Madhya Pradesh High Court
Yogita Ajmera vs The State Of Madhya Pradesh on 29 May, 2020
Author: Sunil Kumar Awasthi
Bench: Sunil Kumar Awasthi
1
THE HIGH COURT OF MADHYA PRADESH
M.Cr.C.No. No.21878/2017
(Pawan Kumar Ajmera s/o Late Nathulal Ji Ajmera)
Versus
(The State of Madhya Pradesh)
M.Cr.C.No. No.21888/2017
(Yogita Ajmera w/o Ritesh Ajmera
Versus
(The State of Madhya Pradesh)
Shri Vivek Dalal, learned counsel for the applicants.
Shri Amol Shrivastava, learned Panel Lawyer for the
respondent No.1/State.
Ms. Kiran Pal, learned counsel for the objector.
ORDER
(Passed on 29/05/2020) The applicants have preferred this petition under Section 482 of the Criminal Procedure Code, 1973 for quashment of First Information Report and all other consequential proceedings with regard to Crime No.13/2016 registered at Police Station Crime Branch, Indore District Indore (MP) against the applicants and other co-accused persons for the commission of offence punishable under Sections 406, 420, 467, 468, 471 and 120-B read with Section 34 of the Indian Penal Code, 1860.
(2). Brief facts of the case are that the aforesaid crime has been registered on the basis of FIR lodged by one Usha Jain w/o Surendra Jain, complaining that one Ritesh 2 Ajmera, Director of Phoenix Devcons Private Limited, Indore sold Plot No.1868, situated at Phoenix Township, Indore, measuring 1,000 sq. ft. to her for a consideration of Rs.3,80,000/-. Allegedly, despite entire consideration being paid by her, the possession of plot was not handed over to her and when she went to the spot to find out the location of her plot, it was revealed that no such plot exits on the spot. Usha Jain made a complaint that the accused persons have also got sanctioned forged site maps with regard to the aforesaid scheme in which many plots have been shown available for sale, though not physically existed on the spot. She further complained that the Directors of the company, Ritesh Ajmera, Chirag Shah, and their authorized agent Jitendra Pawar, Yogita Ajmera and Pawan Ajmera etc. are responsible for this cheating and forgery. During the course of investigation, it was revealed that not only complainant Usha Jain, but certain other persons have also been cheated in the manner that plots of land were sold to them despite the plots were not available physically on the spot. The Police, on completion of investigation, filed charge- sheet against fourteen named persons including the applicants and some other unnamed persons. (3). As common question of law and facts are involved in these three cases, therefore, they were heard analogously and are being disposed of by this common order. For the sake of convenience, facts are taken from Miscellaneous Criminal Case No.21878/2017.
(4). The present case has been registered against the applicants on the basis of complaint made by Usha Jain;
3and during investigation, it was revealed that complainant Usha Jain, Balkrishna Solanki and Mrs. Krishna Tiwari have also been cheated in the manner that plot of land was sold to them despite plot was not available physically on the spot.
(5). The contention of the learned counsel for the applicants is that there is no allegation in the entire charge sheet against the applicants that he / she at any point of time, in any manner, induced any person to part with any money or property with regard to sale of the plot. (6). It is further contended that no forged act has been attributed to the applicants and it is not the allegation of the complainant that the applicants had signed or executed any document which later on was revealed to be false, forged or fabricated. Although it is alleged in the complaint that when complainant went to the Office of the Company with Ashok Kumawat and Balkrishna Solanki at Orbit Mall, where the present applicants were there and he / she told them that township has been opened by the Chief Minister and all the papers of the colony are valid and you pay the installments and get registered plot otherwise price will rise double to triple; and on believing the statement, the complainant paid the installments, but this allegations made in the complaint are so absurd and even if the allegations made in the complaint are taken at their face value and accepted in entirety, even then no offence will be made out against the applicants, because no specific role or participation of the applicants has been assigned in the alleged crime. (7). It is further submitted that the applicants was merely a 4 formal Director of the Company and he / she acted as a Director of the Company for a brief period and he / she retired from the said post far back on 12th September, 2011. Even during the tenure of the Directorship, he / she was never involved in the day to day affairs of the Company and has never participated in any of the activities of the company. None of the documents bear the name or signatures of the applicants to establish any connection of the applicants with day to day affairs of the company or colony to hold him / her vicariously liable for the offence of the company and thus no case is made out against the applicants for just being a Director of the Company. The Company has not been arrayed as accused in the matter; and in such a situation, proceeding against the Director is not maintainable.
