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Radhe Shyam Sharma, J.—Cr. M.Ps. No. 393/2012 and 318/2012 have been preferred u/s 482 of the Code of Criminal Procedure, 1973 for quashing order dated 19-03-2012 passed by Chief Judicial Magistrate, Raigarh in Criminal Case (Complaint) No. 283/2012. By the impugned order, the learned Chief Judicial Magistrate, Raigarh has ordered for registration of a criminal case (complaint) against the petitioners and for issuance of summons to them. The facts necessary for disposal of the case are as under:
The petitioner in Cr. M.P. No. 393/2012 is a private limited company and registered in Singapore with its principal office at 4, Battery Road, # 34-01, Bank of China Building, Singapore. Mr. Manish Jain is authorized representative of the petitioner company and he has been duly authorised to swear affidavit, sign vakalatnama and file the petition. He has also been authorised to do other related necessary acts. The Indian company is a private limited company incorporated and registered in India under the provisions of the Companies Act, 1956. In Cr. M.P. No. 318/2012, petitioner No. 1 Mrinal Chandran is Vice President (Legal) and petitioner No. 2 Amit Gupta is Director of the said Indian company M/s. Clearwater Capital Partners India Private Limited having their office at 201, Central Plaza, IInd Floor, 166 CST Road, Kalina, Mumbai. Mr. Atit Soni is a power of attorney holder on behalf of petitioner No. 2 Amit Gupta and he has been duly authorized to swear affidavit, sign vakalatnama on behalf of petitioner No. 2 Amit Gupta and file the petition.
Respondent No. 1 in both the petitions, namely, M/s. Ind Synergy Limited, represented through Praveend Kumar Shah, son of Late Ganga Prasad Shah, aged about 38 years, working as Factory Manager, M/s. Ind Synergy Limited, Village Kotmar, District Raigarh (CG) has filed Criminal Case (Complaint) No. 283/2012 in the Court of Chief Judicial Magistrate, Baigarh. The petitioner company had initially made investment of approximate 74.2 Crores in respondent No. 1 company (henceforth ''the respondent company''). In connection with the said investment, the respondent company, its promoters and the petitioner company entered into a Subscription Agreement (SSA), Share-Holders Agreement (SHA). At subsequent date, it inter alia entered into Addendum dated 24-11-2008 (Addendum) (SSA, SHA & the Addenda are hereinafter collectively referred to as the Transaction Documents) on 11-03-2008. The petitioner company currently holds:
(i) Phase - I fully convertible debentures being 2,75,000/- 4% coupon bearing unsecured fully and compulsorily convertible debentures of the face value of Rs. 1,000/-
(ii) Phase - II fully convertible debentures being 96,250/- 4% coupon bearing unsecured fully and compulsorily convertible debentures of the face value of Rs. 1,000/-
(iii) 500 equity shares on the terms and conditions as set out in the SSA.
Phase - I fully convertible debentures and
Phase - II fully convertible debentures are hereinafter collectively referred to as the "FCDs".
The respondent company and its promoters created several rights in favor of the petitioner company. According to the provisions of Article 9.8.1 of the "SHA", the petitioner company had right to exercise the irrevocable "Default Put Option" in the following circumstances if:
(i) The Complainant Company and its promoters failing to extract cumulative at least 1 million tones of iron ore for the period between April 1, 2009 to March 31, 2010; and/or;
(ii) The initial Public Officer of the Complainant Company is not completed by June 30, 2011, at the end of 40 months from the Investment Date and/or;
(iii) Upon an event of default occurring under the Transaction Documents and/or;
(iv) Upon the Complainant Company and its Promoters breaching any of their covenants under the Transaction Documents.
The respondent company and its promoters failed to extract cumulative at least one million tons of iron ore for the period between April 1, 2009 to March 31, 2010. Therefore, the petitioner company exercised its DPO right by sending Notice of Put Option on June 18, 2010.
