TMI Blog2016 (3) TMI 1289X X X X Extracts X X X X X X X X Extracts X X X X ..... be held not sufficient to accuse in the police final report or to take cognizance by the learned Special Judge there from against the petitioner/A3 personally, to say no prima facie material to make him liable to face the ordeal of trial or even to frame charge against him from the prosecution material placed reliance with the police final report that is the criterion for the charge to be framed as per the settled expression of the Apex Court more particularly from the three Judge bench expression in State of Orissa v. Debendranath Padhi, (2005) 1 SCC 568, though so far as the quash petition concerned, the accused is also entitled to bring any additional material in asking the Court to receive to consider and the Court can receive to consider as held by referring to Debendranath Padhi's case (2004 (11) TMI 564 - SUPREME COURT), also in the subsequent expressions and in particular in Rukmini Narvekar v. Vijaya Satardekar [2008 (10) TMI 668 - SUPREME COURT]. Accordingly the points 1-3 are answered. In the result the petition is allowed and the proceedings from the cognizance of the offences under Sections 420 and 120B IPC and Section 12 of the PC Act, taken by the Principal Speci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... they acquired M/s. Raasi Cement Limited of Nalgonda District (of the erstwhile State of Andhra Pradesh). (b) It is averred that District Collector, Kadapa had submitted proposals for allotment of land on lease to an extent of Acs. 2.60 cents at Chowdur Mandal, Kadapa District in favour of India Cements Limited (A7) for a period of 20 years from the date on which the Company was in possession from 1983 and the Chief Commissioner Land Acquisition (CCLA) Government of Andhra Pradesh after examining said proposals of the District Collector, issued orders vide G.O.Ms. No. 53, dated 18.1.2001 awarding lease of said land in favour of India Cements Limited (A7) for 20 years with retrospective effect from 1983 to 2003 for construction of infiltration well with pump house for supply of water to the cement plant at Chilamkur Village with a condition of 10% annual lease on market value of ₹ 50,000/- per annum and with provision for 20% increase for every 5 years as per the provisions of the Revenue Board Sanding Order-24. Further, India Cements Limited (A7) submitted a requisition to the District Collector, Kadapa on 30.6.2003 after expiry of the lease period for renewal of the leas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... culated to the then Chief Minister for obtaining specific orders to be placed before the Council of Ministers. The then Chief Minister has given his assent on 16.6.2008 for placing the matter before the Council of Ministers. Sri M. Samuel (A4), the then Principal Secretary, in furtherance of criminal conspiracy with dishonest intention did not mention the fact that the then Chief Minister had approved the lease for a period of five years only, instead he put up a draft memorandum for the Council of Ministers as to the period- as prescribed under G.O.Ms. No. 1484, dated 15.11.1977 read with G.O.Ms. No. 840, wherein the maximum period lease shall in no case exceed 25 years . The proposal placed before the Cabinet in its meeting held on 30.6.2008 was approved for five years period from 1.7.2003 and would expire on 1.7.2008 vide its Resolution No. 241/2008, dated 1.7.2008. Sri M. Samuel (A4)-Principal Secretary, in furtherance of the criminal conspiracy with other accused persons, by abusing his office as a public servant issued orders vide G.O.Ms. No. 865, dated 11.7.2008 extending the lease of land in Sy. No. 657/2, Acs. 2-60 cents of Chowduru Village of Proddatur Mandal in favour of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pment (I CAD) Department raised the following points to be ascertained: i. As to the proposed enhancement regarding drawl of water (13 Mcft) will not affect Lower Upper Riparian Rights and does not exceed the restriction of 6 TMC. ii. No mention is there about the period of permission granted. iii. Whether the former company had paid royalty charges up-to-date. iv. No remarks of CE, ISWR on the proposal. (f) Sri Adithyanath Das, IAS (A5), Secretary (AD), Irrigation Department, in furtherance of criminal conspiracy, by abusing his official position, had made observations regarding the need to refer the matter to Inter State Water Resources (ISWR), terms and conditions of drawl of water in the earlier G.O.Ms. No. 244 namely period and royalty fixed. The issue was again clarified by Special Officer who reiterated to ascertain the period of supply, water royalty fixed by the Government payment of water royalty, dues pending from the firm and others. Sri Adithyanath Das (A5) in furtherance of the criminal conspiracy, by breaching the trust reposed in him and by abuse of his official position, did not refer the matter of allocation of water from Kagna River ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... out penalty) towards outstanding water cess. (g). M/s. India Cements Limited (A7) acquired M/s. Raasi Cement Limited in the year 1998. M/s. Raasi Cement Factory at Wazirabad was given permission to draw 3 lakh gallons of water from Krishna River subject to conditions vide G.O.Ms. No. 408 dated 21.6.1979 issued by Irrigation Power (IRR. III) Department. On 20.9.2007, Sri Y. Shekar Reddy, Executive Engineer, Irrigation Command Area Development, Nalgonda and Sri R. Nagi Reddy., Senior Personal