Patna High Court
Case Details
IN THE HIGH COURT OF JUDICATURE AT PATNA Criminal Miscellaneous No.17791 of 2011 ====================================================== Shankha Banerjee Versus .... .... Petitioner/s The State Of Bihar and another .... .... Opposite Party/s ====================================================== Appearance : For the Petitioner : Mr. Jitendra Singh, Sr. Adv. Mr. Anshuman Singh, Adv. Mr. Rahul Roy, Adv. Mr. Kamal Kishore Singh, Adv. Mr. Shankar Kr. Thakur, Adv. For the Opposite Party : Mr. Amit Kumar, Adv. Mr. Vikash Kumar, Adv. For the State : Mr. J.N. Thakur, APP ====================================================== CORAM: HONOURABLE MR. JUSTICE DINESH KUMAR SINGH ORAL ORDER 12 21-11-2013 Heard learned counsel for the parties. The present application has been filed for quashing of the order dated 18.03.2011 passed by learned JM, 1st Class, Motihari in Complaint Case No. C-2587 of 2009 whereby the process has been directed to be issued after cognizance being taken for the offences punishable under Section 406 of the Indian Penal Code. The prosecution case as per the complainant/opposite party no.2 is that on 22.09.2005, the opposite party no.2 entered into an agreement with Castrol India Ltd. and obtained the agency of Castrol India Ltd. in the name of a partnership firm, namely, Vindhyavasini Enterprises and deposited Rs. Five Lacs as Patna High Court Cr.Misc. No.17791 of 2011 (12) dt.21-11-2013 2/19 security with the Company. Thereafter, the business of O.P. No. 2 ran smoothly. Subsequently, Bajendra Bahadur Verma, Enquiry Witness no. 1 was inducted as partner in the firm of O.P. No. 2 for running the business. After one month of agreement, the O.P. No. 2 was directed to deposit two blank signed cheques as per the policy decision of the Company, failing which the agency was directed to be terminated. The O.P. No. 2, in good faith, deposited two blank cheques, without mentioning the date and amount, with the petitioner, who was Regional Sales Manager in the Company office at Calcutta. The O.P. No. 2 was assured that without any prior notice or information the cheques would not be encashed. The petitioner being the Regional Sales Manager used to visit Patna to look after the functioning of O.P. No.2‟s agency. The accused persons did not provide the gift items to O.P. No. 2, as a result of which an amount of Rs.2,88,494/-, became outstanding in the market, as the customers were ready to make payment only on
Legal Reasoning
9. The duty of a Magistrate receiving a complaint is set out in Section 202 CrPC and there is an obligation on the Magistrate to find out if there is any matter which calls for investigation by a criminal court. The scope of enquiry under this Section is restricted only to find out the truth or otherwise of the allegations made in the complaint in order to determine whether process has to be issued or not. Investigation under Section 202 investigation CrPC contemplated in Section 156 as it is only for holding the Magistrate to decide whether or not there is sufficient ground for him to proceed further. The scope of enquiry under Section 202 CrPC is, therefore, limited to the ascertainment of truth or falsehood of the allegations made in the complaint: (i) on the materials placed by the complainant before the court; (ii) for the limited purpose of finding out whether a prima facie case for issue of process has been made out; and (iii) for deciding the question purely from the point of view of the complainant without at all adverting to any defence that the accused may have. Patna High Court Cr.Misc. No.17791 of 2011 (12) dt.21-11-2013 13/19 10. Section 202 CrPC was amended by the Code of Criminal Procedure (Amendment) Act, 2005 and the following words were inserted: “and shall, in a case where the accused is residing at a place beyond the area in which he exercises his jurisdiction.” The notes on clauses for the abovementioned amendment read as follows: “False complaints are filed against persons residing at far off places simply to harass them. In order to see that innocent persons are not harassed by unscrupulous persons, this clause seeks to amend sub-Section (1) of Section 202 to make it obligatory upon that before the accused residing beyond his summoning jurisdiction he shall enquire into the case himself or direct investigation to be made by a police officer or by such other person as he thinks fit, for finding out whether or not there was sufficient ground for proceeding against the accused.” The amendment has come into force w.e.f. 23-6- 2006 vide Notification No. S.O.923(E dated 21-6- 2006). the Magistrate the that held enquiry
Arguments
