Gujarat High Court
Link Intime India Private Limited vs State Of Gujarat on 20 October, 2023
Bench: Sandeep N. Bhatt
NEUTRAL CITATION
R/CR.MA/2956/2009 JUDGMENT DATED: 20/10/2023
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IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/CRIMINAL MISC.APPLICATION NO. 2956 of 2009
With
R/CRIMINAL MISC.APPLICATION NO. 11063 of 2008
With
R/CRIMINAL MISC.APPLICATION NO. 11064 of 2008
FOR APPROVAL AND SIGNATURE:
HONOURABLE MR. JUSTICE SANDEEP N. BHATT
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1 Whether Reporters of Local Papers may be allowed
to see the judgment ?
2 To be referred to the Reporter or not ?
3 Whether their Lordships wish to see the fair copy
of the judgment ?
4 Whether this case involves a substantial question
of law as to the interpretation of the Constitution
of India or any order made thereunder ?
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LINK INTIME INDIA PRIVATE LIMITED & 5 other(s)
Versus
STATE OF GUJARAT & 1 other(s)
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Appearance:
CRIMINAL MISC.APPLICATION NO.2956 OF 2009:
MS SANGEETA PAHWA FOR MR NAVIN K PAHWA(526) for the
Applicant(s) No. 1,2,3,4,5,6
MR CHINTAN DAVE, APP for the Respondent(s) No. 1
RULE SERVED for the Respondent(s) No. 2
CRIMINAL MISC.APPLICATION NO.11063 OF 2008 AND 11064 OF 2008:
MR BB NAIK, SENIOR ADVOCATE WITH MR MEHUL H RATHOD for the
Applicant(s)
CHINTAN DAVE, APP for the Respondent(s) No. 1
MR MAULIK NANAVATI FOR MR ASHISH DAGLI for the Respondent(s) No.
2
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CORAM:HONOURABLE MR. JUSTICE SANDEEP N. BHATT
Date : 20/10/2023
COMMON ORAL JUDGMENT
1. The present group of petitions are arising from
C.R.No.I-196 of 2008 for the offences punishable under
Sections 409, 420, 465, 467, 468, 471, 506 and 34 of the
Indian Penal Code (`IPC' for short) dated 7.7.2008 registered
with Gorwa police station, Vadodara whereby the present
respondent no.2-complainant power of attorney holder Shri
Mihir Shah has filed the complaint regarding the issue of
transfer of shares by the company named as Diamond Power
Infrastructure Ltd. Which was earlier known as Diamond
Cables Ltd. That, in the year 1995, one Parul Bhupendrabhai
Shah and Kamlesh S Shah were holding 5,000 shares and
thereafter the shares were sent for transfer in the name of
Bhupesh Shah. Out of this, 3100 shares were received back
by transferring the name and 1900 shares were not received
back. Therefore, on inquiry, it is found that they were
transferred to Mrs.Jyotika Ramnikbhai Panchal and therefore
the complaint is filed against the Joint Managing Director of
the company, Company Secretary, Assistant Secretary,
transfer agency-Intispectors Registered Limited and
Mrs.Jyotikaben Panchal. Therefore, the present petitions are
filed by some of the accused persons for quashing of the
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proceedings pertaining to the impugned FIR.
2. As the common question of facts and law are involved
in all these petitions, at the request of learned advocates for
the parties, they are heard together and disposed of by this
common oral judgment.
3. The applicant no.1 of Criminal Miscellaneous
Application No.2956 of 2009 is original accused no.4 and
applicant nos.2 to 5 are directors of applicant no.1 and
applicant no.6 is Assistant Vice President of applicant no.1.
The applicant of Criminal Miscellaneous Application No.11063
of 2008 is original accused no.1. The applicants of Criminal
Miscellaneous Application No.11064 of 2008 are original
accused nos.2 and 3.
