advocatemmmohan

My photo

ADVOCATEMMMOHAN -  Practicing both IN CIVIL, CRIMINAL AND FAMILY LAWS,Etc.,

WELCOME TO LEGAL WORLD

WELCOME TO MY LEGAL WORLD - FOR KNOWLEDGE IN LAW & FOR LEGAL OPINIONS - SHARE THIS

Saturday, December 17, 2016

order under Section 156(3) of Cr.P.C. requiring investigation by the police, cannot be said to have caused an injury of irreparable nature which, at this stage, requires quashing of the investigation. We must keep in our mind that the stage of cognizance would arise only after the investigation report is filed before the Magistrate. Therefore, in our opinion, at this stage the High Court has correctly assessed the facts and the law in this situation and held that filing of the petitions under Article 227 of the Constitution of India or under Section 482 of Cr.P.C., at this stage are nothing but premature. Further, in our opinion, the High Court correctly came to the conclusion that the inherent powers of the Court under Section 482 of Cr.P.C. should be sparingly used. In these circumstances, we do not find that there is any flaw in the impugned order or any illegality has been committed by the High Court in dismissing the petitions filed by the appellants before the High Court.

                                                                  REPORTABLE
                        IN THE SUPREME COURT OF INDIA
                       CRIMINAL APPELLATE JURISDICTION

                      CRIMINAL APPEAL  NO. 1213 OF 2016
                (Arising out of S.L.P.(Crl.) No.1913 of 2012)

HDFC Securities Ltd. & Ors        ...              Appellants
                                  :Versus:
State of Maharashtra & Anr.       ...              Respondents





                               J U D G M E N T
Pinaki Chandra Ghose, J.
Leave granted.
This appeal has been filed assailing  the  judgment  and  order  dated  16th
November, 2011, passed  by  the  High  Court  of  Judicature  at  Bombay  in
Criminal Writ Petition No.672 of 2011, whereby the writ petitions  filed  by
the appellants were dismissed by the High  Court  on  the  ground  that  the
filing of the writ  petition  was  premature  and  there  was  no  need  for
exercising the powers either under Article 227 of the Constitution of  India
or under Section 482 Cr.P.C.

Brief facts of the case are as follows: appellant  No.1  -  HDFC  Securities
Ltd., is a  public  liability  company  (hereinafter  referred  to  as  “the
Company” for  short),  appellant  No.2  is  the  Managing  Director  of  the
Company, appellant No.3 is Business Head of the Company, and appellant  No.4
is the  Regional  head  of  Mumbai  Region  of  the  Company,  respectively.
Respondent  No.1  is  State  of  Maharashtra  and  respondent  No.2  is   an
individual, who held an account with the Company. The Company is engaged  in
the  business  of  dealing  in  shares  and  securities  on  behalf  of  its
constituents and clients on Brokerage Charge and it  is  also  a  member  of
National Stock Exchange of India Limited (NSE) and Bombay Stock Exchange  of
India Limited (BSE).

Respondent  No.2,  had  registered   herself   with   the   Company   as   a
constituent/client by opening Securities Trading Account vide No.342889  and
was an imperial customer of the Company for about eight years. She  executed
a Member-Client Agreement dated  28th  June,  2005.  On  3rd  August,  2009,
respondent No.2, through a legal  Notice  dated  03.08.2009,  requested  the
appellants  to  make  good  the  losses  caused  to  her  by  indulging   in
unauthorized and fraudulent trading  in  her  account  by  one  Vinod  Koper
(Relationship Manager of the company-”RM” in short) during the period  July,
2008 to June, 2009. This Notice was also sent to  RM  and  one  Rohan  Raut,
Assistant Vice President of the Company, on 20th October, 2009.  Thereafter,
she filed arbitration proceedings before NSE Panel  of  Arbitrators  against
the Company for a sum of Rs.48.99 Lacs and costs of Rs.2.5 Lacs,  and  chose
the Arbitrators of her choice, being  two  retired  High  Court  Judges  and
sought to call RM as a witness. The Arbitrators passed an  award  in  favour
of the Company on 18th August, 2010, recording  a  shift  in  the  stand  of
respondent No.2, authorizing her husband to trade  on  her  behalf.  In  the
meantime, as the Police did not take cognizance of the  matter,  albeit  she
filed a complaint on 31st march, 2010, against the appellants, RM  and  AVP,
on 10th June, 2010, she  also  filed  a  criminal  complaint  under  Section
156(3) of the Code of Criminal Procedure, 1973 (hereinafter referred  to  as
Cr.P.C.)  before  10th  Metropolitan  Magistrate,  Andheri,   bearing   Case
No.143/2010, alleging  execution  of  unauthorized  trades  in  her  account
without her consent by the appellants  and  claimed  that  she  had  thereby
suffered losses amounting to Rs.70 Lacs. Specific allegations were  levelled
against RM and appellant No.3 as she was introduced to RM by appellant  No.3
and was told that RM would handle  her  investment  portfolio  honestly  and
efficiently with her prior instructions. General allegations of  involvement
of other appellants were made. On 25th September,  2010,  she  preferred  an
appeal before NSE Appellate Panel  of  Arbitrators,  being  Arbitration  REF
No.CM/M-213/2009, wherein she disputed the  trades  which  had  taken  place
during the period December 2008 to April 2009.  Being  completely  oblivious
of the Arbitration proceedings, the award  passed  therein  and  the  appeal
preferred by  respondent  No.2,  on  04.01.2011,  the  learned  Metropolitan
Magistrate directed registration of FIR against the appellants  and  ordered
for a report after investigation.

