JUDGMENT : The petitioners have challenged the order dated 16.06.2015 by which cognizance of the offence punishable under section 406, 420/120-B IPC has been taken in C.P. No. 42 of 2015 and summons has been issued to them. They are members of the Dhanbad Bar Association who were elected office-bearers of the Association for 2012-2014. 2. An audit of accounts of the Dhanbad Bar Association was conducted by M/s Anjali Jain & Associates which has submitted a report to the Association on 30.08.2014. The gravamen of the allegations against the petitioners is that the auditors have found misappropriation of Rs.1.25 crores from the funds of the Association. In the report dated 30.08.2014, what the auditors have observed, therefore, has become important. A copy of the audit report has been brought on record by the complainant-O.P No. 2 vide Annexure-C to the counter-affidavit. The relevant extracts of the report are reproduced below: Auditor’s Report To, The Secretary District Bar Association Dhanbad, Jharkhand 1. We have audited the attached Balance Sheet of District Bar Association Dhanbad, Jharkhand as on 31st, March 2013 and also the Income & Expenditure Account along with the Receipt & Payment Account for the Year ended on that date. These financial statements are the responsibilities of the Association’s Management. Our responsibility is to express an opinion on these financial statements based on our audit. 2. We conducted our audit in accordance with the Auditing Standard generally accepted in India. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit includes examination, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. 3. Further to the Annexure-II of the Accounts and our comments mentioned under Annexure-“A” forming part of our Audit Report we report that:- (i) We could not obtain all the information and explanation, which to the best of our knowledge and belief were necessary for the purpose of our audit. (ii) In our opinion proper Books of Accounts as required by law have not been kept by the Association so far as appears from our examination of those Books. (ii) In our opinion proper Books of Accounts as required by law have not been kept by the Association so far as appears from our examination of those Books. (iii) The Balance Sheet, Income & Income & Expenditure Account and Receipt & Payment Account dealt with by this report are in agreement with the figures calculated based on ledger and cash book kept & maintained by the Association. 4. In our opinion and to the best of our information and according to the explanation given to us the said accounts read with Accounting Policy & Notes to Accounts & our observation mentioned under Annexure “A” forming part of our audit report give the information as required by Law in the manner so required but we are unable to express the opinion on true and fair view in conformity with the accounting principles generally accepted in India: (a) In case of Balance Sheet, of the state of affairs of the Society as on 31st March 2013 (b) In case of Income and Expenditure Account, of the surplus shown for the year ended on that date and (c) In case of Receipt & Payment Account, of the Receipts & Payments for the year ended on that date. Ranchi Dated: The 30th day of August, 2014 For M/s Anjali Jain & Associates Chartered Accountants (CA ANJALI JAIN) Partner Membership No. 072022 Annexure-A to the Auditor’s Report “1. Proper Books of Account as required by Bye-Law containing details of income expenditure have not been made at all. 2. No Sub-Committee for proper and prudent functioning of the Bar Association has been made. 3. No Library Register has been made. 4. Proper vouchers have not been kept and maintained by the Association. 5. Fixed Assets Register has not been kept and maintained by the Association. 6. There are instances where their arise difference between the ledger posting, Cash Book Entry and vouchers presented and hence the authenticity of the books produced to audit cannot be relied to full extent. 7. The Capital Expenditure incurred by the association has not been found regular as the documentary evidences in support of its decision by any committee has not been produced to Audit. 8. Salary register has not been produced to audit and hence the amount booked under this head remains unverified. 9. 7. The Capital Expenditure incurred by the association has not been found regular as the documentary evidences in support of its decision by any committee has not been produced to Audit. 8. Salary register has not been produced to audit and hence the amount booked under this head remains unverified. 9. The Expenditure amounting to Rs.5,17,191/- towards construction of Shed in Different Locations remained unverified for want of vouchers of Expenditure. Moreover the accountal based on estimate is nothing but an irregular/unacceptable expenditure providing chances of defalcation for which quantum remained unascertained due to non-availability of proper records of expenditure. 10. Most of the expenditures accounted are based on an estimate sheet rather than their actual expenditure voucher and hence their chances of mis-utilization cannot be ruled out. 11. Festival Advance Amounting to Rs.23,98,000/- distributed during the year remained unverified due to non-availability of any documentary evidence in this context. 12. The agreement for shops has not been done as is evident from the records produced to audit. Moreover the allotment system of shops is also not transparent and hence chances of mal-practices in this context are inevitable. 13. The details of collection from Vakalatnama Forms, Affidavit Form, Welfare Stamps & Stamp Papers have not been produced to Audit and accordingly the amount received under these main heads of income remain unverified. 14. The unspent Cash Suspense of Rs.2,78,670/- remained unexplained during the period. 15. Internal Control System for monitoring of Cash & Bank balances and safe-guarding the interest of the Association and its Assets does not exist in the association.” 3. The complaint-petition proceeds on a premise that withdrawal beyond Rs.10,000/- is not permissible and if at all fund is required urgently it has to be approved in the General Body Meeting which has not been done and the Model Rules, in particular, Model Rule 23(b) have not been followed. The petitioners were custodian of the records which they were required to produce before the auditors, but vouchers, bills etc. were not produced by them to the auditors due to which the accounts produced by them which are based on estimates have been found irregular and, thus, unacceptable. The petitioners were custodian of the records which they were required to produce before the auditors, but vouchers, bills etc. were not produced by them to the auditors due to which the accounts produced by them which are based on estimates have been found irregular and, thus, unacceptable. Letters were written to the Jharkhand State Bar Council for initiating an enquiry in the matter and the Bar Council of India was informed about criminal misappropriation of the funds and illegal allotment of Bar building to the shopkeepers by the accused persons by taking huge Salami for their personal benefits. The Bar Council of India has in turn written a letter to the Jharkhand State Bar Council and accordingly, an enquiry was conducted by a Committee of the Jharkhand State Bar Council which finding the complaint against the accused persons true recommended action against them and in the report submitted by the Steering Committee of the Jharkhand State Bar Council one of the recommendations was to lodge a First Information Report, if needed. 