Delhi High Court
Sunil Sareen vs Govt. Of N.C.T. Of Delhi And Anr. on 22 December, 1999
Equivalent citations: 2000IAD(DELHI)977, [2003]115COMPCAS290(DELHI), 2000CRILJ2087, 83(2000)DLT380, 2000(52)DRJ319
Author: K.S. Gupta
Bench: K.S. Gupta
JUDGMENT K.S. Gupta, J.
1. This petition under Section 482 of the Criminal Procedure Code, 1973, filed by the petitioner-accused No. 2 seeks setting aside of the order dated December 9, 1996, and quashing of the criminal proceedings pending against him before a metropolitan magistrate.
2. A complaint was filed by respondent No. 2 on May 3, 1994, inter alia, alleging that it is a company incorporated under the Companies Act, 1956, and is having its branch office at Surya Plaza, First Floor, K-185/1, Sarai Julena, New Friends Colony, New Delhi and has been carrying on business of manufacture of capacitors. Para. No. 2 which is relevant reads as under :
"That the accused No. 1 is a company registered under the Companies Act, 1956, and, inter alia, carrying on its business activities from 25, New Industrial Township, Faridabad, Haryana. Accused Nos. 2 to 7 are its directors responsible for its day to day functioning, as such are jointly and severally liable to the dues of the complainant."
3. It is stated that the complainant sold and supplied material against the orders placed by the accused and in discharge of their debt/liability accused issued cheques Nos. 000841 dated March 10, 1994, for Rs. 19,110 and 000846 dated March 14, 1994, for Rs. 32, 104.80, totalling to Rs. 51,214.80 in favour of the complainant and on presentation these cheques were returned unpaid on March 23, 1994, with the remark "exceeds arrangements". Para No. 6 which is also relevant reads as follows :
"That despite assurances of the accused persons that the said cheques would be honoured by their bankers on presentation, the said cheques had been returned back due to insufficiency of funds. In this way the accused persons including accused Nos. 2 to 7 who are officers responsible for the affairs of the management of the business of accused No. 1, have committed an offence under the provisions of Section 138 of the Negotiable Instruments Act as amended up to date."
4. In the subsequent paras of the complaint it is further alleged that the complainant issued notice dated March 28, 1994, calling upon the accused persons to make the payment of the amount covered by both the cheques in question within 15 days of the receipt of notice. Despite the service of the notice on March 30, 1994, the accused have failed/neglected to pay the said amount together with incidental charges. Accused have thus rendered themselves liable to be prosecuted under the provisions of the Negotiable Instruments Act, 1881 (for short "the Act"), and, therefore, they may be summoned, tried and punished in accordance with law.
5. To appreciate the submission advanced on behalf of the petitioner which I shall be referring hereinafter reference to the statement of Rajiv Agnihotri, marketing manager examined as CW-1 under Section 200 of the Criminal Procedure Code by respondent No. 2 and also the relevant portion of the said notice. Ex. CW-1/H which forms part of pre-summoning evidence, is necessary. CW-1, inter alia, deposed that accused No. 1 is a public limited company and it has got a factory in Faridabad and head office at Connaught Place, New Delhi. Accused Nos. 2 to 7 are the directors of accused No. 1. The entire business in the company is being conducted by accused Nos. 2 to 7 who are also the officers in charge and looking after the day to day affairs of the company and are responsible jointly and severally. They supplied material to the accused company and in discharge of their liability accused No. 1 at the instance of accused Nos. 2 to 7 issued and delivered the two cheques in question.
6. Last but one para, of the notice Ex.CW-1/H reads as follows :
"You addressee Nos. 2 to 6 being officers in charge of the affairs of the company are also liable for the payment of the said cheques and in case you all fail to make the payment of the said amount represented by the said cheques, you all shall be criminally liable under the Negotiable Instrument Act as provided thereof."
