Supreme Court of India
BIRLA CORPORATION LIMITEDversusADVENTZ INVESTMENTS AND HOLDINGS LIMITED & OTHERS
- Citation
- 2019 INSC 663
- Decided
- 9 May 2019
- Disposal
- Disposed off
- Bench
- R BANUMATHI
Holding
The criminal complaint was quashed as it failed to disclose a prima facie case of theft and the magistrate did not apply his mind, rendering the proceedings an abuse of process.
Summary
Birla Corporation filed a criminal complaint alleging that respondents had stolen or misappropriated 54 confidential company documents and sought prosecution under IPC sections 379, 403, 411 read with 120B. The trial magistrate, relying on vague statements of the company representative and an employee, issued summons against all sixteen respondents. The High Court quashed the complaint concerning documents 1‑28 but remitted the case on documents 29‑54 to the trial court. On appeal, the Supreme Court held that the complaint lacked specific particulars of theft, the magistrate had not applied his mind, and the use of the documents in pending civil and company law proceedings did not constitute dishonest theft or wrongful gain. Consequently, the criminal proceedings were deemed an abuse of process and were quashed. The Court allowed the respondents' appeals and dismissed the appellant’s appeal.
Issues considered
- Whether the complaint and the statements before the magistrate disclosed a prima facie case of theft under IPC sections 378, 379, 380 and 411.
- Whether the magistrate applied the requisite judicial mind while taking cognizance under Section 202 CrPC.
- Whether the temporary removal and use of corporate documents in civil and company law proceedings amounts to theft or dishonest misappropriation.
- Whether the issuance of process against the respondents constitutes an abuse of the criminal process under Section 482 CrPC and Article 136 of the Constitution.
Legislation cited
- Code of Civil Procedure, 1908s. Order XI
- Code of Criminal Procedure, 1973s. 200, s. 202, s. 203, s. 204, s. 212, s. 250, s. 482, s. 91
- Companies Act, 1956s. 10-E, s. 235, s. 237, s. 247, s. 250, s. 397, s. 398, s. 402, s. 403
- Indian Penal Code, 1860s. 120B, s. 22, s. 23, s. 24, s. 29, s. 378, s. 379, s. 380, s. 403, s. 411
Subjects
TheftCriminal complaintSection 202 CrPCMoveable propertyCorporate documentsAbuse of processVicarious liabilitySection 120B IPCSection 380 IPCSection 411 IPCCompany Law BoardOppression and mismanagement
Judgment
[2019] 7 S.C.R. 655 655
BIRLA CORPORATION LIMITED A
v.
ADVENTZ INVESTMENTS AND HOLDINGS LIMITED &
OTHERS
(Criminal Appeal No. 875 of 2019)
B
MAY 09, 2019
[R. BANUMATHI AND R. SUBHASH REDDY, JJ.]
Penal Code, 1860 – ss. 379, 403, 411 r/w. s. 120B – Theft
and misappropriation of the documents – A Company petition was
filed before Company Law Board (CLB) – In the said Company C
petition, documents No. 1 to 54 were filed by the respondents –
Appellant-company alleged that respondents had stolen/
misappropriated documents No. 1 to 54 from the appellant’s premises
– It was alleged that documents No. 2 to 28 were photocopied and
then they were kept back in the premises – However, documents No.
29 to 54 were not returned and the same were in the possession of D
the respondents – Pursuant thereto, appellant-company filed criminal
complaint u/ss. 379, 403, 411 r/w. s. 120B IPC – After examining
employee ‘D’ of the appellant company and complainant ‘S’ (a
representative of the company), the Trial court found sufficient
grounds for proceeding against all the respondents and also ordered E
issuance of summons to the respondents for the offences punishable
u/ss. 380, 411 and 120B IPC – Aggrieved, respondents filed petition
u/s. 482 Cr.P.C. – High Court held that since original of documents
No. 1 to 28 were still in the custody of the complainant, thus the
complaint would not survive in respect of the documents No. 1 to 28
– However complaint was allowed by the High Court, insofar as F
documents No. 29 to 54 were concerned and the matter was remitted
to the Trial court – On appeal, held: The allegations in the statement
of complainant ‘S’ were vague and lacked material particulars as
to the commission of theft – Complainant has neither attributed to
any facts nor material particulars as to the commission of theft – In G
the complaint, there were no specific averments against respondents
as to how they were responsible in moving the documents out of the
possession of the appellant – Further, the statement of the employee
‘D’ was only a bare statement that respondents had procured
documents from the custody of the appellant – In the instant case,
H
655
656 SUPREME COURT REPORTS [2019] 7 S.C.R.
A the satisfaction of the magistrate was on presumptive footing – Neither
the statement of the complainant nor the statement of ‘D’ contained
particulars as to the commission of offence – There was no
application of mind by the magistrate in taking cognizance of the
offence against the respondents – Also, issuance of summons was
also not very well founded and the same cannot be sustained – So
B
far as, the allegations of retention of documents No. 29 to 54 are
concerned, there are no allegation as to when and how the original
documents were removed and retained by the respondents – No
prima-facie case is made out against the accused persons – Supreme
Court has the power to quash any judicial proceedings u/Art. 136
C of the Constitution – Thus, criminal complaint qua the documents
No. 29 to 54 quashed.
Code of Criminal Procedure, 1973 – s. 202 – Scope of enquiry
– Held: The scope of enquiry under this section is extremely
restricted only to finding out the truth or otherwise of the allegations
D made in the complaint in order to determine whether process should
be issued or not u/s. 204 Cr.P.C. or whether the complaint should
be dismissed by resorting to s.203 Cr.P.C. on the footing that there
is no sufficient ground for proceeding on the basis of the statements
of the complainant and of his witnesses, if any – At the stage of
enquiry u/s. 202 Cr.P.C., the Magistrate is only concerned with the
E allegations made in the complaint or the evidence in support of the
averments in the complaint to satisfy himself that there is sufficient
ground for proceeding against the accused.
Code of Criminal Procedure, 1973 – Issuance of process –
Held: To be summoned/to appear before the Criminal Court as an
F accused is a serious matter affecting one’s dignity and reputation
in the society – In taking recourse to such a serious matter in
summoning the accused in a case filed on a complaint otherwise
than on a police report, there has to be application of mind as to
whether the allegations in the complaint constitute essential
G ingredients of the offence and whether there are sufficient grounds
for proceeding against the accused.
Penal Code, 1860 – s. 29 – Document – Held: The “document”
as defined in s.29 IPC is a “moveable property” within the meaning
of s.22 IPC which can be the subject matter of theft – The information
H
BIRLA CORPORATION v. ADVENTZ INVESTMENTS & 657
HOLDINGS LTD.
contained thereon in the documents would also fall within the A
purview of the “corporeal property” and can be the subject matter
of the theft.
Penal Code, 1860 – Theft – Intention of the taker – Held:
Intention is the gist of the offence – It is the intention of the taker
which must determine whether taking or moving of a thing is theft – B
The intention to take “dishonestly” exists when the taker intends to
cause wrongful loss to any other which amounts to theft – It is an
essential ingredient of the offence of “theft” that the movable
property should have been “moved” out of the possession of any
person without his consent.
C
Words and Phrases – ‘dishonest intention’, ‘wrongful gain’
and ‘wrongful loss’ – discussed.
Allowing the appeal arising out of SLP(Crl.) D.Nos.6405 &
6122 of 2019 and dismissing the appeal arising out of SLP(Crl.)
No.9053 of 2016, the Court D
HELD: 1. A Company Petition was filed before the Company
Law Board under Sections 235, 237, 247, 250, 397, 398, 402 and
403 of the Companies Act, 1956 by respondents No.1 to 5 who
are the shareholders of the appellant Company alleging
oppression and mismanagement. M/s Birla Education Trust E
(represented by respondent No.6) is also one of the petitioners
in the Company Petition. Along with the Company Petition, the
copy of the documents in question i.e. documents No.1 to 54
including document No.1-Internal Audit Report were filed and
advance copy of the Company Petition and copy of the documents
were given to the appellant. Appellant-Company filed complaint F
alleging that the respondents have gained unauthorized access
and possession of the documents No.1 to 54. ‘S’, complainant (a
representative of the Company) has only alleged that he
apprehends that all the accused persons in connivance with each
other have procured the documents. The allegations in the G
statement of the complainant are vague and lack material
particulars as to the commission of the theft. Complainant has
neither attributed to any facts nor material particulars as to the
commission of theft. [Paras 39, 42 and 47] [69-F-G; 680-G;
683-B-C]
H
658 SUPREME COURT REPORTS [2019] 7 S.C.R.
A 2. Respondent No.10-Birla Buildings Limited is responsible
for the day to day affairs of the maintenance of the building.
Respondent No.11 is the CEO of Respondent No.10-Birla
Buildings Limited. In the complaint, there are no specific
averments against respondents No.10 and 11 as to how they had
access to the 3 rd and 4 th floors of the building owned by the
B
appellant Company and as to how they are responsible in moving
the documents out of the possession of the appellant. Likewise,
no specific overt act of “dishonest removal” of the documents is
attributed to the other respondents. The mere fact that
respondents No.10 and 11 are responsible for security and
C maintenance of the building cannot lead to an inference that
respondents No.10 and 11 are responsible for the theft.
[Para 48] [683-D-E]
3. In the statement of ‘D’, a employee of the appellant
company, there is only a bare statement that respondents No.13
D to 15 have filed case before the Company Law Board that the
documents are highly confidential and that they have procured
the documents stolen from the custody of the appellant. There
are no specific allegations against respondents No.13 to 15.
Likewise, there are no specific allegations against the other
accused who are residing outside the jurisdiction of the court
E and how and when they committed theft of the documents that
how they entered into conspiracy. Considering the various
litigations pending between the parties before issuing summons,
the Magistrate ought to have considered the complaint and
statement of witnesses and satisfied himself that there are prima
F facie materials showing the ingredients of the offence of theft
(house theft) and receipt of stolen property. [Para 54] [685-D-F]
4. For taking cognizance of the offence, the Magistrate inter
alia relied upon the statement of the complainant and ‘D’ to arrive
at a conclusion that a prima facie case is made out against the
G respondents. Neither the statement of the complainant nor the
statement of ‘D’ contain the particulars as to the commission of
the offence to have satisfied the Magistrate that there were
sufficient grounds for proceeding against the accused. By perusal
of the above order passed by the Magistrate, there is absolutely
H
BIRLA CORPORATION v. ADVENTZ INVESTMENTS & 659
HOLDINGS LTD.
nothing to indicate application of mind in taking cognizance of A
the offence against respondents No.1 to 16 including the
respondents who are residents beyond the jurisdiction of the
court. [Para 57] [686-F-H]
5. In the present case, the complaint lacks particulars as to
time and the place of theft or the person who has committed theft. B
There are no averments in the complaint alleging that how the
documents had gone out of the possession of the complainant.
There are only mere statement of the complainant that
respondents No.12 to 16 have filed civil suits basing on the stolen
documents and that he apprehends that all the accused persons
in connivance with each other must have procured the documents C
by theft. In the absence of particulars, by mere possession of the
documents or mere production of the documents in the Company
Petition or civil suits, it cannot be said that sufficient grounds
were made out to proceed against the accused or that the
satisfaction of the Magistrate was well founded justifying issuance D
of process. [Para 58] [687-D-F]
6. The object of investigation under Section 202 Cr.P.C. is
“for the purpose of deciding whether or not there is sufficient ground
for proceeding”. The enquiry under Section 202 Cr.P.C. is to
ascertain the fact whether the complaint has any valid foundation E
calling for issuance of process to the person complained against
or whether it is a baseless one on which no action need be taken.
The law imposes a serious responsibility on the Magistrate to
decide if there is sufficient ground for proceeding against the
accused. The issuance of process should not be mechanical nor
should be made as an instrument of harassment to the accused. F
Issuance of process to the accused calling upon them to appear
in the criminal case is a serious matter and lack of material
particulars and non-application of mind as to the materials cannot
be brushed aside on the ground that it is only a procedural
irregularity. In the present case, the satisfaction of the Magistrate G
in ordering issuance of process to the respondents is not well
founded and the order summoning the accused cannot be
sustained. The impugned order of the High Court holding that
there was compliance of the procedure under Section 202 Cr.P.C.
