Bombay High Court
Mr. Arvind Navinchandra Mafatlal vs Dr. Palakavayalli Joseph Thomas on 23 April, 2010
Author: B. R. Gavai
Bench: B. R. Gavai
1
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
CRIMINAL APPELLATE JURISDICTION
CRIMINAL APPLICATION NO. 3880 OF 2009
1. Mr. Arvind Navinchandra Mafatlal ]
aged about 85 years, Chairman ]
Emeritus of NOCIL Ltd., ]
of Mumbai, residing at 10, Altamount]
Road, Mumbai 400 026 ]
2. Mr. Hrishkesh Arvind Mafatlal ]
aged about 54 years, ]
Chairman of NOCIL Limited ]
Ex-Chairman of DE-NOCIL
ig ]
Crop Protection Pvt. Ltd. ]
having his office at Mafatlal House ]
H. T. Parekh Marg, Backbay ]
Reclamation, Mumbai 400020 ]..Applicants
versus
1. Dr. Palakavayalli Joseph Thomas ]
Residing at 29, Silver Sands, ]
Juhu Tara Road, Juhu, ]
Mumbai 400049 ]
2. Mrs. Sonia Thomas Pinto ]
Residing at Flat No. D, Ever Green ]
Perry Road, Bandra (West), ]
Mumbai 400 050 ]
3. State of Maharashtra ] ..Respondents
Mr. Amit Desai - Sr. Advocate with Mr. Prakash Naik with Mr. Bhaskar
Mehta with Mr. Pradip Kapadia with Mr. Prasanna Tare i/b. Vigil Juris for
Applicants.
Mr. Y. T. John with Mr. Ajay Panickar for Respondent Nos. 1 and 2.
Mr. J. P. Kharge - APP for Respondent No. 3 - State.
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CORAM : B. R. GAVAI, J.
Judgment Reserved on : 05.04.2010
Judgment Pronounced on : 23.04.2010
ORAL JUDGMENT :
1. The applicants have approached this court invoking its jurisdiction under Section 482 of the Criminal Procedure Code praying for quashing and setting aside the Order dated 21st August 2007 passed ig by the learned Additional Chief Metropolitan Magistrate, 47th Court, Esplanade, Mumbai, in C.C. No. 4700076/SW/2007. The applicants have also prayed for quashing the entire proceedings in the said complaint.
2. The present case has a chequered history. Respondent No.1 herein filed a complaint for the offences punishable under Sections 406, 418, 420, 423 read with Section 34 and 120-B of the Indian Penal Code against the present applicants and 14 other accused. In nutshell the contention of the complainants is that the complainant No. 1 (hereinafter referred to as "complainant") was owner of brand name "WEEDOFF" and that though under the agreement between the complainant and the respondent No. 1, the respondent No. 1 could not have manufactured the said product but had to source the same from the complainant, accused No.1 was manufacturing ::: Downloaded on - 09/06/2013 15:52:48 ::: 3 the said product themselves or getting it manufactured from third party and marketing the same with a deceptive name "WEEDALL" without the consent of the complainants and therefore committed the offences punishable under the aforesaid sections.
3. On the complaint being presented, the learned Magistrate vide Order dated 20th June 2006 found that the offences were not disclosed in the complaint and therefore refused to take cognizance. Being aggrieved thereby the respondent No. 1 herein preferred a revision being revision application No. 771 of 2006. The learned Sessions Judge vide Order dated 9th November 2006 partly allowed the revision and set aside the Order passed by the learned Magistrate and directed the learned Magistrate to record verification statement of one of the complainants and then consider issuance of process against accused Nos. 1 and 2 for the offences punishable under section 406 and 411 of I.P.C. The learned Sessions Judge in the said Order found that upon reading the complaint a case could have been made out for issuance of process only against the accused no.1 for the offence punishable under Section 411 of IPC and against the accused No. 2 under section 406 of IPC.
4. On remand the learned Magistrate vide Order dated 27th April, 2007 issued process against all the accused for the offences punishable under ::: Downloaded on - 09/06/2013 15:52:48 ::: 4 sections 406, 420, 423, 34 of IPC. The said Order came to be challenged by way of revision before the learned Sessions Judge being criminal revision application no. 642 of 2007 by the original accused no. 13. It was basically contended before the learned Sessions Judge in the said revision that though the revisional court vide its earlier Order dated 9th November 2006 directed considering of issuance of process only against accused Nos.