7. The submission advanced by Sh. D.C. Mathur, senior advocate, appearing for the petitioner was that both the cheques in question are not signed by the petitioner and as is evident from para. No. 2 of complaint the criminal liability is sought to be fastened by respondent No. 2 not in the capacity of the petitioner being in charge of and responsible to accused No. 1 company for the conduct of its business but by virtue of the petitioner being a director of accused No. 1 company. In support of the submission in addition to said para. No. 2 of the complaint he also invited my attention to para. No. 12 of the decision in Municipal Corporation of Delhi v. Ram Kishan Rohtagi, . Reliance was further placed on the decisions in Smt. Adrash Marwaha v. Nihar Ranjan Bhattacharya [1992] 2 CC Cases 145 (HC), Mahendra Pratap Singh Ratra v. N.K. Metals [1999] 97 Comp Cas 152 (Delhi); [1998] 2 JCC Delhi 270, Col Sir Buta Singh v. Municipal Corporation of Delhi [1977] 1 FAC 163 ; Vikas Pahwa v. State [1996] 2 AD 549 (Delhi) and Pepsi Foods Ltd. v. Special Judicial Magistrate .
8. Beside the said para. No. 12, paras 8, 9, 10 and 15 of the decision in Ram Kishan Rohtagi's case , are also material and they read as follows :
"8. Another important consideration which is to be kept in mind is as to when the High Court acting under the provisions of Section 482 should exercise the inherent power in so far as quashing of criminal proceedings is concerned. This matter was gone into in greater detail in Smt. Nagawwa v. Veeranna Shivalingappa Konjalgi , where the scope of Sections 202 and 204 of the present Code was considered and while laying down the guidelines and the grounds on which proceedings could be quashed this court observed as follows (para. 5) :
'Thus it may be safely held that in the following cases an order of the magistrate issuing process against the accused can be quashed or set aside :
(1) Where the allegations made in the complaint or the statements of the witnesses recorded in support of the same taken at their face value make out absolutely no case against the accused or the complaint does not disclose the essential ingredients of an offence which is alleged against the accused ;
(2) Where the allegations made in the complaint are patently absurd and inherently improbable so that no prudent person can ever reach a conclusion that there is sufficient ground for proceeding against the accused ;
(3) Where the discretion exercised by the magistrate in issuing process is capricious and arbitrary having been based either on no evidence or on materials which are wholly irrelevant or inadmissible ; and (4) Where the complaint suffers from fundamental legal defects, such as, want of sanction, or absence of a complaint by legally competent authority and the like. The cases mentioned by us are purely illustrative and provide sufficient guidelines to indicate contingencies where the High Court can quash proceedings.'
9. Same view was taken in a later decision of this court in Sharda Prasad Sinha v. State of Bihar, where Bhagwati, J. speaking for the court observed as follows (para. 2) :
'It is, now settled law that where the allegations set out in the complaint or the charge-sheet do not constitute any offence, it is competent to the High Court exercising its inherent jurisdiction under Section 482 of the Code of Criminal Procedure to quash the order passed by the magistrate taking cognizance of the offence.'
10. It is, therefore, manifestly clear that proceedings against an accused in the initial stages can be quashed only if on the face of the complaint or the papers accompanying the same, no offence is constituted. In other words, the test is that taking the allegations and the complaint as they are, without adding or subtracting anything, if no offence is made out then the High Court will be justified in quashing the proceedings in exercise of its powers under Section 482 of the present Code . . .
12. Before going to the complaint, we might state that it is common ground that the complaint clearly contains the allegations regarding the visit of the inspector to the shop of respondent No. 6 (Madan Lal) and that the sample taken by him, which was sent to the public analyst, was manufactured by Upper Ganges Sugar Mills, Daryaganj, Delhi, having its registered office at Calcutta and that the public analyst found the samples to be adulterated. There is no dispute regarding these facts. The only point on which the controversy centres is as to whether or not on the allegations, the manager as also the other respondents Nos. 1 to 5 committed any offence. The main clause of the complaint which is the subject matter of the dispute is clause No. 5 which may be extracted thus :
'5. That the accused No. 3 is the manager of accused No. 2 and accused Nos. 4 to 7 are the directors of accused No. 2 and as such they were in charge of and responsible for the conduct of business of accused No. 2 at the time of sampling.'