Pursuant  to  the  order  of  the  learned  Metropolitan  Magistrate   dated
4.01.2011, Juhu Police Station registered the FIR, being MECR No.7  of  2011
dated 30th January, 2011, under  Sections  409,  420,  465,  467  read  with
Sections 34 and 120-B of the IPC.  Meanwhile,  the  Appellate  Tribunal  had
decided the appeal against  respondent  No.2,  vide  its  Award  dated  24th
January, 2011. The Appellate tribunal found that  respondent  No.2  had  not
denied the fact of having received all the  necessary  documents,  including
Contract notes, etc. with regard  to  the  transactions  undertaken  by  the
appellants on her behalf, which were required to be issued  by  the  trading
member  to  the  investor  immediately  after  the  trade   is   undertaken.
Thereafter, the appellants filed a writ  petition  before  the  Bombay  High
Court, being Criminal Writ Petition No.672 of 2011, inter alia  praying  for
quashing of the said FIR and the same prayer was also made in Criminal  Writ
Petition No.767 of 2011, filed by RM before the High Court. The  High  Court
by its judgment dated 16.11.2011,  dismissed  both  the  writ  petitions  as
according to it, the filing of the writ petitions was  premature  and  there
was no need for exercising the  powers  either  under  Article  227  of  the
Constitution of  India  or  under  Section  482  Cr.P.C.  Aggrieved  by  the
aforesaid judgment of the High Court, the appellants  have  approached  this
Court by filing this appeal by special leave.


The only question that arises for decision in this  appeal  is  whether  the
order dated 04.01.2011 passed by the Court of 10th Metropolitan  Magistrate,
Andheri, in Private Complaint, C.C. No.143/Misc/2010,  filed  by  respondent
No.2 for the offences punishable under Sections  409,  420,  465,  467  read
with Sections 34, 120(B) IPC, as well as  FIR  bearing  MECR  No.7  of  2011
dated 30th January, 2011,  registered  at  Police  Station,  Juhu,  District
Mumbai,  are liable to be quashed.


In order to answer this question, it is  necessary  to  first  set  out  the
relevant provisions i.e. Sections 156  and  482  of  the  Code  of  Criminal
Procedure, 1973:
“156. Police officer's power to investigate cognizable case.
(1) Any officer in charge of a police station may, without the  order  of  a
Magistrate,  investigate  any  cognizable  case   which   a   Court   having
jurisdiction over the local area within the limits  of  such  station  would
have power to inquire into or try under the provisions of Chapter XIII.
(2) No proceeding of a police officer in any such case shall  at  any  stage
be called in question on the  ground  that  the  case  was  one  which  such
officer was not empowered under this section to investigate.
(3) Any  Magistrate  empowered  under  Section  190  may   order   such   an
investigation as above- mentioned.”

      “482. Saving of inherent power of High Court.-
Nothing in this code shall be deemed to limit or effect the inherent  powers
of the High Court to make such orders as may be necessary to give effect  to
any order under this Code, or to prevent abuse of process of  any  Court  or
otherwise to secure the ends of justice.”





