Calcutta High Court (Appellete Side)
Stock Holding Corporation Of India Ltd vs Smt. Indu Devi Tapuriah And The on 13 March, 2012
Author: Kanchan Chakraborty
Bench: Kanchan Chakraborty
1
IN THE HIGH COURT AT CALCUTTA
CRIMINAL APPELLATE JURISDICTION
(APPELLATE SIDE)
PRESENT :
The Hon'ble Justice Kanchan Chakraborty
C.R.R 1822 of 2009
With
C.R.R No. 1846 of 2009
C.R.R. 1847 of 2009
C.R.R. 1848 of 2009
C.R.R. 1849 of 2009
C.R.R. 1850 of 2009
C.R.R. 1851 of 2009
C.R.R. 1852 of 2009
C.R.R. 1853 of 2009
Stock Holding Corporation of India Ltd.
Versus
Smt. Indu Devi Tapuriah and the
State of West Bengal ( in C.R.R. 1846 of 2009)
Dr. K. C. Chakraborty and Ors.
Versus
Smt. Indu Devi Tapuriah and the
State of West Bengal (in C.R.R. 1822 of 2009)
Annur Rajagopal Sekar
Versus
Smt. Indu Devi Tapuriah and the
State of West Bengal (in C.R.R. 1847 of 2009)
Sobichelli Palyan Mahadevan Ramamurty
Versus
Smt. Indu Devi Tapuriah and the
State of West Bengal (in C.R.R. 1848 of 2009)
Shashikant Nayak @ Shashikant Laseminarayan Nayak
2
Versus
Smt. Indu Devi Tapuriah and the
State of West Bengal ( in C.R.R. 1849 of 2009)
Sanjeev Ghai
Versus
Smt. Indu Devi Tapuriah and the
State of West Bengal & Anr. ( in C.R.R. 1850 of 2009)
Raj Kumar Bansal @ Rajkumar Ranjit Rai Sawal
Versus
Smt. Indu Devi Tapuriah and the
State of West Bengal & Anr.(in C.R.R. 1851 of 2009)
Manoj Baskar @ Manoj Mahadev Baskar
Versus
Smt. Indu Devi Tapuriah and the
State of West Bengal & Anr.( in C.R.R. 1852 of 2009)
Siby Antony @ Siby Jeseph Antony
Versus
Smt. Indu Devi Tapuriah and the
State of West Bengal & Anr. ( in C.R.R. 1853 of 2009)
For the Petitioners : Mr. Sandipan Ganguly
Mr. Dolon Das Gupta
Mr. Amitava Mitra
For the O.P. No. 2 : Mr. Sabyasachi Banerjee
Mrs. Sutapa Sanyal,
Mr. Asish Mukherjee
Mr. Ayan Bhattacharjee
Heard On :
:19.08.2011,8.9.2011,29.11.2011,14.11.2011,30.11.2011,7.12.2011,2.12.2011,1
.12.2011,8.12.2011,13.12.2011,18.1.2012,13.1.2012,20.1.2012
Judgement On : 13.3.2012
Kanchan Chakraborty, J:
1) Smt. Indu Devi Tapuriah ( hereinafter referred to as O.P. No. 2) lodged one
complaint in the Court of learned Additional Metropolitan Magistrate, Calcutta
against the Punjab National Bank, Dr. K. C. Chakraborty (Chairman & Managing
Director, Punjab National Bank), J. M. Garg ( Executive Director Punjab National
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Bank), Branch Manager, Fort Branch Mumbai ( Anil Kumar Patil), General
Manager, Punjab National Bank (Surendra Singh Bhandari), Chief Manager,
Punjab National Bank ( Harjeet Sing Rekhi), Ramesh Kumar Kocher, Company
Secretary, Punjab National Bank, S. K. Agarwal, Dy. General Manager, Punjab
National Bank, S.K. Agarwal, Deputy General Manager, Punjab National Bank,
Alok Kumar (Recovery Manager, Punjab National Bank), and other petitioners.
The complaint was registered as C- 898/2008. Excepting the accused No. 1,
Punjab National Bank, all the persons made accused in the case have come up
with separate applications under Section 482 of the code of Criminal Procedure
praying for quashing of the proceeding against them on various grounds. The
accused No. 2 to 10, the officials of the Punjab National Bank together has taken
out one application being No. 1828 of 2009. All other applications mentioned in
the captioned above, have been taken out by other petitioners separately. Since
the questions raised by all the petitioners are same and arising out of one
complaint lodged by Smt. Indu Devi Taporiah against them, all the petitions are
disposed of by this common order.
