Jharkhand High Court
Parimal Kumar Singh @ Bhupendra Singh vs The State Of Jharkhand on 16 January, 2020
Author: Anubha Rawat Choudhary
Bench: Anubha Rawat Choudhary
1
IN THE HIGH COURT OF JHARKHAND AT RANCHI
Cr.M.P. No. 1892 of 2014
Parimal Kumar Singh @ Bhupendra Singh, son of Dhiren Prasad
Singh, resident of Chitralay, Karhanibag Road, Deoghar, P.O. & P.S.-
Deoghar, District- Deoghar (Jharkhand)
...... Petitioner
-Versus-
The State of Jharkhand, through the C.B.I. ... Opp. Party
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CORAM: HON'BLE MRS. JUSTICE ANUBHA RAWAT CHOUDHARY
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For the Petitioner : Mr. A.K. Kashyap, Senior Advocate
Mr. D.K. Dubey, Advocate
For the Opp. Party : Mr. Rohit Sinha, Advocate
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7/16.01.2020
1. Heard Mr. A.K. Kashyap, the learned Senior counsel appearing on behalf of the petitioner alongwith Mr. Dhananjay Kumar Dubey, Advocate.
2. Heard Mr. Rohit Sinha, the learned counsel appearing on behalf of the opposite party-C.B.I.
3. This petition has been filed for quashing the entire criminal proceeding in connection with R.C. Case No. 5/(A) of 2013-D registered for committing an offence punishable under Section 120B read with Section 420, 467, 468 and 471 of the Indian Penal Code and Section 13(2) read with Section 13(1)(d) of the Prevention of Corruption Act, 1988 including the order taking cognizance dated 09.07.2014 whereby and whereunder the learned Special Judge, CBI- cum-1st Additional Sessions Judge, Dhanbad has been pleased to take cognizance against the petitioner and others for the offences punishable under Section 120B read with Sections 420, 468 and 471 of the Indian Penal Code and Section 13(2) read with Section 13(1)(d) of the Prevention of Corruption Act, 1988.
Arguments on behalf of the Petitioner
4. The learned Senior counsel for the petitioner submitted that the petitioner, as well as the company in which the petitioner is a Director and also one of the employees of the company have been made accused in the present case alongwith two government 2 officials. Learned Senior counsel submitted that the petitioner has been made accused only because the petitioner is a Director of the accused company, although there is no role played by the petitioner in the commission of alleged offence. The petitioner has been made accused by virtue of alleged vicarious liability. Learned Senior counsel submitted that there is no concept of vicarious liability under the Indian Penal Code and if under any Statute or enactment, vicarious criminal liability is to be alleged, the same is governed by the Special Statute. Learned Senior counsel submitted that in view of the fact that the petitioner has been vicariously made liable to face the prosecution alongwith the company there being no overt act alleged on the part of the petitioner, the entire criminal proceeding as against the petitioner is fit to be set aside. Learned Senior counsel further submitted that there is no substantive evidence against the petitioner and the petitioner has been made accused with the aid of Section 120(B) of the Indian Penal Code.
5. By referring to the Charge-sheet, the learned Senior counsel submitted that there is no allegation in the Charge-sheet that the petitioner had hatched any conspiracy and there is no allegation of forgery against the petitioner. Learned Senior counsel further submitted that so far as allegation of cheating is concerned, there is no allegation that the petitioner had any intention to cheat right from the inception i.e. right from the stage of entering into the contract with Eastern Coalfields Ltd. (E.C.L.) and there has been no loss to the E.C.L. in as much as the amount of loss which is alleged against the accused company has already been adjusted/paid to the E.C.L..
For this purpose, the learned Senior counsel referred to the Letter dated 30.07.2014 issued by the E.C.L. and submitted that against the work order which was issued to the accused company dated 10.03.2011, recovery/adjustment has been made on the basis of written instruction of the Chairman-cum-Managing Director of the Eastern Coalfields Ltd. vide office order dated 27.05.2013 and the details of recoverable amount has been mentioned as Rs. 14,83,351.22 3 and as per the letter, the balance recovery amount of Rs. 95,539.02 was adjusted against the bills after receipt of clarification from the Vigilance Department. Learned Senior counsel submitted that as the entire alleged loss to the E.C.L. was recovered from the company and the E.C.L. did not lodge any complaint before the CBI, the CBI was not justified in taking up the case suo moto upon receipt of certain secret information.