The High Court  dismissed  the  application  filed  by  the  appellants  for
quashing and setting aside the order of the  Metropolitan  Magistrate  dated
4th January, 2011, on the ground that the appellants had applied before  the
stage of issuance of process so to be issued by the Metropolitan  Magistrate
under Section 156(3) of  the  Criminal  Procedure  Code.  According  to  the
appellants, the fundamental rights of the appellants  would  be  compromised
if the order so passed by the Magistrate is allowed to be given  effect  to.
The contention before the High Court on this question is that the  order  so
passed by the Metropolitan Magistrate is illegal and  amounts  to  abuse  of
the process of  law.   On  the  contrary,  before  the  High  Court  it  was
submitted on behalf of respondent No.2 that an order  under  Section  156(3)
of Criminal Procedure Code requiring investigation by the  police  does  not
cause any injury of  irreparable  nature  which  requires  quashing  of  the
investigation. It is further stated  that  the  stage  of  cognizance  would
arise after the investigation report is filed.  Therefore,  the  application
filed by the appellants before the High Court is nothing but prematured  and
thus there is no need for exercising the powers of  the  High  Court  either
under Article 227 of the Constitution of India or under Section 482  of  the
Code. Further contention of the respondent before the High  Court  was  that
the inherent powers under Section 482 of the Code should be sparingly used.

The High  Court  held  that  the  direction  given  to  the  police  by  the
Magistrate  under  Section  156(3)  of  the  Code  for  carrying   out   the
investigation into the complaint and to  submit  a  report,  cannot  give  a
right to the appellants for quashing the same since such an order  would  be
based absolutely on speculations upon the report  not  filed.   Further,  it
would result in prejudging the complaint. In these circumstances,  the  High
Court dismissed the said application.

Dr. Abhishek Singhvi, learned senior counsel  appearing  on  behalf  of  the
appellants submitted that the initiation of proceedings in the instant  case
is an abuse of process of law and is liable to be quashed.  He  argued  that
it is a settled principle that summoning of an accused in  a  criminal  case
is a serious matter and the criminal law  cannot  be  set  in  motion  as  a
matter of course. Therefore,  the  order  of  the  magistrate  must  reflect
application of mind to  the  facts  of  the  case  and  the  law  applicable
thereto.  In support of this submission,  the  learned  counsel  has  relied
upon Anil Kumar Vs.  M. K. Aiyappa, (2013) 10  SCC  705,  paragraph  11,  of
which is quoted below:
“11. The scope of Section 156(3) CrPC came up for consideration before  this
Court in several cases. This  Court  in  Maksud  Saiyed  case  examined  the
requirement of the application of mind by the Magistrate  before  exercising
jurisdiction under Section  156(3)  and  held  that  where  jurisdiction  is
exercised on a complaint filed in terms of Section  156(3)  or  Section  200
CrPC, the Magistrate is required to apply his mind,  in  such  a  case,  the
Special Judge/Magistrate  cannot  refer  the  matter  under  Section  156(3)
against a public servant without a valid sanction order. The application  of
mind by the Magistrate should be reflected in the order. The mere  statement
that  he  has  gone  through  the  complaint,  documents   and   heard   the
complainant, as such, as reflected in the order,  will  not  be  sufficient.
After going through the complaint, documents and  hearing  the  complainant,
what weighed with  the  Magistrate  to  order  investigation  under  Section
156(3) CrPC, should be reflected in the order, though a detailed  expression
of his views is neither required nor warranted. We  have  already  extracted
the order passed by the learned  Special  Judge  which,  in  our  view,  has
stated no reasons for ordering investigation.”


Learned Magistrate had passed an order on 04.01.2011 holding that:
“The bare reading of the complaint and the accompanying  documents  disclose
the cognizable offence. Therefore  in  view  of  the  judgement  of  Hon’ble
Supreme Court in case of Srinivas Gunduri & Ors. vs. M.  S.  SEPCO  Electric
Power Construction & Anr. In the matter of criminal appeal No.1377/2010  and
1378/2010 decided on 30.07.2010 when the complaint  discloses  a  cognizable
offence, then the Magistrate instead of applying his mind to  the  complaint
for deciding whether or not there is sufficient ground for  proceedings  may
direct the police for investigation.

Therefore, considering  all  these  aspects,  the  complaint  discloses  the
commission of cognizable  offence.  Therefore,  considering  the  nature  of
offence it needs to be  sent  to  police  for  investigation  under  section
156(3) of CrPC.”