4. In the aforesaid backdrop, the complainant has pleaded that the accused persons have tried to manipulate (lipapoti) the accounts of the Dhanbad Bar Association and refused to produce records before the auditors who have written letter to the Jharkhand State Bar Council, which has issued show-cause notice dated 02.07.2014 to the accused persons under section 35 of the Advocates Act, 1961 and the accused persons were directed to produce records and render all necessary co-operation to the auditors. It is pleaded that the audit report was received by the Jharkhand State Bar Council on 17.09.2014 in which defalcation of Rs.1,21,20,608/- (One Crore Twenty One Lac Twenty Thousand Six Hundred Eight only); under the heads – Puja Bonus, Construction of Building and Sheds, sale of Vakalatnama/Affidavit/Bail-bonds format, Salami for allotment of shops for Welfare Stamps/Stamps Papers, has been found. 5. In his examination on solemn affirmation, the complainant has reiterated the allegations of financial irregularity and defalcation of Rs.1.25 crores. He has also examined two witnesses during enquiry before the Magistrate. The enquiry witness namely, Mr. Prayag Mahto has spoken about financial irregularity and misappropriation. He has stated that the auditors have found misappropriation of Rs.1.25 crores. He says that the Jharkhand State Bar Council has recommended for registration of a First Information Report, if needed. He has also examined two witnesses during enquiry before the Magistrate. The enquiry witness namely, Mr. Prayag Mahto has spoken about financial irregularity and misappropriation. He has stated that the auditors have found misappropriation of Rs.1.25 crores. He says that the Jharkhand State Bar Council has recommended for registration of a First Information Report, if needed. However, on a Court’s query he admits that he has not lodged a First Information Report. He is a member of the State Bar Council and a member of the Steering Committee constituted by the Jharkhand State Bar Council to look into the allegations of financial irregularities in the funds of the Dhanbad Bar Association. The enquiry witness-Mr. Radhey Shyam Goswami has also stated about financial irregularity and misappropriation of Rs. 1.25 crores. He is a member of the Jharkhand State Bar Council and a member of the Steering Committee of the Jharkhand State Bar Council which has conducted the enquiry. 6. The petitioners have claimed that it is a proxy prosecution by the complainant; the complaint case has been instituted at the instance of the enquiry witness namely, Mr. Radhey Shyam Goswami who lost the election for the post of President of the Dhanbad Bar Association to the petitioner no. 1. In the elections for the Dhanbad Bar Association the petitioner no. 1 was elected as the President and the petitioner nos. 2 and 3 as the Secretary and Treasurer respectively and their tenure starting from 16.09.2012 has ended on 21.09.2014. On 14.02.2014, a show-cause notice was issued to the complainant-Harihar Prasad under section 35 of the Advocates Act, 1961. But before that, a letter was written on 17.01.2014 to the Bar Council of India on illegal allotment of shops by taking huge Salami and a notice was issued to the President and General Secretary of the Dhanbad Bar Association on 23.01.2014. In the elections held on 20.09.2014, the petitioner no. 1 namely, Kansari Mandal was again elected as the President defeating Mr. Radhey Shyam Goswami and on the same day challenging his election Mr. Goswami demanded recounting, but it was rejected. In the re-election, Mr. Radhey Shyam Goswami was declared elected as the President. Just about this time comes the audit report of M/s Anjali Jain & Associates. 1 namely, Kansari Mandal was again elected as the President defeating Mr. Radhey Shyam Goswami and on the same day challenging his election Mr. Goswami demanded recounting, but it was rejected. In the re-election, Mr. Radhey Shyam Goswami was declared elected as the President. Just about this time comes the audit report of M/s Anjali Jain & Associates. It was certain observations in the audit report which has given impetus to the bogey raised by the enquiry witnesses that fund of the Dhanbad Bar Association has been misappropriated by the petitioners. On the question of mala-fide, the petitioners have contended that if in the background of the bitterness between the petitioner no.1 and Mr. Radhey Shyam Goswami, due to their rivalry for the post of President in the Bar Association and the character of Mr. Goswami who has been examined as an enquiry witness, the complaint is examined, particularly, in the context of the materials on record, it stands established that the present complaint case has been instituted with mala-fide intentions and it is vexatious, frivolous and oppressive. It is pleaded that Mr. Radhey Shyam Goswami has been convicted for an offence punishable under section 409 IPC and while so, he has incurred automatic disqualification to hold the post of President of the Dhanbad Bar Association. He has been implicated in another case under section 354 IPC and besides these cases there was another criminal case filed under section 420 and 120-B IPC against which his quash-petition has been rejected by this Court; the judgment is reported in 2006 (3) JLJR 566 (Jhr). Referring to Rule 15, 21, 23 and 27 read with Rule 19 which provide functions of the executive/governing council, the petitioners have pleaded that the composite scheme under the Model Rules framed by the Jharkhand State Bar Council would disclose that the present criminal prosecution could not have been launched against them and, if at all the annual audit report reveals any defalcation the Bar Council can take action in accordance with law. Locus of the complainant has been challenged on the ground that he has not been authorized by a resolution of the Jharkhand State Bar Council to file the complaint. Locus of the complainant has been challenged on the ground that he has not been authorized by a resolution of the Jharkhand State Bar Council to file the complaint. The order taking cognizance dated 16.06.2015 has been challenged on the ground that on mere chances of defalcation and misappropriation cognizance of the offences punishable under section 406, 420 and 120-B IPC cannot be taken and, in fact, the learned Magistrate has exceeded his jurisdiction by usurping powers of the State Bar Council under the Model Rules. The petitioners have further pleaded that in the report of the auditors-M/s Anjali Jain & Associates there is no specific finding on defalcation of Rs.1.25 crores. 