(8). Learned counsel for the applicants have submitted that another plot holder (s) had filed Writ Petition No.12992/2013 before this Court, wherein this Court vide order dated 12.11.2013. Mrs. Vinita Phaye, advocate was appointed as Commissioner to verify the development of the colony. It is submitted that the Commissioner Mrs. Vinita Phaye, advocate had submitted status report before this Court on 27.11.2013, wherein it has been intimated that colony was fully developed except for certain shortcomings. (9). It is further submitted that even otherwise, the matter pertaining to the compliant on the basis of which FIR has been registered against the applicants, has been amicably settled in between the complainant and the Company and no grievance of the complainant is left over with regard to 5 the said complaint. In the affidavit executed by the complainant, she has specifically stated that she does not want to pursue the matter any further. In these circumstances, any further proceedings in the matter is an abuse of process of the Court. Hence, learned counsel for the applicants prays for quashment of the FIR and all other consequential proceedings registered against the applicants.
(10). On the other hand, learned Public Prosecutor for the respondent / State of Madhya Pradesh has invited attention of this Court to the complaint and the statement of Usha Jain and other witnesses, stating that M/s. Phoenix Devcon Private Limited has cheated a number of persons including these witnesses, and therefore, the applicants, who was one of the Directors of the Company, is equally liable on the basis of vicariously liability of acts of the company. It is further submitted that there is specific allegation has been made against the applicants regarding inducement to complainant Usha Jain to invest money in purchasing plot, therefore, prayer for quashment of FIR as well as consequential proceedings is liable to be rejected. (11). I have given my anxious consideration to the facts of the present case and the rival contentions raised by the parties.
(12). In order to appreciate the role of the present applicants in the day to day operation of the company and their involvement in the company, it would be appropriate to commence factual narration from the date on which the company named Phoenix Devcons Pvt. Ltd. was 6 incorporated. The documents indicates that the company was incorporated on 24.09.2007. It is further borne out from the record that the present applicant Yogita remained the director of the company from 30.09.2008 to 12.02.2011 and applicant Pawan was inducted as director of company on 30.09.2008 and he resigned from the post of director on 27.12.2012.
(13). The company was incorporated to develop residential township and in order to achieve its objective, the company purchased the parcel of lands ad-measuring 58.139 acre and for smooth functioning of the company and implementation of the project, the revenue records were muted in the name of the company and diversion order was passed in its favour by the Sub Divisional Officer on 20.03.2009. The record also reveals that the layout plan of the township was duly approved by the town and country planning department and all other necessary permissions were accorded. In the light of these circumstances, it has been submitted by the learned counsel for the applicant that the intention of the company was never to commit fraud or embezzle money, otherwise the exercise under taken above would not have taken place.
(14). The company after having complied with all necessary conditions for commencing development of a township proceeded to advertise the project in order to attract the investors who shall purchase the fully developed plots. By following this mode of operation, the record indicates that large number of people invested in the Phoenix Devcons township project and the company collected amount upto 7 Rs. 32,66,50,128/-
(15). Until this point, the functioning of the company appears to be unblemished but the record demonstrated that the deviation in functioning of the company initiated after having collected large sum of money from the investors. Therefore, it appears that the company did not fulfill its promise of developing the plot and handing over physical possession of the same. Consequently, there are two categories of investors who are aggrieved by the action of the company and its directors. The first category is of those investors, who made payment of money and were issued allotment letter of plots but no sale deed was executed or registered in their favour. The second category is of those investors who made full and final payment of the money and the sale deed was also executed in their favour although the physical possession of the plot was not handed over to them.