2) In her petition of complaint dated 29.8.2008, the opposite party no. 2 alleged
that she was lawful owner of several shares of reputed companies including 6000
equity shares of Grashim Industries Ltd., 950 equity shares of Hindalco
Company Limited and 2600 equity shares of Larson & Toubro Ltd. She was
maintaining depository account in respect of those shares with Global Trust
Bank Ltd. She created pledge of said equity shares and securities in favour of
Nedungadi Bank Ltd ( taken over by accused no. 1 Punjab National Bank on and
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from 01.02.2003) for a period of one year so as to open an import letter of credit
for a sum of Rs. 70 lakhs in the name of Amgulf Polymers and Chemicals Ltd.
The opposite party no. 2 and the then Nedungaldi Bank Ltd. and its responsible
officers agreed to the terms and conditions of said pledge on 17.01.2002. The
pledge was created on 18.01.2002 for one year only, i.e., till 18.01.2003 by the
opposite party no. 2 in respect of her shares and securities. The Banking
company issued two letters on 31.01.2002 and 02.02.2002 in favour of Amgulf
Polymen and Chemicals Ltd. confirming sanction of import letter of credit and the
entire acts were done by the accused no. 11 i.e., Stock Holding Corporation of
India Ltd. and its officers. However, the accused no. 1, the Bank finally refused
issue such letter of credit to that company. Because of non-issuance of letter of
credit by the accused Bank, the pledge agreement became nonest and
infractuous automatically and was supposed to be closed. In stead of closing the
pledge on her shares and securities, the accused no. 1 and 11 retained the said
shares and securities of the opposite party no. 2. She requested Global Trust
Bank Ltd, Stock Holding Corporation of India Lmited and accused bank to
close/release said shares and securities. In stead of closing the pledge or
releasing the shares and securities, the accused Bank in connivance with
accused Stock Holding corporation of India Ltd. surreptitiously transferred the
shares of the opposite party no. 2 in their D. P. Account being client I.D. No.
36450 keeping the opposite party no. 2 in dark. The opposite party no. 2 sent a
legal notice on the accused Bank on 27.12.2003 mentioning therein the illegality
on its part and asked retransfer of her shares and securities in her favour and to
5
release the same by Stock Holding Corporation of India Ltd. The accused Bank
and its officers did not act as asked by the opposite party no. 2 but, on the
contrary, informed her in writing that her request was turned down on the
ground that the securities pledged were adjusted by the Bank towards liquidation
of the debt/liability of the said company and on 14.1.2004, informed her by
another letter that after having adjusted the said shares owned by the opposite
party no. 2 in favour of the said company, excess amount was paid over by the
accused bank to the said company.
3) It has been alleged by the opposite party no. 2 that the accused persons had
dishonest intention from the very inception to induce her to part with her and
entrust with them her shares and securities worth Rs. 200,00,000/- for causing
wrongful gain to them and wrongful loss to her. The pledge was created by the
opposite party no. 2 in favour of accused Bank for one year only through her
depositor participant Bank which was confirmed by the accused no. 11, Stock
Holding corporation of India Ltd.
4) Although expiry date of the pledge was clearly mentioned at the time of
creation of such pledge, the accused No. 11 Stock Holding Corporation India
Limited and its officers did not close the pledge or release the pledge on its expiry
but dishonestly transfered the shares to the account of a third person. Thereby,
the accused persons committed offence under Section 406 and420 of I.P.C. read
with Section 120 B of the I.P.C.
6
5) Annur Raja Gopal sekar, the petitioner in C.R.R. 1847 of 2009 claimed that he
joined the Stock Holding Corporation of India on 25.7.2007 and was not attached
to that company at the time of recording or invocation of the pledge in dispute.
6) Gobi chetti Palyan Mahadevan Rammurthy, the petitioner in C.R.R. 1848 of
2009 claimed that he joined the Stock Holding Corporation of India Ltd. on
3.5.2007 and was not attached to that company at time of recording or
invocation of the pledge in question.
7) The petitioners in C.R.R. 1849 of 2009, Sashi Kant Kayek, in C.R.R. 1850 of
2009, Sanjiv Ghani, in C.R.R. 1851 of 2009, Raj kumar Bansal, in 1953 of 2009
Siby Anthony also claimed that they were not attached to the Stock Holding
corporation of India Ltd. at the time of recording or invocation of the pledge in
question.
8) The aforesaid petitioners claimed that the proceeding against them should be
quashed because they were not attached to either Stock Holding Corporation of
India Limited or Punjab National Bank at the time of recording or invocation of
pledge. They were not liable in any manner for any alleged loss caused to the
opposite party no. 2 or had any hand in the alleged breach of trust and cheating.
