YESHVIR GOYAL v. UNION OF INDIA — 1991 DIGILAW 537 (KAR)

N. Y. HANUMANTHAPPA, J. ( 1 ) THOUGH the matter is listed for admission, on the request made by the learned counsel for the petitioner and the learned Central Government Standing Counsel, the matter is taken up for final hearing. Admit, this petition is filed under Section 482, Cr. P. C. seeking to quash the complaint lodged against the petitioners for the offences punishable under Sections 420 and 120-B, IPC read with Sections 276-C and 277 of Income Tax Act. The point for consideration in this case is whether in the absence of prima facie and a reasonable case to proceed with investigation this Court should refuse to exercise its powers under Section 482 of Cr. P. C. Sri B. V. Acharya, learned counsel for the petitioners, submits that, if the entire complaint is read, it does not disclose that offences punishable under Section 420 read with Section 120-B of IPC has been made out. ( 2 ) SRI Shylendra Kumar, learned Central Government Standing Counsel for the respondents, submits that the ingredients of the offences punishable under Section 420 read with Section 120-B, IPC have been made out in the complaint. The department felt that the main idea of the petitioners was to cheat the Department in making an attempt to escape from payment of tax amounting to the tune of rupees ten lakhs. He further submits that the complaint if read as a whole, it is clear that a case has been made out, merely because the wordings as mentioned in the Indian penal Code are not mentioned in the complaint, that itself is not sufficient to contend that no prima facie case has been made out. He further submits that this court can quash either F. I. R. or investigations only under exceptional and extraordinary circumstances. The present proceedings are not of that type. He further submits that this court can quash either F. I. R. or investigations only under exceptional and extraordinary circumstances. The present proceedings are not of that type. In support of this contention, he relied upon the decision of the Supreme Court in State of Bihar v Murad Ali Khan and Others, AIR 1989 SC 1 , wherein it is held as follows:"where it was alleged in the written complaint filed by the Range Forest officer that the accused person shot and killed an elephant in a particular Range forest and removed the ivory tusks of the elephant and it was mentioned in the complaint that elephant was included in the Schedule I of the Wild Life (Protection) Act, 1972, and that the complainant was authorised by the Bihar government's Notification No. SO 1022/418/73 to file complaints under the Act and the Magistrate took cognizance of the offence under Wild Life Protection act and ordered issue of the process to the accused, it could not be said that the allegations in the complaint, taken on their face-value, would not amount in law to any offence against the 'act'. Therefore, the quashing of the proceedings of the Magistrate, on the facts of the case by the High Court was impermissible as an exercise under Section 482, Cr. P. C. Crl. Misc. Nos. 258 and 259 of 1987 (R), dated 18-2-1987 (Pat.) and Crl. Misc. No. 223 of 1987, dated 13-2-1987 (Pat.), reversed. ( 3 ) IT is trite that jurisdiction under Section 482, Cr. P. C. which saves the inherent power of the High Court, to make such orders as may be necessary to prevent abuse of the process of any Court or otherwise to secure the ends of justice, has to be exercised sparingly and with circumspection. In exercising that jurisdiction the High Court would not embark upon an enquiry whether the allegations in the complaint are likely to be established by evidence or not. That is the function of the Trial Magistrate when the evidence comes before him. In exercising that jurisdiction the High Court would not embark upon an enquiry whether the allegations in the complaint are likely to be established by evidence or not. That is the function of the Trial Magistrate when the evidence comes before him. Though it is neither possible nor advisable to lay down any inflexible rules to regulate that jurisdiction, one thing, however, appears clear and it is that when the High Court is called upon to exercise this jurisdiction to quash a proceeding at the stage of the Magistrate taking cognizance of an offence the High Court is guided by the allegations, whether those allegations, set out in the complaint or the charge-sheet, do not in law constitute or spellout any offence and that resort to criminal proceedings, would, in the circumstances, amount to an abuse of the process of the Court or not. " ( 4 ) THE other contention is that the offence punishable is not merely under Section 420, ipc but also under Section 120-B, IPC read with Sections 276-C and 277 of the Income tax