1 and 2 and that too for the offences punishable under Sections 406 and 411 of IPC, the learned Magistrate had issued process against all the accused and that too without assigning any reasons. The learned revisional court vide Order dated 20th June 2007 finding that the learned Magistrate had passed Order without noticing the order passed by revisional court in revision application No. 771 of 2006, set aside the Order dated 27th April 2006 and remanded back the matter to the learned Metropolitan Magistrate to reconsider the matter afresh in accordance with the observations of the learned Sessions Judge in revision application no. 771 of 2006. On remand the learned Magistrate by Order dated 21st August 2008 directed issuance of process against all the accused for the offences punishable under Sections 406, 420, 423 read with 34 of IPC. Being aggrieved thereby, the original accused Nos. 13 and 16 preferred criminal revision application No. 1110 of 2007 before the learned Sessions Judge. The learned Sessions Judge finding that the accused No. 16 was only Legal Adviser and the Secretary of the Company and therefore was not covered by a definition of "officer in ::: Downloaded on - 09/06/2013 15:52:48 ::: 5 default" as provided in section 5 of the Companies Act, set aside the Order of issuance of process against the said accused. The learned revisional court however upheld the Order of issuing process so far as accused no. 13 is concerned on the ground that he was a common director of accused Nos. 1 and 2 and therefore was covered by the aforesaid definition of "officer in default".
5. Being aggrieved by the Order of issuance of process against the present applicants, the applicants have approached this court.
6. Mr. Desai, the learned sr. counsel appearing on behalf of the applicants submits that the present case is nothing but an abuse of the process of law. The learned counsel submits that upon bare perusal of the complaint, it would reveal that the dispute between the complainant and accused nos. 1 and 2 at the most, is a civil dispute. He submits that the complaint lacks of any allegations against the present applicants so as to prima facie make out ingredients for the offences charged with. The learned counsel submits that the only allegation against the present applicants is that the person accused, were directors of the accused no. 1 company as well as of the accused No.2 company at the relevant time of the commission of the offence. The learned counsel submits that the persons cannot be charged with a vicarious liability for any offence committed by the company only on ::: Downloaded on - 09/06/2013 15:52:48 ::: 6 the ground that the said persons are the directors of the said company, in so far as the general offences under the I.P.C. are concerned. He submits that only if, a statute contemplates creation of such a legal fiction, the directors could be charged with the offences on the ground of vicarious liability. He submits that in the present case the accused are charged with general offences under the IPC for which no vicarious liability is provided in the statute and as such the applicants so also the other directors of the accused no. 1 company cannot be charged with for the offences punishable under IP.C. The learned counsel in this respect relies on the judgment of the Apex Court in the cases of (1) Maksud Saiyed vs. State of Gujarat & Ors.
[(2008)5 SCC 668], (2) S. K. Alagh vs. State of Uttar Pradesh & Ors.
[(2008)5 SCC 662] and (3) R. Kalyani vs. Janak C. Mehta & Ors.
[(2009)1 SCC 516].
7. The learned counsel further submits that since for the offences charged with, "mens rea" is one of the necessary ingredient, the company being a juristic person also cannot be charged with. He therefore submits that the complaint is also not tenable against the accused nos. 1 and 2. The learned counsel in this respect relies on the judgment of this court in the case of (1) Natural Sugar and Allied Industries Ltd. & Anr. vs. Razzak s/o. Hazi Gaffar & Ors. [2006 All M.R. (Cri.) 2822 and (2) Motorola Incorporated vs. Union of India & Ors. [2004 Cri.LJ. 1576].
::: Downloaded on - 09/06/2013 15:52:48 ::: 78. The learned counsel further submits that since the ingredients which are necessary to disclose an offence under sections 420 and 406 of IPC are totally lacking in the complaint, the complaint itself is liable to be quashed and set aside. The learned counsel in this respect relies on the judgment of the Apex Court in the case of Alpic Finance Ltd. vs. P. Sadasivan & Anr.
[(2001)3 SCC 513].
