Delhi District Court
Deepak Relan vs State (Govt. Of Nct) on 18 August, 2012
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IN THE COURT OF MS. NEENA BANSAL KRISHNA :
ADDITIONAL SESSIONS JUDGE-01 : NEW DELHI
In re :
CR No. 47/12
Deepak Relan
S/o Late Sh. A. D. Relan
R/o 8-C/30, Ferozeshah Road,
New Delhi ..... Petitioner
versus
State (Govt. of NCT) ..... Respondent
Date of institution of the appeal : 20.10.2010
Date of reserving judgment/order : 01.08.2010
Date of judgment / order : 18.08.2012
JUDGMENT :
1 This is a criminal revision u/s 397 of Code of Criminal Procedure (hereinafter referred to as "Cr.PC") against the impugned order dated 12.08.2010 vide which the Ld. MM observed that the revisionist was not entitled to discharge and the charge was liable to be framed against him. 2 The facts in brief are that a complaint was made by Sh. Ashok Kumar, Manager, MHTC, Ltd., wherein it was claimed that three posted dated cheques in the sum of Rs.32,76,000/- were issued by M/s Shree Diwan Steel (India) Ltd. towards supply of goods, which on presentation were dishonored. The details of the three posted dated cheques are as under :
(i) Cheque No. 057358, dated 27.02.1996 of Rs.32,76,000/-
(ii) Cheque No. 057359, dated 27.04.1996 of Rs.32,76,000/-CR No. 47/12 Page No. 1 of 19 -2-
(iii) Cheque No. 057360, dated 27.04.1996 of Rs.69,335/-
3 It is submitted that the complainant Company wanted to have long term dealings with the accused Company and on the request of Naresh Chatly, the Managing Director that they have applied to the bankers for enhancing the credit limit and was not able to get the goods released on Letter of Credit, the complainant Company supplied the goods on the basis of post dated cheques. It is submitted that the said cheques on presentation were dishonored on account of insufficiency of funds despite due notice. The accused Company failed to make the payment. It was further submitted that the Company and its officers especially the Managing Director, Naresh Chatly had no intention to pay any amount for the goods supplied to them and with that dishonest and fraudulent intention had caused wrongful loss to the complainant and had thereby committed an offence u/s 420 IPC. On the basis of the said complaint an FIR No. 886/99, u/s 420/406/120B IPC, PS Connaught Place was registered. 4 During the investigations Sh. Naresh Chatly, Managing Director and the other Directors viz. Vilayati Ram Chatly, Shamita Chatly and Pushpa Chatly could not be arrested and were declared Proclaimed Offenders. In so far as the present revisionist concerned, it was noted in the charge- sheet that after due investigations it could not be established that the accused Umesh Munjal and Revisionist Deepak Relan were involved in the day to day business and affairs of the Company but because they were the Directors of the Company CR No. 47/12 Page No. 2 of 19 -3- were responsible for causing wrongful loss to the complainant Company. The revisionist was not arrested but the charge- sheet was forwarded against him to the Court u/s 406/420/120B IPC.
5 The Ld. MM in its impugned order observed that there was no ground for discharge of the accused Deepak Relan and directed the charge be framed against him. 6 Aggrieved by the said order, the present revision has been preferred against the impugned order. 7 The Ld. counsel on behalf of the revisionist has argued that on the basis of same cheques, a complaint u/s 138 of Negotiable Instruments Act (hereinafter referred to as "NI Act") read with Section 420 IPC and other provisions had been filed by the complainant in the year 1996 but in the said complaint the notice was given only for the offence u/s 138 NI Act and the Ld. MM vide his order dated 30.07.1996 had summoned the accused persons u/s 138 NI Act and the charges u/s 420/406/120B/34 IPC were dropped. It has been held in various judgments that once the complaint has been filed on one set of facts and the charge is framed only in respect of certain offences, while the other offences are dropped, then the second complaint in respect of those other offences is not maintainable as it tantamounts to double jeopardy. It is, therefore, argued that on the same set of facts a complaint had been filed by the complainant, wherein Section 420/406 IPC were specifically pleaded but dropped. In the circumstances, this complaint to the police and consequent CR No. 47/12 Page No. 3 of 19 -4- registration of FIR amounts to making the accused to face a trial twice for the same offence, which is against the provisions of Constitution and Cr.PC.