Act, 1961. When different acts are committed, the Court which has got jurisdiction or the authority can as well proceed against the petitioners for the offences made out unmindful to the fact that some of the offences are cognizable and some are non-cognizable. For this proposition Sri Shylendra Kumar relies upon a decision of this Court in State of Karnataka v Kallappa Yallappa Goni, 1987 (1) Kar. L. J. Sh. N. 118 : ILR 1986 Kar. 1225. He also submits that this Court can exercise its inherent powers under Section 482, Cr. P. C. only when it is required to correct any order passed under the Cr. P. C. or to prevent abuse of the process of Court or to secure ends of justice. According to him that in the instant case none of the above three ingredients is made out. Hence, the request of the petitioners to set aside the proceedings is neither tenable nor reasonable. ( 5 ) AS an answer to these contentions Sri Acharya, learned counsel for the petitioners, submits that, if the entire complaint is read, there is nothing to indicate that the petitioners have committed any of the offences as alleged. Hence, the request of the petitioners to set aside the proceedings is neither tenable nor reasonable. ( 5 ) AS an answer to these contentions Sri Acharya, learned counsel for the petitioners, submits that, if the entire complaint is read, there is nothing to indicate that the petitioners have committed any of the offences as alleged. The complaint reads as follows:"credible information has been received to the effect that S-1 to S-3 who are partners/directors of South Eastern Roadways, Bangalore entered into a criminal conspiracy with S-4 who is a resident of Gongtok, East Sikkim and some unknown officials/persons during 1985 to cheat the Government of India, i. e. , income Tax Department by way of evading payment of income tax and in pursuance of the conspiracy S-l to S-3 handed over to S-4 unaccounted black money to the tune of about Rs. 10 lakhs, S-4 obtained eight demand drafts in november 1985 from State Bank of India and United Commercial Bank branches in Sikkim on Bangalore Branch of these banks favouring minor children/wives of S-l to S-3 for a total sum of Rs. 10 lakhs and sent them to S-l to s-3 along with affidavits sworn before the Court of the Judicial Magistrate, East sikkim, Gongtok to the effect that he had donated the amount to the minor children/wives of S-1 to S-3 out of love and affection and out of his capital, etc. , s-1 to S-3 opened accounts in the names of their minor children/wives in Canara bank, Benson Town Branch between July and November, 1985 and deposited the demand drafts in those accounts which were cleared from SBI and United commercial Bank and credited to the respective accounts from where the funds were later on transferred to the credit of South Eastern Roadways and nandavanam Roadways - an associate firm. Thus S-1 to S-3 with the connivance of S-4 and others cheated the Government of India of Income Tax on Rs. 10 lakhs and thereby committed offences punishable under Section 120-B r/w 420, ipc and Sections 276-C and 277 of the Income Tax Act, 1961, 420 of IPC, 276-C and 277 of the Income Tax Act, 1961. Thus S-1 to S-3 with the connivance of S-4 and others cheated the Government of India of Income Tax on Rs. 10 lakhs and thereby committed offences punishable under Section 120-B r/w 420, ipc and Sections 276-C and 277 of the Income Tax Act, 1961, 420 of IPC, 276-C and 277 of the Income Tax Act, 1961. " ( 6 ) IN order to know whether any offence has been committed particularly the offence punishable under Section 420, IPC as submitted by Sri Shylendra Kumar, it is proper to bear in mind Sections 415 and 420, IPC which deal with 'cheating'. Section 415 reads thus:"415. Whoever, by deceiving any person, fraudulently or dishonestly induces the person so deceived to deliver any property to any person, or to consent that any person shall retain any property, or intentionally induces the person so deceived to do or omit to do anything which he would not do or omit if he were not so deceived, and which act or omission causes or is likely to cause damage or harm to that person in body, mind, reputation or property, is said to 'cheat'. Explanation. A dishonest concealment of facts is a deception within the meaning of this section. "section 420, IPC reads thus:"420. Whoever cheats and thereby dishonestly induces the person deceived to deliver any property to any person, or to make, alter or destroy the whole or any part of a valuable security, or anything which is signed or sealed, and which is capable of being converted into a valuable security, shall be punished with imprisonment of either description for a term which may extend to seven years and shall also be liable to fine. " ( 7 ) ACCORDING to Sri