The petitioner company filed an application u/s 8 of the Arbitration and Conciliation Act, 1996 before Bombay High Court for seeking direction to refer the matter to the Arbitration, which was rejected. The petitioner company challenged the said order before the Hon''ble Supreme Court by filing SLP (C) No. 17543/2011 which is pending for adjudication. As per condition mentioned in article No. 116 of the articles of association and Clause 5.2 of the SHA, the respondent company and its promoters, were required to obtain approval from the petitioner company before making application for its debt restructuring, but the respondent company and its promoters failed to obtain approval of the petitioner company before making application to "CDRC Mumbai" for reorganizing its load availed from various banks. The petitioner company sent letter on 26-08-2010 to Corporate Debt Restructuring Cell (CDRC) in the said letter, it was mentioned that the respondent company made default to banks, the company was also in default to the petitioner company who was an investor in the said company. On the basis of said letter, the respondent company filed Criminal Case (Complaint) No. 283/2012 before CJM, Raigarh against the petitioners of both the petitions. The CJM, Raigarh ordered for registration of a criminal case (complaint) against the petitioners for offence under Sections 500, 501 read with Section 34 IPC and for issuance of summons to them. Hence, these petitions u/s 482 Cr.P.C. for quashing order dated 19-03-2012 passed in Criminal Case (Complaint) No. 283/2012.
Shri Atul Nanda, learned Senior Advocate with Shri Manish Nigam and Shri Sharad Bansal, learned counsel for the petitioners submitted that the letter dated 26-08-2010 does not constitute offence under Sections 500 and 501 of the IPC. The said letter is per se not defamatory and is a simple assertion of the contractual right of the petitioner company. Learned Senior Advocate for the petitioners submitted that there is on allegation against Directors of the petitioner company in the complaint. Mere use of a word ''default'' is not sufficient for offence u/s 500 IPC. In absence of specific averment demonstrating role of accused in commission of offence, no prima facie case is made out against the petitioners. Hence, the complaint is liable to be quashed. Learned Senior Advocate for the petitioners placed reliance on Asoke Basak Vs. State of Maharashtra and Others, S.K. Alagh Vs. State of U.P. and Others, Keki Hormusji Gharda and Others Vs. Mehervan Rustom Irani and Another, Narender Kapoor Vs. Ramesh C. Bansal and Others,
Learned Senior Advocate for the petitioners further submitted that the learned CJM, Raigarh has not complied with the mandatory provision of Section 202 Cr.P.C. The petitioner company is situated at a place beyond the area in which the CJM, Raigarh exercises his jurisdiction, therefore, the provision of Section 202 Cr.P.C. is mandatory. Learned CJM, Raigarh summoned the petitioners without following the provision of Section 202 Cr.P.C. which is erroneous, illegal and without jurisdiction. Learned Senior Advocate for the petitioners placed reliance on K.T. Joseph Vs. State of Kerala and Another, , Udai Shankar Awasthi Vs. State of U.P. and Another, , Shivjee Singh Vs. Nagendra Tiwary and Others,
Learned Senior Advocate for the petitioners further submitted that letter dated 26-08-2010 was sent to Managing Director of the respondent company at Raipur and Nagpur. The letter was never sent to Raigarh, therefore, the cause of action does not arise at Raigarh, The learned CJM, Raigarh has erred in taking cognizance of the complaint and ordering issuance of summons to the petitioners. Therefore, the complaint deserves to be quashed. Learned Senior Advocate for the petitioners placed reliance on Sunilakhya Chowdhury Vs. H.M. Jadwet and Another, Sri. C.S. Sathya Vs. State of Karnataka, Martin Lottery Agencies Ltd. and Others Vs. S. Manimaran, Editor, Athirshtam and Others, In re In Re: Jivandas Savchand,
Shri Rakesh Makhija and Shri Ankit Singhal, learned counsel for respondent No. 1 (the respondent company) argued that learned CJM, Raigarh has jurisdiction to take cognizance. The respondent company is situated at Village Kotmar, District Raigarh. Letter dated 26-08-2010 was sent to Managing Director of the respondent company at Raipur. The head office of the respondent company is situated at Raigarh. The Managing Director who received the letter sent it to the Raigarh office. The letter reached at Raigarh, therefore, the cause of action arose at Raigarh itself. Hence, the CJM, Raigarh has jurisdiction. Learned counsel for respondent No. 1 (the respondent company) placed reliance on Dilip Kr. Hazarika and Another Vs. Nalin Ch. Buragohain, Rekhabai Vs. Dattatraya and Another, , Rajiv Modi Vs. Sanjay Jain and Others,
Learned counsel for respondent No. 1 (the respondent company) further submitted that the word ''defaulter'' used in the letter dated 26-08-2010 is prima facie defamatory. If the allegations made are to be taken as true, truthfulness or otherwise cannot be gone through at the stage of cognizance. They further submitted that the order taking cognizance of offence and issuing process cannot be ordinarily quashed by invoking inherent power u/s 482 Cr.P.C. The impugned order passed by learned CJM, Raigarh is in accordance with law. The inherent power of the High Court to quash complaint at the initial stage has been exercised in the rarest of rare cases. They placed reliance on U.P. Pollution Control Board Vs. Dr. Bhupendra Kumar Modi and Another, C.M. Ibrahim Vs. Tata Sons Ltd., Bangalore 2009 Cr. L. 228 (Karnataka), Shatrughna Prasad Sinha Vs. Rajbhau Surajmal Rathi and Others, , Bhushan Kumar and Another Vs. State (NCT of Delhi) and Another,
Shri Vinay Harit, learned Deputy Advocate General for the State/respondent No. 2 supported the arguments advanced by learned counsel for respondent No. 1 (the respondent company).
