Allowed

P.N.Dhoot and Ors. v. Ram Harisinghani and Anr.

Bombay HC27 Nov 2012WP/1191/2003

Case brief

AI extract

What is this about?

A writ petition seeking quashing of process issued under section 420 r/w 34 IPC was allowed. The court held that vicarious criminal liability does not exist for acts committed by a company unless specific personal involvement or gain by directors is established, rendering the complaint devoid of material.

What did the court decide?

The criminal proceedings for offence under section 420 r/w 34 IPC were quashed and set aside; the writ petition was allowed.

P.N.Dhoot and Ors. Vs Ram Harisinghani and Anr. — Cheating and Forgery | Bombay HC (2012)

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IN THE HIGH COURT OF JUDICATURE AT BOMBAY

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CRIMINAL APPELLATE JURISDICTION

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CRIMINAL WRIT PETITION NO.1191 OF 2003

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Pradip N. Dhoot and others ...Petitioners v/s

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Ram Harisinghani and anr.

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...Respondents

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Mr R.D. Soni with Mr M.A. Saiyed i/b M/s Ram and Co. for Petitioners.

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Mr Yusuf Nevellie i/b M/s Yusuf and Associates for Respondent No.1.

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Mrs A.A. Mane, APP for State.

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CORAM : K.U. CHANDIWAL J.

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DATED : 27TH NOVEMBER 2012.

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P.C. :-

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On 10^th August 2007, rule was issued with

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interim order in terms of prayer clause (c). The

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petitioners question issuance of process by the

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learned Additional Chief Metropolitan Magistrate,

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9^th Court, Bandra, Mumbai in criminal case No.397 of 2002 for offence under section 420 r/w 34 of IPC.

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The petitioner No.1 is Chairman and

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petitioner Nos.2 and 3 are Directors of a Company Holzmann Videocon Engineers Ltd. (hereinafter

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referred as 'Joint Venture Company'). The

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respondent No.1 (original complainant) was a

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contractor appointed to carry development activities

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by the Joint Venture Company of the properties belonged to Videocon Properties Ltd. The present

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petitioners were also Directors in said Videocon Properties Ltd. or the Principal Company – Videocon International Ltd.

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As per Complainant, in accordance with

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contract agreement between him and the Joint Venture Company on running account bills raised by him, the

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later would certify the works carried out and the

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said bills then would be presented by them in their own form to the owners Videocon Properties Ltd. for payment. Thereafter the owners would certify the

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bill amount and pay to the Joint Venture Company who

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would then pay 85 % of the certified amount so as to

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enable contractor to carry on balance work. According to the respondent No.1 – original

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complainant, the statement furnished by him illustrate that the Joint Venture Company has collected Rs.33,55,749/- from owner being part of 85 % of payment payable to him. Additionally, an amount of Rs.15,00,000/- as deposit was also retained by Joint Venture Company. Thus, total amount of Rs.48,55,749/- was due and payable to the complainant. The complainant feels that the same has been utilised by it for business purpose.

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The complainant asserts in paragraph 8 that

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the payment has been misappropriated by the said Joint Venture Company which is controlled by the petitioners as Chairman, Directors and therefore, they are liable for offence of misappropriation of the said amount. In paragraph 9 it is stated that since inception, intention of the accused / petitioners was to cheat him.

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Considering issuance of process under

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section 420 r/w 34 IPC, the averments concerning

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misappropriation of funds as referred in paragraph 8

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or elaborated in paragraph 9, are of insignificance.

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complainant himself asserts that the Joint Venture Company has utilised the amount of Rs.48,55,749/-. If this is so, the element of cheating personally attributable to petitioners either as Chairman or Directors is missing. For act of Company, the Chairman or Director cannot be prosecuted for penal

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statute in the absence of specific role. There cannot be a vicarious criminal liability.

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Paragraph 10 of the complaint deals with initiating arbitral proceedings. It is informed, an arbitral award is passed against the Joint Venture Company recorded on 6^th June 2012.

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The learned counsel for respondent No.1

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complainant canvassed, it was a standard modus operandi of the petitioners to float Companies in joint venture and to cheat unsuspected developers of

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the properties and he is one of victim of

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situation. This submission may be correct, however,

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far away from available record, therefore needs to be discarded.

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There is nothing in the complaint to

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demonstrate since inception the petitioners had control over the affairs of Joint Venture Company

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and they had personal gains to cheat respondent No.1.

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The legal position is well settled as

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indicated latest in the judgment of M/s Thermax Ltd. v/s K.M. Johny and others in criminal appeal No.1868 of 2011 dated 27^th September 2011 wherein

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in paragraph 21, the Hon'ble Supreme Court has indicated about ingredients of sections 405, 406, 420 read with section 34 IPC. It is also informed

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that the concept of vicarious liability is unknown

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to criminal law. Barring casual reference in

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paragraph 9 “that since inception intention of the

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accused was to cheat me”, there is nothing to suggest any act in personal capacity by the

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petitioners to dupe or to commit fraud or to cheat to ensure parting of property, money etc., for personal gain.

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Reading the contract between the

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complainant and the Joint Venture Company as a whole it emerges on payment in consideration of certain

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development activities to be carried by the

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complainant over the properties of Principal Company – Videocon Properties Ltd. or Videocon International

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Ltd. The retention of 15 % or 16 % or 84 % to

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which reference is given may be with the Joint Venture Company in its accounts, it cannot be said to have been personally utilised by the petitioners for their benefits.

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The complainant as could be seen has taken recourse to civil proceedings and arbitral award has been recorded. Thus, the complaint being devoid of material, disclosing ingredients of offence under section 420 r/w 34 IPC, proceedings are quashed and set aside. Writ petition is allowed.

P.N.Dhoot and Ors. v. Ram Harisinghani and Anr.

Case brief

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P.N.Dhoot and Ors. v. Ram Harisinghani and Anr.

Case brief

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