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2017 DIGILAW 137 (GUJ)

Hiren D. Padharia v. State of Gujarat

2017-01-20

A.J.SHASTRI

body2017
JUDGMENT A.J. Shastri, J. 1. The present petition is filed seeking quashment of Criminal Case No. 904 of 2008 pending before Court of learned Judicial Magistrate (First Class), Anjar, and consequent issuance of process thereupon. 2. The facts of the prosecution in the background are as under: "2.1 Global Oil & Fats Ltd. is a company established and incorporated under the provisions of Companies Act, 1956 engaged in the business of refining, packaging, manufacturing and trading of branded edible oils. One of its units is situated at Anjar, Kachchh. The said company was amalgamated with three other companies namely (i) Cargill Foods India Limited, (ii) Duckworth Flavours (India) Pvt. Ltd. and (iii) Cargill Matrix Feeds Pvt. Ltd. and thereafter merged with Cargill India Pvt. Ltd. under the scheme of amalgamation. The Hon'ble Delhi High Court was pleased to allow merger/amalgamation by order dated 13.8.2008 by which, accused No. 1 company has attained a "Civil Death" and has lost its legal existence in the eye of law. 2.2 Further facts are that prior to the said merger, there was a job work/toll manufacturing agreement entered into on 1.11.2005 between Cargill India Private Limited and Global Oil and Fats Limited valid till the merger dated 13.8.2008. The said agreement provided that Cargill India Pvt. Ltd. would supply to Kandla Plant of the then GOFL different types of crude oil and then would manufacture refined branded and packed edible oils. For the said purpose, GOFL would raise invoices to Cargill India Pvt. Ltd. for labour and equipment charges for all processing activities for the job work done. It was also provided that Cargill India Pvt. Ltd. shall have a right to depute to GOFL any time during the period of agreement for supervision of job work and for other processes. Under clause 24 of the agreement, the then GOFL was responsible for all statutory permission and would indemnify Cargill for all liabilities including state and local laws. Officer of the complainant when visited the unit of the then GOFL reported that during the months of February to April, 2008, no apprentice was recruited. Hence, a notice was issued by the complainant on 22.1.2008 to the then GOFL to comply with the provisions of Apprentice Act, 1961. Officer of the complainant when visited the unit of the then GOFL reported that during the months of February to April, 2008, no apprentice was recruited. Hence, a notice was issued by the complainant on 22.1.2008 to the then GOFL to comply with the provisions of Apprentice Act, 1961. As per section 6 of the Apprentice Act, the Central Government shall determine for each designated trade in the ratio of trade apprentices to workers other than unskilled workers in that trade and the Apprenticeship Advisor shall inform the employer to engage such number of trade apprentices within the ratio determined by the Central Government and to undergo apprenticeship training in the trade. For non-compliance of the said provisions, penal provisions as contemplated under section 30 of the Act would be attracted. As the company has failed to comply with aforesaid provisions of the Apprentice Act, a complaint was filed by the Apprentice Advisor on 13.10.2008 before the learned Judicial Magistrate First Class, Anjar, Kachchh, who issued summons on 13.10.2008 which is registered as Criminal Case No. 904 of 2008. It is this complaint and the process issued therein which is made the subject matter of the present petition filed under section 482 of the Cr.P.C. 2.3 In view of the aforesaid situation prevailing on record, this Court while entertaining the petition has passed the following order on 19-6-2009: "Heard Mr. Devang Nanavati, learned advocate for Mrs. V.D. Nanavati, learned advocate for the applicant. 2. It is submitted that the alleged offence is stated to have been committed by Global Oil and Fats Limited which has subsequently been amalgamated with Cargill India Private Limited under a Scheme of Amalgamation. It is submitted that the applicant herein is the Manager of Cargill India Private Limited and at the relevant time, when the alleged offence is stated to have been committed was not in charge of the affairs of Global Oil and Fats Limited. It is accordingly submitted that the applicant can, in no manner, be made liable for the alleged offence which is stated to have been committed by Global Oil and Fats Limited. 3. In view of the submissions advanced by the learned advocate for the applicant, issue notice returnable on 14th July, 2009. It is accordingly submitted that the applicant can, in no manner, be made liable for the alleged offence which is stated to have been committed by Global Oil and Fats Limited. 