Maharashtra State
Elect. Distrn. Co.L.& ANR Vs. Datar Switchgear Ltd.& Ors. [2010] INSC
841 (8 October 2010)
Judgment
IN THE SUPREME COURT
OF INDIA CRIMINAL APPELLATE JURISDICTION CRIMINAL APPEAL NO. 1979 OF 2010
(Arising out of S.L.P. (Crl.) No. 7336 of 2007) MAHARASHTRA STATE -- APPELLANT
(S) ELECTRICITY DISTRIBUTION CO. LTD. & ANR.
VERSUS
D.K. JAIN, J.:
1.
Leave
granted.
2.
This
appeal, by special leave, is directed against the judgment, dated 9th October
2007, delivered by the High Court of Bombay in Criminal Application No. 3715 of
2005, in a petition filed by the two appellants herein under Section 482 of the
Code of Criminal Procedure, 1973 (in short "the Code"). By the
impugned judgment, the High Court has declined to quash a criminal complaint
filed by respondents No.1 to 3 in 1 this appeal against the appellants and
others for offences under Sections 192 and 199 read with Section 34 of the
Indian Penal Code, 1860 (for short "the IPC").
3.
Shorn
of unnecessary details, the facts, material for adjudication of the issue
arising in this appeal may be stated thus:
Appellant No.1, viz.
Maharashtra State Electricity Distribution Co. Ltd.; constituted in terms of
the provisions of the Electricity Act, 2003 is the successor in interest of
Maharashtra State Electricity Board (for short "MSEB") and appellant
No. 2 is its Chairman. Respondent No.1 is an incorporated company, viz. M/s
Datar Switchgear Ltd. and respondents No.2 and 3, senior officials of
respondent No.1, are the complainants and respondents No.4 to 7 are the
co-accused.
4.
Pursuant
to various contracts entered into between respondent No. 1 and MSEB in the year
1993-94 for installation of "Low Tension Load Management Systems"
(for short "LTLMS"), MSEB issued a work order on 27th March 1997
whereby respondent No. 1 was required to install at various locations and lease
out 47,987 LTLMS to MSEB for a period of 10 years at a monthly rent of ` 825/-
for the first six years, and about ` 650/- per month for the remaining four
years. 2
5.
Clause
8.1 of the said contract stipulated that respondent No.1 would send intimation
to the Section-in-charge of MSEB regarding the installation of the equipment,
and thereafter, a commissioning report was to be prepared in that regard, which
was to be signed jointly by the representative of the complainant and the
concerned Section-in-charge of the MSEB.
6.
During
the validity period of the contract, various disputes arose between respondent
No.1 and MSEB. On 19th February 1999, respondent No.1 partially terminated the
contract, conveying to MSEB that it would not install any more LTLMS, and would
only maintain the installed items.
7.
On
21st April 1999, respondent No.1 terminated the contract in entirety.
Nevertheless, they offered to maintain the installed objects provided MSEB
continued to pay rent during the duration of the work order. As the dispute
arose between respondent No. 1 and MSEB vide order dated 5th May 1999, the High
Court of Bombay referred the disputes to Arbitral Tribunal.
8.
The
arbitration proceedings commenced on 19th February 1999. The controversy in the
instant case pertains to the amended written statement filed by the MSEB on 7th
February 2000, the relevant extract of which reads as follows:
"9A. The
Respondents submit that the Claimants are not entitled to claim any amount from
the Respondents as claimed or otherwise. In fact, as stated hereinafter, the
Claimants are bound to refund to the Respondents all the amounts recovered by
them from the Respondents along with interest thereon. The Respondents submit
that the Claimants are guilty of having practiced fraud upon the Respondents.
The Claimants have fabricated documents as also are guilty of misrepresentation
of material facts in the matter of commissioning objects, installing them,
taking out print outs therefrom and submitting bills in respect thereof....
.... .... .... .... .... .... .... .... .... .... .... .... .... .... .... ....
