2020 (7) TMI 736 - HC - Companies Law

High Court Sets Standard for Summoning Orders, Emphasizes Judicial Scrutiny

M/s Agrawal Khandelwal And Associates Charted Accountants Versus State of U.P. and Another

The High Court quashed the summoning order under Section 143 of the Companies Act 2013, emphasizing the necessity of a thorough judicial examination ... Principles of natural justice - allegation that the concerned Judicial Magistrate did not apply his judicial mind at the time of passing the summoning order against the applicant as the impugned summoning order has been passed in five lines based on proforma - HELD THAT:- The use of proforma in passing the judicial order is not proper and the order of summoning the applicant has been passed without application of judicial mind, which is substantiated by the fact that neither the facts of the case nor any finding or reason have been mentioned in the summoning order. The impugned order dated 27th February, 2019 is cryptic and is set aside - application allowed. Issues:1. Quashing of criminal proceedings under Section 143 of the Companies Act 2013.2. Legality of summoning order passed by the Special Judicial Magistrate.3. Application of judicial mind by the Magistrate.4. Use of proforma in judicial orders.5. Requirement of explicit narration of reasons for summons issuance.Analysis:1. The applicant filed an application under Section 482 Cr.P.C. seeking to quash the criminal proceedings of Complaint Case No. 11 of 2019 under Section 143 of the Companies Act 2013. The applicant contended that the summoning order passed by the Special Judicial Magistrate was based on a proforma and lacked judicial application, citing the case of Ankit Vs. State of U.P. The applicant argued that summoning in a criminal case is a serious matter and should be based on a thorough examination of the case.2. The learned Magistrate's summoning order was challenged on the grounds of being proforma-based and lacking judicial scrutiny. The applicant's counsel highlighted that the order was passed in five lines without any mention of facts, findings, or reasons, indicating a non-application of judicial mind. The opposition by the learned A.G.A. did not dispute these contentions.3. The High Court analyzed the legal requirement of the Magistrate to form an opinion on sufficient grounds for proceeding, as per Section 204 of the Code. Referring to the case of Bhushan Kumar v. State (NCT of Delhi), the Court noted that explicit narration of reasons for summons issuance is not mandatory. However, it emphasized the importance of the Magistrate forming an opinion after due application of mind, as highlighted in the case of Sunil Bharti Mittal v. CBI.4. The Court held that the use of proforma in passing judicial orders is improper, especially when summoning an accused. Citing precedents, the Court emphasized the necessity of the Magistrate applying judicial mind before issuing summons. The summoning order in question was deemed cryptic and not meeting the legal standards set by the Apex Court.5. Consequently, the High Court quashed the impugned summoning order dated 27.02.2019, directing the lower court to reconsider the complaint after a proper application of judicial mind. The judgment highlighted the importance of judicial scrutiny in summoning orders and the need for explicit reasoning, as per legal precedents. The application was allowed with no order as to costs, and procedural instructions were provided for filing and verification of the court order.