9. The learned counsel relies on various judgments of the Apex Court which hold that, when a complaint is an abuse of the process of the law, this Court in exercise of jurisdiction under Section 482 of Cr.P.C. is required to quash the entire proceedings. The learned counsel further relies on the judgment of the Apex Court in the case of Ashok Chaturvedi & Ors. vs. Shitul H. Chanchani & Anr. [(1998)7 SCC 698] in support of the proposition that since the complaint is an abuse of the process of law, it is liable to be quashed and set aside also against the accused, who have not approached this court.
10. Mr. John, the learned counsel appearing on behalf of the respondent Nos. 1 and 2 on the contrary submits that at the stage of considering the complaint under the provisions of section 202 of IPC, the trial court can only consider as to whether there exist sufficient ground for proceeding ::: Downloaded on - 09/06/2013 15:52:48 ::: 8 with the complaint. It is submitted that since the learned Magistrate after applying its mind has come to a conclusion that there exist sufficient ground for proceeding with the complaint, this Court should not interfere in its extra ordinary jurisdiction under Section 482 of the Cr.P.C. In this respect, reliance is placed on the judgments of the Apex Court in the cases of (1) Vadilal Panchal vs. Dattatraya Dulaji Ghadigaonkar [1960 AIR (SC)1113 ], (2) Debendra Nath Bhattacharyya & Ors. vs. State of West Bengal [AIR 1972 SC 1607], (3) Smt. Nagawwa vs. Veeranna S. Konjalgi [1976(3) SCC 736], (4) Chandra Deo Singh vs. Prakash Chandra Bose alias Chabi Bose & Anr. [AIR 1963 SC 1430] and (5) CBI vs. Ravishankar Prasad & Ors. [CDJ 2009 SC 1035].
11. The learned counsel further submits that the allegations in the complaint at its face value do disclose the ingredients of the offences charged with. He submits that whether the allegations are true or false is a matter of evidence and this court is not expected to conduct a trial. In this respect, reliance is placed on the judgment of the Apex Court in the case of Zandu Pharmaceutical Works Ltd. vs. Mohd. Sharaful Haque & Anr.
[(2005) 1 SCC 122].
12. The learned counsel further submits that the crime cannot be committed by a company alone since it is a juristic person and therefore the ::: Downloaded on - 09/06/2013 15:52:48 ::: 9 Directors and other Officers who were in charge of the affairs of the accused Nos. 1 and 2 have rightly been impleaded as accused.
13. By now the scope of the powers of this Court under Section 482 of Cr.P.C. have been well defined by various pronouncements. The Apex Court in the case of R. Kalyani (cited supra), after considering the various judgments has observed thus :-
"15. Propositions of law which emerge from the said decisions are :
(1) The High Court ordinarily would not exercise its inherent jurisdiction to quash a criminal proceeding and, in particular, a first information report unless the allegations contained therein, even if given face value and taken to be correct in their entirety, disclosed no cognizable offence.
(2) For the said purpose, the Court, save and except in very exceptional circumstances, would not look to any document relied upon by the defence.
(3) Such a power should be exercised very sparingly. If the allegations made in the FIR disclose commission of an offence, the Court shall not go beyond the same and pass an order in favour of the accused to hold absence of any mens rea or actus reus.
(4) If the allegation discloses a civil dispute, the same by itself may not be a ground to hold that the criminal proceedings should not be allowed to continue."::: Downloaded on - 09/06/2013 15:52:48 ::: 10
The Apex Court in the said case has further observed thus in paragraph 16 :
"It is furthermore well known that no hard and fast rule can be laid down. Each case has to be considered on its own merits. The Court, while exercising its inherent jurisdiction, although would not interfere with a genuine complaint keeping in view the purport and object for which the provisions of Sections 482 and 483 of the Code of Criminal Procedure had been introduced by Parliament but would not hesitate to exercise its jurisdiction in appropriate cases. One of the paramount duties of the superior courts is to see that a person who is apparently innocent is not subjected to persecution and humiliation on the basis of a false and wholly untenable complaint."
(emphasis supplied).