.... .... .... .... .... ...
a)
COMMISSIONING/COMMISSIONING REPORTS The provisions of Clause 8.1 of the work
order provided for installation and commissioning of LTLMS systems in presence
of Section in Charge of every Section. The Claimants not only did not inform
the concerned/Section in Charge as required by Clauses (a) and (b) thereof, but
submitted commissioning reports for the LM systems making it appear as if the
objects were installed on a given date in presence of the representatives of
the Section in charge as mentioned in the said reports, and thereafter
submitted the same for the signature of the Sections in charge. With a view
that the sub divisions, divisions and circles of the Respondents are not able
to find out the same, the Claimants failed and neglected to send copies of the
Commissioning reports as provided in Clause 8.0(d), thereby making it
impossible for the officers mentioned in clause (e) thereof to depute
representatives to inspect the commissioned objects in the circle. The
Claimants thus obtained payments from the dates mentioned in the said reports
fraudulently by misrepresentation of the facts...."
9.
The
Arbitral Tribunal passed the final award on 18th June 2004 whereby it directed
MSEB to pay `185,97,86,399/- as damages to respondent No.1, and pay interest at
the rate of 10% p.a. on the sum of `179,15,87,009/-. The award contained the
following observations suggesting that the MSEB had introduced certain
fabricated documents as evidence:
"As regards the
Commissioning Reports produced by the Respondents at Exhs. C-64 and C-74, the
Claimants submitted, and with considerable merit that the Respondents had
indulged in tampering the commissioning reports produced on the record. The
submission is correct."
10.
On
the basis of the said observations in the arbitral award, on 23rd June 2004
respondent Nos. 1 to 3 filed criminal complaint No. 476 of 2004 before the
Judicial Magistrate, First Class, Nasik for offences under Sections 192 and 199
read with Section 34 of the IPC. The Judicial Magistrate, First Class, Nasik
took cognizance of the said complaint and issued summons against all the
accused named in the complaint.
11.
Being
aggrieved by the order of the Magistrate taking cognizance of the complaint,
appellants preferred the afore-stated petition under Section 482 of the Code
before the High Court of Bombay for quashing of the complaint.
12.
As
stated above, the High Court, vide the impugned judgment has dismissed the said
petition. The High Court has inter alia observed that a prima facie case has
been made out against the accused and the complaint clearly establishes the
joint action of the accused to attract vicarious liability under the IPC.
Hence, the present appeal by two of the accused.
13.
Mr.
Vikas Singh, learned senior counsel appearing on behalf of the appellants
assailed the impugned judgment on the ground that the dispute between the
parties was purely civil in nature, and the criminal justice system has been
set in motion only to pressurize the appellants. In order to buttress the
contention that the High Court would be justified in exercising its powers
under Section 482 of the Code to quash a vexatious criminal complaint to
prevent an abuse of the process of the Court, learned counsel commended us to
the decisions of this Court in Inder 1 (2007) 12 SCC 1 2 (2008) 4 SCC 541 3
(2008) 8 SCC 77 4 (2008) 11 SCC 670 5 (2000) 2 SCC 636 6 Rustom Irani &
Anr.8, learned counsel contended that the IPC, save and except in some specific
cases, does not contemplate vicarious liability of a person who is not directly
charged for the commission of an offence, and a person cannot be made an
accused merely by reason of his official position. Further,
14.
it
was contended that in order to launch prosecution against the officers of a
company, the complainant must make specific averments as to the role played by
each of the officials accused in the complaint. In order to buttress the
contention, learned counsel placed Gujarat & Ors.12.
15.
Mr.
