Full Judgment Text
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IN THE SUPREME COURT OF INDIA
CRIMINAL APPELLATE JURISDICTION
CRIMINAL APPEAL NO.1584 OF 2007
Sharad Kumar Sanghi … Appellant
VERSUS
Sangita Rane … Respondent
J U D G M E N T
DIPAK MISRA, J.
Calling in question the legal validity of the order dated
30.11.2006 passed by the learned Single Judge of the High
Court of Madhya Pradesh at Jabalpur in M.Cr.C.No.1922 of
2002 whereby the learned Judge had declined to exercise the
power under Section 482 of the Code of Criminal Procedure
(Cr.P.C.) for quashing of the proceedings in Criminal Case
No.895 of 2001 pending in the court of Judicial Magistrate
First Class, Betul which has been registered under Section 420
of the Indian Penal Code against the appellant, the present
Signature Not Verified
Digitally signed by
Gulshan Kumar Arora
Date: 2015.03.30
15:42:21 IST
Reason:
appeal has been preferred by special leave.
2. Bereft of unnecessary details, the facts which are
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necessary to be stated are that the appellant is the Managing
Director M/s. Sanghi Brothers (Indore) Ltd., Indore which is a
registered company duly incorporated and registered under the
Companies Act, 1956 and is engaged in the business of
automobile sale, finance and shipping etc. having branches at
various places including the city of Bhopal. The
respondent-complainant obtained a quotation from the Bhopal
Branch for purchase of a TATA Diesel vehicle model SFC
709/38 LB in the month of April 1998 and the vehicle was
delivered to the respondent on 01.05.1998 on payment of the
price deposited at Bhopal vide Bank Draft issued from the
State Bank of India, Sarni, Betul. The respondent faced
difficulty with the vehicle and eventually he came to know in
the month of August 2000 that a different engine number was
made in the invoice that was issued to him than the engine
that was put in the chasis. On further enquiry, he found that
there is a letter issued by Tata Engineering and Locomotive
Company (TELCO) on 7.11.2000 that in the course of transit
from the company to Bhopal, the said vehicle had met with an
accident as a result of which the engine was replaced by
another engine. Coming to know of this, the respondent filed a
complaint under Section 200 of the Cr.P.C. alleging that M/s
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Sanghi Brothers (Indore) Ltd., Indore being represented by the
Managing Director, Sharad Kumar Sanghi, had suppressed the
information and deliberately cheated the respondent.
3. The learned Magistrate, after following the procedure as
contemplated under Section 202 of the Cr.P.C., took
cognizance of the offence to which we shall advert to at a later
stage.
4. After cognizance was taken and summons were issued,
the appellant filed a revision before the learned Sessions Judge,
Betul which was dismissed on 27.02.2002.
5. Being aggrieved by the aforesaid order, he preferred an
application under Section 482 of the Cr.P.C. before the High
Court. It was contended before the High Court that the learned
Magistrate had no territorial jurisdiction; that there was no
deceit by the respondent; that the company was not made an
accused in the complaint and, therefore, the complaint was not
maintainable; and that there was no mens rea . The High
Court, as is manifest from the order impugned, repelled all the
submissions and dismissed the application for quashment.
6. We have heard Mr. Sidharth Luthra, learned senior
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counsel for the appellant and Mr. Akshat Shrivastava, learned
counsel for the respondent.
7. It is not in dispute that the vehicle was purchased by
the respondent on 01.05.1998. The invoice contained a
different engine number than the engine that was fitted into the
vehicle. The respondent lodged the complaint on 08.05.2001.
To satisfy ourselves whether there has been any specific
allegation against the appellant, we have carefully perused the
complaint filed under Section 200 of the Cr.P.C. The English
translation of the complaint has been brought on record. The
original complaint which is in Hindi has also been filed. The
allegations made against the appellant read as follows :
“That the proprietor of M/s Sanghi Brothers
Indore accused Sharad S/o Sohan Sanghi
negligently prepare the accidental vehicle no.709
L.M. & projected the same as new to deliver the
complainant causing gain to self and loss to the
complainant which is punishable U/s 420 of the
I.P.C.”
8. Barring the aforesaid allegation, there is no allegation
against him. In the initial statement made under Section 200
of the Cr.P.C., the complainant after narrating the facts, has
stated thus :
“Sanghi Brothers Limited run by Mr. Sharad
Sanghi committed cheating with the Applicant by
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delivering accidented vehicle in place of a new
one and caused gross financial loss. Applicant is
operating the vehicle after borrowing loan from
Bank and the vehicle is not worth operating at
present due to said defects. I have filed the
Photostat copies of the concerning documents in
the case.”
9. The allegations which find place against the Managing
Director in his personal capacity, as we notice, are absolutely
vague. When a complainant intends to proceed against the
Managing Director or any officer of a company, it is essential to
make requisite allegation to constitute the vicarious liability.
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In Maksud Sajyad vs. State of Gujarat , it has been held,
thus:
“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
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
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(2008) 5 SCC 668
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were personally liable for any offence. The Bank
is a body corporate. Vicarious liability of the
Managing Director and Director would arise
provided any provision exists in that behalf in the
statute. Statutes indisputably must contain
provision fixing such vicarious liabilities. Even
for the said purpose, it is obligator on the part of
the complainant to make requisite allegations
which would attract the provisions constituting
vicarious liability.”