7. By an order dated 29.09.2015 to take views of the Jharkhand State Bar Council, it was made a party in the present proceeding and it has filed an affidavit, but on several occasions; at least on the last 7 occasions, no one has appeared for the Jharkhand State Bar Council. 8. By an order dated 05.01.2016, the application for intervention vide I.A No. 6267 of 2015 filed by Mr. Prayag Mahto, who is one of the enquiry witnesses, was dismissed. 9. In its affidavit the Jharkhand State Bar Council has pleaded that under the Advocates Act, 1961 it is the only competent authority to take any action against any affiliated association for any malpractice and no private individual or an advocate is competent to take any action against the District Bar Association (para 5). It says that on the apprehension expressed by the auditors accounts of the Dhanbad Bar Association were scrutinized by the finance committee of the Jharkhand State Bar Council and a notice was issued to the District Bar Association. It is asserted that observation of the auditors is not conclusive and, in fact, the matter is still pending before the Jharkhand State Bar Council. 10. In the aforesaid facts launching a 3-pronged attack, Mr. It is asserted that observation of the auditors is not conclusive and, in fact, the matter is still pending before the Jharkhand State Bar Council. 10. In the aforesaid facts launching a 3-pronged attack, Mr. A. K. Kashyap, the learned Senior counsel for the petitioners has assailed the order taking cognizance dated 16.06.2015 inter-alia on the following grounds; (i) Rule 46 of the Model Rules framed by the Jharkhand State Bar Council creates a bar on taking cognizance of any irregularity in the accounts of the Bar Association, (ii) the materials brought before the Magistrate do not constitute the offence punishable under section 406, 420 and 120-B IPC, and (iii) the complaint is mala-fide, vexatious and oppressive. 11. The Advocates Act, 1961 was enacted to implement the recommendations of the All-India Bar Committee and Law Commission on reform of the judicial administration. It provides for constitution of Bar Councils and All-India Bar. The statement of objects and reasons when the Bill was introduced in the Parliament indicate that it is confined to the Bar and the legal education. Section 6 of the Advocates Act, 1961 provides the functions of the State Bar Council and section 7 outlines the functions of the Bar Council of India. “6. The statement of objects and reasons when the Bill was introduced in the Parliament indicate that it is confined to the Bar and the legal education. Section 6 of the Advocates Act, 1961 provides the functions of the State Bar Council and section 7 outlines the functions of the Bar Council of India. “6. Functions of State Bar Councils.— (1) The functions of a State Bar Council shall be — (a) to admit persons as advocates on its roll; (b) to prepare and maintain such roll; (c) to entertain and determine cases of misconduct against advocates on its roll; (d) to safeguard the rights, privileges and interests of advocates on its roll; [(dd) to promote the growth of Bar Associations for the purposes of effective implementation of the welfare schemes referred to in clause (a) of sub-section (2) of this section and clause (a) of sub-section (2) of Section 7;] (e) to promote and support law reform; [(ee) to conduct seminars and organise talks on legal topics by eminent jurists and publish journals and papers of legal interest; (eee) to organise legal aid to the poor in the prescribed manner;] (f) to manage and invest the funds of the Bar Council; (g) to provide for the election of its members; [(gg) to visit and inspect Universities in accordance with the directions given under clause (i) of sub-section (1) of Section 7;] (h) to perform all other functions conferred on it by or under this Act; (i) to do all other things necessary for discharging the aforesaid functions. [(2) A State Bar Council may constitute one or more funds in the prescribed manner for the purpose of— (a) giving financial assistance to organise welfare schemes for the indigent, disabled or other advocates; (b) giving legal aid or advice in accordance with the rules made in this behalf; [(c) establishing law libraries.] (3) A State Bar Council may receive any grants, donations, gifts or benefactions for all or any of the purposes specified in sub-section (2) which shall be credited to the appropriate fund or funds constituted under that sub-section.] 7. Functions of Bar Council of India.— [(1)] The functions of the Bar Council of India shall be— (a) [***] (b) to lay down standards of professional conduct and etiquette for advocates; (c) to lay down the procedure to be followed by its disciplinary committee and the disciplinary committee of each State Bar Council; (d) to safeguard the rights, privileges and interests of advocates; (e) to promote and support law reform; (f) to deal with and dispose of any matter arising under this Act, which may be referred to it by a State Bar Council; (g) to exercise general supervision and control over State Bar Councils; (h) to promote legal education and to lay down standards of such education in consultation with the Universities in India imparting such education and the State Bar Councils; (i) to recognise Universities whose degree in law shall be a qualification for enrolments as an advocate and for that purpose to visit and inspect Universities [or cause the State Bar Councils to visit and inspect Universities in accordance with such directions as it may give in this behalf]; [(ia) to conduct seminars and organise talks on legal topics by eminent jurists and publish journals and papers of legal interest; (ib) to organise legal aid to the poor in the prescribed manner; (ic) to recognise on a reciprocal basis foreign qualifications in law obtained outside India for the purpose of admission as an advocate under this Act;] (j) to manage and invest the funds of the Bar Council; (k) to provide for the election of its members; (l) to perform all other functions conferred on it by or under this Act; (m) to do all other things necessary for discharging the aforesaid functions. [(2) The Bar Council of India may constitute one or more funds in the prescribed manner for the purpose of— (a) giving financial assistance to organise welfare schemes for indigent, disabled or other advocates; (b) giving legal aid or advice in accordance with the rules made in this behalf; [(c) establishing law libraries.] (3) The Bar Council of India may receive any grants, donations, gifts or benefactions for all or any of the purposes specified in sub-section (2) which shall be credited to the appropriate fund or funds constituted under that sub-section.] 