G.S.P Veera Reddy Vs the State of Karnataka and Anr.

Digitally signed by SHILPA R TENIHALLI 1. THE STATE OF KARNATAKA, Location: HIGH BY SINDAGI POLICE STATION-586128. COURT OFKARNATAKA (RPTD., BY ASPP, HC KAR, KLB-585107). 2. GANAPPA S/O BHIMAPPA HALAVAR, AGED ABOUT 61 YEARS, OCC: E.E. HESCOM INDI, R/O HESCOM INDI, NOW AT B. BAGEWADI, VIJAYAPURA-586203.

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…RESPONDENTS

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(BY SMT. MAYA T.R., HCGP FOR R1 SRI RAVINDRA REDDY, ADVOCATE FOR R2)

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THIS CRL.P IS FILED U/S.482 OF CR.P.C. PRAYING TO QUASH THE PROSECUTION LAUNCHED AGAINST THE PETITIONERS IN C.C.NO.921/2020 ARISING OUT OF P.C. NO. 06/2015 ON THE FILE OF THE SENIOR CIVIL JUDGE AND JMFC, SINDAGI, DIST. VIJAYAPUR, FOR THE OFFENCES PUNISHABLE U/SEC. 408, 409, AND 420 OF IPC AT ANNEXURE-E.

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THIS PETITION, COMING ON FOR FURTHER HEARING, THIS DAY, ORDER WAS MADE THEREIN AS UNDER:

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CORAM: HON'BLE MR. JUSTICE S.VISHWAJITH SHETTY

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ORAL ORDER

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(PER: HON'BLE MR. JUSTICE S.VISHWAJITH SHETTY)

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Accused in C.C.No.921/2020 arising out of

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P.C.No.06/2015 pending before the court of Senior Civil Judge and JMFC, Sindagi, Vijayapura District registered for offences punishable under sections 408, 409 and 420 of IPC is before this court under section 482 of Cr.P.C with the prayer to quash the entire prosecution case as against him.

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Heard learned counsels for the parties.

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Respondent No.2 had filed a private complaint in

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P.C.No.06/2015 before the court of Senior Civil Judge and

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JMFC Sindagi against the petitioner herein alleging that the contract for providing electricity connections to BPL houses under the Scheme known as Rajiv Gandhi Grameen Vidyutikaran Yojana was awarded to a company known as M/s. GVPR Engineers Ltd., Hyderabad of which the petitioner was the Managing Director. After the work awarded was completed, bills were submitted by the company claiming that electricity connection was provided to 450 BPL houses, whereas actually electricity connection was given only for 177 beneficiaries. Allegation was therefore made that a claim was made for excess payment though work was not actually done and accordingly a sum of Rs.7,63,035/- was allegedly misappropriated by the accused. The learned Magistrate vide order dated 20.10.2020 had taken cognizance of offences punishable under sections 408, 409 and 420 of IPC against the petitioner and had issued summons to him. Being aggrieved by the same, the petitioner is before this Court.

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Learned Counsel for the Petitioner submits that on

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the very same allegations, the respondent No.2 had filed a police complaint earlier and after investigation, B report was filed in the said case which was accepted by the Jurisdictional Court of Magistrate. Without challenging the same, a private complaint was subsequently filed. He submits that since the Company of which the petitioner was the Managing Director, is not made as a party to the impugned criminal proceedings, the petitioner who is being vicariously held liable for the act of the Company, cannot be prosecuted in the absence of the company. In support of his arguments, he has placed reliance on the order of the co-ordinate bench of this Court in Criminal Revision Petition No.843/2013.

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Per Contra, learned counsel appearing for the respondent No.2 submits that the petitioner was the Managing Director of the company and therefore he is responsible for all the acts of the company. He submits that merely for the reason that B report is filed in the

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police complaint that was filed earlier, there is no bar to file a private complaint by producing necessary material before the learned Magistrate. In support of this argument, he has placed reliance on the judgment of the Division bench of this court in the case of J.Alexander Vs State of Karnataka By the Superintendent of Police, City Division, Karnataka Lokayukta, Bangalore reported in 1995(4) Kar.L.J 227 (DB) and in the case of Naveen Kumar and Others Vs State By Circle Inspector of Police, Udupi Circle, Udupi and Another reported in 1998(5) Kar.L.J.596.

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The undisputed facts of the present case are the respondent No.2 had earlier filed a police complaint based on which FIR in Crime No.48/2010 was registered against the petitioner herein for offences punishable under sections 408, 409 & 420 of IPC by Sindagi Police Station. In the said case, the police after investigation had filed “B final report” and the said B final report was accepted by the Jurisdictional court of Magistrate and the criminal case

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was closed. Thereafter respondent No.2 has filed a private complaint in P.C.No.06/2015 and the learned Magistrate has taken cognizance of the alleged offences and has issued summons to the petitioner by passing a detailed order. The co-ordinate bench of this court in the case of

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Naveen Kumar (supra) has held that filing of B report by the police and acceptance of the same by the learned Magistrate cannot be a bar for the Magistrate to entertain a second complaint.

