REPORTABLE
IN THE SUPREME COURT OF INDIA
CRIMINAL APPELLATE JURISDICTION
CRIMINAL APPEAL NO. OF 2008
(Arising out of SLP(Crl.) No. 1707 of 2006)
M. Viswanathan ..Appellant
Versus
M/s. S.K. Tiles & Potteries P. Ltd. & Ors. ..Respondents
JUDGMENT
Dr. ARIJIT PASAYAT, J.
1. Leave granted.
2. Challenge in this appeal is to the judgment of a learned Single Judge
of the Madras High Court allowing the application filed under Section 482
of the Code of Criminal Procedure, 1973 (in short the `Cr.P.C.’). Prayer in
the petition was to call for the records in Crime No.576 of 2005 in the file of
the Inspector of Police Team IV, Central Crime Branch, Chennai, and to
quash the same. The respondents 1 to 4 were booked for alleged
commission of offences punishable under Sections 379, 468, 471, 420, 506
(ii) of the Indian Penal Code, 1860 (in short the `IPC’) based on the
reference made by learned Additional Chief Metropolitan Magistrate,
Egmore, on the complaint presented by the present appellant under Section
200 of the Cr.P.C.
3. In the complaint essentially it was stated as follows:
“3. The first accused is M/s. Sri Krishna Tiles and Potteries
(Madras) Pvt. Ltd., the second accused is A.R. Santhanakrishnan,
Director of the first accused-company, the third accused is Mrs.
Radhika Santhanakrishnan, yet another Director of the first accused-
company and the – fourth accused is Chandrasekaran, working as
Commercial Manager of M/s. Sai Sri Krishna Properties and
Facilitators (P) Ltd.
4. M/s. Sri Krishna Tiles and Potteries (Madras) Pvt. Ltd., is the
owner of property to an extent of 34.04 acres in Thirumangalam
Village, Anna Nagar (West), Chennai. The first accused-company
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entered into a Memorandum of Understanding with the complainant
on 2.7.2001, as per which the first accused-company entrusted the
land for development with the complainant. The complainant started
developing the properties through his partnership firm `M/s. Sai Sri
Krishna Properties’. `M/s. Sai Sri Krishna Properties’ was converted
to a private limited company, in which the complainant was the
Managing Director and the third accused was the Director. An
agreement was entered into between the said `M/s. Sai Sri Krishna
Properties’ and `Sri Krishna Tiles and Potteries (Madras) Pvt. Ltd.’ on
24.6.2002. The newly floated `M/s. Sai Sri Krishna Properties’ was
appointed as a Facilitator by the accused Nos. 1 to 3 for developing
the properties after obtaining approval from Chennai Metropolitan
Development Authority (C.M.D.A.). Since the accused Nos.1 to 3
were not in a position to obtain approval from C.M.D.A., the project
could not be completed at the earliest.
5. Pursuant to the, above agreements, the complainant entered into an
agreement to sell and an agreement to construct with 146 purchasers
and received a sum of Rs.2,54,67,091/- as sale advance. The
complainant had invested a total sum of Rs.3 crores approximately
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including the said sum of Rs.2,54,67,091/- for the purpose of
developing the project and maintaining the property. The complainant
had returned a sum of Rs.21,71,360/- to 47 allottees out of the 146
allottees. A sum of Rs.2,29,71,775/- has to be refunded by the
complainant to the remaining 99 allottees. The accused Nos.1 to 3 are
also negotiating with the allottees for refunding the advance sale
consideration received from them. The purchasers informed the
complainant that the agreement between the accused Nos.1 to 3 and
the complainant’s private limited company had been terminated by
mutual consent. The complainant was shocked to see that the records
and the accounts relating to the said private limited company were
found missing at its office. The third accused had illegally taken away
all the records and accounts relating to the said private limited
company, including the originals of the aforesaid two agreements
dated 24.6.2002. Refunds have also been made to few of the
purchasers with a mala fide intention of cheating the complainant.
The complainant never entered into any mutual agreement for
termination of the aforesaid agreements. The accused Nos.1 to 3 have
fabricated a termination agreement as if it had been signed by the
complainant. On complainant’s enquiry, the accused Nos.1 to 3 are
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threatening to kill him.”
4. In seeking quashment of the proceedings stand of the respondents 1
to 4 was as follows:
(1) Though the complainant committed as per Memorandum of
Understanding that he will deposit Rs.2.5 crores for development of
the project, he did not do so. As per the terms and conditions of the
Memorandum of Understanding, it will get rescinded if the said
amount was not deposited by the complainant within one month from
the date of Memorandum of Understanding. The Memorandum of
Understanding has become a void agreement as the said amount was
not deposited. By way of abundant caution, the Memorandum of
Understanding was terminated as on 4.8.2001. As the Board of M/s.