Manager of India Cements Limited (A7), Wazirabad entered into Article of Agreement for permission to draw 3 lakh gallons of water per day from Krishna River for cement factory for the period from 20.9.2007 to 19.9.2008 for an amount of ₹ 1,62,000/- for 12 months. Prior to 2007, there is no record of India Cements Limited (A7) paying any royalty and fulfilling conditions prescribed in G.O.Ms. No. 408, dated 21.6.1979. The agreement was entered on 20.9.2007 for one year only, which paved the way for the company to seek permission for additional quantity of water. Based on said agreement, the Superintendent Engineer requested Chief Engineer to obtain and communicate necessary permissi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eir expansion of cement plant. On receipt of letter from Chief Engineer, dated 28.3.2008 by the I CAD (PW) Department, a circulation note was put up vide C. No. 10548/Reforms/2008 on 3.4.2008. In the note file Sri A. Subba Rao, Special Officer (Technical) made the following observation: a. That the period is not specified. b. The remarks of the E in C (irrigation) and the CE/ISWR on sparing of 10 lakh gallons per day to the company are to be obtained. c. The proposal to expand the cement plant requires confirmation from the Industries Department duly indicating the approval accorded by the department indicating the plan readiness and the expanded installed capacity and the date of commissioning. (h) A5, in furtherance of criminal conspiracy intentionally raised doubts on referring the file to the Chief Engineer, ISWR. Sri A. Subba Rao, Special Officer (Technical) clarified that as the drawl of water was from River Krishna at the rate of 10 lakh gallons per day and suggested for taking the views of the Chief Engineer, ISWR. A5 issued a memo vide No. 10548/Reforms/2008, dated 29.4.2008 to the Engineer-in-Chief/Chief Engineer, Inter State Water Resources to offer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eir expansion unit at Nalgonda. A5 by abusing his official position as a public servant issued G.O.Ms. No. 146, dated 22.7.2008 according permission to draw 10 lakh gallons of total quantity of water per day including 3 lakh gallons of water already permitted from Krishna River unduly favouring the firm, by deceit and suppressing the facts pertaining to the terms and conditions mentioned in the earlier G.O.Ms. No. 408, during the period 2007 to 2008 apart from India Cements Limited (A7) other companies viz., M/s. Deccan Cements Limited, Hyderabad, M/s. Madhucon Sugar and Power Industries, M/s. Maruti Ispat and Energy Private Limited had also applied for allocation of water. Their proposals from the concerned Chief Engineers were sent to Secretary, Irrigation Department and they were kept pending on the instructions of the then Chief Minister by abusing his official position made remarks on the file Tie until further orders' whereas in case of India Cements Limited (A7), no such remarks were made by the then Chief Minister as there was illegal gratification in the guise of investment as quid-pro-quo by India Cements Limited (A7) into the companies of Sri Y.S. Jagan Mohan Reddy. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... further that during June, 2007 India Cements Limited (A7) gave inter corporate deposits to M/s. Sandur Power Company Limited amounts aggregating to ₹ 8.50 crores. During November, 2007 India Cements Limited (A7) placed inter corporate deposit with M/s. RR Global Enterprises Private Limited amounting to ₹ 13.00 crores. For above said inter corporate deposits, there was no approval of the Board of the Directors and there were no written agreements between India Cements Limited (A7) and M/s. Sandur Power Company Limited and M/s. RR Global Enterprises Private Limited, none of these companies have any business dealing with India Cements Limited (A7) and others. Inter corporate deposits made by India Cements Limited represented by N. Srinivasan (A3) without any Board Resolution clearly indicates connivance of N. Srinivasan (A3) with Sri Y.S. Jagan Mohan Reddy (A1). An amount of ₹ 1.35 crores were given by India Cements Limited (A7) as a loan to Sri Y.S. Jagan Mohan Reddy (A1), vide cheque Nos. 315471, 315472 315473 drawn on Punjab National Bank dated 11.3.2005 which was repaid with interest clearly establishes an undue interest and connivance between them. 2(v). I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... antity of water, extension of lease of land for a period of 20 years and priority in supply of cement under Indiramma Scheme. A3 in furtherance of the conspiracy paid illegal gratification in the form of investments amounting to ₹ 95.32 crores in A6 company by purchasing shares on high premium of ₹ 1440/- amounting to ₹ 40.00 crores in M/s. Jagati Publications Limited (A8) and ₹ 5.00 crores in M/s. Carmel Asia Holdings Private Limited (A9), thereupon A7 invested in 0% convertible preference shares and also surrendered all their rights in favour of A6 as a preference shareholder/equity shareholder and received no dividends. The total amount paid by A7 was to the tune of ₹ 140.32 crores. A3 being the Managing Director in furtherance of criminal conspiracy had given Inter Corporate Deposits of ₹ 8.5 crores to M/s. Sandur Power Corporation Limited of A1 and ₹ 13.00 Crores to M/s. R.R. Global Enterprises Limited with whom either India Cements Limited (A7) or Sri N. Srinivasan (A3) had no direct business relationship. A3 also given a personal loan of ₹ 1.35 crores to A1. None of these