Delhi High Court
V P Aggarwal vs Cbi on 21 October, 2013
Author: Sunil Gaur
* IN THE HIGH COURT OF DELHI AT NEW DELHI
Judgment Reserved on: October 01, 2013
Judgment Pronounced on: October 21, 2013
+ (i) CRL.M.C.4165/2013 & Crl. M.A.No.14848/2013
GIRDHIR LAL MOHTA .....Petitioner
Through: Mr. Abhishek Manu Singhvi &
Mr. Joy Basu, Senior Advocates
with with Mr. Vijay Aggarwal,
Mr. Ankur Chawla, Mr. Mudit Jain
& Ms. Megha Gupta, Advocates
Versus
CBI ....Respondent
Through: Mr. Narender Mann, Special
Public Prosecutor for CBI
+ (ii) CRL.M.C.4166/2013 & Crl. M.A.No.14850/2013
VIPUL AGGARWAL .....Petitioner
Through: Mr. Aman Lekhi, Senior
Advocate with Mr. Vijay
Aggarwal, Mr. Mudit Jain &
Mr. Ashwani Kumar, Advocates
Versus
CBI ....Respondent
Through: Mr. Narender Mann, Special
Public Prosecutor for CBI
+ (iii) CRL.M.C.4167/2013 & Crl. M.A.No.14852/2013
V P AGGARWAL .....Petitioner
Through: Mr. Abhishek Manu Singhvi &
Mr. Joy Basu, Senior Advocates
with with Mr. Vijay Aggarwal,
Mr. Ankur Chawla, Mr. Mudit Jain
& Ms. Megha Gupta,
Mr. Gurbaksh Singh, Mr. Avtar
Singh & Ms. Richa Samihta,
Advocates
Versus
CBI ....Respondent
Through: Mr. Narender Mann, Special
Public Prosecutor for CBI
CORAM:
HON'BLE MR. JUSTICE SUNIL GAUR
% JUDGMENT
1. Vide impugned order of 6th September, 2013 petitioners have been
summoned as accused in R.C. No.AC2/2010/A0001/ACU-II/CBI/ New
Delhi, for the offences under Sections 120-B/420/511/468/471 of the
IPC and under Sections 15 & 13 (2) r/w Section 13 (1) (d) of The
Prevention of corruption Act, 1988. Since the above captioned three
petitions are directed against common impugned order and as the
challenge to the impugned order in these three petitions is on identical
grounds, therefore, with the consent of learned counsel for the parties,
these three petitions were heard together and are being disposed of by
this common judgment.
2. Petitioners in the above-captioned first two petitions are the
Directors of M/S Prakash Industries Ltd. (henceforth referred to as the
accused-company) whereas petitioner of above-captioned third petition
is the Chairman-cum-Managing Director of the aforesaid Company. In
the original charge-sheet, there are allegations of forgery and of use of
forged documents while making application on behalf of accused
company for allocation of additional coal block. As per the charge-sheet
filed, application and documents for allocation of additional coal block
was signed by A.K. Chaturvedi as President (Corporate Affairs) and
Constituted Attorney of the accused company. In the charge-sheet
(Annexure- C), accused company has been prosecuted through its
Chairman-cum-Managing Director. Now vide impugned order,
petitioners in their individual capacity have been summoned as accused
to stand the trial in this RC case after filing of the supplementary charge-
sheet (Annexure-I).
3. Challenge to the impugned order by learned senior counsel for
petitioners is on the ground that no material has surfaced in the
supplementary charge-sheet warranting taking of cognizance for the
offence in question with the aid of Section 120-B of the IPC against
petitioners and the impugned order proceeds on conjectures. It was next
contended on behalf of petitioners that no role has been attributed to the
petitioners either in the first charge-sheet or the second charge-sheet to
connect them even indirectly with the commission of offences in
question. Learned senior counsel for petitioners had contended during
the course of arguments that if any fresh material comes on record
during the recording of evidence, then trial court can summon petitioners
as accused but not amidst trial. It was pointed out that deposition of three
prosecution witnesses has been recorded till date and no fresh material
has come in their depositions to justify summoning of petitioners as
accused in this RC case.
