2011 Supreme(SC) 945

2011 (6) Supreme 548
SUPREME COURT OF INDIA
P. Sathasivam and Dr. B.S. Chauhan, JJ.
M/s Thermax Ltd. & Ors. — Appellant(s)
versus
K.M. Johny & Ors. — Respondent(s)
Criminal Appeal No. 1868 of 2011
(Arising out of SLP (Crl.) No. 590 of 2008
Decided on : 27-9-2011

IMPORTANT POINTS
(1) In complaint filed under Sections 405, 420 and 34 IPC, no specific liability is imposed on the officers of the company viz. Ex-Chairperson, Ex-Directors and Senior Managerial Personnel etc. if the alleged offence is by the company. In the absence of specific details about the same, no person other than the company can be presented under the alleged complaint.
(2). The concept of ‘vicarious liability’ is unknown to criminal law.

Headnote:(a) Criminal Procedure Code, 1973, Section 482 ¯ Respondent no. 1 filed complaint against the appellants with allegations that the respondent had done fabrication job works for the appellants under purchase orders placed by the appellant company in the year 1995 ¯ The appellant company owes a total sum of Rs. 68,79,750/- to the respondent which still remains unpaid ¯ When the police did not take any action against the appellants on several complaints filed by respondent, the respondent filed petitioner under Section 156(3) Cr. P.C. for offences under Sections 406, 420 and 34 IPC ¯ The Magistrate registered offence and initiated proceedings against the appellants ¯ The appellants challenged the order of the Magistrate by filing petition under Section 482 Cr. P.C., the High Court confirmed the action of the Magistrate and dismissed the petition as not maintainable ¯ Hence this appeal before the Supreme Court ¯ The Supreme Court held that as the dispute arose out of a contract and a constituted remedy is only before a Civil Court, the Respondent was attempting to use the machinery of the criminal Courts for private gains and for exerting unjust, undue and unwarranted pressure on the appellants in order to fulfill his illegal demands and extract undeserving monetary gains from them ¯ Appeal was allowed and proceedings under Section 156(3) Cr. P.C. were quashed. (Paras 16,17,18 and 19)

        (b) Indian Penal Code, 1860, Section 420 ¯ The essential ingredient of an offence under Section 420, is there has to be dishonest intention to deceive another person ¯ In the instant case allegations in the complaint clearly shows that no such dishonest intention can be seen or even inferred inasmuch as the entire dispute pertains to contractual obligations between the parties ¯ Since the very ingredients of Section 430 are not attracted, the prosecution initiated was wholly untenable ¯ A breach of contract and the same cannot give rise to criminal prosecution for cheating unless fraudulent or dishonest intention is shown right from the beginning of the transaction. (Para 19)

        (c) Indian Penal Code, 1860, Sections 405, 406, 420 and 34 ¯ Held, 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 ¯ The concept of ‘vicarious liability’ is unknown to criminal law ¯ There is no specific allegation made against any person but the members of the Board and senior executives have been joined as the persons looking after the management and business of the appellant company ¯ The offence alleged in the criminal complaint filed by respondent is under Sections 405 and 430 IPC whereunder no specific liability is imposed on the officers of the company, if the alleged offence is by the company ¯ In the absence of specific details about the same, no person other than appellant no. 1 company can be prosecuted under the alleged complaint. (Paras 21 and 22)

        (d) Criminal Procedure Code, 1973, Section 156(3) ¯ Hearing of accused ¯ Held, it is true that accused have no right of hearing at the stage of Section 156(3) Cr. P.C., but where the Magistrate hears the accused in pursuance of the order passed by the higher Court, in the instant case High Court ,to pass order recording reasons, after giving adequate opportunity of hearing to both the sides, no grievance can be made on that account. (Para 28)

        (e) Limitation ¯ Estoppel ¯ The complaint was filed in the year 2002 when the alleged dispute pertains to the period from 1993-1995 ¯ Respondent was trying to circumvent the jurisdiction of the Civil Courts which estopped him from proceeding on account of the law of limitation. (Para 23)