8 The second ground which has been agitated on behalf of the accused is that the dispute involved in the present case is civil in nature and once the complaint has already initiated a civil suit before the High Court of Delhi for recovery of the amounts against those cheques, the present criminal proceedings are not maintainable and the accused is liable to be discharged.
9 The third ground which has been agitated is that in the charge-sheet itself it has been concluded that the accused though was a Director in the Company, but was not found to be involved in the day to day business and the affairs of the Company. Under Section 420/406 IPC no vicarious liability can be imposed on an individual merely on account of his being a Director in the Company. There is no averment in the complaint and there is also no evidence on record to show that the revisionist had ever held out any dishonest or fraudulent representation to the complainant or was in any manner involved in the affairs of the Company. Even if it is accepted that there was an offence of cheating committed by the Company, then too, the revisionist merely on account of being a Director in the Company cannot be held liable for the offence of cheating. In the prospectus of the Public Issue dated 06.12.1995 it had been clearly mentioned against the names of the other Directors about their day to day involvement in CR No. 47/12 Page No. 4 of 19 -5- the affairs of the Company. The present revisionist Deepak Relan though a Director, was stated to be a Chartered Accountant, who has been actively involved in the operations of primary stock market and would be advising the Company on financial matters from time to time.
10 It is submitted that even from the prospectus it is apparent that the present revisionist was not involved in the day to day affairs but only been kept for rendering advice to the Company from time to time. In fact, the revisionist had admittedly resigned from the Directorship on 15.04.1996 and the same was communicated to the Registrar of Companies in the month of Oct., 1996. Moreover, there is not a single averment in the complaint or in any document to show that any fraudulent representation had been done by the revisionist and that no offence u/s 420/406 IPC is established against the revisionist and the order of framing of charge against the revisionist is liable to be set aside.
11 The Ld. counsel on behalf of the complainant had addressed detailed arguments and had also submitted his written arguments wherein it was submitted that the scope of Section 138 NI Act and that of the offences u/s 420/406 IPC was absolutely different. Moreover, at the time of filing of the complaint u/s 138 NI Act read with Section 420/406/120B IPC it is not as if the Court had held that no offence u/s 420 IPC was made out; rather on account of different scope of these two provisions, the complainant himself had not pressed for the charges u/s 420 IPC and had sought the dropping of those CR No. 47/12 Page No. 5 of 19 -6- offences and had thereafter, filed the present complaint on the basis of which the FIR was registered. It was submitted that offence punishable u/s 138 NI Act and offence punishable u/s 420 IPC have separate ingredients and merely because they arise out from the same set of facts would not attract the doctrine of double jeopardy.
12 It is further argued that mis-representation for dishonest and fraudulent intention for causing wrongful loss to the complainant which is a Government Company was held by the accused Company M/s Shree Diwan Steel, its Managing Director Naresh Chatly and its Directors. The prospectus of the accused Company also shows the revisionist to be a Director in the said Company. In so far as the resignation of the revisionist is concerned it had only been communicated to the Registrar of Companies in Oct., 1996, much after the commission of the offence. It is submitted that there is enough prima facie evidence against the revisionist and the impugned order does not suffer from any infirmity.