(16). The present case involves the second category of investor. Once the necessary ascertain of facts is done with, it is appropriate to now deal with the role of the present applicant.
(17). I have duly perused the record and I am of the considered opinion that the prosecution has not been able to indicate the involvement of the present applicants in day to day management of the company or the manner in which the applicant was part of fraudulent design devised by Ritesh Ajmera and Chirag Shah. In order to rope in the Director of a company, who is not involving in management of the company requires clear involvement of such director 8 whereas a perusal of the FIR and the contents of the case diary falls short of insinuating the present applicants directly or indirectly.
(18). At this juncture, the observation of the Apex Court in the case of K.K. Ahuja vs V.K. Vora 2009 (10) SCC 48 is worth placing reliance on. The Hon'ble Apex Court has held as :
" Section 291 of the Said Act provides that subject to the provisions of that Act, the Board of Directors of a company shall be entitled to exercise all such powers, and to do all such acts and things, as the company is authorised to exercise and do. A company though a legal entity can act only through its Board of Directors. The settled position is that a Managing Director is prima facie in charge of and responsible for the company's business and affairs and can be prosecuted for offences by the company. But insofar as other directors are concerned, they can be prosecuted only if they were in charge of and responsible for the conduct of the company's business.
(19). In State of NCT of Delhi through Prosecuting Officer, Insecticides, Government of NCT, Delhi Vs. Rajiv Khurana reported in (2010) 11 Supreme Court Cases 469, it was observed thus at paragraph 17;
"17. The ratio of all these cases is that the complainant is required to state in the complaint how a Director who is sought to be made an accused, was in charge of the business of the company or responsible for the conduct of the company's business. Every Director need not be and is not in charge of the business of the company. If that is the position with regard to a Director, it is needless to emphasise that in the case of non- Director officers, it is all the more necessary to state what were his duties and responsibilities in the conduct of business of the company and how and in what manner he is responsible or liable."
Accordingly, it was held that in absence of such clear averments in respect of the respondent accused being in- charge of and responsible for conduct of business and no role having been specifically attributed to the respondent accused in commission of offence alleged, the accused cannot be compelled to face criminal trial. (20). In the case of GHCL Employee Stock Option Trust 9 Vs. Central Bureau of Investigation reported in 2013(4) SCC 505, It has been observed in paragraph 12 as follows--
"12. From a bare perusal of the complaint and the allegations made therein, we do not find in any of the paragraphs that the complainant has made specific allegations against Respondents 2 to 7. In Para 2 of the complaint, it is alleged that Respondents 2 to 6 are looking after the day-to-day affairs of the Company. With whom the complainant or its authorised representative interacted has also not been specified. Although in Para 11 of the complaint it is alleged that the complainant on numerous occasions met Accused 2 to 7 and requested to refund the amount, but again the complainant has not made specific allegation about the date of meeting and whether it was an individual meeting or collective meeting. Similarly, in Para 17 of the complaint, there is no allegation that a particular Director or Managing Director fabricated the debit note. In the entire complaint there are bald and vague allegations against Respondents 2 to 7."
(21). In the case of Sunil Bharti Mittal Vs. Central Bureau of Investigation reported in 2015(4) SCC 609, it has been held that--
"if the person or group of persons who control the affairs of the company commit an offence as well as they are "alter ego" of the company. In the present case, however, this principle is applied in an exactly reverse scenario. Here, company is the accused person and the Special Magistrate has observed in the impugned order that since the appellants represent the directing mind and will of each company, their state of mind is the state of mind of company and, therefore, on this premise, acts of the company are attributed and imputed to the appellants. It is difficult to accept it as the correct principle of law. As demonstrated hereinafter, this proposition would run contrary to the principle of vicarious liability detailing the circumstances under which a Director of a company can be held liable".
