Case: Esso Standard Inc Vs. Udharam Bhagwandas Japanwalla

Maharashtra v. Syndicate Transport Co. that a company cannot be indictable for offences which can only be committed by a human individual, like treason, murder, bigamy, perjury, rape, etc. , or for offences punishable with imprisonment or corporal punishment, the propositions made at page 200 by L. M. Paranjpe J. that :". . . . . a corporate body ought to be indictable for criminal acts or omissions of its directors, or authorised agents or servants, whether they involve mens area or not, provided they have acted or have purported to act under authority of the corporate body or in pursuance of the aims or objects of the corporate body and that the question whether a corporate body should or should not be liable for criminal action resulting from the acts of some individual must depend on the nature of the offence disclosed by the allegations in the complaint or in the charge-sheet, the relative position of the officer or agent, vis--vis, the corporate body and the other relevant facts and circumstances which could show that the corporate body, as such, meant or intended to commit that act. " and further that each case will have necessarily to depend on its own facts, must be considered as propositions which ignore the constitution of corporate bodies under the memorandum of association and articles of association. This criticism appears to us to be justified having regard to what Lord Diplock has stated in his speech but the remarks of L. M. Paranjpe J. were obiter as the case was decided in the context of the question of liability of a company under section 420 of the Indian Penal Code alone and it was rightly held by L. M. Paranjpe J. that as section 420, Indian Penal Code, made it necessary for the court to inflict imprisonment, a company could not be indicted under that section. (32) PERHAPS the true view appears to be what Lord Reid has stated :"i think that the true view is that the judge must direct the jury that if they find certain facts proved then as a matter of law they must find that the criminal act of the officer, servant or agent including his state of mind, intention, knowledge or belief is the act of the company. "(33) BUT it must be proved as a matter of fact that the officers were acting within the limits of their authority on behalf of the company. (34) APPLYING this test to the present case we feel no hesitation in holding that the complaint was drafted without any regard to these principles. There is not a word to suggest anywhere in the complaint that the officers-accused Nos. 2 to 5 - had done any act on behalf of the company so as to make such act in law the act of the company. On the contrary the averments made in the complaint this, in our judgment, is nothing but confused thinking on the matter. The law attributes to the company intention of the officers of the company under certain circumstances. The companys intention could be ascertained only when the company in a general body or at the meeting of the board of directors or in accordance with the memorandum of association or articles of association has expressed that intention in the form in which it should be expressed. In the absence of any such averments it is clear that the complaint against the applicant-company is clearly not maintainable in law having regard to the general principles of criminal liability enunciated by the House of Lords in the above case. (35) MR. Jethmalani, in our opinion, is also right in his contention that as the substance of the complaint is with respect to the loss sustained by the complainant in giving up his claim against the Esso Co. , although section 417, Indian Penal Code, is referred to in the complaint and in the process issued by the learned Magistrate the only section which could be, if at all, invoked by the complainant on the basis of his allegations was section 420, Indian Penal Code, and not section 417, Indian Penal Code, and hence the ratio of L. M. Paranjpe J. s judgment in State of maharashtra v. Syndicate Transport Co. would also apply and no indictment could be made against the company under section 420, Indian Penal Code. If no indictment could be made against the company the allegations of the complainant that the accused had common intention with the company also will fall to the ground and the complaint must be dismissed against all the accused. (36) MR. Paranjpe, learned counsel for the complainant, fairly stated that he could not submit that this court had no jurisdiction under section 561-A read with section 439 of the Criminal procedure Code to quash the proceedings against all the accused on an application filed by the applicant-company if this court found, as it has found, that the allegations made in the complaint did not constitute any offence and the complaint was not maintainable as it involves a civil dispute. It is, therefore, unnecessary for us to discuss the question any further.(37) MR. Jethmalani submitted that as the present complaint was filed on the same allegations on the basis of which the earlier complaint was filed and withdrawn, it was clear that the complainants motive in filing this complaint was not to vindicate the law but to coerce the accused by criminal process to enter into a settlement with regard to his false claim. He, therefore, submitted that this was a case in which compensation should be ordered under section 516-AA of the Criminal Procedure Code. There is undoubtedly some force in what Mr. Jethmalani has stated, but it is clear that there is a dispute as found by us above. In view of that dispute it is possible that the complainant was advised to file a complaint and it cannot be said that it is without any reasonable or proper cause.