In this regard, reference to a three-Judge Bench decision in
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S.M.S. Pharmaceuticals Ltd. v. Neeta Bhalla and Another
would be apposite. While dealing with an offence under
Section 138 of the Negotiable Instruments Act, 1881, the Court
explaining the duty of a Magistrate while issuing process and
his power to dismiss a complaint under Section 203 without
even issuing process observed thus:-
“.... a complaint must contain material to enable
the Magistrate to make up his mind for issuing
process. If this were not the requirement, conse-
quences could be far-reaching. If a Magistrate
had to issue process in every case, the burden of
work before the Magistrate as well as the harass-
ment caused to the respondents to whom process
is issued would be tremendous. Even Section
204 of the Code starts with the words “if in the
opinion of the Magistrate taking cognizance of an
offence there is sufficient ground for proceeding”.
2 (2005) 8 SCC 89
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The words “sufficient ground for proceeding”
again suggest that ground should be made out in
the complaint for proceeding against the respon-
dent. It is settled law that at the time of issuing
of the process the Magistrate is required to see
only the allegations in the complaint and where
allegations in the complaint or the charge-sheet
do not constitute an offence against a person, the
complaint is liable to be dismissed.”
After so stating, the Court analysed Section 141 of the Act
and after referring to certain other authorities answered a refer-
ent and relevant part of the answer reads as follows:-
“It is necessary to specifically aver in a complaint
under Section 141 that at the time the offence
was committed, the person accused was in
charge of, and responsible for the conduct of
business of the company. This averment is an es-
sential requirement of Section 141 and has to be
made in a complaint. Without this averment be-
ing made in a complaint, the requirements of
Section 141 cannot be said to be satisfied.”
10. The same principle has been reiterated in S.K. Alagh v.
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State of UP ; Maharashtra State Electricity Distribution
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Company Ltd. v. Datar Switchgear Ltd. ; and GHCL
3 (2008) 5 SCC 662
4 (2010) 10 SCC 479
8
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Employees Stock Option Trust v. India Infoline Ltd.
11. In the case at hand as the complainant's initial
statement would reflect, the allegations are against the
company, but the company has not been made arrayed as a
party. Therefore, the allegations have to be restricted to the
Managing Director. As we have noted earlier, allegations are
vague and in fact, principally the allegations are against the
company. There is no specific allegation against the Managing
Director. When a company has not been arrayed as a party,
no proceeding can be initiated against it even where vicarious
liability is fastened on certain statutes. It has been so held by
a three-Judge Bench in Aneeta Hada v. Godfather Travels
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and Tours Private Limited in the context of Negotiable
Instruments Act, 1881.
12. At this juncture, it is interesting to note, as we have
stated earlier, that the learned Magistrate while passing the
order dated 22.10.2001, had opined, thus :-
“It appears prima-facie from the complaint filed by
the complainant, documents, evidence and
arguments that accused company has committed
cheating with the complaint by delivering old and
accidented vehicle to her at the cost of a new
5 (2013) 4 SCC 505
6 (2012) 5 SCC 661
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truck. Accordingly, prima-facie sufficient grounds
exist for registration of a complaint against the
accused U/s. 420 of I.P.C. and is accordingly
registered.”
13. When the company has not been arraigned as an
accused, such an order could not have been passed. We have
said so for the sake of comp 4leteness. In the ultimate
analysis, we are of the considered opinion that the High Court
should have been well advised to quash the criminal
proceedings initiated against the appellant and that having not
been done, the order is sensitively vulnerable and accordingly
we set aside the same and quash the criminal proceedings
initiated by the respondent against the appellant.
14. The appeal stands allowed accordingly.
................................,J.
(Dipak Misra)
................................,J.
(Adarsh Kumar Goel)
New Delhi;
February 10, 2015.
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ITEM NO.1 COURT NO.5 SECTION IIA
S U P R E M E C O U R T O F I N D I A
RECORD OF PROCEEDINGS
Criminal Appeal No(s). 1584/2007
SHARAD KUMAR SANGHI Appellant(s)
VERSUS
SANGITA RANE Respondent(s)
(With appln.(s) for Stay, early hearing and office report)
Date : 10/02/2015 This appeal was called on for hearing today.
CORAM : HON'BLE MR. JUSTICE DIPAK MISRA
HON'BLE MR. JUSTICE ADARSH KUMAR GOEL
For Appellant(s) Mr. Sidharth Luthra, Sr. Adv.
Mr. Buddy A. Ranganna Dhan, Adv.
Mr. A.V. Rangam, Adv.
Mr. D.V. Raghu Vamsy, Adv.
For Respondent(s) Mr. Akshat Shrivastava, Adv.
Ms. Manjeet Kirpal, Adv.
UPON hearing the counsel the Court made the following
O R D E R
The appeal stands allowed in terms of the signed reportable
judgment.
(Gulshan Kumar Arora) (H.S. Parasher)
Court Master Court Master
(Signed reportable judgment is placed on the file)