ORDER
N.S. Veerabhadraiah, J.
1. The petitioners who are accused 5 and 6 before the IV Additional Chief Municipal Magistrate, Bangalore, have sought for quashing of the charge-sheet filed for the offence under Sections 406 and 420 read with Section 34 of the IPC in C.C. No. 8257 of 2001.
2. The brief facts are as follows:
The Police, Ashoknagar Police Station, Bangalore City filed the charge-sheet through COD against the petitioners and four others alleging that the petitioners and four others being the Directors of M/s. Synergy Finance Exchange Limited, Chonnai, opened a Branch at No. 107, Raheja Plaza, Commercial Street, Bangalore, with an announcement to the general public for investment of money on term deposits, for higher rate of interest. In pursuant of the said announcement, C.W. 1-K. Kadhakrishna invested Rs. 26,000/- on 15-11-1996 and deposited in RD for one year on 2-12-1996 amounting to Rs. 12,000/-, C.W. 2-Narahari Shastry deposited Rs. 50,000/- on 14-9-1997 and another sum of Rs. 50,000/- on 26-9-1997, C.W. 3-N. Raghunath deposited Rs. 2,60,000/- on 2-12-1997, C.W. 4-K.L. Lingaraja Aras invested Rs. 25,000/- on 14-9-1997, C.W. 5-Vijaya invested Rs. 77,000/- on 27-4-1995, C.W. 6-S.K. Sengupta invested Rs. 1,00,000/- on 2-2-1997, C.W. 7-Prema invested Rs. 40,000/- on 19-12-1996, Rs. 70,0007- on 19-12-1996 and Rs. 36,000/- on 4-7-1997 and Rs. 30,0007- on 24-7-1997, C.W. 8-M.C. Subadra invested Rs. 10,000/- during September 1996, C.W. 9-Mythili investeds. 25,000/- during January 1997 in the name of her children, C.W. 10-Narasimhan invested Rs. 5,000/- on 24-12-1996, C.W. 11-Varadaraj invested a sum of Rs. 1,00,000/- during December 1996 in the name of his wife and children, C.W. 12-Seethamma invested a sum of Rs. 20,000/- on 16-10-1986 likewise after its maturity in respect of some portion of interest and deposit, the accused persons issued the cheques which were dishonoured and made good an amount of Rs. 10,94,0597- for their own purpose and thereby misappropriated the amount by cheating the said depositors. On filing of the charge-sheet, the learned Chief Metropolitan Magistrate took cognizance of the offence under Sections 406 and 420 of the IPC and ordered for issue of summons to the accused persons 1 to 6. The petitioners who are A-5 and A-6 have sought for quashing of the charge-sheet filed insofar as they are concerned for the alleged offences.
3. The learned Counsel Sri S.G. Bhagawan relying on the various decisions of the Hon'ble Supreme Court contended that the learned Chief Metropolitan Magistrate erred in taking cognizance against these two petitioners though there is no 'prima facie' case. Secondly, contended that the learned Chief Metropolitan Magistrate has not even made any efforts to find out whether they are responsible for any liability as such, as these two petitioners have not signed the cheques. Therefore, they cannot be vicariously made liable for the offence alleged. That apart, there is nothing on record to show whether they were in charge of the company activities or not. That the charge-sheet material showing that they are only the Directors. Further contended that on examining the materials placed on record, no overt act has been attributed and in the absence of a prima facie case, the filing of the charge-sheet against these two petitioners is not sustainable, therefore, prayed to quash the proceedings.
4. That apart, the learned Counsel has also filed detailed written arguments and also relied on the decisions: (1) Pepsi Foods Limited v. Special Judicial Magistrate, : 1998CriLJ1 (2) G. Sagar Suri and Anr. v. State of Uttar Pradesh and Ors., : 2000CriLJ824 . (3) Dr. S.P. Kohli v. High Court of Punjab and Haryana, : 1978CriLJ1804 . (4) Nucor Wires Limited, Bangalore and Others v. HMT (International) Limited, Bangalore, : ILR1997KAR3239 . (5) State of Haryana v. Brij Lal Mittal and Ors., : 1998CriLJ3287 and (6) Kedarnath Goenka and Ors. v. Superintendent of Central Excise and Ors. 1978(2) ELT 538 (Cal.) of the Calcutta High Court. It is on these grounds, the learned Counsel prayed to quash the proceedings on the ground that the petitioners have not committed any offence as alleged in the charge-sheet and that no ingredients under Sections 406 and 420 of the IPC are made out.