I have heard learned counsel for the parties at length and have also perused the pleadings and the documents appended thereto with utmost circumspection.
Now, I shall first deal with the question of territorial jurisdiction, whether the CJM, Raigarh has jurisdiction to take cognizance of the complaint and to issue summons to the petitioners?
I consider it necessary to reproduced the relevant provisions of the Code of Criminal Procedure, 1973, which read thus:
Ordinary place of inquiry and trial.-- Every offence shall ordinarily be inquired into and tried by a Court within whose local jurisdiction it was committed.
Place of inquiry or trial.-- (a) When it is uncertain in which of several local areas an offence was committed, or
(b) where an offence is committed partly in one local area and partly in another, or
(c) where an offence is continuing one, and continues to be committed in more local areas than one, or
(d) where it consist of several acts done in different local areas, it may be inquired into or tried by a Court having jurisdiction over any of such local areas.
Offence triable where act is done or consequence ensues.-- When an act is an offence by reason of anything which has been done and of a consequence which has ensued, the offence may be inquired into or tried by a Court within whose local jurisdiction such thing has been done or such consequence has ensued.
In order to appreciate the jurisdictional aspect, it would be relevant to discuss regarding the meaning of the expression "cause of action".
In Rajiv Modi Vs. Sanjay Jain and others (supra), the Hon''ble Supreme Court observed thus:
It is relevant to take note of what was stated by this Court in State of Bombay Vs. Narothamdas Jethabai and Another, ). In this case, it is observed, that: (AIR p. 73, para 14)
...... The jurisdiction of the courts depended in civil cases on a ''cause of action'' giving rise to a civil liability, and in criminal cases on the commission of an offence, and on the provisions made in the two codes of procedure as to the venue of the trial and other relevant matters.
In The State of Madras Vs. C.P. Agencies and Another, it was stated that: (AIR p. 1310, para 3)
........... Now the cause of action, has no relation whatever to the defence which may be set up by the defendant, nor does it depend upon the character of the relief prayed for by the plaintiff. It refers entirely to the grounds set forth in the plaint as the cause of action, or, in other words, to the media upon which the plaintiff asks the court to arrive at a conclusion in his favour.
In Gurdit Singh and Others Vs. Munsha Singh and Others, ) this Court held that: (SCC p. 808, para 41)
The expression ''cause of action'' has sometimes been employed to convey the restricted idea of facts or circumstances which constitute either the infringement or the basis of a right and no more. In a wider and more comprehensive sense, it has been used to denote the whole bundle of material facts which a plaintiff must prove in order to succeed. These are all those essential facts without the proof of which the plaintiff must fail in his suit.
In State of Rajasthan and Others Vs. Swaika Properties and Another, it was observed that: (SCC p. 223, para 8)
..... The ''cause of action'' means every fact which, if traversed, it would be necessary for the plaintiff to prove in order to support his right to a judgment of the court.