Dr. Abhishek Singhvi, learned senior counsel  appearing  on  behalf  of  the
appellants has relied upon the following decisions of this Court  to  assail
the aforesaid order passed by  the  Magistrate:  Devarapall  Lakshminarayana
Vs. V. Narayana Reddy & Ors., (1976) 3 SCC 252, and Ram  Dev  Food  Products
Pvt. Ltd. Vs. State of Gujrat, reported in (2015) 6 SCC 439.



Further, it was submitted by the learned counsel  for  the  appellants  that
there is no merit in the complainant’s  (respondent  No.2)  contention  that
the transactions from her trading account were  unauthorized.  Trading  from
the complainant’s trading account were being carried out by her  husband  as
admitted by the  complainant  in  the  complaint  made  before  the  learned
Magistrate, and at the time of opening the trading  account  with  appellant
No.1, she was made aware of all the risks involved and the  complainant  had
agreed to the same and understood that she would be responsible for all  the
risks and consequences of entering into trades. The relevant clause  of  the
Agreement entered into by complainant is reproduced hereinbelow:


“2.11 The Client agrees and declares as follows: (i)  The  Client  shall  be
wholly responsible for all  the  investment  decisions  and  trades  of  the
Client; (ii) The Client will pay receive  applicable  daily  margins;  (iii)
Payment of margins  by  the  Client  does  not  necessarily  imply  complete
satisfaction of all dues; (iv) In spite of consistent having  paid  margins,
the Client may, on the closing of his trade, be obliged to pay (or  entitled
to receive) such further sums as  the  market  price  or  an  instrument  of
contract may dictate; and (v) The failure of  a  Client  to  understand  the
risk involved or the failure of the  member  to  explain  the  risk  to  the
Client shall not render a contract as void or voidable and the Client  shall
be and shall continue to be responsible for all the risks  and  consequences
for entering into trades in Derivatives.”


In the light of the Agreement entered  into  between  complainant-respondent
No.2 and the appellants, the learned  counsel  for  the  appellants  further
averred that criminal prosecution of the appellants could not be allowed  to
continue because the criminal prosecution requires a  much  higher  standard
of proof beyond  reasonable  doubt,  whereas  civil  matters  require  lower
standard of proof - preponderance of probabilities. He  drew  our  attention
towards a very recent pronouncement in the case of Lalitha Kumari Vs.  Govt.
of Uttar Pradesh, reported in (2014) 2 SCC 1, wherein this Court held:
“Therefore, in view of various counter claims regarding registration or non-
registration, what is necessary is only that the information  given  to  the
police must disclose the commission of  a  cognizable  offence.  In  such  a
situation, registration of an FIR is mandatory. However,  if  no  cognizable
offence is made out in the information given,  then  the  FIR  need  not  be
registered immediately  and  perhaps  the  police  can  conduct  a  sort  of
preliminary verification or inquiry for the limited purpose of  ascertaining
as to  whether  a  cognizable  offence  has  been  committed.  But,  if  the
information given clearly mentions the commission of a  cognizable  offence,
there  is  no  other  option  but  to  register  an  FIR  forthwith.   Other
considerations are not relevant at the stage of registration  of  FIR,  such
as, whether the information is falsely given,  whether  the  information  is
genuine, whether the information is credible etc. These are the issues  that
have to be verified during the investigation of the FIR.  At  the  stage  of
registration of FIR, what is to be seen is merely  whether  the  information
given ex facie discloses the commission of a cognizable offence.  If,  after
investigation, the information given is found to be false, there  is  always
an option to prosecute the complainant for filing a false FIR.”


We are of the considered opinion that in the present  case  a  fact  finding
investigation was directed by the  impugned  order.  Consequently,  FIR  was
registered against appellants No.2 to 4 and against RM  (Vinod  Kopar).  The
accused under Indian Criminal  Legal  System,  unless  proved  guilty  shall
always be given  a  reasonable  space  and  liberty  to  defend  himself  in
accordance with the law. Further,  it  is  always  expected  from  a  person
accused of an offence pleading not  guilty  that  he  shall  co-operate  and
participate in criminal proceedings or proceedings of that nature  before  a
court of law, or other  Tribunal  before  whom  he  may  be  accused  of  an
‘offence’ as defined in Section 3(38) of the General Clauses Act,  i.e.,  an
act punishable under the Penal Code or any special  or  local  law.  At  the
same time, courts, taking cognizance of the offence or  conducting  a  trial
while issuing any order, are expected to apply  their  mind  and  the  order
must be a well reasoned one.