6. Learned Senior counsel for the petitioner has further submitted that from perusal of the Charge-sheet, it appears that co-accused namely, Ajit Kumar Ray was representative / staff / supervisor on behalf of the company for executing the work vide Affidavit dated 27.06.2008 and accordingly, the entire responsibility to execute the work was upon the staff /supervisor Ajit Kumar Ray who was apparently looking about the day-to-day affairs of the company. There being no overt act alleged against the present petitioner, the entire criminal proceeding against the petitioner, who has been made accused only on account of vicarious liability being the Director of the co-accused company, is fit to be quashed.
7. The learned Senior counsel appearing on behalf of the petitioner has also referred to Paragraph Nos. 9 and 29 of the counter affidavit to submit that the statements made therein are inconsistent and the specific case is that the petitioner has been made accused only by way of vicarious liability of the company and there is no overt act, so far as the petitioner is concerned.
8. Learned counsel for the petitioner has relied upon following judgments: -
(i) (2008) 5 SCC 662 Paragraph-21 (S.K. Alagh vs. State of Uttar Pradesh and Others);
(ii) (2008) 5 SCC 668 (Maksud Saiyad vs. State of Gujarat and Others)
(iii) (2013) 1 SCC JBCJ 10 (Satyendra Nath Tiwari @ Satyendra Tiwary vs. Union of India through C.B.I.)
(iv) (2013)2 Eastern Criminal Cases 326 (S.C.) (M/s. GHCL Employees Stock Option Trust -Versus- M/s. India Infoline Limited) Paras-12, 13, 14, 19 and 20. This case is also reported in (2013) 4 SCC 505.
(v) (2011) 13 SCC 412 Paragraph-37, 38, 39 and 42 (Thermax Limited and Others -Versus- K.M. Johny and Others) 4 Arguments on behalf of the Opposite Party-C.B.I.
9. The learned counsel for the C.B.I. submitted that upon perusal of the materials on record, it is apparent that the work was given pursuant to the N.I.T. dated 21.10.2010 and the work order is dated 21.03.2011. He referred to the Charge-sheet and submitted that during the course of investigation, specimen signatures/writings have been sent for verification to Kolkata vide letter dated 21.12.2014 in respect of petitioner as well as said employee of the accused company namely, Ajit Kumar Ray, although the expert opinion in connection with the signatures is awaited, it has also been recorded in the charge-sheet that their signatures on the measurement book/ bills/ vouchers/ cheques/deposit slips have been confirmed by the witnesses.
10. The learned counsel submitted that the aforesaid recordings in the Charge-sheet indicates that the documents in connection with the execution of work and payment of bills etc. contains the signatures of the petitioner as well as the co-accused namely, Ajit Kumar Ray and accordingly, at this stage, it cannot be said that the petitioner had no role to play in the alleged commission of offence. He submitted that it has been clearly alleged that there has been false measurement book, false and fraudulent bills for making payment in respect of unexecuted work. Learned counsel submitted that plea of the petitioner that he had no role to play, has to be examined by the learned court below at appropriate stage. He further submitted that considering the allegations which are reflected in the Charge-sheet, the active role of the petitioner in the commission of offence cannot be disputed. Learned counsel further submitted that the petitioner may raise these points at appropriate stage before the learned court below and it cannot be said that ex-facie, no criminal case is made out against the petitioner.