transactions had any approval of Board of Directors. Thi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... there is no averment in the charge-sheet of any criminal act attributed to the petitioner, the inclusion of a serious offence in the impugned order without giving reason would be illegal. The learned Special Judge for C.B.I. cases has completely ignored the fundamental principle of criminal jurisprudence that the petitioner cannot be held vicariously liable even for any act or omission by A7. The final report while making specific references to the alleged roles played by each of the accused, as far as the petitioner concerned, has repeated the same set of allegations made against A7 concerning investments made by A7 and the alleged unlawful benefits conferred on A7 are the only allegations made against the petitioner/A3 also in the charge-sheet and therefore, the accusation against the petitioner/A3 of having conspired to commit fraud or for that matter any other offence is absurd and unsustainable on Its face for no specific allegations of criminal conduct against the petitioner. The petitioner/A3 has not signed or entered into any share subscription agreement with accused No. 1 and that is why no such document has been supplied along with the charge-sheet and the charge-sheet i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nts made by A7 were nothing but bribe amounts, even then the role played by the petitioner has to be necessarily spelt out as a specific item of charge, that in the absence of any material whatsoever in the charge-sheet against the petitioner, the petitioner need not face the ordeal of a trial and finally prayed to quash the proceedings in CC No. 24 of 2013 against the petitioner/A3. 7. Whereas it is the submission by the learned special public prosecutor for the CBI that the accused as Vice-Chairman-cum-Managing Director, responsible for day to day affairs of the A7 Company and as such for every act of A7 is done by A3, he is personally liable and therefore the final report from investigation when spelt out the same and the learned special Judge having perused the record and taken cognizance, leave about reasons not mentioned even that itself is not at all a ground for quashing the cognizance order, a reading of the same clearly proves judicial application of mind and thereby there is nothing to entertain the quash petition, much less to quash the case proceedings pending against A3/petitioner, saying such a contention is meritless and any remedy is besides submission from pros ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for the water allocation and land lease etc., is nothing but a bribe under another device if considered the substance over the form even recorded in the books as investments for cannot be recorded as bribe, same is also in relation to payments to Sandur and R.R. Global though the Board resolution was in ratification of the same subsequently, further that though money paid for the allotment of shares in 2009 shares were allotted in March, 2010 which cannot be called a strategic investment that too in preference and not equity shares and the investments are with no protective clauses and the collusion and conspiracy is to deprive the rights of listed company shareholders as held in Ramachandra Singh v. Savitri Devi, 2004 (6) ALD 31 (SC) : (2003) 8 SCC 319 and even the preference shares that carry dividend such rights of dividend also surrendered for the investments in Raghuram Cements supra and the surrender of liquidity of shares in favour of A1 is proving the factum of collusion and conspiracy and the charge-sheet discloses the commission of offence by the petitioner/A3 and there are no grounds to quash as held in Dr. Sharada Prasad Sinha v. State of Bihar, AIR 1977 SC 1754, of all ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nvenience. 10. From the writ petition orders directing C.B.I. investigation though speak allegations showing quid-pro-quo investments made out of the benefits received by investors/beneficiaries from the decision of the State Government in various forms and M/s. Jagati Publications of the year 2008-09 shows huge unexplained cash credit and huge escalated face value of shares and it is necessary to ascertain role of individuals/firms/public servants/group of companies Sri Y.S. Jagan Mohana Reddy and the material available supports a thorough probe and investigation in all the aspects into financial misdeeds involving huge magnitude of Government largesse corporate dealings including huge investments as part of quid-pro-quo arrangement for the largesse and benefit obtained by investors..............., the most appropriate agency would be the C.B.I., from C.B.I. investigation covered by the charge-sheet averments supra, even coming to the role of the petitioner/A3 as the Vice-Chairman and Managing Director of India Cements/A7 from the material placed reliance in opposing the quash petition of the petitioner, by the respondent-C.B.I., through its Special Public Prosecutor, the mater ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rt of their respective contentions, is a private limited company incorporated and in existence since 1946 and A3 is acting as its Vice-Chairman and Managing Director from 15.09.1989 undisputedly. It is also not in dispute that A7 entity has acquired or taken over some of the cement and other units viz., Coromandel Fertilizers, Raasi Cements etc., and the entity got more than 4000 crores turn over. 15. It is needless to say that the