13 I have heard the arguments and perused the record. My observations are as under :
14 It was at the stage of framing of charge u/s 227 Cr.PC that the impugned order has been made observing that the charge is liable to be framed against the revisionist. The scope of Section 227 Cr.PC was considered by the Supreme Court in the case of "State of Bihar v. Ramesh Singh, 1997 SCC (Criminal) 533", wherein it was observed that strong suspicion against the accused, if the matter remains in the CR No. 47/12 Page No. 6 of 19 -7- region of suspicion, cannot take the place of proof of his guilt at the conclusion of the trial. But at the initial stage if there is a strong suspicion which leads the court to think that there is a ground for presuming that the accused has committed an offence, then it is not open to the court to say that there is no sufficient ground for proceeding against the accused. The presumption of the guilt of the accused which is to be drawn at the initial stage is only for the purpose of testing prima facie whether the court should proceed with the trial or not. 15 Similarly, in the case of "P. Vijayan v. State of Kerala, (2010) 2 SCC 398", the Supreme Court observed that at the stage of framing of charge, the Court is merely to sift the evidence to find out whether there is or not sufficient ground for proceeding against the accused with the trial. The sufficiency of ground would take within its fold the nature of evidence recorded by the police or the documents produced before the Court which ex facie disclose that there are suspicious circumstances against this accused so as to frame a charge against him.
16 In "Union of India v. Prafull Kumar Samal, 1979 SCC Criminal 609", it was explained that the sifting and weighing of evidence is purely for the limited purpose to find out whether a prima facie case against the accused is disclosed.
17 In the light of these principles in regard to the framing of charge which have been enumerated in various judgments of the Supreme Court, the case of the revisionist CR No. 47/12 Page No. 7 of 19 -8- needs to be examined.
18 The first objection which has been taken on behalf of the revisionist is that the present case is barred on the principle of double jeopardy. It is argued that the earlier complaint u/s 138 NI Act which was filed in the year 1996 included Sections 420/406 IPC and while the notice u/s 138 NI Act was framed, the charges u/s 420/406 were dropped. Now, the second complaint in regard to the Section 420 IPC on the same set of facts is not maintainable.
19 The concept of double jeopardy was explained by the Supreme Court of India in the case of "Monica Bedi v. State of Andhra Pradesh, VIII (2010) SLT 171", as under :
"To operate as a bar the second prosecution and the consequential punishment thereunder, must be for 'the same offence'. The crucial requirement therefore for attracting the Article is that the offences are the same, i.e., they should be identical. If, however, the two offences are distinct, then notwithstanding that the allegations of fact in the two complaints might be substantially similar. It is, therefore, necessary to analyze and compare not the allegations in the two complaints but the ingredients of the two offences and see whether their identity is made out."
20 The Supreme Court of India in the case of "Kola Veera Raghav Rao v. Gorantla Venkateswara Rao & Anr., 2011 (1) RCR (Criminal) 803", had pointed out the difference between the language used in Article 20 (2) of the CR No. 47/12 Page No. 8 of 19 -9- Constitution of India, 1950 and Section 300 (1) of Cr.PC. After referring to these provisions it was noted that the scope of Section 300 (1) Cr.PC was much wider than the Article 20 (2). Article 20 (2) stated that no-one can be prosecuted and punished for the same offence more than once, while Section 300 (1) of Cr.PC states that no-one can be tried and convicted for the same offence or even for a different offence but on the same facts. In the said case the appellant had already been convicted u/s 138 NI Act and in this contest it was noticed that since the subsequent offence u/s 420 IPC was arising out of the same facts, the offence u/s 420 IPC was barred u/s 300 (1) of Cr.PC.
21 From these judgments it is apparent that the concept of double jeopardy u/s 300 (1) Cr.PC can only be invoked only if it can be shown that the accused has already been prosecuted and convicted for an offence and his subsequent prosecution for different offences arising from the same set of facts cannot be sustained. Unless there is the conviction, the concept of double jeopardy cannot be invoked.
22 In the present case, it has been mentioned that the proceedings u/s 138 NI Act are still continuing. Therefore, it cannot be said that the accused has already been convicted for an offence arising from the same set of facts and the present charge-sheet is barred.
