Jharkhand High Court
Nama Sethaiah @ Sethaiah Nama vs The State Of Jharkhand on 21 October, 2024
Author: Anil Kumar Choudhary
Bench: Anil Kumar Choudhary
IN THE HIGH COURT OF JHARKHAND AT RANCHI
Cr.M.P. No.1358 of 2023
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1. Nama Sethaiah @ Sethaiah Nama, aged about 55 years, son of
Late Muthaiah Nama, Resident of Nehru Nagar, 1-7-70,
Khammam, P.O. and P.S. - Khammam, District- Khammam,
State- Telengana;
2. K. Srinivas Rao, aged about 48 years, son of Sri Nageswar Rao,
Resident of Vasantha Valley, Flat No.21, Phase-II, White Fields,
Kondapur, P.O. and P.S. - Kondapur, District - Hyderabad,
State - Telangana.
... Petitioners
Versus
1. The State of Jharkhand
2. Uma Shankar Singh, son of Late Prakash Singh, resident of
Main Road, Ramgarh Cantt., P.O. and P.S. - Ramgarh, District-
Ramgarh.
... Opposite Parties
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For the Petitioners : Mr. Ravi Shankar Mazumdar, Sr. Advocate
Mrs. Jasvindar Mazumdar, Advocate
Mr. Nishant Kr. Roy, Advocate
For the State : Mr. Prabhu Dayal Agrawal, Spl.P.P.
For the O.P. No.2 : Mr. Nilesh Kumar, Advocate
Ms. Sonal Sodhani, Advocate
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PRESENT
HON'BLE MR. JUSTICE ANIL KUMAR CHOUDHARY
By the Court:- Heard the parties.
2. This Criminal Miscellaneous Petition has been filed invoking the
jurisdiction of this Court under Section 482 of the Code of Criminal Procedure
with a prayer to quash the entire criminal proceeding including the order dated
28.03.2022 passed by the Chief Judicial Magistrate, Ramgarh in connection with
Ramgarh P.S. Case No.131 of 2021 corresponding to G.R. Case No.352 of 2022
whereby and where under the learned Chief Judicial Magistrate, Ramgarh has
taken cognizance of the offences punishable under Section 420, 406, 504 and 506
of the Indian Penal Code against the petitioners differing from the Final Report
submitted by the police by not sending all the petitioners for trial as the dispute
between the parties is a civil dispute.
3. The allegation against the petitioners is that the petitioner No.1, being
the Managing Director of M/s Madhucon Projects Ltd., and petitioner No.2,
being the Chief Operating Officer of M/s Madhucon Projects Ltd.
4. The case of the complainant is that M/s Madhucon Projects Ltd.
represented by their Director entered into an agreement of 'Piece Rate Contract'
on 28.10.2013 and in terms of the agreement, the complainant submitted Bank
Guarantee of Rs.40,00,000/-. Even after the work was completed and the bills of
the complainant was paid, still 'No Objection Certificate' for releasing the Bank
Guarantee, has not been furnished by M/s Madhucon Projects Ltd. causing loss
to the complainant.
5. Learned senior counsel for the petitioners relies upon the judgment of
the Hon'ble Supreme Court of India in the case of Shiv Kumar Jatia vs. State
(NCT of Delhi) reported in (2019) 17 SCC 193 and submits that in paragraph-
21, the Hon'ble Supreme Court of India has taken note of the ratio led by the
Hon'ble Supreme Court of India in the case of Sunil Bharti Mittal vs. CBI
reported in (2015) 4 SCC 609 to the effect 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.
6. Learned senior counsel for the petitioners next submits that there is
absolutely no role attributed to the petitioners and the entire allegations is
against the company namely M/s Madhucon Projects Ltd. Hence, no offence is
made out against the petitioners, even if the allegations made against them are
considered to be true in their entirety.
7. Learned senior counsel for the petitioners next relies upon the judgment
of the Hon'ble Supreme Court of India in the case of Sharad Kumar Sanghi vs.
Sangita Rane reported in (2015) 12 SCC 781 and submits that in paragraph-11
to 13 of the said judgment, the Hon'ble Supreme Court of India has held that
when there is no allegation against the Managing Director and when a
company has not been arrayed as a party, no proceeding can be initiated
against it even where vicarious liability is fastened under certain statutes. In
this respect, it is relevant to refer to paragraph-11 to 13 of the said judgment,
which reads as under:-
"11. In the case at hand as the complainant's initial
statement would reflect, the allegations are against the Company,
the Company has not been made a party and, therefore, the
allegations are restricted to the Managing Director. As we have
noted earlier, allegations are vague and in fact, principally the
allegations are against the Company. There is no specific allegation
against the Managing Director. When a company has not been
arrayed as a party, no proceeding can be initiated against it even
where vicarious liability is fastened under certain statutes. It has
been so held by a three-Judge Bench in Aneeta Hada v. Godfather
Travels and Tours (P) Ltd. [Aneeta Hada v. Godfather Travels and
Tours (P) Ltd., (2012) 5 SCC 661 : (2012) 3 SCC (Civ) 350 :
(2012) 3 SCC (Cri) 241] in the context of the Negotiable
Instruments Act, 1881.
12. At this juncture, it is interesting to note, as we have
stated earlier, that the learned Magistrate while passing the order
dated 22-10-2001, had opined, thus:
"It appears prima facie from the complaint filed by the
complainant, documents, evidence and arguments that the accused
company has committed cheating with the complaint by delivering
old and accidented vehicle to her at the cost of a new truck.
