1. The present petitioner has been filed by the petitionersoriginal accused nos.1 and 2 under Article 226 of the Constitution of India as well as under Section 482 of the Code of Criminal Procedure, 1973 for the following prayers : “(a) Be pleased to call for the records in Criminal Case No.21540 of 2010 pending before the Learned Second Additional Judicial Magistrate, Gandhinagar.
(b) Be pleased to quash and set aside the Order of Learned Chief Judicial Magistrate, Gandhinagar passed in Inquiry No.202 / 212 of 2008 dated 19/10/2010 and consequently be pleased to quash and set aside the proceedings in Criminal Case No. 21540 of 2010 pending before Learned Second Additional Judicial Magistrate, Gandhinagar.
(c) Be pleased to stay the proceedings initiated in Criminal Case No. 21540 of 2010 pending before the Learned Second Additional Judicial Magistrate, Gandhinagar pending hearing and disposal of the present Petition.
(d) Be pleased to pass such other orders as may be deemed fit and necessary in the interest of justice.”
2. Thus, the prayers have been made to stay the proceeding of Criminal Case No.21540/2010 and also to quash and set aside the order of the Chief Judicial Magistrate, Godhra passed in Inquiry Case Nos.202/201 & 121/2012 dated 19.10.2010 on the grounds stated in the memo of petition.
3. The facts giving rise to filing of the present petition briefly summarized are that the petitioner no.1Yes Bank Ltd., is a Company within the meaning of Companies Act, 1956 and a banking company within the meaning of the Banking Regulation Act, 1949 and is engaged in banking business of providing financial services to the customers. The representative of the petitioner no.1 approached the respondent no.2Company for such investment of the amount in Mutual Funds through the petitioner no.1Company in the year 200708. The respondent no.2 is said to have invested huge amount of Rs.1.00 crore through the petitioner no.1bank and same has been invested in various Mutual Funds as stated in the petition. It is stated that the petitioner no.1Company and the petitioner no.2 are said to have made the investments without any consent or approval of the respondent no.2, which has caused huge loss to the respondent no.2 Company. It is contended inter alia that the order passed by the Chief Judicial Magistrate, Godhra dated 12.10.2009 initiating inquiry under Section 156(3) of the Code of Criminal Procedure, 1973 was set aside in the proceeding of Criminal Revision Application No.123 of 2009 by the District & Sessions Court, Gandhinagar. Therefore, the allegations are that the petitioner no.2 without
to filing of the present complaint.
4. Heard learned Sr. Counsel, Mr.Mihir Joshi appearing with learned counsel, Mr.Padmaraj K. Jadeja for the petitioners, learned APP Mr.H.L. Jani for the respondent no.1State and learned counsel, Mr.Vivek Bajwa appearing with learned counsel, Mr.Nikunt Raval for the respondent no.2original complainant.
5. Learned Sr. Counsel, Mr.Joshi has pointedly referred to the details and submitted that the ingredients for the alleged offences are not fulfilled even if the allegations taken at the face value are that the investment made by the respondent no.2Company through the petitioner no.2 in equity or the mutual funds led to huge loss. However, he submitted that if due to global economic recession or other movement of the market, which was beyond the control of anyone including the petitioner, if any loss is occurred then, it would not amount to any offence. He has tried to submit that the petitioner no.1Company does not have any direct business benefit from the investment made in the Mutual Funds Companies and they are working only as agents and they do not have direct control over the Mutual Funds Company or market fluctuation and, therefore, if any loss is suffered, it would not be a cause for any complaint for the alleged offences. He submitted that the Indian economy during the said period in the year 200809 was going through turbulent times due to global recession, which would have an impact on the stock market and the investors in such market sensitive induces lost substantial money beyond the control of any one, for which, the complaint would not be justified.