petitioner/A3 by virtue of his status as Vice-Chairman and Managing Director of A7/India Cements not shown as vicariously liable either under the Prevention of Corruption Act or under the I.P.C. or by any other statutory or legal expressions or other legal fiction including on the principle of alterego. The vicarious liability at best that is defined under the Indian Penal Code to be make out is under Sections 34 to 37 or 141 to 149 or 107 to 120 or 120-B IPC and under the Prevention of Corruption Act is with reference to Section 120-B and 107 I.P.C. and under Section 12 of the Act. It is needless to say for that there must be a specific allegation or attribution either as instigator or abettor or conspirator or person sharing common intention or part ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ers from the very averments in the final report referred supra. 17. Undisputedly India Cements Limited (A7) acquired the Coromandel cement plant of Kadapa only in 1990 and the cement plant of Cement Corporation of India of Yarraguntla in Kadapa District only in the year 1998 (which are within the Andhra area) and acquired the Visakha Cement Industry of Tandur at Ranga Reddy District in the year 1997 and the Raasi Cement Limited of Nalgonda District in the year 1998 which are within the Telangana area. So far as regards the lease of lands concerned, (i) of Acs. 2.60 cents at Chowdur Mandal, Kadapa District in favour of India Cements Limited (A7) for a period of 20 years from the date on which the Company was in possession from 1983 and the Chief Commissioner Land Acquisition (CCLA) Government of Andhra Pradesh after examining said proposals of the District Collector, issued orders vide G.O.Ms. No. 53, dated 18.1.2001 awarding lease of said land in favour of India Cements Limited (A7) for 20 years with retrospective effect from 1983 to 2003 for construction of infiltration well with pump house for supply of water to the cement plant at Chilamkur village with a condition of 10% ann ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d 15.11.1977 read with G.O.Ms. No. 840, dated 14.10.1996, thereby giving the lease for 25 years instead of only five years and M/s. India Cements Limited (A7) was unduly favoured through this and A7, in furtherance of the above said criminal conspiracy and in quid-pro-quo for favours received, had paid illegal gratification to the tune of ₹ 140.00 crores in total, in the guise of investment, in the companies viz., M/s. Raghuram Cements Limited (Rs. 95.00 crores), M/s. Jagati Publications Limited (Rs. 40.00 crores) and M/s. Carmel Asia Holdings Private Limited (Rs. 5.00 Crores), owned by Sri Y.S. Jagan Mohan Reddy (A1), who was the ultimate beneficiary to the illegal gratification. 18. From the above, there is nothing against A3 of he played personal and specific role to make him liable and in the absence of which from his mere status as Managing Director of A7 cannot be made liable for any of the offences taken cognizance by the learned Special Judge from the transactions supra. It is also important in this context of G.O.Ms. No. 1484, dated 15.11.1977 is only applicable to the Telangana Area under Hyderabad Land Revenue Act for uniformity of the leases as it mentions spec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 's order did not mention the period of permission and the rate of water royalty to be fixed by the Government. The India Cements Limited (A7) applied only on 10.3.2008 for additional allocation of 13 Mcft water from River Kagna in addition to the already allocated 10 Mcft water to M/s. Visaka Cements. The Chief Engineer, Minor Irrigation forwarded the request for obtaining Government Orders, from Special Officer (Technical), Irrigation Command Area Development (I CAD) Department raised the following points to be ascertained as to the proposed enhancement will not affect Lower Upper Riparian Rights and does not exceed the restriction of 6 TMC, period of permission to be granted, whether the former company had paid royalty charges up-to-date and remarks of CE, ISWR on the proposal, the matter was needed to be referred to Inter State Waiter Resources (ISWR), terms and conditions of drawl of water in the earlier G.O.Ms. No. 244 namely period and royalty fixed, however Sri Adithyanath Das (A5) in furtherance of the criminal conspiracy, by breaching the trust reposed in him and by abuse of his official position, without referring the matter of allocation of water from Kagna Riv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f one year. The Executive Engineer, Nalgonda, recommended the request of India Cements Limited (A7) for enhancement of water to a tune of 10 lakh gallons per day by letter dated 23.2.2008 and the Superintendent Engineer, Irrigation Command Area Development, Irrigation Circle, Hyderabad by letter No. DEE-I/TS-2/7152, dated 12.3.2008 addressed to the Chief Engineer, Minor Irrigation, Hyderabad requesting the Chief Engineer to obtain necessary permission from the Government and the Chief Engineer, Minor Irrigation addressed a letter No. DCE(MI)/OT3-T4/India Cements/2008, dated 28.3.2008 to the Principal Secretary, Irrigation CAD, Department, Hyderabad stating that permission was accorded to India Cements Limited (A7) formerly M/s. Raasi Cement to draw water from Krishna River, downstream of Nagarjunasagar Dam near Wazirabad Village at the rate of 3 lakh gallons per day as per G.O.Ms. No. 408, Irrigation Power (Irrigation-II) Department dated 21.6.1979 and are paying royalty and for additional