Research › Search › Judgment

Karnataka High Court · body

2019 DIGILAW 1343 (KAR)

Sunil Kallerckal v. Thomas Daniel

2019-06-19

JOHN MICHAEL CUNHA

body2019
JUDGMENT : John Michael Cunha, J. Petitioners have sought to quash the FIR registered against them in Crime No.561/2013 for the offence punishable under Sections 427, 506, 120B, 418, 420 426 read with 34 of IPC. 2. Heard learned counsel for the petitioners and learned counsel for respondent No.1 and the learned High Court Government Pleader for respondent No.2. Perused the records. 3. Learned counsel for the petitioners submitted that the compliant lodged by respondent No.1/complainant is misconceived. The averments made therein do not disclose commission of criminal offence by the petitioners. There was no basis for the learned Magistrate to refer the complaint for investigation under Section 156(3) of Cr.P.C. Respondent No.1 did not produce any prima-facie evidence to show that at any point of time respondent No.1 participated in the affairs of the Company and made investments therein. There is no material to show that respondent No.1 was admitted to Company either as a Director or Shareholder. In the absence of any such material, the learned Magistrate has committed an error in referring the complaint for investigation by the Police. The learned Magistrate has failed to apply his mind to the facts of the case and mechanically referred the complaint for investigation by Police, contrary to the guidelines laid down by the Hon'ble Supreme Court reported in the case of Priyanka Srivastava and another vs. State of Uttar Pradesh and others, (2015) 6 SCC 287 . Further, referring to the order passed by the National Company Law Tribunal, Bengaluru Bench, (hereinafter referred to as 'NCLT'), learned counsel emphasized that respondent No.1 has already availed alternative remedy by approaching NCLT with the very same grievance and the NCLT has recorded a finding that the Company has been struck off from the Registrar of Companies, as such, respondent No.1 had no cause of action to initiate criminal proceedings against the petitioners, thus, respondent No.1 has misused the criminal process out of vengeance. In support of his contention, learned counsel has placed reliance on the decision of the Hon'ble Supreme Court in the case of Prof.R.K.Vijayasarathy and another vs. Sudha Seetharam and another in Criminal Appeal No.238/2019 Special Leave Petition (Crl) No.1434/2018 disposed of on 15.02.2019. 4. In support of his contention, learned counsel has placed reliance on the decision of the Hon'ble Supreme Court in the case of Prof.R.K.Vijayasarathy and another vs. Sudha Seetharam and another in Criminal Appeal No.238/2019 Special Leave Petition (Crl) No.1434/2018 disposed of on 15.02.2019. 4. Refuting the above submissions, learned counsel for respondent No.1/complianant has taken me through the complaint and emphasized that the averments made therein clearly disclose that on account of the inducement made by the petitioners, the respondent No.1 made huge investments with the expectation that he would be allotted shares and would be inducted as Director of the said Company. The details of the payments made to the petitioners are detailed in Annexure-B appended to the petition. All these materials clearly make out the ingredients of the offence alleged against the petitioners. In the said circumstances, learned Magistrate was justified in referring the matter for investigation by the Police and hence, there is no ground to quash the proceedings. 5. Learned HCGP appearing for the respondent No.2 has argued in line with the submissions made by the learned counsel for respondent No.1 and sought for dismissal of the petition contending that the jurisdiction of this Court cannot be exercised at this stage as the matter is under investigation. 6. Considered the submissions and perused the records. Insofar as the averments constituting the offence are concerned, a reading of the complaint discloses to the effect that respondent No.1/complainant was induced by petitioners to make investment in their Company i.e., M/s.V.Resonate Tech. Solutions Pvt. Ltd. It is specifically stated in the complaint that taking cognizance of complainant's expertise, petitioners induced the complainant to consider joining them as equity partner with equal share holding, offering impressive packages in their new endeavor. It is further stated that pursuant to the calculated false solemn promise, assurance and representations of the accused persons, the complainant decided to join Accused No.1 and 2 in their proposed venture. In paragraph No.11 and 12 of the complaint, complainant has narrated the contents of the emails exchanged between them, which are as under: "In an email dated 17.01.2008, the accused No.1 wrote to the complainant, as follows: "Aju [Complainant's nickname]: Welcome onboard! My idea is each of us will own 30% of the company. we (sic.) will set asside (sic.) 10% for Board of Advisors/resources who can help us complete the pilot and build visibility for us. My idea is each of us will own 30% of the company. we (sic.) will set asside (sic.) 10% for Board of Advisors/resources who can help us complete the pilot and build visibility for us. We can get investment if needed but all of us proportionately dilute then." In response thereto, the complainant wrote an email on the same date as follows: "Hi, Everything sounds good, including the proposed ownership arrangement. Honestly, since you have been there, done that, I am sure that you would have deliberated along lines of how each of our interests are protected & how we have ourselves covered from threats from Outsiders (sic.)!..." 