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Gujarat High Court · body

2016 DIGILAW 2197 (GUJ)

PRANAV v. ADANI (DIRECTOR) VS STATE OF GUJARAT

2016-11-29

A.J.SHASTRI

body2016
JUDGMENT : A.J. SHASTRI, J. 1. The applicants, by way of present application, has challenged the legality, propriety and maintainability of complaint dated 26.7.2006 under the provisions of the Prevention of Food Adulteration Act,1954 registered as PFA No.3818 of 2006 before the JMFC, Municipal Court, Vadodara and also issuance of process upon the applicants by the learned JMFC, Vadodara 2. The case of the applicants is that one company named as 'B-2-C India Limited' has started a retail chain of providing facility for purchasing variety of things i.e. various products and goods and the same was set up till 21.10.2005. Said company was managing the affairs of said retail chain. However, subsequently, in exercise of powers under Section 21 of the Companies Act, a resolution came to be passed by the company on 18.10.2005 and the name of the said company came to be altered from B-2-C India Limited to Adani Retail Limited and in respect of this change of the name, a fresh certificate in the name of the company came to be issued on 21.10.2005. It is the further case of the applicants that while the company was acting and operating, the activity in the name and style of 'B-2-C India Limited' into Limited, it had nominated Mr.Parag S. Padrakar, officer in-charge and made responsible for the affairs of the company's activity in the entire territory of the State of Gujarat under the provisions contained under Section 17 read with Rule 12B by submitting Form-VIII dated 15.2.2005. The applicants have asserted in the application that said Mr.Parag S. Pardrakar was duly authorized and nominated officer of the company for its activities falling within the purview of the Act and this nomination was appropriately filed before the authority as also before the Medical Officer, Local Health Authority, Ahmedabad and this nomination is acknowledged by the authority on 15.2.2005. The applicants have stated that it is the case of the prosecution that respondent No.2 – complainant had visited the outlet of the company on 8.6.2006 at around 1.30 p.m. and at that point of time, there was a product known as ‘Nathji Kesari Mukhwas and the said product which was stored for the purpose of sale and was packed in polythene pouch of 250 gms. and there were about 4 such polythene pouches lying in the outlet. and there were about 4 such polythene pouches lying in the outlet. The complainant entered into the transaction and interaction with regard to said product with accused No.1 on the said day i.e. on 8.6.2008 and had purchased 3 packets/pouches of the said product and then forwarded to the public analyst for the report and according to the report, said product has been found to have been adulterated which has attracted the provisions contained under Section 2(ia)(j) and (h) and the complaint thereupon alleges against the applicants accused that there is a breach of Section 7(i)(v) which is punishable under Section 16 of the Act. The complaint in question came to be filed by respondent No.2 on 26.7.2006 before the learned Municipal Magistrate First Class Court which was registered as FAC No.3818 of 2006 and based upon that, on the very same day the learned Magistrate has issued summons upon the applicants, who are made accused before the Court for offences punishable under Section 2(ia)(j) and (h) as well as Section 7(i)(v) which is punishable under Section 16(1)(a)(ii) and it is this action of issuance of the summons based upon the complaint, the present application came to be brought before this Court by present applicants under Section 482 of the Cr.P.C. 3. The Court while initially entertaining the application had passed the following order whereby, notice came to be issued and ad-interim relief in terms of Para.12(D) came to be granted. Said order reads as under : “1. Heard Mr. M.J.Thakore, learned senior advocate with Mr.D.K.Puj, learned advocate for the petitioners. 2. It is submitted that sub-section (1) of Section 202 of the Code of Criminal Provisions, 1973, (the Code) makes it obligatory upon the learned Magistrate that before summoning the accused residing beyond his jurisdiction he shall inquire into the case himself or direct the investigation to be made by a police officer or such other person as he thinks fit, for finding out whether there was sufficient ground for proceeding against the accused. It is further submitted that necessary averments to the effect that the petitioners were in-charge of and responsible to the company for the conduct of the business of the company as envisaged under Section 17 of the Prevention of Food Adulteration Act, 1954, are not found in the entire complaint. It is further submitted that necessary averments to the effect that the petitioners were in-charge of and responsible to the company for the conduct of the business of the company as envisaged under Section 17 of the Prevention of Food Adulteration Act, 1954, are not found in the entire complaint. Attention is drawn to the nomination Form-viii filed under the Rule 12(B) of the Prevention of Food Adulteration Rules, 1955, to point out that one Mr.Parag S. Padrakar had been nominated by the company to be in-charge of and responsible to the company for Gujarat in connection with any offence under the Act. It is submitted that in the circumstances, the petitioners could not have been arraigned as accused in the complaint in question. 3. Having considered the submissions advanced by the learned senior advocate, NOTICE returnable on 10th April, 2008. Ad-interim relief is granted in terms of Paragraph-12(D). 4. Mr.L.B.Dabhi, learned Additional Public Prosecutor waives service on behalf of respondent No.1-State of Gujarat. Direct Service is permitted qua respondent No.2.” 4. The application thereafter came up for consideration by passage of time in which, on 4.8.2008 this Court has admitted the application and continued the ad-interim relief which was earlier granted. The present application has come up for final hearing before this Court in the aforesaid premise. 5. Learned Senior Counsel, Mr.Shalin Mehta appearing with learned counsel, Mr.D.K.Puj representing the applicants has vehemently contended that this is nothing but a clear example of abuse of process of law and therefore, said attempt may not be allowed to be encouraged. It has also been contended by the learned senior counsel that main offence is committed, as per the complaint, by the company which is not even joined at all because under the provisions of the Act, the company can be said to be a principal offender if the offence is committed and therefore, without joining the company as an accused, dragging the directors, who were not in charge of the day-to-day affairs of the company, is nothing but tantamounts to be an abuse of process of law. Learned senior counsel further contended that there is no specific allegation or attribution reflecting from the complaint in question against the present applicants. It has also not been asserted in the complaint, though required, that applicants are in-charge of day-to-day affairs of the company and are responsible for it. Learned senior counsel further contended that there is no specific allegation or attribution reflecting from the complaint in question against the present applicants. It has also not been asserted in the complaint, though required, that applicants are in-charge of day-to-day affairs of the company and are responsible for it. It is also not averred that in what manner the applicants are concerned with the local sales and purchase of the product in question and therefore, in the absence of any such specific assertion on the part of complainant, to allow the applicants to be dragged in the criminal prosecution is nothing but a clear example of misuse of criminal machinery. It is also pointed out by learned senior counsel that the concept of vicarious liability has no application in the background of present set of circumstance and therefore, learned senior counsel requested the Court to quash the complaint insofar as it relates to present applicants. 