REPORTABLE

IN THE SUPREME COURT OF INDIA

CRIMINAL APPELLATE JURISDICTION

CRIMINAL APPEAL NO.  1377   OF 2010 (Arising out of S.L.P. (Crl.) No. 3267 of 2010)

Srinivas Gundluri  & Ors.                  .... Appellant  (s)

Versus

M/s SEPCO Electric Power Construction                 ....  Respondent(s) Corporation & Ors.

WITH

CRIMINAL APPEAL NO.  1378        OF 2010     (Arising out of S.L.P.(Crl.) No. 5095 of 2010)

J U D G M E N T  

P. Sathasivam, J.

1) Leave granted.

2) The  appeal  arising  out  of  S.L.P.(Crl.)  No.  3267  of  

2010  is  directed  against  the  final  judgment  dated  

01.04.2010 passed by the High Court of Chhattisgarh at  

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Bilaspur in W.A. No. 281 of 2009 whereby the High Court  

dismissed the appeal  filed by the appellants herein and  

the appeal arising out of S.L.P.(Crl.) No. 5095 of 2010 is  

preferred  against  the  interim  order  dated  27.04.2010  

passed by the High Court of Judicature of Andhra Pradesh  

at Hyderabad in Crl. R.C. M.P. No. 1307 of 2010 in Crl.  

R.C. No. 893 of 2010 staying the order dated 22.04.2010  

passed by the Chief Metropolitan Magistrate, Hyderabad  

rejecting the application for extension of transit bail and  

also recording of the fact that fraud has been played upon  

the  Court  and  resultantly,  non-bailable  warrant  was  

issued  against  respondent  No.1  in  this  appeal  for  his  

arrest and production before JMFC, Korba, Chhattisgrarh.

3) The facts leading to the filing of  these two appeals  

are:

a) M/s SEPCO Electric Power Construction Corporation  

(in short “SEPCO”) was engaged in erection of power plant  

at  village  Nariyara  in  Akaltara  District  Janjgir-Champa.  

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SEPCO  awarded  constructional  work  to  M/s  SSVG  

Engineering Projects Private Limited (in short “SSVG”) the  

appellants in appeal arising out of SLP (Crl.) No. 3267 of  

2010  as  per  the  terms  and  conditions  of  the  contract  

settled between SEPCO and SSVG.  The contract value of  

the work was Rs. 42,92,19,800/- and the work was to be  

completed  within  a  period  of  two  months.   As  per  the  

terms, 50% of the value of the contract was to be paid in  

advance.  SSVG was required to go ahead with the project  

work immediately.  The work order was issued by SEPCO  

on 16.06.2009.  A cheque for a sum of Rs. 20,97,46,840/-

towards payment of 50% advance was issued to SSVG on  

25.06.2009.  SSVG wrote a letter on 28.06.2009 to the Dy.  

General  Manager,  SEPCO  complaining  that  despite  

repeated requests, SEPCO has not handed over the site for  

commencing the work and requested to hand over the site  

so as to enable it to complete the work within two months.  

However,  SEPCO vide  letter  dated 29.06.2009 cancelled  

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the work order dated 16.06.2009 on the ground that the  

company  has  failed  to  mobilize  requisite  manpower,  

machinery and equipment by that date but diverted the  

amount for some other purpose than the one as agreed,  

hence demanded refund of advance money.   

b) On  03.07.2009,  SSVG  received  a  letter  from  the  

Union  Bank of  India  whereby  it  was  apprised  that  the  

Bank has received a letter on 02.07.2009 from the Police  

Station  Balco  Nagar  requesting  to  freeze  their  current  

account with immediate effect on the complaint of SEPCO.  

Subsequently,  SSVG came to know that on 04.07.2009,  

SEPCO has filed a criminal complaint against them in the  

Court  of  Chief  Judicial  Magistrate,  Class  I  Korba.   The  

Chief Judicial Magistrate, by his order dated 04.07.2009,  

allowed the application of SEPCO filed under Section 156  

(3) of the Code of Criminal Procedure (hereinafter referred  

to  as  ‘the  Code’)  and  forwarded  the  original  complaint  

along  with  documents  to  the  concerned  Station  House  

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Officer  (SHO)  directing  him  to  register  FIR,  after  due  

enquiry, and to submit a chargesheet after investigation.  

