - Thus, at this stage
G it is not desirable to exculpate the appellants from
proceedings initiated by the complainant before the
Magistrate - Said issue may be re-agitated after production
of evidence by rival parties before the trial court.
H
Summoning order ulss. 403, 405, 420 and 423 r/w ss.
LEE KUN HEE & ORS. v. STATE OF U.P. & ORS. 289
1208 and 34 - Challenge to - On the ground that the charges A
not made out against the appellants-ultimate beneficiary and
the foreign parties (officials allegedly connected with the
offence); that the appellants being functionaries of a company
per se could not be made vicariously liable for offences
emerging out of actions taken in discharge of their B
responsibilities towards the company; and that the appellants
had no

## Text

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[2012] 4 S.C.R. 287
LEE KUN HEE & ORS.
V.
STATE OF U.P. & ORS.
(Criminal Appeal No. 304 of 2012)
FEBRUARY 1, 2012
[ASOK KUMAR GANGULY AND JAGDISH SINGH
KHEHAR, JJ.]
Penal Code, 1860 - ss. 2, 403, 405, 415, 418, 420 and
A
B
423 r/w ss. 1208 and 34:
c
Territorial jurisdiction of courts in India - Agreement
between intermediary buyer (based abroad) and seller (based
in Delhi, India) to purchase certain products which were to be
further transferred by the intermediary buyer to ultimate
beneficiary (foreign company, based in Dubai) - Upon supply D
of the product, the ultimate beneficiary was to issue a Bill of
Exchange in favour of the intermediary buyer who was to
further endorse the same to the seller towards payment of
goods which were supplied by the seller from Ghaziabad -
Ultimate beneficiary not honouring its commitment under the
E
bill of exchange - Issuance of legal notice by seller to the
ultimate beneficiary - However, the ultimate beneficiary not
making payment - Criminal complaint by seller ulss. 403,
405, 415, 418, 420 and 423 r/w ss. 1208 and 34 before the
Magistrate at Ghaziabad against appellants-the ultimate
F
beneficiary and the foreign parties (officials allegedly
connected with the offence) - Summoning order ulss. 403,
405, 420 and 423 r/w ss. 1208 and 34 - Challenged by the
appellants on the ground that courts in India had no
jurisdiction to entertain the criminal complaint filed by the
G
seller against the appellants - Held: The competent court at
Ghaziabad has the jurisdiction to entertain the complaint in
the matter uls. 179, 181(4) and 182 Cr.P.C. - The factum of
287
H
288
SUPREME COURT REPORTS
(2012] 4 S.C.R.
A supply of goods from Ghaziabad (in India) to Dubai (in the
United Arab Emirates), as an essential component of the
offences allegedly committed by the accused, is relatable to
the words "anything which has been done" used in s. 179 -
Since the complainant-seller allegedly held the bill of
B exchange at Ghaziabad in India, the consequence emerging
out of the said denial of encashment of the bill of exchange,
'ensued' at Ghaziabad in India - Bill of exchange issued by
the ultimate beneficiary was received and is allegedly being
held by seller at Ghaziabad in India - Ultimate beneficiary by
C a letter denied its liability towards seller under the bill of
exchange and the said response on behalf of ultimate
beneficiary was received by seller at Ghaziabad in India -
Thus, it cannot be said that the actions attributed by the seller
to the appellants have no connectivity to territorial jurisdiction
0
in India - Submission of the appellants about their foreign
nationality, their residence outside India, and the fact that they
were not present in India when the offence(s) was/were
allegedly committed, of no consequence - They would not be
protected uls. 2 - Code of Criminal Procedure, 1973 - ss. 179,
181 and 182 - Jurisdiction.
E
Summoning order u/ss. 403, 405, 420 and 423 r/w ss.
1208 and 34 - Challenge to -
On the ground that the
appellants- ultimate beneficiary and the foreign parties
(officials allegedly connected with the offence) were not privy
F to contract/agreement thus, could not be proceeded against
for breach of the agreement - Held: Pleadings prima facie
demonstrate connectivity of the appellants with the
foundational basis expressed in the complaint - One of the
accused also supported the accusation - Thus, at this stage
G it is not desirable to exculpate the appellants from
proceedings initiated by the complainant before the
Magistrate - Said issue may be re-agitated after production
of evidence by rival parties before the trial court.
H
Summoning order ulss. 403, 405, 420 and 423 r/w ss.
LEE KUN HEE & ORS. v. STATE OF U.P. & ORS. 289
1208 and 34 - Challenge to - On the ground that the charges A
not made out against the appellants-ultimate beneficiary and
the foreign parties (officials allegedly connected with the
offence); that the appellants being functionaries of a company
per se could not be made vicariously liable for offences
emerging out of actions taken in discharge of their B
responsibilities towards the company; and that the appellants
had no concern with the allegations leveled by the
complainant - Held: Statement of the complainant uls. 200
Cr. P. C. categorically asserted that the appellants were jointly
and severally liable to honour the bill of exchange endorsed c
in the favour of the buyer - Acts of omission and commission
presented by the complainant specific and categoric -
Allegations leveled by the complainant fully incorporate all
the basic facts necessary to make out the offences
whereunder the summoning order was P.assed - Also, instant 0
case does not suffer from any of the impairments referred in
Iridium Telecom Limited's case - Appellants granted liberty
to raise the legal issues before the trial court.