23 The other aspect which needs to be examined is whether on filing of complaint u/s 138 NI Act, the subsequent CR No. 47/12 Page No. 9 of 19
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charge-sheet u/s 420/406 IPC can be filed or not. 24 This question was considered in the case of "R. P. Mathur Prop. Radhika Leather v. S.R. P. Industries Ltd., 2009 (109) DRJ 1" by the High Court of Delhi. In the said case an FIR was registered against the applicant u/s 420/120B/477 IPC. The applicant had claimed that the subsequent complaint u/s 138 NI Act was not maintainable. However, it was observed that the bare perusal of Section 138 of the Act and Section 420 IPC would reveal that the basic ingredients of these two offences are distinct and, therefore, the complaint u/s 138 of NI Act cannot be considered to be barred because of the FIR u/s 420 IPC.
25 The principles of same offences in American Law is stated thus :
"The proliferation of technically different offences encompassed in a single instance of crime behaviour has increased the importance of defining the scope of the offence that controls for purposes of the double jeopardy guarantee."
26 Distinct statutory provisions will be treated as involving separate offences for double jeopardy purposes only if 'each provision requires proof of an additional fact which the other does not'. Where the same evidence suffices to prove both crimes, they are the same for double jeopardy purposes, and the clause forbids successive trials and cumulative punishments for the two crimes. The offences must be joined in one indictment and tried together unless the defendant CR No. 47/12 Page No. 10 of 19
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requests that they be tried separately.
27 Friedland in Double Jeopardy (Oxford 1969) says at p.108 :
"The trouble with this approach is that it is vague and hazy and conceals the thought processes of the court. Such an inexact test must depend upon the individual impressions of the judges and can give little guidance for future decisions. A more serious consequence is the fact that a decision in one case that two offences are 'substantially the same' may compel the same result in another case involving the same two offences where the circumstances may be such that a second prosecution should be permissible...."
28 In "State of Bihar v. Murad Ali Khan, (1998) 4 SCC 655", exactly similar situation arose and in that case it was held that on the same set of facts in conceivable cases can constitute offences under two different laws; an act or omission can amount to constitute an offence under the Indian Penal Code and may also constitute at the same time under any other law. The provision of fine cannot be equated or put on the same pedestal as allowing the respondent / complainant to receive the double of the amount of the cheque as in default of fine person can always be sent to imprisonment. 29 This aspect of double jeopardy was in detail considered by High Court of Delhi in the case of "R. P. Mathur Prop. Radhika Leather v. S.R. P. Industries Ltd., 2009 (109) DRJ 1" wherein reference was made to all the above CR No. 47/12 Page No. 11 of 19
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mentioned cases and it was held that a bare perusal of provisions of Section 138 NI Act and Section 420/477/120B IPC would reveal that the ingredients of two offences are distinct and the prosecution of the accused u/s 138 NI Act cannot be considered to be a bar to the prosecution in the said case u/s 420/120B IPC. While, u/s 138 NI Act the specific ingredients are issue of cheque, dishonor of cheque on account of non- sufficiency of funds and failure to make payment despite service of legal notice. However, the offence of cheating requires element of falsification, fraud, dishonest, inducement, etc. 30 In the present case, the complainant had filed the complaint u/s 138 NI Act and also u/s 420 IPC, but had sought to not pursue the offence u/s 420 IPC in the said complaint and had filed a separate complaint with the police u/s 420 IPC on the basis of which the present FIR was registered and charge- sheet filed. It is not as if the complainant had given up his right to allege the commission of the offence u/s 420 IPC, but had sought to file a separate complaint for the simple reason that the process to be followed for the complaint u/s 138 NI Act was a summary procedure, while the offence u/s 420 IPC and other allied Sections required detailed investigation by the police and were to be tried as a warrant triable case. The present FIR, therefore, is not liable to be quashed on the principle of double jeopardy merely because a complaint was filed earlier u./s 138 NI Act, which is apparently still pending adjudication.
The present FIR and the charge-sheet filed CR No. 47/12 Page No. 12 of 19
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consequent thereto is not hit by the principle of double jeopardy. However, it still remains to be seen if there is enough prima facie evidence against the accused / revisionist for framing of charge against him especially in the light of conclusion drawn in the charge-sheet that there was no evidence on record to show that they had made any representation or was involved in the transaction or were involved in the day to day business of the Company, but the charge-sheet was filed against them as he was the Director of the accused Company.
