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2025 (4) TMI 1312
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....ief facts necessary for disposal of the criminal appeal are that the appellant/S.C. Garg ('Garg') was the Managing Director of the Company Ruchira Papers Ltd. ('Company') which was engaged in manufacturing craft papers. The Company had business dealings with ID Packaging, a partnership concern of respondent no. 2/R.N. Tyagi ('Tyagi'). In conduct of business between two entities, the parties used to maintain a running account and Tyagi used to issue cheques from time to time in favour of ID Packaging. Between 22.12.1997 to 30.01.1998, Tyagi issued 11 cheques which were initially dishonoured due to insufficiency of funds in the account. To maintain business relations, both the parties agreed to present the 11 cheques again at a later stage upon instructions from Tyagi. In relation to the liabilities other than the amount involved in the 11 cheques, Tyagi made payment by issuing 03 demand drafts in the name of the appellant's company. On 08.06.1998, 11 cheques were again presented for encashment upon which only four cheques were cleared leaving the remaining 07 cheques to be dishonoured again. The appellant's company filed a complaint under Section 138 of the Negotiable Instruments Ac....
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....al No.752 of 2002, titled M/s Ruchira Papers Ltd., versus M/s I.D. Packings and another is disposed of as not pressed. b) Criminal Revision No. 52 of 2005, titled M/s I.D. Packings and another versus M/s Ruchira Papers and another is disposed of with the directions that the amount lying deposited in FDR A/c No. 042704PR00001211 dated 11.09.2012 along with interest satisfies the entire claim of the respondents M/s Ruchira Papers subject matter of the revision. c) CMPMO No. 305 of 2012, titled R.N. Tyagi and another versus M/s Ruchira Papers ltd., is also disposed of with this direction that the decree passed in Civil Suit No.47/1 of 2005/01, titled M/s Ruchira Papers versus M/s I.D. packing shall stand fully satisfied on the FDR along with interest having been paid to respondents M/s Ruchira Papers Limited. d) The registry is directed to remit the amount of aforesaid FDR account along with interest accrued thereon to the bank account of M/s Ruchira Papers Limited for which purpose they shall submit the photocopy of their current account to the Registry." 5. From the above extracted order of the High Court, it appears that Garg had instituted a suit for ....
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....ating. 9. Having heard learned senior counsel for the parties and upon perusal of the material on record we are satisfied that the appeal deserves to be allowed, and the impugned chargesheet/criminal proceedings deserve to be quashed on the reasoning hereafter stated. 10. It is to be noted that in 138 NI Act proceedings against Tyagi, he raised a specific defence that there is no outstanding debt qua 07 cheques as the amount involved therein has already been paid by separate demand drafts. Learned Magistrate in its order dated 25.10.2002 rejected the said defence by recording a finding that no request was made by Tyagi to the complainant company to return the bounded cheques to the accused company when the demand drafts were allegedly sent by the accused persons to the complainant company. The Trial Magistrate specifically recorded a finding in paragraph No. 16 in the following manner: "16. Moreover, it may be stated that the accused company was having business dealing with the complainant company. The complainant company has also placed on record the copy of statement of account Ex. P-16 pertaining to the transaction of the accused firm with the complainant company.....
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....e principle of res judicata is equally applicable in criminal matters. However, in two later decisions, namely, Devendra & Ors. vs. State of Uttar Pradesh & Anr. ((2009) 7 SCC 495) and Muskan Enterprises & Anr. Vs. The State of Punjab & Anr. ((2024) INSC 1046) in which one of us was a member (Justice Prashant Kumar Mishra), this Court observed in the context of maintainability of second petition under Section 482 Cr.P.C. that principle of res judicata has no application in a criminal matter. Considering divergence of opinion, it would be appropriate for us to have deeper examination and reading of the law laid down by this Court in the earlier decisions. 14. In Pritam Singh (supra), a three Judge Bench of this Court speaking through Natwarlal Harilal Bhagwati, J. placing reliance on Sambasivam vs. Public Prosecutor, Federal of Malaya (1950) AC 458, decided by a Bench of Five Judges of the Judicial Committee, opined that maxim res judicata is no less appliable to criminal than to civil proceedings. In the said matter, accused Pritam Singh was earlier tried for an offence under the Arms Act basing recovery of a weapon from him. In the said case Pritam Singh was acquitted. In a sub....