5.1 Learned senior counsel, Mr.Shalin Mehta has further contended that the applicants are the directors of the company and are not in charge of the day-to-day affairs of the company. Attention was also drawn to the fact that applicant No.1 is the Director, whereas applicant No.2 is the Managing Director and applicant No.3 is also a simple Director and these Directors have no role to play in the local affairs of the company and are not dealing or in charge of the day-to-day affairs of sales and purchase of the product in question. It is further contended that there is a nomination, as required under the provisions of the Act, of one Mr.Parag S. Padrakar and this nomination is also given in Form-VIII as required under Rule-12B of the Rules and it has been categorically stated before the Court on instructions that though this nomination is dated 15.2.2005, till date said nomination continues and therefore, it has been specifically contended that even after change of the name of the company on 18.10.2005, this nomination in favour of Mr.Parag S. Padrakar is continued by the company and therefore, there is one responsible person is very much available to face the trial and therefore, learned senior counsel submitted that the complaint in question against present applicants is nothing but a clear misuse of law. It has also been contended that while issuing the summons in respect of the complaint, there is no proper subjective satisfaction nor anything which is reflecting from the order of issuance of summons that there appears to be some application of mind but, in a casual and routine manner, on receipt of complaint, straightway, the learned Magistrate has issued the summons. It has also been contended that it would clearly appear from the Rojkam which is annexed with the application that without giving any chance to the applicants, straightway the Non-Bailable Warrant came to be issued. There is a specific assertion that one officer in-charge is already nominated across the State, still the authority has lodged the complaint against the present applicants. It has also been contended that learned Magistrate was under an obligation to make proper scrutiny of facts before issuance of Non-Bailwable Warrant and therefore, the discretion which has been exercised by the learned Magistrate is reflecting a causal exercise of jurisdiction and therefore, on this ground alone, same be quashed in the interest of justice. By referring to these main 3 contentions, learned senior counsel has taken the Court to the averments contained in the complaint and thereafter, has also drawn the attention of the Court to a nomination form which has been submitted before the appropriate authority and the same is stated to have been continued till date and therefore, ultimately requested the Court that the complaint insofar as it related to present applicants, is required to be quashed. No other submission is made by learned senior counsel for the applicants. 6. To substantiate these contentions, learned senior counsel, Mr.Shalin Mehta has relied upon few decisions of the Supreme Court as well as other High Courts on the issue. Learned senior counsel has relied upon a decision in case of Anita Hada V. Godfather Travels and Tours Pvt. Ltd., reported in 2012 (0) GLHEL-SC 51148 : [ 2012 (5) SCC 661 ] and by referring to this decision, it has been contended that without joining the company as an accused, the applicants cannot be vicariously liable to be prosecuted and dragged into prosecution. The relevant paragraphs about this proposition are referred to by learned senior counsel and thereby, contended that here is a case which is squarely coming within the purview of this proposition laid down by the Supreme Court and therefore, the complaint qua present applicants is required to be quashed. Learned senior counsel has relied upon another decision in case of Oanali Ismailji Sadikot V/s State of Gujarat, reported in 2016 (0) AIJEL-HC 234882 : [ 2016 (3) GLR 1991 ] wherein also, the concept of vicarious liability is examined by the Court and after referring to the provisions. 7. In addition to this, learned senior counsel has, in support of his case, relied upon another decision rendered in Criminal Misc. Application No.3006 of 2006 and by referring this decision, it has been contended that without making any inquiry as required under the provisions of the Act, no process in a routine manner could have been issued and therefore, by referring to these decisions, learned counsel has submitted to grant the relief as prayed for in the petition as this is nothing but a glaring example of abuse of process of law. 8. To oppose this application, learned APP, Mr.Chintan Dave for the respondent – State has pointed out that the main case falls under the provisions of the Act which is a serious offence and therefore, no complaint at this stage of the proceedings be quashed by exercising inherent jurisdiction. It has also been pointed out by learned APP that the Rojkam attached to the application reflects that on several occasions, summons have been issued by the learned Magistrate and only thereafter, Non-Bailable Warrant came to be issued and therefore, learned APP has stated that such exercise of power cannot be questioned more particularly when the applicants have chosen not to cooperate with the proceedings. Learned APP has further pointed out that the provisions of the Act are indicating the procedure, which has been observed in the present case by the complainant at the time when the complaint came to be filed and therefore, in the absence of any irregularity in the process of filing the complaint, no exercise of Section 482 of the Cr.P.C. be undertaken. It has also been pointed out that the Food Inspector has filed the complaint upon proper material having been given to him and therefore, this being the position, he requested the Court not to entertain the application. However, upon pointed question on the issue of specific averments insofar as the applicants are concerned, he candidly submitted that on the basis of such averments made in the complaint, there appears to be no specific attribution against the present applicants. 