4. For the sake of convenience, the facts are taken
from the Criminal Miscellaneous Application No.2956 of 2009,
which are as under:
4.1 That the applicant no.1 was originally incorporated
with its name as Intime Spectrum Registry Private Limited
which was subsequently changed to Intime Spectrum Registry
Limited, which was again changed to Link Intime India
Private Limited and the said company is engaged in the
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business of Registrars and Share Transfer Agents; that the
applicant no.1 company was appointed as Depository
connectivity provider by Diamond Power Infrastructure
Limited and the actual work started in March 2004; that as
per clause no.3 of the agreement, the company was obliged to
ensure that all records/reports/documents are handed over to
the transfer agent after its appointment and the work of the
applicant no.1 would start only after that; however, the
specimen signature cards of shareholders were handed over
by the company in the year 2008. It is further stated that
the applicant no.1 had to verify the details mentioned in the
share transfer application with the original records/signature
records of the company, but, in the present case, as the
original records/signature records were lying with the
company, the applicant no.1 used to send share transfer
application forms along with share certificates to the company
for its verification and the company in turn after appropriate
verification would send it back with all required
endorsements and signatures; that in the meeting with the
directors of the company, it is discussed about the said
aspect and it is explicitly mentioned in the minutes of the
meeting that the transfer deeds are verified by Mr.Prashant
Mehta, Assistant Company Secretary of the company-original
accused no.3; that the Assistant Vice President of the
applicant no.1 was arrested on the basis of the impugned
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complaint for the allegations as mentioned hereinabove.
5. Heard learned advocates for the parties.
5.1 Learned senior advocate Mr.Naik appearing for the
applicants in Criminal Miscellaneous Application Nos.11063 of
2008 and 11064 of 2008 has drawn my attention towards
the FIR which is filed under Sections 409, 420, 465, 468,
471, 506 and 34 of the IPC. He has submitted that on bare
reading of the FIR, no offence is made out against the
present applicants who are original accused nos.1, 2 and 3,
who are the Joint Managing Director, Company Secretary and
Financial Officer respectively of the company. He has
therefore submitted that the present complaint is filed by the
present complainant with a view to harass the applicants as
there is a dispute of 1900 shares going on and if it is not
settled as per the the wish of the complainant, then he has
threatened time and again for dire consequences. That under
the threat of criminal complaint given by such share holder
and pressure from the police authority for reconciliation of
the matter, the company placed the issue before the
Shareholders Grievance Committee. Looking to the larger
interest of the company image and welfare of the
shareholders, it was decided to rectify the records by bringing
back on record the share certificate of the shareholders and
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accordingly, the company instructed the registrar to cancel
the share certificate of its sister concern M/s Enterprise
Intelligence Systems Ltd. accompanied with the surrender
request of M/s Enterprise Intelligence Systems Ltd, however,
it is submitted that registrar has in turn informed the
company that shares sent by Parulben are duplicate in
nature and during discussion it was pointed out that in such
circumstances it is not advisable to transfer the shares in
favour of Parulben as it is a case of fraud committed by the
shareholders. He has further submitted that under the
constant threats and pressure from the power of attorney
holder of shareholder, his associates and advocates of the
shareholders continued to management of the company for
settling the dispute by giving them Rs. 1 crore. It is further
submitted that because of such unreasonable demand of
extorting money in the name of settlement continued
therefore on 11.6.2008, the company was constrained to make
written complaint to the Commissioner of Police and to the
Additional Commissioner of Police, Vadodara for seeking
protection against such threats of registering false criminal
complaint against the company's officials. He has drawn my
attention to the copies of complaint dated 11.6.2008.
5.2 Learned senior advocate Mr.Naik has further
submitted that on 7.7.2008, again the applicants were
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constrained to ask for protection to save their life from such
threats by making request to the Police Commissioner
Vadodara as the Gorwa police station is acting under the
pressure of the advocates of Parulben, although the dispute
pertaining to shares is essentially in nature of civil dispute.
He has further submitted that considering all these aspects,
the FIR which is registered by the present complainant is
nothing but abuse of process of law. He has further
submitted that even on bare reading of the complaint which
is otherwise also so vague and absurd that no prudent man
would come to the conclusion that any offence as alleged is
committed and the description suggests that the dispute is of
civil nature. He further submitted that the complainant is
not victim herself but one Mr.Mihir Shah who is broker and
while filing this frivolous complaint on behalf of others, he
has not stated that he is holding any power of attorney or
any reason that why so called victim is not filing this
complaint and complaint is severally delayed by one year. He
has further submitted that the complaint is filed with respect
of 1900 shares which were transferred to Jyotikaben by the
shareholder Parulben in July 2006 and it is relevant to note
that that happened prior to the present applicants joined
services with the company and as the applicant no.1 joined
the company on 5.9.2006 and applicant no.2 joined company
on 1.3.2007. When 1900 shares were transferred to
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Jyotikaben at that point of time, none of the applicants were
serving for the company and therefore it cannot be said that
the applicants had played any role in alleged offences. He
has further submitted that no ingredients of the alleged
offence in the FIR are satisfied, more particularly any offence
under the provisions of the IPC. That in the impugned
complaint, it is stated that `forgery' and `fraud' is committed
but there are no ingredients of those offences punishable
under the IPC were found in the FIR on plain reading of
the FIR. That since the dispute mentioned herein is purely of
civil nature for which separate statutory forum i.e. the
Company Law Board is available to the shareholders. But in
the instant case, the civil dispute is sought to be converted
into criminal complaint under the advice of share broker with
the sole purpose of extorting money from the company. Thus
filing the FIR itself suffers from malafide and liable to be
quashed.
