IN THE HIGH COURT OF JUDICATURE AT BOMBAY CRIMINAL APPELLATE JURISDICTION CRIMINAL WRIT PETITION NO.308 OF 2009 Prakash M.Pai ] Age – 56 years ] of Mumbai, Indian Inhabitant, ] R/at.5/251, Alankar, 251, Sion Road ] Mumbai – 400 022. ] V/s. 1. State of Maharashtra ] having its Head Office at ] Mantralaya, through Government ] Pleader, Mumbai. ] ] 2. MSTC Limited ] a Government of India Undertaking ] Registered under the Companies Act,] 1956, Having its registered office at ] 225C, AJC, Bose Road, Calcutta & ] its Regional Office at 607, Raheja ] Centre, Nariman Point, ] Mumbai – 400 021, through its ] Regional Manager ] Mr.T.K.Bhattacharya. ] ] 3. M/s.Fifth India Steel Co.Ltd. ] having its registered office at ] Plot No.F-3, Road No.22, ] Wagle Estate, Thane – 400 604 ] And Sales Office at 4th Floor, ] 1 Bank of Maharashtra Building, ] 45/47, Mumbai Samachar marg, ] Fort, Mumbai – 400 023. ] Through Shri Praksh M.Pai, ] Vice Chairman, & Managing Director.] ] 4. Shri U.V.Kini of Mumbai ] Chairman of Respondent No.3. ] ] 5. Shri Mohandas Shenoy of Mumbai ] President & Executive Director of ] Respondent No.3. ] ] 6. Shri Kishore P.Shenoy of Mumbai ] Vice President, Management ] Services of Respondent No.3. ] ] 7. Shri V.N.Hegde of Mumbai ] Finance Executive of ] Respondent No.3. ] ] 8. Shri K.R.Pai of Mumbai ] General Manager (Operations) of ] Respondent No.3. ] ] 9. Shri K.N.Samant of Mumbai ] of Respondent No.3. ] ] 10.K.B.Rao of Mumbai ] of Respondent No.3. ] ] 11. Shri Y.V.Pai of Mumbai ] of Respondent No.3. ] ] 12.Shri T.Sudhakar Paid of Mumbai ] of Respondent No.3. ] 2 ] 13. Shri Hari Bhushan of Mumbai ] of Respondent No.3. ] ] 14. Shri K.R.Modi of Mumbai ] Respondent No.3. ] ] 15. Shri B.D.Baliga of Mumbai ] Respondent No.3. ] ] .. Respondents Respondent Nos. 4 to 15, all ] Indian Inhabitants of Mumbai, ] Director of Respondent No.3 ] having their Sales Office/ ] Registered office at ] (1) 4th floor, Bank of Maharashtra ] building, 45/47, Bombay ] Samachar Marg, Fort, ] Mumbai 400 023. ] (2) Plot No.F/3, Road No.22, ] Wagale Estate Post Box No.422, ] Thane – 400 604, Maharashtra ] Mr.G.R.Sharma and Mr.Amar K.Shilwant and Mr.Pankaj Jain i/b. M/s.P.D.Jain & Co.for the Petitioner. Ms.S.D.Shinde, A.P.P. and Ms.Mohite for Respondent Nos.1 and 2. CORAM : A.R.JOSHI, J. DATED : APRIL 3RD, 2009. ORAL JUDGMENT :- 3 This writ petition is filed by the original accused No.4 challenging the lodging of the compliant against him before the Metropolitan Magistrate Court for the offences punishable under section 420, 403, 406 read with section 120 (B) of Indian Penal Code, 1973. 2. Allegedly, there was some transaction of sale of scrape material by original complainant to the company of which the present Petitioner accused No.4 was Vice Chairman and Managing Director. Said transaction took place somewhere in the year 1995-96 by which there were negotiations for few months between original complainant company which is the Government Company and the accused No.1 company of which present Petitioner was one of the office bearer and Vice Chairman and Managing Director. During the said negotiations, accused No.1 had personally guaranteed the repayment with interest thereon towards purchase of 3000 metric tone of carbon steel melting scrap by executing a personal Guarantee . The total price of the said scrap was more than Rs.2,60,00,000/- and odd, and it was paid on different dates running from March-1996 till March-1997 by 10 cheques and the cheques ranging from 5 lacks and odd upto Rs.40 lacs and odd, thus, totally amounting to Rs.2,60,56,269/-. Admittedly, all these cheques were bounced, thus causing loss of more than 2.6 crores to the complainant company. This transaction happened in the year 1996. However, the complaint 4 which is challenged in the present writ petition came to be filed in the year 2000, in which all the office bearers of accused company total 14 in numbers including accused No.4 i.e. Present Petitioner, were made an accused. Cognizance of the matter was taken and processes were issued against the accused persons for the offence punishable under section 420, 406 and 403 read with section 120-B of the Indian Penal Code on 28th February, 2000 by Metropolitan Magistrate 47th Court, Esplanade, Mumbai. 3. Reportedly, the present Petitioner appeared in the matter, also obtained the bail and matter was pending for about 7 years, and sometime in the year 2007 around the month of December a discharge application was preferred by accused No.4 present Petitioner, and it was rejected on 7th August, 2008 by learned Metropolitan Magistrate. Against such rejection of discharge application, criminal Revision was preferred in the Session Court, Mumbai and was dismissed on 15th January, 2009. Said order has been challenged in this writ petition, and it is prayed that entire proceeding initiated against the Petitioner, Accused No.4, be quashed and set aside. Reportedly, other accused persons have not taken any reservations against the said issuance of process or they have not prayed for any quashing of the complaint. 