HC Allahabad (11.05.2023) In Shekhar Ramamurthy Vs The State Of U.P. Thru. Prin. Secy. Home, Lko. And Another [Application U/S 482 No. - 7907 of 2022 ] held that;
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.
However, at the same time, it is the cardinal principle of criminal jurisprudence that there is no vicarious liability unless the statute specifically provides so.
Thus, an individual who has perpetrated the commission of an offence on behalf of a company can be made an accused, along with the company, if there is sufficient evidence of his active role coupled with criminal intent.
Second situation in which he can be implicated is in those cases where the statutory regime itself attracts the doctrine of vicarious liability, by specifically incorporating such a provision.
When the company is the offender, vicarious liability of the Directors cannot be imputed automatically, in the absence of any statutory provision to this effect.
When the accused is a Company, the complaint/ FIR or Charge-sheet must contain requisite allegations of commission of the offence by such individual(s).
Excerpts of the order;
# 2. The present application under section 428 Cr. P.C. has been filed by the applicant-Shekhar Ramamurthy, seeking following prayer:-
"Wherefore it is most respectfully prayed that in the aforesaid facts and circumstances the application preferred under section 482 Cr.P.C. may kindly be allowed and the quashment of Order dated 17.10.2022 alongwith all consequential proceedings and effects arising out of FIR no. 260/2018 U/s 406, 420, 467, 468, 471 and 120-B of IPC P.S. - Hussain Ganj, District Lucknow, pending before the court of ACJM - III may kindly be quashed along with all consequential proceedings in respect of the applicant in the interest of justice."
# 3. Learned Counsel for the applicant submits that the facts of the case, in brief, are that the United Breweries Limited (hereinafter referred to as "UBL") is a company registered under the provisions of Companies Act, 1956, having its registered office at U.B. Tower V.B. City 24, Vittal Mallya Road, Bangalure, Karnataka. The Company is engaged in manufacturing and sale of beer and other alcoholic beverages in India and worldwide.
# 4. That the applicant was working with UBL as Managing Director and a First Information Report was lodged on 16.09.2018 by the informant Shri Sanjeev Jaiswal wherein certain allegations regarding some business disputes were made against three persons, namely, Akhil Sarda, Himanshu Tewari and Arvind Padhi. During the course of time applicant ceased to be a Director of the aforesaid company w.e.f. 31.07.2020 upon his superannuation and the information about his leaving the company was filed with the Ministry of Corporate Affairs in Form DIR-12 as required under the Companies Act, 2013.
# 5. As per the contents of the FIR lodged on a complaint moved by opposite party No. 2 at Police Station Husainganj, Lucknow, on 15.9.2018 and as per the case setup the complainant placed an order for three trucks of Beer on 07.09.2018 and on 11.09.2018 through e-mail to Akhil Sharda, Branch Manager (Sales) Uttar Pradesh and Uttarakhand and made payment of Rs. 65,66,152/- on 7.9.2018 and Rs. 27,32,750/- on 11.9.2018, total amount of Rs. 92,98,902/- by his banker, Federal Bank Limited, Cantt. Road Lucknow. Despite making of payment for three trucks of Beer, Akhil Sarda did not ensure the supply of the ordered Beer, nor any proper reply was given by him. The complainant was apprehensive that three employees named in the FIR had no intention to supply the ordered Beer and they wanted to misappropriate the amount paid by the complainant and as per Excise Rules, the supply was to be made within 72 hours of the order.
# 6. The opposite party No. 2 placed a demand order for two trucks load of Beer through e-mail, total 2360 cases to the company on 07.09.2018. This e-mail was also sent to the Assistant Excise Commissioner Web Distillery, Aligarh. As the next two days, i.e., Saturday and Sunday were holidays, the process for supply of goods for which order was placed by the opposite party party No. 2 was initiated on 10.9.2018. In pursuance of the indent/ demand order dated 07.09.2018 placed by opposite party No. 2, the Company directed its transporter Sical Logistics Limited to arrange vehicles for delivery of goods from its godown located at Noida to the Licensee at Lucknow. The transport permit (Form FL-36) was issued by the concerned Excise Officer on 11.9.2018 for supply of Beer by 13.09.2018. The consignment of Beer was dispatched on 11.9.2018 for delivery to the Licensee at Lucknow after payment of excise duty in advance through transporter of the company by Truck Nos.UP32 HN 3209 and UP32 FN 8048.