5.3 He has further submitted that it is also relevant
to note that the first informant is a power of attorney holder
of shareholders who himself is a share broker and has full
knowledge of legalities and in the instant case the FIR was
lodged after a period of one year of the alleged incident as
the informant has failed in his intention of getting huge
amount from the company by way of settlement. Therefore,
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the allegations in the FIR are afterthought and systematically
designed by trained mind of share broker coupled with legal
assistance and therefore it amounts to abuse of process of
law and requires to be quashed and set aside.
5.4 It is submitted that the dispute is essentially of
civil nature and criminality cannot be attracted to the
present applicants as at the relevant point of time, they were
not in service.
5.5 With reference to Criminal Miscellaneous
Application No.11063 of 2008, he has submitted that the
applicant is Joint Managing Director and accused no.1 and
except joining of service the same set of arguments can be
applied to the applicant. He, therefore, submitted that the
dispute is essentially of civil nature and since 2008, the
dispute is going on and no fruitful purpose will be served to
direct the present applicant to face the proceeding of the
trial pursuant to the impugned FIR He further submitted
that if any mischief is committed, then the same is
committed by the Registrar who is incharge of the transfer of
shares. He, therefore prays to quash the impugned FIR.
6. Learned advocate Mrs.Pahwa for the applicants in
Criminal Miscellaneous Application No.2956 of 2009 has
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adopted the arguments of learned senior advocate Mr.Naik to
some extent and has submitted that even from the bare
reading of the complaint, no offence is made out against the
present applicants. At the best, there can be said that there
is some negligence in process of the transfer but no
criminality can be attributed. Moreover, the complaint is filed
after delay of one year and the dispute essentially is of civil
nature and more particularly when the remedy is available
with the Company Law Board and considering the material
available on the record, the complainant is trying to extort
money under the guise of such complaint which is required
to be quashed and set aside.
6.1 She has further submitted by referring to the
minutes of meeting dated 15.3.2007 sent by Mr.Prashant
Mehta, Assistant Company Secretary of Diamond Cable Ltd
and further submitted that Diamond Cable limited informed
that the matter has been referred to SEBI and SEBI has
appointed Arbitrator at that point of time. Therefore, she has
submitted that essentially the dispute is of civil nature and
the applicants in the present petition has acted as courier in
sending documents to Diamond Cable Ltd for verification and
approval as per their direction/minutes. The data of signature
card were in their custody and the role of the present
applicants is very limited. She has further submitted that the
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complainant has never met the present applicants and the
applicants are not known to the complainant.
6.2 Lastly, she has drawn attention to the order
passed by this Court in case of one of the accused persons
Jyotikaben Panchal whereby the FIR qua her was quashed
by order dated 27.2.2020 passed in Criminal Miscellaneous
Application No.4125 of 2020 and has submitted that when
the FIR qua the person who is benefitted out of the said
transaction is quashed with consent of the complainant, no
fruitful purpose will be served and therefore, she prayed to
allow the application in view of the judgment in case of
State of Haryana V/s Bhajanlal & Ors., reported in AIR
1992 SC 604.
6.3 Learned advocate Mr.Maulik Nanavati appearing
for respondent no.2-complainant has strongly opposed the
prayers made at the bar by the learned advocates for the
applicants and has submitted that prima facie the offence is
made out against the present applicants. He has referred to
the affidavit-in-reply filed in Criminal Miscellaneous
Application No.11063 of 2008, and has submitted that prima
facie, the case is made out against the accused persons as
they are holding responsible position in the company in
question and the other applicants in the matter of Criminal
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Miscellaneous Application No.2956 of 2009 are also holding
position of the share transfer agency. He has further
submitted that the dispute is essentially arising from the
documentary evidence and the documents available on the
record clearly indicate that out of total 5000 shares, 3100
shares were transferred to the given persons and thereafter
1900 shares which were not transferred and were found to
be transferred in the name of one Jyotikaben Panchal.
