M. Viswanathan Vs.
M/S.S.K. Tiles & Potteries P. Ltd.& Ors.  INSC 2010 (25 November
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
Dr. ARIJIT PASAYAT,
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.
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.
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 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.
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 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 4 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.
5 (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
5. The Inspector of
Police, inter alia, stated as follows in the counter affidavit:
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 along 6
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),
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.
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.
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 that the alleged
writing of the complainant in certain documents were not to be in his hand
High Court noted in para 12 as follows:
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."
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."
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.
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.
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.
counsel for the State supported the stand taken by the appellant.
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.
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 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
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 areaccepted in toto.
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
(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.
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 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.
(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."
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.
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 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.
above position was recently highlighted in Zandu Pharmaceutical Works Ltd.
& Ors. v. Mohd. Sharaful Haque and Another (2005 (1) SCC 122).
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.
appeal is allowed.
(Dr. ARIJIT PASAYAT)