# 7. The aforesaid two trucks had to reach the destination on 13.9.2018. And on 13.9.2018, location of both the trucks was tracked through GPS upto the outer limit of the Lucknow city, which was near about one and a half kilometre from the hotel Ramada Palace of opposite party No. 2 and, thereafter, the GPS device of both trucks lost contact with GPS Tracker Agency, namely, QTS Solutions Private Limited after 11.41 hours on 13.09.2018. QTS Solutions Private Limited sent a message through e-mail on 14.9.2018 at 4.15 PM of one Mr. Dharam Chand, Depot In-charge of the company.
# 8. It is further submitted that Ashok Kumar Jaiswal, who manages the business of opposite party No. 2, also runs Hotel Ramada, Near Bani Junabganj, Banthara, Lucknow, which is located at a distance of 1.5 kilometres from the place from where the trucks loaded with Beer went missing and which is specifically the same place from where the GPS fitted in the trucks stopped giving the track of the two trucks on 13.09.2018.
# 9. The Depot In-charge also informed to the officers of the company as well as the transporter, Sical Logistics Limited about the loss of trucks. The officers of the company also inquired about the trucks’ location from opposite party No. 2 through telephone, but opposite party No. 2 informed the company that the trucks had not yet reached the designated place i.e. 18, Station Road, Lucknow.
# 10. It was further submitted that the trucks loaded with Beer from the Depot of the company going missing, was brought to the notice of the District Excise Officer, who directed the company on 14.9.2018 to lodge the FIR at Police Station Badalpur, Gautam Budh Nagar. When the whereabouts of the trucks were not known, on 21.9.2018 the company requested consent of the licensee, opposite party No. 2, through e-mail for re-supply of Beer against the order dated 07.09.2018 as the consent was required for issuance of transport permit (FL-36) afresh. The consent for re-supply was given by opposite party No. 2 through e-mail on 22.9.2018. The licensee also informed the company that criminal proceedings have already been initiated at Police Station Husainganj, Lucknow with regard to non supply of Beer and civil proceedings would be initiated for the losses suffered. After consent was given by the licensee on 22.09.2018, fresh Form FL-36 was issued by the concerned Excise Officer on 22.09.2018 itself and Beer was supplied on 22.09.2018 against the order dated 07.09.2018 after payment of excise duty in advance through transporter of the company. The supply of goods/ Beer were delivered at the address of the licensee at Lucknow on 24.09.2018, which were accepted by the licensee, however, acknowledgement was not given by the licensee even after receipt of the goods. As the licensee did not acknowledge the delivery of goods, the drivers of the trucks contacted Excise Department and the Excise Inspector was deputed to verify the delivery of beer. The concerned Excise Officer inspected the location of the licensee and submitted his report dated 27.9.2018 that Beer ordered was duly received by the licensee at his premises.
# 11. It was further submitted that the licensee had also placed another order dated 11.09.2018 at 8:30 PM through e-mail for delivery of 1180 cases of Beer at Varanasi. Since the vehicles of transportation of Beer to Varanasi could not be arranged and the transport Form FL-36 could not be issued, the licensee on 15.09.2018 modified its original order dated 11.09.2018 through e-mail instructing that the ordered beer be delivered at Lucknow instead of Varanasi. After receipt of revised order on 15.09.2018 with changed location, the vehicle was arranged and Form FL-36 was issued by the concerned Excise Officer on 17.09.2018 and on the same day, consignment of beer was dispatched after payment of excise duty in advance through transporter of the company, namely, Buland Logistic Limited by Truck No.UP81 BT 5285 from Aligarh to Lucknow and the consignment of beer was delivered and received by the licensee on 19.09.2018. It is stated that the goods were duly delivered as per the orders dated 07.09.2018 and 11.09.2018.