5. On the other hand, the learned Additional State Public Prosecutor Sri B.C. Muddappa contended that it is not in dispute that petitioners are also the Directors of the company. It is the Directors of the company who invited the general public at large to deposit the amount with a promise to pay higher rate of interest. Subsequently, neither they paid the amount nor the interest as agreed to. Therefore, the ingredients of Sections 406 and 420 of the IPC are made out which is clear from the statement of the witnesses. The petitioners are also the parties to the transaction of inviting the general public to invest the amount are liable. When prima facie materials are made out from the statement of witnesses who invested the amount, this Court should not exercise powers under Section 482 of the Cr. P.C. to quash the proceedings so as to enable the petitioners to escape from the clutches of criminal law as these two petitioners also stand on the same footing to that of the other accused persons by reason of Section 34 of the IPC. Therefore, prayed to dismiss the petition.
6. In the light of the submission, it is necessary to examine: 'Whether the materials placed by the prosecution are sufficient to proceed with, if so liable to be interfered with?'
7. It is an admitted fact that the accused persons, namely: (1) K.P. Narasimhan, (2) Y.G. Rajendran, (3) S. Venkataraman, (4) V. Venkatesh, (5) Farooq Dadabhai, petitioner 1, (6) P.K. Kurian, petitioner 2 are the Directors. Among the accused, A-1, K.P. Narasimham is the Chairman, A-2 is the Managing Director, A-3 is the Financial Advisor, A-4 is the Chartered Accountant, A-5 and A-6 are the Directors of M/s. Synergy Financial Exchange Limited, Chennai. The allegations in the charge-sheet read as follows:
'That the accused persons being the Directors of M/s. Synergy Financial Exchange Limited, Chennai, opened a Branch at No. 107, Raheja Plaza, Commercial Street in the year 1992, collected deposits from the general public promising to pay higher rate of interest. After the period of maturity, they 'neither paid the deposit amount nor the interest' and thereby cheated the depositors'.
The Investigation Officer recorded the statements of as many as C.Ws. 1 to 12 which show that they invested the amount with the Finance Company and after the completion of the investigation, filed the charge-sheet. Before considering the contention of the learned Counsels, it is essential to consider the ingredients of criminal breach of trust as well as cheating. Section 405 defines what is criminal breach of trust which thus reads:
'405. Criminal breach of trust.--Whoever, being in any manner entrusted with property, or with any dominion over property, dishonestly misappropriates or converts to his own use that property, or dishonestly uses or disposes off that property in violation of any direction of law prescribing the mode in which such trust is to be discharged, or of any legal contract, express or implied, which he has made touching the discharge of such trust, or wilfully suffers any other person so to do, commits 'criminal breach of trust'.
Section 406 is the punishment clause. In order to establish the offence of criminal breach of trust, the prosecution has to prove the following ingredients:
(1) Entrusting any person with property or with any dominion over the property.
(2) The person entrusted (a) dishonestly misappropriating or converting to his own use that property; or (b) dishonestly using or disposing off that property or wilfully suffering any other person so to do in violation--
(i) of any direction of law prescribing the mode in which such trust is to be discharged, or
(ii) of any legal contract made touching the discharge of such trust.
So also Section 415 defines what is cheating which thus reads:
'415. Cheating.--Whoever, by deceiving any person, fraudulently or dishonestly induces the person so deceived to deliver any property to any person, or to consent that any person shall retain any property, or intentionally induces the person so deceived to do or omit to do anything which he would not do or omit if he were not so deceived, and which act or omission causes or is likely to cause damage or harm to that person in body, mind, reputation or property, is said to 'cheat' '.
The penal section is Section 420 of the IPC thus reads:
'420. Cheating and dishonestly inducing delivery of property.--Whoever cheats and thereby dishonestly induces the person deceived to deliver any property to any person, or to make, alter or destroy the whole or any part of a valuable security, or anything which is signed or sealed, and which is capable of being converted into a valuable security shall be punished with imprisonment of either description for a term which may extend to seven years, and shall also be liable to fine'.
The ingredients to prove this section requires: (1) Deception of any person. (2)(a) Fraudulently or dishonestly inducing that person, (i) to deliver any property to any person; or (ii) to consent that any person shall retain any property; or (b) intentionally inducing that person to do or omit to do anything which he would not do or omit if he were not so deceived, and which act or omission caused or is likely to cause damage or harm to that person in body, mind, reputation or property.
