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REPORTABLE

IN  THE SUPREME COURT OF INDIA CRIMINAL APPELLATE JURISDICTION

CRIMINAL APPEAL NO. 488 OF 2013 (Arising out of SLP (CRL.) No.3086 of 2010)

M/s. GHCL Employees Stock Option Trust                   …..Appellant(s)

Versus

M/s India Infoline Limited                                ….Respondent(s)     

With

  CRIMINAL APPEAL NO.489 OF 2013    (Arising out of SLP(Crl.)No.3091 of 2010)

M/s. GHCL Employees Stock Option Trust                   …..Appellant(s)

Versus

Nilesh Shivji Vikamsey            …..Respondent(s)

CRIMINAL APPEAL NO.490 OF 2013 (Arising out of SLP(Crl.)No.3112 of 2010)

M/s. GHCL Employees Stock Option Trust                   …..Appellant(s)

Versus

Venkataraman Rajamani                               …..Respondent(s)

CRIMINAL APPEAL NO. 491 OF 2013 (Arising out of SLP(Crl.)No.3113 of 2010)

M/s. GHCL Employees Stock Option Trust                   …..Appellant(s)

Page 2

Versus

Nimish Ramesh Mehta                      …..Respondent(s)

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            CRIMINAL APPEAL NO. 492 OF 2013  (Arising out of SLP(Crl.)No.3120 of 2010)

M/s. GHCL Employees Stock Option Trust                   …..Appellant(s)

Versus

Arun Kumar Purwar                                                 …..Respondent(s)   

CRIMINAL APPEAL NO . 493 OF 2013 (Arising out of SLP(Crl.)No.3213 of 2010)

M/s. GHCL Employees Stock Option Trust                  …..Appellant(s)    

Versus

Nirmal Bhanwarlal Jain                                           …..Respondent(s)

CRIMINAL APPEAL NO. 494  OF 2013  (Arising out of SLP(Crl.)No.3217 of 2010)

M/s. GHCL Employees Stock Option Trust                  …..Appellant(s)

Versus

Kranti Sinha                                                          ….Respondent(s)

J U D G M E N T

M.Y. EQBAL, J.

Leave granted.

2. Since these seven appeals arose out of the common order  

passed  by  the  Delhi  High  Court  in  seven  Criminal  Miscellaneous  

Cases  filed  by  the  respondents,  the  same have been heard and  

disposed of by this common judgment.

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3. The  aforesaid  seven  Criminal  Miscellaneous  Cases  were  

filed in the High Court challenging the order dated 27th September,  

2008 passed by the Metropolitan Magistrate, New Delhi whereby he  

had summoned the respondents to face trial under Sections 415,  

409, 34, 120B of the Indian Penal Code (IPC) on a complaint filed by  

the  appellant.   These  Criminal  Miscellaneous  Cases  were  filed  

separately in the High Court  on behalf  of  the Company, namely,  

India  Infoline  Limited,  and  by  the  Managing  Director,  Company  

Secretary and other Directors of the said Company.

4. The appellant had filed a complaint before the Metropolitan  

Magistrate  alleging  commission  of  offences  under  the  

aforementioned Sections of IPC.  The brief facts of the case as set  

out in the complaint are as follows:  The complainant  opened a  

Demat  Account  with  respondent  No.  1  Company,  namely,  India  

Infoline Limited in 2007 and placed orders from time to time for  

purchase of  shares  and also made payments  against  its  running  

account  with  the  Company.   The  Company  allegedly  claimed  

outstanding debit of Rs.10.48 crores against the complainant in its  

Demat Account with it.   The said Company was having a lien on  

20,46,195 shares  purchased by the complainant  in  that account.  