ARGUMENTS OF LEARNED COUNSEL FOR THE APPLICANT
# 12. Shri Satish Chandra Mishra, learned Senior Advocate representing the applicant has submitted that there is no evidence available on record to show any involvement of the applicant in the alleged offence. The criminal liability cannot be fixed only on the allegation that the accused was the Director of the company at the time of alleged incident without disclosing any role played by such a person in the entire transaction, which form part of the offence and subject matter of the FIR and the chargesheet. He has further submitted that the impugned proceedings against the applicant are nothing but a sheer abuse of process of law and are manifestly unjust and illegal. The investigation has also been closed, and no further investigation is pending in the offence and the continuation of proceedings against the applicant would result only in his further harassment for alleged offences, which are not made out against him inasmuch as there is no evidence indicating his involvement in any manner for commission of alleged offences.
# 13. Learned Senior Counsel for the applicant further submits that pursuant to the FIR (case crime no. 260/2018, P.S. Husaain Ganj, Lucknow) the Investigating Officer had filed a charge sheet dated 10.02.2019 against four accused persons namely (i) Akhil Sarda, (ii) Himanshu Tewari, (iii) Arvind Padhai and (iv) United Breweries Limited. Thereafter cognizance on the said chargesheet was taken by the court below vide order dated 13.02.2019 to issue process against the then Managing Director Shekhar Ramamurthy vide order dated 13.02.2019 and there is no any whisper about his name in the aforesaid chargesheet and the order.
# 14. It was further submitted that Subsequently the investigation proceeded further and one more charge sheet No. 03 was filed by the Investigating Officer against nine Directors and Company Secretary of the Company. The court below vide order dated 03.04.2019 had taken cognizance on the said supplementary chargesheet, thereafter the investigation remained continued and a final chargesheet No. 04 dated 27.06.2019 was filed before the court below, whereupon cognizance was taken on 04.07.2019 by the court below. In the final chargesheet in the column of the name of the accused at Serial No. 4 only the name of the company, i.e., United Breweries Limited, has been mentioned and the name of the applicant Shekhar Ramamurthy, Managing Director, has not been mentioned in any of the chargesheet. Thus entire proceedings initiated against the applicant is sheer abuse of process of law.
# 15. It was further argued that in the impugned summoning order dated 17-10-2022 it has been mentioned by the court below that earlier vide order dated 25.03.2019 non bailable warrants were issued against all the accused persons. The order sheet of this case reveals that the chargesheet was filed on 10.02.2019 and cognizance was taken on 13.02.2019 only against the company UBL and other three individual persons, namely (i) Akhil Sarda, (ii) Himanshu Tewari, (iii) Arvind Padhai. It is argued that the name of the applicant was not mentioned in the summoning order and summons were issued to other persons fixing the next date for appearance for 05.03.2019. Subsequently, on 15.03.2019 case was called out and service report on the summons was submitted to the court, thereafter, bailable warrants for Rs. 10,000/- were issued against three individuals and UBL as a Company by the court below. Neither the summons nor the bailable warrants were issued against present applicant Shekhar Ramamurthy and the processes were only issued against the Company. Subsequently, the date was fixed for 25.03.2019 as indicated in the order sheet as it has been mentioned that Vakalatnama for the accused was filed. Thereafter, non bailable warrants were issued against three individuals and UBL as a Company vide order dated 25.03.2019.
# 16. It is further submitted by Senior Advocate Shri Satish Chandra Mishra that from perusal of the aforementioned order sheet it is apparent that non bailable warrants were issued only in respect of aforesaid three persons who were named in the FIR and charge sheeted. The non bailable warrant cannot be issued against a juristic person which in this case is the company UBL. No otherwise meaning could be deciphered from these order sheets that at any point of time the court below had issued any kind of process including non bailable warrant against the applicant-Shekhar Ramamurthy at any point of time.
# 17. It is further submitted that the learned court below in the impugned summoning order has mechanically followed the earlier order dated 25.03.2019 without going into the details of the material available on record that in previous order sheets which clearly indicate that no process have ever been initiated against the present applicant and neither he is an accused in the individual capacity.
