was taken against respondents No.1 to 16 for commission of
the offences under Sections 380, 411 and 120B IPC. There
are no averments in the complaint nor are there allegations
in the statement of the complainant or the witness P.B.
Dinesh as to when and how the theft was committed and the
order of the Magistrate dated 08.10.2010 taking cognizance
of the criminal case against respondents No.1 to 16 qua
documents No.1 to 54 is liable to be set aside.
It is held that the “document” as defined in Section 29 IPC is
a “moveable property” within the meaning of Section 22 IPC
which can be the subject matter of theft. The information
contained thereon in the documents would also fall within the
purview of the “corporeal property” and can be the subject
matter of the theft. The findings of the High Court is
modified to that extent.
In the facts and circumstances of the present case, use of
documents No.1 to 28 and documents No.29 to 54 by the
respondents in judicial proceedings is to substantiate their
case namely, “oppression and mismanagement” of the
administration of appellant-Company and their plea in other
pending proceedings and such use of the documents in the
litigations pending between the parties would not amount to
theft. No “dishonest intention” or “wrongful gain” could be
attributed to the respondents and there is no “wrongful loss”
to the appellant so as to attract the ingredients of Sections
378 and 380 IPC.
REPORTABLE
IN THE SUPREME COURT OF INDIA
CRIMINAL APPELLATE JURISDICTION
CRIMINAL APPEAL NO. 875 OF 2019
BIRLA CORPORATION LIMITED Vs ADVENTZ INVESTMENTS AND HOLDINGS LIMITED
Dated:May 09, 2019.
R. BANUMATHI, J.
Leave granted.
2. These appeals arise out of the judgment dated 15.05.2015
passed by the High Court of Calcutta in C.R.R. No.323 of 2011 in
1
and by which the High Court quashed the complaint of the
appellant-Company filed under Sections 379, 403 and 411 IPC
read with Section 120-B IPC qua documents No.1 to 28 of the
Schedule. Insofar as documents No.29 to 54 of the Schedule, the
High Court remitted the matter to the trial court to proceed with
the matter in accordance with law.
3. Being aggrieved by quashing of the complaint qua
documents No.1 to 28, the appellant-complainant has preferred
appeal (SLP (Crl.) No.9053 of 2016). Being aggrieved by
remitting the matter to the trial court qua documents No.29 to 54,
the respondents have filed appeal [SLP(Crl.) D No.6405 of 2019
and SLP(Crl.) D. No.6122 of 2019]. Though the SLPs by the
respondents are filed with delay, in the interest of justice, delay in
filing the SLPs are condoned.
4. These appeals arise out of the criminal complaint filed by
the appellant-Company which belong to Madhav Prasad Birla
(MPB) Group, now under the control of respondent No.17-
Harshvardhan Lodha who is the son of Rajendra Singh Lodha.
The impugned complaint has a background of multitude of
litigations filed by the respondents and others. Brief facts which
led to filing of these appeals are that one Priyamvada Devi Birla
2
(PDB) and her husband Madhav Prasad Birla (MPB) were in
control and management of several corporate entities which are
collectively referred to as the M.P. Birla Group of Industries. They
did not have any children. They have created several trusts for
undertaking charitable activities in particular on the education
side. PDB died on 03.07.2004 and MPB had predeceased her.
There is an ongoing dispute over legality of a Will allegedly
executed by Priyamvada Devi Birla (PDB) dated 18.04.1999 in
favour of Rajendra Singh Lodha and respondent No.17-son of
said Rajendra Singh Lodha. On 19.07.2004, a petition was filed
by Rajendra Singh Lodha, father of respondent No.17 for grant of
probate of the purported Will before the High Court at Calcutta.
The Probate Petition has been converted into a testamentary suit
for grant of Letters of Administration. Krishna Kumar Birla (KKB),
Basant Kumar Birla (BKB), Ganga Prasad Birla (GPB) and
Yashovardhan Birla (YB) have filed caveats to oppose the grant
of probate of the said Will dated 18.04.1999. The High Court held
that Ganga Prasad Birla (GPB) has a caveatable interest and
therefore, he has a right to oppose the grant of probate of the
said Will. The said testamentary suit is pending. Subsequently,
Krishna Kumar Birla (KKB), Kashi Nath Tapuriah (KNT) and
3
Pradip Kumar Khaitan (PKK) filed an application for grant of
probate of the 1982 Will of Madhav Prasad Birla (MPB) and
Ganga Prasad Birla (GPB); Kashi Nath Tapuriah (KNT) and
Pradip Kumar Khaitan (PKK) have filed an application for grant of
probate of the 1982 Will of Madhav Prasad Birla (MPB) before the
High Court at Calcutta and the said testamentary proceedings are
also pending.
5. Respondents No.1 to 5 who are shareholders of the
appellant Company and the trust-Birla Education Trust
represented by respondent No.6, had filed a Company petition in
CP No.1/2010 under Sections 397 and 398 of the Companies Act,
1956 before the Company Law Board (CLB) alleging oppression
and mismanagement being perpetrated by respondent No.17 who
is in administration and operation of the said Company. The
petition before the CLB has been filed through respondents No.6
to 9 who are shown as accused Nos.6 to 9 in the complaint.
6. On 24.03.2010, respondents No.12 to 16 have filed five civil
suits in the High Court of Calcutta (CS Nos.73-77/2010) under
Section 92 of the Code of Civil Procedure stating that in the year
1988, MPB and PDB had created five mutual and reciprocal
trusts to leave the estate covered by these trusts for charity.
These trusts are said to have been revoked just three days prior
to the alleged Will dated 18.04.1999. In the said suits in CS
No.73-77/2010, respondents No.12 to 16 have challenged the
revocation of the five trusts and prayed for recovery of the
properties of the public charity and for enforcement of the public
trust obligations of the properties vested in the said five trusts.
7. The company petition in CP No.1/2010 was filed before
CLB (now pending before NCLT) on 10.03.2010. In the said
company petition, documents No.1 to 54 have been filed. The
advance copy of the company petition and the copies of the
documents have been served upon the appellant-Company.
Document No.1-Internal Audit Report of the appellant Company
was filed in the civil suits filed by respondents No.12 to 16
challenging the revocation of the five trusts created by MPB and
PDB. Alleging theft and misappropriation of all the documents
No.1 to 54, the appellant Company filed the criminal complaint
under Sections 379, 403, 411 read with Section 120B IPC against
respondents No.1 to 16 and in the said complaint, appellant was
represented by Shri Samir Ganguly who is the Vice-President
(Legal) of the appellant-company. The gravamen of the
allegations in the complaint is that copies of 54 documents were
used before the Company Law Board (CLB) in C.P. No.1 of 2010
filed by respondents No.1 to 5 and Birla Education Trust
represented by respondent No.6. Copy of one such document
viz., Internal Audit Report of Chanderia Unit of the appellant
Company has been filed along with the interlocutory applications
filed by respondents No.13 to 16 in the civil suits which were filed
challenging the revocation of trusts and for recovery of properties
vested in the trust.
8. Let us understand the array of the parties. Each one of
respondents No.1 to 5 are the shareholders of the appellant-
Company. Respondent No.6-Pradip Kumar Khaitan is a reputed
lawyer and a trustee of Birla Education Trust. Respondent No.7-
Akshay Poddar is a Director of respondent No.1-Adventz
Investments & Holdings Limited. Respondent No.8-Santosh
Kumar Poddar is the Director of respondent No.3-Britex (India)
Limited. Respondent No.9-Bal Kishan Toshniwal is the Director
of respondent No.2-Govind Promoters Private Limited.
Respondent No.10-Birla Buildings Limited is in-charge of the
overall maintenance and upkeep of Birla Buildings where the
appellant Company is located. Respondent No.11-S. Chakrabarty
is the Chief Executive Officer of respondent No.10. Respondents
No.12 to 16 are ones who have filed the suits CS No.73-77/2010
under Section 92 CPC before the High Court at Calcutta
challenging the revocation of the trusts and for recovery of the
properties of the public charity. Respondent No.17-Harshvardhan
Lodha is the son of late Rajendra Singh Lodha and now the
Director-cum-Chairman of the appellant-Company against whom
C.P. No.1 of 2010 has been filed.
9. The allegations in the complaint in brief are as under:-
The complaint contains a list of fifty-four documents with
their brief description given in the Schedule of the complaint.
Document No.1 is an Internal Audit Report of Chanderia unit of
the appellant Company for the period ending November, 2009.
According to the appellant-complainant, keeping in mind the
confidential nature of the report, only six copies were made. Out
of which, five sets were sent to officers of the Company
individually named and one was retained by the Auditor. The
Internal Audit Report produced by the respondents is the copy of
one of the original five sets which was sent to one Bachh Raj
Nahar-Executive Director and Chief Executive Officer of the
Company. It is alleged that respondents No.1 to 16 have
stolen/misappropriated documents No.2 to 28 from the
appellant’s premises and that after photocopying the documents,
they were kept back in the appellant’s premises. It is alleged that
documents No.29 to 54 have been stolen/misappropriated from
the appellant’s premises and that after photocopying the
documents, they were not returned in the appellant’s premises
and the originals are still in the possession of the respondents.
Before making the complaint, the complainant-appellant had
conducted an internal enquiry to find out how these documents
reached the respondents.