3. In view of the submissions advanced by the learned advocate for the applicant, issue notice returnable on 14th July, 2009. By way of ad-interim relief, further proceedings of Criminal Case No. 904 of 2008 pending in the Court of learned Judicial Magistrate First Class, Anjar, Kachchh are hereby stayed. 4. Ms. Trusha Patel, learned Additional Public Prosecutor waives service of notice on behalf of respondent No. 1 - State of Gujarat. Direct Service is permitted qua respondent No. 2. It is apparent that in view of the fact that respondent No. 3 - Global Oil and Fats Limited has amalgamated with Cargill India Private Limited, it is no longer in existence and as such, the question of serving the said respondent does not arise." Thereafter, on 8.2.2010, the petition came to be admitted by issuing rule and interim relief which was granted earlier was ordered to be continued and later on, time and again, matter has come up for further hearing. 3. During the course of final hearing of the petition, learned advocate, Mr. Saurin Mehta, appearing with Mr. S.I. Nanavati, learned Senior Advocate for Mrs. V.D. Nanavati, learned advocate representing the petitioner-original accused No. 2, has stated before the Court that even looking to the averments contained in the complainant, there appears to be no violation of any of the provisions of the Apprentice Act on the part of the present petitioner. He has contended that now it is emerged that the Company is no longer in existence and therefore, in the absence of any legal entity being available to prosecute the Company, the petitioner cannot be fastened with any vicarious liability. Drawing attention of the Court to the order passed by the Delhi High Court annexed to the petition at page 22 of the petition compilation, he has contended that four companies have been amalgamated in which there is a specific reference to accused No. 1 company as well as the Company of which, the present petitioner was an employee and therefore, when the Company itself is no longer in existence, there is no question of shifting criminal liability on the present petitioner. He has specifically contended that the petitioner was never working with accused No. 1 company and was, in fact, an employee of one Cargill Foods India Ltd. and was under a job work contract and therefore, no vicarious liability can be fastened upon the petitioner for any of the alleged misdeed of accused No. 1 company. In addition to this, even in the contract executed between the Company to which the petitioner was attached and accused No. 1 Company, a specific liability clause is inserted by way of clause 24. By virtue of this specific clause pertaining to complying with all lows, provisions related to Apprentice Act are also to be observed by accused No. 1 Company only and therefore also, no liability can be fastened on the petitioner. He has further contended that even assuming without admitting that the petitioner who is shown as accused No. 2 has acted on behalf of accused No. 1 company, then also, a bare reading of the complaint clearly indicates that there is no specific allegation levelled against the petitioner nor has any specific role attributed or averred in the complaint against him. In the absence of any such specific allegation or averment, no prosecution can be launched and initiated against the petitioner. He has further contended that even apart from this, issuance of summons in a criminal proceeding is a serious matter and therefore, while exercising such power of issuance of process, the authority/Magistrate/Court has to apply its mind and the same cannot be issued in a mechanical or casual manner and therefore, in the background of these facts, when the violation is not established so far as the present petitioner is concerned, the petition be allowed qua the present petitioner. He has fairly conceded that he is not representing accused No. 1 company nor the Company has come up with any such present petition and therefore, when original accused No. 1 company is very much available, it is always open for the authority to take or initiate appropriate steps against the Company against which violations are alleged and therefore, he has requested the Court to quash the proceeding qua the present petitioner. 3.1 While substantiating his contentions, Mr. 3.1 While substantiating his contentions, Mr. Mehta has relied upon following decisions which will be dealt with at a later point of time in the present judgment: "(i) Nicholas Piramal India Ltd. v. S. Sundaranayagam reported in 1989 DLT page 22 SIV. (ii) Ramrajsingh v. State of Madhya Pradesh and Another reported in (2009)6 SCC page 729 (para 10). (iii) National Small Industries Corporation Limited v. Harmeet Singh Paintal and another reported in (2010)3 SCC page 330 (paras 13, 14 and 15). (iv) Aneeta Hada v. Godfather Travels and Tours Private Limited reported in (2012)5 SCC page 661(paras 57, 59 & 64). (v) Anil Gupta v. Star India Pvt. Ltd. & Anr. reported in 2014 AIR SCW page 4210(paras 14 and 15)." 