In Oil and Natural Gas Commission Vs. Utpal Kumar Basu and Others, this Court held that: (SCC p. 717, para 6)
It is well settled that the expression ''cause of action'' means that bundle of facts which the petitioner must prove, if traversed, to entitle him to a judgment in his favour by the Court. ......... Therefore, in determining the objection of lack of territorial jurisdiction the court must take all the facts pleaded in support of the cause of action into consideration albeit without embarking upon an enquiry as to the correctness or otherwise of the said facts. In other words the question whether a High Court has territorial jurisdiction to entertain a writ petition must be answered on the basis of the averments made in the petition, the truth or otherwise whereof being immaterial. To put it differently, the question of territorial jurisdiction must be decided on the facts pleaded in the petition.
In Bloom Dekor Limited Vs. Subhash Himatlal Desai and Others, t was observed that: (SCC p. 328, para 28)
By ''cause of action'' it is meant every fact, which, if traversed, it would be necessary for the plaintiff to prove in order to support his right to a judgment of the court, (Cooke v. Gill (1873 LR 8 CP 107). In other words, a bundle of facts which it is necessary for the plaintiff to prove in order to succeed in the suit.
In Rajasthan High Court Advocates Association Vs. Union of India and Others, ) this Court stated that: (SCC p. 304, para 17)
The expression ''cause of action'' has acquired a judicially settled meaning. In the restricted sense cause of action means the circumstances forming the infraction of the right or the immediate occasion for the action. In the wider sense, it means the necessary conditions for the maintenance of the suit, including not only the infraction coupled with the right itself. Compendiously the expression means every fact which it would be necessary for the plaintiff to prove, if traversed, in order to support his right to the judgment of the court. Every fact which is necessary to be proved, as distinguished from every piece of evidence which is necessary to prove each fact, comprises in ''cause of action''. It has to be left to be determined in each individual case as to where the cause of action arises.
In Y. Abraham Ajith and Others Vs. Inspector of Police, Chennai and Another, this Court said that: (SCC p. 1054, para. 17)
The expression ''cause of action'' is generally understood to mean a situation or state of facts that entitles a party to maintain an action in a court or a tribunal; a group of operative facts giving rise to one or more bases for sitting; a factual situation that entitles one person to obtain a remedy in court from another person. In Black''s Law Dictionary a ''cause of action'' is stated to be the entire set of facts that gives rise to an enforceable claim; the phrase comprises every fact, which, if traversed, the plaintiff must prove in order to obtain judgment. In Words and Phrases (4th Edn.), the meaning attributed to the phrase ''cause of action'' in common legal parlance is existence of those facts, which give a party a right to judicial interference on his behalf.
In Halsbury''s Laws of England (4th Edn.) it has been stated as follows:
Cause of action has been defined as meaning simply a factual situation, the existence of which entitles one person to obtain from court a remedy against another person. The phrase has been held from earliest time to include every fact which is material to be proved to entitle the plaintiff to succeed, and every fact which a defendant would have a right to traverse. ''Cause of action'' has also been taken to mean that a particular act on the part of the defendant which gives the plaintiff his cause of complaint, or the subject-matter of grievance founding the action, not merely the technical cause of action.
This Court in Alchemist Limited and Another Vs. State Bank of Sikkim and Others, has held that (SCC p. 346, para 37):
From the aforesaid discussion and keeping in view the ratio laid down in a catena of decisions by this Court, it is clear that for the purpose of deciding whether facts averred by the appellant-petitioner would or would not constitute a part of cause of action, one has to consider whether such fact constitutes a material, essential, or integral part of the cause of action. It is no doubt true that even if a small fraction of the cause of action arises within the jurisdiction of the court, the court would have territorial jurisdiction to entertain the suit/petition. Nevertheless it must be a ''part of cause of action'', nothing less than that.
It is evident from the above decisions that to constitute the territorial jurisdiction, the whole or a part of "cause of action" must have arisen within the territorial jurisdiction of the court and the same must be decided on the basis of averments made in the complaint without embarking upon an enquiry as to the correctness or otherwise of the said facts.
