Dismissed

M.Panchalai v. Inspector of Police

Madras HC20 Jul 2018CRL RC/812/2011

Case brief

AI extract

What is this about?

The High Court dismissed criminal revision petitions filed by victims against an order of discharge in a case of financial fraud. The court held that mere shareholding in the accused company did not attract vicarious liability under IPC and there was no evidence connecting the respondents to the alleged offence.

What did the court decide?

Directed the Chief Judicial Magistrate, Salem to proceed further in C.C.No.27/2008 and complete the proceedings within six months.

M.Panchalai Vs Inspector of Police — Constitutional and Fundamental Rights | Madras HC (2018)

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IN THE HIGH COURT OF JUDICATURE AT MADRAS

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DATED: 20.07.2018

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CORAM:

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THE HONOURABLE MR. JUSTICE N. ANAND VENKATESH
Crl.R.C.Nos.812 & 813 of 2011
and
M.P.1 of 2011
1.M.Panchalai
2.P.Kaliyamoorthy
... Petitioners
in both Crl.R.C.
..Vs..
1.State rep.by
Inspector of Police,
Economic Offence Wing II,
Salem.
2.R.Chittibabu ... Respondents
in Crl.R.C.No.812/2011
1.State rep.by
Inspector of Police,
Economic Offence Wing II,
Salem.
2.A.Shanthi ... Respondents
in Crl.R.C.No.813/2011
Common Prayer:

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Criminal Revision case filed under Section 397 r/w 401(1) of Crl.P.C,1973, to set aside the order dated 08.03.2011 made in Crl.M.P.Nos.649 of 2009 & 1003 of 2009 in C.C.No.27 of 2008 on the file of the Chief Judicial Magistrate, Salem.

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For Petitioners : Mr.V.Rajesh (In both Crl. R.C) For Respondent : Mrs.S.Thankira, Government Advocate (Crl.Side) (for R 1 in both Crl.RC)

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Mr.P.Jagadeesan

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(for R2 in Crl.R.C.No.812/2011)

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(for R2 in Crl.R.C.No.813/2011

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These Criminal Revision Petitions have been filed against https://hcservices.ecourts.gov.in/hcservices/ the orders of the Court below discharging A-3 and A-6, by an

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order dated, 08.03.2011. The Revision Petitioners in both the petitions are the victims in the crime who had deposited the money with the Finance Company.

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2.The second respondent in both these Criminal Revision Petitions were arrayed as A-3 and A-6 and a Final Report was filed against them apart from 19 other accused persons. Fourteen of the accused persons filed discharge petitions before the Court below mainly contending that they are neither the Directors of the Company nor the subscribers of the Finance Company and they are in no way connected with the day to day administration of the Company. The respondents in the present revision petitions are share holders in the Finance Company.

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3.The Respondents took a specific stand that they are merely share holders in the Finance Company and there are absolutely no allegations against them either in the complaint or in the 161 statements taken by the Police from the witnesses. Even the statements of the subscribers are not against these two accused persons, and therefore, the respondents filed the discharge petition on the ground that no case has been made out by the respondent Police to frame charges against them.

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4.The Court below on considering the Final Report and after considering the 161 statements given by the witnesses, came to a categorical conclusion that there are no materials or evidence on record to connect the respondents with the alleged offence. There is also no material to establish that the respondents conspired to cheat the depositors and induce them to deposit the money. The Court below did not even find prima facie materials to frame charges against the respondents and consequently an order of discharge came to be passed.

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5.The petitioners in these revision petitions have chosen to challenge the order of discharge only insofar as A-3 and A- 6 are concerned.

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6.The learned counsel for the petitioners would submit that the respondents are shareholders of Finance Company and they are directly involved in the business of the Company. For the said purpose, the learned counsel for petitioners brought to a notice of this Court Memorandum and Articles of Association of the Company and also the invitation that was given at the time of inaugurating the Company. The learned counsel would submit that in the Memorandum of Association, the names of the respondents are found in their capacity as shareholders. Even in the invitation that was given at the time of inauguration, their names have been found and they have been described as shareholders. Therefore, the learned counsel would contend that there is prima facie material to frame charges against the respondents and their complete involvement in the offence will get established only during https://hcservices.ecourts.gov.in/hcservices/ course of trial.

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7.Per contra, the learned counsel for the respondents would submit that in an offence under IPC, the concept of vicarious liability will not apply. In the present case except for the fact that the respondents are shareholders of the Finance Company, there are absolutely no materials to connect the respondents to the alleged offence. The learned counsel further contend that the Court below has taken into consideration the materials available on record and has come to a categorical conclusion that there are no materials to frame charges against the respondents.

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8.This Court has carefully considered the submissions made on either side. It is an admitted case that the respondents are neither directors of the Company nor are they connected with the Management of the Company and they are merely shareholders holding shares in the Finance Company. Neither in the complaint nor in the statement of witnesses, any one has indicted the respondents herein. The respondents have been arrayed as an accused persons only on the ground that they are shareholders in the Finance Company.

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9.For an offence under IPC there must be specific allegation made against the accused persons insofar as their involvement in the crime is concerned. The concept of vicarious liability cannot be extended to IPC offence and the law on this issue is well settled. Being a shareholder of a Company by itself will not expose a person to a crime committed by the Company and its directors. The Court below on appreciation of the entire materials collected by the Police has come to a categorical conclusion that no prima facie case or sufficient materials are available to frame charges against the accused persons and accordingly the discharge petition was allowed.

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10.This Court does not find any ground to interfere with the order passed by the Court below. Accordingly, these Criminal Revision Petitions are dismissed. Consequently, the connected miscellaneous petition is closed.

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11.In view of a stay granted in the Criminal Revision Petitions, there has been absolutely no progress in the proceedings before the trial Court. The Chief Judicial Magistrate, Salem is directed to proceed further in C.C.No.27/2008 and complete the proceedings within a period of six months from the date of receipt of a copy of this order.

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Sd/Assistant Registrar(CS-VII)

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//True Copy//

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Sub Assistant Registrar

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Kp https://hcservices.ecourts.gov.in/hcservices/

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Chief Judicial Magistrate Court,
Chief Judicial Magistrate,
Salem.
2. The Inspector of Police,
Economic Offence Wing II,
Salem.
3.The Public Prosecutor,
High Court,
Madras.
4. The Section officer,
criminal section
High Court,
Madras.
+1CC TO MR.P.JAGADEESAN ADVOCATE SR.NO. 48877
+1CC TO Mr.L.MOULI, ADVOCATE SR.NO.48664
Crl.R.C.Nos.812 & 813/2011
AK(CO)
ASK(01/08/2018)

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https://hcservices.ecourts.gov.in/hcservices/

M.Panchalai v. Inspector of Police

Case brief

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M.Panchalai v. Inspector of Police

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