getting the delivery of gift items. The further case of the Opposite Party No.2 is that the accused persons maliciously presented the blank cheque for encashment without giving any prior information to the O.P. No. 2 and thereby misappropriated the security amount as well as gift items worth Rs. One Lac. The accused persons, in spite of the request of the O.P. No. 2 to return the blank cheques, Patna High Court Cr.Misc. No.17791 of 2011 (12) dt.21-11-2013 3/19 tried to encash the same and maliciously issued notice to the Opposite Party No.2. On examination of the complainant on solemn affirmation and the three enquiry witnesses, vide order dated 18.3.2011, the process was directed to be issued after cognizance being taken under Section 406 IPC which is under challenge in the present proceeding. It is submitted by learned Senior Counsel for the petitioner that the agreement contained in Annexure 4 reflects that it was between O.P. No. 2 and Castrol India Limited, but the Company has not been made an accused. An amount of Rs.1,80,551.22/- remained outstanding, which was payable to the Company by the O.P. No. 2 and the said outstanding amount was demanded after adjusting the security deposit. The O.P. No. 2 issued an account payee cheque worth Rs. 1,21,466/- in favour of the Company but when the cheque was presented for encashment, it was dishonoured with remarks „insufficient fund‟ and thus a demand notice dated 27.11.2007 was issued to O.P. No. 2 under Section 138(b) of the N.I. Act, but the O.P. No. 2 did not reply and ultimately Complaint Case No. C-773 of 2008 was filed in which cognizance of the offences has been taken by the learned Chief Judicial Metropolitan Magistrate, Kolkata under Section 138 read Patna High Court Cr.Misc. No.17791 of 2011 (12) dt.21-11-2013 4/19 with 141 of N.I. Act against the partnership firm of the Opposite Party No.2, namely Vindhyavasini Enterprises. Thereafter, as a retaliatory measure, the present complaint has been filed by the O.P. No. 2. It is further submitted that admittedly, as per the complaint itself, the petitioner is resident of West Bengal, despite that, no enquiry or investigation as stipulated under Section 202(1) Cr.P.C. with regard to the territorial jurisdiction, which is mandatory in nature, has been made, which vitiates the issuance of process. Even assuming the accusation levelled in the complaint to be true, no case under Sections 405 or 406 IPC is made out against the petitioner, as admittedly, the cheque was issued in favour of the Castrol India Limited and there is nothing on record to suggest that it was ever entrusted to the petitioner. It is submitted by the learned counsel for the O.P. No. 2, that accused no. 2 was the Managing Director, whereas petitioner was a Regional Sales Manager of Castrol India Ltd. The agreement was executed on behalf of the Company through the accused persons including the petitioner, when the cheques issued by the Opposite Party No.2 were maliciously presented for encashment. Subsequently, contrary to the promise that no such encashment will be made without prior information to the O.P. Patna High Court Cr.Misc. No.17791 of 2011 (12) dt.21-11-2013 5/19 No. 2. The cheques, bearing subsequent numbers, were encashed prior to the alleged two cheques which were entrusted to the Castrol India Limited which supports the contention of the O.P. No. 2 that cheques were subsequently handed over to the accused persons. The process has been directed to be issued on finding prima facie case after cognizance being taken and the process under Section 202 Cr.P.C. were never suspended by the learned Magistrate. Considering the rival submissions of the parties and perusing the materials on record, it appears that the agreement was between O.P. No. 2 and Castrol India Ltd., which is not in dispute but Castrol India Ltd. has not been made accused. Now, the question arises whether the proceeding can continue without making the Company an accused? The averments made in paragraph 2 of the complaint suggest that the cheque was given to the petitioner but it was assured that it will be encashed only after prior information to O.P. No.2, but the complainant, in his solemn affirmation, has stated that two blank cheques were given to the accused persons. Similar was the statement on oath by enquiry witness no. 1 Brajendra Bahadur Verma whereas on the contrary the enquiry witness no. 3 Dinesh Kumar Sinha has not stated that cheques were handed over Patna High Court Cr.Misc. No.17791 of 2011 (12) dt.21-11-2013 6/19 to the accused persons. There is no document on record to suggest that the cheques were handed over to the accused persons, including the petitioner. Admittedly, the agreement was entered into between Castrol India Ltd. and O.P. No. 2. In terms of Section 200 Cr.P.C. the