# 18. It is further submitted that after filing of the chargesheet and after taking cognizance vide order dated 13.02.2019, the informant Sanjeev Jaiswal, opposite party no. 2 had filed an application dated 07.03.2019 for issuance of bailable warrant against the then Managing Director namely, Shekhar Ramamurthy, whereupon the learned court below passed the order on the application itself to the effect that Investigating Officer shall be present on the date fixed and also directed him to file his reply, and the application was fixed for 25.03.2019 and on the same date 07.03.2019 the Investigating Officer also moved an application before the learned court below submitting therein that vide order dated i.e., 07.03.2019 the learned court below has included UBL as an accused through Managing Director, Shekhar Ramamurthy in place of the name of Director and for rest of its shareholders/ Directors a supplementary chargesheet shall be filed as investigation was continued.
# 19. It was further submitted that thereafter the name of applicant has been inserted in handwriting in the chargesheet No. 2 but the same is not available in the certified copy of the said chargesheet issued on 20.02.2019. The certified copy was applied vide Folio No. 77(urgent) dated 20.02.2019 and the same was issued on the same day. This certified copy was filed before this Court by the other named accused persons including the company as a party as Annexure No. 01 to the Crl. Misc. Application U/s 482 Cr.P.C. No. 2005 of 2019, Akhil Sharda and others Vs. State of U.P. and others and the aforesaid application U/s 482 Cr.P.C. No. 2005 of 2019 was allowed by a coordinate Bench of this Court vide order dated 06.03.2020. Subsequently, the State of U.P. and the complainant had challenged separately the aforesaid order dated 06.03.2020 before the Hon'ble Supreme Court by filing their respective SLP(Crl) No. 5577 of 2020 and SLP (Crl) 5899 of 220 and the Hon'ble Supreme Court vide order dated 11.7.2022 restored the proceedings initiated against three accused persons and the Company, while setting aside the order dated 06.03.2020 passed by this Court with certain directions. The opposite parties namely, State of U.P. and the informant, never argued or intimated the Hon'ble High Court that the name of applicant has been inserted in handwriting at any subsequent date or if the name has been inserted/ included then when the said order was passed by the learned court below regarding inclusion of the name of applicant as an accused along with the company. Even though the name of the applicant was not arrayed as party by the state or the informant before the Hon'ble Supreme Court in the aforesaid SLP's.
# 20. Learned Senior Counsel for the applicant further submits that upto 25.03.2019 neither cognizance was taken against the applicant nor any non bailable warrant was issued against the applicant and the non bailable warrant dated 25.03.2019 was issued only against three individuals and the Company and not against the present applicant.
# 21. It was further argued by the learned counsel for the applicant that the name of applicant was neither in the FIR nor in the chargesheet but his name came into light only after an application moved on behalf of Investigating Officer before the court concerned after which the learned court below without due process of law inserted the name of applicant and issued process vide impugned order dated 17.10.2022.
# 22. It was further stated that on the application moved on behalf of Company under Section 305 Cr.P.C., the learned court below issued non bailable warrant and thus has caused a manifest illegality on the ground that it is the prerogative of the company to appoint its representative/ authorized person under section 305 Cr. P.C. for participation in the criminal prosecution for and on behalf of the company and the said person would be representative of the said company.
# 23. It was further argued by the learned counsel for the applicant that the learned trial court has no power for naming any particular person with name and designation for prosecution on behalf of company. It is settled principle of law that whenever a company is named in any prosecution then as per the provisions of Section 305(2) Cr. P.C. the company may appoint a representative for the purpose of inquiry or trial and such appointment need not be under the seal of corporation and the counsel has placed the provision of Section 305 Cr.P.C. which is reproduced here in below:-
305. Procedure when corporation or registered society is an accused.-
(1) In this section, "corporation" means an incorporated company or other body corporate, and includes a society registered under the Societies Registration Act, 1860 (21 of 1860).
(2) Where a corporation is the accused person or one of the accused persons in an inquiry or trial, it may appoint a representative for the purpose of the inquiry or trial and such appointment need not be under the seal of the corporation.
(3) Where a representative of a corporation appears, any requirement of this Code that anything shall be done in the presence of the accused or shall be read or stated or explained to the accused, shall be construed as a requirement that that thing shall be done in the presence of the representative or read or stated or explained to the representative, and any requirement that the accused shall be examined shall be construed as a requirement that the representative shall be examined.
