1 THE HIGH COURT OF MADHYA PRADESH CRR No.6206/2018 ([ENTITY] Vs. The State of Madhya Pradesh) Shri [ENTITY], learned counsel for the applciant. Shri [ENTITY], learned Public Prosecutor for the respondent/State. ORDER
(27/06/2019) The applicant has preferred this criminal revision under [SECTION] read with [SECTION] of [ACT] ( in short " [ACT]) against the order dated 25.09.2018 passed by [ACT] Indore in Sessions Trial No.118/2018 whereby the application filed by the applicant under [SECTION] of the [ACT] has been rejected.
(2). Brief facts of the case are that a written complaint was filed by [ENTITY] and 20 others on 14.10.2014 against the applicant and seven other accused persons regarding the act of cheating and fraud committed by them in selling the plots to the complainants situated at [ENTITY], [ENTITY] and [ENTITY], District Indore. As per the complaint, accused person induced them to purchase the plots in Natural Valley Colony and cheated them by taking the money from them and not giving them their plots and not getting the plots registered their name. It is also alleged that accused persons did not allot the plots to the complainants and they are cheated them. It is also alleged that the accused persons were not having any land in [ENTITY], [ENTITY] and [ENTITY], inspite of that they have entered into an agreement of sale of plots with the complainants and cheated them.
(3). As per prosecution case, the present applicant was appointed on the post of marketing agent in Pheonix Infra Estate Interntation company a company incorporated under the [ACT]. The applicant was allegedly inducted as Director of the company. After completion of the investigation, charge-sheet was filed before the Court of Judicial Magistrate First, Class Indore, who committed the case to the Session Court and ultimately, it was transferred to the [ACT].
(4). The applicant has filed an application under [SECTION] of [ACT] for discharging him from offence under [SECTION], [SECTION], [SECTION], [SECTION] and [SECTION] of [ACT] registered against him, however, the said application was dismissed vide order dated 25.09.2018, which is subject matter of challenge before this Court.
(5). Learned counsel for the applicant has submitted that applicant has not executed any agreement in favour of the complaints nor he has received any amount more over there is no allegation that he ever acted in his personal capacity for the act of the company. The applicant cannot be held personally liable in the offence of legal fiction. The only averments in the FIR regarding the non- fulfillment of the promise which does not constitute for offence under [SECTION] of [ACT] No mens rea is inducted on the part of the applicant based on the FIR. He has not alleged to have prepared any forge documents, thus no offence can be said to be committed under [SECTION], [SECTION] , [SECTION] and [SECTION] of [ACT] It is also submitted that the applicant has been implicated in the said crime on the premises that he is being one of the Director of the company is vicariously liable for the acts of the company. Although the director can be vicariously liable for the act done by the company but it is the company who is the Principal offender and without impleading the company as accused no prosecution is legally maintainable against the director of the company. Under these grounds, it is prayed for quashment of FIR bearing Crime No.1056/2014 and charge-sheet dated 25.09.2018 filed against the applicant. (6). Learned counsel for the respondent/State opposed the prayer by contending that there are allegations against the applicant that number of persons booked the plots in the Natural Valley Colony and they have paid the consideration amount of plots but despite the payment of full plots price no sale deed was executed in their favour and applicant committed fraud with them, therefore, he prayed for dismissal of the petition.
(7). I have heard learned counsel for the parties and perused the record.
(8). The legal principles in regard to quashing of a First Information Report in view of a large number of decisions rendered by the Hon'ble Apex Court now almost well settled.
(9). In [PRECEDENT], it was held :
"102. In the backdrop of the interpretation of the various relevant provisions of the Code under [SECTION] and of the principles of law enunciated by this Court in a series of decisions relating to the exercise of the extra-ordinary power under [SECTION] or the inherent powers Under [SECTION] of the Code which we have extracted and reproduced above, we give the following categories of cases by way of illustration wherein such power could be exercised either to prevent abuse of the process of any Court or otherwise to secure the ends of justice, though it may not be possible to lay down any precise, clearly defined and sufficiently channelised and inflexible guidelines or rigid formulae and to give an exhaustive list of myriad kinds of cases wherein such power should be exercised.
