HIGH COURT OF JUDICATURE AT ALLAHABAD
Reserved on 09.07.2019
Delivered on 19.07.2019
Court No. – 65
Case :- APPLICATION U/S 482 No. – 24772 of 2019
Applicant :- Ram Kishore
Opposite Party :- State Of U.P. And Another
Counsel for Applicant :- Tarun Agrawal
Counsel for Opposite Party :- G.A.,Vikrant Rana,Vikrant Ra
Hon’ble Dinesh Kumar Singh-I,J.
1. Sri Vikrant Rana, learned Advocate has filed Vakalatnama on behalf of opposite party no. 2, which is taken on record.
2. Heard Sri Manish Tiwari, learned Senior Advocate assisted by Sri Tarun Agrawal, learned counsel for the applicant and Sri Vikrant Rana, learned counsel for opposite party no. 2.
3. This application under Section 482 Cr.P.C. has been filed seeking quashing of the entire proceedings of Case No. 3901/IX/2018 State of U.P. vs. Shyam Sundar Yadav and others, pending in the court of ACJM, Court No. 2, Meerut, arising out of Case Crime No. 340/17, under Sections 420, 406, 504, 506 and 323 I.P.C., at Police Station- Pallavpuram, District- Meerut, as well as the impugned charge sheet dated 24.05.2018 and the impugned summoning order dated 03.07.2018 as well as the order dated 26.02.2019 passed by the ACJM, Court No. 2, Meerut issuing non bailable warrant against the applicant, and also a prayer is made to stay the proceeding of the case till the disposal of this application.
4. As per F.I.R. the opposite party no. 2 came to know in the month of May, 2012 that M/s Kalindi Construction Pvt. Ltd. was going to construct residential houses in Kalindi Kunj, a residential colony situated on Roorki Meerut and were going to sell residential flats therefore, opposite party no. 2 and others met Directors of the Company namely, Sanjeev, Rajendra Prasad, Shyam Sundar Yadav and Ram Kishore (applicant) and obtained more information from them. All the four Directors gave them assurance that the said flats could be purchased by them as there was no dispute with respect to the land etc. and believing them the opposite party no. 2 and others got the flat booked by making advance payments of amounts from Rs.10 lakhs after 17 lakhs between the dates 01.06.2012 to 30.09.2012 and obtained their receipts and allotment letters of flats and they were assured that the possession of the said flats would be handed over by 31.10.2015 to them. Thereafter, they continued to meet the said Directors by going to the office of the said Company but applicant, his companion Shyam Sundar and others abused them and gave life threats to them and did not give the flats nor did return the money which was given by them in advance. Thus all the accused, named above had cheated the applicant and others of about Rs. 11 crores, which was usurped by them.
5. After investigation into the matter, the police has submitted charge- sheet against the applicant and others under the above-mentioned sections.
6. The submission made by the learned counsel for the applicant is that as per F.I.R. the opposite party no. 2 claims to have deposited an amount from Rs.10 lakhs to 17 lakhs between 01.06.2012 and 30.09.2012 in the account of M/S Kalindi Construction Private Limited (Company) as allotment money for residential house to be constructed by the Company in question, the physical possession of which was to be delivered by 31.10.2015. During course of investigation, the Investigating Officer has recorded the statement of as many as 20 independent witnesses under sections 161 Cr.P.C. who are similarly aggrieved as the opposite party no. 2. The entire amount was delivered only to Shyam Sundar Yadav who was Additional Director of the said Company while opposite party no. 2 did not claim any amount either in cash or through cheque or in any other form. Applicant was not involved in any financial transaction with the opposite party no. 2 rather he transacted exclusively with the other Additional Director of the Company namely Shyam Sundar Yadav. The opposite party no. 2 has not alleged in the F.I.R. or in his statement that the applicant was responsible for day-to-day affairs of the Company which assumes significance in the wake of settled principle of law that all directors cannot be held liable for acts and omissions of the Company in absence of any specific allegation against them. All the witnesses examined by the Investigating Officer have stated unambiguously that the advance was handed over only to Shyam Sundar Yadav and that no money was directly given to the applicant nor any of the witnesses has stated that the applicant was responsible for managing the affairs of the Company. As a matter of fact, even Shyam Sundar Yadav in his statement under sections 161 Cr.P.C. has admitted to have received payment from the opposite party no. 2 and having issued receipts to him under his signature. A copy of letter of allotment and receipt issued to opposite party no. 2 by Shyam Sundar Yadav has been annexed. Shyam Sundar Yadav after having received the money directly from the allottees did not deposit the same in the account of Company, rather siphoned off the same keeping the allottees as well as the other Directors in the dark, which is evident by a copy of the account statement of the two accounts maintained by the Company which are annexed and Shyam Sundar Yadav deposited in the account of Company only few cheques which were issued in the name of the Company. Initially, charge-sheet was submitted on 24.04.2019 against Shyam Sundar Yadav only but thereafter, on the basis of statement of one Dharmendra, the Investigating Officer has filed the impugned supplementary charge-sheet naming the applicant as an accused. Mahendra has claimed to have paid certain amount as advance for purchase of land. This amount was claimed to have been credited into the account of the Company. Certain amount was paid in cash and around 5 lakh was paid in cheques. The amount which was paid through cheques was duly credited into the account of the Company.