6. Learned Sr. Counsel, Mr.Joshi referred to Annexure B, which is a complaint to the Chief Judicial Magistrate, Gandhinagar and submitted that the complaint as stated above has been ordered for further investigation under Section 156(3) of the Code by the Chief Judicial Magistrate, Gandhinagar vide order dated 11.10.2010. He submitted that Revision was preferred challenging the said order, however, inquiry report under Section 202 of the Code was made. He submitted that the examination of the complainant as required is a mandatory requirement of Section 202 of the Code and the complaint is based on a report under Section 202 of the Code. Therefore, it was submitted that non examination of the complainant, which is mandatory requirement, would vitiate the entire procedure. In support of his submission, he has referred to and relied upon the judgment of the Hon'ble Apex Court in case of Tula Ram & Ors. Vs. Kishore Singh, reported in AIR 1977 SC 2401, more particularly, the observation made in Para No.14. He, therefore, submitted that the allegations made are inherently incompatible. He submitted that the acknowledgment of the Mutual Funds amount goes to the account of the complainant and the present accused has not gained any benefit. He pointedly referred to the papers and submitted that the allegations have been made with regard to the operation of the Mutual Funds and the investment, however, the amount will directly get deposited in the account of the investors and the petitionerCompany as agent would get only some commission for the transaction as an agent. He, therefore, submitted that as there is no benefit accruing to the petitioners, there is no need for the alleged offences and in fact, mens rea, which is required, is not made out. He also referred to the provisions of alleged sections and submitted that the ingredients for the alleged offences are not fulfilled and, therefore, the present complaint may be quashed and set aside. He has also referred to and relied upon the judgment of the Hon'ble Apex Court in case of Parminder Kaur Vs. State of U.P. & Anr., reported in AIR 2010 SC 840 and tried to submit that if there is no dishonest intention on the part of the appellant, the prosecution was held to malicious. He referred to various observations made in this judgment.
7. Learned counsel, Mr.Vivek Bajwa appearing with learned counsel, Mr.Nikunt Raval for the respondent no.2original complainant has referred to the papers in detailed and submitted that the amount has been invested without any sense or consent of the respondent no.2original complainant and the allegations have been made for creating a forged document. He has referred to AnnexureA i.e. Criminal Case No.21540/2012 and submitted that it has been specifically averred in the said complaint that without any consent or approval, the forged stamp was made by the petitioner no.2 and has diverted the investment made by the respondent no.2 knowingfully well that the market was low. It was submitted that when they are claiming and providing such financial services to the customers, it is expected of such financial adviser, who are managing the funds of the investors that they would be having some idea about the market force, over all fluctuation and economic condition. Therefore, he submitted that it is over a simplification that it was only due to economic recession or market fluctuation if the loss is occurred, the petitioners could not be held liable or responsible. He pointedly referred to further details in order to emphasize that not only the forged stamp was applied to create a document but inspite of specific instructions that the amount invested in the Mutual Funds may be redeemed and it has been admitted by the petitioner no.2. He emphasized that it is admitted that the petitioner no.2 had prepared the memo of such redemption slip to obtain the signature and then there was no reason for diverting the funds, which would reflect the mens rea. It was submitted that on getting signature on such slip and, thereafter, when it has been misused, the intention is evident. He has referred to affidavitinreply and submitted that the petitioner no.1bank had helped the petitioner no.2 to achieve her business target for personal gain. In fact, the petitioner no.2 had done this manipulation only with a view to personal gain or the redemption. He emphasized that in fact, the redemption of the Mutual Funds, in specific Standard Chartered Classic Equity Funds, in which, the bank mandate was illegally changed by the petitioner no.2 from Bank of Baroda to Yes Bank led to the inflow of considerable sum of money in Yes Bank and thereby had helped the petitioner no.2 to achieve target, which speaks voluminous about her own intention. Therefore, he submitted that when the proceedings are initiated, it cannot be permitted to be scuttled in exercise of inherent powers under Section 482 of the Code and extra ordinarily jurisdiction and the petitioner will have ample opportunity of being heard to defend the case. But if on the other hand, this proceedings are quashed, it will be an insult to the injury caused to the respondent no.2 and, therefore, it may not be entertained.
8. Learned counsel, Mr.Bajwa has also referred to and relied upon the judgment of the Hon'ble Apex Court in case of Mahesh Choudhary Vs. State of Rajasthan & Anr., reported in JT 2009(3) 314 and submitted that when the chargesheet primafacie discloses the commission of offence, the Court should not interfere. He emphasized the observation made on Para No.14 of this judgment that “Although allegations contained in the complaint petition may disclose a civil dispute, the same by itself may not be a ground to hold that the criminal proceedings should not be allowed to continue. For the purpose of exercising its jurisdiction, the superior courts are also required to consider as to whether the allegations made in the FIR or Complaint Petition fulfill the ingredients of the offences alleged against the accused.” He, therefore, submitted that the Court is not required to scrutinize the material and evidence at this stage.
