9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2020 (1) TMI 1445 - SC - Companies LawCriminal conspiracy - receiving the sub-standard runner turbines which were not in conformity with the specified standard - whether a case has been made out to quash the FIR and the chargesheet against the Appellants for the offences Under Section 420 read with Section 120B of the Indian Penal Code, in exercise of powers Under Section 482 Code of Criminal Procedure? - HELD THAT - The company, namely, M/s. SPML Infra Limited supplied substandard materials - runner bucket turbines and the supplied runner bucket turbines were not as per the technical specifications. It is also required to be noted that there is no FIR/complaint/chargesheet against the company - M/s. SPML Infra Limited and the Appellants are arrayed as an Accused as Managing Director and Director of M/s. SPML Infra Limited respectively. From a bare reading of the FIR and even the chargesheet, there are no allegations that there was a fraudulent and dishonest intention to cheat the government from the very beginning of the transaction. Even there are no specific allegations and averments in the FIR/chargesheet that the Appellants were in-charge of administration and management of the company and thereby vicariously liable. In light of the aforesaid, the prayer of the Appellants to quash the criminal proceedings against the Appellants for the offence Under Section 420 Indian Penal Code is required to be considered. In the case of Bhajan Lal 1990 (11) TMI 386 - SUPREME COURT , this Court has categorised the cases by way of illustration wherein the powers Under Article 226 or the inherent powers Under Section 482 Code of Criminal Procedure could be exercised either to prevent the abuse of the process of any court or otherwise to secure the ends of justice. The chargesheet has been filed against the Appellants for the offences Under Section 420 read with Section 120B of the Indian Penal Code. However, it is required to be noted that there are no specific allegations and averments in the FIR and/or even in the chargesheet that fraudulent and dishonest intention of the Accused was from the very beginning of the transaction. It is also required to be noted that contract between M/s. SPML Infra Limited and the Government was for supply and commissioning of the Nurang Hydel Power Project including three power generating units. The Appellants purchased the turbines for the project from another manufacturer. The company used the said turbines in the power project. The contract was in the year 1993 - this is a fit case to exercise the powers Under Section 482 Code of Criminal Procedure and to quash the criminal proceedings against the Appellants for the offence Under Section 420 read with Section 120B of the Indian Penal Code. To continue the criminal proceedings against the Appellants would be undue harassment to them. The impugned FIR and the chargesheet filed against the Appellants for the offence Under Section 420 Indian Penal Code are hereby quashed - Appeal allowed - decided in favor of appellant.
Issues Involved:
1. Quashing of Criminal Proceedings 2. Allegations of Fraudulent and Dishonest Intentions 3. Vicarious Liability of Directors 4. Delay in Service of Summons Issue-Wise Detailed Analysis: 1. Quashing of Criminal Proceedings: The appellants challenged the High Court's decision to dismiss their petition to quash criminal proceedings under Section 482 of the Code of Criminal Procedure. The Supreme Court considered whether the allegations in the FIR and chargesheet constituted a prima facie case of cheating under Section 420 read with Section 120B IPC. The Court observed that the allegations primarily pertained to a breach of contract and did not demonstrate fraudulent or dishonest intentions from the inception of the transaction. The Court emphasized that mere breach of contract does not amount to cheating unless there is deception at the very beginning. The Court concluded that no prima facie case of cheating was made out against the appellants, and the criminal proceedings were quashed. 2. Allegations of Fraudulent and Dishonest Intentions: The allegations against the appellants included supplying sub-standard materials and charging exorbitant rates. The Supreme Court noted that the FIR and chargesheet lacked specific allegations of fraudulent and dishonest intentions from the beginning of the transaction. The Court highlighted that the appellants had replaced defective turbines, indicating no intention to cheat. The Court reiterated that for an offense under Section 420 IPC, there must be evidence of fraudulent or dishonest intention at the time of making the promise or representation, which was absent in this case. 3. Vicarious Liability of Directors: The appellants argued that they were not vicariously liable for the company's actions as the company was not named as an accused. The Supreme Court agreed, stating that there were no specific allegations against the Managing Director or Director to constitute vicarious liability. The Court referred to precedents that vicarious liability of directors arises only if the statute explicitly provides for it and if specific allegations are made. Since the FIR and chargesheet did not contain such allegations, the Court held that the criminal proceedings against the appellants were not maintainable. 4. Delay in Service of Summons: The Supreme Court noted that the FIR was filed in 2000, and the chargesheet was submitted in 2004, but the appellants were served with summons only in 2017. The Court found this delay of approximately 13 years significant and indicative of undue harassment. The Court criticized the High Court for not exercising its jurisdiction under Section 482 CrPC to quash the proceedings, given the long delay and lack of prima facie evidence of cheating. Conclusion: The Supreme Court allowed the appeal, quashing the criminal proceedings against the appellants for the offense under Section 420 read with Section 120B IPC. The Court emphasized that continuing the criminal proceedings would result in undue harassment, as no prima facie case of cheating was made out. The judgment clarified that the quashing applied only to the appellants and not to other accused individuals, against whom the proceedings would continue as per law.
|
