When directors of company can be prosecuted if company is accused in the case?

Learned counsel for the appellants further relied upon
few more judgments wherein it was well settled that
the test to be applied for quashing is, whether
uncontroverted allegations made, prima facie
establish the offence. This is because the Court
cannot be utilized for any oblique purpose and where,
in the opinion of the Court, the chances of an
ultimate conviction are bleak, no useful purpose will
be served by allowing the criminal prosecution to
continue. He relied upon the decisions of this Court in
Madhavrao Jiwanrao Scindia & Ors. Vs.
Sambhajirao Chandrajirao Angre & Ors., (1998) 1
SCC 692 (para 7-8); State of Haryana Vs. Bhajanlal,
1992 Supp (1) SCC 335 (para 102); Rajiv Thapar &
Ors Vs. Madan Lal Kapoor, (2013) 3 SCC 330 at para
30; Rishi Pal Singh Vs. State of Uttar Pradesh &
Anr. (2014) 7 SCC 215, at para 12-13.
18. Learned counsel for the respondents have not
rebutted this issue in any of his arguments. With the
meticulous understanding of the orders of the Courts
below in the instant case, we can see that general and
bald allegations are made in the context of appellant
No.1 who is a juristic person and not a natural
person. The Indian Penal Code, 1860, does not
provide for vicarious liability for any offence alleged to
be committed by a company. If and when a statue
contemplates creation of such a legal fiction, it
provides specifically therefor, e.g. Negotiable
Instruments Act, 1881. Further, reliance was made
on S.K. Alagh Vs. State of Uttar Pradesh & Ors.,
reported in (2008) 5 SCC 662, where at paragraph 16,
this Court observed that “Indian Penal Code, save and
except some provisions specifically providing therefor,
does not contemplate any vicarious liability on the part
of a party who is not charged directly for commission ofan offence.” Further in Maksud Saiyed Vs. State of
Gujrat & Ors., reported in (2008) 5 SCC 668, at
paragraph 13, this Court observed that where a
jurisdiction is exercised on a complaint petition filed
in terms of Section 156(3) or Section 200 of the Code
of Criminal Procedure, the Magistrate is required to
apply his mind. Indian Penal Code does not contain
any provision for attaching vicarious liability on the
part of the Managing Director or the Directors of the
Company when the accused is the Company. The
Learned Magistrate failed to pose unto himself the
correct question viz. as to whether the complaint
petition, even if given face value and taken to be
correct in its entirety, would lead to the conclusion
that the respondents herein were personally liable for
any offence. The Bank is a body corporate. Vicarious
liability of the Managing Director and Director would
arise provided any provision exists in that behalf in
the statute. Statutes indisputably must contain
provision fixing such vicarious liability. Even for the
said purpose, it is obligatory on the part of the
complainant to make requisite allegations which
would attract the provisions constituting vicarious
liability. 
REPORTABLE
IN THE SUPREME COURT OF INDIA
CRIMINAL APPELLATE JURISDICTION
CRIMINAL APPEAL NO. 1213 OF 2016

HDFC Securities Ltd. & Ors V State of Maharashtra & Anr.
Dated:December 9, 2016.
Citation: 2017 CRLJ 1033 SC


2. This appeal has been filed assailing the judgment and
order dated 16th November, 2011, passed by the High
Court of Judicature at Bombay in Criminal Writ
Petition No.672 of 2011, whereby the writ petitions
filed by the appellants were dismissed by the High
Court on the ground that the filing of the writ petition
was premature and there was no need for exercising
the powers either under Article 227 of the
Constitution of India or under Section 482 Cr.P.C.
3. Brief facts of the case are as follows: appellant No.1 -
HDFC Securities Ltd., is a public liability company
(hereinafter referred to as “the Company” for short),
appellant No.2 is the Managing Director of the
Company, appellant No.3 is Business Head of the
Company, and appellant No.4 is the Regional head of
Mumbai Region of the Company, respectively.
