TaxTMI 
TaxTMI 
2019 (5) TMI 730
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....HI, J. Leave granted. 2. These appeals arise out of the judgment dated 15.05.2015 passed by the High Court of Calcutta in C.R.R. No.323 of 2011 in and by which the High Court quashed the complaint of the appellant-Company filed under Sections 379, 403 and 411 IPC read with Section 120-B IPC qua documents No.1 to 28 of the Schedule. Insofar as documents No.29 to 54 of the Schedule, the High Court remitted the matter to the trial court to proceed with the matter in accordance with law. 3. Being aggrieved by quashing of the complaint qua documents No.1 to 28, the appellant-complainant has preferred appeal (SLP (Crl.) No.9053 of 2016). Being aggrieved by remitting the matter to the trial court qua documents No.29 to 54, the respondents have filed appeal [SLP(Crl.) D No.6405 of 2019 and SLP(Crl.) D. No.6122 of 2019]. Though the SLPs by the respondents are filed with delay, in the interest of justice, delay in filing the SLPs are condoned. 4. These appeals arise out of the criminal complaint filed by the appellant-Company which belong to Madhav Prasad Birla (MPB) Group, now under the control of respondent No.17- Harshvardhan Lodha who is the son of Rajendra Singh Lodha. The i....
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....in the complaint. 6. On 24.03.2010, respondents No.12 to 16 have filed five civil suits in the High Court of Calcutta (CS Nos.73-77/2010) under Section 92 of the Code of Civil Procedure stating that in the year 1988, MPB and PDB had created five mutual and reciprocal trusts to leave the estate covered by these trusts for charity. These trusts are said to have been revoked just three days prior to the alleged Will dated 18.04.1999. In the said suits in CS No.73-77/2010, respondents No.12 to 16 have challenged the revocation of the five trusts and prayed for recovery of the properties of the public charity and for enforcement of the public trust obligations of the properties vested in the said five trusts. 7. The company petition in CP No.1/2010 was filed before CLB (now pending before NCLT) on 10.03.2010. In the said company petition, documents No.1 to 54 have been filed. The advance copy of the company petition and the copies of the documents have been served upon the appellant-Company. Document No.1-Internal Audit Report of the appellant Company was filed in the civil suits filed by respondents No.12 to 16 challenging the revocation of the five trusts created by MPB and PDB.....
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....ellant-complainant, keeping in mind the confidential nature of the report, only six copies were made. Out of which, five sets were sent to officers of the Company individually named and one was retained by the Auditor. The Internal Audit Report produced by the respondents is the copy of one of the original five sets which was sent to one Bachh Raj Nahar-Executive Director and Chief Executive Officer of the Company. It is alleged that respondents No.1 to 16 have stolen/misappropriated documents No.2 to 28 from the appellant's premises and that after photocopying the documents, they were kept back in the appellant's premises. It is alleged that documents No.29 to 54 have been stolen/misappropriated from the appellant's premises and that after photocopying the documents, they were not returned in the appellant's premises and the originals are still in the possession of the respondents. Before making the complaint, the complainant-appellant had conducted an internal enquiry to find out how these documents reached the respondents. 10. These documents have at all times been kept at the registered office of the appellant-Birla Buildings. These documents have restricted access and are m....
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....mined on 08.10.2010. Considering the averments in the complaint and the statement of Complainant Shri Samir Ganguly and P.B. Dinesh, the learned Magistrate vide order dated 08.10.2010 found that there are sufficient grounds for proceeding against all the sixteen respondents and ordered issuance of summons to the respondents for the offences punishable under Sections 380, 411 and 120B IPC. 14. Aggrieved by the summoning order dated 08.10.2010, respondents filed petition under Section 482 Cr.P.C. before the High Court for quashing the criminal proceedings. Insofar as compliance of the procedure in taking cognizance of the offences, the High Court held that upon perusal of the averments in the complaint and the statement of representative of the company Shri Samir Ganguly and P. B. Dinesh, the Magistrate satisfied himself that there were sufficient grounds for proceeding against the accused and ordered to issue process against the sixteen accused and the High Court held that on the procedural aspect, the Magistrate did not commit any error. The High Court held that since originals of documents No.1 to 28 are still in the custody of the complainant, taking away the information conta....