Learned counsel for the appellants has further invited our attention to  the
order of the High Court dismissing the  writ  petitions.  According  to  the
learned counsel for  the  appellants,  the  High  Court,  relying  upon  the
decision of this Court in Iqbal Singh Marwah & Anr. Vs. Meenakshi  Marwah  &
Anr., (2005) 4 SCC 370 and Rukhmni Narvekar Vs. Vijya Statardekar and  Ors.,
(2008) 14 SCC 1, found that there was no  substance  in  the  argument  that
respondent No.2 ought to have disclosed the arbitration proceedings and  the
outcome thereof in  her  complaint  and  that  non-disclosure  of  the  same
amounts  to  suppression  of  material  facts.  Learned  counsel   for   the
appellants further submitted that the High Court failed to  appreciate  that
it was within  its  inherent  jurisdiction  under  Section  482  Cr.P.C.  to
consider the correspondence exchanged as  well  as  the  admitted  documents
under the arbitration proceedings.  In the case of All Cargo Movers  (India)
(P.) Limited Vs. Dhanesh Badarwal Jain, (2007) 14 SCC 776,  relied  upon  in
paragraph 17 thereof, it was held by this Court:

“We are of the opinion that the allegations made in the complaint  petition,
even if given face value and taken to be correct in  its  entirety,  do  not
disclose an offence. For the said purpose, This  Court  may  not  only  take
into consideration the admitted facts but it is  also  permissible  to  look
into the  pleadings  of  the  plaintiff-respondent  No.1  in  the  suit.  No
allegation whatsoever was made against the appellants herein in the  notice.
What was contended was negligence and/or breach of contract on the  part  of
the carriers and their  agent.  Breach  of  contract  simplicitor  does  not
constitute an offence. For the said purpose, allegations  in  the  complaint
petition must disclose the necessary ingredients  therefor.  Where  a  civil
suit is pending and the complaint petition has been  filed  one  year  after
filing of the civil suit, we may for  the  purpose  of  finding  out  as  to
whether  the  said  allegations  are   prima   facie   cannot   notice   the
correspondences exchanged by the parties and other  admitted  documents.  It
is one thing to say that the Court at this juncture would not  consider  the
defence of the accused but it is another thing to say  that  for  exercising
the inherent jurisdiction of this Court, it is impermissible  also  to  look
to the admitted documents. Criminal proceedings should  not  be  encouraged,
when it is found to be mala fide or otherwise an abuse  of  the  process  of
the Court. Superior Courts while exercising this power  should  also  strive
to serve the ends of justice.


Learned counsel for the appellants further relied upon  few  more  judgments
wherein it was well settled that the test to be  applied  for  quashing  is,
whether uncontroverted allegations made, prima facie establish the  offence.
This is because the Court cannot be utilized for  any  oblique  purpose  and
where, in the opinion of the Court, the chances of  an  ultimate  conviction
are bleak, no useful  purpose  will  be  served  by  allowing  the  criminal
prosecution to continue. He relied upon  the  decisions  of  this  Court  in
Madhavrao Jiwanrao Scindia &  Ors.  Vs.  Sambhajirao  Chandrajirao  Angre  &
Ors., (1998) 1 SCC 692 (para 7-8); State  of  Haryana  Vs.  Bhajanlal,  1992
Supp (1) SCC 335 (para 102); Rajiv  Thapar  &  Ors  Vs.  Madan  Lal  Kapoor,
(2013) 3 SCC 330 at para 30; Rishi Pal Singh Vs. State of  Uttar  Pradesh  &
Anr. (2014) 7 SCC 215, at para 12-13.