Decision (1 = appeal accepted, 0 = rejected): 1

Explanation:
1[ds](17) IT is manifest that but for the averments that the claim of the complainant wasand process should be issued against the accused the complaint sounds almost like a plaint in civil suit. As far as we can see, what is alleged is nothing more than a breach of an assurance or undertaking or representation made by accused Nos. 2,3, and 4 to the complainant that even though the agreement was not an agreement for 50 years as it was automatically renewable every year it mounted to an automatic agreement renewable for 50 years and, hence, when they wrote on April, 3, 1968, that the agreement was terminated, the said accused Nos. 2, 3 and 4 and the company committed breach of the agreement to renew the agreement for 50 years. Merely stating in the complaint that the termination showed that the parties were "dishonest" from the beginning cannot convert a purely civil dispute like the present one into a crime.(18) A civil proceeding has for its object the recovery of money or other property, or the enforcement of a right for the advantage of the person suing, while criminal proceeding has for its object the punishment of a public offence. Criminal proceedings cannot be used as a means of recovering a civil debt in the absence of express provision to that effect. (See Halsburys Laws of england, Volume X, para. 502, page 271, and R. v. Peel). The allegations made in the complaint are not at all sufficient to attract the application section 417 and 420 read with sections 34, 109 and 114 of the Indian PenalThe complainant himself and signed the agreement which was an agreement renewable every year. Merely because he signed it believing the assurances of the officers that if he did not commit breach of the agreement the agreement would be renewed, it could not make the conduct of accused Nos. 2 to 4 dishonest in any manner. The complainant is a business man. He has signed the agreement with open eyes. It was clear that the agreement was renewable every year. It could not be so renewed without the consent of both the parties. In the face of the written agreement it is not open to the complainant to allege dishonest intention against the officers of the company. In these circumstances it is doubtful whether even a civil claim could be made by the complainant against the accused. By mere reproduction of the words "dishonestly" or "intention to cheat" a party cannot convert a purely civil dispute into aDISTINCTION between mere breach of contract and cheating depends upon the intention of the accused at the time of the alleged inducement which my be judged by his subsequent act of which the subsequent act is not the sole criteria. The complainant has inferred a dishonest intention on the part of the officers by their subsequent declaration that the agreement was already terminated as one year had expired. This inference is not open to him because on his own allegations he had signed the agreement renewable every years believing that it was renewable for a period of 50 years. He need not have signed the agreement. He has said in the complaint itself that the legal department of thehad said that the officers could not put in 50 years in the agreement. Hence it is clear that the complainant knew that the officers could not assure him at all that the agreement was renewable for 50 years. The allegations made in the complaint itself disclose only at the highest a mere breach of the contract which cannot give rise to a criminal proceeding against any of the accused. The ends of justice, therefore, require the proceedings to be quashed to prevent waste of time of the criminal court and multiplicity of proceedings and consequent harassment to thecriticism appears to us to be justified having regard to what Lord Diplock has stated in his speech but the remarks of L. M. Paranjpe J. were obiter as the case was decided in the context of the question of liability of a company under section 420 of the Indian Penal Code alone and it was rightly held by L. M. Paranjpe J. that as section 420, Indian Penal Code, made it necessary for the court to inflict imprisonment, a company could not be indicted under thatAPPLYING this test to the present case we feel no hesitation in holding that the complaint was drafted without any regard to these principles. There is not a word to suggest anywhere in the complaint that theNos. 2 to 5had done any act on behalf of the company so as to make such act in law the act of the company. On the contrary the averments made in the complaint this, in our judgment, is nothing but confused thinking on the matter. The law attributes to the company intention of the officers of the company under certain circumstances. The companys intention could be ascertained only when the company in a general body or at the meeting of the board of directors or in accordance with the memorandum of association or articles of association has expressed that intention in the form in which it should be expressed. In the absence of any such averments it is clear that the complaint against theis clearly not maintainable in law having regard to the general principles of criminal liability enunciated by the House of Lords in the aboveMR. Jethmalani, in our opinion, is also right in his contention that as the substance of the complaint is with respect to the loss sustained by the complainant in giving up his claim against the Esso Co. , although section 417, Indian Penal Code, is referred to in the complaint and in the process issued by the learned Magistrate the only section which could be, if at all, invoked by the complainant on the basis of his allegations was section 420, Indian Penal Code, and not section 417, Indian Penal Code, and hence the ratio of L. M. Paranjpe J. s judgment in State of maharashtra v. Syndicate Transport Co. would also apply and no indictment could be made against the company under section 420, Indian PenalIf no indictment could be made against the company the allegations of the complainant that the accused had common intention with the company also will fall to the ground and the complaint must be dismissed against all theMR. Paranjpe, learned counsel for the complainant, fairly stated that he could not submit that this court had no jurisdiction under sectionread with section 439 of the Criminal procedure Code to quash the proceedings against all the accused on an application filed by theif this court found, as it has found, that the allegations made in the complaint did not constitute any offence and the complaint was not maintainable as it involves a civil dispute. It is, therefore, unnecessary for us to discuss the question anyis undoubtedly some force in what Mr. Jethmalani has stated, but it is clear that there is a dispute as found by us above. In view of that dispute it is possible that the complainant was advised to file a complaint and it cannot be said that it is without any reasonable or proper cause.