31 In "Nemi Chand Swaroopchand Shaha v. M/s T. H. Raibhagi Firm, 2005 Cr LJ 2896" it was held that it is absolutely necessary for the purpose of bringing in Section 415 IPC that the complainant should have been fraudulently or dishonestly induced by the petitioners to deliver the property concerned and unless the ingredients of cheating within the meaning of Section 415 of IPC are made out, no cognizance can be taken for the said offence.
32 In "S. Jayaswami and Another v. State of Orissa and Another, 2005 (4) R.C.R. (Criminal) 704" it was held that the dishonor of cheque by the Bank due to insufficiency of funds is squarely covered under the scope of Section 138 of the NI Act. But, to attract Section 420 IPC it is to be further established that there was malafide intention of the person issuing the cheque.
33 In the case of "G. Sagar Suri and Another v. State of U. P. and Others, (2000) 2 SCC 636" it was noted CR No. 47/12 Page No. 13 of 19
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that dishonest intention and mis-representation are to be specifically indicated to attract the provision of Section 406 and 420 IPC and if such specific allegations are not there and there are only general allegations of dishonor of cheque, only the Section 138 NI Act would be attracted. In such a case investigations into the offence u/s 406/420 IPC would be an abuse of process of law and Court.
34 Similar observations were made in the case of "Hridaya Ranjan Prasad Verma and Others v. State of Bihar and Another, (2000) 2 SCC 168", wherein the Supreme Court held that to hold a person guilty of cheating it is necessary to show that he had fraudulent or dishonest intention at the time of making the promise. From his mere failure to keep up promise subsequently, such a culpable intention right at the beginning when the promise was made, cannot be presumed.
35 The complaint dated 08.04.1996 was made on behalf of the complainant Company, wherein it was stated that the complainant Company had entered into an agreement with the accused Company M/s Shree Dewan Steels Pvt. Ltd. and its Managing Director Naresh Chatly for supply of 1000 MTS of melting scrap in the month of December, 1995. One transaction took place on the basis of letter of credit. However, for the subsequent transactions, the Managing Director Naresh Chatly represented that they have applied to their bankers for enhancement of their credit limit to Rs.20 lacs and, therefore, not able to get the goods released on letter of credit and CR No. 47/12 Page No. 14 of 19
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instead issued post dated cheques. The goods were supplied, but since the bank draft was not forthcoming, the first post dated cheque was presented which was dishonored for insufficiency of funds. When they approached the organization they evaded the payment on one pretext or the other. It was further alleged that the accused Company took the entire consignment of nearly 1000 MTS of melting scrap for the value of Rs.66,48,935/-, but not a single penny had been paid till date. It is further claimed that the Company and its officers especially the Managing Director had no intention to pay any amount and has wrongfully caused loss to the complainant which amounts to cheating. They have also committed offence of breach of trust and criminal misappropriation, for which they are liable to be prosecuted.
36 The perusal of the complaint would show that all the allegations which have been made are against the Company and its Managing Director Naresh Chatly, who has also admittedly signed the post dated cheques. The allegations vis a vis the other accused are only general and vague and there is not a single word stated vis a vis Deepak Relan as to how and at what point of time did he make any fraudulent misrepresentation. In order to bring home the offence u/s 420 IPC it has to be specifically pleaded that the act was done with the fraudulent or dishonest intention. In the entire complaint there is nothing which is forthcoming to show that the accused in any way involved in the issue of the cheque or had made any dishonest or fraudulent representation to the complainant.
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37 In the case of "P. Eswara Reddy v. State of Andhra Pradesh, 1987 (1) Crl. LR 1980", it was observed that mere dishonor of a cheque for an antecedent debt does not amount to cheating. Mere evasion or deferment in the realization of the amount due which amounts to a pecuniary advantage obtained by the accused, cannot under the Indian Law be treated as a penal offence.
