Delhi High Court
Angad Paul And Ors. vs M.D. Jindal on 31 May, 2005
Equivalent citations: [2006]130COMPCAS381(DELHI), 122(2005)DLT44, 2005(83)DRJ353
Author: Manju Goel
Bench: Manju Goel
JUDGMENT Manju Goel, J.
1. This petition under Section 482 of the Cr.P.C. seeks quashment of order dated 4.11.2004 by which Shri V.K. Khanna, Metropolitan Magistrate, Patiala House has summoned the petitioners in CR No. 43/2004 under Section 409/468/471/477/477A/506 of the Indian Penal Code. Before coming to the grounds on which the relief is sought, it will be appropriate to narrate in brief the complaint.
2. The complainant Shr. M.D. Jindal is a shareholder, Chairman and Director of Caparo Maruti Ltd. (hereinafter referred to as CML) which is a public limited company which was promoted by the complainant sometime in 1994. The accused No. 7 Caparo India Ltd. (U.K.) is a part of Caparo Group of Companies of U.K. in which the accused No. 1 Shri Angad Paul, (petitioner No. 1 herein) has substantial shareholdings. He is also the director of CML. Accused No. 2 who is petitioner No. 2 is the Chairman of Caparo Group of Companies and is father of accused No. 1. Accused Nos. 3 (petitioner No. 3), accused No. 4 and accused No. 5 (petitioner No. 4) are the Managing Director, General Manager and Company Secretary-cum- Deputy General Manager (Finance) of CML respectively. The accused No. 3 is the Managing Director of CML and also associated with Caparo Group of Companies whereas accused No. 4 is the General Manager of the Caparo Maruti Ltd. and also is a director of Caparo India Pvt. Ltd. (CIPL) and Caparo India Development Pvt. Ltd. (CIDPL). Accused No. 6 who is petitioner No. 5 herein is the director of CML as also of the Caparo India Ltd. Accused No. 8 is Caparo India Pvt. Ltd. (CIPL) whereas accused No. 9 is Caparo India Development Ltd. (CIDPL), while accused No. 10 is Caparo Engineering India Pvt. Ltd. (CEIPL). The accused Nos. 7, 8, 9 and 10 are controlled and managed by accused Nos. 1 & 2 along with other accused as mentioned above. It is alleged by the complainant that the funds of CML are being siphoned off into accused Nos. 7,8, 9 and 10 by circular transactions and forgery. According to the complainant accused No. 8 & 9 are said to be only paper companies while accused No. 10 is owned and controlled by the Caparo Group of Companies. CML is said to be a company with a share capital of Rs. 20.00 crores. 60% of the shareholding is with the Jindal Group consisting of the complainant and members of his family. The story of the complainant is that in the Annual General Meeting of the CML dated 30.9.2003 the complainant tried several times to raise certain relevant queries regarding the functioning of CML and tried to register certain observations and protests by virtue of his being the shareholder and the Chairman of the company as also by virtue of an order dated 29.9.2003 of the Company Law Board but he was forced to leave the meeting being abused and intimidated by the other accused persons present in the meeting. Accused Nos. 1 & 2 were particularly intimidating and the accused No. 1 also subsequently threatened the complainant of being killed. The complainant then lodged a report with the police station, New Friends Colony against the accused alleging offence of cheating, criminal breach of trust, forgery etc. In the meeting dated 30.9.2003 accused No. 1 pretended to preside over the meeting despite the presence of the complainant and instigated the other accused to condemn and abuse the complainant. The police did not take any action despite a complaint. The complainant then filed the complaint with the same averments as mentioned in his report to the police. The sum and substance of the averments given to the police are as under :
3. On or about November and December, 2001 the accused Nos. 1, 2, 3, 4, 5 & 6 who were entrusted with the funds of CML hatched a conspiracy to misappropriate and divert the funds of the CML to their own use. A loan of Rs. 7.00 crores has already been advanced to accused No. 7 (CIL) in December, 2001. In the Board meeting of 17.12.2001 the loan of Rs. 2.07 crores was further extended by the Board of Directors of CML on the insistence of accused Nos. 3,4 & 5 who had acted at the instance of accused Nos. 1, who himself was absent, although at that time the CML itself had extensive borrowings from the market and the complainant had objected to the extension of the loan. The minutes of the meeting dated 17.12.2001 were not sent to the complainant by the accused No. 5 who was in conspiracy with the accused Nos. 1, 2, 3 & 4. For the meeting of 18.1.2002 the notice to the complainant was deliberately short so as to prevent the complainant from attending the same. The accused No. 1 signed the minutes of the meeting dated 17.12.2001 despite the fact that he himself was absent in the meeting and thereby caused an extension of the loan. Further in the meeting dated 18.1.2002 a further sum of Rs. 2.95 crores and Rs. 4.5 crores were transferred to the accused Nos. 8 and 9 companies which are controlled by accused Nos. 