Case: P.S. Meherhomji Vs. K.T.Vijay Kumar

K.T. Vijay Kumar - Respondent no.1 joined M/s. Rallis India Ltd. -Respondent no.4, as Sales Representative and later promoted to different posts. The Company entrusted various powers to him including the powers to recommend various companies or firms for dealership to sell companys product. Taking advantage of the powers entrusted by the Company, Respondent no.1 along with few of his relatives and friends clandestinely formed two partnership firms and he appointed them as Companys dealers to misappropriate funds by way of diverting goods from M/s. Rallies India. It is alleged that upon enquiry, it was found that huge amount of stocks were routed clandestinely through the said two firms and Respondent no.1 - Vijay Kumar along with his associates defrauded the Company M/s. Rallies India. It is further alleged that Vijay Kumar - Respondent no.1 floated a Company called Chemical Biotech Ltd. with his wife and relatives at Vijayawada while he was serving with M/s. Rallies India Ltd. and his Company was dealing, producing and trading in the same products as manufactured by Respondent no.4 company - M/s. Rallies India. When all the facts came to light, he resigned from M/s. Rallies India -Respondent No.4Respondent no.1 made two firms M/s. Sri Laxmi Agencies and M/s. Vaishnavi Chemicals through their partners to enter into and execute a Memorandum of Understanding dated 31.3.2004 with Respondent No.4 Company (M/s. Rallies) wherein they admitted their entire liability of Rs.7,94,70,517/ - payable to M/s. Rallies and agreed to settle the same by payment of Rs.4.05 crores. Thereafter in August, 2006, M/s. Rallies India through Mr. Ankur Sharma (recovery agent) lodged a complaint under Sections 403, 405, 406, 408, 415, 420 r/w Section 34 of the IPC against Respondent no.1 and aforesaid two firms and their respective partners with the Economic Offences Wing, Mumbai4. Respondent Nos.1 and 2 are the Managing Director and Chairman of the Company - M/s. Chemical Bio Tech Limited, respectively. Respondents Company with an intention to go for public issue engaged Ashika Capital Limited, Mumbai as lead manager to handle their public issue and in course of their due diligence acts, sought clarification and information in respect of respondent Companys credentials so as to go ahead with the publication of prospectus5. It is alleged that the present appellant, representing Rallis India as its Company Secretary, addressed a letter dated 14.12.2006 to the Manager -MBD of Ashika Capital Limited, Mumbai making false and baseless allegations against the respondents with a malicious intention of causing wrongful loss to them. The said letter was forwarded by the present appellant marking copies to Managing Director, Ashika Capital Limited; Secretary, Indian Bank Association, Mumbai; Managing Director, Credit Information Bureau, Mumbai; Chairman, SEBI, Mumbai; Finance Minister, Government of India, New Delhi; State Minister of Finance (Banking), New Delhi; Secretary, Ministry of Finance, New Delhi; Secretary (Banking) Government of India, New Delhi, Joint Secretary(Banking), Govt. of India, New Delhi and Joint Secretary (C.M.) Department of Economic Affairs, New Delhi6. The said letter contained the following imputations:Mr. K.T. Vijay Kumar along with his brother Mr. Balakrishna Rao had affected suitable change in the shareholding pattern as the part of well planned conspiracy perfectly planned and executed by them and other directors of the Chemical Biotech Ltd. to cheat and depute the common men via the IPO mode and finally to embezzle crores of rupeesWe are in the process of approaching CBLs banks, financial institutions and the state government departments which have also been mislead by these habitual cheats and had been made a part of the conspiracy in the proposed initial public offer. This shall help these banks, financial institution and state govt. departments to revaluate their support for these habitual cheats at the cost of public money7. The said letter was in turn forwarded by Ashika Capital Ltd. to Respondents Company on 21.12.2006. It was alleged by the respondents that the imputations made in the letter dated 14.12.2006 are defamatory. Hence, Respondent Nos. 1 and 2 filed a private complaint in the Court of Ist Additional Chief Metropolitan Magistrate, against the present proforma respondent Company viz., Rallis India through its Managing Director, present appellant (Company Secretary of proforma Respondent Company) and the directors of the proforma respondent Company. The trial court took cognizance of the offence against present appellant and proforma respondent company and held that a prima facie case is made out under Sections 499 and 500 of the IPC making the proforma Respondent Company and the appellant as necessary parties for the cause of action and they were accordingly summoned as accused nos.1& 28. Aggrieved by the order of the trial court the present appellant and proforma respondent -Company preferred a Criminal Petition No.3917 of 2007 under Section 482 Cr.P.C. before the High Court of Andhra Pradesh praying inter alia to quash the complaint initiated against them. The High Court dismissed the said petition and observed that the contents of the letter dated 14.12.2006, authored by the present appellant, prima facie contained defamatory statements. Hence, the present appeal by special leave

Reasoning: 11. Indisputably, judicial process should not be an instrument of oppression or needless harassment. The court should be circumspect and judicious in exercising discretion and should take all the relevant facts and circumstances into consideration before issuing process lest it would be an instrument in the hands of private complainant as vendetta to harass the persons needlessly12. It is equally well settled that summoning of an accused in a criminal case is a serious matter and the order taking cognizance by the Magistrate summoning the accused must reflect that he has applied his mind to the facts of the case and the law applicable thereto. Section 482 of the Code of Criminal Procedure empowers the High Court to exercise its inherent powers to prevent abuse of the process of court and to quash the proceeding instituted on complaint but such power could be exercised only in cases where the complaint does not disclose any offence or is vexatious or oppressive. If the allegations set out in the complaint do not constitute the offence of which cognizance is taken by the Magistrate it is open to the High Court to quash the same in exercise of power under Section 48213. So far as the complaint alleging offence under Section 499 IPC is concerned, if on consideration of the allegations the complaint is supported by a statement of the complainant on oath and the necessary ingredients of the offence are disclosed, the High Court should not normally interfere with the order taking cognizanceDr. Singhvi, for the first time before this Court tried to make out a case that the letter dated 14.12.2006 which is the basis of taking cognizance was allegedly sent from the office of Respondent No.4 Company under the signature of one colleague of the appellant without the knowledge or prior permission of the appellant and the said letter was never signed by the present appellant. In our view, if that is so, it is open to the appellant to take a defense and prove their contention during trial. Needless to say that the trial court shall consider the said contention during trial and record its findingsAfter giving our thoughtful consideration in the matter we are of the view that the High Court rightly refused to quash the criminal proceedings in exercise of power under Section 482 Cr.P.C