Maksud Saiyed Vs. State of Gujarat & Ors  Insc 949 (18 September 2007)
Sinha & Harjit Singh Bedi
APPEAL NO. 1248 OF 2007 [Arising out of SLP (Crl.) No. 923 of 2006] S.B. SINHA,
Respondent No. 2 is a former Chairman-cum-Managing Director of Dena Bank. He is
presently the Chairman and Managing Director of Bank of Baroda, Mumbai.
Respondent Nos. 3 to 11 are Directors of Dena Bank.
is a Director of Nagami Nicotine Pvt. Ltd. (hereinafter referred to as "the
Company"). He had transactions with the said Company. He had taken loan
from Dena Bank. As loans were not paid, admittedly, an original application was
filed against him before the Debts Recovery Tribunal, Ahmedabad for recovery of
a sum of Rs. 120.13 lakhs from the Company.
Bank floated a public issue of 8 crores equity shares of Rs. 10/- each for cash
at a premium of Rs. 17/- i.e. at a price of Rs. 27/- each.
was published for the purpose of public issue and therein some false and misleading
information had been given with regard to sanction limits, the dues and export
bills of the Company. It was alleged that the Company had committed an offence
punishable under Sections 120B, 425, 191, 192, 177, 181 as also 500 of the
Indian Penal Code. A criminal complaint was filed before the Chief Judicial
Magistrate, Vadodara by the appellant on or about 28.02.2005 alleging:
Following false, fabricated and fraudulent documents illegally and dishonestly
misused by Shri G.C. Garg in the absence of the sanction letters of the Bank
along with its stipulated sanctioned terms and conditions for the sanctioned so
called credit facilities, evidently acceptance of Complainant's Company for the
stipulated sanctioned terms and conditions does not exist.
following false, fabricated and fraudulent dishonestly and purposefully misused
documents with malafide intention are illegal, invalid and not maintainable.
Thus, Shri G.C. Garg solemnly affirmed and signed the verification of the
aforesaid Original Application by dishonestly making false claim under Section
209 by giving false and fabricated statements, information and evidences under
Sections 177, 181, 191, 192, 196, 199, 200, 470 and 471 of IPC."
order under Sub-section (3) of Section 156 of the Code of Criminal Procedure
was passed by the learned Chief Judicial Magistrate relying on or on the basis
of allegations made in the said complaint petition.
learned Chief Judicial Magistrate by an order dated 28.02.2005 directed the
police authorities to investigate the complaint. Respondent filed an
application under Section 482 of the Code of Criminal Procedure for quashing
the complaint and the investigation on 10.05.2005. By reason of the impugned
judgment dated 9.01.2006, the said application has been allowed.
Bishwajit Bhattacharyya, learned counsel appearing on behalf of the appellant
would submit that the High Court committed a serious error in passing the
impugned order insofar as it failed to take into consideration that it had no
jurisdiction to quash the police investigation at that stage.
to the learned counsel, the acts of omission and commission on the part of the
bank in causing loss of reputation of the appellant is evident on its face.
Such an action on the part of the officers of the appellant's bank was wholly
jurisdiction of the High Court to quash a FIR in exercise of its jurisdiction
under Section 482 of the Code of Criminal Procedure is well- known. The court
may not enter into determination of a disputed question of fact at that stage.
It may, however, take note of the allegations made in the complaint petition vis-`-vis
the conduct of the parties. It is not disputed that the bank had filed an
original application before the Debts Recovery Tribunal, Ahmedabad. A civil
suit was filed at Vadodara in the year 2003.
prospectus issued, it was stated:
details, Date of Filing Name of the party Branch Amount claimed (Rs. in lacs)
Nature of claim made against the Bank 4 DRT, A'bad 28.3.03 M/s. Nagami Nicotine
Pvt. Ltd. A.R.B. A'bad 993.74 The case is filed against the Bank for non-
submission of export bills and non-releasing of the sanctioned limits.
have taken plea that since the borrower is not clearing the dues of the Bank,
Bank has not released the export bills as per procedure of UCPDC rules."
is not in dispute that in the year 2003, the matter was pending before the City Civil Court, Ahmedabad. Other relevant facts
stated in the said prospectus were not incorrect. The stand taken by the
respondents therein as contained in Column under the Head "Nature of claim
made against the Bank" is also not incorrect as the same was subject
matter of a civil suit. Appellant in its notice addressed to Respondent No. 2
herein through his advocate dated 25.01.2005 stated:
client says and submits that the litigation you are mentioning does not exist
at DRT, Ahmedabad. On the contrary my client has filed Special Civil Suit No.
