TaxTMI 
TaxTMI 
TaxTMI 
2025 (9) TMI 616
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....pon perusal of the record, the facts are summarised as follows: 2.1. A complaint under Section 156(3) of CrPC was filed by Sushila Gupta (the Complainant/Respondent No. 2) before the Metropolitan Magistrate. The Complainant alleged that she had issued a cheque of INR 25,000/- (bearing No. 852507) to Suraj Garg, the Petitioner, a Chartered Accountant, towards professional services, which, she alleges, were never rendered. She further alleged that she had advanced an additional sum of INR 1,00,000/-, by way of two cheques (one bearing No. 852510 dated 1st September, 2005 and the other bearing No. 852511 dated 2nd September, 2005) drawn on Bank of Punjab, each of INR 50,000/-, to the Petitioner for his assistance in financial matters and for investment in shares through MLB Capital Pvt. Ltd., a broker of the National Stock Exchange; however, neither were the shares credited in her DEMAT Account, nor was the amount returned. 2.2. On 17th April, 2006, a notice was sent to the Petitioner, with a copy thereof to MLB Capital Pvt. Ltd., but no response was received. Subsequently, MLB Capital Pvt. Ltd. clarified that the Petitioner was neither a director of the company nor associated with ....
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....ated 31st May, 2011, recording that when he attempted to examine the Complainant and her husband, they refused to cooperate, insisting that the investigation be carried out strictly in accordance with their instructions. The incident was contemporaneously recorded vide DD No. 22 dated 27th May, 2011, and the IO sought appropriate directions from the Court to secure their cooperation. 2.7. Pursuant to directions of the Magistrate, further investigation was carried out and a fresh status report was filed on 18th August, 2011. In this report, the Investigating Officer reported that: (i) The Complainant had invested voluntarily in shares through M/s Share-in-Shares. (ii) She had suffered losses and left her shares with the firm. (iii) No cognizable offence is disclosed. (iv) The firm 'M/s Share-in-Shares', is not registered with SEBI, and any violation in this respect fell under the SEBI Act, not the IPC. The IO, therefore, reiterated his conclusion that while there may have been regulatory violations, no offence under IPC was disclosed. 2.8. The Magistrate, however, by order dated 1st December, 2011, declined to accept the cancellation report, took cognizance of the o....
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....es, and the Petitioner had no role therein. 3.4. The account statements of M/s Share-in-Shares together with the statement of Narayan Kumar Jha, recorded on 27th May, 2010, confirm that the two cheques of INR 50,000/- each were duly accounted for in the firm's books. As on 31st March, 2006, after transfer from the Margin Account, the Complainant's account reflected a debit balance of INR 6,078/-, while that of her husband showed a debit balance of INR 92,188/-, totalling INR 98,266/-. By 7th April, 2006, when they ceased dealing with M/s Share-in-Shares, the market value of their withheld shares was INR 87,120/-, leaving a net balance of INR 11,146/- payable by them to the firm. These facts establish beyond doubt that the Complainant and her husband were active investors with M/s Share-in-Shares, suffered losses in share trading, and left their shares with the firm. At best, therefore, the dispute is of a civil or regulatory nature, not criminal. In fact, this position was noticed by the Sessions Court while granting pre-arrest bail to the Petitioner. 3.5. There is no material whatsoever to suggest that the Petitioner harboured any dishonest intention at the inception of the tran....
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....cie on the complaint..." 4.4. The Petitioner was actively engaged in the business of shares. He was operating as a sub-broker with MLB Capital Pvt. Ltd., under the name of 'M/s Share-in-Shares', a proprietorship concern of his father. The business was under his direct supervision and control, including not only the share transactions but also the firm's banking operations. The bank account was directly linked to the Petitioner's personal email ID and mobile number, as reflected in the account opening documents of IDBI Bank, thereby establishing his direct involvement. 4.5. The summoning order was passed with due application of mind, as the material on record prima facie discloses that the Petitioner, with fraudulent intent from the inception, induced the Complainant to part with her savings under the guise of purchasing shares, without any genuine intention of doing so. The essential ingredients of Section 420 IPC are, therefore, satisfied. 4.6. Merely because the offence was committed during the course of a commercial transaction would not be sufficient to hold that the complaint, which is criminal in nature, did not warrant a trial. Analysis 5. The FIR had been registered ....
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....ome to the accused. It is not that the Magistrate is a silent spectator at the time of recording of preliminary evidence before summoning of the accused. The Magistrate has to carefully scrutinise the evidence brought on record and may even himself put questions to the complainant and his witnesses to elicit answers to find out the truthfulness of the allegations or otherwise and then examine if any offence is prima facie committed by all or any of the accused. 29. No doubt the Magistrate can discharge the accused at any stage of the trial if he considers the charge to be groundless, but that does not mean that the accused cannot approach the High Court under Section 482 of the Code or Article 227 of the Constitution to have the proceeding quashed against him when the complaint does not make out any case against him and still he must undergo the agony of a criminal trial...." [emphasis supplied] 7. The same principles were reiterated by the Supreme Court in Sunil Bharti Mittal v. CBI (2015) 4 SCC 609., where it was emphasised that the process of summoning requires due satisfaction of the Magistrate that sufficient material exists to proceed against a person. Likewise, in GHCL....
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....ginning or inception." [Emphasis Supplied] 10. Tested against the settled principles outlined above, the Court finds that the material on record fails to disclose the essential ingredients of Section 420 IPC. Further, the Magistrate's order summoning the Petitioner does not reflect a conscious application of mind, particularly in light of the conclusions drawn by the investigating agency, from which the Magistrate departed without sufficient reasoning. Both the cancellation report and the subsequent status report dated 18th August, 2011, clearly record that the Complainant and her husband had invested through M/s Share-in-Shares, a sole proprietorship of the Petitioner's late father; that the two cheques of INR 50,000/- each were credited not to the Petitioner's personal account but to the Complainant's Margin Account with the firm; and that trading activity was indeed undertaken on behalf of the Complainant, which resulted in losses, with certain shares remaining withheld by the firm. These facts are corroborated by account statements and the statement of the firm's authorised signatory, Narayan Kumar Jha. While the Complainant alleges that the Petitioner harboured dishonest in....