Case: M. A. A. Annamalai Vs. State of Karnataka and Anr

in which this Court, while dealing with section 482 Cr.P.C. has held as under: "It is not necessary that a complainant should verbatim reproduce in the body of his complaint all the ingredients of the offence he is alleging. Nor is it necessary that the complainant should state in so many words that the intention of the accused was dishonest or fraudulent. Splitting up of the definition into different components of the offence to make a meticulous scrutiny, whether all the ingredients have been precisely spelled out in the complaint, is not the need at this stage. If factual foundation for the offence has been laid in the complaint the court should not hasten to quash criminal proceedings during investigation stage merely on the premise that one or two ingredients have not been stated with details. For quashing an FIR (a step which is permitted only in extremely rare cases) the information in the complaint must be so bereft of even the basic facts which are absolutely necessary for making out the offence". 37. The learned counsel for the State further submitted that the mere settlement of the case with the complainant on whose complaint the initial FIR was lodged does not dislodge a criminal prosecution by the State. Several other witnesses exist who would testify to the transactions and it would be up to the trial court to test the prosecution case. 38. Reliance was also placed on the case of Medchl Chemicals & Pharma (P) Ltd. v. Biological E.Ltd. & Ors.(2000) 3 SCC 269 , wherein this Court observed as under: "Needless to record however and it being a settled principle of law that to exercise powers under Section 482 of the Code, the complaint in its entirety shall 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 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". 39. It is further submitted by the counsel for the State that the complaint clearly disclosed the offences under sections 3, 4, 5 and 6 of the Act and also offence under section 420 IPC. 40. Reliance has been placed by the learned counsel for the State that this Court in Kuriachan Chacko & Others v. State of Kerala (2008) 8 SCC 708 , while dealing with the Prize Chits and Money Circulation Schemes (Banning) Act, has held that: "21. The Preamble of the 1978 Act declares that it has been enacted "to ban the promotion or conduct of prize chits and money circulation schemes and for matters connected therewith and incidental thereto". 22. Section 2 is legislative dictionary and defines certain terms. The phrase "money circulation scheme" is defined in clause (c) which reads as under: 2.(c) `money circulation scheme means any scheme, by whatever name called, for the making of quick or easy money, or for the receipt of any money or valuable thing as the consideration for a promise to pay money, on any event or contingency relative or applicable to the enrolment of members into the scheme, whether or not such money or thing is derived from the entrance money of the members of such scheme or periodical subscriptions; In this case, it was further held that: "39. We are unable to agree with the learned counsel. The courts below rightly held that prima facie case had been made out against the accused. Both the ingredients necessary for application of Section 2(c) of the Act are present in the case on hand. The trial court, for coming to that conclusion, referred to certain documents. The advertisement clearly declared that a member would get double the amount when after his enrolment, two members were enrolled under him and thereafter, 4 other persons were enrolled and after the enrolled 4 persons, 8 persons were enrolled under them. Thus, only after 14 persons under the first enrolled person become members under the Scheme, the first person would get Rs.1250 i.e. double the amount of Rs.625 (1+2+4+8). The trial court also noted that Kuriachan Chacko (Accused 1) who proposed the project for implementation, described how the project would work from which also it is clear that the double amount will be given to a person who purchases a unit only after 14 persons are enrolled subsequent to him." 41. We have carefully considered the rival contentions. It emerges that: a) In the instant case, the appellant ceased to be a Director of the company from 27.12.1997 whereas the alleged offences, if any, were committed during the period from 24.5.1998 to 17.9.1999. b) Admittedly, there are no allegations against the appellant in the First Information Report. c) The company had invited investment from the depositors to invest in the business/benefit funds after receiving due approval of the scheme from the Reserve Bank of India. Therefore, in any event, the element of cheating as alleged cannot be made out by any stretch of imagination. d) The complainant/respondent no.2 submitted in writing to this Court that he does not want to proceed against the appellant because according to him the appellant has been inadvertently included as an accused by the Investigating Officer. He further mentioned in the letter that he had already received 55% of the deposited amount from the Official Liquidator and he did not want to proceed against the appellant. e) Even assuming that there could have been a vicarious liability thrust on the appellant, even then there cannot be any such vicarious liability in absence of any allegations and material to show that the appellant was in-charge of or responsible for the conduct of the companys business which had given rise to the offence. From any angle of the matter, the appellant cannot be compelled to face the criminal trial in this case.

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

Explanation:
1[ds]17. We have heard the learned counsel for the parties. The learned counsel appearing for the State has failed to point out any specific allegation or averment against the appellant. Admittedly, the appellant had resigned from the Board of Directors of the Company with effect from 27.12.1997 and therefore, cannot be held responsible for any activities of the company after he ceased to be a Director of the company. Even, according to the allegation of respondent no.2, no criminal case can be made out against the appellant20. It may be pertinent to mention that respondent no. 2 also filed an affidavit on 16.9.2009 before this Court. In this affidavit, reference has also been made to the affidavit filed before the High Court on 24.6.2009 in which he prayed that all cases against the Company and the Directors be withdrawn as he had already received 55% of the deposit amount from the Official Liquidator, High Court of Madras at Chennai. In the said affidavit filed before this Court, it was also mentioned that the appellant had resigned as Director from RPS Benefit Fund Ltd. on 8.12.1997 but his name had been included as one of the accused by the Investigating Officer. In this connection, he had also mentioned that the deponent was to withdraw the charges of cheating against all the Directors of the RPS Benefit Fund Ltd., including the appellant pending before the 10th Additional Chief Metropolitan Magistrate, Bangalore41. We have carefully considered the rival contentions. It emerges that:In the instant case, the appellant ceased to be a Director of the company from 27.12.1997 whereas the alleged offences, if any, were committed during the period from 24.5.1998 to 17.9.1999b) Admittedly, there are no allegations against the appellant in the First Information Reportc) The company had invited investment from the depositors to invest in the business/benefit funds after receiving due approval of the scheme from the Reserve Bank of India. Therefore, in any event, the element of cheating as alleged cannot be made out by any stretch of imaginationd) The complainant/respondent no.2 submitted in writing to this Court that he does not want to proceed against the appellant because according to him the appellant has been inadvertently included as an accused by the Investigating Officer. He further mentioned in the letter that he had already received 55% of the deposited amount from the Official Liquidator and he did not want to proceed against the appellante) Even assuming that there could have been a vicarious liability thrust on the appellant, even then there cannot be any such vicarious liability in absence of any allegations and material to show that the appellant wase of or responsible for the conduct of the companys business which had given rise to the offence. From any angle of the matter, the appellant cannot be compelled to face the criminal trial in this