Thereafter, after several attempts and several requests made
before the company, the company has assured the present
complainant to do needful but nothing turned up and,
therefore, the complainant has to file the present complaint
as his legitimate amount of the claim is defrauded by such
action of the present applicants who are accused persons and
they are jointly and severally liable for the action as the
complainant cannot identify the specific role of the individual
accused but since they are holding the position in the
respective company/respective firm as a responsible person
they are liable for such action.
6.4 Learned APP Mr.Dave has submitted by drawing
attention from the report received from the Gorwa police
station dated 21.9.2023 that specific role is attributed to all
the present applicants and it transpires that various
statements of one of the co-accused Chirag Gada clearly
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reveals that he is knowing Mihir Shah who is complainant
herein and since Mihirbhai has lent some amount to his
brother Rakeshbhai of 12.5. lacs, which was not returned
back by him and therefore he was falsely implicated in the
said transaction otherwise he has nothing to do with that. It
also transpires from the report that further investigation is
carried out and most of the accused persons have submitted
that they are not knowing Jyotikaben in whose name the
shares were transferred. Therefore, considering the same and
considering the order passed by this Court, whereby interim
relief is granted by this Court and therefore, further progress
is not done in the present matter, regarding any further
investigation. Therefore, he prays that considering the
material available on the record, whereby prima facie case is
made out, this Court may not exercise inherent jurisdiction
under 482 of the Code and the present petition is required
to be dismissed.
7. I have considered the rival submissions made at
the bar and perused the material placed on record.
8. Sections invoked in the impugned FIRs read as
under:
"409. Criminal breach of trust by public servant, or by
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banker, merchant or agent.--Whoever, being in any manner
entrusted with property, or with any dominion over property
in his capacity of a public servant or in the way of his
business as a banker, merchant, factor, broker, attorney or
agent, commits criminal breach of trust in respect of that
property, shall be punished with imprisonment for life, or
with imprisonment of either description for a term which
may extend to ten years, and shall also be liable to fine.
420. Cheating and dishonestly inducing delivery of property.
--Whoever cheats and thereby dishonestly induces the person
deceived to deliver any property to any person, or to make,
alter or destroy the whole or any part of a valuable
security, or anything which is signed or sealed, and which
is capable
of being converted into a valuable security, shall be
punished with imprisonment of either description for a term
which may extend to seven years, and shall also be liable
to fine.
465. Punishment for forgery.--Whoever commits forgery shall
be punished with imprisonment of either description for a
term which may extend to two years, or with fine, or with
both.
467. Forgery of valuable security, will, etc.--Whoever forges
a document which purports to be a valuable security or a
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will, or an authority to adopt a son, or which purports to
give authority to any person to make or transfer any
valuable security, or to receive the principal, interest or
dividends thereon, or to receive or deliver any money,
movable property, or valuable security, or any document
purporting to
be an acquittance or receipt acknowledging the payment of
money, or an acquittance or receipt for the delivery of any
movable property or valuable security, shall be punished
with
[imprisonment for life], or with imprisonment of either
description for a term which may extend to ten years, and
shall also be liable to fine.
468. Forgery for purpose of cheating.--Whoever commits
forgery, intending that the [document or electronic record
forged] shall be used for the purpose of cheating, shall be
punished with imprisonment of either description for a term
which may extend to seven years, and shall also be liable
to fine.
471. Using as genuine a forged document or electronic
record.--Whoever fraudulently or dishonestly uses as genuine
any [document or electronic record] which he knows or has
reason to believe to be a forged [document or electronic
record], shall be punished in the same manner as if he had
forged such [document or electronic record].
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506. Punishment for criminal intimidation.--Whoever commits
the offence of criminal intimidation shall be punished with
imprisonment of either description for a term which may
extend to two years, or with fine, or with both;
If threat be to cause death or grievous hurt, etc.--and if
the threat be to cause death or grievous hurt, or to cause
the destruction of any property by fire, or to cause an
offence punishable with death or [imprisonment for life], or
with imprisonment for a term which may extend to seven
years, or to impute unchastity to a woman, shall be
punished with imprisonment of either description for a term
which may extend to seven years, or with fine, or with
both.