Ashok Desai, learned senior counsel appearing for respondents No.1 & 2, on
the other hand, while emphasizing that power under Section 482 6 (1998) 5 SCC
749 7 (2005) 8 SCC 89 8 (2009) 6 SCC 475 9 (2007) 9 SCC 481 10 (2009) 3 SCC 375
11 (2008) 5 SCC 662 12 (2008) 5 SCC 668 7 of the Code is to be exercised
sparingly and with circumspection, argued that in the instant case, in light of
the averments in the complaint, a prima facie case is made out against the
appellants and, therefore, the High Court was fully justified in declining to
exercise its jurisdiction under the said provision. In the written submissions
filed on behalf of the respondents reliance is placed on the decisions of this
Court in Sunita Karnataka14 to contend that the present case does not fall in
the category of "rarest of rare" cases, warranting exercise of
jurisdiction by the High Court under Section 482 of the Code. Learned counsel
contended that the offence of fabrication of false evidence cannot be described
as a civil act, and in any event, the existence of a civil remedy does not
preclude the maintainability of criminal complaint. was next contended that it
was not necessary to allege an overt act by each of the accused, and in that
regard, the averments in the complaint were sufficient. Moreover, the use of
the expression "whoever causes 13 (2008) 2 SCC 705 14 (2008) 3 SCC 574 15
(2001) 9 SCC 728 16 (2002) 6 SCC 670 8 any circumstance to exist" in
Section 192 of the IPC indicates that vicarious liability is in-built within
the Section, and the complaint contains specific averments to that effect.
16.
Learned
counsel urged that the offences under Sections 192 and 199 IPC were complete
when the accused had adduced the fabricated commissioning reports in
proceedings before the arbitrators, who had adversely commented on the conduct
of the appellants. It was argued that the said offences would survive
irrespective of the sustenance or otherwise of the arbitral award. Commending
us to the decisions of this Court in In Re: Suo Moto Proceedings Against R.
Karuppan, Ashok Kr. Newatia & Anr.19, learned counsel pleaded that the
offences of perjury and fabrication of false evidence require stern action to
be taken against persons indulging in such acts.
17.
Before
embarking on an evaluation of the rival submissions, it would be apposite to
briefly examine the nature of the power of the High Court under Section 482 of
the Code. 17 (2001) 5 SCC 289 18 (2003) 8 SCC 673 19 (2000) 2 SCC 367 9
18.
It
is well settled that though the inherent powers of the High Court under Section
482 of the Code are very wide in amplitude, yet they are not unlimited.
However, it is neither feasible nor desirable to lay down an absolute rule
which would govern the exercise of inherent jurisdiction of the Court.
Nevertheless, it is trite that powers under the said provision have to be
exercised sparingly and with caution to secure the ends of justice and to
prevent the abuse of the process of the Court. Where the allegations in the
first information report or the complaint taken at its face value and accepted
in their entirety do not constitute the offence alleged, the High Court would
be justified in invoking its powers under Section 482 of the Code to quash the
criminal proceedings. (See: R.P. Pal Singh Gill & Anr.21.)
19.
In
Som Mittal (supra), a three judge bench of this Court, while holding that the
power under Section 482 of the Code to quash criminal proceedings should be
used sparingly, and with circumspection in the "rarest of rare
cases", observed that:
20.
"When
the words "rarest of rare cases" are used after the words
"sparingly and with circumspection" while describing the scope of
Section 482, those words merely emphasise and 20 AIR 1960 SC 866 21 (1995) 6
SCC 194 1 reiterate what is intended to be conveyed by the words
"sparingly and with circumspection". They mean that the power under
Section 482 to quash proceedings should not be used mechanically or routinely,
but with care and caution, only when a clear case for quashing is made out and
failure to interfere would lead to a miscarriage of justice. The expression
"rarest of rare cases" is not used in the sense in which it is used
with reference to punishment for offences under Section 302 IPC, but to
emphasise that the power under Section 482 CrPC to quash the FIR or criminal
proceedings should be used sparingly and with circumspection. Judgments are not
to be construed as statutes. Nor words or phrases in judgments to be
interpreted like provisions of a statute. Some words used in a judgment should
be read and understood contextually and are not intended to be taken literally.
Many a time a judge uses a phrase or expression with the intention of
emphasising a point or accentuating a principle or even by way of a flourish of
writing style. Ratio decidendi of a judgment is not to be discerned from a
stray word or phrase read in isolation."
21.
Thus,
the question for consideration is whether or not in light of the allegations in
the complaint against the appellants, the High Court was correct in law in
declining to exercise its jurisdiction under Section 482 of the Code? 22.In
order to appreciate the rival contentions of the parties, it would be expedient
to refer to the relevant portions of the complaint:
22.
