Full Judgment Text
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REPORTABLE
IN THE SUPREME COURT OF INDIA
CRIMINAL APPELLATE JURISDICTION
CRIMINAL APPEAL No. …………… OF 2022
(Arising out of SLP (Criminal) No. 9528 of 2021)
Sri Narendra Kumar A. Baldota … Appellant (s)
Versus
The State of Karnataka … Respondent (s)
J U D G M E N T
Indira Banerjee, J.
Leave granted.
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2. This Appeal is against an order dated 22 October 2021 passed by the
Dharwad Bench of the High Court of Karnataka dismissing the Criminal Petition
being CRL.P. No.100167 of 2017 filed by the Appellant under Section 482 of the
Code of Criminal Procedure (“Cr.P.C.”), seeking to quash the proceedings against
the Appellant in Crime No.69/2012 on the file of the III Additional District and
Sessions Judge, Ballari later numbered as Special Case No.04/2016 for offences
punishable under Sections 13(1)(c) and 13(1)(d) read with Section 13(2) of the
Prevention of Corruption Act, 1988 (hereinafter referred to as “the P.C. Act”) and
Sections 120B and 420 of the Indian Penal Code (“IPC”).
3. The Appellant is the Chairman and Managing Director of M/s MSPL
Signature Not Verified
Digitally signed by
GULSHAN KUMAR
ARORA
Date: 2022.04.07
17:29:01 IST
Reason:
Limited. In 2010, MSPL Limited imported an Aston Martin Rapide car for which
the Company paid the applicable customs duty. The Company also paid road
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tax to the Regional Transport Office (RTO), Hosapete.
4. One Jagadish B.N., Advocate filed a private complaint in the Court of XXIII
Additional City Civil Sessions Judge, Bangalore City and Special Judge,
Prevention of Corruption Act, Bangalore Urban District, Bangalore City alleging
that there was collusion and conspiracy between RTOs in Karnataka as a result
of which appropriate road tax was not being collected. It was alleged that cars
were being imported in Karnataka for which RTO was not charging road tax as
per the actual cost.
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5. By an order dated 7 August 2012, the Court of XXIII Additional City Civil
& Special Judge, Prevention of Corruption Act Bengaluru passed an order
referring the complaint to the Superintendent of Police, Lokayuktha, Bengaluru
Urban, under Section 156(3) of the Cr.P.C. with a direction to constitute a team
of four Deputy Superintendents of Police to investigate the matter and report.
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On 14 August 2012, FIR in respect of the complaint was registered at the
Lokayuktha Police Station, Bengaluru, Urban and a criminal case being Crime
No.69/2012 was started.
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6. Some relevant observations and/or findings in the order dated 7 August
2012 of the XXIII Additional City Civil Sessions Judge, Bangalore City and Special
Judge, Prevention of Corruption Act, Bangalore Urban District, Bangalore City are
as follows:
“This complaint is filed under section 200 of Cr.P.C. on 06.08.2012
by the complainant Mr. Jagadeesh B.N, advocate and the
complainant claims that a huge scam has taken place in
connection with imported cars, more particularly Bentley and
Ferari cars.
3
…
5. The complaint claims that huge scam has taken place regarding
registration of Foreign cars that are imported to India more
particularly Bentley and Ferari. The complainant claims that the
vehicle dealers, middle man, smugglers across the country and
owners of the imported vehicle at Mangalore have misquoted and
collected the price of Bentley and Ferari car have come away with
the registration, and in the process have also managed suppress
the brand names of the cars. The complainant claims that he is
unable to procure that facts which have been hidden and buried at
high public functionaries and it is only an authorised investigating
agency that can unearth the fraud taken place regarding the fraud
in the registration.
6. The complainant claims that after a tax investing exposed the
alleged smuggling operation, nervous members of the super-rich
have scrambled to avoid arrest by abandoning cars, including
Bentleys and Astoria Martins on the streets of New Delhi and it is
reported and a copy photograph is made available. The
complainant claims that the said document is down loaded from
the internet.