Respondent No.1 is State of Maharashtra and
respondent No.2 is an individual, who held an
account with the Company. The Company is engaged
in the business of dealing in shares and securities on
behalf of its constituents and clients on Brokerage
Charge and it is also a member of National Stock
Exchange of India Limited (NSE) and Bombay Stock
Exchange of India Limited (BSE).
4. Respondent No.2, had registered herself with the
Company as a constituent/client by opening
Securities Trading Account vide No.342889 and was
an imperial customer of the Company for about eight
years. She executed a Member-Client Agreement
dated 28th June, 2005. On 3rd August, 2009,
respondent No.2, through a legal Notice dated
03.08.2009, requested the appellants to make good
the losses caused to her by indulging in unauthorized
and fraudulent trading in her account by one Vinod
Koper (Relationship Manager of the company-”RM” in
short) during the period July, 2008 to June, 2009.
This Notice was also sent to RM and one Rohan Raut,
Assistant Vice President of the Company, on 20th
October, 2009. Thereafter, she filed arbitration
proceedings before NSE Panel of Arbitrators against
the Company for a sum of Rs.48.99 Lacs and costs of
Rs.2.5 Lacs, and chose the Arbitrators of her choice,
being two retired High Court Judges and sought to
call RM as a witness. The Arbitrators passed an award
in favour of the Company on 18th August, 2010,
recording a shift in the stand of respondent No.2,
authorizing her husband to trade on her behalf. In the
meantime, as the Police did not take cognizance of the
matter, albeit she filed a complaint on 31st march,
2010, against the appellants, RM and AVP, on 10th
June, 2010, she also filed a criminal complaint under
Section 156(3) of the Code of Criminal Procedure,
1973 (hereinafter referred to as Cr.P.C.) before 10th
Metropolitan Magistrate, Andheri, bearing Case
No.143/2010, alleging execution of unauthorized
trades in her account without her consent by the
appellants and claimed that she had thereby suffered
losses amounting to Rs.70 Lacs. Specific allegations
were levelled against RM and appellant No.3 as she
was introduced to RM by appellant No.3 and was told
that RM would handle her investment portfolio
honestly and efficiently with her prior instructions.
General allegations of involvement of other appellants
were made. On 25th September, 2010, she preferred
an appeal before NSE Appellate Panel of Arbitrators,
being Arbitration REF No.CM/M-213/2009, wherein
she disputed the trades which had taken place during
the period December 2008 to April 2009. Being
completely oblivious of the Arbitration proceedings,
the award passed therein and the appeal preferred by
respondent No.2, on 04.01.2011, the learned
Metropolitan Magistrate directed registration of FIR
against the appellants and ordered for a report after
investigation.
5. Pursuant to the order of the learned Metropolitan
Magistrate dated 4.01.2011, Juhu Police Station
registered the FIR, being MECR No.7 of 2011 dated
30th January, 2011, under Sections 409, 420, 465,
467 read with Sections 34 and 120-B of the IPC.
Meanwhile, the Appellate Tribunal had decided the
appeal against respondent No.2, vide its Award dated
24th January, 2011. The Appellate tribunal found that
respondent No.2 had not denied the fact of having
received all the necessary documents, including
Contract notes, etc. with regard to the transactions
undertaken by the appellants on her behalf, which
were required to be issued by the trading member to
the investor immediately after the trade is
undertaken. Thereafter, the appellants filed a writ
petition before the Bombay High Court, being
Criminal Writ Petition No.672 of 2011, inter alia
praying for quashing of the said FIR and the same
prayer was also made in Criminal Writ Petition
No.767 of 2011, filed by RM before the High Court.
The High Court by its judgment dated 16.11.2011,
dismissed both the writ petitions as according to it,
the filing of the writ petitions was premature and
there was no need for exercising the powers either
under Article 227 of the Constitution of India or under
Section 482 Cr.P.C. Aggrieved by the aforesaid
judgment of the High Court, the appellants have
approached this Court by filing this appeal by special
leave.