11. Learned counsel for the Opposite Party-C.B.I. has relied upon a judgment passed by the Hon'ble Supreme Court which is reported in (2015) 4 SCC 609 (Sunil Bharti Mittal vs. Central Bureau of Investigation) and has referred to its Paragraphs-42 and 43 which deals with the 5 circumstances when Director / person in charge of the affairs of the company can also be prosecuted when the company is accused person. He submitted that it has been held by the Hon'ble Supreme Court that no doubt a corporate entity is an artificial person which acts through its officers/Director/Managing Directors/Chairman etc., but if such a company commits an offence involving mens rea, it would normally be the intent and action of the individual who would act on behalf of the company. It would be more so when the criminal act is that of conspiracy. However, at the same time, it is cardinal principle of criminal jurisprudence that there is no vicarious liability unless the statute specifically provides for it. Accordingly, the Hon'ble Supreme Court in the aforesaid judgement has held that individual, who has perpetrated the commission of an offence on behalf of the company, can be made accused alongwith the company, if there is sufficient evidence of his active role coupled with criminal intent. The 2nd situation in which he can be implicated in those cases is where the statutory regime itself attracts the doctrine of vicarious liability by specifically incorporating such a provision. Accordingly, the learned counsel for the CBI has submitted that the present case is a case of criminal conspiracy leading to falsification of measurement book, bills, etc. which has ultimately resulted in payment and benefit to the company. Accordingly, at this stage, it cannot be said that petitioner had no role to play and the petitioner has been made accused merely because the petitioner is a Director of the company.
Rejoinder arguments on behalf of the petitioner
12. Learned Senior counsel appearing on behalf of the petitioner, in response, also relied upon the judgment passed by the Hon'ble Supreme Court reported in (2015) 4 SCC 609 (Sunil Bharti Mittal vs. Central Bureau of Investigation) and referred to its Paras-40 and 41 to submit that it has been held by the Hon'ble Supreme Court that being a person or group of persons who control the affairs of the company, commit an offence with the criminal intent, there criminality can be imputed to the company as well, as they are "alter ego" of the 6 company, but the reverse scenario is not permissible, in as much as, there is no principle of vicarious liability under which the Director of the company can be held liable for offences under Indian Penal Code. He submitted that the judgement relied upon by the opposite party is in favour of the petitioner.
Findings of this court
13. This court finds that as per the Charge-sheet, on 19.06.2012, an enquiry was conducted by the Vigilance Department of the Eastern Coalfields Ltd. in connection with the irregularities in strengthening / construction of road at Jamatara Railway Siding , S.P. Mines Area by the contractor company( hereinafter referred to as the accused company) and found shortage of work, irregularities in measurement of work by two officers of the Eastern Coalfields Ltd. (hereinafter referred to as the coal company). The award of work was given to the accused company vide N.I.T. dated 28.12.2010 and the work order was issued on 10.03.2011.
14. There is an allegation against the accused persons namely, Shri H.K. Prasad , Engineering Assistant (Civil); Vinod Prasad, the then Area Engineer (Civil), both of concerned mines area of Eastern coalfields limited , Chitra having entered into criminal conspiracy with the petitioner, who is the Director and Chairman of the accused company, Shri Ajit Kumar Ray who is Staff/Supervisor of the accused company as well as the accused company namely, M/s Bhupendra Engineering & Construction (P) Ltd. represented through its Director and Chairman Shri Parimal Kumar Singh (petitioner) for preparing false measurement book, false and fraudulent bills and for making payments in respect of unexecuted work and cheating thereof by abusing their respective official positions and commission thereof.
15. It has also been mentioned in the charge-sheet that during course of investigation, the specimen signatures/writings have been sent to the GEQD, Kolkata vide office letter dated 12.05.2014 in respect of the petitioner and aforesaid co-accused Shri Ajit Kumar Ray, both of the 7 accused company and the expert opinion of GEQD on said specimen signatures/writings are awaited. It has also been mentioned in the charge-sheet that their signatures on Measurement Book, bills, vouchers, cheques, deposit slips etc. have been confirmed by the witnesses. The charge-sheet clearly mentions that the sanction for prosecution has been duly accorded by the competent authority against Shri H.K. Prasad, Engineering Assistant (C) SP Mines Area, Chitra and sanction for prosecution as against Shri Vinod Prasad, then Area Engineer (Civil), SP Mines Area is still awaited.
16. It has been alleged that the investigation of the case prima-facie discloses commission of offences punishable under Sections 120-B, 420, 468, 471 IPC & Section 13(2) read with 13(1)(d) of the Prevention of Corruption Act, 1988 and accordingly, altogether five persons i.e. the accused company, Director/Chairman of the accused company, staff/supervisor of the accused company and two employees of the coal company were charge-sheeted. There is an allegation of conspiracy amongst five accused for commission of the alleged offences. The records of the case indicate that vide order dated 09.07.2014, cognizance of offence was taken against all the five accused persons under Sections 120-B, 420, 468, 471 of IPC & Sections 13(2) read with 13(1)(d) of the P.C. Act, 1988. It appears that by this time, sanction for prosecution of Shri Vinod Prasad was also received.