7. The Complainant claims that more than 500 cars entered India
and majority have been illegal or illegal means and to general car
registered it requires the payment of tax of 18% of the amount.
The complainant claims that to get a car registered in the passport
authorities, and approved procedure is laid down by the Motor
Vehicles Act, more particularly a custom duty of 10% should have
been paid.
8. Complaint further claims that not less than 500 cars entered in
Karnataka and for name sake 4 to 5 car were mentioned as
Bentley and remaining cars have been registered by suppressing
the brand name and more than 98% have been registered on the
basis of invoice and not on the basis of cash bill.
…
11. The complainant further claims that the manufacturing
rate of Bentley car is 1.16 crores for basic model and car which
have entered Bangalore range from basic model to top end. The
selling rate at the factory ord is 86,000 pounds i.e.,
Rs.1,16,00,000/- and on road the value of Bentley car
would go beyond Rs.3 crores for a car and if formalities are
properly complied with. The complainant further claims
that top end model would range up more the Rs.6 crores.
12. The complainant also claims that the racket is done with
extraordinary brilliance and intelligence and it is abetting come
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and also influencing the public servant in getting their car
registered and unless proper investigation agency conducted fair,
equal and comprehensive investigation, the fraud cannot be
unearthed……
13. The complainant further claims that the majority of the dealers
who have not disclosed their identity in Bangalore after receiving
the assignment, have based on the documents only invoice which
totally not explained and have cleverly avoided the cash receipt
being given, for the reason that the majority of the authorized
dealer are not entitled to deal with the vehicle.
…..
20. The complainant claims that the accused persons are private
individual and no sanction is necessary to take cognizance against
them the complainant orally submits that the accused persons
have abetted and influenced the public servants for committing
the offences and the investigating agency would get the definite
picture orally after ascertaining with the concerned transport
authority at different levels and at different parts of Karnataka, but
mainly in Bangalore as the cars moved from Bangalore and
fabrication and forgery of documents took place in Bangalore,
besides abetments (sic) to commit offence under prevention of
corruption act complainant further claims that a full scale
investigation is required by independent agency.
…..
24. The complainant further orally submitted that, few vehicles
were registered with take documents in the transport authority in
India and thereafter in Karnataka through Bangalore more
particularly rural areas and thereafter they go away from the state
and will be applied in different parts it is further submitted that for
registration the documents are necessary and one the registration
is the certificate given by the R.T.O. in that event the different
between the fake and genuine papers pertaining to the presence
of the motors vehicles get vanished.
…
28. The Complainant claims that the accused persons who are
the dealers, distributors in Bangalore, other places have forged the
documents and have successfully abated the public servants
(Transport Authorities) and have got the registration of the said
vehicles illegally and have resulted in the loss of crores and cores
of rupees and in the process have cheated the Government Public
at large. He further submits that mafia in the form of a ‘net work’
is behind the scam.
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...
31. In the cell all context and circumstances of the case and
after recording the complainant his grievance and contents of the
complaint at this stage I am of the sincere view that is it just and
proper that only a comprehensive investigation is necessary by the
superintendent of police, lokayukta Bangalore urban by constitute
a team of four Dy. SP and entrust the matter to them to
investigation and to report. Hence I proceed to pass the following
ORDER
The complaint is referred to superintendent of Police, Lokayukta,
Bangalore Urban under Section 156(3) of Cr.P.C. with a direction to
constitute a team of four Dy. S.P. for investigating the matter and
to report. “
7. The Appellant is neither a vehicle dealer nor a middle man nor a
smuggler. He is not even the owner of the vehicle in question but only the
Chairman/Managing Director of M/s MSPL Limited, the Company which has
imported the vehicle, and got the same registered. Neither the Appellant nor
the Company of which the Appellant is the Managing Director has abandoned
any vehicle.