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.... was not right in quashing the criminal complaint qua documents No.1 to 28. 17. In appeal preferred by the respondents, they assailed the order of issuance of process against the respondents by the Magistrate contending that there were no adequate materials so as to arrive at satisfaction of the Magistrate that there were sufficient grounds for proceeding against the respondents. It was submitted that the production of the copies of the documents in the Company Law Petition and in the civil suits would not amount to theft and the averments in the complaint and the statement of the complainant and witness P.B. Dinesh would not attract the ingredients of theft and there was no application of mind of the learned Magistrate and the Magistrate mechanically issued process against the respondents and the High Court ought to have quashed the proceedings in toto. 18. On behalf of respondents No.1 to 5, Mr. Kapil Sibal, learned senior counsel submitted that the complaint lacks specification as to the time and manner of the commission of the offence and who committed theft of the documents and when and how the same was detected. The learned senior counsel contended that the averments in....
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....el further submitted that the doctrine of vicarious liability is based upon a legal presumption and creates fictional liability and since the doctrine of vicarious liability is not available (as a matter of law) in regard to offences under the IPC, the complainant cannot rely upon a legal presumption of an act or mensrea to proceed against respondent No.11 in a criminal case. 21. On behalf of respondents No.13 to 16, Mr. Ranjit Kumar and Mr. Debal Banerjee, learned senior counsel submitted that the trial court had not applied its mind to the materials on record and the averments in the complaint and the statement of the witnesses do not make a prima facie case and the Magistrate mechanically issued process against respondents No.12 to 16. It was submitted that filing a document in the judicial proceedings can never be termed as an act of "theft" or "dishonest misappropriation" so as to attract the ingredients of Sections 380 and 411 IPC read with Section 120-B IPC. 22. Reiterating the contention of other respondents, Mr. K.V. Viswanathan, learned senior counsel appearing on behalf of respondent No.6 submitted that respondent No.6 is a well reputed lawyer and a trustee of the ....
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....justifying taking cognizance of the offences? (v) Whether there is dishonest moving of documents causing wrongful loss to the appellants and wrongful gain to the respondents? (vi) Whether filing of documents in the judicial proceedings can be termed as an act of theft causing wrongful gain to oneself and wrongful loss to the opponent so as to attract the ingredients of Section 378 IPC? 26. Complaint filed under Section 200 Cr.P.C. and enquiry contemplated under Section 202 Cr.P.C. and issuance of process:- Under Section 200 of the Criminal Procedure Code, on presentation of the complaint by an individual, the Magistrate is required to examine the complainant and the witnesses present, if any. Thereafter, on perusal of the allegations made in the complaint, the statement of the complainant on solemn affirmation and the witnesses examined, the Magistrate has to get himself satisfied that there are sufficient grounds for proceeding against the accused and on such satisfaction, the Magistrate may direct for issuance of process as contemplated under Section 204 Cr.P.C. The purpose of the enquiry under Section 202 Cr.P.C. is to determine whether a prima facie case is....
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....als with the further procedure for dealing with "Complaints to Magistrate". Under Section 200 Cr.P.C, the Magistrate, taking cognizance of an offence on a complaint, shall examine upon oath the complainant and the witnesses, if any, present and the substance of such examination should be reduced to writing and the same shall be signed by the complainant, the witnesses and the Magistrate. Under Section 202 Cr.P.C, the Magistrate, if required, is empowered to either inquire into the case himself or direct an investigation to be made by a competent person "for the purpose of deciding whether or not there is sufficient ground for proceeding". If, after considering the statements recorded under Section 200 Cr.P.C and the result of the inquiry or investigation under Section 202 Cr.P.C, the Magistrate is of the opinion that there is no sufficient ground for proceeding, he should dismiss the complaint, after briefly recording the reasons for doing so. 3. Chapter XVI Cr.P.C deals with "Commencement of Proceedings before Magistrate". If, in the opinion of the Magistrate taking cognizance of an offence, there is sufficient ground for proceeding, the Magistrate has to issue process un....