Sai Sri Krishna Properties and Facilitators (P) Ltd, decided to remove
the complainant from his office as Managing Director, a resolution to
that effect was passed on 7.7.2005 in a board meeting conducted to
the effect that the complainant was ousted from his office as
Managing Director.
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(2) The accused with a good intention in order to avoid any
unwanted complications, made arrangements for repayment of the
funds collected by the complainant. The second and third accused
also made arrangements by pledging their own personal properties
and the advance received for allotment of flats was repaid. There
cannot be a case of theft as against a partner or a director of the
company with regard to its own property. The complainant will have
to remedy his grievances invoking Sections 627 to 630 of the
Companies Act. The allegations made by the complainant will not
attract the penal provisions of the Indian Penal Code. Therefore the
accused seek for quashment of the criminal proceedings.
5. The Inspector of Police, inter alia, stated as follows in the counter
affidavit:
“The investigation reveals that the complainant had spent
nearly a sum of Rs.3 crores for the development of the
property by doing enormous earthwork, laying of roads
etc. After the complainant asked for the records of the
company, the accused have taken away all the records,
books of accounts, returns, statutory registers,
agreements etc. The complainant filed a petition before
the Company Law Board in C.P.No. 44 of 2005 praying
to set aside the allotment of shares and appointment of
Additional Director. The accused filed a counter along6
with two documents forging the signatures of the
complainant and the Postal Authority. It is found that the
postal seal on the document does not tally with the seal
of the Postal Department. The Forensic Science
Department has given a report that the writings of the
complainant in the documents dated 29.1.2004 and
5.12.2004 are forged. The accused are also involved in
several other cases pending before the Central Crime
Branch (Economic Offences Wing), Chennai.”
6. Respondents 1 to 4 further submitted that the complainant was not a
party to the termination agreement and his signature also did not find place
in the agreement and, therefore, the question of manipulation of the said
document does not arise. He was curious to allege that one of the directors
of the company had taken away the original documents and records from the
company. The amounts which had been received by the complainant from
the intending purchasers had been completely accounted by the company.
The complainant’s stand was that the complaint discloses commission of
theft of document, forgery of certain records and criminal intimidation and,
therefore, the police had rightly started the investigation.
7. Learned counsel for the State also submitted that during the course of
investigation it was found that the seal of the postal department found a
particular document did not tally with the postal seal. It was also submitted
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that the alleged writing of the complainant in certain documents were not to
be in his hand writing.
8. The High Court noted in para 12 as follows:
“In the complaint, four types of allegations have been
made. The first allegation is that Mrs. Radhika
Santhanakrishnan, the third accused in this case had
illegally taken away all the records and accounts relating
to M/s. Sai Sri Krishna Properties and Facilitators (P)
Ltd. The Second allegation is that the accused have
fabricated a termination agreement as if the same had
been signed by the complainant. The third allegation is
that the advance amount received from the prospective
purchasers was returned behind the back of the
complainant in order to cheat him and the last allegation
is “on complainant’s enquiry, the accused 1 to 3 are
threatening to kill him.”
9. After noticing the factual aspects the High Court referred to some
judgments and came to an abrupt conclusion in the following words:
“Here in this case, there is no forgery of documents
referred to in the complaint. The first respondent
invents certain documents to show that those documents
were not in the handwriting of the complainant. Further,
there is no allegation that by using such forged
document, the accused has acquired gains. Therefore the
above authority will not apply to the facts and
circumstances of this case.”
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10. Accordingly, the prosecution was quashed holding that the grievance,
if any, of the complainant will have to be redressed through the Civil Forum
or the Company Law Board. He cannot prosecute the respondents on the
basis of bald allegation without any basis. Accordingly, prosecution has
quashed.
11. Learned counsel for the appellant submitted that while exercising
powers conferred under Section 482 Cr.P.C. the parameters have not been
kept in view by the High Court and matters which are essentially to be
resolved during trial, have been quashed by a practically non-reasoned
order.
12. Reading of the complaint clearly shows that the allegations are
substantially made out. This is not a case where the jurisdiction under
Section 482 Cr.P.C. was to be exercised. Per contra learned counsel for the
respondents 1 to 4 supported the judgment placing strong reliance on a
decision of this Court in Zandu Pharmaceutical Works Ltd. & Ors. v. Mohd.
Sharaful Haque & Anr. [2005(1) SCC 122] contending that the parameters
for exercising jurisdiction under Section 482 Cr.P.C. have been kept out and
there is nothing illicit in the impugned judgment to warrant interference.
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13. Learned counsel for the State supported the stand taken by the
appellant.