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8. On 27 February 2013, the RTO, Hosapete issued a demand notice to M/s
MSPL Limited demanding differential motor vehicle tax of Rs.20,44,468/- in
respect of the vehicle in question. M/s MSPL Limited immediately complied with
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the demand and paid the demanded sum of Rs.20,44,468/- in full on 20 March
2013, after which the RTO, Hosapete issued a “No Dues Certificate” to M/s MSPL
Limited.
nd th
9. On 2 November 2015, Lokayuktha Police issued a notice dated 13
nd
October 2015 to the RTO, Ballari. By a letter dated 2 November 2015, the
RTO informed the Lokayuktha Police that M/s MSPL Limited had paid the entire
deficit tax.
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10. On 8 December 2015, Lokayuktha Police filed an inquiry report-cum-
chargesheet in the aforesaid case being Crime No. 69/2012 under Sections
13(1)(c), 13(1)(d) and 13(2) of the P.C. Act, 1988 and Sections 120B and 420 of
IPC.
11. In the chargesheet, it is alleged that the Appellant had conspired with one
Mr. K. Pampapati, Regional Transport Officer, Hosapete and Mr. Shanmukh Naik
Superintendent, Office of Regional Transport Officer, Hosapete to evade
payment of an amount of Rs.20,44,468/- towards road tax.
12. Pursuant to the chargesheet filed by the Lokayuktha Police, against the
Appellant and others, Special Case No.4 of 2016 was started in the Court of the
III Additional District and Sessions Judge, Ballari sitting at Hosapete.
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13. By an order dated 4 November 2016, in Special Case No.4/2016, the
learned III Additional District and Sessions Judge, Ballari sitting at Hosapete took
cognizance and issued summons to the Appellant.
14. Thereafter, the Appellant filed Criminal Petition No.100167 of 2017 before
the Dharwad Bench of the High Court of Karnataka under Section 482 of the
Cr.P.C., praying that the proceedings in Special Case No.4/2016 on the file of the
III Additional District and Sessions Judge, Ballari sitting at Hosapete be quashed
as against the Appellant.
15. Section 8A of the Karnataka Motor Vehicles Taxation Act, 1957 provides as
follows:-
“8A. Collection of tax escaping payment.- If at any time it is found
that the amount of tax paid for any period in respect of any motor vehicle
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falls short of the tax payable under this Act, then, notwithstanding any
incorrect entry or the absence of any entry in the certificate of registration
relating to the motor vehicle regarding the tax payable in respect of such
vehicle or the issue of a taxation card or an entry having been made in
such taxation card regarding the payment of tax for such period, the
taxation authority may, after notice to the registered owner or person
having possession or control of the motor vehicle and giving him an
opportunity of being heard recover the difference between the tax so paid
and the tax payable by such owner or person”.
16. In the said petition, the Appellant pointed out that short collection in road
tax, if any, could be collected from the owner of the vehicle, under Section 8A of
the Karnataka Motor Vehicles Taxation Act, 1957. On receipt of demand notice,
M/s MSPL Limited, the owner of the vehicle in question, had paid the differential
tax. M/s MSPL Limited had deposited the entire road tax in full.
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17. By an interim order dated 14 February 2017, the Dharwad Bench of the
High Court of Karnataka was pleased to stay the criminal proceedings against
the Appellant. The interim order was extended from time to time.
nd
18. By the judgment and order dated 22 October 2021 impugned in this
Court, the High Court dismissed the Criminal Revisional Petition being CRL.P.
No.100167 of 2017.
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19. It is the case of the Appellant that on 19 December 2019, the Bengaluru
Bench of the High Court of Karnataka allowed a Writ Petition/Criminal Revisional
Petition filed by one S.V. Nandaraju and others being Writ Petition
No.41103/2016 (GM-RES) and quashed proceedings initiated against petitioners
in the aforesaid case, S.V. Nandaraju, which arose from the same chargesheet
as in the present case. The High Court held:-
“23. In that view of the matter, as already noticed, the occurrence of
the events and accrual of cause of action in the present set of
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matters were between the years 2003 and 2006. The private
complaint under Section 200 of Cr.P.C. was registered on
06.08.2012, while the FIR was registered on 14.08.2012. It is an
admitted fact that except petitioners No.6 and 7, in
Crl.P.No.5130/2016, who retired in the year 2013 and 2015
respectively, the other petitioners had already retired, way back in
the year 2006-2007. Some of the petitioners continue to serve.