[34. Acts done by several persons in furtherance of common
intention.--When a criminal act is done by several persons
in furtherance of the common intention of all, each of such
persons is liable for that act in the same manner as if it
were done by him alone.]
9. Prima facie, it transpires that essentially the
dispute is regarding the transfer of shares; that the matter
has been referred to the SEBI and SEBI has appointed
Arbitrator thereafter at the relevant point of time; that
complainant has settled the matter with the main accused-
Ms.Jyotikaben Panchal and order is passed for quashing the
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complaint qua Jyotikaben Panchal; that the Diamond Power
Infrastructure Ltd., has issued letter dated 8.5.2008 enclosing
thereof the abstract of the minutes of the meeting of the
Shareholders Grievance Committee (internal committee set up
as per SEBI, which reveals as under:
"It appears that the duplicate shares under dispute have
been erroneously issued by the Share Transfer Agency
handling the job in 1993-96. Since the agency has been
changed and has closed business it is nearly impossible to
trace the root cause of the problem. Due to these
enrroneous issues of shares, the shares were subsequently
transferred and dematerialized.
Committee has hereby resolved to rectify the error by bring
back on the record share certificates details of which are
indicated in the table above. In order to avoid the
discrepancy regarding the total capital of the Company, it is
hereby instructed to cancel from records share certificates
number for distinctive nos. as per Annexure annexed
herewith held by Enterprise Intelligent Systems Ltd. As they
have voluntarily agreed to surrender their claim on the said
shares before the Committee."
10. It also transpires from the record that there is
FIR filed by the power of attorney holder against the persons
in whose favour 1900 shares were transferred and such
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complaint is filed after more than one year and six months.
It also transpires from the complaint that there is no
explanation for causing of such delay.
11. Moreover, considering the entire transaction
involved in the present petition, it is essentially dispute
regarding the wrong share transfer in the account of some
third party. It is also still not clear from the material
available on the record that who has committed such mistake
of transferring the shares to the account of third party. As
per the report of the internal committee of the company, it
transpires that earlier agency is now closed. It transpires
that the present agency of namely Link Intime India Pvt.
Ltd., of whom some of the persons have filed the petition by
way of Criminal Miscellaneous Application No.2956 of 2009,
has received the specimen card of the signatures in the year
2008 from the company Diamond Power Infrastructure Ltd.
though the agreement was entered on 31.1.2003 for the
appointment of the company as share transfer agent,
however, the actual work has started from March, 2004. It
transpires that the applicants of the petition no.11064 of
2008, the applicant no.1 is working as company secretary,
applicant no.2 is working as financial officer who were
appointed much after the alleged offence which has allegedly
happened in July, 2006.
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12. Considering these aspects and considering the role
of the applicants of Criminal Miscellaneous Application
Nos.11063 of 2008 and 11064 of 2008 cannot be held
vicariously liable for any action committed prior to their
appointment. Moreover, now the Shareholders Grievance
Committee has also decided to reverse the transaction and to
give the necessary shares to the complainant is also required
to be taken note of irrespective of the mistake or mischief
committed by any person in entire transaction. Whoever may
be at fault, the most relevant aspect is that the complainant
has entered into compromise with the main accused
Ms.Jyotikaben Panchal in whose name 1900 shares were
transferred and the complaint is quashed qua her. Therefore,
the continuity of the proceeding against the present
applicants whose roles are not direct and there is no
material to connect any of the accused by which it can be
believed that they are directly involved in the crime of said
offence as alleged in the FIR will amount to abuse of process
of law. Further, the fact that the complaint is filed after 1
½ year delay also cannot be ignored. Further, essentially the
dispute is of civil nature and the fact that the persons who
are made accused in the present proceeding cannot be held
criminally liable in view of the various decisions of the
Hon'ble Apex Court and considering the fact that it is not
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still clear that who has committed such mischief by which
1900 shares of the company which was subsequently sought
to be rectified by the company and therefore the complainant
cannot be said to have any financial loss. Even if there is
any grievance, the same could be redressed by resorting to
the remedy available under the civil law to redress his
grievance, but under the guise of criminal proceedings in the
facts and circumstances of the present case, the applicant
cannot insist for further criminal prosecution and more
particularly the role of the complainant himself is also
doubtful to some extent as he is well aware about the
proceeding of the share market and he has not taken any
action for about a year after the alleged incident.