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The division bench of this Court in the case of J. Alexander (supra) in para No.16 of the judgment has observed as follows:

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“We shall now consider the contention of the learned Counsel for the petitioners that there was no hearing in the matter much less any notice was served on the party concerned. In this context, reliance was placed upon the decision of the Supreme Court in the case of Kamalapati Trivedi, supra, to contend that an order made by the Magistrate accepting a 'B' report is a judicial order determining the rights of the parties-the State on the one hand and the accused on the other, after application of mind. If that is so, the order passed must be characterised as a judicial act and therefore is one performed in its capacity as a Court. The order made by the Magistrate though

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judicial, is only of tentative character because even if there be adjudication of the matter, the order made by the Magistrate accepting a 'B' report could not become final because if certain events or circumstances take place such as a complaint being filed under Section 200 and cognizance taken, further investigation can be directed, at any rate. If that be so, we fail to understand as to why any notice is required in such circumstances. In such circumstances that notice need not be given does not admit of any doubt. Therefore, at the stage when the police want to investigate the matter further in terms of Section 173(8) of the Code, without reference to the Court, question of issue of notice to the petitioner would not arise. Thus if merely an intimation is made to the Court and further investigation is done, how notice and hearing in the matter is required baffles us. At the stage of investigation the principles of audi alteram partem do not apply. We are not impressed with any of the contentions advanced on behalf of the petitioner. Petition is therefore dismissed.”

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In the present case Respondent No.2 in its private complaint has revealed the fact of filing of a B report in the earlier police complaint and the Trial Court after appreciating the averments made in the private complaint and also the documents that were produced along with the private complaint by respondent No.2, which were marked as Exs.C.1 to C.13, has issued summons to the accused. Therefore, no fault can be found in the said order, on the ground that the private complaint has been entertained by

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the learned Magistrate in spite of the fact that the police had filed a B report in the earlier police complaint that was filed by the respondent No.2 herein based on which FIR in crime No.48/2010 was registered against the petitioner by Sindagi Police Station, Vijayapur.

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Perusal of the averments made in the private complaint would reveal that allegation by the complainant is that the contract was awarded to a company known as M/s. GVPR Engineers Limited, Hyderabad and undisputedly the payment is also made to the very same company. Allegation in the complaint is that though the Company claimed that electricity connection was provided to 450 houses, actually the electricity connection was provided only to 177 beneficiaries and a false claim was made and a sum of Rs.7,63,035/- was wrongly claimed by the Company. Petitioner was the Managing Director of the said Company during the relevant period. Petitioner is therefore being vicariously held liable for the act committed by the company. The Hon’ble Supreme Court in the case of

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R.Kalyani vs. Janak C. Mehta and others reported in

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(2009) 1 SCC 516 in para No.41 of judgment has observed as follows.

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“If a person, thus, has to be proceeded with as being vicariously liable for the acts of the 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.”

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In the case of S.K. Alagh vs. State of Uttar

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Pradesh and others, reported in (2008) 5 SCC 662 in

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para No.19, the Hon’ble Supreme Court observed as follows.

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“As admittedly, drafts were drawn in the name of the Company, even if the appellant was its Managing Director, he cannot be said to have committed an offence under Section 406 of the Penal Code. If and when a statute contemplates creation of such a legal fiction. It provides specifically therefore. In the absence of any provision laid down under the statute, a Director of a Company or an employee cannot be held to be vicariously liable for any offence committed by the Company itself.”

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11. In the case of Sharad Kumar Sanghi vs. Sangita

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Rane reported in (2015) 12 SCC 781, the Hon’ble Supreme Court for the reason that though the allegations were made against the Company, the Company was not made as a party to the proceedings had quashed the criminal proceedings as against the Managing Director.

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12. The co-ordinate bench of this Court placing reliance

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on the aforesaid judgments of the Hon’ble Supreme Court, in Crl.R.P.No.843/2013 disposed of on 16.09.2022 in para No.12 has observed as follows:

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“The above judgments clearly go to show that when the allegations are against the company of alleged cheating or criminal breach of trust, in such a circumstance, the registered Company under the Companies Act, 1956 being a juristic person is required to be arraigned as an accused. Independent of the Company arraigning only the Managing Director or Directors of that Company against whom no individual allegations or specific allegations are made, then the said criminal proceedings initiated only against the Managing Director or Directors is not maintainable.”

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Perusal of the allegations made in the private

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complaint in the present case would go to show that all

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the allegations made in the complaint is against the Company of which the petitioner was the Managing Director and undisputedly the contract was awarded to the Company and the payments were also made to the Company.

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Under the circumstances, the Company is a necessary party to the criminal proceedings and in the absence of the Company, the petitioner, who was the Managing Director of the Company alone cannot be prosecuted for the alleged offences.

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Under the circumstances on this short ground, the impugned criminal proceeding is liable to be quashed. Accordingly, I pass the following:

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ORDER

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i) Criminal Petition is allowed.

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ii) The entire proceedings in C.C.No.921/2020 pending before the Court of Sr.Civil Judge and JMFC,

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Sindagi, District VIjayapur, registered for the offences punishable under sections 408, 409 and 420 of IPC, is hereby quashed as against the petitioner.

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Sd/-

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(S.VISHWAJITH SHETTY)

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JUDGE

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DHA,AMM List No.: 1 Sl No.: 51 CT:PK

G.S.P Veera Reddy v. the State of Karnataka and Anr.

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G.S.P Veera Reddy v. the State of Karnataka and Anr.

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