15. So far as the manager is concerned, we are satisfied that from the very nature of his duties it can be safely inferred that he would undoubtedly be vicariously liable for the offence; vicarious liability being an incident of an offence under the Act. So far as the directors are concerned, there is not even a whisper nor a shred of evidence nor anything to show, apart from the presumption drawn by the complainant, that there is any act committed by the directors from which a reasonable inference can be drawn that they could also be vicariously liable. In these circumstances, therefore, we find ourselves in complete agreement with the argument of the High Court that no case against the directors (accused Nos. 4 to 7) has been made out ex facie on the allegations made in the complaint and the proceedings against them were rightly quashed."
9. The aforesaid para. No. 2 cannot be read in isolation of para. No. 6 as the allegations made in the complaint are to be read in its entirety. Reading both these paras. 2 and 6 together it is manifest that criminal liability arising out of dishonour of the two cheques in question is sought to be fastened by respondent No. 2 on the petitioner in the capacity of his being director as also he being responsible for the management of the business of accused No. 1 company along with the co-accused. That being so, the petitioner cannot derive any advantage of what has been observed by the apex court in paras. 12 and 15 in Ram Kishan Rohtagi's case .
10. Coming to the other decisions, in Smt. Adrash Marwaha's case [1992] 2 CC Cases 145 (HC) the opening lines of para. 4 indicate that the statement of PW-1 examined in the case was confined to saying that the petitioner was one of the partners of the firm. Para. No. 10 of the decision in Mahendra Pratap Singh Ratra's case [1992] 97 Comp Cas 152 (Delhi); [1998] 2 JCC Delhi 270 notices that there was no allegation in the complaint or pre-summoning evidence that the petitioners-directors were at any point of time directly or indirectly in charge of and responsible to the company for the conduct of its day to day business nor was there any material on record which may even remotely suggest that the alleged offence was committed with the consent or connivance of or was attributable to any neglect on the part of the petitioners within the meaning of Section 141 of the Act. In Col Sir Buta Singh's case [1977] 1 FAC 163 as is manifest from the discussions made in paras. 5 and 7, the statement of PW-1 Joginder Singh, Food Inspector was silent that the petitioner was in charge of and responsible to the company. In Jarnail Singh's case reading of paras. 5 and 15 would reveal that the matter came up before this court after the cross-examination with Food Inspector was completed. As is manifest from the discussion made in para. 3 in Vikas Pahwa's case [1996] II AD 549 (Delhi) there was no material available on record which may have suggested even remotely that the petitioner was in charge of and responsible to the company for the conduct of its business. Discussion made towards the middle in para. No. 29 in Pepsi Foods Ltd.'s case , 761 which is material runs thus :
"The allegations in the complaint merely show that the appellants have given their brand name to 'Residency Foods and Beverages Ltd.' for bottling the beverage 'Lehar Pepsi'. The complaint does not show what is the role of the appellants in the manufacture of the beverage which is said to be adultered. The only allegation is that the appellants are the manufacturers of bottle. There is no averment as to how the complainant could say so and also if the appellants manufactured the alleged bottle or its contents. His sole information is from A. K. Jain who is imp leaded as accused No. 3. The preliminary evidence on which the first respondent relied in issuing summons to the appellants also does not show as to how it could be said that the appellants are manufacturers of either the bottle or the beverage or both."