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 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 F.I.R. do not disclose a cognizable offence, justifying an investigation by police officers under [SECTION] of the Code except under an order of a Magistrate within the purview of [SECTION] 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.
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.
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."
(10). In [PRECEDENT], the Hon'ble Apex Court held as under.
"7. After quoting [SECTION] of [ACT] learned judges proceeded to consider the main elements of the offence in the following lines:
"A bare reading of the definition of cheating would suggest that there are two elements thereof, namely, deception and dishonest intention to do or omit to do something. In order to bring a case within the first part of [SECTION], it is essential, in the first place, that the person, who delivers the property should have been deceived before he makes the delivery; and in the second place that he should have been induced to do so fraudulently or dishonestly. Where property is fraudulently or dishonestly obtained, [SECTION] would bring the said act within the ambit of cheating provided the property is to be obtained by deception."
XXX XXX XXX
12. The High Court seems to have adopted a strictly hyper-technical approach and sieved the complaint through a calendar of finest gauzes for testing the ingredients under [SECTION], [ACT].
Such an endeavour may be justified during trial, but certainly not during the stage of investigation. At any rate, it is too premature a stage for the High Court to step in and stall the investigation by declaring that it is a commercial transaction simplicitor wherein no semblance of criminal offence is involved."
(11). In [PRECEDENT], this Court stated the law, thus :
"11. As noted above, the powers possessed by the High Court under [SECTION] of the [ACT] are very wide and the very plenitude of the power requires great caution in its exercise. Court must be careful to see that its decision in exercise of this power is based on sound principles. The inherent power should not be exercised to stifle a legitimate prosecution. The High Court being the highest court of a State should normally refrain from giving a prima facie decision in a case where the entire facts are incomplete and hazy, more so when the evidence has not been collected and produced before the Court and the issues involved, whether factual or legal, are of magnitude and cannot be seen in their true perspective without sufficient material. Of course, no hard and fast rule can be laid down in regard to cases in which the High Court will exercise its extraordinary jurisdiction of quashing the proceeding at any stage.
XXX XXX XXX
14. It is to be noted that the investigation was not complete and at that stage it was impermissible for the High Court to look into materials, the acceptability of which is essentially a matter for trial. While exercising jurisdiction under [SECTION] of the [ACT], it is not permissible for the Court to act as if it was a trial Court. Even when charge is framed at that stage, the Court has to only prima facie be satisfied about existence of sufficient ground for proceeding against the accused. For that limited Page 2274 purpose, the Court can evaluate material and documents on records but it cannot appreciate evidence. The Court is not required to appreciate evidence to conclude whether the materials produced are sufficient or not for convicting the accused. In Chand Dhawan (Smt.) v. Jawahar Lal and Ors.
[(1992) 3 SCC 317], it was observed that when the materials relied upon by a party are required to be proved, no inference can be drawn on the basis of those materials to conclude the complaint to be unacceptable. The Court should not act on annexures to the petitions under [SECTION] of the [ACT], which cannot be termed as evidence without being tested and proved."
In the aforesaid backdrop, I may examine as to whether the FIR lodged by the the applicant makes out any case for proceeding against the respondent. For the said purpose,notice the ingredients of [SECTION] of the [ACT] which are as follows.
(I). Deception of any persons.
(II) Fraudulently or dishonestly inducing any person to deliver any property; or (III) to consent that any person shall retain any property and finally intentionally inducing that person to do or omit to do anything which he would not do or omit.
iii) to consent that any person shall retain any property and finally intentionally inducing that person to do or omit to do anything which he would not do or omit.
[SECTION] of the [ACT] reads, thus :
"406. Punishment for criminal breach of trust.
Whoever commits criminal breach of trust shall be punished with imprisonment of either description for a term which may extend to three years, or with fine, or with both."