"5.
In the said Arbitration proceedings it was falsely contended by the Accused at
para 9(A)(a) of the Written Statement that the Complainant No. 1 had submitted
false and fabricated Commissioning Reports and the equipment particularized
therein was installed without the presence of the MSEBs Section-in-Charge and
the Accused relied upon a copy of the 1 Commissioning Report inter alia
pertaining to Shirpur Section in Dhule Circle. The said Commissioning Report as
relied upon by the Accused was tendered as Exhibit `C-64' by the witness
examined on behalf of the Accused No. 1. The said Commissioning Report
contained an endorsement `not installed in presence' to allege that the
Commissioning of the equipment particularized in the said Commissioning Report
at Exhibit `C- 64' was not done in the presence of MSEBs Section Officer. The
said Commissioning Report contained the signature of the representative of the
Complainant No. 1 and the said endorsement was made above the said signature of
the Complainant No. 1's representative in a manner to depict as if the
Complainant No. 1's representative had accepted the fact alleged in the said
endorsement.
6. On the other hand,
the Complainant No. 1 brought on record their copy of the Commissioning Report
pertaining to Shirpur Section in Dhule Circle as Exhibit `C-74' which had no
such endorsement as is found on the face of Exhibit `C-74'. It is the case of
the Complainant No.1 that the Accused with common criminal intent caused the
impugned endorsement "not installed in presence" to be superscribed
on Exhibit `C-64' after it was duly signed by the representative of the
Complainant No. 1 and the Section in charge of MSEB so as to convey the
impression that the Complainant No.1's representative had accepted the fact
alleged in the said endorsement. The said falsification and fabrication of the
record was brought to the notice of the Ld. Arbitrators in the Arbitration
proceedings and the Ld. Arbitrators observed in their award dated 18.06.2004 as
under:.... .... .... .... .... .... .... .... .... .... .... .... .... ....
.... .... .... .... .... .... .... .... ...
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
18.
19.
20.
21.
22.
23.
The
Complainants say and submit that the Ld. Arbitrators have thus held that the
said endorsement was fabricated and was admittedly tendered in evidence by the
Accused No.1 acting under the control and management of Accused Nos. 2, 3, 4
and
5. The Accused No. 6
was particularly responsible for the conduct of the MSEBs officers in the
Shirpur Section which falls under the Dondaicha Division of Dhule District. The
Complainants say and submit that the Accused acted with common criminal intent
to falsify and fabricate the said 1 endorsement with the intention to support
the case of the Accused No. 1 that the equipment was installed by the
Complainant No. 1 without the presence of the officers of the MSEB. The
Complainants say and submit that the said action was therefore clearly intended
to pervert the course of justice and misled (sic) the Ld. Arbitrator into
entertaining in erroneous opinion touching upon the point of material
determination as to whether the Complainant No. 1 had installed the equipment
without the presence of the MSEBs Section-in-charge. The Complainants say and
submit that the Accused fabricated false evidence which has been tendered by
them in the course of judicial proceedings before the Ld. Arbitrators and the
Accused are guilty of offence u/s 192, 199 r/w Sec. 34 of the Indian Penal Code.
The Complainants say and submit that the Accused acted with common criminal
intention to play fraud on the Ld. Arbitral Tribunal and deny justice to the
Complainant No. 1."
(Emphasis supplied by
us) 23.It is manifest that the allegation against the appellants herein is that
appellant No.1 had, acting under the control and management of all the accused,
including appellant No. 2 and in particular accused No. 6, superscribed an
endorsement on Exhibit C-64 with an intention to support its case and tendered
the same in the course of judicial proceedings before the Arbitral Tribunal,
thereby committing offence of fabricating false evidence in terms of Section
192 and 199 read with Section 34 IPC.
24.
At
this juncture, it would be apposite to refer to the relevant statutory
provisions and examine the legal position.
25.
Sections
192 and 199 IPC, read as follows:
"192.