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....ding at far off places in order to harass them. The object of the amendment is to ensure that persons residing at far off places are not harassed by filing false complaints making it obligatory for the Magistrate to enquire. Notes on Clause 19 reads as under:- "False complaints are filed against persons residing at far off places simply to harass them. In order to see that the innocent persons are not harassed by unscrupulous persons, this clause seeks to amend sub-section (1) of Section 202 to make it obligatory upon the Magistrate that before summoning the accused residing beyond his jurisdiction he shall enquire into the case himself or direct investigation to be made by a police officer or by such other person as he thinks fit, for finding out whether or not there was sufficient ground for proceeding against the accused." 33. Considering the scope of amendment to Section 202 Cr.P.C., in Vijay Dhanuka and Others v. Najima Mamtaj and Others (2014) 14 SCC 638, it was held as under:- "12. ....The use of the expression "shall" prima facie makes the inquiry or the investigation, as the case may be, by the Magistrate mandatory. The word "shall" is ordinarily manda....
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....ore the criminal court, there is ground for proceeding against the accused under Section 204 Cr.P.C., by issuing process for appearance. The application of mind is best demonstrated by disclosure of mind on the satisfaction. If there is no such indication in a case where the Magistrate proceeds under Sections 190/204 Cr.P.C., the High Court under Section 482 Cr.PC. is bound to invoke its inherent power in order to prevent abuse of the power of the criminal court. To be called to appear before the criminal court as an accused is serious matter affecting one's dignity, self-respect and image in society. Hence, the process of criminal court shall not be made a weapon of harassment." 35. In Pepsi Foods Ltd. and Another v. Special Judicial Magistrate and Others (1998) 5 SCC 749, the Supreme Court has held that summoning of an accused in a criminal case is a serious matter and that the order of the Magistrate summoning the accused must reflect that he has applied his mind to the facts of the case and law governing the issue. In para (28), it was held as under:- "28. Summoning of an accused in a criminal case is a serious matter. Criminal law cannot be set into motion as a mat....
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.... ....The taking of cognizance of the offence is an area exclusively within the domain of a Magistrate. At this stage, the Magistrate has to be satisfied whether there is sufficient ground for proceeding and not whether there is sufficient ground for conviction. Whether the evidence is adequate for supporting the conviction, can be determined only at the trial and not at the stage of inquiry. At the stage of issuing the process to the accused, the Magistrate is not required to record reasons." 38. Extensive reference to the case law would clearly show that the allegations in the complaint and complainant's statement and other materials must show that there are sufficient grounds for proceeding against the accused. In the light of the above principles, let us consider the present case whether the allegations in the complaint and the statement of the complainant and other materials before the Magistrate were sufficient enough to constitute prima-facie case to justify the Magistrate's satisfaction that there were sufficient grounds for proceeding against the respondents-accused and whether there was application of mind by the learned Magistrate in taking cognizance of the offences a....
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....espondents No.1 to 5 are the shareholders who filed the Company Petition CP No.1 of 2010. Respondents No.12 to 16 are the plaintiffs who have instituted civil suits challenging the revocation of the five trusts and for recovery of the properties that are vested in the public charity. 41. Respondents No.3, 6, 12 and some of the other respondents are the residents beyond the local limits of the trial court - 10th Metropolitan Magistrate, Calcutta. Since number of accused are residents beyond the local limits of the trial court, as per amended provision of Section 202 Cr.P.C., it is obligatory upon the Magistrate that before summoning the accused, he shall enquire into the case or direct the investigation to be made by a police officer or by such other person as he thinks fit for finding out whether or not there are sufficient grounds for proceeding against the accused. In the present case, the learned Magistrate has opted to hold such enquiry himself. 42. The complaint alleges that the respondents have gained unauthorized access and possession of the documents No.1 to 54. It is alleged that documents No.1 to 28 have been stolen/misappropriated from the premises of the appellant....