Acharya, if the averments made in the complaint and the words used in the above sections are compared and understood properly, the conclusion will be that the averments made in the complaint fall short of the requirements as provided under Sections 415 and 420 of IPC. Hence, the request of Sri Acharya is to quash the proceedings. Perusal of the allegations made in the complaint and requirements in Sections 415 and 420 of IPC, the conclusion will be that the complaint does not make out a prima facie case to proceed with the case. Hence, the request of Sri Acharya is to quash the proceedings. Perusal of the allegations made in the complaint and requirements in Sections 415 and 420 of IPC, the conclusion will be that the complaint does not make out a prima facie case to proceed with the case. The next point is whether this Court will be justified in quashing the proceedings at the stage of investigation. Section 482, Cr. P. C. is analogous to Section 561-A of the old Code, viz. , Cr. P. C. , 1898. Dealing with Section 561-A of 1898 Code, the Supreme Court in R. P. Kapur v state of Punjab, AIR 1960 SC 866 observed that the inherent power of this Court to quash any proceeding can be exercised in a proper case either to prevent abuse of the process of Court or to secure ends of justice. However, the Court must be cautious. Ordinarily criminal proceedings instituted against the accused person must be tried under the provisions of the Code and the High Court must be reluctant to interfere with the proceedings at an interlocutory stage. The Supreme court further held that it is not possible, desirable or expedient to lay down any inflexible rule which would govern the exercise of this inherent jurisdiction. Thus the Supreme Court categories the cases where the inherent jurisdiction to quash proceedings can be exercised thus:" (I) Where it manifestly appears that there is a legal bar against the institution or continuance of the criminal proceedings in respect of the offence alleged. Absence of the requisite sanction may, for instance, furnish cases under this category. (II) Where the allegations in the First Information Report or the complaint, even if they are taken at their face value and accepted in their entirety, do not constitute the offence alleged; in such cases no question of appreciating evidence arises; it is a matter merely of looking at the complaint or the First information Report to decide whether the offence alleged is disclosed or not. (III) Where the allegations made against the accused person do constitute an offence alleged but there is cither no legal evidence adduced in support of the case or the evidence adduced clearly or manifestly fails to prove the charge. (III) Where the allegations made against the accused person do constitute an offence alleged but there is cither no legal evidence adduced in support of the case or the evidence adduced clearly or manifestly fails to prove the charge. In dealing with this class of cases 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 manifestly and clearly inconsistent with the accusation made and cases where there is legal evidence which on its appreciation may or may not support the accusation in question. In exercising its jurisdiction under Section 561-A the high Court would not embark upon and enquiry as to whether the evidence in question is reliable or not. That is the function of the trial Magistrate, and ordinarily it would not be open to any party to invoke the High Court's inherent jurisdiction and contend that on a reasonable appreciation of the evidence the accusation made against the accused would not be sustained. Broadly stated that is the nature and scope of the inherent jurisdiction of the high Court under Section 561-A in the matter of quashing criminal proceedings, and that is the effect of the judicial decisions on the point. " ( 8 ) WHILE interpreting Section 482, Cr. P. C. read with Article 226 of the Constitution, the Supreme Court in State of West Bengal and Others v Swapan Kumar Guha and others, AIR 1982 SC 949 , held whether an offence has been disclosed or not must necessarily depend on the facts and circumstances of each particular case. If on a consideration of the relevant materials, the Court is satisfied that an offence is disclosed, the Court will normally not interfere with the investigation into the offence and will generally allow the investigation in the offence to be completed for collecting materials for proving the offence. If, on the other hand, the Court on a consideration of the relevant materials is satisfied that no offence is disclosed, it will be the duty of the Court to interfere with any investigation and to stop the same to prevent any kind of uncalled for and unnecessary harassment to an individual. If, on