2019 (1) TMI 1878 - SC - Indian Laws

Illegal procurement of bonus shares - thrust of the allegations in the complaint is that the shares in question were acquired from the funds of the complainant, though they have always stood in the names of the complainant and his brother - HELD THAT - In the present case the shares in question, right since the date of acquisition have always been in the custody of Appellant No. 1. The material on record is absolutely clear that the acquisition was from the funds of Appellant No. 1. The complainant has merely alleged that the funds came from his bank account but beyond such allegations no material has been placed on record at any stage. The stand taken by the Appellants in their application Under Section 245(2) Code of Criminal Procedure is quite clear that the shares can be sold in the market and the proceeds can be divided between Appellant No. 2 and Respondent No. 2. If Respondent No. 2 is insisting on having complete ownership in respect of the concerned shares, the matter must first be established before a competent forum. The material on record are considered, through the steps indicated in Rajiv Thapar v. Madan Lal Kapoor 2013 (1) TMI 932 - SUPREME COURT and it is convinced that the instant case calls for interference Under Section 482 Code of Criminal Procedure. Further, from the facts that Appellant No. 1 had disowned Respondent No. 2 and had filed civil proceedings seeking appropriate orders against them, we are also convinced that the present criminal complaint is nothing but an attempt to wreck vengeance against the father, brother and the brother in law of the complainant. The instant criminal complaint is an abuse of the process of Court and is required to be quashed. The application for discharge Under Section 245(2) Code of Criminal Procedure is allowed.

Summary

Issues Involved:
1. Legality of the High Court's dismissal of the application under Section 482 of the Code of Criminal Procedure.
2. Allegations of conspiracy, forgery, and cheating regarding the acquisition and custody of shares.
3. Validity of the charges framed under various sections of the Indian Penal Code.
4. Jurisdiction and appropriateness of invoking Section 482 CrPC for quashing proceedings.
5. Determination of ownership and funding for the acquisition of shares.
6. Examination of the abuse of the judicial process.

Detailed Analysis:

1. Legality of the High Court's Dismissal:
The appeal challenges the High Court's order dated 29.05.2018, which dismissed the application under Section 482 CrPC. The High Court had noted that disputed questions of fact could not be resolved in a petition under Section 482 CrPC and that the ownership of shares was a matter of evidence, thus no interference was warranted.

2. Allegations of Conspiracy, Forgery, and Cheating:
Respondent No. 2 filed a complaint alleging that the appellants had conspired to beat him and threw him out of the house, forged his signatures, and illegally procured bonus shares. The complaint included allegations under Sections 406, 420, 467, 471, 323, 504, 506, 447, and 448 IPC. However, the Additional Chief Judicial Magistrate initially found no grounds to summon the appellants for trial, dismissing the complaint under Section 203 CrPC. This order was later set aside by the Additional Sessions Judge, who remanded the matter for fresh orders.

3. Validity of Charges:
The application for discharge under Section 245(2) CrPC was rejected by the Additional Chief Judicial Magistrate, who found sufficient grounds to frame charges under Sections 420, 323, and 504 IPC. The High Court upheld this decision, noting that the issue of ownership of shares needed to be resolved through evidence.

4. Jurisdiction and Appropriateness of Invoking Section 482 CrPC:
The Supreme Court referred to the principles laid down in Rajiv Thapar v. Madan Lal Kapoor, emphasizing that the High Court must exercise caution when invoking Section 482 CrPC to quash proceedings. The material produced by the accused must be of sterling and impeccable quality, sufficient to rule out the allegations without the necessity of recording any evidence.

5. Determination of Ownership and Funding for Acquisition of Shares:
The appellants contended that the acquisition of shares was funded by Appellant No. 1, and the shares were always in his custody. The complainant's allegations of funding the acquisition from his bank account were unsupported by substantial evidence. The Supreme Court found that the material on record clearly indicated that the acquisition was from Appellant No. 1's funds and that the shares could be sold in the market with proceeds divided between the parties.

6. Examination of Abuse of Judicial Process:
The Supreme Court concluded that the criminal complaint was an attempt to wreck vengeance against the appellants, considering the background of previous civil and criminal proceedings initiated by Appellant No. 1 against Respondent No. 2. The Court found the complaint to be an abuse of the judicial process and quashed the proceedings.

Conclusion:
The Supreme Court allowed the appeal, set aside the orders of the lower courts, and granted the application for discharge under Section 245(2) CrPC. The Court directed Respondent No. 2 to pay costs of ?25,000 to each appellant for initiating frivolous litigation, emphasizing that the initiation of the complaint was not a bona fide exercise.