The  respondent-Company  being  accused  No.  1  informed  the  

complainant  about  the aforesaid debit.   The complainant  cleared  

the amount outstanding against it by making payment of Rs.10.48  

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crores by a cheque.  Later on, it transpired that the correct debit  

against the complainant was Rs.10,22,77,522/-.  It was alleged that  

the  respondent-Company  dishonestly  received  a  sum  of  

Rs.25,22,477.53 from the complainant by making false demand.  It  

was  further  alleged  by  the  complainant  that  on  receipt  of  the  

amount  of  Rs.10.48  crores  the  respondent-accused  were  under  

legal obligation to transfer the shares purchased by the complainant  

from the Pool Account to its Demat Account but instead of doing  

that  and  refunding  the  excess  amount  of  Rs.25,22,477.53,  they,  

vide letter dated 14th May, 2008 asked the complainant to clear the  

debit of 5 companies, namely, (i) Carissa Investments Pvt. Ltd. (ii)  

Altar  Investments  Pvt.  Ltd.  (iii)  Oval  Investments  Pvt.  Ltd.  (iv)  

Dalmia Housing Finance Ltd. (v) Dear Investment Pvt. Ltd.  in terms  

of  its   letter  dated  1st March,  2008  failing  which  they  would  

regularize the aforementioned 5 accounts by selling the stock of the  

complainant.  The complainant alleged that since no letter dated 1st  

March, 2008 had been written by the complainant to the accused, it  

denied the averments made in their  letter dated 14th May, 2008.  

The complainant further alleged that they met respondents Nos. 2  

to 7, namely, the Managing Director, the Company Secretary and  

the Directors of respondent No. 1 Company and requested to refund  

the excess amount and transfer its shares to Demat Account but  

nothing was done.   The complainant, therefore,  alleged that the  

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respondents have committed criminal breach of trust and cheating,  

inasmuch as they have sold off 8,76,668 shares of the complainant  

on 23rd June, 2008 and misappropriated the entire sale proceeds.

5. The  Metropolitan  Magistrate  after  considering  the  

allegations made in the complaint, documents placed on the record  

and the evidence led by the witnesses, and after being satisfied that  

a  prima  facie  case  is  made  out,  directed  issuance  of  summons  

against  the  respondents  to  face  trial  under  the  aforementioned  

Sections of IPC.

6. Aggrieved by  the said order  passed by the Metropolitan  

Magistrate,  New  Delhi,  the  respondents  filed  separate  petitions  

before the Delhi High Court challenging the issuance of summons  

against  the  Company,  the  Managing  Director,  the  Company  

Secretary and the Directors of the Company.  The High Court by the  

impugned  order  held  that  issuance  of  summons  against  

respondents  Nos.  2  to  7,  namely,  the  Managing  Director,  the  

Company Secretary and the Directors of the Company cannot be  

sustained  and  the  same  are  liable  to  be  set  aside.   So  far  as  

respondent No. 1 Company is concerned, the High Court held that  

issuance of summons as against the Company under Section 415  

IPC also  cannot  be  sustained.   The learned Magistrate  has been  

directed  to  proceed with  the trial  against  respondent  No.  1 M/s.  

India Infoline Limited under other Sections of IPC.

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7. Dissatisfied with the aforesaid order passed by the High  

Court,  the  complainant  has  preferred  these  appeals  by  special  

leave.

8. Mr. Rakesh Tiku, learned senior counsel appearing for the  

appellant assailed  the impugned order passed by the High Court as  

being illegal and wholly without jurisdiction.  Learned counsel first  

contended that the High Court has gravely erred in law in taking  

into  consideration  probable  defence  of  the  accused,  which  was  

tendered at the time of the hearing of the petitions under Section  

482 Cr.P.C. questioning the legality of the summoning order passed  

by the learned Magistrate.  Learned counsel submitted that the High  

Court  has  failed  to  appreciate  that  the  allegations  against  the  

Managing Director, Company Secretary and other Directors of the  

Company (accused Nos. 2 to 7) in the original complaint were not  

based on any vicarious  liability  but  on the specific  allegations of  

their  having  conspired  together  to  cheat  and  commit  breach  of  

trust, which is supported by documentary evidence.  According to  

the learned senor counsel, the High Court exceeded its jurisdiction  

under Section 482 Cr.P.C. by entering into the merits of the case  

observing that there were no material against the accused so as to  

proceed against them under Sections 406, 409, 420, 477A, 34 and  

120B of  I.P.C.  Learned counsel  submitted that  the appellant  is  a  

registered  Trust  created  by  M/s.  G.H.C.L.,  a  Company  registered  

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under the Companies Act, for the benefit of eligible employees of  