10. These documents have at all times been kept at the
registered office of the appellant-Birla Buildings. These
documents have restricted access and are meant for the
consumption of designated and specified individuals only. These
documents include intra-company correspondence, internal audit
reports, agreements etc. in relation to operations of the Company.
The appellant-complainant alleges that respondents No.1 to 9
and 12 to 16 gained access to the Internal Audit Report and other
documents unauthorizedly and illegally with the aid of respondent
No.10-Birla Buildings Limited and respondent No.11-S.
Chakrabarty, CEO who are in-charge of upkeep of the building in
which the office of the appellant-complainant is situated.
11. The appellant further averred that by letter dated
29.03.2010, the Company through its advocate called upon the
advocate of respondents No.1 to 6 to disclose as to how they
obtained the documents mentioned in the Schedule of the
complaint. The respondents sent reply dated 30.03.2010 and
evaded giving any response to the said query on the premise that
there was no procedure of the Company Law Board (CLB) for
seeking such information. Appellant-Company sent a letter dated
17.04.2010 to respondents No.12 to 16 calling upon them to
explain as to how they came in possession of the documents; but
there was no reply. In the rejoinder filed by respondents No.1 to
6, they again failed and/or refused to state how they procured
these documents.
12. Appellant alleged that without the consent of the appellant
Company, the respondents/accused have dishonestly
stolen/misappropriated the documents and thus committed theft
and conspiracy to commit theft. It is also averred that the
respondents/accused dishonestly received or retained the stolen
property knowing and having reason to believe the same to be
stolen property and as such committed the offence punishable
under Section 411 IPC. It is alleged that the respondents/accused
9
thus dishonestly committed theft of the documents No.1 to 54
belonging to the appellant Company and misappropriated them
by converting the same for their own use and thus committed the
offences punishable under Sections 379, 403 IPC read with
Section 120-B IPC.
13. Complainant Shri Samir Ganguly was examined on
06.10.2010. Since some of the accused persons are residents
beyond local jurisdiction of the court, the trial court/the Magistrate
fixed the matter for enquiry under Section 202 Cr.P.C. on
08.10.2010. An employee of the appellant Company by name
P.B. Dinesh was examined on 08.10.2010. Considering the
averments in the complaint and the statement of Complainant
Shri Samir Ganguly and P.B. Dinesh, the learned Magistrate vide
order dated 08.10.2010 found that there are sufficient grounds for
proceeding against all the sixteen respondents and ordered
issuance of summons to the respondents for the offences
punishable under Sections 380, 411 and 120B IPC.
14. Aggrieved by the summoning order dated 08.10.2010,
respondents filed petition under Section 482 Cr.P.C. before the
High Court for quashing the criminal proceedings. Insofar as
10
compliance of the procedure in taking cognizance of the offences,
the High Court held that upon perusal of the averments in the
complaint and the statement of representative of the company
Shri Samir Ganguly and P. B. Dinesh, the Magistrate satisfied
himself that there were sufficient grounds for proceeding against
the accused and ordered to issue process against the sixteen
accused and the High Court held that on the procedural aspect,
the Magistrate did not commit any error. The High Court held that
since originals of documents No.1 to 28 are still in the custody of
the complainant, taking away the information contained in such
documents cannot be considered to be “movable property” and
the temporary removal of the documents for taking away the
contents thereon by itself cannot be the subject of the offence of
theft or dishonest misappropriation of property as well as
dishonest receiving of the stolen property. On those findings, the
High Court held that the complaint would not survive in respect of
the documents No.1 to 28. Insofar as documents No.29 to 54 are
concerned, the High Court held that as the originals of those
documents are missing, the complaint discloses ingredients of the
offence of theft. The High Court held that insofar as documents
No.29 to 54 are concerned, the complainant can proceed against
11
the respondents and accordingly remitted the matter to the trial
court.
15. On behalf of the appellant, Mr. C.A. Sundaram, learned
senior counsel submitted that the appellant discharged the initial
burden placed upon it by adducing pre-summoning evidence by
examining two witnesses and based upon the averments in the
complaint and the statement of witnesses Shri Samir Ganguly
and P.B. Dinesh, the Magistrate satisfied himself that there are
sufficient grounds for proceeding against the accused and the
High Court rightly held that there was no irregularity in the
procedure followed by the Magistrate in issuing process against
the respondents. The learned senior counsel submitted that
respondents No.1 to 9 have produced the documents before the
Company Law Board and respondents No.12 to 16 have filed
document No.1-Internal Audit Report which are highly confidential
documents and having not disclosed the source for the
accusation/possession of the documents, prima facie case in
dishonest removal of the documents have been made out and the
Magistrate rightly found that there are sufficient grounds for
proceeding against the respondents/accused and took the
12
cognizance of the offences under Sections 380, 411 and 120-B
IPC.
16. The learned senior counsel for the appellant submitted that
when the Magistrate has taken cognizance of the offence, the
High Court ought not to have substituted its views for the
summoning order passed by the Magistrate qua documents No.1
to 28. In support of his submission, reliance was placed upon
Smt. Nagawwa v. Veeranna Shivalingappa Konjalgi and Others
(1976) 3 SCC 736 and number of other decisions. It was
submitted that the High Court was not right in quashing the
criminal complaint qua documents No.1 to 28.
17. In appeal preferred by the respondents, they assailed the
order of issuance of process against the respondents by the
Magistrate contending that there were no adequate materials so
as to arrive at satisfaction of the Magistrate that there were
sufficient grounds for proceeding against the respondents. It was
submitted that the production of the copies of the documents in
the Company Law Petition and in the civil suits would not amount
to theft and the averments in the complaint and the statement of
the complainant and witness P.B. Dinesh would not attract the
ingredients of theft and there was no application of mind of the
13
learned Magistrate and the Magistrate mechanically issued
process against the respondents and the High Court ought to
have quashed the proceedings in toto.
18. On behalf of respondents No.1 to 5, Mr. Kapil Sibal, learned
senior counsel submitted that the complaint lacks specification as
to the time and manner of the commission of the offence and who
committed theft of the documents and when and how the same
was detected. The learned senior counsel contended that the
averments in the complaint do not make out a prima facie case of
theft and that the materials placed before the Magistrate were
inadequate and there were no sufficient grounds for proceeding
against the respondents and the High Court ought to have
quashed the entire proceedings in toto. The learned senior
counsel further submitted that document No.1-Internal Audit
Report of the appellant Company and other documents have
been filed by the respondents in the company petition before the
CLB to substantiate their case of oppression and
mismanagement, which can never amount to theft. Learned
senior counsel contended that when the documents are produced
in the proceedings before the Company Law Board for vindication
of their rights or defence, the criminal complaint filed by the
14
appellant is nothing but a “legal thumb screw” and the High Court
rightly quashed the criminal proceedings qua documents No.1 to
28. It was submitted that since there was neither application of
mind by the Magistrate nor any reasoned order has been passed
disclosing the satisfaction of the mind, the entire proceedings
before the Magistrate is liable to be quashed.
19. Mr. Mukul Rohatgi, learned senior counsel appearing on
behalf of respondent No.10 and Mr. Amit Desai, learned senior
counsel appearing on behalf of respondent No.11 submitted that
respondent No.10 has the overall responsibility of the
management and maintenance of the “building” in which the
office of the appellant is situated and there are no specific
allegations in the complaint as to how respondents No.10 and 11
had access to these documents which were in the custody of
designated employees of the complainant. It was submitted that
in the absence of allegations in the complaint to prove
commission of offence by respondents No.10 and 11, the mere
fact that respondents No.10 and 11 are responsible for the
maintenance of the building by itself, cannot lead to an inference
that respondents No.10 and 11 are responsible for the theft.
15
20. On behalf of respondent No.11, learned senior counsel
submitted that respondent No.11 is the CEO of respondent
No.10-Company and is overall administrative in-charge of the
company’s affairs in Birla Building and in the absence of specific
allegations against him, the mere official position of respondent
No.11 will not automatically make him vulnerable to criminal
prosecution. The learned senior counsel further submitted that
the doctrine of vicarious liability is based upon a legal
presumption and creates fictional liability and since the doctrine of
vicarious liability is not available (as a matter of law) in regard to
offences under the IPC, the complainant cannot rely upon a legal
presumption of an act or mensrea to proceed against respondent
No.11 in a criminal case.
21. On behalf of respondents No.13 to 16, Mr. Ranjit Kumar and
Mr. Debal Banerjee, learned senior counsel submitted that the
trial court had not applied its mind to the materials on record and
the averments in the complaint and the statement of the
witnesses do not make a prima facie case and the Magistrate
mechanically issued process against respondents No.12 to 16. It
was submitted that filing a document in the judicial proceedings
can never be termed as an act of “theft” or “dishonest
16
misappropriation” so as to attract the ingredients of Sections 380
and 411 IPC read with Section 120-B IPC.
22. Reiterating the contention of other respondents, Mr. K.V.
Viswanathan, learned senior counsel appearing on behalf of
respondent No.6 submitted that respondent No.6 is a well reputed
lawyer and a trustee of the Birla Education Trust which is a
shareholder of the appellant Company. The learned senior
counsel further submitted that in the absence of specific
allegations against respondent No.6, he cannot be made
vicariously liable merely because he is adorning the position of
trustee in Birla Education Trust. It was submitted that the
complaint filed by the appellant is intended to arm twist the
respondents from ventilating the legitimate rights before the
appropriate judicial forum and in the absence of materials, the
proceedings initiated against respondent No.6 is liable to be
quashed.