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....inst the respondents is that respondents No.10 and 11 are under the control and management of the Birla Buildings and has security and the overall responsibility of the management and maintenance of the same. It is alleged that the respondents in connivance with respondents No.10 and 11 have gained unauthorised access to the documents and thus the documents have been stolen from the premises and then misappropriated. The averments in the complaint even if taken at its face value and accepted in its entirety do not constitute prima facie offence under Section 378 IPC. 45. After referring to filing of CP No.1/2010 where the xerox copies of the documents were annexed, the complaint alleges as under:- "9. ....The Company submits that the said documents are highly confidential internal records and correspondence of Company and its officers. These documents were at all time kept inside the registered office of the Company at the said premises. These documents have restricted access and are meant for the perusal and consumption only of designated and specified individuals. These documents and the information contained therein is the property of company over which no unauthoriz....
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.... respondents No.10 and 11 are responsible for security and maintenance of the building cannot lead to an inference that respondents No.10 and 11 are responsible for the theft. 49. So far as respondent No.11 who is the CEO of respondent No.10-Company is concerned, it is stated that he is responsible for the day to day affairs of respondent No.10-Company and the complainant invoked the doctrine of vicarious liability. The learned senior counsel Mr. Desai has submitted that for proceeding against respondent No.11, the complaint must show "active role" of the natural person. Reliance was placed upon Sunil Bharti Mittal v. Central Bureau of Investigation (2015) 4 SCC 609, wherein it was held as under:- "43. Thus, an individual who has perpetrated the commission of an offence on behalf of a company can be made an accused, along with the company, if there is sufficient evidence of his active role coupled with criminal intent....." 50. As rightly submitted by learned senior counsel for respondents No.10 and 11, it is inconceivable that respondent No.11, CEO of respondent No.10-Company, if committed the offence of theft, would have been permitted to continue in that professio....
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....tion to be made by the police officer and is required to apply his mind and record his satisfaction with reasons. 53. As pointed our earlier, P.B. Dinesh had merely stated that respondent No.14-Shri Kumar Mangalam Birla is the Chairman of Aditya Birla Group having their office in Mumbai and respondent No.15-Shri Sidharth Birla is a part of the Company and resides at Alipore. P.B. Dinesh has also stated that respondent No.13- Rajendra Prasad Pansari stays in Calcutta and that he was an ex-employee of Birla Corporation and now he has joined Birla Group. P.B. Dinesh has thus stated about residence of respondent No.14 being at Mumbai and residence of respondents No.13 and 15 at Calcutta. There are no specific allegations against respondent No.14 or against any other respondents who are residing outside the jurisdiction. Likewise, no specific allegation as to how respondent No.14 or other respondents who are residing outside the jurisdiction have gained entry into the building of the appellant Company and committed theft of the documents nor any specific allegation as to the alleged conspiracy. 54. In the statement of P.B. Dinesh, there is only a bare statement that respondents No....
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....complainant company. Perused the documents (both original and xerox copies) suppolied and relied on by the complainant company in support of its case. Considering all above I find sufficient grounds for proceeding against all the sixteen accused persons for commission of an offence under Sections 380, 411, 120B IPC. Cognizance is taken. Issue summons accordingly upon the accused persons fixing 10.12.2010 for S/R and appearance. Requisites at once." For taking cognizance of the offence, the Magistrate thus inter alia relied upon the statement of the complainant and P.B. Dinesh to arrive at a conclusion that a prima facie case is made out against the respondents. As discussed earlier, neither the statement of the complainant nor the statement of P.B. Dinesh contain the particulars as to the commission of the offence to have satisfied the Magistrate that there were sufficient grounds for proceeding against the accused. By perusal of the above order passed by the Magistrate, we find absolutely nothing to indicate application of mind in taking cognizance of the offence against respondents No.1 to 16 including the respondents who are residents beyond the jurisdiction of the court. Tho....