13. At this stage, it is fruitful to refer to the
judgment rendered by the Hon'ble Apex Court in the case of
S.P.Mani and Mohan Dairy V/s Dr.Snehalatha Elangovan
reported in 2022(13) Scale, page 543, more particularly,
paragraphs 33, 35, 41 and 42, which read as under:
"33. Thus, the legal principles discernible from the aforesaid
decision of this Court may be summarized as under:
(a) Vicarious liability can be fastened on those who are in-
charge of and responsible to the company or firm for the
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conduct of its business. For the purpose of Section 141, the
firm comes within the abmit of a company.
(b) It is not necessary to reproduce the language of Section
141 verbatim in the complaint since the complaint is
required to be read as a whole;
(c) If the substance of the allegations made in the complaint
fulfill the requirements of Section 141, the complaint has to
proceed in regards the law.
(d) In construing a complaint a hyper technical approach
should not be adopted so as to quash the same.
(e) The laudable object of preventing bouncing the cheques
and sustaining the credibility of commercial transactions
resulting in the enactment of Sections 138 and 141
respectively should be kept in mind by the Court concerned.
(f) These provisions create a statutory presumption of
dishonesty exposing a person to criminal liability if payment
is not made within the statutory period even after the issue
of notice.
(g) The power of quashing should be exercised very
sparingly and where, read as a whole, the factual foundation
for the offence had been laid in the complaint, it should not
be quashed.
(h) The Court concerned would owe a duty to discharge the
accused if taking everything stated in the complaint is
correct and construing the allegations made therein liberally
in favour of the complainant, the ingredients of the offence
are altogether lacking.
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35. This Court in Assistant Commissioner, Assessment II,
Bangalore and Ors. v. Velliappa Textiles Ltd. And Ors.
AIR(2004)SC 86, introduced the concept of ego and alter ego
in relation to the employee and the employer corporation.
The Court elucidated this principle in the following words:-
"In order to trigger corporation criminal liability for the
actions of the employee (who must generally be liable
himself), the actor-employee who physically committed the
offence must be the ego, the centre of the corporation
personality, the vital organ of the body corporate, the alter
ego of the employer corporation or its directing mind. Since
the company/corporation has no mind of its own, its active
and directing will must consequently be sought in the
person of somebody who for some purposes may be called an
agent, but who is really the directing mind and will of the
corporation, the very ego and centre of the personality of
the corporation. To this extent there are no difficulties in
our law to fix criminal liability on a company. The common
law tradition of alter ego or identification approach is
applicable under our existing laws.
Specific Averments in the complaint:
41. In Gunmala Sales Private Limited (supra), this Court
after an exhaustive review of its earlier decisions on Section
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141 of the NI Act, summarized its conclusion as under:
"a) Once in a complaint filed under Section 138 read with
Section 141 of the NI Act the basic averment is made that
the Director was in charge of and responsible for the
conduct of the business of the company at the relevant time
when the offence was committed, the Magistrate can issue
process against such Director;
b) If a petition is filed under Section 482 of the Code for
quashing of such a complaint by the Director, the High
Court may, in the facts of a particular case, on an overall
reading of the complaint, refuse to quash the complaint
because the complaint contains the basic averment which is
sufficient to make out a case against the Director;
c) In the facts of a given case, on an overall reading of the
complaint, the High Court may, despite the presence of the
basic averment, quash the complaint because of the absence
of more particulars about role of the Director in the
complaint. It may do so having come across some
unimpeachable, incontrovertible evidence which is beyond
suspicion or doubt or totally acceptable circumstances which
may clearly indicate that the Director could not have been
concerned with the issuance of cheques and asking him to
stand the trial would be abuse of the process of the court.
Despite the presence of basic averment, it may come to a
conclusion that no case is made out against the Director.
Take for instance a case of a Director suffering from a
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terminal illness who was bedridden at the relevant time or
a Director who had resigned long before issuance of cheques.