Mr.  Srinivas  Gundluri,  Managing  Director  &  Principal  

Officer, SSVG also received a memo from Police Station,  

Balco  Nagar,  for  recording  his  statement.   In  this  

background, the Managing Director and Principal Officer,  

Director  and Promoter  as well  as the Company -  SSVG  

Engineering Projects Pvt. Ltd. filed Writ Petition No. 3647  

of 2009 before the High Court of Chhattisgarh praying for  

quashing  and setting  aside  the  order  dated  04.07.2009  

passed by the  Chief  Judicial  Magistrate,  Class  I,  Korba  

and  the  proceedings  drawn  by  the  Magistrate  on  the  

complaint  of  SEPCO.  They also prayed for  issuance of  

writ of prohibition in order to prohibit further proceedings  

pending  in  the  Court  of  Magistrate,  Class  I,  Korba  in  

connection  with  the  complaint  lodged  by  SEPCO  and  

quashing  the  communication  dated  03.07.2009  by  the  

bank relating to freezing of the SSVG’s account.

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c) The learned single Judge, by order dated 03.09.2009,  

dismissed writ petition No. 3647 of 2009 and held that the  

Magistrate passed an order under Section 156 (3) of the  

Code  after  perusing  the  complaint  which  discloses  

commission of cognizable offence and has not committed  

any illegality by directing the police to register FIR.  The  

learned  single  Judge  further  held  that  since  the  police  

authorities  are  investigating  into  the  matter  after  

registering FIR and final report is yet to be filed, therefore,  

challenge at this stage by SSVG is premature.   

d) Questioning  the  order  of  the  learned  single  Judge,  

SSVG preferred W.A. No 281 of 2009 before the Division  

Bench  of  the  same  High  Court.   The  Division  Bench,  

entirely agreeing with the reasons assigned by the learned  

single Judge, by order dated 01.04.2010, dismissed their  

writ  appeal  and permitted  the  Magistrate  to  proceed in  

accordance with law.  Against the decision of the Division  

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Bench,  SSVG preferred  appeal  arising  out  of  SLP (Crl.)  

3267 of 2010 before this Court.

(e) On  09.04.2010,  Chhatisgrarh  Police  had  taken  

Srinivas  Gundluri,  Managing  Director  and  Principal  

Officer of SSVG into custody in Crime No. 272 of 2009 and  

produced  him  for  transit  warrant  before  CMM  at  

Hyderabad and on the same day he applied for transit bail  

and the same was granted directing him to appear before  

Magistrate Class-I,  Korba on or before 19.04.2010.  On  

19.04.2010,  Srinivas  Gundluri  moved  an  application  

before the CMM, Hyderabad, for extension of the period of  

transit bail on the ground of his illness and of his wife and  

another  application  before  the  Judicial  Magistrate  Ist  

class, Korba, Chhattisgarh seeking extension of time on  

the ground that the S.L.P. filed against the order of the  

writ appeal is listed before this Court on 20.04.2010 and  

as such, the time to surrender be extended by a week.  On  

22.04.2010,  when the matter  was taken up for  hearing  

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before  CMM,  Hyderabad,  none  appeared  for  Srinivas  

Gundluri,  therefore,  the  Magistrate  took  cognizance  of  

such fact and in view of the fraud played upon the court  

rejected the application for extension of time and issued  

non-bailable  warrant  against  him  for  his  arrest  and  

production before the JMFC Korba, Chhattisgarh.  Before  

this  Court,  on  26.04.2010,  counsel  for  the  appellant  

herein offered to pay a sum of Rs. 5 crores to SEPCO of  

which 2 crores to be paid within two days and sought four  

weeks’  time to pay another Rs. 3 crores and this Court  

granted an order of interim protection of stay of arrest till  

14.05.2010.   On  26.04.2010,  Srinivas  Gundluri  filed  a  

petition before the High court of Andhra Pradesh, under  

Section 397 read with Section 401 read with Section 482  

of  the  Code  challenging  the  order  dated  22.04.2010  

passed  by  the  CMM,  Hyderabad.   In  the  said  petition,  

State of Andhra Pradesh and State of Chhattisgarh were  

arrayed as parties and represented through their Public  

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Prosecutors.  SEPCO was not made a party as required  

under Section 397 read with Section 401.  The High Court  

of  Andhra  Pradesh,  on  27.04.2010,  passed  an  interim  

order staying the order dated 22.04.2010 passed by the  

CMM Hyderabad. Aggrieved by the said order, SEPCO filed  

appeal @ S.L.P.(Crl.) 5095 of 2010 before this Court. On  

14.05.2010,  this  Court  after  issuing  notice  tagged  this  

S.L.P.  along  with  S.L.P.(Crl.)No.  3267  of  2010.   For  

convenience, we refer the parties as described in SLP (Crl.)  