3.2 In addition thereto, for issuance of process in the criminal proceeding, there must be a strong application of mind and the said action may not reflect mechanical exercise and for that, he has relied upon a decision of the Hon'ble Apex Court in the case of GHCL Employees Stock Option Trust v. India Infoline Limited reported in (2013)4 SCC 505 (pages 13 and 19). By referring these decisions, he has requested the Court to allow the petition by quashing the complaint so far it relates to the present petitioner only. "1. To oppose this petition, learned APP, Mr. L.R. Poojari, has contended that there are disputed questions of fact reflecting and prevailing on record of the case and therefore, no exercise of power under section 482 of the Code of Criminal Procedure (hereinafter referred to as "Cr.P.C." for short) is warranted. He has also contended that it was obligatory on the part of the Company to inform about the vacancies of apprentice employees who can be accommodated and therefore, when the Company has failed to discharge its burden by informing the authority, the complaint has rightly been filed. He has further contended that the petitioner has already put his signature when inspection took place in the Company related to this very issue and therefore, when he is a party to the said process upon which the complaint is filed, no leniency be shown irrespective of the fact whether the Company is in existence or not and therefore, he has requested the Court not to entertain the petition. He, however, upon instructions, has stated that looking to the role alleged in the complaint against the petitioner, appropriate order be passed with respect to present petitioner as the petitioner has not filed any proceeding for and on behalf of accused No. 1 company against whom specific complaint is filed. 2. Having heard the learned advocates appearing for the parties and having gone through the record and having considered the decisions cited before the Court, the Court is of the considered opinion that continuing the prosecution against the petitioner is of no avail in the following background of facts: (1) Original accused No. 1 Company, Global Oils and Fats Ltd., is not before this Court by way of petition under section 482 of Cr.P.C. along with the present petitioner. (2) Accused No. 1 Company has already been amalgamated way back in August, 2008 and a specific reference is very much available on record in the form of decision of Delhi High Court annexed to the petition at page 22 of the petition compilation. (3) In addition thereto, Cargill Foods India Ltd. is the employer of the present petitioner and the appointment letter of the petitioner is also very much available on record which is on page 17 of the petition compilation. (4) It is also emerging from the record that there is a Toll Agreement between Cargill India Private Limited and Global Oils and Fats Ltd. i.e. accused No. 1 company and in view of the terms of the contract, liability of compliance of various laws is the burden of accused No. 1 Company and clause No. 24 contained in the contract reads as under: "24. Compliance with all laws: GOFL will be responsible for all the statutory permissions and will indemnify Cargill from all liabilities with regard to product liability and statutory performances including Prevention of Food Adulteration Act, 1954, Prevention of Food Adulteration Rules, 1955, Vegetable Oil Products (Regulation) Order 1998, Standards of Weights and Measures Act read with Packaged Commodities Rules, 1977, Factories Act, Essential Commodities Act, 1955 etc. (including all amendments thereto and all rules framed thereunder) and all local/State laws as also rules framed there under from time to time including for labour, pollution control/environmental etc., to the extent applicable." (5) Record also indicates that there is a specific averment contained in the affidavit-in-reply filed on behalf of respondent No. 2 authority by Deputy Director, Mr. S.A. Pandav in which a specific assertion has been made that the present petitioner has already informed that GOFL i.e. accused No. 1 company has already been merged with other company and pursuant to that, even the resurvey has also been undertaken and therefore, looking to these circumstances prevailing on record, prima facie it seems that no case is made out at least against the present petitioner. (6) It further appears from the record that process of summons issued on 13.10.2008 on the complaint is not reflecting any reasons nor any application of mind and the criminal proceedings have been put to motion by one line order which indicates a total non-application of mind on the part of learned Magistrate. 