(4) Where a representative of a corporation does not appear, any such requirement as is referred to in subsection (3) shall not apply.
(5) Where a statement in writing purporting to be signed by the managing director of the corporation or by any person (by whatever name called) having, or being one of the persons having the management of the affairs of the corporation to the effect that the person named in the statement has been appointed as the representative of the corporation for the purposes of this section, is filed, the Court shall, unless the contrary is proved, presume that such person has been so appointed.
(6) If a question arises as to whether any person, appearing as the representative of a corporation in an inquiry or trial before a Court is or is not such representative, the question shall be determined by the Court.
# 24. Learned counsel for the applicant further stated that a Director of a company who was not in charge or responsible for the conduct of business of the company at the relevant time, will not be liable under those provisions. As held by Hon’ble Supreme Court in S.M.S. Pharmaceuticals Ltd Vs Neeta Bhalla (2005) 8 SCC 89, relevant portion is quoted below:
"Section 141 of the Act does not say that a Director of a Company shall automatically be vicariously liable for commission of an offence on behalf of the Company. What is necessary is that sufficient averments should be made to show that the person who is sought to be proceeded against on the premise of his being vicariously liable for commission of an offence by the Company must be incharge and shall also be responsible to the Company for the conduct of its business".
# 25. That learned counsel for the applicant further submits that liability depends on the role one plays in the affairs of a company and not on designation or status alone and was pleased to refer the judgment passed by the Apex Court in the case of a S.M.S. Pharmaceuticals Ltd Vs Neeta Bhalla(Supra).
# 26. Learned counsel for the applicant has vehemently submitted that in the facts and circumstances of the case and after having satisfied that the ingredients of Sections 406, 420 IPC are not made out against the applicant and the case falls within the parameters laid down by this Hon'ble Court in the case of Ch. Bhajan Lal v. State of Haryana 1992 Supp (1) SCC 335 which are required to be considered while quashing the criminal proceedings. He further argued that from the material available on record it is apparent that the applicant is not involved in the day-to-day affairs of the company or in running of the company, thus, he prays that it is a fit case for quashing of the impugned order dated 17.10.2022 and all the consequential proceedings of the case so far as the present applicant is concerned.
# 27. Per contra, Shri Anurag Verma, the learned Additional Government Advocate for the State-opposite party No. 1 has submitted that learned court below has not committed any error or illegality in issuing non bailable warrant order dated 17.10.2022 against the applicant including other accused persons and the present application s liable to be dismissed as all the Factial aspects has been argued.
OBSERVATIONS OF THE COURT
# 41. I have considered the rival submissions of the learned counsel for the parties and the judgments referred herein above and perused the material available on record and also the prayer made in the present application filed under Section 482 Cr.P.C. by the applicant.
# 42. The powers of the High Court to quash criminal proceedings in exercise of its jurisdiction under Section 482 Cr.P.C. is well known. The High Court may not enter into determination of the disputed questions of fact at the stage of its exercise of powers under section 482 Cr.P.C, however, the Court may examine and take note of the facts and allegations in order to find out whether the impugned proceedings are in abuse of the process of the court and law and their continuance would result in miscarriage of justice or not.
# 43. In the present case the facts, as noted above, are not in dispute. The FIR and the charge-sheet discloses as to how and in what manner the applicant was responsible for day-to-day conduct of business of the Company or otherwise responsible in its day-to-day functioning.
# 44. The question which arises for consideration in the present case is that whether the applicant was liable for any offence even if the allegations in the FIR and charge-sheet are taken on their face value to be correct in entirety. The Company is a body incorporated under the Companies Act. Vicarious criminal liability of its Directors and Shareholders would arise provided any provision exists in that behalf in the statute. The Statute must contain provision fixing such a vicarious liability. Even for the said purpose, it would be obligatory on the part of the complainant and the investigating agency to make requisite allegations and collect evidence in support thereof which would attract provisions constituting vicarious liability.