7. The proposed project failed to take off on account of siphoning off of funds by Shyam Sundar Yadav, therefore, the Company resolved to refund the money to allottees. The Company could only have refunded the amount of those allottees who had paid through cheques as only the said amount was credited into the account of Company while entire cash was misappropriated by Shyam Sundar Yadav. The Company entered into a settlement with Dharmendra in the year 2013, pursuant to which an amount of Rs.5,06,000/- was transferred back into the account of Dharmendra towards full and final settlement of his dues, therefore, his statement could not have been used against the applicant. After having received entire amount, Dharmendra did not initiate any proceedings against the Company or the applicant, therefore, his statement cannot in any manner establish the case of opposite party number 2. There is no concept of vicarious liability in criminal law. In the present case, admittedly, the money was paid and credited into the account of the Company but despite that the applicant has been roped in as an accused only because of being one of the Directors of the said Company at the relevant time. The said Company was originally incorporated on 25.01.2005 under the Companies Act, 1956. The induction of the applicant in the said Company as Additional Director was made on 05.07.2012 and he was made permanent Director on 29.09.2012. It was essential for the opposite party no. 2 to have impleaded the Company as an accused. In a catena of cases of Apex Court it has been laid down that criminal prosecution is not maintainable against the Directors of the Company in cases where Company itself was not arrayed as an accused. Further it is argued that the prosecution is barred under section 80 of Real Estate (Regulation and Development) Act, 2016 (“RERA” hereinafter) which is a comprehensive legislation covering the entire field of real estate transactions in India which has come in force with effect from 25.03.2016 and in Chapter VIII, Sections 59 to 72, provision is made to deal with the kind of disputes which has been raised by the opposite party no. 2 precisely and yet the opposite party no. 2 has maliciously chosen to invoke criminal proceedings against the applicant.
8. The learned Magistrate has taken cognizance erroneously without application of mind in a mechanical manner without even recording satisfaction of service of summons upon the applicant. The said summoning order has been passed in a printed proforma which has been severely deprecated by this Court in several cases. The applicant is 82 years old person having no criminal history. Therefore, the entire proceedings initiated against him need to be quashed.
9. Reliance has been placed from the side of the applicant upon several case laws which are as follows:-
10. S.K. Alagh Vs. State of Uttar Pradesh and others (2008) 5 Supreme Court Cases 662, wherein, in a matter under Section 405 and 206 I.P.C., it was found that the drafts were drawn in the name of the Company and it was held that even if the appellant was its Managing Director, he could not have committed an offence under Section 406 I.P.C. If and when a statute contemplates creation of such a legal fiction, it provides specifically therefor. In absence of any provision laid down under the statute, a Director of a Company or an employee cannot be held to be vicariously liable for any offence committed by the Company itself. It is also held in this case that the Penal Code, save and except some provisions specifically providing therefor, does not contemplate any vicarious liability on the part of a party who is not charged directly for commission of an offence. The provisions of Essential Commodities Act, Negotiable Instruments Act, the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952, etc. have created such vicarious liability. In terms of explanations appended to Section 405 of the Penal Code, a legal fiction has been created to the effect that the employer shall be deemed to have committed an offence of criminal breach of trust. Whereas, a person in charge of the affairs of Company and in control thereof has been made vicariously liable for the offence committed by the Company along with the Company but even in a case falling under Section 406 I.P.C. vicarious liability has been held to be not extendable to the Directors or officers of the Company.
