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TMI Blog1997 (10) TMI 415X X X X Extracts X X X X X X X X Extracts X X X X ..... ng to the appellant/complainant, respondents 1 & 2 (hereinafter called the "contesting respondents") have committed offences under Section 120-B and 409 IPC read with Section 77 of the Companies Act. The contesting respondents are father and son. One Vadilal Lalbhai Mehta was the father of the first respondent Bipinbhai Vadilal Mehta. One Suhasbhai Vadilal Mehta was the brother of the first respondent. They entered into a memorandum of understanding on 30.1.1982 for dividing their properties. As per the said memorandum of understanding, the first respondent's family will be given management and control of M/s Sayaji Industries Ltd and M/s. C.V. Mehta Pvt. Ltd. On the other hand, the management and control of other companies, namely, M/s. Industrial Machinery Manufacturers Pvt. Ltd, M/s. C.Doctor. & Co. Pvt. Ltd. shall remain with Suhash Bhai Mehta, brother of the first respondent. As per the terms of the memorandum, the liabilities of M/s. C.V.Mehta Pvt. Ltd. towards other concerns amounting to ₹ 39 lacs and odd was to be discharged by the first respondent and his family and only after the Clarence of the said liability, the first respondent and his family could ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ces punishable under Section 120-B and 40 of IPC. On receipt of such complaint, the Judicial Magistrate, First Class, Ahmadabad (Rural) conducted an inquiry under Section 202 Cr. P.C. The learned Magistrate recorded statements of four witnesses. After considering the deposition of the said four witnesses and also the documents produced before him, the Magistrate was of the opinion that prima facie a case against the contesting respondents was made out for the offences punishable under Section 120-B and 409 IPC read with Section 77 of the Companies Act. Learned Magistrate was also of the view that the case has to be tried by the Sessions Court and accordingly he committed the case under Section 323 of Cr.P.C. to Sessions Court. The contesting respondents previously moved the Sessions Court for anticipatory bail while the proceedings were pending before the Magistrate. The learned Sessions Judge rejected that application for anticipatory bail. The contesting respondents moved the Gujarat High Court against the order of the Sessions Judge declining to grant anticipatory bail and also against the order of the Magistrate registering the case and committing the same for proceeding furt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he money was advanced from the funds of the company, it was for a definite purpose of getting it back to discharge the personal liability and this is sufficient to constitute an offence under Section 409. He further submitted that even though the contesting respondents were not in actual control and management of the company on the relevant date, they were in de facto control of management of the company and that was sufficient for making them liable under Section 409. In any case that was a matter for evidence and not a case for quashing. He emphasized that contesting respondents held dominion over the company's funds and the company having 67% public money, the transaction in question coupled with the manner in which it was carried out clearly or at least prima facie bring out an offence under Section 409 punishable under Section 120-B IPC. He further emphasized about the limited jurisdiction of the High Court under Section 482 of the Code of Criminal Procedure and according to him the High Court exceeded its jurisdiction in quashing charge and proceeding which was the result of preliminary inquiry held under Section 202 of Cr.P.C. Mr. Shanti Bhushan, learned Senior Counsel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... considered the arguments advanced by the counsel on both sides. We are of the view that the High Court was right in exercising the power under Section 482 Cr.P.C. and quashing the proceedings in this case. As noticed above, the High Court has given mainly three reasons in support of its conclusion. We feel that out of three reasons by the High Court the one reason with which we propose to deal with is more than sufficient to sustain the order of the High Court. Before giving our reasons, it is necessary to extract the relevant portions from the complaint itself. The pivotal point in the complaint finds a place in paragraph 8 of the complaint, which reads as follows:- "These accused persons in furtherance of the conspiracy made advances to a supplier M/s Santosh Starch Products situate at 71, New Cloth Market, Ahmedabad, as under:- Amount Rs. Date Cheque No. Bank's name 1.00 lacs 13.11.82 853901 PNB, Maskati 5.00 lacs -do- 853902 Mkt. Branch 5.00 lacs 25.11.82 853934 -do- -do- thus the accused persons in furtherance of conspiracy diverted the funds of M/s Sayaji Industries Ltd. to M/s Santosh Starch Products to the tune of ₹ 20.00 lacs. The co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ther allegations in the complaint which are given below: In paragraph 6, it is stated: "According to this Memorandum of Modification the accused persons were required to deposit ₹ 20.00 lacs immediately with M/s C.V. Mehta Pvt. Ltd. in order to acquire first the shares of M/s Sayaji Industries Ltd. In paragraph 7, the complaint has stated: "These accused persons with a dishonest and fraudulent intention, with a view to acquire and gain the management and control of M/s Sayaji Industries Ltd. diverted the funds of the company in a clandestine manner. The complainant/appellant herein in his affidavit in reply before the High Court in Crl. Misc. Application No.2627 of 1988, inter alia, had stated thus: "Thus said document also contained a recital that transfer of the management of Sayaji Mills Ltd. and the appointment of Shri Bipinbhai Vadilal Mehta and Shri Pribambhai Bipinbhai Mehta on the Board of Directors thereof are only to be made after Shri Bipinbhai Vadilal Mehta has paid and brought in C.V.Mehta Pvt. Ltd. the sum of ₹ 20.00 lacs. No doubt this document has been signed on 13th November, 1982 but it clearly transpires that move for this modifica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the institution or continuance of criminal proceedings against an accused person may amount to the abuse of the process of the court or that the quashing of the impugned proceedings would secure the ends of justice......................... Cases may also arise where the allegations in the First Information Report or the complaint, even if they are taken at their face value and accepted in their entirely, do not constitute the offence alleged; in such cases no question of appreciating evidence arises; it is a matter merely of looking at the complaint or the First Information Report to decide whether the offence alleged is disclosed or not. In such cases it would be legitimate for the High Court to hold that it would be manifestly unjust to allow the process of the criminal court to be issued against the accused person." We are firmly of the view that the above observations with all fours apply to the facts of this case in the light of the extracts given above from the complaint itself. The law laid down by this Court in K.P.Kapur's case has stood the test of time and held the field or more than three decades. This Court has applied the above ruling wherever the facts warr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y person to do so also constitute the offence of "Criminal Breach of Trust". Now upon reading the complaint, it becomes clear that it is the specific case of the complainant that the loan was advanced on 13.11.1982 by Sayaji Industries Limited to Santosh Starch Products alleged to have advanced the loan to the accused on the same day and thus, according to him, is an offence constituting of both criminal breach and trust and conspiracy. This, in my view, does not amount in law into an offence under section amount in law into an offence under section 409 as the ingredients of section 409 are not attracted. For attracting the provisions of Section 409 one has to allege that the breach of trust is committed by public servant or by banker, merchant or agent, broker or attorney. Reading the accused occupy any of these positions. In absence of these particulars in the complaint, in my view, the complainant has prima facie failed to make out the case against the petitioners, Similarly, it is clear from reading the complaint and other material on record that the complainant has failed to make out any case under section 120B or 409 of IPC." We are in agreement with the view ..... X X X X Extracts X X X X X X X X Extracts X X X X
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