# 45. In the facts of the present case, it is not in dispute that order for supply of beer by complainant/ opposite party No. 2 was placed through Akhil Sarda, Depot Manager. The applicant was the Managing Director who has been appointed under the provisions of Section 149/ 150 of the Companies Act, 2013, having regard to his qualification, expertise etc. If the applicant was involved in the alleged transaction at any point of time, vicarious criminal liability can be fixed upon the applicant.
# 46. The Hon'ble Supreme Court in the case of Pepsi Foods Ltd. v. Special Judicial Magistrate, (1998) 5 SCC 749 has held that summoning of an accused in a criminal case is a serious matter. Criminal law cannot be set in motion as the matter of course for alleged offences and was pleased to observe in para28 of the aforesaid judgment which reads 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."
# 47. The Hon'ble Supreme Court also in the case of Sunil Bharti Mittal v. CBI, (2015) 4 SCC 609 while dealing with the issue of vicarious liability of the Officers, Directors, Managing Directors, Chairman of the Company was pleased to observe in paras- 42 to 44 and 48 to 50 of the aforesaid judgment, which read as under:-
"42. No doubt, a corporate entity is an artificial person which acts through its officers, Directors, Managing Director, Chairman, etc. If such a company commits an offence involving mens rea, it would normally be the intent and action of that individual who would act on behalf of the company. It would be more so, when the criminal act is that of conspiracy. However, at the same time, it is the cardinal principle of criminal jurisprudence that there is no vicarious liability unless the statute specifically provides so.
43. Thus, an individual who has perpetrated the commission of an offence on behalf of a company can be made an accused, along with the company, if there is sufficient evidence of his active role coupled with criminal intent. Second situation in which he can be implicated is in those cases where the statutory regime itself attracts the doctrine of vicarious liability, by specifically incorporating such a provision.
44. When the company is the offender, vicarious liability of the Directors cannot be imputed automatically, in the absence of any statutory provision to this effect. One such example is Section 141 of the Negotiable Instruments Act, 1881. In Aneeta Hada [Aneeta Hada v. Godfather Travels & Tours (P) Ltd., (2012) 5 SCC 661 : (2012) 3 SCC (Civ) 350 : (2012) 3 SCC (Cri) 241] , the Court noted that if a group of persons that guide the business of the company have the criminal intent, that would be imputed to the body corporate and it is in this backdrop, Section 141 of the Negotiable Instruments Act has to be understood. Such a position is, therefore, because of statutory intendment making it a deeming fiction. Here also, the principle of "alter ego", was applied only in one direction, namely, where a group of persons that guide the business had criminal intent, that is to be imputed to the body corporate and not the vice versa. Otherwise, there has to be a specific act attributed to the Director or any other person allegedly in control and management of the company, to the effect that such a person was responsible for the acts committed by or on behalf of the company."
48. Sine qua non for taking cognizance of the offence is the application of mind by the Magistrate and his satisfaction that the allegations, if proved, would constitute an offence. It is, therefore, imperative that on a complaint or on a police report, the Magistrate is bound to consider the question as to whether the same discloses commission of an offence and is required to form such an opinion in this respect. When he does so and decides to issue process, he shall be said to have taken cognizance. At the stage of taking cognizance, the only consideration before the court remains to consider judiciously whether the material on which the prosecution proposes to prosecute the accused brings out a prima facie case or not.
49. Cognizance of an offence and prosecution of an offender are two different things. Section 190 of the Code empowered taking cognizance of an offence and not to deal with offenders. Therefore, cognizance can be taken even if offender is not known or named when the complaint is filed or FIR registered. Their names may transpire during investigation or afterwards.
50. Person who has not joined as accused in the charge-sheet can be summoned at the stage of taking cognizance under Section 190 of the Code. There is no question of applicability of Section 319 of the Code at this stage (see SWIL Ltd. v. State of Delhi [(2001) 6 SCC 670 : 2001 SCC (Cri) 1205] ). It is also trite that even if a person is not named as an accused by the police in the final report submitted, the court would be justified in taking cognizance of the offence and to summon the accused if it feels that the evidence and material collected during investigation justifies prosecution of the accused (see Union of India v. Prakash P. Hinduja [(2003) 6 SCC 195 : 2003 SCC (Cri) 1314] ). Thus, the Magistrate is empowered to issue process against some other person, who has not been charge-sheeted, but there has to be sufficient material in the police report showing his involvement. In that case, the Magistrate is empowered to ignore the conclusion arrived at by the investigating officer and apply his mind independently on the facts emerging from the investigation and take cognizance of the case. At the same time, it is not permissible at this stage to consider any material other than that collected by the investigating officer."