6. The only question that arises for decision in this
appeal is whether the order dated 04.01.2011 passedPage 7
7
by the Court of 10th Metropolitan Magistrate, Andheri,
in Private Complaint, C.C. No.143/Misc/2010, filed
by respondent No.2 for the offences punishable under
Sections 409, 420, 465, 467 read with Sections 34,
120(B) IPC, as well as FIR bearing MECR No.7 of 2011
dated 30th January, 2011, registered at Police Station,
Juhu, District Mumbai, are liable to be quashed.
7. In order to answer this question, it is necessary to
first set out the relevant provisions i.e. Sections 156
and 482 of the Code of Criminal Procedure, 1973:
“156. Police officer's power to investigate cognizable
case.
(1) Any officer in charge of a police station may, without
the order of a Magistrate, investigate any cognizable case
which a Court having jurisdiction over the local area
within the limits of such station would have power to
inquire into or try under the provisions of Chapter XIII.
(2) No proceeding of a police officer in any such case shall
at any stage be called in question on the ground that the
case was one which such officer was not empowered
under this section to investigate.
(3) Any Magistrate empowered under Section 190 may
order such an investigation as above- mentioned.”
“482. Saving of inherent power of High Court.-
Nothing in this code shall be deemed to limit or effect the
inherent powers of the High Court to make such orders as
may be necessary to give effect to any order under thisPage 8
8
Code, or to prevent abuse of process of any Court or
otherwise to secure the ends of justice.”
8. The High Court dismissed the application filed by the
appellants for quashing and setting aside the order of
the Metropolitan Magistrate dated 4th January, 2011,
on the ground that the appellants had applied before
the stage of issuance of process so to be issued by the
Metropolitan Magistrate under Section 156(3) of the
Criminal Procedure Code. According to the appellants,
the fundamental rights of the appellants would be
compromised if the order so passed by the Magistrate
is allowed to be given effect to. The contention before
the High Court on this question is that the order so
passed by the Metropolitan Magistrate is illegal and
amounts to abuse of the process of law. On the
contrary, before the High Court it was submitted on
behalf of respondent No.2 that an order under Section
156(3) of Criminal Procedure Code requiring
investigation by the police does not cause any injury
of irreparable nature which requires quashing of thePage 9
9
investigation. It is further stated that the stage of
cognizance would arise after the investigation report
is filed. Therefore, the application filed by the
appellants before the High Court is nothing but
prematured and thus there is no need for exercising
the powers of the High Court either under Article 227
of the Constitution of India or under Section 482 of
the Code. Further contention of the respondent before
the High Court was that the inherent powers under
Section 482 of the Code should be sparingly used.
9. The High Court held that the direction given to the
police by the Magistrate under Section 156(3) of the
Code for carrying out the investigation into the
complaint and to submit a report, cannot give a right
to the appellants for quashing the same since such an
order would be based absolutely on speculations upon
the report not filed. Further, it would result in
prejudging the complaint. In these circumstances, the
High Court dismissed the said application.
10. Dr. Abhishek Singhvi, learned senior counselPage 10
10
appearing on behalf of the appellants submitted that
the initiation of proceedings in the instant case is an
abuse of process of law and is liable to be quashed.
He argued that it is a settled principle that
summoning of an accused in a criminal case is a
serious matter and the criminal law cannot be set in
motion as a matter of course. Therefore, the order of
the magistrate must reflect application of mind to the
facts of the case and the law applicable thereto. In
support of this submission, the learned counsel has
relied upon Anil Kumar Vs. M. K. Aiyappa, (2013)
10 SCC 705, paragraph 11, of which is quoted below:
“11. The scope of Section 156(3) CrPC came up for
consideration before this Court in several cases. This
Court in Maksud Saiyed case examined the requirement of
the application of mind by the Magistrate before exercising
jurisdiction under Section 156(3) and held that where
jurisdiction is exercised on a complaint filed in terms of
Section 156(3) or Section 200 CrPC, the Magistrate is
required to apply his mind, in such a case, the Special
Judge/Magistrate cannot refer the matter under Section
156(3) against a public servant without a valid sanction
order. The application of mind by the Magistrate should be
reflected in the order. The mere statement that he has
gone through the complaint, documents and heard the
complainant, as such, as reflected in the order, will not bePage 11
11
sufficient. After going through the complaint, documents
and hearing the complainant, what weighed with the
Magistrate to order investigation under Section 156(3)
CrPC, should be reflected in the order, though a detailed
expression of his views is neither required nor warranted.
