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Judgment
Mahendra Dayal, J.—1. All the aforesaid petitions under Section 482 Cr.P.C. involve a common question of law and arise out of the same complaint filed by the opposite party No. 2, therefore, for the sake of convenience, all the three petitions are being taken up together and are being decided by a common judgment.
The petitioners in all the aforesaid petitions are Roop Mani Pandey, Col. Babu Ram Kushwaha and Alankar Tandon and Girish Tandon.
I have heard Shri Manish Tiwari and Shri Manish Bajpai, learned counsel appearing on behalf of the petitioners and Shri Dhirendra Kumar Mishra, learned counsel for the opposite party No. 2.
The brief facts giving rise to these petitions are that the opposite party No. 2 filed a complaint under Section 156(3) Cr.P.C. on 16.07.2013. The learned Magistrate before whom the aforesaid application was filed, vide order dated 05.08.2013 passed an order that the application under Section 156(3) Cr.P.C. be treated as complaint case. Pursuant to this order, the procedure of complaint case was followed and the statement under Sections 200 and 202 Cr.P.C. was recorded, the petitioners were summoned under Sections 418 and 506 IPC to face trial. The applicant Col. Babu Ram Kushwaha is the Chief Operating Officer of M/s. Shree Bhawani Papers Mill, which is a registered company under the Companies Act and is engaged in the production and distribution of papers having its registered office at Allahabad. The petitioner Roop Mani Pandey is the Chief Accountant of the aforesaid paper mill while Alankar Tandon and Girish Tandon are the Executive Director and Managing Director of the aforesaid paper mill. The opposite party No. 2 has been a supplier of paddy husk, which is required for the purpose of generating steam in the production of paper. He had been supplying paddy husk and had business relations with the aforesaid paper mill. The opposite party No. 2 was always made payment against his supplies. Thereafter, the company ran into losses and inspite of best efforts made by the company to maintain the economic balance, it could not recover. The company was, therefore, forced to apply under the Sick Industrial Companies Act. A petition to this effect was made on 26.03.2013 and on 28.03.2013, the B.I.F.R. was received. The reference made by the company was registered and in this regard an intimation was made to the Managing Director of the company by the Registrar of B.I.F.R. on 27.05.2013. An order was also passed by the Board on 08.10.2013 declaring the company as sick and consequently the Bank of Baroda was appointed as operating agency to see over the rehabilitation of the company. The dispute in these petitions pertains to nonpayment of certain dues to the opposite party No. 2. The opposite party No. 2 also filed a suit on 30.05.2013 in the Court of Civil Judge (Senior Division), Faizabad being Suit No. 274/2013, which is pending. The company has put in appearance in the aforesaid suit and it has been brought to the knowledge of the Court that the company has been declared as sick company. The opposite party No. 2 concealing all these facts filed a complaint against the petitioners in which, the learned Magistrate passed an order summoning the petitioners.
It has been contended by the learned counsel for the petitioners that after the company was declared sick and was referred to B.I.F.R., the conditions contained in the order dated 08.10.2013 passed by B.I.F.R. came into play and as such the petitioners are not in a position to do anything till the company is rehabilitated. It has been submitted by the learned counsel for the petitioners that although civil litigation was pending with regard to the payment of amount claimed by the opposite party No. 2, the complaint has been filed on the basis of account statement. The opposite party No. 2 has adopted the short cut procedure in the nature of criminal complaint which is legally not permissible in criminal jurisprudence. Moreover, the company has not been impleaded as an accused in the complaint. The petitioners are merely office bearers of the company and no personal liability can be fastened upon them. The continuation of the criminal complaint against the petitioners is nothing, but abuse of the process of the Court which would result in miscarriage of justice.
In support of their contentions, learned counsel for the petitioners has relied upon Hon''ble Apex Court''s decision rendered in Criminal Appeal No. 1584/2007, decided on 10.02.2015 - Sharad Kumar Sanghi v. Sangita Rane. In this case, Hon''ble the Apex Court has held that when the company has not been arrayed as an accused, the order against its employees could not have been passed. The appellant in this case had approached the Hon''ble Apex Court assailing the order of the High Court of Madhya Pradesh at Jabalpur, whereby the High Court had declined to exercise the power under Section 482 Cr.P.C. for quashing of the proceedings pending in the Court of Judicial Magistrate First Class, Betul, which was registered under Section 420 IPC against the appellant. The appellant was Managing Director of M/s. Sanghi Brothers Ltd., the company registered under the Companies Act and was engaged in the business of automobile sale, finance and shipping etc. The respondent in the said appeal had obtained a quotation for purchase of a vehicle and the vehicle was delivered to him on payment of certain amount. When he found that there were discrepancies in the engine number and invoice issued to him, and the vehicle met with an accident, he filed a complaint alleging that the company had suppressed the information and deliberately cheated him. The Magistrate took cognizance of the offence and issued summons to the appellant to face trial under Section 420 IPC. The revision filed by the appellant before the Session Judge was also dismissed. The High Court of Madhya Pradesh also declined to quash the proceedings of complaint case under Section 482 Cr.P.C. Hon''ble the Apex Court while deciding the appeal has observed that when the Managing Director or any other official of the company is sought to be prosecuted, it is necessary that specific allegation should be made against him to constitute vicarious liability. It has also been held by Hon''ble the Apex Court that when the jurisdiction is exercised on a complaint, 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 itself. Vicarious liability of the Managing Director or Director would arise only if any provision exists in the statute. The complainant has to make specific allegation with regard to such liability. Hon''ble the Apex Court found that the High Court ought to have quashed the criminal proceedings in such a case. Hon''ble the Apex Court instead of remitting the matter back to the High Court, quashed the criminal proceedings initiated by the complainant.