23. On behalf of respondents No.7 to 9, Mr. Sidharth Luthra,
learned senior counsel submitted that absolutely there are no
averments as to how the said documents had gone out of the
possession of the appellant-complainant and mere possession of
the copy of the documents will not amount to theft nor would
17
amount to conspiracy. It was submitted that even assuming that
the evidence was illegally obtained, the same cannot be shut out
and it cannot amount to theft.
24. We have considered the submissions of the learned senior
counsel appearing on behalf of the appellant and the respondents
and carefully perused the impugned judgment and materials on
record.
25. The following questions arise for consideration in these
appeals:-
(i) Whether the allegations in the complaint and the
statement of the complainant and other materials before
the Magistrate were sufficient to constitute prima facie
case to justify the satisfaction of the Magistrate in
issuing process against the respondents?
(ii) Whether the respondents are right in contending that in
taking cognizance of the offences under Sections 380,
411 and 120-B IPC and ordering issuance of process
against the respondents is vitiated due to nonapplication
of mind?
(iii) Whether the High Court was right in quashing the
criminal proceedings qua documents No.1 to 28 on the
ground that mere information contained in the
documents cannot be considered as “moveable
18
property” and cannot be the subject of the offence of
theft or receipt of stolen property?
(iv) Whether filing of the documents in question in the
petition before the Company Law Board to substantiate
their case of oppression and mismanagement and
document No.1 in the civil suits challenging revocation
of the trust deeds would amount to theft justifying taking
cognizance of the offences?
(v) Whether there is dishonest moving of documents
causing wrongful loss to the appellants and wrongful
gain to the respondents?
(vi) Whether filing of documents in the judicial proceedings
can be termed as an act of theft causing wrongful gain
to oneself and wrongful loss to the opponent so as to
attract the ingredients of Section 378 IPC?
26. Complaint filed under Section 200 Cr.P.C. and enquiry
contemplated under Section 202 Cr.P.C. and issuance of
process:- Under Section 200 of the Criminal Procedure Code,
on presentation of the complaint by an individual, the Magistrate
is required to examine the complainant and the witnesses
present, if any. Thereafter, on perusal of the allegations made in
the complaint, the statement of the complainant on solemn
affirmation and the witnesses examined, the Magistrate has to get
himself satisfied that there are sufficient grounds for proceeding
19
against the accused and on such satisfaction, the Magistrate may
direct for issuance of process as contemplated under Section 204
Cr.P.C. The purpose of the enquiry under Section 202 Cr.P.C. is
to determine whether a prima facie case is made out and whether
there is sufficient ground for proceeding against the accused.
27. The scope of enquiry under this section is extremely
restricted only to finding out the truth or otherwise of the
allegations made in the complaint in order to determine whether
process should be issued or not under Section 204 Cr.P.C. or
whether the complaint should be dismissed by resorting to
Section 203 Cr.P.C. on the footing that there is no sufficient
ground for proceeding on the basis of the statements of the
complainant and of his witnesses, if any. At the stage of enquiry
under Section 202 Cr.P.C., the Magistrate is only concerned with
the allegations made in the complaint or the evidence in support
of the averments in the complaint to satisfy himself that there is
sufficient ground for proceeding against the accused.
28. In National Bank of Oman v. Barakara Abdul Aziz and
Another (2013) 2 SCC 488, the Supreme Court explained the
scope of enquiry and held as under:-
20
“9. The duty of a Magistrate receiving a complaint is set out in
Section 202 CrPC and there is an obligation on the Magistrate to
find out if there is any matter which calls for investigation by a
criminal court. The scope of enquiry under this section is
restricted only to find out the truth or otherwise of the allegations
made in the complaint in order to determine whether process has
to be issued or not. Investigation under Section 202 CrPC is
different from the investigation contemplated in Section 156 as it
is only for holding the Magistrate to decide whether or not there
is sufficient ground for him to proceed further. The scope of
enquiry under Section 202 CrPC is, therefore, limited to the
ascertainment of truth or falsehood of the allegations made in the
complaint:
(i) on the materials placed by the complainant before the
court;
(ii) for the limited purpose of finding out whether a prima
facie case for issue of process has been made out; and
(iii) for deciding the question purely from the point of view
of the complainant without at all adverting to any defence
that the accused may have.”
29. In Mehmood Ul Rehman v. Khazir Mohammad Tunda and
Others (2015) 12 SCC 420, the scope of enquiry under Section
202 Cr.P.C. and the satisfaction of the Magistrate for issuance of
process has been considered and held as under:-
“2. Chapter XV Cr.P.C. deals with the further procedure for
dealing with “Complaints to Magistrate”. Under Section 200
Cr.P.C, the Magistrate, taking cognizance of an offence on a
complaint, shall examine upon oath the complainant and the
witnesses, if any, present and the substance of such examination
21
should be reduced to writing and the same shall be signed by the
complainant, the witnesses and the Magistrate. Under Section
202 Cr.P.C, the Magistrate, if required, is empowered to either
inquire into the case himself or direct an investigation to be made
by a competent person “for the purpose of deciding whether or
not there is sufficient ground for proceeding”. If, after considering
the statements recorded under Section 200 Cr.P.C and the result
of the inquiry or investigation under Section 202 Cr.P.C, the
Magistrate is of the opinion that there is no sufficient ground for
proceeding, he should dismiss the complaint, after briefly
recording the reasons for doing so.
3. Chapter XVI Cr.P.C deals with “Commencement of
Proceedings before Magistrate”. If, in the opinion of the
Magistrate taking cognizance of an offence, there is sufficient
ground for proceeding, the Magistrate has to issue process
under Section 204(1) Cr.P.C for attendance of the accused.”
30. Reiterating the mandatory requirement of application of
mind in the process of taking cognizance, in Bhushan Kumar and
Another v. State (NCT of Delhi) and Another (2012) 5 SCC 424, it
was held as under:-
“11. In Chief Enforcement Officer v. Videocon International Ltd.
(2008) 2 SCC 492 (SCC p. 499, para 19) the expression
“cognizance” was explained by this Court as “it merely means
‘become aware of’ and when used with reference to a court or a
Judge, it connotes ‘to take notice of judicially’. It indicates the
point when a court or a Magistrate takes judicial notice of an
offence with a view to initiating proceedings in respect of such
offence said to have been committed by someone.” It is entirely
a different thing from initiation of proceedings; rather it is the
22
condition precedent to the initiation of proceedings by the
Magistrate or the Judge. Cognizance is taken of cases and not of
persons. Under Section 190 of the Code, it is the application of
judicial mind to the averments in the complaint that constitutes
cognizance. At this stage, the Magistrate has to be satisfied
whether there is sufficient ground for proceeding and not
whether there is sufficient ground for conviction. Whether the
evidence is adequate for supporting the conviction can be
determined only at the trial and not at the stage of enquiry. If
there is sufficient ground for proceeding then the Magistrate is
empowered for issuance of process under Section 204 of the
Code.”
31. Under the amended sub-section (1) to Section 202 Cr.P.C.,
it is obligatory upon the Magistrate that before summoning the
accused residing beyond its jurisdiction, he shall enquire into the
case himself or direct the investigation to be made by a police
officer or by such other person as he thinks fit for finding out
whether or not there is sufficient ground for proceeding against
the accused.
32. By Cr.P.C. (Amendment) Act, 2005, in Section 202 Cr.P.C.
of the Principal Act with effect from 23.06.2006, in sub-section (1),
the words “…and shall, in a case where accused is residing at a
place beyond the area in which he exercises jurisdiction…” were
inserted by Section 19 of the Criminal Procedure Code
(Amendment) Act, 2005. In the opinion of the legislature, such
23
amendment was necessary as false complaints are filed against
persons residing at far off places in order to harass them. The
object of the amendment is to ensure that persons residing at far
off places are not harassed by filing false complaints making it
obligatory for the Magistrate to enquire. Notes on Clause 19
reads as under:-
“False complaints are filed against persons residing at far off
places simply to harass them. In order to see that the innocent
persons are not harassed by unscrupulous persons, this clause
seeks to amend sub-section (1) of Section 202 to make it
obligatory upon the Magistrate that before summoning the
accused residing beyond his jurisdiction he shall enquire into the
case himself or direct investigation to be made by a police officer
or by such other person as he thinks fit, for finding out whether or
not there was sufficient ground for proceeding against the
accused.”
33. Considering the scope of amendment to Section 202
Cr.P.C., in Vijay Dhanuka and Others v. Najima Mamtaj and
Others (2014) 14 SCC 638, it was held as under:-
“12. ….The use of the expression “shall” prima facie makes the
inquiry or the investigation, as the case may be, by the
Magistrate mandatory. The word “shall” is ordinarily mandatory
but sometimes, taking into account the context or the intention, it
can be held to be directory. The use of the word “shall” in all
circumstances is not decisive. Bearing in mind the aforesaid
principle, when we look to the intention of the legislature, we find
that it is aimed to prevent innocent persons from harassment by
24
unscrupulous persons from false complaints. Hence, in our
opinion, the use of the expression “shall” and the background
and the purpose for which the amendment has been brought, we
have no doubt in our mind that inquiry or the investigation, as the
case may be, is mandatory before summons are issued against
the accused living beyond the territorial jurisdiction of the
Magistrate.”