4. During the arguments, learned counsel for the Petitioner 5 raised two main objections. Firstly, that the transaction between both the companies was of civil nature and that it is a civil dispute and probably might be only a breach of contract and for which an appropriate civil action can be initiated by the complainant company for breach of contract for non payment of goods supplied. It is also submitted and admitted fact that for the dishonor of cheques, an appropriate proceedings under section 138 of Negotiable Instruments Act have been initiated against the company and its officers including the present Petitioner accused No.4. In fact such proceedings are still pending before the concerned learned Metropolitan Magistrate' s Court. 5. Second argument advanced on behalf of the Petitioner is that there are no such circumstances which can attract the ingredients of the penal section 420 and 406 and as such once there was no entrustment of the property with the accused there cannot be any liability for the offence under section 406, and secondly there cannot be any charge for the offence under section 420. In support of the above submission, following authorities were cited before the Court on behalf of the Petitioner (2000)3 SCC 269 in case of Medchl Chemicals & Pharma (P) Ltd. V/s. Bilogical E.Ltd. & Ors. 2007 AIR SCW 4816 in case of Veer Prakash Sharma V/s.Anil Kumar Agarwal & Anr., and it was strongly submitted that mere non- payment of any purchase good may not always direct the penal 6 liability, if that does not constitute any breach of trust or any cheating as contemplated by penal sections 420 and 406 of Indian Penal Code. 6. It is submitted that even at this stage of the matters under the writ jurisdiction and under the powers vested in this Court under section 482 of Criminal Procedure Code, such aspect can be taken into consideration, and if on the face of the allegations made in the original compliant, if there is nothing against the Petitioner accused No.4 then, it would be just and proper to quash the entire proceeding against him, further argued. 7. As against this, the learned counsel for the original complainant present Respondent No.2 strongly submitted that an action as provided by section 482 of Criminal Procedure Code is not wide and it is to be sparingly used and that allegations made in the compliant cannot be tested for their correctness, at this stage. In other words, it is submitted that the truth or falsity of the allegations would not be gone into by the court at such earliest stage without there being any full fledge trial and giving an opportunity to the complainant to put forth his case and to establish the ingredient as to commission of offence. Moreover, in the opinion of this Court, at this stage, all the accused which are before the learned Metropolitan Magistrate Court, are yet to be charged and as such appropriate precautions need be taken by the Magistrate as to which charges can 7 be framed against any of the accused. 8. In order to substantiate the arguments in favour of Respondent No.2 Company, ratio of the authority as under was taken shelter of. The said authority is (2000)3 SCC 269 (Supra) with advance following observations of the Apex Court can be reproduced. “Exercise of jurisdiction under the inherent power as envisaged in Section 482 of the Code to have the complaint or the charge-sheet quashed is an exception rather then a rule and the case for quashing at the initial stage must have to be treated as rarest of rare so as not to scuttle the prosecution. With the lodgment of first information report the ball is set to roll and thenceforth the law takes its own course and the investigation ensues in accordance with the provisions of law. The jurisdiction as such is rather limited and restricted and its undue expansion is neither practicable nor warranted. In the event, however, the Court on a perusal of the compliant comes to a conclusion that the allegations leveled in the complaint or charge-sheet on the face of it do not constitute or disclose any offence as alleged, there ought not to be any hesitation to rise up to the expection of the people and deal with the situation as is required under the law. To exercise powers under Section 482 of the Code, the complaint in its entirety will have to be examined