9. Having heard the learned counsel appearing for the respective parties and having gone through the averments made in the complaint as well as in the application, following circumstances are emerging from the record : (i) A bare look of the complaint would clearly indicate that there is no specific averments contained as to in which manner the vicarious liability can be attached to present applicants, who are the Directors of the company. (ii) It is also appearing from the complaint that the main company, who can be said to be principal offender is not made a party to the complaint. (iii) It is also reflecting from the record that the complaint came to be filed on 26.7.2006 and the summons came to be issued on the very same day without any reasons nor the order reflects any application of mind as to prima facie whether on the basis of averments contained in the complaint, the offence as alleged are established or not against present applicants. (iv) It is also appearing from the record that one Mr.Parag S. Padrakar is already nominated by the company under Rule 12- B of the Rules in Form-VIII and whose nomination has already been submitted before the appropriate authority and it has been specifically conveyed to the Court, upon instructions, that said nomination dated 15.2.2005 is till date continued. (v) It is also emerging from the averments made on oath by the applicants that applicant have not been served with summons and they came to know about issuance of Nonbailable Warrant on the basis of availability of the Rojkam only and to these averments contained in Para.6 and 7, there is no counter filed by the respondent in any manner. 10. 10. In view of aforesaid circumstance, it is not emerging from the record that applicants were at no point of time in-charge or responsible to the company for conduct of the business as envisaged under Section 17 of the Act. It is also emerging from the record that nowhere any specific role is assigned in the complaint by alleging against the applicants and it is also not established even prima facie that as to in which manner the present applicants, who are the Directors, are responsible to the local affairs of the company and there is no such allegation which can connect the applicants with the main allegations contained in the complaint and therefore, it appears that the Directors have been dragged in a casual manner and the learned Magistrate has without application of mind in a routine manner issued the process in criminal matter which is uncalled for. It is also appearing from the record that the nomination in favour of Mr.Parag S. Padrakar is still in continuance and therefore, there is some responsible person very much available before the authority and therefore, it appears to this Court that dragging the applicants in criminal matter on the basis of such kind of material would be nothing but a miscarriage of justice. 11. In the context of aforesaid facts and circumstance, if we see the statutory provisions contained under Section 17 of the Act, it deals with offences by the company. It can be seen that the applicants cannot be attributed to have committed the offence as alleged and therefore, they could not have been dragged into prosecution. 11. In the context of aforesaid facts and circumstance, if we see the statutory provisions contained under Section 17 of the Act, it deals with offences by the company. It can be seen that the applicants cannot be attributed to have committed the offence as alleged and therefore, they could not have been dragged into prosecution. For immediate perusal Section 17 of the Act is reproduced hereinafter : “[17 Offences by companies:- (1) Where an offence under this Act has been committed by a company — (a) (i) the person, if any, who has been nominated under sub-section (2) to be in charge of, and responsible to, the company for the conduct of the business of the company (hereafter in this section referred to as the person responsible), or (ii) where no person has been so nominated, every person who at the time the offence was committed was in charge of, and was responsible to, the company for the conduct of the business of the company; and (b) the company, shall be deemed to be guilty of the offence and shall be liable to be proceeded against and punished accordingly: Provided that nothing contained in this sub-section shall render any such person liable to any punishment provided in this Act if he proves that the offence was committed without his knowledge and that he exercised all due diligence to prevent the commission of such offence. (2) Any company may, by order in writing, authorize any of its directors or managers (such manager being employed mainly in a managerial or supervisory capacity) to exercise all such powers and take all such steps as may be necessary or expedient to prevent the commission by the company of any offence under this Act and may give notice to the Local (Health) Authority, in such form and in such manner as may be prescribed, that it has nominated such director or manager as the person responsible, along with the written consent of such director or manager for being so nominated. Explanation :- Where a company has different establishments or branches or different units in any establishment or branch, different persons may be nominated under this sub-section in relation to different establishments or branches or units and the person nominated in relation to any establishment, branch or unit shall be deemed to be the person responsible in respect of such establishment, branch or unit. (3) The person nominated under sub-section (2) shall, until— (i) further notice cancelling such nomination is received from the company by the Local (Health) Authority; or (ii) he ceases to be a director or, as the case may be, manager of the company; or (iii) he makes a request in writing to the Local (Health) Authority, under intimation to the company, to cancel the nomination [which request shall be complied with by the Local (Health) Authority], whichever is the earliest, continue to be the person responsible: Provided that where such person ceases to be a director or, as the case may be, manager of the company, he shall intimate the fact of such cesser to the Local (Health) Authority: Provided further that where such person makes a request under clause (iii), the Local (Health) Authority shall not cancel such nomination with effect from a date earlier than the date on which the request is made. (4) Notwithstanding anything contained in the foregoing sub-sections, where an offence under this Act has been committed by a company and it is proved that the offence has been committed with the consent or connivance of, or is attributable to, any neglect on the part of, any director, manager, secretary or other officer of the company [not being a person nominated under sub-section (2)] such director, manager, secretary or other officer shall also be deemed to be guilty of that offence and shall be liable to be proceeded against and punished accordingly. Explanation.—For the purposes of this section— (a) “Company” means any body corporate and includes a firm or other association of individuals; (b) “director”, in relation to a firm, means a partner in the firm; and (c) “manager”, in relation to a company engaged in hotel industry, includes the person in charge of the catering department of any hotel managed or run by it.” 12. The scheme of this statutory provision is that where a company has committed an offence under the Act, the person nominated under sub-section (2) to be in-charge of and responsible to the company for conduct of its business shall be proceeded against unless it is shown that the offence was committed with the consent/connivance/negligence on any other director, manager, secretary or officer of the company and in which case, such person can also be proceeded with. Whereas herein the instant case, looking to the averments contained in the complaint there appears to be no such element appearing which would attract the applicants to be an offender and therefore, under the scheme of this statutory provision also, there appears to be no justification in continuing the prosecution against the applicants and therefore, the Court is of the considered opinion that the complaint insofar as it relates to present applicants is concerned, is nothing but misuse of process of law even allowed to be continued against them and therefore, same deserves to be quashed in the interest of justice. 