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Issues: (i) Whether the complaint disclosed a prima facie case of criminal breach of trust and cheating so as to justify issuance and continuance of process against the company and its directors; (ii) Whether the pendency of arbitration proceedings and the pleaded contractual terms barred or diluted the criminal prosecution; (iii) Whether the revisional court was justified in interfering with the Magistrate's order issuing process, including on the grounds of vicarious liability, delay, and the earlier inquiry under Section 202 of the Code of Criminal Procedure, 1973.
Issue (i): Whether the complaint disclosed a prima facie case of criminal breach of trust and cheating so as to justify issuance and continuance of process against the company and its directors.
Analysis: The complaint, read as a whole, alleged that pledged shares entrusted as security were sold by the accused to their own concern at a low price and in circumstances suggesting dishonest dealing and misappropriation. The materials before the Magistrate, including the complaint, verification, supporting documents, and the police inquiry report, were sufficient at the stage of process to indicate ingredients of criminal breach of trust and cheating. At the stage of summoning, the defence version could not be tested as if at trial.
Conclusion: The complaint disclosed a prima facie case and the order issuing process was justified.
Issue (ii): Whether the pendency of arbitration proceedings and the pleaded contractual terms barred or diluted the criminal prosecution.
Analysis: The existence of contractual arrangements or arbitration proceedings did not extinguish the criminality alleged in the complaint. Criminal liability for cheating may arise in commercial transactions, and arbitral proceedings do not have a determinative bearing on the criminal case. The pleaded contractual clauses and the arbitral award were matters of defence and could not by themselves defeat prosecution at the threshold.
Conclusion: The arbitration proceedings and contractual defences did not justify quashing or truncating the criminal process.
Issue (iii): Whether the revisional court was justified in interfering with the Magistrate's order issuing process, including on the grounds of vicarious liability, delay, and the earlier inquiry under Section 202 of the Code of Criminal Procedure, 1973.
Analysis: A company can be prosecuted for criminal offences and, where the allegations disclose its role in the transaction, it cannot be dropped at the threshold merely because imprisonment cannot be imposed on it. The complaint also contained sufficient allegations against the directors, and the earlier inquiry under Section 202 had already been carried out, so there was no necessity for a fresh report. The delay in filing the complaint was explained, and in any event the allegation of cheating was not rendered untenable on that ground. The revisional court erred in setting aside the process against the company and in exonerating the accused from the cheating charge.
Conclusion: The revisional court's interference was unsustainable, except that the Section 15-HA allegation was not pursued and stood dropped from the process order.
Final Conclusion: The process order was restored for the offences under the Penal Code, the complaints by the complainant succeeded, and the petitions by the accused failed.
Ratio Decidendi: At the stage of process or quashing, the court must see only whether the complaint and accompanying material disclose a prima facie criminal case; contractual remedies, arbitration, and proposed defences cannot negate prosecution where the allegations themselves disclose cheating or criminal breach of trust, and a company may be prosecuted as a juristic person.
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