However, as noticed earlier the State Government had declined to
sanction prosecution against the serving employees. It was also
observed in the Government Order that two of the employees had
already retired and therefore the State Government declined to
sanction prosecution. Furthermore, the State Government,
while pointing out to Section B(a) of the Taxation Act, had
observed that if there was short collection of tax, the
difference could be collected from the owners of the
vehicles. It is an admitted fact that the owners of the
vehicles were called upon to pay the difference amount and
the same has been paid by them. Consequently, the criminal
proceedings against the owners of the vehicles were
quashed by this Court. Further, as held by the State Government,
since Section 21 of the Taxation Act protects the Officers who acted
in good faith, and since sanction to prosecute was declined by the
State Government, the same benefit is required to be granted to the
petitioners who are similarly placed. Some of the petitioners have
already got the benefit of the order passed by the Government.”
20. Mr. Rohatgi, learned Senior Counsel appearing for the Appellant drew
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attention of this Court to an order dated 26 September 2019 passed by the
Bengaluru Bench of the High Court of Karnatka in Criminal Petition No.3087 of
2018 titled S. Rajendran v. State of Karnataka & Others and an order
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dated 11 December 2019 passed by another Bench of the High Court of
Karnatka at Bengaluru in Criminal Petition No.344 of 2017 ( K.J. Kruruvilla v.
State of Karnataka & Another ) . In both the cases, the criminal revisional
petitions were allowed and the proceedings against the petitioners were
quashed.
21. In the case of S. Rajendran (supra) he had purchased a Toyota Prado
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vehicle, which was registered on 3 November 2007. Pursuant to the private
complaint filed by the Respondent No. 2, FIR was registered and chargesheet
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was filed on 28 November 2016. In the meanwhile, on 28 July 2010, a notice
was issued demanding a sum of Rs.2,83,480/-. At the time of hearing, the
petitioner in Criminal Petition No.344 of 2017 produced a receipt acknowledging
payment of the aforesaid amount. Taking note of the fact that there was no
material annexed to the chargesheet against the petitioner, S. Rajendran, in
Criminal Petition No.3087 of 2018, and that payment of differential tax had been
made before filing of the private complaint, the petition was allowed.
22. In the case of the K.J. Kuruvilla (supra), the petitioner had purchased a
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Range Rover which was registered on 30 March 2007. At the time of
Registration, the petitioner was called upon to pay Rs.9,99,628/- towards Life
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Time Tax. Later the vehicle was sold on 11 March 2011. Thereafter, the
petitioner was called upon to pay differential tax of Rs.19,045/- which was paid.
Relying on S. Rajendran (supra), Criminal proceedings against K.J. Kuruvilla
were also quashed. Under Section 8A of the Karnataka Motor Vehicle Taxation
Act, 1957 a notice is required to be issued to the petitioner to explain how there
was shortfall in collection of tax and thereafter the petitioner is required to pay
the differential amount, if any.
23. The chargesheet filed by the police is totally vague and devoid of material
particulars. The charges in the Chargesheet were identical stereotype charges.
Only the dates of registration and the deficit fee amount varied from case to
case. On such stereotype charge is as follows:-
“On 10.01.2011 at the time of registering the vehicle shown in
Column No.4, indulged with the officers shown in column No.2 and
hatched a criminal conspiracy by paying deficit fee of Rs.20,44,468/-
causing loss of revenue to Government and thus committed offence of
cheat.”
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24. As observed above, the Appellant is Chairman and Managing Director of
the corporate entity, which purchased the vehicle in question. There is not a
whisper in the chargesheet of the specific role played by the Appellant or how
he committed the offence of cheating.