12. Section 6 and section 7 appear under Chapter-II of the Advocates Act, 1961. Section 6 and section 7 appear under Chapter-II of the Advocates Act, 1961. To carry out the purposes of this Chapter, under section 15 the Bar Council may make rules. Sub-section 2 to section 15 indicates that under section 15 the Bar Council may make rules, primarily for election of the members, chairman and vice-chairman of the Bar Council; powers and duties of the chairman and vice-chairman; constitution and functions of the committees and sub-committees; meetings of the Bar Council and conduct of business etc. Sub-section 3 provides that no rules made under section 15 by a State Bar Council shall have effect unless they have been approved by the Bar Council of India. Section 17 mandates that every State Bar Council shall prepare and maintain a roll of the advocates and section 24 lays down the conditions for enrollment as an advocate; one of the conditions is that the person seeking enrollment as an advocate shall fulfill such other conditions as may be specified in the rules made by the State Bar Council. Section 25-A provides that no person shall be admitted as an advocate of a State roll; (a) if he is convicted of an offence involving moral turpitude, (b) if he is convicted of an offence under the provisions of the Untouchability (Offences) Act, 1955, or (c) if he is dismissed or removed from employment of office in the State of any charge involving moral turpitude. Proviso to sub-section (1) restricts the period of disqualification for enrollment to two years after the period of release, or dismissal or removal. 13. Rule 46 of the Model Rules framed by the Jharkhand State Bar Council is extracted below: Account of the Association 46 (1). The Treasurer shall cause to be kept an account of all receipts and disbursement made by or on behalf of the Association, during the year. (2). The Accounts of the Association shall be audited, once every year, by a qualified Auditors, appointed by the Bar Council. The fee of the Auditor and his stay expenses shall be fixed by the Executive Committee of the Bar Council and shall be paid by each Association immediately after Audit is made and report is submitted. (3). Audited Annual Accounts report shall be handed over to Secretary/Secretary General of concerned Association and a copy of report shall also be sent to Bar Council for information and necessary action. (3). Audited Annual Accounts report shall be handed over to Secretary/Secretary General of concerned Association and a copy of report shall also be sent to Bar Council for information and necessary action. If any defalcation is indicated in the report, the Bar Council shall take suitable action in accordance with law. (4). All Associations shall co-operate with the auditor and supply all papers needed in auditing account of association. 14. Much stress has been laid by Mr. A. K. Kashyap, the learned Senior counsel for the petitioners on sub-rule(3) to challenge the locus of the complainant to file the complaint without authorization from the Jharkhand State Bar Council. It is contended that it is the Jharkhand State Bar Council alone which can take action against the erring office-bearers of the Bar Association, if the audit report indicates any defalcation of the funds. 15. With reference to the judgments in “State (NCT of Delhi) Vs. Sanjay” reported in (2014) 9 SCC 772 ; “State of Karnataka Vs. Pastor P. Raju” reported in (2006) 6 SCC 728 and “Vishwa Mitter Vs. O.P Poddar and Others” reported in (1983) 4 SCC 701 , Mr. R.S. Mazumdar, the learned Senior counsel for the complainant-O.P No. 2, however, has contended that Rule 46 of the Model Rules does not create a statutory bar to the powers of the Magistrate to take cognizance of an offence. 16. Various provisions of the Advocates Act, 1961 and the Rules framed thereunder make it more than clear that the powers and function of the Bar Council are intended at maintaining the highest standards of professional ethics, etiquette and discipline amongst the members of the Bar. A Bar Council taking note of an improper or illegal conduct of an advocate may initiate a disciplinary proceeding and in certain cases may institute a proceeding in a competent court for the misconduct committed by an advocate which may incur imprisonment (refer, section 45), but in no case a Bar Council can assume the role of a criminal court. Its role in a matter in which an advocate is liable for his prosecution in a criminal court is limited to the aforesaid extent; may be the offence committed by the advocate pertains to funds of the Bar Association or even in his capacity as an advocate. Its role in a matter in which an advocate is liable for his prosecution in a criminal court is limited to the aforesaid extent; may be the offence committed by the advocate pertains to funds of the Bar Association or even in his capacity as an advocate. The rules framed by the Bar Council of India also make it abundantly clear that the role of a Bar Council or the Bar Council of India does not take it to a position to assert that it is the Bar Council which alone can take cognizance of the illegal conduct of an advocate pertaining to cheating, falsification of records, misappropriation of fund etc. of a Bar Association. 17. Rule 46 of the Model Rules framed by the Jharkhand State Bar Council which is said to have been approved by the Bar Council of India lays down the procedure how the accounts of the Bar Association shall be kept and audited. Sub-rule (3) to Rule 46 of the Model Rules simply reiterates the powers of the State Bar Council under the Advocates Act, 1961 and its locus as any other person has in law to report commission of a cognizable offence. If misappropriation or defalcation of the funds of the Bar Association has taken place it is not only the State Bar Council which can launch a criminal proceeding, rather any other person who has knowledge of the commission of the offence and who can prima-facie demonstrate commission of such offence can file a complaint. No doubt, the Jharkhand State Bar Council can take cognizance of such misconduct of an advocate which constitutes offence and initiate disciplinary proceeding against such advocate; that would be a civil action, and, additionally, it can make a written report to the police or the prescribed authority for registration of a criminal case but on the ground that under Rule 46 of the Model Rules only the State Bar Council can take cognizance of misappropriation of funds of the Bar Association, a criminal complaint cannot be held incompetent and the order taking cognizance of the offence by the Magistrate cannot be held without jurisdiction. 