9) Manoj Baskar @ Manoj Mahadev Baskar , the petitioner in C.R.R. 1852 of
2009 claimed that he was the Company Secretary of Stock Holding Corporation
of India Limited at the time of recording or invocation of the pledge in question.
As a company Secretary, he had no role to play in the matter of recording or
invocation of the pledge. Therefore, the case against him should not be allowed to
be continued.
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10) There are 9 petitioners in C.R.R. 1822 of 2009 amongst them Dr. K. C.
Chakraborty joined Punjab National Bank as Chairman and Managing Director
with effect from 4.7.2007, that is, long after alleged recording or invocation of
pledge in question. The another petitioner K. Raghuraman E, joined Punjab
National Bank on 1.4.2006 as Director and continued his office till 30.3.2008. He
was not attached to Punjab National Bank at the relevant period of time. Another
petitioner J. M. Garg joined Punjab National Bank on 6.7.2007 as Executive
Director and continued his office as such till 6.11.2008. He was not attached to
Punjab National Bank at the relevant period and time. The other petitioners in
C.R.R. 1822 of 2009 have been prosecuted in their official designation not in
their names. They are Chief Managers, General Managers, Company Secretary,
Deputy General Manager of the Punjab National Bank.
11) Mr. Sandipan Ganguly, learned Counsel for all the petitioners contended that
the accused/petitioners who were not either attached to Stock Holding
Corporation of India Limited or Punjab National Bank at the relevant period of
time when the pledge in question was recorded or invoked, no criminal
prosecution can not be allowed to be continued against them in their names
because no criminality was attributed to them.
12) Mr. Sabyasachi Banerjee, learned Counsel appearing for the opposite party
no. 2 fairly conceded to the submission of Mr. Ganguly and contended that the
prosecution against those petitioners who were not either attached to Stock
Holding Corporation of India Limited accused no. 11 or Punjab National Bank
8
(accused no. 1) is not required to be continued because neither they had
knowledge about recording or invocation of the pledge in question nor they had
personally or under any capacity, any hand in the alleged breach of trust and
cheating.
13) In view of the submission above, the prosecution against petitioner Annur
Rajagopal Sekar C.R.R. 1847 of 2009, Sobichelli Palyan Mahadevan Ramamurty
petitioner in C.R.R. 1848 of 2009, Shashikant Nayak petitioner in C.R.R. 1849 of
2009, Sanjeev Ghai, petitioner in C.R.R. 1850 of 2009, Raj Kumar Bansal,
petitioner in C.R.R. 1851 of 2009, Siby antony petitioner in C.R.R. 1853 of 2009.
Dr. K. C. Chakraborty, K. Raghuraman and G. M. Garg the petitioner no. 1,2 and
3 in C.R.R. 1882 of 2009 are not required to be continued. Accordingly
prosecution against them stand queashed.
14) As far as claim of Monoj Barkar @ Manoj Mahadev Baskar the petitioner in
C.R.R. 1852 of 2009, is concerned, Mr. Banerjee, learned Counsel appearing on
behalf of the opposite party no. 2 submitted that he can not be put on the similar
footing with the above mentioned petitioners. So, submission made by Mr.
Ganguly on behalf of Mr. Mr. Barkar and opposed by Mr. Banerjee will be taken
up subsequently.
15) Now, the question is whether the prosecution against Stock Holding
Corporation of India Limited and the officials of Punjab National Bank who are
the petitioners no. 4 to 9 in C.R.R. 1882 of 2009 and Monoj Barkar petitioner in
C.R.R. 1852 of 2009 is to be quashed or not.
9
16) Mr. Sandipan Ganguly, Learned Advocate on behalf of the petitioners
contended that no where within four corners of the petition of complaint it has
been averred that Stock Holding Corporation India Limited as well as Punjab
National Bank induced the opposite party no. 2 to depart with her shares and
securities with mal intention for their wrongful gain. The ingredients of the
offence "cheating" are conspicuously absent against both Stock Holding
Corporation India Limited as well as Punjab National Bank. He contended further
there was no delivery of shares but recording of pledge of share for one year only
by the Stock Holding Corporation India Limited and subsequent invocation of the
pledge by Punjab National Bank was only after expiry of one year and that too
after giving notice. There was no false representation either on behalf of the Stock
Holding Corporation India Limited on the Punjab National Bank. He submitted
further that Global Trust Bank informed the opposite party no. 2 about
invocation/transfer of pledge/share prior to expiry of one year. Therefore, it can
not be said there was wrongful mis-appropriation share and securities of the
opposite party no. 2 by Stock Holding Corporation India Limited as well as
Punjab National Bank. When there was no entrustment of any property, offence
under Section 406 IPC is not attracted.