14. In view of the settled legal position, let me examine the averments made in the complaint. Undisputedly the accused No. 1 M/s. Dow Chemicals Ltd. and accused No. 2 M/s. National Organic Chemical Industries Ltd. (NOCIL) are the Companies duly incorporated under the provisions of the Companies Act. The accused No. 3 is a President and CEO of accused No.1 stationed at USA, accused No. 4 is a Managing Director of accused No.1 company stationed at Mumbai. Accused Nos. 5 to 8 have been impleaded as Directors of accused No.1 averring that they are ::: Downloaded on - 09/06/2013 15:52:48 ::: 11 responsible for all major decisions of the accused No.1 company. Accused Nos. 9 and 10 have been impleaded since they were Directors of accused No.1 when according to the complainant offence was allegedly committed.
Accused No. 11 has been impleaded as Director and Chairman of NOCIL (accused No. 2). Accused Nos. 12 to 14 have been impleaded since they were Directors of both the accused Nos. 1 as well as accused No. 2 at the relevant time of the commission of the offence and many years thereafter. It is alleged that accused Nos. 11, 12, 13, 14 and 15 continued to be the Directors of the accused no. 2 company. Accused No.16 has been impleaded as at the relevant time he was Legal Manager of the accused No.2 company.
15. It has been alleged in the complaint that the complainant had carried out researches in his laboratory and had invented several new agrochemical products which were of greater interest of accused No. 2 company. It is alleged that one such product was "Glyphosate" and which was registered with brand name "WEEDOFF" with the Central Insecticide Board, New Delhi. It is further alleged that another product which was invented by the complainant was "ADDON" which was tested for efficacy as a booster for WEEDOFF. It is averred that the complainant No.1 along with his family members and friends set up a new factory at Patalganga for producing the said two products and the company was named as M/s. Enzymes ::: Downloaded on - 09/06/2013 15:52:48 ::: 12 Pharmaceuticals and Industrial Chemicals Pvt. Ltd. (EPIC Pvt. Ltd.). It is averred that on 16th September 1983 there was a meeting between the complainant and NOCIL (accused No. 2). The minutes of the said meeting were recorded which were received by the complainant on 20th September 1983 along with the forwarding letter of accused No. 2. The said meeting was between the complainant on one hand and Dr. J. S. Verma and S. Gupta on behalf of NOCIL. According to the complainant the NOCIL has replied to the Secretary, Central Insecticides Board, New Delhi on 6 th August 1984 that they had not secured a Certificate of Registration under the Insecticides Act either for import or manufacture of indigenous manufacture of Glyphosate. It has been admitted that the distribution of the product has been offered by the registered user. It is further averred in the complaint that the complainant had permitted accused No. 2 to market his another product known as "Miraculan". It is averred by the complainant that since there was a dispute between the accused and the complainant regarding the distribution of the said product, a suit came to be filed being Suit No. 2061 of 2004 in this court. It is averred by the complainant that in the said suit an affidavit has been filed on behalf of the accused no. 2 stating therein that the accused No. 2 was the owner of the trade mark. It is further stated that in the said affidavit there was a reference to the Deed of Assignment dated 25th July 1996 entered into between accused No.1 and accused No. 2. It has been therefore averred by the complainant that the ::: Downloaded on - 09/06/2013 15:52:48 ::: 13 said product "WEEDOFF" and "ADDON" were the intellectual property of the complainant No. 1 which was entrusted by him to the accused No. 2 and that the accused No. 2 had dishonestly misappropriated the said property by registering the trade mark in their name and subsequently disposing of the same to accused No. 1. It is averred that the accused No. 1 has dishonestly received and retained the said property knowing fully well or at least having reasons to believe that the same belongs to the complainant No. 1. It is alleged that at the relevant time there were common Directors in both the accused Nos. 1 and 2.
16. The entire allegations in the complaint regarding the commission of offences are in paragraphs 21, 22 and 23 of the complaint. At the cost of burdening the judgment, the same are reproduced herein below:
"21. The Complainants therefore, submit that relying upon the representation made by the Accused Complainant parted with his intellectual property i.e. the brand name "WEDOFF". The Accused No. 2 without the consent of the Complainant got the said brand registered in their name and further misappropriated the said brand without the consent of the Complainants by assigning the said brand to the Accused No. 1. The Accused No. 1 and 2 have thus committed the offence of 'criminal breach of trust', punishable under section 406 of the Indian Penal ::: Downloaded on - 09/06/2013 15:52:48 ::: 14 Code. All the accused having conspired with each other with the common intention to commit the said offence, all of them are liable to be punished in terms of Section 34 and 120B of the Indian Penal Code.