25. Criminal law cannot be set into motion as a matter of course. Summoning
of an accused in a criminal case is a serious matter. To set Criminal law into
motion, the order of the Magistrate summoning the accused, must reflect that
he has applied his mind to the facts of the case. Before the Magistrate issues
summons to a Chairman, Managing Director, Director or any other official of the
company, the Magistrate has to record his satisfaction of a prima facie case
against him/her in his/her own capacity is sine qua non for initiation of criminal
proceedings against a Chairman, Managing Director or officer of a company. It
is well settled that no official of a company can be dragged into criminal
proceedings only in his/her capacity as official of the company, without any
specific role attributed to him/her in relation to the offence alleged against the
company.
26. In Ravindranatha Bajpe v. Mangalore Special Economic Zone
1
Limited and Others , this Court held:-
"…… All of them are arrayed as an accused as Chairman, Managing
Director, Deputy General Manager (Civil & Env.), Planner & Executor,
Chairman and Executive Director respectively. Therefore, as such, in
absence of any specific allegations and the specific role attributed
to them, the learned Magistrate was not justified in issuing process
against accused nos. 1 to 8 for the offences punishable under
Sections 427, 447, 506 and 120B read with Section 34 IPC.
26. As observed by this Court in the case of Pepsi Foods Ltd. v. Special
Judicial Magistrate, (1998) 5 SCC 749 and even thereafter in catena of
decisions, summoning of an accused in a criminal case is a serious matter.
Criminal Law cannot be set into motion as a matter of course. In paragraph
1 2021 SCC Online SC 806
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28 in Pepsi Foods Limited (supra), it is observed and held as under:
“28. Summoning of an accused in a criminal case is a serious
matter. Criminal law cannot be set into motion as a matter of
course. It is not that the complainant has to bring only two
witnesses to support his allegations in the complaint to have
the criminal law set into motion. The order of the Magistrate
summoning the accused must reflect that he has applied his
mind to the facts of the case and the law applicable thereto.
He has to examine the nature of allegations made in the complaint
and the evidence both oral and documentary in support thereof and
would that be sufficient for the complainant to succeed in bringing
charge home to the accused. It is not that the Magistrate is a silent
spectator at the time of recording of preliminary evidence before
summoning of the accused. The Magistrate has to carefully scrutinise
the evidence brought on record and may even himself put questions
to the complainant and his witnesses to elicit answers to find out the
truthfulness of the allegations or otherwise and then examine if any
offence is prima facie committed by all or any of the accused.”
27. As held by this Court in the case of India Infoline
Limited (supra), in the order issuing summons, the learned
Magistrate has to record his satisfaction about a prima facie case
against the accused who are Managing Director, the Company
Secretary and the Directors of the Company and the role played by
them in their respective capacities which is sine qua non for
initiating criminal proceedings against them. Looking to the averments
and the allegations in the complaint, there are no specific allegations and/or
averments with respect to role played by them in their capacity as Chairman,
Managing Director, Executive Director, Deputy General Manager and Planner
& Executor. Merely because they are Chairman, Managing
Director/Executive Director and/or Deputy General Manager and/or
Planner/Supervisor of A1 & A6, without any specific role attributed
and the role played by them in their capacity, they cannot be
arrayed as an accused, more particularly they cannot be held
vicariously liable for the offences committed by A1 & A6.”
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27. In Maksud Saiyed v. State of Gujarat , this Court held:-
“13. 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 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
2 (2008) 5 SCC 668
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must contain provision fixing such vicarious liabilities. Even for the said
purpose, it is obligatory on the part of the complainant to make requisite
allegations which would attract the provisions constituting vicarious
liability.”
3
28. In State of Haryana v. Bhajan Lal this Court held:-
“102. In the backdrop of the interpretation of the various relevant
provisions of the Code under Chapter XIV and of the principles of law
enunciated by this Court in a series of decisions relating to the exercise of
the extraordinary power under Article 226 or the inherent powers under
Section 482 of the Code which we have extracted and reproduced above,
we give the following categories of cases by way of illustration wherein
such power could be exercised either to prevent abuse of the process of
any court or otherwise to secure the ends of justice, though it may not be
possible to lay down any precise, clearly defined and sufficiently
channelised and inflexible guidelines or rigid formulae and to give an
exhaustive list of myriad kinds of cases wherein such power should be
exercised.