H
660 SUPREME COURT REPORTS [2019] 7 S.C.R.
A cannot be sustained and is liable to be set aside. [Para 61]
[688-E-H]
7. Admittedly, documents No.1 to 54 including the
Document No.1-Internal Audit Report of Chanderia unit of the
appellant Company has been filed by the respondents in the
B company petition. These documents are intra-company
correspondence, internal audit reports, agreements, etc. in
relation to the operations of the appellant Company. Admittedly,
these documents have been produced in the company petition
by the shareholders of the appellant-Company to substantiate
their case of oppression and mismanagement by respondent No.17
C and for vindication of their rights. In the facts and circumstances
of the case in hand, the taking away of the documents temporarily
and using them in the pending litigations between the parties
would not amount to theft. [Para 70] [691-G-H; 692-A]
8. The FIR or the criminal proceedings can be quashed if
D the allegations do not make out a prima-facie case or allegations
are so improbable that no prudent person would ever reach a
just conclusion that there are sufficient grounds for proceeding
against the accused. So far as, the allegation of retention of the
documents No. 29 to 54, no allegation as to when and how the
E original documents were removed and retained by the
respondents. Where on the admitted facts no prima-case case is
made out against the accused for proceeding or when the Supreme
Court is satisfied that the criminal proceedings amount to abuse
of process of court, Supreme Court has the power to quash any
judicial proceedings in exercise of its power under Article 136 of
F the Constitution of India. The present case is a fit case for
exercising the power in quashing the criminal complaint qua the
documents No.29 to 54 also. [Para 88] [699-B-D]
9. Conclusions are summarised as under:-
G a) By the order of the Magistrate, cognizance was taken
against respondents No.1 to 16 for commission of the offences
under Sections 380, 411 and 120B IPC. There are no averments
in the complaint nor are there allegations in the statement of the
complainant or the witness ‘D’ as to when and how the theft was
committed and the order of the Magistrate taking cognizance of
H
BIRLA CORPORATION v. ADVENTZ INVESTMENTS & 661
HOLDINGS LTD.
the criminal case against respondents No.1 to 16 qua documents A
No.1 to 54 is liable to be set aside.
b) The “document” as defined in Section 29 IPC is a
“moveable property” within the meaning of Section 22 IPC which
can be the subject matter of theft. The information contained
thereon in the documents would also fall within the purview of B
the “corporeal property” and can be the subject matter of the
theft. The information contained thereon in the documents would
also fall within the purview of the “corporeal property” and can
be the subject matter of the theft. The findings of the High Court
is modified to that extent.
C
c) In the facts and circumstances of the present case, use
of documents No.1 to 28 and documents No.29 to 54 by the
respondents in judicial proceedings is to substantiate their case
namely, “oppression and mismanagement” of the administration
of appellant-Company and their plea in other pending proceedings
and such use of the documents in the litigations pending between D
the parties would not amount to theft. No “dishonest intention”
or “wrongful gain” could be attributed to the respondents and
there is no “wrongful loss” to the appellant so as to attract the
ingredients of Sections 378 and 380 IPC.
d) Considering the facts and circumstances of the present E
case and the number of litigations pending between the parties,
continuation of the criminal proceedings would be an abuse of
the process of the court. The order of the Magistrate taking
cognizance of the offences and the issuance of summons to
respondents No.1 to 16 and the criminal proceedings thereon F
are liable to be quashed. [Para 89] [699-E-H; 700-A-D]
National Bank of Oman v. Barakara Abdul Aziz and Another
(2013) 2 SCC 488 : [2012] 11 SCR 500 ; Mehmood Ul
Rehman v. Khazir Mohammad Tunda and Others (2015) 12
SCC 420 : [2015] 4 SCR 841 ; Bhushan Kumar and Another G
v. State (NCT of Delhi) and Another (2012) 5 SCC 424 : [2012]
2 SCR 696 ; Vijay Dhanuka and Others v. Najima Mamtaj
and Others (2014) 14 SCC 638 : [2014] 4 SCR 171 ; Pepsi
Foods Ltd. and Another v. Special Judicial Magistrate and
Others (1998) 5 SCC 749 : [1997] 5 Suppl. SCR 12 ; Punjab
National Bank and Others v. Surendra Prasad Sinha 1993 H
662 SUPREME COURT REPORTS [2019] 7 S.C.R.
A Supp (1) SCC 499 : [1992] 2 SCR 528 ; Jagdish Ram v. State
of Rajasthan and Another (2004) 4 SCC 432 : [2004] 2
SCR 846 ; Smt. Nagawwa v. Veeranna Shivalingappa Konjalgi
and Others (1976) 3 SCC 736 : [1976] Suppl. SCR 123 ;
State of Haryana and Others v. Bhajan Lal and Others 1992
Supp (1) SCC 335 : [1990] 3 Suppl. SCR 259 ; Indian Oil
B
Corpn. v. NEPC India Ltd. and Others (2006) 6 SCC 736 :
[2006] 3 Suppl. SCR 704 – relied on.
Sunil Bharti Mittal v. Central Bureau of Investigation (2015)
4 SCC 609 : [2015] 1 SCR 377 ; Chandra Deo Singh v.
Prokash Chandra Bose alias Chabi Bose and Another AIR
C 1963 SC 1430 : [1964] SCR 639 ; K.N. Mehra vs. State of
Rajasthan AIR 1957 SC 369 : [1957] SCR 623 ; Pooran
Mal v. Director of Inspection (Investigation), New Delhi and
Others (1974) 1 SCC 345 : [1974] 2 SCR 704 ; Madhavrao
Jiwajirao Scindia and Others v. Sambhajirao Chandrojirao
D Angre and Others (1988) 1 SCC 692 : [1988] 2 SCR 930 ;
Abhijit Pawar v. Hemant Madhukar Nimbalkar and Another
(2017) 3 SCC 528 : [2016] 9 SCR 475 ; GHCL Employees
Stock Option Trust v. India Infoline Limited (2013) 4 SCC
505 : [2013] 5 SCR 276 ; Pyare Lal Bhargava v. State of
Rajasthan AIR 1963 SC 1094 : [1963] Suppl. SCR 689 –
E referred to.
Case Law Reference
[2012] 11 SCR 500 relied on Para 28
[2015] 4 SCR 841 relied on Para 29
F
[2012] 2 SCR 696 relied on Para 30
[2014] 4 SCR 171 relied on Para 33
[2016] 9 SCR 475 referred to Para 33
[1997] 5 Suppl. SCR 12 relied on Para 35
G
[2013] 5 SCR 276 referred to Para 35
[1992] 2 SCR 528 relied on Para 36
[2004] 2 SCR 846 relied on Para 37
H
BIRLA CORPORATION v. ADVENTZ INVESTMENTS & 663
HOLDINGS LTD.
[2015] 1 SCR 377 referred to Para 49 A
[1964] SCR 639 referred to Para 56
[1963] Suppl. SCR 689 referred to Para 64
[1957] SCR 623 referred to Para 67
[1974] 2 SCR 704 referred to Para 76 B
[1976] Suppl. SCR 123 relied on Para 83
[1990] 3 Suppl. SCR 259 relied on Para 84
[2006] 3 Suppl. SCR 704 relied on Para 86
C
[1988] 2 SCR 930 referred to Para 87
CRIMINAL APPELLATE JURISDICTION : Criminal Appeal
No. 875 of 2019.
From the Judgment and Order dated 15.05.2015 of the High Court
at Calcutta in C.R.R. No. 323 of 2011. D
With
Criminal Appeal Nos. 876, 877 of 2019.
C. A. Sundaram, Arvind P. Datar, Mukul Rohatgi, Amit Desai,
Kapil Sibal, K. V. Vishwanathan, Sidharth Luthra, Ranjit Kumar, Debol
E
Banarjee, Ms. V. Mohana, Sr. Advs., Senthil Jagadeesan, Siddharth
Aggarwal, Rohit Bharadwaj, Ms. Rupali Samuel, Ms. Sonakshi Malhan,
Ms. Suriti Chowdhary, Ms. Mrinal Kanwar, Ms. Rohini Musa, Arjun
Singh, Zafar Inayat, Abhishek Gupta, Geo Joseph, Rohan Jaitley, Ajay
Bhargava, Vikas Mehta, Ms. Trishala Trivedi, Rohan Dakshini,
Ms. Namrata Vinod, Gopalakrishna S., Apoorv Khator,. Mithun Shashank, F
Karan Gupta, Vasanth B., Amit Agarwalla, P. C. Sharma, Ms.Vrinda
Bhandari, Himanshu Gupta, Akshay Sehgal, T.R.B. Sivakumar, Kunal
Chatterjee, Mahesh Agarwal, Ajay Bhargava, Mrs. Shally Bhasin,
Vaibhav Niti, Ms. Sayaree Basu Mallik, Ms. Madhavi Agarwal,
Ms. Surabhi Limaye, Ms. Trishala Trivedi, Rishi Raj Sharma, Ms. Soumya
G
Joykaran Singh, Chaitanya Safaya, Soumya Ray Chowdhury,
Ms. Sangeeta Mandal, Ms. Swati Sinha, Sanjiv Kumar Trivedi, Savinder
Singh, Dhananjaya Sud, Ms. Ankita Sharma (for M/S. Fox Mandal &
Co.), Amit Agarwalla, P. C. Sharma, T.R.B. Sivakumar, Sayantan
Talapatra, Saifudin S., Advs. for the appearing parties.
H
664 SUPREME COURT REPORTS [2019] 7 S.C.R.
A The Judgment of the Court was delivered by
R. BANUMATHI, J. 1. Leave granted.
2. These appeals arise out of the judgment dated 15.05.2015 passed
by the High Court of Calcutta in C.R.R. No.323 of 2011 in and by which
the High Court quashed the complaint of the appellant-Company filed
B under Sections 379, 403 and 411 IPC read with Section 120-B IPC qua
documents No.1 to 28 of the Schedule. Insofar as documents No.29 to
54 of the Schedule, the High Court remitted the matter to the trial court
to proceed with the matter in accordance with law.
3. Being aggrieved by quashing of the complaint qua documents
C No.1 to 28, the appellant-complainant has preferred appeal (SLP (Crl.)
No.9053 of 2016). Being aggrieved by remitting the matter to the trial
court qua documents No.29 to 54, the respondents have filed appeal
[SLP(Crl.) D No.6405 of 2019 and SLP(Crl.) D. No.6122 of 2019].
Though the SLPs by the respondents are filed with delay, in the interest
D of justice, delay in filing the SLPs are condoned.
4. These appeals arise out of the criminal complaint filed by the
appellant-Company which belong to Madhav Prasad Birla (MPB) Group,
now under the control of respondent No.17-Harshvardhan Lodha who
is the son of Rajendra Singh Lodha. The impugned complaint has a
E background of multitude of litigations filed by the respondents and others.
Brief facts which led to filing of these appeals are that one Priyamvada
Devi Birla (PDB) and her husband Madhav Prasad Birla (MPB) were
in control and management of several corporate entities which are
collectively referred to as the M.P. Birla Group of Industries. They did
not have any children. They have created several trusts for undertaking
F charitable activities in particular on the education side. PDB died on
03.07.2004 and MPB had predeceased her. There is an ongoing dispute
over legality of a Will allegedly executed by Priyamvada Devi Birla (PDB)
dated 18.04.1999 in favour of Rajendra Singh Lodha and respondent
No.17-son of said Rajendra Singh Lodha. On 19.07.2004, a petition was
G filed by Rajendra Singh Lodha, father of respondent No.17 for grant of
probate of the purported Will before the High Court at Calcutta. The
Probate Petition has been converted into a testamentary suit for grant of
Letters of Administration. Krishna Kumar Birla (KKB), Basant Kumar
Birla (BKB), Ganga Prasad Birla (GPB) and Yashovardhan Birla (YB)
have filed caveats to oppose the grant of probate of the said Will dated
H 18.04.1999. The High Court held that Ganga Prasad Birla (GPB) has a
BIRLA CORPORATION v. ADVENTZ INVESTMENTS & 665
HOLDINGS LTD. [R. BANUMATHI, J.]
caveatable interest and therefore, he has a right to oppose the grant of A
probate of the said Will. The said testamentary suit is pending.
Subsequently, Krishna Kumar Birla (KKB), Kashi Nath Tapuriah (KNT)
and Pradip Kumar Khaitan (PKK) filed an application for grant of probate
of the 1982 Will of Madhav Prasad Birla (MPB) and Ganga Prasad
Birla (GPB); Kashi Nath Tapuriah (KNT) and Pradip Kumar Khaitan
B
(PKK) have filed an application for grant of probate of the 1982 Will of
Madhav Prasad Birla (MPB) before the High Court at Calcutta and the
said testamentary proceedings are also pending.