Complaint under, for dishonour of bill of exchange by the
accused - Order of summoning under the Sections - Civil E
suit already filed at the behest of the complainant, based on
the alleged breach of the agreement - Maintainability of the
criminal proceedings - Held: In offences of the nature
contemplated under the summoning order, there can be civil
liability coupled with criminal culpability - It cannot be said F
that since a civil claim has been raised by the complainant it
can be prevented from initiating proceedings for penal
consequences for the alleged offences committed by the
accused under the Penal Code.
G
Code of Criminal Procedure, 1973 - ss. 179, 181(4) and
182 - Jurisdiction of courts in India for trial of a case -
Determination of - Explained.
In terms of the agreement, the seller (based in Delhi,
H
290
SUPREME COURT REPORTS
[2012) 4 S.C.R.
A
India) supplied certain products to the intermediary buyer
(based abroad) which was further transferred to ultimate
beneficiary (foreign Company). The ultimate- beneficiary
executed a bill of exchange in favour of the intermediary
buyer and the intermediary buyer endorsed the bill of
B exchange in favour of the seller, towards payment for
products. The ultimate beneficiary did not honour its
commitment under the bill of exchange. The seller issued
legal notice to the ultimate beneficiary calling them to
make the payment to the seller within the stipulated
C period. Despite repeated demands, the ultimate
beneficiary denied its liability. The seller carrying its
business activities either in Delhi or Ghaziabad, through
its sole proprietor filed a criminal complaint u/ss. 403, 405,
415, 418, 420 and 423 read with Sections 1208 and 34 IPC
o before the Magistrate at Ghaziabad, against the ultimate
beneficiary and the parties who were allegedly involved
in the matter (appellant no. 1 to 5 and others). The
Magistrate passed an order summoning the accused
under Sections 403, 405, 420 and 423 read with Sections
E 1208 and 34 IPC. The five appellants challenged the order
before the High Court and the same was disposed of.
Thus, the appellants filed the instant appeal.
Dismissing the appeal, the Court
F
HELD: 1.1. The two phrases of Section 179 Cr.P .C.
"anything which has been done", with reference to the
offence and "consequence which has ensued"
substantially enlarge and magnify the scope of
jurisdiction contemplated under Section 179, so as to
G extend the same over areas contemplated by the two
phrases. In the instant case, the offence(s) alleged in the
complaint emerge from the fact, that even though the
complainant faithfully performed its obligations under the
agreement/contract,
the
accused
dishonestly/
H fraudulently/falsely denied/avoided the reciprocal
-
LEE KUN HEE & ORS. v. STATE OF U.P. & ORS.
291
obligation(s) which they were obliged to perform
A
thereunder. The words "anything which has been done",
would extend to anything which has been done in
furtherance of the execution of the agreement. The facts
constituting the performance of obligations by the
complainant, actually constitute the foundational basis
B
for the criminal accusation levelled against the accused
(in refusing to honour the corresponding obligation). The
instant foundational basis for establishing the
commission of the offence, would fall within the ambit of
the words "anything which has been done" used in the c
said provision. In the absence of the instant affirmation
of the factual position, the culpability of the accused
cannot be established. In the complaint it is asserted, that
the contracted goods/product were/was supplied by JCE
Consultancy (seller) from Ghaziabad in India. The factum
0
of having supplied the goods/product to 'S' Company in
Dubai (the ultimate beneficiary) through 'SI' Company
(intermediary buyer), is sought to be established not only
through a delivery receipt dated 28.1.2002 (issued by the
intermediary buyer-'SI' Company, but also, on the basis
E
of the bill of exchange executed by 'S' Company in Dubai
(the ultimate beneficiary), constituting the payment for the
goods/product purchased. The factum of supply of goods
from Ghaziabad (in India) to Dubai (in the United Arab
Emirates), as an essential component of the offence(s)
allegedly committed by the accused, is relatable to the
F
words "anything which has been done" used in Section
179. This factual position, is sufficient to vest jurisdiction
under Section 179 Cr.P.C.; with a competent Court at
Ghaziabad. [Para 12] [312-G-H; 313-A-G]
G
1.2. Under Section 179 Cr.P.C., even the place(s)
wherein the consequence (of the criminal act) "ensues",
would i;~ relevant to determine the court of competent
jurisdiction. Therefore, even the courts within whose local
jurisdiction, the repercus~ion/effect of the criminal act H
292
SUPREME COURT REPORTS
(2012] 4 S.C.R.
