Avanindra Kumar Tripathi & Ors vs Jay Prakash Sharma

The applicants have preferred this petition under Section 482 of the Cr.P.C. for quashment of order dated 07/01/2016 passed in Criminal Case No.

62/2016, by which the Chief Judicial Magistrate, Ratlam has taken cognizance against the applicants for offence punishable under Sections 409, 420,

465, 468, 471 and 500/34 of the IPC.

Brief facts of the case are that on 27/02/2015, the respondents filed criminal complaint against the applicants alleging that he is the Director of M/s

Laxyo Energy Ltd., Ratlam; whereas applicant Nos. 1 & 2 are the Directors of M/s. Chinar Shipping & Infrastructure (India) Pvt. Ltd. In the month

of November, 2011, the applicant No.1 has met with the respondent and said that he is 95% share holder of the Company, who has got the contract

for draining stretch of river Ganga and Bramhaputra. However, the economic condition of the Company is not good, therefore, he cannot be able to do

aforesaid work. Therefore, he proposed that if the respondent invested his money in the Company, then he will became 45% share holder of the

Company and his brother also be inducted in the part of the Company. Agreed with the aforesaid proposal agreement dated 11/11/2011 was executed

and supplementary agreement dated 14/11/2011 was also executed for smooth transfer of share and functioning of the Chinar Company. It is further

alleged that various accounts were opened for operational purpose of the Chinar Company, therefore, the applicants were agreed to close all the bank

accounts of the Company and two new bank accounts were opened in HDFC Bank and Bank of Maharashtra Branch at Ratlam so that the financial

transaction of the company can be conducted by these accounts. However, with the collusion of Bank Authorities applicants have opened

unauthorized bank account in the name of Chinar Company and they used huge amount of the Company for their personal use. It is also alleged that

the applicants have misused the authority to sign the cheques and misappropriated funds of the Company and when he came to know about the

cheating committed by the applicants from cash book and laser accounts of the Company he found that Rs. 2,24,39,047/- is the liability due towards

service tax and income tax and the same was passed on to the complainant deceitfully. It is also alleged that the applicant has committed

embezzlement of Rs.5,38,55, 345/- and they also cheated the respondent to the tune of Rs. 1.50 crores. On the basis of the aforesaid complaint after

recording the statement of the complainant and his witnesses learned Chief Judicial Magistrate taking the cognizance against the applicants for

offence under Sections 409, 420, 465, 468, 471 and 500/34 of the IPC, which is a subject matter of challenge before this Court.

Learned counsel for the applicants submitted that the share holding was transferred by the applicant Nos. 1 & 2 to Laxyo with the purpose of

financing, managing, pool of skilled manpower, expertise on management and providing resources for expansion of business of Chinar Company. The

respondent was nominated as Directors of Chinar Company as representatives of Laxyo Company by agreement dated 11/11/2011, however, the

respondent never provided any support in the management and afairs of the Company. Whenever, any query or help was sought from them, they

never replied the same. When the respondent was found guilty of gross misconduct as a nominee Director in Chinar Company, he was confronted

with the instances of misconduct of the respondent and embezzlement of huge amount of Chinar Company, then instead of giving explanation

regarding his misconduct, the complainant resigned from the nominee directorship of Chinar Company with the false assurance that he would give

explanation by afternoon of 24/02/2015, when he did not give any explanation till 26/02/2015 then he was removed from the Post of Nominee Director

of Board of Chinar Company and after that he filed petition bearing CP No. 06/2015 before the Company Law Board, Mumbai Bench under Section

409 of the Companies Act on false and flimsy grounds and the same was dismissed by the Company Law Board, Mumbai Bench, vide order dated

13/03/2015. Thereafter, applicant Nos. 1 & 2 filed petition bearing CP No. 27/2015 before the Company Law Board, Mumbai against Laxyo

Company and its Directors (including the respondent) in which Company Law Board, vide order dated 13/04/2015 appointed Ms. Manjri Kakker as

Independent Chairperson of the Company. At present all the bank accounts of the company are being operated by the Chairperson only.

