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2007 DIGILAW 306 (DEL)

SANJAY NAYAR v. MONEY MANAGERS & STATE

2007-02-13

S.RAVINDRA BHAT

body2007
JUDGMENT S. Ravindra Bhat, J.- The petitioner invokes the inherent power of this Court under Section 482 of the Code of Criminal Procedure, 1973 for quashing proceedings pursuant to initiated by the first respondent (hereafter referred to as complainant). 2. The brief facts of this case are that the complainant a proprietorship concern engaged in business of sale and purchase of shares and investment in Mutual Funds, alleged that in a transaction with Mis. Bharat Share and Stock Brokers Ltd. (the first accused in the proceedings and hereafter referred to as A1) it delivered 41,000/- shares of Mis. Pushpsons Industries Ltd. The shares were in fact sold. It was alleged that A-1, through the other accused such as its Promoter Director, Managing Director, the President and the present petitioner (A-5) despite receiving the shares did not pay the consideration viz. Rs. 2,05,000/- (Rupees two lakh five thousand). The amount was to be paid within 15 days of receipt of the shares. It was alleged that even though the said period ended, no amounts were paid and a sum of Rs. 1,00,000/- (Rupess one lakh) was paid by the 4th accused purportedly on behalf of a sister concern of A-1. 3. A complaint was preferred in 1997 in respect of the transaction which allegedly took place some time in April, 1996. Paragraphs 3, 4 and 5 of the complaint describe the status of the Accused Nos.2,3 and 4 as the Promoter Director of A-1, Managing Director of A-1 and President of A-1 respectively. It was alleged that A-1 and A-3 were also members of the Delhi Stock Exchange and that A-4 was Director of a sister concern namely, Mis. S.S. Financial Services Ltd, which allegedly issued the cheque for Rs. 1,00,000/-. 4. The material portion of the complaint so far as it pertained to the petitioner are reproduced below: "6. That the accused No.5 was the Assistant Manager and authorized signatory of the accused No.1 at the relevant time when the transaction between the complainant and the accused took place. 7. That under the pretext and co lour of its ordinary course of business the accused No.1 had purchased 41,000 Nos. of equity shares of M/s. Pushpsons Industries Ltd. from the complainant for a sum of Rs. 2,05,000/-, the details of which is given herein as under: xxxxxx xxxxxx xxxxx Bill Dt. of delivery No.of Distinct-Ivenos. 7. That under the pretext and co lour of its ordinary course of business the accused No.1 had purchased 41,000 Nos. of equity shares of M/s. Pushpsons Industries Ltd. from the complainant for a sum of Rs. 2,05,000/-, the details of which is given herein as under: xxxxxx xxxxxx xxxxx Bill Dt. of delivery No.of Distinct-Ivenos. Amount No. Receipt shares FROM TO Rs. 95 5/4/96 20,000 5488900 55089001,00,000/- 976/4/96 20,000 5508901 5528900 1,00,000/- 98 9/4/96 1,000 3322701 3323700 5,000/- That the receipt of the aforesaid shares and their consequent purchase was duly acknowledged by the accused No.4 through the accused No.5 on three different dates/occasions. That the duly acknowledged and endorsed copies of the bills raised by the complainant in this regard as annexed hereto as ANNEXURE –P-5 (COLLY). XXXX XXXX XXXX 12. That all the aforesaid accused in furtherance of their common intention of all, dishonestly and mala fidely misappropriated and/or converted to their own use the aforesaid shares under the pretext of sale and thereby committed the offence of criminal misappropriation under Section 403 read with Section 34 of I.P.C." 5. The trial Court issued the impugned summoning order on 18.8.1999. It recorded the submissions of Counsel for the complainant and also, inter alia, that the petitioner was acting as Assistant Manager, Merchant Banking of A-1. The relevant part of the impugned summoning order reads as follows: "4. Learned Counsel submitted that there is sufficienet prima facie evidence to summon all as accused. 5. In view of the above submissions and my perusal of or at evidence and documents, I have found that there is evidence on record and documents to prove commission of offence. There is clear prima facie evidence that all accused dishonestly induced complainant to hand over all 41 ,000 shares and to that extent also to create confidence first cheque of Rs. 1,00,000/- for part payment was encashed but thereafter neither they made the payment of balance amount nor returned the shares to the extent of that amount to the complainant. Complainant also suffered loss to the extent of Rs.l,05,000/- and further interest, if any, and all the accused gain to that extent. There is sufficient prima facie evidence against all accused. Ingredients of Section 420, IPC only are attracted. Therefore, all the accused be summoned for allegedly committed an offence under Sections 420/34, IPC as per rules for 3.11.99." 6. Complainant also suffered loss to the extent of Rs.l,05,000/- and further interest, if any, and all the accused gain to that extent. There is sufficient prima facie evidence against all accused. Ingredients of Section 420, IPC only are attracted. Therefore, all the accused be summoned for allegedly committed an offence under Sections 420/34, IPC as per rules for 3.11.99." 