Since the amendment is aimed to prevent persons residing
outside the jurisdiction of the court from being harassed, it was
reiterated that holding of enquiry is mandatory. The purpose or
objective behind the amendment was also considered by this
Court in Abhijit Pawar v. Hemant Madhukar Nimbalkar and
Another (2017) 3 SCC 528 and National Bank of Oman v.
Barakara Abdul Aziz and Another (2013) 2 SCC 488.
34. The order of the Magistrate summoning the accused must
reflect that he has applied his mind to the facts of the case and
the law applicable thereto. The application of mind has to be
indicated by disclosure of mind on the satisfaction. Considering
the duties on the part of the Magistrate for issuance of summons
to accused in a complaint case and that there must be sufficient
indication as to the application of mind and observing that the
Magistrate is not to act as a post office in taking cognizance of
the complaint, in Mehmood Ul Rehman, this Court held as under:-
25
“22. ….the Code of Criminal Procedure requires speaking order
to be passed under Section 203 Cr.P.C. when the complaint is
dismissed and that too the reasons need to be stated only briefly.
In other words, the Magistrate is not to act as a post office in
taking cognizance of each and every complaint filed before him
and issue process as a matter of course. There must be
sufficient indication in the order passed by the Magistrate that he
is satisfied that the allegations in the complaint constitute an
offence and when considered along with the statements
recorded and the result of inquiry or report of investigation under
Section 202 Cr.P.C., if any, the accused is answerable before the
criminal court, there is ground for proceeding against the
accused under Section 204 Cr.P.C., by issuing process for
appearance. The application of mind is best demonstrated by
disclosure of mind on the satisfaction. If there is no such
indication in a case where the Magistrate proceeds under
Sections 190/204 Cr.P.C., the High Court under Section 482
Cr.PC. is bound to invoke its inherent power in order to prevent
abuse of the power of the criminal court. To be called to appear
before the criminal court as an accused is serious matter
affecting one’s dignity, self-respect and image in society. Hence,
the process of criminal court shall not be made a weapon of
harassment.”
35. In Pepsi Foods Ltd. and Another v. Special Judicial
Magistrate and Others (1998) 5 SCC 749, the Supreme Court has
held that summoning of an accused in a criminal case is a serious
matter and that the order of the Magistrate summoning the
accused must reflect that he has applied his mind to the facts of
26
the case and law governing the issue. In para (28), it was held as
under:-
“28. Summoning of an accused in a criminal case is a serious
matter. Criminal law cannot be set into motion as a matter of
course. It is not that the complainant has to bring only two
witnesses to support his allegations in the complaint to have the
criminal law set into motion. The order of the Magistrate
summoning the accused must reflect that he has applied his
mind to the facts of the case and the law applicable thereto. He
has to examine the nature of allegations made in the complaint
and the evidence both oral and documentary in support thereof
and would that be sufficient for the complainant to succeed in
bringing charge home to the accused. It is not that the Magistrate
is a silent spectator at the time of recording of preliminary
evidence before summoning of the accused. The Magistrate has
to carefully scrutinise the evidence brought on record and may
even himself put questions to the complainant and his witnesses
to elicit answers to find out the truthfulness of the allegations or
otherwise and then examine if any offence is prima facie
committed by all or any of the accused.”
The principle that summoning an accused in a criminal case is a
serious matter and that as a matter of course, the criminal case
against a person cannot be set into motion was reiterated in
GHCL Employees Stock Option Trust v. India Infoline Limited
(2013) 4 SCC 505.
36. To be summoned/to appear before the Criminal Court as an
accused is a serious matter affecting one’s dignity and reputation
27
in the society. In taking recourse to such a serious matter in
summoning the accused in a case filed on a complaint otherwise
than on a police report, there has to be application of mind as to
whether the allegations in the complaint constitute essential
ingredients of the offence and whether there are sufficient
grounds for proceeding against the accused. In Punjab National
Bank and Others v. Surendra Prasad Sinha 1993 Supp (1) SCC
499, it was held that the issuance of process should not be
mechanical nor should be made an instrument of oppression or
needless harassment.
37. At the stage of issuance of process to the accused, the
Magistrate is not required to record detailed orders. But based on
the allegations made in the complaint or the evidence led in
support of the same, the Magistrate is to be prima facie satisfied
that there are sufficient grounds for proceeding against the
accused. In Jagdish Ram v. State of Rajasthan and Another
(2004) 4 SCC 432, it was held as under:-
“10. ….The taking of cognizance of the offence is an area
exclusively within the domain of a Magistrate. At this stage, the
Magistrate has to be satisfied whether there is sufficient ground
for proceeding and not whether there is sufficient ground for
conviction. Whether the evidence is adequate for supporting the
conviction, can be determined only at the trial and not at the
28
stage of inquiry. At the stage of issuing the process to the
accused, the Magistrate is not required to record reasons.”
38. Extensive reference to the case law would clearly show that
the allegations in the complaint and complainant’s statement and
other materials must show that there are sufficient grounds for
proceeding against the accused. In the light of the above
principles, let us consider the present case whether the
allegations in the complaint and the statement of the complainant
and other materials before the Magistrate were sufficient enough
to constitute prima-facie case to justify the Magistrate’s
satisfaction that there were sufficient grounds for proceeding
against the respondents-accused and whether there was
application of mind by the learned Magistrate in taking
cognizance of the offences and issuing process to the
respondents.
39. Respondents No.1 to 5 are minority shareholders in the
appellant-Company. Respondent No.6 is a lawyer and a trustee
of Birla Education Trust. Respondent No.6 had been empowered
to file petition before the CLB. Respondents No.7, 8 and 9 are
the Directors of respondents No.1, 3 and 2 respectively. On
10.03.2010, Company Petition CP No.1/2010 was filed before the
29
Company Law Board under Sections 235, 237, 247, 250, 397,
398, 402 and 403 of the Companies Act, 1956 by respondents
No.1 to 5 who are the shareholders of the appellant Company
alleging oppression and mismanagement. M/s Birla Education
Trust (represented by respondent No.6) is also one of the
petitioners in the Company Petition. Along with the Company
Petition, the copy of the documents in question i.e. documents
No.1 to 54 including document No.1-Internal Audit Report were
filed and advance copy of the Company Petition and copy of the
documents were given to the appellant.
40. On 24.03.2010, respondents No.12 to 16 have filed five civil
suits under Section 92 of Code of Civil Procedure before the High
Court of Calcutta being CS Nos.73-77 of 2010 challenging the
revocation of five public charitable trusts created by Madhav
Prasad Birla (MPB) and Priyamvada Devi Birla (PDB) in 1988.
Respondents No. 12 to 16 have averred that the trusts have
assets worth thousands of crores of rupees which are vested with
the trusts dedicated for charity. In the said suits, respondents
No.12 to 16 have challenged the revocation of the trusts and
sought for recovery of the property that are vested in the public
charity through the five trusts set up by MPB and PDB and the
30
said suits are pending. On 29.03.2010, five interlocutory
applications have been filed in the aforesaid suits praying for
interim reliefs and in those applications, respondents No.12 to 16
annexed photocopy of the document No.1-Internal Audit Report of
the Chanderia unit of Birla Corporation Limited for the period
ending November, 2009. About seven months thereafter on
04.10.2010, criminal complaint was filed by the appellant against
respondents No.1 to 16 under Sections 379, 403 and 411 read
with Section 120-B IPC alleging theft of the documents and
receipt of stolen property and dishonest misappropriation of the
documents. Of the sixteen accused, six are corporate entities and
rest are natural persons. Respondents No.1 to 5 are the
shareholders who filed the Company Petition CP No.1 of 2010.
Respondents No.12 to 16 are the plaintiffs who have instituted
civil suits challenging the revocation of the five trusts and for
recovery of the properties that are vested in the public charity.
41. Respondents No.3, 6, 12 and some of the other
respondents are the residents beyond the local limits of the trial
court – 10th Metropolitan Magistrate, Calcutta. Since number of
accused are residents beyond the local limits of the trial court, as
per amended provision of Section 202 Cr.P.C., it is obligatory
31
upon the Magistrate that before summoning the accused, he shall
enquire into the case or direct the investigation to be made by a
police officer or by such other person as he thinks fit for finding
out whether or not there are sufficient grounds for proceeding
against the accused. In the present case, the learned Magistrate
has opted to hold such enquiry himself.
42. The complaint alleges that the respondents have gained
unauthorized access and possession of the documents No.1 to
54. It is alleged that documents No.1 to 28 have been
stolen/misappropriated from the premises of the appellant and
that after photocopying the documents, they were kept back in the
premises. In so far as documents No.29 to 54, it is alleged that
they have been stolen/misappropriated and have not been
returned and are still in the possession of the respondents. It is
alleged that respondents No.1 to 16 had gained unauthorized
access and exercised to control over the said documents. It is
further alleged that by letter dated 29.03.2010, on being called
upon to disclose as to how the respondents had obtained the
documents, the respondents by letter dated 30.03.2010 evaded
making response to the query on the premise that there was no
procedure of the CLB for seeking such information.
32
43. The gist of the allegations in the complaint are:-
(i) Respondent No.10-Company is in-charge of day to day
maintenance of the building which houses office of the
complainant and others. Respondent No.11 is the CEO
In-charge of respondent No.10 and responsible for the
day to day administration of respondent No.10.
