TMI Blog2013 (3) TMI 725X X X X Extracts X X X X X X X X Extracts X X X X ..... d with the trial against respondent No. 1 u/s of IPC. The issuance of summons against respondents Nos. 2 to 7, namely, the Managing Director, the Company Secretary and the Directors of the Company cannot be sustained and the same are liable to be set aside. So far as respondent No. 1 Company is concerned, the issuance of summons as against the Company under Section 415 IPC also cannot be sustained. The order of the High Court, therefore, needs no interference by this Court. - Criminal Appeal No. 488 of 2013 (Arising out of SLP (CRL.) No. 3086 of 2010), Criminal Appeal No. 489 of 2013 (Arising out of SLP (Crl.) No. 3091 of 2010), Criminal Appeal No. 490 Of 2013 (Arising out of SLP(Crl.) No. 3112 of 2010) - - - Dated:- 22-3-2013 - P. Sathasivam And M. Y. Eqbal, JJ. JUDGMENT Criminal Appeal No. 491 of 2013 (Arising out of SLP (Crl.) No. 3113 of 2010), Criminal Appeal No. 492 of 2013 (Arising out of SLP (Crl.) No. 3120 of 2010), Criminal Appeal No . 493 of 2013 (Arising out of SLP (Crl.) No. 3213 of 2010), Criminal Appeal No. 494 of 2013 (Arising out of SLP (Crl.) No. 3217 of 2010) M. Y. Eqbal, J. Leave granted. 2. Since these seven appeals arose out of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (iv) Dalmia Housing Finance Ltd. (v) Dear Investment Pvt. Ltd. in terms of its letter dated 1st March, 2008 failing which they would regularize the aforementioned 5 accounts by selling the stock of the complainant. The complainant alleged that since no letter dated 1st March, 2008 had been written by the complainant to the accused, it denied the averments made in their letter dated 14th May, 2008. The complainant further alleged that they met respondents Nos. 2 to 7, namely, the Managing Director, the Company Secretary and the Directors of respondent No. 1 Company and requested to refund the excess amount and transfer its shares to Demat Account but nothing was done. The complainant, therefore, alleged that the respondents have committed criminal breach of trust and cheating, inasmuch as they have sold off 8,76,668 shares of the complainant on 23rd June, 2008 and misappropriated the entire sale proceeds. 5. The Metropolitan Magistrate after considering the allegations made in the complaint, documents placed on the record and the evidence led by the witnesses, and after being satisfied that a prima facie case is made out, directed issuance of summons against the respondents to f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... yees of the Company for transfer of Company s equity shares. It was contended that accused Nos. 2 to 7, who were Managing Director, Company Secretary and Directors of the Company are involved in the day-to-day activities of the Company and responsible for the conduct and business of the said Company. Lastly, it was submitted that there is a specific allegation and averment in the complaint that the complainant had been interacting with the Directors of the Company and, therefore, there was sufficient material for issuance of summons against them. Learned counsel put reliance on the decisions of this Court in Madhav Rao Jiwaji Rao Scindia Ors. vs. Sambhajirao Chandrojirao Angre Ors. (1988) 1 SCC 692 and S.K. Alagh vs. State of Uttar Pradesh Ors. (2008) 5 SCC 662. 9. Per contra, Dr. Abhishek Manu Singhvi, learned senior counsel appearing for the respondents in all the cases at the very outset submitted that the High Court has correctly quashed the criminal proceedings initiated against the Managing Director, the Company Secretary and other Directors of the Company holding that there cannot be vicarious liability; and moreover, the complainant needs to specifically allege the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Bank and Ors. Etc. vs. Directorate of Enforcement Ors. AIR 2005 SC 2622. 10. We have carefully considered the submissions of the learned counsel on either side. The various decisions relied upon by the learned counsel appearing on either side have been considered by us. It is not necessary to quote extensively various passages from several judgments except a few which are relevant and touching the issue directly on the point raised in these appeals. 