13. To arrive at such conclusion, the Court has an assistance of some of the pronouncements of the Supreme Court which are required to be reproduced hereinafter. 14. First judgment which has been cited which is reported in 2015 (4) SCC 609 [Sunil Bharti Mittal v. C.B.I.] in which the concept of corporate criminal liability is dealt with by the Apex Court and while dealing with the said concept in what manner the vicarious liability doctrine can be pressed into service. The Supreme Court while analyzing the said doctrine has propounded that only if there is sufficient incriminating material then only the same can be pressed into service and the relevant discussion which contains the proposition is reflecting in paragraphs 42, 43, 44, 45 and 46 which are reproduced hereinafter: “42. No doubt, a corporate entity is an artificial person which acts through its officers, directors, managing director, chairman etc. If such a company commits an offence involving mens rea, it would normally be the intent and action of that individual who would act on behalf of the company. It would be more so, when the criminal act is that of conspiracy. However, at the same time, it is the cardinal principle of criminal jurisprudence that there is no vicarious liability unless the statute specifically provides so. 43. Thus, an individual who has perpetrated the commission of an offence on behalf of a company can be made accused, along with the company, if there is sufficient evidence of his active role coupled with criminal intent. Second situation in which he can be implicated is in those cases where the statutory regime itself attracts the doctrine of vicarious liability, by specifically incorporating such a provision. 44. Second situation in which he can be implicated is in those cases where the statutory regime itself attracts the doctrine of vicarious liability, by specifically incorporating such a provision. 44. When the company is the offendor, vicarious liability of the Directors cannot be imputed automatically, in the absence of any statutory provision to this effect. One such example is Section 141 of the Negotiable Instruments Act, 1881. In Aneeta Hada (supra), the Court noted that if a group of persons that guide the business of the company have the criminal intent, that would be imputed to the body corporate and it is in this backdrop, Section 141 of the Negotiable Instruments Act has to be understood. Such a position is, therefore, because of statutory intendment making it a deeming fiction. Here also, the principle of "alter ego", was applied only in one direction namely where a group of persons that guide the business had criminal intent, that is to be imputed to the body corporate and not the vice versa. Otherwise, there has to be a specific act attributed to the Director or any other person allegedly in control and management of the company, to the effect that such a person was responsible for the acts committed by or on behalf of the company. 45. This very principle is elaborated in various other judgments. We have already taken note of Maharashtra State Electricity Distribution Co. Ltd. [2010 (10 SCC 479] AND S.K. Alagh [ 2008 (5) SCC 662 ] Few other judgments reiterating this principle are the following: 45.1. Jethsur Surangbhai v. State of Gujarat, 1984 Supp SCC 207, (SCC pp. 210-11, para-9) "9. With due respect what the High Court seems to have missed is that in a case like this where there was serious defalcation of the properties of the Sangh, unless the prosecution proved that there was a close cohesion and collusion between all the accused which formed the subject matter of a conspiracy, it would be difficult to prove the dual charges particularly against the appellant (A-1). The charge of conspiracy having failed, the most material and integral part of the prosecution story against the appellant disappears. The charge of conspiracy having failed, the most material and integral part of the prosecution story against the appellant disappears. The only ground on the basis of which the High Court has convicted him is that as he was the Chairman of the Managing Committee, he must be held to be vicariously liable for any order given or misappropriation committed by the other accused. The High Court, however, has not referred to the concept of vicarious liability but the findings of the High Court seem to indicate that this was the central idea in the mind of the High Court for convicting the appellant. In a criminal case of such a serious nature mens rea cannot be excluded and once the charge of conspiracy failed the onus lay on the prosecution to prove affirmatively that the appellant was directly and personally connected with acts or omissions pertaining to Items 2, 3 and 4. It is conceded by Mr Phadke that no such direct evidence is forthcoming and he tried to argue that as the appellant was Chairman of the Sangh and used to sign papers and approve various tenders, even as a matter of routine he should have acted with care and caution and his negligence would be a positive proof of his intention to commit the offence. We are however unable to agree with this somewhat broad statement of the law. In the absence of a charge of conspiracy the mere fact that [pic] the appellant happened to be the Chairman of the Committee would not make him criminally liable in a vicarious sense for items 2 to 4. There is no evidence either direct or circumstantial to show that apart from approving the purchase of fertilisers he knew that the firms from which the fertilisers were purchased did not exist. Similar is the case with the other two items. Indeed, if the Chairman was to be made liable then all members of the Committee viz. Tehsildar and other nominated members, would be equally liable because all of them participated in the deliberations of the meetings of the Committee, a conclusion which has not even been suggested by the prosecution. Similar is the case with the other two items. Indeed, if the Chairman was to be made liable then all members of the Committee viz. Tehsildar and other nominated members, would be equally liable because all of them participated in the deliberations of the meetings of the Committee, a conclusion which has not even been suggested by the prosecution. As Chairman of the Sangh the appellant had to deal with a large variety of matters and it would not be humanly possible for him to analyse and go into the details of every small matter in order to find out whether there has been any criminal breach of trust. In fact, the hero of the entire show seems to be A-3 who had so stagemanaged the drama as to shield his guilt and bring the appellant in the forefront. But that by itself would not be conclusive evidence against the appellant. There is nothing to show that A-3 had either directly or indirectly informed the appellant regarding the illegal purchase of fertilisers or the missing of the five oil engines which came to light much later during the course of the audit. Far from proving the intention the prosecution has failed to prove that the appellant had any knowledge of defalcation of Items 2 to 4. In fact, so far as item 3 is concerned, even Mr Phadke conceded that there is no direct evidence to connect the appellant." 