17) Mr. Banerjee, learned Counsel appearing on behalf of the opposite party no. 2
contended that Nadun Gadi Bank Limited was taken over by Punjab National
Bank with effect from 1.2.2003. By taking over the rights and liabilities of such a
bank, the Punjab National Bank has also taken over the responsibilities of all the
clients maintaining their accounts with Nadun Gadi Bank Limited and also taken
10
the responsibilities to maintain depository participant account of Stock Holding
Corporation India Limited. Punjab National Bank being successor in interest of
the Bank accepted the liability or responsibilities of the pledge in question which
was created in favour of Nadun Gadi Bank Limited knowing its purpose very well.
The agreement between Nadun Gadi Bank Limited and the opposite party no. 2
dated 17.1.2002 resulted in creation of a pledge on 18.1.2002 for one year was
obviously came to the knowledge of the Punjab National Bank when it took over
the rights and liabilities of the said bank. He submitted further that Punjab
National Bank was well aware of the fact that the two letters confirming sanction
of letter of credit were issued by the Bank which was taken over by it and the
pledge became infractuous after 18.2.2002. In such a case, Punjab National
Bank could not have invoked the pledge on 18.12.2003. Neither Stock Holding
Corporation India Limited nor the Punjab National Bank closed the pledge and
released the shares and securities despite request letter. The letter dated
27.12.2003 given by the opposite party no. 2 was received by the Punjab National
Bank and Punjab National Bank was not in a position to deny the allegation put
forth therein. Rather, it partly admitted the allegations made by the opposite
party no. 2. While the pledge itself shows the closing date of the same was
18.1.2003, and the P.W. 1, in connivance of Stock Holding Corporation of India
Limited, misappropriated the same by transferring the shares and, finally, using
the same for the purpose of liquidation of liability of a third client, cheated the
opposite party no. 2 and that case has been clearly made out in the petition of
complaint.
11
18) At this juncture it would be appropriate to look into the petition of complaint
which requires careful scrutiny. In paragraph 6 in the petition of complaint the
opposite party no. 2 stated that she created pledge in respect of equity shares
and securities in favour of the accused bank only i.e. Punjab National Bank for
one year only. The pledge was credited on 18.1.2002 between the opposite party
no. 2 and bank represented by its officer. It is stated also in paragraph 8 that the
banking company finally refused to issue the letter of credit in favour of Amgulf
Polymer and Chemical limited. In paragraph 9, it has been specifically stated that
the pledge became infractuous and non est for non-issuance of letter of credit in
favour of Amgalf Ploymer and Chemical Limited on expiry of 18.1.2003. It has
been mentioned in paragraph 10 that written information for closure of pledge
was given to Global Trust Bank India Limited, Punjab National Bank as well as
Stock Holding Corporation of India Limited with a request to release the shares
and securities under pledge which became non est on expiry of its stipulated
period of one year. That application was sent on 18.1.2003. On 18.1.2003,
naturally, the Punjab National Bank as well as Stock Holding Corporation of
India Limited were aware of the fact that the period of pledge was over and the
owner of the shares and securities should get the shares and securities back and
for that purpose those should be released after closure of the pledge. The
paragraph 9,11 and 12 make it abundantly clear that the Stock Holding
Corporation of India Limited as well as Punjab National Bank retained shares
and securities of the opposite party no. 2 knowing fully well that he pledge period
was virtually and legally over and the opposite party no. 2 is entitled to get his
12
securities and shares back in his own account. But the pledge was not closed
and shares and securities of the opposite party no. 2 were not released to her
account. It has been specifically mentioned in paragraph no. 12 that on the
contrary, the Punjab National Bank utilised the same towards liquidation of
debt/liabilities of a company. Which is entirely illegal. Again, by a letter dated
14.1.2004 the accused bank informed opposite party no. 2 to her shares and
securities for which pledge was credited was adjusted in favour of the said
company and excess amount was paid to that company.
19) In paragraph 16 and 17 the opposite party no. 2 has made it clear how the
Punjab National Bank and the Stock Holding Corporation of India Limited and
their responsible officers were involved in such illegal activities causing wrongful
loss of her.
20) There are some admitted position in this case :
i) The opposite party no. 1 was the owner of shares and
securities in dispute;
ii) that she has been maintaining depository account with
Global Trust Bank Limited with a specific client I.D. No.