22. The Accused on the basis of the inducement of acting as the marketing agent of the Complainants, caused the Complainant to supply the product "WEEDOFF" and "ADDON" and use the said brand name for the said limited purpose. However, the Accused No.2 without the consent of the Complainant got the said brand registered in their name and further misappropriated the said brand without the consent of the Complainants by assigning the said brand to the Accused No. 1. Thereby caused wrongful loss to the Complainant, for making wrongful grain to the Accused themselves. The Accused No. 1 and 2 have thus committed the offence of 'cheating', punishable under section 418/420 of the Indian Penal Code. All the Accused having conspired with each other with the common intention to commit the said offence, all of them are liable to be punished in terms of Section 34 and 120B of the Indian Penal Code.
23. The Accused No. 1 and 2 in Order to defeat the legal right of the Complainant entered into a conspiracy and executed the alleged Deed of Assignment dated 25-7-1996 in which it is falsely stated that the Accused No. 2 is the owner of the said brand name "WEEDOFF", "ADDON" etc., which was false to the knowledge of the ::: Downloaded on - 09/06/2013 15:52:48 ::: 15 Accused No. 1 and 2. The Accused No.2 assigned the said property in favour of their own subsidiary Accused No. 1 for a consideration of Rs.100/- without the consent of Complainant. The Accused No.1 in their website have falsely claimed to the owner of the said brand name. The Accused have thus committed the offence punishable under section 423 of the Indian Penal Code. All the Accused having conspired with each other with the common intention to commit the said offence, all of them are liable to be punished in terms of Section 34 and 120B of the Indian Penal Code."
It can therefore clearly be seen that the allegation in the complaint is that it is the accused No. 1 and 2 who have committed the offence of a criminal breach of trust and cheating. In so far as the other accused are concerned, the only allegation as can be seen from the aforesaid paragraphs is that all the accused having conspired with each other with common intention to commit the said offence; all of them are liable to be punished for the offences.
17. From the bare perusal of the complaint, it would reveal that the grievance of the complainants is alleged breach of an agreement entered between the complainant and the accused No. 2 arising out of the minutes which were recorded between him and two officers on behalf of accused No.2 on 16th September 1983. It would thus be clear that the dispute at the ::: Downloaded on - 09/06/2013 15:52:48 ::: 16 most between the parties would be a civil dispute and taking at the highest the dispute under The Trade Marks Act, 1999. However it has to be noted that even in the complaint nothing is placed on record to prima facie show that the aforesaid two brand names were patented or registered by the complainants with the appropriate authority. As already discussed herein above in so far as the other accused except accused Nos. 1 and 2 are concerned, the only allegation is that the said accused were Directors of the accused Nos. 1 and 2 at different points of time and all of them have conspired with each other with a common intention to commit offence. At the cost of repetition, it will have to be stated that there is not even a whisper regarding the particular role played by any of the accused. Even according to the complainant, the agreement between him and the accused No. 2 was entered into according to the minutes recorded on 16th September, 1983. It is his own case that he was present in the meeting and on behalf of accused No. 2, two officers of accused No. 2, viz. Mr. J. S. Verma - Head of Agrochemicals and Mr. S. Gupta - Manager at NOCIL were present. It is not the case of the complainants that any of the accused arrayed in the complaint were present in the said meeting and had given any representation to him. It is to be noted that the said Mr. J. S. Verma and Mr. S.Gupta have not been arrayed as accused. Thus it appears that the complainant wants to rope in all the accused Nos. 3 to 15 by reason that the said accused were Directors of the accused No.1 or accused No.2 at some ::: Downloaded on - 09/06/2013 15:52:48 ::: 17 point of time. Accused No. 16 who has been discharged by the learned revisional court was impleaded only because he was a Secretary.