178/2003 on 28.3.2003 and the same is pending for adjudication in the Civil
Court Vadodara before the Hon'ble Civil Judge (SD) Vadodara. Besides my client
does not know ARB, Ahmedabad and also not aware of its place of existence and
its whereabouts in Ahmedabad and ARB, Ahmedabad has nothing to do with the
case of defamation was found only on that basis. It is not in dispute that
Respondent No. 2 in reply to the said notice dated 5.02.2005 through his
The averments made in para 3 of your legal notice are not true and correct and
are not admitted. The export bills were sent to Bank of Fujirah and the same
were returned unpaid due to discrepancy in the documents, and again, the said
export bills were sent to HSBC Bank but, the same were returned unpaid by HSBC
bank without payment on account of discrepancy in the Export bills L/C. There
is no negligence on the part of Bank in respect of Export bills under L/C.
Thus, to pressurize the Bank, your client has filed the Special Civil Suit No.
178/2003 in the Civil
Court at Vadodara. In
fact, in para 51 of your client's plaint, it is claimed that the branch did not
release the CC hypothecation limit.
contents of para 5 of your notice are not true and correct and the same are
denied by my client and there is no question of concealing any facts in the
prospectus as alleged by you.
is no question of any concealment or suppression of facts in the prospectus.
Had the notice been given in time the bank could have taken corrective steps in
time to include the fact which was omitted unintentionally. The public issue
was closed on 29.01.2005 (Saturday) as mentioned in the prospectus.
of public issue was filed by the Bank with SEBI on 3.12.2004 and was kept on
the Website of the bank, SEBI and Lead Manager M/s. SBI Caps and a press note
was released. Final prospectus of the issue was filed with SEBI on 10.1.2005
and was kept on Website of the Bank, SEBI and lead Manager M/s. SBI Caps, and a
press note was released. Statutory advertisement was published in the newspapaer
on 12.1.2005. The public issue opened on 24.1.2005 and closed on 29.1.2005.
client received your notice on 27.1.2005, but it was not readable and hence my
client informed on fax to send the same again.
the notice was not refaxed and instead my client received the notice on
28.1.2005 by post.
fact that the notice was served belatedly, suggests that the intention of your
client is to pressurize and put the bank into uncomfortable position. Thus,
there is no bonafide intention on the part of your client except to harass my
client and to avoid your client's liability towards the repayment of the Bank's
view of the above, my client has not acted with malafide intention and has not
concealed or suppressed any material facts against the interest of the public
at large and investors in particulars.
error is by inadvertence and was not intentional.
hope that wiser counsel shall prevail upon your client and advise your client
to withdraw the notice forthwith. We request you that you will desist from
taking unwarranted actions against the bank.
spite of the above if your client takes any action against my client, my client
will defend the same at the cost of your client and your client will be held
liable and responsible for the costs and consequences thereof."
inadvertent mistake committed by the bank in referring to the case being
pending before DRT instead of City Civil Court cannot, in our opinion, give
rise to a cause of action for filing a complaint petition far less under
Section 500 of the Indian Penal Code particularly when the other particulars
contained therein were not found to be incorrect.
is pertinent to notice that the learned Chief Judicial Magistrate in its order
dated 28.02.2005 proceeded on the basis that the respondents are Managers and
Branch Managers of Dena Bank. There has, thus, been a total non-application of
mind on the part of the learned Chief Judicial Magistrate.
learned Chief Judicial Magistrate noticed:
per the say of the Complainant, Dena Bank has come out with public issue and on
page no. 87 of its Prospectus, the published false information damages the
Complainant's Company and endangers credit of the Company. This apart, the Bank
fabricated false documents in spite of Complainant has not taken amount under
loan and in violation of the rules and regulations of banking law and practice,
the Bank deceived the company by filing false suit before DRT, by false
submissions and producing false affidavit are the allegations of the
Complainant. This apart, the Bank withheld export bills of the Complainant's
Company under its custody under the pretext of the false excuses by cheating
and committed criminal offence, despite no amount of demand loan taken by the
Complainant, the Bank fabricated false reasons and committed offence against
the Complainant's Company are the subject matter of the Complaint and looking
to this, if the Police investigates the present complaint, more and better investigation
is possible. Hence the present complaint is necessitated for the investigation
by the Police, therefore following order is given."
Allegations contained in the complaint petition, as noticed by the learned
Magistrate, may give rise to tortuous liability on the part of Dena Bank.
Principal allegations were made against the bank. Who had acted on behalf of
the bank was not disclosed. The acts of omission and commission on the part of
the bank, if any, by withholding export bills of the bank may give rise to a
statutory violation on its part but the respondents were not personally liable therefor.
Saroj Kumar Poddar v. State (NCT of Delhi) and Anr. [2007 (2) SCALE 36], this Court held:
from the Company and the appellant, as noticed hereinbefore, the Managing
Director and all other Directors were also made accused. The appellant did not
issue any cheque. He, as noticed hereinbefore, had resigned from the
Directorship of the Company. It may be true that as to exactly on what date the
said resignation was accepted by the Company is not known, but, even otherwise,
there is no averment in the complaint petitions as to how and in what manner
the appellant was responsible for the conduct of the business of the Company or
otherwise responsible to it in regard to its functioning. He had not issued any
cheque. How he is responsible for dishonour of the cheque has not been stated.