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....agistrate dated 08.10.2010 as to application of the mind and as to the satisfaction of the Magistrate as to the sufficient ground for proceeding against the respondents under Sections 380, 411 and 120-B IPC. 60. The High Court held that witness P.B. Dinesh has stated about alleged involvement of some of the accused and there is no fundamental error committed by the Magistrate in following the procedure under Chapter XIX of the Criminal Procedure Code. The High Court further observed that the flaw at the worst would be a procedural irregularity. The order dated 08.10.2010 taking cognizance of the offence under Sections 380, 411 and 120B IPC against respondents No.1 to 16 are liable to be set aside. The Magistrate who is conducting an investigation under Section 202 Cr.P.C. has full power in collecting the evidence and examining the matter. We are conscious that once the Magistrate is exercised his discretion, it is not for the Sessions Court or the High Court to substitute its own discretion for that of the Magistrate to examine the case on merits. The Magistrate may not embark upon detailed enquiry or discussion of the merits/demerits of the case. But the Magistrate is required ....
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....emporary removal of the documents and filing of photocopies and use of the information/contents of the documents can be the subject matter of theft. 64. Contention of the appellant is that the very act of moving the documents out of the possession of the appellant-Company would amount to theft. It was submitted that the loss need not be caused by permanent deprivation of the property; but loss due to theft may be caused even by temporary moving of the property. In support of this contention, the learned senior counsel for the appellants placed much reliance upon Pyare Lal Bhargava v. State of Rajasthan AIR 1963 SC 1094. In the said case, wherein the appellant-Pyare Lal Bhargava, a superintendent in the Chief Engineer's Office, at the instance of one Ram Kumar Ram got a file from the Secretariat through a clerk and took the file to his house, made it available to said Ram Kumar Ram who replaced the same documents in the file with other papers and thereafter, returned the file the next day. In the said case, the arguments was advanced contending that appellant/accused Pyare Lal Bhargava was one of the officers working in the department and the facts do not constitute the offence o....
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....ponents of theft is that the subject matter of the theft needs to be a "moveable property". "Moveable property" is defined in Section 22 IPC which includes a corporeal property of every description. It is beyond doubt that a document is a "moveable property" within the meaning of Section 22 IPC which can be the subject matter of theft. A "document" is a "corporeal property". A thing is "corporeal" if it has a body, material and a physical presence. As per Section 29 IPC, "Document" denotes "any matter expressed or described upon any substance by means of letters, figures or marks or by more than one of those means, intended to be used, or which may be used as evidence of that matter". The first Explanation to Section 29 IPC provides that it is immaterial by what means or upon what substance these are formed. This definition would include within its ambit photocopy of a document. As per Explanation No.2 of Section 29 IPC, letters, figures or marks shall be deemed to be expressed by such letters, figures or marks within the meaning of the Section. Such letters, figures or marks thus have a material and physical presence. Therefore, it can also be inferred that the said information wo....
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....theft, the following ingredients are essential:- i. Dishonest intention to take property; ii. The property must be moveable; iii. It should be taken out of the possession of another person; iv. It should be taken without the consent of that person; v. There must be some removal of the property in order to accomplish the taking of it. 72. Intention is the gist of the offence. It is the intention of the taker which must determine whether taking or moving of a thing is theft. The intention to take "dishonestly" exists when the taker intends to cause wrongful loss to any other which amounts to theft. It is an essential ingredient of the offence of "theft" that the movable property should have been "moved" out of the possession of any person without his consent. "Movable property" is defined in Section 22 of IPC, which reads as under:- "Movable property - The words "movable property" are intended to include corporeal property of every description, except land and things attached to the earth or permanently fastened to anything which is attached to the earth." "Dishonestly" has been defined in Section 24 IPC, which reads a....