A occurs, would have jurisdiction in the matter. The
reciprocal consideration, flowing out of the agreement, is
comprised of a monetary payback. The said monetary
payback was allegedly transmitted by the recipient of
goods ('S' Company in Dubai) to the intermediary buyer
B ('SI' Limited), by way of a bill of exchange valued at US$
14,32,745, on 1.2.2002. The said bill of exchange was then
endorsed by 'SI' Limited to the complainant-JCE
Consultancy. JCE Consultancy maintains that it holds the
said bill of exchange at Ghaziabad in India. The execution
c of the bill of exchange by 'S' Company in Dubai and its
endorsement by 'SI' Limited is in consonance with the
terms and conditions of the agreement. Upon alleged
denial of payment to JCE Consultancy (under the bill of
exchange), a legal notice was issued demanding
0 payment. In its response, 'S' Company in Dubai, allegedly
dishonestly/fraudulently/falsely
denied
liability/
responsibility. Since the complainant is allegedly holding
the bill of exchange at Ghaziabad in India, the
consequence emerging out of the said denial of
E encashment of the bill of exchange, would be deemed to
"ensue" at Ghaziabad in India. Thus, the competent Court
at Ghaziabad in India, would have jurisdiction in the
matter under Section 179 Cr.P.C. [Para 13) [313-H; 314A-F]
F
1.3. A perusal of Section 181 Cr.P .C. leaves no room
for any doubt that in offences of the nature as are subject
matter of consideration, the court within whose local
jurisdiction, the whole or a part of the consideration
" ... were required to be returned or accounted for ... "
G would have jurisdiction in the matter. In the instant case,
a bill of exchange dated 1.2.2002 was issued on behalf
of 'S' Company in Dubai, to 'SI' Company Limited; 'SI'
Company, in terms of the agreement, endors.'::ld the said
bill of exchange in favour of tb.ie complainant-'JCE'
H Company; JCE Company cl.eim1s to be holding the said
LEE KUN HEE & ORS. v. STATE OF U.P. & ORS.
293
bill of exchange at Ghaziabad in India. Being holder of A
the bill of exchange, JCE Company demanded the right
of payment thereunder, which is being denied by the
accused. Since the bill of exchange issued by 'S'
Company in Dubai for US$14,32,745 was received, and
is allegedly being held by 'JCE"Company at Ghaizabad
B
in India; the said bill of exchange, according to the
complainant, has to be honoured/realized at the place
where it is held (i.e. at Ghaziabad, in India). In the instant
alleged factual background of the matter, the competent
court at Ghaziabad in India, would have jurisdiction to c
hold the trial of the complaint under Section 181 (4)
Cr.P.C. (Para 14] (315-D-H]
1.4. A perusal of Section 182 Cr.P.C. reveals that the
said provision can be invoked to determine jurisdiction
in respect of a number of offences which include D
cheating as a component. When acts of fraud/dishonesty/
deception, relatable to the offence(s), contemplated u/s.
182 emerge from communications/messages/letters etc.,
the place(s) from where the communications/messages/
letters etc. were sent, as also, the places at which the
E
same were received, would be relevant to determine the
court of competent jurisdiction. The allegations contained
in the complaint reveal, that the complainant-JCE
Company addressed a legal notice to 'S' Company in
Dubai, calling upon 'S' Company in Dubai, to honour its
F
reciprocal commitment of the monetary payback
contemplated under the agreement. In its response, 'S'
Company in Dubai, denied liability, by asserting that 'S'
Company in Dubai, had no commitment/responsibility
towards JCE Company under the bill of exchange dated
G
1.2.2002. The said denial according to the complainant,
constitutes the basis of the criminal complaint filed
against the accused. The place at which the said
response on behalf of 'S' Company in Dubai, was
received, would be relevant to determine the court of H
294
SUPREME COURT REPORTS
[2012] 4 S.C.R.
A competent jurisdiction, under Section 182 Cr.P.C. Even
if the response was received by the counsel for JCE
Consultancy in a place other than Ghaziabad (though in
India), still the competent court at Ghaziabad in India,
would be vested with jurisdiction, as under Section 178
B (d) Cr.P.C., in cases where an offence consists of several
acts carried out under different jurisdictions, a court
having jurisdiction where any one of such acts was
committed, would be competent to try the same. [Para 15]
(316-F-H; 317-A-D]
c
1.5. In view of the said deliberations, it is not
legitimate for the appellants to contend, that the actions
attributed by JCE Consultancy to the accused, have no
connectivity to territorial jurisdiction in India. Section 179
Cr.P.C. vests jurisdiction for inquiry and trial in a court,
D within whose jurisdiction anything has been done with
reference to an alleged crime, and also, where the
consequence of the criminal action ensues. Section
181(4) Cr.P.C. leaves no room for any doubt, that
culpability is relatable even to the place at which
E consideration is required to be returned or accounted for.
