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2020 DIGILAW 2251 (KAR)

Jeer Jambanna v. State Of Karnataka

2020-11-13

JOHN MICHAEL CUNHA

body2020
JUDGMENT John Michael Cunha, J. - These petitions are filed by Accused Nos.13, 14, 15, 16 and 17 respectively seeking to quash the proceedings initiated against them in Spl. Case No.534/2016 arising out of Crime No.5/2015 for the alleged offences punishable under Sections 379, 409, 420, 471 read with 120(B) of IPC and Sections 21 and 23 read with 4(1)(A) of Mines and Minerals (Development and Regulation) Act, 1957 (for short, MMDR Act ) and Rules 165 read with 144 of the Karnataka Forest Rules, 1969 (for short, Forest Rules ). Accused No.13 is the Company by name ILC Industries Limited. Accused No.14 is the Managing Director of the company (A13). 2. The case of the prosecution is that Accused No.13-M/s. ILC Industries Limited between 01.01.2009 and 31.05.2010, sold 25000 Metric Tons of Iron Ore to M/s. Priyanka Agencies without valid permit and without proper invoice and out of the said quantity 11901 Metric Tons was stolen by Accused No.13 from somewhere and the same was sold to M/s. Frost International Limited through M/s. Priyanka Agencies without valid permit and without payment of royalty and thereby caused loss of Rs.1,41,36,139/- to the State Exchequer and thereby committed the above offences. 3. Learned counsel for the petitioners Sri. Ravi L. Vaidya would submit that the allegations made in the charge sheet and the documents produced therewith do not prima facie make-out the ingredients of offences charged against the petitioners. Even though it is the case of the prosecution that, Accused No.13 had sold 25000 Metric Ton Iron Ore to M/s. Priyanka Agency and M/s. Priyanka Agency in turn sold a part of it to M/s Frost International Limited, yet M/s. Priyanka Agency or M/s. Frost International Limited are not arraigned as accused in the charge sheet. That apart, there are no allegations whatsoever in so far as Accused Nos. 15, 16 and 17 are concerned. They are sought to be prosecuted only on the ground that, they happened to be the Directors of Accused No.13 at the relevant time. There are no allegations to impute vicarious liability to Accused Nos. 13 to 17. Accused Nos.13 to 16 were neither in charge of the affairs of Accused No.13-Company at relevant time nor is there any material to show that they had knowledge of any transaction in question and therefore the prosecution of Accused Nos. There are no allegations to impute vicarious liability to Accused Nos. 13 to 17. Accused Nos.13 to 16 were neither in charge of the affairs of Accused No.13-Company at relevant time nor is there any material to show that they had knowledge of any transaction in question and therefore the prosecution of Accused Nos. 13 to 17 is wholly illegal and abuse of the process of the court. On these grounds, learned counsel for the petitioners has sought to quash the proceedings initiated against the petitioners and the order of taking cognizance by the learned Special Judge under the impugned order. 4. Sri. B.S. Prasad, learned Special Public Prosecutor appearing for the respondent however by referring to the charge sheet and the documents filed in support thereof would submit that the material produced by Investigating Agency clearly disclose that the entire transaction had taken place with the knowledge or the active connivance of the petitioners and sufficiency of this evidence is a matter for trial and therefore, that being prima facie material to show the involvement of the petitioners in the alleged offence, there is no ground to quash the proceedings or to interfere with the impugned order passed by the learned Special Judge. 5. I have considered the submissions and perused the records. 6. In so far as Accused No.13 is concerned, there are specific allegations that, without obtaining valid permit and without proper invoice, 25000 Metric Ton Iron Ore was sold to M/s. Priyanka Agency. Documents are available to show that at the relevant time, Accused No.14 was the Managing Director of Accused No.13-Company. In the said circumstances, there cannot be any difficulty in prosecuting Accused Nos. 13 and 14 based on the materials produced by Investigating Agency. In so far as Accused Nos. 15, 16 and 17, even though the learned counsel for the petitioners has emphatically submitted that, no material is available to show their involvement in the alleged transaction, but, perusal of the charge sheet indicates that, the proceeds of sale obtained by Accused No.13-Company has been credited to the accounts of Accused Nos. 15, 16 & 17 as reflected in the statement of accounts produced along with the petition. As such, there is prima facie material to show that, even Accused Nos. 15, 16 & 17 had the knowledge of the alleged transaction. 15, 16 & 17 as reflected in the statement of accounts produced along with the petition. As such, there is prima facie material to show that, even Accused Nos. 15, 16 & 17 had the knowledge of the alleged transaction. At the stage of issuing process, court is not required to consider the sufficiency of the evidence. As the material on record prima facie disclose that the transaction in question was within the knowledge of the petitioners, the Court below was justified in taking cognizance of the alleged offences and issuing summons to the petitioners. Therefore, the contention of the learned counsel for the petitioners that, Accused Nos. 15, 16 & 17 are sought to be prosecuted solely on the ground that they were Directors of the Company without there being any prima facie material to show their involvement in the alleged offences cannot be accepted. 