2014 (10) TMI 976 - SC - Indian Laws

Oppression and mismanagement - Criminal proceedings in exercise of power Under Section 482 Code of Criminal Procedure - Embezzlement of crore of Rupees by affecting suitable change in the shareholding pattern - Held that - Judicial process should not be an instrument of oppression or needless harassment. The court should be circumspect and judicious in exercising discretion and should take all the relevant facts and circumstances into consideration before issuing process lest it would be an instrument in the hands of private complainant as vendetta to harass the persons needlessly Summoning of an accused in a criminal case is a serious matter and the order taking cognizance by the Magistrate summoning the accused must reflect that he has applied his mind to the facts of the case and the law applicable thereto. Section 482 of the Code of Criminal Procedure empowers the High Court to exercise its inherent powers to prevent abuse of the process of court and to quash the proceeding instituted on complaint but such power could be exercised only in cases where the complaint does not disclose any offence or is vexatious or oppressive. If the allegations set out in the complaint do not constitute the offence of which cognizance is taken by the Magistrate it is open to the High Court to quash the same in exercise of power Under Section 482. The power of quashing a criminal proceeding should be exercised very sparingly and with circumspection and that too in the rarest of rare cases; that the court will not be justified in embarking upon an enquiry as to the reliability or genuineness or otherwise of the allegations made in the FIR or the complaint and that the extraordinary or inherent powers do not confer an arbitrary jurisdiction on the court to act according to its whim or caprice. The letter dated 14.12.2006 which is the basis of taking cognizance was allegedly sent from the office of Respondent No. 4 Company under the signature of one colleague of the Appellant without the knowledge or prior permission of the Appellant and the said letter was never signed by the present Appellant. In our view if that is so it is open to the Appellant to take a defense and prove their contention during trial. Needless to say that the trial court shall consider the said contention during trial and record its findings. The High Court rightly refused to quash the criminal proceedings in exercise of power Under Section 482 Code of Criminal Procedure - appeal dismissed.

Summary

Issues Involved:
1. Quashing of criminal proceedings under Section 482 of the Code of Criminal Procedure.
2. Allegations of defamation under Sections 499 and 500 of the Indian Penal Code.
3. Prima facie case determination by the trial court.
4. High Court's dismissal of the quashing petition.

Issue-wise Detailed Analysis:

1. Quashing of Criminal Proceedings under Section 482 of the Code of Criminal Procedure:
The appellant sought to quash the criminal proceedings initiated against them under Section 482 of the Code of Criminal Procedure. The High Court dismissed the petition, stating that the contents of the letter dated 14.12.2006 prima facie contained defamatory statements. The Supreme Court reiterated that judicial processes should not be instruments of oppression or harassment and that the High Court should exercise its inherent powers to prevent abuse of the process of the court. However, such power should only be exercised when the complaint does not disclose any offence or is frivolous, vexatious, or oppressive.

2. Allegations of Defamation under Sections 499 and 500 of the Indian Penal Code:
The complaint alleged that the appellant, representing Rallis India Ltd., addressed a letter to Ashika Capital Limited containing defamatory statements against the respondents. The letter accused the respondents of engaging in a conspiracy to cheat and embezzle money through an IPO, labeling them as "habitual cheats." The trial court took cognizance of the offence under Sections 499 and 500 of the Indian Penal Code, finding a prima facie case against the appellant and Rallis India Ltd. The Supreme Court noted that if the allegations in the complaint, supported by the complainant's statement on oath, disclose the necessary ingredients of the offence, the High Court should not interfere with the order taking cognizance.

3. Prima Facie Case Determination by the Trial Court:
The trial court, after considering the allegations and the statement recorded on oath, concluded that a prima facie case was made out for summoning the appellant. The court dismissed the complaint against other directors of Rallis India Ltd. (A.3 to A.9), stating that no material was placed to substantiate their active participation in releasing the defamatory letter. The Supreme Court emphasized that summoning an accused in a criminal case is a serious matter and that the Magistrate's order must reflect that they have applied their mind to the facts and the applicable law.

4. High Court's Dismissal of the Quashing Petition:
The High Court dismissed the quashing petition, observing that the letter dated 14.12.2006 contained defamatory statements. The appellant argued that the letter was sent from the office of Rallis India Ltd. under the signature of a colleague without their knowledge or permission. The Supreme Court held that this contention could be raised and proved during the trial. The Court affirmed the High Court's decision, stating that the High Court rightly refused to quash the criminal proceedings in exercise of its power under Section 482 of the Code of Criminal Procedure.

Conclusion:
The Supreme Court dismissed the appeal, finding no merit in the appellant's case. The Court upheld the High Court's decision to dismiss the quashing petition and affirmed the trial court's determination of a prima facie case for defamation against the appellant and Rallis India Ltd. The Court reiterated the principles governing the exercise of inherent powers under Section 482 of the Code of Criminal Procedure and the seriousness of summoning an accused in a criminal case.