In such cases, if the High Court is convinced that
prosecuting such a Director is merely an armtwisting tactics,
the High Court may quash the proceedings. It bears
repetition to state that to establish such case unimpeachable,
incontrovertible evidence which is beyond suspicion or doubt
or some totally acceptable circumstances will have to be
brought to the notice of the High Court. Such cases may be
few and far between but the possibility of such a case being
there cannot be ruled out. In the absence of such evidence
or circumstances, complaint cannot be quashed;
d) No restriction can be placed on the High Court's powers
under Section 482 of the Code. The High Court always uses
and must use this power sparingly and with great
circumspection to prevent inter alia the abuse of the process
of the Court. There are no fixed formulae to be followed by
the High Court in this regard and the exercise of this
power depends upon the facts and circumstances of each
case. The High Court at that stage does not conduct a mini
trial or roving inquiry, but nothing prevents it from taking
unimpeachable evidence or totally acceptable circumstances
into account which may lead it to conclude that no trial is
necessary qua a particular Director.
42. The principles of law and the dictum as laid in
Gunmala Sales Private Limited (supra), in our opinion, still
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holds the field and reflects the correct position of law."
14. It will also be fruitful to refer to the judgment of
the Hon'ble Apex Court in the case of Mehmood Ali and
Others V/s State of U.P, and others, reported in 2023 SCC
Online SC 950, paragraph 13 of which reads as under:
"13. At this stage, we would like to observe something
important. Whenever an accused comes before the Court
invoking either the inherent powers under Section 482 of the
Code of Criminal Procedure (CrPC) or extraordinary
jurisdiction under Article 226 of the Constitution to get the
FIR or the criminal proceedings quashed essentially on the
ground that such proceedings are manifestly frivolous or
vexatious or instituted with the ulterior motive for wreaking
vengeance, then in such circumstances the Court owes a
duty to look into the FIR with care and a little more
closely. We say so because once the complainant decides to
proceed against the accused with an ulterior motive for
wreaking personal vengeance, etc., then he would ensure that
the FIR/complaint is very well drafted with all the necessary
pleadings. The complainant would ensure that the averments
made in the FIR/complaint are such that they disclose the
necessary ingredients to constitute the alleged offence.
Therefore, it will not be just enough for the Court to look
into the averments made in the FIR/complaint alone for the
purpose of ascertaining whether the necessary ingredients to
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constitute the alleged offence are disclosed or not. In
frivolous or vexatious proceedings, the Court owes a duty to
look into many other attending circumstances emerging from
the record of the case over and above the averments and, if
need be, with due care and circumspection try to read in
between the lines. The Court while exercising its jurisdiction
under Section 482 of the CrPC or Article 226 of the
Constitution need not restrict itself only to the stage of a
case but is empowered to take into account the overall
circumstances leading to the initiation/registration of the case
as well as the materials collected in the course of
investigation. Take for instance the case on hand. Multiple
FIRs have been registered over a period of time. It is in the
background of such circumstances the registration of multiple
FIRs assumes importance, thereby attracting the issue of
wreaking vengeance out of private or personal grudge as
alleged."
15. At this stage, the parameters laid down by the
Hon'ble Apex court in the case of State of Haryana v.
Bhajan Lal, AIR 1992 SC 604, are required to be referred
to, which are as under:
"(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
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constitute any offence or make out a case against the
accused.
(2) Where the allegations in the first information report and
other materials, if any, accompanying the FIR do not
disclose a cognizable offence, justifying an investigation by
police officers under Section 156(1) of the Code except under
an order of a Magistrate within the purview of Section
155(2) of the Code.
(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.
(4) Where, the allegations in the FIR do not constitute a
cognizable offence but constitute only a non-cognizable
offence, no investigation is permitted by a police officer
without an order of a Magistrate as contemplated under
Section 155(2) of the Code.
(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.
(6) Where there is an express legal bar engrafted in any of
the provisions of the Code or the concerned Act (under
which a criminal proceeding is instituted) to the institution
and continuance of the proceedings and/or where there is a
specific provision in the Code or the concerned Act,
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providing efficacious redress for the grievance of the
aggrieved party.
(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."
15. In view of the above discussion and settled
position of law, the continuation of further proceedings
pursuant to the said complaints will cause greater hardships
to the applicants and no fruitful purpose would be served if
such proceedings are allowed to be continued. The Court
must ensure that criminal proceedings is not used as
instrument of harassment or for seeking private vendetta or
with ulterior motive to pressurise accused or to settle the
score.
16. Accordingly, these applications are allowed. The
impugned FIR being C.R.No.I-196 of 2008 registered with
Gorwa police station, Vadodara and consequential proceedings,
if any, are hereby quashed and set aside qua the present
applicants. Rule is made absolute. Direct service is permitted.
(SANDEEP N. BHATT,J)
SRILATHA
