TaxTMI 
TaxTMI 
2009 (9) TMI 573
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....on behalf of the complainant-opposite party. 3. Before entering into the contents of the complaint and determining the question as to whether the complaint discloses commission of any offence, it is imperative to point out at the very outset, that accused-petitioner No. 1, namely, Mahindra and Mahindra Financial Services Ltd. (herein-after referred to as "the accused company") is, admittedly, a company registered under the Companies Act, 1956, which finances purchase of vehicles, and accused-petitioner No. 2 is its managing director. As far as the remaining accused persons, against whom processes have been directed to be issued, are concerned, they are not petitioners in the present proceeding. 4. The complainant's case may, in brief, be described thus : In the month of April, 2003, agents and representatives of the accused company approached the complainant with various schemes of financing, as regards purchase of vehicles, on the basis of hire-purchase agreement. Induced by accused Nos. 2 and 3, namely, managing director and branch manager of the accused company respectively, the complainant entered into a hire-purchase agreement with the accused company, on 20-6-2003, for ....
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....-petitioners, it has been submitted by Ms. Hazarika, learned senior counsel, that the complaint, when read as a whole, does not disclose commission of any offence by any of the accused named in the complaint inasmuch as the complainant had voluntarily entered into an agreement on 20-6-2003 and obtained a sum of Rs. 3,14,000 as loan, which was payable with interest within a period of three years. It is pointed out by Ms. Hazarika that the complainant took delivery of the vehicle on 23-6-2003 and the sale certificate as well as the registration certificate, issued by the Motor Vehicular Department, clearly indicate that the vehicle stood hypothecated to the accused company. It is also pointed out by Ms. Hazarika that the complainant became a habitual defaulter inasmuch as several cheques, issued by the complainant, were dishonoured by the bank due to insufficiency of fund and despite several visits made to the complainant by the representatives of the accused company, the habitual default of the complainant towards repayment of his loan continued. Having been left with no other alternative and acting upon the terms of the agreement of loan, the accused company, according to Ms. Hazar....
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....for the offences aforementioned inasmuch as the accused company can be clearly seen to have, in the facts and attending circumstances of the present case, committed the offences aforementioned. In support of his submissions, Mr. Bhuyan has placed reliance on S.M.S. Pharmaceuticals Ltd. v. Neeta Bhalla [2007] 136 Comp. Cas. 268^1 (SC). 8. Before entering into the merit of this criminal petition, it is necessary to point out that the law with regard to quashing of criminal complaint or FIR is no longer res integra. A catena of judicial decisions has settled the position of law on this aspect of the matter. I may refer to the case of R.P. Kapur v. State of Punjab AIR 1960 SC 866, wherein the question, which arose for consideration was whether a First Information Report can be quashed under section 561A of the Code of Criminal Procedure, 1898. The Court held, on the facts before it, that no case for quashing of the proceeding was made out; Gajendragadkar, J., speaking for the Court, however, observed that though, ordinarily, criminal proceedings, instituted against an accused, must be tried under the provisions of the Code, there are some categories of cases, where the inherent juri....
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.... the complaint, even if they are taken at their face value and accepted in their entirety, do not prima facie constitute any offence or make out a case against the accused. (2) Where the allegations made in the First Information Report and other materials, if any, accompanying the FIR do not disclose a cognisable offence justifying an investigation by police officers under section 156(1) of the Code except under an order of a Magistrate within the purview of section 155(2) of the Code. (3) Where the uncontroverted allegations made in the FIR or complaint and evidence collected in support of the same do not disclose the commission of any offence and make out a case against the accused. (4) Where the allegations in the FIR do not constitute a cognisable offence but constitute only a non-cognisable offence, no investigation is permitted by a police officer without an order of a Magistrate as contemplated under section 155(2) of the Code. (5) Where the allegations made in the FIR or complaint are so absurd and inherently improbable on the basis of which no prudent person can ever reach a just conclusion that there is sufficient ground for proceeding against the accused. ....