11. On GHCL Employees Stock Option Trust vs. India Infoline Limited and connected appeals (2013) 4 Supreme Court cases 505, reliance has been placed by the learned counsel for the applicant wherein facts were that the appellant had a demat account with respondent No. 1, Company. The Company allegedly claimed outstanding debit of Rs.10.48 crores against the appellant in its demat account with it. The Company had a lien of 20,46,195 shares purchased by the appellant in that account. The Company informed the appellant about the aforesaid debit. The appellant cleared the amount outstanding against it by making payment of Rs.10.18 crores by a cheque. Later on, it transpired that the correct debit against the appellant was Rs.10,22,77,522. The appellant filed a criminal complaint alleging that the Company dishonestly received a sum of Rs.25,22,477.53 from it by making false demand. It was further alleged that on receipt of the amount of Rs. 10.48 crores the respondent-accused were under legal obligation to transfer the shares purchased by the appellant from the pool account to its demat account. The appellant further alleged that it met Respondents 2 to 7, namely Managing Director, the Company Secretary and Directors of Respondent No. 1 Company and requested to refund the excess amount and transfer its share to demat account but nothing was done. The appellant therefore, alleged that the respondents committed criminal breach of trust and cheating, inasmuch as they sold off 8,76,668 shares of the appellant and misappropriated the entire sale proceeds. The Magistrate directed issuance of summons against the respondents to face trial under the relevant sections of I.P.C. Aggrieved by the said order the respondents approached the High Court under Section 482 Cr.P.C. challenging the issuance of summons against the Managing Director, the Company Secretary and the Directors of the Company, (i.e. respondents 2 to 7). It was held by the Supreme Court that the said issuance of summons would not sustain and the same was liable to be set aside. So far as the Company (i.e. respondent no. 1) was concerned, the High Court held that issuance of summons against it under Section 415 I.P.C. could not be sustained, but directed the Magistrate to proceed with the trial against the Company in respect of other offences. Dissatisfied with the order of the High Court, the complainant preferred the present appeal before the Supreme Court and the Supreme Court held that the High Court had clearly noted that issuance of the summons against respondent No. 2 to 7 was illegal and amounted to abuse of process of law because the Magistrate had not recorded his satisfaction about the prima facie case as against Respondents 2 to 7 and the role played by them in the capacity of Managing Director, Company Secretary or Directors.
12. He has also placed reliance on Criminal Appeal No. 1584 of 2007, Sharad Kumar Sanghi vs. Sangita Rane, (MANU/SC/0205/2015) decided by the Hon’ble Supreme Court on 10.02.2015. In this case the facts were that appellant was the Managing Director M/s. Sanghi Brothers (Indore) Ltd., Indore which was a registered Company, which was engaged in the business of automobile sale, finance and shipping etc. having branches at various places including in the city of Bhopal. The Respondent-complainant obtained a quotation from the Bhopal Branch for purchase of a Tata Diesel Vehicle in the month of April 1998, which was delivered to the respondent on 01.05.1998 on payment of the price deposited at Bhopal vide Bank Draft issued from the State Bank of India, Sarni, Betul. The respondent faced difficulty with the vehicle and eventually he came to know that in the month of August 2000 a different engine number was made in the invoice that was issued to him than the engine that was put in the chassis. On further enquiry, he found that a letter was issued by Tata Engineering and Locomotive Company (TELCO) on 07.11.2000 that in course of transit from the Company to Bhopal, the said vehicle had met with an accident as a result of which the engine was replaced by another engine. Coming to know of this, the Respondent filed a complaint under Section 200 of the Criminal Procedure Code alleging that the M/s. Sanghi Brothers, (Indore), Ltd., Indore being represented by the Mangaing Director, Sharad Kumar Sanghi, had suppressed the information and deliberately cheated the respondent. It was held in this case that the complainant’s initial statement would reflect, the allegations were against Company, but the Company had not been arrayed as a party. Therefore, the allegations had to be restricted to the Managing Director. The allegations levelled against him were found to be vague and in fact, principally they were against the Company. There was 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 whereby vicarious liability is fastened on certain statutes and reliance is placed by Supreme Court on the law laid down in Aneeta Hada vs. Godfather Travels and Tours Private Limited (2012) 5 SCC 661. After being considered the case, the Hon’ble High Court held that when the Company has not been arraigned as an accused, such an order could not have been passed and accordingly quashed the criminal proceedings.
13. Citing the above case laws the main point hammered was that in the present case admittedly, the Company was registered by the name M/s Kalindi Construction Pvt. Ltd., of which there were four Directors who have been named in the F.I.R. including the present applicant. The main allegation, according to the F.I.R. is against the other co-accused namely Shyam Sundar Yadav, who actually had taken all the money and issued receipts. All the witnesses who have been recorded by the Investigating Officer through investigation have stated him only to be the person who was actually collecting the money and was issuing receipts in that regard and none took name of the accused-applicant and therefore, it is crystal clear from the evidence on record that the accused applicant was not an active partner nor, did he participate in day-to-day business of the Company, rather the same was being performed by the co-accused Shyam Sundar Yadav, who collected the money paid by the various allottees and defalcated the same. Moreover, it is also argued that because of Compnay not being arrayed as a party/ accused in the present case the accused-applicant could not have been made an accused and issued summons under the above mentioned sections as he had no role in the present offence. It was also argued that the trial court had passed the impugned order on a proforma which would reflect that there was no application of mind while issuing the summons.