Finally, Section 182 Cr.P.C. postulates that for offences
of which cheating is a component, if the alleged act of
deception is shown to have been committed, through
communications/letters/messages, the court within
F whose jurisdiction the said communications/letters/
messages were sent (were received), would be competent
to inquire into and try the same. Thus, viewed, it is not
justified for the appellants to contend, that the allegations
levelled by the complainant against the accused, specially
G in respect of the five appellants, are not relatable to
territorial jurisdiction in India, under the provisions of the
Code of Criminal Procedure. [Para 16) (317-E-H; 318-A]
1.6. All components of the submissions advanced by
the appellants, more particularly their foreign nationality,
H their residence outside India, and the fact that they were
'
I
LEE KUN H~E & ORS. v. STATE OF U.P. & ORS.
295
not present in India when the offence(s) was/were A
allegedly committed, are of no consequence. They would
not be protected u/s. 2 IPC. There is no merit in the first
contention that the Magistrate could not have entertained
the complaint filed by JCE Consultancy against the
appellants. [Para 17] [324-F-H; 325-A]
B
Mobarik Ali Ahmed vs. The State of Bombay (1958)
SCR 328 - relied on.
2. It was submitted that that the complaint lodged by
JCE Consultancy was based on an agreement between C
JCE Consultancy and 'SI" Company; that the appellants
were not privy to the said contract/agreement, and as
such the grievance of the complainant, if any could have
been raised only as against 'SI' Company; and that the
appellants having no role to play under the contract/ o
agreement were wrongfully involved in the controversy
by the complainant. In the complaint filed by JCE
Consultancy, it was expressly averred that all the
appellants were involved in "each and every act done by
the company" ('S' Company in Dubai). In the statement E
recorded under Section 200 Cr.P.C., the complainant
deposed that the appellants were individually and jointly
liable for the commission of offences emerging from the
complaint. How they were liable (if at all), is a question of
evidence, which would emerge only after evidence is
F
recorded by the trial court But what is interesting is, that
'SI' Company though an accused in the complaint filed
by JCE Company totally supported the accusation(s)
levelled by the complainant against the appellants. In a
detailed response to the culpability of the appellants 'SI' G
Company adopted a firm stance. Even the pleadings,
prima facie demonstrate the connectivity of the
appellants, with the foundational basis expressed in the
complaint. It is undesirable to exculpate the appellants
from the proceedings initiated by 'JCE' Company before
the Magistrate, Ghaziabad. The issue under reference
H
296
SUPREME COURT REPORTS
[2012] 4 S.C.R.
A may be re-agitated, after evidence has been produced by
the rival parties before the trial court. [Paras 20, 21] [326C-D, E-G; 327-A-D; 329-G-H; 330-A]
3. Through the complaint, as also, in the statement
8 of the complainant recorded under Section 200 Cr.P.C.,
JCE Consultancy categorically asserted that the
appellants were jointly or severally liable to honour the
bill of exchange, which had been endorsed in its (JCE
Consultancy's) favour. In order to demonstrate the
C appellant's liability, a series of documents were also
placed before the trial court. The Magistrate having
considered the said material, issued the summoning
order. The culpability of the appellants would obviously
depend upon the evidence produced before the
jurisdictional court. It can definitely be stated from the
D pleadings before this Court, that one of the accused,
namely, 'SI' Company totally supported the cause of the
complainant-JCE Consultancy, through its written reply.
The factual details emerging from the evidence to be
produced by the rival parties, would be necessary to
E project a clear picture. It is only thereafter, that a rightful
decision on this issue canvassed would be possible. The
factual foundation/background of the acts of omission
and commission presented by the complainant is specific
and categoric. The allegations levelled by the
F complainant, fully incorporate all the basic facts which are
necessary to make out the offences whereunder the
impugned summoning order was passed. The instant
case does not suffer from any impairments referred in
lridum India Telecom Limited Case. It is left open to the
G appellants to canvass the legal issues, before the trial
court. After the rival parties have led their evidence, the
trial court would return its finding thereon, in accordance
with law, without being influenced by any observations
made on the merits of the controversy. [Para 23] [336-H;
H 337-A-H]
LEE KUN HEE & ORS. v. STATE OF U.P. & ORS.
297
Iridium India Telecom Limited vs. Motorola Incorporated
A
and Ors. (2011) 1 SCC 7 4: 2010 (14) SCR 591; Haryana vs.
Bhajan Lal 1992 Supp. (1) SCC 335: 1990 (3) Suppl. SCR
259; M.N. Ojha vs. Alok Kumar Srivastav (2009) 9 SCC 682:
2009 (13) SCR 444 - referred to.
4. In offences of the nature contemplated under the
summoning order, there can be civil liability coupled with
criminal culpability. What a party has been deprived of by
B
an act of cheating, can be claimed through a civil action.
