Bombay High Court Quashes FIR Against Managing Director and President of Ford India and Car Dealer Directors in Alleged Fraud Case. Sale of Used Car Disguised as New Model Leads to Allegations of Cheating and Forgery, but Court Finds No Involvement of Manufacturer.

Petitions under section 482 CrPC seeking quashing of FIR for offences of cheating, forgery and criminal conspiracy.

Applicants sought quashing of FIR No. I-91/2018 registered with MIDC Police Station, Ahmednagar.

Alleged that the FIR was false and did not disclose any offence against the applicants, especially the manufacturer’s representative.

Whether the FIR against the applicants, particularly the Managing Director and President of Ford India, disclosed any offence warranting investigation. Whether the manufacturer could be held liable for the acts of its dealer in absence of any manufacturing defect or direct misrepresentation by the manufacturer.

The applicant Anurag Mehrotra, through counsel, argued that under clause 2(b) of the dealership agreement, the dealer independently purchases and sells vehicles, and the manufacturer cannot be held responsible for the dealer's independent fraudulent acts. The manufacturer's liability is limited to manufacturing defects or its own misrepresentations. The applicant Akshay Bihani contended that he is a Chartered Accountant with no connection to the dealer company, and thus no offence could be made out against him. The applicant Govardhan Bihani, director of the dealer company, submitted that the FIR was false and motivated, and pointed to a related criminal writ petition where the court had directed CID investigation into the harassment allegations against the informant. The respondent first informant, through senior counsel, argued that clause 4(b) of the dealership agreement required the manufacturer's consent for dealing in used vehicles, implying the manufacturer's involvement in the transaction and thus liability.

A manufacturer cannot be held criminally liable for the independent fraudulent acts of its dealer in the absence of any manufacturing defect or false representation made directly by the manufacturer. The transaction of sale between the dealer and customer is distinct, and the manufacturer’s responsibility is limited to matters of manufacturing defects and its own advertisements. (Paras 9-10)

Only when the manufacturer is liable due to some manufacturing defect in the vehicle action can be taken against the manufacturer. Similarly when there is false representation in the advertisement of the Company (manufacturer) or in the broacher of the manufacturer, action is possible against the manufacturer. the Company cannot be roped in as an accused or defendant in that matter. Even if this clause is read as it is that cannot help the first informant or the prosecution in future.

The first informant, a sitting Member of Parliament, lodged an FIR on 4 March 2018 with MIDC Police Station, Ahmednagar, alleging that the directors of Salasar Wheels Private Limited and the Managing Director of Ford India Private Limited committed offences of cheating, forgery, and criminal conspiracy by selling him a 2012 model vehicle as a 2015 model. The applicants filed three separate criminal applications under Section 482 CrPC before the Aurangabad Bench seeking quashing of the FIR. The court issued notice and heard all parties. Meanwhile, in Criminal Writ Petition No.1286/2017, another bench had directed CID investigation into the applicants’ allegations of harassment by the informant. The present applications were taken up for final hearing on 27 June 2018, and the court after hearing both sides allowed the applications and quashed the FIR.

• Indian Penal Code, 1860: 120B, 406, 420, 467, 468, 471, 34
• Code of Criminal Procedure, 1973: 482