14. On the other hand, learned counsel for the opposite party No. 2 has vehemently opposed the quashing of the proceedings and it was stated that it was the accused-applicant who was equally responsible for the collection of money which was made by him and it cannot be said that he was not dealing with day-to-day business of the said Company and the attention was drawn to the statements of several witnesses/ allottees who were aggrieved persons such as Atul Gupta, Rajendra Singh, Harendra Chauhan, Rajat Goel and a number of them. Particularly, the persons named above, Atul Gupta has stated that in the year, 2012 he and his wife had given Rs. 8 lakh in cash on 23.06.2012, when they had approached Shyam Sundar Yadav, Rajendra, Ram Kishore (applicant), for purchase of Flat No. 40 for an amount of Rs. 30 lakhs and Ram Kishore got a receiving prepared for an amount of Rs. 8 lakhs from Shyam Sundar. Who-so-ever used to visit the office for getting a flat booked, he used to be given receipt by Shyam Sundar and the amount used to be taken by Ram Kishore (applicant) and Rajendra. Almost the similar kind of statements have been given by Rajendra Singh and Sompal also. Therefore, it is quite clear from the statements of these witnesses that the accused-applicant is stated to have received cash amount from the allottees and O.P. No. 2, who was also one of the allottees, who had given amount to the accused-applicant. Therefore, it cannot be denied that he had an active role in the day-to-day affairs of the Company. As regards the Company not being impleaded as an accused and because of that the accused-applicant’s summoning being defective/ illegal, I am of the view that when the money is directly collected by one of the Directors i.e. accused-applicant, it does not matter as to whether the Company has been impleaded as an accused or not. It may be true that the Company could also have been impleaded but merely if it is not impleaded, would not exonerate the accused-applicant of its wrongs under the technical flaw that the Company was not impleaded.
15. Learned counsel for the opposite party no. 2 has also relied upon several case laws which are as follows:-
(a). In Venkateshwaran and another vs. Singaravel Yarn Traders, (2009) 16 Supreme Court Cases 757, an attention was drawn to the Para No. 2 in which it has been recorded that the question as to whether the present appellants, who were Accused 3 and 4, were the partners of the firm and were responsible for conduct of business, is a disputed question of fact which could not have been gone into under Section 482 Cr.P.C. The High Court was absolutely right in not entertaining that question. It would be appropriate for accused persons to urge that they were not concerned in any way with the said partnership firm during trial.
16. He has also placed reliance on Usher Agro Ltd. vs. State of U.P. and another, Allahabad High Court, 2018 (8) ADJ 336 and attention was drawn to Para Nos. 33, 34 and 35, in which the High Court has placed reliance upon a judgment of Madhya Pradesh High Court, Manish Kalani and another vs. Housing and Development Corporation Ltd. (HUDCO) and another, M.Cr.C. No. 16285 of 2016, decided on 30.01.2018, several paragraphs of which are quoted in the said judgment and in Para No. 31 of the said judgment it has been recorded that for taking cognizance against applicant No. 2 Company the provision of Section 319 Cr.P.C. could be adopted. Relying upon it, it appears that the learned counsel for the opposite party no. 2 wanted to convey that if at all, it was found by the Trial Court that the Company was necessary party/ accused in this case the provision of Section 319 Cr.p.C. could be invoked against the said Company, hence on that ground alone that the Company was not made accused in the present proceedings, the proceedings in the present case cannot be dropped against the accused-applicant. I find that the said law which has been cited by the learned counsel for the opposite party no. 2 relates to the proceedings under Section 138 of Negotiable Instruments Act, but whether they would be applicable wholly in the present case, is a matter to be considered by the trial court at the appropriate stage.
17. The last rebuttal of the argument of learned counsel for the applicant that the cognizance taken by trial court was illegal because the said order was passed on a proforma by filling in the blanks, in this regard the reply given is that the same, at the most would be treated to be an irregularity and on that count alone the entire criminal proceedings against accused-applicant may not be dropped. I find weight in the argument of the learned counsel for the opposite party no. 2.
18. After having considered the arguments made from the both sides, I am convinced that in the present case the accused-applicant has been found to have received cash amount from the allottees including the complainant, opposite party no. 2. Therefore, I am not inclined to accept the argument of learned counsel for the applicant that accused was not dealing with day-to-day business of the said Company and for other arguments that the Company was necessary party, I have already given my opinion that the same can be taken care of by the trial court at the time when the proceedings are further taken ahead. The facts of the present case are totally different from the facts of the case laws relied upon by learned counsel for the applicant which have been narrated in the rulings which have been relied upon by the learned counsel for the applicant, cited above.
19. In view of the above discussion, I do not see any infirmity in the impugned orders. The present application under Section 482 Cr.P.C. deserves to be dismissed and it is accordingly dismissed.
Order Date :- 19.07.2019