Learned counsel for the respondents have not rebutted this issue in  any  of
his arguments. With the  meticulous  understanding  of  the  orders  of  the
Courts below in  the  instant  case,  we  can  see  that  general  and  bald
allegations are made in the context of appellant  No.1  who  is  a  juristic
person and not a natural person. The  Indian  Penal  Code,  1860,  does  not
provide for vicarious liability for any offence alleged to be  committed  by
a company. If and when a  statue  contemplates  creation  of  such  a  legal
fiction, it provides  specifically  therefor,  e.g.  Negotiable  Instruments
Act, 1881. Further, reliance was made on  S.K.  Alagh  Vs.  State  of  Uttar
Pradesh & Ors., reported in (2008) 5 SCC 662, where at  paragraph  16,  this
Court observed that “Indian Penal Code,  save  and  except  some  provisions
specifically  providing  therefor,  does  not  contemplate   any   vicarious
liability on the part of a party who is not charged directly for  commission
of an offence.”  Further in Maksud  Saiyed  Vs.  State  of  Gujrat  &  Ors.,
reported in (2008) 5 SCC 668, at paragraph  13,  this  Court  observed  that
where a jurisdiction is exercised on a complaint  petition  filed  in  terms
of Section 156(3) or Section 200 of the  Code  of  Criminal  Procedure,  the
Magistrate is required  to  apply  his  mind.  Indian  Penal  Code does  not
contain any provision for attaching vicarious liability on the part  of  the
Managing Director or the Directors of the Company when the  accused  is  the
Company. The Learned Magistrate failed to  pose  unto  himself  the  correct
question viz. as to whether the  complaint  petition,  even  if  given  face
value and taken to be correct in its entirety, would lead to the  conclusion
that the respondents herein were personally  liable  for  any  offence.  The
Bank is a body corporate. Vicarious liability of the Managing  Director  and
Director would arise provided any provision exists in  that  behalf  in  the
statute. Statutes indisputably must contain provision fixing such  vicarious
liability. Even for the said purpose, it is obligatory on the  part  of  the
complainant  to  make  requisite  allegations  which   would   attract   the
provisions constituting vicarious liability. In Thermax Limited &  Ors.  Vs.
K. M. Johny & Ors., (2011) 13 SCC 412,  and   in  Sunil  Bharti  Mittal  Vs.
Central Bureau of Investigation, (2015) 4 SCC 609, at para  39,  this  Court
held:

“Apart  from  the  fact  that  the  complaint  lacks  necessary  ingredients
of Sections 405, 406, 420 read with Section 34 IPC, it is to be  noted  that
the concept  of  `vicarious  liability'  is  unknown  to  criminal  law.  As
observed earlier, there is no specific allegation made  against  any  person
but the members of the  Board  and  senior  executives  are  joined  as  the
persons  looking  after  the  management  and  business  of  the  appellant-
Company”.



Learned counsel for the appellants  has  lastly  argued  in  favour  of  the
partial quashment of the FIR against the appellants on the  contention  that
there was no criminality on their behalf.  It  has  been  further  submitted
that the allegations made against them do not amount  to  disclosure  of  an
offence and  were  made  with  the  purpose  of  harassing  the  appellants.
Additionally, learned counsel contends that vicarious  liability  cannot  be
attributed to appellant Nos.2 to 4, while relying upon R. Kalyani Vs.  Janak
C. Mehta & Ors., (2009) 1 SCC 516, wherein it was held:

“Whereas,  thus,  no  allegation  whatsoever  has  been  made  against   the
respondent No.1, the only allegation against the respondent  No.2  was  that
he  had  forwarded  the  said  letter  dated  10.1.2002  to  National  Stock
Exchange. The act of forgery on/or fabrication of the said letter  had  been
attributed to Respondent No.3.

Respondent Nos.1 and 2 herein were sought to be  proceeded  against  on  the
premise that they are vicariously liable for the affairs of the company.
As Mr. Mani had time and again  referred  to  the  allegations  relating  to
forgery of  the  said  document  dated  10.1.2002,  we  may  also  notice  a
disturbing fact. Before lodging the said First  Information,  a  notice  was
issued by the  appellant  against  the  respondents  herein  on  15.10.2002,
whereas the address of respondent Nos.1 and 2 were  shown  as  404,  Embassy
Centre, Nariman Point, Mumbai - 400 021 and 302, Veena Chambers,  21,  Dalal
Street, Fort, Mumbai - 400  001  respectively.  However,  in  the  complaint
petition, they were shown to be residents of Chennai”.


In Sharad Kumar Sanghi Vs. Sangta Rane, reported in (2015) 12 SCC 781  (para
9-11) it is noted by this Court:

“The allegations which find place  against  the  Managing  Director  in  his
personal capacity seem to be absolutely vague. When  a  complainant  intends
to rope in a Managing Director or any officer of a company, it is  essential
to make requisite allegation to constitute the vicarious liability.”