18. Viewed thus, the plea founded on Rule 46 of the Model Rules to challenge the cognizance order, therefore, must fail. 19. 18. Viewed thus, the plea founded on Rule 46 of the Model Rules to challenge the cognizance order, therefore, must fail. 19. On mala-fide of the complainant and the enquiry witness at whose instance the present complaint has allegedly been instituted by the complainant, it is required to be indicated that if the materials brought before the Magistrate disclose commission of an offence mala-fide of the complainant becomes secondary [refer, “Dhanalakshmi Vs. R. Prasanna Kumar” reported in (1990) Suppl. SCC 686], and therefore it is necessary to first examine whether the materials brought on record of C.P. No. 42 of 2015 constitute a prima-facie offence under section 406, 420 and 120-B IPC. 20. In the order taking cognizance dated 16.06.2015 in C.P. No. 42 of 2015, the Judicial Magistrate, Dhanbad has held as under; “In the light of the above facts and circumstances of the case and on perusal of S.A, two enquiry witnesses as well as C.C of Audit report, documents connected to communication with both national and State Bar Council and other documents, it transpires that Jharkhand State Bar Council has appointed M/s Anjali Jain & Associates to verify the allegation of defalcation of fund by the Dhanbad Bar Association and after Auditing of available records the Auditors have found gross discrepancies in the accounting of Dhanbad Bar Association many important papers, vouchers, bills, minutes etc. were not kept record to support the expenditure of Funds by the Dhanbad Bar Association and the Auditors raised serious apprehension of defalcation and misappropriation of Funds. Hence, I find that the complainant has been able to establish a priam-facie case U/s. 406/420/120(B) of the I.P.C against the accused persons namely (1) Kansari Mondal, President of Dhanbad Bar Association, (2) Debi Saran Sinha, General Secretary, Dhanbad Bar Association and (3) Madhusudhan Chakrobarty, Treasurer, Dhanbad Bar Association. So far as offences U/s. 114/468/477(A)/469/471/120(B) & 34 I.P.C is concerned, the complainant is failed to fulfill the ingredients of the said offences prima-facie.” 21. The order taking cognizance reflects that the learned Magistrate has found a prima-facie case under section 406/420/120-B IPC primarily for two reasons; in the report of M/s Anjali Jain & Associates serious apprehensions of defalcation and misappropriation of fund have been raised and the auditors have found gross discrepancies in the accounting of the Dhanbad Bar Association. 22. The order taking cognizance reflects that the learned Magistrate has found a prima-facie case under section 406/420/120-B IPC primarily for two reasons; in the report of M/s Anjali Jain & Associates serious apprehensions of defalcation and misappropriation of fund have been raised and the auditors have found gross discrepancies in the accounting of the Dhanbad Bar Association. 22. The petitioners have contended that on mere apprehension a person cannot be prosecuted in a criminal case; the audit report does not record the amount of defalcation/misappropriation; enquiry in the matter is still inconclusive; the vouchers, bills, bank statements and other documents have now been submitted to the Jharkhand State Bar Council, and on the face of the records the order taking cognizance is bad in law. 23. What would constitute criminal breach of trust can be gathered from a reading of section 405 IPC and the statutory illustrations incorporated in the Code itself. It is commonly accepted that the offence of criminal breach of trust is committed when the person who is entrusted in any manner with the property or with any dominion over it, dishonestly misappropriates it or converts it to his own use, or dishonestly uses it or disposes it of, in violation of any direction of law prescribing the mode in which the trust is to be discharged, or of any lawful contract, express or implied, made by him touching such discharge, or willfully suffers any other person so to do. The offence of the criminal breach of trust thus involves two stages, namely; (i) creation of an obligation in relation to the property over which dominion or control is acquired by the accused and, (ii) misappropriation or converting the property for own use dishonestly and contrary to the terms of the obligation created. 24. Cheating is an essential element for the offence under section 420 IPC. Cheating is defined under section 415 IPC. Explanation to section 415 IPC clarifies that the dishonest concealment of facts is a deception within the meaning of section 415 IPC. The expression “dishonestly” as defined under section 24 must involve a positive act with the intention of causing wrongful gain to one person or wrongful loss to another; wrongful gain is gain by unlawful means of property to which the person gaining is not legally entitled. The expression “dishonestly” as defined under section 24 must involve a positive act with the intention of causing wrongful gain to one person or wrongful loss to another; wrongful gain is gain by unlawful means of property to which the person gaining is not legally entitled. Section 25 IPC defines fraudulently to mean a thing done by a person fraudulently if he does that thing with intent to defraud but not otherwise. To constitute the offence under section 415 IPC intention to deceive or the inducement must be proved at the initial stage when a person is said to have been deceived. In “Hira Lal Hari Lal Bhagwati Vs. CBI” reported in (2003) 5 SCC 257 , it has been held that to hold a person guilty of cheating as defined under section 415 of the Indian Penal Code it is necessary to show that the accused had fraudulent or dishonest intention at the time of making the promise with an intention to retain the property. 25. The audit report reveals that proper books of accounts as required by the bye-laws have not been maintained, no committee for proper and prudent functioning of the Bar Association has been constituted and the register for the fixed assets has not been maintained. They have, of course, written that “chances of defalcation” cannot be ruled out, but then the auditors have also clarified that their report is just an opinion. The audit report records the reason for financial mismanagement due to absence of internal control system for monitoring of cash and bank balances (para15). The balance-sheet for the year ending March 31, 2013 records total liabilities at Rs. 56,76,659.93/- and the total assets at Rs.56,76,659.93/-; the total income for the said period was Rs.1,54,54,145.50/- and expenditure was Rs.1,54,54,145.50/-. The figures of the receipts and payments are also matching, that is, Rs. 1,79,68,081.93/-. The audit report of M/s Anjali Jain & Associates records thus; the Balance-sheet, Income & Expenditure Account and Receipt & Payment Account dealt with by this report are in agreement with the figures calculated based on ledger and cash book kept and maintained by the Association (para iii). The audit report clarifies that the audit was conducted following the auditing standards generally accepted in India and it is “an expression of opinion”. The audit report clarifies that the audit was conducted following the auditing standards generally accepted in India and it is “an expression of opinion”. It says that an audit includes examination on test basis and it is intended to find out whether the financial statements are free from material mis-statement. 