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2020 (2) TMI 675 - HC - Indian Laws


Issues Involved:
1. Quashing of the criminal proceedings under Sections 420, 406, and 120B of the Indian Penal Code.
2. Allegations of cheating and criminal breach of trust.
3. Compliance with Section 202(1) of the Code of Criminal Procedure for accused residing outside the territorial jurisdiction.
4. Vicarious liability of the Directors of the accused company.

Detailed Analysis:

Issue 1: Quashing of the criminal proceedings under Sections 420, 406, and 120B of the Indian Penal Code
The petitioners sought to quash the proceedings of Complaint Case No.C/4906 of 2013 under Sections 420, 406, and 120B of the Indian Penal Code. The petitioners argued that the allegations in the complaint do not prima facie disclose the commission of any offense and that the proceedings are a counterblast to the criminal action initiated by the petitioners for dishonor of cheques. They contended that the dispute is of a civil and commercial nature and does not constitute the alleged offenses. The court, however, held that the complaint, when read as a whole, reveals allegations that prima facie constitute the offenses under Sections 420 and 406 IPC. The court emphasized that quashing of criminal proceedings under Section 482 Cr.P.C. is an exception and should only be exercised to prevent abuse of the process of the court.

Issue 2: Allegations of cheating and criminal breach of trust
The complainant alleged that the accused had a dishonest and fraudulent intention from the inception of the loan agreement and misappropriated the pledged shares of Dunlop India Limited, causing wrongful loss to the complainant. The accused allegedly invoked the pledged shares without prior knowledge, consent, or approval of the complainant and misappropriated the proceeds. The court noted that the essential elements of the alleged offenses under Sections 420 and 406 IPC are prima facie present in the allegations contained in the complaint. The court stated that the nature of the transaction and the intention of the accused are crucial to determine the commission of the offense of cheating.

Issue 3: Compliance with Section 202(1) of the Code of Criminal Procedure for accused residing outside the territorial jurisdiction
The petitioners argued that the Learned Magistrate issued process against them without complying with the mandatory provisions of Section 202(1) Cr.P.C., as the accused reside outside the territorial jurisdiction. The court recognized that non-compliance with Section 202(1) Cr.P.C. is significant but not a ground for quashing the proceedings. The court remitted the case to the Learned Magistrate to pass a fresh order after complying with the mandatory provisions of Section 202(1) Cr.P.C.

Issue 4: Vicarious liability of the Directors of the accused company
The petitioners contended that the Directors of the accused company cannot be held vicariously liable for the alleged offenses committed by the company. The court acknowledged that in the absence of specific averments in the complaint demonstrating the role of the Directors in the commission of the alleged offenses, the Directors cannot be prosecuted. However, the court found specific averments in the complaint indicating the involvement of the Directors in the alleged offenses. Thus, the court did not find merit in the petitioners' contention regarding the quashment of proceedings against the Directors.

Conclusion:
The court disposed of the criminal revisional application by remitting the case to the Learned Magistrate for passing a fresh order after complying with the mandatory provisions of Section 202(1) Cr.P.C. The court clarified that the observations made in the judgment should not be taken as an expression of any opinion regarding the merit of the criminal proceedings pending before the Learned Magistrate, who shall proceed with the case and dispose of the same in accordance with the law.

 

 

 

 

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