45.2. Sham Sunder v. State of Haryana, [ 1989 (4) SCC 630 ], (SCC p.632, para9) "9. But we are concerned with a criminal liability under penal provision and not a civil liability. The penal provision must be strictly construed in the first place. Secondly, there is no vicarious liability in criminal law unless the statute takes that also within its fold. Section 10 does not provide for such liability. It does not make all the partners liable for the offence whether they do business or not." 45.3. Hira Lal Hari Lal Bhagwati v. CBI, [ 2003 (5) SCC 257 ], (SCC p.277, para 30) "30. In our view, under the penal law, there is no concept of vicarious liability unless the said statute covers the same within its ambit. It does not make all the partners liable for the offence whether they do business or not." 45.3. Hira Lal Hari Lal Bhagwati v. CBI, [ 2003 (5) SCC 257 ], (SCC p.277, para 30) "30. In our view, under the penal law, there is no concept of vicarious liability unless the said statute covers the same within its ambit. In the instant case, the said law which prevails in the field i.e. the Customs Act, 1962 the appellants have been thereinunder wholly discharged and the GCS granted immunity from prosecution." 45.4. Maksud Saiyed v. State of Gujarat, [ 2008 (5) SCC 668 ] (SCC p. 674, para 13) "13. 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. The 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. Statutes indisputably must contain provision fixing such vicarious liabilities. Even for the said purpose, it is obligatory on the part of the complainant to make requisite allegations which would attract the provisions constituting vicarious liability." 45.5. R. Kalyani v. Janak C. Mehta, [ 2009 (1) SCC 516 ] (SCC p. 527, para 32) "32. Allegations contained in the FIR are for commission of offences under a general statute. A vicarious liability can be fastened only by reason of a provision of a statute and not otherwise. For the said purpose, a legal fiction has to be created. Even under a special statute when the vicarious criminal liability is fastened on a person on the premise that he was in charge of the affairs of the company and responsible to it, all the ingredients laid down under the statute must be fulfilled. For the said purpose, a legal fiction has to be created. Even under a special statute when the vicarious criminal liability is fastened on a person on the premise that he was in charge of the affairs of the company and responsible to it, all the ingredients laid down under the statute must be fulfilled. A legal fiction must be confined to the object and purport for which it has been created." 45.6 Sharon Michael v. State of T.N., [ 2009 (1) SCC 516 ], (SCC p. 383, para 16) "16. The first information report contains details of the terms of contract entered into by and between the parties as also the mode and manner in which they were implemented. Allegations have been made against the appellants in relation to execution of the contract. No case of criminal misconduct on their part has been made out before the formation of the contract. There is nothing to show that the appellants herein who hold different positions in the appellant Company made any representation in their personal capacities and, thus, they cannot be made vicariously liable only because they are employees of the Company." 45.7. Keki Hormusji Gharda v. Mehervan Rustom Irani, [ 2009 (6) SCC 475 ] (SCC pp. 480-81, paras 16-19) "16. We have noticed hereinbefore that despite of the said road being under construction, the first respondent went to the police station thrice. He, therefore, was not obstructed from going to the police station. In fact, a firm action had been taken by the authorities. The workers were asked not to do any work on the road. We, therefore, fail to appreciate that how, in a situation of this nature, the Managing Director and the Directors of the Company as also the Architect can be said to have committed an offence under Section 341 IPC.” 15. In yet another decision in the context of vicarious liability of the directors for the charges leveled against the company, the Apex Court while dealing with the case in case of Maksud Saiyed reported in 2008 (5) SCC 668 has held that absence of any requisite allegation, the vicarious liability cannot be allowed to be attracted and while dealing with the case the Apex Court has held that summoning the accused person in criminal case is a serious matter and the duty of Magistrate was prescribed. The relevant paragraphs of the said decision is reproduced hereinafter: “13. 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. Statutes indisputably must contain provision fixing such vicarious liabilities. Even for the said purpose, it is obligatory on the part of the complainant to make requisite allegations which would attract the provisions constituting vicarious liability.” 16. Even on the issuance of summons as well as order on inquiry, there must be a proper application of mind by the learned Magistrate and the learned Magistrate is under a legal duty to apply the mind when a person is to be dragged in a criminal matter and therefore, relevant observations with respect to this also are required to be taken assistance which are reproduced hereinafter : 17. In the context of aforesaid proposition of law, if we see the judgments which have been referred to by learned senior counsel, Mr.Shalin Mehta appearing for the applicant, though the decisions which have been cited are related to an offence committed under the provisions of the Negotiable Instruments Act,1881, however, the principle of vicarious liability is dealt with by the Court and therefore, same is also taken in aid by this Court while coming to this conclusion that complaint against the applicants is nothing but a clear example of abuse of process of law. 18. 18. Similar is the case with respect to a decision reported in 2013 (4) SCC 505 [G.H.C.L. Employees Stock Option Trust v. India infoline Ltd.] in which also it has been held by the Apex Court that if no specific role assigned to the accused in commission of crime and if the complaint is based upon bald and vague allegations, the issuance of summons against this accused is held to be illegal amounting to abuse of the process of law and thereby the Apex Court has deprecated the said issuance and roping the accused in general. The relevant extract of the said decision is contained in paragraphs 13, 14, 15 to 19. Hence, reproduced hereinafter: “13. There is no dispute with regard to the legal proposition that the case of breach of trust or cheating are both a civil wrong and a criminal offence, but under certain situations where the act alleged would predominantly be a civil wrong, such an act does not constitute a criminal offence. 14. Be that as it may, as held by this Court, summoning of accused in a criminal case is a serious matter. Hence, criminal law cannot be set into motion as a matter of course. The order of Magistrate summoning the accused must reflect that he has applied his mind to the facts of the case and the law applicable thereto. The Magistrate has to record his satisfaction with regard to the existence of a prima facie case on the basis of specific allegations made in the complaint supported by satisfactory evidence and other material on record. 