2025 (4) TMI 508 - SC - Indian Laws

Quashing the criminal proceedings against respondent No.1 - prima facie evidence to proceed with the charges against the respondent or not - invocation of inherent powers under Section 482 Cr.P.C. - HELD THAT - The contours of exercise of the powers under Section 482 Cr.P.C. have been expressed in various judgments. In the well known case of State of Haryana v. Bhajan Lal 1990 (11) TMI 386 - SUPREME COURT this Court while recognizing that it would not be possible to account for all possibilities detailed seven circumstances where the exercise would be justified. What is therefore to be seen is whether in the present facts any of the seven circumstances/situations mentioned in Bhajan Lal 1990 (11) TMI 386 - SUPREME COURT are justifiably met. One of the submissions advanced on behalf of respondent No.1 was that reliance solely on the statement of the co-accused is not justified. It is found that this submission to be incorrect for presently respondent No.1 s own statement also presents some corroboration for the statement of accused No.1. When his own statement acknowledges the possibility that he had received money from accused No.1 which the latter has also alluded to there prima facie appears to be a connection. This however is not the only connection between these two persons. It was on accused No.1 s recommendation that respondent No.1 appointed one Ritesh Merugu who is accused No.2 as Accounts Manager. Furthermore it is surprised by the fact that the CFO of a company and an alleged chartered accountant both readily agreed to not put ink to paper to formalise this relationship between them and sans the same found it completely alright to share all financial details and books of accounts. Conclusion - The inherent powers under Section 482 Cr.P.C. should be exercised with caution ensuring that prima facie evidence is not disregarded without due trial. The proceedings are revived and restored to the file of III Additional Chief Metropolitan Magistrate Bengaluru - application disposed off.

Summary

ISSUES PRESENTED and CONSIDERED

The core legal issues considered in this judgment include:

1. Whether the High Court was justified in quashing the criminal proceedings and chargesheet against the respondent under its inherent powers.

2. Whether there was prima facie evidence to proceed with the charges against the respondent, particularly concerning allegations of fraud and misappropriation of funds.

3. The applicability of Section 409 of the Indian Penal Code (IPC) regarding the respondent's role and responsibilities within the company.

4. The admissibility and reliance on the statement of a co-accused in implicating the respondent.

ISSUE-WISE DETAILED ANALYSIS

1. Justification for Quashing Criminal Proceedings

- Relevant Legal Framework and Precedents: The exercise of inherent powers under Section 482 of the Cr.P.C. is guided by the principles laid down in the case of State of Haryana v. Bhajan Lal, which outlines specific circumstances where such powers can be exercised.

- Court's Interpretation and Reasoning: The Court noted that the High Court quashed the proceedings without adequate consideration of the prima facie evidence available against the respondent. The Supreme Court emphasized that the inherent power should be exercised sparingly and not to conduct a 'mini-trial' at the stage of framing charges.

- Application of Law to Facts: The Court found that the High Court erred in quashing the proceedings as there was substantial prima facie evidence that warranted a trial.

- Treatment of Competing Arguments: The appellant argued that the High Court prematurely assessed the evidence, while the respondent contended that there was no direct evidence against him. The Supreme Court sided with the appellant, emphasizing the need for a trial to ascertain the truth of the allegations.

2. Prima Facie Evidence and Role of the Respondent

- Key Evidence and Findings: The statements of the respondent and co-accused indicated a possible connection in the alleged misappropriation of funds. The respondent's acknowledgment of receiving substantial sums of money and his role in appointing key personnel were significant points of consideration.

- Application of Law to Facts: The Court highlighted the respondent's involvement in financial transactions and his role as CFO, which prima facie suggested a link to the alleged offenses.

- Treatment of Competing Arguments: The respondent claimed his role was merely administrative, but the Court found that his actions and connections to other accused warranted further investigation.

3. Applicability of Section 409 IPC

- Relevant Legal Framework: Section 409 IPC pertains to criminal breach of trust by a public servant, banker, merchant, or agent.

- Court's Interpretation and Reasoning: The respondent argued that he did not fit the criteria under Section 409 IPC. However, the Court noted that as CFO, he had significant control over the company's finances, which could potentially bring him within the ambit of this section.

4. Reliance on Co-Accused's Statement

- Relevant Legal Framework and Precedents: The Court considered the legal position on relying on a co-accused's statement, noting that such statements require corroboration.

- Court's Interpretation and Reasoning: The Court found that the respondent's own statement provided some corroboration to the co-accused's statement, thereby justifying the continuation of proceedings.

SIGNIFICANT HOLDINGS

- Core Principles Established: The judgment reinforced the principle that inherent powers under Section 482 Cr.P.C. should be exercised with caution, ensuring that prima facie evidence is not disregarded without due trial.

- Final Determinations on Each Issue: The Supreme Court set aside the High Court's decision to quash the proceedings, reinstating the charges and directing the trial to proceed to ensure a thorough examination of the evidence.

Conclusion: The appeal was allowed, and the proceedings were restored to the trial court, emphasizing the importance of a trial in determining the veracity of the allegations and the respondent's role in the alleged offenses.