TaxTMI 
TaxTMI 
2024 (3) TMI 697
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....Phaze III, District Gautam Buddha Nagar pending in court of Chief Judicial Magistrate, Gautam Buddha Nagar. 3. It emanates from the record that M/s Brys International Private Ltd. (opposite party No. 2) has lodged an FIR being Case Crime No. 0408 dated 14.3.2018 levelling allegation of criminal breach of trust, cheating, dishonestly inducing delivery of property, forgery and criminal conspiracy against the M/s Dignify Builtech Private Ltd. (accused company) and its directors namely Rishi Aggarwal (applicant No. 1), Smt. Sheron Aggarwal (applicant No. 2) and Sri Rajinder Aggarwal (applicant No. 3) with an averment that:- (i). First informant (opposite party No. 2) is a registered company under the Companies Act, 1956 engaged in the business of construction of residential and commercial buildings, flats, apartments, farm houses, multi story buildings and shades for the factories. (ii). Accused Company namely M/s Dignify Builtech Pvt. Ltd. is a registered company as well. Present applicants are directors of the said company and are responsible for day to day working of accused company. They take decisions on it's behalf. (iii). In the month of May, 2014, ....
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....evelled against the present applicants as mentioned in the F.I.R. Documents adduced by the present applicant in support of their defence have not been considered by the Investigating Officer. Moreover, opposite party No. 2 has not filed any documentary evidence to strengthen its allegations as mentioned in the FIR. The Investigating Officer failed to appreciate that there was a tripartite agreement between M/s Dignify Builtech Private Ltd. (accused company) and M/s Shubhkamna Builtech Private Ltd., wherein parties agreed upon that M/s Shubhkamna Builtech Private Ltd. shall transfer the amount through informant company and M/s Dignify Builtech Private Ltd. shall pay the amount directly to M/s Shubhkamna Builtech Private Ltd. The same has been acknowledge by M/s Shubhkamna Builtech Private Ltd. in letter dated 10.8.2014 (Annexure- 11) wherein it is stated that the amount paid by the said company to the informant shall be given by M/s Dignify Builtech Private Ltd. directly to M/s Shubhkamna Builtech Private Ltd. The bank statement evinces the transfer of amount in question by the accused company in favour of M/s Shubhkamna Builtech Private Ltd. Transaction record, however, evinces tha....
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.... (vii). Civil litigation has illegally been dragged into criminal proceeding. Simple financial transaction matter has been brought under the criminal law, which is not justifiable. (viii). In the FIR or the charge sheet, no overt act has been attributed to the applicants No. 2 and 3, who have illegally been arraigned in the charge sheet owing to their being directors of the company. The concept of vicarious liability is absent in the criminal law, therefore, for the criminal act/conduct of the company, if any, present applicants cannot be punished. The company has its separate legal entity in the eye of law. The company, being an accused, has not been arraigned in the charge shet, thus, present cognizance order cannot be passed against the present applicants without summoning the accused company. In support of his case, the learned counsel for the applicant has relied upon the case of Ravindranatha Bajpe Vs. Manglore Special Economic Zone Limited and others Etc., Criminal Appeal Nos. 1047-1048 of 2021 decided on 27.10.2021, Sunil Bharti Mittal Vs. Central Bureau of Investigation [AIR 2015 SC 923], GHCL Employees Stock Option Trust Vs. India Infoline Ltd. [2013 4 Supreme....
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....de by the present applicants they have deliberately cheated the respondent No. 2 and committed forgery by digesting the money amounting to Rs. 8,80,00,000/- (Rs. Eight Crores and Eighty Lakhs) which has been transferred by opposite party No. 2 for the purpose of securing the land deal. (ii) Money transaction intending to purchase the land near NOIDA Express Way was a bipartite transaction between the applicants and the opposite party No. 2 and, therefore, third party, namely, M/s. Shubhkamna Builtech Private Ltd. has got no concern with it, whose involvement in the transaction has illegally been shown by the present applicants just to usurp transfered money. Mr. Piyush Tiwari has made it clear in his affidavit that his company, namely, M/s. Shubhkamna Builtech Private Ltd. has not received any money from the accused company namely M/s Dignify Builtech Private Ltd. for or on behalf of respondent No. 2, therefore, transaction, if any, made between the accused company and M/s. Shubhkamna Builtech Private Ltd. is their individual transaction and opposite party No. 2 has no concern with it. (iii) Present applicants alongwith their company have induced opposite party No....