(ii) Respondents No.1 to 9 are in possession of
photocopies of documents No.1 to 28 and stated to be
in possession of originals of documents No.29 to 54;
(iii) Use of photocopies of documents No.1 to 24 by
respondents No.1 to 9 in the company petition before
the CLB and use of document No.1-Internal Audit
Report by respondents No.12 to 16 in the civil suits filed
by them;
(iv) The documents are highly confidential and meant for
use/consumption only of designated and specified
individuals of the appellant Company and the
respondents have gained unauthorized access to the
documents and exercise of control over the documents;
and
(v) Omission to explain the source of copies of documents
in spite of issuance of notice dated 29.03.2010 to
respondents No.1 to 9 and notice dated 01.04.2010 to
respondents No.12 to 16.
44. With reference to document No.1-Internal Audit Report of
Chanderia Unit, it is alleged that one copy of the original of
document No.1 was marked to Bachh Raj Nagar and it was
claimed to be still with them. With reference to documents No.2
33
to 28, in para No.(20) of the complaint, it is alleged that the
documents were kept in the premises on the 3rd and 4th floor with
the concerned individuals or their secretaries and the
respondents have gained unauthorised access and had control
over the documents. The allegations against the respondents is
that respondents No.10 and 11 are under the control and
management of the Birla Buildings and has security and the
overall responsibility of the management and maintenance of the
same. It is alleged that the respondents in connivance with
respondents No.10 and 11 have gained unauthorised access to
the documents and thus the documents have been stolen from
the premises and then misappropriated. The averments in the
complaint even if taken at its face value and accepted in its
entirety do not constitute prima facie offence under Section 378
IPC.
45. After referring to filing of CP No.1/2010 where the xerox
copies of the documents were annexed, the complaint alleges as
under:-
“9. ….The Company submits that the said documents are highly
confidential internal records and correspondence of Company
and its officers. These documents were at all time kept inside
the registered office of the Company at the said premises.
34
These documents have restricted access and are meant for the
perusal and consumption only of designated and specified
individuals. These documents and the information contained
therein is the property of company over which no unauthorized
person has any right.”
46. On 06.10.2010, Vice-President (Legal) - Power of Attorney
of the complainant Company, Shri Samir Ganguly was examined
as a representative of the Company under Section 200 Cr.P.C.
Shri Samir Ganguly has stated “that the accused persons have
filed various litigations before various forums. These accused
persons have committed a serious crime of theft of various
documents which I have mentioned in my compliant.” Shri Samir
Ganguly has further stated as under:-
“….Our office situated at Birla Building, 9/1, R.N. Mukherjee at
3rd & 4th Floor. Accused No.10 has full control of maintenance
and security to each and every floor….”
“.….In normal course, the accused persons could never have
access to those documents except by illegal means. The
documents are highly confidential like internal audit report of one
of our units which is not supposed to be in their possession.
Other accused persons have filed five civil suits basing on those
stolen documents, from which I apprehend that all accused
persons in connivance with each other have procured those
documents by theft……”
47. Being the Vice-President (Legal) and a representative of the
Company, Shri Samir Ganguly may not have personal knowledge
35
of the averments made in the complaint and he has not attributed
any specific overt act to any of the respondents. Shri Samir
Ganguly has only alleged that he apprehends that all the accused
persons in connivance with each other have procured the
documents. The allegations in the statement of the complainant
are vague and lack material particulars as to the commission of
the theft. Complainant Shri Samir Ganguly has neither attributed
to any facts nor material particulars as to the commission of theft.
48. Respondent No.10-Birla Buildings Limited is responsible for
the day to day affairs of the maintenance of the building.
Respondent No.11-S. Chakrabarty is the CEO of Respondent
No.10-Birla Buildings Limited. In the complaint, there are no
specific averments against respondents No.10 and 11 as to how
they had access to the 3rd and 4th floors of the building owned by
the appellant Company and as to how they are responsible in
moving the documents out of the possession of the appellant.
Likewise, no specific overt act of “dishonest removal” of the
documents is attributed to the other respondents. The mere fact
that respondents No.10 and 11 are responsible for security and
maintenance of the building cannot lead to an inference that
respondents No.10 and 11 are responsible for the theft.
36
49. So far as respondent No.11 who is the CEO of respondent
No.10-Company is concerned, it is stated that he is responsible
for the day to day affairs of respondent No.10-Company and the
complainant invoked the doctrine of vicarious liability. The
learned senior counsel Mr. Desai has submitted that for
proceeding against respondent No.11, the complaint must show
“active role” of the natural person. Reliance was placed upon
Sunil Bharti Mittal v. Central Bureau of Investigation (2015) 4
SCC 609, wherein it was held as under:-
“43. Thus, 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…..”
50. As rightly submitted by learned senior counsel for
respondents No.10 and 11, it is inconceivable that respondent
No.11, CEO of respondent No.10-Company, if committed the
offence of theft, would have been permitted to continue in that
profession. Be it noted, the complainant-appellant Company is
also a shareholder in respondent No.10-Company and had its
nominee Mr. S.N. Prasad on the Board of Directors of the
appellant at the relevant time till his death in December, 2012. It
is pertinent to note that no complaint has ever been made against
37
respondent No.11 against alleged theft or any other overt act. In
the absence of particulars or prima-facie case in the complaint or
the statement of Shri Samir Ganguly against respondents No.10
and 11, the satisfaction of the Magistrate appears to be on the
presumptive footing that respondents No.10 and 11 are in-charge
of maintenance of the building. Likewise, issuance of process to
other respondents is only on the presumptive footing that they
have filed copies of the documents in CP No.1/2010 and in the
civil suits filed challenging revocation of the trusts.
51. In his order dated 06.10.2010, the Magistrate observed that
since some of the accused persons are residents beyond the
local jurisdiction of the court, the matter further requires to be
enquired into under Section 202 Cr.P.C. and therefore, fixed the
matter for further enquiry on 08.10.2010. On 08.10.2010, P.B.
Dinesh, employee of the appellant Company was examined who
have stated that respondent No.14-Kumar Mangalam Birla is the
Chairman of Aditya Birla Group having their office in Mumbai;
respondent No.15-Sidharth Birla is also a part of that Company
and he resides at Alipore, Calcutta; respondent No.13-Rajendra
Prasad Pansari is a resident of Calcutta who has now joined Birla
Group. Witness P.B. Dinesh has stated that these respondents
38
have procured documents stolen from the appellant’s custody
and filed case before the Company Law Board on the basis of
those documents.
52. Based on the allegations in the complaint and the
statements of Shri Samir Ganguly and P.B. Dinesh, the
Metropolitan Magistrate took cognizance and directed issuance of
summons to respondents No.1 to 16. As pointed out earlier, as
per Notes on Clause 19, the object behind the amendment to
Section 202 Cr.P.C. is to ensure that innocent persons who are
residing at far off places are not harassed by unscrupulous
persons. The amendment therefore, makes it obligatory upon the
Magistrate that before summoning the accused residing beyond
the jurisdiction, the Magistrate has to enquire the case either
himself or direct investigation to be made by the police officer and
is required to apply his mind and record his satisfaction with
reasons.
53. As pointed our earlier, P.B. Dinesh had merely stated that
respondent No.14-Shri Kumar Mangalam Birla is the Chairman of
Aditya Birla Group having their office in Mumbai and respondent
No.15-Shri Sidharth Birla is a part of the Company and resides at
Alipore. P.B. Dinesh has also stated that respondent No.13-
39
Rajendra Prasad Pansari stays in Calcutta and that he was an
ex-employee of Birla Corporation and now he has joined Birla
Group. P.B. Dinesh has thus stated about residence of
respondent No.14 being at Mumbai and residence of respondents
No.13 and 15 at Calcutta. There are no specific allegations
against respondent No.14 or against any other respondents who
are residing outside the jurisdiction. Likewise, no specific
allegation as to how respondent No.14 or other respondents who
are residing outside the jurisdiction have gained entry into the
building of the appellant Company and committed theft of the
documents nor any specific allegation as to the alleged
conspiracy.
54. In the statement of P.B. Dinesh, there is only a bare
statement that respondents No.13 to 15 have filed case before
the Company Law Board that the documents are highly
confidential and that they have procured the documents stolen
from the custody of the appellant. There are no specific
allegations against respondents No.13 to 15. Likewise, there are
no specific allegations against the other accused who are residing
outside the jurisdiction of the court and how and when they
committed theft of the documents that how they entered into
40
conspiracy. Considering the various litigations pending between
the parties before issuing summons, the learned Magistrate ought
to have considered the complaint and statement of witnesses and
satisfied himself that there are prima facie materials showing the
ingredients of the offence of theft (house theft) and receipt of
stolen property.
55. While ordering issuance of process against the accused,
the Magistrate must take into consideration the averments in the
complaint, statement of the complainant examined on oath and
the statement of witnesses examined. As held in Mehmood Ul
Rehman, since it is a process of taking a judicial notice of certain
facts which constitute an offence, there has to be application of
mind whether the materials brought before the court would
constitute the offence and whether there are sufficient grounds for
proceeding against the accused. It is not a mechanical process.