the  Company  for   transfer  of  Company’s  equity  shares.   It  was  

contended that accused Nos. 2 to 7, who were Managing Director,  

Company Secretary and Directors of the Company are involved in  

the day-to-day activities of  the Company and responsible  for the  

conduct  and  business  of  the  said  Company.    Lastly,  it  was  

submitted that there is a specific allegation and averment in the  

complaint  that  the  complainant  had  been  interacting  with  the  

Directors  of  the  Company  and,  therefore,  there  was  sufficient  

material for issuance of summons against them.  Learned counsel  

put reliance on the decisions of this Court in  Madhav Rao Jiwaji  

Rao Scindia  & Ors.  vs. Sambhajirao  Chandrojirao Angre &  

Ors. (1988)  1  SCC  692 and  S.K.  Alagh vs.  State  of  Uttar  

Pradesh & Ors. (2008) 5 SCC 662.

9. Per  contra,  Dr.  Abhishek  Manu  Singhvi,  learned  senior  

counsel appearing for the respondents in all the cases at the very  

outset  submitted  that  the  High  Court  has  correctly  quashed the  

criminal  proceedings  initiated against  the Managing Director,  the  

Company Secretary and  other Directors of the Company holding  

that   there  cannot  be  vicarious  liability;  and   moreover,  the  

complainant  needs  to  specifically  allege  the  act/complaint  

of/against  the  individual  Director  and  what  role  such  individual  

Director  had  played.   Learned  counsel  submitted  that  the  

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complainant made a general averment that respondent Nos. 2 to 7  

were  responsible   for  day-to-day affairs  of  the  Company without  

specifying the exact role played by them in the transaction.  It was  

contended that the appellant-complainant is seeking to make new  

allegations supplemented by new documents to show that the order  

passed by the Magistrate summoning the respondents was justified.  

Nowhere in the complaint, the appellant-complainant mentioned the  

details of the alleged meeting and discussion with respondents Nos.  

2  to  7  or  even  alleged  that  which  of  the  appellant’s  authorized  

representative  met  the  Managing  Director  or  Directors  of  the  

Company and  vague allegations have been made stating that on  

numerous occasions  the appellant’s representative met  accused  

Nos. 2 to 7 which is not sufficient for  summoning them in a criminal  

proceedings.  Dr. Singhvi then contended that at the outset  the  

alleged letter dated 1st March, 2008 has been treated by the High  

Court for all practical purposes in favour of the respondents which is  

grossly  incorrect when the High Court by arriving at its decision has  

proceeded on the assumption that the letter dated 1st March, 2008  

was  not  written  by  Shri  Bhuwneswar  Mishra  to  the  respondent  

Company.   Referring  various  decisions  of  this  Court,  Dr.  Singhvi  

submitted that a mere bald statement that respondents Nos. 2 to 7  

were  in  charge  of  the  Company  and  responsible  for  day-to-day  

affairs of the Company is not sufficient,   but the complaint must  

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contain specific averments and allegations against each and every  

Director of the Company.  Lastly, it was contended that the dispute  

raised by the complainant  is  purely a civil  dispute.   Further,  the  

parties have already put their disputes before the Arbitrator and the  

arbitration  proceedings  are  pending  for  hearing.   Under  these  

circumstances, according to Dr.  Singhvi,  the criminal  proceedings  

are nothing but an abuse of the process of court.  Learned counsel  

put reliance  on the decisions of this Court in the cases of Madhav  

Rao Jiwaji Rao Scindia  & Ors.  vs. Sambhajirao  Chandrojirao  

Angre & Ors. (1988) 1 SCC 692,    S.K. Alagh vs. State of Uttar  

Pradesh & Ors. (2008) 5 SCC 662, M/s. Thermax Ltd. & Ors. vs.  

K.M.  Johny  &  Ors. 2011  (11)  SCALE  128  and  Standard  

Chartered Bank and Ors. Etc. vs. Directorate of Enforcement  

& Ors. AIR 2005 SC 2622.