18. The Apex Court in the case of Maksud Saiyed (cited supra) has observed in paragraphs 13 and 14 thus :
"13. 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 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 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.::: Downloaded on - 09/06/2013 15:52:48 ::: 18
14. It will bear repetition to state that throughout the complaint petition, no allegation had been made as against any of the respondents herein that they had any thing to deal with personally either in discharge of their statutory or official duty. As indicated herein before, in the prospectus, a bona fide mistake had been committed.
The fact that such a mistake had been committed stands accepted. In any event, the statement that the matter was pending before the DRT in stead and place of the City Civil Court, Ahmedabad, per se, cannot be said to be defamatory as the fact that a suit was pending for recovery of the huge amount is neither denied nor disputed. Whether such a suit was maintainable and/ or is ultimately to be decreed or disposed of is a question which has to be gone into in the suit itself. A criminal court cannot even take that factor into consideration. The High Court considered the matter at some great details.
Having analysed the materials placed before it, it was held:
"It was, therefore, stated that there was no suppression or concealment of any facts and it did not amount to criminal breach of trust and cheating on the part of the Bank as alleged by the complainant. The said export bills under L/C were negotiated by the Bank under the provisions of UCPDC 500 1995 Revision. The Bank has also informed vide its letter dated 8.2.2005 to M/s. SBI Capital Markets Ltd. It was stated therein that the Bank has not concealed or suppressed any material fact against the interest of the public at large and investors in ::: Downloaded on - 09/06/2013 15:52:48 ::: 19 particular. The bonafide mis-description in setting out the nature of claim was unintentional. It was further stated that the material particulars like the amount of claim, date of filing and name of the company was correctly mentioned. The mis-description did not materially influence/affect the decision of the investors/public......."
It was furthermore opined:
"It appears to the Court that the learned Chief Judicial Magistrate has not applied his mind while passing the Order under Section 156(3) of the Criminal Procedure Code directing the police to investigate in the matter. The impugned Order, on the face of it, reveals that he has not gone through the complaint. He has stated in the Order that the accused 1 to 10 are Manager and Branch Manager of Dena Bank. As a matter of fact, the accused No. 1 was the Ex-Chairman and Managing Director of Dena Bank, and the accused No. 2 was the Executive Director. The accused Nos. 3 to 10 are Directors of Dena Bank. None of these persons are Managers or Branch Manager. Despite this, the learned Chief Judicial Magistrate has mentioned in his Order that they are Managers or Branch Managers. With regard to the prospectus he has simply stated that the Bank has issued prospectus for its public issue and at p. No. 87 false informations were given so as to cause damage to the Company and to jeopardize the reputation of the Company. Despite the fact that the litigations are pending ::: Downloaded on - 09/06/2013 15:52:49 ::: 20 before the Civil Court he has mentioned about non- returning of export bills, etc. On these facts he has passed Order under Section 156 (3) of the Criminal Procedure Code, directing the PSI, Sayajiganj Police Station to make inquiry in the matter."
The approach of the High Court, with respect, is entirely correct. "
19. The Apex Court in the case of S. K. Alagh (cited supra) in paragraphs 19 and 20 has observed thus:
"19. 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. (See Sabitha Ramamurthy v. R.B.S. Channabasavaradhya).
