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Gujarat High Court · body

2017 DIGILAW 936 (GUJ)

Jenish Maganlal Kantari v. State of Gujarat

2017-05-02

ALPESH Y.KOGJE

body2017
JUDGMENT : Alpesh Y. Kogje, J. 1. This petition is filed under Section 482 of the Criminal Procedure Code for quashing of the FIR being CR No. I-306 of 2011 registered with Rajkot City "B" Division Police Station for offences punishable under Sections 406, 420 and 114 of IPC. The FIR was registered on 10.12.2011 against three accused persons, of which the present petitioner is arraigned as accused No. 3. 2. In the FIR, it is alleged that the complainant (respondent No. 2), who was doing business of steel, had come in contact with accused No. 1, who was doing business in the name of "Shivami Enterprise India Ltd." It is alleged that the complainant previously three years back had dealt with Shivami Enterprise and its partner - Mr. Yogeshbhai Suvariya and present petitioner. 2.1 It is further alleged that of 12.11.2011, Mr. Yogeshbhai Suvariya gave a huge order for purchase of TMT steel and assured that gradually, payment by cheque for the goods would be sent. On such assurance, goods around 300 tons was sent to Shivami Enterprise, details of which are mentioned in the FIR itself. It is alleged that a huge amount was due from the accused persons towards the goods supplied. However, as and when any demand was made, the accused persons kept on promising to make good the payment towards the goods supplied. 2.2 It is on such allegations, the complaint came to be filed wherein allegations so far as the petitioner is concerned are made to the extent that certain official numbers like TIN number, sales tax number, etc. of the petitioner are still in use by the accused company, i.e. Shivami Enterprise. It is also alleged that in the name of Shivami, several other companies are also functioning where the petitioner is still active and it is the modus adopted by the accused persons jointly. 3. Heard learned Advocate Mr. Harshit Tolia for the petitioner, learned APP Ms. Monali Bhatt for respondent No. 1-State and learned Advocate Mr. Salim Saiyed for respondent No. 2 - complainant. 4. Learned Advocate for the petitioner submitted that the prosecution against the petitioner should fail as from the allegations made in the complaint itself, it is evident that even before the original complainant entered into transaction with the accused company, the petitioner had already resigned from the said company. Salim Saiyed for respondent No. 2 - complainant. 4. Learned Advocate for the petitioner submitted that the prosecution against the petitioner should fail as from the allegations made in the complaint itself, it is evident that even before the original complainant entered into transaction with the accused company, the petitioner had already resigned from the said company. He took this Court through the official document in the nature of Form No. 32 of the Registrar of Companies, which indicates that the petitioner had resigned on 25.03.2010 and therefore, the petitioner had nothing to do with the accused company. 4.1 He also drew attention of this Court to communication dated 19.04.2010 addressed to the Commercial Tax Officer, Rajkot, wherein it is informed, on the strength of his resignation, that the VAT/TIN numbers assigned to the company, from which the petitioner has resigned and his name has been deleted from the list of Directors. 4.2 He also drew attention of this Court to the deed of dissolution which appears to have been signed by the petitioner on one side and one Mr. Yogesh Suvariya which was executed in the month of April 2009, which is indicative of the fact that the petitioner is now no more concerned with administration and functioning of Shivami Enterprise. 4.3 He submitted that in absence of any allegations to attract ingredients of the offences under Sections 406 and 420, the petitioner cannot be involved in the offence as the concept of vicarious liability is unknown to criminal jurisprudence. For that purpose, he relied upon judgment of the Apex Court in the matter of Sunil Bharti Mittal Vs. Central Bureau of Investigation, reported in (2015) 4 SCC 609 . He submitted that therefore, the FIR deserves to be quashed. 5. Learned Advocate for respondent No. 2 - complainant took this Court to the allegations made in the FIR to the extent that the petitioner, though has resigned from Shivami Enterprise, still he continued to be active in other concerns/firm/companies, which are in the name of Shivami. He also drew attention to the allegations that this is the modus operandi adopted by the Directors of Shivami to defraud not only the complainant but several other persons. He therefore submitted that the FIR against the petitioner may not be quashed, more particularly when the investigation qua other two accused persons has been completed and they have been charge sheeted. 6. He therefore submitted that the FIR against the petitioner may not be quashed, more particularly when the investigation qua other two accused persons has been completed and they have been charge sheeted. 6. Learned APP under the instructions of the officer tenders counter of the charge sheet being Charge Sheet No. 156 of 2012 dated 19.03.2012 in connection with this very offence, which is taken on record. Learned APP submitted that as the High Court had granted indulgence to the present petitioner, investigation qua other accused persons had proceeded for them, charge sheet is filed. Learned APP also fairly drew attention of this Court that in the charge sheet, in column No. 4, the name of the present petitioner is appearing as witness No. 5 in this very offence. 7. Having heard learned Advocates for the respective parties and having gone through the case papers, it is evident even from perusal of the FIR that the complainant himself was aware about legal status of the petitioner that the petitioner is no more attached to the company against which the FIR is registered. A perusal of the FIR would also indicate that all the allegations in FIR, insofar as representing or inducing the complainant are concerned, are directed against other accused persons, where no role of the petitioner is coming out. 8. It has also come on record that the petitioner has resigned from the company much prior to even date on which the complainant contacted the existing Directors of the company for the purpose of transaction and thereafter, in series of transactions, the goods were sent by relying upon representation made by other accused persons and this would not attribute any role to the petitioner. The resignation which is there on record is a document which is evidence sufficient to come to conclusion that the relation between the petitioner and Shivami Enterprise has thus ended. Over and above, the communication to the Sales Tax authorities to discontinue his name from VAT/TIN numbers is also indicative of the fact that intention of the petitioner was to once and for all terminate any relation with Shivami Enterprise. 9. Over and above, the communication to the Sales Tax authorities to discontinue his name from VAT/TIN numbers is also indicative of the fact that intention of the petitioner was to once and for all terminate any relation with Shivami Enterprise. 9. The submissions made by the petitioner on the ground of vicarious liability of a Director should be upheld as is held by the Apex Court in the case of Sunil Bharti Mittal (supra), wherein in paras-41 to 44, the Apex Court has held as under:- "41. In the present case, however, this principle is applied in an exactly reverse scenario. Here, company is the accused person and the learned Special Magistrate has observed in the impugned order that since the appellants represent the directing mind and will of each company, their state of mind is the state of mind of the company and, therefore, on this premise, acts of the company is attributed and imputed to the appellants. It is difficult to accept it as the correct principle of law. As demonstrated hereinafter, this proposition would run contrary to the principle of vicarious liability detailing the circumstances under which a direction of a company can be held liable. (iii) Circumstances when Director/Person in charge of the affairs of the company can also be prosecuted, when the company is an accused person: 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 offend or, 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." 10. In view of the aforesaid, this Court has no hesitation in coming to conclusion that no further prosecution of the petitioner under this FIR is warranted. 11. Over and above this, when the Investigating Agency has cited the petitioner as witness No. 5 in the charge sheet, there is more so reason for this Court to quash the FIR qua the present petitioner. 12. In view of the aforesaid, FIR being CR No. I-306 of 2011 registered with Rajkot City "B" Division Police Station for offences punishable under Sections 406, 420 and 114 of IPC is quashed qua the present petitioner - Jenish Maganlal Kantaria. The petition is allowed. Rule is made absolute. 13. The observations and findings recorded in this judgment will govern the case of the present petitioner alone. Petition Allowed.