3267 of 2010.

4)  Heard Dr. A. M. Singhvi, learned senior counsel for the  

appellants, Mr. C.A. Sundaram, learned senior counsel for  

the  contesting  respondent-SEPCO  and  Mr.  Atul  Jha,  

learned counsel for the State of Chhattisgarh.

5)   Dr.  Singhvi,  learned  senior  counsel,  at  the  outset,  

highlighted that in view of the facts and circumstances,  

more  particularly,  suit  for  recovery  of  money  filed  by  

SEPCO is pending in the civil court and counter claim of  

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the appellants  is  also pending in the same suit,  proper  

course would be to  appoint  an arbitrator  to  resolve the  

dispute.  However, according to him, instead of pursuing  

the  said  legal  and  contractual  remedy,  the  respondent-

SEPCO  rushed  to  the  Magistrate  and  the  Magistrate  

committed an error in invoking jurisdiction under Section  

156 (3) of the Code by directing the Investigation Officer  

concerned to submit a charge sheet in the Court.  He also  

submitted that inasmuch as the appellants, as on date,  

have repaid Rs. 10 crores as against the claim of Rs. 21  

crores  and made  a  counter  claim for  Rs.10  crores,  the  

criminal  proceedings  could  be  deferred  till  appropriate  

decision being taken in the civil proceedings.  On the other  

hand, Mr. Sundaram, learned senior counsel for SEPCO,  

after  taking  us  through  the  salient  features  in  the  

complaint,  specific  allegations  with  reference  to  the  

criminality  of  the  respondents,  various  terms  of  the  

contract and the conduct of the appellant in diverting the  

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entire amount received for a different purpose and in view  

of  the  Sections  156  (3)  and  190  of  the  Code,  the  

Magistrate is well within his powers to pass the impugned  

order  and  the  same  has  been  rightly  considered  and  

approved by the learned single Judge and Division Bench  

of the High Court contended that there is no merit in the  

appeal filed by the appellants.  He also pleaded that the  

learned single Judge of the High Court of Andhra Pradesh  

committed an error  in granting stay in respect  of  order  

dated 22.04.2010 passed by the CMM, Hyderabad in Crl.  

M.P.  No.  690  of  2010  in  Crime  No.  272  of  2009,  P.D.  

Balco, Korba District, Chhattisgarh pending Crl. R.C. No.  

893 of 2010 on the file of the High Court.   

6)  We have carefully perused the relevant materials and  

considered the rival contentions.  

7)  Inasmuch as, admittedly, for the recovery of amount,  

civil suit and counter claim are pending in the civil court,  

we may not be justified in expressing our views in respect  

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of  suit  and  counter  claim  of  the  respective  parties.  

However,  in  order  to  answer  the  contentions  raised  by  

both  parties,  it  is  useful  to  refer  certain  relevant  

provisions of the Code which are as under:-

“Section  156  -  Police  officer's  power  to  investigate  cognizable case:  

(1) Any officer in charge of a police station may, without the  order of a Magistrate, investigate any cognizable case which a  Court having jurisdiction over the local area within the limits  of such station would have power to inquire into or try under  the provisions of Chapter XIII.

(2) No proceeding of a police officer in any such case shall at  any stage be called in question on the ground that the case  was one which such officer was not empowered  under this  section to investigate.

(3) Any Magistrate empowered under section  190 may order  such an investigation as above-mentioned.

Section 173 - Report of police officer on completion of  investigation  

(1) Every  investigation under this Chapter shall be completed  without unnecessary delay.

(1A) The investigation in relation to rape of  a child may be  completed within three months from the date on which the  information was recorded by the officer in charge of the police  station.

(2) (i) As soon as it is completed, the officer in charge of the  police station shall forward to a Magistrate empowered to take  cognizance of the offence on a police report,  a report in the  form prescribed by the State Government, stating-

(a)       the names of the parties;

(b)  the nature of the information;

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(c)  the  names  of  the  persons  who  appear  to  be  acquainted with the circumstances of the case;

(d)  whether any offence appears to have been committed  and, if so, by whom;

(e)  whether the accused has been arrested;

(f)    whether he has been released on his bond and, if  so, whether with or without sureties;

(g)  whether he has been forwarded in custody under  section 170;

(h)  whether  the  report  of  medical  examination  of  the  woman has been attached where investigation relates to  an  offence  under  section  376,  376A,  376B,  376C  or  376D of the Indian Penal Code(45 of 1860).