4. To contend that Indian Penal Code does not contain any provision
making the Directors of the company vicariously liable, when accused is
a company, reliance was placed on behalf of petitioners upon decisions
in Maksud Saiyed Vs. State of Gujrat & ors. 2007 [v] A.D. (cr.) SC 277;
C.P. Parthasarthy Vs. Bulls and Bears (Stock Brokers) Ltd. 2013 (2)
AD (Delhi) 130; S.K.Alagh Vs. State of U.P. 2008 (5) SCC 662; R C
Gupta & Ors. Vs. State & Anr. 149 (2008) DLT 376 & Avinash Bajaj
Vs.State 2008 [IV] AD [CR] [DHC] 53. To further contend that a person
can be summoned as an additional accused while invoking Section 319
of the Cr.P.C. and not prior thereto, reliance was placed by learned
senior counsel for petitioners upon decisions in Anirudh Sen Vs. State
(N.C.T. of Delhi ) 2006 [3] JCC 2081 & Kishun Singh Vs. State of
Bihar 1993 Crl.L.J. 1700. Impugned order is assailed by learned senior
counsel for petitioners also on the ground that petitioners have been
summoned as accused in this case without any application of mind and
in an arbitrary manner. To assert so, reliance is placed upon decisions in
Pepsi Foods Ltd. & Anr. Vs. Special Judicial Magistrate & ors. 1998 SC
(Crl.) 1400 & LPA No. 810/2010 Naveen Kaushik vs. Central Bureau of
Investigation decided by a Division Bench of this Court on 30th March,
2011. Thus, quashing of impugned order is sought in the above
captioned three petitions.
5. At the hearing, Mr. Narender Mann, learned Special Prosecutor for
respondent-CBI had staunchly supported the impugned order and had
relied upon Apex Court's decision in SMS Pharmaceuticals Vs. Neeta
Bhalla & anr. (2005) 8 SCC 89 to contend that petitioners are the
persons who are Incharge and responsible for day to day affairs of the
accused company and without their knowledge or approval, President
(Corporate Affairs) and Constituted Attorney of the accused company
could not have submitted application of 12th January, 2007 along with
forged documents and ER-I forms for allocation of additional coal
mining block. Finally, it was submitted on behalf of respondent-CBI that
the decisions relied upon by petitioners have no application to the facts
of the instant case, as upon taking of cognizance of the offences in view
of the supplementary charge-sheet, additional accused can be always
summoned to face the trial and there is no need of waiting for the stage
to invoke Section 319 of the Cr.P.C. Thus, dismissal of these three
petitions is sought.
6. Upon considering the contentions advanced by both the sides, on
perusal of the impugned order, copies of charge-sheet and supplementary
charge-sheet filed, the material on record and the decisions cited, it
emerges that neither in the charge-sheet nor in the supplementary
charge-sheet, any material has surfaced to justify taking of cognizance
for the offences in question against petitioners in their individual
capacity, especially when accused company is being already prosecuted
in this case. No doubt, court is empowered to take cognizance of the
offences against additional accused when supplementary charge-sheet is
filed but it can be only done when prima facie material surfaces against
proposed additional accused.
7. Relevantly, respondent in the supplementary charge-sheet has not
sought to prosecute petitioners as additional accused and trial court suo
motto has chosen to do so. Infact, in the supplementary charge-sheet
what has been disclosed runs counter to the impugned order. The
conclusion drawn in the supplementary charge-sheet is extracted as
under:-
'However, the investigation has not been able to establish
the destination of this purportedly diverted coal. Investigation
could also not establish the role of individuals responsible for
such a purported diversion of coal.''
8. Operative portion of the impugned order reads as under:-
'Á-3 A.K. Chaturvedi is simply an employee of A-4 M/s
Prakash Industries Ltd. and as an employee not in a position to
do anything of his own. Moreover, he is not at all the
beneficiary of the allocation and the beneficiary if at all was, it
was the company and from the allegations it is quite evident
that submission of these forged documents to the Ministry of
Coal for allocation of the coal block was within the knowledge
and had the approval of the Directors of the Company.'
9. The reasoning adopted by the trial court in the impugned order is
reproduced as under:-'
'Cognizance in the matter has been taken, however, the
CMD Shri V.P. Agarwal and the Directors Shri G.L.Mohta and
Shri Vipul Agarwal who are in-charge of and responsible for
day to day affairs of the company have not been summoned so
far.
Since the application dated 12.01.2007 has been
submitted on behalf of the company using forged documents
and ER-I forms, which in the circumstances was within the
knowledge and had the approval of their directors, I find
sufficient grounds on record to proceed against Shri
V.P.Agarwal, Shri G.L.Mohta and Shri Vipul Agarwal.'
10. During the course of hearing, it was put to learned Special
Prosecutor for the CBI as to on what basis afore-referred conclusion has
been drawn by the trial court and learned Special Prosecutor could not
draw attention of this Court to any material in the charge-sheet or the
supplementary charge-sheet to support the afore-referred reasoning or
the conclusion drawn by the trial court. Infact, it was pointed out by
learned senior counsel for petitioners that petitioners had no knowledge
about the documents submitted by A.K. Chaturvedi, President (Corporate
Affairs) and Constituted Attorney of the accused company nor they had
accorded their approval for submission of application dated 12 th January,
2007, which is purportedly accompanied by the forged documents. It
was also pointed out by learned senior counsel for petitioners that Apex
Court's decision in SMS Pharmaceuticals (Supra), relied upon by
respondent-CBI has no application as it pertains to prosecution under the
Negotiable Instruments Act in which Section 141 permits prosecution of
persons who are incharge of the affairs of the company or responsible to
it for the conduct of its business whereas there is no such provision in the
Indian Penal Code creating deemed criminal liability.