15. In the case of Madhavrao Jiwaji Rao Scindia and Another Etc. vs. Sambhajirao Chandrojirao Angre and Others Etc. AIR 1988 SC 709 , this Court held as under: 7. The legal position is well-settled that when a prosecution at the initial stage is asked to be quashed, the test to be applied by the court is as to whether the uncontroverted allegations as made prima facie establish the offence. It is also for the court to take into consideration any special features which appear in a particular case to consider whether it is expedient and in the interest of justice to permit a prosecution to continue. It is also for the court to take into consideration any special features which appear in a particular case to consider whether it is expedient and in the interest of justice to permit a prosecution to continue. This is so on the basis that the court cannot be utilised for any oblique purpose and where in the opinion of the court chances of an ultimate conviction is bleak and, therefore, no useful purpose is likely to be served by allowing a criminal prosecution to continue, the court may while taking into consideration the special facts of a case also quash the proceeding even though it may be at a preliminary stage. 16. In the case of Punjab National Bank and Others vs. Surendra Prasad Sinha, AIR 1992 SC 1815 , a complaint was lodged by the complainant for prosecution under Sections 409, 109 and 114, IPC against the Chairman, the Managing Director of the Bank and a host of officers alleging, inter alia, that as against the loan granted to one Sriman Narain Dubey the complainant and his wife stood as guarantors and executed Security Bond and handed over Fixed Deposit Receipt. Since the principal debtor defaulted in payment of debt, the Branch Manager of the Bank on maturity of the said fixed deposit adjusted a part of the amount against the said loan. The complainant alleged that the debt became barred by limitation and, therefore, the liability of the guarantors also stood extinguished. It was, therefore, alleged that the officers of the Bank criminally embezzled the said amount with dishonest intention to save themselves from financial obligation. The Magistrate without adverting whether the allegations in the complaint prime facie make out an offence charged for, in a mechanical manner, issued the process against all the accused persons. The High Court refused to quash the complaint and the matter finally came to this Court. Allowing the appeal and quashing the complaint, this Court held as under: (Surendra Prasad Sinha case, SCC pp. 504-05, para 6) 6. It is also salutary to note that judicial process should not be an instrument of oppression or needless harassment. The complaint was laid impleading the Chairman, the Managing Director of the Bank by name and a host of officers. There lies responsibility and duty on the Magistracy to find whether the concerned accused should be legally responsible for the offence charged for. The complaint was laid impleading the Chairman, the Managing Director of the Bank by name and a host of officers. There lies responsibility and duty on the Magistracy to find whether the concerned accused should be legally responsible for the offence charged for. Only on satisfying that the law casts liability or creates offence against the juristic person or the persons impleaded then only process would be issued. At that stage the court would be circumspect and judicious in exercising discretion and should take all the relevant facts and circumstances into consideration before issuing process lest it would be an instrument in the hands of the private complainant as vendetta to harass the persons needlessly. Vindication of majesty of justice and maintenance of law and order in the society are the prime objects of criminal justice but it would not be the means to wreak personal vengeance. Considered from any angle we find that the respondent had abused the process and laid complaint against all the appellants without any prima facie case to harass them for vendetta. 17. In the case of Maksud Saiyed vs. State of Gujarat and Others (2008) 5 SCC 668 , this Court while discussing vicarious liability observed as under :- (SCC p, 674, para 13) 13. 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. The 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. Statutes indisputably must contain provision fixing such vicarious liabilities. Even for the said purpose, it is obligatory on the part of the complainant to make requisite allegations which would attract the provisions constituting vicarious liability.” 19. In a decision of the Supreme Court in case of Priyanka Srivastava & Anr. Statutes indisputably must contain provision fixing such vicarious liabilities. Even for the said purpose, it is obligatory on the part of the complainant to make requisite allegations which would attract the provisions constituting vicarious liability.” 19. In a decision of the Supreme Court in case of Priyanka Srivastava & Anr. V/s. State of Uttar Pradesh & Ors., reported in (2015) 6 SCC 287 , it is held as under : “20. The learned Magistrate, as we find, while exercising the power under Section 156(3), Cr.P.C. has narrated the allegations and, thereafter, without any application of mind, has passed an order to register an FIR for the offences mentioned in the application. The duty cast on the learned Magistrate, while exercising power under Section 156(3), Cr.P.C., cannot be marginalized. To understand the real purport of the same, we think it apt to reproduce the said provision: "156. Police officer's power to investigate cognizable case:- (1) Any officer in charge of a police station may, without the order of a Magistrate, investigate any cognizable case which a Court having jurisdiction over the local area within the limits of such station would have power to inquire into or try under the provisions of Chapter XIII. (2) No proceeding of a police officer in any such case shall at any stage be called in question on the ground that the case was one which such officer was no empowered under this section to investigate. (3) Any Magistrate empowered under section 190 may order such an investigation as above-mentioned." 21. Dealing with the nature of power exercised by the Magistrate under Section 156(3) of the Cr.P.C., a three- Judge Bench in Devarapalli Lakshminarayana Reddy and others v. V. Narayana Reddy and others, 1976 (3) SCC 252 , had to express thus: "17. It may be noted further that an order made under sub-section (3) of Section 156, is in the nature of a peremptory reminder or intimation to the police to exercise their plenary powers of investigation under Section 156(1). Such an investigation embraces the entire continuous process which begins with the collection of evidence under Section 156 and ends with a report or charge-sheet under Section 173." 22. In Anil Kumar v. M.K. Aiyappa, 2013 20 SCC 705, the two-Judge Bench had to say this: "11. The scope of Section 156(3), Cr.P.C. came up for consideration before this Court in several cases. In Anil Kumar v. M.K. Aiyappa, 2013 20 SCC 705, the two-Judge Bench had to say this: "11. The scope of Section 156(3), Cr.P.C. came up for consideration before this Court in several cases. This Court in Maksud Saiyed [ (2008) 5 SCC 668 ] examined the requirement of the application of mind by the Magistrate before exercising jurisdiction under Section 156(3) and held that where jurisdiction is exercised on a complaint filed in terms of Section 156(3) or Section 200, Cr.P.C., the Magistrate is required to apply his mind, in such a case, the Special Judge/Magistrate cannot refer the matter under Section 156(3) against a public servant without a valid sanction order. The application of mind by the Magistrate should be reflected in the order. The mere statement that he has gone through the complaint, documents and heard the complainant, as such, as reflected in the order, will not be sufficient. After going through the complaint, documents and hearing the complainant, what weighed with the Magistrate to order investigation under Section 156(3), Cr.P.C., should be reflected in the order, though a detailed expression of his views is neither required nor warranted. We have already extracted the order passed by the learned Special Judge which, in our view, has stated no reasons for ordering investigation." 