Allowed

Vikas Malhotra v. State Of Chhattisgarh and Ors.

Chhattisgarh HC6 Sept 2017CRMP/1108/2013

Case brief

AI extract

What is this about?

In a petition under Section 482 CrPC, the High Court quashed criminal proceedings against the petitioner for cheating and forgery. The Court held that the prosecution was bad in law as the petitioner, a director, had no personal involvement in the alleged inducement, relying on Supreme Court precedents rejecting vicarious liability for directors.

What did the court decide?

Criminal proceedings pending against the petitioner alone before the Court of Judicial Magistrate First Class, Raipur in Criminal Case No. 278 of 2011 are quashed.

Vikas Malhotra Vs State Of Chhattisgarh and Ors. — Cheque Dishonour | Chhattisgarh HC (2017)

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NAFR

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HIGH COURT OF CHHATTISGARH, BILASPUR

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Cr.M.P. No. 1108 of 2013

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Vikas Malhotra S/o Late Shri Ved Prakash Malhotra Aged About 41 Years R/o F-1, Radhey Puri, Post & Thana New Delhi.

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---- Petitioner

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Versus

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State of Chhattisgarh Through City Kotwali, Raipur, Tahsil Civil and Revenue District Raipur C.G.

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Smt. Vandana Rai W/o Shri R.K. Rai Aged About 38 Years M/s R.K. Enterprises, Registered Office Junior M.I.G. 683, Sector-2, Pt. Deendayal Upadhyay Nagar, PS D.D. Nagar, Raipur C.G.

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R.K. Rai S/o Late Shri Heera Lal Aged About 47 Years R/o Junior M.I.G. 683, Sector-2, Pt. Deendayal Upadhyay Nagar, PS D.D. Nagar, Raipur C.G.

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---- Respondents

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For the Petitioner : Shri R.S. Patel, Advocate. For the Respondent/State :Shri Anil S. Pandey, Government Advocate.

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Hon'ble Shri Justice Rajendra Chandra Singh Samant ORDER

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06.09.2017

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Heard.

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This petition has been brought under Section 482 of the Code of Criminal Procedure with a prayer to quash the criminal proceedings against the petitioner.

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Facts of the case are that a charge-sheet has been filed before the Court of Judicial Magistrate First Class, Raipur against the petitioner and two others for trial of offences under Sections 420, 409, 506 read with Section 34 of the Indian Penal Code alleging that the petitioner and two others fraudulently induced the complainant, namely, respondents

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No.2 and 3 – Smt. Vandana Rai and R.K. Rai to invest for the purpose of obtaining Clearing and Forwarding Agency of the AIBA company in which the petitioner and two others were Directors. Because of the inducement given, respondent No.2 deposited Rs.21,00,000/- as security through cheque which was encashed. Later on, the business of the said company was winded up and no C & F Agency was granted to respondent No.2. On the First Information Report lodged by respondent No.2, the case has been investigated and the charge-sheet has been filed.

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It is submitted by counsel for the petitioner that the FIR dated 22.2.2010 did not mention the name of the petitioner as one of the Directors of the said company and similarly no specific statement was given by respondent No.2 under Section 161 of the Code of Criminal Procedure against the petitioner about his involvement in the said act of inducement. Reference has been made to a letter dated 1.4.2009 in which the AIBA Company engaged the petitioner for a period of six months to establish retailers' network for the company products in the States of Rajasthan and Delhi.

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Cr.M.P. No. 750 of 2010 was brought earlier by the petitioner before this Court with a prayer to quash the FIR registered against him which was dismissed vide order dated 29.3.2012. Subsequent to that, the petitioner moved a Special Leave Petition before the Supreme Court of India registered as Special Leave to Appeal (Cri) No.7192 of 2012 and the said petition was withdrawn on 7.10.2013 with liberty to challenge the charge-sheet filed against the petitioner. Thereafter, this

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petition has been filed challenging the charge-sheet filed against the petitioner. Hence, it is prayed that no case is made out against the petitioner and the criminal proceedings pending against him be quashed.

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Learned counsel for respondent No. 1 submitted that the petitioner was one of the Joint Directors of the said company i.e. M/s Advisons Infra & Basic Amenities Limited (AIBA) and vide Annexure-P/1 a letter was issued through the petitioner in capacity of Joint Managing Director authorising for opening of the accounts in the Punjab National Bank in the name of Rakesh Kumar Chouhan who is said to have fraudulently induced the complainant for making deposits. Hence, it is submitted that the petitioner has no case and thus, the jurisdiction under Section 482 of the Cr.P.C. cannot be exercised in this case.

