N Criminal Appeal No 175 of 1988
298 From the Judgment and order dated 10286 in the High Court of Bombay in Crl
Writ Petition No 295 of 1986
Kuldeep Singh Solicitor General Ms A Subhashini Mrs Sushma Suri and B Parthasarthy for the Appellants
CL Sareen OK Khuller RC Kohli and Mrs H Wahi for the Respondents
The following order of the Court was delivered O R D E R Special leave granted
This appeal is by special leave
The appellant who is Deputy Chief Controller of Imports and Exports filed a complaint in the Court of Chief Metropolitan Magistrate Bombay alleging commission of offence under Section 5 of the Imports and Exports Control Act 1947 by the respondents 1 and 2
The said case got transferred to the Court of the Additional Chief Metropolitan Magistrate 38th Court Ballard Estate Bombay and was numbered as 82S of 1983
The respondent No 1 is a private limited company with its registered office at Bombay and the respondent No 2 is its Managing Director
To this complaint proviso a of Section 200 of the Code of Criminal Procedure was applicable
Therefore cognizance was taken of the offence alleged without examining the appellant
On 1711983 an application was filed on behalf of the two accused persons for recall of the summonses and dismissal of the complaint
On 12th of May 1983 the learned Magistrate dismissed the petition
The order of the learned magistrate was assailed before the High Court and on 291983 the High Court dismissed it
Then the matter was brought to this Court by filing an application for special leave on 12121983 this Court dismissed the leave application
The case set down for trial after charges were framed
An application was made to the trial court at this stage to discharge the Managing Director Respondent No 2 in exercise of inherent powers by contending that the company was prepared to admit its guilt and may be appropriately penalised and the Managing Director against whom there was no allegation of any criminal conduct should be discharged
The learned Magistrate by a reasoned order dated 17th February 1986 dismissed the application and directed that the trial should proceed against both
That order was assailed by the respondents before the Bombay High Court by filing a criminal writ 299 petition
The High Court by its order dated 10th July 1986 which is impugned in this appeal held On perusal of the averments it is seen that at the time the learned Trial Judge issuedprocessed against the petitioners accused the Department and the State had merely filed a complaint case along with list of witnesses and documents
None of the statements of witnesses or copies of documents were produced before the Trial Judge
The complainant s verification statement is also not recorded
As such the order of issuance of process is clearly a result of non application of mind by the trial Judge
Such order would mean that merely on filing a complaint the process could be issued
It would be unjust to the accused if process is issued against him by the Magistrate without first satisfying himself about the nature of the case and whether there exists sufficient grounds for proceeding with the case
Since this is not done then in the instant case the process issued against petitioner No 2 Managing Director is liable to be quashed on this ground alone
Without short circuiting the other grounds it must be pointed out that perusal of the complaint and in particular page 23 of the complaint shows that the prosecution intends to charge petitioner No 2 as the principal offender along with the petitioner No 1 company
That is not possible for the simple reason that offence under Section 5 of the Imports and Exports Control Act is done Principally by the licencee Company in this case andor by the abetter to the offence
There are no allegations in the complaint that the petitioner No 2 either aided or abetted in the contravention of licence conditions by the petitioner No 1 Company
As such on this ground also the process issued against petitioner No 2 is liable to be and is quashed and set aside
 The criticism advanced by the learned Judge against the trying Magistrate is wholly untenable and is perhaps applicable to the learned Judge
If reference had been made to Section 200 Proviso a of the Code of Criminal Procedure what has been advanced as the most impressive ground for quashing the proceedings against the respondent No 2 could not at all have been accepted
The learned Judge obviously has not cared to look into the procedural law applicable to the factual situation before him
The learned Judge also lost sight of the fact that similar objections had once been raised and his High 300 Court had refused to entertain the same and the order of the High Court had been upheld here by dismissing the special leave petition
The portion we have extracted from the order of the High Court suggested that the learned Judge wanted to draw a distinction between then and now by saying that the records of investigation had not then been available
Records of investigation are not evidence in this case and a complaint could not be quashed by referring to the investigation records particularly when the petition of the complainant did allege facts which prima facie show commission of an offence
The learned Judge did note the fact that the licencee was a company but lost sight of the fact that a company by itself could not act
Obviously the Company has to act through some one
In the petition of the complainant there was clear allegation that the Managing Director had committed the offence acting on behalf of the licencee
If the complainant s petition had been properly scrutinized the second ground advanced in the impugned order for quashing the proceedings against the Managing Director could not have been utilised in the impugned order
Both the grounds are wholly untenable and therefore the order of the High Court has got to be reversed
We allow the appeal and vacate the order of the High Court
Once the order of the High Court is vacated the order of the learned Magistrate would revive and the prosecution as directed by the learned Magistrate has now to continue
The petition of the complainant at page 21 of the paper book shows that the offence was committed between 1967 and 1969 which is some 20 years back
While we have no sympathy for the respondent No 2 and we are clearly of the opinion that he has no equity in his favour and the delay after the complaint had been filed has been mostly on account of his mala fide move we do not think it would be in the interest of justice to allow a prosecution to start 20 years after the offence has been committed
