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TMI Blog1997 (10) TMI 415X X X X Extracts X X X X X X X X Extracts X X X X ..... ellant/complainant, respondents 1 2 (hereinafter called the contesting respondents ) have committed offences under Section 120-B and 409 IPC read with Section 77 of the Companies Act. The contesting respondents are father and son. One Vadilal Lalbhai Mehta was the father of the first respondent Bipinbhai Vadilal Mehta. One Suhasbhai Vadilal Mehta was the brother of the first respondent. They entered into a memorandum of understanding on 30.1.1982 for dividing their properties. As per the said memorandum of understanding, the first respondent's family will be given management and control of M/s Sayaji Industries Ltd and M/s. C.V. Mehta Pvt. Ltd. On the other hand, the management and control of other companies, namely, M/s. Industrial Machinery Manufacturers Pvt. Ltd, M/s. C.Doctor. Co. Pvt. Ltd. shall remain with Suhash Bhai Mehta, brother of the first respondent. As per the terms of the memorandum, the liabilities of M/s. C.V.Mehta Pvt. Ltd. towards other concerns amounting to ₹ 39 lacs and odd was to be discharged by the first respondent and his family and only after the Clarence of the said liability, the first respondent and his family could take over the manageme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 120-B and 40 of IPC. On receipt of such complaint, the Judicial Magistrate, First Class, Ahmadabad (Rural) conducted an inquiry under Section 202 Cr. P.C. The learned Magistrate recorded statements of four witnesses. After considering the deposition of the said four witnesses and also the documents produced before him, the Magistrate was of the opinion that prima facie a case against the contesting respondents was made out for the offences punishable under Section 120-B and 409 IPC read with Section 77 of the Companies Act. Learned Magistrate was also of the view that the case has to be tried by the Sessions Court and accordingly he committed the case under Section 323 of Cr.P.C. to Sessions Court. The contesting respondents previously moved the Sessions Court for anticipatory bail while the proceedings were pending before the Magistrate. The learned Sessions Judge rejected that application for anticipatory bail. The contesting respondents moved the Gujarat High Court against the order of the Sessions Judge declining to grant anticipatory bail and also against the order of the Magistrate registering the case and committing the same for proceeding further by the Sessions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... advanced from the funds of the company, it was for a definite purpose of getting it back to discharge the personal liability and this is sufficient to constitute an offence under Section 409. He further submitted that even though the contesting respondents were not in actual control and management of the company on the relevant date, they were in de facto control of management of the company and that was sufficient for making them liable under Section 409. In any case that was a matter for evidence and not a case for quashing. He emphasized that contesting respondents held dominion over the company's funds and the company having 67% public money, the transaction in question coupled with the manner in which it was carried out clearly or at least prima facie bring out an offence under Section 409 punishable under Section 120-B IPC. He further emphasized about the limited jurisdiction of the High Court under Section 482 of the Code of Criminal Procedure and according to him the High Court exceeded its jurisdiction in quashing charge and proceeding which was the result of preliminary inquiry held under Section 202 of Cr.P.C. Mr. Shanti Bhushan, learned Senior Counsel, appeari ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the arguments advanced by the counsel on both sides. We are of the view that the High Court was right in exercising the power under Section 482 Cr.P.C. and quashing the proceedings in this case. As noticed above, the High Court has given mainly three reasons in support of its conclusion. We feel that out of three reasons by the High Court the one reason with which we propose to deal with is more than sufficient to sustain the order of the High Court. Before giving our reasons, it is necessary to extract the relevant portions from the complaint itself. The pivotal point in the complaint finds a place in paragraph 8 of the complaint, which reads as follows:- These accused persons in furtherance of the conspiracy made advances to a supplier M/s Santosh Starch Products situate at 71, New Cloth Market, Ahmedabad, as under:- Amount Rs. Date Cheque No. Bank's name 1.00 lacs 13.11.82 853901 PNB, Maskati 5.00 lacs -do- 853902 Mkt. Branch 5.00 lacs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unds of the company. Thus the accused achieved their primary objective of taking over the management and control of M/s Sayaji Industries Ltd. continued with their conspiracy in arranging to consolidate control and management of M/s Sayaji Industries Ltd. This was done by acquiring the control and management of M/s C.V. Mehta Pvt. Ltd. This was very essential to consolidate the control of M/s Sayaji Industries Ltd. Primarily because M/s C.V. Mehta Pvt. Ltd. owned approximately 10,000 shares of M/s Sayaji Industries Ltd. Apart from the above, it is also relevant to notice some of the other allegations in the complaint which are given below: In paragraph 6, it is stated: According to this Memorandum of Modification the accused persons were required to deposit ₹ 20.00 lacs immediately with M/s C.V. Mehta Pvt. Ltd. in order to acquire first the shares of M/s Sayaji Industries Ltd. In paragraph 7, the complaint has stated: These accused persons with a dishonest and fraudulent intention, with a view to acquire and gain the management and control of M/s Sayaji Industries Ltd. diverted the funds of the company in a clandestine manner. The complainant/appellant herein i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 61-A of the Code (predecessor for Section 482) held as follows:- It is well established that the inherent jurisdiction of the High Court can be exercised to quash proceedings in a proper case either to prevent the abuse of the process of any Court or otherwise to secure the ends of justice....... It is not possible, desirable or expedient to lay down any inflexible rule which would govern the exercise of this inherent jurisdiction can and should be exercised for quashing the proceedings. There may be cases where it may be possible for the High Court to take the view that the institution or continuance of criminal proceedings against an accused person may amount to the abuse of the process of the court or that the quashing of the impugned proceedings would secure the ends of justice......................... Cases may also arise where the allegations in the First Information Report or the complaint, even if they are taken at their face value and accepted in their entirely, do not constitute the offence alleged; in such cases no question of appreciating evidence arises; it is a matter merely of looking at the complaint or the First Information Report to decide whether the offen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... IPC. It is therefore necessary for the complainant o prove the entrustment of property or dominion over it and in the second instance dishonest misappropriation or conversion to the accused own use of the property concerned, It is well settled that the dishonest use or disposition of the property in question in violation of any direction of the law prescribing the mode in which the trust is to be discharge or of any legal contract, express or implied, which is made touching the discharge of such trust, or wilfully suffering of any person to do so also constitute the offence of Criminal Breach of Trust . Now upon reading the complaint, it becomes clear that it is the specific case of the complainant that the loan was advanced on 13.11.1982 by Sayaji Industries Limited to Santosh Starch Products alleged to have advanced the loan to the accused on the same day and thus, according to him, is an offence constituting of both criminal breach and trust and conspiracy. This, in my view, does not amount in law into an offence under section amount in law into an offence under section 409 as the ingredients of section 409 are not attracted. For attracting the provisions of Section 409 on ..... X X X X Extracts X X X X X X X X Extracts X X X X
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