10.  We  have  carefully  considered  the  submissions  of  the  

learned counsel on either side.  The various decisions relied upon by  

the learned counsel appearing on either side have been considered  

by us. It is not necessary to quote extensively  various passages  

from  several  judgments  except  a  few  which  are  relevant  and  

touching the issue  directly on the point raised in these appeals.

11. In order to appreciate the rival contentions made by the  

learned counsel,  we would like to refer  hereinbelow some of the  

relevant  paragraphs  of  the  complaint  in  order  to  find  out  as  to  

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whether  those  averments  constitute  offences  under  Sections  

406/409/420/477A/34/120B, IPC:

“2) That the Accused No. 1 is the Company  registered  under  the  Companies  Act,  1956.  The  accused  deal  in  securities  and  are  the  registered stock brokers and agents with the  National  Stock  Exchange  India  Ltd.  and  also  with Bombay Stock Exchange Ltd.  It also has  their branch office in Delhi.  That the Accused  Nos.  2 to 6 are the Directors  of  the accused  company and accused No. 7 is Secretary of the  accused No. 1 Company and are looking after  day to day affairs of the company and are/were  responsible  for  conduct  and  business  of  the  accused No. 1 and at some or the other time  interacted with the complaint.  The employees  of accused No. 1 act as per the direction given  by the accused Nos. 2 to 7 from time to time.  They in connivance with each other in order to  fulfill  the  malafide  intention  and  in  order  to  make  illegal  gain  has  cheated  the  petitioner  company and in breach of trust also sold the  shares worth Rs. Nine crores approximately.  

3) That the trustees of the Complainant at  the  request  of  the  GHCL  opened  a  Demat  Account No. (DP ID and Client ID is IN302269- 120107581) with accused No. 1 on 11.9.2007  and transferred the shares acquired in the said  account  after  entering  into  Broker-Client  Agreement.

4) That  after  opening  the  Demat  account,  the  complainant  kept  on  placing  orders  for  purchase of  share on the accused and made  payments  against  the  running  account  from  time to time.

5) That the Accused No. 1 vide letter dated  30.4.2008 informed the complainant that there  is  an  outstanding  debit  of  Rs.10.48  crores  against  the  complainant  and  the  20,46,195  quantity  of  GHCL  shares  acquired  by  the  Complainant  shall  be  free  from  lien  after  

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clearing  the  debit  in  their  account.   The  relevant portion of the letter is reproduced as  under:-

“It  is  hereby  informed  that  your  trading  account  with  client  code  EMPTRUST  is  having  an  outstanding  debit  of  Rs.10.48  crores.   Further,  the  20,46,195  quantity of GHCL share bought by  you  shall  be  free  from  lien  after  clearing the debit in the account.”

xxx xxx xxx

9)  That instead of transferring the share to the  Demat  account  of  the  complainant  and  refunding  the  excess  amount  of  Rs.25,22,477.53,  the  Accused  vide  a  letter  dated 14.5.2008 to the complainant asked to  clear the debit of the following companies:

(a) Carissa Investments Pvt. Ltd.

(b) Altar Investments Pvt. Ltd.

(c) Oval Investments Pvt. Ltd.

(d) Dalmia Housing Finance Ltd.

(e) Dear Investment Pvt. Ltd.

The  aforesaid  letter  by  the  Accused  though  dated  14.5.2008  was  received  by  the  complainant on 28.5.2008.   In fact, the above  said letter was predated as evident  from the  postal stamp on the envelop which bears the  date posting as 21.5.2008.

xxx xxx xxx

11) That  the  complainant  on  numerous  occasions  met  the  Accused  Nos.  2  to  7  and  requested to refund the excess amount and to  transfer its share to Demat Account, however  

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the  meetings  as  well  as  various  communications  with  the  accused  failed  to  bring  any  result.   The  complainant  also  requested  to  the  Accused  to  withdraw  the  fictitious  claim/adjustment as desired by it  in  their letter dated 14.5.2008.  However, instead  the  accused  vide  its  letter  dated  9.6.2008  again intimated the complainants to regularize  the  accounts  of  the  aforesaid  companies  by  selling  the  stocks  in  the  Complainant’s  accounts  as  instructed  vide  letter  dated  1.3.2008 alleged to  be signed by one of  the  trustees of the complainant Mr. Bhuwneshwar  Mishra.