5. Respondents No.1 to 5 who are shareholders of the appellant
Company and the trust-Birla Education Trust represented by respondent
No.6, had filed a Company petition in CP No.1/2010 under Sections 397 C
and 398 of the Companies Act, 1956 before the Company Law Board
(CLB) alleging oppression and mismanagement being perpetrated by
respondent No.17 who is in administration and operation of the said
Company. The petition before the CLB has been filed through respondents
No.6 to 9 who are shown as accused Nos.6 to 9 in the complaint. D
6. On 24.03.2010, respondents No.12 to 16 have filed five civil
suits in the High Court of Calcutta (CS Nos.73-77/2010) under Section
92 of the Code of Civil Procedure stating that in the year 1988, MPB
and PDB had created five mutual and reciprocal trusts to leave the
estate covered by these trusts for charity. These trusts are said to have E
been revoked just three days prior to the alleged Will dated 18.04.1999.
In the said suits in CS No.73-77/2010, respondents No.12 to 16 have
challenged the revocation of the five trusts and prayed for recovery of
the properties of the public charity and for enforcement of the public
trust obligations of the properties vested in the said five trusts.
F
7. The company petition in CP No.1/2010 was filed before CLB
(now pending before NCLT) on 10.03.2010. In the said company petition,
documents No.1 to 54 have been filed. The advance copy of the company
petition and the copies of the documents have been served upon the
appellant-Company. Document No.1-Internal Audit Report of the
appellant Company was filed in the civil suits filed by respondents No.12 G
to 16 challenging the revocation of the five trusts created by MPB and
PDB. Alleging theft and misappropriation of all the documents No.1 to
54, the appellant Company filed the criminal complaint under Sections
379, 403, 411 read with Section 120B IPC against respondents No.1 to
16 and in the said complaint, appellant was represented by Shri Samir H
666 SUPREME COURT REPORTS [2019] 7 S.C.R.
A Ganguly who is the Vice-President (Legal) of the appellant-company.
The gravamen of the allegations in the complaint is that copies of 54
documents were used before the Company Law Board (CLB) in C.P.
No.1 of 2010 filed by respondents No.1 to 5 and Birla Education Trust
represented by respondent No.6. Copy of one such document viz., Internal
Audit Report of Chanderia Unit of the appellant Company has been
B
filed along with the interlocutory applications filed by respondents No.13
to 16 in the civil suits which were filed challenging the revocation of
trusts and for recovery of properties vested in the trust.
8. Let us understand the array of the parties. Each one of
respondents No.1 to 5 are the shareholders of the appellant-Company.
C Respondent No.6-Pradip Kumar Khaitan is a reputed lawyer and a
trustee of Birla Education Trust. Respondent No.7-Akshay Poddar is a
Director of respondent No.1-Adventz Investments & Holdings Limited.
Respondent No.8-Santosh Kumar Poddar is the Director of respondent
No.3-Britex (India) Limited. Respondent No.9-Bal Kishan Toshniwal
D is the Director of respondent No.2-Govind Promoters Private Limited.
Respondent No.10-Birla Buildings Limited is in-charge of the overall
maintenance and upkeep of Birla Buildings where the appellant
Company is located. Respondent No.11-S. Chakrabarty is the Chief
Executive Officer of respondent No.10. Respondents No.12 to 16 are
ones who have filed the suits CS No.73-77/2010 under Section 92 CPC
E before the High Court at Calcutta challenging the revocation of the trusts
and for recovery of the properties of the public charity. Respondent
No.17-Harshvardhan Lodha is the son of late Rajendra Singh Lodha
and now the Director-cum-Chairman of the appellant-Company against
whom C.P. No.1 of 2010 has been filed.
F 9. The allegations in the complaint in brief are as under:-
The complaint contains a list of fifty-four documents with their
brief description given in the Schedule of the complaint. Document No.1
is an Internal Audit Report of Chanderia unit of the appellant Company
for the period ending November, 2009. According to the appellant-
G complainant, keeping in mind the confidential nature of the report, only
six copies were made. Out of which, five sets were sent to officers of
the Company individually named and one was retained by the Auditor.
The Internal Audit Report produced by the respondents is the copy of
one of the original five sets which was sent to one Bachh Raj Nahar-
H
BIRLA CORPORATION v. ADVENTZ INVESTMENTS & 667
HOLDINGS LTD. [R. BANUMATHI, J.]
Executive Director and Chief Executive Officer of the Company. It is A
alleged that respondents No.1 to 16 have stolen/misappropriated
documents No.2 to 28 from the appellant’s premises and that after
photocopying the documents, they were kept back in the appellant’s
premises. It is alleged that documents No.29 to 54 have been stolen/
misappropriated from the appellant’s premises and that after photocopying
B
the documents, they were not returned in the appellant’s premises and
the originals are still in the possession of the respondents. Before making
the complaint, the complainant-appellant had conducted an internal enquiry
to find out how these documents reached the respondents.
10. These documents have at all times been kept at the registered
office of the appellant-Birla Buildings. These documents have restricted C
access and are meant for the consumption of designated and specified
individuals only. These documents include intra-company correspondence,
internal audit reports, agreements etc. in relation to operations of the
Company. The appellant-complainant alleges that respondents No.1 to 9
and 12 to 16 gained access to the Internal Audit Report and other D
documents unauthorizedly and illegally with the aid of respondent No.10-
Birla Buildings Limited and respondent No.11-S. Chakrabarty, CEO who
are in-charge of upkeep of the building in which the office of the appellant-
complainant is situated.
11. The appellant further averred that by letter dated 29.03.2010, E
the Company through its advocate called upon the advocate of
respondents No.1 to 6 to disclose as to how they obtained the documents
mentioned in the Schedule of the complaint. The respondents sent reply
dated 30.03.2010 and evaded giving any response to the said query on
the premise that there was no procedure of the Company Law Board
(CLB) for seeking such information. Appellant-Company sent a letter F
dated 17.04.2010 to respondents No.12 to 16 calling upon them to explain
as to how they came in possession of the documents; but there was no
reply. In the rejoinder filed by respondents No.1 to 6, they again failed
and/or refused to state how they procured these documents.
12. Appellant alleged that without the consent of the appellant G
Company, the respondents/accused have dishonestly stolen/
misappropriated the documents and thus committed theft and conspiracy
to commit theft. It is also averred that the respondents/accused
dishonestly received or retained the stolen property knowing and having
H
668 SUPREME COURT REPORTS [2019] 7 S.C.R.
A reason to believe the same to be stolen property and as such committed
the offence punishable under Section 411 IPC. It is alleged that the
respondents/accused thus dishonestly committed theft of the documents
No.1 to 54 belonging to the appellant Company and misappropriated
them by converting the same for their own use and thus committed the
offences punishable under Sections 379, 403 IPC read with Section 120-
B
B IPC.
13. Complainant Shri Samir Ganguly was examined on 06.10.2010.
Since some of the accused persons are residents beyond local jurisdiction
of the court, the trial court/the Magistrate fixed the matter for enquiry
under Section 202 Cr.P.C. on 08.10.2010. An employee of the appellant
C Company by name P.B. Dinesh was examined on 08.10.2010.
Considering the averments in the complaint and the statement of
Complainant Shri Samir Ganguly and P.B. Dinesh, the learned Magistrate
vide order dated 08.10.2010 found that there are sufficient grounds for
proceeding against all the sixteen respondents and ordered issuance of
D summons to the respondents for the offences punishable under Sections
380, 411 and 120B IPC.
14. Aggrieved by the summoning order dated 08.10.2010,
respondents filed petition under Section 482 Cr.P.C. before the High
Court for quashing the criminal proceedings. Insofar as compliance of
E the procedure in taking cognizance of the offences, the High Court held
that upon perusal of the averments in the complaint and the statement of
representative of the company Shri Samir Ganguly and P. B. Dinesh, the
Magistrate satisfied himself that there were sufficient grounds for
proceeding against the accused and ordered to issue process against the
sixteen accused and the High Court held that on the procedural aspect,
F the Magistrate did not commit any error. The High Court held that since
originals of documents No.1 to 28 are still in the custody of the
complainant, taking away the information contained in such documents
cannot be considered to be “movable property” and the temporary
removal of the documents for taking away the contents thereon by itself
G cannot be the subject of the offence of theft or dishonest misappropriation
of property as well as dishonest receiving of the stolen property. On
those findings, the High Court held that the complaint would not survive
in respect of the documents No.1 to 28. Insofar as documents No.29 to
54 are concerned, the High Court held that as the originals of those
documents are missing, the complaint discloses ingredients of the offence
H
BIRLA CORPORATION v. ADVENTZ INVESTMENTS & 669
HOLDINGS LTD. [R. BANUMATHI, J.]
of theft. The High Court held that insofar as documents No.29 to 54 are A
concerned, the complainant can proceed against the respondents and
accordingly remitted the matter to the trial court.
15. On behalf of the appellant, Mr. C.A. Sundaram, learned senior
counsel submitted that the appellant discharged the initial burden placed
upon it by adducing pre-summoning evidence by examining two witnesses B
and based upon the averments in the complaint and the statement of
witnesses Shri Samir Ganguly and P.B. Dinesh, the Magistrate satisfied
himself that there are sufficient grounds for proceeding against the
accused and the High Court rightly held that there was no irregularity in
the procedure followed by the Magistrate in issuing process against the
respondents. The learned senior counsel submitted that respondents C
No.1 to 9 have produced the documents before the Company Law Board
and respondents No.12 to 16 have filed document No.1-Internal Audit
Report which are highly confidential documents and having not disclosed
the source for the accusation/possession of the documents, prima facie
case in dishonest removal of the documents have been made out and the D
Magistrate rightly found that there are sufficient grounds for proceeding
against the respondents/accused and took the cognizance of the offences
under Sections 380, 411 and 120-B IPC.
16. The learned senior counsel for the appellant submitted that
when the Magistrate has taken cognizance of the offence, the High E
Court ought not to have substituted its views for the summoning order
passed by the Magistrate qua documents No.1 to 28. In support of his
submission, reliance was placed upon Smt. Nagawwa v. Veeranna
Shivalingappa Konjalgi and Others (1976) 3 SCC 736 and number
of other decisions. It was submitted that the High Court was not right in
quashing the criminal complaint qua documents No.1 to 28. F
17. In appeal preferred by the respondents, they assailed the order
of issuance of process against the respondents by the Magistrate
contending that there were no adequate materials so as to arrive at
satisfaction of the Magistrate that there were sufficient grounds for
proceeding against the respondents. It was submitted that the production G
of the copies of the documents in the Company Law Petition and in the
civil suits would not amount to theft and the averments in the complaint
and the statement of the complainant and witness P.B. Dinesh would
not attract the ingredients of theft and there was no application of mind
H
670 SUPREME COURT REPORTS [2019] 7 S.C.R.
A of the learned Magistrate and the Magistrate mechanically issued process
against the respondents and the High Court ought to have quashed the
proceedings in toto.
18. On behalf of respondents No.1 to 5, Mr. Kapil Sibal, learned
senior counsel submitted that the complaint lacks specification as to the
B time and manner of the commission of the offence and who committed
theft of the documents and when and how the same was detected. The
learned senior counsel contended that the averments in the complaint do
not make out a prima facie case of theft and that the materials placed
before the Magistrate were inadequate and there were no sufficient
grounds for proceeding against the respondents and the High Court ought
C to have quashed the entire proceedings in toto. The learned senior counsel
further submitted that document No.1-Internal Audit Report of the
appellant Company and other documents have been filed by the
respondents in the company petition before the CLB to substantiate their
case of oppression and mismanagement, which can never amount to
D theft. Learned senior counsel contended that when the documents are
produced in the proceedings before the Company Law Board for
vindication of their rights or defence, the criminal complaint filed by the
appellant is nothing but a “legal thumb screw” and the High Court
rightly quashed the criminal proceedings qua documents No.1 to 28. It
was submitted that since there was neither application of mind by the
E Magistrate nor any reasoned order has been passed disclosing the
satisfaction of the mind, the entire proceedings before the Magistrate is
liable to be quashed.