complainant is bound to make statement on oath as to how the offence has been committed and how the accused persons are responsible therefor. Neither the accusation levelled in the complaint nor the solemn affirmation of the complainant or the statement on oath of the enquiry witnesses suggest that how the case under Section 406 IPC is made out against this petitioner. Admittedly, the cheque was drawn in the name of the Company. Even if the petitioner was its Regional Sales Manager, he cannot be said to have committed offence under Section 406 IPC and the Regional Manager or the employee of the Company cannot be held to be vicariously liable for an offence committed by the Company itself. Criminal breach of trust is an offence committed by a person to whom the property is entrusted. Ingredients of the offence under Section 406 IPC are that the person should have been entrusted with the property or entrusted with the dominion over the property. That person should dishonestly misappropriate Patna High Court Cr.Misc. No.17791 of 2011 (12) dt.21-11-2013 7/19 or convert to his own use or dishonestly dispose of that property or willfully suffers any other person to do so. Such misappropriation, conversion, use or disposal should be in violation of any direction of law prescribing the mode in which such trust is to be discharged, or any legal contract which the person has made touching the discharge of such trust. In terms of „Explanation‟ appended to Section 405 IPC, a legal fiction has been created to the effect that an employer shall be deemed to have committed an offence of criminal breach of trust, whereas the person in charge of the affairs of the Company, not in control thereof has been made vicariously liable for the offence committed by the Company, along with the Company but even in a case under Section 406 IPC, vicarious liability has been held to be not extendable to the Directors or Officers of the Company. The allegations contained in the complaint are for commission of offence under a general statute. The vicarious liability can be fastened only by reason of the provision of a statute and not otherwise. For the said purpose the legal fiction has to be created and even under special statute when vicarious liability is fastened on the person on the premise that he was incharge of the Company and responsible to it, all the ingredients laid down under the statute must be fulfilled. The legal fiction must be confined to the Patna High Court Cr.Misc. No.17791 of 2011 (12) dt.21-11-2013 8/19 object and purpose for which it has been created. In a criminal statute, the offence charged must be within the letter of law. It has been held by the Apex Court in the case of R. Kalyani Vs. Janak C. Mehta and others, (2009) 1 Supreme Court Cases 516 that if a person has to be proceeded with as being vicariously liable for the act of the Company, the Company must be made an accused. Paragraph 41 of the judgment reads as follows: the acts of “If a person, thus, has to be proceeded with as the liable for being variously Company, the Company must be made an accused. In any event, it would be a fair thing to do so, as legal fiction is raised both against the Company as well as the person responsible for the acts of the Company.” The issue, whether, without making the Company an accused can the prosecution proceed, was considered in the case of Aneeta Hada Vs. Godfather Travels and Tours Private Limited, (2008) 13 Supreme Court Cases 703 and held that the prosecution of the Company is a sine qua non for the prosecution of the Director or other officers of the Company. Paragraphs 51 and 54 read as follows: “51. I have no doubt whatsoever in our mind that prosecution of the Company is a sine qua non for prosecution of the other persons who fall within the second and third categories of the candidates viz. everyone who was in charge and was responsible for the business of the Company and any other person who was a Patna High Court Cr.Misc. No.17791 of 2011 (12) dt.21-11-2013 9/19 Director or Managing Director or Secretary or officer of the Company with whose connivance or due to whose neglect the Company had committed the offence. 