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Tuesday, October 29, 2013

Cryptic and non-speaking orders not maintainable and are liable to be set aside = M/s. Shree Mahavir Carbon Ltd. ...Appellant(s) Versus Om Prakash Jalan (Financer) & Anr. …Respondent(s)- http://judis.nic.in/supremecourt/imgst.aspx?filename=40911

High court with out discussing the pleadings- with out assigning valid reasons - cryptically quashed the complaint which was taken cognizance by Lower court  by it's non-speaking orders - Apex court set aside & remanded for afresh disposal = 
the impugned judgment does not disclose as to how this finding was arrived at and that it was a non-speaking  order.
  “On perusal of the nature of allegations made in  the  complaint
           petition and the statements given by  the  complainant  and  the
           witnesses, it is clearly disclosed that the dispute is civil  in
           nature relating  to  settlement  of  the  accounts  between  the
           parties and no offence is made out.”


what is meant by “reasons”?  
In the context of legal decision  making,  the focus is to what makes something a legal valid reason.  
Thus,  “reason
      would mean a justifying reason, or more simply a justification  for  a
      decision is a consideration, in a  non-arbitrary  ways  in  favour  of
      making or accepting that - decision.  
If there is no justification in support of a decision,  such a decision is without any reason or justifying reason.

      15.   We are  not  entering  into  a  jurisprudential  debate  on  the
      appropriate theory of legal reasoning. 
It is not even a  discourse  on how to write judgments. 
Our intention is  to  simply  demonstrate  the
      importance of legal reasoning in support  of  a  particular  decision.
      
What we have highlighted is that instant is a case or  arriving  at  a
      conclusion, in complete absence of reasons, what to talk  of  adequate
      or good reasons that justifying that conclusion.

      16.   In the given case, 
it was required by the  High  Court  to  take
      note of the arguments  of  the  complainant  on  the  basis  of  which
      complainant insist that ingredients of the particular offences alleged
      are prime facie established justifying the cognizance of the complaint
      and the arguments of the respondents herein  on  the  basis  of  which
      respondents made an endeavour to demonstrate that it was a pure  civil
      dispute with no elements of  criminality  attached.   
Thereafter,  the
      conclusion should have been backed by reasons as to why the  arguments
      of the complainant are merit less and what is the rationale basis  for
      accepting the case of accused persons. 
We hope that this aspect  would
      be kept in mind by the High Court while deciding the case afresh.

      -

      17.   Accordingly, this appeal is allowed and the  impugned  order  is
      set aside with direction as aforesaid.  No costs.


                                                                  REPORTABLE




                        IN THE SUPREME COURT OF INDIA
                       CRIMINAL APPELLATE JURISDICTION
                        CRIMINAL APPEAL NO. 1875/2013
        (Arising out of Special Leave Petition (Crl.) No. 2509/2012)






      M/s. Shree Mahavir Carbon Ltd.
      ...Appellant(s)


                                  Versus


      Om Prakash Jalan (Financer) & Anr.
      …Respondent(s)






                                  J U D G M E N T


      A.K.SIKRI,J.


      1.    Leave granted.




      2.    The appellant-company has filed a complaint  registered  as  ICC
      No.62/2008 under Sections 420/406/468/471, Indian Penal  Code  against
      the respondent herein and two  others.   
After  recording  preliminary
      evidence, the learned Judicial Magistrate First Class (JMFC), Salipur,
      Orissa took cognizance of the aforesaid offence and issued summons  to
      the accused persons including  the  respondents.   
On   receiving  the
      summons, the respondents filed applications under Section 482  of  the
      Code of Criminal -Procedure with a prayer that orders dated 9.6.2008 by the learned JMFC
      taking cognizance of the complaint be quashed.  
It  was  pleaded  that
      the complaint was with regard to rendition of accounts  maintained  by
      the accused persons in respect of business between the complainant and
      the accused persons and therefore the dispute  was  of  civil  nature.
     
The High Court has allowed the said application thereby setting  aside
      orders taking cognizance of the offence.  
It is this  order  which  is
      challenged by the appellant-complainant in these proceedings.