;
iii) that there was an agreement on 17.1.2002 with Nadun
Gadi Bank Limited and the opposite party no. 2 for
creation of a pledge in respect of the said shares and
securities so as to enable Amgulf Polymer and Chemical
Limited to get a import letter of credit;
13
iv) that the pledge was credited on 18.1.2002 upon such
terms and condition only for one year expiring on
18.1.2003;
v) that Nadun Gadi Bank Limited was taken over by
Punjab National Bank with effect from 1.2.2003;
vi) that the Stock Holding Corporation of India Limited was
the depository participant of Nadun Gadi Bank Limited
and consequently Punjab National Bank;
vii) that the recording of pledge was done after confirmation
by Stock Holding Corporation of India Limited who was
depository participant of the Punjab National Bank;
viii) that the pledge was not credited in adjustment of any
debt/liabilities or any other company maintaining
separate account with the Punjab National Bank as well
as is depository participant Bank;
ix) that the pledge, virtually and in the eye of law, was non
est on expiry of 18.1.2003 but not closed and the shares
and securities under pledge were not released in favour
of the owner of the shares and securities but utilised by
the Punjab National Bank with confirmation from Stock
Holding Corporation of India Limited for the purpose of
adjustment of debt/liability of another account holder;
14
21) If the admitted facts are taken into consideration which have been clearly and
manifestly avered in the petition of complaint, it leaves no room of doubt that
Stock Holding Corporation of India Limited and Punjab National Bank have
obviously caused wrongful loss to the opposite party no. 2 in respect of her
shares and securities worth Rs. 200,00,000/-. In the petition of complaint at
paragraph 3, it has been mentioned clearly that the Monoj Baskar @ Manoj
Mahadev Baskar in C.R.R. 1852 of 2009 being the company Secretary of the
Stock Holding Corporation of India Limited at the relevant period of time of
recording and invocation of the pledge, was responsible for the regular business
and activities of the accused no. 11, i.e., Stock Holding Corporation of India
Limited.
22) It is trite law that where the allegations made in the first information report
or the complaint, even are taken on their face value and accepted in their entirety
do not prima facie constitute any offence or make out a case against the accused,
a prosecution can be quashed by High Court by exercising its inherent power
under Section 482 of the Code of Criminal Procedure. The view of Hon'ble Apex
Court in State of Hariyana Vs. Bajanlal reported in AIR 1992 Supreme Court 604
is the guarding principle on this issue which has been followed by all the High
Courts and the Apex Court itself in all its subsequent decisions. It is also settled
principle of law that inherent power under Section 482 to be exercised ex debetio
justiae to do real and substantial justice of administration of which alone the
Court exists. It is also a principle settled by the Hon'ble Apex Court that such
power should not be exercised to stifle a legitimate prosecution and Court should
15
refrain from their giving a prima facie decision in a case where entire facts are
incomplete and hazy. It should be exercised sparingly and in exceptional cases in
order to prevent abuse of the process of the Court and to prevent mis-carriage of
justice.
23) In the instant case, the opposite party no. 2 had taken recourse of several
Courts also and some orders were passed by this Court under civil jurisdiction. It
was argued that the C.S. No. 79 of 2004 is pending for hearing and decision. The
entire allegations and aspersions relating to shares and securities of opposite
party no. 2 appearing to be civil in nature. Therefore, when there is no criminality
is attributed to the petitioners in respect of same allegations and aspersions
amounting to civil in nature, continuation of such a criminal proceeding would
be amounting to abuse of the process of the Court.
24) It is settled principle of law that merely because an act has a civil profile that
does not denude it of its criminal outfit unless the allegations fall short in making
out a criminal case. No Criminal prosecution can be thwarted at the initial stage
merely because civil proceeding are also pending over the self-same allegation
and at the same time, there is no bar to the simultaneous continuation of a
criminal proceeding even when both arise out of same transaction, unless
element of criminality is absent. Even findings of fact recorded by civil Court do
not have any bearing so far as the Criminal case is concerned. In Krishan Singh
(D) through L.R.S. Vs Gurpal Singh and others reported in 2011 (1) CLJ S.C.
106, the Hon'ble Court observed that the law on the issue stands crystallised to
the effect that findings of fact recorded by Civil Court do not have any bearing so
16
far as the Criminal case is concerned and vice versa. Standard of proof is
different in a civil and criminal cases. In civil cases it is preponderance of
probability while in criminal cases it is proof beyond reasonable doubt. There is
neither any statutory nor any legal principle that findings recorded by the Court
either in civil or criminal proceeding shall be binding between the same parties
while dealing with the same subject matter and both the case have to be decided
on the basis of evidence aduced therein. It is true that the C.S. 79 of 2009 is
pending and the issue therein is the shares and securities which are disputed in
this criminal proceeding but, that can not be the ground for dis-continuing the
criminal proceeding.