17. It was also found during investigation that the petitioner was the Director/Chairman of the accused company and the petitioner, by an Affidavit dated 27.06.2008 had authorised Ajit Kumar Ray, representative/staff supervisor on behalf of the company for executing the work. However, the petitioner has not filed a copy of the said affidavit for perusal of this court. The work, in connection with which the present case has been instituted is related to N.I.T. dated 28.12.2010, work order was issued on 10.03.2011, work commenced on 11.03.2011 and completed on 10.07.2011.
18. It is alleged that the measurement of the said work was falsely noted 8 in the measurement book which was accepted by the co-accused namely, Shri Ajit Kumar Ray (the said staff/supervisor of the accused company) and the same was falsely certified by the co-accused officers of the coal company, the measurement book was certified by the co-accused officers of the coal company on 30.07.2011 and the same was accepted by Shri Ajit Kumar Ray. It is alleged that the first running bill of the work was raised for an amount of Rs. 5,39,369.62 and was cleared for an amount of Rs. 4,90,560.00 and the second and final bill was raised for an amount of Rs. 37,25,905.49 and the same was passed for the same amount by the Finance Department and after adjustment under all heads, an amount of Rs. 30,59,353.00 was calculated as payable amount on 23.08.2011. Prior to 23.08.2011, on 28.02.2011, a committee comprising of the officers of the coal company was constituted to inspect all the civil works done by the civil contractors and the said committee submitted its report on 31.03.2011 and 12.08.2011 in respect of both the bills raised by the accused company on the basis of visual inspection made by the committee. Investigation further revealed that both the bills of the accused company were false bills alleged to be dishonestly and fraudulently prepared, certified, finalized and forwarded by the co- accused officers of the coal Company and payment was made vide two cheques to the accused company. It is alleged that the petitioner dishonestly and fraudulently received the payment of the amount by depositing the two cheques in the account of the company and investigation revealed that the company did not complete the work as per the work order and executed less work. It is alleged in the Charge-sheet that the investigation discloses that the measurement towards the said work were dishonestly and fraudulently shown and noted in excess in the measurement book and false bills were prepared and certified by the officers of the coal company in criminal conspiracy with private persons i.e. the petitioner and Shri Ajit Kumar Ray. It is alleged that there has been a loss of Rs. 16,04,987.00 to the coal company due to the conspiracy of the accused persons.
919. It has also been recorded in the Charge-sheet that during course of investigation, specimen signatures/writings have been sent to Kolkata vide Letter dated 12.05.2014 in respect of the present petitioner and the co-accused, Shri Ajit Kumar Ray, both of the co- accused company and expert opinion is awaited. It has also been recorded that however, the signatures on measurement book, bills, vouchers, cheques, deposit slips, etc. have been confirmed by the witnesses. The aforesaid recording in the Charge-sheet indicates that certainly some of the documents in connection with the work/payment were also signed by the present petitioner and accordingly, at this stage, this court is of the considered view that the petitioner had a role in connection with the ultimate payment for the work in the account of the accused company, which was not actually executed on the spot.
20. In such circumstances, it cannot be said, at this stage, that the petitioner had no role to play in the matter to execution of the contract and payment in relation to alleged non executed work and that the petitioner has been made accused only by way of vicarious liability of the accused company, particularly when some of the documents collected during investigation, in relation to the execution/non execution of work and payment, are alleged to have been signed by the petitioner and expert's opinion in connection with signatures is awaited. It is further not clear, either from the records of this case or even from the arguments of the petitioner as to which documents were signed by the petitioner. It is neither the case of the petitioner, at this stage, that the petitioner did not sign any document in relation to the work / payment involved in the present case, nor it is the case of the petitioner before this court that none of the documents sent for examination by the expert has been signed by the petitioner. Further, there is an allegation of criminal conspiracy amongst the five accused persons.