11. Obviously, said decisions are distinguishable and have no applicability to the facts of the present case.
12. This brings me to yet another submission advanced on behalf of the petitioner that there is omnibus statement made in the complaint as also in the deposition of Rajiv Agnihotri, CW-1 about the petitioner being responsible for the conduct of business of accused No. 1 company along with co-accused and, therefore, such a statement cannot be accepted at its face value. In support of the submission strong reliance was placed on the observations made in para. 31 of the decision in Pandurang v. State of Hyderabad, . On the other hand, it was contended by Sh. S. C. Verma appearing for respondent No. 2 that during the course of enquiry under Section 200 of the Criminal Procedure Code the magistrate has to satisfy himself simply on the evidence adduced by the complainant whether prima facie case has been made out so as to put the proposed accused on a regular trial and that no detailed enquiry is called for at that stage. Reliance was placed on the decision in Mohinder Singh v. Gulwant Singh .
13. The relevant portion in para. 31 in Pandurang's case, on which reliance was placed runs as under (page 221) :
". . . that the 'accused' raised their axes and sticks and threatened her when she called out to them, but that again is an all embracing statement which we are not prepared to take literally in the absence of further particulars. People do not ordinarily act in unison like a Greek chorus and, quite apart from dishonesty, this is a favourite device with witnesses who are either not mentally alert or are mentally lazy and are given to loose thinking. They are often apt to say 'all' even when they only saw 'some' because they are too lazy, mentally to differentiate. Unless, therefore, a witness particularises when there are a number of accused it is ordinarily unsafe to accept omnibus inclusions like this at their face value. We are unable to deduce any prior arrangement to murder from these facts."
14. In para. 11 (page 545) in Mohinder Singh's case which is material it was held by the Supreme Court :
"This court as well as various High Courts in a catena of decisions have examined the gamut and significance of Section 202 of the Code and settled the principle of law, the substance of which is as follows :
The scope of enquiry under Section 202 is extremely restricted only to finding out the truth or otherwise of the allegations made in the complaint in order to determine whether process should issue or not under Section 204 of the Code or whether the complaint should be dismissed by resorting to Section 203 of the Code on the footing that there is no sufficient ground for proceeding on the basis of the statements of the complainant and of his witnesses if any. But the enquiry at that stage does not partake of the character of a full dress trial which can only take place after process is issued under Section 204 of the Code calling upon the proposed accused to answer the accusation made against him for adjudging the guilt or otherwise of the said accused person. Further, the question whether the evidence is adequate for supporting the conviction can be determined only at the trial and not at the stage of the enquiry contemplated under Section 202 of the Code. To say in other words, during the course of the enquiry under Section 202 of the Code, the enquiry officer has to satisfy himself simply on the evidence adduced by the prosecution whether prima facie case has been made out so as to put the proposed accused on a regular trial and that no detailed enquiry is called for during the course of such enquiry. Vide Vadilal Panchal v. Dattatraya Dulaji Ghadigaonkar and Pramatha Nath Talukdar v. Saroj Ranjan [1962] 2 SCC 297."
15. It may be noticed that observations in the said para. No. 31 in Pandurang's case were made by the apex court while appreciating the testimony of Rasikabai, PW in appeal. In the present case only process under Section 204 of the Criminal Procedure Code has been issued and evidence of respondent No. 2/complainant on the merits is yet to commence. As laid down in the aforesaid para. 11 in Mohinder Singh's case the scope of enquiry under Section 202 of the Criminal Procedure Code is extremely restricted only to finding out the truth or otherwise of the allegations made in the complaint in order to determine whether process under Section 204 of the Criminal Procedure Code should issue or whether the complaint should be dismissed under Section 203 of the Criminal Procedure Code on the footing that there is no sufficient ground for proceeding on the basis of the statement of the complainant and the witnesses, if any, examined by him. That being so, the petitioner cannot seek any assistance from the decision in Pandurang's case, because of the present stage in the complaint proceedings. The allegations referred to above made in the complaint which alone are to be considered as per the test laid down in para. No. 10 in Ram Kishan Rohtag's case, prima facie make out a case against the petitioner for the offence for which he has been summoned by the order dated July 21, 1995, by the metropolitan magistrate. The petition has no force and thus deserves to be dismissed.
16. Consequently, the petition is dismissed.