19. Mr. Mukul Rohatgi, learned senior counsel appearing on behalf
of respondent No.10 and Mr. Amit Desai, learned senior counsel
F appearing on behalf of respondent No.11 submitted that respondent No.10
has the overall responsibility of the management and maintenance of the
“building” in which the office of the appellant is situated and there are
no specific allegations in the complaint as to how respondents No.10
and 11 had access to these documents which were in the custody of
G designated employees of the complainant. It was submitted that in the
absence of allegations in the complaint to prove commission of offence
by respondents No.10 and 11, the mere fact that respondents No.10 and
11 are responsible for the maintenance of the building by itself, cannot
lead to an inference that respondents No.10 and 11 are responsible for
the theft.
H
BIRLA CORPORATION v. ADVENTZ INVESTMENTS & 671
HOLDINGS LTD. [R. BANUMATHI, J.]
20. On behalf of respondent No.11, learned senior counsel A
submitted that respondent No.11 is the CEO of respondent No.10-
Company and is overall administrative in-charge of the company’s affairs
in Birla Building and in the absence of specific allegations against him,
the mere official position of respondent No.11 will not automatically make
him vulnerable to criminal prosecution. The learned senior counsel further
B
submitted that the doctrine of vicarious liability is based upon a legal
presumption and creates fictional liability and since the doctrine of
vicarious liability is not available (as a matter of law) in regard to offences
under the IPC, the complainant cannot rely upon a legal presumption of
an act or mensrea to proceed against respondent No.11 in a criminal
case. C
21. On behalf of respondents No.13 to 16, Mr. Ranjit Kumar and
Mr. Debal Banerjee, learned senior counsel submitted that the trial court
had not applied its mind to the materials on record and the averments in
the complaint and the statement of the witnesses do not make a prima
facie case and the Magistrate mechanically issued process against D
respondents No.12 to 16. It was submitted that filing a document in the
judicial proceedings can never be termed as an act of “theft” or “dishonest
misappropriation” so as to attract the ingredients of Sections 380 and
411 IPC read with Section 120-B IPC.
22. Reiterating the contention of other respondents, Mr. K.V. E
Viswanathan, learned senior counsel appearing on behalf of respondent
No.6 submitted that respondent No.6 is a well reputed lawyer and a
trustee of the Birla Education Trust which is a shareholder of the appellant
Company. The learned senior counsel further submitted that in the absence
of specific allegations against respondent No.6, he cannot be made
vicariously liable merely because he is adorning the position of trustee in F
Birla Education Trust. It was submitted that the complaint filed by the
appellant is intended to arm twist the respondents from ventilating the
legitimate rights before the appropriate judicial forum and in the absence
of materials, the proceedings initiated against respondent No.6 is liable
to be quashed. G
23. On behalf of respondents No.7 to 9, Mr. Sidharth Luthra,
learned senior counsel submitted that absolutely there are no averments
as to how the said documents had gone out of the possession of the
appellant-complainant and mere possession of the copy of the documents
H
672 SUPREME COURT REPORTS [2019] 7 S.C.R.
A will not amount to theft nor would amount to conspiracy. It was submitted
that even assuming that the evidence was illegally obtained, the same
cannot be shut out and it cannot amount to theft.
24. We have considered the submissions of the learned senior
counsel appearing on behalf of the appellant and the respondents and
B carefully perused the impugned judgment and materials on record.
25. The following questions arise for consideration in these
appeals:-
(i) Whether the allegations in the complaint and the statement
of the complainant and other materials before the Magistrate
C were sufficient to constitute prima facie case to justify the
satisfaction of the Magistrate in issuing process against the
respondents?
(ii) Whether the respondents are right in contending that in taking
cognizance of the offences under Sections 380, 411 and
D 120-B IPC and ordering issuance of process against the
respondents is vitiated due to non-application of mind?
(iii) Whether the High Court was right in quashing the criminal
proceedings qua documents No.1 to 28 on the ground that
mere information contained in the documents cannot be
E considered as “moveable property” and cannot be the subject
of the offence of theft or receipt of stolen property?
(iv) Whether filing of the documents in question in the petition
before the Company Law Board to substantiate their case
of oppression and mismanagement and document No.1 in
F the civil suits challenging revocation of the trust deeds would
amount to theft justifying taking cognizance of the offences?
(v) Whether there is dishonest moving of documents causing
wrongful loss to the appellants and wrongful gain to the
respondents?
G (vi) Whether filing of documents in the judicial proceedings can
be termed as an act of theft causing wrongful gain to oneself
and wrongful loss to the opponent so as to attract the
ingredients of Section 378 IPC?
H
BIRLA CORPORATION v. ADVENTZ INVESTMENTS & 673
HOLDINGS LTD. [R. BANUMATHI, J.]
26. Complaint filed under Section 200 Cr.P.C. and enquiry A
contemplated under Section 202 Cr.P.C. and issuance of process:-
Under Section 200 of the Criminal Procedure Code, on presentation of
the complaint by an individual, the Magistrate is required to examine the
complainant and the witnesses present, if any. Thereafter, on perusal of
the allegations made in the complaint, the statement of the complainant
B
on solemn affirmation and the witnesses examined, the Magistrate has
to get himself satisfied that there are sufficient grounds for proceeding
against the accused and on such satisfaction, the Magistrate may direct
for issuance of process as contemplated under Section 204 Cr.P.C. The
purpose of the enquiry under Section 202 Cr.P.C. is to determine whether
a prima facie case is made out and whether there is sufficient ground C
for proceeding against the accused.
27. The scope of enquiry under this section is extremely restricted
only to finding out the truth or otherwise of the allegations made in the
complaint in order to determine whether process should be issued or not
under Section 204 Cr.P.C. or whether the complaint should be dismissed D
by resorting to Section 203 Cr.P.C. on the footing that there is no sufficient
ground for proceeding on the basis of the statements of the complainant
and of his witnesses, if any. At the stage of enquiry under Section 202
Cr.P.C., the Magistrate is only concerned with the allegations made in
the complaint or the evidence in support of the averments in the complaint
to satisfy himself that there is sufficient ground for proceeding against E
the accused.
28. In National Bank of Oman v. Barakara Abdul Aziz and
Another (2013) 2 SCC 488, the Supreme Court explained the scope of
enquiry and held as under:-
F
“9. The duty of a Magistrate receiving a complaint is set out in
Section 202 CrPC and there is an obligation on the Magistrate to
find out if there is any matter which calls for investigation by a
criminal court. The scope of enquiry under this section is restricted
only to find out the truth or otherwise of the allegations made in
the complaint in order to determine whether process has to be G
issued or not. Investigation under Section 202 CrPC is different
from the investigation contemplated in Section 156 as it is only for
holding the Magistrate to decide whether or not there is sufficient
ground for him to proceed further. The scope of enquiry under
H
674 SUPREME COURT REPORTS [2019] 7 S.C.R.
A Section 202 CrPC is, therefore, limited to the ascertainment of
truth or falsehood of the allegations made in the complaint:
(i) on the materials placed by the complainant before the court;
(ii) for the limited purpose of finding out whether a prima facie
case for issue of process has been made out; and
B
(iii) for deciding the question purely from the point of view of
the complainant without at all adverting to any defence that
the accused may have.”
29. In Mehmood Ul Rehman v. Khazir Mohammad Tunda and
C Others (2015) 12 SCC 420, the scope of enquiry under Section 202
Cr.P.C. and the satisfaction of the Magistrate for issuance of process
has been considered and held as under:-
“2. Chapter XV Cr.P.C. deals with the further procedure for
dealing with “Complaints to Magistrate”. Under Section 200
D Cr.P.C, the Magistrate, taking cognizance of an offence on a
complaint, shall examine upon oath the complainant and the
witnesses, if any, present and the substance of such examination
should be reduced to writing and the same shall be signed by the
complainant, the witnesses and the Magistrate. Under Section
202 Cr.P.C, the Magistrate, if required, is empowered to either
E inquire into the case himself or direct an investigation to be made
by a competent person “for the purpose of deciding whether or
not there is sufficient ground for proceeding”. If, after considering
the statements recorded under Section 200 Cr.P.C and the result
of the inquiry or investigation under Section 202 Cr.P.C, the
F Magistrate is of the opinion that there is no sufficient ground for
proceeding, he should dismiss the complaint, after briefly recording
the reasons for doing so.
3. Chapter XVI Cr.P.C deals with “Commencement of
Proceedings before Magistrate”. If, in the opinion of the Magistrate
taking cognizance of an offence, there is sufficient ground for
G
proceeding, the Magistrate has to issue process under Section
204(1) Cr.P.C for attendance of the accused.”
30. Reiterating the mandatory requirement of application of mind
in the process of taking cognizance, in Bhushan Kumar and Another v.
H
BIRLA CORPORATION v. ADVENTZ INVESTMENTS & 675
HOLDINGS LTD. [R. BANUMATHI, J.]
State (NCT of Delhi) and Another (2012) 5 SCC 424, it was held as A
under:-
“11. In Chief Enforcement Officer v. Videocon International
Ltd. (2008) 2 SCC 492 (SCC p. 499, para 19) the expression
“cognizance” was explained by this Court as “it merely means
‘become aware of’ and when used with reference to a court or a B
Judge, it connotes ‘to take notice of judicially’. It indicates the
point when a court or a Magistrate takes judicial notice of an
offence with a view to initiating proceedings in respect of such
offence said to have been committed by someone.” It is entirely a
different thing from initiation of proceedings; rather it is the
condition precedent to the initiation of proceedings by the C
Magistrate or the Judge. Cognizance is taken of cases and not of
persons. Under Section 190 of the Code, it is the application of
judicial mind to the averments in the complaint that constitutes
cognizance. At this stage, the Magistrate has to be satisfied whether
there is sufficient ground for proceeding and not whether there is D
sufficient ground for conviction. Whether the evidence is adequate
for supporting the conviction can be determined only at the trial
and not at the stage of enquiry. If there is sufficient ground for
proceeding then the Magistrate is empowered for issuance of
process under Section 204 of the Code.”
E
31. Under the amended sub-section (1) to Section 202 Cr.P.C., it
is obligatory upon the Magistrate that before summoning the accused
residing beyond its jurisdiction, he shall enquire into the case himself or
direct the investigation to be made by a police officer or by such other
person as he thinks fit for finding out whether or not there is sufficient
ground for proceeding against the accused. F
32. By Cr.P.C. (Amendment) Act, 2005, in Section 202 Cr.P.C. of
the Principal Act with effect from 23.06.2006, in sub-section (1), the
words “…and shall, in a case where accused is residing at a place
beyond the area in which he exercises jurisdiction…” were inserted
by Section 19 of the Criminal Procedure Code (Amendment) Act, 2005. G
In the opinion of the legislature, such amendment was necessary as
false complaints are filed against persons residing at far off places in
order to harass them. The object of the amendment is to ensure that
persons residing at far off places are not harassed by filing false
H
676 SUPREME COURT REPORTS [2019] 7 S.C.R.
A complaints making it obligatory for the Magistrate to enquire. Notes on
Clause 19 reads as under:-
“False complaints are filed against persons residing at far off
places simply to harass them. In order to see that the innocent
persons are not harassed by unscrupulous persons, this clause
B seeks to amend sub-section (1) of Section 202 to make it
obligatory upon the Magistrate that before summoning the
accused residing beyond his jurisdiction he shall enquire into the
case himself or direct investigation to be made by a police officer
or by such other person as he thinks fit, for finding out whether
or not there was sufficient ground for proceeding against the
C accused.”
33. Considering the scope of amendment to Section 202 Cr.P.C.,
in Vijay Dhanuka and Others v. Najima Mamtaj and Others (2014)
14 SCC 638, it was held as under:-
D “12. ….The use of the expression “shall” prima facie makes the
inquiry or the investigation, as the case may be, by the Magistrate
mandatory. The word “shall” is ordinarily mandatory but
sometimes, taking into account the context or the intention, it can
be held to be directory. The use of the word “shall” in all
circumstances is not decisive. Bearing in mind the aforesaid
E principle, when we look to the intention of the legislature, we find
that it is aimed to prevent innocent persons from harassment by
unscrupulous persons from false complaints. Hence, in our opinion,
the use of the expression “shall” and the background and the
purpose for which the amendment has been brought, we have no
F doubt in our mind that inquiry or the investigation, as the case may
be, is mandatory before summons are issued against the accused
living beyond the territorial jurisdiction of the Magistrate.”
Since the amendment is aimed to prevent persons residing outside
the jurisdiction of the court from being harassed, it was reiterated that
G holding of enquiry is mandatory. The purpose or objective behind the
amendment was also considered by this Court in Abhijit Pawar v.