21. This court is also of the considered view, at this stage, that merely because there is an affidavit executed as back as in the year 2008 by 10 the petitioner in favour of the co-accused namely, Ajay Ray for supervision of the work of the company, the same by itself, is not enough to absolve the petitioner from the alleged offence particularly when there is an allegation of conspiracy with the other accused persons. There is no doubt that in case of allegation of criminal conspiracy, there can be direct or even indirect evidences.
22. So far as the claim of the petitioner that the excess amount paid by the coal company to the accused company has been recovered in the year 2014 is concerned, this court is of the considered view that mere recovery of amount does not absolve the accused of their criminal liability when the matter relates to dealing with public money.
23. In the judgment passed by the Hon'ble Supreme Court reported in (2008) 5 SCC 668 (MaksudSaiyad vs. State of Gujarat and Others) it has been clearly held in Para-13 that the Indian Penal Code does not contain any provision for attracting vicarious liability on the part of the Managing Director or Director of the company when the accused is a company and the vicarious liability arises only when there is a provision in the statute. It has also been held that the moot question which is to be posed before the Magistrate is as to whether the CMD and Directors of Dena Bank were personally liable for any offence? The said judgment in Para-15 referred to judgment passed in the case of Pepsi Foods Ltd. reported in (1998) 5 SCC 749 to reiterate that summoning of an accused in a criminal case is a serious matter and the magistrate has to carefully scrutinize the evidence to find out if any offence is prima facie committed by all or any of the accused. The judgment reported in (2008) 5 SCC 668 was followed in the judgement reported in (2008) 5 SCC 662 (S.K. Alagh vs. State of Uttar Pradesh and Others).
24. This court finds that there is no dispute in the legal proposition that the Indian Penal Code does not contain any provision for attracting vicarious liability for the offences involved in the present case.
25. In the judgment reported in (2013) 4 SCC 505 (M/s. GHCL Employees Stock Option Trust Versus M/s. India Infoline Limited), there was 11 allegation of cheating and breach of trust against the Respondent No. 1 company and so far its Managing Director, company secretary and directors are concerned, who were Respondent Nos. 2 to 7 in the case, general and bald allegations were levelled against them and the Magistrate issued summons to all of them to face the trial. The Hon'ble Supreme Court held that in absence of any specific allegation made against any of the Respondent Nos. 2 to 7, they could not be made accused. While deciding the said case, the principle of law laid down in the judgment reported in (2008) 5 SCC 668 (supra) and (1998) 5 SCC 749 (supra) were followed. In the judgment reported in (2011) 13 SCC 412 (Thermax Limited and Others -Versus- K.M. Johny and Others), it has been held in Para-42 that if the alleged offence is by the company, no person other than the company can be prosecuted in absence of specific details about the role of the person concerned.
26. Thus , there is no dispute on the legal proposition that in order to make a director of a company an accused when the alleged offence is by the company, specific role of the concerned director is required to be given and a person cannot be made an accused vicariously only because he happens to be the director of the company.
27. So far as the other judgment reported in (2013) 1 JBCJ 19 (Satyendra Nath Tiwari vs. Union of India) is concerned, the facts of the case are mentioned at Paragraph No. 7 of the judgment which is quoted hereunder :-
"In this regard, it was further submitted that it has been the case of the parties that the contract on being awarded to the company, the company through Bijay Kumar Tiwary, one of the Directors of the company entered into an agreement whereupon work order was issued in favour of the company and the work of the company was being looked after by one Uday Shankar Tiwary on the strength of power of attorney executed in his favour by M/s. Kalawati Construction (P) Ltd. It is also come during investigation that he was also looking after the work of the procurement of Bitumen from H.P.C.L. Ranchi and in fact, it is he whose signatures are there on the 11 forged invoices, bills were drawn and the payments are said to have been made to the company. In spite of that, this petitioner has been made accused simply for the reason that he happened to be the Director of the Company, M/s. Kalawati Construction (P) Ltd."12
28. The Hon'ble Court after considering the aforesaid facts and arguments of the parties found that in the whole process, the petitioner had figured at two places. It is said that the bid document was submitted by the petitioner and the power of attorney was executed in favour of Uday Shankar Tiwari for looking after day-to- day affairs of the company. However, no act was alleged to have been done by the petitioner of the case in the matter of execution of the work, for procurement of bitumen, even for taking payment on the basis of forged bills, still the petitioner was being prosecuted for the simple reason that he happened to be the director of the company that too, in absence of any allegation that he was in charge or responsible for the day-to-day affairs of the company, presumable under the garb of principles of vicarious liability. In such circumstances, the criminal case against the petitioner of the said case was quashed and set-aside.