xxx xxx xxx

14) That  all  the  accused  not  only  received  the  excess  amount  but  misappropriated  the  same, which they invariably refused to refund  and instead constantly started intimidating the  complainant to discharge the liabilities of  the  aforesaid companies mentioned in their letters  dated  14.5.2008  and  9.6.2008  whereas  the  complainant was under no such legal obligation  to clear the debits of these companies for the  reason that these five companies are separate  legal  entities  and  there  is  no  relation  whatsoever  with  the  complainant.   All  the  accused were fully aware that complainant is  under no obligation to pay any amount alleged  to be payable from the other companies.

xxx xxx xxx

16) That  it  has  now been  learned  that  the  accused  despite  having  no  legal  right,  has  illegally,  without  any  authorization,  and  in  order to cheat the complainant sold off 876668  shares on 23.6.2008 of the Complainant trust  in the open market.  The Complainant received  SMS on  24.6.2008  about  the  said  sale.   The  trust  has  suffered  a  huge  monetary  loss  on  account of this illegal disposal of stocks of the  complainant by the accused.  The shares were  

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lying/kept with the accused for the purpose of  DEMATINC, to account of complainant and as  evident from their own letter dated 30.4.2008  they had no lien once the payment was made  and  thus  accused  in  connivance  with  each  other  committed  breach  of  trust  and  caused  unlawful loss to the complainant and this also  offence of cheating.

17) That  accused  by  raising  the  false  and  fabricated debit note induced the complainant  to deposit a huge amount of Rs.10.48 crores,  which  as  per  their  own  admission  i.e.  statement of account is excess to the tune of  Rs.25,22,477.53.  The  accused  have  thereby  rendered  themselves  liable  to  be  prosecuted  by  this  Hon’ble  Court  under  Section  477A of  the Indian Penal Code.

18) That  the  accused  in  connivance  with  each  other  have  further  dishonestly  transferred/misappropriated funds obtained on  the  pretext  of  some unaccounted  debit  and  further  the  accused  despite  having  no  legal  right  has  illegally  without  any  authorization,  sold  off  876668  shares  on  23.6.2008  of  the  Complainant trust in the open market without  any  prior  intimation  to  the  complainant  and  has  misappropriated  the  sale  proceeds  for  wrongful gain since the shares never kept with  them in trust.  By disposing of the said shares  without any prior consent or intimation clearly  reflects  that  the  accused  dishonestly  misappropriated  the  shares  in  trust  with  the  Accused and thus liable to be prosecuted under  the  provisions  of  section  406  of  the  Indian  Penal Code, 1860.”

12. From bare  perusal  of  the  complaint  and  the  allegations  

made therein,  we do not  find in  any of  the paragraphs that  the  

complainant  has  made  specific  allegations  against  respondent  

Nos.2  to  7.   In  paragraph  2  of  the  complaint,  it  is  alleged  that  

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respondent Nos.2 to 6 are looking after the day-to-day affairs of the  

Company.   With  whom  the  complainant  or  its  authorized  

representative interacted has also not been specified.  Although in  

paragraph 11 of the complaint it is alleged that the complainant on  

numerous  occasions  met  accused  Nos.2  to  7  and  requested  to  

refund  the  amount,  but  again  the  complainant  has  not  made  

specific allegation about the date of  meeting and whether it was an  

individual meeting or collective meeting.  Similarly, in paragraph 17  

of the complaint, there is no allegation that a particular Director or  

Managing Director fabricated debit note.  In the entire complaint  

there are bald and vague allegations against respondent Nos.2 to 7.

13. There is no dispute with regard to the legal proposition that  

the case of breach of trust or cheating are both a civil wrong and a  

criminal offence, but under certain situations where the act alleged  

would  predominantly  be  a  civil  wrong,  such  an  act  does  not  

constitute a criminal offence.