7. The submission of the learned counsel for the petitioners that the vicarious liability cannot be fastened on Accused Nos. 15 to 17 merely on the ground of crediting the proceeds of sale to their Bank Account, also cannot be accepted for the reason that the very credit of the amount to their account being the proceeds of an illegal sale should have put them on notice to make necessary enquiries. In that view of the matter, the knowledge has to be imputed to them until it is shown during trial that the alleged offences was committed without their knowledge or that they have exercised all due diligence to prevent the commission of such offences as provided in section 23 of the Act. 8. Coming to the objection relating to the validity of the cognizance taken by the learned Special Judge and the consequent orders of summons issued to the petitioners is concerned, a perusal of the order sheets produced by the petitioners indicate that on perusal of the FIR, Charge Sheet, Seizure mahazar and documents collected by the Investigating Officer, the learned Special Judge has taken cognizance of the alleged offences and has issued summons to the petitioners. This order clearly reflects application of mind and consideration of the material leading to issuance of summons. The offences in respect of which summons are issued are also detailed in the order, as such, no fault could be found with the impugned orders. 9. This order clearly reflects application of mind and consideration of the material leading to issuance of summons. The offences in respect of which summons are issued are also detailed in the order, as such, no fault could be found with the impugned orders. 9. However, the difficulty arises in respect of the offences under the provisions of MMDR Act. Section 22 of the Act creates a restriction on the courts in taking cognizance of the offences under the Act. The Section reads as under: 22. Cognizance of offences.? No court shall take cognizance of any offence punishable under this Act or any rules made thereunder except upon complaint in writing made by a person authorised in this behalf by the Central Government or the State Government. 10. Learned Counsel for the petitioners/accused has placed heavy reliance on the decision of the Hon ble Apex Court in the case of STATE (NCT OF DELHI) vs. SANJAY, (2014) 9 SCC 772 , in paragraph 70, wherein it is held as under: 70. There cannot be any dispute with regard to restrictions imposed under the MMDR Act and remedy provided therein. In any case, where there is a mining activity by any person in contravention of the provisions of Section 4 and other sections of the Act, the officer empowered and authorized under the Act shall exercise all the powers including making a complaint before the jurisdictional magistrate. It is also not in dispute that the Magistrate shall in such cases take cognizance on the basis of the complaint filed before it by a duly authorized officer. In case of breach and violation of Section 4 and other provisions of the Act, the police officer cannot insist Magistrate for taking cognizance under the Act on the basis of the record submitted by the police alleging contravention of the said Act. In other words, the prohibition contained in Section 22 of the Act against prosecution of a person except on a complaint made by the officer is attracted only when such person sought to be prosecuted for contravention of Section 4 of the Act and not for any act or omission which constitute an offence under the Penal Code. (underlining supplied) 11. (underlining supplied) 11. What emerges from the above decision is that based on the final report filed under Section 173 of the Code, the Special Court cannot take cognizance of the offences under the provisions of the MMDR Act. Apparently, to get over this restriction, the respondent appears to have filed a complaint in the proceedings before the Special court in terms of Section 22 of the MMDR Act. The learned Special Public Prosecutor for the respondent has made available copy of the complaint filed by the authorized officer before the learned Special Judge which contain the very same allegations as found in the charge sheet submitted by SIT. This complaint therefore could be taken as due compliance of the statutory requirement prescribed in Section 22 of the MMDR Act. But the question still remains to be considered is, whether by mere filing the complaint, can it be said that the Special Court has taken cognizance of the offences based on the said complaint as mandated in Section 22 of the MMDR Act? 12. Though it is vehemently argued by the learned counsel for the petitioners/accused that such exercise has not been done by the Special Court as the impugned orders of cognizance do not reflect that the learned Special Judge has looked into the averments made in the complaint yet, what is significant to be noted is that the allegations made in this complaint as well as the facts constituting the offences alleged against the petitioners/accused in the final report filed by the SIT are one and the same. Under the said circumstance, if the learned Special Judge has looked into the allegations made in the final report filed by the SIT and on satisfying himself that these allegations prima facie disclose the commission of offences by the petitioners/accused under IPC as well as under the MMDR Act, it could possibly be held that the learned Special Judge has taken cognizance of the offences in terms of Section 22 of MMDR Act. 13. 