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Perused the record.

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The petitioner has placed reliance on the judgment of the Supreme Court in the case of Anil Mahajan vs. Bhor Industries Limited and Another reported in (2005) 10 SCC 228 , in which the Supreme Court held that the fraudulent and dishonest intention must be shown from the very beginning of the transaction. Further reliance has been placed in the judgment of Keki Hormusji Gharda and Others vs. Mehervan Rustom Irani and Another reported in (2009) 6 SCC 475 , in which it was held that the office bearers like Directors of the Limited Company are not personally liable for the commission of offence under

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Indian Penal Code and no vicarious liability can be attached with the Directors of the Company for the offence committed by any person employed by such people. Reliance has also been placed in the case of Dr. Basant Kumar Sahoo vs. State of Chhattisgarh and Another reported in 2012(1)C.G.L.J. 185 .

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On going through the material in the charge-sheet, it is apparently clear that the petitioner never personally contacted with the complainant and the petitioner was not the person who gave inducement to respondent No.2 to deposit amount with the company. After failure of respondent No.2 in getting the agency, she made a demand from the Directors of the AIBA Company for refund of the amount deposited, which has not been refunded.

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Looking to the above factors, there is no statement that he was the person, who induced respondent No.2 for making deposit with the company. The observation made by the Supreme Court in the case of Keki Hormusji Gharda and Others vs. Mehervan Rustom Irani and Another (supra) in paragraphs 17 and 18 which are relevant and is as under:

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The Penal Code, 1860 save and except some matters does not contemplate any vicarious liability on the part a person. Commission of an offence by raising a legal fiction or by creating a vicarious liability in terms of the provisions of a statute must be expressly stated. The Managing Director or the Directors of the Company, thus, cannot be said to have committed an offence only because they are holders of offices. The learned Additional Chief Metropolitan Magistrate,

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therefore, in our opinion, was not correct in issuing summons without taking into consideration this aspect of the matter. The Managing Director and the Directors of the Company should not have been summoned only because some allegations were made against the Company.

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In Pepsi Foods Ltd. & Anr. vs. Special Judicial Magistrate & Ors . (1998) 5 SCC 749, this Court held as under:

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"28. Summoning of an accused in a criminal case is a serious matter. Criminal law cannot be set into motion as a matter of course. It is not that the complainant has to bring only two witnesses to support his allegations in the complaint to have the criminal law set into motion. The order of the Magistrate summoning the accused must reflect that he has applied his mind to the facts of the case and the law applicable thereto. He has to examine the nature of allegations made in the complaint and the evidence both oral and documentary in support thereof and would that be sufficient for the complainant to succeed in bringing charge home to the accused. It is not that the Magistrate is a silent spectator at the time of recording of preliminary evidence before summoning of the accused. The Magistrate has to carefully scrutinise the evidence brought on record and may even himself put questions to the complainant and his witnesses to elicit answers to find out the truthfulness of the allegations or otherwise and then examine if any offence is prima facie committed by all or any of the accused.'

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After due consideration, it is found that the petitioner has been prosecuted only because it was found in the investigation that during the period in which alleged offences were committed, the petitioner held the

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post of Joint Director of the Company. Hence, in accordance with the view laid down by the Supreme Court in Keki Hormusji Gharda and Others vs. Mehervan Rustom Irani and Another (supra) and Pepsi Foods Limited & Anr. Versus Special Judicial Magistrate and Others reported in (1998) 5 SCC 749, the prosecution against the petitioner appears to be bad in law and abuse of process of law. Hence, for the aforesaid reasons, this petition is allowed. The criminal proceedings pending against the petitioner, so far it relates to the petitioner alone, before the Court of Judicial Magistrate First Class, Raipur in Criminal Case No. 278 of 2011 are quashed. This order shall have no effect on the prosecution against the other accused persons in the case.

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12. Accordingly, this petition stands disposed off.

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Sd/-

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(Rajendra Chandra Singh Samant) Judge

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Nimmi

Vikas Malhotra v. State Of Chhattisgarh and Ors.

Case brief

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Vikas Malhotra v. State Of Chhattisgarh and Ors.

Case brief

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