Dismissed

Mr. Shivaram Kumar Malakala v. M/S Habitat Pragnya Properyty

Karnataka HC6 Apr 2022CRL.P/2625/2021

Case brief

AI extract

What is this about?

This Criminal Petition under Section 482 Cr.P.C. sought to quash proceedings alleging an offence under the Companies Act, 2013. The petitioner challenged the Magistrate's order for non-application of mind due to the absence of the phrase 'cognizance taken'. The Court relied on a coordinate bench judgment that such omission does not vitiate the order if the subsequent order shows application of min

What the court decided

AI extract

Mr. Shivaram Kumar Malakala Vs M/S Habitat Pragnya… — Company and Corporate | Karnataka HC (2022)

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IN THE HIGH COURT OF KARNATAKA AT BENGALURU

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DATED THIS THE 06^TH DAY OF APRIL, 2022

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BEFORE

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THE HON'BLE MR. JUSTICE M. NAGAPRASANNA CRIMINAL PETITION No.2625 OF 2021

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BETWEEN:

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MR.SHIVARAM KUMAR MALAKALA S/O LATE PREMA KUMAR MALAKALA, AGED ABOUT 51 YEARS, “SHIVA SWAROOP”, NO.459, 18^TH MAIN ROAD, JAYANAGAR 4^TH ‘T’ BLOCK, BENGALURU – 560 041.

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MR.BHASKAR T.N., S/O LATE NAGENDRAPPA AGED ABOUT 52 YEARS NO.2210, 4^TH A CROSS RPC LAYOUT VIJAYANAGAR 2^ND STAGE BENGALURU – 560 040.

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... PETITIONERS

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(BY SRI MAHESH S., ADVOCATE)

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AND:

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M/S HABITAT PRAGNYA PROPERTY DEVELOPMENTS PRIVATE LIMITED HAVING ITS REGISTERED OFFICE AT NO.340, 2^ND CROSS, R.T.NAGAR BENGALURU – 560 032 REPRESENTED BY ITS

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COMPANY SECRETARY AND DULY AUTHORIZED REPRESENTATIVE MR.VIJAY KUMAR NAIDU CH.

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... RESPONDENT

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(BY SRI C.K.NANDAKUMAR SR.ADVOCATE FOR SRI RAGHURAM CADAMBI, ADVOCATE)

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THIS CRIMINAL PETITION IS FILED UNDER SECTION 482 OF CR.P.C., PRAYING TO QUASH THE ENTIRE PROCEEDINGS AS AGAINST THE PETITIONERS IN C.C.NO.12955/2019 (PCR NO.1136/2015) PENDING ON THE FILE OF 32^nd ADDL.C.M.M., BENGALURU.

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THIS CRIMINAL PETITION COMING ON FOR ADMISSION THIS DAY, THE COURT MADE THE FOLLOWING:

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ORDER

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The petitioners are before this Court calling in question proceedings in C.C.No.12955/2019, registered for the offence under Sections 452 of the Companies Act, 2013 (for short ‘the Act’).

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Heard Sri Mahesh S., learned counsel appearing for the petitioners and Sri C.K.Nandakumar, learned senior counsel appearing for the respondent.

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Brief facts leading to the filing of the present petition, as borne out from the pleadings, are as follows:

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The respondent registers a complaint against the petitioners alleging that it had invested huge sums of money pursuant to a development agreement and were in the process of negotiation with the contractors and suppliers, for the purpose of carrying out development work. Several allegations are made which according to the complainant are punishable under Section 452 of the Act. The police after investigation have filed charge sheet in the matter and the learned Magistrate has taken cognizance on the charge sheet for the offence punishable Section 452 of the Act.

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Learned counsel for the petitioners though has urged several grounds but restricts his submission to a solitary ground that the order of the learned Magistrate, while recording the sworn statement does not bear the words ‘ cognizance taken’ and suffers from non-application of mind.

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Learned senior counsel representing the respondent would however contend that if that is the only submission made by the learned counsel for the petitioners, the same stands covered by the recent judgment of a Co-ordinate Bench of this Court in the case of SRI SATHYA SAI CENTRAL TRUST VS. STATE OF KARNATAKA in CRIMINAL PETITION NO.1422/2021 AND CONNECTED MATTERS disposed on 22.07.2021. Therefore, he would seek dismissal of the petition.