drawl from 3 lakh gallons to 10 lakh gallons per day sought from expansion of the cement plant. Same was circulated with note put up in C. No. 10548/Reforms/2008 on 3.4.2008 and the Special ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... increase the premium from ₹ 110/- to ₹ 1440/- (sudden raise of almost 12 times within a small time span of 9 to 10 months), except a simple statement that it is a bouquet of investments and India Cements Limited (A7) sold the shares at ₹ 671/- to M/s. PARFICIM, SAS, FRANCE on 14.4.2010 undergoing a loss of ₹ 26,85,50,489/- Even therefrom in saying the investments into M/s. Raghuram Cements Limited, M/s. Bharathi Cement Corporation Limited by M/s. India Cements Limited (A7) was nothing but a quid-pro-quo investment, there is nothing of any specific role of A3-petitioner, but for saying his status as Managing Director of India Cements Ltd., including in regard to in April, 2010 M/s. Pani Associates, Bangalore evaluated the share price of M/s. Raghuram Cement Corporation Private Limited at ₹ 221.17 Ps per share and the Board Resolution of India Cements Limited (A7) dated 14.04.2010 resolved to invest upto ₹ 125 crores by way of Inter Corporate Loans/Advance/Investment in M/s. Bharathi Cement Group whereas on the same day India Cements Limited (A7) had sold their stake 1803973 shares of ₹ 10/- each in M/s. Bharathi Cements Corporation Limit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the water and sources like run of the water or reservoir point of view, the recommendations were sent to the Government which examined the availability and the industrial use from the policy in issuing the G.Os. concerned, it also made clear from para Nos. 32 to 36 that the quantity required by India Cements Limited was relatively small even from the remarks of Chief Engineer, ISWR submitted to the Memo of Irrigation and CAD (PW-Reforms), preceded by recommendation of the Chief Engineer of sufficient quality of water available that also from report of Executive Engineer and Superintending Engineers concerned and what was accorded is from the savings from utilization within framework of Bachawat Tribunal allocations and within the water and industrial policy of the State pursuant to the Government Orders in vogue, leave about before acquisition by India Cements Limited, the earlier entities were even allotted the Water and the bona fide actions or conduct do not attract any liability under Prevention of Corruption Act muchless as misconduct or privy or abetment. 21. So far as the investment referred supra, in relation investment in Raghuram Cements of ₹ 90.00 Crores lim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ution dated 16.1.2008, which is no doubt subsequently some months later to the respective three cheques. Once such is the case, a lack of prior board resolution for the investment, when even subsequently a board resolution ratified the investment as part of the business activity in investing, therefrom nothing to attribute so far as against the petitioner/A3 concerned personally, that too when the Board resolution is there passed confirming the investment by its acceptance and not by opposing or questioning. Even coming to the investments made by India Cements of purchase of shares of 12,50,000 at purchase value of ₹ 120/- per share in Raghuram Cements Limited of ₹ 15.00 Crores covered by Board Resolution dated 16.1.2008 and the share certificates were dated 26.2.2008, similarly 2,09,147 shares at share value of ₹ 1,450/- each for a total of ₹ 30,32,63,150/- covered by Board Resolution of even date in Bharath Cements Corporation Limited and the share certificates were dated 14.8.2008. Needless to say again in Bharathi Cements Corporation Limited from 3,44,826/- shares with share value of ₹ 1,450/- total value ₹ 49,99,97,700/- as per Board Resolut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s accused and there is nothing to show how A3 is personally liable in the absence of his any active role with specific averments and material in showing the same. In fact, there was earlier Board resolution even generally dated 20.11.1996 apart from specific Board resolution dated 28.10.2009 in respect of Carmel Asia Holdings Limited ₹ 5.00 Crores, Sandur power of ₹ 8.50 Crores and R.R. Global of ₹ 12.00 Crores and for Jagati Publications of ₹ 40.00 Crores investment respectively authorizing to make the corporate investments upto ₹ 100.00 Crores which the C.B.I. could not dispute. In fact, once these are the investments made by India Cements and nothing personally by petitioner/A3 Srinivasan to make him personally liable in the absence of showing how personally privy or to make him liable. It is also to mention the investments in Raghuram Cements and Bharti Cements in the years 2008 and 2010 showing the purchase on average at ₹ 528.42 ps. and sold on an average at ₹ 671.20 Ps. of each share, but for on comparison of investment in Raghuram Cements in February, 2008 at ₹ 120/- per share, whereas in Bharti Cements in August, 2008 and Mar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ould not embark upon an enquiry as to whether evidence is reliable or not which is a function of trial Magistrate to appreciate as to the accusation is not sustained or not ultimately. It was also held in State of Orissa v. Saroj Kumar Sahu, (2005) 13 SCC 540 Para Nos. 11 and 14 that though no hard and fast rale can be laid down in exercise of the extraordinary jurisdiction of the High Court, but for to say it is not permissible for the High Court in exercise of the jurisdiction to act as if it was a trial Court but for prima facie to satisfy about existence of sufficient ground of accusation for proceeding or not and to evaluate the material for the limited purpose with reference to documents. 