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....the respondents or "wrongful loss" to the appellant. 74. As pointed out earlier, documents No.1 to 54 are filed in the Company Petition to substantiate their case of oppression and mismanagement. Filing of documents in the CLB proceedings is only to assert their claim of oppression and mismanagement of the appellant Company. According to the respondents, there is a bona fide dispute of oppression and mismanagement and the documents No.1 to 54 are filed only to substantiate their case. When a bona fide dispute exists between the parties as to whether there is oppression and mismanagement, there is no question of "wrongful gain" to the respondents or "wrongful loss" to the appellant. In using the documents, when there is no dishonest intention to cause "wrongful loss" to the complainant and "wrongful gain" to the respondents, it cannot be said that the ingredients of theft are made out. 75. As discussed earlier, respondents No.12 to 16 have filed five civil suits challenging the cancellation of the trusts for recovery of the property that had vested in public charity through the trust deeds. Respondents No.12 to 16 have filed copy of document No.1-Internal Audit Report of Chand....
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....to make "wrongful gain" to themselves. Filing of the documents in the legal proceedings is only to vindicate their stand in the company petition. We find much force in the submission of the learned senior counsel, Mr. Sibal, appearing for respondents No.1 to 5 that the attempt of the appellant in trying to prosecute the respondents appears to arm-twist the respondents in an attempt to shut out the relevant material documents before the CLB proceedings by prosecuting respondents No.1 to 9 and in the civil suits. 78. Whether respondents should have called for the documents in accordance with various provisions:- Contention on behalf of the appellant is that despite there being adequate provisions under Section 10-E of Companies Act and Section 91 Cr.P.C. relating to summoning of documents and of discovery, interrogatories and inspection of documents under Order XI CPC, the respondents resorted to dubious methods to procure the documents and thus, cannot skirt the liability for their actions by contending that since the documents were used for a legal proceeding, it cannot be theft. 79. Undoubtedly, adequate provisions have been provided in all the laws concerned with the instan....
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.... earlier, there are no specific allegations as to when, where and how the respondents have committed theft; nor are there specific allegations against the respondents accused. Allegations in the complaint, being taken at their face value, do not disclose prima-facie case nor the ingredients of the offence of house theft or misappropriation are made out. 82. Exercise of power under Section 482 Cr.P.C. envisages three circumstances in which the inherent jurisdiction may be exercised namely:- (i) to give effect to an order under the Code; (ii) to prevent abuse of the process of court; and (iii) to otherwise secure the ends of justice. Inherent jurisdiction under Section 482 Cr.P.C. though wide has to be exercised sparingly, carefully and with caution. 83. It is well settled that the inherent jurisdiction under Section 482 Cr.P.C. is designed to achieve a salutary purpose and that the criminal proceedings ought not to be permitted to degenerate into a weapon of harassment. When the Court is satisfied that the criminal proceedings amount to an abuse of process of law or that it amounts to bringing pressure upon the accused, in exercise of the inherent powers, such proceedings can ....
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....cised by the High Court to prevent abuse of process of Court or otherwise to secure ends of justice. It was held that "where the uncontroverted allegations made in the FIR or complaint and the evidence collected in support of the same do not disclose the commission of any offence and make out a case against the accused." 85. In the present case, it is one thing to say that the documents have not been secured in accordance with the law and no value could be attached to them. But merely because documents have been produced from one source or other, it cannot be said that documents have been dishonestly removed to obtain "wrongful gain" to the respondents and cause "wrongful loss" to the appellant. Where it appears that the criminal complaint has been filed to bring pressure upon the respondents who are shown as accused in the criminal case, the complaint is to be quashed. 86. In Indian Oil Corpn. v. NEPC India Ltd. and Others (2006) 6 SCC 736, the Supreme Court after observing that there is a growing tendency in business circles to convert powerful civil disputes in criminal cases held as under:- "14. While no one with a legitimate cause or grievance should be prevente....