The same deprivation based on denial by way of
deception, emerging from an act of cheating, would also
C
attract criminal liability. In the course of criminal
prosecution, a complainant cannot seek a reciprocal
relief, for the actions of the accused. As in the instant
case, the monetary consideration under the bill of
exchange, cannot be claimed in the criminal proceedings,
D
for that relief the remedy would be only through a civil
suit. Therefore, it is not possible to accept, that since a
civil claim was raised by the complainant-JCE
Consultancy, based on the alleged breach of the
agreement, it can be prevented from initiating
E
proceedings for penal consequences for the alleged
offences committed by the accused under the Penal
Code. It would not be appropriate to delve into the
culpability of the appellants at the instant juncture, on the
basis of the factual position projected by the rival parties.
F
The culpability (if at all) would emerge only after evidence
is adduced by the rival parties before the trial court. Even
on the basis of the submission it is not possible to quash
the summoning order at this stage. Thus, it is left open
to the appellants to raise their objections, if they are so
G
advised, before the trial court. [Para 26] [341-A-F]
Case Law Reference:
(1958) SCR 328
Relied on.
Para 17
H
A
298
SUPREME COURT REPORTS
2010 (14) SCR 591
Referred to.
1990 (3) Suppl. SCR 259 Referred to.
2009 (13) SCR 444
Referred to.
[2012] 4 S.C.R.
Para 22
Para 22
Para 22
B
CRIMINAL APPELLATE JURISDICTION : Criminal Appeal
No. 304 of 2012.
c
From the Judgment & Order dated 13.11.2009 of the High
Court of Judicature at Allahabad in Criminal Misc. Application
No. 11404 of 2006.
Ram Jethmalani, Joy Basu, Neeraj Singh, Bikas Kargupta,
Meenakshi Midha, Karan Kalia, Avijit Bhattacharjee, Pranav
Diesh, Pratik Datta for the Appellants.
S.S. Gandhi, R.K. Dash, Prashant Chandra, Sanjay
D Sareen Rahul Sharma, P.N. Puri, Pooja M. Saigal, T.N. Singh,
Rajeev Dubey, Kamlendra Mishra, S.K. Dwivedi, M.S. Vinaik,
Ajay Kumar Talesara for the Respondents.
E
The Judgment of the Court was delivered by
JAGDISH SINGH KHEHAR, J. 1. Leave granted.
2. Sky lmpex Limited (as buyer) entered into an
agreement with JCE Consultancy (as seller) on 1.12.2001. The
sale consideration for the products to be supplied by JCE
F
Consultancy was determined at US$13,70,000 (approximately
Rs.9 crores). The product was to be delivered no later than
30.1.2002. The buyer was to confirm receipt and certify quality
and quantity. As per the agreement, the product was to be
further transferred by the buyer (Sky lmpex Limited) to
G Samsung Gulf Electronics, Dubai (hereafter referred to as
"Samsung, Dubai"), a wholly owned subsidiary of Samsung
Corporation, South Korea (hereinafter referred to as
"Samsung, South Korea). Consequent upon supply of the
product under the contract/agreement dated 1.12.2001,
H
Samsung Dubai was to issue a bill of exchange valued at
LEE KUN HEE & ORS. v. STATE OF U.P. & ORS.
299
[JAGDISH SINGH KHEHAR, J.]
US$14,32,000, in favour of the buyer Sky lmpex Limited. Sky
A
lmpex Limited was to further endorse the bill of exchange in
favour of the seller (JCE Consultancy). Within 72 hours
wherefrom the seller was required to transfer to Sky lmpex
Limited US$62,000 as commission. Alternatively, the buyer
(Sky lmpex Limited) could transfer, upon delivery, a sum of B
US$13, 70,000, as sale consideration for the product. It was also
provided in the agreement, that after endorsement of bill of
exchange, the liability of the buyer towards the seller would stand
exhausted. Thereupon, the seller would hold the bill of
exchange, in due course, and get vested with the authority under c
the Negotiable Instrument Act, to claim value, directly from
Samsung, Dubai. Importantly, the agreement dated 1.12.2001
provided that the contract would be governed by the laws of
India. The agreement dated 1.12.2001 being of substantial
relevance in the present controversy, is being extracted
D
herein under:-
"Sky lmpex Limited BVI
Agreement No.SA/100/019
This agreement is made this day December the 1st 2001
between M/s. Sky lmpex Ltd., having its registered office
E
at Omer Hodge Bldg., 2nd Floor, Wickham's Cay1, P.O.
Box-985, Road Town, Tortola, British Virgin Islands, herein·
referred to as the 'the Buyer' and Mis. J.C.E. Consultancy
a proprietorship Company having its office at 108, Rohini
Complex, WA-121, Shakarpur, Delhi-110092, India, herein
F
referred to as 'the Seller'.
The Agreement between the two parties constitute the
following:
1. The buyer has agreed to purchase Coke Calcination
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packages from the Seller to the value of USD 1,370,000
as per order sheet dated November, 25th, 2001 and duly
acknowledge by the Seller.
