AI Drafter 
TaxTMI 
TaxTMI 
2008 (10) TMI 713
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....ld, in support of the appeal, contend: (1) The High Court exercised its inherent jurisdiction under Section 482 of the Code of Criminal Procedure wholly illegally and without jurisdiction insofar as it entered into the disputed questions of fact in regard to the involvement of the respondents as the contents of the first information report disclose an offence of cheating, criminal breech of trust and forgery. (2) While admittedly the investigation was not even complete, the High Court could not have relied upon the documents furnished by the defendants either for the purpose of finding out absence of mens rea on the part of the applicants or their involvement in the case. (3) Respondent Nos. 1 and 2 herein being high ranking officers of M/s. Shares and Securities Ltd., a company dealing in shares, were vicariously liable for commission of the offence being in day to day charge of the affairs thereof. (4) An offence of forgery being a serious one and in view of the fact that the respondent No. 2 forwarded a letter purporting to authorize the accused No. 3 to transfer shares to the National Stock Exchange, he must be held to....
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....erpretation of the various relevant provisions of the Code under Chapter XIV and of the principles of law enunciated by this Court in a series of decisions relating to the exercise of the extra-ordinary power under Article 226 or the inherent powers Under Section 482 of the Code which we have extracted and reproduced above, we give the following categories of cases by way of illustration wherein such power could be exercised either to prevent abuse of the process of any Court or otherwise to secure the ends of justice, though it may not be possible to lay down any precise, clearly defined and sufficiently channelised and inflexible guidelines or rigid formulae and to give an exhaustive list of myriad kinds of cases wherein such power should be exercised. 1. Where the allegations made in the First Information Report or 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 in the First Information Report and other materials, if any, accompanying the F.I.R. do not disclose a cognizable offence, justifying an investi....
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....474, this Court opined : 6. We are in agreement with the contention advanced on behalf of the complainant appellant. Section 482 Cr.P.C. saves the inherent powers of the High Court and its language is quite explicit when it says that nothing in the Code shall be deemed to limit or affect the inherent powers of the High Court to make such orders as may be necessary to give effect to any order under the Code, or to prevent abuse of the process of any Court or otherwise to secure the ends of justice. A procedural Code, however exhaustive, cannot expressly provide for all time to come against all the cases or points that may possibly arise, and in order that justice may not suffer, it is necessary that every court must in proper cases exercise its inherent power for the ends of justice or for the purpose of carrying out the other provisions of the Code. It is well established principle that every Court has inherent power to act ex debito justitiae to do that real and substantial justice for the administration of which alone it exists or to prevent abuse of the process of the Court. In Sunita Jain v. Pawan Kumar Jain and Ors. (2008)2SCC705 , it is stated : &nb....
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....arty are required to be proved, no inference can be drawn on the basis of those materials to conclude the complaint to be unacceptable. The Court should not act on annexures to the petitions under Section 482 of the Cr.P.C., which cannot be termed as evidence without being tested and proved. In Kailsah Verma v. Punjab State Civil Supplies Corporation and Anr. (2005)2SCC571 this Court stated: 5. In Krishnan and Anr. v. Krishnaveni and Anr. 1997CriLJ1519 this question came up for consideration. That was a case where the complaint was registered under Sections 420, 406 IPC. After inquiry, the police filed a report stating that the case was essentially of a civil nature and no offence was made out. The complainant brought the matter to the Superintendent of Police. As per the directions of the Superintendent of Police, the case was investigated by the Crime Branch and a fresh report was filed under Section 173 IPC. On receipt of the report, the Magistrate took cognizance of the offences under Sections 420 and 406 IPC. Thereupon, the appellant/accused filed an application for discharge and the accused was discharged by the Magistrate. The complainant filed a revision b....
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.... the same by itself may not be a ground to hold that the criminal proceedings should not be allowed to continue. 10. It is furthermore well known that no hard and fast rule can be laid down. Each case has to be considered on its own merits. The Court, while exercising its inherent jurisdiction, although would not interfere with a genuine complaint keeping in view the purport and object for which the provisions of Sections 482 and 483 of the Code of Criminal Procedure had been introduced by the Parliament but would not hesitate to exercise its jurisdiction in appropriate cases. One of the paramount duties of the Superior Courts is to see that a person who is apparently innocent is not subjected to persecution and humiliation on the basis of a false and wholly untenable complaint. 11. In the aforementioned backdrop, we may now examine as to whether the FIR lodged by the appellant makes out any case for proceeding against the respondent. 12. We may, for the said purpose, notice the ingredients of Section 420 and 406 of the Indian Penal Code. The ingredients of Section 420 of the Indian Penal Code are as follows: i) Deception of any persons; ii....