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To consider the aforesaid submissions, it is necessary to notice the order passed by the learned Magistrate on 09.06.2015. The order reads as follows;

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“This private complaint is filed for initiation of criminal proceedings against accused No.1 and 2 for the offence punishable U/s.452 of Companies Act, 2013. On perusal of contents of complaint and documents annexed there to, it is necessary to record sworn statement of complainant. Therefore, the matter is posted for sworn statement.

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Sworn statement by: 09/10/2015.”

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After recording the sworn statement, on issuance of

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process, the learned Magistrate has passed the detailed order on 29.05.2019, which reads as follows:

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“ORDER

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Acting U/Sec. 204 of the Cr.P.C., I hereby direct the office to register criminal case against accused no.1 and 2 for the offence punishable U/s. 452 of the Companies Act, 2013.

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The complainant is directed to comply Sec. 204 of the Cr.P.C. by producing the true copy of the complaint and true copies of the documents relied on by the complainant and to pay necessary P.F.

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Issue summons to accused no.1 and 2, if complainant complies Sec.204 Cr.P.C. (vide separate order)”

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The submission now made is that, the order dated 09.06.2015, which directs recording sworn statement does not bear the words ‘ cognizance taken’ and the order is vitiated and consequently, all actions taken by the learned Magistrate would be a nullity in law, is unacceptable, as omission to mention the words ‘cognizance taken’ would not render the order

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unsustainable or would bear the stamp of non-application of mind, in the light of the judgment of the Co-ordinate Bench in the case of SRI SATHYA SAI (supra). Considering the very issue, the Co-ordinate Bench holds as follows:

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“55. Based on the above discussion, the cognizance taking procedure to be followed may be set out as follows :-

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(i) After presentation of the complaint, the Magistrate must read the complaint and if he finds on the face of it, commission of an offence or offences is not disclosed, he can reject or dismiss the complaint. But the Magistrate must be slow in rejecting the complaint just on reading it because if the complaint is not properly articulated, rejection of complaint may result in causing injustice to the complainant. It is also possible that intelligent drafting may give an impression that an offence has taken place, which may not be true sometimes. Therefore it is better to examine the complainant and the witnesses if necessary.

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(ii) If after reading the complaint and examining the witness ((if they are present and their examination is necessary) under section 200 Cr.P.C. the Magistrate arrives at conclusion that there are sufficient grounds to proceed further, he shall take cognizance of the offence and issue process to the accused.

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(iii) Even after following the procedure set out in section 200, if the Magistrate is not convinced about existence of sufficient materials to take cognizance, he may resort to hold an inquiry himself or direct investigation as contemplated under section 202.

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(iv) If the Magistrate does not prima facie find materials as to constitution of any offence after examining the complainant and witnesses (if any), he can dismiss the complaint in accordance with section 203.

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(v) Resorting to procedure contemplated under section 202 is not always mandatory, it may be resorted to only in the circumstances stated in section 202. That means, cognizance may be taken or the complaint may be rejected depending upon the situation even after the stage of section 200.

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(vi) It is not necessary that a Magistrate must endorse “cognizance taken” in the order sheet, but what is required is application of mind and it must be depicted in a brief order. Decision as to issuing process to the accused itself amounts to cognizance being taken.

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(vii) Whenever investigating police officer files ‘B’ report, and the complainant wants to contest the ‘B’ report, the Magistrate has to follow the same procedure set out above.”

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(Emphasis Supplied)

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Clause 6 to paragraph No.55 as afore-extracted, the Coordinate Bench holds that the word ‘cognizance taken’ if missing in the order, it would not vitiate the order, nonetheless, it should bear application of mind albeit very brief. The order reads that the complaint after filing for the offence under Section 452 of the Act and the perusal of the complaint and the documents would necessarily entail recording of the sworn statement of the complainant. The subsequent order passed, which considers the entire issue at large and then issues process, this order is detailed enough and demonstrates application of mind.

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Therefore, the order made which is now sought to be given the colour of non-application of mind has not ended in any prejudice to the petitioners, in the light of the subsequent order of issuing process bearing complete application of mind. In the peculiar facts and circumstances, I decline to accept the submission that the order impugned suffers from nonapplication of mind and needs to be obliterated.

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Finding no merit, the criminal petition is dismissed.

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All other contentions of both the parties, remain open.

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Sd/JUDGE

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nvj CT:MJ

Mr. Shivaram Kumar Malakala v. M/S Habitat Pragnya Properyty

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Mr. Shivaram Kumar Malakala v. M/S Habitat Pragnya Properyty

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