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.... is the difference between the offence of "cheating" and the offence of "criminal breach of trust", for, cognizance, in the present case, has been taken of the offences punishable under sections 420 and 409 of IPC. 14. In "criminal breach of trust", an accused comes into possession of a property or acquires dominion over a property honestly and bona fide, but he develops dishonest intention subsequent to the taking possession of, or subsequent to having acquired the dominion over, the property and, having developed such dishonest intention, he dishonestly misappropriates or converts to his own use the property or dishonestly uses or disposes of the property in violation of any direction of law prescribing the mode in which such trust is to be discharged, or of any legal contract, express or implied, which he has made touching the discharge of such trust, or wilfully suffers any other person so to do. 15. Thus, in "criminal breach of trust", the intention of the accused cannot be dishonest or mala fide at the time, when he comes into possession of the property or comes to acquire dominion over the property; but, having come into possession of, or having acquired dominion over,....
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....aw, as discussed in Criminal Petition No. 250 of 2007 - R.S. Sodhi v. Partha Pratim Saikia [2009] 151 Comp. Cas. 583 (Gau.), decided on 3-9-2009, may be possible for offence of "criminal breach of trust" and/or for offence of "cheating", the fact remains that a corporate body cannot be prosecuted for the said offences unless mens rea is shown to exist in such human mind, which has the control of the company and whose will, is the will of the company. 19. In the present case, the complainant is completely silent, he makes no accusation and identifies no such natural person, who had criminal intent and whose criminal intent is attributable to the accused company. In this regard, it has been contended by Mr. Bhuyan that since accused No. 2 is the managing director of the accused company, accused No. 2 is liable for prosecution for offences of "cheating" and "criminal breach of trust", which the company is alleged to have committed. In view of the fact that the complainant has not made any accusation, in the complaint, to show that the present accused company can be prosecuted for the offence of "cheating" or "criminal breach of trust", it logically follows that when the company can....
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....sel, contends that even in the present case, wherein the accused company is alleged to have committed offences under sections 420 and 409 of the IPC, petitioner No. 2, being the managing director of the said company, shall be held liable. 23. While considering the case of S.M.S. Pharmaceuticals Ltd. (supra), it may be noted that no one can be held criminally liable for an act of another unless this general rule is deviated from by making statutory provision(s). In other words, the normal rule, as observed, in S.M.S. Pharmaceuticals Ltd.'s case (supra), is that an accused cannot be made vicariously liable unless an exception, in this regard, is made specifically by statutes extending liability to persons, apart from those, who can commit the offence. This is what has been precisely pointed out, even in Maksud Saiyed v. State of Gujarat [2007] 140 Comp. Cas. 590 (SC) and S.K. Alagh v. State of U.P. [2008] 142 Comp. Cas. 228 (SC). The decision, in S.M.S. Pharmaceuticals Ltd. (supra), therefore, clarifies that unless there are statutory provisions making a person vicariously liable for an act of another, no such vicarious liability can be fastened on the person, other than the one, ....
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....mpany, had a role to play in relation to the incriminating act and further that such a person should know what is attributed to him to make him liable. In other words, persons who had nothing to do with the matter need not be roped in. A company being a juristic person, all its deeds and junctions are result of acts of others. Therefore, officers of a company, who are responsible for acts done in the name of the company, are sought to be made personally liable for acts, which result in criminal action being taken against the company. It makes every person who, at the time the offence was committed, was in-charge of and was responsible to the company for the conduct of business of the company, as well as the company, liable for the offence. The proviso to the sub-section contains an escape route for persons who are able to prove that the offence was committed without their knowledge or that they had exercised all due diligence to prevent commission of the offence." (p. 569) 25. In S.M.S. Pharmaceuticals Ltd.'s case (supra), it has been clarified that the officers, responsible for conducting the affairs of a company, are, generally, referred to as directors, managers, secretaries,....
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....a complaint. When the requirement in section 141, which extends the liability to officers of a company, is that such a person should be in-charge of, and responsible to, the company for conduct of business of the company, how can a person be subjected to liability of criminal prosecution without it being averred in the complaint that he satisfies those requirements ? Not every person connected with a company is made liable under section 141. Liability is cast on persons, who may have something to do with the transaction complained of. A person, who is in-charge of and responsible for conduct of business of a company, would naturally know why the cheque, in question, was issued and why it got dishonoured." (pp. 571 and 572) 26. From the observations made above, it is clear that simply because of the fact that a person has been functioning as a director, manager or secretary of a company, he cannot be made vicarious liable for the act done by the company, for, it will depend upon the role, which such a man is assigned by the company. This apart, the vicarious liability, which is sought to be extended to a company's officers, will not arise until the time the statute provides there....