Jharkhand High Court
Sidh Nath Mehra ? S.N.Mehra vs State Of Jharkhand Thr Cbi on 2 May, 2014
Author: R.R.Prasad
Bench: R.R.Prasad
In the High Court of Jharkhand at Ranchi
Cr.M.P. No.719 of 2011
1. Sidh Nath Mehra @ S.N.Mehra
2. Mahesh Mehra..................................Petitioners
VERSUS
State of Jharkhand through C.B.I.....Opposite Party
CORAM: HON'BLE MR. JUSTICE R.R.PRASAD
For the Petitioner: M/s. Indrajit Sinha and Rohit Roy
For the C.B.I : Mr. M. Khan
07 / 02.05.14. Heard learned counsel appearing for the petitioners and learned counsel appearing for the C.B.I on the interlocutory application bearing no.2476 of 2014 wherein prayer has been made to allow the petitioners to delete the name of petitioner no.1 as the petitioner no.1 during the pendency of this case has died.
In view of the submission, let the name of petitioner no.1 be deleted from the memo of petition.
In that event, this application shall confine only to petitioner no.2. Heard learned counsel appearing for the petitioner and learned counsel appearing for the C.B.I. This application has been filed for quashing fo the entire criminal proceeding of R.C.No.19(A) of 2009 including the order dated 4.2.2011 passed by the learned Special Judge, C.B.I, Ranchi whereby and whereunder cognizance of the offences punishable under Sections 120B, 420, 467, 471 of the Indian Penal Code and also under Section 13(2) read with Section 13(1)(d) of the Prevention of Corruption Act, 1988 has been taken against the petitioner.
Before adverting to the submission advanced on behalf of the parties, the case of the prosecution needs to be taken notice of.
It is the case of the prosecution that one company namely, M/s. Kaushalya Infrastructure Development Corporation Limited had been awarded work for strengthening Parwa-Garhwa Road ( 0 to 30 K.M). Under the agreement, the company was supposed to procure Bitumen from Government Oil Company. The Company, M/s. Kaushalya Infrastructure Development Cr.M.P.No.719 of 2011 -2- Corporation Limited submitted 59 invoices showing procurement of Bitumen from the Government Company for execution of the contractual work. Out of 59, 26 invoices were found tobe forged but the accused persons in connivance with the Engineers took payment of the amount covered under 26 invoices and thereby the Government was put to loss to the extent of Rs.1,03,95,583/-.
On such allegation, a case was registered against several Engineers of the Road Construction Department as well as M/s.Kaushalya Infrastructure Development Corporation Limited.
After completion of investigation, charge sheet was submitted wherein on amongst other the petitioner, namely, Mahesh Mehra, who happens to be one of the Directors of the Company was also made accused along with the Company. On submission of the charge sheet, cognizance of the offences as aforesaid was taken against the petitioner and other accused persons, vide order dated 4.2.2011 which is under challenge.
Mr.Sinha, learned counsel appearing for the petitioner submits that the Company, M/s.Kaushalya Infrastructure Development Corporation Limited is a reputed Company listed under Bombay Stock Exchange as well as National Stock Exchange and the petitioner is one of the Directors, who had nothing to do with the execution of the work, rather the Company had nominated one Nagwant Pandey to represent the Company relating to execution of the project and this Nagwant Pandey seems to have submitted three invoices which are said tobe forged and apart from that, rest of the invoices had been signed by one Om Prakash and had been submitted by Nagwant Pandey.
Thus, it is the case of the prosecution that on the basis of those invoices, payments were taken and thereby whatever allegations direct or indirect or circumstantial is there it is there against Nagwant Pandey, who allegedly upon submission of forged bills took payment of the bills amount but the petitioner is one of the Directors and without there being any Cr.M.P.No.719 of 2011 -3- allegation showing his involvement in the matter relating to execution of the work and then submission of forged bills, the prosecution of the petitioner is quite illegal.
Learned counsel in this respect submits that the petitioner, who happens to be one of the Directors seems to have been made accused on the principle of vicarious liability, though that principle in the nature of the offence would never be applicable and that unless and until there has been specific allegation against the Director of the Company relating to commission of offence, the Director cannot be held liable vicariously.
In this respect, learned counsel has referred to a decision rendered in a case of of S.K.Alagh vs. State of Uttar Pradesh and others [(2008) 5 SCC 662] and also in a case of Maksud Saiyed vs. State of Gujarat [(2008) 5 SCC 668] Thus, it was submitted that the order taking cognizance being bad is fit tobe quashed.
As against this, Mr.Khan, learned counsel appearing for the C.B.I by referring to the statement made in paragraph 9 of the counter affidavit submits that as per the agreement entered into in between the Engineers and the Company, 1245.968 M.T of Bitumen was required to be procured for execution of the awarded work but the accused persons having conspired with other accused persons, particularly Engineers procured less quantity of Bitumen from the Government Oil Company to execute the work. In order to execute the work, 59 invoices were submitted before the Department showing procurement of 963.635 M.T of Bitumen and not for total quantity of Bitumen which was required to be used in execution of the work. Out of 59 invoices, 26 invoices covering 560.959 M.T of Bitumen worth Rs.1,08,95,583/- were found to be forged. In that manner, the accused persons in conspiracy with other accused caused wrongful loss to the Government and correspondingly wrongful gain to the accused persons.