13. In drawing the above conclusion, I am fortified by the observations of the Hon ble Supreme Court in the case of FAKHRUDDIN AHMAD vs. STATE OF UTTARANCHAL AND ANOTHER, (2008) 17 SCC 157 , wherein it is observed that whether Magistrate has or has not taken cognizance of offence will depend upon circumstances of the particular case, including mode in which case is sought to be instituted and the nature of preliminary action . No doubt, even in the said case it is held that before a Magistrate can be said to have taken cognizance of an offence, it is imperative that he must have taken notice of accusations and applied his mind to allegations made in complaint or in police report or information received from a source other than a police report, as the case may be, and material filed therewith. It is only when the Magistrate applies his mind and is satisfied that allegations, if proved, would constitute an offence and decides to initiate proceedings against the alleged offenders, that it can be positively stated that he has taken cognizance of the offence. 14. Similar view is taken in MEHMOOD UL REHMAN vs. KHAZIR MOHAMMAD TUNDA AND OTHERS, (2015) 12 SCC 420 , wherein it is held that though no formal or speaking or reasoned orders are required at the stage of Ss.190/204 CrPC, there must be sufficient indication in the order that the Magistrate is satisfied that: (i) the facts alleged in the complaint constitute an offence, and (ii) these facts when considered along with the statements recorded under S.200 CrPC and the result of inquiry or report of investigation under S.202 CrPC, if any, prima facie make the accused answerable before the criminal court. 15. As the impugned orders and the records of the proceedings disclose that the learned Special Judge has considered the material placed before him namely, the charge sheet which contain identical allegations as found in the complaint filed by the authorized officer under Section 22 of the Act, I hold the cognizance taken by the learned Special Judge and the summons issued by him in respect of MMDR offences is in accordance with Section 22 of MMDR Act. 16. 16. Viewed from another angle, on filing a complaint either under Section 200 CrPC or under Section 22 of MMDR Act, the course open for the Court/Magistrate was either to take cognizance based on the facts alleged in the complaint or to refer the complaint for investigation under Section 156(3) of CrPC or to postpone the process and hold an enquiry in terms of Section 202 of CrPC. In the instant cases, detailed investigation into the alleged offences having already been undertaken by SIT pursuant to the directions of the Hon ble Supreme Court and necessary evidence having been collected in respect of the alleged offences, the Special Court could not have ordered a parallel investigation nor could it have rejected the final report. It is not the case of the petitioners that the report submitted by the SIT is without authority of law. Even otherwise, investigating of the offences is within the domain of the police and the power of the police officers to investigate into cognizable offence is not ordinarily impinged by any fetters. There is no provision under the MMDR Act that the appropriate authority alone shall investigate any complaint of breach of any of the provisions of the MMDR Act. As observed by the Hon ble Supreme Court in KANWAR PAL SINGH vs. THE STATE OF UTTAR PRADESH (Crl.Appeal No.1920/2019, arising out of SLP (Crl.) No.10707/2019, dated December, 18, 2019), the violation of Section 4 being cognizable offence, the police could always investigated the same, there being no bar under the MMDR Act . Therefore, it follows that when the police have the power to investigate the contraventions of Section 4 of the Act, they have also the power to submit the final report. Therefore, no illegality could be attached to the final report and the evidence collected by the police officers in proof of the offences investigated by them under the Act. This report, therefore, cannot be excluded from consideration while taking cognizance of the offence under the Act, provided a complaint as required under Section 22 is filed by the authorized officer. Therefore, no illegality could be attached to the final report and the evidence collected by the police officers in proof of the offences investigated by them under the Act. This report, therefore, cannot be excluded from consideration while taking cognizance of the offence under the Act, provided a complaint as required under Section 22 is filed by the authorized officer. If the argument of the learned counsel for the petitioners is accepted, despite there being a report on investigation, the Court has to either order for fresh investigation or hold an enquiry under Section 202 of Cr.PC, which would tantamount to nullifying the investigation ordered by the Hon ble Supreme Court and the Government of Karnataka, which in the circumstances of the case cannot be permitted. It is a cardinal principle of law that every law is designed to further the ends of justice and shall not be frustrated on mere technicalities. When the law authorizes the police/SIT to investigate the offences including the offences under the MMDR Act, the said report cannot be excluded from consideration at the stage of cognizance or issuance of summons to the accused subject to the compliance of the requirements of Section 22 of the Act. 17. In the light of these principles and for the reasons discussed above, and especially keeping in mind the peculiarities of the present case and the special circumstances arising on account of the investigation report submitted by SIT, in my view, the course adopted by the learned Special Judge in considering the final report for issuing process to the petitioners