Fabricating false evidence.-Whoever causes any circumstance to exist or makes
any false entry in any book or record, or electronic record or makes any
document or electronic record containing a false statement, intending that such
circumstance, false entry or false statement may appear in evidence in a
judicial proceeding, or in a proceeding taken by law before a public servant as
such, or before arbitrator, and that such circumstance, false entry or false
statement, so appearing in evidence, may cause any person who in such
proceeding is to form an opinion upon the evidence, to entertain an erroneous
opinion touching any point material to the result of such proceeding, is said
"to fabricate false evidence"."
"199. False
statement made in declaration which is by law receivable as evidence.- Whoever,
in any declaration made or subscribed by him, which declaration any Court of
Justice, or any public servant or other person, is bound or authorized by law
to receive as evidence of any fact, makes any statement which is false, and
which he either knows or believes to be false or does not believe to be true,
touching any point material to the object for which the declaration is made or
used, shall be punished in the same manner as if he gave false evidence."
26.
It
is plain that for constituting an offence under Section 192 IPC, the following
ingredients must be satisfied:
(i) Causing any
circumstance to exist, or making any false entry in any book or record or
making any document containing a false statement. (ii) Doing one of the above
acts with the intention that it may appear in evidence in a judicial
proceeding, or in a proceeding taken by law before a public servant or an
arbitrator.
(iii) Doing such act
with the intention that it may cause any person, who in such proceeding, is to
form an opinion upon the evidence to entertain an erroneous opinion touching
any point 1 State of Uttar Pradesh & Ors.22.)
27.
Similarly,
Section 199 IPC requires the following ingredients to be established:
"(i) Making of a
declaration which a Court or a public servant is bound or authorised by law to
receive in evidence.
(ii) Making of a
false statement in such declaration knowing or believing it to be false.
(iii) Such false
statement must be touching any point material to the object for which the
declaration is made or used."
28.
A
bare perusal of the complaint shows that the gravamen of the allegation is that
a fabricated document containing the offending endorsement was tendered in
evidence before the Arbitral Tribunal on behalf of MSEB by accused No. 6, who
was in-charge of Shirpur section. It is evident from the afore-extracted
paragraphs of the complaint that other accused have been named in the complaint
because, according to the complainant, MSEB-accused No. 1 was acting under
their control and management. It bears repetition that the only averment made
against appellant No. 2 is that appellant No.1, i.e. MSEB was acting under the
control and management of appellant No. 2 along with other three accused. There
is no denying the fact that appellant No. 2 happened to be the Chairman of 22
AIR 1964 SC 725. 1 MSEB at the relevant time but it is a settled proposition
of law that one cannot draw a presumption that a Chairman of a company is
responsible for all acts committed by or on behalf of the Company. In the
entire body of the complaint there is no allegation that appellant No. 2 had
personally participated in the arbitration proceedings or was monitoring them
in his capacity as the Chairman of MSEB and it was at his instance the subject
interpolation was made in Exhibit C-64. At this stage, we may refer to the extract
of a Board resolution, pressed into service by the respondents in support of
their plea that appellant No. 2 was responsible for the conduct of business of
appellant No. 1. The said resolution merely authorises the Chief-Engineer to
file counter claim before the Arbitral Tribunal in proceedings between
appellant No. 1 and respondent No. 1. It rather demonstrates that it was the
Chief Engineer who was made responsible for looking after the interest of the
appellant No. 1 in those proceedings. In this regard, it would be useful to
advert to the observations made by a three judge bench of this Court in S.M.S.
Pharmaceuticals (supra) :- "There is no universal rule that a director of
a company is in charge of its everyday affairs. We have discussed about the
position of a director in a company in order to illustrate the point that there
is no magic as such in a particular word, be it director, manager or secretary.
It all depends upon the respective roles assigned to the officers in a company.
A 1 company may have managers or secretaries for different departments, which
means, it may have more than one manager or secretary."
29.
It
is trite law that wherever by a legal fiction the principle of vicarious
liability is attracted and a person who is otherwise not personally involved in
the commission of an offence is made liable for the same, it has to be
specifically provided in the statute concerned. In our opinion, neither Section
192 IPC nor Section 199 IPC, incorporate the principle of vicarious liability,
and therefore, it was incumbent on the complainant to specifically aver the
role of each of the accused in the complaint. It would be profitable to extract
the following observations made in S.K. Alagh (supra) :- "As, admittedly,
drafts were drawn in the name of the Company, even if the appellant was its
Managing Director, he cannot be said to have committed an offence under Section
406 of the Penal Code. 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."