2. The above packages will be delivered by the Seller to
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the Buyer, no later than January, 30th 2002. The packages
shall be handed over by the Seller to the Buyer's
representative as per communication in writing to be sent
by the Buyer to the Seller.
3. The Buyer should provide a Performance Certificate to
the Seller, confirming that the above packages are in
accordance with the order placed and thereafter the Buyer
shall not have any claims against the Seller in respect to
the quality of the packages and quantity ordered.
4. it is understood by the Seller that the said packages are
to be further transferred by the Buyer to M/s. Samsung Gulf
Electronics, Dubai, a company registered under the laws
of Dubai, UAE and which is a wholly owned subsidiary of
Samsung Corporation, South Korea.
5. The Buyer shall receive from Samsung Gulf Electronics,
Dubai a Bill of Exchange for the value of approx. USD
1,432,000 due for payment of July, 2002 and shall endorse
the same to the seller as consideration for the sale of the
packages to the Buyer. Within 72 hours of receiving
settlement of the said Bill of Exchange the Seller shall
transfer to the Buyer the amount of USO 62,000 to the
nominated account of the Buyer as his commission.
Alternatively the Buyer shall transfer to the Seller the sum
of USO 1,370,000 against delivery of goods to a Bank
account that shall be nominated by the Seller.
6. After endorsement of the said Bill of Exchange, the
liability of the Buyer towards the Seller ceases and the
Seller shall become holder in due course of the Bill of
Exchange with all the rights as per the Negotiable
Instrument Act to claim value directly from the Samsung
Gulf Electronics, Dubai.
7. The Buyer, however, in good faith shall follow up with
Samsung Gulf Electronics, for payment of the said Bill of
LEE KUN HEE & ORS. v. STATE OF U.P. & ORS.
301
[JAGDISH SINGH KHEHAR, J.]
Exchange at maturity expected in July, 2002 and shall in
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good faith keep the Seller informed of any development
in respect of settlement of the Bill.
8. This contract is governed by the Laws of India."
3. Through a delivery receipt dated 28.1.2002, Sky lmpex
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Limited confirmed having received the product valued at
US$13,70,000 under the contract/agreement dated 1.12.2001.
The buyer neither complained about quality nor quantity. There
was also no protest that the goods/product was not received
in time. The aforesaid receipt of goods implies the delivery of C
the product by JCE Consultancy to Sky lmpex Limited. On
1.2.2002, Samsung, Dubai executed a bill of exchange valued
at US$14,32,745 in favour of the buyer Sky lmpex Limited. This
implies further delivery of goods/product from Sky lmpex
Limited to Samsung, Dubai. The said bill of exchange was then
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endorsed in favour of the seller JCE Consultancy, in terms of
agreement dated 1.12.2001.
4. Allegedly, on account of Samsung, Dubai not honouring
its commitment under the bill of exchange dated 1.2.2002, a
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legal notice dated 20.12.2004 was issued by JCE Consultancy
(the seller) through counsel, on instructions from M.A. Packir
(Shaikh Allauddin Paker Maiddin - sole proprietor of JCE
Consultancy) to Samsung, Dubai. Through the aforesaid notice
Samsung, Dubai, was called upon to make payment of
US$14,32,000 to JCE Consultancy within 48 hours, either by
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way of bank draft or other smart investment. Samsung, Dubai,
was warned, that in case of non-receipt of payment, JCE
Consultancy would be constrained to take recourse to legal
remedies, both civil and criminal. The legal notice issued by
JCE Consultancy dated 20.12.2004 was responded to by
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Samsung., Dubai, through counsel on 21.12.2004. In response,
it was inter alia asserted:
" ... that a Credit Note was already been issued by the
beneficiary for the Bill of Exchange, Sky lmpex Limited on
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22 June 2002 and before the due date of payment.
Therefore, our client has no commitment or responsibility
to pay your client any amount in relating to the above
mentioned Bill of Exchange and your client can simply
demand the amount of the Bill of Exchange from Sky
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lmpex Limited, who mislead your client. .. "
It is therefore apparent, that in its response Samsung, Dubai,
acknowledged execution of a bill of exchange valued at
US$14,32,000, in favour of Sky lmpex Limited, and thereby, its
liability under the contract dated 1.12.2001. lnspite thereof
C Samsung, Dubai, as a matter of defence, in order to avoid
liability, took up the position, that the bill of exchange executed
by it in favour of Sky lmpex Limited had been satisfied, and the
beneficiary (Sky lmpex Limited) had already issued a credit
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note in its (Samsung, Dubai) favour on 22.6.2002.