      3.    The impugned order is two page order.
 After taking note of facts
      in one paragraph, the High  Court  has  allowed  the  application  and
      quashed the order taking cognizance of the offence and the  discussion
      leading to this judgment is contained in the following paragraph:

           “On perusal of the nature of allegations made in  the  complaint
           petition and the statements given by  the  complainant  and  the
           witnesses, it is clearly disclosed that the dispute is civil  in
           nature relating  to  settlement  of  the  accounts  between  the
           parties and no offence is made out.”



      4.    Questioning the rationality of the aforesaid order, Mr. Ganguli,
      the learned senior  counsel  appearing  for  the  appellant,  took  us
      through the various paragraphs of the complaint on the basis of  which
      he made an attempt to demonstrate that  it  was  not  simply  a  civil
      dispute pertaining to - settlement of accounts between the parties.
He also argued  that  the
      High Court had allowed petition filed by the respondent under  Section
      482,Cr.P.C.  without  giving  any  reason  inasmuch  as  the  impugned
      judgment  hardly  contained  any  discussion  for  arriving   at   the
      conclusion that the dispute in question was civil in nature.   
Learned
      senior counsel, who appeared for the respondent, though tried to argue
      that conclusion of the High Court that dispute was of civil nature, he
      candidly concededly that the impugned judgment does not disclose as to
      how this finding was arrived at and that it was a non-speaking  order.
      He, thus, submitted that instead of this Court  examining  the  issue,
      the matter be relegated back to the High  Court  for  hearing  afresh.
      Mr. Ganguly also accepted this suggestion of Mr.  Giri.   Accordingly,
      we set aside the impugned judgment and remand the  case  back  to  the
      High Court to decide the  same  with  direction  to  hear  afresh  the
      petition filed by the respondent under Section 482 of the Cr.P.C.  and
      decide it on merits without being influenced by the earlier view taken
      in the impugned order dated 16.1.2012.

      5.    Before we part with, we would like to  observe  that  this  case
      necessitates making certain comments on the  importance  of  rationale
      legal reasoning in support of judicial  orders.   From  the  extracted
      portion, which is the only discussion on the merits of the matter,  it
      can clearly be discerned -

      that what is stated is the conclusion and no reasons are given by  the
      High Court for holding that dispute between the parties  is  civil  in
      nature.  The complainant in its complaint had  made  various  specific
      allegations of cheating,  siphoning  of  funds  and  falsification  of
      accounts etc.  In the complaint filed by the appellant, the  appellant
      averred that it is engaged in the business of manufacturing  and  sale
      of low ash phos metallurgical  coke.  The  appellant  entered  into  a
      tripartite agreement dated 08.04.2003 with Om Prakash Jalan respondent
      No.1 herein and Mr. Rajeev Maheshwari-Respondent No.3 herein. In  this
      agreement Respondent Nos.1 and 3 agreed to  provide  sufficient  funds
      for expansion of the coke oven plant owned by  the  appellant  and  in
      consideration thereof the respondents were to be allotted 70%  of  the
      existing shares of the appellant company while 30% of its shares  were
      to be retained by the existing shareholders. It was also  agreed  that
      the Board of Directors of the appellant Company would be reconstituted
      with three directors  consisting  of  one  nominee  of  the  appellant
      company,  and  one  nominee  each  from  the   respondent   companies.
      Respondent No.1 was to become the Managing Director  of  the  Company.
      It was further agreed between the parties that  while  the  respondent
      would bring in  the  additional  working  capital  for  operation  and
      expansion of the plant but one of the -

      contracting parties shall be entitled to  withdraw  any  profits  till
      such time there is enough working capital in the company.

      6.    It was further agreed that the profit and loss as earned for the
      new expansion would be shared in the same ratio till 31st  March  2004
      and thereafter on the total plant would also be  shared  in  the  same
      ratio.  Pursuant to the said agreement the control and  management  of
      the appellant company and its Coke Oven Plant was virtually taken over
      by the respondents while they remained responsible to both the Company
      and its existing shareholders who have been running the business since
      the inception of the company till  the  execution  of  the  tripartite
      agreement.

