2010 (10) TMI 83 - SC - Indian Laws

Company liable for fabricating false documents under sections 192 and 199 IPC but director escapes without specific allegations

The SC dismissed the appeal against appellant No. 1 (company), upholding that a prima facie case existed under sections 192 and 199 IPC for fabricating ... High Court has declined to quash a criminal complaint filed by respondents Nos. 1 to 3 in this appeal against the appellants and others for offences under sections 192 and 199 read with section 34 of the Indian Penal Code, 1860 (for short 'the IPC'). Issues Involved:1. Whether the High Court was correct in declining to exercise its jurisdiction under section 482 of the Code of Criminal Procedure, 1973, to quash the criminal complaint against the appellants.2. Whether the allegations in the complaint disclose a prima facie case against the appellants under sections 192 and 199 read with section 34 of the Indian Penal Code, 1860.3. Whether appellant No. 2 could be held vicariously liable for the alleged offences.Issue-wise Detailed Analysis:1. Jurisdiction under Section 482 of the Code of Criminal Procedure, 1973:The Supreme Court examined the scope and nature of the power of the High Court under section 482 of the Code. It was emphasized that although the inherent powers of the High Court are wide, they must be exercised sparingly and with caution to prevent abuse of the process of the court and secure the ends of justice. The Court referenced several precedents, including *R.P. Kapur v. State of Punjab* and *Rupan Deol Bajaj v. Kanwar Pal Singh Gill*, to underscore that powers under section 482 should be invoked when the allegations in the complaint do not constitute the offence alleged.2. Prima Facie Case under Sections 192 and 199 read with Section 34 of the IPC:The complaint alleged that appellant No. 1, acting under the control and management of all accused, including appellant No. 2, fabricated a document and tendered it in evidence before the arbitral tribunal, thereby committing offences under sections 192 and 199 read with section 34 of the IPC. The Court outlined the ingredients necessary for constituting an offence under sections 192 and 199, emphasizing that a false statement or fabricated document must be made with the intention to influence the outcome of a judicial proceeding.The Court found that the complaint disclosed a prima facie case against appellant No. 1 company as the document in question (exhibit C-64) was submitted with the intention to support the averments in the written statement filed on their behalf, which could influence the decision of the arbitral tribunal. However, the Court noted that the complaint did not contain specific averments against appellant No. 2, demonstrating his direct involvement in the alleged fabrication.3. Vicarious Liability of Appellant No. 2:The Court examined whether appellant No. 2 could be held vicariously liable for the alleged offences. It was highlighted that vicarious liability must be specifically provided for in the statute concerned, and neither section 192 nor section 199 of the IPC incorporates the principle of vicarious liability. The Court referenced *S.K. Alagh v. State of Uttar Pradesh* and *S.M.S. Pharmaceuticals Ltd. v. Neeta Bhalla* to assert that a director or chairman of a company cannot be presumed to be responsible for all acts committed by or on behalf of the company without specific allegations.The Court concluded that the complaint did not establish that appellant No. 2 was involved in the alleged fabrication of false evidence or adducing the same in evidence before the arbitral tribunal. The Court also noted that section 34 of the IPC, which deals with common intention, was not attracted in appellant No. 2's case as the complaint did not indicate any pre-arranged plan or participation by appellant No. 2 in the acts constituting the offence.Conclusion:The Supreme Court dismissed the appeal in relation to appellant No. 1, holding that a prima facie case under sections 192 and 199 of the IPC was made out against the company. However, the appeal was allowed in relation to appellant No. 2, and the order of the Magistrate taking cognizance against appellant No. 2 was quashed, as no prima facie case was made out against him.