Dismissal of Criminal Petition; Contractual Disputes Can Lead to Prosecution

The court dismissed the criminal petition seeking to quash proceedings under Section 482 of the Cr.P.C. The allegations of offences under various sections of the IPC, including fraudulent transfer and forgery, were deemed triable issues. The court held that vicarious liability requires specific allegations and that contractual disputes can lead to criminal prosecution if dishonest intentions are present. The NCLT's decision did not bar criminal proceedings, and the collected evidence supported a prima facie case. Legal precedents cited were found inapplicable, and the trial was allowed to proceed for further adjudication.

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Issues Involved:
1. Quashing of criminal proceedings under Section 482 of the Code of Criminal Procedure, 1973.
2. Allegations of offences under Sections 406, 420, 465, 468, and 471 read with Section 34 of the Indian Penal Code, 1860.
3. Vicarious liability of employees of the purchaser company.
4. Breach of contract and its implications for criminal prosecution.
5. Role of the National Company Law Tribunal (NCLT) and its decisions.
6. Admissibility and relevance of evidence collected by the Investigating Officer.
7. Applicability of legal precedents cited by the petitioners.

Detailed Analysis:

1. Quashing of Criminal Proceedings:
The petitioners sought to quash the proceedings in C.C. No.165 of 2018 under Section 482 of the Cr.P.C. The court emphasized that quashing criminal proceedings is warranted only in rarest of rare cases with extreme caution, as held by the Supreme Court in Skoda Auto Volkswagen India Private Limited v. The State of Uttar Pradesh.

2. Allegations of Offences:
The petitioners were accused of committing offences under Sections 406, 420, 465, 468, and 471 read with Section 34 of the IPC. The allegations included fraudulent transfer of company assets without the consent of certain shareholders and forgery of documents. The court found that these allegations were triable issues that should be adjudicated by the trial court.

3. Vicarious Liability:
The petitioners argued that they were merely employees of M/s. Clininvent Research Private Limited and not personally liable. The court noted that vicarious liability requires specific allegations, as held in Sharad Kumar Sanghi v. Sangita Rane and Sunil Bharti Mittal v. Central Bureau of Investigation. However, the court found that the charge sheet contained specific allegations against the petitioners, making it inappropriate to quash the proceedings at this stage.

4. Breach of Contract:
The petitioners contended that the allegations primarily constituted a breach of contract, which should not give rise to criminal prosecution for cheating. They argued that the charge sheet did not demonstrate dishonest intention from the beginning of the transaction. The court, however, stated that contractual disputes could also involve criminal acts, and the nature of civil and criminal proceedings are different. The court referred to Hridaya Ranjan v. State of Bihar, which emphasized that mere breach of contract does not constitute cheating unless there is dishonest intention from the outset.

5. Role of NCLT:
The petitioners highlighted that respondent Nos.2 and 3 had already approached the NCLT, which dismissed their claims. The court noted that the NCLT's decision did not preclude criminal proceedings, as civil and criminal remedies can coexist.

6. Evidence Collected:
The court observed that the Investigating Officer had collected material evidence and recorded statements under Section 161 of the Cr.P.C. The magistrate, upon reviewing the charge sheet, found a prima facie case against the petitioners and took cognizance of the offences. The court held that the truthfulness of the allegations was a matter for trial.

7. Legal Precedents:
The petitioners cited several legal precedents to support their case, including Hridaya Ranjan Pd. Verma, Sushil Sethi v. The State of Arunachal Pradesh, Ashok Giri v. State, and Mitesh Kumar J. Sha v. The State of Karnataka. The court found that the facts of these cases were distinguishable from the present case and did not support quashing the proceedings.

Conclusion:
The court concluded that the petitioners had not made out any ground to quash the proceedings. The criminal petition was dismissed, and the trial was allowed to proceed to adjudicate the issues raised. The court emphasized that the correctness of the allegations would be determined during the trial.

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