56. As held in Chandra Deo Singh v. Prokash Chandra Bose
alias Chabi Bose and Another AIR 1963 SC 1430 and in a series
of judgments of the Supreme Court, the object of an enquiry
under Section 202 Cr.P.C. is for the Magistrate to scrutinize the
material produced by the complainant to satisfy himself that the
complaint is not frivolous and that there is evidence/material
41
which forms sufficient ground for the Magistrate to proceed to
issue process under Section 204 Cr.P.C. It is the duty of the
Magistrate to elicit every fact that would establish the bona fides
of the complaint and the complainant.
57. The order of the Magistrate dated 08.10.2010 reads as
under:-
“The representative of the complainant Company is present.
This court takes the case record up for enquiry under Section
202 Cr.P.C. itself. Witness P.B. Dinesh is examined during the
enquiry and his statement has been recorded. Purpose of the
enquiry seems to have been meted out. Perused the affidavit
filed for that purpose on behalf of the complainant company.
Perused the documents (both original and xerox copies)
suppolied and relied on by the complainant company in support
of its case. Considering all above I find sufficient grounds for
proceeding against all the sixteen accused persons for
commission of an offence under Sections 380, 411, 120B IPC.
Cognizance is taken. Issue summons accordingly upon the
accused persons fixing 10.12.2010 for S/R and appearance.
Requisites at once.”
For taking cognizance of the offence, the Magistrate thus inter
alia relied upon the statement of the complainant and P.B. Dinesh
to arrive at a conclusion that a prima facie case is made out
against the respondents. As discussed earlier, neither the
statement of the complainant nor the statement of P.B. Dinesh
42
contain the particulars as to the commission of the offence to
have satisfied the Magistrate that there were sufficient grounds
for proceeding against the accused. By perusal of the above
order passed by the Magistrate, we find absolutely nothing to
indicate application of mind in taking cognizance of the offence
against respondents No.1 to 16 including the respondents who
are residents beyond the jurisdiction of the court. Though
speaking or elaborate reasoned orders are not required at this
stage, there must be sufficient indication that there was
application of mind by the Magistrate to the facts constituting the
commission of offence.
58. There are no averments in the complaint nor allegations in
the statement of the complainant or witness P.B. Dinesh as to
when and how the theft was committed. The complaint has been
filed alleging commission of the offence punishable under
Sections 380, 411 and 120B IPC. The Magistrate has taken
cognizance under Sections 380, 411 and 120B IPC. The offence
under Section 380 IPC in the case instituted otherwise than on a
police report is a warrant case triable by the Magistrate under
Chapter XIX – Trial of warrant cases by Magistrates, XIX-B –
Cases instituted otherwise than on police report. For the offences
43
triable under Chapter XIX – trial of warrant cases by the
Magistrate, the court has to frame the charge. As per Section
212 Cr.P.C., the charge shall contain such particulars as to the
time and place of the alleged offence and the person against
whom or the thing in respect of which, the offence was committed
as are reasonably sufficient to give the accused notice of the
matter with which he is charged. In the present case, the
complaint lacks particulars as to time and the place of theft or the
person who has committed theft. There are no averments in the
complaint alleging that how the documents had gone out of the
possession of the complainant. There are only mere statement of
the complainant Shri Samir Ganguly that respondents No.12 to
16 have filed civil suits basing on the stolen documents and that
he apprehends that all the accused persons in connivance with
each other must have procured the documents by theft. In the
absence of particulars, by mere possession of the documents or
mere production of the documents in the Company Petition or
civil suits, it cannot be said that sufficient grounds were made out
to proceed against the accused or that the satisfaction of the
Magistrate was well founded justifying issuance of process.
44
59. As held in Pepsi Foods Limited, summoning the accused for
a criminal offence is a serious matter and the respondents are
answerable in the criminal court. The non-application of mind as
to the materials cannot be brushed aside as a procedural
irregularity. There is no indication in the order of the Magistrate
dated 08.10.2010 as to application of the mind and as to the
satisfaction of the Magistrate as to the sufficient ground for
proceeding against the respondents under Sections 380, 411 and
120-B IPC.
60. The High Court held that witness P.B. Dinesh has stated
about alleged involvement of some of the accused and there is no
fundamental error committed by the Magistrate in following the
procedure under Chapter XIX of the Criminal Procedure Code.
The High Court further observed that the flaw at the worst would
be a procedural irregularity. The order dated 08.10.2010 taking
cognizance of the offence under Sections 380, 411 and 120B IPC
against respondents No.1 to 16 are liable to be set aside. The
Magistrate who is conducting an investigation under Section 202
Cr.P.C. has full power in collecting the evidence and examining
the matter. We are conscious that once the Magistrate is
exercised his discretion, it is not for the Sessions Court or the
45
High Court to substitute its own discretion for that of the
Magistrate to examine the case on merits. The Magistrate may
not embark upon detailed enquiry or discussion of the
merits/demerits of the case. But the Magistrate is required to
consider whether a prima case has been made out or not and
apply the mind to the materials before satisfying himself that there
are sufficient grounds for proceeding against the accused. In the
case in hand, we do not find that the satisfaction of the Magistrate
for issuance of summons is well founded.
61. The object of investigation under Section 202 Cr.P.C. is “for
the purpose of deciding whether or not there is sufficient ground
for proceeding”. The enquiry under Section 202 Cr.P.C. is to
ascertain the fact whether the complaint has any valid foundation
calling for issuance of process to the person complained against
or whether it is a baseless one on which no action need be taken.
The law imposes a serious responsibility on the Magistrate to
decide if there is sufficient ground for proceeding against the
accused. The issuance of process should not be mechanical nor
should be made as an instrument of harassment to the accused.
As discussed earlier, issuance of process to the accused calling
upon them to appear in the criminal case is a serious matter and
46
lack of material particulars and non-application of mind as to the
materials cannot be brushed aside on the ground that it is only a
procedural irregularity. In the present case, the satisfaction of the
Magistrate in ordering issuance of process to the respondents is
not well founded and the order summoning the accused cannot
be sustained. The impugned order of the High Court holding that
there was compliance of the procedure under Section 202 Cr.P.C.
cannot be sustained and is liable to be set aside.
Production of copies of documents in the Company Petition
– whether would amount to theft:
62. So far as documents No.1 to 28 filed in the company
petition, the High Court held that since originals of
documents No.1 to 28 are still in the custody of the appellant
Company-complainant, temporary removal of those documents
and the subject of alleged removal was “the information”
contained in those documents, the same cannot be considered to
be “movable property”. The High Court took the view that such
temporary removal of documents and use of information cannot
be the subject of the offence of theft or dishonest
misappropriation of property as well as dishonest receiving of the
stolen property.
47
63. Insofar as documents No.1 to 28 are concerned, the point
falling for consideration is whether the temporary removal of the
documents and filing of photocopies and use of the
information/contents of the documents can be the subject matter
of theft.
64. Contention of the appellant is that the very act of moving the
documents out of the possession of the appellant-Company
would amount to theft. It was submitted that the loss need not be
caused by permanent deprivation of the property; but loss due to
theft may be caused even by temporary moving of the property. In
support of this contention, the learned senior counsel for the
appellants placed much reliance upon Pyare Lal Bhargava v.
State of Rajasthan AIR 1963 SC 1094. In the said case, wherein
the appellant-Pyare Lal Bhargava, a superintendent in the Chief
Engineer’s Office, at the instance of one Ram Kumar Ram got a
file from the Secretariat through a clerk and took the file to his
house, made it available to said Ram Kumar Ram who replaced
the same documents in the file with other papers and thereafter,
returned the file the next day. In the said case, the arguments
was advanced contending that appellant/accused Pyare Lal
Bhargava was one of the officers working in the department and
48
the facts do not constitute the offence of theft for the reason that
there was no intention to take it dishonestly as he had taken it
only for the purpose of showing the documents to Ram Kumar
Ram and returned it on the next day to the office and therefore,
he had not taken the said file out of the possession of any person.
Rejecting the said contention, the Supreme Court held that
“………To commit theft, one need not take movable property
permanently out of the possession of another with the intention
not to return it to him. It would satisfy the definition if he took any
movable property out of the possession of another person though
he intended to return it later on……..”. In the light of the ratio laid
down in Pyare Lal Bhargava, temporary removal of original
documents for the purpose of replicating the information
contained in them in some other medium would thus fulfill the
requirement of “moving” of property which is the actus reus of the
offence of theft as defined under Section 378 IPC.
65. In Pyare Lal Bhargava, yet another contention raised was
that the accused did not intend to take it dishonestly as he did not
receive any “wrongful gain” or caused any “wrongful loss” to any
other person. Rejecting the said contention, in Pyare Lal
Bhargava, the Supreme Court held as under:-
49
“8. ………. To commit theft one need not take movable property
permanently out of the possession of another with the intention
not to return it to him. It would satisfy the definition if he took any
movable property out of the possession of another person
though he intended to return it later on. We cannot also agree
with learned Counsel that there is no wrongful loss in the present
case. Wrongful loss is loss by unlawful means of property to
which the person losing it is legally entitled. It cannot be disputed
that the appellant unauthorizedly took the file from the office and
handed it over to Ram Kumar Ram. He had, therefore, unlawfully
taken the file from the department, and for a short time he
deprived the Engineering Department of the possession of the
said file. The loss need not be caused by a permanent
deprivation of property but may be caused even by temporary
dispossession, though the person taking it intended to restore it
sooner or later. A temporary period of deprivation or
dispossession of the property of another causes loss to the
other………...”