30.
Therefore,
we are of the view that even the Board Resolution, adduced by the complainant,
does not establish that appellant No.2 was involved in the alleged fabrication
of false evidence or adducing the same in 1 evidence before the arbitral
tribunal. In the absence of any such specific averment demonstrating the role of
appellant No.2 in the commission of the offence, we find it difficult to hold
that the complaint, even assuming it to be correct in its entirety, discloses
the commission of an offence by appellant No.2 under Sections 192 and 199 of
IPC.
31.
However,
in so far as the case of appellant No.1 company is concerned, bearing in mind
the fact that Exhibit C-64 was submitted with the intention to support the
averments in the written statement filed on their behalf, which could possibly
influence the decision of the arbitral tribunal in relation to the conduct of
the respondent No. 1 while discharging their obligations under the contract
between them and appellant No. 1, we are unable to hold that prima facie, a
case of offences under Sections 192 and 199 IPC is not made out against them.
It is evident from the observations of the Tribunal quoted in para 9 (supra)
that had the tribunal not doubted the veracity of the said document, it could
have made a material difference to the result of the arbitral proceedings.
32.
32.It
was faintly argued that the arbitral award on the basis whereof the said
complaint has been filed has been set aside and therefore, the complaint is
liable to be quashed on this ground. The submission is untenable as the
offences under Sections 192 and 199 IPC, if made out, exist independent of the
final arbitral award. We are, therefore, of the opinion, that it is not a fit
case for the exercise of power under Section 482 of the Code, in favour of
appellant No. 1.
33.
We
shall now examine whether appellant No.2 could be made liable for the
afore-mentioned offences by operation of Section 34 of IPC. It is trite that
Section 34 IPC does not constitute a substantive offence, and is merely in the
nature of a rule of evidence, and liability is fastened on a person who may
have not been directly involved in the commission of the offence on the basis
of a pre-arranged plan between that person and the persons who actually
committed the offence. In order to attract Section 34 IPC, the following
ingredients must be established:
"(i) there was
common intention in the sense of a pre-arranged plan;
(ii) the person
sought to be so held liable had participated in some manner in the act
constituting the offence." (See:
34.
It
is manifest that common intention refers to a prior concert or meeting of
minds, and though, it is not necessary that the existence of a distinct 23 1998
SCC (Cri) 698 24 (2003) 10 SCC 108 25 (2000) 4 SCC 110 1 previous plan must be
proved, as such common intention may develop at the spur of the moment, yet the
meeting of minds must be prior to the commission of offence suggesting the
existence of a pre-arranged plan. Therefore, in order to attract Section 34 of
the IPC, the complaint must, prima facie, reflect a common prior concert or
planning amongst all the accused. In our opinion, in the present case, the
complaint does not indicate the existence of any pre-arranged plan whereby
appellant No. 2 had, in collusion, with the other accused decided to fabricate
the document in question and adduce it in evidence before the arbitral
tribunal. There is not even a whisper in the complaint indicating any
participation of appellant No. 2 in the acts constituting the offence, and that
being the case we are convinced that Section 34 IPC is not attracted in his
case.
35.
In
the final analysis, we are of the opinion that no prima facie case has been
made out against appellant No.2 in respect of offences under Sections 192 and
199 of the IPC, even with the aid of Section 34 of the IPC. Therefore, it was a
fit case where the High Court should have exercised its powers under Section
482 of the Code by quashing the complaint against appellant No. 2.
36.
36.For
the aforegoing reasons, the appeal is dismissed qua appellant No. 1; it is
allowed in relation to appellant No.2; and consequently order of the Magistrate
taking cognizance against appellant No. 2 in Complaint No.476 of 2004 is
quashed.
...........................................J.
(D.K. JAIN)
............................................J.
(H.L. DATTU)
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DELHI;
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