14. Be that as it  may, as held by this  Court,  summoning of  

accused in a criminal case is a serious matter.  Hence, criminal law  

cannot  be  set  into  motion  as  a  matter  of  course.   The order  of  

Magistrate summoning the accused must reflect that he has applied  

his mind to the facts of the case and the law applicable thereto.  

The  Magistrate  has  to  record  his  satisfaction  with  regard  to  the  

existence of a prima facie case on the basis of specific allegations  

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made in the complaint supported by satisfactory evidence and other  

material on record.

15. In  the  case  of  Madhavrao  Jiwaji  Rao  Scindia  and  

Another Etc. vs. Sambhajirao Chandrojirao Angre and Others  

Etc. AIR 1988 SC 709, this Court held as under:

“7. The  legal  position  is  well-settled  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  is  also  for  the  court  to  take  into  consideration  any  special  features  which  appear in a particular case to consider whether  it is expedient and in the interest of justice to  permit a prosecution to continue. This is so on  the basis that the court cannot be utilised for  any oblique purpose and where in the opinion  of the court chances of an ultimate conviction  is  bleak  and,  therefore,  no  useful  purpose  is  likely  to  be  served  by  allowing  a  criminal  prosecution  to continue,  the court  may while  taking into consideration the special facts of a  case also quash the proceeding even though it  may be at a preliminary stage.”

16. In  the  case of  Punjab National  Bank and Others vs.  

Surendra  Prasad  Sinha, AIR  1992  SC  1815,  a  complaint  was  

lodged by the complainant for prosecution under Sections 409, 109  

and 114, IPC against the Chairman, the Managing Director of the  

Bank and a host of officers alleging,  inter alia,  that as against the  

loan granted to one Sriman Narain Dubey the complainant and his  

wife stood as guarantors and executed Security Bond and handed  

over Fixed Deposit Receipt.  Since the principal debtor defaulted in  

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payment of debt, the Branch Manager of the Bank on maturity of  

the said fixed deposit adjusted a part of the amount against the said  

loan.   The complainant  alleged that  the  debt  became barred by  

limitation and, therefore, the liability of the guarantors also stood  

extinguished.  It was, therefore, alleged that the officers of the Bank  

criminally embezzled the said amount with dishonest intention to  

save themselves from financial obligation.  The Magistrate without  

adverting  whether  the  allegations  in  the  complaint  prime  facie  

make out an offence charged for, in a mechanical manner, issued  

the  process  against  all  the  accused  persons.   The  High  Court  

refused to quash the complaint and the matter finally came to this  

Court.  Allowing the appeal and quashing the complaint, this Court  

held as under:

“5. It  is  also  salutary  to  note  that  judicial  process  should  not  be  an  instrument  of  oppression  or  needless  harassment.  The  complaint  was  laid  impleading the  Chairman,  the  Managing  Director  of  the  Bank  by  name  and a host of officers. There lies responsibility  and duty on the Magistracy to find whether the  concerned  accused  should  be  legally  responsible for the offence charged for.  Only  on  satisfying  that  the  law  casts  liability  or  creates  offence against  the juristic  person or  the  persons  impleaded  then  only  process  would be issued. At that stage the court would  be  circumspect  and  judicious  in  exercising  discretion and should take all the relevant facts  and  circumstances  into  consideration  before  issuing process lest it would be an instrument  in  the  hands  of  the  private  complainant  as  vendetta  to  harass  the  persons  needlessly.  Vindication  of  majesty  of  justice  and  

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maintenance of  law and order  in  the  society  are the prime objects of criminal justice but it  would  not  be  the  means  to  wreak  personal  vengeance. Considered from any angle we find  that  the  respondent  had  abused  the  process  and  laid  complaint  against  all  the  appellants  without  any prima facie case to harass them  for vendetta.”