the other hand, the Court on a consideration of the relevant materials is satisfied that no offence is disclosed, it will be the duty of the Court to interfere with any investigation and to stop the same to prevent any kind of uncalled for and unnecessary harassment to an individual. The supreme Court further held:"a First Information Report which does not allege or disclose that the essential requirements of the penal provision are prima facie satisfied, cannot form the foundation or constitute the starting point of a lawful investigation. "an investigation can be quashed if no cognizable offence is disclosed by the f. I. R. It is surely not within the province of the police to investigate into a Report (F. I. R.) which does not disclose the commission of a cognizable offence and the code does not impose upon them the duty of inquiry in such cases. The condition precedent to the commencement of investigation under section 157 of the Code is that the F. I. R. must disclose, prima facie, that a cognizable offence has been committed. It is wrong to suppose that the police have an unfettered discretion to commence investigation under Section 157 of the Code. Their right of inquiry is conditioned by the existence of reason to suspect the commission of a cognizable offence and they cannot, reasonably, have reason so to suspect unless the F. I. R. , prima facie, discloses the commission of such offence. If that condition is satisfied, the investigation must go on. The Court has then no power to stop the investigation, for to do so would be to trench upon the lawful power of the police to investigate into cognizable offences. On the other hand, if the F. I. R. does not disclose the commission of a cognizable offence, the Court would be justified in quashing the investigation on the basis of the information as laid or received. The power to investigate into cognizable offences must, therefore, be exercised strictly on the condition on which it is granted by the Code. " ( 9 ) EARLIER the Supreme Court in Trilok Singh and Others v Satya Deo Tripathi, AIR 1979 SC 850 , explaining the sc9pc of Section 482, Cr. P. C. held that the inherent jurisdiction can be exercised to quash the proceedings, if so required to prevent the abuse of the process of the Court. " ( 9 ) EARLIER the Supreme Court in Trilok Singh and Others v Satya Deo Tripathi, AIR 1979 SC 850 , explaining the sc9pc of Section 482, Cr. P. C. held that the inherent jurisdiction can be exercised to quash the proceedings, if so required to prevent the abuse of the process of the Court. That was a case where on the material the Court came to the conclusion that the allegations made were purely civil in nature and held as follows:"the proceeding initiated was clearly an abuse of the process of the Court. It was not a case where any process ought to have been directed to be issued against the accused (appellants ). On the well-settled principles of law it was a very suitable case where the criminal proceeding ought to have been quashed by the High Court in exetcise of its inherent power. The dispute raised by the respondent was purely of a civil nature even assuming the facts stated by him to be substantially correct. "apart from the decisions of the Supreme Court referred to above, this Court in C. /v. Seetharam v State of Karnataka, 1988 (2) Kar. L. J. 310 : ILR 1988 (3) Kar. 2053 explaining the scope of Section 482, Cr. P. C. held thus:"where, within the limits of the exercise of the statutory power, the police in cognizable case takes up investigation under Section 157, Cr. P. C. the High court will refrain from interfering in the course of investigation. There are exceptions to this broad principle of law as laid in various decisions. For instance where the facts in the FIR themselves do not constitute any cognizable or non-cognizable offence and if the police proceed to register a case and take up investigation, the High Court will be within its powers to interfere with such investigation and quash the FIR cither in exercise of the powers of writ jurisdiction or inherent powers conferred under Section 482, Cr. P. C. to prevent abuse of the process of Court or otherwise to secure the ends of justice. " ( 10 ) AGAIN in 1990 the Supreme Court in Mrs. Dhanalakshmi v R. Prasanna Kumar and others, AIR 1990 SC 494 held that quashing of proceedings by exercising the power under Section 482, Cr. P. C. to prevent abuse of the process of Court or otherwise to secure the ends of justice. " ( 10 ) AGAIN in 1990 the Supreme Court in Mrs. Dhanalakshmi v R. Prasanna Kumar and others, AIR 1990 SC 494 held that quashing of proceedings by exercising the power under Section 482, Cr. P. C. is unwarranted and uncalled for particularly when the proceedings do not disclose any mala fides or