TaxTMI 
TaxTMI 
2016 (12) TMI 1855
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....minal Procedure. 3. Brief facts of the case are as follows: Appellant No. 1-HDFC Securities Ltd., is a public liability company (hereinafter referred to as "the Company" for short), Appellant No. 2 is the Managing Director of the Company, Appellant No. 3 is Business Head of the Company, and Appellant No. 4 is the Regional head of Mumbai Region of the Company, respectively. Respondent No. 1 is State of Maharashtra and Respondent No. 2 is an individual, who held an account with the Company. The Company is engaged in the business of dealing in shares and securities on behalf of its constituents and clients on Brokerage Charge and it is also a member of National Stock Exchange of India Limited (NSE) and Bombay Stock Exchange of India Limited (BSE). 4. Respondent No. 2, had registered herself with the Company as a constituent/client by opening Securities Trading Account vide No. 342889 and was an imperial customer of the Company for about eight years. She executed a Member-Client Agreement dated 28th June, 2005. On 3rd August, 2009, Respondent No. 2, through a legal Notice dated 03.08.2009, requested the Appellants to make good the losses caused to her by indulging in unauthorized and....
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....he appeal against Respondent No. 2, vide its Award dated 24th January, 2011. The Appellate tribunal found that Respondent No. 2 had not denied the fact of having received all the necessary documents, including Contract notes, etc. with regard to the transactions undertaken by the Appellants on her behalf, which were required to be issued by the trading member to the investor immediately after the trade is undertaken. Thereafter, the Appellants filed a writ petition before the Bombay High Court, being Criminal Writ Petition No. 672 of 2011, inter alia praying for quashing of the said FIR and the same prayer was also made in Criminal Writ Petition No. 767 of 2011, filed by RM before the High Court. The High Court by its judgment dated 16.11.2011, dismissed both the writ petitions as according to it, the filing of the writ petitions was premature and there was no need for exercising the powers either Under Article 227 of the Constitution of India or Under Section 482 Code of Criminal Procedure. Aggrieved by the aforesaid judgment of the High Court, the Appellants have approached this Court by filing this appeal by special leave. 6. The only question that arises for decision in this a....
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....f Criminal Procedure requiring investigation by the police does not cause any injury of irreparable nature which requires quashing of the investigation. It is further stated that the stage of cognizance would arise after the investigation report is filed. Therefore, the application filed by the Appellants before the High Court is nothing but prematured and thus there is no need for exercising the powers of the High Court either Under Article 227 of the Constitution of India or Under Section 482 of the Code. Further contention of the Respondent before the High Court was that the inherent powers Under Section 482 of the Code should be sparingly used. 9. The High Court held that the direction given to the police by the Magistrate Under Section 156(3) of the Code for carrying out the investigation into the complaint and to submit a report, cannot give a right to the Appellants for quashing the same since such an order would be based absolutely on speculations upon the report not filed. Further, it would result in prejudging the complaint. In these circumstances, the High Court dismissed the said application. 10. Dr. Abhishek Singhvi, learned senior Counsel appearing on behalf of the ....
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....ng whether or not there is sufficient ground for proceedings may direct the police for investigation. Therefore, considering all these aspects, the complaint discloses the commission of cognizable offence. Therefore, considering the nature of offence it needs to be sent to police for investigation Under Section 156(3) of Code of Criminal Procedure. 12. Dr. Abhishek Singhvi, learned senior Counsel appearing on behalf of the Appellants has relied upon the following decisions of this Court to assail the aforesaid order passed by the Magistrate: Devarapall Lakshminarayana v. V. Narayana Reddy and Ors. (1976) 3 SCC 252, and Ram Dev Food Products Pvt. Ltd. v. State of Gujarat, reported in (2015) 6 SCC 439. 13. Further, it was submitted by the learned Counsel for the Appellants that there is no merit in the complainant's (Respondent No. 2) contention that the transactions from her trading account were unauthorized. Trading from the complainant's trading account were being carried out by her husband as admitted by the complainant in the complaint made before the learned Magistrate, and at the time of opening the trading account with Appellant No. 1, she was made aware of all ....