8. In the case of M/s. Pepsi Foods Limited, supra, the allegations of the complaint are as follows:
'...that complainant was sold a bottle of beverage under the brand 'Lehar Pepsi' which was adulterated. The bottle was purchased by the complainant on 13-9-1993, He filed the complaint on 6-5-1994. After recording preliminary evidence the Magistrate passed orders summoning the appellants and others on 9-5-1994'.
The question of issue of summons came up before the High Court of Allahabad in the writ petition which came to be dismissed with a direction to approach the Trial Court for their discharge under Section 245 of the Cr. P.C. The High Court also observed that filing of writ petition is not permissible, when the matter came up before the Apex Court under Articles 226 and 227 of the Constitution, made the following observation:
'The Court can certainly treat the petition as one under Article 227 or Section 482 of the Code, It may not however, be lost sight of that provisions exist in the Code of revision and appeal but some time for immediate relief Section 482 of the Code or Article 227 may have to be resorted to for correcting some grave errors that might be committed by the subordinate Courts. The present petition though filed in the High Court as one under Articles 226 and 227 could well be treated under Article 227 of the Constitution'.
After considering the relevant provisions, facts and also the materials on record, observed as follows:
'If we now refer to the facts of the case before us it is clear to us that not only that allegation against the appellants do not make out any case for an offence under Section 7 of the Act and also that there is no basis for the complainant to make such allegations. The allegations in the complaint merely show that the appellants have 'given their brand name to 'Residency Foods and Beverages Limited' for bottling the beverage 'Lehar Pepsi'. The complaint does not show what is the role of the appellants in the manufacture of the beverage which is said to be adulterated. The only allegation is that the appellants are the manufacturers of bottle. There is no averment as to how the complainant could say so and also if the appellants manufactured the alleged bottle or its contents. His sole information is from A.K. Jain who is impleaded as A-3. The preliminary evidence on which the first respondent relied in issuing summons to the appellants also does not show as to how it could be said that the appellants are manufacturers of either the bottle or the beverage or both'.
It is in this context at para 28, the Apex Court observed as follows:
'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 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 spectator at the time of recording of preliminary evidence before summoning of the accused. 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 any of the accused'.
From the decision supra, it makes clear unless prima facie case is made out, it is erroneous on the part of the Court to order for issue of summons. Therefore, it is observed that while taking cognizance or issue of summons, the Magistrate should apply his mind. Insofar as the principles laid down, there cannot be any dispute. Each case has to be examined on its own facts and circumstances. Therefore, what has to be considered in the present case is whether the Magistrate has properly exercised its jurisdiction in issuing summons after taking cognizance.
9. In the decision of G. Sagar Suri, supra, it is clearly laid down that when proceedings under Section 138 of the Negotiable Instruments Act are issued, subsequent filing of complaint for the offence under Sections 406 and 420 of the IPC is not sustainable. The above decision is not applicable to the facts of this case. Further, it is held that there was no occasion for the complainant to prosecute the accused under Sections 406 and 420 of the IPC. In the absence of pleadings, prosecuting the accused for the offence under Sections 406 and 420 does not arise. Accordingly, the proceedings initiated came to be quashed.
10. It is also not in dispute that when the Magistrate proceeds under Section 204 of the IPC for issue of summons or process, it does not make any distinction between private complaint and a case filed on the basis of the charge-sheet by the prosecution. The Court is required to find out whether there is any prima facie case from the materials placed and nothing else at the preliminary stage.
11. In the case of Dr. S.P. Kohli, supra, at para 15 thus observed:
'15. It is true that what the Courts have to see before issuing the process against the accused is whether there is evidence in support of the allegations made by the complainant to justify the initiation of proceedings against the accused and not whether the evidence is sufficient to warrant his conviction, but this does not mean that the Courts should not prima facie be of the opinion that there are sufficient and reasonable grounds for setting the machinery of criminal law in motion against the accused. The moment this guiding principle is overlooked, the prosecution degenerates itself into persecution which often is fraught with evil consequences. The language in which the above quoted observations of the High Court about the exercise of pressure by the appellant on Dr. Mrs. L.K. Grewal are couched shows that the High Court was itself not prima facie, satisfied about the validity of the action that it was taking'.