      7.     As  per  the  allegation  in  the  complaint,  no  sooner   the
      respondents  assumed  control  over  the  business  of  the  appellant
      company, the respondents started indulging in large  scale  fraudulent
      transactions  for  and  on  behalf  of  the  company,  subjecting  the
      appellant company to great loss  and  consequences  and  also  foisted
      civil and criminal liabilities on the company as well as its Directors
      and shareholders. Large amount of money from the  appellant  company’s
      account was allegedly siphoned out in favour of third parties  without
      the appellant company having any transaction with them.  Large amounts
      were also allegedly deposited in the appellant  company’s  account  in
      cash purportedly received by them from third parties, thus -

      making the appellant company, its directors  and  shareholders  liable
      for violation of laws and commission of crime.  It  was  also  alleged
      that large sums of money was also siphoned out from bank  accounts  of
      the appellant company and paid to third parties  without  the  company
      entering into any transaction with them.

      8.    In the complaint instances of siphoning  of  the  funds  by  the
      accused persons to its own company have been given.   On  this  basis,
      the  appellant/complainant  sought  to  make  a  complaint  that   the
      aforesaid acts of  the  accused  persons  amounted  to  offence  since
      punishable under Sections 419,420,406,486,471 of the IPC.

      9.    The JMFC after going through the preliminary  evidence  recorded
      by him had chosen to take cognizance of the matter. Challenge  against
      this order has been accepted by the High Court it becomes the  bounden
      duty of the High Court to give appropriate and sufficient  reasons  on
      the basis of which it arrived at a conclusion, the dispute was  merely
      that of accounts with no elements of criminality.  We are conscious of
      the legal position that Ingredients of each of the provisions of  IPC,
      which is sought to be foisted upon the respondents  are  to  be  prima
      facie established before cognizance of the complaint is taken  by  the
      Judicial Magistrate. However, when  the  summoning  order  is  quashed
      holding that it is a civil dispute, various -

      allegations and  averments  made  in  the  complaint  and  preliminary
      evidence led in support thereof has to be appropriately dealt with  by
      the High Court. We  are  not  commenting  upon  the  merits  of  these
      allegations. However, there is no discussion worth the  name,  in  the
      impugned judgment, as to how and on what basis the High Court accepted
      such a plea of the respondents herein,  in  recording  its  conclusion
      that it was a case of rendition of accounts simplicitor.

      10.   After all the High Court was setting  aside  the  order  of  the
      Subordinate Court by which Subordinate Court had taken  cognizance  in
      the matter. This could be done after appropriately  dealing  with  the
      contentions of both the parties, more  specially  when  it  was  first
      judicial review of the orders of the Court below. In  Hindustan  Times
      Ltd. Vs. Union of India; (1998) 2 SCC 242, this Court  made  pertinent
      observation in the context:

           “In an article  on  Writing  Judgments,  Justice  Michael  Kirby
           (1990)  64 Austr L.J p.691) of  Australia,  has  approached  the
           problem from the point of the litigant,  the  legal  profession,
           the subordinate Courts/tribunals, the  brother  Judges  and  the
           Judge’s own conscience. To the litigant, the duty of  the  Judge
           is to uphold his own integrity and let the losing party know why
           he lost the case. The legal profession is entitled  to  have  it
           demonstrated that the Judge had the correct principles in  mind,
           had properly applied them and is entitled to examine the body of
           the judgment for the learning and precedent  that  they  provide
           and for the reassurance of the quality of the judiciary which is
           still the centre-piece of our administration of justice. It does
           not take long for the profession  to  come  to  know,  including
           through -

           the written pages of published judgments, the  lazy  Judge,  the
           Judge  prone  to  errors  of  fact,   etc.    The   reputational
           considerations are  important  for  the  exercise  of  appellate
           rights, for the Judge’s own self  discipline,  for  attempts  at
           improvement and the maintenance of the integrity and quality  of
           our judiciary. From the point  of  view  of  other  Judges,  the
           benefit that accrues  to  the  lower  hierarchy  of  Judges  and
           tribunals is of utmost importance. Justice Asprey  of  Australia
           has even said in Petit v. Dankley (1971) (1) NSWLR 376 (CA) that
           the failure of a Court to give reasons is an  encroachment  upon
           the right of appeal given to a litigant.




