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of <h1>Court Quashes Charges Against Company; No Mens Rea for Cheating, Case Deemed Civil, Lacks Jurisdiction.</h1> <h3>Motorola Incorporated Versus Union of India (UOI) and Ors.</h3> Motorola Incorporated Versus Union of India (UOI) and Ors. - TMI Issues Involved:1. Whether a company can have the requisite mens rea to commit the offence of cheating.2. Whether the dispute is of civil nature and if the process of the criminal court is being abused.3. Whether there is material to make out a prima facie case of cheating and conspiracy against the petitioner.4. Whether the court of the Judicial Magistrate at Khadki, Pune has territorial jurisdiction to take cognizance of the alleged offence.5. Whether there is proper and legal service of summonses to the petitioner and other accused in accordance with the provisions of Section 105 of the Cr.P. Code.6. Whether the exercise of inherent powers by the High Court is necessary to prevent abuse of process of the criminal court and to secure the ends of justice.Issue-wise Detailed Analysis:1. Mens Rea and Company:The court examined whether a company, being a juridical person, can possess the mens rea necessary for the offence of cheating under Section 420 of the IPC. The court referred to various judgments, including A.K. Khosla v. T.S. Venkatesan and Kalpanath Rai v. State, which held that a company cannot be prosecuted for offences requiring mens rea. The court concluded that a company, being an artificial person, cannot have the requisite mens rea to deceive others, and thus, cannot commit the offence of cheating or conspiracy.2. Nature of the Dispute:The court analyzed whether the dispute was of a civil nature. It was noted that the representations made in the Private Placement Memorandum (PPM) of 1992 included detailed risk factors, and the investors were cautioned about the potential risks. The court observed that the dispute arose from commercial transactions where the respondent did not achieve the anticipated profits. Referring to cases like Trisun Chemical Industry v. Rajesh Agarwal and Bomanji Kavasji v. Mehernosh, the court held that the dispute was essentially civil and that criminal proceedings were being misused to settle it.3. Prima Facie Case of Cheating and Conspiracy:The court examined the allegations made in the complaint and the representations in the 1992 PPM. It was found that the PPM contained detailed risk factors and did not give absolute warranties about the technical viability of the Iridium System. The court held that there was no fraudulent or dishonest inducement by the petitioner and that the allegations did not prima facie constitute the offence of cheating.4. Territorial Jurisdiction:The court considered whether the Judicial Magistrate at Khadki, Pune, had territorial jurisdiction. It was noted that the alleged misrepresentations and the resultant monetary loss occurred at the respondent's registered office in Mumbai. Referring to Section 179 of the Cr.P.Code and the full bench decision in Re Jivandas, the court held that the Khadki court did not have territorial jurisdiction as the cause of action did not arise within its limits.5. Service of Summons:The petitioner contended that there was no proper service of summonses in accordance with Section 105 of the Cr.P.Code. The court noted that this issue was not crucial to the case's outcome and did not affect the order of issue of process. The court decided not to delve into this matter, as the other accused were not parties to the petition.6. Exercise of Inherent Powers:The court deliberated on whether to exercise its inherent powers under Section 482 of the Cr.P.Code to quash the proceedings. Referring to various judgments, including State of Haryana v. Bhajanlal and Pepsi Food Ltd. v. Special Judicial Magistrate, the court concluded that this was an exceptional case where inherent powers should be exercised to prevent abuse of the process of the criminal court and to secure the ends of justice.Conclusion:The court allowed the petition, quashing the order dated 6.11.2001 passed by the Judicial Magistrate, F.C., Khadki, Pune, in C.C. No. 181 of 2001 against the petitioner company and all the remaining accused. The court emphasized that the dispute was essentially civil and that the criminal proceedings were an abuse of the process of the court.
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