Judgment

M.Y.Eqbal, J.

1. Leave granted.

2. This appeal arises out of an order dated 5.12.2009 passed by the High Court of Andhra Pradesh, Hyderabad in Criminal Petition No. 3917 of 2007, whereby the High Court dismissed the petition preferred by the Appellant and Respondent No. 4 herein, Under Section 482 Code of Criminal Procedure for quashing proceedings in C.F. No. 2425 of 2007 on the file of 1st Additional Chief Metropolitan Magistrate, Vijayawada relating to offence Under Section499 of the Indian Penal Code (in short, 'Indian Penal Code'). Respondent No. 4 (Rallies India Ltd.) and the Appellant, Company Secretary of M/s. Rallies India Ltd. are accused Nos. 1 and 2 in the aforesaid proceedings.

3. The brief facts of the case are that K.T. Vijay Kumar-Respondent No. 1 joined M/s. Rallis India Ltd.-Respondent No. 4, as Sales Representative and later promoted to different posts. The Company entrusted various powers to him including the powers to recommend various companies or firms for dealership to sell company's product. Taking advantage of the powers entrusted by the Company, Respondent No. 1 along with few of his relatives and friends clandestinely formed two partnership firms and he appointed them as Company's dealers to misappropriate funds by way of diverting goods from M/s. Rallies India. It is alleged that upon enquiry, it was found that huge amount of stocks were routed clandestinely through the said two firms and Respondent No. 1-Vijay Kumar along with his associates defrauded the Company M/s. Rallies India. It is further alleged that Vijay Kumar-Respondent No. 1 floated a Company called Chemical Biotech Ltd. with his wife and relatives at Vijayawada while he was serving with M/s. Rallies India Ltd. and his Company was dealing, producing and trading in the same products as manufactured by Respondent No. 4 company-M/s. Rallies India. When all the facts came to light, he resigned from M/s. Rallies India-Respondent No. 4.

4. Respondent No. 1 made two firms M/s. Sri Laxmi Agencies and M/s. Vaishnavi Chemicals through their partners to enter into and execute a Memorandum of Understanding dated 31.3.2004 with Respondent No. 4 Company (M/s. Rallies) wherein they admitted their entire liability of Rs. 7,94,70,517/- payable to M/s. Rallies and agreed to settle the same by payment of Rs. 4.05 crores. Thereafter in August, 2006, M/s. Rallies India through Mr. Ankur Sharma (recovery agent) lodged a complaint Under Section s 403, 405, 406, 408, 415, 420 r/w Section 34 of the Indian Penal Code against Respondent No. 1 and aforesaid two firms and their respective partners with the Economic Offences Wing, Mumbai.

5. Respondent Nos. 1 and 2 are the Managing Director and Chairman of the Company-M/s. Chemical Bio Tech Limited, respectively. Respondent's Company with an intention to go for public issue engaged Ashika Capital Limited, Mumbai as lead manager to handle their public issue and in course of their due diligence acts, sought clarification and information in respect of Respondent Company's credentials so as to go ahead with the publication of prospectus.

6. It is alleged that the present Appellant, representing Rallis India as its Company Secretary, addressed a letter dated 14.12.2006 to the Manager-MBD of Ashika Capital Limited, Mumbai making false and baseless allegations against the Respondents with a malicious intention of causing wrongful loss to them. The said letter was forwarded by the present Appellant marking copies to Managing Director, Ashika Capital Limited; Secretary, Indian Bank Association, Mumbai; Managing Director, Credit Information Bureau, Mumbai; Chairman, SEBI, Mumbai; Finance Minister, Government of India, New Delhi; State Minister of Finance (Banking), New Delhi; Secretary, Ministry of Finance, New Delhi; Secretary(Banking) Government of India, New Delhi, Joint Secretary(Banking), Govt. of India, New Delhi and Joint Secretary (CM.) Department of Economic Affairs, New Delhi.

7. The said letter contained the fol