(ii) The officer shall also communicate, in such manner as  may be prescribed by the  State  Government,  the action  taken  by him,  to  the  person,  if  any,  by  whom  the  information relating to the commission of the offence was  first given.

(3)  Where  a  superior  officer  of  police  has  been  appointed  under section 158, the report, shall, in any case in which the  State Government by general or special order so  directs, be  submitted  through  that  officer,  and  he  may,  pending  the  orders  of  the  Magistrate,  direct  the officer  in charge of  the  police station to make further investigation.

(4) Whenever it appears from a report forwarded under this  section that the accused has been released on his bond, the  Magistrate shall make such order for the discharge of  such  bond or otherwise as he thinks fit.

(5) When such report is in respect of a case to which section  170 applies, the police  officer shall forward to the Magistrate  along with the report-

(a) all documents or relevant extracts thereof on which the  prosecution proposes to rely other than those already sent  to the Magistrate during investigation;

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(b) the statements recorded under section 161 of all the  persons whom the  prosecution proposes to examine as its  witnesses.

(6) If the police officer is of opinion that any part of any such  statement  is  not  relevant  to  the  subject-matter  of  the  proceeding or that its disclosure to the accused is not essential  in the interests of  justice and is inexpedient in the public  interest,  he  shall  indicate  that  part  of  the  statement  and  append a note requesting the Magistrate to exclude  that part  from the copies to be granted to the accused and stating his  reasons for making such request.

(7)  Where  the  police  officer  investigating  the  case  finds  it  convenient so to do, he may furnish to the accused copies of  all or any of the documents referred to in sub-section (5).

(8)  Nothing  in  this  section  shall  be  deemed  to  preclude  further investigation in respect of an offence after a report  under sub-section (2) has been forwarded to the  Magistrate  and, where upon such investigation, the officer in charge of the  police station obtains further evidence, oral or documentary,  he shall forward to the Magistrate a further report or reports  regarding  such  evidence  in  the  form  prescribed;  and  the  provisions of sub-sections (2) to (6) shall, as far as may be,  apply in relation to such  report or reports as they apply in  relation to a report forwarded under sub-section (2).

Section 200 - Examination of complainant  

A Magistrate taking cognizance of an offence on complaint  shall examine upon oath the complainant and the witnesses  present, if any, and the substance of such examination shall  be reduced to writing and shall be signed by the complainant  and the witnesses, and also by the Magistrate:  

Provided that,  when the complaint is made in writing,  the  Magistrate  need  not  examine  the  complainant  and  the  witnesses—

(a) if a public servant acting or purporting to act in the  discharge of his official duties or a Court has made the  complaint; or

(b) if the Magistrate makes over the case for inquiry or  trial to another Magistrate under section 192:

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Provided further that if the Magistrate makes over the case  to another Magistrate under section 192 after examining the  complainant and the witnesses, the latter Magistrate need not  re-examine them.

Section 201 - Procedure by Magistrate not competent to  take cognizance of the case  

If  the  complaint  is  made  to  a  Magistrate  who  is  not  competent to take cognizance of the offence, he shall,—

(a) if the complaint is in writing, return it for presentation  to the proper Court with an endorsement to that effect;

(b) if the complaint is not in writing, direct the complainant  to the proper Court.

Section 202 - Postponement of issue of process  

(1) Any Magistrate, on receipt of a complaint of an offence of  which he is authorised to take cognizance or which has been  made over to him under section 192 , may, if he thinks fit  and shall in a case where the accused is residing at a place  beyond  the  area  in  which  he  exercises  his  jurisdiction  postpone  the  issue  of  process  against  the  accused,  and  either inquire into the case himself or direct an investigation  to be made by a police officer or by such other person as he  thinks fit, for the purpose of deciding whether or not there is  sufficient ground for proceeding:

Provided  that  no  such direction  for  investigation  shall  be  made-

(a) where it appears to the Magistrate that the offence  complained  of  is  triable  exclusively  by  the  Court  of  Sessions; or

(b) where the complaint has not been made by a Court,  unless the complainant and the witnesses present (if  any) have been examined on oath under section 200 .

(2) In an inquiry under sub-section (1), the Magistrate may,  if he thinks fit, take evidence of witness on oath:

Provided that if it appears to the Magistrate that the  offence  complained  of  is  triable  exclusively  by  the  

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Court of Session, he shall call upon the complainant to  produce all his witnesses and examine them on oath.