We have already extracted the order passed by the
learned Special Judge which, in our view, has stated no
reasons for ordering investigation.”
11. Learned Magistrate had passed an order on
04.01.2011 holding that:
“The bare reading of the complaint and the accompanying
documents disclose the cognizable offence. Therefore in
view of the judgement of Hon’ble Supreme Court in case
of Srinivas Gunduri & Ors. vs. M. S. SEPCO Electric
Power Construction & Anr. In the matter of criminal
appeal No.1377/2010 and 1378/2010 decided on
30.07.2010 when the complaint discloses a cognizable
offence, then the Magistrate instead of applying his mind
to the complaint for deciding whether or not there is
sufficient ground for proceedings may direct the police for
investigation.
Therefore, considering all these aspects, the complaint
discloses the commission of cognizable offence. Therefore,
considering the nature of offence it needs to be sent to
police for investigation under section 156(3) of CrPC.”
12. Dr. Abhishek Singhvi, learned senior counsel
appearing on behalf of the appellants has relied upon
the following decisions of this Court to assail thePage 12
12
aforesaid order passed by the Magistrate: Devarapall
Lakshminarayana Vs. V. Narayana Reddy & Ors.,
(1976) 3 SCC 252, and Ram Dev Food Products Pvt.
Ltd. Vs. State of Gujrat, reported in (2015) 6 SCC
439.
13. Further, it was submitted by the learned counsel for
the appellants that there is no merit in the
complainant’s (respondent No.2) contention that the
transactions from her trading account were
unauthorized. Trading from the complainant’s trading
account were being carried out by her husband as
admitted by the complainant in the complaint made
before the learned Magistrate, and at the time of
opening the trading account with appellant No.1, she
was made aware of all the risks involved and the
complainant had agreed to the same and understood
that she would be responsible for all the risks and
consequences of entering into trades. The relevant
clause of the Agreement entered into by complainant
is reproduced hereinbelow:Page 13
13
“2.11 The Client agrees and declares as follows: (i) The
Client shall be wholly responsible for all the investment
decisions and trades of the Client; (ii) The Client will pay
receive applicable daily margins; (iii) Payment of margins
by the Client does not necessarily imply complete
satisfaction of all dues; (iv) In spite of consistent having
paid margins, the Client may, on the closing of his trade,
be obliged to pay (or entitled to receive) such further sums
as the market price or an instrument of contract may
dictate; and (v) The failure of a Client to understand the
risk involved or the failure of the member to explain the
risk to the Client shall not render a contract as void or
voidable and the Client shall be and shall continue to be
responsible for all the risks and consequences for entering
into trades in Derivatives.”
14. In the light of the Agreement entered into between
complainant-respondent No.2 and the appellants, the
learned counsel for the appellants further averred
that criminal prosecution of the appellants could not
be allowed to continue because the criminal
prosecution requires a much higher standard of proof
beyond reasonable doubt, whereas civil matters
require lower standard of proof - preponderance of
probabilities. He drew our attention towards a very
recent pronouncement in the case of Lalitha Kumari
Vs. Govt. of Uttar Pradesh, reported in (2014) 2 SCCPage 14
14
1, wherein this Court held:
“Therefore, in view of various counter claims regarding
registration or non-registration, what is necessary is only
that the information given to the police must disclose the
commission of a cognizable offence. In such a situation,
registration of an FIR is mandatory. However, if no
cognizable offence is made out in the information given,
then the FIR need not be registered immediately and
perhaps the police can conduct a sort of preliminary
verification or inquiry for the limited purpose of
ascertaining as to whether a cognizable offence has been
committed. But, if the information given clearly mentions
the commission of a cognizable offence, there is no other
option but to register an FIR forthwith. Other
considerations are not relevant at the stage of registration
of FIR, such as, whether the information is falsely given,
whether the information is genuine, whether the
information is credible etc. These are the issues that have
to be verified during the investigation of the FIR. At the
stage of registration of FIR, what is to be seen is merely
whether the information given ex facie discloses the
commission of a cognizable offence. If, after investigation,
the information given is found to be false, there is always
an option to prosecute the complainant for filing a false
FIR.”