20. We may, in this regard, notice that the provisions of the Essential Commodities Act, the Negotiable Instruments Act, the Employees' Provident Funds (Miscellaneous Provisions) Act, 1952 etc. have created such vicarious liability. It is interesting to note that ::: Downloaded on - 09/06/2013 15:52:49 ::: 21 Section 14-A of the 1952 Act specifically creates an offence of criminal breach of trust in respect of the amount deducted from the employees by the company. In terms of the explanations appended to Section 405 of the Penal Code, a legal fiction has been created to the effect that the employer shall be deemed to have committed an offence of criminal breach of trust. Whereas a person in charge of the affairs of the company and in control thereof has been made vicariously liable for the offence committed by the company along with the company but even in a case falling under Section 406 of the Penal Code vicarious liability has been held to be not extendable to the Directors or officers of the company. (See Maksud Saiyed v. State of Gujarat)"
20. The same view is reiterated by the Apex Court in the case of R. Kalyani (cited supra). It is thus a settled position of law that only when a statute contemplates creation of a legal fiction that the Directors of the company would be vicariously liable for the offences committed by a company, the Directors can be proceeded with for the said offences. It cannot be disputed that no such legal fiction is available in so far as the offence for which the accused Nos. 3 to 14 have been charged with. In the present case as already discussed hereinabove, the learned Magistrate had initially rightly refused to take cognizance of the matter and the learned revisional court on the first occasion had rightly held that no case for proceeding with the accused Nos. 2 to 16 was made out. However, the ::: Downloaded on - 09/06/2013 15:52:49 ::: 22 learned revisional court remanded the matter for reconsidering the issuance of process against accused Nos. 1 and 2. The learned Magistrate, in my view, had exceeded in his jurisdiction in issuing process against all the accused persons vide Order dated 27th April, 2007. The Court of Sessions Judge is superior to the Court of learned Magistrate and when the learned Sessions Judge had remanded the matter only for reconsidering the matter for reissuance of process to respondent Nos. 1 and 2, the learned Magistrate could not have issued process against all the accused. It is stated across the bar that the Order of the learned revisional court dated 9th November 2006, in so far it held that the non issuance of process against the accused Nos. 2 to 16 was justified, was challenged before this court, however, since in the meantime vide Order dated 27th April, 2007 the learned Magistrate had already issued process against all the accused the said proceedings in this court were disposed of as rendered infructuous. Be that as may it, the second Order of the Magistrate dated 27th April 2007 was also challenged by filing revision before the learned Sessions Judge and the learned Sessions Judge had rightly vide Order dated 20th June 2007 set aside the Order of issuance of process on the ground that the Order of the learned Magistrate did not reflect that he had considered the Order of the revisional court dated 9th November 2006. However, inspite of that the learned Magistrate again on 21st August 2007 issued process against all the accused on the ground that accused were elected and appointed by the shareholders ::: Downloaded on - 09/06/2013 15:52:49 ::: 23 and that they were in charge and responsible for the day to day affairs of the company. I find that the learned Magistrate had totally erred in issuing the process against the accused Nos. 3 to 16. The order of issuance of process against the accused No. 16 has already been set aside by the revisional court vide Order dated 19th March 2008. As already discussed hereinabove, merely because accused Nos. 3 to 15 were Directors of accused Nos. 1 and 2 and merely because since there was an averment that they were responsible for the day to day affairs of the company and for taking major decisions of the company, they could not have been proceeded further with the charges under the IPC, since there was no legal fiction making them vicariously liable for the offences charged with. In my considered view, the learned Magistrate has totally erred in issuing process against accused Nos. 3 to 16. The order of issuance of process therefore against accused Nos. 3 to 16 is not sustainable in law.
21. That leaves with the question as to whether the proceedings against accused nos. 1 and 2 are tenable or not in view of the Order of the revisional court dated 9th November 2006. For all the offences the accused Nos. 1 and 2 charged with, "mens rea" is one of the essential ingredients.
22. The learned Single Judge of this Court in the case of Motorola (cited supra) has observed thus :-
::: Downloaded on - 09/06/2013 15:52:49 ::: 24"Therefore, reliance upon M.V. Javali's case by Shri Rohatgi is not proper and correct and it cannot sustain prosecution against the petitioner company which being a juridical persons is in a sense doli incapax and it cannot commit an offence of cheating within the meaning of S. 415, which positively involves criminal intention to deceive others. The same is also true in respect of the offence of conspiracy which involves guilty mind to do an illegal thing. Therefore, although a person who is victim of deception can be a company, the perpetrator of deception cannot be a corporate body like a company or association. It can only be a natural person who is capable of having mens rea to commit the offence. Consequently, the words "whoever" occurring at the beginning of Section 415 and 120B cannot include in its sweep juridical person like a company. In view of this position the objection raised on behalf of the petitioner to the maintainability of the complaint will have to be upheld."