(3)  If  an investigation under  sub-section (1)  is  made by a  person  not  being  a  police  officer,  he  shall  have  for  that  investigation all  the powers  conferred by this  Code on an  officer in charge of a police station except the power to arrest  without warrant.”

8)  A perusal of the above provisions, particularly, Section  

156 (3) and Sections 200 and 202 of the Code would reveal  

that Chapter XII of the Code contains provisions relating to  

information  to  the  police  and  their  powers  to  investigate  

whereas Chapter XV, which contains Section 202, deals with  

provisions relating to the steps which a Magistrate has to  

adopt while and after taking cognizance of any offence on a  

complaint.  As rightly observed by the learned single Judge of  

the High Court, the provisions of the above two Chapters deal  

with two different facets altogether.   

9)  Dr. Singhvi, learned senior counsel, relying on a judgment  

of this Court in Madhavrao Jiwajirao Scindia & Ors. vs.  

Sambhajirao Chandrojirao Angre & Ors. (1988) 1 SCC  

692 contented that the learned Magistrate is not justified in  

issuing direction to the Investigation Officer and the same is  

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liable to be interfered with and the High Court ought to have  

interfered with and quashed the same.  We have perused the  

facts of  this case.   The High Court,  in the said decision,  

quashed the prosecution against two of the four accused.  We  

have  also  gone  through  the  factual  details  as  stated  in  

paragraphs 2, 3 and 4 as well as the submissions made by  

the counsel.  After narrating all the events in paragraph 7,  

Their Lordships have held that:

“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 are 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.

On perusal of the factual details, while agreeing with the legal  

principles, we are of the view that since in the said case  

summons  were  ordered  to  be  issued  by  the  learned  

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Magistrate,  the  said  decision  is  distinguishable  and  not  

applicable to the case on hand.   

10)   Mr.  Sundaram,  learned  senior  counsel  for  SEPCO  

pressed into service the decisions rendered in  Devarapalli  

Lakshminarayana Reddy & Ors. vs. V. Narayana Reddy  

&  Ors. (1976)  3  SCC  252  and  Tula  Ram &  Ors. vs.  

Kishore Singh  (1977) 4 SCC 459.   

11) In  Devarapalli  Lakshminarayana  Reddy  (supra),  a  

bench of three Hon’ble Judges have explained the power of  

the Magistrate under Section 156 (3) and Sections 200 and  

202.  The following discussion and ultimate conclusion are  

relevant which reads as under:-

“13.  It  is  well  settled  that  when  a  Magistrate  receives  a  complaint,  he  is  not  bound  to  take  cognizance  if  the  facts  alleged in the complaint, disclose the commission of an offence.  This is clear from the use of the words “may take cognizance”  which in the context in which they occur cannot be equated  with “must take cognizance”. The word “may” gives a discretion  to the Magistrate in the matter. If on a reading of the complaint  he  finds  that  the  allegations  therein  disclose  a  cognizable  offence and the forwarding of  the complaint to the police for  investigation under Section 156(3) will be conducive to justice  and save the valuable time of the Magistrate from being wasted  in enquiring into a matter which was primarily the duty of the  

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police to investigate, he will be justified in adopting that course  as an alternative to taking cognizance of the offence, himself. 14.  This  raises  the  incidental  question:  What  is  meant  by  “taking  cognizance  of  an offence”  by  a Magistrate  within  the  contemplation  of  Section  190? This  expression  has  not  been  defined  in  the  Code.  But  from the  scheme of  the  Code,  the  content and marginal heading of Section 190 and the caption of  Chapter XIV under which Sections 190 to 199 occur, it is clear  that a case can be said to be instituted in a court only when the  court takes cognizance of the offence alleged therein. The ways  in which such cognizance can be taken are set out in clauses  (a), (b) and (c) of Section 190(1). Whether the Magistrate has or  has  not  taken  cognizance  of  the  offence  will  depend  on  the  circumstances  of  the  particular  case  including  the  mode  in  which the case is sought to be instituted, and the nature of the  preliminary  action,  if  any,  taken  by  the  Magistrate.  Broadly  speaking, when on receiving a complaint, the Magistrate applies  his mind for the purposes of proceeding under Section 200 and  the succeeding sections in Chapter XV to the Code of 1973, he  is  said  to  have  taken  cognizance  of  the  offence  within  the  meaning  of  Section  190(l)(a).  If,  instead  of  proceeding  under  Chapter XV, he has, in the judicial exercise of his discretion,  taken  action  of  some  other  kind,  such  as  issuing  a  search  warrant  for  the  purpose  of  investigation,  or  ordering  investigation by the police under Section 156(3), he cannot be  said to have taken cognizance of any offence. 15. This position of law has been explained in several cases by  this Court, the latest being Nirmaljit Singh Hoon v. State of West  Bengal. 16.  The position under  the Code of  1898 with regard to the  powers of a Magistrate having jurisdiction, to send a complaint  disclosing  a  cognizable  offence  —  whether  or  not  triable  exclusively  by  the  Court  of  Session  —  to  the  police  for  investigation under Section 156(3), remains unchanged under  the Code of 1973. The distinction between a police investigation  ordered  under  Section  156(3)  and  the  one  directed  under  Section 202, has also been maintained under the new Code; but  a rider has been clamped by the first proviso to Section 202(1)  that  if  it  appears  to  the  Magistrate  that  an  offence  triable  exclusively  by  the  Court  of  Session  has  been  committed,  he  shall not make any direction for investigation. 17. Section 156(3) occurs in Chapter XII, under the caption :  “Information to the Police and their powers to investigate”; while  Section  202  is  in  Chapter  XV which  bears  the  heading:  “Of  complaints  to  Magistrates”.  The  power  to  order  police  investigation under Section 156(3) is different from the power to  