25. In Madhavrao Jiwaji Rao Scindia v. Sambhajirao Chandrojirao Angre and others, AIR 1988 SC 709 : (1988) 1 SCC 692, it was held at Para No. 7 that: The legal position is well-settled that when a prosecution at the initial stage is asked to be quashed, the test to be applied by the court is as to whether the uncontroverted allegations as made prima facie establish the offence. It is also for the court to take into consideration any special features which appear in a particular case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h enacts that an officer of the company who is in default shall be liable to any punishment or penalty, whether by way of imprisonment, fine or otherwise, the expression officer who is in default means all the following officers of the company, namely: (a) the managing director or managing directors; (b) the whole-time director or whole-time directors; (c) the manager; (d) the secretary; (e) any person in accordance with whose directions or instructions the Board of directors of the company is accustomed to act; (f) any person charged by the Board with the responsibility of complying with that provision: Provided that the person so charged has given his consent in this behalf to the Board; (g) where any company does not have any of the officers specified in clauses (a) to (c), any director or directors who may be specified by the Board in this behalf or where no director is so specified, all the directors: Provided that where the Board exercises any power under clause (f) or clause (g), it shall, within thirty days of the exercise of such powers, file with the Registrar a return in the prescribed form. Section 291. General Powers of Boar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 7 Company v. Turner, 1972 (2) Cha. 149, observed that the Directors are the mere trustees or agents of the Company and trustees of the Company money and principal agent in the transaction which they enter into or on behalf of the Company and concluded in R.K. Dalmia's case (supra), ultimately that Dalmia Chukkani were entrusted with dominion over the funds of Bharat Insurance Company in the banks. Said R.K. Dalmia placed reliance by two Judge Bench in Shiva Narain Laxman v. State of Maharashtra, AIR 1980 SC 419, where referring to Section 409 I.P.C. of the Director of a Company by placed reliance on R.K. Dalmia's case (supra), held that a Director is not only an agent but is in the position of trustee and being a trustee of the assets which has come into his hands, as dominion and control over the same and so far as criminal conspiracy concerned observed in Shiva Narain's case (supra) that a conspiracy is always hatched in secrecy and it is impossible to adduce direct evidence of the same and the offence can be only proved largely from the inferences to be drawn from acts or illegal omissions committed by the conspirator in pursuance of a common design. Though the pri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... D (Crl.) 775 (SC) : (2009) 8 SCC 751, particularly at para Nos. 24 to 28 by relying upon earlier expressions. 31. In this regard, regarding the basic ingredients required to satisfy for attributing criminal conspiracy, the Apex Court in Maharashtra State Electricity Distribution Co. Ltd. v. Datar Switchgear Ltd., (2010) 10 SCC 479, categorically held that merely on the basis of the appellant's status in the company, it could not be presumed that it is the appellant who became a party to the alleged conspiracy. Further the Constitution Bench expression of the Apex Court in Bhagwan Swarup Lal Bishan Lal v. State of Maharashtra, AIR 1965 SC 682, observed that the offence of conspiracy has to be established like any other offence but for Section 10 of the Indian Evidence Act introduces the doctrine of agency subject to conditions laid therein are satisfied for act done by one is admissible against coconspirators. But this Section will come into play only when the Court is satisfied that there is a reasonable ground to believe that two or more persons have conspired together to commit an offence or the actionable wrong that is to say there should be a prima facie evidence that a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , Panian Shanmugam v. State of Andhra Pradesh, (1991) SCC (Crl.) 84, of mercantile transactions consignments are delivered on credit and very often the payment cannot be made on due date that does not attract penal consequences. In Vimala v. Delhi Administration, AIR 1963 SC 1572 and State of U.P. v. Ranjit Singh,: 1999 (1) ALD (Crl.) 476 (SC) : (1999) 2 SCC 617, it was held further that to constitute the offence of Section 420 IPC there should not only the cheating but as a consequence of such cheating the accused should have been dishonestly induced the person deceived and the complaint must be by the person deceived or on his behalf. The criminal culpability to attract for certain specified acts alleged to have been done fraudulently or dishonestly to constitute an offence it cannot be assumed that the person committed the offence merely by alleging or showing that he acted fraudulently unless such a fraudulent act is specifically made an offence under IPC or some other law. The expression 'defraud' involves two elements of deceit and