15. We are of the considered opinion that in the
present case a fact finding investigation was directed
by the impugned order. Consequently, FIR was
registered against appellants No.2 to 4 and against
RM (Vinod Kopar). The accused under Indian CriminalPage 15
15
Legal System, unless proved guilty shall always be
given a reasonable space and liberty to defend himself
in accordance with the law. Further, it is always
expected from a person accused of an offence pleading
not guilty that he shall co-operate and participate in
criminal proceedings or proceedings of that nature
before a court of law, or other Tribunal before whom
he may be accused of an ‘offence’ as defined in
Section 3(38) of the General Clauses Act, i.e., an act
punishable under the Penal Code or any special or
local law. At the same time, courts, taking cognizance
of the offence or conducting a trial while issuing any
order, are expected to apply their mind and the order
must be a well reasoned one.
16. Learned counsel for the appellants has further invited
our attention to the order of the High Court
dismissing the writ petitions. According to the learned
counsel for the appellants, the High Court, relying
upon the decision of this Court in Iqbal Singh
Marwah & Anr. Vs. Meenakshi Marwah & Anr.,Page 16
16
(2005) 4 SCC 370 and Rukhmni Narvekar Vs. Vijya
Statardekar and Ors., (2008) 14 SCC 1, found that
there was no substance in the argument that
respondent No.2 ought to have disclosed the
arbitration proceedings and the outcome thereof in
her complaint and that non-disclosure of the same
amounts to suppression of material facts. Learned
counsel for the appellants further submitted that the
High Court failed to appreciate that it was within its
inherent jurisdiction under Section 482 Cr.P.C. to
consider the correspondence exchanged as well as the
admitted documents under the arbitration
proceedings. In the case of All Cargo Movers (India)
(P.) Limited Vs. Dhanesh Badarwal Jain, (2007) 14
SCC 776, relied upon in paragraph 17 thereof, it was
held by this Court:
“We are of the opinion that the allegations made in the
complaint petition, even if given face value and taken to be
correct in its entirety, do not disclose an offence. For the
said purpose, This Court may not only take into
consideration the admitted facts but it is also permissible
to look into the pleadings of the plaintiff-respondent No.1
in the suit. No allegation whatsoever was made against
the appellants herein in the notice. What was contendedPage 17
17
was negligence and/or breach of contract on the part of
the carriers and their agent. Breach of contract simplicitor
does not constitute an offence. For the said purpose,
allegations in the complaint petition must disclose the
necessary ingredients therefor. Where a civil suit is
pending and the complaint petition has been filed one year
after filing of the civil suit, we may for the purpose of
finding out as to whether the said allegations are prima
facie cannot notice the correspondences exchanged by the
parties and other admitted documents. It is one thing to
say that the Court at this juncture would not consider the
defence of the accused but it is another thing to say that
for exercising the inherent jurisdiction of this Court, it is
impermissible also to look to the admitted documents.
Criminal proceedings should not be encouraged, when it is
found to be mala fide or otherwise an abuse of the process
of the Court. Superior Courts while exercising this power
should also strive to serve the ends of justice.
17. Learned counsel for the appellants further relied upon
few more judgments wherein it was well settled that
the test to be applied for quashing is, whether
uncontroverted allegations made, prima facie
establish the offence. This is because the Court
cannot be utilized for any oblique purpose and where,
in the opinion of the Court, the chances of an
ultimate conviction are bleak, no useful purpose will
be served by allowing the criminal prosecution to
continue. He relied upon the decisions of this Court in
Madhavrao Jiwanrao Scindia & Ors. Vs.