26. It is common knowledge that discrepancies in the accounting may occur for various reasons and every discrepancy would not lead to an inference that there was misappropriation of fund. 27. On behalf of the complainant-O.P No. 2, it is contended that this is not the stage of meticulous examination of the prosecution evidence and at the pre-trial stage it is sufficient that materials produced before the Magistrate disclose commission of the offence as alleged in the complaint-petition. It is further contended that “opinion” of the auditors as reflected in the audit report dated 30.08.2014 is sufficient to infer that the accused persons have misappropriated the funds of the Dhanbad Bar Association. Mr. R. S. Mazumdar the learned Senior counsel for O.P No. 2 has referred to the decisions in “State of Maharashtra Vs. Ishwar Piraji Kalpatri and Others” reported in (1996) 1 SCC 542 and “Rajiv Thapar and Others Vs. Madan Lal Kapoor” reported in (2013) 3 SCC 330 , to support the aforesaid contention. 28. Before proceeding further in the matter, it is necessary to record that it is not opinion of the auditors which would prima-facie constitute an offence, rather it must be opinion of the Magistrate which he has to form on the basis of the materials produced before him that the law recognizes. The expression “prima-facie” may have resemblance to the dictionary meaning of the expression “opinion”, but a mere opinion of the auditors would not be a substitute for essential ingredients of an offence which prima-facie must be disclosed before the Magistrate takes cognizance of the offence. The exercise of powers under section 204 Cr.P.C ensues serious consequences; issue of process against a person to face trial in a criminal case is a serious matter. That precisely is the reason the Hon’ble Supreme Court has time and again said that the Magistrate must exercise the discretion judiciously. The Magistrate is not to act as a machine in taking cognizance of each and every complaint filed before him and issue process as a matter of course; he is not a post-office. That precisely is the reason the Hon’ble Supreme Court has time and again said that the Magistrate must exercise the discretion judiciously. The Magistrate is not to act as a machine in taking cognizance of each and every complaint filed before him and issue process as a matter of course; he is not a post-office. As has been explained by the Hon’ble Supreme Court in “Devarapalli Lakshminarayana Reddy Vs. V. Narayana Reddy” reported in (1976) 3 SCC 252 , exercise of powers by the Magistrate under section 190/204 Cr.P.C is discretionary and the discretion has to be exercised on satisfaction about commission of an offence on the basis of the materials brought before him. It is not that the Magistrate “must take cognizance” on each every complaint. The Hon’ble Supreme Court has held, thus; “13. It is well settled that when a Magistrate receives a complaint, he is not bound to take cognizance if the facts alleged in the complaint, disclose the commission of an offence. This is clear from the use of the words ‘may take cognizance’ which in the context in which they occur cannot be equated with ‘must take cognizance’. The word ‘may’ gives a discretion to the Magistrate in the matter. If on a reading of the complaint he finds that the allegations therein disclose a cognizable offence and the forwarding of the complaint to the police for investigation under Section 156(3) will be conducive to justice and save the valuable time of the Magistrate from being wasted in enquiring into a matter which was primarily the duty of the police to investigate, he will be justified in adopting that course as an alternative to taking cognizance of the offence, himself.” 29. Under the Code of Criminal Procedure, 1973 the Magistrate has been given an undoubted discretion in the matter – the discretion has to be exercised judiciously, but if on a bare reading of the complaint it can be gathered that commission of the offence as alleged in the complaint is so inherently improbable, or that the act or omission complained of is purely civil in nature, or no offence is made out against the accused person, the complaint shall be dismissed and if the Magistrate has taken cognizance in a case falling under the aforesaid circumstances the High Court can interfere with the order taking cognizance. In “Vadilal Panchal Vs. In “Vadilal Panchal Vs. Dattatraya Dulaji Ghadigaonkar & Another” reported in AIR 1960 SC 1113 , what has been observed by the Hon’ble Supreme Court may usefully be quoted: “9. .........The inquiry is for the purpose of ascertaining the truth or falsehood of the complaint; that is, for ascertaining whether there is evidence in support of the complaint so as to justify the issue of process and commencement of proceedings against the person concerned.…...” 30. The expression, “for the purpose of deciding whether or not there is sufficient ground for proceeding”, amply demonstrates that the enquiry under section 202 Cr.P.C is for ascertaining whether there is any evidence in support of the complaint so as to justify the issue of process against the persons concerned. The discretion vested in the Magistrate under section 202 Cr.P.C mandates that it is the duty of the Magistrate to find out what material there is to support the allegations made in the complaint and to remove any hesitation from his mind that he may have felt upon the mere perusal of the complaint and the complainant’s evidence on oath [refer, “Chandra Deo Singh Vs. Prakash Chandra Bose” reported in AIR 1963 SC 1430 ]. The object of the enquiry under section 202 Cr.P.C is to ascertain the truth or falsehood of the complaint and the Magistrate has to take a decision with reference to the intrinsic quality of the statements made in the complaint and the pre-trial evidence during the enquiry. In “Smt. Nagawwa Vs. The object of the enquiry under section 202 Cr.P.C is to ascertain the truth or falsehood of the complaint and the Magistrate has to take a decision with reference to the intrinsic quality of the statements made in the complaint and the pre-trial evidence during the enquiry. In “Smt. Nagawwa Vs. Veeranna Shivalingappa Konjalgi and Others” reported in (1976) 3 SCC 736 , the Hon’ble Supreme Court has indicated four category of cases in which