5. JCE Consultancy filed a criminal complaint (complaint
no.30 of 2005) under Sections 403, 405, 415, 418, 420 and
423 read with Sections 120B and 34 of the Indian Penal Code
before the Vllth Additional Chief Judicial Magistrate,
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Ghaziabad. In the complaint filed by Shaikh Allauddin Pakir
Maiddin - the sole proprietor of JCE Cc.~:'.Jltancy, Samsung,
Dubai, was impleaded as accused no.1 (appellant no. 5,
herein); Byung Woo Lee, Managing Director of Samsung,
Dubai, was impleaded as accused no.2 (appellant no.3, herein);
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L.ee Kun Hee, President, Samsung Corporation, was
impleaded as accused no.3 (appellant no.1, herein); Yon Jung
Yung, Vice President and Chief Executive Officer, Samsung
Corporation, was impleaded as accused no.4 (appellant no. 2,
herein); Dong Kwon Byon, Ex. Managing Director, Samsung,
Dubai, was impleaded as accused no.5 (appellant No. 4,
G herein); S.C. Baek, ex. Financial Advisor, Samsung, Dubai, was
impleaded as accused no.6; Sky lmpex Limited, was
impleaded as accused no.7; and the Chairman of Sky lmpex
Limited, was impleaded as accused no.8. Since the contents
of the complaint are of substantial relevance to the present
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LEE KUN HEE & ORS. v. STATE OF U.P. & ORS.
303
[JAGDISH SINGH KHEHAR, J.]
controversy, the same are being extracted hereunder:
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"1. That the complainant company is dealing in consultancy
in the Engineering Field and Sh.Sheikh Allauddin Pakir
Maddin is its sole Prop. Who has been authorized on
behalf of the company to sign, verify and present the
complaint and is empowered to do all the acts.
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2. That the accused no.1 is a Multi National Company who
have business in Foreign Countries and is reputed.
Accused No.2 is the Managing Director of accused No.1,
Accused No.3 the President, Accused No.4 the Vice
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President and Chief Executive Officer, Accused No.5 the
Ex. Managing Director, Accused No.6 the Ex-Financial
Controller, who are being officers of the company and are
responsible each and every done by the company.
3. That on dated 25.11.2011, the Accused no. 7 placed
order for supply of Coke Calcination package with
complainant company and was told to make supply of the
said items to accused no.1 which paper is Annexure K-1.
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In this regard an agreement (contract) between Accused
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No. 7 and the complainant company was executed vide
L.A./100/019 dt.1.12.01 which was signed by the Accused
No. 7 and the authorized signatory of the complainant
company which paper is Annexure K-2.
4. That in compliance of the order dt.25.11.01 complainant
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company supplied the ordered goods to Accused No. 7 the
acknowledgement receipt was given by Accused No.7 vide
letter dt.28.1.02 which paper is Annexure K-3.
5. That the Accused No. 7 handed over the supplied goods
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by the complainant company to Accused No.1 and the
handig over - taking over receipt was acknowledged by
the Accused No.1 vide letter dt.1.2.02 in favour of the
Accused no.7 which paper is Annexure K-4.
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6. That as per the clause No.5 of the agreement executed
between the complainant company and the Accused no.7
the due payment of the received goods was to be made
by the Accused No.1 in the form of Bi!I of Exchange
through Accused No.7. The accused No.7 was to endorse
the bill of Exchange in favour of the complainant company
so received by the Accused No.7.
7. That the Accused No.1 in its Board Meeting of the
company passed a resolution on 15.8.01 by virtue of which
Accused No.6 in addition to other works was also
authorized to sign Bill of Exchange. The said resolution has
been signed by Accused No.5 in the capacity of Director
and Secretary, the same is Annexure K-5.
8. That in accordance with aforesaid resolution, Accused
No.1 intimated their Bank Manager vide their letter
dt.26.1.02 informing that Accused No.6 is authorized to
issue Bill of Exchange on behalf of Accused No.1 and the
signatures of the Accused No.6 were also attested vide
the abovesaid letter. The signature of Accused no.6 have
been attested by the Bank Officer of Accused No.1 which
is Annexure K-6.
9. That Accused no.6 for and on behalf of Accused No.1
issued Bill of Exchange No.S.M.l.C. dt:1.2.02 for
Rs.14,32, 7 45/- American Dollars under his signature in
favour of Accused No. 7 after having received the ordered
goods and on being satisfied of its quality, the same was
endorsed by the Accused No. 7 in favour of the complainant
company in view of the agreement executed between him
and the complainant company which is Annexure K-7.
10. That the complainant company made demand of
payment from the Accused No.1 against the Bill of
Exchange issued in favour of the Accused No.7 and
endorsement thereon which the Accused No.1 did not pay
despite repeated demands from time to time. The
LEE KUN HEE & ORS. v. STATE OF U.P. & ORS.
305
[JAGDISH SINGH KHEHAR, J.]
complainant company sent a legal demand notice dt:
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20.12.04 through their Advocate to Accused No.1 on not
receiving the due payment which is Annexure K-8, and a
reply to the same was sent by Accused No.1 on 21.12.04
through their Advocate stating therein that the payment of
the alleged Bill of Exchange has already been made in
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favour of Accused No.7 on 22.6.02, they, therefore, have
no liability to discharge with regard to payment. The reply
to notice is Annexure K-9.