It has further been argued by the learned counsel for the petitioners that the Magistrate while taking cognizance on the complaint filed by the opposite party No. 2 ought to have gone through the contents of the complaint. Mere use of the expression cheating in the complaint is of no consequence. There must be specific averment in the complaint with regard to the fraudulent intention of the accused and specific averments should be made so as to attract the offence of cheating. Learned counsel further submits that in the present case, from a perusal of the complaint filed by the opposite party No. 2, it cannot be said that the petitioners are personally liable for the wrong, if any, committed by the company. Learned counsel has also drawn attention of this Court towards the summoning order dated 05.03.2014 passed by the learned Magistrate. A perusal of the order reveals that the learned Magistrate has not recorded any reason as to how the offence of Sections 418 and 506 IPC is, prima-facie, made out against the petitioners. The Magistrate has passed the summoning order only writing few lines that on the basis of averments made in the complaint and the statement of the complainant as well as his witnesses, prima-facie offence under Section 418 and 506 IPC is made out against the petitioners.
The submission of the learned counsel for the petitioners is that although at the stage of taking cognizance and summoning the accused, detailed inquiry is not required but the Magistrate is required to pass a speaking order giving reasons as to on what basis, he finds that prima-facie offence is made out against the accused persons. For this reason also the impugned summoning order is bad in law and cannot be said to be a valid order in the eyes of law.
Learned counsel for the opposite party No. 2 has submitted that prior to filing of the complaint, the opposite party No. 2 had issued a notice on 18.05.2013, which was duly served upon the petitioners and when the petitioners denied their liability to pay the outstanding amount, the criminal complaint was filed. He has further submitted that from the averments made in the complaint, the criminal liability is made out against the petitioners. He has further submitted that while exercising jurisdiction under Section 482 Cr.P.C. this Court cannot assume jurisdiction of the trial Court. The proceedings of a complaint can be quashed only if from the averments made in the complaint and the material on record, no offence is made out against the accused persons. The provision of Section 482 Cr.P.C. has been enacted to prevent the abuse of the process of law and to prevent miscarriage of justice. The petitioners are responsible officers of the company and it is not disputed that the opposite party No. 2 supplied material to the company and the company was liable to pay the price of the material supplied to the company. The petitioners being the officers of the company are responsible for payment of dues to the opposite party No. 2. However, the opposite party No. 2 has not disputed the fact that he has already filed a civil suit for recovery of the amount due and the company has been declared as sick company.
After having given my anxious thought to the rival submissions made on behalf of the parties and considering the material on record, I find that it is not disputed between the parties that the opposite party No. 2 has supplied the material to the company and the company was liable to pay its price to the opposite party No. 2, but it is not disputed between the parties that by order passed by B.I.F.R. dated 08.10.2013 the company has been declared as sick unit and unless the company stands rehabilitated, the petitioners, who are sought to be prosecuted, cannot do anything. It has also not been disputed that the opposite party No. 2 has also initiated the proceedings of civil case for recovery of the amount due. The company has not been impleaded as an accused in the complaint. It has also not been shown as to how the petitioners are liable for payment of dues to the opposite party No. 2 while the material was supplied in the name of the company. The opposite party No. 2 has failed to show as to how the petitioners are vicariously liable for the company. The learned Magistrate while passing the summoning order and taking cognizance, has failed to disclose as to how the petitioners are liable to be prosecuted for the offence under Sections 418 and 506 IPC. Since, the opposite party No. 2 had supplied the material in the name of the company and admittedly company has not been arrayed as an accused, the learned Magistrate ought not to have passed the impugned order summoning the petitioners, specially when the opposite party No. 2 had failed to show as to how the petitioners are liable for the wrong committed by the company.
In these circumstances, I find that it is a fit case to be interfered with and if the present criminal proceedings are allowed to continue, the same would result into miscarriage of justice.
In the result, all the aforesaid petitions are allowed and the entire proceedings of Complaint Case No. 312/2013, under Sections 418 and 506 IPC, relating to P.S. Mill Area, District Raebareli, pending in the Court of Judicial Magistrate-I, Court No. 17, Raebareli are hereby quashed.