If we could convict the respondent No 2 in accordance with law we would have been prepared to do so taking the facts of the case and conduct of the respondent into consideration but that would not be possible within the framework of the law of procedure
We therefore do not propose to allow the learned Magistrate to proceed with the trial of the case at this belated stage
We accordingly direct the case to be closed against respondent No 2 without further delay
Ordinarily in a criminal case of this type there would have been no order for costs
But keeping in view the background of the case the manner in which the respondent No 2 has behaved and the fact that he is squarely responsible for delaying the 301 proceedings by reiterating the same contention twice over
We are of A the definite opinion that the respondent No 2 should be made to suffer exemplary costs
We accordingly direct that he shall be called upon to pay a sum of Rs 10000 by way of costs and the said amount is to be deposited in the trial court within one month hence failing which the trial court shall have a direction to recover the same as fine and pay the amount to the complainant
Compliance shall be reported to the Registry of this Court


Summary:
 The appellants had filed a suit for partition of property claiming 13rd share
A preliminary decree was passed by the trial court
Respondent No 1 defendant No 9 in the suit challenged the decree before the High Court in first appeal
The appeal was disposed of on compromise whereby the appellants plaintiffs  claim to l3rd share was accepted but it was agreed that half of the share of the plaintiffs would go to the defendant No 9 provided he paid Rs40000 to the plaintiffs in two instalments the first one of Rs10000 by 3171979 and the second of the remaining amount by 2821980 failing which payment within time the decree passed by the trial court would stand confirmed as per the terms of the compromise
The first instalment was paid within time but the remaining amount was not paid
The defendant No 9 made an application before the High Court on 2881981 for extension of time for payment of the second instalment
The High Court by its order dated 3181981 allowed the application
The appellants moved this Court by special leave challenging the said order dated 3181981 of the High Court
The appellants inter alia contended that an order based on the consent of the parties could be modified only with the further consent of the parties and it was not open to the Court to alter the terms otherwise
If the High Court had issued notice on the application for extension of time made by the defendant No 9 to the plaintiffs appellants they would have placed before the Court the circumstances showing that it was against the cause of justice to allow the prayer of the defendant No 9 and specially so after such a long delay
There was no justification whatsoever for the High Court to condone the delay and extend the period for deposit of the money they contended
288 The contesting respondents argued that the 6th term of the com promise dealing with the consequence of the default in payment of the instalments was penal in nature and illegal and that the clause being severable from the other terms of the compromise should be ignored
It was further argued that it was not correct to suggest that the Court had no power to permit the respondent No I to make the deposit later
Allowing the appeal the Court  HELD There was no merit in the argument that the impugned clause 6 of the agreement was illegal being penal in nature
It had to be noted that the plaintiffs had in the trial court obtained a decree for partition for their l3rd share in the suit properties and there was presumption in favour of correctness of the decree
At the appellate stage one of the three branches of the parties represented by the heirs of Brajgopal and uncle of the plaintiffs appellants was satisfied with the share allotted to them and the interest of defendant No 9 second uncle of the plaintiffs was identical to their interest
The situation was acceptable to the defendant No 9 also but he wanted to acquire half the share of the plaintiffs on payment of consideration fixed at Rs40000
The amount was to be paid by way of price
It had not been suggested by the defendant No 9 or his heirs that the entire compromise should be ignored on account of the impugned clause 6 thereof
They had been relying upon the compromise except the default clause which alone was sought to be ignored
That part of the compromise was in substance an agreement for transfer by the plaintiffs of half of their share for a sum of Rs40000 to be paid within stipulated time
The market price of the property was higher and a beneficial right was bestowed on the defendant No 9 to acquire the property for a considerably low amount
In this background the said defendant was subjected to the condition that if he had to take the advantage of the bargain he was under a duty to pay the stipulated amount within the time mentioned in the agreement
On failure to pay within time he was to be deprived of that special benefit
Such a clause could not be considered a penalty clause
The expression penalty  is an elastic term with many different shades of meanings but it always involves an idea of punishment
The impugned clause in this case did not involve infliction of any punishment it merely deprived the defendant No 9 of a special advantage in case of default
293A H 294A The High Court assuming it had the power to do so was not justified in allowing the prayer of the defendant No 9 to make a grossly belated payment
Even where such a power exists it is not to be exercised liberally
294B C 289 Justice was manifestly in favour of the plaintiffs and against the contesting respondents
The clause in question was not a forfeiture clause
294E The grievance of the plaintiffs that they were not afforded reasonable opportunity to contest the prayer of the defendant was also well founded notice of the application for extension of time should have been directly sent to the plaintiffs
The Court did not consider it necessary to remand the matter to the High Court for a fresh consideration as it had come to a final conclusion on merits in favour of the plaintiffs
294G 295B The order dated 3181981 of the High Court was set aside and the application filed by respondent No1 defendant No 9 for extension of time was rejected
295C D Charles Hubert Kinch vs Edward Keith Walcott  Ors
 AIR 1929 PC 289 Banku Behari Dhur vs JC Galstaun  Anr AIR 1922 PC 339 Jagat Singh  Ors
vs Sangat Singh  Ors AIR 1940 PC 70 and Smt
Periyakkal  Ors
vs Smt
Dakshyani   referred to