TaxTMI 
TaxTMI 
2013 (3) TMI 725
X X X X Extracts X X X X
X X X X Extracts X X X X
....ases filed by the respondents, the same have been heard and disposed of by this common judgment. 3. The aforesaid seven Criminal Miscellaneous Cases were filed in the High Court challenging the order dated 27th September, 2008 passed by the Metropolitan Magistrate, New Delhi whereby he had summoned the respondents to face trial under Sections 415, 409, 34, 120B of the Indian Penal Code (IPC) on a complaint filed by the appellant. These Criminal Miscellaneous Cases were filed separately in the High Court on behalf of the Company, namely, India Infoline Limited, and by the Managing Director, Company Secretary and other Directors of the said Company. 4. The appellant had filed a complaint before the Metropolitan Magistrate alleging commission of offences under the aforementioned Sections of IPC. The brief facts of the case as set out in the complaint are as follows: The complainant opened a Demat Account with respondent No. 1 Company, namely, India Infoline Limited in 2007 and placed orders from time to time for purchase of shares and also made payments against its running account with the Company. The Company allegedly claimed outstanding debit of Rs. 10.48 crores against the c....
X X X X Extracts X X X X
X X X X Extracts X X X X
....tropolitan Magistrate, New Delhi, the respondents filed separate petitions before the Delhi High Court challenging the issuance of summons against the Company, the Managing Director, the Company Secretary and the Directors of the Company. The High Court by the impugned order held that issuance of summons against respondents Nos. 2 to 7, namely, the Managing Director, the Company Secretary and the Directors of the Company cannot be sustained and the same are liable to be set aside. So far as respondent No. 1 Company is concerned, the High Court held that issuance of summons as against the Company under Section 415 IPC also cannot be sustained. The learned Magistrate has been directed to proceed with the trial against respondent No. 1 M/s. India Infoline Limited under other Sections of IPC. 7. Dissatisfied with the aforesaid order passed by the High Court, the complainant has preferred these appeals by special leave. 8. Mr. Rakesh Tiku, learned senior counsel appearing for the appellant assailed the impugned order passed by the High Court as being illegal and wholly without jurisdiction. Learned counsel first contended that the High Court has gravely erred in law in taking into....
X X X X Extracts X X X X
X X X X Extracts X X X X
....earned counsel submitted that the complainant made a general averment that respondent Nos. 2 to 7 were responsible for day-to-day affairs of the Company without specifying the exact role played by them in the transaction. It was contended that the appellant-complainant is seeking to make new allegations supplemented by new documents to show that the order passed by the Magistrate summoning the respondents was justified. Nowhere in the complaint, the appellant-complainant mentioned the details of the alleged meeting and discussion with respondents Nos. 2 to 7 or even alleged that which of the appellant's authorized representative met the Managing Director or Directors of the Company and vague allegations have been made stating that on numerous occasions the appellant's representative met accused Nos. 2 to 7 which is not sufficient for summoning them in a criminal proceedings. Dr. Singhvi then contended that at the outset the alleged letter dated 1st March, 2008 has been treated by the High Court for all practical purposes in favour of the respondents which is grossly incorrect when the High Court by arriving at its decision has proceeded on the assumption that the letter dated 1st M....
X X X X Extracts X X X X
X X X X Extracts X X X X
....at some or the other time interacted with the complaint. The employees of accused No. 1 act as per the direction given by the accused Nos. 2 to 7 from time to time. They in connivance with each other in order to fulfill the malafide intention and in order to make illegal gain has cheated the petitioner company and in breach of trust also sold the shares worth Rs. Nine crores approximately. 3) That the trustees of the Complainant at the request of the GHCL opened a Demat Account No. (DP ID and Client ID is IN302269- 120107581) with accused No. 1 on 11.9.2007 and transferred the shares acquired in the said account after entering into Broker- Client Agreement. 4) That after opening the Demat account, the complainant kept on placing orders for purchase of share on the accused and made payments against the running account from time to time. 5) That the Accused No. 1 vide letter dated 30.4.2008 informed the complainant that there is an outstanding debit of Rs. 10.48 crores against the complainant and the 20,46,195 quantity of GHCL shares acquired by the Complainant shall be free from lien after clearing the debit in their account. The relevant portion of the le....
X X X X Extracts X X X X
X X X X Extracts X X X X
....o obligation to pay any amount alleged to be payable from the other companies. xxx xxx xxx 16) That it has now been learned that the accused despite having no legal right, has illegally, without any authorization, and in order to cheat the complainant sold off 876668 shares on 23.6.2008 of the Complainant trust in the open market. The Complainant received SMS on 24.6.2008 about the said sale. The trust has suffered a huge monetary loss on account of this illegal disposal of stocks of the complainant by the accused. The shares were lying/kept with the accused for the purpose of DEMATINC, to account of complainant and as evident from their own letter dated 30.4.2008 they had no lien once the payment was made and thus accused in connivance with each other committed breach of trust and caused unlawful loss to the complainant and this also offence of cheating. 17) That accused by raising the false and fabricated debit note induced the complainant to deposit a huge amount of Rs. 10.48 crores, which as per their own admission i.e. statement of account is excess to the tune of Rs. 25,22,477.53. The accused have thereby rendered themselves liable to be prosecuted ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he law applicable thereto. The Magistrate has to record his satisfaction with regard to the existence of a prima facie case on the basis of specific allegations made in the complaint supported by satisfactory evidence and other material on record. 15. In the case of Madhavrao Jiwaji Rao Scindia and Another Etc. vs. Sambhajirao Chandrojirao Angre and Others Etc. AIR 1988 SC 709, this Court held as under: "7. The legal position is well-settled that when a prosecution at the initial stage is asked to be quashed, the test to be applied by the court is as to whether the uncontroverted allegations as made prima facie establish the offence. It is also for the court to take into consideration any special features which appear in a particular case to consider whether it is expedient and in the interest of justice to permit a prosecution to continue. This is so on the basis that the court cannot be utilised for any oblique purpose and where in the opinion of the court chances of an ultimate conviction is bleak and, therefore, no useful purpose is likely to be served by allowing a criminal prosecution to continue, the court may while taking into consideration the special facts of ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....k personal vengeance. Considered from any angle we find that the respondent had abused the process and laid complaint against all the appellants without any prima facie case to harass them for vendetta." 17. In the case of Maksud Saiyed vs. State of Gujarat and Others (2008) 5 SCC 668, this Court while discussing vicarious liability observed as under :- "13. Where a jurisdiction is exercised on a complaint petition filed in terms of Section 156(3) or Section 200 of the Code of Criminal Procedure, the Magistrate is required to apply his mind. The Penal Code does not contain any provision for attaching vicarious liability on the part of the Managing Director or the Directors of the Company when the accused is the Company. The learned Magistrate failed to pose unto himself the correct question viz., as to whether the complaint petition, even if given face value and taken to be correct in its entirety, would lead to the conclusion that the respondents herein were personally liable for any offence. The Bank is a body corporate. Vicarious liability of the Managing Director and Director would arise provided any provision exists in that behalf in the statute. Statutes indisputa....