9911796707
TMI Blog2007 (9) TMI 400X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs. 10 each for cash at a premium of Rs. 17, i.e., at a price of Rs. 27 each. The prospectus was published for the purpose of public issue and therein some false and misleading information had been given with regard to sanction limits, the dues and export bills of the company. It was alleged that the company had committed an offence punishable under sections 120B, 425, 191, 192, 177, 181 as also 500 of the Indian Penal Code (45 of 1860). A criminal complaint was filed before the Chief Judicial Magistrate, Vadodara, by the appellant on or about February 28, 2005, alleging : "(A) Following false, fabricated and fraudulent documents illegally and dishonestly misused by Shri G.C. Garg in the absence of the sanction letters of the bank along with its stipulated sanctioned terms and conditions for the sanctioned so called credit facilities, evidently acceptance of complainant's company for the stipulated sanctioned terms and conditions does not exist. Hence following false, fabricated and fraudulent dishonestly and purposefully misused documents with mala fide intention are illegal, invalid and not maintainable. Thus, Shri G.C. Garg solemnly affirmed and signed the verification of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lls as per procedure of UCPDC rules." It is not in dispute that in the year 2003, the matter was pending before the City Civil Court, Ahmedabad. Other relevant facts stated in the said prospectus were not incorrect. The stand taken by the respondents therein as contained in column under the head "Nature of claim made against the bank" is also not incorrect as the same was subject-matter of a civil suit. The appellant in its notice addressed to respondent No. 2 herein through his advocate dated January 25, 2005, stated : "My client says and submits that the litigation you are mentioning does not exist at DRT, Ahmedabad. On the contrary my client has filed Special Civil Suit No. 178 of 2003 on March 28, 2003, and the same is pending for adjudication in the Civil Court, Vadodara, before the hon'ble Civil Judge (SD), Vadodara. Besides my client does not know ARB, Ahmedabad, and also not aware of its place of existence and its whereabouts in Ahmedabad and ARB, Ahmedabad, has nothing to do with the suit." A case of defamation was found only on that basis. It is not in dispute that respondent No. 2 in reply to the said notice dated February 5, 2005, through his advocate stated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d with mala fide intention and has not concealed or suppressed any material facts against the interest of the public at large and investors in particular. The error is by inadvertence and was not intentional. We hope that wiser counsel shall prevail upon your client and advise your client to withdraw the notice forthwith. We request you that you will desist from taking unwarranted actions against the bank. In spite of the above if your client takes any action against my client my client will defend the same at the cost of your client and your client will be held liable and responsible for the costs and consequences thereof." An inadvertent mistake committed by the bank in referring to the case being pending before the DRT instead of city civil court cannot, in our opinion, give rise to a cause of action for filing a complaint petition far less under section 500 of the Indian Penal Code particularly when the other particulars contained therein were not found to be incorrect. It is pertinent to notice that the learned Chief Judicial Magistrate in its order dated February 28, 2005, proceeded on the basis that the respondents are managers and branch managers of Dena Bank. There has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the conduct of the business of the company or otherwise responsible to it in regard to its functioning. He had not issued any cheque. How he is responsible for dishonour of the cheque has not been stated. The allegations made in paragraph 3, thus, in our opinion do not satisfy the requirements of section 141 of the Act." (see also Everest Advertising P. Ltd. v. State Government of NCT of Delhi [2007] 5 JT SC 529 ([2007] 137 Comp. Cas. 32 (SC)) and S.M.S. Pharmaceuticals Ltd. v. Neeta Bhalla [2007] 3 Scale 245([2007] 136 Comp. Cas. 268 (SC))). Where a jurisdiction is exercised on a complaint petition filed in terms of section 156(3) or section 200 of the Code of Criminal Procedure, the magistrate is required to apply his mind. The Indian Penal Code does not contain any provision for attaching vicarious liability on the part of the managing director or the directors of the company when the accused is the company. The learned magistrate failed to pose unto himself the correct question, viz., as to whether the complaint petition, even if given face value and taken to be correct in its entirety, would lead to the conclusion that the respondents herein were personally liable for any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... udicial Magistrate has not applied his mind while passing the order under section 156(3) of the Criminal Procedure Code directing the police to investigate in the matter. The impugned order, on the face of it, reveals that he has not gone through the complaint. He has stated in the order that accused Nos. 1 to 10 are manager and branch manager of Dena Bank. As a matter of fact, accused No. 1 was the ex-chairman and managing director of Dena Bank, and accused No. 2 was the executive director. Accused Nos. 3 to 10 are directors of Dena Bank. None of these persons are manager or branch manager. Despite this, the learned Chief Judicial Magistrate has mentioned in his order that they are managers or branch managers. With regard to the prospectus he has simply stated that the bank has issued prospectus for its public issue and at page No. 87 false informations were given so as to cause damage to the company and to jeopardize the reputation of the company. Despite the fact that the litigations are pending before the civil court he has mentioned about non-returning of export bills, etc. On these facts he has passed order under section 156(3) of the Criminal Procedure Code, directing the P ..... X X X X Extracts X X X X X X X X Extracts X X X X
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