3. If the background of facts and the background of law prevailing on the issue is analysed, it would be quite clear that the complaint in question so far as it relates to the present petitioner is nothing but a sheer example of abuse of process of law. Now the Court would deal with the decisions relied on by the learned advocate, Mr. Mehta. 6.1 It has been specifically held in Nicholas Piramal India (supra) by considering several decisions that when the Company is amalgamated, the transferor company ceases to have any legal entity and the amalgamated company acquires a new status and therefore, in the background of this situation prevailing on record, when the transferor company dies as a civil death pursuant to the order of amalgamation, hardly any vicarious liability can be shifted upon the present petitioner and therefore, considering this observation made by the Delhi High Court, it appears that no case is made out atleast against the present petitioner. For a bare perusal, paragraph Nos. 16, 17 and 19 are reproduced hereunder: "16. In the decision reported as American Exch. Bank v. Mitchell, 179 III. For a bare perusal, paragraph Nos. 16, 17 and 19 are reproduced hereunder: "16. In the decision reported as American Exch. Bank v. Mitchell, 179 III. App.612, 615, 616, it was held that after a corporation is dissolved, it is incapable of maintaining an action; and that all such actions pending at the time of dissolution abate, in the absence of a statute to the contrary. 17. In the decision reported as M/s. General Radio and Appliances Co. Ltd. v. M.A. Khader (dead) by LR's, (1986) 2 SCC 656 , the effect of amalgamation of 2 companies was considered by the Hon'ble Supreme Court. It was held that after the amalgamation of the 2 companies the transferor company ceases to have any entity and the amalgamated company acquires a new status and it is not possible to treat the two companies as partners or jointly liable in respect of their liabilities and assets." "19. The legal position which emerges from afore-noted judicial decisions is that upon an amalgamation between two companies, the transferor company dies a civil death and the entity which has evolved upon amalgamation cannot be prosecuted for an offence committed by the transferor company. To the same effect are the observations of the High Court of Himachal Pradesh in the unreported decision in Crl. Rev. No. 150/1994 M/s. Brooke Bond Lipton (India) Ltd. & Anr. v. State of H.P. & Anr. decided on 24.3.1995." 6.2 With respect to the contention whether an Officer of the Company or employee can be prosecuted or not, Mr. Mehta has relied upon the case of Aneeta Hada (supra). The observations made by the Hon'ble Apex Court in paragraphs 58, 59 and 64 of the said decision are sufficient enough to indicate that the contention deserves to be accepted. For the purpose of making a reference, these paragraphs are quoted hereunder: "58. Applying the doctrine of strict construction, we are of the considered opinion that commission of offence by the company is an express condition precedent to attract the vicarious liability of others. Thus, the words's well as the company appearing in the Section make it absolutely unmistakably clear that when the company can be prosecuted, then only the persons mentioned in the other categories could be vicariously liable for the offence subject to the averments in the petition and proof thereof. Thus, the words's well as the company appearing in the Section make it absolutely unmistakably clear that when the company can be prosecuted, then only the persons mentioned in the other categories could be vicariously liable for the offence subject to the averments in the petition and proof thereof. One cannot be oblivious of the fact that the company is a juristic person and it has its own respectability. If a finding is recorded against it, it would create a concavity in its reputation. There can be situations when the corporate reputation is affected when a director is indicted. 