# 48. The Hon'ble Supreme Court also in the case of Shiv Kumar Jatia Vs. State of NCT of Delhi : (2019) 17 SCC 193 while dealing with vicarious liability of Managing Director of the Company was pleased to observe in paras-21 and 22 as under:-
"21. By applying the ratio laid down by this Court in Sunil Bharti Mittal [Sunil Bharti Mittal v. CBI, (2015) 4 SCC 609 : (2015) 2 SCC (Cri) 687] it is clear that an individual either as a Director or a Managing Director or Chairman of the company can be made an accused, along with the company, only if there is sufficient material to prove his active role coupled with the criminal intent. Further the criminal intent alleged must have direct nexus with the accused. Further in Maksud Saiyed v. State of Gujarat [Maksud Saiyed v. State of Gujarat, (2008) 5 SCC 668 : (2008) 2 SCC (Cri) 692] this Court has examined the vicarious liability of Directors for the charges levelled against the Company. In the aforesaid judgment this Court has held that, 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 a company. It is held that vicarious liability of the Managing Director and Director would arise provided any provision exists in that behalf in the statute. It is further held that statutes indisputably must provide fixing such vicarious liability. It is also held that, 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.
22. In the judgment of this Court in Sharad Kumar Sanghi v. Sangita Rane [Sharad Kumar Sanghi v. Sangita Rane, (2015) 12 SCC 781 : (2016) 1 SCC (Cri) 159] while examining the allegations made against the Managing Director of a Company, in which, company was not made a party, this Court has held that when the allegations made against the Managing Director are vague in nature, same can be the ground for quashing the proceedings under Section 482 CrPC. In the case on hand principally the allegations are made against the first accused company which runs Hotel Hyatt Regency. At the same time, the Managing Director of such company who is Accused 2 is a party by making vague allegations that he was attending all the meetings of the company and various decisions were being taken under his signatures. Applying the ratio laid down in the aforesaid cases, it is clear that principally the allegations are made only against the company and other staff members who are incharge of day-to-day affairs of the company. In the absence of specific allegations against the Managing Director of the company and having regard to nature of allegations made which are vague in nature, we are of the view that it is a fit case for quashing the proceedings, so far as the Managing Director is concerned."
# 49. Thus, an Officer, Director, Managing Director or Chairman of the Company can be made an accused along with the Company only if there is sufficient material to prove his active role coupled with criminal intent. Indian Penal Code does not contain any provision for vicarious liability. For Managing Director or Director to be accused and their implications in the offence allegedly committed on behalf of the company, when the accused is a Company, the complaint/ FIR or Charge-sheet must contain requisite allegations of commission of the offence by such individual(s).
# 50. The Hon'ble Supreme Court in the case of Kishori Singh and others v. State of Bihar and another : (2004) 13 SCC 11, while dealing with the issue whether when some evidence or material are brought on record in course of trial the person can be arrayed as "accused persons" and was pleased to observe in para-10 as under: -
"10. So far as those persons against whom chargesheet has not been filed, they can be arrayed as “accused persons” in exercise of powers under Section 319 CrPC when some evidence or materials are brought on record in course of trial or they could also be arrayed as “accused persons” only when a reference is made either by the Magistrate while passing an order of commitment or by the learned Sessions Judge to the High Court and the High Court, on examining the materials, comes to the conclusion that sufficient materials exist against them even though the police might not have filed charge-sheet, as has been explained in the latter three-Judge Bench decision. Neither of the contingencies has arisen in the case in hand."