(1) Where the allegations made in the first information report or the
complaint, even if they are taken at their face value and accepted in
their entirety do not prima facie constitute any offence or make out
a case against the accused.
….
(3) Where the uncontroverted allegations made in the FIR or
complaint and the evidence collected in support of the same do not
disclose the commission of any offence and make out a case against
the accused.
….
(5) Where the allegations made in the FIR or complaint are so
absurd and inherently improbable on the basis of which no prudent
person can ever reach a just conclusion that there is sufficient
ground for proceeding against the accused.
…..
(7) Where a criminal proceeding is manifestly attended with mala
fide and/or where the proceeding is maliciously instituted with an
ulterior motive for wreaking vengeance on the accused and with a
view to spite him due to private and personal grudge .”
29. Short payment of tax per se is not a criminal offence, as held by this Court
4
in Devendra v. State of U.P. . The High Court ordinarily would exercise its
3 (1992) Supp (1) SCC 335
4 (2009) 7 SCC 495
13
jurisdiction under Section 482 of Cr.P.C., if the allegations made in the FIR taken
to be correct in entirety, do not make out any offence. When the allegations
made in the FIR or evidence collected during investigation do not satisfy the
ingredients of an offence, the superior Courts would not encourage harassment
of a person in a Criminal Court.
5
30. In G. Sagar Suri & Another v. State of U.P . and Others , this Court
adjudicating the liability of a Director in a proceedings under Section 420 of the
IPC held:-
“8. Jurisdiction under Section 482 of the Code has to be exercised
with great care. In exercise of its jurisdiction the High Court is not
to examine the matter superficially. It is to be seen if a matter,
which is essentially of a civil nature, has been given a cloak of
criminal offence. Criminal proceedings are not a short cut of other
remedies available in law. Before issuing process a criminal court
has to exercise a great deal of caution. For the accused it is a
serious matter. This Court has laid certain principles on the basis
of which the High Court is to exercise its jurisdiction under
Section 482 of the Code. Jurisdiction under this section has to be
exercised to prevent abuse of the process of any court or
otherwise to secure the ends of justice.
…
14. We agree with the submission of the appellants that the whole
attempt of the complainant is evidently to rope in all the
members of the family particularly those who are the parents of
the Managing Director of Ganga Automobiles Ltd. in the instant
criminal case without regard to their role or participation in the
alleged offences with the sole purpose of getting the loan due to
the Finance Company by browbeating and tyrannising the
appellants with criminal prosecution. A criminal complaint under
Section 138 of the Negotiable Instruments Act is already pending against
the appellants and other accused. They would suffer the consequences if
offence under Section 138 is proved against them. In any case there is
no occasion for the complainant to prosecute the appellants
under Sections 406/420 IPC and in his doing so it is clearly an
abuse of the process of law and prosecution against the
appellants for those offences is liable to be quashed, which we
do.”
5 (2000) 2 SCC 636
14
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31. In Joseph Salvaraj A. v. State of Gujarat and Others , this Court held
that even if chargesheet had been filed, Magistrate could still examine whether
the offences alleged to have been committed by the accused were prima facie
made out from the complainant’s FIR, chargesheet, documents, etc. or not.
32. In the instant case, the allegations in the FIR read with the chargesheet
filed by the Lokayuktha Police only discloses short payment of road tax. There
is only a vague, bald allegation of collusion and conspiracy to defraud the State
of revenue, which is devoid of any material particulars.
33. The Appellant filed the Criminal Revisional Petition under Section 482 of
the Cr.P.C. praying that the proceedings in Special Case No.4 of 2016 on the file
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of the III Additional District and Sessions Judge, Ballari sitting at Hosapete be
quashed in so far as the Appellant is concerned.
34. In the said petition the Appellant contended:-
(i) The Appellant is not in charge of the day to day affairs of the company,
M/s MSPL limited;
(ii) The Appellant had not signed the application for registration of the
vehicle in question;
(iii) Even though the vehicle is owned and registered in the name of the
Company, no complaint has been filed against the Company but only
against the Appellant;
(iv) No notice was issued to the Appellant during the investigation and no
opportunity was given to the Appellant or to the Company.