9. He has also referred to and relied upon the judgment of the Hon'ble Apex Court in case N. Devindrappa Vs. State of Karnataka, reported in JT 2007(7) SC 35. He again emphasized that merely because an act is given rise to both civil and criminal liability, it does not mean that he cannot have a criminal liability.
10. He has also referred to and relied upon the judgment of the Hon'ble Apex Court in case of H.S. Bains Vs. The State (Union Territory of Changigarh), reported in AIR 1980 SC 1883 and submitted that the Hon'ble Apex Court has considered the provisions of Section 156(3) of the Code and exercised the discretion for the Magistrate and it has been observed that “if he adopts the third alternative, he may hold or direct an inquiry under Section 202 if he thinks fit. Thereafter he may dismiss the complaint or issue process, as the case may be.” He, therefore, submitted that there may not be a ground for interference.
11. He has also referred to and relied upon the judgment of the Hon'ble Apex Court in case of Ajay Mehna & Anr. Vs. Durgesh Babu & Ors., reported in 2001(1) Supreme (Cr.) 606 and submitted that again scope of Sections 200 and 202 of the Code has been considered in similar circumstance where the petitions to quash the proceedings were filed. It has been observed that “primafacie material can be looked into.”
12. He has also referred to and relied upon the judgment of the Hon'ble Apex Court in case of Rajesh Bajaj Vs. State NCT of Delhi & Ors., reported in AIR 2009 SC 1216 and submitted that as observed by the Hon'ble Apex Court in this judgment that “It is not necessary that a complainant should verbatim reproduce in the body of his complaint all the ingredients of the offence he is alleged.” It was submitted that the splitting up of the definition into different components of the offence to make a meticulous scrutiny is not required. He emphasized the observation made in Para No.9 of the said judgment that “It is not necessary that a complainant should verbatim reproduce in the body of his complaint all the ingredients of the offence he is alleging. Nor is it necessary that the complainant should state in so many words that the intention of the accused was dishonest or fraudulent. Splitting up of the definition into different components of the offence to make a meticulous scrutiny, whether all the ingredients have been precisely spelled out in the complaint, is not the need at this stage. If factual foundation for the offence has been laid on the complaint the Court should not hasten to quash criminal proceedings during investigation stage merely on the premise that one or two ingredients have not been stated with details.” He, therefore, submitted that the present petition may not be entertained.
13. In view of the rival submissions, it is required to be considered whether the present petition can be entertained or not for the prayers which have been asked with regard to the stay of the proceedings and for quashing the complaint.
14. The submissions have been made at length by both the sides and as recorded hereinabove, learned Sr.
Counsel, Mr.Joshi has tried to emphasize with regard to the normal course of business activity of the petitioners and also submitted that while providing the financial services in normal course of business, the investments of the customers like the respondent no.2Company have been made in the Mutual Funds, however due to recession, market force and fluctuation etc. it may have some loss due to reasons beyond the control of the petitioners. It was emphasized that they are only providing service and they do not have control over either market force or the Mutual Funds Company. Therefore, when they have no personal gain as the amounts are directly credited in the respective accounts of the customers like the respondent no.2, no mens rea could be attributed. It is in this context, the submissions have been made that the ingredients for the alleged offences have not been made out. Therefore, the entire transaction at the most may have civil liability but such complaint would not be justified is required to be examined visavis the rival submissions, which are also made by learned counsel, Mr.Vivek Bajwa appearing with learned counsel, Mr.Nikunt Raval. Bare perusal of the complaint and the papers would make the position clear that if the submissions made by learned Sr. Counsel, Mr.Joshi are accepted at the face value, it would rather be over simplification of the entire transaction. It is required to be mentioned that if they are providing the financial services to its customer, the customer would be guided with regard to the investments. Therefore, when the customer had asked for the redemption of the investment in the mutual funds and when the petitioner no.2 is said to have prepared a slip, the investment should have been redeemed. However instead of such redemption, the mandate of the bank has been changed from Bank of Baroda to Yes Bank (the petitioner no.1Company) and the amount has been diverted or used. Therefore, it would not be a valid justification to come forward saying that the amount has been invested but it has resulted into loss due to market fluctuation and, hence, it would require a close scrutiny. If such a thing is accepted, it would be adding an insult to the injury caused to the respondent no.2 being investors, relying upon the Experts, who are rendering such services. The petitioners, who render such services, claiming to be a Company registered under the Banking Regulations Act providing such financial services is expected to have a some idea about the economic recession, market force, over all condition including fluctuation. In the facts of the case, inspite of the instruction regarding the redemption when the mandate has been changed so as to convert the investment funds would certainly a ground to raise some doubt, which would be a subject of scrutiny at an appropriate stage before the trial court. Therefore, without expressing any opinion, it would not be desirable to jump to any conclusion at this stage in the present petition. At the same time, the submission that there is no mens rea or the ingredients for the offences are not attracted cannot be accepted at the face value as rightly emphasized by learned counsel.