an order of the Magistrate issuing process can be quashed: “(i) Where the allegations made in the complaint or the statements of the witnesses recorded in support of the same taken at their face value make out absolutely no case against the accused or the complaint does not disclose the essential ingredients of an offence which is alleged against the accused; (ii) where the allegations made in the complaint are patently absurd and inherently improbable so that no prudent person can ever reach a conclusion that there is sufficient ground for proceeding against the accused; (iii) Where the discretion exercised by the magistrate in issuing process is capricious and arbitrary having been based either on no evidence or on materials which are wholly irrelevant or inadmissible; and (iv) where the complaint suffers from fundamental legal defects, such as, want of sanction, or absence of a complaint by legally competent authority and the like. 31. Both the enquiry witnesses have spoken about complaints to the State Bar Council, report of the Committee constituted by the Jharkhand State Council, audit report, and financial irregularity and misappropriation of the funds of the Dhanbad Bar Association. However, except alleging that the auditors’ report has found misappropriation of Rs.1.25 crores which, of course, is not reflected in the auditors’ report and stating that “the accused persons have misappropriated the funds of the Dhanbad Bar Association”, they have not spoken of the material and foundational facts constituting any offence. A plain reading of the complaint-petition and the evidence led during the enquiry under section 202 Cr.P.C do not indicate that the materials for constituting the offence under section 405 Cr.P.C and/or 420 IPC are present in this case. A plain reading of the complaint-petition and the evidence led during the enquiry under section 202 Cr.P.C do not indicate that the materials for constituting the offence under section 405 Cr.P.C and/or 420 IPC are present in this case. Leaving aside the cryptic and bald allegation made by the enquiry witnesses that the fund of the Bar Association has been misappropriated, it is a matter of record that the enquiry witnesses have spoken about misappropriation of 1.25 crores on the basis of the audit report whereas the audit report nowhere records that Rs.1.25 crores has been misappropriated. The audit report simply speaks about mis-management of the accounts, non-production of bills, vouchers etc., but it does not point out an accusing finger to the petitioners. On an allegation that proper accounts were not maintained and important papers, vouchers, bills, minutes etc. were not kept on record to support the expenditures, an inference cannot be drawn that the petitioners have committed criminal breach of trust or cheating. The audit report does not disclose the amount of misappropriation and, the documents which have been produced on record do not reflect the amount of Salami, welfare stamps, Vakalatnama, affidavit etc, which has been misappropriated by the petitioners. It may be that many details were not furnished before the auditors, but for that reason no inference can be drawn on misappropriation of the funds. In fact, the auditors’ report reflects income from sale of Vakalatnama, bail-bonds, affidavit form, membership description, admission-fee, deposit from shop allottees etc. Since few heads of income have remained unverified, primarily due to lack of details, it cannot be held that the funds of the Dhanbad Bar Association have been swindled by the petitioners. It is a basic rule of construction that a document must be read as a whole; piece-meal reading of a document may lead to contrary conclusions. While reading the auditors’ report it has to be kept in mind that the registers at the Association were not maintained and there was no proper system for accounting as also books of accounts as required under the bye-laws were not maintained by the Association. The complainant has claimed that a report was submitted on 23.03.2014 by the Jharkhand State Bar Council in which allegation of misappropriation has been found correct (paragraph No. 9 of the complaint-petition). The complainant has claimed that a report was submitted on 23.03.2014 by the Jharkhand State Bar Council in which allegation of misappropriation has been found correct (paragraph No. 9 of the complaint-petition). The complaint-petition refers also to a report by the Steering Committee of the Jharkhand State Bar Council which has submitted a report on 12.06.2014 to recover loss, if any, to the Bar Association from the persons concerned. There is a letter written by Mr. Radhey Shyam Goswami, one of the enquiry witnesses, to the Jharkhand State Bar Council, a copy of which forms part of Annexure-F to the counter-affidavit filed on behalf of O.P No. 2, which has a reference to lodging of F.I.R, if needed. This letter was written on account of the dispute in the Dhanbad Bar Association elections. In this letter also it is stated that the accounts of the Dhanbad Bar Association should be audited and if any irregularity is found, recovery should be made [para (iv)]. The letter dated 12.06.2014 of the Jharkhand State Bar Council which has been produced by O.P No. 2 also refers to a similar proposal for recovery for loss, if any. The proceeding of the meeting of the Jharkhand State Bar Council convened on 13.12.2014, which has been heavily relied upon by Mr. R. S. Mazumdar, the learned Senior Counsel, records that it was discussed and decided to conduct an audit of the accounts of the Dhanbad Bar Association to verify the allegations of financial irregularities. Not to be over-looked, the complaint case has been instituted on 05.01.2015. 32. On the basis of the aforesaid materials, can it be concluded that a prima-facie case for taking cognizance of the offence punishable under section 406, 420/120-B IPC has been made out. In my opinion, the answer is a definite ‘No’. 33. Another aspect of the matter is that by the impugned order dated 16.06.2015 the learned Magistrate has declined to take cognizance of the offence under section 114, 468, 477A, 469, 471, 120-B and 34 IPC. Normally, this part of the impugned order would not have been significant but for the reason that on account of absence of vouchers, bills, minutes etc. an apprehension has been raised that funds were misappropriated. Normally, this part of the impugned order would not have been significant but for the reason that on account of absence of vouchers, bills, minutes etc. an apprehension has been raised that funds were misappropriated. Now, by virtue of the impugned order it can safely be said that the petitioners have not committed forgery for the purpose of cheating nor they have produced a forged document or electronic record. They have also not defrauded, destroyed, altered, mutilated or falsified any book, electronic record, paper writing or any valuable security or any account in their possession or received by them. The question is, when these elements are not found present in the evidence brought on record of C.P No. 42 of 2015 whether on the basis of the aforesaid reports it can be said that a prima-facie case for the offence punishable under section 406 IPC or 420 IPC is made out, particularly when an inference on misappropriation of the funds is sought to be raised because bills, vouchers etc. were not produced. 