Hemant Madhukar Nimbalkar and Another (2017) 3 SCC 528 and
National Bank of Oman v. Barakara Abdul Aziz and Another (2013)
2 SCC 488.
H
BIRLA CORPORATION v. ADVENTZ INVESTMENTS & 677
HOLDINGS LTD. [R. BANUMATHI, J.]
34. The order of the Magistrate summoning the accused must A
reflect that he has applied his mind to the facts of the case and the law
applicable thereto. The application of mind has to be indicated by
disclosure of mind on the satisfaction. Considering the duties on the part
of the Magistrate for issuance of summons to accused in a complaint
case and that there must be sufficient indication as to the application of
B
mind and observing that the Magistrate is not to act as a post office in
taking cognizance of the complaint, in Mehmood Ul Rehman, this Court
held as under:-
“22. ….the Code of Criminal Procedure requires speaking order
to be passed under Section 203 Cr.P.C. when the complaint is
dismissed and that too the reasons need to be stated only briefly. C
In other words, the Magistrate is not to act as a post office in
taking cognizance of each and every complaint filed before him
and issue process as a matter of course. There must be sufficient
indication in the order passed by the Magistrate that he is satisfied
that the allegations in the complaint constitute an offence and D
when considered along with the statements recorded and the result
of inquiry or report of investigation under Section 202 Cr.P.C., if
any, the accused is answerable before the criminal court, there is
ground for proceeding against the accused under Section 204
Cr.P.C., by issuing process for appearance. The application of
mind is best demonstrated by disclosure of mind on the satisfaction. E
If there is no such indication in a case where the Magistrate
proceeds under Sections 190/204 Cr.P.C., the High Court under
Section 482 Cr.PC. is bound to invoke its inherent power in order
to prevent abuse of the power of the criminal court. To be called
to appear before the criminal court as an accused is serious matter F
affecting one’s dignity, self-respect and image in society. Hence,
the process of criminal court shall not be made a weapon of
harassment.”
35. In Pepsi Foods Ltd. and Another v. Special Judicial
Magistrate and Others (1998) 5 SCC 749, the Supreme Court has G
held that summoning of an accused in a criminal case is a serious matter
and that the order of the Magistrate summoning the accused must reflect
that he has applied his mind to the facts of the case and law governing
the issue. In para (28), it was held as under:-
H
678 SUPREME COURT REPORTS [2019] 7 S.C.R.
A “28. Summoning of an accused in a criminal case is a serious
matter. Criminal law cannot be set into motion as a matter of
course. It is not that the complainant has to bring only two
witnesses to support his allegations in the complaint to have the
criminal law set into motion. The order of the Magistrate
summoning the accused must reflect that he has applied his mind
B
to the facts of the case and the law applicable thereto. He has to
examine the nature of allegations made in the complaint and the
evidence both oral and documentary in support thereof and would
that be sufficient for the complainant to succeed in bringing charge
home to the accused. It is not that the Magistrate is a silent
C spectator at the time of recording of preliminary evidence before
summoning of the accused. The Magistrate has to carefully
scrutinise the evidence brought on record and may even himself
put questions to the complainant and his witnesses to elicit answers
to find out the truthfulness of the allegations or otherwise and
then examine if any offence is prima facie committed by all or
D
any of the accused.”
The principle that summoning an accused in a criminal case is a
serious matter and that as a matter of course, the criminal case against
a person cannot be set into motion was reiterated in GHCL Employees
Stock Option Trust v. India Infoline Limited (2013) 4 SCC 505.
E
36. To be summoned/to appear before the Criminal Court as an
accused is a serious matter affecting one’s dignity and reputation in the
society. In taking recourse to such a serious matter in summoning the
accused in a case filed on a complaint otherwise than on a police report,
there has to be application of mind as to whether the allegations in the
F complaint constitute essential ingredients of the offence and whether
there are sufficient grounds for proceeding against the accused. In
Punjab National Bank and Others v. Surendra Prasad Sinha 1993
Supp (1) SCC 499, it was held that the issuance of process should not
be mechanical nor should be made an instrument of oppression or
G needless harassment.
37. At the stage of issuance of process to the accused, the
Magistrate is not required to record detailed orders. But based on the
allegations made in the complaint or the evidence led in support of the
same, the Magistrate is to be prima facie satisfied that there are sufficient
H
BIRLA CORPORATION v. ADVENTZ INVESTMENTS & 679
HOLDINGS LTD. [R. BANUMATHI, J.]
grounds for proceeding against the accused. In Jagdish Ram v. State A
of Rajasthan and Another (2004) 4 SCC 432, it was held as under:-
“10. ….The taking of cognizance of the offence is an area
exclusively within the domain of a Magistrate. At this stage, the
Magistrate has to be satisfied whether there is sufficient ground
for proceeding and not whether there is sufficient ground for B
conviction. Whether the evidence is adequate for supporting
the conviction, can be determined only at the trial and not at the
stage of inquiry. At the stage of issuing the process to the accused,
the Magistrate is not required to record reasons.”
38. Extensive reference to the case law would clearly show that C
the allegations in the complaint and complainant’s statement and other
materials must show that there are sufficient grounds for proceeding
against the accused. In the light of the above principles, let us consider
the present case whether the allegations in the complaint and the statement
of the complainant and other materials before the Magistrate were
sufficient enough to constitute prima-facie case to justify the Magistrate’s D
satisfaction that there were sufficient grounds for proceeding against
the respondents-accused and whether there was application of mind by
the learned Magistrate in taking cognizance of the offences and issuing
process to the respondents.
39. Respondents No.1 to 5 are minority shareholders in the E
appellant-Company. Respondent No.6 is a lawyer and a trustee of Birla
Education Trust. Respondent No.6 had been empowered to file petition
before the CLB. Respondents No.7, 8 and 9 are the Directors of
respondents No.1, 3 and 2 respectively. On 10.03.2010, Company Petition
CP No.1/2010 was filed before the Company Law Board under Sections F
235, 237, 247, 250, 397, 398, 402 and 403 of the Companies Act, 1956 by
respondents No.1 to 5 who are the shareholders of the appellant Company
alleging oppression and mismanagement. M/s Birla Education Trust
(represented by respondent No.6) is also one of the petitioners in the
Company Petition. Along with the Company Petition, the copy of the
documents in question i.e. documents No.1 to 54 including document G
No.1-Internal Audit Report were filed and advance copy of the Company
Petition and copy of the documents were given to the appellant.
40. On 24.03.2010, respondents No.12 to 16 have filed five civil
suits under Section 92 of Code of Civil Procedure before the High Court
H
680 SUPREME COURT REPORTS [2019] 7 S.C.R.
A of Calcutta being CS Nos.73-77 of 2010 challenging the revocation of
five public charitable trusts created by Madhav Prasad Birla (MPB)
and Priyamvada Devi Birla (PDB) in 1988. Respondents No. 12 to 16
have averred that the trusts have assets worth thousands of crores of
rupees which are vested with the trusts dedicated for charity. In the said
suits, respondents No.12 to 16 have challenged the revocation of the
B
trusts and sought for recovery of the property that are vested in the
public charity through the five trusts set up by MPB and PDB and the
said suits are pending. On 29.03.2010, five interlocutory applications
have been filed in the aforesaid suits praying for interim reliefs and in
those applications, respondents No.12 to 16 annexed photocopy of the
C document No.1-Internal Audit Report of the Chanderia unit of Birla
Corporation Limited for the period ending November, 2009. About seven
months thereafter on 04.10.2010, criminal complaint was filed by the
appellant against respondents No.1 to 16 under Sections 379, 403 and
411 read with Section 120-B IPC alleging theft of the documents and
receipt of stolen property and dishonest misappropriation of the
D
documents. Of the sixteen accused, six are corporate entities and rest
are natural persons. Respondents No.1 to 5 are the shareholders who
filed the Company Petition CP No.1 of 2010. Respondents No.12 to 16
are the plaintiffs who have instituted civil suits challenging the revocation
of the five trusts and for recovery of the properties that are vested in the
E public charity.
41. Respondents No.3, 6, 12 and some of the other respondents
are the residents beyond the local limits of the trial
court – 10th Metropolitan Magistrate, Calcutta. Since number of accused
are residents beyond the local limits of the trial court, as per amended
F provision of Section 202 Cr.P.C., it is obligatory upon the Magistrate that
before summoning the accused, he shall enquire into the case or direct
the investigation to be made by a police officer or by such other person
as he thinks fit for finding out whether or not there are sufficient grounds
for proceeding against the accused. In the present case, the learned
Magistrate has opted to hold such enquiry himself.
G
42. The complaint alleges that the respondents have gained
unauthorized access and possession of the documents No.1 to 54. It is
alleged that documents No.1 to 28 have been stolen/misappropriated
from the premises of the appellant and that after photocopying the
documents, they were kept back in the premises. In so far as documents
H
BIRLA CORPORATION v. ADVENTZ INVESTMENTS & 681
HOLDINGS LTD. [R. BANUMATHI, J.]
No.29 to 54, it is alleged that they have been stolen/misappropriated and A
have not been returned and are still in the possession of the respondents.
It is alleged that respondents No.1 to 16 had gained unauthorized access
and exercised to control over the said documents. It is further alleged
that by letter dated 29.03.2010, on being called upon to disclose as to
how the respondents had obtained the documents, the respondents by
B
letter dated 30.03.2010 evaded making response to the query on the
premise that there was no procedure of the CLB for seeking such
information.
43. The gist of the allegations in the complaint are:-
(i) Respondent No.10-Company is in-charge of day to day C
maintenance of the building which houses office of the
complainant and others. Respondent No.11 is the CEO In
charge of respondent No.10 and responsible for the day to
day administration of respondent No.10.
(ii) Respondents No.1 to 9 are in possession of photocopies of D
documents No.1 to 28 and stated to be in possession of
originals of documents No.29 to 54;
(iii) Use of photocopies of documents No.1 to 24 by respondents
No.1 to 9 in the company petition before the CLB and use of
document No.1-Internal Audit Report by respondents No.12 E
to 16 in the civil suits filed by them;
(iv) The documents are highly confidential and meant for use
consumption only of designated and specified individuals of
the appellant Company and the respondents have gained
unauthorized access to the documents and exercise of control F
over the documents; and
(v) Omission to explain the source of copies of documents in
spite of issuance of notice dated 29.03.2010 to respondents
No.1 to 9 and notice dated 01.04.2010 to respondents No.12
to 16.
G
44. With reference to document No.1-Internal Audit Report of
Chanderia Unit, it is alleged that one copy of the original of document
No.1 was marked to Bachh Raj Nagar and it was claimed to be still with
them. With reference to documents No.2 to 28, in para No.(20) of the
complaint, it is alleged that the documents were kept in the premises on
H
682 SUPREME COURT REPORTS [2019] 7 S.C.R.
A the 3rd and 4th floor with the concerned individuals or their secretaries
and the respondents have gained unauthorised access and had control
over the documents. The allegations against the respondents is that
respondents No.10 and 11 are under the control and management of the
Birla Buildings and has security and the overall responsibility of the
management and maintenance of the same. It is alleged that the
B
respondents in connivance with respondents No.10 and 11 have gained
unauthorised access to the documents and thus the documents have
been stolen from the premises and then misappropriated. The averments
in the complaint even if taken at its face value and accepted in its entirety
do not constitute prima facie offence under Section 378 IPC.
C 45. After referring to filing of CP No.1/2010 where the xerox
copies of the documents were annexed, the complaint alleges as under:-
“9. ….The Company submits that the said documents are highly
confidential internal records and correspondence of Company and
its officers. These documents were at all time kept inside the
D registered office of the Company at the said premises. These
documents have restricted access and are meant for the perusal
and consumption only of designated and specified individuals.
These documents and the information contained therein is the
property of company over which no unauthorized person has any
E right.”
46. On 06.10.2010, Vice-President (Legal) - Power of Attorney
of the complainant Company, Shri Samir Ganguly was examined as a
representative of the Company under Section 200 Cr.P.C. Shri Samir
Ganguly has stated “that the accused persons have filed various
F litigations before various forums. These accused persons have
committed a serious crime of theft of various documents which I
have mentioned in my compliant.” Shri Samir Ganguly has further
stated as under:-
“….Our office situated at Birla Building, 9/1, R.N. Mukherjee at
G 3rd & 4th Floor. Accused No.10 has full control of maintenance
and security to each and every floor….”