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....icable to criminal proceedings and it is not permissible in the subsequent stage of the same proceedings to convict a person for an offence in respect of which an order for his acquittal has already been recorded. Reliance in this context was placed upon the observations of the Judicial Committee in the case of Samba Sivam v. Public Prosecutor, Federation of Malaya. [1950 AC 458] In Bhagat Ram case [(1972) 2 SCC 466: 1972 SCC (Cri) 751] a Single Judge of the High Court to whom a limited question had been referred because of a difference of opinion between two Judges of the Division Bench, not only decided the question referred to him, he also interfered with the acquittal of the accused regarding certain offences in respect of which an order for acquittal had already been made earlier by the Division Bench. It was held that it was not within the competence of the Single Judge to reopen the matter and pass the above order of conviction in the face of the earlier order of the Division Bench for acquittal. Although Bhagat Ram case [(1972) 2 SCC 466 : 1972 SCC (Cri) 751] related to acquittal, the principle laid down in that case, in our opinion, holds good in a case like the present wh....
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....nt decision in Devendra (supra) and Muskan Enterprises (supra) have been decided at the stage of quashing petition under Section 482 Cr.P.C., thus, in both the matters, there was no final adjudication of merits. While in Devendra (supra), the first petition was for quashing of the FIR and the second petition was preferred after the Magistrate took cognizance of the matter; in Muskan (supra), the first petition was dismissed as withdrawn whereas the second petition was held not maintainable due to earlier withdrawal without any liberty. Thus, these two cases are totally distinguishable. In addition, it is important to bear that Sambasivam (supra) was decided by Five Judges of the Judicial Committee and Pritam Singh (supra) was decided by a three Judge Bench, whereas all subsequent decisions have been rendered by the two Judges Bench. Therefore, Pritam Singh (supra) is binding insofar as the issue concerning the applicability of principle of res judicata in a criminal proceeding is concerned. 20. For the above reason it is absolutely clear that Tyagi cannot maintain a prosecution on the basis of allegations which were precisely his defence in the earlier proceedings wherein he ....
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....r under the Iron and Steel Control Order, 1956), is a company, every person who, at the time the contravention was committed, was in charge of, and was responsible to, the company for the conduct of the business of the company as well as the company, shall be deemed to be guilty of the contravention and shall be liable to be proceeded against and punished accordingly. It was urged that the two respondents were in charge of, and were responsible to, the Company for the conduct of the business of the Company and, consequently, they must be held responsible for the sale and for thus contravening the provisions of clause (5) of the Iron and Steel Control Order. This argument cannot be accepted, because it ignores the first condition for the applicability of Section 10 to the effect that the person contravening the order must be a company itself. In the present case, there is no finding either by the Magistrate or by the High Court that the sale in contravention of clause (5) of the Iron and Steel Control Order was made by the Company. In fact, the Company was not charged with the offence at all. The liability of the persons in charge of the Company only arises when the contravention is....
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.... the offence was committed by the company is sine qua non for convicting those other persons. But if a company is not prosecuted due to any legal snag or otherwise, the other prosecuted persons cannot, on that score alone, escape from the penal liability created through the legal fiction envisaged in Section 141 of the Act." 25. However, subsequent decisions of this Court have emphasised that the provision imposes vicarious liability by way of deeming fiction which presupposes and requires the commission of the offence by the company itself as it is a separate juristic entity. Therefore, unless the company as a principal accused has committed the offence, the persons mentioned in sub-section (1) would not be liable and cannot be prosecuted. Section 141(1) of the Negotiable Instruments Act, extends vicarious criminal liability to the officers of a company by deeming fiction, which arises only when the offence is committed by the company itself and not otherwise. Overruling Sheoratan Agarwal and Anil Hada, in Aneeta Hada v. Godfather Travels & Tours (P) Ltd. (2012) 5 SCC 661, a three- Judge Bench of this Court expounding on the vicarious liability under Section 141 of the Ne....