66. One of the foremost components of theft is that the subject
matter of the theft needs to be a “moveable property”. “Moveable
property” is defined in Section 22 IPC which includes a corporeal
property of every description. It is beyond doubt that a document
is a “moveable property” within the meaning of Section 22 IPC
which can be the subject matter of theft. A “document” is a
“corporeal property”. A thing is “corporeal” if it has a body,
material and a physical presence. As per Section 29 IPC,
“Document” denotes “any matter expressed or described upon
50
any substance by means of letters, figures or marks or by more
than one of those means, intended to be used, or which may be
used as evidence of that matter”. The first Explanation to Section
29 IPC provides that it is immaterial by what means or upon what
substance these are formed. This definition would include within
its ambit photocopy of a document. As per Explanation No.2 of
Section 29 IPC, letters, figures or marks shall be deemed to be
expressed by such letters, figures or marks within the meaning of
the Section. Such letters, figures or marks thus have a material
and physical presence. Therefore, it can also be inferred that the
said information would be deemed to fall within the purview of
“Document” – a corporeal property.
67. Information contained in a document, if replicated, can be
the subject of theft and can result in wrongful loss, even though
the original document was only temporarily removed from its
lawful custody for the purpose of extracting the information
contained therein. In the case of K.N. Mehra vs. State of
Rajasthan AIR 1957 SC 369, this Court held that gain or loss
contemplated need not be a total acquisition or a total deprivation
but it is enough if it is a temporary retention of property by the
51
person wrongfully gaining or a temporary keeping out of property
from person legally entitled.
68. The High Court, in our view, was not right in holding that the
replication of the documents or use of information in the
documents No.1 to 28 and the contents thereon are not corporeal
property and would not amount to theft qua documents No.1 to
28. The documents and the replication of the documents and the
contents thereon have physical presence and therefore, are
certainly “corporeal property” and the same can be the subject
matter of theft.
69. The main question falling for consideration is whether in the
facts and circumstances of the case in hand whether temporary
removal of the documents and using them in the litigations
pending between the parties would amount to theft warranting
lodging of a criminal complaint.
70. Admittedly, documents No.1 to 54 including the Document
No.1-Internal Audit Report of Chanderia unit of the appellant
Company has been filed by the respondents in the company
petition. These documents are intra-company correspondence,
internal audit reports, agreements, etc. in relation to the
52
operations of the appellant Company. Admittedly, these
documents have been produced in the company petition by the
shareholders of the appellant-Company to substantiate their case
of oppression and mismanagement by respondent No.17 and for
vindication of their rights. As discussed infra in the facts and
circumstances of the case in hand, in our view taking away of the
documents temporarily and using them in the pending litigations
between the parties would not amount to theft.
71. In the criminal complaint, by order dated 08.10.2010, the
Magistrate has taken the cognizance of the offence under Section
380 IPC - “Theft in dwelling house, etc.”. In order to constitute
theft, the following ingredients are essential:-
i. Dishonest intention to take property;
ii. The property must be moveable;
iii. It should be taken out of the possession of another
person;
iv. It should be taken without the consent of that
person;
v. There must be some removal of the property in
order to accomplish the taking of it.
72. Intention is the gist of the offence. It is the intention of the
taker which must determine whether taking or moving of a thing is
theft. The intention to take “dishonestly” exists when the taker
53
intends to cause wrongful loss to any other which amounts to
theft. It is an essential ingredient of the offence of “theft” that the
movable property should have been “moved” out of the
possession of any person without his consent. “Movable
property” is defined in Section 22 of IPC, which reads as under:-
“Movable property – The words “movable property” are
intended to include corporeal property of every description,
except land and things attached to the earth or permanently
fastened to anything which is attached to the earth.”
“Dishonestly” has been defined in Section 24 IPC, which reads as
under:-
“Dishonestly - Whoever does anything with the intention of
causing wrongful gain to one person or wrongful loss to
another person, is said to do that thing “dishonestly”.
“Wrongful gain” and “Wrongful loss” have been defined in Section
23 IPC which read as under:-
“Wrongful gain” - “Wrongful gain” is gain by unlawful means
of property to which the person gaining is not legally entitled.
“Wrongful loss” - “Wrongful loss” is the loss by unlawful
means of property to which the person losing it is legally
entitled.
Gaining wrongfully, losing wrongfully - A person is said to
gain wrongfully when such person retains wrongfully, as well
as when such person acquires wrongfully. A person is said to
lose wrongfully when such person is wrongfully kept out of any
54
property, as well as when such person is wrongfully deprived
of property.”
73. In the facts and circumstances of the case, it is to be seen in
using the documents in the litigation, whether there is “dishonest
intention” on the part of the respondents in causing “wrongful
loss” to the appellant Company and getting “wrongful gain” for
themselves. Respondents No.1 to 5 are the shareholders of the
appellant-Company and they have produced the photocopies of
the documents No.1 to 54 in the CLB proceedings which were
filed by them on the ground of oppression and mismanagement.
Merely because the respondents have produced the copies of the
documents in the CLB proceedings, it cannot be said that the
respondents have removed the documents with “dishonest”
intention. Copies of documents are produced in support of the
case of respondents No.1 to 5 and to enable the Court to arrive at
the truth in a judicial proceeding involving alleged oppression and
mismanagement in the affairs of the appellant Company by
respondent No.17. A person can be said to have “dishonest
intention” if in taking the property it is the intention to wrongful
gain by unlawful means or to cause wrongful loss by unlawful
means. As discussed earlier, the complaint does not allege that
55
there was any wrongful gain to the respondents or wrongful loss
to the appellant-Company so as to constitute ingredients of theft
under Section 378 IPC. The complaint only alleges that the copies
of the document were used in the CLB proceedings by
respondents No.1 to 5. There is no allegation of “wrongful gain”
to the respondents or “wrongful loss” to the appellant.
74. As pointed out earlier, documents No.1 to 54 are filed in the
Company Petition to substantiate their case of oppression and
mismanagement. Filing of documents in the CLB proceedings is
only to assert their claim of oppression and mismanagement of
the appellant Company. According to the respondents, there is a
bona fide dispute of oppression and mismanagement and the
documents No.1 to 54 are filed only to substantiate their case.
When a bona fide dispute exists between the parties as to
whether there is oppression and mismanagement, there is no
question of “wrongful gain” to the respondents or “wrongful loss”
to the appellant. In using the documents, when there is no
dishonest intention to cause “wrongful loss” to the complainant
and “wrongful gain” to the respondents, it cannot be said that the
ingredients of theft are made out.
56
75. As discussed earlier, respondents No.12 to 16 have filed five
civil suits challenging the cancellation of the trusts for recovery of
the property that had vested in public charity through the trust
deeds. Respondents No.12 to 16 have filed copy of document
No.1-Internal Audit Report of Chanderia Unit of the appellant
Company. By the time, the document was filed in the interlocutory
applications filed in the civil suits, the document was already filed
in CP No.1/2010. Here again, there is a bona fide dispute as to
the correctness of cancellation of the revocation of the trusts deed
and to substantiate the averments in the complaint and in the
interlocutory applications. It cannot be said that the respondents
No.1 to 16 had dishonest intention in using the documents so as
to cause “wrongful loss” to the appellant or “wrongful gain” to
themselves so as to attract the ingredients of theft under Section
378 IPC.
76. How the respondents had access to the documents may be
one thing. It may perhaps have bearing on the evidentiary value
to be attached to the documents. But to say that it amounts to
theft and seeking to prosecute the respondents is nothing but an
attempt to cow down their defence in the litigation or to deprive
the respondents of their valuable defence. In Pooran Mal v.
57
Director of Inspection (Investigation), New Delhi and Others
(1974) 1 SCC 345, it has been held by the Constitution Bench
that even in case of illegal search and seizure, the documents
obtained cannot be shut out from consideration as long as they
are relevant to the matters in issue. In the present case, the
documents are used in good faith in the legal proceedings i.e.
Company Petition filed by respondents No.1 to 5 alleging
oppression and mismanagement and the other suits are the civil
suits challenging the cancellation of the Trusts. These cases are
pending and both the parties are hotly contesting those cases.
Use of the documents in judicial proceeding by the respondents is
to substantiate the case of oppression and mismanagement of
the appellant-Company. Absolutely, no “dishonest intention” or
“wrongful gain” could be attributed to the respondents. Likewise,
there is no “wrongful loss” to the appellants so as to attract the
ingredients of Sections 378 and 380 IPC.
77. The intention under Section 24 IPC “dishonestly” must be to
cause “wrongful loss” to the other or to have “wrongful gain” for
oneself. In determining whether a person has acted dishonestly
or not, it is the intention which has to be seen. By filing the
documents in the legal proceedings, there is no intention on the
58
part of the respondents to cause “wrongful loss” to the appellant
nor intention to make “wrongful gain” to themselves. Filing of the
documents in the legal proceedings is only to vindicate their stand
in the company petition. We find much force in the submission of
the learned senior counsel, Mr. Sibal, appearing for respondents
No.1 to 5 that the attempt of the appellant in trying to prosecute
the respondents appears to arm-twist the respondents in an
attempt to shut out the relevant material documents before the
CLB proceedings by prosecuting respondents No.1 to 9 and in
the civil suits.