“.….In normal course, the accused persons could never have
access to those documents except by illegal means. The documents
are highly confidential like internal audit report of one of our units
which is not supposed to be in their possession. Other accused
H
BIRLA CORPORATION v. ADVENTZ INVESTMENTS & 683
HOLDINGS LTD. [R. BANUMATHI, J.]
persons have filed five civil suits basing on those stolen documents, A
from which I apprehend that all accused persons in connivance
with each other have procured those documents by theft……”
47. Being the Vice-President (Legal) and a representative of the
Company, Shri Samir Ganguly may not have personal knowledge of the
averments made in the complaint and he has not attributed any specific B
overt act to any of the respondents. Shri Samir Ganguly has only alleged
that he apprehends that all the accused persons in connivance with each
other have procured the documents. The allegations in the statement of
the complainant are vague and lack material particulars as to the
commission of the theft. Complainant Shri Samir Ganguly has neither
attributed to any facts nor material particulars as to the commission of C
theft.
48. Respondent No.10-Birla Buildings Limited is responsible for
the day to day affairs of the maintenance of the building. Respondent
No.11-S. Chakrabarty is the CEO of Respondent No.10-Birla Buildings
Limited. In the complaint, there are no specific averments against D
respondents No.10 and 11 as to how they had access to the 3rd and 4th
floors of the building owned by the appellant Company and as to how
they are responsible in moving the documents out of the possession of
the appellant. Likewise, no specific overt act of “dishonest removal”
of the documents is attributed to the other respondents. The mere fact E
that respondents No.10 and 11 are responsible for security and
maintenance of the building cannot lead to an inference that respondents
No.10 and 11 are responsible for the theft.
49. So far as respondent No.11 who is the CEO of respondent
No.10-Company is concerned, it is stated that he is responsible for the F
day to day affairs of respondent No.10-Company and the complainant
invoked the doctrine of vicarious liability. The learned senior counsel
Mr. Desai has submitted that for proceeding against respondent No.11,
the complaint must show “active role” of the natural person. Reliance
was placed upon Sunil Bharti Mittal v. Central Bureau of Investigation
(2015) 4 SCC 609, wherein it was held as under:- G
“43. Thus, an individual who has perpetrated the commission of
an offence on behalf of a company can be made an accused,
along with the company, if there is sufficient evidence of his active
role coupled with criminal intent…..”
H
684 SUPREME COURT REPORTS [2019] 7 S.C.R.
A 50. As rightly submitted by learned senior counsel for respondents
No.10 and 11, it is inconceivable that respondent No.11, CEO of respondent
No.10-Company, if committed the offence of theft, would have been
permitted to continue in that profession. Be it noted, the complainant-
appellant Company is also a shareholder in respondent No.10-Company
and had its nominee Mr. S.N. Prasad on the Board of Directors of the
B
appellant at the relevant time till his death in December, 2012. It is
pertinent to note that no complaint has ever been made against respondent
No.11 against alleged theft or any other overt act. In the absence of
particulars or prima-facie case in the complaint or the statement of Shri
Samir Ganguly against respondents No.10 and 11, the satisfaction of the
C Magistrate appears to be on the presumptive footing that respondents
No.10 and 11 are in-charge of maintenance of the building. Likewise,
issuance of process to other respondents is only on the presumptive
footing that they have filed copies of the documents in CP No.1/2010
and in the civil suits filed challenging revocation of the trusts.
D 51. In his order dated 06.10.2010, the Magistrate observed that
since some of the accused persons are residents beyond the local
jurisdiction of the court, the matter further requires to be enquired into
under Section 202 Cr.P.C. and therefore, fixed the matter for further
enquiry on 08.10.2010. On 08.10.2010, P.B. Dinesh, employee of the
appellant Company was examined who have stated that respondent
E No.14-Kumar Mangalam Birla is the Chairman of Aditya Birla Group
having their office in Mumbai; respondent No.15-Sidharth Birla is also a
part of that Company and he resides at Alipore, Calcutta; respondent
No.13-Rajendra Prasad Pansari is a resident of Calcutta who has now
joined Birla Group. Witness P.B. Dinesh has stated that these respondents
F have procured documents stolen from the appellant’s custody and filed
case before the Company Law Board on the basis of those documents.
52. Based on the allegations in the complaint and the statements
of Shri Samir Ganguly and P.B. Dinesh, the Metropolitan Magistrate
took cognizance and directed issuance of summons to respondents No.1
G to 16. As pointed out earlier, as per Notes on Clause 19, the object
behind the amendment to Section 202 Cr.P.C. is to ensure that innocent
persons who are residing at far off places are not harassed by
unscrupulous persons. The amendment therefore, makes it obligatory
upon the Magistrate that before summoning the accused residing beyond
the jurisdiction, the Magistrate has to enquire the case either himself or
H
BIRLA CORPORATION v. ADVENTZ INVESTMENTS & 685
HOLDINGS LTD. [R. BANUMATHI, J.]
direct investigation to be made by the police officer and is required to A
apply his mind and record his satisfaction with reasons.
53. As pointed our earlier, P.B. Dinesh had merely stated that
respondent No.14-Shri Kumar Mangalam Birla is the Chairman of Aditya
Birla Group having their office in Mumbai and respondent No.15-Shri
Sidharth Birla is a part of the Company and resides at Alipore. P.B. B
Dinesh has also stated that respondent No.13-Rajendra Prasad Pansari
stays in Calcutta and that he was an ex-employee of Birla Corporation
and now he has joined Birla Group. P.B. Dinesh has thus stated about
residence of respondent No.14 being at Mumbai and residence of
respondents No.13 and 15 at Calcutta. There are no specific allegations
against respondent No.14 or against any other respondents who are C
residing outside the jurisdiction. Likewise, no specific allegation as to
how respondent No.14 or other respondents who are residing outside
the jurisdiction have gained entry into the building of the appellant
Company and committed theft of the documents nor any specific
allegation as to the alleged conspiracy. D
54. In the statement of P.B. Dinesh, there is only a bare statement
that respondents No.13 to 15 have filed case before the Company Law
Board that the documents are highly confidential and that they have
procured the documents stolen from the custody of the appellant. There
are no specific allegations against respondents No.13 to 15. Likewise, E
there are no specific allegations against the other accused who are
residing outside the jurisdiction of the court and how and when they
committed theft of the documents that how they entered into conspiracy.
Considering the various litigations pending between the parties before
issuing summons, the learned Magistrate ought to have considered the
complaint and statement of witnesses and satisfied himself that there F
are prima facie materials showing the ingredients of the offence of
theft (house theft) and receipt of stolen property.
55. While ordering issuance of process against the accused, the
Magistrate must take into consideration the averments in the complaint,
statement of the complainant examined on oath and the statement of G
witnesses examined. As held in Mehmood Ul Rehman, since it is a
process of taking a judicial notice of certain facts which constitute an
offence, there has to be application of mind whether the materials brought
before the court would constitute the offence and whether there are
H
686 SUPREME COURT REPORTS [2019] 7 S.C.R.
A sufficient grounds for proceeding against the accused. It is not a
mechanical process.
56. As held in Chandra Deo Singh v. Prokash Chandra Bose
alias Chabi Bose and Another AIR 1963 SC 1430 and in a series of
judgments of the Supreme Court, the object of an enquiry under Section
B 202 Cr.P.C. is for the Magistrate to scrutinize the material produced by
the complainant to satisfy himself that the complaint is not frivolous and
that there is evidence/material which forms sufficient ground for the
Magistrate to proceed to issue process under Section 204 Cr.P.C. It is
the duty of the Magistrate to elicit every fact that would establish the
bona fides of the complaint and the complainant.
C
57. The order of the Magistrate dated 08.10.2010 reads as under:-
“The representative of the complainant Company is present. This
court takes the case record up for enquiry under Section 202
Cr.P.C. itself. Witness P.B. Dinesh is examined during the enquiry
D and his statement has been recorded. Purpose of the enquiry
seems to have been meted out. Perused the affidavit filed for
that purpose on behalf of the complainant company. Perused the
documents (both original and xerox copies) suppolied and relied
on by the complainant company in support of its case. Considering
all above I find sufficient grounds for proceeding against all the
E sixteen accused persons for commission of an offence under
Sections 380, 411, 120B IPC. Cognizance is taken. Issue summons
accordingly upon the accused persons fixing 10.12.2010 for S/R
and appearance. Requisites at once.”
For taking cognizance of the offence, the Magistrate thus inter
F alia relied upon the statement of the complainant and P.B. Dinesh to
arrive at a conclusion that a prima facie case is made out against the
respondents. As discussed earlier, neither the statement of the
complainant nor the statement of P.B. Dinesh contain the particulars as
to the commission of the offence to have satisfied the Magistrate that
G there were sufficient grounds for proceeding against the accused. By
perusal of the above order passed by the Magistrate, we find absolutely
nothing to indicate application of mind in taking cognizance of the offence
against respondents No.1 to 16 including the respondents who are
residents beyond the jurisdiction of the court. Though speaking or
elaborate reasoned orders are not required at this stage, there must be
H
BIRLA CORPORATION v. ADVENTZ INVESTMENTS & 687
HOLDINGS LTD. [R. BANUMATHI, J.]
sufficient indication that there was application of mind by the Magistrate A
to the facts constituting the commission of offence.
58. There are no averments in the complaint nor allegations in the
statement of the complainant or witness P.B. Dinesh as to when and
how the theft was committed. The complaint has been filed alleging
commission of the offence punishable under Sections 380, 411 and 120B B
IPC. The Magistrate has taken cognizance under Sections 380, 411 and
120B IPC. The offence under Section 380 IPC in the case instituted
otherwise than on a police report is a warrant case triable by the
Magistrate under Chapter XIX – Trial of warrant cases by
Magistrates, XIX-B – Cases instituted otherwise than on police
report. For the offences triable under Chapter XIX – trial of warrant C
cases by the Magistrate, the court has to frame the charge. As per
Section 212 Cr.P.C., the charge shall contain such particulars as to the
time and place of the alleged offence and the person against whom or
the thing in respect of which, the offence was committed as are reasonably
sufficient to give the accused notice of the matter with which he is D
charged. In the present case, the complaint lacks particulars as to time
and the place of theft or the person who has committed theft. There are
no averments in the complaint alleging that how the documents had gone
out of the possession of the complainant. There are only mere statement
of the complainant Shri Samir Ganguly that respondents No.12 to 16
have filed civil suits basing on the stolen documents and that he E
apprehends that all the accused persons in connivance with each other
must have procured the documents by theft. In the absence of particulars,
by mere possession of the documents or mere production of the
documents in the Company Petition or civil suits, it cannot be said that
sufficient grounds were made out to proceed against the accused or that F
the satisfaction of the Magistrate was well founded justifying issuance
of process.
59. As held in Pepsi Foods Limited, summoning the accused for
a criminal offence is a serious matter and the respondents are answerable
in the criminal court. The non-application of mind as to the materials G
cannot be brushed aside as a procedural irregularity. There is no indication
in the order of the Magistrate dated 08.10.2010 as to application of the
mind and as to the satisfaction of the Magistrate as to the sufficient
ground for proceeding against the respondents under Sections 380, 411
and 120-B IPC.
H
688 SUPREME COURT REPORTS [2019] 7 S.C.R.
A 60. The High Court held that witness P.B. Dinesh has stated about
alleged involvement of some of the accused and there is no fundamental
error committed by the Magistrate in following the procedure under
Chapter XIX of the Criminal Procedure Code. The High Court further
observed that the flaw at the worst would be a procedural irregularity.
The order dated 08.10.2010 taking cognizance of the offence under
B
Sections 380, 411 and 120B IPC against respondents No.1 to 16 are
liable to be set aside. The Magistrate who is conducting an investigation
under Section 202 Cr.P.C. has full power in collecting the evidence and
examining the matter. We are conscious that once the Magistrate is
exercised his discretion, it is not for the Sessions Court or the High
C Court to substitute its own discretion for that of the Magistrate to examine
the case on merits. The Magistrate may not embark upon detailed enquiry
or discussion of the merits/demerits of the case. But the Magistrate is
required to consider whether a prima case has been made out or not
and apply the mind to the materials before satisfying himself that there
are sufficient grounds for proceeding against the accused. In the case in
D
hand, we do not find that the satisfaction of the Magistrate for issuance
of summons is well founded.