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direct investigation conferred by Section 202(1). The two operate  in distinct spheres at different stages. The first is exercisable at  the  pre-cognizance  stage,  the  second  at  the  post-cognizance  stage when the Magistrate is in seisin of the case. That is to say  in  the  case  of  a  complaint  regarding  the  commission  of  a  cognizable  offence,  the  power  under  Section  156(3)  can  be  invoked by  the  Magistrate before he  takes  cognizance  of  the  offence  under  Section  190(l)(a).  But  if  he  once  takes  such  cognizance  and  embarks  upon  the  procedure  embodied  in  Chapter  XV,  he  is  not  competent  to  switch  back to  the  pre- cognizance stage and avail of Section 156(3). It may be noted  further  that  an  order  made  under  sub-section  (3)  of  Section  156, is in the nature of a peremptory reminder or intimation to  the  police  to  exercise  their  plenary  powers  of  investigation  under  Section  156(1).  Such  an  investigation  embraces  the  entire continuous process which begins with the collection of  evidence under Section 156 and ends with a report or charge- sheet under Section 173. On the other hand, Section 202 comes  in at  a stage when some evidence has been collected by the  Magistrate in proceedings under Chapter XV, but the same is  deemed insufficient to take a decision as to the next step in the  prescribed  procedure.  In  such  a  situation,  the  Magistrate  is  empowered  under  Section  202  to  direct,  within  the  limits  circumscribed by that section an investigation “for the purpose  of  deciding  whether  or  not  there  is  sufficient  ground  for  proceeding”. Thus the object of an investigation under Section  202 is not to initiate a fresh case on police report but to assist  the  Magistrate  in  completing  proceedings  already  instituted  upon a complaint before him. 18. In the instant case the Magistrate did not apply his mind to  the  complaint  for  deciding  whether  or  not  there  is  sufficient  ground for proceeding;  but  only for  ordering an investigation  under  Section  156(3).  He  did  not  bring  into  motion  the  machinery of Chapter XV. He did not examine the complainant  or his witnesses under Section 200 CrPC, which is the first step  in the procedure prescribed under that chapter. The question of  taking the next step of that procedure envisaged in Section 202  did not arise.  Instead of taking cognizance of  the offence,  he  has,  in  the  exercise  of  his  discretion,  sent  the complaint  for  investigation by police under Section 156.”

12)  In Tula Ram & Ors. vs. Kishore Singh  (supra) again  

this Court considered order for investigation under Section  

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156 (3)  on a complaint.   After considering various earlier  

decisions, the Court on a careful consideration of the facts  

and circumstances of the case propounded the following legal  

propositions:-

“…. 1. That a Magistrate can order investigation under S.  156 (3) only at the pre-cognizance stage, that is to say,  before taking cognizance under Sections 190, 200 and 204  and where a Magistrate decides to take cognizance under  the provisions of Chapter 14 he is not entitled in law to  order any investigation under Section 156 (3) though in  cases not falling within the proviso to Section 202 he can  order an investigation by the police which would be in the  nature of an enquiry as contemplated by Sec. 202 of the  Code.

2. Where a Magistrate chooses to take cognisance he can  adopt any of the following alternatives:

(a) He can peruse the complaint and if satisfied that there  are sufficient grounds for proceeding he can straightaway  issue process to the accused but before he does so he must  comply with the requirements of Section 200 and record  the evidence of the complainant or his witnesses.