25) Mr. Ganguly contended that the main ingredient of 406 of I.P.C. is
conspicuously absent in this case because there is no entrustment of any
property in favour of Stock Holding Corporation of India Limited or Punjab
National Bank. If the petition of complaint is read minutely, it can well be
understood that shares and securities were not personally handed over to Stock
Holding Corporation of India Limited or Punjab National Bank by the
complainant. Shares and Securities are not object or subject which can be
transfered by hand. Dealing with shares and securities is done by making
necessary entries. Transfer of share can also be done in such a manner. It is only
the account which is being maintained is concerned. Stock Holding Corporation
of India Limited given the green signal to the Punjab National Bank to accept the
pledge created by the complainant. It is true that the complaint herself made the
approach and according to her wish and desire the pledge was created. There
17
was no inducement on the part of the Stock Holding Corporation of India Limited
or Punjab National Bank (the then Nadun Gadi Bank Limited) to create such a
pledge by the complainant. I accept that proposition of Mr. Ganguly. But, the fact
that pledge was created upon certain terms and condition for a particular period
of time can not be ignored. It was obviously desire of the complainant that pledge
should not continue after certain period of time and same would be released
thereafter by the bank. On such believe, she acted. Had not the bank or the
Stock Holding Corporation of India Limited disclosed at that time that even after
expiry of the pledge period the same would not be released in favour of the
complainants' account but would be used for adjustment of debt/liability of
another account holder, the complainant perhaps would not have agreed to creat
the pledge. Therefore, Stock Holding Corporation of India Limited as well as
Punjab National Bank can not shrug off part of their involvement in the matter of
creation of the pledge. Whatever it might be, the ultimate result is that the shares
and securities of the complaints were not released to her own account but used
for the purpose of adjustment of debt and liabilities of another account holder
which was not the purpose of pledge and consented to by the complainant.
Everything was done to the detrimental to the interest of the complainant. She
felt defrauded and cheated because she never expected that the bank and Stock
Holding Corporation of India Limited would continue the pledge even after expiry
of the same and use the same for another purpose for their own benefit. On the
basis of terms and condition of the agreement, the complainant trusted the bank
18
as well as the Stock Holding Corporation of India Limited and there was a breach
of trust, nodoubt.
26) Mr. Ganguly submitted that the offence under Section 420 IPC has not been
made out. Since there is no mesne rea on the part of the Stock Holding
Corporation of India Limited or Punjab National Bank to deceive the complainant
to deliver any property, offence under Section 420 can not be said to have been
made out.
27) This Court reiterates that the terms and conditions of the pledge were very
important in the instant case. Because the complainant wanted to create the
pledge only for one year with the expectation, of course, that it would be released
after expiry of period of pledge and she would again become the owners of the
shares and securities without any encumbrances. Having that idea in her mind,
she created the pledge. The Stock Holding Corporation of India Limited or Punjab
National Bank, on their part, agreed to that terms and condition but violated the
same. That is how they deceived the complainant to create the pledge.
28) Mr. Ganguly has taken this Court to different averments in the petition of
complainant as well as the plaint filed in the civil suit and contended that neither
the bank nor Stock Holding Corporation of India Limited at any point of time
induced or deceived the complainant. No offence, in fact and in substance, under
Section 406 and 420 of IPC has been made out against the Stock Holding
Corporation of India Limited as well as Punjab National Bank and its officials.
29) I find that the learned Magistrate upon consideration of the averments made
in the petition of complaint as well as the initial statements recorded by it came
19
to a conclusion that a prima facie case is made out against the accused persons
including Stock Holding Corporation of India Limited and Punjab National Bank
and their officials under Section 406 and 420 IPC. Whether the allegations and
aspersions put forth in the petition of complaint are true or false is a matter to be
decided by the Trial Court. While dealing with an application under Section 482
Cr.P.C. for quashing of a proceeding, High Court should not or must be go into
the truthfulness or otherwise of the allegations and aspersions set forth in the
petition of complaint. Court is to see whether any prima facie case on the face of
allegations and aspersions is made out or not. The offences under Section 406
and 420 triable by the Magistrate. Matter would have been different had the
offences been triable as a sessions case. The accused persons can ask for their
discharge under Section 239 of Cr.P.C. in the Magistrate's Court itself and satisfy
the Magistrate that the charge against them to be groundless. This opportunity is
open to the accused persons.