14. Exercise of power under Section 482 of the Code in a case of this
nature is the exception and not the rule. The Section does not confer any
new powers on the High Court. It only saves the inherent power which the
Court possessed before the enactment of the Code. It envisages three
circumstances under which the inherent jurisdiction may be exercised,
namely, (i) to give effect to an order under the Code, (ii) to prevent abuse of
the process of court, and (iii) to otherwise secure the ends of justice. It is
neither possible nor desirable to lay down any inflexible rule which would
govern the exercise of inherent jurisdiction. No legislative enactment
dealing with procedure can provide for all cases that may possibly arise.
Courts, therefore, have inherent powers apart from express provisions of
law which are necessary for proper discharge of functions and duties
imposed upon them by law. That is the doctrine which finds expression in
the section which merely recognizes and preserves inherent powers of the
High Courts. All courts, whether civil or criminal possess, in the absence of
any express provision, as inherent in their constitution, all such powers as
are necessary to do the right and to undo a wrong in course of
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administration of justice on the principle “quando lex aliquid alicui
concedit, concedere videtur et id sine quo res ipsae esse non potest” (when
the law gives a person anything it gives him that without which it cannot
exist). While exercising powers under the section, the court does not
function as a court of appeal or revision. Inherent jurisdiction under the
section though wide has to be exercised sparingly, carefully and with
caution and only when such exercise is justified by the tests specifically laid
down in the section itself. It is to be exercised ex debito justitiae to do real
and substantial justice for the administration of which alone courts exist.
Authority of the court exists for advancement of justice and if any attempt is
made to abuse that authority so as to produce injustice, the court has power
to prevent abuse. It would be an abuse of process of the court to allow any
action which would result in injustice and prevent promotion of justice. In
exercise of the powers court would be justified to quash any proceeding if it
finds that initiation/continuance of it amounts to abuse of the process of
court or quashing of these proceedings would otherwise serve the ends of
justice. When no offence is disclosed by the complaint, the court may
examine the question of fact. When a complaint is sought to be quashed, it
is permissible to look into the materials to assess what the complainant has
alleged and whether any offence is made out even if the allegations are
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accepted in toto.
15. In R. P. Kapur v. State of Punjab (AIR 1960 SC 866) this Court
summarized some categories of cases where inherent power can and should
be exercised to quash the proceedings.
(i) where it manifestly appears that there is a legal bar
against the institution or continuance e.g. want of
sanction;
(ii) where the allegations in the first information report
or complaint taken at its face value and accepted in their
entirety do not constitute the offence alleged;
(iii) where the allegations constitute an offence, but there
is no legal evidence adduced or the evidence adduced
clearly or manifestly fails to prove the charge.
16. In dealing with the last case, it is important to bear in mind the
distinction between a case where there is no legal evidence or where there is
evidence which is clearly inconsistent with the accusations made, and a case
where there is legal evidence which, on appreciation, may or may not
support the accusations. When exercising jurisdiction under Section 482 of
the Code, the High Court would not ordinarily embark upon an enquiry
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whether the evidence in question is reliable or not or whether on a
reasonable appreciation of it accusation would not be sustained. That is the
function of the trial Judge. Judicial process should not be an instrument of
oppression, or, needless harassment. Court should be circumspect and
judicious in exercising discretion and should take all relevant facts and
circumstances into consideration before issuing process, lest it would be an
instrument in the hands of a private complainant to unleash vendetta to
harass any person needlessly. At the same time the section is not an
instrument handed over to an accused to short-circuit a prosecution and
bring about its sudden death. The scope of exercise of power under Section
482 of the Code and the categories of cases where the High Court may
exercise its power under it relating to cognizable offences to prevent abuse
of process of any court or otherwise to secure the ends of justice were set
out in some detail by this Court in State of Haryana v. Bhajan Lal (1992
Supp (1) 335). A note of caution was, however, added that the power should
be exercised sparingly and that too in rarest of rare cases. The illustrative
categories indicated by this Court are as follows:
“(1) Where the allegations made in the first information
report or the complaint, even if they are taken at their
face value and accepted in their entirety do not prima
facie constitute any offence or make out a case against
the accused.
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(2) Where the allegations in the first information report
and other materials, if any, accompanying the FIR do not
disclose a cognizable offence, justifying an investigation
by police officers under Section 156(1) of the Code
except under an order of a Magistrate within the purview
of Section 155(2) of the Code.
(3) Where the uncontroverted allegations made in the
FIR or complaint and the evidence collected in support
of the same do not disclose the commission of any
offence and make out a case against the accused.
