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TMI Blog2016 (12) TMI 1855X X X X Extracts X X X X X X X X Extracts X X X X ..... e, courts, taking cognizance of the offence or conducting a trial while issuing any order, are expected to apply their mind and the order must be a well reasoned one. The Appellants approached the High Court even before the stage of issuance of process. In particular, the Appellants challenged the order dated 04.01.2011 passed by the learned Magistrate Under Section 156(3) of Code of Criminal Procedure. The learned Counsel appearing on behalf of the Appellants after summarizing their arguments in the matter have emphasized also in the context of the fundamental rights of the Appellants under the Constitution, that the order impugned has caused grave inequities to the Appellants. In the circumstances, it was submitted that the order is illegal and is an abuse of the process of law. However, it appears to us that this order Under Section 156(3) of Code of Criminal Procedure requiring investigation by the police, cannot be said to have caused an injury of irreparable nature which, at this stage, requires quashing of the investigation. There are no flaws in the impugned order or any illegality has been committed by the High Court in dismissing the petitions filed by the Appellan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 008 to June, 2009. This Notice was also sent to RM and one Rohan Raut, Assistant Vice President of the Company, on 20th October, 2009. Thereafter, she filed arbitration proceedings before NSE Panel of Arbitrators against the Company for a sum of ₹ 48.99 Lacs and costs of ₹ 2.5 Lacs, and chose the Arbitrators of her choice, being two retired High Court Judges and sought to call RM as a witness. The Arbitrators passed an award in favour of the Company on 18th August, 2010, recording a shift in the stand of Respondent No. 2, authorizing her husband to trade on her behalf. In the meantime, as the Police did not take cognizance of the matter, albeit she filed a complaint on 31st march, 2010, against the Appellants, RM and AVP, on 10th June, 2010, she also filed a criminal complaint Under Section 156(3) of the Code of Criminal Procedure, 1973 (hereinafter referred to as Code of Criminal Procedure) before 10th Metropolitan Magistrate, Andheri, bearing Case No. 143/2010, alleging execution of unauthorized trades in her account without her consent by the Appellants and claimed that she had thereby suffered losses amounting to ₹ 70 Lacs. Specific allegations were levelled a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Complaint, C.C. No. 143/Misc./2010, filed by Respondent No. 2 for the offences punishable Under Sections 409, 420, 465, 467 read with Sections 34, 120(B) Indian Penal Code, as well as FIR bearing MECR No. 7 of 2011 dated 30th January, 2011, registered at Police Station, Juhu, District Mumbai, are liable to be quashed. 7. In order to answer this question, it is necessary to first set out the relevant provisions i.e. Sections 156 and 482 of the Code of Criminal Procedure, 1973: 156. Police officer's power to investigate cognizable case. (1) Any officer in charge of a police station may, without the order of a Magistrate, investigate any cognizable case which a Court having jurisdiction over the local area within the limits of such station would have power to inquire into or try under the provisions of Chapter XIII. (2) No proceeding of a police officer in any such case shall at any stage be called in question on the ground that the case was one which such officer was not empowered under this Section to investigate. (3) Any Magistrate empowered Under Section 190 may order such an investigation as above-mentioned. 482. Saving of inherent power of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se of process of law and is liable to be quashed. He argued that it is a settled principle that summoning of an accused in a criminal case is a serious matter and the criminal law cannot be set in motion as a matter of course. Therefore, the order of the magistrate must reflect application of mind to the facts of the case and the law applicable thereto. In support of this submission, the learned Counsel has relied upon Anil Kumar v. M.K. Aiyappa (2013) 10 SCC 705, paragraph 11, of which is quoted below: 11. The scope of Section 156(3) Code of Criminal Procedure came up for consideration before this Court in several cases. This Court in Maksud Saiyed case examined the requirement of the application of mind by the Magistrate before exercising jurisdiction Under Section 156(3) and held that where jurisdiction is exercised on a complaint filed in terms of Section 156(3) or Section 200 Code of Criminal Procedure, the Magistrate is required to apply his mind, in such a case, the Special Judge/Magistrate cannot refer the matter Under Section 156(3) against a public servant without a valid sanction order. The application of mind by the Magistrate should be reflected in the order. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... same and understood that she would be responsible for all the risks and consequences of entering into trades. The relevant Clause of the Agreement entered into by complainant is reproduced hereinbelow: 2.11 The Client agrees and declares as follows: (i) The Client shall be wholly responsible for all the investment decisions and trades of the Client; (ii) The Client will pay receive applicable daily margins; (iii) Payment of margins by the Client does not necessarily imply complete satisfaction of all dues; (iv) In spite of consistent having paid margins, the Client may, on the closing of his trade, be obliged to pay (or entitled to receive) such further sums as the market price or an instrument of contract may dictate; and (v) The failure of a Client to understand the risk involved or the failure of the member to explain the risk to the Client shall not render a contract as void or voidable and the Client shall be and shall continue to be responsible for all the risks and consequences for entering into trades in Derivatives. 