In Rekhabai Vs. Dattatraya and another (supra), it has been observed by Bombay High Court as under:
The decision of the Andhra Pradesh High Court in Pisupati Purnaiah Sidhanthi Vs. Pisupati Satyanarayana Sidhanthi, ) clearly explains the decision of Madras High Court in U.M. Aravamutha Iyengar Vs. Rajarathna Mudaliar, and it further endorses the view earlier taken by the Madras High Court in M.R. Krishnamurthy Aiyar Vs. C.V. Parasurama Aiyar, and Mrs. S.K. Burke Vs. T.C.W. Skipp, . Similar view is also taken by Rajasthan High Court as reported 1979 Raj. Cr. C. 63. In my opinion, the posting of the letter being publication in cases where the letter reaches its destination, the offence itself is completed with the posting of the letter and gives jurisdiction to the Court where the letter is posted and the consequences which consisted in gaining publicity at the opening of the letter at the other and also gives jurisdiction to the Court where the addressee resided. In other words, the offence is triable where the act is done or where the consequence ensues in accordance with the provisions of S. 179 of the Cr.P.C. S. 179 of the Cr.P.C. reads thus:
When an act is an offence by reason of anything which has been done and of a consequence which has ensued, the offence may be inquired into or tried by a Court within whose local jurisdiction such thing has been done or such consequence has ensued.
For S. 179 of the Cr.P.C. the person must be accuse of commission of offence by reason of the act done and consequence which has ensued. The Full Bench of this Court in In Re: Jivandas Savchand, (In Re Jivandas Savchan,). Beaumont, C.J. observed as follows:
Now I must confess that but for the fact that many eminent Judges have thought that the language of that section was when a person is accused of the commission of any offence by reason of two things, by reason of anything which has been done, and, secondly, of any consequence which has ensued, then jurisdiction is conferred on the Court where the act has been done or the consequence has ensued. But the offence must be charged by reason of those two things, the act done and the consequence which ensued. If that is so the consequence is necessarily part of the offence. It does not matter whether you say, as some of the Court have said, that the consequence must be an integral part of the offence or whether you say, as others of the Courts have said, that it is a necessary ingredient of the offence, the point is that the consequence must be part of the offence charged. The section does not refer to an offence charged by reason of an act done, from which act any consequence has ensued.
Therefore, in a defamation case, the venue of trial could be at the place where the letter was written and posted or also at the place where the letter was received and read. In the instant case, the Judicial Magistrate, First Class, Arvi, was right in holding that Arvi Court had jurisdiction to entertain and try the complaint.
The respondent company was situated at Village Kotmar, District Raigarh and Praveend Kumar Shah is a working Manager of the Factory. The Managing Director of the respondent company was residing at 624, Urla Industrial Area, Raipur, Chhattisgarh. The letter dated 26-08-2010 was sent to Managing Director of the respondent company. The respondent company was situated at District Raigarh, therefore, it was obligatory for the Managing Director to send the letter received by him to the concerned factory. It is apparent that the letter was also received and read in Village Kotmar, District Raigarh, where the respondent company was situated and running the business.
It is evident from the above discussion that the letter was also received and read at Village Kotmar, District Raigarh, therefore, the cause of action also arose within the territorial jurisdiction of the CJM, Raigarh. In the instant case, CJM, Raigarh was right in holding that he had jurisdiction to entertain and try the complaint.
Now, I shall examine whether the CJM complied with the provision of Section 202 Cr.P.C. or not?
Section 202 of the Code of Criminal Procedure, 1973 reads thus:
Postponement of issue of process.--(1) Any Magistrate, on receipt of a complaint of an offence of which he is authorised to take cognizance or which has been made over to him u/s 192, may, if he thinks fit, [and shall, in a case where the accused is residing at a place beyond the area in which he exercises his jurisdiction] postpone the issue of process against the accused, and either inquire into the case himself or direct an investigation to be made by a police officer or by such other person as he thinks fit, for the purpose of deciding whether or not there is sufficient ground for proceeding:
Provided that no such direction for investigation shall be made,--
(a) where it appears to the Magistrate that the offence complained of is triable exclusively by the Court of Session; or
(b) where the complaint has not been made by a Court, unless the complainant and the witnesses present (if any) have been examined on oath u/s 200.
(2) In an inquiry under sub-section (1), the Magistrate may, if he thinks fit, take evidence of witnesses on oath:
Provided that if it appears to the Magistrate that the offence complained of is triable exclusively by the Court of Session, he shall call upon the complainant to produce all his witnesses and examine them on oath.
