2020 (8) TMI 113 - HC - Companies Law

Court quashes criminal complaint & notice, emphasizes judicial scrutiny in summoning. Prevents abuse of process.

The court quashed the criminal complaint under Section 383(1A) of the Companies Act, 1956, and set aside the order framing notice under Section 251 ... Penalty u/s 383(1A) of the Companies Act, 1956 - non-application of mind - the company did not have a Whole-time secretary - order passed only on the basis of a bare complaint without any supporting documents - allegation is that despite having share capital of more than ₹ 50 lacs as on 31.03.1996, the company did not have a Whole-time secretary from 18.09.1997 - HELD THAT:- The respondent in this case as well, chose to file the criminal complaint without any supporting documents despite referring to them in the body of the complaint - A perusal of the complaint would show that in Para 4, it was stated that the criminal complaint had been filed only on the basis of an Inspection Report, conducted at the behest of the respondent which revealed the alleged contravention. However, neither the contents of any Inspection Report were reproduced in the complaint nor the same was filed along with the complaint. Learned ACMM, while passing the order on summoning had completely overlooked this aspect that not only the Inspection Report, which was stated to be the very basis of filing the complaint, was not filed, but the other supporting documents mentioned in the complaint were also not placed on record. This non application of mind continued when, again in absence of the above referred documents, ld. ACMM framing the notice under S. 251 Cr.P.C. against the petitioners. The respondent was well aware of the objections raised in the earlier petition but still remained in a state of inertia and did not bring on record the requisite documents for 9 years despite being in possession of those document for all these years. It is not a case of inadvertence but rather sheer continued negligence which has caused serious failure and prejudice to the petitioners - The application of mind at the time of taking cognizance and framing of notice is sine qua non. In the opinion of this Court, the impugned order of framing of notice and the earlier order of summoning were passed mechanically & in a perfunctory manner without any application of judicial mind either to the facts or to the records of the case. Accordingly, in the facts and circumstances of the case, the petition deserves to be allowed on this ground only and the other grounds raised need not be gone into. Petition allowed. ISSUES PRESENTED AND CONSIDERED 1. Whether the order framing notice under the criminal procedure provision for summary/summons trials was passed with requisite application of mind where the complaint relied upon certain documents but none were annexed to the complaint or placed on record at the stage of cognizance and summoning. 2. Whether permitting the complainant to place relied-upon documents on record long after framing of notice (post-charge stage) was permissible, and whether such belated filing amounted to filling lacunae impermissibly or caused abuse of process and prejudice to the accused. 3. Whether a subsequent petition under the inherent jurisdiction of the High Court to quash criminal proceedings is maintainable where earlier proceedings or petitions had been filed and dismissed/withdrawn, given a fresh cause of action arising from later orders passed without application of mind. ISSUE-WISE DETAILED ANALYSIS Issue 1: Application of mind at cognizance/summoning and at framing of notice Legal framework: The Code requires a magistrate/trial court to apply judicial mind when taking cognizance, summoning an accused and when framing notice under the provision applicable to summons trials. Orders at these stages must indicate satisfaction that the allegations together with material on record disclose a prima facie offence and must not be mechanical or perfunctory. Precedent treatment: The Court followed established principles from higher judicial decisions emphasizing that summoning and framing of notice are serious steps and that the magistrate must examine the complaint, statements and documentary material (if any) to determine if there are sufficient grounds for proceeding. Decisions stressing the need for a speaking order or at least an indication of application of mind were applied. Interpretation and reasoning: The Court examined the complaint and trial court record and found that the complaint repeatedly referred to an Inspection Report and other annexures as the basis for alleging contravention but none of those documents were filed with the complaint or available on record at the time of summoning or at the later stage when notice was framed. The summoning order and the notice-framing order were passed on pre-formatted proforma orders with blanks filled in, indicating a mechanical approach. The Court treated the absence of the very documents on which the complaint purported to rely as a fundamental defect demonstrating