SHOUKAT RAI MALHOTRA Vs. DELLATORA ENTERPRISES LTD

JUDGEMENT

(1.) BY the present petition the Petitioners seek quashing of the summoning order dated 27th July, 2010 passed by the Learned Metropolitan Magistrate against the Petitioners in criminal complaint No. 1594/2001.

(2.) LEARNED counsel for the Petitioners contends that taking the contents of the complaint as also the pre-summoning evidence on their face value, the commission of any offence by the Petitioners punishable under Section 406/420 IPC read with Section 120-B IPC is not disclosed. The entire case of the Respondent is that on certain representations made by accused No.1 Sanjay Malhotra between May to September, 2006 the complainant/Respondent invested the money in the shares. There is no allegation that the Petitioners misrepresented or entered into any correspondence. No evidence in this regard has been produced by the complainant/Respondent. The only allegation set out against the Petitioners in the complaint is that the Petitioners were the first Directors of the accused No.6 i.e. SRM Exploration Pvt. Ltd. (in short SRMEPL) being the initial subscribers to the Articles/Memorandum of Association. The Petitioners in any case had resigned as Directors of SRMEPL with effect from 15th February, 2007 on which date the Respondent had not even made the complete investment of funds. The allegations at best relate to breach of contract or violation of RBI Guidelines. Further no vicarious liability can be fastened upon the Petitioners merely because they were the first Directors of the accused No.6 company SRMEPL. Reference is made to S.K. Alagh Vs. State of Uttar Pradesh & Ors. AIR 2008 SC 1731 and Maharashtra State Electricity Distribution Company Ltd. and Anr. Vs. Dattar Switchgear Ltd. and Ors JT 2010 (11) SC 252. The complainant has also filed a civil suit and preferred a company petition. The allegations as set out by the complainant in the company petition and the civil suit are contrary to the allegations in the complaint. In the company petition the complainant has stated that it was enticed to invest in equity shares of SRMEPL by Sanjay Malhotra and the reference to discussions in this regard is only to Sanjay Malhotra and Vishal Rastogi and not to the Petitioners. In the civil suit filed being CS (OS) No. 957/2010 the Petitioners have not been made defendants and the suit for recovery of money for USD 16,59,762/- is sought against SRMEPL, Sanjay Malhotra, Gagan Rastogi as also 5 other companies. Relying upon B. Suresh Yadav Vs. Sharifa Bee & Anr. (2007) 13 SCC 107 it is contended that a contrary or inconsistent stand taken by a party in a civil suit assumes significance and can be taken into consideration while exercising power under Section 482 Cr.P.C. for quashing of the criminal proceedings. In order to extract money Sanjay Malhotra, the son of the Petitioners was coerced. They sent an e-mail dated 22nd May, 2009 with a threat of registering a criminal case against the Petitioners as well, being the parents of Sanjay Malhotra. This Court in Y.S. Manchanda Vs. Nand Singh & Ors. 175 (2010) DLT 393 held that a threat of false prosecution amounts to coercion. In the absence of any overt act, merely being the shareholders and initial Directors of SRMEPL, the Petitioners cannot be fastened with the criminal liability. Further the ingredients of offence under Section 420 IPC are not made out since there was no dishonest or wrongful intention at the inception as the Respondent has admitted in his complaint as also in its pre- summoning evidence that the allotment of shares has been made by SRMEPL which was the very purpose of investment.

(3.) IN the present case it is thus to be seen whether any role is attributed to the Petitioners or is it a case of fastening of vicarious liability or that the Petitioners having retired from the company on 15 th February, 2007 have no role to play and thus the summoning order is liable to be set aside qua them. It may be noted that in the complaint and complainant's evidence there is specific averment of representations by the Petitioners and accused No.1. Thus no vicarious liability is being fastened on the Petitioner and there are direct allegations against them. No subscription could have been sought without the consent of the Petitioners who were the sole Directors till 15 th February, 2007. At the stage of summoning it is not required that the complaint or the evidence should disclose each and every date, time and place where the meetings took place and name of each person who attended the meetings. As held by the Hon'ble Supreme Court in Radhey Shyam Khemka (supra) where a person issues prospectus and collects money from the public assuring that it intends to do business with the public money for its benefit and the benefit of such public, but the real intention is to do no business other than collecting the money from the public for their personal gains, cannot be said to be immune from the provisions of the Penal Code.