1 & 2 and the funds were siphoned off from the account of CML and were converted to the use of the accused. The complainant suspecting dishonest and fraudulent intentions on the part of the accused No. 1 by letter dated 16.1.2002 addressed to the Company Secretary of CML requested to record his distress about the inadequate notice and lack of agenda for the meeting of 18.1.2002. Further, the accused No. 5 falsified documents by replacing the minutes of the Board meeting held on 27.5.2002 and 27.8.2002 with minutes not signed by the complainant. Similarly in the meeting of 14.12.2002 the draft minutes as circulated by the complainant were falsified and fabricated by the accused No. 5 in conspiracy with accused Nos. 1, 2, 3, 4 & 6 and those minutes were subsequently signed and confirmed by accused No. 1, although the accused No. 1 was not present in the meeting of 14.12.2002. In the Board meeting of 7.2.2003 the complainant again protested to the lack of discloser of interest of the accused Nos. 8 & 9 by the directors and to several discrepancies in the minutes of earlier meetings. Accused Nos. 1 to 6 in order to attain their objective of misappropriating and diverting the funds of CML then connived to remove the complainant from the seat of the Chairman. Accused No. 1 in collusion with the accused Nos. 2 to 6 fraudulently antedated documents by forging minutes of the meetings dated 27.5.2002, 27.8.2002, 16.9.2002, 14.12.2002 and 7.2.2003. Hence the complaint under Sections 120B read with Sections 409/468/471/477/477A/506 IPC.
4. The complaint was received by the Magistrate on 1.6.2004. One witness was examined on 6.8.2004 and two more on 1.10.2004. The Magistrate heard arguments on 1.10.2004, 29.10.2004 and on 4.11.2004. The impugned order of summoning was passed on 4.11.2004. In his three page order the Magistrate took note of the allegations that A-8 was a shell company to whom loan of Rs. 2.95 crores has been illegally diverted, that 99.9% of the paid up capital of A-10 was owned by A-9, that A-9 itself is a shell company to whom loan of Rs. 4.5 crores has been advanced and that A-10, that is, Caparo Engineering Pvt. Ltd. was in competing business of Caparo Maruti Ltd. He also took note of the allegations about notice for the meetings of 30.9.2003 being too short deliberately and of the other allegations of forgery and intimidation made by the complainant. He accordingly summoned the above accused.
5. In the present petition it is, inter alia, alleged that the allegations made by the complainant are false. The petitioners have given a detailed account of the facts as they perceived them. They also allege forgery, falsification of accounts and other offences against the complainant. Neither counsel dispute the legal situation that in proceedings under Section 482 of the Cr.P.C. only the allegations in the complaint have to be seen and the court can not adjudicate the facts on the basis of rival contentions. For the purpose the present petition it may be relevant to mention that the accused also had initiated certain proceedings against the complainant in the High Court and in the court of Metropolitan Magistrate. The aspect on which lot of emphasis has been placed is an order dated 19.8.2004 which was passed by the Company Law Board. In this order, as narrated in the petition under Section 482 of the Cr.P.C. itself, the Company Law Board has gone into some of the allegations made in the complaint and has observed that the meeting of 18.1.2004 was convened after due notice and further that the loans granted to CIPL and CIDPL were on competitive rates when compared to the borrowing rates in the market and particularly the rate at which CML itself had borrowed money from ICICI. It is alleged that the complainant/respondent had concealed material facts from the Metropolitan Magistrate in obtaining the order of summons against the petitioners. It is alleged that the petitioner having failed to be elected as Chairman of the company out of mala fide intention and as an act of vengeance filed the criminal proceedings. It is alleged, inter alia, that the complainant concealed from the court, apart from the proceedings before the Company Law Board the proceedings arising out of the civil suit in the High Court being Suit No. 611/2003, a criminal complaint filed by Caparo India Ltd., U.K. before the ACMM, Tis Hazari and the arbitration proceedings initiated by CML against the respondent in August, 2003. The complaint is alleged to have been a counter blast of the proceedings initiated by the petitioners. It is then contended that the allegations in the complaint do not constitute a forgery, criminal breach of trust or intimidation. In this context again the petitioners have narrated certain facts in order to assert that nothing has been done by the petitioners which could make them guilty of such offences. Further it is alleged that the complaint suffers from unexplained delay and laches and that the Metropolitan Magistrate has passed the order without due application of mind. On behalf of the complainant it is submitted that