14. In the light of the Agreement entered into between complainant-Respondent No. 2 and the Appellants, the learned Counsel for the Appellants furthe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 39;offence' as defined in Section 3(38) of the General Clauses Act, i.e., an act punishable under the Penal Code or any special or local law. At the same time, courts, taking cognizance of the offence or conducting a trial while issuing any order, are expected to apply their mind and the order must be a well reasoned one. 16. Learned Counsel for the Appellants has further invited our attention to the order of the High Court dismissing the writ petitions. According to the learned Counsel for the Appellants, the High Court, relying upon the decision of this Court in Iqbal Singh Marwah and Anr. v. Meenakshi Marwah and Anr. (2005) 4 SCC 370 and Rukhmani Narvekar v. Vijya Statardekar and Ors. (2008) 14 SCC 1, found that there was no substance in the argument that Respondent No. 2 ought to have disclosed the arbitration proceedings and the outcome thereof in her complaint and that non-disclosure of the same amounts to suppression of material facts. Learned Counsel for the Appellants further submitted that the High Court failed to appreciate that it was within its inherent jurisdiction Under Section 482 Code of Criminal Procedure to consider the correspondence exchanged as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... C 335 (para 102); Rajiv Thapar and Ors. v. Madan Lal Kapoor (2013) 3 SCC 330 at para 30; Rishi Pal Singh v. State of Uttar Pradesh and Anr. (2014) 7 SCC 215, at para 12-13. 18. Learned Counsel for the Respondents have not rebutted this issue in any of his arguments. With the meticulous understanding of the orders of the Courts below in the instant case, we can see that general and bald allegations are made in the context of Appellant No. 1 who is a juristic person and not a natural person. The Indian Penal Code, 1860, does not provide for vicarious liability for any offence alleged to be committed by a company. If and when a statue contemplates creation of such a legal fiction, it provides specifically therefor, e.g. Negotiable Instruments Act, 1881. Further, reliance was made on S.K. Alagh v. State of Uttar Pradesh and Ors., reported in (2008) 5 SCC 662, where at paragraph 16, this Court observed that Indian Penal Code, save and except some provisions specifically providing therefor, does not contemplate any vicarious liability on the part of a party who is not charged directly for commission of an offence. Further in Maksud Saiyed v. State of Gujarat and Ors., ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has been made against the Respondent No. 1, the only allegation against the Respondent No. 2 was that he had forwarded the said letter dated 10.1.2002 to National Stock Exchange. The act of forgery on/or fabrication of the said letter had been attributed to Respondent No. 3. Respondent Nos. 1 and 2 herein were sought to be proceeded against on the premise that they are vicariously liable for the affairs of the company. As Mr. Mani had time and again referred to the allegations relating to forgery of the said document dated 10.1.2002, we may also notice a disturbing fact. Before lodging the said First Information, a notice was issued by the Appellant against the Respondents herein on 15.10.2002, whereas the address of Respondent Nos. 1 and 2 were shown as 404, Embassy Centre, Nariman Point, Mumbai-400 021 and 302, Veena Chambers, 21, Dalal Street, Fort, Mumbai-400 001 respectively. However, in the complaint petition, they were shown to be residents of Chennai. 20. In Sharad Kumar Sanghi v. Sangita Rane, reported in (2015) 12 SCC 781 (para 9-11) it is noted by this Court: The allegations which find place against the Managing Director in his personal capacity ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nts and alleged that their conduct had caused wrongful loss to her and wrongful gain to the Appellants and other accused. It is a fact that at the time of summoning of the accused, the Courts must be careful to scrutinize the evidence brought on record and in elicitation of answers to find out the truthfulness of the allegations. 24. It appears to us that the Appellants approached the High Court even before the stage of issuance of process. In particular, the Appellants challenged the order dated 04.01.2011 passed by the learned Magistrate Under Section 156(3) of Code of Criminal Procedure. The learned Counsel appearing on behalf of the Appellants after summarizing their arguments in the matter have emphasized also in the context of the fundamental rights of the Appellants under the Constitution, that the order impugned has caused grave inequities to the Appellants. In the circumstances, it was submitted that the order is illegal and is an abuse of the process of law. However, it appears to us that this order Under Section 156(3) of Code of Criminal Procedure requiring investigation by the police, cannot be said to have caused an injury of irreparable nature which, at this stage ..... X X X X Extracts X X X X X X X X Extracts X X X X
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