(3) If an investigation under sub-section (1) is made by a person not being a police officer, he shall have for that investigation all the powers conferred by this Code on an officer in charge of a police station except the power to arrest without warrant.
In Bhushan Kumar and another Vs. State (NCT of Delhi) and another (supra), the Hon''ble Supreme Court observed thus:
Section 204 of the Code does not mandate the Magistrate to explicitly state the reasons for issuance of summons. It clearly states that if in the opinion of a Magistrate taking cognizance of an offence, there is sufficient ground for proceeding, then the summons may be issued. This section mandates the Magistrate to form an opinion as to whether there exists a sufficient ground for summons to be issued but it is nowhere mentioned in the section that the explicit narration of the same is mandatory, meaning thereby that it is not a pre-requisite for deciding the validity of the summons issued.
In Udai Shankar Awasthi Vs. State of Uttar Pradesh and another (supra), the Hon''ble Supreme Court observed thus:
The Magistrate had issued summons without meeting the mandatory requirement of Section 202 Cr.P.C., though the appellants were outside his territorial jurisdiction. The provisions of Section 202 Cr.P.C. were amended vide the Amendment Act, 2005, making it mandatory to postpone the issue of process where the accused resides in an area beyond the territorial jurisdiction of the Magistrate concerned. The same was found necessary in order to protect innocent persons from being harassed by unscrupulous persons and making it obligatory upon the Magistrate to enquire into the case himself, or to direct investigation to be made by a police officer, or by such other person as he thinks fit for the purpose of finding out whether or not, there was sufficient ground for proceeding against the accused before issuing summons in such cases.
In National Bank of Oman Vs. Barakara Abdul Aziz and Another, , the Hon''ble Supreme Court observed thus:
The duty of a Magistrate receiving a complaint is set out in Section 202 Cr.P.C. and there is an obligation on the Magistrate to find out if there is any matter which calls for investigation by a criminal court. The scope of enquiry under this section is restricted only to find out the truth or otherwise of the allegations made in the complaint in order to determine whether process has to be issued or not. Investigation u/s 202 Cr.P.C. is different from the investigation contemplated in Section 156 as it is only for holding the Magistrate to decide whether or not there is sufficient ground for him to proceed further. The scope of enquiry u/s 202 Cr.P.C. is, therefore, limited to the ascertainment of truth or falsehood of the allegations made in the complaint:
(i) on the materials placed by the complainant before the court;
(ii) for the limited purpose of finding out whether a prima facie case for issue of process has been made out; and
(iii) for deciding the question purely from the point of view of the complainant without at all adverting to any defence that the accused may have.
Order-sheets dated 13-02-2012, 13-03-2012 and 19-03-2012 of the proceedings of Criminal Case (Complaint) No. 283/2012 pending before the Court of CJM, Raigarh read thus:
Section 202 Cr.P.C. was amended by the Code of Criminal Procedure (Amendment Act, 2005). Sub-section 1 of Section 202 makes it obligatory upon the Magistrate that before summoning the accused residing beyond his jurisdiction he shall enquire into the case himself or direct investigation to be made by a police officer or by such other person as he thinks fit for finding out whether or not, there was sufficient ground for proceeding against the accused.
A bare perusal of order-sheets dated 13-02-2012, 13-03-2012 and 19-03-2012 would reveal that CJM, Raigarh has only examined Praveend Kumar Shah u/s 200 Cr.P.C. but the learned CJM did not comply with the amended provision of Section 202 Cr.P.C. and it is an admitted fact that the petitioners were residing outside the jurisdiction of the CJM, Raigarh.
Hence, the CJM, Raigarh has failed to carry out any inquiry or to order investigation as contemplated under the amended Section 202 Cr.P.C. Therefore, it is essential to direct the CJM, Raigarh to pass fresh orders following the provisions of Section 202 Cr.P.C. In the result, Cr.M.Ps. No. 393/2012 and 318/2012 are allowed. The impugned order dated 19-03-2012 is set aside. The matter is remitted to the Chief Judicial Magistrate, Raigarh for passing fresh orders. The Chief Judicial Magistrate, Raigarh shall pass fresh orders after complying with the procedure laid down in Section 202 Cr.P.C. within 3 months from the date of receipt of this order.