(b) The Magistrate can postpone the issue of process and  direct an enquiry by himself.

(c) The Magistrate can postpone the issue of process and  direct an enquiry by any other person or an investigation  by the police.

3. In case the Magistrate after considering the statement of  the complainant and the witnesses or as a result of the  investigation and the enquiry ordered is not satisfied that  there are sufficient grounds for proceeding he can dismiss  the complaint.

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4. Where a Magistrate orders investigation by the police  before taking cognizance under S. 156 (3) of the Code and  receives the report thereupon he can act on the report and  discharge  the  accused  or  straightaway  issue  process  against the accused or apply his mind to the complaint  filed  before  him and take  action under  Section  190 as  described above.”

13)   With  these  legal  principles,  we  also  verified  the  

allegations in the complaint made by SEPCO as well as the  

order of the Magistrate dated 04.07.2009.  The order of the  

Magistrate reads as under:-

“IN THE COURT OF CHIEF JUDICIAL MAGISTRATE, KORBA  (CHHATISGARH)

COMPLAINT CASE NO.                    OF 2009   

M/s Sepco Electric Power Construction Corporation Vs.

Mr. Srinivas Gundluri and Ors.

04.07.2009

Present case was produced before me because Smt. Saroj Nand  Das,  Judicial  Magistrate  1st Class,  Korba,  is  on  leave.  Complainant present along with his counsel Shri B.K. Shukla,  Advocate.  Complaint under Section 200 Cr.P.C. has been filed  against  Respondents-accused  praying  for  taking  cognizance  against them under Sections 405, 406, 418, 420, 427, 503, 504,  506/34 and 120B of Indian Penal Code.  It has been further  prayed that case be sent to the concerned Police Officer under  Section 156 (3) Cr.P.C.

Heard on the application.  Perused Complaint under Section 200  Cr.P.C.  According to this complaint, a prayer has been made to  take  cognizance  against  Accused-Mr.  Srinivas  Gundluri  and  Smt. Bharati Devi, Director and others under Sections 405, 406,  

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418, 420, 427, 503, 504, 506/34 and 120B of Indian Penal  Code.  All these are cognizable offences.  

Therefore, application filed on behalf of the Complainant under  Section 156 (3) Cr.P.C. is allowed and original complaint and  other documents are sent to concerned Station House Officer  and he  is  directed to  register  a  first  information report  and  conduct  investigation  in  the  matter  on  the  basis  of  facts  mentioned in the and after completion of investigation, to submit  a charge sheet in the Court.

Sd/- Illegible

Chief Judicial Magistrate

Korba (Chhatisgarh)”   

From the above, it is clear that the Magistrate only ordered  

investigation  under  Section  156  (3)  of  the  Code.   It  also  

shows that  the Magistrate perused the complaint  without  

examining the merits  of  the claim that  there  is  sufficient  

ground  for  proceeding  or  not,  directed  the  police  officer  

concerned  for  investigation  under  Section  156  (3)  of  the  

Code.  As rightly observed by the learned single Judge of the  

High Court,  the Magistrate did not bring into motion the  

machinery of Chapter XV of the Code.  He did not examine  

the complainant or his witnesses under Section 200 of the  

Code  which is  the  first  step  in  the  procedure  prescribed  

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under the said Chapter.  The question of taking next step of  

the procedure envisaged in Section 202 did not arise.  As  

rightly  pointed  out  by  Mr.  Sundaram,  instead  of  taking  

cognizance of the offence, the learned Magistrate has merely  

allowed  the  application  filed  by  the  complainant/SEPCO  

under Section 156(3) of the Code and sent the same along  

with  its  annexure  for  investigation  by  the  police  officer  

concerned under Section 156 (3) of the Code.  To make it  

clear and in respect of doubt raised by Mr. Singhvi to proceed  

under Section 156 (3) of the Code, what is required is a bare  

reading  of  the  complaint  and  if  it  discloses  a  cognizable  

offence, then the Magistrate instead of applying his mind to  

the complaint for deciding whether or not there is sufficient  

ground for proceeding, may direct the police for investigation.  

In the case on hand, the learned single Judge and Division  

Bench  of  the  High  Court  rightly  pointed  out  that  the  

Magistrate  did  not  apply  his  mind  to  the  complaint  for  

deciding  whether  or  not  there  is  sufficient  ground  for  

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proceeding  and,  therefore,  we  are  of  the  view  that  the  

Magistrate has not committed any illegality in directing the  

police for investigation.  In the facts and circumstances, it  

cannot be said that while directing the police to register FIR,  

the Magistrate has committed any illegality.  As a matter of  

fact, even after receipt of such report, the Magistrate under  

Section 190 (1) (b) may or may not take cognizance of offence.  