11. In order to appreciate the rival contentions made by the learned counsel, we would like to refer hereinbelow some of the relevant paragraphs of the complaint in order to find out as to whether those averments constitute offences under Sections 406/409/420/477A/34/120B, IPC: 2) That the Accused No. 1 is the Company registered under the Companies Act, 1956. The accused deal in securities and are the registered stock brokers and agents with the National Stock Exchange India Ltd. and also with Bombay Stock Exchange Ltd. It also has their branch office in Delhi. That the Accused Nos. 2 to 6 are the Directors of the accused company and accused No. 7 is Secretary of the accused No. 1 Company and are looking after day to day a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efund the excess amount and to transfer its share to Demat Account, however the meetings as well as various communications with the accused failed to bring any result. The complainant also requested to the Accused to withdraw the fictitious claim/adjustment as desired by it in their letter dated 14.5.2008. However, instead the accused vide its letter dated 9.6.2008 again intimated the complainants to regularize the accounts of the aforesaid companies by selling the stocks in the Complainant s accounts as instructed vide letter dated 1.3.2008 alleged to be signed by one of the trustees of the complainant Mr. Bhuwneshwar Mishra. xxx xxx xxx 14) That all the accused not only received the excess amount but misappropriated the same, which they invariably refused to refund and instead constantly started intimidating the complainant to discharge the liabilities of the aforesaid companies mentioned in their letters dated 14.5.2008 and 9.6.2008 whereas the complainant was under no such legal obligation to clear the debits of these companies for the reason that these five companies are separate legal entities and there is no relation whatsoever with the complainant. All the accused ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mpany. With whom the complainant or its authorized representative interacted has also not been specified. Although in paragraph 11 of the complaint it is alleged that the complainant on numerous occasions met accused Nos.2 to 7 and requested to refund the amount, but again the complainant has not made specific allegation about the date of meeting and whether it was an individual meeting or collective meeting. Similarly, in paragraph 17 of the complaint, there is no allegation that a particular Director or Managing Director fabricated debit note. In the entire complaint there are bald and vague allegations against respondent Nos.2 to 7. 13. There is no dispute with regard to the legal proposition that the case of breach of trust or cheating are both a civil wrong and a criminal offence, but under certain situations where the act alleged would predominantly be a civil wrong, such an act does not constitute a criminal offence. 14. Be that as it may, as held by this Court, summoning of accused in a criminal case is a serious matter. Hence, criminal law cannot be set into motion as a matter of course. The order of Magistrate summoning the accused must reflect that he has applied h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l manner, issued the process against all the accused persons. The High Court refused to quash the complaint and the matter finally came to this Court. Allowing the appeal and quashing the complaint, this Court held as under: 5. It is also salutary to note that judicial process should not be an instrument of oppression or needless harassment. The complaint was laid impleading the Chairman, the Managing Director of the Bank by name and a host of officers. There lies responsibility and duty on the Magistracy to find whether the concerned accused should be legally responsible for the offence charged for. Only on satisfying that the law casts liability or creates offence against the juristic person or the persons impleaded then only process would be issued. At that stage the court would 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 the private complainant as vendetta to harass the persons needlessly. Vindication of majesty of justice and maintenance of law and order in the society are the prime objects of criminal justice but it w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... offence u/s 415, 409/34/120B is made out. Let all the accused hence be summoned to face trial under the aforesaid sections on PF/RC/Speed Post/courier for 2.12.2008. 19. In the order issuing summons, the learned Magistrate has not recorded his satisfaction about the prima facie case as against respondent Nos.2 to 7 and the role played by them in the capacity of Managing Director, Company Secretary or Directors which is sine qua non for initiating criminal action against them. Recently, in the case of M/s.Thermax Ltd. Ors. vs. K.M. Johny Ors. 2011 (11) SCALE 128, ors. while dealing with a similar case, this Court held as under :- 20. Though Respondent No.1 has roped all the appellants in a criminal case without their specific role or participation in the alleged offence with the sole purpose of settling his dispute with appellant-Company by initiating the criminal prosecution, it is pointed out that appellant Nos. 2 to 8 are the Ex-Chairperson, Ex-Directors and Senior Managerial Personnel of appellant No.1 Company, who do not have any personal role in the allegations and claims of Respondent No.1. There is also no specific allegation with regard to their role. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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