Sambhajirao Chandrajirao Angre & Ors., (1998) 1
SCC 692 (para 7-8); State of Haryana Vs. Bhajanlal,
1992 Supp (1) SCC 335 (para 102); Rajiv Thapar &
Ors Vs. Madan Lal Kapoor, (2013) 3 SCC 330 at para
30; Rishi Pal Singh Vs. State of Uttar Pradesh &
Anr. (2014) 7 SCC 215, at para 12-13.
18. Learned counsel for the respondents have not
rebutted this issue in any of his arguments. With the
meticulous understanding of the orders of the Courts
below in the instant case, we can see that general and
bald allegations are made in the context of appellant
No.1 who is a juristic person and not a natural
person. The Indian Penal Code, 1860, does not
provide for vicarious liability for any offence alleged to
be committed by a company. If and when a statue
contemplates creation of such a legal fiction, it
provides specifically therefor, e.g. Negotiable
Instruments Act, 1881. Further, reliance was made
on S.K. Alagh Vs. State of Uttar Pradesh & Ors.,
reported in (2008) 5 SCC 662, where at paragraph 16,
this Court observed that “Indian Penal Code, save and

except some provisions specifically providing therefor,
does not contemplate any vicarious liability on the part
of a party who is not charged directly for commission ofan offence.” Further in Maksud Saiyed Vs. State of

Gujrat & Ors., reported in (2008) 5 SCC 668, at
paragraph 13, this Court observed that where a
jurisdiction is exercised on a complaint petition filed
in terms of Section 156(3) or Section 200 of the Code
of Criminal Procedure, the Magistrate is required to
apply his mind. Indian Penal Code does not contain
any provision for attaching vicarious liability on the
part of the Managing Director or the Directors of the
Company when the accused is the Company. The
Learned Magistrate failed to pose unto himself the
correct question viz. as to whether the complaint
petition, even if given face value and taken to be
correct in its entirety, would lead to the conclusion
that the respondents herein were personally liable for
any offence. The Bank is a body corporate. Vicarious
liability of the Managing Director and Director would
arise provided any provision exists in that behalf in
the statute. Statutes indisputably must contain
provision fixing such vicarious liability. Even for the
said purpose, it is obligatory on the part of the
complainant to make requisite allegations which
would attract the provisions constituting vicarious
liability. In Thermax Limited & Ors. Vs. K. M.
Johny & Ors., (2011) 13 SCC 412, and in Sunil
Bharti Mittal Vs. Central Bureau of Investigation,
(2015) 4 SCC 609, at para 39, this Court held:
“Apart from the fact that the complaint lacks necessary
ingredients of Sections 405, 406, 420 read with Section
34 IPC, it is to be noted that the concept of `vicarious
liability' is unknown to criminal law. As observed earlier,
there is no specific allegation made against any person
but the members of the Board and senior executives are
joined as the persons looking after the management and
business of the appellant-Company”.
19. Learned counsel for the appellants has lastly argued
in favour of the partial quashment of the FIR against
the appellants on the contention that there was no
criminality on their behalf. It has been further
submitted that the allegations made against them do
not amount to disclosure of an offence and were made
with the purpose of harassing the appellants.
Additionally, learned counsel contends that vicarious
liability cannot be attributed to appellant Nos.2 to 4,
while relying upon R. Kalyani Vs. Janak C. Mehta &
Ors., (2009) 1 SCC 516, wherein it was held:
“Whereas, thus, no allegation whatsoever has been made
against the respondent No.1, the only allegation against
the respondent No.2 was that he had forwarded the said
letter dated 10.1.2002 to National Stock Exchange. The
act of forgery on/or fabrication of the said letter had been
attributed to Respondent No.3.
Respondent Nos.1 and 2 herein were sought to be
proceeded against on the premise that they are vicariously
liable for the affairs of the company.