cannot be faulted with. Likewise, as held in the above decisions, non recording the reasons by the Special Court while issuing summons to the petitioners also cannot be a reason to set aside the orders of cognizance and the summons issued to the petitioners. In the circumstances of the case, even if there is an error or omission on the part of the learned Special Judge, it is not something so vital as to cut at the root of jurisdiction so as to render the impugned orders illegal or without jurisdiction so as to quash the entire proceedings as sought for by the petitioners. In the circumstances of the case, even if there is an error or omission on the part of the learned Special Judge, it is not something so vital as to cut at the root of jurisdiction so as to render the impugned orders illegal or without jurisdiction so as to quash the entire proceedings as sought for by the petitioners. Since the petitioners were notified of the offences at the earliest point of time before their appearance, there is substantial compliance of the outward forms of the law as held by the Constitution Bench of the Apex Court in WILLIE (WILLIAM) SLANEY vs. STATE OF MADHYA PRADESH, (1956) AIR SC 116 . 18. As a result, I hold that the impugned orders of cognizance and the consequent orders of summons issued by the learned Special Judge do not suffer from any error or illegality vitiating the proceedings pending against the petitioners. 19. The next contention urged by learned counsel for the petitioners that the allegations leveled in the charge sheet are directed only against the company and therefore the prosecution of the accused Nos. 15 to 17 is not tenable in the eye of law, is also liable to be dismissed. A reading of the charge sheet and the allegations made in the complaint clearly disclose that the accused Nos. 15 to 17 are sought to be prosecuted not only as the partners of the involved firms, but also in their personal capacity. 20. As could be seen from the above narration, accused Nos. 15 to 17 are implicated in the alleged offences in their individual capacity as well as alter ego of the company. The question of making the firm or the company an accused would arise only when such company commits an offence involving mens rea, it would normally be the intent and action of the individual who would act on behalf of the company. Only then, an individual who has perpetrated the commission of an offence on behalf of a company can be made an accused along with the company, if there is sufficient evidence of his active role coupled with criminal intent. This is the law laid down in SUNIL BHARTI MITTAL vs. CENTRAL BUREAU OF INVESTIGATION, (2015) 4 SCC 609 (paras 40, 42 and 43), which is extracted herebelow:- 40. This is the law laid down in SUNIL BHARTI MITTAL vs. CENTRAL BUREAU OF INVESTIGATION, (2015) 4 SCC 609 (paras 40, 42 and 43), which is extracted herebelow:- 40. It is abundantly clear from the above that the principle which is laid down is to the effect that the criminal intent of the "alter ego" of the company, that is the personal group of persons that guide the business of the company, would be imputed to the company/corporation. The legal proposition that is laid down in the aforesaid judgment is that if the person or group of persons who control the affairs of the company commit an offence with a criminal intent, their criminality can be imputed to the company as well as they are "alter ego" of the company. 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. 21. In the instant cases, specific allegations are directed against the petitioners as well as the company. The role played by the petitioners has been narrated. When the notion of the company or its corporate identity is used to circumvent law, to defeat public policy, perpetuate fraud or illegality and used as a cover or fa ade to justify wrong, defend crime, to lend a name to a private dealing, law will not regard the company as a corporate entity and afford the protection which is otherwise entitled under law. When camouflaged transactions are carried on behind the legal fa ade, court may lift this veil and look behind the artificial personality of the company and identify the real personalities or natural persons operating behind the veil. The facts and circumstances disclosed in the material collected by Investigating officer undoubtedly point out that the petitioners ingeniously have been operating behind the cover of firm or company by entering into conspiracy with other accused with intent to make unlawful gain making out the ingredients of offence under sections 420 and 120B of IPC. Therefore, the contention of the petitioners that only the company is liable for prosecution does not hold water. 22. The allegations made in the complaint which are duly supported by the material collected by SIT during investigation undoubtedly make out the ingredients of the offences under Sections 379, 409, 420, 471, r/w 120(B) of IPC and Sections 21, 23 r/w 4(1) and 4(1)(A) of MMDR Act, 1957 and Rule 165 r/w 144 of Karnataka Forest Rules, 1969. In the course of the arguments, the learned Special Public Prosecutor has referred to the relevant documents which prima facie disclose the involvement of the petitioners in the alleged offences. Under the said circumstances, the criminal action having been rightly initiated against the petitioners, I do not find any justifiable ground to interfere in the impugned proceedings. Accordingly, rejecting the contentions urged by the learned counsel for the petitioners, the Criminal Petitions are dismissed. In view of dismissal of main petitions, all pending I.As, if any, are also dismissed.