(v) The Company M/s MSPL Limited had paid the entire tax amount, as was
6 (2011) 7 SCC 59
15
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evident from “no dues certificate” issued by the RTO, Hosapete dated 16
August, 2016.
(vi) The Appellant has not gained any pecuniary benefit, nor has the
company gained any pecuniary benefit;
(vii) The Appellant never met any official of the road transport, the question
of conspiracy involving the Appellant did not arise.
35. The Appellant claims that he has never been involved in any criminal
offence in his life time. The false implication of the Appellant would damage the
reputation of the Appellant. There being absolutely no materials against the
Appellant anywhere in the chargesheet, the proceedings as against the
Appellant are liable to be quashed. The filing of the chargesheet against the
Appellant is arbitrary, harassive and unsupported by any materials on record.
36. None of the aforesaid contentions have been considered by the High
Court. The High Court observed:-
14. On going through the charge sheet filed by the investigation
“
officer, which is referred to above, discloses that accused Nos.1
and 2 have involved in evasion of the tax and admittedly, the
difference tax of Rs.20,44,468/- was collected from accused No.2
only on 20.03.2013, whereas, the R.C. was issued on 10.01.2011
by collecting nominal tax of Rs.21,98 ,801/- only. The allegation is
of serious nature and these facts are not disputed. Under such
circumstances, it cannot be concluded that the criminal
proceeding was initiated against the accused Nos.1 and 2 without
any basis. The contention of the learned counsel for accused No.1 that he
was not knowing the value of the vehicle and he accepted the value as
declared by accused No.2 and therefore, he demanded lesser amount of
tax, cannot be accepted at this stage. Similarly, the contention of the
learned counsel for accused No.2 that he was not knowing either the value
of the vehicle or the tax and whatever tax demanded by accused No.1 was
paid by him and therefore, he was not committed any offence also cannot
be accepted at this stage. When there is specific allegation made against
various accused including the present petitioners, regarding evasion of tax
systematically showing the value of the imported vehicles at a lesser
value, the same cannot be ignored. Therefore, I am of the opinion that the
petitioners are not entitled for the relief they are claimed in the present
petitions and they are required to answer the charges and face the trial.”
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37. The Appellant has not questioned initiation of criminal proceedings
against any of the other accused persons. He has no intention of stalling
proceedings against any person involved in smuggling cars or forging or
fabricating documents or committing any other illegal activities. He has
questioned the legality of initiation of proceedings against him for alleged short
payment of road tax in respect of a vehicle owned by the company of which he
is Chairman and Managing Director even though, the alleged deficit road tax
had been paid by the company within one month of issuance of demand notice.
38. There is no whisper of how and in what manner the Appellant has abetted
the commission of any offence. It is nobody’s case that any document
submitted in connection with the vehicle in question imported by M/s MSPL
Limited is fake or fabricated. That is not the charge, so far as the Appellant is
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concerned. From Paragraph 11 of the order dated 7 August 2012, it transpires
that in case of some of the cars, the owners had declared the selling rates at
the factory as the value of the car, and not the on road value which would be
about three times the factory value.
39. Mr. Rohatgi emphatically argued that the company of which the Appellant
is the Chairman and Managing Director, M/s. MSPL Limited, had paid road tax as
charged by the Motor Vehicle Authorities on the basis of the value of the vehicle
as given in the invoice. The Appellant has annexed a copy of the invoice which
shows that the vehicle in question was purchased by the Company from Aston
Martin Brussels by the Manager of M/s MSPL Limited at a total cost of
162,465,00 Euros, the Appellant has also annexed the application form for
registration of the vehicle. It is pointed out that all the required information was
provided in the application for registration.
17
40. Opposing the appeal, Mr. Subhranshu Padhi, learned counsel appearing on
behalf of the State of Karnataka emphasized the gravity of the allegations in the
complaint. Mr. Padhi submitted that there was a racket in operation to defraud
the State of revenue of crores of rupees. Mr. Padhi submitted that this Court
ought not to quash the proceedings.