59. In view of our aforesaid analysis, we arrive at the irresistible conclusion that for maintaining the prosecution under Section 141 of the Act, arraigning of a company as an accused is imperative. The other categories of offenders can only be brought in the dragnet on the touchstone of vicarious liability as the same has been stipulated in the provision itself. We say so on the basis of the ratio laid down in C.V. Parekh (supra) which is a three-Judge Bench decision. Thus, the view expressed in Sheoratan Agarwal (supra) does not correctly lay down the law and, accordingly, is hereby overruled. The decision in Anil Hada (supra) is overruled with the qualifier as stated in paragraph 51. The decision in Modi Distilleries (supra) has to be treated to be restricted to its own facts as has been explained by us hereinabove." "64. Keeping in view the anatomy of the aforesaid provision, our analysis pertaining to Section 141 of the Act would squarely apply to the 2000 enactment. Thus adjudged, the director could not have been held liable for the offence under Section 85 of the 2000 Act. Resultantly, the Criminal Appeal No. 1483 of 2009 is allowed and the proceeding against the appellant is quashed. As far as the company is concerned, it was not arraigned as an accused. Ergo, the proceeding as initiated in the existing incarnation is not maintainable either against the company or against the director. As a logical sequitur, the appeals are allowed and the proceedings initiated against Avnish Bajaj as well as the company in the present form are quashed." 6.3 The aforesaid very principle is reiterated in yet another decision delivered by the Hon'ble Apex Court in Anil Gupta (supra). As a logical sequitur, the appeals are allowed and the proceedings initiated against Avnish Bajaj as well as the company in the present form are quashed." 6.3 The aforesaid very principle is reiterated in yet another decision delivered by the Hon'ble Apex Court in Anil Gupta (supra). The Hon'ble Apex Court by referring the case of Aneeta Hada (supra) has observed in paragraphs 14 and 15 as under: "14. Again the same question was considered by three Judge Bench of this Court in Aneeta Hada v. Godfather Travels and Tours Pvt. Ltd. (2012) 5 SCC 661 . The Court noticed the decisions in Anil Hada (supra) case and Aneeta Hada (supra) case. The three Judge Bench while partly overruled the finding of Anil Hada (supra) affirmed the decision of Aneeta Hada (supra). This Court held " 51. We have already opined that the decision in Sheoratan Agarwal runs counter to the ratio laid down in C.V. Parekh which is by a larger Bench and hence, is a binding precedent. On the aforesaid ratiocination, the decision in Anil Hada has to be treated as not laying down the correct law as far as it states that the Director or any other officer can be prosecuted without impleadment of the company. Needless to emphasise, the matter would stand on a different footing where there is some legal impediment and the doctrine of lex non cogit ad impossibilia gets attracted." 53. It is to be borne in mind that Section 141 of the Act is concerned with the offences by the company. It makes the other persons vicariously liable for commission of an offence on the part of the company. As has been stated by us earlier, the vicarious liability gets attracted when the condition precedent laid down in Section 141 of the Act stands satisfied. There can be no dispute that as the liability is penal in nature, a strict construction of the provision would be necessitous and, in a way, the warrant." "58. Applying the doctrine of strict construction, we are of the considered opinion that commission of offence by the company is an express condition precedent to attract the vicarious liability of others. There can be no dispute that as the liability is penal in nature, a strict construction of the provision would be necessitous and, in a way, the warrant." "58. Applying the doctrine of strict construction, we are of the considered opinion that commission of offence by the company is an express condition precedent to attract the vicarious liability of others. Thus, the words "as well as the company" appearing in the section make it absolutely unmistakably clear that when the company can be prosecuted, then only the persons mentioned in the other categories could be vicariously liable for the offence subject to the averments in the petition and proof thereof. One cannot be oblivious of the fact that the company is a juristic person and it has its own respectability. If a finding is recorded against it, it would create a concavity in its reputation. There can be situations when the corporate reputation is affected when a Director is indicted. 59. In view of our aforesaid analysis, we arrive at the irresistible conclusion that for maintaining the prosecution under Section 141 of the Act, arraigning of a company as an accused is imperative. The other categories of offenders can only be brought in the drag-net on the touchstone of vicarious liability as the same has been stipulated in the provision itself. We say so on the basis of the ratio laid down in C.V. Parekh which is a three-Judge Bench decision. Thus, the view expressed in Sheoratan Agarwal does not correctly lay down the law and, accordingly, is hereby overruled. The decision in Anil Hada is overruled with the qualifier as stated in para 51. The decision in Modi Distillery has to be treated to be restricted to its own facts as has been explained by us hereinabove." 