Per  contra,  learned  counsel  for  respondent  No.2  submitted  that   the
complaint has disclosed the commission of an offence which is cognizable  in
nature and in the light of Lalitha Kumari’s Case, (supra),  registration  of
FIR becomes mandatory. We observe that it is  clear  from  the  use  of  the
words "may take cognizance" in the context in which  they  occur,  that  the
same cannot be equated with "must take cognizance".  The  word  "may"  gives
discretion to the  Magistrate  in  the  matter.  If  on  a  reading  of  the
complaint he finds  that  the  allegations  therein  disclose  a  cognizable
offence and  that  the  forwarding  of  the  complaint  to  the  police  for
investigation under Section 156(3) will be conducive  to  justice  and  save
the valuable time of the Magistrate from being wasted in  enquiring  into  a
matter, which was primarily the duty of the police to investigate,  he  will
be justified in adopting that course as an alternative to taking  cognizance
of the offence, himself. It is settled that when  a  Magistrate  receives  a
complaint, he is not bound to take cognizance if the facts  alleged  in  the
complaint, do not disclose the commission of an offence.



Learned counsel for the  respondents  further  submitted  that  there  is  a
marked difference between the civil nature of  the  arbitration  proceedings
and the Criminal nature of the current proceedings and relieving the  RM  on
the same day when he had  tendered  his  resignation  reflects  the  conduct
whereby conspiracy could be proved. It was further  argued  that  respondent
No.2 has also sent the legal notice requesting for making  good  the  losses
caused to her by the appellants of which Criminal Court and the  Arbitration
Tribunal took notice of. Thus, allegations were  already  made  against  all
the  appellants.  We  find  no  substance  in  the  said  submission   being
completely opposed to the settled legal principles.  Nevertheless,  we  find
patent  illegalities  which   would   result   in   vitiating   the   entire
investigation which would result in miscarriage of justice.


Mr. Basava Prabhu Patil, learned  senior  counsel  appearing  on  behalf  of
respondent No.2 submitted  that respondent No.2 in  her  complaint  had  set
out the conduct of the appellants and alleged that their conduct had  caused
wrongful loss to her and wrongful gain to the appellants and other  accused.
It is a fact that at the time of summoning of the accused, the  Courts  must
be careful to scrutinize the evidence brought on record and  in  elicitation
of answers to find out the truthfulness of the allegations.


It appears to us that the appellants approached the High Court  even  before
the stage of issuance of process. In particular, the  appellants  challenged
the order dated 04.01.2011 passed by the learned  Magistrate  under  Section
156(3) of Cr.P.C. The learned counsel appearing on behalf of the  appellants
after summarizing their arguments in the matter have emphasized also in  the
context of the fundamental rights of the appellants under the  Constitution,
that the order impugned has caused grave inequities to  the  appellants.  In
the circumstances, it was submitted that the order  is  illegal  and  is  an
abuse of the process of law. However, it  appears  to  us  that  this  order
under Section 156(3) of  Cr.P.C.  requiring  investigation  by  the  police,
cannot be said to have caused an injury  of  irreparable  nature  which,  at
this stage, requires quashing of the investigation.  We  must  keep  in  our
mind that the stage of cognizance would arise only after  the  investigation
report is filed before the Magistrate.  Therefore, in our opinion,  at  this
stage the High Court has correctly assessed the facts and the  law  in  this
situation and held that filing of the petitions under  Article  227  of  the
Constitution of India or under Section 482 of Cr.P.C.,  at  this  stage  are
nothing but premature. Further, in our opinion,  the  High  Court  correctly
came to the conclusion that the inherent powers of the Court  under  Section
482 of Cr.P.C. should be sparingly used. In these circumstances, we  do  not
find that there is any flaw in the impugned  order  or  any  illegality  has
been committed by the High Court in dismissing the petitions  filed  by  the
appellants before the High Court.   Accordingly,  we  affirm  the  order  so
passed by the High Court  dismissing  the  writ  petitions.  The  appeal  is
dismissed.



………………………………….J
(Pinaki Chandra Ghose)




………………………………….J
(Amitava Roy)
      New Delhi;
December 9, 2016.

No comments:

Post a Comment

Note: Only a member of this blog may post a comment.