This Court in the case of Natural Sugar (cited supra) has observed thus:
"It cannot be disputed that the offences punishable under Sections 406 and 420 require mens rea. It is, therefore, necessary that "whoever" is alleged to have deceived must be a person capable of having the requisite mens rea. Since Company is juristic person and not a natural ::: Downloaded on - 09/06/2013 15:52:49 ::: 25 person, by no stretch of imagination, it can be said to have requisite mens rea. In so far as the reliance placed by the learned counsel on the judgment of the Constitution Bench of the Apex Court in the case of Standard Chartered Bank and others vs. Directorate of Enforcement and others [2006 ALL MR (Cri) 1209 (S.C)] (cited supra) is concerned. I do not find that said judgment would be applicable to the facts of the present case. In the aforesaid case, the Apex Court was considering a question of statutory offence. The Apex Court in the said ig case has held that in the case of absolute liability where the legislature by the clearest intendment establishes an offence where liability arises instantly upon the breach of the statutory prohibition, no particular state of mind is a prerequisite to guilt. It has been held that Corporation and individual person stand on the same footing in the face of such a statutory offence and that it is a case of automatic primary responsibility. The Apex Court itself has observed in paragraph 8 thus:
"It is only in a case requiring mens rea, a question arises whether a corporation could be attributed with requisite mens rea to prove the guilt."
It can thus clearly be seen that for all the three offences under Sections 406, 420 and 423 of IPC for which the process has been issued "mens rea" is one of the essential ingredient of the offence. Since accused Nos. 1 and 2 are juristic persons and not a natural person, by no stretch of imagination ::: Downloaded on - 09/06/2013 15:52:49 ::: 26 they can be said to have requisite mens rea. As such the proceedings against the accused Nos. 1 and 2 will also be not sustainable in law.
23. I find that even on merits the allegations in the complaint taken at face value did not make out a case for the offences charged with. The Apex Court has considered the similar facts in the case of Alpic Finance Ltd.
(cited supra) wherein a complaint was made for an offence punishable under Sections 420, 406, 423, 424 read with 120B of the IPC. The Apex Court has observed thus :
"There is no allegation that the respondents made any wilful misrepresentation. Even according to the appellant, the parties entered into a valid lease agreement and the grievance of the appellant is that the respondents failed to discharge their contractual obligations. In the complaint, there is no allegation that there was fraud or dishonest inducement on the part of the respondents and thereby the respondents parted with the property."
It can be seen that in the present complaint also there is no allegation that any of the accused obtained the product of the complainant by any fraudulent inducement or by wilful misrepresentation. As such I find that even on merits the allegations in the complaint do not constitute the ingredients of the offences charged with.
::: Downloaded on - 09/06/2013 15:52:49 ::: 2724. That leaves me to the last question as to whether the complaint could also be quashed in so far as the accused who have not approached this Court. The Apex Court in the case of Ashok Chaturvedi (cited supra) has observed thus:-
"6. It is true that out of 9 officials of the Company who are the accused persons in the criminal case, only 7 of them have preferred this special leave petition and R. K. Sharma, Whole-time Director, as well as Capt. G.P.S. Choudhary, Director of the Company have not preferred the Special leave petition. But in view of our conclusion that the allegations in the complaint petition do not make out any offence against any of the officers of the Company, it would be futile to allow continuance of the criminal proceedings so far as the said two officers of the Company are concerned.
7. In the premises, as aforesaid, we quash not only the cognizance taken by the Magistrate of the offences as against the 7 appellants but also against the said two officers of the Company, namely, Shri R. K. Sharma and Capt. G.P.S. Choudhary. This appeal is accordingly allowed."
25. Since I have taken a view that the complaint against any of the accused is not sustainable in law and since I am of the considered view that the complaint is nothing but an abuse of the process of law, I find that in ::: Downloaded on - 09/06/2013 15:52:49 ::: 28 view of the law laid down by the Apex Court in the case of Ashok Chaturvedi (cited supra) it will be futile to continue the criminal proceedings against the other accused persons merely because they did not approach this Court. I am therefore of the considered view that in the interest of justice it is necessary to quash the criminal proceedings against all the accused.
26. Rule is therefore made absolute by quashing of the said criminal proceedings being C.C. No. 4700076/SW/2007 pending in the Court of the Ld. Additional Chief Metropolitan Magistrate, 47th Court, Esplanade, Mumbai, against all the accused.
27. At this stage, the learned counsel for the respondent Nos. 1 and 2 prays for stay of the Order passed by this Court. However, in the light of the view taken by me, I am not inclined to grant the said prayer. The same is rejected.
(B. R. GAVAI, J.) ::: Downloaded on - 09/06/2013 15:52:49 :::