11. That the aforesaid statement of Accused No.1 is illegal
and contrary to law. The complainant company is the real
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holder of the Bill of Exchange. Till the demand for payment
against the Bill of Exchange is made there is no question
of payment of the same. Only the holder is entitled to
receive the payment, therefore, the Accused No.1 along
with Accused No.7 do not want to make the payment to
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the complainant company and they want to misappropriate
the same.
12. That the complainant company is entitled to receive the
payment against the supplied goods which amounts to
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14,32,745/- American Dollars from the Accused no.1
personally and jointly and the accused persons have
deliberately not paid the same.
13. That the accused persons have committed the above
offence punishable under Sec.403, 405, 415, 418, 420,
423, 120B, 34 Indian Penal Code.
It is therefore prayed that this Hon'ble Court may be
pleased to summon the accused persons and on proof
they be punished."
Shaikh Allauddin Pakir Maiddin - the sole proprietor of JCE
Consultancy, examined himself under Section 200 of the Code
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of Criminal Procedure before the Vllth Additional Chief Judicial
Magistrate on 7.1.2005. In his testimony he, inter alia, asserted
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[2012) 4 S.C.R.
A that accused nos.2 to 6 were individually and jointly liable/
responsible for the activities of accused no.1 (Samsung,
Dubai). He deposed that on 25.11.2001 accused no. 7 Sky
lmpex Limited had placed an order with the complainant,
whereupon an agreement dated 1.12.2001 was executed
B between Sky lmpex Limited (as buyer) and the complainant -
JCE Consultancy (as seller). He maintained, that the
complainant delivered the contracted goods to accused no. 7
(Sky lmpex Limited), who further delivered the contracted
goods to accused no.1 (Samsung, Dubai). He affirmed, that a
C receipt of the goods was also issued by accused no.7 (Sky
lmpex Limited) vide a letter dated 1.2.2002. It was maintained,
in the statement of Shaikh Allauddin Pakir Maiddin, that
accused no.1, in a Board meeting, approved the proposal to
authorize accused no.6 (S.C. Baek, ex.-Financial Advisor,
D Samsung, Dubai) to sign and issue bills of exchange, for and
on behalf of Samsung, Dubai. He also asserted, that a bill of
exchange for US$14,32,745 was signed and issued by
accused no.6 on behalf of Samsung, Dubai, to accused no.7
(Sky lmplex Limited). He also deposed, that the said bill of
exchange was endorsed in favour of the complainant - JCE
E Consultancy, by accused no.7 (Sky lmpex Limited). Shaikh
Allauddin Pakir Maiddin averred, in his statement, that despite
repeated demands made to accused no.1, to honour the bill
of exchange dated 1.2.2002, no payment came to be made by
accused no. 1 to the complainant. Resultantly, on 20.12.2004
F the complainant sent a legal notice, through counsel, to accused
no.1. In its response dated 21.12.2004, through counsel, it was
stated on behalf of the accused (Samsung, Dubai), that the
amount of the said bill of exchange had already been made
over to accused no. 7 on 22.6.2002. He also asserted, that in
G reply to the notice, the accused adopted the position of no
liability towards the complainant under the bill of exchange
dated 1.2.2002. Shaikh Allauddin Pakir Maiddin, in his
statement under Section 200 of the Code of Criminal
Procedure, contested the stance adopted by the accused in
H response to the legal notice, by testifying that the complainant
LEE KUN HEE & ORS. v. STATE OF U.P. & ORS.
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[JAGDISH SINGH KHEHAR, J.]
company was the holder of the bill of exchange, consequent
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upon an endorsement made thereupon by Sky lmpex Limited.
As such, the complainant - JCE Consultancy maintained, that
it was entitled to payment under the bill of exchange. He also
averred, that accused no.1 (Samsung, Dubai), in collusion with
accused no.7 (Sky lmpex Limited), in order to deny payment
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to the complainant, had adopted the aforesaid position. He
asserted, that the complainant - JCE Consultancy was entitled
to recover payment under the bill of exchange, individually and
jointly from the accused. Besides recording his statement under
Section 200 of the Code of Criminal Procedure, Shaikh
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Allauddin Pakir Maiddin also tendered copies of the order
sheet dated 2.11.2001, the agreement dated 1.12.2001, the
delivery receipt dated 28.1.2002, the perforriance certificate
dated 1.2.2002, proceedings of the Board meeting of accused
no.1 approving the proposal to authorize accused no.6, the letter 0
dated 26.1.2002 (issued by accused no.1 to its banker,
informing its banker that accused no.6 was its authorized
signatory), the bill of exchange dated 1.2.2002 in the sum of
US$14,32,745 (issued in favour of Sky lmpex Limited, duly
endorsed to JCE Consultancy), the legal notice dated
20.12.2004 and its reply dated 21.12.2004.
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6.