29. However, in the instant case, the facts are different. The petitioner of this case besides being the Chairman/Director of the accused company had signed some of the documents in connection with the execution of the work and its payment received by the accused company. This is coupled with the allegation of criminal conspiracy with the four other co-accused including the accused company. There is no specific detail before this court, as to which documents were signed by the petitioner and as per Charge-sheet, the signatures on the various documents have been sent for examination by expert and the report is awaited. It is not the case of the petitioner that the petitioner had not signed any of the documents relating to the work and its payment received by the accused company. Accordingly, at this stage, it cannot be said that the petitioner is not connected with the alleged offence and that he has been made accused only because he is the Chairman/Director of the accused company, particularly, when an allegation of criminal conspiracy is involved in the present case. There can be no doubt that the criminal conspiracy by itself is a distinct offence and persons can be made accused only for criminal 13 conspiracy and for which there can be direct evidence or indirect evidence.
30. In the judgment reported in (2015) 4 SCC 609 (Sunil Bharti Mittal vs. Central Bureau of Investigation), it has been held by the Hon'ble Supreme Court that if the group of persons or the person who control the affairs of the company commit an offence with a criminal intent, their criminality can be imputed to the company as well, as they are "alter ego" of the company.
It has also been held that if a company commits an offence involving mens rea, it would normally be the intent and action of that individual who would act on behalf of the company, more so, when the criminal act is that of company. However, at the same time there is no vicarious liability unless the statute specifically provides so.
It has been held that thus an individual who has perpetrated the commission of any offence on behalf of the company can be made an accused, alongwith the company, if there is sufficient evidence of his active role coupled with criminal intent. Reference may be had to para 40 to 44 of the said judgment.
31. In the present case, considering the allegation, the perpetrators of the crime are:-
(i) accused company;
(ii) the staff/supervisor of the accused company;
(iii) Director/Chairman of the accused company i.e. the petitioner;
(iv) officials of the coal company
in conspiracy with each other.
The company has been made accused not only in individual capacity, but also due to the reason that criminality of its staff and Director (petitioner) can certainly be imputed upon the company as they are "alter ego" of the company.
32. Applying the ratio of the judgment reported in (2015) 4 SCC 609 (supra) to the present case, this court finds that the petitioner (Director/Chairman of the accused company), in conspiracy with other accused persons, is alleged to have perpetrated the commission of offence on behalf of the company, and can certainly be made an 14 accused alongwith the company, as there is sufficient material of his active role coupled with criminal intent in conspiracy with the co- accused for the purposes of constituting a prima-facie case for the purposes of taking cognizance of offence, inter-alia against the petitioner .
33. The allegation of false entries made in the measurement book, producing the bills and getting the payment through cheque with regards to such work entry in the measurement book and ultimately, encashing the cheque in the company's account are individual acts of the accused persons including the petitioner in conspiracy with each other, which prima-facie reflects his active role coupled with criminal intent and such criminal intent of the petitioner has to be imputed upon the company, as the petitioner alongwith the co-accused-staff /supervisor of the company are "alter ego" of the company. Thus, the company as well as its staff and the Director -petitioner have been rightly made accused in the present criminal case. Considering the nature of allegations and the alleged role of the petitioner, it cannot be said, at this stage, that the petitioner has been made accused vicariously only for being the Chairman/ Director of the accused company.
34. As a cumulative effect of the aforesaid findings, this court is not inclined to grant any relief to the petitioner, as prayed for in the present petition, in exercise of powers under Section 482 of Cr.P.C. Accordingly, the present petition is hereby dismissed.
35. However, the dismissal of this case will not prejudice the case of the petitioner in any manner before the learned court below and it will be open to the petitioner to raise all points before the learned court below at appropriate stage as per law.
36. Pending Interlocutory applications, if any, are dismissed as not pressed.
37. Office is directed to immediately communicate this order to the learned court below.
(Anubha Rawat Choudhary, J.) Binit/