It is further submitted that The applicant No. 1 filed a complaint against the respondent and his associates before the Additional Director General of

Police, Bhopal, however, no action was taken by the Police. Then the applicant No. 1 lodged complaint against the respondent and his associates with

Pydhoonie Police Station Mumbai and also complained about the embezzlement of company's fund by the respondent from the company's bank

accounts at Ratlam. On the basis of aforesaid complaint FIR No. 269/2015 was registered against the respondent and his associates under Sections

409, 420, 465, 468, 471 and 500/34 of the IPC . After that as a counterblast the respondent has made a false complaint against the applicant, which

was registered by the Chief Judicial Magistrate withoug considering the fact that there was arbitration clause provided in the alleged agreement,

therefore, no criminal proceedings can be initiated against the applicants for commiting any breach of contract. The company opened the bank

accounts providing various facilities for ongoing projects of the Company and the same cannot be closed until and unless the projects are completed.

These bank accounts had the approval of Laxyo Energy Ltd., and the aforesaid Company was also depositing amounts in these accounts which were

always in the knowledge of the Laxyo and its Directors. The respondent/complainant has falsely alleged that certain amounts are due from the

company towards service tax and income tax but he has failed to show that how this amount will be shifted towards applicants. In the aforesaid facts

and circumstances of the case, criminal proceedings against the applicants will serve no purpose, therefore, it would be appropriate to quashed the

same.

Learned counsel appearing on behalf of the respondent has submitted that the criminal prosecution on the ground that prima-facie the allegation

levelled against the applicants are made out, therefore, the petition deserves to be dismissed.

I have considered arguments advanced by the learned counsel for the parties and perused the record.

The applicants takes the plea that the respondent has also committed gross mis-conduct as nominee Director of the Chinar Company and he has

committed embezzlement of huge amount of the Chinar Company, therefore, he was removed for the post of Nominee Directors of the Board of

Chinar Company and on the basis of the complaint lodged by the applicants the FIR bearing Crime No. 269/2015 was registered against the

respondent and his associates under Section 409, 420, 465, 468, 571 and 500/34 of the IPC. However, the respondent did not disclose the facts

regarding the aforesaid FIR. In this manner, there is suppression of material fact, which has not brought to the notice of Chief Judicial Magistrate,

Ratlam at the time of taking cognizance against the present applicants. But in view of this Court the plea taken by the applicants has no tenability at

this stage of cognizance by the Court of CJM, Ratlam, in the light of the judgment passed by this Court in the case of Colgate Palmolive India Ltd. Vs.

Satish Rohra, 2005(4) MPLJ 380, where it has held in the following manner:-

“ I have heard learned counsel of both the parties and carefully perused the evidence and the material on record. Before considering the evidence

and the material on record for the limited purpose of finding out whether a prima facie case for issuance of process has been made out or not, it may

be mentioned at the very outset that the various documents and the reports filed by the petitioners/Company alongwith the petitioner cannot be looked

into at the stage of taking cognizance or at the stage of framing of the charge. The question whether prima facie case is made out or not has to be

decided purely from the point of view of the complainant without at all adverting to any defence that the accused may have. No provision in the Code

of Criminal Procedure grants to the accused any right to file any material or document at the stage of taking cognizance or even at the stage of

framing of the charge in order to thwart it. That right is granted only at the stage of trial. At this preliminary stage the material produced by the

complainant alone is to be considered.â€​

In no ambiguous manner this Court has laid down that at the stage of taking cognizance the complaint and documents filed along with the complaint

are to be perused but the material brought on record by the accused cannot be looked into at the stage of cognizance.

The law laid down in Colgate Palmolive (supra) is squarely applicable to the facts of the presentd case and the material brought on record against

the respondent cannot be gone into at this stage. These documents can be taken into consideration at the appropriate stage of the trial.

The contents of the complaint filed by the respondent reveals that the complaint is based upon the main allegation that despite agreement between

the parties, the applicants do not close all the 5 bank accounts as agreed, vide agreement dated 11/11/2011 and continued one bank account. Although

they intimated the complainant/respondent that they have closed all the 5 bank accounts. It is also alleged that applicant Nos. 1 & 2 deceitfully opened

9 bank accounts in the name of their company by vitue of forged board resolution, for which the approval of the complainant/respondent was not

taken.

Although Clause 24 of the agreement dated 11/11/2011 provides arbitration clause and if any disputes and differences arises between the parties

then same shall be referred to arbitrator for settlement. In the case of Kailash Verma Vs. Punjab State Civil Supplies Corporation and another,

2002(2) SCC 571,the Hon'ble apex Court has also expressed his opinion that when there was arbitration clause the breach of agreement was civil

liability and no criminal case could be imputed to the persons, who committed such breach. Although present case the allegation against the applicants

are that they breach the condition of the agreement dated 11/11/2011, however, the applicants have also got registered an FIR against the respondent

regarding the same allegation. Under these circumstances, the applicants cannot take shield of arbitration clause.