11. On the aforesaid aspect, the Apex Court in Maksud Saiyed (supra),
has reiterated as under:-
"Vicarious liability of the Managing Director and
Director would arise provided any provision exists in that
behalf in the statute. Statutes indisputably must contain
provision fixing such vicarious liabilities. Even for the said
purpose, it is obligatory on the part of the complainant to make
requisite allegations which would attract the provisions
constituting vicarious liability."
12. The aforesaid dictum of the Apex Court has been followed by a
Coordinate Bench of this Court in Avnish Bajaj (supra), to hold that the
law as it presently stands does not envisage an automatic liability
attaching to a Director for the offences committed by a company. The
pertinent observations made in this regard in Avnish Bajaj (supra) are as
under:-
''It requires to be noted that unlike some other statutes
containing penal provisions, the IPC does not incorporate the
concept of criminal liability of a Director or an employee
where the principal accused is a company. In other words,
there is no provision similar to Section 141 of the Negotiable
Instruments Act, 1881 („NI Act‟) or Section 140 of the Customs
Act, 1962 or Section 85 of the IT Act. These are provisions that
provide for a deemed criminal liability of a person who, at the
time of commission of the offence by the company, was in
charge of the affairs of the company or responsible to it for the
conduct of its business. The proviso to such provision makes it
possible for such person to escape liability by proving at the
stage of trial that the offence was committed by the company
without his or her knowledge. Therefore once the deemed
criminal liability gets attracted under the substantive provision,
the burden shifts to the accused under the proviso to rebut such
presumption. However, there is no such provision in the IPC.‟
13. Recently, another Coordinate Bench of this Court in C.P.
Parthasarthy (supra) while applying the dictum of the Apex Court in
Maksud Saiyed (supra), had held that it is not permissible to prosecute
Chairman-cum-Managing Director in individual capacity by pertinently
observing as under:-
„There is no dispute about the fact that the company is a
juristic person and can be sued and can sue also. It can be an
accused also. Section 305 of the Cr.P.C. clearly lays down that
when a company is an accused, it has to be made as an accused
through its CMD or a Company Secretary or Chief Executive
Officer but nevertheless the accused remains the company and
not the CMD in its individual capacity. While as in the instant
case, the respondent / complainant has sought to prosecute the
CMD of both these companies as individuals as if they are
vicariously liable for the acts of the company. This cannot be
permitted to be done. The Supreme Court in Maksud Saiyed‟s
case (supra) has reiterated this very point that unless and until
there is a specific provision in the statute which fastens
vicarious liability on the principle officer of the company, he
cannot be held liable and admittedly, under the IPC, there is no
provision which would make the CMD or a principle officer of
a company vicariously liable for an offence of cheating, breach
of trust, forgery or using forged documents as genuine.
Therefore, on this point, the complaint of the
respondent/complainant deserves to be quashed."
14. Since there is no deeming provision in the Indian Penal Code
creating deemed criminal liability, as in Section 141 of The Negotiable
Instruments Act, therefore, finding returned in the impugned order of
petitioners being liable to be prosecuted for the offences in question by
virtue of being incharge of and responsible for the conduct of the
business of the company and summoning of petitioners as additional
accused, is rendered unsustainable.
15. This Court is conscious of the fact that petitioners have been
summoned as additional accused with the aid of Section 120-B of the
IPC and that direct evidence of conspiracy is seldom available. However,
to infer that petitioners had the knowledge of submission of application
dated 12th January, 2007 or of their approving submission of aforesaid
application along with forged document, there has to be some material
on record on the basis of which it can be so inferred. It was neither
pointed out during the course of hearing, nor upon scanning of charge-
sheet and supplementary charge-sheet, it can be reasonably inferred that
petitioners had the knowledge of submission of application dated 12 th
January, 2007 with forged documents or they had approved it.
16. There has to be legitimate basis to draw inferences of petitioners
having conspired to commit the offences in question. Attention of this
Court was also not drawn by learned Special Prosecutor for respondent-
CBI to any Board Resolution of accused company on record or for that
matter, to any material on record, to justify the conclusion in the
impugned order of petitioners having knowledge of submission of
application dated 12th January, 2007 along with forged documents or of
their approving it. Thus, finding returned in the impugned order of
petitioners having knowledge about application dated 12th January, 2007
being submitted with forged documents or of their approving it cannot
be sustained.
17. In light of the aforesaid, impugned order summoning petitioners in
their individual capacity as accused is rendered unsustainable and is
accordingly quashed while not commenting upon the merits. Needless to
say that it would be open to the trial court to summon petitioners as
additional accused while invoking Section 319 of the Cr.P.C. if any
evidence comes on record about petitioners having knowledge of
submission of application dated 12th January, 2007 along with forged
documents or of their having approved it.
18. With aforesaid observations, the above captioned three petitions
and applications are accordingly disposed of.
(SUNIL GAUR)
Judge
OCTOBER 21, 2013
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