54. True interpretation, in my opinion, of the said provision would be that a Company has to be made an accused but applying the principle of lex non cogit ad impossibilia i.e. if for some legal snag, the Company cannot be proceeded against without obtaining sanction of a court of law or other authority, the trial as against the other accused may be proceeded against if the ingredients of Section 138 as also Section 141 are otherwise fulfilled. In such an event, it would not be a case where the Company had not been made an accused but would be one where the Company cannot be proceeded against due to existence of a legal bar. A distinction must be borne in mind between cases where a Company had not been made an accused and the one where despite making it an accused, it cannot be proceeded against because of a legal bar.” Since there was a difference of opinion in Aneeta Hada case (supra), the matter was referred to three-Judge bench which is reported in (2012) 5 Supreme Court Cases 661 where it has been held that commission of offence by Company is an express condition precedent to attract the vicarious liability of others. Paragraph 58 of the judgment reads as follows: the considered opinion “Applying the doctrine of strict construction, we are of that commission of offence by the Company is an express condition precedent to attract the vicarious liability of others. Thus, the words “as well as the Company” appearing in the Patna High Court Cr.Misc. No.17791 of 2011 (12) dt.21-11-2013 10/19 Section make it absolutely unmistakably clear that when the Company can be prosecuted, then only the persons mentioned in the other categories could be vicariously liable for the offence subject to the averments in the petition and proof thereof. One cannot be oblivious of the fact that the Company is a juristic person and it has its own respectability. If a finding is recorded against it, it would create a concavity in its reputation. There can be situations when the corporate reputation is affected when a Director is indicted.” Hence, in view of the settled law, the present prosecution could not have proceeded since Castrol India Ltd. has not been made accused. Admittedly, the cheque, which is brought on record as Annexure 10, was issued in the name of Castrol India Ltd. and attempt to encash the same was made by the Company. Hence, prima facie, the entrustment was to Castrol India Ltd. So far as the security amount of Rupees Five Lacs is concerned, that was also admittedly entrusted to the Company and it has been alleged in the complaint that the Company did not supply the gift items as a result, the loss was caused to O.P. No. 2. Hence, on this score also, no case is made out against the petitioner. The other issue which has been raised by learned counsel for the petitioner is that the petitioner is admittedly a resident of Kolkata but no enquiry or investigation was directed to Patna High Court Cr.Misc. No.17791 of 2011 (12) dt.21-11-2013 11/19 be made in spite of the fact that in the complaint petition the petitioner is described to be resident of Kolkata which is made by none else than the complainant himself. The provision under Section 202 Cr.P.C. reads as follows: for that no such direction 202. Postponement of issue of process (1) Any Magistrate, on receipt of a complaint of an offence of which he is authorised to take cognizance or which has been made over to him under Section 192, may, if he thinks fit, postpone the issue of process against the accused, and either inquire into the case himself or direct an investigation to be made by a police officer or by such other person as he thinks fit, for the purpose of deciding whether or not there is sufficient ground for proceeding: Provided investigation shall be made,— (a) where it appears to the Magistrate that the offence complained of is triable exclusively by the Court of Sessions; or (b) where the complaint has not been made by a witnesses present (if any) have been examined on oath under Section 200. (2) In an inquiry under sub-Section (1), the Magistrate may, if he thinks fit, take evidence of witness on oath: the Provided Magistrate that the offence complained of is triable exclusively by the Court of Session, he shall call upon the complainant to produce all his witnesses and examine them on oath. (3) If an investigation under sub-Section (1) is made by a person not being a police officer, he shall have for that investigation all the powers conferred by this Code on an officer in charge of a police station except the power to arrest without warrant.” it appears that to if Court, unless the complainant and the Patna High Court Cr.Misc. No.17791 of 2011 (12) dt.21-11-2013 12/19 From perusal of the provision, it appears that the amendment with regard to enquiry or investigation if the accused is residing out side the territorial jurisdiction of the court has been enforced with effect from 23.6.2006 but the said provision has not been noticed by the learned Magistrate, while conducting enquiry. The issue was considered and it was upheld that such enquiry is mandatory in nature in the case of National Bank of Oman Vs. Barakara Abdul Aziz and Another, (2013) 2 Supreme Court Cases 488. Paragraphs 9,10 and 11 read as follows: the from is different
Decision