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..... Other considerations are not relevant at the stage of registration of FIR, such as, whether the information is falsely given, whether the information is genuine, whether the information is credible etc. These are the issues that have to be verified during the investigation of the FIR. At the stage of registration of FIR, what is to be seen is merely whether the information given ex facie discloses the commission of a cognizable offence. If, after investigation, the information given is found to be false, there is always an option to prosecute the complainant for filing a false FIR. 15. We are of the considered opinion that in the present case a fact finding investigation was directed by the impugned order. Consequently, FIR was registered against Appellants No. 2 to 4 and against RM (Vinod Koper). The accused under Indian Criminal Legal System, unless proved guilty shall always be given a reasonable space and liberty to defend himself in accordance with the law. Further, it is always expected from a person accused of an offence pleading not guilty that he shall co-operate and participate in criminal proceedings or proceedings of that nature before a court of law, or other Tribu....
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....respondences exchanged by the parties and other admitted documents. It is one thing to say that the Court at this juncture would not consider the defence of the accused but it is another thing to say that for exercising the inherent jurisdiction of this Court, it is impermissible also to look to the admitted documents. Criminal proceedings should not be encouraged, when it is found to be mala fide or otherwise an abuse of the process of the Court. Superior Courts while exercising this power should also strive to serve the ends of justice. 17. Learned Counsel for the Appellants further relied upon few more judgments wherein it was well settled that the test to be applied for quashing is, whether uncontroverted allegations made, prima facie establish the offence. This is because the Court cannot be utilized for any oblique purpose and where, in the opinion of the Court, the chances of an ultimate conviction are bleak, no useful purpose will be served by allowing the criminal prosecution to continue. He relied upon the decisions of this Court in Madhavrao Jiwanrao Scindia and Ors. v. Sambhajirao Chandrajirao Angre and Ors. (1998) 1 SCC 692 (para 7-8); State of Haryana v. Bhajanlal 1....
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....12, and in Sunil Bharti Mittal v. Central Bureau of Investigation (2015) 4 SCC 609, at para 39, this Court held: Apart from the fact that the complaint lacks necessary ingredients of Sections 405, 406, 420 read with Section 34 Indian Penal Code, it is to be noted that the concept of 'vicarious liability' is unknown to criminal law. As observed earlier, there is no specific allegation made against any person but the members of the Board and senior executives are joined as the persons looking after the management and business of the Appellant-Company. 19. Learned Counsel for the Appellants has lastly argued in favour of the partial quashment of the FIR against the Appellants on the contention that there was no criminality on their behalf. It has been further submitted that the allegations made against them do not amount to disclosure of an offence and were made with the purpose of harassing the Appellants. Additionally, learned Counsel contends that vicarious liability cannot be attributed to Appellant Nos. 2 to 4, while relying upon R. Kalyani v. Janak C. Mehta and Ors. (2009) 1 SCC 516, wherein it was held: Whereas, thus, no allegation whatsoever has been made against....
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....s not bound to take cognizance if the facts alleged in the complaint, do not disclose the commission of an offence. 22. Learned Counsel for the Respondents further submitted that there is a marked difference between the civil nature of the arbitration proceedings and the Criminal nature of the current proceedings and relieving the RM on the same day when he had tendered his resignation reflects the conduct whereby conspiracy could be proved. It was further argued that Respondent No. 2 has also sent the legal notice requesting for making good the losses caused to her by the Appellants of which Criminal Court and the Arbitration Tribunal took notice of. Thus, allegations were already made against all the Appellants. We find no substance in the said submission being completely opposed to the settled legal principles. Nevertheless, we find patent illegalities which would result in vitiating the entire investigation which would result in miscarriage of justice. 23. Mr. Basava Prabhu Patil, learned senior Counsel appearing on behalf of Respondent No. 2 submitted that Respondent No. 2 in her complaint had set out the conduct of the Appellants and alleged that their conduct had caused wr....