As Mr. Mani had time and again referred to the allegations
relating to forgery of the said document dated 10.1.2002,
we may also notice a disturbing fact. Before lodging the
said First Information, a notice was issued by the
appellant against the respondents herein on 15.10.2002,
whereas the address of respondent Nos.1 and 2 were
shown as 404, Embassy Centre, Nariman Point, Mumbai -
400 021 and 302, Veena Chambers, 21, Dalal Street, Fort,
Mumbai - 400 001 respectively. However, in the complaint
petition, they were shown to be residents of Chennai”.
20. In Sharad Kumar Sanghi Vs. Sangta Rane, reported
in (2015) 12 SCC 781 (para 9-11) it is noted by this
Court:
“The allegations which find place against the Managing
Director in his personal capacity seem to be absolutely
vague. When a complainant intends to rope in a Managing
Director or any officer of a company, it is essential to make
requisite allegation to constitute the vicarious liability.”
21. Per contra, learned counsel for respondent No.2
submitted that the complaint has disclosed the
commission of an offence which is cognizable in
nature and in the light of Lalitha Kumari’s Case,
(supra), registration of FIR becomes mandatory. We
observe that it is clear from the use of the words "may
take cognizance" in the context in which they occur,
that the same cannot be equated with "must take
cognizance". The word "may" gives 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 that 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. It is
settled that when a Magistrate receives a complaint,
he is not bound to take cognizance if the facts alleged
in the complaint, do not disclose the commission of
an offence.
22. Learned counsel for the respondents further
submitted that there is a marked difference between
the civil nature of the arbitration proceedings and the
Criminal nature of the current proceedings and
relieving the RM on the same day when he had
tendered his resignation reflects the conduct whereby
conspiracy could be proved. It was further argued that
respondent No.2 has also sent the legal notice
requesting for making good the losses caused to her
by the appellants of which Criminal Court and the
Arbitration Tribunal took notice of. Thus, allegations
were already made against all the appellants. We find
no substance in the said submission being completely
opposed to the settled legal principles. Nevertheless,
we find patent illegalities which would result in
vitiating the entire investigation which would result in
miscarriage of justice.
23. Mr. Basava Prabhu Patil, learned senior counsel
appearing on behalf of respondent No.2 submitted
that respondent No.2 in her complaint had set out the
conduct of the appellants and alleged that their
conduct had caused wrongful loss to her and
wrongful gain to the appellants and other accused. It
is a fact that at the time of summoning of the
accused, the Courts must be careful to scrutinize the
evidence brought on record and in elicitation of
answers to find out the truthfulness of the allegations.
24. It appears to us that the appellants approached the
High Court even before the stage of issuance of
process. In particular, the appellants challenged the
order dated 04.01.2011 passed by the learned
Magistrate under Section 156(3) of Cr.P.C. The
learned counsel appearing on behalf of the appellants
after summarizing their arguments in the matter have
emphasized also in the context of the fundamental
rights of the appellants under the Constitution, that
the order impugned has caused grave inequities to the
appellants. In the circumstances, it was submitted
that the order is illegal and is an abuse of the process
of law. However, it appears to us that this order under
Section 156(3) of Cr.P.C. requiring investigation by
the police, cannot be said to have caused an injury of
irreparable nature which, at this stage, requires
quashing of the investigation. We must keep in our
mind that the stage of cognizance would arise only
after the investigation report is filed before the
Magistrate. Therefore, in our opinion, at this stage
the High Court has correctly assessed the facts and
the law in this situation and held that filing of the
petitions under Article 227 of the Constitution of India
or under Section 482 of Cr.P.C., at this stage are
nothing but premature. Further, in our opinion, the
High Court correctly came to the conclusion that the
inherent powers of the Court under Section 482 of
Cr.P.C. should be sparingly used. In these
circumstances, we do not find that there is any flaw in
the impugned order or any illegality has been
committed by the High Court in dismissing the
petitions filed by the appellants before the High Court.
Accordingly, we affirm the order so passed by the
High Court dismissing the writ petitions. The appeal
is dismissed.
………………………………….J
(Pinaki Chandra Ghose)
………………………………….J
(Amitava Roy)
New Delhi;
December 9, 2016. 

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