15. In the present case, the High Court by impugned judgment dated 13th August, 2007 held that the complaint against respondent No. 2-Company was not maintainable and quashed the summon issued by the Trial Court against respondent No. 2-Company. In the present case, the High Court by impugned judgment dated 13th August, 2007 held that the complaint against respondent No. 2-Company was not maintainable and quashed the summon issued by the Trial Court against respondent No. 2-Company. Thereby, the Company being not a party to the proceedings under Section 138 read with Section 141 of the Act and in view of the fact that part of the judgment referred to by the High Court in Anil Hada (supra) has been overruled by three Judge Bench of this Court in Aneeta Hada (supra), we have no other option but to set aside the rest part of the impugned judgment whereby the High Court held that the proceedings against the appellant can be continued even in absence of the Company. We, accordingly, set aside that part of the impugned judgment dated 13th August, 2007 passed by the High Court so far it relates to appellant and quash the summon and proceeding pursuant to complaint case No. 698 of 2001 qua the appellant." Considering the overall view of the matter, when the Company itself is not in existence by virtue of the amalgamation order, shifting of vicarious liability upon the present petitioner cannot be permitted more particularly when the Court is not dealing with the issue from standpoint of the Company. Hence, in the absence of any specific averments contained in the complaint about the role being played in what manner by the petitioner, it is hardly possible for the Court to accept the stand taken by learned APP and therefore, in view of aforesaid proposition of law, the Court is of the opinion that to continue with the criminal proceeding against the petitioner would turn out to be unfair and would result in coercion upon the present petitioner and therefore, the complaint qua him deserves to be quashed. 6.4 In addition thereto, if the process of issuance of summons in the case is looked into, the manner in which the summons have been issued can hardly be accepted. 6.4 In addition thereto, if the process of issuance of summons in the case is looked into, the manner in which the summons have been issued can hardly be accepted. It is a settled position of law that issuance of process and summons in criminal proceeding is a serious matter and no criminal proceeding be put to motion pursuant to this kind of summons being issued in a casual manner to visit coercive step to be taken pursuant to criminal proceeding and therefore, keeping this principle in mind, issuance of summons in the present case is absolutely a reflection of non-application of mind. Every exercise must be backed by cogent reasons which is completely missing in the present case and therefore, on this ground alone, it appears to this Court that this type of issuance of summons is impermissible and to substantiate this, decision of GHCL Employees Stock Option Trust (supra) is worth to be considered in which also, it has been clearly spelt out that at least while issuing summons or process, there must be some reflection of application of mind. In this connection, paragraphs 13 and 19 of the said decision are quoted hereunder: "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." "19. In the order issuing summons, the learned Magistrate has not recorded his satisfaction about the prima facie case as against respondent Nos. 2 to 7 and the role played by them in the capacity of Managing Director, Company Secretary or Directors which is sine qua non for initiating criminal action against them. Recently, in the case of M/s. Thermax Ltd. & Ors. v. K.M. Johny & Ors, 2011 (11) SCALE 128 , & ors. while dealing with a similar case, this Court held as under:- "20. Though Respondent No. 1 has roped all the appellants in a criminal case without their specific role or participation in the alleged offence with the sole purpose of settling his dispute with appellant-Company by initiating the criminal prosecution, it is pointed out that appellant Nos. while dealing with a similar case, this Court held as under:- "20. Though Respondent No. 1 has roped all the appellants in a criminal case without their specific role or participation in the alleged offence with the sole purpose of settling his dispute with appellant-Company by initiating the criminal prosecution, it is pointed out that appellant Nos. 2 to 8 are the Ex-Chairperson, Ex-Directors and Senior Managerial Personnel of appellant No. 1 - Company, who do not have any personal role in the allegations and claims of Respondent No. 1. There is also no specific allegation with regard to their role. 21. Apart from the fact that the complaint lacks necessary ingredients of Sections 405, 406, 420 read with Section 34 IPC, it is to be noted that the concept of 'vicarious liability' is unknown to criminal law. As observed earlier, there is no specific allegation made against any person but the members of the Board and senior executives are joined as the persons looking after the management and business of the appellant-Company." 