78. Whether respondents should have called for the
documents in accordance with various provisions:-
Contention on behalf of the appellant is that despite there being
adequate provisions under Section 10-E of Companies Act and
Section 91 Cr.P.C. relating to summoning of documents and of
discovery, interrogatories and inspection of documents under
Order XI CPC, the respondents resorted to dubious methods to
procure the documents and thus, cannot skirt the liability for their
actions by contending that since the documents were used for a
legal proceeding, it cannot be theft.
79. Undoubtedly, adequate provisions have been provided in all
the laws concerned with the instant case to enable a party to a
suit or the concerned court to require the production of all
documents and materials considered necessary or desirable for
proper adjudication of the dispute at hand. If a document in
possession is not produced after notice, there is further
presumption under Section 114 illus.(g) that the evidence if
produced would have been unfavourable to the opposite party.
80. The respondents herein are alleged to have used the
documents of appellant-Corporation without calling upon them to
produce the documents in accordance with law. Of course, the
litigants and their counsel are expected to comply with the
provisions of law and court discovery rules in producing the
documents. But merely because the respondents have not called
for the documents as per the provisions, it cannot be said that
they have committed “theft”. It may be that the respondents have
not issued notice calling upon the appellant-Corporation to
produce the documents or may not have taken steps in
accordance with various provisions of law calling upon them to
produce documents. This may probably be the point to be raised
in appropriate proceedings so as to advance arguments as to the
evidentiary value to be attached to the documents. But it would
be far-fetched to say that the respondents have dishonestly
removed the documents and committed the offence of theft and
that they are to face criminal prosecution for theft of the
documents. It would only be an arm-twisting tactics to deprive
the respondents from pursuing their defence with relevant
evidence and materials. Since we have held that there are no
sufficient ground for proceeding against the respondents and that
the order of issuance of summons itself is not sustainable, we are
not inclined to go further deep on this aspect; nor express our
views as to the evidentiary value to be attached to the documents
in the relevant proceedings. Lest, it would amount to expressing
our views in the pending proceedings between the parties.
81. Whether the criminal prosecution against the
respondents be permitted to continue:- As discussed earlier,
admittedly the parties are entangled in several litigations.
Allegations of theft and misappropriation are relating to the
documents No.1 to 28 and the documents No.1 to 54 which are
filed in the company petition and filing of Internal Audit Report in
the civil suits. As discussed earlier, there are no specific
allegations as to when, where and how the respondents have
61
committed theft; nor are there specific allegations against the
respondents accused. Allegations in the complaint, being taken at
their face value, do not disclose prima-facie case nor the
ingredients of the offence of house theft or misappropriation are
made out.
82. Exercise of power under Section 482 Cr.P.C. envisages
three circumstances in which the inherent jurisdiction may be
exercised namely:- (i) to give effect to an order under the Code;
(ii) to prevent abuse of the process of court; and (iii) to otherwise
secure the ends of justice. Inherent jurisdiction under Section 482
Cr.P.C. though wide has to be exercised sparingly, carefully and
with caution.
83. It is well settled that the inherent jurisdiction under Section
482 Cr.P.C. is designed to achieve a salutary purpose and that
the criminal proceedings ought not to be permitted to degenerate
into a weapon of harassment. When the Court is satisfied that the
criminal proceedings amount to an abuse of process of law or
that it amounts to bringing pressure upon the accused, in
exercise of the inherent powers, such proceedings can be
quashed. In Smt. Nagawwa v. Veeranna Shivalingappa Konjalgi
62
and Others (1976) 3 SCC 736, the Supreme Court reviewed the
earlier decisions and summarised the principles as to when the
issue of process can be quashed and held as under:-
“5. ………….. Once the Magistrate has exercised his discretion it
is not for the High Court, or even this Court, to substitute its own
discretion for that of the Magistrate or to examine the case on
merits with a view to find out whether or not the allegations in the
complaint, if proved, would ultimately end in conviction of the
accused. These considerations, in our opinion, are totally foreign
to the scope and ambit of an inquiry under Section 202 of the
Code of Criminal Procedure which culminates into an order
under Section 204 of the Code. Thus it may be safely held that in
the following cases an order of the Magistrate issuing process
against the accused can be quashed or set aside:
(1) 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;
(2) 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;
(3) 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
(4) 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.
63
The cases mentioned by us are purely illustrative and provide
sufficient guidelines to indicate contingencies where the High
Court can quash proceedings.”
84. In State of Haryana and Others v. Bhajan Lal and Others
1992 Supp (1) SCC 335, the Supreme Court considered the
scope of inherent powers of the Court and after referring to earlier
decisions, the Supreme Court enumerated categories of cases by
way of illustration where the extraordinary jurisdiction under
Article 226 of the Constitution of India can be exercised by the
High Court to prevent abuse of process of Court or otherwise to
secure ends of justice. It was held that “where the uncontroverted
allegations made in the FIR or complaint and the evidence
collected in support of the same do not disclose the commission
of any offence and make out a case against the accused.”
85. In the present case, it is one thing to say that the documents
have not been secured in accordance with the law and no value
could be attached to them. But merely because documents have
been produced from one source or other, it cannot be said that
documents have been dishonestly removed to obtain “wrongful
gain” to the respondents and cause “wrongful loss” to the
appellant. Where it appears that the criminal complaint has been
filed to bring pressure upon the respondents who are shown as
accused in the criminal case, the complaint is to be quashed.
86. In Indian Oil Corpn. v. NEPC India Ltd. and Others (2006) 6
SCC 736, the Supreme Court after observing that there is a
growing tendency in business circles to convert powerful civil
disputes in criminal cases held as under:-
“14. While no one with a legitimate cause or grievance should be
prevented from seeking remedies available in criminal law, a
complainant who initiates or persists with a prosecution, being
fully aware that the criminal proceedings are unwarranted and
his remedy lies only in civil law, should himself be made
accountable, at the end of such misconceived criminal
proceedings, in accordance with law. One positive step that can
be taken by the courts, to curb unnecessary prosecutions and
harassment of innocent parties, is to exercise their power under
Section 250 CrPC more frequently, where they discern malice or
frivolousness or ulterior motives on the part of the complainant.
Be that as it may.”
87. In Madhavrao Jiwajirao Scindia and Others v. Sambhajirao
Chandrojirao Angre and Others (1988) 1 SCC 692, it was held
that “when a prosecution at the initial stage is asked to be
quashed, the test to be applied by the court is as to whether the
uncontroverted allegations as made prima-facie establish the
offence.” It was further held that “while considering the matter,
the court is to take into consideration any special feature which
65
appear in a particular case showing whether or not it is expedient
in the interest of justice to permit a prosecution to continue.”
88. The FIR or the criminal proceedings can be quashed if the
allegations do not make out a prima-facie case or allegations are
so improbable that no prudent person would ever reach a just
conclusion that there are sufficient grounds for proceeding
against the accused. So far as, the allegation of retention of the
documents No.29 to 54, in our view, no allegation as to when and
how the original documents were removed and retained by the
respondents. Where on the admitted facts no prima-case case is
made out against the accused for proceeding or when the
Supreme Court is satisfied that the criminal proceedings amount
to abuse of process of court, Supreme Court has the power to
quash any judicial proceedings in exercise of its power under
Article 136 of the Constitution of India. In our view, the present
case is a fit case for exercising the power in quashing the criminal
complaint qua the documents No.29 to 54 also.
89. We summarise our conclusions as under:-
By the order of the Magistrate dated 08.10.2010, cognizance
was taken against respondents No.1 to 16 for commission of
the offences under Sections 380, 411 and 120B IPC. There
are no averments in the complaint nor are there allegations
in the statement of the complainant or the witness P.B.
Dinesh as to when and how the theft was committed and the
order of the Magistrate dated 08.10.2010 taking cognizance
of the criminal case against respondents No.1 to 16 qua
documents No.1 to 54 is liable to be set aside.
It is held that the “document” as defined in Section 29 IPC is
a “moveable property” within the meaning of Section 22 IPC
which can be the subject matter of theft. The information
contained thereon in the documents would also fall within the
purview of the “corporeal property” and can be the subject
matter of the theft. The findings of the High Court is
modified to that extent.
In the facts and circumstances of the present case, use of
documents No.1 to 28 and documents No.29 to 54 by the
respondents in judicial proceedings is to substantiate their
case namely, “oppression and mismanagement” of the
administration of appellant-Company and their plea in other
pending proceedings and such use of the documents in the
litigations pending between the parties would not amount to
theft. No “dishonest intention” or “wrongful gain” could be
attributed to the respondents and there is no “wrongful loss”
to the appellant so as to attract the ingredients of Sections
378 and 380 IPC.
Considering the facts and circumstances of the present case
and the number of litigations pending between the parties, in
our considered view, continuation of the criminal
proceedings would be an abuse of the process of the court.
The order of the Magistrate dated 08.10.2010 taking
cognizance of the offences and the issuance of summons to
respondents No.1 to 16 and the criminal proceedings
thereon are liable to be quashed.
90. In the result, the impugned judgment of the High Court
dated 15.05.2015 qua Documents No.29 to 54 is set aside and
the appeals arising out of SLP(Crl.) D.Nos.6405 and 6122 of
2019 preferred by the respondents are allowed. The appeal
arising out of SLP(Crl.) No.9053 of 2016 preferred by the
appellants qua Documents No.1 to 28 is dismissed.
…………………………..J.
[R. BANUMATHI]
…………………………..J.
[R. SUBHASH REDDY]
New Delhi;
May 09, 2019
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