23. In Dilawar Singh v. State of Delhi, 2007 (12) SCC 641 , this Court ruled thus: "18. ...11. The clear position therefore is that any Judicial Magistrate, before taking cognizance of the offence, can order investigation under Section 156(3) of the Code. If he does so, he is not to examine the complainant on oath because he was not taking cognizance of any offence therein. For the purpose of enabling the police to start investigation it is open to the Magistrate to direct the police to register an FIR. There is nothing illegal in doing so. After all registration of an FIR involves only the process of entering the substance of the information relating to the commission of the cognizable offence in a book kept by the officer in charge of the police station as indicated in Section 154 of the Code. There is nothing illegal in doing so. After all registration of an FIR involves only the process of entering the substance of the information relating to the commission of the cognizable offence in a book kept by the officer in charge of the police station as indicated in Section 154 of the Code. Even if a Magistrate does not say in so many words while directing investigation under Section 156(3) of the Code that an FIR should be registered, it is the duty of the officer in charge of the police station to register the FIR regarding the cognizable offence disclosed by the complainant because that police officer could take further steps contemplated in Chapter XII of the Code only thereafter." 25. Recently, in Ramdev Food Products Private Limited v. State of Gujarat 2015 (6) SCC 439 , while dealing with the exercise of power under Section 156(3), Cr.P.C. by the learned Magistrate, a three-Judge Bench has held that: "22.1 The direction under Section 156(3) is to be issued, only after application of mind by the Magistrate. When the Magistrate does not take cognizance and does not find it necessary to postpone instance of process and finds a case made out to proceed forthwith, direction under the said provision is issued. In other words, where on account of credibility of information available, or weighing the interest of justice it is considered appropriate to straightway direct investigation, such a direction is issued. 22.2 The cases where Magistrate takes cognizance and postpones issuance of process are cases where the Magistrate has yet to determine "existence of sufficient ground to proceed." 27. Regard being had to the aforesaid enunciation of law, it needs to be reiterated that the learned Magistrate has to remain vigilant with regard to the allegations made and the nature of allegations and not to issue directions without proper application of mind. He has also to bear in mind that sending the matter would be conducive to justice and then he may pass the requisite order. The present is a case where the accused persons are serving in high positions in the bank. We are absolutely conscious that the position does not matter, for nobody is above law. But, the learned Magistrate should take note of the allegations in entirety, the date of incident and whether any cognizable case is remotely made out. The present is a case where the accused persons are serving in high positions in the bank. We are absolutely conscious that the position does not matter, for nobody is above law. But, the learned Magistrate should take note of the allegations in entirety, the date of incident and whether any cognizable case is remotely made out. It is also to be noted that when a borrower of the financial institution covered under the SARFAESI Act, invokes the jurisdiction under Section 156(3), Cr.P.C. and also there is a separate procedure under the Recovery of Debts due to Banks and Financial Institutions Act, 1993, an attitude of more care, caution and circumspection has to be adhered to. 29. At this stage it is seemly to state that power under Section 156(3) warrants application of judicial mind. A court of law is involved. It is not the police taking steps at the stage of Section 154 of the Code. A litigant at his own whim cannot invoke the authority of the Magistrate. A principled and really grieved citizen with clean hands must have free access to invoke the said power. It protects the citizens but when pervert litigations takes this route to harass their fellows citizens, efforts are to be made to scuttle and curb the same. 30. In our considered opinion, a stage has come in this country where Section 156(3), Cr.P.C. applications are to be supported by an affidavit duly sworn by the applicant who seeks the invocation of the jurisdiction of the Magistrate. That apart, in an appropriate case, the learned Magistrate would be well advised to verify the truth and also can verify the veracity of the allegations. This affidavit can make the applicant more responsible. We are compelled to say so as such kind of applications are being filed in a routine manner without taking any responsibility whatsoever only to harass certain persons. That apart, it becomes more disturbing and alarming when one tries to pick up people who are passing orders under a statutory provision which can be challenged under the framework of said Act or under Article 226 of the Constitution of India. But it cannot be done to take undue advantage in a criminal court as if somebody is determined to settle the scores. 31. But it cannot be done to take undue advantage in a criminal court as if somebody is determined to settle the scores. 31. We have already indicated that there has to be prior applications under Section 154(1) and 154(3) while filing a petition under Section 156(3). Both the aspects should be clearly spelt out in the application and necessary documents to that effect shall be filed. The warrant for giving a direction that an the application under Section 156(3) be supported by an affidavit so that the person making the application should be conscious and also endeavour to see that no false affidavit is made. It is because once an affidavit is found to be false, he will be liable for prosecution in accordance with law. This will deter him to casually invoke the authority of the Magistrate under Section 156(3). That apart, we have already stated that the veracity of the same can also be verified by the learned Magistrate, regard being had to the nature of allegations of the case. We are compelled to say so as a number of cases pertaining to fiscal sphere, matrimonial dispute/family disputes, commercial offences, medical negligence cases, corruption cases and the cases where there is abnormal delay/laches in initiating criminal prosecution, as are illustrated in Lalita Kumari are being filed. That apart, the learned Magistrate would also be aware of the delay in lodging of the FIR.” 20. Yet in another decision in case of Sharad Kumar Sanghi V/s. Sangita Rane, reported in (2015) 12 SCC 781 , the Supreme Court has held as under : “11. In the case at hand as the complainant's initial statement would reflect, the allegations are against the company, but the company has not been arrayed as a party. Therefore, the allegations have to be restricted to the Managing Director. As we have noted earlier, allegations are vague and in fact, principally the allegations are against the company. There is no specific allegation against the Managing Director. When a company has not been arrayed as a party, no proceeding can be initiated against it even where vicarious liability is fastened on certain statutes. It has been so held by a three-Judge Bench in Aneeta Hada v. Godfather Travels and Tours Private Limited, 2012 (5) SCC 661 in the context of Negotiable Instruments Act, 1881. 