6.5 In yet another recent decision in the case of Sunil Bharti Mittal v. Central Bureau of Investigation reported in (2015)4 SCC 609 , the Hon'ble Apex Court has reiterated the very same principle while exercising of jurisdiction to issue process of summons in criminal complaint. Paragraph Nos. 43, 44, 45, 46 and 55 of the said decision are reproduced hereinafter: "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. When the company is the offender, 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. 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. (supra) and S.K. Alagh (supra). Few other judgments reiterating this principle are the following: 45.1 Jethsur Surangbhai v. State of Gujarat "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 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. 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. 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 stage-managed 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. In fact, the hero of the entire show seems to be A-3 who had so stage-managed 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 "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 "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 therein under wholly discharged and the GCS granted immunity from prosecution." 45.4 Maksud Saiyed v. State of Gujarat "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. 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 "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. 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. "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 "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 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." 17. The Penal Code, 1860 save and except in some matters does not contemplate any vicarious liability on the part of a person. Commission of an offence by raising a legal fiction or by creating a vicarious liability in terms of the provisions of a statute must be expressly stated. The Managing Director or the Directors of the Company, thus, cannot be said to have committed an offence only because they are holders of offices. The learned Additional Chief Metropolitan Magistrate, therefore, in our opinion, was not correct in issuing summons without taking into consideration this aspect of the matter. The Managing Director and the Directors of the Company should not have been summoned only because some allegations were made against the Company. 18. In Pepsi Foods Ltd. v. Special Judicial Magistrate (1998) 5 SCC 749 this Court held as under: (SCC p. 760, para 28) "28. Summoning of an accused in a criminal case is a serious matter. Criminal law cannot be set into motion as a matter of course. It is not that the complainant has to bring only two witnesses to support his allegations in the complaint to have the criminal law set into motion. The order of the Magistrate summoning the accused must reflect that he has applied his mind to the facts of the case and the law applicable thereto. He has to examine the nature of allegations made in the complaint and the evidence both oral and documentary in support thereof and would that be sufficient for the complainant to succeed in bringing charge home to the accused. It is not that the Magistrate is a silent spectator at the time of recording of preliminary evidence before summoning of the accused. It is not that the Magistrate is a silent spectator at the time of recording of preliminary evidence before summoning of the accused. The Magistrate has to carefully scrutinise the evidence brought on record and may even himself put questions to the complainant and his witnesses to elicit answers to find out the truthfulness of the allegations or otherwise and then examine if any offence is prima facie committed by all or any of the accused." 19. Even as regards the availability of the remedy of filing an application for discharge, the same would not mean that although the allegations made in [pic] the complaint petition even if given face value and taken to be correct in its entirety, do not disclose an offence or it is found to be otherwise an abuse of the process of the court, still the High Court would refuse to exercise its discretionary jurisdiction under Section 482 of the Code of Criminal Procedure." 