The allegations made in paragraph 3, thus, in our opinion do not satisfy the
requirements of Section 141 of the Act."
also Everest Advertising Pvt. Ltd. v. State, Govt. of NCT of Delhi and Ors. JT
2007 (5) SC 529 and S.M.S. Pharmaceuticals Ltd. v. Neeta Bhalla and Anr. 2007
(3) SCALE 245]
Where a jurisdiction is exercised on a complaint petition filed in terms of
Section 156(3) or Section 200 of the Code of Criminal Procedure, the Magistrate
is required to apply his mind. Indian Penal Code does not contain any provision
for attaching vicarious liability on the part of the Managing Director or the
Directors of the Company when the accused is the Company. The learned
Magistrate failed to pose unto himself the correct question viz. as to whether
the complaint petition, even if given face value and taken to be correct in its
entirety, would lead to the conclusion that the respondents herein were
personally liable for any offence. The Bank is a body corporate. Vicarious
liability of the Managing Director and Director would arise provided any
provision exists in that behalf in the statute.
indisputably must contain provision fixing such vicarious liabilities.
for the said purpose, it is obligatory on the part of the complainant to make
requisite allegations which would attract the provisions constituting vicarious
will bear repetition to state that throughout the complaint petition, no
allegation had been made as against any of the respondents herein that they had
any thing to deal with personally either in discharge of their statutory or
official duty. As indicated hereinbefore, in the prospectus, a bona fide
mistake had been committed. The fact that such a mistake had been committed
stands accepted. In any event, the statement that the matter was pending before
the DRT in stead and place of the City Civil Court, Ahmedabad, per se, cannot be said to be defamatory as the
fact that a suit was pending for recovery of the huge amount is neither denied
such a suit was maintainable and/ or is ultimately to be decreed or disposed of
is a question which has to be gone into in the suit itself. A criminal court
cannot even take that factor into consideration. The High Court considered the
matter at some great details. Having analysed the materials placed before it,
it was held:
was, therefore, stated that there was no suppression or concealment of any
facts and it did not amount to criminal breach of trust and cheating on the
part of the Bank as alleged by the complainant. The said export bills under L/C
were negotiated by the Bank under the provisions of UCPDC 500 1995 Revision.
The Bank has also informed vide its letter dated 8.2.2005 to M/s. SBI Capital
Markets Ltd. It was stated therein that the Bank has not concealed or
suppressed any material fact against the interest of the public at large and
investors in particular. The bonafide mis- description in setting out the
nature of claim was unintentional. It was further stated that the material
particulars like the amount of claim, date of filing and name of the company
was correctly mentioned. The mis-description did not materially
influence/affect the decision of the investors/public"
was furthermore opined:
appears to the Court that the learned Chief Judicial Magistrate has not applied
his mind while passing the order under Section 156(3) of the Criminal Procedure
Code directing the police to investigate in the matter. The impugned order, on
the face of it, reveals that he has not gone through the complaint. He has
stated in the order that the accused Nos. 1 to 10 are Manager and Branch
Manager of Dena Bank. As a matter of fact, the accused No. 1 was the
Ex-Chairman and Managing Director of Dena Bank, and the accused No. 2 was the
Executive Director. The accused Nos. 3 to 10 are Directors of Dena Bank. None
of these persons are Managers or Branch Manager. Despite this, the learned
Chief Judicial Magistrate has mentioned in his order that they are Managers or
Branch Managers. With regard to the prospectus he has simply stated that the
Bank has issued prospectus for its public issue and at page No. 87 false informations
were given so as to cause damage to the Company and to jeopardize the
reputation of the Company. Despite the fact that the litigations are pending
before the Civil Court he has mentioned about
non-returning of export bills etc. On these facts he has passed order under
Section 156 (3) of the Criminal Procedure Code, directing the PSI, Sayajiganj
Police Station to make inquiry in the matter."
approach of the High Court, with respect, is entirely correct.
This Court in Pepsi Foods Ltd. and Another v. Special Judicial Magistrate and
Others [(1998) 5 SCC 749], held as under:
Summoning of an accused in a criminal case is a serious matter. Criminal law
cannot be set into motion as a matter of course. It is not that the complainant
has to bring only two witnesses to support his allegations in the complaint to
have the criminal law set into motion. The order of the Magistrate summoning
the accused must reflect that he has applied his mind to the facts of the case
and the law applicable thereto. He has to examine the nature of allegations
made in the complaint and the evidence both oral and documentary in support
thereof and would that be sufficient for the complainant to succeed in bringing
charge home to the accused. It is not that the Magistrate is a silent spectator
at the time of recording of preliminary evidence before summoning of the
accused. The Magistrate has to carefully scrutinise the evidence brought on
record and may even himself put questions to the complainant and his witnesses
to elicit answers to find out the truthfulness of the allegations or otherwise
and then examine if any offence is prima facie committed by all or any of the
learned Magistrate, in our opinion, shall have kept the said principle in mind.
For the reasons aforementioned, there is no merit in this appeal which is
dismissed accordingly with costs. Counsel's fee assessed at Rs. 25,000/-.