15. A useful reference can be made to the observation made by the Hon'ble Apex Court in a judgment Rajesh Bajaj (supra), more particularly, the observations quoted hereinabove that it is not necessary to reproduce the entire ingredients in the complaint and the splitting up of the definition into different components of the offence to make a meticulous scrutiny is not required. Again the submissions have been made with much emphasis referring to Section 202 of the Code. The Hon'ble Apex Court has made observations that if the allegations in the complaint make out a primafacie case, the defences are not required to be considered at this stage. The Hon'ble Apex Court in a judgment in case of H.S. Bains (supra) has clearly referred to the scheme of the provisions of Section 156(3) as well as Sections 202 and 204 of the Code and it has been observed that the inquiry under Section 202 could be ordered or on the basis of the report, the Magistrate may proceed further dismissing the complaint or may issue process. It is in this background, the prayer with regard to quashing of the Criminal Case No.21540/2010 or the order passed in Inquiry No.202/121 of 2008 dated 19.10.2010 cannot be entertained.
16. It is required to be mentioned that the order passed in Inquiry Case No.202/2010 dated 19.10.2010 is now sought to be challenged at this stage. Therefore, considering the material and the rival submissions, the present petition cannot be entertained without allowing the matter to have its own recourse when both the side will have opportunity. In fact, it is necessary and desirable that both the side should have opportunity in further proceeding before the trial court, which can decide on proper appreciation and scrutiny of the evidence. Moreover, the Hon'ble Apex Court has expressed the word of caution in such situation and has clearly observed in a judgment in the case of Inder Mohan Goswami & Anr. v. State of Uttaranchal & Ors., reported in (2007) 12 SCC 1 as under: “The powers possessed by the High Court under Section 482 of the Code are very wide and the very plenitude of the power requires great caution in its exercise. The Court must be careful to see that its decision in exercise of this power is based on sound principles. The inherent power should not be exercised to stifle a legitimate prosecution. The High Court should normally refrain from giving a prima facie decision in a case where all the facts are incomplete and hazy, more so, when the evidence has not been collected and produced before the Court and the issues involved, whether factual or legal, are of such magnitude that they cannot be seen in their true perspective without sufficient material. Of course, no hard andfast rule can be laid down in regard to cases in which the High Court will exercise its extraordinary jurisdiction of quashing the proceedings at any stage.”
17. Therefore, at this stage it would not be desirable to quash the criminal case No.21540/2010 as prayed in exercise of extra ordinary jurisdiction under Article 226 of the Constitution of India or in exercise of inherent powers under Section 482 of the Code, which is very limited. In catena of judicial pronouncement, the Hon'ble Apex Court has time and again expressed the word of 'caution” that it has to be exercised with care and circumspection. If such powers are exercised lightly in such cases, it would amount to permit one of the side to scuttle the judicial process at the threshold without any material. On the other hand, if it is allowed to proceed, it will give sufficient opportunity to both sides as stated above and it cannot be said that any such complaint or the proceedings initiated are either malafide or by way of abuse of the process of the Court. The contentions which have been raised with regard to mens rea or the ingredients will have to be culled out from the totality of the facts and material, which will be considered at an appropriate stage by the trial court, which cannot be assumed either way in the present proceeding.
18. Therefore, the present petition deserves to be dismissed and accordingly stands dismissed. Notice is discharged. Adinterim relief granted earlier stands vacated.
Sd/
(RAJESH H.SHUKLA, J.)
FURTHER ORDER
After the order was pronounced, learned counsel, Mr.Padamraj Jadeja has requested for stay of the operation of the order stating that otherwise the matter may proceed further for recording of the evidence. However, learned counsel, Mr.Nikunt Raval has opposed the same. In the circumstances, operation of such order is stayed upto 26th September, 2012.
/patil
Sd/
(RAJESH H.SHUKLA, J.)