There cannot be any dispute regarding the principles laid down wherein a duty cast on the Magistrate to find out prima facie, whether there are materials to proceed by issuing summons. The decisions in the cases of (i) Nucor Wires Limited, supra, (ii) Brij Lal Mittal, supra, (iii) Kedarnath Goenka, supra, are no way applicable to the facts of this case. Firstly, in the case of Nucor Wires Limited, supra, it is to fix up the responsibility of the Directors of the company in the proceedings under Section 138 of the N.I. Act has not come up for consideration wherein Section 141(2) of the N.I. Act makes clear that only on proof of offence under Section 138 of the N.I. Act, the Directors, Manager, Secretary or any other person is responsible for such act and also can be penalised. Therefore, the decisions are in no way helpful for the petitioners. Likewise, the other two decisions are also not applicable to the facts of this case.
12. In the case of State of Uttar Pradesh v. Suryanarayan, 1999 SOL Case No. 669. while considering the provisions of Sections 239 and 482 of the Cr. P.C., it is clearly held that at the stage of framing charges, Court cannot screen the evidence and the High Court exceeded its jurisdiction in quashing the proceedings. In the case of Rajesh Bajaj v. State NCT of Delhi and Ors., : 1999CriLJ1833 thus observed:
'9. It is not necessary that a complainant should verbatim reproduce in the body of his complaint all the ingredients of the offence he is alleging. Nor is it necessary that the complainant should state in so many words that the intention of the accused was dishonest or fraudulent. Splitting up of the definition into different components of the offence to make a meticulous scrutiny, whether all the ingredients have been precisely spelled out in the complaint, is not the need at this stage. If factual foundation for the offence has been laid in the complaint the Court should not hasten to Quash criminal proceedings during investigation stage merely on the premise that one or two ingredients have not been stated with details. For quashing an FIR (a step which is permitted only in extremely rare cases) the information in the complaint must be so bereft of even the basic facts which are absolutely necessary for making out the offence. In State of Haryana v. Ch. Bhajan Lal, : 1992CriLJ527 this Court laid down the premise on which the FIR can be quashed in rare cases. The following observations made in the aforesaid decisions are a sound reminder (para 109 of AIR):
'We also give a note of caution to the effect that the power of quashing a criminal proceeding should be exercised very sparingly and with circumspection and that too in the rarest of rare cases; that the Court will not be justified in embarking upon an enquiry as to the reliability or genuineness or otherwise of the allegations made in the FIR or the complaint and that the extraordinary or inherent powers do not confer an arbitrary jurisdiction on the Court to act according to its whim or caprice'.
Further, in the case reported in 2001 AIR SOW 482, it is observed that 'materials on record discloses a prima fade case, investigation cannot be interfered with'. It is with this background, we have to examine whether in the case on hand, a prima facie case is made out against these two petitioners or the proceedings has to be quashed. On perusal of the charge-sheet papers, the statement of C.Ws. 1 to 16 shows that C.W. 1-Radhakrishna deposited Rs. 26,000 and Es. 12,000, C.W. 2-Narahari Shastry deposited Rs. 50,000/- and Rs. 50,000/-, C.W. 3-N. Raghunath deposited Rs. 2,50,000/-, C.W. 4-K.L. Lingaraja Aras deposited Rs. 25,000/-, C.W. 5-Vijaya deposited Rs. 77,000/-, C.W. 6-S.K Sengupta deposited Rs. 1,00,000/-, C.W. 7-Prema deposited Rs. 40,000/-, Rs. 70,000/-, Rs. 36,000/- and Rs. 30,000/-, C.W. 8-M.C. Subadra deposited Rs. 10,000, C.W. 9-Mythili deposited Rs. 25,000/-, C.W. 10-Narasimhan deposited Rs. 5,000/-, C.W. 11-Varadaraj deposited Rs. 1,00,000/- and C.W. 12-Seethamma deposited Rs. 20,000/-, in pursuance of their promise to pay higher rate of interest and thereby it is alleged, that the accused persons have collected more than Rs. 9,45,800/-. It is also specifically alleged that after the maturity of the amount, they paid neither the principal nor the interest. Therefore, the charge-sheet came to be filed for the offence under Sections 406 and 420 read with Section 34 of the IPC against all the persons responsible i.e., the Directors of M/s. Synergy Exchange Finance Limited. It is pertinent to note that when the company has invited the general public to invest the amount and in pursuance of it, the public at large having invested the amount, that all directors having enjoyed the fruits of it, at this stage, they cannot plead, that they are in no way concerned with the alleged collection of the deposits. On a careful examination of the charge-sheet papers it clearly establishes that it is neither a case for quashing of the proceedings nor for discharge of the accused persons.
For the foregoing reasons, I do not find any merits in this petition. Accordingly, the petition is dismissed.