on the basis of the allegation made in the complaint and the High Court at that stage has no authority or jurisdiction to go into the matter or examine its correctness. Whatever appears on the 8 face of the complaint shall be taken into consideration without any critical examination of the same. But the offence ought to appear ex facie on the complaint. The truth or falsity of the allegations would not be gone into by the Court at this earliest stage. Whether or not the allegations in the complaint were true is to be decided on the basis of the evidence led at the trial. So the question is : Can it be said that the allegations in the complaint do not make out any case against the accused nor do they disclose the ingredients of an offence alleged against the accused or the allegations are patently absurd and inherently improbable so that no prudent person can ever reach to such a conclusion that there is sufficient ground for proceeding against the accused?” Apart from the arguments as above, attention of this Court is drawn towards the averments made in the original complaint and specifically the averments in paragraph No.4 and paragraph No.13. So also, it is specifically brought to the notice of this Court as to specific allegations against present Petitioner Accused No.4 that he also personally liable for having executed the personal guarantee securing the liability of the accused No.1. 9. During the arguments on behalf of the Petitioner, it is tried to argue that said company accused No.1 almost went in liquidation since the end of the year 1997. As such till the year 2000 in fact the Petitioner accused No.4 was not holding any charge, and as an office bearer as alleged, he was holding the charge in the year 9 1996 and as such filing of such belated complaint in the year 2000 is one of the circumstances that can be considered while deciding the present matter. At this stage, it is contended on behalf of Respondent No.2 that factually the complaint came to be filed in the year 2000 and though there was apparent delay of about four years in filing the complaint that does not take away the right of action against the accused persons when the allegations are that of commission of the offence, for their actions committed in the year 1996 when presumably Petitioner accused No.4 was validly holding a charge of Vice Chairman and Managing Director. 10. In order to substantiate these submissions, attention of this Court was invited towards the contents of the personal guarantee and corporate guarantee executed in favour of complainant company. Personal Guarantee is in fact given by present Petitioner Accused No.4 and is dated 1st July, 1995 and Corporate Guarantee is also of the same date and also signed by the Petitioner accused No.4 for on behalf of accused No.1 company as Vice Chairman and Managing Director. By pointing out these two guarantees, it is submitted that there was personal liability accepted by the Petitioner accused No.1 towards the repayment of the dues for the supply of goods. Lastly, it is submitted that the amount of cheque is not such a small thing and the total amount in more then 2.6 crores and as such definitely it can be presumed on the face of the allegations contained in the main 10 complaint that there was an element of cheating and it was shared by all the accused being the office bearers when just within a span of about two months or so the bank balance of accused No.1 company was lowered to such an extent that the cheques were dishonored. 11. Considering the ratio propounded by the authority cited before this Court and considering the orders passed by the Metropolitan Magistrate Court and also Additional Session Judge, Mumbai, in the opinion of this Court, there is nothing to interfere with the order challenged in the present petition. In other words, considering the scope as envisaged under section 482 of Criminal Procedure Code and as spelt out in various authorities including the authority cited above on behalf of the Respondent No.2 original complainant company, situation does not warrant the quashing of the case and the allegations made against the accused persons in the complaint and that whatever defence available to the accused could be effectively dealt with when the matter will be put for trial after framing of the charges. 12. Under these circumstances, this court do not want to interfere with the impugned order and hence, present Writ Petition is disposed of as dismissed. If ad interim orders are passed, same shall stand vacated. 11 13. It is made clear that the observations made herein above shall not influence the trial Magistrate while deciding the case on merits. (A.R. JOSHI, J.) 12