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....his case as well Delhi High Court, vide its order dated 20.9.2017, appointed the provisional liquidator only to preserve the assets of opposite party No. 2. (x) There is no bar to initiate the criminal proceedings against the accused while the civil litigation is going on before the competent court. In support of this submission, learned counsel for the respondent has relied upon Indian Oil Corporation Vs. NEPC Indian Ltd. and others, (2006) 6 SCC 736 and case of Mohd Allauddin Khan Vs. State of Bihar and others (2019) 6 SCC 107. (xi) Appreciation of evidence is not permissible in exercise of power under Section 482 Cr.P.C. In support of his submission learned counsel for the opposite party has relied upon Mohd. Akaram Siddiquee Vs. State of Bihar (2019) 13 SCC 350. (xii) It is lastly contended that company can also be held responsible for the offence under Sections 420 and 406 IPC. Opposite party No. 2 has lodged FIR against the company, namely, M/s Dignify Builtech Private Ltd. However, charge sheet was filed only against the present applicants. This does not absolve the present applicants inasmuch as company can be summoned as well by trial court in ex....
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.... and Eighty Lakhs) in account of accused No. 1 (accused company). (iv) After receiving money, the accused have misappropriated the aforesaid fund and illegally utilized the same in purchasing the shop in the premises of Greater NOIDA Corporation Complex instead of acquiring the land for opposite party No. 2. (v) While paid money was demanded by first informant, accused have refused to return money on the pretext that they already returned said money to M/s Shubhkamna Builtech Private Ltd. 7. In this backdrop of the facts, opposite party No. 2 (first informant) has made clear-cut allegation of cheating, fraud etc. against the present applicants, who were directly involved in negotiations with the director of opposite party No. 2. They participated in the meetings convened in the office of opposite party No. 2 and negotiated the terms and conditions to acquire the land for opposite party No. 2 for the purpose of developing group housing projects. 8. Learned counsel for the applicant has precisely made three fold submissions; first, regarding the maintainability of the criminal proceeding against the present applicants, who are the directors of M/s Dignify Buil....
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.... allegations have been levelled against the Managing Director, and other officials of the company and, even, Magistrate who issued summons has not recorded his satisfaction about prima facie case against those officials (respondents) and role played by them in capacity of Managing Director or Directors or Company Secretary, thus, held that issuance of summons against the said officials of the company was illegal and amounts to abuse of process of law. In the case of SK Alagh (supra), Hon'ble Supreme Court, in paragraph 16 of the judgment, has observed that in penal code, save and except some provisions specifically provided therefor, does not contemplate any vicarious liability on the part of a party who is not charged directly for commission of an offence. In the cited case, admittedly, drafts were drawn in the name of the Company, thus, Hon'ble Apex Court has observed that even if the appellant was its Managing Director he cannot be said to have committed an offence under section 406 IPC. If and when a statute contemplates creation of such a legal fiction, it provides specifically therefor. In absence of any provision laid down under the statute, a Director of a Company or any em....
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.... SCC (Cri) 567, Ravindranatha Bajpe (supra) and Sunil Bharti Mittal (supra). Perusal of record reveals that opposite party No. 2 has lodged FIR against accused company namely M/s Dignify Builtech Private Ltd., being accused No. 1 and its directors (applicants herein) as accused No. 2 to 4. Thus, FIR was instituted accusing the company as well, however, after due investigation, the company has not been arraigned in the charge sheet. The Investigating Officer has found the present applicants guilty for the offence under several sections of IPC. Separate summoning order has not been brought on the record except the endorsement of cognizance made by the learned Magistrate on the shargesheet for taking the cognizance and register the criminal case. Therefore, it would not be befitting to make any comment on the summoning order, however, technicality, if any, is not sufficient to drop the entire criminal proceeding initiated at the behest of opposite party No. 2. In this eventuality, it is always open to the present applicant to raise this objection before the court concerned, who is not bound with the police report submitted under Section 173 CrPC and the court can issue summons, having....
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....Medchl Chemicals & Pharma (P) Ltd. v. Biological E. Ltd. [2000 (3) SCC 269], Hridaya Ranjan Prasad Verma v. State of Bihar [2000 (4) SCC 168], M. Krishnan vs Vijay Kumar [2001 (8) SCC 645], and Zandu Phamaceutical Works Ltd. v. Mohd. Sharaful Haque [2005 (1) SCC 122]. The principles, relevant to our purpose are: (i) A complaint can be quashed where the allegations made in 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 the case alleged against the accused. For this purpose, the complaint has to be examined as a whole, but without examining the merits of the allegations. Neither a detailed inquiry nor a meticulous analysis of the material nor an assessment of the reliability or genuineness of the allegations in the complaint, is warranted while examining prayer for quashing of a complaint. (ii) A complaint may also be quashed where it is a clear abuse of the process of the court, as when the criminal proceeding is found to have been initiated with malafides/malice for wreaking vengeance or to cause harm, or where the allegations are absurd and inherently improba....