in any way frivolous or vexatious. However, in the same decision, the Supreme Court laid down the circumstances in which the High Court can quash the proceedings. The relevant portion reads thus: "section 482 empowers the High Court to exercise its inherent powers to prevent abuse of the process of Court. In proceedings instituted on complaint exercise of the inherent power to quash the proceedings is called for only in cases 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 is taken by the Magistrate is open to the High Court to quash the same in exercise of the inherent powers under Section 482. It is not, however, necessary that there should be a meticulous analysis of the case, before the trial to find out whether the case would end in conviction or not. The complaint has to be read as a whole. ( 11 ) FROM the above rulings of the Supreme Court and also of this Court, it is clear that the inherent powers under Section 482, Cr. P. C. arc to be used sparingly and with circumspection. But, it cannot be said that, if the allegations made in the complaint are either vague and frivolous in nature or vexatious, this Court should close its eyes and refuse to quash the proceedings initiated on such baseless allegations. Thus powers under Section 482, Cr. P. C. arc to be used sparingly and with circumspection. But, it cannot be said that, if the allegations made in the complaint are either vague and frivolous in nature or vexatious, this Court should close its eyes and refuse to quash the proceedings initiated on such baseless allegations. Thus powers under Section 482, Cr. P. C. to quash the F. I. R. or investigation be exercised when it is shown on consideration of relevant material that: (i) Grounds made out in the complaint to suspect that an offence has been committed are not reasonable; (ii) allegations in the complaint if read as a whole do not constitute an offence; (iii) f. I. R. is quite frivolous and vexatious in that prima fade no cognizable or non-cognizable offence has been made out; (iv) (a) Interference under Section 482, Cr. P. C. is required to correct any order passed under this Code, or (b) to prevent of abuse of process of the Court, or (c) to secure ends of justice. Keeping the above principles laid down by this Court as well as by the Supreme court, if the complaint is read as a whole the only conclusion that could be arrived at is that the proceedings initiated are vague, vexatious and unreasonable and the resultant of non-application of mind on the part of the Department to the provisions of Section 120-B, read with Sections 415 and 420, IPC, Because, there is neither fraud played or inducement made so as to make the Department to part with any property for the benefit of the petitioners. When it is said that the complaint itself is resultant of vague and baseless allegations coupled with non-application of mind to the provisions of the Act upon which the Department relies, it has to be said that any investigation pursuant to such a complaint is a misconceived one and, if such proceedings are allowed to continue, the same would result in abuse of the process of the Court. When such a probable abuse of process of the Court is brought to the notice of this Court, it is paramount duly of this Court to prevent such abuse of the process of the Court at its threshold instead of driving the parties to a disadvantageous position. When such a probable abuse of process of the Court is brought to the notice of this Court, it is paramount duly of this Court to prevent such abuse of the process of the Court at its threshold instead of driving the parties to a disadvantageous position. It is not the case of the prosecution that in case of evasion of tax, the Department has no power to book the evader and recover the revenue to the State. When such a course is still available, it is difficult to understand why the Department is interested in present proceedings initiated on baseless allegations. Hence, in order to prevent abuse of the process of the Court and to secure ends of justice, the proceedings have to be quashed. Another peculiarity in this case is that the complaint was filed on 30-6-1989. So far, the prosecution has not completed its investigation. The delay caused is sufficient to infer that everything is going in a very leisurely manner and the seriousness which the Department thought of at the time of filing the complaint has been diluted at a later stage. Accordingly, this petition is allowed and complaint is quashed. Consequently, the proceedings initiated by the prosecution on the said complaint also are quashed. All other contentions which are available to the Department including its right to recover the tax, if any, from the petitioners in the manner known to it are left open. --- *** --- .