13. When a company has not been arrayed as a party, no proceeding can be initiated against it even where vicarious liability is fastened on certain statutes. It has been so held by a three-Judge Bench in Aneeta Hada v. Godfather Travels and Tours Private Limited, 2012 (5) SCC 661 in the context of Negotiable Instruments Act, 1881. 13. When the company has not been arraigned as an accused, such an order could not have been passed. We have said so for the sake of completeness. In the ultimate analysis, we are of the considered opinion that the High Court should have been well advised to quash the criminal proceedings initiated against the appellant and that having not been done, the order is sensitively vulnerable and accordingly we set aside the same and quash the criminal proceedings initiated by the respondent against the appellant.” 21. Even on the issue of the process on the receipt of the complaint after taking into consideration series of decisions of the Supreme Court and the coordinate bench of this Court has also clearly opined that issuance of summons is not a mere formality but, it must be reflected through application of mind and here in the instant case, it is emerging from that record that while issuing summons upon the complaint even while issuing Non-bailable Warrant, no such application of mind is reflected which warrant this Court to quash the complaint insofar a it relates to present applicants. 22. In an unreported decision of this Court rendered in Criminal Misc. Application No.3066 of 2007 decided on 29.2.2008, it is held like this : “13. However, the core of the submissions advanced by the learned Senior Advocate was that in view of the amended provisions of section 202 of the Code, issuance of process without making inquiry as envisaged under sub-section (1) of section 202 of the Code was in breach of the said provision. It was contended that after the amendment of 2005, which was brought into force with effect from 23rd June, 2006, in case where the accused is residing at a place beyond the area in which he exercises his jurisdiction, it has become mandatory for the Magistrate to postpone the issue of process and make inquiry for the purpose of deciding whether or not there is sufficient ground for proceeding. On facts it is pointed out that the petitioners No.1, 2 and 3 who are the main accused, are residing outside the area in which the learned Metropolitan Magistrate exercises his jurisdiction.” 23. The Apex court has consistently held that if facts are so warranting, the power to quash the complaint can be exercised and such proposition of law laid down by the Honble Apex Court in some decisions which are also relevant hence, reproduced hereinafter: “ 2015 (11) SCC 730 : 7. We have carefully considered the rival submissions made before us. From a bare perusal of Section 482 of the Code, it is clear that the object of exercise of power under the Section is to prevent abuse of process of law, and to secure ends of justice. In Rajiv Thapar v. Madan Lal Kapoor, 2013 (3) SCC 330 , this Court has enumerated the steps required to be followed before invoking inherent jurisdiction by the High Court under Section 482 of the Code as under: (SCC pp. 348-49, para 30) 30. Based on the factors canvassed in the foregoing paragraphs,. We would delineate the following steps to determine the veracity of a prayer for quashment raised by an accused by invoking the power vested in the High Court under Section 482 of Cr. P.C.: 30.1. Step one: Whether the material relied upon by the accused is sound, reasonable, and indubitable i.e. the material is of sterling ans impeccable quality? 30.2. Step two: Whether the material relied upon by the accused would rule out the assertions contained in the charges levelled against the accused i.e. the material is sufficient to reject and overrule the factual assertions contained in the complaint i.e. the material is such as would persuade a reasonable person to dismiss and condemn the factual basis of the accusations as false? 30.3. Step three: Whether the material relied upon by the accused has not been refuted by the prosecution/complainant; and/or the material is such that it cannot be justifiably refuted by the prosecution/complainant? 30.4. Step four: Whether proceeding with the trial would result in an abuse of process of the court, and would not serve the ends of justice? 30.5. 30.3. Step three: Whether the material relied upon by the accused has not been refuted by the prosecution/complainant; and/or the material is such that it cannot be justifiably refuted by the prosecution/complainant? 30.4. Step four: Whether proceeding with the trial would result in an abuse of process of the court, and would not serve the ends of justice? 30.5. If the answer to all the steps is in the affirmative, the judicial conscience of the High Court should persuade it to quash such criminal proceedings in exercise of power vested in it under Section 482 of Cr.P.C. such exercise of power, besides doing justice to the accused, would save precious court time, which would otherwise be wasted in holding such a trial (as well as proceedings arising therefrom) specially when it is clear that the same would not conclude in the conviction of the accused. 8. In Rishipal Singh v. State of U.P., 2014 (7) SCC 215 explaining the law in the similar circumstances, as in the present case, this Court observed, in para 17 as under: 17. It is no doubt true that the courts have to be cry careful while exercising the power under Section 482 Cr.P.C. At the same time we should not allow a litigant to file vexatious complaints to otherwise settle their scores by setting the criminal law into motion, which is a pure abuse of process of law and it has to be interdicted at the threshold. In Rishipal Singh, the complainant, who was an accused in connection with an offence punishable under Section 138 of the Act, had filed a criminal complaint relating to offences punishable under Sections 34, 379, 411, 417, 418, 467, 468, 471 and 477 IPC.” 24. In the aforesaid premise, the Court is of the considered opinion that complaint in question and the issuance of process deserve to be quashed insofar as it relates to present applicants and same is accordingly quashed and set aside qua the present applicants. 25. It is needless to say that the Court has not examined the other issues with respect to complaint and therefore, without entering into merit and demerit of the main complaint, the complaint on the basis of the aforesaid circumstance is quashed insofar as it relates to the present applicants. Accordingly, present application is allowed. Rule is made absolute. Petition allowed.