Learned counsel for the applicants placed reliance on the judgments of the Hon'ble apex Court in the case of Fiona Shrikhande Vs. State of

Maharashtra and Another, (2013) 14 SCC 44 and Sonu Gupta Vs. Deepak Gupta and Others, (2015) 3 SCC 424, in my opinion, is of no help to the

applicants, as according to the ratio of indulgence under Section 482 Cr.P.C. can be shown in cases whereupon uncontroverted reading of the FIR or

complaint the ingredients of the offence levied are not made out or the prosecution has been lodged with ulterior motive. However, in the instant case

the material brought on record by the applicants does not reveal beyond reasonable doubt any ulterior motive and the questions raised regarding the

complaint of respondent are disputed questions, which cannot be gone into while exercising powers under Section 482 of the Cr.P.C.

In the case of K. Ashoka Vs. N.L. Chandrashekhar, 2009(5) SC 191, the apex Court is held that the opinion of the High Court that the averments

made in the complaint are imaginary is not based on any materiaal. Even assuming that the complainant had a score to settle against the accused, the

same by itself may not be a ground to quash the entire criminal proceedings particularly in view of the fact that at least a prima facie case hs been

established in view of the evidence on record.

The apex Court in the case of Rajiv Thapar Vs. Madan Lal Kapoor (2013) 3 SCC 330, has cautioned the High Court while exercising the power

under Section 482 of the Cr.P.C. in the following manner :-

“22. The issue being examined in the instant case is the jurisdiction of the High Court under Section 482 of the Cr.P.C., if it choses to quash the

initiation of the prosecution against an accused, at the stage of issuing process, or at the stage of committal, or even at the stage of framing of

charges. These are all stages before the commencement of the actual trial. The same parameters would naturally be available for later stages as well.

The power vested in the High Court under Section 482 of the Cr.P.C., ata the stages referred to hereinabove, would have far reaching consequences,

in as much as, it would negate the prosectuion's/ complainant's case without allowing the prosecution/complainant to lead evidence. Such a

determination must always be rendered with caution, care and circumspection. To invoke its inherent jursidiction under Section 482 of the Cr.P.C. the

High Court has to be fully satisfied, that the material produced by teh accused is such, that would lead to conclusion, that his/their defence is based on

sound, reasonable, and indubitable facts; the material produced is such, as would clearly reject and overrule the veracity of the allegations contained in

the accusations levelled by the prosecution/complaint. It should be sufficient to to rule out, reject and discard the accusations levelled by the

prosecution /complainant, without the necessity of recording any evidence. For this the material relied upon by the defence should not have been

refuted, or alternatively, cannot be justifiably refuted, being material of sterling and impeccable quality. The material relied upon by the accused should

be such, as would persuade a reasonable person to dismiss and condemn the actual basis of the accusasations are false. In such a situation, the judicial

conscience of the High Court would persuade it to exercise its power under Section 482 of the Cr.P.C. to quash such criminal proceedings, for that

would prevent abuse of process of the court, and secure the ends of justice.â€​

The Hon'ble apex Court in the case of Taramani Prakash Vs. State of M.P., 2015 Cri. L.J. 2031, has held as under:-

“27.1. Though there are no limits of the powers of the Court under Section 482 of the Code but the more the power, the morre due care and

caution is to be exercised in invoking these powers. The power of quashing criminal proceedings, particularly, the charge framed in terms of Section

228 of the Code should be exercised very sparingly and with circumspection and that too in the rarest of rare cases.

27.2 The Court should apply the test as to whether the uncontroverted allegations as made from the record of the case and the documents submitted

therewith prima fcie establish the offence or not. If the allegations are so patently absurd and inherently improbable that no prudent person can ever

reach such a conclusion and where the basic ingredients of a criminal offence are not satisfied then the Court may interfere.

27.3 The High Court should not unduly interefere. No meticulous examination of the evidence is needed for considering whether the case would end in

conviction or not at the stage of framing of charge of quashing of charge.â€​

Having carefully examined the law laid down by the Hon'ble apex Court in the case of Rajiv Thapar (supra) and Taramani Prakash (supra) and

consideration of material brought on record by the applicants, it is clear that the interference under Section 482 of the Cr.P.C. is not warranted.

Further detailed discussion on the material furnished by the applicants will prejudice their defence before the trial Court. Accordingly, this petition is

fails and is hereby dismissed.

Let a copy of the order alongwith record be sent to the trial Court for information and necessary compliance.