injury to the person deceived and such injury is something other than economic loss and it will include any harm caused to any person in b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... levant Paras 20 21 read that: 20. Indian Penal Code save and except some provisions specifically providing there for, does not contemplate any vicarious liability on the part of a party who is not charged directly for commission of an offence. A criminal breach of trust is an offence committed by a person to whom the property is entrusted. As, admittedly, drafts were drawn in the name of the company, even if appellant was its Managing Director, he cannot be said to have committed an offence under Section 406 of the Indian Penal Code. If and when a statute contemplates creation of such a legal fiction, it provides specifically there for. 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, as held in Sabitha Rama Murthy v. R.B.S. Channabasavaradha, (2006) 10 SCC 581. 21. We may, in this regard, notice that the provisions of the Essential Commodities Act, Negotiable Instruments Act, Employees' Provident Fund (Miscellaneous Provision) Act, 1952 etc., have created such vicarious liability. It is interesting to note that Section 14-A of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vided any provision exists in that behalf in the statute. Even for the said purpose to fix vicarious liability from a statutory provision, it is obligatory on the part of the complainant to make requisite allegations which would attract the provisions constituting vicarious liability . 38. This Court in Pepsi Foods Limited v. Special Judicial Magistrate, 1997 (2) ALD (Crl.) 840 (SC) : (1998) 5 SCC 749 at Para 28 held that summoning of accused in a criminal case is a serious matter. Criminal law cannot be set into motion as a matter course. It is not that the complainant has to bring only two witnesses to support his allegations in the complaint to have criminal law set into motion. The order of Magistrate summoning the accused must reflect that he had applied his mind to the facts of the case and the law applicable thereto. He has to examine the nature of allegations in the complaint and evidence both oral and documentary in support of thereof and to see would that be sufficient for the Complainant to succeed in bringing charge the home to accused. 39. It is not that the Magistrate is a silent spectator at the time of recording of preliminary evidence before summoning of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... page Nos. 98 to 100 in nutshell that a Company in many ways be like a human body they have a brain and nerve centre which controls what they do. Some of the people in the Company are mere servants and agents who are nothing more than hands to do the work and cannot be said to represent the mind or will. Others are directors and managers who represent directing the mind and will of the Company and control what they do. The state of mind of these managers is the state of mind of the Company and is treated the law as such. The fault of the manager will be the personal fault of the Company. The knowledge and intention must be imputed to the body corporate. It was concluded therefrom by referring to Standard Chartered Bank (para No. 6) supra of a Company is liable to be prosecuted and punished for criminal offences in deviation to the earlier authorities in India of Corporations cannot commit a crime, for generally accepted modern rule is that except for such crime as a corporation is held incapable of committing by reason of the fact that they involve personally with malicious intent, a corporation may be subject to indictment or other criminal process, although the criminal act is com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat a Director of a Company is in-charge of its every day affairs. It all depends upon the respective roles assigned. A company have managers or secretaries for different Departments and may have more than one Manager or Secretary. In Aneeta Hada's case (supra), it is observed with reference to Section 141 of N.I. Act that the deeming fiction therein makes the functionaries of the Companies to be liable as its own signification. In fact before Aneeta Hada, S.M.S. Pharmaceuticals, Standard Chartered Bank and Iridium India (supra), some of which referred in Sunil Bharti Mittal (supra), the expression of the Apex Court in Anil Hada v. India Accrelic Limited, 2000 (1) ALD (Crl.) 25 (SC) : (2000) 1 SCC 1, speaks in a case under Section 141 of the N.I. Act that even the Company or Corporation not impleaded as accused the proceedings against a Director can be issued. The same was later held as not good law in Aneeta Hada (I) v. Godfather Travels Tours (P) Ltd., (2008) 13 SCC 703 saying without the Company impleaded as accused on the principle of Lex non cogit ad impossibilia and from that legal snag if the Company is not made accused, the proceedings against others cannot be survive ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... part of a person and not merely on account of holding an offence or a position in a Company. The complaint therefore must disclose the necessary facts which make a person liable, specifically aver that at the time of offence committed, the person accused was incharge of and responsible for conduct of the business of the company. A Director cannot be deemed to be incharge of and responsible to the Company for the conduct of the business for no deemed liability of a Director from that status, unless the