(4) Where the allegations in the FIR do not constitute a
cognizable offence but constitute only a non-cognizable
offence, no investigation is permitted by a police officer
without an order of a Magistrate as contemplated under
Section 155(2) of the Code.
(5) Where the allegations made in the FIR or complaint
are so absurd and inherently improbable on the basis of
which no prudent person can ever reach a just conclusion
that there is sufficient ground for proceeding against the
accused.
(6) Where there is an express legal bar engrafted in any
of the provisions of the Code or the Act concerned
(under which a criminal proceeding is instituted) to the
institution and continuance of the proceedings and/or
where there is a specific provision in the Code or Act
concerned, providing efficacious redress for the
grievance of the aggrieved party.
(7) Where a criminal proceeding is manifestly attended
with mala fide and/or where the proceeding is
maliciously instituted with an ulterior motive for
wreaking vengeance on the accused and with a view to
spite him due to private and personal grudge.”
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As noted above, the powers possessed by the High Court under Section 482
of the Code are very wide and the very plenitude of the power requires great
caution in its exercise. Court must be careful to see that its decision in
exercise of this power is based on sound principles. The inherent power
should not be exercised to stifle a legitimate prosecution. The High Court
being the highest court of a State should normally refrain from giving a
prima facie decision in a case where the entire facts are incomplete and
hazy, more so when the evidence has not been collected and produced
before the Court and the issues involved, whether factual or legal, are of
magnitude and cannot be seen in their true perspective without sufficient
material. Of course, no hard-and-fast rule can be laid down in regard to
cases in which the High Court will exercise its extraordinary jurisdiction of
quashing the proceeding at any stage. (See: Janata Dal v. H. S. Chowdhary
(1992 (4) SCC 305), and Raghubir Saran (Dr.) v. State of Bihar (AIR 1964
SC 1). It would not be proper for the High Court to analyse the case of the
complainant in the light of all probabilities in order to determine whether a
conviction would be sustainable and on such premises arrive at a conclusion
that the proceedings are to be quashed. It would be erroneous to assess the
material before it and conclude that the complaint cannot be proceeded with.
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In a proceeding instituted on complaint, exercise of the inherent powers to
quash the proceedings is called for only in a case where the complaint does
not disclose any offence or is frivolous, vexatious or oppressive. If the
allegations set out in the complaint do not constitute the offence of which
cognizance has been taken by the Magistrate, it is open to the High Court to
quash the same in exercise of the inherent powers under Section 482 of the
Code. It is not, however, necessary that there should be meticulous analysis
of the case before the trial to find out whether the case would end in
conviction or acquittal. The complaint has to be read as a whole. If it
appears that on consideration of the allegations in the light of the statement
made on oath of the complainant that the ingredients of the offence or
offences are disclosed and there is no material to show that the complaint is
mala fide, frivolous or vexatious, in that event there would be no
justification for interference by the High Court. When an information is
lodged at the police station and an offence is registered, then the mala fides
of the informant would be of secondary importance. It is the material
collected during the investigation and evidence led in court which decides
the fate of the accused person. The allegations of mala fides against the
informant are of no consequence and cannot by themselves be the basis for
quashing the proceedings. (See: Dhanalakshmi v. R. Prasanna Kumar (1990
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Supp SCC 686), State of Bihar v. P. P. Sharma (AIR 1996 SC 309), Rupan
Deol Bajaj v. Kanwar Pal Singh Gill (1995 (6) SCC 194), State of Kerala v.
O. C. Kuttan (AIR 1999 SC 1044), State of U.P. v. O. P. Sharma (1996 (7)
SCC 705), Rashmi Kumar v. Mahesh Kumar Bhada (1997 (2) SCC 397),
Satvinder Kaur v. State (Govt. of NCT of Delhi) (AIR 1996 SC 2983) and
Rajesh Bajaj v. State NCT of Delhi (1999 (3) SCC 259.
17. The above position was recently highlighted in Zandu Pharmaceutical
Works Ltd. & Ors. v. Mohd. Sharaful Haque and Another (2005 (1) SCC
122).
18. In the instant case the only conclusions arrived at by the High Court
is in para 23 of the judgment which have been quoted above. The High
Court has wrongly come to the conclusion that the matter in issue has to be
decided by a Civil Court or the Company Law Board. The High Court had
referred to the four types of allegations. Some of the allegations are
certainly not adjudicable by the Civil Court or the Company Law Board.
That being so the exercise of jurisdiction by the High Court in terms of
Section 482 Cr.P.C. cannot be maintained. The impugned order is
indefensible and is set aside.
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19. The appeal is allowed.
……………………………………J.
(Dr. ARIJIT PASAYAT)
……………………………………J.
(Dr. MUKUNDAKAM SHARMA)
New Delhi,
November 25, 2008
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