Observation as made in paragraph 42 is noteworthy in this context which is as follows--
"42. No doubt, a corporate entity is an artificial person which acts through its officers, Directors, Managing Director, Chairman, etc. If such a company commits an offence involving means rea, it would normally be the intent and action of that individual who would act on behalf of the company. It would be more so, when the criminal act is that of conspiracy. However, at the same time, it is cardinal principle of criminal jurisprudence that there is no vicarious liability unless the statute specifically provides so."
(22). It is alleged that accused persons have sold large number of plots which were not in existence or not located on the land belonging to other owners or on government and they have wrongful gain. However, the applicant has not executed any sale deed during the tenure of his/ her 10 directorship in favour of the complainants. He/ she did not sign the document nor he/she did endorse same as witness. The complaint does not make any averment so as to infer any fraudulent or dishonest inducement having been made by the applicants pursuant to which the respondent parted with the money.
(23). The applicants have neither executed any agreement or sale deed in favour of the complainants nor they have received any amount from them. They have been implicated in the present crime only on the basis that when complainant went to the office of company for depositing the second installment of the consideration amount at that time the applicants were present there and they told her that the Township was inaugurated by the Chief Minister and all papers of the colony are valid and they will pay the installment otherwise price will be risen double or tripal. On believing the statement of the of the applicants, complainant paid the installment. However, the said statement indicate that prior to the aforesaid conversation between applicants and complainant they have already booked the plot in the aforesaid colony and already paid the first installment of consideration amount, therefore, it cannot be said that the applicants are the persons, who induced the complainants to purchase the plots in the colony developed by Ms. Phoenix Devcons Pvt. Ltd. Therefore, no case for prosecution under Section 420 IPC is made out even prima facie.
(24). Learned counsel for the applicants has also relied upon the judgment of Hridaya Ranjan Pd. Verma and others vs. State of Bihar 11 & another reported in 2000 Cri.L.J. 2983, whereby the Hon'ble Apex Court has held that if a criminal prosecution was to take place arising out of breach of contract then the dishonest intention was to be shown at the beginning of the transaction i.e. at the time of making the promise. The relevant portion of the judgment reads as under:
"16. In determining the question it has to be kept in mind that the distinction between mere breach of contract and the offence of cheating is a fine one. It depends upon the intention of the accused at the time to inducement which may be judged by his subsequent conduct but for this subsequent conduct is not the sole test. Mere breach of contract cannot give rise to criminal prosecution for cheating unless fraudulent or dishonest intention is shown right at the beginning of the transaction, that is the time when the offence is said to have been committed.
Therefore it is the intention which is the gist of the offence. To prosecute a person of cheating it is necessary to show that he had fraudulent or dishonest intention at the time of making the promise. From his/her mere failure to keep up promise subsequently such a culpable intention right at the beginning, that is, when he/she made the promise cannot be presumed.
(25). In the case of S.W. Palanitkar And Ors vs State Of Bihar And Anr, AIR 2001 SC 2960, it has been held that in order to constitute an offence of cheating, the intention to deceive should be in existence at the time when the inducement was made. It is necessary to show that a person had fraudulent or dishonest intention at the time of making the promise, to say that he committed an act of cheating. A mere failure to keep up promise subsequently cannot be pre-sumed as an act leading to cheating.
(26). So far as the offence under Section 467, 468 and 471 of IPC is concerned, it is admitted that the applicant has not executed any sale deed in favour of the complainant. The 12 term forgery used in under Section 467 is defined under Section 463 of I.P.C. Whoever makes any false document or part of a document, with intent to cause damage or injury to the public or to any person, or to support any claim or title or to cause any person to part with property, or to enter into any express or implied contract, or with intent to commit fraud or that fraud may be committed, commits forgery.