11. We are of the view that the High Court has abovementioned correctly the CJM, amendment was not noticed by Ahmednagar. The CJM had failed to carry out any as order contemplated under the amended Section 202 CrPC. Since it is an admitted fact that the accused is residing outside the jurisdiction of the CJM, Ahmednagar, we find no error in the view taken by the High Court.” investigation or Admittedly, the complaint was filed on 2.12.2009, the complainant was examined on solemn affirmation on 8.1.2010, the enquiry witness no. 1 Brajendra Bahadur Verma was examined on Patna High Court Cr.Misc. No.17791 of 2011 (12) dt.21-11-2013 14/19 5.3.2010, enquiry witness no. 2 Dinesh Kumar Sinha was examined on 26.4.2010. Lastly, enquiry witness no. 3 Satyendra Kumar Singh was examined on 15.6.2010 and thereafter the processes were directed to be issued on 18.3.2011. Hence, it is not in dispute that the processes were suspended while resorting to the provision under Section 202 Cr.P.C. but the learned Magistrate had erred in either not making the enquiry himself or by choosing to direct for investigation, in spite of the fact that the complaint petition reflects that the petitioner is a resident of Kolkata and that the learned Magistrate was holding enquiry at East Champaran in the State of Bihar. The Apex Court in the case of Udai Shankar Awasthi vs. State of Uttar Pradesh and Another (2013) 2 Supreme Court Cases 435 has held that suspension of issuance of process is mandatory where the accused resides in an area beyond the territorial jurisdiction of the Magistrate concerned. Paragraph 40 of the judgment reads as follows: “The Magistrate had issued summons without meeting the mandatory requirement of Section 202 CrPC, though the appellants were outside his territorial jurisdiction. The provisions of Section 202 CrPC were amended vide the Amendment Act 2005, making it mandatory to postpone the issue of process where the accused resides in an area beyond the territorial jurisdiction of the Magistrate concerned. The same was found necessary in order to protect innocent persons from being harassed by unscrupulous persons and making it obligatory upon the Magistrate to enquire into the Patna High Court Cr.Misc. No.17791 of 2011 (12) dt.21-11-2013 15/19 case himself, or to direct investigation to be made by a police officer, or by such other person as he thinks fit for the purpose of finding out whether or not there was sufficient ground for proceeding against the accused before issuing summons in such cases.” Since the learned Magistrate failed to comply the mandatory requirement of enquiry or investigation under Section 202 Cr. P.C., the order of issuance of process cannot be sustained. Admittedly, the present accusation arises out of contractual dispute between Castrol India Ltd. and O.P. No. 2 which is primarily a civil nature of dispute. The Apex Court in the case of Indian Oil Corporation Vs. NEPC India Limited and Ors. reported in (2006) 6 SCC 736 has deprecated the misuse of criminal forum for redressal of civil grievances. Paragraph 13 reads as follows: “While on this issue, it is necessary to take notice of a growing tendency in business circles to convert purely civil disputes into criminal cases. This is obviously on account of a prevalent impression that civil law remedies are time consuming and do not adequately protect the interests of lenders/creditors. Such a tendency is seen in several family disputes also, leading to irretrievable break down of marriages/families. There is also an impression that if a person could somehow be entangled in a criminal prosecution, there is a likelihood of imminent settlement. Any effort to settle civil disputes and claims, which do not involve any criminal offence, by applying pressure through criminal prosecution should be deprecated and discouraged. In G. Sagar Suri V. State of U.P., this Court observed as follows:- "It is to be seen if a matter, which is essentially of Patna High Court Cr.Misc. No.17791 of 2011 (12) dt.21-11-2013 16/19 civil nature, has been given a cloak of criminal offence. Criminal proceedings are not a short cut of other remedies available in law. Before issuing process a criminal court has to exercise a great deal of caution. For the accused it is a serious matter. This Court has laid certain principles on the basis of which High Court is to exercise its jurisdiction under Section 482 of the Code. Jurisdiction under this Section has to be exercised to prevent abuse of the process of any court or otherwise to secure the ends of justice." From the averments made in paragraph 5 of the complaint petition, it appears that after notice being received on behalf of the Company the present complaint has been filed. The alleged demand