61. The object of investigation under Section 202 Cr.P.C. is “for
the purpose of deciding whether or not there is sufficient ground
for proceeding”. The enquiry under Section 202 Cr.P.C. is to ascertain
E the fact whether the complaint has any valid foundation calling for issuance
of process to the person complained against or whether it is a baseless
one on which no action need be taken. The law imposes a serious
responsibility on the Magistrate to decide if there is sufficient ground for
proceeding against the accused. The issuance of process should not be
F mechanical nor should be made as an instrument of harassment to the
accused. As discussed earlier, issuance of process to the accused calling
upon them to appear in the criminal case is a serious matter and lack of
material particulars and non-application of mind as to the materials cannot
be brushed aside on the ground that it is only a procedural irregularity.
In the present case, the satisfaction of the Magistrate in ordering issuance
G of process to the respondents is not well founded and the order summoning
the accused cannot be sustained. The impugned order of the High Court
holding that there was compliance of the procedure under Section 202
Cr.P.C. cannot be sustained and is liable to be set aside.
H
BIRLA CORPORATION v. ADVENTZ INVESTMENTS & 689
HOLDINGS LTD. [R. BANUMATHI, J.]
Production of copies of documents in the Company A
Petition – whether would amount to theft:
62. So far as documents No.1 to 28 filed in the company petition,
the High Court held that since originals of documents No.1 to 28 are
still in the custody of the appellant Company-complainant, temporary
removal of those documents and the subject of alleged removal was B
“the information” contained in those documents, the same cannot be
considered to be “movable property”. The High Court took the view
that such temporary removal of documents and use of information cannot
be the subject of the offence of theft or dishonest misappropriation of
property as well as dishonest receiving of the stolen property.
C
63. Insofar as documents No.1 to 28 are concerned, the point
falling for consideration is whether the temporary removal of the
documents and filing of photocopies and use of the information/contents
of the documents can be the subject matter of theft.
64. Contention of the appellant is that the very act of moving the D
documents out of the possession of the appellant-Company would amount
to theft. It was submitted that the loss need not be caused by permanent
deprivation of the property; but loss due to theft may be caused even by
temporary moving of the property. In support of this contention, the learned
senior counsel for the appellants placed much reliance upon Pyare Lal
Bhargava v. State of Rajasthan AIR 1963 SC 1094. In the said case, E
wherein the appellant-Pyare Lal Bhargava, a superintendent in the Chief
Engineer’s Office, at the instance of one Ram Kumar Ram got a file
from the Secretariat through a clerk and took the file to his house, made
it available to said Ram Kumar Ram who replaced the same documents
in the file with other papers and thereafter, returned the file the next day. F
In the said case, the arguments was advanced contending that appellant/
accused Pyare Lal Bhargava was one of the officers working in the
department and the facts do not constitute the offence of theft for the
reason that there was no intention to take it dishonestly as he had taken
it only for the purpose of showing the documents to Ram Kumar Ram
and returned it on the next day to the office and therefore, he had not G
taken the said file out of the possession of any person. Rejecting the said
contention, the Supreme Court held that “………To commit theft, one
need not take movable property permanently out of the possession
of another with the intention not to return it to him. It would satisfy
H
690 SUPREME COURT REPORTS [2019] 7 S.C.R.
A the definition if he took any movable property out of the possession
of another person though he intended to return it later on……..”.
In the light of the ratio laid down in Pyare Lal Bhargava, temporary
removal of original documents for the purpose of replicating the
information contained in them in some other medium would thus fulfill
the requirement of “moving” of property which is the actus reus of the
B
offence of theft as defined under Section 378 IPC.
65. In Pyare Lal Bhargava, yet another contention raised was
that the accused did not intend to take it dishonestly as he did not receive
any “wrongful gain” or caused any “wrongful loss” to any other person.
Rejecting the said contention, in Pyare Lal Bhargava, the Supreme
C Court held as under:-
“8. ………. To commit theft one need not take movable property
permanently out of the possession of another with the intention
not to return it to him. It would satisfy the definition if he took any
movable property out of the possession of another person though
D he intended to return it later on. We cannot also agree with learned
Counsel that there is no wrongful loss in the present case. Wrongful
loss is loss by unlawful means of property to which the person
losing it is legally entitled. It cannot be disputed that the appellant
unauthorizedly took the file from the office and handed it over to
E Ram Kumar Ram. He had, therefore, unlawfully taken the file
from the department, and for a short time he deprived the
Engineering Department of the possession of the said file. The
loss need not be caused by a permanent deprivation of property
but may be caused even by temporary dispossession, though the
person taking it intended to restore it sooner or later. A temporary
F period of deprivation or dispossession of the property of another
causes loss to the other………...”
66. One of the foremost components of theft is that the subject
matter of the theft needs to be a “moveable property”. “Moveable
property” is defined in Section 22 IPC which includes a corporeal
G property of every description. It is beyond doubt that a document is a
“moveable property” within the meaning of Section 22 IPC which can
be the subject matter of theft. A “document” is a “corporeal property”.
A thing is “corporeal” if it has a body, material and a physical presence.
As per Section 29 IPC, “Document” denotes “any matter expressed
H or described upon any substance by means of letters, figures or
BIRLA CORPORATION v. ADVENTZ INVESTMENTS & 691
HOLDINGS LTD. [R. BANUMATHI, J.]
marks or by more than one of those means, intended to be used, or A
which may be used as evidence of that matter”. The first Explanation
to Section 29 IPC provides that it is immaterial by what means or upon
what substance these are formed. This definition would include within
its ambit photocopy of a document. As per Explanation No.2 of Section
29 IPC, letters, figures or marks shall be deemed to be expressed by
B
such letters, figures or marks within the meaning of the Section. Such
letters, figures or marks thus have a material and physical presence.
Therefore, it can also be inferred that the said information would be
deemed to fall within the purview of “Document” – a corporeal property.
67. Information contained in a document, if replicated, can be the
subject of theft and can result in wrongful loss, even though the original C
document was only temporarily removed from its lawful custody for the
purpose of extracting the information contained therein. In the case of
K.N. Mehra vs. State of Rajasthan AIR 1957 SC 369, this Court held
that gain or loss contemplated need not be a total acquisition or a total
deprivation but it is enough if it is a temporary retention of property by D
the person wrongfully gaining or a temporary keeping out of property
from person legally entitled.
68. The High Court, in our view, was not right in holding that the
replication of the documents or use of information in the documents
No.1 to 28 and the contents thereon are not corporeal property and E
would not amount to theft qua documents No.1 to 28. The documents
and the replication of the documents and the contents thereon have
physical presence and therefore, are certainly “corporeal property”
and the same can be the subject matter of theft.
69. The main question falling for consideration is whether in the F
facts and circumstances of the case in hand whether temporary removal
of the documents and using them in the litigations pending between the
parties would amount to theft warranting lodging of a criminal complaint.
70. Admittedly, documents No.1 to 54 including the Document
No.1-Internal Audit Report of Chanderia unit of the appellant Company G
has been filed by the respondents in the company petition. These
documents are intra-company correspondence, internal audit reports,
agreements, etc. in relation to the operations of the appellant Company.
Admittedly, these documents have been produced in the company petition
by the shareholders of the appellant-Company to substantiate their case
of oppression and mismanagement by respondent No.17 and for H
692 SUPREME COURT REPORTS [2019] 7 S.C.R.
A vindication of their rights. As discussed infra in the facts and
circumstances of the case in hand, in our view taking away of the
documents temporarily and using them in the pending litigations between
the parties would not amount to theft.
71. In the criminal complaint, by order dated 08.10.2010, the
B Magistrate has taken the cognizance of the offence under Section 380
IPC - “Theft in dwelling house, etc.”. In order to constitute theft, the
following ingredients are essential:-
i. Dishonest intention to take property;
ii. The property must be moveable;
C
iii. It should be taken out of the possession of another person;
iv. It should be taken without the consent of that person;
v. There must be some removal of the property in order to
accomplish the taking of it.
D
72. Intention is the gist of the offence. It is the intention of the
taker which must determine whether taking or moving of a thing is theft.
The intention to take “dishonestly” exists when the taker intends to
cause wrongful loss to any other which amounts to theft. It is an essential
ingredient of the offence of “theft” that the movable property should
E have been “moved” out of the possession of any person without his
consent. “Movable property” is defined in Section 22 of IPC, which
reads as under:-
“Movable property – The words “movable property” are
intended to include corporeal property of every description, except
F land and things attached to the earth or permanently fastened to
anything which is attached to the earth.”
“Dishonestly” has been defined in Section 24 IPC, which reads as under:-
“Dishonestly - Whoever does anything with the intention of
causing wrongful gain to one person or wrongful loss to another
G person, is said to do that thing “dishonestly”.
“Wrongful gain” and “Wrongful loss” have been defined in Section 23
IPC which read as under:-
“Wrongful gain” - “Wrongful gain” is gain by unlawful means
of property to which the person gaining is not legally entitled.
H
BIRLA CORPORATION v. ADVENTZ INVESTMENTS & 693
HOLDINGS LTD. [R. BANUMATHI, J.]
“Wrongful loss” - “Wrongful loss” is the loss by unlawful means A
of property to which the person losing it is legally entitled.
Gaining wrongfully, losing wrongfully - A person is said to
gain wrongfully when such person retains wrongfully, as well as
when such person acquires wrongfully. A person is said to lose
wrong-fully when such person is wrongfully kept out of any B
property, as well as when such person is wrongfully deprived of
property.”
73. In the facts and circumstances of the case, it is to be seen in
using the documents in the litigation, whether there is “dishonest
intention” on the part of the respondents in causing “wrongful loss” to C
the appellant Company and getting “wrongful gain” for themselves.
Respondents No.1 to 5 are the shareholders of the appellant-Company
and they have produced the photocopies of the documents No.1 to 54 in
the CLB proceedings which were filed by them on the ground of
oppression and mismanagement. Merely because the respondents have
produced the copies of the documents in the CLB proceedings, it cannot D
be said that the respondents have removed the documents with
“dishonest” intention. Copies of documents are produced in support of
the case of respondents No.1 to 5 and to enable the Court to arrive at
the truth in a judicial proceeding involving alleged oppression and
mismanagement in the affairs of the appellant Company by respondent E
No.17. A person can be said to have “dishonest intention” if in taking
the property it is the intention to wrongful gain by unlawful means or to
cause wrongful loss by unlawful means. As discussed earlier, the
complaint does not allege that there was any wrongful gain to the
respondents or wrongful loss to the appellant-Company so as to constitute
ingredients of theft under Section 378 IPC. The complaint only alleges F
that the copies of the document were used in the CLB proceedings by
respondents No.1 to 5. There is no allegation of “wrongful gain” to the
respondents or “wrongful loss” to the appellant.
74. As pointed out earlier, documents No.1 to 54 are filed in the
Company Petition to substantiate their case of oppression and G
mismanagement. Filing of documents in the CLB proceedings is only to
assert their claim of oppression and mismanagement of the appellant
Company. According to the respondents, there is a bona fide dispute of
oppression and mismanagement and the documents No.1 to 54 are filed
only to substantiate their case. When a bona fide dispute exists between H
694 SUPREME COURT REPORTS [2019] 7 S.C.R.
A the parties as to whether there is oppression and mismanagement, there
is no question of “wrongful gain” to the respondents or “wrongful
loss” to the appellant. In using the documents, when there is no dishonest
intention to cause “wrongful loss” to the complainant and “wrongful
gain” to the respondents, it cannot be said that the ingredients of theft
are made out.
B
75. As discussed earlier, respondents No.12 to 16 have filed five
civil suits challenging the cancellation of the trusts for recovery of the
property that had vested in public charity through the trust deeds.
Respondents No.12 to 16 have filed copy of document No.1-Internal
Audit Report of Chanderia Unit of the appellant Company. By the time,
C the document was filed in the interlocutory applications filed in the civil
suits, the document was already filed in CP No.1/2010. Here again,
there is a bona fide dispute as to the correctness of cancellation of the
revocation of the trusts deed and to substantiate the averments in the
complaint and in the interlocutory applications. It cannot be said that the
D respondents No.1 to 16 had dishonest intention in using the documents
so as to cause “wrongful loss” to the appellant or “wrongful gain” to
themselves so as to attract the ingredients of theft under Section 378
IPC.
