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IN THE HIGH COURT AT CALCUTTA
BIBHAS RANJAN DE, J.
Shree Gopal Tantia @ Gopal Prasad Tantia – Petitioner
Versus
The State of West Bengal and Another – Respondents
C.R.R. No. 3864 of 2016
Decided On : 20-06-2023
CRIMINAL REVISION - SECTION 156(3) OF THE CODE OF CRIMINAL PROCEDURE 1973 - SECTION 406/409/467/468/471/120B OF THE IPC - MANAGER/DIRECTOR OF A COMPANY - LIABILITY - TRANSACTION OF MONEY IN THE NAME OF ANY COMPANY - WHETHER MANAGER/DIRECTOR CAN BE HELD LIABLE IN ABSENCE OF ANY PROVISION LAID DOWN UNDER THE STATUTE.
Fact of the Case:
A complaint was filed under Section 156(3) of the Code of Criminal Procedure 1973 against the director of B2R project Private Limited, Rashid Ali Khan, Arif Md. Khan, and Gopal Prasad Tantia, Director of G.P.T Infra Project Private Limited, alleging misappropriation of money.
Finding of the Court:
The court held that there was no privity of contract between the complainant and the petitioner, and that there was no specific allegation against the petitioner in the complaint. The court also held that a director of a company cannot be held vicariously liable for any offence committed by the company itself in the absence of any provision laid down under the statute.
Issues: 1. Whether there was a privity of contract between the complainant and the petitioner? 2. Whether there was any specific allegation against the petitioner in the complaint? 3. Whether a director of a company can be held vicariously liable for any offence committed by the company itself in the absence of any provision laid down under the statute?
Ratio Decidendi: 1. The court relied on the case of U. Dhar and Another vs. State of Jharkhand and Another, (2003) 2 SCC 219, in which the Hon’ble Apex Court ruled that where two contracts are independent of each other, payment under one has no relevance qua the other. It cannot be said that there is any dishonest intention on the part of the appellants nor can it be said that TCPL or the appellants have misappropriated or converted the movable property of the complainant to their own use. 2. The court also relied on the case of Asoke Basak vs. State of Maharashtra and Others, (2010) 10 SCC 660, in which the Hon’ble Apex Court observed that if and when a statute contemplates creation of such a legal fiction, it provides specifically therefor. In absence of any provision laid down under the statute, a Director of a company or an employee cannot be held to be vicariously liable for any offence committed by the company itself.
Final Decision: The court allowed the revision application and quashed the proceeding against the petitioner.
JUDGMENT :
BIBHAS RANJAN DE, J.
1. In this case, law was put into motion by filing an application under Section 156(3) of the Code of Criminal Procedure 1973(hereinafter referred to as CrPC) by one Tapas Kumar Biswas proprietor of M/s Vinayak Construction against Mr. Sahinul Isalm, director of B2R project Private Limited (hereinafter referred to as B2R), Rashid Ali Khan, Arif Md. Khan and Gopal Prasad Tantia , Director of G.P.T Infra Project Private Limited, alleging inter alia that one G.P.T Infra Project Limited ( hereinafter referred to as GPT) obtained a contract for earth work in filling on Railway embankment and approaches of level-Xing, supplying and spreading of stone dust over formation and approaches of Level-Xing as blanketing materials and RCC minor bridges, retaining wall and other ancillary works in Section ‘A’ from Ahmedpur (excluding) to Labpur (including) km 0.00 to 15.00 in connection with Gangu conversion work of Ahmedpur-Katwa N.G. Section vide Letter of Acceptance No. CAO/Con/WT/8934 dated December 14, 2012 issued by the Chief Administrative Officer (CON), Eastern Railway, 14 Strand Road, Kolkata-700001.
2. Subsequently, B2R, a partnership firm, approached GPT for execution of part of the said contract an accordingly an agreement was executed between GPT and B2R on 26.12.2012.
3. On receiving such contract, B2R engaged M/s. Vinayak Construction for execution of the work by executing an agreement on 11.01.2013. In terms of agreement Vinayak Construction completed the work within January, 2016 and accordingly measurement was taken in presence of GPT, B2R & authorized Officer of Eastern Railway.
4. To complete the work Vinayak Construction appointed one Rashid Ali Khan and Arif Md. Khan for execution of work and technical administration. One Pradip Ghosh was also appointed for overall administration and audit of accounts. During functioning of work payments were made in terms of agreement dated 11.01.2013. Subsequently, said Rashid Ali Khan and Arif Khan in collusion with B2R violated the terms of agreement dated 11.01.2013. Accordingly, Vinayak Construction call off the bank transaction with Allahabad Bank by issuing a letter dated 12th February, 2015. Thereafter, on verbal discussion between B2R and M/s Vinayak Construction it was resolved that all transaction will be made through Vinayak Construction directly and no cash amount would be given to Rashid Ali Khan and Arif Md. Khan without prior written permission of M/s Vinayak Construction.
5. It was alleged that Rashid Ali Khan & Arif Md. Khan took up control of the account after preparing a forged letter heads and signature of the proprietor of Vinayak Construction and made payments to the supplier, labourers and contractors. They even prepared forged bills for obtaining payment and misappropriated the same.
6. Specific allegation was that Rashid Ali and Arif Md. Khan in collusion with B2R misappropriated the amount after 13 R/A Bill exclude in the payment made to the supplier labourers and other contractors.
7. It was alleged that in terms of agreement dated 11.01.2013 Vinayak Construction paid Rs. 42,66,469/- only as performance and bank guarantee to B2R as the said amount in turn has been deposited to GPT by B2R and amount is lying with the GPT. That apart, security deposit i.e. amount of Rs. 1, 06.66,173/- only is lying with GPT. It was again alleged that a sum of Rs. 1,61,82,642/- only was lying with GPT as performance guarantee, bank guarantee and security deposit. A some of Rs. 63,99,704/- only was lying with B2R as Sales Tax.
8. In the penaltinum paragraph complainant alleged that conspiracy was hatched up by and between GPT and B2R with the active role of Rashid Ali Khan and Arif Md. Khan. But, in the last part of penaltium paragraphs it was alleged as follows:
“Sahinul Islam, Rashid Ali Khan and Arif Md. Khan are real culprits who have impersonated me in every manner and without authority misappropriate the entire amount in conspiracy with each other afte
AI
A director of a company cannot be held vicariously liable for any offence committed by the company itself in the absence of any provision laid down under the statute.
Wrongful loss is not a necessary ingredient for establishing the offense of forgery; the mere act of using forged documents suffices to constitute the offense.
The main legal point established is that criminal courts should not be used to settle civil disputes, and a breach of contract does not automatically lead to criminal prosecution for cheating.
Allegations of dishonest misappropriation and breach of trust in contractual agreements can sustain criminal liability under IPC, irrespective of the civil nature of disputes.
The judgment established that not every breach of contract amounts to a criminal offence and emphasized the importance of the presence of deception and dishonesty at the inception of a transaction to....
Insufficient evidence of misconduct or conspiracy led to the acquittal of public servants in a procurement corruption case.
The court held that the FIR lacked evidence and did not disclose the ingredients of any cognizable offence. The court further held that the complainant's attempt to resolve a civil dispute through cr....
Civil disputes cannot be transformed into criminal proceedings, and attempts to misappropriate criminal law for debt recovery are deemed an abuse of process.
The main legal point established in the judgment is that at the stage of consideration of charge, an accused cannot rely on materials by way of defense, and the power under Section 482 of the Code of....
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