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....nd transactions by and between the appellant and the company, if any, were made by the complainant only with the respondent No. 3. 15. A bare perusal of the First Information clearly goes to show that authorisedly or unauthorisedly, respondent No. 3 was operating the appellant's account. It is furthermore not in dispute that she and her family members were operating six accounts with the company, the details whereof are as under: 16. It is admitted that the appellant and her husband were Directors of M/s. R.S.R. Securities Ltd. It is furthermore conceded that the respondent No. 3 and the brother of the appellant herein, when the company was in great financial difficulties, became the Directors of the said M/s. RSR Securities Ltd. It also stands admitted that the respondent No. 3 resigned from the post of Branch Manager on or about 25.10.2002. 17. The records before us also show that Demat Fixed Accounts were being operated by Sridhar, brother of the appellant. It does not appear that any transaction involving purchase and sale of any share was entered into by and between the appellant and the company at any point of time, although the accounts of the RSR Securities had....
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....it balance after adjustment as above will be recoverable against the company. 21. Whereas, thus, no allegation whatsoever has been made against the respondent No. 1, the only allegation against the respondent No. 2 was that he had forwarded the said letter dated 10.1.2002 to National Stock Exchange. The act of forgery on/or fabrication of the said letter had been attributed to Respondent No. 3. Respondent Nos. 1 and 2 herein were sought to be proceeded against on the premise that they are vicariously liable for the affairs of the company. 22. As Mr. Mani had time and again referred to the allegations relating to forgery of the said document dated 10.1.2002, we may also notice a disturbing fact. Before lodging the said First Information, a notice was issued by the appellant against the respondents herein on 15.10.2002, whereas the address of respondent Nos. 1 and 2 were shown as 404, Embassy Centre, Nariman Point, Mumbai - 400 021 and 302, Veena Chambers, 21, Dalal Street, Fort, Mumbai - 400 001 respectively. However, in the complaint petition, they were shown to be residents of Chennai. 23. In the aforementioned factual backdrop, we although do not agree with the approa....
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....by this Court, thus: 6. But, at the same time, while taking cognizance of alleged offences in connection with the registration, issuance of prospectus, collection of moneys from the investors and the misappropriation of the fund collected from the share-holders which constitute one offence or other under the Penal Code, court must be satisfied that prima facie and offence under the Penal Code has been disclosed on the materials produced before the court. If the screening on this question is not done properly at the stage of initiation of the criminal proceeding, in many cases, some disgruntled share-holders may launch prosecutions against the promoters , directors and those in charge of the management of the company concerned and can paralyse the functioning of such company. It need not be impressed that for prosecution for offences under the Penal Code the complainant has to make out a prima fade case against the individuals concerned, regarding their acts and omissions which constitute the different ingredients of the offences under the Penal Code. It cannot be overlooked that there is a basic difference between the offences under the Penal Code and acts and omissi....
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....less the contrary intention appears, that the legislator intended to conform to this legal policy. A principle of statutory interpretation can therefore be described as a principle of legal policy formulated as a guide to legislative intention. Maxwell in The Interpretation of Statutes (12th Edn) says: The strict construction of penal statutes seems to manifest itself in four ways: in the requirement of express language for the creation of an offence; in interpreting strictly words setting out the elements of an offence; in requiring the fulfillment to the letter of statutory conditions precedent to the infliction of punishment; and in insisting on the strict observance of technical provisions concerning criminal procedure and jurisdiction. In Craies and Statute Law (7th Edn. At p. 529) it is said that penal statutes must be construed strictly. At page 530 of the said treatise, referring to U.S. v. Wiltberger (1820) 2 Wheat (US) 76, it is observed, thus: The distinction between a strict construction and a more free one has, no doubt, in modern times almost disappeared, and the question now is, what is the true construction of the statute? I shoul....