           It was finally stated:




                 “In our view, the satisfaction which a  reasoned  judgment
           gives to the losing party or his lawyer is the test  of  a  good
           judgment. Disposal of cases is no doubt important but quality of
           the judgment is equally, if not more,  important.  There  is  no
           point in shifting the burden  to  the  higher  Court  either  to
           support the judgment by reasons or to consider the  evidence  or
           law for the first time to see if the judgment needs a reversal.




                 In that case, the order of dismissal of the writ  petition
           by the High Court was affirmed by us but the task  fell  on  the
           Supreme Court, to inform the appellant why it had lost the  case
           in the High Court.”




      11.   In the present case, we have avoided to  do  this  exercise  and
      have not gone into the merits of the case  to  find  out  whether  the
      conclusion of the High Court is correct or not,  as  the  counsel  for
      both the parties have agreed for remand of the matter.

      -

      12.   It is no where suggested by us that the judgment should  be  too
      lengthy  or  prolix  and  disproportionate  to  the  issue   involved.
      However, it is to be borne in mind that  the  principal  objective  in
      giving judgment is  to  make  an  effective,  practical  and  workable
      decision. The court resolves conflict by  determining  the  merits  of
      conflicting  cases,  and  by  choosing  between  notions  of  justice,
      convenience, public policy, morality, analogy, and takes into  account
      the opinions of other courts or writers (Precedents). Since the  Court
      is to come to a workable decision, its reasoning and  conclusion  must
      be practical, suit the facts  as  found  and  provide  and  effective,
      workable remedy to the winner.

      13.   We are of the opinion that while  recording  the  decision  with
      clarity, the Court is also supposed to record  sufficient  reasons  in
      taking a particular decision or arriving at a  particular  conclusion.
      The reasons should be such that they demonstrate that the decision has
      been arrived at on a objective consideration.

     14.    When we talk of giving “reasons” in support of a judgment,
what
      is meant by “reasons”?  
In the context of legal decision  making,  the
      focus is to what makes something a legal valid reason.  
Thus,  “reason
      would mean a justifying reason, or more simply a justification  for  a
      decision is a consideration, in a  non-arbitrary  ways  in  favour  of
      making or accepting that - decision.  
If there is no justification in support of a decision,  such
      a decision is without any reason or justifying reason.

      15.   We are  not  entering  into  a  jurisprudential  debate  on  the
      appropriate theory of legal reasoning. 
It is not even a  discourse  on how to write judgments.
Our intention is  to  simply  demonstrate  the
      importance of legal reasoning in support  of  a  particular  decision.
     
What we have highlighted is that instant is a case or  arriving  at  a
      conclusion, in complete absence of reasons, what to talk  of  adequate
      or good reasons that justifying that conclusion.

      16.   In the given case,
it was required by the  High  Court  to  take
      note of the arguments  of  the  complainant  on  the  basis  of  which
      complainant insist that ingredients of the particular offences alleged
      are prime facie established justifying the cognizance of the complaint
      and the arguments of the respondents herein  on  the  basis  of  which
      respondents made an endeavour to demonstrate that it was a pure  civil
      dispute with no elements of  criminality  attached.  
Thereafter,  the
      conclusion should have been backed by reasons as to why the  arguments
      of the complainant are merit less and what is the rationale basis  for
      accepting the case of accused persons. 
We hope that this aspect  would
      be kept in mind by the High Court while deciding the case afresh.

      -

      17.   Accordingly, this appeal is allowed and the  impugned  order  is
      set aside with direction as aforesaid.  No costs.


                                                             .…………………………..J.
                                                   [K.S.Radhakrishnan]






                                                              …………………………..J.
                                                   [A.K.Sikri]




      New Delhi,
      October 28, 2013




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