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.... of the Company. We, accordingly, set aside that part of the impugned judgment dated 13-8- 2007 passed by the High Court so far as it relates to the appellant and quash the summons and proceeding pursuant to Complaint Case No. 698 of 2001 qua the appellant." 27. In Sharad Kumar Sanghi v. Sangita Rane (2015) 12 SCC 781, this Court observed that : (SCC p. 785, paras 11 & 13) "11. In the case at hand as the complainant's initial statement would reflect, the allegations are against the Company, the Company has not been made a party and, therefore, the allegations are restricted to the Managing Director. As we have noted earlier, allegations are vague and in fact, principally the allegations are against the Company. There is no specific allegation against the Managing Director. When a company has not been arrayed as a party, no proceeding can be initiated against it even where vicarious liability is fastened under certain statutes. It has been so held by a three-Judge Bench in Aneeta Hada v. Godfather Travels & Tours (P) Ltd. in the context of the Negotiable Instruments Act, 1881. *** 13. When the company has not been arraigned as an accused, such....
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....her categories could be vicariously liable for the offence subject to the averments in the petition and proof thereof. One cannot be oblivious of the fact that the company is a juristic person and it has its own respectability. If a finding is recorded against it, it would create a concavity in its reputation. There can be situations when the corporate reputation is affected when a Director is indicted.' In similar terms, the Court further held : (Aneeta Hada case, SCC p. 688, para 59) '59. In view of our aforesaid analysis, we arrive at the irresistible conclusion that for maintaining the prosecution under Section 141 of the Act, arraigning of a company as an accused is imperative. The other categories of offenders can only be brought in the drag-net on the touchstone of vicarious liability as the same has been stipulated in the provision itself.' *** 12. The provisions of Section 141 postulate that if the person committing an offence under Section 138 is a company, every person, who at the time when the offence was committed was in charge of or was responsible to the company for the conduct of the business of the company as well as the company, shall be....
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....bar. However, such exceptions are of no relevance in the present case. Thus, the present prosecution must fail for this reason as well." 23. Similarly in the matter of Delhi Race Club (1940) Ltd. & Ors. vs. State of Uttar Pradesh & Anr. (2024) SCC online SC 2248, this Court has held that a person cannot be vicariously prosecuted, especially for offences under the IPC, merely on account of the fact that he holds a managerial position in a company without there being specific allegations regarding his involvement in the offence. The following has been held in paras 13 and 14: "13. This Court has time and again reminded that summoning of an accused in a criminal case is a serious matter. Criminal law cannot be set into motion as a matter of course. It is not that the complainant has to bring only two witnesses to support his allegations in the complaint to have the criminal law set into motion. The order of the Magistrate summoning the accused must reflect that he has applied his mind to the facts of the case and the law applicable thereto. He has to examine the nature of allegations made in the complaint and the evidence both oral and documentary in support thereof. It is....
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....tious. The following is held in paras 9, 10 and 11: "9. At this stage, we would like to observe something important. Whenever an accused comes before the court invoking either the inherent powers under Section 482 of the Code of Criminal Procedure (CrPC) or extraordinary jurisdiction under Article 226 of the Constitution to get the FIR or the criminal proceedings quashed essentially on the ground that such proceedings are manifestly frivolous or vexatious or instituted with the ulterior motive for wreaking vengeance, then in such circumstances the court owes a duty to look into the FIR with care and a little more closely. 10. We say so because once the complainant decides to proceed against the accused with an ulterior motive for wreaking personal vengeance, etc. then he would ensure that the FIR/complaint is very well drafted with all the necessary pleadings. The complainant would ensure that the averments made in the FIR/complaint are such that they disclose the necessary ingredients to constitute the alleged offence. Therefore, it will not be just enough for the court to look into the averments made in the FIR/complaint alone for the purpose of ascertaining whe....