38 It was explained in the case of "Anil Kohli v. State (NCT of Delhi), 2002 (61) DRJ 227 (DB)" that to deceive is to induce a man to believe that a thing is true which is false and which a person practising the deceit knows or believes to be false. It must be shown that there existed a fraudulent and dishonest intention at the time of commission of offence.
39 In the complaint it has been stated that one transaction on letter of credit was undertaken with the accused Company, but subsequently on account of request to the bank for enhancement of the credit limit, the subsequent delivery could not be taken against the letter of credit, but posted dated cheques were furnished as security for delivery of goods. There is no averment whatsoever especially vis a vis the accused that he had made any fraudulent or dishonest representation. The breach of contract, mere failure to pay the amount, cannot be called a case of cheating especially vis a vis the present accused. Likewise in the case of "G. Sagar Suri (Supra)" it was observed that omnibus statement of misrepresentation and absence of details as to how the CR No. 47/12 Page No. 16 of 19
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complainant was duped would not entail the trial of the accused u/s 420 IPC.
40 In the present case there are no specific allegations against the present accused and having made any fraudulent or dishonest representation or of having committed breach of trust or misappropriation of the goods of the complainant. It is significant to note that similar were the conclusion made in the charge-sheet vis a vis the present accused.
41 In the end it would be proper to refer to the observations made in the charge-sheet that the present accused has been charge-sheeted for the offences u/s 420/406 IPC as he was a Director in the accused Company, though he was not arrested as it was not found that he was involved in the day to day affairs of the Company.
42 Criminal Law does not recognize the principle of vicarious liability of the Directors for any offence committed by the Company under any provisions of Indian Penal Code. For bringing any of the offence under IPC against any person it has to be shown that the specific ingredients of the offence were committed by the accused persons.
43 The Supreme Court in the case of "S. K. Alagh v. State of Uttar Pradesh & Ors., (2008) 5 SCC 662" had noted that the Penal Code, save and except some provisions specifically providing therefor, does not contemplate any vicarious liability on the part of a party who is not charged directly for commission of an offence. If and when a stature CR No. 47/12 Page No. 17 of 19
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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. (Also in "Sabitha Ramamurthy v. R. B. S. Channabasavarthya, (2007) 1 SCC (Crl.) 621".) 44 It is only Section 141 of NI Act, which has made the Directors and the specified officers of the accused Company responsible for the acts of the Company but that too, subject to the conditions of them being involved in the day to day affairs of the Company. Even u/s 141 N.I. Act there has to be clear and specific averment in the complaint that when the offence was committed, the accused person was in-charge of and was responsible for the conduct of the business of the Company as was observed in the case of "S.M.S. Pharmaceuticals Ltd. v. Neeta Bhalla & Anr., 2005 (4) RCR (Criminal) 141". Therefore Section 138 and 141 by which statutory fiction makes the director responsible for the act of the Company also provides that there has to be specific averment that Director was involved in the day to day affair of the Company. In the present case after due investigations it had been concluded that the involvement of the accused in the day to day affairs of the business of the Company was not established. 45 Therefore, there is no allegation whatsoever of any of the ingredient of 420/406 IPC alleged against the present accused. In the circumstances, it cannot be held that a prima CR No. 47/12 Page No. 18 of 19
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facie case for the offences u/s 420/406/120B IPC are made out against the present accused. It may, however, be clarified that the observations made herein are only in respect of Revisionist Deepak Relan and not in regard to the other three accused persons viz. Vilayati Ram Chatly, Shamita Chatly and Pushpa Chatly, who have been placed in Column No. 2. 46 No prima facie case is disclosed against accused Deepak Relan, who is hereby discharged. His bail bond and surety bond stand cancelled.
47 Trial Court Record be sent back along with the copy of this order. The Trial Court may, however, proceed against accused in Column No. 2 as per law.
48 Revision file be consigned to the Record Room. Announced in the open Court on 18th Day of August,2012.
(Neena Bansal Krishna) ASJ-01/PHC/New Delhi CR No. 47/12 Page No. 19 of 19