there was no civil or criminal litigation pending between the parties except the one in which the impugned order was passed and that the complainant came to know only recently about the other criminal proceedings in which he has put in his appearance and has obtained bail. It is further submitted that the complaint taken on its face value discloses commission of cognizable offences and the Magistrate took cognizance after due application of mind. However, it is denied that proceedings were initiated with mala fide or with the oblique purpose of wreaking vengeance. It is further submitted that the complaint relates to colossal fraud committed by the petitioners over 7.5 crores of rupees and that such an offence cannot be a dispute of civil nature not amenable to criminal procedure. On law it is submitted that power under Section 482 Cr.P.C. has to be used in the rarest of rare case and that it is not a suitable case in which such power can be used.
6. The scope of Section 482 Cr.P.C. has been enunciated by the Supreme Court in various judgments. I prefer to refer to the case of Zandu Pharmaceutical Works Ltd. and Ors. v. Mohd. Sharaful Haque and Anr. (2005) 1 SCC 122 in which the principles governing the use of Section 482 as developed by various judgments of the Supreme Court have been reiterated. Referring to the judgment in the case of R.P. Kapur v. State of Punjab AIR 1960 SC 866 it was recalled that the such power should be used to quash the proceedings:
(i)Where it manifestly appears that there is a legal bar against the institution or continuance e.g. want of sanction;
(ii)Where the allegations in the first information report or complaint taken on its face value and accepted in their entirety do not constitute the offence alleged;
(iii) Where the allegations constitute an offence, but there is no legal evidence adduced or the evidence adduced clearly and manifestly fails to prove the charge;
7. Again recalling the illustrative categories enunciated in State of Haryana v. Bhajan Lal 1992 Supplement (1) SCC 335 the Supreme Court recalled paragraph 102 of the judgment which is as under:
"102. (1) Where the allegations made in the first information report or the complaint, even if they are taken at their face value and accepted in their entirety do not prima facie constitute any offence or make out a case against the accused.
(2) Where the allegations in the first information report and other materials, if any, accompanying the FIR do not disclose a cognizable offence, justifying an investigation by police officers under Section 156(1) of the Code except under an order of a Magistrate within the purview of Section 155(2) of the Code.
(3) Where the uncontroverter allegations made in the FIR or complaint and the evidence collected in support of the same do not disclose the commission of any offence and make out a case against the accused.
(4) Where, the allegations in the FIR do not constitute a cognizable offence but constitute only a non-cognizable offence, no investigation is permitted by a police officer without an order of a Magistrate as contemplated under Section 155(2) of the Code.
(5) Where the allegations made in the FIR or complaint are so absurd and inherently improbable on the basis of which no prudent person can ever reach a just conclusion that there is sufficient ground for proceeding against the accused.
(6) Where there is an express legal bar engrafted in any of the provisions of the Code or the Act concerned (under which a criminal proceeding is instituted) to the institution and continuance of the proceedings and/or where there is a specific provision in the Code or the Act concerned, providing efficacious redress for the grievance of the aggrieved party.
(7) Where a criminal proceeding is manifestly attended with mala fides and/or where the proceeding is maliciously instituted with an ulterior motive for wreaking vengeance on the accused and with a view to spite him due to private and personal grudge."
It may be added further that these illustrative categories were never taken to be exhaustive.
8. In the present case there can be no dispute that there is no legal bar against institution or continuance of the complaint. Nor can it be said that the allegations in the complaint taken on its face value and accepted in their entirety do not constitute an offence. There are allegations of forgery as well as criminal intimidation apart from conspiracy and criminal breach of trust. It cannot be said that no evidence has been produced before the Magistrate to justify issue of summons. As stated earlier three witnesses were examined by the Magistrate and the Magistrate after examining the statements of the three witness and hearing the counsel has passed the impugned order. The petitioners' case is that the complaint is false, that no offence is made out, that the complaint is highly belated and that it is mala fide. The main argument for quashing the complaint is that the complaint is manifestly mala fide, aimed at wreaking of vengeance with a view to spite the accused due to private and personal grudge.