aforesaid requirement of Section 141 of the N.I. Act has been averred as a fact in the complaint. In another expression referring to Section 141 of the N.I. Act by the Apex Court in Saroj Kumar Poddar's case (supra), referring to S.M.S. Pharmaceuticals's case (supra), apart from other expressions that for dishonour of cheque making of requisite averments in the complaint is a statutory requirement and the allegations satisfy the same, in the absence of which the proceedings are liable to be quashed. The other expression of the Apex Court two Judge Bench in National Small Industries Corporation's case (supra), also referring to Parekh's case (supra) and S.M.S. Pharmaceu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he 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. l. There is also no specific allegation with regard to their role. 21. Apart from the fact that the complaint lacks necessary ingredients of Sections 405, 406, 420 read with Section 34 IPC, it is to be noted that the concept of 'vicarious liability' is unknown to criminal law. As observed earlier, there is no specific allegation made against any person but the members of the Board and senior executives are joined as the persons looking after the management and business of the appellant-Company. 44. In the latest expression of the Apex Court in Gunmala Sales Private Limited v. Anu Mehta, (2015) 1 SCC 103, it is held no doubt a case under Section 138 read with Section 141 of the N.I. Act, that the necessary requirements of the complaint which need to be indicated in the complaint are how , in what manner , the role , description and specific allegation as to the part played by a person before he could be made an accu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed in the charge-sheet as accused though the trial court has adequate powers to take cognizance and summon if found from perusal of charge-sheet and documents and other material placed with the charge-sheet disclosed sufficient prima facie material to proceed against such person as well, however where there is sufficient material or not be reflected in the order of the learned Magistrate. On facts it was held that the Special Judge for C.B.I. has not stated in the order that after examining of the final report with relevant documents and the statements of the witnesses satisfied on sufficient material incriminating to proceed against the police as well. The learned Special Judge did not record any reasons for his satisfaction to take cognizance on any incriminating material and even C.B.I. did not implicate the appellants in the final report. It is held further that the sine-qua non of taking cognizance for an offence is application of mind, for Special Judge's satisfaction of the allegations if proved constitute an offence and it is imperative from the complaint or on the police report. The Magistrate is bound to consider the question as to whether the same discloses commissio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issued on next day on 1.2.2002 as per the charge-sheet, investigation has also revealed that all this was done in haste to help M/s. Bharati Cellular Limited which had come out with Initial Public Offer (IPO) that was opened and it was not getting good response from the public as it had remained under-subscribed. The moment such a decision of allocating additional spectrum was taken on 31.1.2002, on the very next day, the issue got over-subscribed. In that charge-sheet filed, Mr. J.R. Gupta was not made accused as no material of any conspiracy or being a part of decision being attributed to him. 48. In this charge-sheet, the C.B.I. named Shyamal Ghosh the complainant and three companies namely Mr. Bharati Cellular Limited, M/s. Hatchison Max Telecom (P) Limited and M/s. Sterling Cellular Limited as accused persons in respect of offences under Section 13(2) read with 13(i)(d) of the P.C. Act and allied offences impleaded as accused persons in this charge-sheet one of the two appellants, Sunil Bharathi Mittal Chairman-cum-Managing Director of Bharati Cellular Limited, was interrogated but in the opinion of the C.B.I. case was not made out. The Special Judge in Para 2 of the impug ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appropriate orders in this behalf. Even if at this stage no such prima facie material is found, if in future such evidence surpasses against the appellant, the special Judge got liberty to exercise his powers under Section 319 of Cr.P.C. to rope all or any of the appellants by passing orders in accordance with law. For that conclusion the expressions referred are of Dharampal v. State, (2014) 3 SCC 206, Aneeta Hada v. Godfather Travels and Tours (P) Ltd. (supra), Iridium India Telecom Limited's case (supra), Maksood Sayed's case (supra), Sabita Rama Murthy supra, SMS Pharmaceuticals supra, Standard Chartered Bank supra among other expressions. 50. Now coming to the requirement of reasons showing judicial application of mind for taking cognizance from the expressions supra; from non giving reasons whether fatal or not concerned, no doubt in the latest Four Judges Bench expression of Sarath Mathew v. IOCVD, (2014) 2 SCC 62, in dealing with limitation to count from the date of filing and not from later date of taking cognizance, it was held that the phrase 'taking of cognizance', the application of mind by the learned Magistrate or Court to the suspected offence an ..... X X X X Extracts X X X X X X X X Extracts X X X X
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