34. For constituting the offence under section 405 IPC and 415 IPC, it is not sufficient to just mention the words “misappropriation” or “financial irregularity” or “scam”. These expressions are not the magic words which would be a substitute for the essential ingredients constituting the offence of criminal breach of trust or cheating. The allegation of deception at the very inception is conspicuously missing in this case. In “Hridaya Ranjan Prasad Verma and Others Vs. State of Bihar and Another” reported in (2000) 4 SCC 168 , it has been held that to hold a person guilty of cheating it is necessary to show that he had fraudulent or dishonest intention at the time of making the promise. In “Anil Mahajan Vs. Bhor Industries Ltd. and Another” reported in (2005) 10 SCC 228 , in the complaint filed before the Magistrate the complainant alleged deceit and cheating and it had also alleged cheating in the complaint filed before the police, however, there was no specific averment on deceit, cheating or fraudulent intention of the accused at the time of entering into MoU to infer that the accused had the intention to deceive the complainant to pay. The Hon’ble Supreme Court has held that mere use of the expression “cheating” in the complaint is of no consequence. The Hon’ble Supreme Court has held that mere use of the expression “cheating” in the complaint is of no consequence. In the present case, a plain reading of the complaint-petition, statement of the complainant on solemn affirmation and the statement of the enquiry witnesses gives an impression that it is something recorded in the audit report which has finally prompted the complainant to lodge the complaint case. No doubt, there were other enquiries which were conducted at the instance of the Jharkhand State Bar Council and there was a demand for audit of the funds of the Dhanbad Bar Association but then these reports just take the matter in the realm of doubt. To hold that a prima-facie case has been made out, there must be something more than a mere doubt. At the stage of section 204 Cr.P.C, the Magistrate cannot make-up his mind thinking of the case only with the complainant’s perspective rather he has to make-up his mind whether this is a case in which the proposed accused should face the trial. In forming such an opinion the Magistrate is not required to sift the evidence, probe into the contradictions in the materials brought before him, but at the same time he must not be swayed away by sheer volume of the documents or the magnitude of the allegation and take cognizance of the offence in the hope that something might be unearthed. The test is, whether the materials on record, if remain uncontroverted, would constitute a prima-facie case for the offence as alleged in the complaint. 35. What has been observed by me in the foregoing paragraphs are just extracts from the materials from the record, which, without any strenuous exercise disclose that no offence punishable under section 406 and 420 IPC is made out. Consequently, the charge under section 120-B IPC would fail. Accordingly, it is held that the order taking cognizance dated 16.06.2015 in C.P. No. 42 of 2015 is illegal. 36. There are few other significant features of the case which must be recorded. In support of the allegations in the complaint-petition the complainant has examined two witnesses; both are highly interested witnesses, though there are as many as 10 witnesses named in the complaint-petition. 36. There are few other significant features of the case which must be recorded. In support of the allegations in the complaint-petition the complainant has examined two witnesses; both are highly interested witnesses, though there are as many as 10 witnesses named in the complaint-petition. During the enquiry under section 202 Cr.P.C it is not necessary that evidence on oath of all the witnesses must be taken, however, in the context of the allegation levelled against the petitioners which is primarily founded on the audit report the auditors were required to be examined before process under section 204 Cr.P.C was issued to the petitioners. More than one list of dates and written notes of argument have been filed but none of these or any of the documents produced by the complainant-O.P No. 2 discloses how the allegation of misappropriation of Rs.1.25 crores is substantiated and taking the audit report on its face value, established. All the reports referred to in the complaint-petition and going by the complainant’s own version, it can be concluded that there is a need for further probe in the matter, but on such allegations a criminal trial for such an enquiry is not contemplated by a criminal court. In a proceeding commencing on a complaint-petition, even if it is at the initial stage, allegations made against the accused person must not be a mere doubt of the complainant; the materials brought before the Magistrate must disclose at least, prima-facie, commission of an offence. On a vague, unsubstantiated allegation, cognizance of the offence as alleged by the complainant cannot be taken by the Magistrate. 37. I am alive to the legal position that it would not be proper for the High Court to analyze the case of the complainant in the light of all probabilities in order to determine whether a conviction would be sustainable, but time and again it has been observed by the Hon’ble Supreme Court that if the allegations set-out in the complaint read with other materials on record do not constitute the offence of which cognizance has been taken by the Magistrate it is open to the High Court to quash the order taking cognizance in exercise of the inherent powers under section 482 of the Code of Criminal Procedure, 1973. In my opinion, the present one is one such case which warrants interference by this Court. 38. In my opinion, the present one is one such case which warrants interference by this Court. 38. In view of the aforesaid discussions, it is held that the impugned order taking cognizance dated 16.06.2015 in C. P. No. 42 of 2015 suffers from serious infirmities in law. The learned Magistrate has erroneously held that a prima-facie case for the offence punishable under section 406, 420 and 120-B IPC has been made out. Accordingly, the impugned order dated 16.06.2015 is quashed. Consequently, the entire criminal proceeding arising out of Complaint Case No. 42 of 2015 stands quashed. 39. In the result, Cr.M.P No. 1311 of 2015 is allowed.