Accordingly, prima facie sufficient grounds exist for registration of
a complaint against the accused under Section 420 IPC and is
accordingly registered."
13. When the company has not been arraigned as an
accused, such an order could not have been passed. We have said so
for the sake of completeness. In the ultimate analysis, we are of the
considered opinion that the High Court should have been well
advised to quash the criminal proceedings initiated against the
appellant and that having not been done, the order is sensitively
vulnerable and accordingly we set aside the same and quash the
criminal proceedings initiated by the respondent against the
appellant."
8. Learned senior counsel for the petitioners further relies upon the
judgment of the Hon'ble Supreme Court of India in the case of Sushil Sethi &
Another vs. State of Arunachal Pradesh reported in (2020) 3 SCC 240 and
submits that in paragraph-8.2 of the said judgment, it has been held that where
there is no specific allegation against the Managing Director or even the
Director and there are no allegations to constitute the vicarious liability, the
continuation of the criminal proceeding against the Managing Director or the
Director will amount to abuse of process of law.
9. Learned senior counsel for the petitioners lastly relies upon the judgment
of the Hon'ble Supreme Court of India in the case of Nupur Talwar vs. Central
Bureau of Investigation, Delhi & Another reported in (2012) 2 SCC 188 and
submits that therein the Hon'ble Supreme Court of India has observed that in
that case, the Magistrate taking cognizance has passed a well-reasoned order
while differing from Final Report submitted by the police. It is next submitted
that even if the entire allegations made in the FIR and the materials available in
the case-diary as well as Final Report are considered to be true in their entirety,
there is absolutely no allegation for commission of the offences punishable
under Section 504 and 506 of the Indian Penal Code and the ingredients of the
offence under Section 420 and 406 is not made out against the petitioners.
Hence, it is submitted that continuation of this criminal proceeding against the
petitioners will amount to abuse of process of law. Therefore, it is submitted
that the prayer, as prayed for in this Cr.M.P., be allowed.
10. Learned Spl.P.P. appearing for the State and the learned counsel for the
opposite party No.2 on the other hand vehemently oppose the prayer of the
petitioners and submits that the witnesses have stated that the petitioners,
being the Managing Director and the Chief Operating Officer respectively of
the company- M/s Madhucon Projects Ltd., are squarely responsible for the act
of not issuing the 'No Objection Certificate' for releasing the Bank Guarantee
furnished by the complainant-informant. Hence, it is submitted that this
Cr.M.P., being without any merit, be dismissed.
11. Having heard the rival submissions made at the Bar and after carefully
going through the materials available in the record, it is pertinent to mention
here that the law is well settled that unless there is direct and specific role
attributed to the Managing Director or Director or any other Officer of a
company for the acts committed by the company, they cannot be arrayed as an
accused in a criminal case. Now coming to the facts of the case as has rightly
been submitted by the learned counsel for petitioners, there is absolutely no
allegation against the petitioners, so far as the offences punishable under
Sections 504 and 506 of the Indian Penal Code is concerned. Hence, the offences
punishable under Section 504 and 506 of the Indian Penal Code is not made out
against the petitioners.
12. So far as the offences punishable under Sections 406 and 420 of the Indian
Penal Code are concerned, there is absolutely no allegation against the
petitioners of cheating or dishonestly inducing the complainant-informant to
part with any property nor there is any allegation that the petitioners had
intention to deceive the complainant from the very beginning of the
transactions between the parties.
13. Under such circumstances, this Court is of the considered view that even
if the entire allegations, made in the FIR and the materials available in the case-
diary as well as Final Report, are considered to be true in their entirety, still the
offence punishable under Section 420 of the Indian Penal Code is not made out
against the petitioners.
14. So far as the offence punishable under Section 406 of the Indian Penal
Code is concerned, there is no allegation against the petitioners of entrustment
of any property nor is there any allegation of dishonest misappropriation or
dishonest retention of any property by them. Under such circumstances, this
Court has no hesitation in holding that the offence punishable under Section
406 of the Indian Penal Code is not made out even if the entire allegations made
in the FIR and the materials available in the case-diary as well as Final Report
are considered to be true in their entirety.
15. Under such circumstances, this Court has no hesitation in holding that
the continuation of this criminal proceeding against the petitioners will amount
to abuse of process of law and the learned Chief Judicial Magistrate, Ramgarh
has committed a grave illegality by differing from the Final Report submitted
by the police and taking cognizance of the offences. Hence, this is a fit case
where the entire criminal proceeding including the order dated 28.03.2022
passed by the Chief Judicial Magistrate, Ramgarh in connection with Ramgarh
P.S. Case No.131 of 2021 corresponding to G.R. Case No.352 of 2022, be
quashed and set aside qua the petitioners.
16. Accordingly, the entire criminal proceeding including the order dated
28.03.2022 passed by the Chief Judicial Magistrate, Ramgarh in connection with
Ramgarh P.S. Case No.131 of 2021 corresponding to G.R. Case No.352 of 2022,
is quashed and set aside qua the petitioners.
17. In the result, this Criminal Miscellaneous Petition is allowed.
(Anil Kumar Choudhary, J.)
High Court of Jharkhand, Ranchi
Dated the 21st of October, 2024
AFR/ Saroj