76. How the respondents had access to the documents may be
E one thing. It may perhaps have bearing on the evidentiary value to be
attached to the documents. But to say that it amounts to theft and seeking
to prosecute the respondents is nothing but an attempt to cow down
their defence in the litigation or to deprive the respondents of their valuable
defence. In Pooran Mal v. Director of Inspection (Investigation),
New Delhi and Others (1974) 1 SCC 345, it has been held by the
F Constitution Bench that even in case of illegal search and seizure, the
documents obtained cannot be shut out from consideration as long as
they are relevant to the matters in issue. In the present case, the
documents are used in good faith in the legal proceedings i.e. Company
Petition filed by respondents No.1 to 5 alleging oppression and
G mismanagement and the other suits are the civil suits challenging the
cancellation of the Trusts. These cases are pending and both the parties
are hotly contesting those cases. Use of the documents in judicial
proceeding by the respondents is to substantiate the case of oppression
and mismanagement of the appellant-Company. Absolutely, no “dishonest
intention” or “wrongful gain” could be attributed to the respondents.
H
BIRLA CORPORATION v. ADVENTZ INVESTMENTS & 695
HOLDINGS LTD. [R. BANUMATHI, J.]
Likewise, there is no “wrongful loss” to the appellants so as to attract A
the ingredients of Sections 378 and 380 IPC.
77. The intention under Section 24 IPC “dishonestly” must be to
cause “wrongful loss” to the other or to have “wrongful gain” for
oneself. In determining whether a person has acted dishonestly or not, it
is the intention which has to be seen. By filing the documents in the legal B
proceedings, there is no intention on the part of the respondents to cause
“wrongful loss” to the appellant nor intention to make “wrongful gain”
to themselves. Filing of the documents in the legal proceedings is only to
vindicate their stand in the company petition. We find much force in the
submission of the learned senior counsel, Mr. Sibal, appearing for
respondents No.1 to 5 that the attempt of the appellant in trying to C
prosecute the respondents appears to arm-twist the respondents in an
attempt to shut out the relevant material documents before the CLB
proceedings by prosecuting respondents No.1 to 9 and in the civil suits.
78. Whether respondents should have called for the
documents in accordance with various provisions:- Contention on D
behalf of the appellant is that despite there being adequate provisions
under Section 10-E of Companies Act and Section 91 Cr.P.C. relating to
summoning of documents and of discovery, interrogatories and inspection
of documents under Order XI CPC, the respondents resorted to dubious
methods to procure the documents and thus, cannot skirt the liability for E
their actions by contending that since the documents were used for a
legal proceeding, it cannot be theft.
79. Undoubtedly, adequate provisions have been provided in all
the laws concerned with the instant case to enable a party to a suit or
the concerned court to require the production of all documents and F
materials considered necessary or desirable for proper adjudication of
the dispute at hand. If a document in possession is not produced after
notice, there is further presumption under Section 114 illus.(g) that the
evidence if produced would have been unfavourable to the opposite party.
80. The respondents herein are alleged to have used the documents G
of appellant-Corporation without calling upon them to produce the
documents in accordance with law. Of course, the litigants and their
counsel are expected to comply with the provisions of law and court
discovery rules in producing the documents. But merely because the
respondents have not called for the documents as per the provisions, it
H
696 SUPREME COURT REPORTS [2019] 7 S.C.R.
A cannot be said that they have committed “theft”. It may be that the
respondents have not issued notice calling upon the appellant-Corporation
to produce the documents or may not have taken steps in accordance
with various provisions of law calling upon them to produce documents.
This may probably be the point to be raised in appropriate proceedings
so as to advance arguments as to the evidentiary value to be attached to
B
the documents. But it would be far-fetched to say that the respondents
have dishonestly removed the documents and committed the offence of
theft and that they are to face criminal prosecution for theft of the
documents. It would only be an arm-twisting tactics to deprive the
respondents from pursuing their defence with relevant evidence and
C materials. Since we have held that there are no sufficient ground for
proceeding against the respondents and that the order of issuance of
summons itself is not sustainable, we are not inclined to go further deep
on this aspect; nor express our views as to the evidentiary value to be
attached to the documents in the relevant proceedings. Lest, it would
amount to expressing our views in the pending proceedings between the
D
parties.
81. Whether the criminal prosecution against the
respondents be permitted to continue:- As discussed earlier,
admittedly the parties are entangled in several litigations. Allegations of
theft and misappropriation are relating to the documents No.1 to 28 and
E the documents No.1 to 54 which are filed in the company petition and
filing of Internal Audit Report in the civil suits. As discussed earlier,
there are no specific allegations as to when, where and how the
respondents have committed theft; nor are there specific allegations
against the respondents accused. Allegations in the complaint, being taken
F at their face value, do not disclose prima-facie case nor the ingredients
of the offence of house theft or misappropriation are made out.
82. Exercise of power under Section 482 Cr.P.C. envisages three
circumstances in which the inherent jurisdiction may be exercised
namely:- (i) to give effect to an order under the Code; (ii) to prevent
G abuse of the process of court; and (iii) to otherwise secure the ends of
justice. Inherent jurisdiction under Section 482 Cr.P.C. though wide has
to be exercised sparingly, carefully and with caution.
83. It is well settled that the inherent jurisdiction under Section
482 Cr.P.C. is designed to achieve a salutary purpose and that the criminal
H proceedings ought not to be permitted to degenerate into a weapon of
BIRLA CORPORATION v. ADVENTZ INVESTMENTS & 697
HOLDINGS LTD. [R. BANUMATHI, J.]
harassment. When the Court is satisfied that the criminal proceedings A
amount to an abuse of process of law or that it amounts to bringing
pressure upon the accused, in exercise of the inherent powers, such
proceedings can be quashed. In Smt. Nagawwa v. Veeranna
Shivalingappa Konjalgi and Others (1976) 3 SCC 736, the Supreme
Court reviewed the earlier decisions and summarised the principles as
B
to when the issue of process can be quashed and held as under:-
“5. ………….. Once the Magistrate has exercised his discretion
it is not for the High Court, or even this Court, to substitute its
own discretion for that of the Magistrate or to examine the case
on merits with a view to find out whether or not the allegations in
the complaint, if proved, would ultimately end in conviction of the C
accused. These considerations, in our opinion, are totally foreign
to the scope and ambit of an inquiry under Section 202 of the
Code of Criminal Procedure which culminates into an order under
Section 204 of the Code. Thus it may be safely held that in the
following cases an order of the Magistrate issuing process against D
the accused can be quashed or set aside:
(1) where the allegations made in the complaint or the
statements of the witnesses recorded in support of the same
taken at their face value make out absolutely no case against
the accused or the complaint does not disclose the essential E
ingredients of an offence which is alleged against the accused;
(2) where the allegations made in the complaint are patently
absurd and inherently improbable so that no prudent person
can ever reach a conclusion that there is sufficient ground for
proceeding against the accused; F
(3) where the discretion exercised by the Magistrate in issuing
process is capricious and arbitrary having been based either
on no evidence or on materials which are wholly irrelevant or
inadmissible; and
(4) where the complaint suffers from fundamental legal G
defects, such as, want of sanction, or absence of a complaint
by legally competent authority and the like.
The cases mentioned by us are purely illustrative and provide
sufficient guidelines to indicate contingencies where the High Court
can quash proceedings.” H
698 SUPREME COURT REPORTS [2019] 7 S.C.R.
A 84. In State of Haryana and Others v. Bhajan Lal and Others
1992 Supp (1) SCC 335, the Supreme Court considered the scope of
inherent powers of the Court and after referring to earlier decisions, the
Supreme Court enumerated categories of cases by way of illustration
where the extraordinary jurisdiction under Article 226 of the Constitution
of India can be exercised by the High Court to prevent abuse of process
B
of Court or otherwise to secure ends of justice. It was held that “where
the uncontroverted allegations made in the FIR or complaint and
the evidence collected in support of the same do not disclose the
commission of any offence and make out a case against the
accused.”
C 85. In the present case, it is one thing to say that the documents
have not been secured in accordance with the law and no value could be
attached to them. But merely because documents have been produced
from one source or other, it cannot be said that documents have been
dishonestly removed to obtain “wrongful gain” to the respondents and
D cause “wrongful loss” to the appellant. Where it appears that the criminal
complaint has been filed to bring pressure upon the respondents who are
shown as accused in the criminal case, the complaint is to be quashed.
86. In Indian Oil Corpn. v. NEPC India Ltd. and Others (2006)
6 SCC 736, the Supreme Court after observing that there is a growing
E tendency in business circles to convert powerful civil disputes in criminal
cases held as under:-
“14. While no one with a legitimate cause or grievance should be
prevented from seeking remedies available in criminal law, a
complainant who initiates or persists with a prosecution, being
F fully aware that the criminal proceedings are unwarranted and
his remedy lies only in civil law, should himself be made
accountable, at the end of such misconceived criminal proceedings,
in accordance with law. One positive step that can be taken by
the courts, to curb unnecessary prosecutions and harassment of
innocent parties, is to exercise their power under Section 250 CrPC
G more frequently, where they discern malice or frivolousness or
ulterior motives on the part of the complainant. Be that as it may.”
87. In Madhavrao Jiwajirao Scindia and Others v.
Sambhajirao Chandrojirao Angre and Others (1988) 1 SCC 692, it
was held that “when a prosecution at the initial stage is asked to be
H
BIRLA CORPORATION v. ADVENTZ INVESTMENTS & 699
HOLDINGS LTD. [R. BANUMATHI, J.]
quashed, the test to be applied by the court is as to whether the A
uncontroverted allegations as made prima-facie establish the
offence.” It was further held that “while considering the matter, the
court is to take into consideration any special feature which appear
in a particular case showing whether or not it is expedient in the
interest of justice to permit a prosecution to continue.”
B
88. The FIR or the criminal proceedings can be quashed if the
allegations do not make out a prima-facie case or allegations are so
improbable that no prudent person would ever reach a just conclusion
that there are sufficient grounds for proceeding against the accused. So
far as, the allegation of retention of the documents No.29 to 54, in our
view, no allegation as to when and how the original documents were C
removed and retained by the respondents. Where on the admitted facts
no prima-case case is made out against the accused for proceeding or
when the Supreme Court is satisfied that the criminal proceedings amount
to abuse of process of court, Supreme Court has the power to quash any
judicial proceedings in exercise of its power under Article 136 of the D
Constitution of India. In our view, the present case is a fit case for
exercising the power in quashing the criminal complaint qua the documents
No.29 to 54 also.
89. We summarise our conclusions as under:-
By the order of the Magistrate dated 08.10.2010, cognizance E
was taken against respondents No.1 to 16 for commission of
the offences under Sections 380, 411 and 120B IPC. There
are no averments in the complaint nor are there allegations in
the statement of the complainant or the witness P.B. Dinesh
as to when and how the theft was committed and the order of F
the Magistrate dated 08.10.2010 taking cognizance of the
criminal case against respondents No.1 to 16 qua documents
No.1 to 54 is liable to be set aside.
It is held that the “document” as defined in Section 29 IPC is
a “moveable property” within the meaning of Section 22 IPC G
which can be the subject matter of theft. The information
contained thereon in the documents would also fall within the
purview of the “corporeal property” and can be the subject
matter of the theft. The findings of the High Court is modified
to that extent.
H
700 SUPREME COURT REPORTS [2019] 7 S.C.R.
A In the facts and circumstances of the present case, use of
documents No.1 to 28 and documents No.29 to 54 by the
respondents in judicial proceedings is to substantiate their case
namely, “oppression and mismanagement” of the
administration of appellant-Company and their plea in other
pending proceedings and such use of the documents in the
B
litigations pending between the parties would not amount to
theft. No “dishonest intention” or “wrongful gain” could
be attributed to the respondents and there is no “wrongful
loss” to the appellant so as to attract the ingredients of Sections
378 and 380 IPC.
C Considering the facts and circumstances of the present case
and the number of litigations pending between the parties, in
our considered view, continuation of the criminal proceedings
would be an abuse of the process of the court. The order of
the Magistrate dated 08.10.2010 taking cognizance of the
D offences and the issuance of summons to respondents No.1 to
16 and the criminal proceedings thereon are liable to be quashed.
90. In the result, the impugned judgment of the High Court dated
15.05.2015 qua Documents No.29 to 54 is set aside and the appeals
arising out of SLP(Crl.) D.Nos.6405 and 6122 of 2019 preferred by the
E respondents are allowed. The appeal arising out of SLP(Crl.) No.9053
of 2016 preferred by the appellants qua Documents No.1 to 28 is
dismissed.
Ankit Gyan Appeals disposed of.
F
G
H
Search Indian case law
Ask in plain English, not just keywords. 25,000 AI words free, no card.
Try "Theft"Sign in to search