In other words, he is not bound to take cognizance upon  

submission of the police report by the Investigating Officer,  

hence,  by  directing  the  police  to  file  chargesheet  or  final  

report  and  to  hold  investigation  with  a  particular  result  

cannot be construed that the Magistrate has exceeded his  

power as provided in sub-section 3 of Section 156.   

14) Neither the chargesheet nor the final report has been  

defined in the Code.  The chargesheet or final report whatever  

may be  the  nomenclature,  it  only  means a  report  under  

Section 173 of the Code which has to be filed by the police  

officer  on completion of  his investigation.   In view of  our  

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discussion, in the case on hand, we are satisfied that the  

Magistrate in passing the impugned order has not committed  

any  illegality  leading  to  manifest  injustice  warranting  

interference by the High Court in exercise of extraordinary  

jurisdiction conferred under Article 226 of the Constitution of  

India.  We are also satisfied that learned single Judge as well  

as the Division Bench rightly refused to interfere with the  

limited order passed by the Magistrate.  We also hold that  

challenge at this stage by the appellants is pre-mature and  

the High Court rightly rejected their request.

15)  It is true that Dr. Singhvi, learned senior counsel for the  

appellants, highlighted that out of the claim of Rs. 21 crores,  

Rs. 10 crores have already been paid, the appellants have  

also  laid  counter  claim for  Rs.  10  crores  and in  such a  

factual scenario, there is no need to continue the criminal  

proceedings and prayed for deferment of the same till the  

outcome of the civil proceedings.  However, Mr. Sundaram  

for SEPCO, by taking us through various allegations in the  

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complaint  highlighted that  SSVG by misappropriating the  

advance money for the purpose other than for which it was  

granted submitted that the Magistrate correctly exercised his  

jurisdiction under Section 156 (3) and referred the matter for  

investigation.   He also submitted that  the  complaint  very  

much discloses cognizable offence under Sections 405, 406,  

418, 420, 427, 503, 504, 506/34 and 120B of IPC.  Whatever  

may be, we are not here to find out the truth or otherwise of  

those allegations but the Magistrate is justified in asking to  

register FIR, conduct investigation on the facts mentioned in  

the  complaint  and  after  completion  of  the  investigation  

submit a report in the Court.  We do not find any illegality  

either in the course adopted by the Magistrate or in ultimate  

direction to the police.

16) Dr.  Singhvi  has  also  brought  to  our  notice  that  the  

respondent - SEPCO has made another complaint in respect  

of the same issue before the Chief Metropolitan Magistrate,  

Hyderabad.  According to him, the same is not permissible  

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and the stay granted by the High Court in Crl. M.P. 1307 of  

2010 in Crl. R.C. No. 893 of 2010 is justifiable.  However, we  

are not expressing anything on the said complaint and it is  

for the appropriate Court to consider about the merits of the  

claim made by both the parties.

17)  In the light of what has been stated above, we are in  

agreement with the order dated 20.07.2009 passed by the  

learned single Judge of the High Court of Chhattisgarh in  

W.P. No. 3647 of 2009 as well as the order dated 01.04.2010  

passed  by  the  Division  Bench  of  the  High  Court  of  

Chhattisgarh in WA No. 281 of 2009.  As on date there is no  

impediment for the police to investigate and submit report as  

directed  in  the  order  dated  04.07.2009  by  Chief  Judicial  

Magistrate, Korba District, Chhattisgarh.  Interim orders in  

respect  of  all  the  proceedings  including  the  order  dated  

27.04.2010 passed by the High Court of Andhra Pradesh in  

Crl. M.P. No. 1307 of 2010 in Crl. R.C. No. 893 of 2010 are  

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vacated  and  both  parties  are  at  liberty  to  pursue  their  

remedy in the pending proceedings in accordance with law.   

18) In the result, the appeal arising out of SLP (Crl.) 3267 of  

2010 of Srinivas Gundluri and others (SSVG) is dismissed  

and the appeal arising out of SLP (Crl.) No. 5095 of 2010 filed  

by SEPCO is allowed to the extent indicated above.  

...…………………………………J.                   (P. SATHASIVAM)  

...…………………………………J.           (ANIL R. DAVE)  

NEW DELHI; JULY 30, 2010.

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