30) Therefore, I find that the Stock Holding Corporation of India Limited has a
role rather active role in the matter of creation of the pledge, continuation of the
same after expiry period and transfer of the same in favour of the Punjab
National Bank and on the other and Punjab National Bank, though not a
petitioner herein, had active role in utilising the shares and securities of the
complainant after expiry of the pledge period for adjustment of debt/liability of its
account holder knowing fully well that the pledge in question was non est in the
eye of law and the shares and securities under pledge were to be released in the
account of the complainant. Therefore, the case against the Stock Holding
20
Corporation of India Limited can not be quashed. As far as the petitioner Monoj
Baskar @ Manoj Mahadev Baskar in C.R.R. 1852 of 2009 is concerned, Mr.
Ganguly submitted that he was simply a company secretary of the Stock Holding
Corporation of India Limited at the relevant period of time. As a company
Secretary, he has nothing to do with recording or invoking of the pledge as well
as transfer of the same to Punjab National Bank and not releasing the shares
and securities in favour of the complainant on expiry of pledge period. Mr.
Ganguly has drawn attention of this Court to the company secretary act 1980 as
amended in 2006 and submitted that company secretary can not made liable for
offence committed by the company. The Section 28 of the Company Secretary
Act, 1980 amended in 2006 says :
Offences by companies.
(1) If the person committing an offence under this Act is a company, the company
as well as every person in charge of, and responsible to, the company for the
conduct of its business at the time of the commission of the offence shall be
deemed to be guilty of the offence and shall be liable to be proceeded against and
punished accordingly:
Provided that nothing contained in this sub-section shall render
any such person liable to any punishment if he proves that the
offence was committed without his knowledge or that he had
exercised all due diligence to prevent the commission of such offence.
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(2) Notwithstanding anything contained in Sub section (1), where
an offence under this Act has been committed by a company and it is
proved that the offence has been committed with the consent or
connivance of, or that the commission of the offence is attributable to
any neglect on the part of, any director, manager, secretary or other
officer of the company, such director, manger, secretary or other
officer shall also be deemed to be guilty of that offence and shall be
liable to be proceeded against and punished accordingly
Explanation - For the purposes of this section,-
(a) "Company" means any body corporate and includes a firm or other
association of individuals; and
(b) "director", in relation to a firm, means a partner in the firm.
31) A bare reading of the Subsection (2) of Section 28 of the Act makes it clear
that a company secretary shall be liable to be proceeded against where an offence
under the Act has been committed by a company if the commission of offence is
attributed to any negligent on the part of, committed with the consent or
connivance of the secretary. In the petition of complaint it has been clearly
averred that the accused no. 13(a) were looking after the regular business and
activities of the accused no. 11 i.e. Stock Holding Corporation of India Limited at
the relevant period of time. There is specific averment to that effect in the
complainant against him. Therefore, it can not be said that there is no specific
averment against him in the petition of complaint making out a prima facie case
against him for the purpose of issuing process under Section 204 of Cr.P.C.
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32) At the bar the following decisions have been referred :
a) Kamaladevi Agarwal Vs. State of West Bengal & Ors.
Reported in (2002) 1 Supreme Court Cases 555.
b) All Cargo Movers ( India) Private Limited Vs. Dhanesh
Badarmal Jain & Anr. reported in (2007) 14 Supreme
Court Cases 776.
c) Maksud Saiyed Vs. State of Gujarat & Ors. reported in
(2008) 2 Supreme Court Cases (Cri) 692
d) S. K. Alagh Vs. State of Uttar Pradesh and Ors.
reported in (2008) 2 Supreme Court Cases (Cri) 686
e) K. V. Kamath Vs. Pradip Kr. Sureka & Ors. reported in
E Cr. N 2010 (1) (Cal) 509.
f) Harshendra Kumar D. Vs. Rebatilata Koley and Ors.
reported in (2011) 3 Supreme Court Cases 351
g) Ajay Mitra Vs. State of M. P. & Ors. reported in (2003) 3
Supreme Court Cases 11.
h) S.W. Palanitkar and Ors. Vs. State of Bihar & Anr.
reported in (2002) 1 Supreme court Cases 241.
a) In Kamaladevi Agarwal (Supra) the Hon'ble Court was
pleased to observe that criminal prosecution can not be
thwarted at the initial stage merely because civil proceedings
are also pending. It was further held that High Court was not
justified in quashing the criminal proceeding merely on the
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ground that the same document was under scrutiny by it in a
civil proceeding initiated by the same complaint.
b) In All Cargo Movers (India) Private Limited (Supra) it was held
by the Hon'ble Court that breach of contract simplicitor does
not constitute an offence either under Section 406 or Section
420 of I.P.C. Allegations in criminal complaint must disclose
the necessary ingredients therefor.