Section 464 defining "making a false document" is extracted below:
"464. Making a false document.-A person is said to make a false document or false electronic record-
First.-Who dishonestly or fraudulently -
(a) makes, signs, seals or executes a document or part of a document;
(b) makes or transmits any electronic record or part of any electronic record;
(c) affixes any digital signature on any electronic record;
(d) makes any mark denoting the execution of a document or the authenticity of the digital signature, with the intention of causing it to be believed that such document or a part of document, electronic record or digital signature was made, signed, sealed, executed, transmitted or affixed by or by the authority of a person by whom or by whose authority he knows that it was not made, signed, sealed, executed or affixed; or Secondly.-Who, without lawful authority, dishonestly or fraudulently, by cancellation or otherwise, alters a document or an electronic record in any material part thereof, after it has been made, executed or affixed with digital signature either by himself or by any other person, whether such person be living or dead at the time of such alternation;
or Thirdly.-Who dishonestly or fraudulently causes any person to sign, seal, execute or alter a document or an electronic record or to affix his digital signature on any electronic record knowing that such person by reason of unsoundness of mind or intoxication cannot, or that by reason of deception practised upon him, he does not know the contents of the document or electronic record or the nature of the alteration.
Explanation 1 - A man's signature of his own name may amount to forgery.
Explanation 2 - The making of a false document in the name of a fictitious person, intending it to be believed that the document was made by a real person, or in the name of a deceased person, intending it to be believed that the document was made by the person in his lifetime, may amount to forgery.
[Note: The words 'digital signature' wherever it occurs were substituted by the words 'electronic signature' by Amendment Act 10 13 of 2009].
(27). The condition precedent for an offence under sections 467, 468 and 471 is forgery. The condition precedent for forgery is making a false document . However, This case does not relate to execution of any false document by the present applicant. If any officer bearer of company executed sale deed and registered it and even if it is assumed that it did not belong to company, it cannot be said to have made and executed false documents, in collusion with the other accused. There is no allegation that the applicant dishonestly or fraudulently claiming that he is owner of the land executed a sale deed in favour of the complainant, therefore, prima facie no offence under Section 467, 468, 471 is not attracted against the applicant. (28). More over in such indicated circumstances, the coordinate bench of this court in a case presented by Sonali Ajmera bearing M.Cr.C. No 4198/2017 had quashed the criminal proceeding by following the aforesaid analogy. (29). Learned counsel for the objector has relied upon the judgment passed by the Hon'ble Apex Court in the case of Prabhat Bhai Aahir and others Vs. State of Gujrat and another 2017 (9) SCC 641 in which it is held that where the case is not merely one involving a private dispute over a land transaction between two contesting parties, but involves allegations of extortion, forgery and fabrication of documents, utilization of fabricated documents to effectuate transfers of title before registering authorities and deprivation of complainant of his interest in land on basis of a fabricated power of attorney. If allegations in FIR are construed as they stand, it is evident that they implicate 14 serious offences having a bearing on a vital societal interest in securing probity of titles to or interest in land. Such offences cannot be construed to be merely private or civil disputes but implicate societal interest in prosecuting serious crime. But in the present case prima facie no material available to connect the applicant with the present crime, therefore the aforesaid judgment is not applicable in the facts of the instant case.
(30). Upon commutative consideration of the above, it is apparent without adopting any process of reasoning or analogy that the present applicant was not the managing director of the company and had resigned from the company, way back in the year 2009 and also served himself/ herself from the affairs of the company, the prosecution cannot be permitted to make him/her stand the trial merely because he/she was one of the director of the company at some point of time. Consequently, criminal proceedings initiated in furtherance to FIR bearing crime No.13/2016 registered at Police Station Crime Branch Indore against the present applicant Yogita Ajmera and Pawan Kumar Ajmera is hereby quashed. However, this order shall not influence the trial court so far as with respect to other co-accused persons.
(S. K. AWASTHI) JUDGE praveen PRAVEEN Digitally signed by PRAVEEN KUMAR NAYAK DN: c=IN, o=DISTRICT AND SESSION KUMAR COURT INDOR, postalCode=452005, st=Madhya Pradesh, 2.5.4.20=e98f729464903facdd39c454715 d6eccc5a350c9111fb019b34dace6d05b8f NAYAK d5, cn=PRAVEEN KUMAR NAYAK Date: 2020.05.29 14:25:54 -12'00'