41. Mr. Padhi tried to distinguish the judgments of the High Court cited by the
Appellant, that is, the judgments/orders in the cases of S.V. Nandaraju
(supra), S. Rajendran (supra) and K.J. Kuruvilla (supra). Mr. Padhi pointed
out that in the cases of S. Rajendran (supra) and K.J. Kuruvilla (supra),
where the High Court had quashed the criminal proceedings, the demand notice
for deficit tax had been issued and the deficit tax had also been realized before
the private complaint filed by the Respondent No.2 was registered.
42. The mere fact that demand notice may have been issued and the
differential tax realized before institution of the private complaint is in our view
inconsequential. Either the charges disclose an offence of defrauding the State
of revenue or the offence of defrauding the State of revenue not made out. The
question is whether the materials on record disclose any criminal act on the part
of these Appellants. The answer cannot but be in the negative.
th
43. The judgment dated 19 December, 2019 in the case of S.V. Nandaraju
and others (supra) is distinguishable and has no application to the facts of this
case. The accused were officers and/or employees of the Motor Vehicles
Department, some of whom had retired long before the complaint was lodged.
In some of the cases, proceedings had been quashed on the ground that
18
sanction under Section 17 of the P.C. Act to prosecute had been declined by the
State Government.
44. Mr. Rohatgi argued with force that the Company had paid full road tax as
charged by the Motor Vehicles Authorities, on the basis of the actual invoice
value of the car in question. No further amount was payable. However, when
the RTO raised a notice of demand for Rs. 21 lakh odd in 2012, the company did
not raise any dispute since the amount claimed was a small amount for the
Company, which had a turnover of crores of rupees.
45. This Court is of the view that the proceedings against the Appellant are
misconceived, harassive, in abuse of process of law and have been initiated
without proper application of mind. This appeal is, therefore, allowed. Further
proceedings against these Appellants in the Court below, shall remain stayed.
…..............................J.
[INDIRA BANERJEE]
................................J.
[J.K. MAHESHWARI]
NEW DELHI
MARCH 14, 2022
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ITEM NO.26 Court 8 (Video Conferencing) SECTION II-C
S U P R E M E C O U R T O F I N D I A
RECORD OF PROCEEDINGS
Petition(s) for Special Leave to Appeal (Crl.) No(s). 9528/2021
(Arising out of impugned final judgment and order dated 22-10-2021
in CRLP No. 100167/2017 passed by the High Court of Karnataka
Circuit Bench At Dharwad)
SRI NARENDRA KUMAR A. BALDOTA Petitioner(s)
VERSUS
THE STATE OF KARNATAKA Respondent(s)
(IA No. 160552/2021 - EXEMPTION FROM FILING C/C OF THE IMPUGNED
JUDGMENT IA No. 160554/2021 - EXEMPTION FROM FILING O.T.)
Date : 14-03-2022 These matters were called on for hearing today.
CORAM : HON'BLE MS. JUSTICE INDIRA BANERJEE
HON'BLE MR. JUSTICE J.K. MAHESHWARI
For Petitioner(s) Mr. Mukul Rohatgi, Sr. Adv.
Mr. Mahesh Agarwal, Adv.
Mr. M.S. Ananth, Adv.
Mr. Anshuman Srivastava, Adv.
Mr. Rohan Talwar, Adv.
Mr. E. C. Agrawala, AOR
For Respondent(s) Mr. Shubhranshu Padhi, AOR
Mr. Ashish Yadav, Adv.
Mr. Rakshit Jain, Adv.
Mr. Vishal Banshal, Adv.
UPON hearing the counsel the Court made the following
O R D E R
Leave granted.
The appeal is allowed in terms of the signed reportable
judgment. Further proceedings against the appellant in the courts
20
below shall remain stayed.
(GULSHAN KUMAR ARORA) (MATHEW ABRAHAM)
AR-CUM-PS COURT MASTER (NSH)
(Signed reportable judgment is placed on the file)