notice dated 27.11.2007 has been brought on record as Annexure 12, while Annexure 13 to the petition is the copy of the Complaint Case No. C-773 of 2008 which was filed by Castrol India Ltd. against O.P. No. 2, since the cheque issued by the complainant in favour of the Company was dishonoured which suggest that the present complaint has been filed to wreak vengeance by way of retaliatory measure and such prosecution has been permitted to be quashed in view of the ratio laid down in the case of State of Haryana Vs. Bhajan Lal 1992 Supp (1) Supreme Court Cases 335. Para 102 of the said judgment lays down seven parameters for quashing of the prosecution which read as follows:- “In the backdrop of the interpretation of the various relevant provisions of the Code under Chapter XIV and of the principles of law enunciated by this Court in a series of decisions relating to the exercise of the extraordinary power under Article 226 or the inherent powers under Section 482 of the Code which we have Patna High Court Cr.Misc. No.17791 of 2011 (12) dt.21-11-2013 17/19 extracted and reproduced above, we give the following categories of cases by way of illustration wherein such power could be exercised either to prevent abuse of the process of any Court or otherwise to secure the ends of justice, though it may not be possible to lay down any precise, clearly defined and sufficiently channelised and inflexible guidelines or rigid formulae and to give an exhaustive list of myriad kinds of cases wherein such power should be exercised. 1. Where the allegations made in the First Information Report or the complaint, even if they are taken at their face value and accepted in their entirety do not prima facie constitute any offence or make out a case against the accused. in 2. Where the allegations the First if any, Information Report and other materials, acCompanying the F. I. R. do not disclose a cognizable offence, justifying an investigation by police officers under Section 156 (1) of the Code except under an order of a Magistrate within the purview of Section 155(2) of the Code. 3. Where the uncontroverted allegations made in the FIR or complaint and the evidence collected in support of the same do not disclose the commission of any offence and make out a case against the accused. 4. Where, the allegations in the F.I.R. do not constitute a cognizable offence but constitute only a non- cognizable offence, no investigation is permitted by a police officer without an order of a Magistrate as contemplated under Section 155(2) of the Code. 5. Where the allegations made in the F.I.R. or complaint are so absurd and inherently improbable on the basis of which no prudent person can ever reach a just conclusion that there is sufficient ground for proceeding against the accused. 6. Where there is an express legal bar engrafted in any of the provisions of the Code or the concerned Act (under which a criminal proceeding is instituted) to the institution and continuance of the proceedings and/ or where there is a specific provision in the Code or the concerned Act, providing efficacious redress for the grievance of the aggrieved party. 7. Where a criminal proceeding is manifestly attended with mala fide and/ or where the proceeding is Patna High Court Cr.Misc. No.17791 of 2011 (12) dt.21-11-2013 18/19 maliciously instituted with an ulterior motive for wreaking vengeance on the accused and with a view to spite him due to private and personal grudge.” The present case also comes within more than one parameters as enumerated by Apex Court in the case of State of Haryana Vs. Bhajan Lal (Supra). Admittedly, submission of alleged two blank cheques by opposite party no.2 to the Company through the accused persons is not incorporated in the agreement as contained in Annexure 4 and such accusation does not inspire confidence in view of the fact that there is nothing on record to suggest that the cheques were demanded back or any issue was raised by O.P. No. 2 with regard to dishonour of cheque issued by O.P. No. 2, prior to the filing of the complaint. More over, the complaint has been filed after four years of entering into the agreement and submission of cheques by O.P. No. 2. In view of the discussions made above, this Court comes to a conclusion that allowing the present prosecution to continue will be an abuse of process of the Court. Hence to secure the ends of justice, the order of cognizance dated 18.03.2011 passed in Complaint Case No. C- 2587 of 2009 including the entire prosecution of aforesaid case Patna High Court Cr.Misc. No.17791 of 2011 (12) dt.21-11-2013 19/19 with regard to the petitioner is hereby quashed. Accordingly, the application is allowed. (Dinesh Kumar Singh, J) Amrendra/Anil/