9. It is true that the complainant has been unseated and, therefore, he may have a grudge against the accused. But can it be said that complaint itself discloses that it is manifestly attended with mala fides and is instituted with ulterior motive of wreaking vengeance? The mere fact that the complainant has been unseated does not necessarily make his complaint bad. The complainant has made allegations of repeated acts of forgery and falsification of documents.
10. So far as mala fides are concerned the same become important only when the complaint is patently false so that the mala fides are also manifest on the complaint itself. Non disclosure of the order dated 19.8.2004 is set up as a sign of mala fides. It is true that by the time process was issued by the court the order of Company Law Board dated 19.8.2004 had already been passed. This order deals with the meeting dated 18.1.2002 and with the complainant's objection to the sanction of loan to the aforesaid shell companies. There is, however, no finding about the allegations of falsification of records, particularly the minutes of the meeting and other documents in which the objection of the complainant to the aforesaid loans were required to be recorded. The criminal offences were not within the competence of the Company Law Board to adjudicate.
11. In the case of Bhajan Lal (supra) the Supreme Court recalled its earlier judgment in Sheonandan Paswan v. State of Bihar, (1987) 1 SCC 238 in which it was observed:
"It is well established proposition of law that a criminal prosecution if otherwise justifiable and based upon adequate evidence, does not become vitiated on account of mala fides or political vendetta of the first information or the complaint."
12. A word of caution was however added for persons coming with a totally malicious and false complaint viz. of prosecution under Section 182, 211 & 500 of the IPC as well as a civil action for damages.
" In a given situation, false and vexatious charges of corruption and venality may be maliciously attributed against any person holding a high office and enjoying respectable status thereby sullying his character, injuring his reputation and exposing him to social ridicule with a view to spite him on account of some personal rancour, predilections and past prejudices of the complainant. In such a piquant situation, the person who dishonestly makes such false allegations is liable to be proceeded against under the relevant provisions of the Indian Penal Code - namely under Section 182 or 211 or 500 besides becoming liable to be sued for damages."
13. In these circumstances, I do not find it proper to hold that the complaint is fraught with manifest mala fides and that, therefore, it has to be quashed.
14. No limitation is prescribed for prosecution of offence under Section 468 or 471 of the Cr.P.C. A series of offence of forgery has been alleged in the complaint and the last such offence was allegedly committed in February, 2003. It will not be possible to throw out the complaint on account of such delay because although the delay does exist it cannot be said to be so great as to defeat the complaint itself. In fact the complaint was made to the police at the first instance on 31.9.2003. The complaint was subsequently filed in June, 2004 only after the police failed to act.
15. It has been contended on behalf of petitioner No. 2 that he was never present in any of the meetings and, therefore, could not have been a party to the controversy. In response it is stated that the offence of conspiracy can be committed even being absent from the scene and, therefore the mere fact that he was never present in any of the meetings will not be sufficient to discharge him.
16. The next question is which offences have been made out. The Magistrate has mentioned the offence under Sections 120B read with Section 409/468/471/477/477A/506 IPC. It is a warrant friable case and the Magistrate will have ample opportunities to hear the two parties at the time of arguments on charge. The Magistrate has already discharged the accused Nos. 7 to 10 as they are companies and could not have been involved in such offences. In exercise of power under Section 482 Cr.P.C., this Court cannot take upon itself the responsibility of the trial court in framing charge. No meticulous examination of the evidence available can be made here as if this Court is framing charge. It is sufficient to say for now that an offence has been made out and the complaint cannot be quashed. The trial court will hear the parties at the appropriate stage and come to a decision which offence is made out against whom. Hence I dismiss the petition under Section 482 of the Cr.P.C. but leave it open to the Magistrate to form his independent opinion at the time of framing of charge as to which accused can be charged with which offence or offences, and for that purpose this order will not be deemed to have expressed any opinion. The parties shall also be free to submit before the trial court as to which particular offences have been made out in the complaint and which of the accused can be charged for the same.