In the facts as stated above, it was submitted that when the C.B.I during investigation has found culpability of this petitioner, the order taking Cr.M.P.No.719 of 2011 -4- cognizance never warrants to be quashed.
As against this, Mr.Sinha, learned counsel appearing for the petitioner submits that whatever statement is there in paragraph 9 of the counter affidavit, that is not specific, rather it is general in nature whereas specific statement has been made in other paragraphs of the counter affidavit which would go to show that the C.B.I in course of investigation did find that one Nagwant Pandey had been nominated by the Company to look after the work which has been awarded to the Company and it was Nagwant Pandey, who had submitted three invoices which had been signed by him and further other invoices signed by Om Prakash had also been submitted by Nagwant Pandey and in that event, nothing specific is there against the petitioner showing his culpability and thus, it was submitted that the order taking cognizance is fit to be quashed.
Having heard learned counsel appearing for the parties and on perusal of the record, it does appear that initially FIR was lodged against the Company, namely, M/s.Kaushalya Infrastructure Development Corporation Limited as well as Engineers, who were suspected to have gone into collusion with the Company and that the Company had put the State exchequer to loss by drawing money on the basis of forged invoices. However during investigation, the Company as well as two of its Directors were made accused. One of them has died whereas other Director is the petitioner but he never seems to have done anything in the matter of execution of the work awarded to the Company as it is the case of the petitioner that one Nagwant Pandey had been nominated to look after the work awarded to the Company and this fact has been found to be correct by the C.B.I during investigation. As per the further case of the prosecution, Nagwant pandey after putting signature of three invoices had submitted before the Department for its payment and rest of the invoices which are said tobe forged had been signed by Om Prakash but it had been submitted Cr.M.P.No.719 of 2011 -5- by Nagwant Pandey and as per the case of the prosecution, it was Nagwant Pandey, who had taken payment of the amount covered under the forged invoices. In that event, entire culpability seems to have upon the said accused but the C.B.I has also submitted charge sheet against the petitioner simply for the reason that he happens tobe a Director as it has already been stated that nothing has been placed to show that this petitioner had done anything in the matter relating to execution of the work awarded to the Company or drawing money on the basis of forged invoices.
Thus, the question does arise as to whether under the circumstances, the petitioner can be prosecuted on the principle of vicarious liability for the commission of offence allegedly committed by the Company.
To answer this question, I need not to go too far away as the issue has already been decided by the Hon'ble Supreme Court.
In this regard I may refer to a decision rendered in a case of S.K. Alagh vs. State of U.P and others (supra) wherein it has been held as under:
"As, admittedly, drafts were drawn in the name of the Company, even if the appellant was its Managing Director, he cannot be said to have committed an offence under Section 406 of the Penal Code. If and when a statute contemplates creation of such a legal fiction, it provides specifically therefor. In 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."
Further one may take notice of a decision rendered in a case of Maksud Saiyed vs. State of Gujarat and others (supra) it has been observed as follows:
"Where a jurisdiction is exercised on a complaint petition filed in terms of Section 156(3) or Section 200 of the Code of Criminal Procedure, the Magistrate is required to apply his mind. The Penal Code does not contain any provision for attaching vicarious liability on the part of the Managing Cr.M.P.No.719 of 2011 -6- Director or the Directors of the Company when the accused is the Company. The learned Magistrate failed to pose unto himself the correct question viz. as to whether the complaint petition, even if given face value and taken to be correct in its entirety, would lead to the conclusion that the respondents herein were personally liable for any offence. The Bank is a body corporate. Vicarious liability of the Managing Director and the Director would arise provided any provision exists in that behalf in the statute. Statutes indisputably must contain provision fixing such vicarious liabilities. Even for the said purpose, it is obligatory on the part of the complainant to make requisite allegations which would attract the provisions constituting vicarious liability."
Thus, it has categorically been held that the Managing Director or the Director can be held vicariously liable for commission of the offence committed by the Company under any statute if that statute provides for that. Even in that case where statute contemplates prosecution of the Managing Director or the Director on account of principle of vicarious liability, it is obligatory on the part of the complainant to make requisite allegations which would attract the provisions constituting vicarious liability.
It be noted that Penal Code save and except some provision specifically providing thereof does not contemplate vicarious liability on the part of the party, if is not charged directly for commission of an offence.
Thus, it is quite evident that the petitioner in absence of any allegation showing his culpability in the offence cannot be prosecuted for the offence said to have been committed by the Company or other accused persons and thereby the court seems to have committed illegality in taking cognizance of the offence against the petitioner and hence, the order dated 4.2.2011 taking cognizance as well as entire criminal proceeding of R.C No.19(A) of 2009 is hereby quashed so far the petitioner is concerned.
Cr.M.P.No.719 of 2011-7-
In the result, this application stands allowed.
It goes without saying that the Company and other accused persons will be facing trial.
ND/ ( R.R. Prasad, J.)