non-application of mind by the trial court at both stages. Ratio vs. Obiter: Ratio - Orders of summoning and framing of notice passed without the supporting documents referenced in the complaint, and without any indication of judicial application of mind, are vulnerable to quashment. Obiter - observations on administrative trends in usage of pre-formatted orders as symptomatic of non-application of mind. Conclusions: The impugned order framing notice was quashed and set aside because it was passed mechanically and without the requisite application of mind to the allegations and to the (non-existent) documentary material; the earlier summoning order similarly suffered from the same vice and contributed to prejudice. Issue 2: Permissibility and effect of belated filing of relied-upon documents after framing of notice Legal framework: The trial court has power to receive evidence and documents, but the propriety of admitting documents at a late stage must be judged against principles preventing abuse of the process, ensuring fairness and preventing prejudice to the accused. The Code and judicial precedents require that the prosecution should not be permitted to fill lacunae in the complaint at the post-charge stage if such belated steps cause injustice. Precedent treatment: The Court considered earlier authorities recognizing that in suitable cases documents may be placed on record subsequently, but emphasized that such permissibility does not cure an initial failure where the complaint itself did not disclose the basis for filing and where summoning/notice were issued without application of mind. A coordinate decision involving near-identical facts (absence of annexures) was noted as closely analogous and relied upon. Interpretation and reasoning: The Court found prolonged inaction by the complainant/respondent - possession of documents for years yet not filing them until after framing of notice - amounted to negligence rather than inadvertence. The belated filing (an application made years later and allowed) could not validate earlier mechanically passed orders. Admission of documents at that belated stage was held to be incapable of curing the foundational infirmity of the complaint and the earlier judicial orders. Ratio vs. Obiter: Ratio - Permitting the complainant to cure the foundational omission by filing documents after framing of notice, when the trial court originally ignored absence of those documents, cannot cure the defect of non-application of mind and may constitute abuse of process. Obiter - distinctions as to when later filing might be harmless were implicitly left to be determined case-by-case. Conclusions: The late placing of documents on record did not validate the earlier orders which had been passed without consideration of such material; the belated filing could not remedy the prejudice caused by mechanical summoning and framing of notice. Issue 3: Maintainability of a subsequent petition invoking inherent jurisdiction after earlier proceedings/petitions Legal framework: The inherent jurisdiction of the High Court to quash criminal proceedings may be exercised to prevent abuse of process and to secure the ends of justice; such jurisdiction is not ousted merely because an earlier application was rejected or withdrawn, provided circumstances have changed and a fresh cause of action has arisen. Precedent treatment: The Court followed binding authority holding that the High Court may entertain subsequent petitions under its inherent jurisdiction when facts changed or when continuation of proceedings, in light of later events, constitutes an abuse of process. This principle was applied to refuse the maintainability objection raised by the respondent. Interpretation and reasoning: The Court treated the subsequent framing of notice in absence of supporting documents as a fresh cause of action distinct from earlier petitions, thereby making the present petition maintainable. The delay or prior withdrawal did not bar invocation of inherent powers where later orders perpetuated the defect and prejudice. Ratio vs. Obiter: Ratio - A later petition under inherent jurisdiction is maintainable when subsequent judicial orders (post the earlier petition) create a fresh cause of action or continued abuse of process; prior dismissal/withdrawal does not preclude reconsideration on new facts. Obiter - no general rule as to limits of successive petitions beyond the facts of the case. Conclusions: The objection to maintainability was rejected; the Court retained jurisdiction to examine and quash the impugned notice-framing order passed without application of mind. Overall Disposition Having found non-application of mind by the trial court at summoning and at framing of notice, and having held the belated placement of documents incapable of curing that defect, the Court quashed and set aside the order framing notice under the relevant criminal procedure provision; ancillary applications were disposed of as infructuous and a copy of the order was directed to be communicated to the trial court.