6. It is averred by the petitioner, and contended on his behalf by learned Senior Counsel, Mr. Dinesh Mathur that neither the complaint nor the materials on record could justify a prima facie view that the ingredients of Sections 420/34, Indian Penal Code had been made out to justify the summoning order. It was submitted that the petitioner was, by the admission of the complainant, only an employee, i.e. an Assistant Manager acting on behalf of the first accused, company. If there was any default or criminality attributable to the company or its business activities, and the other accused, in the absence of a more specific role or overt action by the petitioner, he could not be dragged into the proceedings, through omnibus allegations. 7. Learned Counsel submitted that in proceedings involving plurality of accused, particularly initiated through private complaints, disclosure of specific acts of omission or commission which would amount to offences is necessary and that the Court has to satisfy itself on the basis of the complaint, the materials on record and the pre-summoning evidence, that an order summoning such accused is justified. 8. Learned Senior Counsel relied upon the judgments of the Supreme Court as S. W. Palanitkar and Others v. State of Bihar and Anr., 2002 SCC (Cri) 129 and Ajay Mitra v. State of M.P. and Ors., 2003 SCC (Cri) 703 for the proposition that guilty intention is an essential ingredient of the offence of cheating and that mens rea has to be necessarily established before an accused can be proceeded against for such offence. It was submitted that in the present case neither the complaint nor the pre-summoning evidence could reveal how an employee such as the petitioner (5th accused) could be said to have mens rea or conspired with the other accused, for cheating the complainants. 9. Mr. It was submitted that in the present case neither the complaint nor the pre-summoning evidence could reveal how an employee such as the petitioner (5th accused) could be said to have mens rea or conspired with the other accused, for cheating the complainants. 9. Mr. Anurag Kumar Aggarwal, learned Counsel for the respondent-complainant resisted the petition and stated that there were sufficient material averments in the complaint and sufficient disclosure in the pre-summoning evidence to justify the impugned order against the petitioner. ]t was submitted that on 20.9.1996 the first accused wrote a letter to the complainant, flatly refusing any transaction with it. Counsel submitted that the said letter distorted the transaction by which the shares were delivered to the said accused; a claim was made that the first accused merely acted as a consultant that even the issuance of the cheque for Rs. 1,00,000/- was also disputed. This document, it was contended, was sufficient to support a prima facie view that even though the petitioner was an Assistant Manager, he was involved in the conspiracy with the other accused to cheat the complainant. 10. The offences of cheating, and criminal breach of trust both presuppose criminality, i.e. mens rea on the part of the accused. It has been held, in G. V. Rao v. L.H.V. Prasad, 2000 (3) SCC 693 , that the offence under Section 415 punishable by Section 420 comprehends intentional inducement to the innocent party to do or not do something. Such intention should exist at the time of the inducement. This reasoning was followed in S.W. Palanitkars case (supra). Similarly, the offence of criminal misappropriation presupposes mens rea (dishonestly) in regard to the property entrusted. 11. In Pandurang v. State of Hyderabad, AIR 1955 SC 216 and Lala Ram & Ors. v. State of UP, 1990 (2) SCC 113 , the Supreme Court held that in the absence of particularization as to role of an accused, it would not be appropriate or safe to accept omnibus allegations for implication in offences. 12. There is no dispute here that the petitioner acted, and held himself out as an Assistant Manager, in the transactions complained of. No other involvement, except his capacity as employer, acting for his employees, has been averred. Overt representation by him, of a falsehood, or active inducement, by him, leading to the complainant parting with the shares, have not been made out. No other involvement, except his capacity as employer, acting for his employees, has been averred. Overt representation by him, of a falsehood, or active inducement, by him, leading to the complainant parting with the shares, have not been made out. I am therefore of the opinion that the mere general allegation against him in the complaint and the statement of A-1 in its letter was not sufficient to warrant a summoning order. 13. For the above reasons, the petition is entitled to succeed. The summoning order, and criminal proceedings, so far as they relate to the petitioner, are hereby set aside. The revision petition is allowed in the above terms; no costs. Ordered accordingly.