46. It is stated at the cost of repetition that in the present case, while issuing summons against the appellants, the Special Magistrate has taken shelter under a so-called legal principle, which has turned out to be incorrect in law. He has not recorded his satisfaction by mentioning the role played by the appellants which would bring them within criminal net. In this behalf, it would be apt to note that the following observations of this Court in the case of GHCL Employees Stock Option Trust v. India Infoline Ltd.: "19. In the order issuing summons, the learned Magistrate has not recorded his satisfaction about the prima facie case as against Respondents 2 to 7 and the role played by them in the capacity of Managing Director, Company Secretary or Directors which is sine qua non for initiating criminal action against them. (Thermax Ltd. v. K.M. Johny followed) * * * * 21. In the instant case the High Court has correctly noted that issuance of summons against Respondents 2 to 7 is illegal and amounts to abuse of process of law. The order of the High Court, therefore, needs no interference by this Court." * * * * "55. (Thermax Ltd. v. K.M. Johny followed) * * * * 21. In the instant case the High Court has correctly noted that issuance of summons against Respondents 2 to 7 is illegal and amounts to abuse of process of law. The order of the High Court, therefore, needs no interference by this Court." * * * * "55. While parting, we make it clear that since on an erroneous presumption in law, the Special Magistrate has issued the summons to the appellants, it will always be open to the Special Magistrate to undertake the exercise of going through the material on record and on that basis, if he is satisfied that there is enough incriminating material on record to proceed against the appellants as well, he may pass appropriate orders in this behalf. We also make it clear that even if at this stage, no such prima facie material is found, but during the trial, sufficient incriminating material against these appellants surfaces in the form of evidence, the Special Judge shall be at liberty to exercise his powers under Section 319 of the Code to rope in the appellants by passing appropriate orders in accordance with law at that stage." 6.6 The very same principle has been further reiterated by the Hon'ble Apex Court in the case of P.S. Meherhomji v. K.T. Vijay Kumar and others reported in (2015)1 SCC 788 . Paragraph Nos. 13 and 14 of the said decision are reproduced hereinafter: "13. Indisputably, judicial process should not be an instrument of oppression or needless harassment. The court should be circumspect and judicious in exercising discretion and should take all the relevant facts and circumstances not consideration before issuing process lest it would be an instrument in the hands of private complainant as vendetta to harass the persons needlessly. 14. It is equally well settled that summoning of an accused in a criminal case is a serious matter and the order taking cognizance by the Magistrate summoning the accused must reflect that he has applied his mind to the facts of the case and the law applicable thereto. 14. It is equally well settled that summoning of an accused in a criminal case is a serious matter and the order taking cognizance by the Magistrate summoning the accused must reflect that he has applied his mind to the facts of the case and the law applicable thereto. Section 482 of the Code of Criminal Procedure empowers the High Court to exercise its inherent powers to prevent abuse of the process of court and to quash the proceeding instituted on the complaint but such power could be exercised only in cases where the complaint does not disclose any offence or its vexatious or oppressive. If the allegations set out in the complaint do not constitute the offence of which cognizance is taken by the Magistrate it is open to the High Court to quash the same in exercise of power under section 482." 4. Considering the overall view of the matter and considering the aforesaid position of law laid down by Hon'ble Apex Court, the Court is of the opinion that a case is made for exercise of jurisdiction under section 482 of Cr.P.C. and accordingly, the complaint being Criminal Case No. 904 of 2008 pending before Court of learned Judicial Magistrate (First Class), Anjar, and consequent issuance of process thereupon so far as it relates to the present petitioner is quashed and set aside. The petition is accordingly allowed. Rule is made absolute. 5. The Court has not dealt with the petition from the standpoint of view of accused No. 1 company with regard to its alleged violation and therefore, without commenting anything upon it, it is always open for the authority to initiate appropriate steps against the transferor company for any alleged violation, if permissible under the law.