# 51. In M/s. India Carat Pvt. Ltd. v. State of Karnataka and another : (1989) 2 SCC 132, the Hon'ble Court, after analyzing the provisions of the Code, referred to the decisions in Abhinandan Jha v. Dinesh Mishra : AIR 1968 SC 117 and H.S. Bains v. State (UT of Chandigarh) : (1980) 4 SCC 631 and, eventually was pleased to observe as under:
16. “The position is, therefore, now well settled that upon receipt of a police report under Section 173(2) a Magistrate is entitled to take cognizance of an offence under Section 190(1)(b) of the Code even if the police report is to the effect that no case is made out against the accused. The Magistrate can take into account the statements of the witnesses examined by the police during the investigation and take cognizance of the offence complained of and order the issue of process to the accused. Section 190(1)(b) does not lay down that a Magistrate can take cognizance of an offence only if the investigating officer gives an opinion that the investigation has made out a case against the accused. The Magistrate can ignore the conclusion arrived at by the investigating officer and independently apply his mind to the facts emerging from the investigation and take cognizance of the case, if he thinks fit, in exercise of his powers under Section 190(1)(b) and direct the issue of process to the accused.”
# 52. Thus, this Court is of the view that all the contentions raised by the applicant's counsel relate to disputed questions of fact. The court has also been called upon to adjudge the testimonial worth of prosecution evidence and evaluate the same on the basis of various intricacies of factual details which have been touched upon by learned counsel. The veracity and credibility of material furnished on behalf of the prosecution has been questioned and false implication has been pleaded. In the process of invoking its inherent jurisdiction, this court cannot be persuaded to have a pre trial before the actual trial begins. The submissions made by the learned counsel call for adjudication on pure questions of fact which may be adequately adjudicated upon only by the trial court and while doing so even the submissions made on points of law can also be more appropriately gone into by the trial court in this case.
# 53. At this stage of issuing process the court below is not expected to examine and assess in detail the material placed on record, only this has to be seen whether prima facie cognizable offence is disclosed or not. The quashing of charge sheet, summoning order and entire proceedings can also be done only if it does not disclose any offence or if there is any legal bar which prohibits the proceedings on its basis. The Apex Court has also laid down the guidelines where the criminal proceedings could be interfered and quashed in exercise of its power by the High Court in the following cases and make the position of law in this regard clear:-
(i) R.P. Kapoor Vs. State of Punjab, AIR 1960 S.C. 866,
(ii) State of Haryana Vs. Bhajanlal, 1992 SCC (Crl.)426,
(iii) State of Bihar Vs. P.P. Sharma, 1992 SCC (Crl.)192 and
(iv) Zandu Pharmaceutical Works Ltd. Vs. Mohd. Saraful Haq and another, (Para-10) 2005 SCC (Cri.)283.
# 54. The power of High Court is very wide but should be exercised very cautiously to do real and substantial justice for which the court alone exists. Hence the chances of ultimate conviction is bleak and no useful purpose is likely to be served by allowing criminal proceedings to be continue. In S.W. Palankattkar & others Vs. State of Bihar, 2002 (44) ACC 168, it has been held by the Hon'ble Apex Court that quashing of the criminal proceedings is an exception than a rule. The inherent powers of the High Court under Section 482 Cr.P.C itself envisages three circumstances under which the inherent jurisdiction may be exercised:-
(i) to give effect an order under the Code;
(ii) to prevent abuse of the process of the court;
(iii) to otherwise secure the ends of justice.
# 55. In absence of any of the grounds recognized by the Apex Court which might justify the quashing of summoning order dated 17.10.2022 or consequential proceedings, the prayer for quashing the same is refused, as I do not see any abuse of the courts process either. The court below has been vested with sufficient powers to discharge the accused even before the stage to frame the charges comes, if for reasons to be recorded it considers the charge to be groundless.
# 56. However, in view of the above discussions and observations, it is directed that the applicant shall appear before the concerned court below, within a period of three weeks from today and move an application claiming discharge, the concerned court below shall after hearing the counsel for the parties decide the aforesaid discharge application on merits in accordance with law within a period which shall not exceed a period of three months from today without granting any unnecessary adjournment to either of the parties, unless there is some legal impediment or unless there is any order passed by the higher court staying the proceedings of the case.
# 57. It is further directed that till the disposal of the aforesaid discharge application no coercive action shall be taken against the applicant.
# 58. With the above observations and directions, this application filed by the applicant under Section 482 Cr.P.C. for the relief claimed stands disposed of.
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