7. In paragraph No.16, it is further stated that, on 08.07.2008, pursuant to a query by the Company Secretary appointed to incorporate the Company, accused No.1 wrote an email, to which the complainant expressly stated that the "Board of Directors of the Company are Sunil, Thomas and Elezabeth". The aforesaid email was issued in response to an email from the Company Secretary wherein he informed as follows: "Sunil, The MoA and AoA, Form 1, Form 18 and Form 32 are ready. I will send the MoA and AoA. The shares will be issued as follows: Sunil 3000 Elezabeth 3000 Thomas 3000 Aasim 500 Total 9500 The following fees require to be paid." 8. Paragraph No.19 of the complaint may also be apt to be noted, wherein the complainant has asserted that "once again, on 25.11.2008, the Company Secretary wrote to the accused No.1 seeking action on his request for the complainant's DIN. This was responded to directly by the complainant informing that his DIN had not yet been obtained and seeking that action be taken to secure a DIN for him. Accused No.1 and 2, who were privy to this correspondence, took no steps to controvert the above position and stop action to obtain a DIN for the complainant. The position that complainant was a shareholder of the Company was reiterated on various subsequent dates even well after the incorporation of the Company. On 27.02.2010, Accused No.1 wrote to the Accused No.2 as follows: "The expenses that Aju (Complainant) or I are incurring lets hold off making reimbursements until we have launched national level or start getting some inflow. The position that complainant was a shareholder of the Company was reiterated on various subsequent dates even well after the incorporation of the Company. On 27.02.2010, Accused No.1 wrote to the Accused No.2 as follows: "The expenses that Aju (Complainant) or I are incurring lets hold off making reimbursements until we have launched national level or start getting some inflow. As a practice, please make sure to collect expense reports from each of us so some day we get reimbursed and company is obligated to pay us / you. Till then, pay employees who are not assigned equity provided they have sent weekly reports, reimburse travel tickets, and cab expenses in each city. Also vendor payments as we have no choice here." 9. In paragraph No.28, it is stated that in an email dated 13.11.2009 addressed by Accused No.1 to the Complainant and Accused No.2, the Accused No.1, after setting out the foreseeable expenditure of the Company, wrote as follows: "One option is to fund it ourselves and raise money in June. Today we are valued at $3m as the VC's in various discussions. In June we the above milestone will be valued at $20Million worst case. So for the same equity, given we infuse 7 to 10 times more money Assuming we collect only 20 lacs the funding (sic.) needed is Rs.20 lacs. I think we should fund it. We will three of us put in 7 lacs each and run if we believe in it." 10. In paragraph No.38, the complainant has stated that on his birthday, accused Nos.1 and 2 handed over him an envelope which contained the certificates of the complainant's shares in the Company. 11. If these assertions are considered in the light of the observations made by the NCLT in its order dated 29.05.2019 referred by the learned counsel for the petitioners that the Company was struck off, it only goes to show that after inducing respondent No.1 to invest in the company, petitioners herein managed to close down the Company. All these circumstances, in my view, clearly make out the ingredients of the offence warranting investigation by the Police. 12. It is now well settled that the inherent powers under section 482 of Cr.P.C., can be exercised to give effect to an order under the Code to prevent abuse of process of the court and to otherwise secure the ends of justice. 12. It is now well settled that the inherent powers under section 482 of Cr.P.C., can be exercised to give effect to an order under the Code to prevent abuse of process of the court and to otherwise secure the ends of justice. It is also well settled that the inherent powers under this provision should not be exercised to stifle a legitimate prosecution. The High Court should normally refrain from giving a prima facie decision in a case where all the facts are incomplete and hazy; more so, when the evidence has not been collected and produced before the court and the issues involved, whether factual or legal, are of such magnitude that they cannot be seen in their true perspective without sufficient material. It is a settled proposition that the wholesome power under Section 482 of Cr.P.C. entitles the High Court to quash a proceeding only when it comes to the conclusion that allowing the proceeding to continue would be an abuse of the process of the court or that the ends of justice require that the proceeding ought to be quashed. 13. Since the averments made in the complaint clearly make out the ingredients of criminal offences, the contention of the learned counsel for the petitioners that the complaint is misconceived and there was no basis for the learned Magistrate to refer the compliant for investigation under Section 156(3) of Cr.P.C. cannot be accepted. 14. The order dated 08.02.2013 indicates that the learned Magistrate has perused the complaint and the documents, and having found it necessary to call for investigation by the Police, has issued the direction, which in my view, in the context of the case, does not suffer from any error or illegality warranting interference. As a result, I do not find any justifiable reason to accede to the prayer made in the petition. Consequently, the petition is dismissed.