(12). Undisputedly, the present applicant is one of the Director of TDS Infra Company. He has been arrayed as accused in the FIR on the ground that he was marketing agent of the said company, who made advertisement that the company developed three colonies namely Vidhya Vihar, [ENTITY] & natural Valey and on believing of the advertisement published in the news papers by the company, complainants come forward for booking the plots in the aforesaid. Thereafter company entered into an agreement of sale and received earnest money from the purchaser, however after receipt of consideration amount they have not executed the sale deed in favour of purchasers / complainants and by this committed cheating with the complainants.
(13). It is settled law, by catena of decisions, that for establishing the offence of cheating, the complainant is required to show that the accused had fraudulent or dishonest intention at the time of making promise of representation. From his making failure to keep up promise subsequently, such a culpable intention right at the beginning that is at the time when the promise was made cannot be presumed.
(14). From the statement of the complainants, it appears that when the company and its functionaries accepted the money from the complainants entering into the agreement for sale of the plots they were having knowledge that the land in which the aforesaid colony was to be developed was not owned by the company or any of the Director of the company, therefore, they were not having any right to develop the colony in the said land and inspite of that they sold the plot to the complainants, despite plots are not physically available on the spot. Thus it is clear that the applicants deceived the complainants making a false or misleading representation claiming that they are developing the colony namely Vidhya Vihar, [ENTITY] & natural Valey and they dishonestly induced them to invest the amount in the said colony one of the director executed sale of agreement in favour of the complainants and received consideration amount. From the documents seized by the police, it appears that neither the agreement executed by the present applicant, nor he is the witness of the agreement, the said agreement was executed by one [ENTITY] on behalf of TDS Infra Company. There is no documents seized by the police by which, the applicant collected the amount of consideration from the purchasers and issued receipt to the beneficiaries, therefore, applicant has not signed or executed any document which lateron was reveal to be false, forged or fabricated. Hence, if all the allegations made in the charge-sheet against the applicant are accepted as such, at their face value still prima facie offence under [SECTION], [SECTION] and [SECTION] of [ACT] are not made out against the applicants, however, there is sufficient material is available on record for framing the charges against the applicant for the offence under [SECTION] and [SECTION] of [ACT]
(15). It is not disputed that the applicant is the one of Director of Pheonix Infra Estate International company and he was appointed as marketing agent of the said compnay, therefore it cannot be said that he was not responsible for running day to day affairs of the company and he has not played any active role in the commission of the alleged offence, thus, he is also vicariously liable for the acts of the company.
(16). In the case of [PRECEDENT] the Apex Court has held that when the act is done on behalf of the company and company has not been arrayed as accused no criminal proceedings can be initiated against the representative/ employees of the company unless they are personally responsible for the act. In this regard it would be appropriate to reproduce the relevant paragraph, 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 [PRECEDENT] in the context of the [ACT].
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 complainants. 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.
(17). In the present matter, police filed the charge- sheet against the applicant and [ENTITY], however, the police left open the investigation under [SECTION] of [ACT] and therefore, at this stage it cannot be said that the company has not made an accused in the present case and no vicarious liability against the applicant can be fixed without holding the principle offender as guilty. This question can be considered by the trial court while deciding the matter on merits, thus, at this stage the FIR or charge-sheet cannot be quashed on the aforesaid ground.
(18). In view whereof the present petition is partly allowed. Accordingly, FIR and consequential proceedings so far it relates to the applicant [ENTITY] for the offence under [SECTION], [SECTION] and [SECTION] of [ACT] is hereby quashed, however, with regards to the offence under [SECTION] and [SECTION] proceedings shall continue against the present applicant [ENTITY]. It is made clear that trial court shall decide the case without being influenced by the observation made by this Court.
([ENTITY]) Judge [ENTITY] DN: c=IN, o=DISTRICT AND SESSION COURT INDOR, postalCode=452005, st=Madhya Pradesh, 2.5.4.20=e98f729464903facdd39c45[SECTION]5d6eccc5a3 [ENTITY] 50c9111fb019b34dace6d05b8fd5, cn=[ENTITY] Date: 2019.06.28 11:49:18 -07'00'