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.... 2 namely M/s Brys International Private Ltd. On the premise of appointment of provisional liquidator, it has been submitted that no proceeding can be instituted before any court on behalf of opposite party No. 2 without sanction of the court competent. He has drawn attention of the court towards the provisions enunciated under Sections 446 and 457 (1)(a) of Companies Act, 1956. He has also relied upon the judgment dated 15.1.2018 (Annexure No. 9) passed by NCLT in the case filed on behalf of opposite party No. 2 against the accused company under Section 9 of Insolvency and Bankruptcy Code, 2016 beseeching initiate Corporate Insolvency Resolution Process. In the said case, accused company namely M/s Dignify Builtech Private Ltd. has been shown as a corporate debtor and opposite party No. 2 has been presented itself as a operational creditor. NCLT has dismissed the aforesaid petition with an observation that transfer of money, which is disputed owing to tripartite transaction, can only be ascertained through trial. So far as company petition No. 359 of 2016 filed on behalf of UltraTech Cement is concerned, same was ultimately dismissed vide order dated 27.8.2018. In the light of the....
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....mpany and to secure its funds. In the matter of Jaswantrai Manilal Akhaney (supra), Hon'ble Supreme Court has expounded that where a prosecution is to be lodged in the name of, or on behalf of, the company, it naturally becomes the concern of the judge to see whether or not it was worthwhile to incur expenses on behalf of the company and therefore, section requires the sanction of the judge before the liquidator can undertake the prosecution or defence in the name of and on behalf of the company. It is apposite to mention that criminal law does not create any distinction between persons who can report for the offence or who cannot. Any person can resort to the criminal law for commission of any offence which comes within the purview of IPC. Hon'ble Supreme Court in the matter of A.R. Antulay Vs. Ramdas Sriniwas Nayak & ANR (1984 ) 2 SCC 500 expounded that there is no bar under the criminal law to give information qua any crime. Relevant paragraphs No. 6 and 7 of the aforesaid judgment are quoted hereinbelow:- "6. It is a well recognised principle of criminal jurisprudence that any- one can set or one put the criminal law into motion except where the statute enacting or cre....
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....rivate vendetta or vengeance. If such is the public policy underlying penal statutes, who brings an act or omission made punishable by law to the notice of the authority competent to deal with it, is immaterial and irrelevant unless the statute indicates to the contrary. Punishment of the offender in the interest of the society being one of the objects behind penal statutes enacted for larger good of the society, right to initiate proceedings cannot be whittled down, circumscribed or fettered by putting it into a straitjacket formula of locus standi unknown to criminal jurisprudence, save and except specific statutory exception. To hold that such an exception exists that a private complaint for offences of corruption committed by public servant is not maintainable, the court would require an unambiguous statutory provision and a tangled web of argument for drawing a far fetched implication, cannot be a substitute for an express statutory provision. In the matter of initiation of proceeding before a Special Judge under Section 8(1), the Legislature while conferring power to take cognizance had three opportunities to unambiguously state its mind whether the cognizance can be taken on....
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....e Magistrate and investigate the offence. Similarly anyone can approach the Magistrate with a complaint and even if the offence disclosed is a serious one, the Magistrate is competent to take cognizance of the offence and initiate proceedings. It is open to the Magistrate but not obligatory upon him to direct investigation by police. Thus two agencies have been set up for taking offences to court. One would therefore, require a cogent and explicit provision to hold that Section 5-A displaces this scheme. 16. Thus, it is clear, as discussed above, that opposite party No. 2 has not committed any illegality in instituting a criminal proceeding against the present applicants, who have been arraigned in the FIR for the offence under several sections of the IPC. 17. Third submission raised by the learned Senior Counsel for the applicants with respect to the financial transaction is of no avail as well, inasmuch as these are disputed questions of fact as to whether financial transaction between the parties was bipartite or tripartite transaction. The applicants have relied upon letter/communication dated 10.8.2014 which was sent by the accused company to M/s Shubhkamna Builtech Priv....