17. In the case of Maksud Saiyed  vs.  State of Gujarat and  

Others      (2008)  5 SCC 668,  this  Court while  discussing vicarious  

liability observed as under :-

“13. Where a jurisdiction is exercised on  a complaint  petition  filed  in terms of  Section  156(3) or Section 200 of the Code of Criminal  Procedure, the Magistrate is required to apply  his mind.  The Penal Code does not contain any  provision for attaching vicarious liability on the  part of the Managing Director or the Directors  of  the  Company  when  the  accused  is  the  Company.   The  learned  Magistrate  failed  to  pose unto himself the correct question viz., as  to whether the complaint petition, even if given  face  value  and  taken  to  be  correct  in  its  entirety, would lead to the conclusion that the  respondents  herein were personally  liable  for  any offence.   The Bank  is  a  body  corporate.  Vicarious liability of the Managing Director and  Director  would  arise  provided  any  provision  exists in that behalf  in the statute.   Statutes  indisputably must contain provision fixing such  vicarious liabilities.  Even for the said purpose,  it is obligatory on the part of the complainant  to  make  requisite  allegations  which  would  attract  the  provisions  constituting  vicarious  liability.”

18. From bare perusal of the order passed by the Magistrate, it  

reveals  that  two  witnesses  including  one  of  the  trustees  were  

examined by the complainant but none of them specifically stated  

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as to which of the accused committed breach of trust or cheated  

the complainant except general and bald allegations made therein.  

While  ordering  issuance  of  summons,  the  learned  Magistrate  

concluded as under :-

“The complainant has submitted that the  accused  Nos.2  to  6  are  the  directors  of  the  company and accused No.7 is the secretary of  the company and were looking after the day to  day  affairs  of  the  company  and  were  also  responsible  for  conduct  and  business  of  the  accused No.1 and some time or the other have  interacted with the complainant.

I have heard arguments on behalf of the  complainant and perused the record.  From the  allegations raised, documents placed on record  and the evidence led by the witnesses, prima  facie an offence u/s 415, 409/34/120B is made  out.  Let all the accused hence be summoned  to  face  trial  under  the  aforesaid  sections  on  PF/RC/Speed Post/courier for 2.12.2008.”

19. In the order issuing summons, the  learned Magistrate has  

not recorded his satisfaction about the prima facie case as against  

respondent Nos.2 to 7 and the role played by them in the capacity  

of Managing Director, Company Secretary or  Directors which is sine  

qua non for initiating criminal action against them.  Recently, in the  

case of M/s  .  Thermax Ltd. & Ors.    vs.    K.M. Johny  & Ors  .  2011    

(11) SCALE 128,  & ors. while dealing with a similar case, this Court  

held as under :-

“20. Though  Respondent  No.1  has  roped  all  the  appellants  in  a  criminal  case  without their specific role or participation in the  alleged  offence  with  the  sole  purpose  of  

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settling his dispute with appellant-Company by  initiating the criminal prosecution, it is pointed  out  that  appellant  Nos.  2  to  8  are  the  Ex- Chairperson,  Ex-Directors  and  Senior  Managerial  Personnel  of  appellant  No.1  –  Company, who do not have any personal role  in  the  allegations  and  claims  of  Respondent  No.1.  There is also no specific allegation with  regard to their role

21. Apart  from  the  fact  that  the  complaint  lacks  necessary  ingredients  of  Sections  405,  406,  420 read with  Section 34  IPC,  it  is  to  be  noted  that  the  concept  of  ‘vicarious liability’ is unknown to criminal law.  As  observed  earlier,  there  is  no  specific  allegation  made  against  any  person  but  the  members of  the Board and senior  executives  are  joined  as  the  persons  looking  after  the  management  and  business  of  the  appellant- Company.”

20. As stated above, the decisions relied upon by the counsel  

for the appellant and the respondents need not be discussed as the  

law has been well settled by those decisions as to the power and  

duty of the Magistrate while issuing summons in a complaint case.

21. In the instant case the High Court has correctly noted that  

issuance of summons against respondent Nos.2 to 7 is illegal and  

amounts to abuse of  the process of  law.  The order of  the High  

Court, therefore, needs no interference by this Court.

22. For  the  aforesaid  reasons,  we  find  no  merit  in  these  

appeals, which are accordingly dismissed.

…………………………….J. (P. Sathasivam)

…………………………….J.

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(M.Y. Eqbal) New Delhi March  22, 2013

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