The facts before the Hon'ble court and that of this case are
quite different in nature and substance. There was a contract of
carriage to delivery of the cargo done without original bill of
leading. There was a suit filed by the respondent. One year
thereafter, a case of criminal breach of trust for causing criminal mis-appreciation of valuable property was lodged. The fact of the case in hands is quite different. Herein the parties agreed to terms and conditions to the pledge created by the complainant believing that the pledge would expire within a period of one year and the shares and securities would be released by the Stock Holding Corporation of India and the accused bank on expiry of the pledge. It can well be presumed Stock Holding Corporation of India Limited and Punjab National Bank together withheld the shares and securities in question on expiry of the pledge and that is how they have domain over the said shares and securities and 24 that is why they could use the same for their own purposes by way of adjusting debt/liability of their account holder.
c) In Maksud Saiyed (Supra) the Hon'ble Court held that in absence of requisite allegation vicarious liability of directors for the charges leveled against the company is untenable. There is no dispute as to the proposition propounded by the Hon'ble Court. The Directors have not been made personally liable for the offence alleged. On that count, the prosecution against some of the petitioners have already been agreed to be quashed.
d) In S. K. Alagh (Supra) the Hon'ble Court held that vicarious liability can not be fastened on Managing Director, Directorate or other officers of a company which is accused of commission of offence under Section 406 of the IPC.
e) In K. V. Kamath (Supra) this Court followed the view of the Hon'ble Apex Court in S. K. Alagh (Supra) and Mauksud Saiyed (Supra).
f) In Harshendra Kumar D. (Supra) it was held that proceeding against Director who had resigned prior to offence allegedly 25 committed by the company should be quashed and relegating made to face the trial would be abuse of the process of the Court.
g) In Ajay Mitra (Supra) the Hon'ble Court was pleased to observe that mesne rea at the time of inducing the person deceived to delivery any property to any person is essential to constitute an offence under Section 420 of the IPC and where the complaint or FIR prima facie does not disclose such mesne rea it can not be said that offence under Section 420 of IPC is made out. In case before the Hon'ble Court the commission of offence prima facie was not established. There was also no specific case of cheating. There is no dispute as to the fact that guilty intention is an essential ingredient of the offence of cheating and it should be in existence at the time when the inducement was offered. In the instant case, according to Mr. Ganguly, there was no inducement on the part of the Stock Holding Corporation of India Limited for delivering the shares and securities and entered into an agreement of pledge. Therefore, it can not be said that Stock Holding Corporation of India had an intention to deceive the complaint at the time when the pledge was created. The factual aspects of this case have been discussed thoroughly. It appears prima facie that 26 Stock Holding Corporation of India Limited deviated from the agreement entered into by the complainant with the Punjab National Bank with approval of the Stock Holding Corporation of India Limited, knowing fully well that the pledge in question would expire after the period of one year. The complainant believing on such terms and conditions, created the pledge. On the date the pledge expired, she informed all the concerned companies including Global Trust Bank limited requesting them to release the shares and securities in her account. She was completely ignored by them. The shares and securities so pledged were withheld by them and used the same for their own purpose after wards. Whether or not there guilty intention existed at the time the pledge was recorded and invoked, can well be judged by the Trial Court after taking evidence and on perusal of the documents to be admitted into evidence on behalf of the parties. At this stage it would be preposterous action for this Court to jump into a conclusion that there was no guilty intention at the time of recording and invocation of the pledge in question on the part of the Stock Holding Corporation of India Limited and accused bank. Therefore, I do not accept the proposition of Mr. Ganguly.
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h) In S.W. Palanitkar (supra) it was held that mesne rea is a necessary ingredient without it a breach of trust may not result in criminal breach of trust. This Court has already considered this proposition of law in the background of this case. It is really impossible for this Court to take even a prima facie view as to existence of mesne rea at the time of recording and invocation of the pledge on the part of the Stock Holding Corporation of India Limited and the accused bank.
33) From the observation above, this Court finds that the proceeding against Stock Holding Corporation of India Limited as well as Manoj Baskar @ Manoj Mahadev Baskar can well be continued by the learned Magistrate. This proceeding can not be quashed as prayed for.
34) The other proceeding against other petitioners stand quashed. All the relevant applications are disposed of accordingly.
35) No order as to costs.
(Kanchan Chakraborty,J)