2004 (3) TMI 826 - HC - Indian Laws

Issues Involved:
1. Legality and propriety of the Magistrate's orders taking cognizance.
2. Allegations of lack of prima facie case against the petitioners.
3. Use of printed formats by the Magistrate.
4. Specific averments in the complaints regarding the petitioners' roles.
5. Petitioners' status as Directors at the relevant times.
6. Exercise of inherent powers under Section 482 Cr. P.C.

Detailed Analysis:

1. Legality and Propriety of the Magistrate's Orders Taking Cognizance:
The petitioners contended that the orders impugned are illegal and improper, arguing that there was no prima facie case made out against them. They asserted that the Magistrate's use of printed formats indicated a lack of judicial application of mind. The respondents countered that the orders were legal and proper, emphasizing that the Magistrate had applied judicial mind and the material on record supported the orders. The court held that the Magistrate had indeed applied judicial mind, as evidenced by sufficient material on record, thus rejecting the petitioners' contention.

2. Allegations of Lack of Prima Facie Case Against the Petitioners:
The petitioners argued that there was no prima facie case against them, particularly highlighting that one of the petitioners, Prakash Jain, had ceased to be a Director of the company from 4-10-2000. The respondents maintained that a prima facie case existed and that the issues raised by the petitioners should be addressed during a full trial. The court agreed with the respondents, noting that the complaints and material on record indicated that the petitioners were responsible for the conduct of the company's business, thus necessitating a full trial to resolve the factual disputes.

3. Use of Printed Formats by the Magistrate:
The petitioners criticized the Magistrate's use of printed formats for taking cognizance, arguing it demonstrated a lack of judicial application of mind. The court, referencing a prior decision (Hanumanthi v. PCH Marketing Services), acknowledged this practice but noted that sufficient material indicated the Magistrate had indeed applied judicial mind. Therefore, the court found this contention unmeritorious.

4. Specific Averments in the Complaints Regarding the Petitioners' Roles:
The petitioners claimed that the complaints lacked specific averments that they were in charge of the company's affairs and responsible for its business conduct. The court, however, found that the complaints did contain such averments and emphasized that the statutory provisions required all responsible persons to be arraigned as accused. The court cited the Supreme Court decision in Rajesh Bajaj v. State NCT of Delhi, which held that a complainant need not reproduce verbatim the ingredients of the offense, and found the petitioners' contention insufficient to quash the proceedings.

5. Petitioners' Status as Directors at the Relevant Times:
Several petitioners argued that they had ceased to be Directors at the relevant times, producing documents like Form 32 to substantiate their claims. The respondents disputed these claims, presenting evidence such as annual reports indicating continued directorship. The court held that these factual disputes should be resolved in a full trial, referencing decisions like S. P. Subramaniam v. Vasavi Cotton Traders, which stated that such factual determinations were inappropriate for resolution under Section 482 Cr. P.C.

6. Exercise of Inherent Powers Under Section 482 Cr. P.C.:
The court reiterated that inherent powers under Section 482 Cr. P.C. should be exercised with caution and only in rare cases. Given the material on record and the necessity of a full trial to resolve factual disputes, the court found no grounds to exercise these powers to quash the proceedings against the petitioners.

Conclusion:
The court allowed Crl. P. No. 3840/2003, setting aside the order against accused Nos. 4 to 6 and quashing the proceedings against them. However, it dismissed the remaining petitions, maintaining the orders impugned and directing the trial court to proceed against the other accused persons.

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