By Ananya Khanna, Symbiosis Law School
Section 482 of the Criminal Procedure Code pertains to the inherent powers of the High Court and can only be deployed in the rarest of the rare cases where it is imperative for the High Court to intervene to secure the ends of justice.This case discusses applicability of Section 482 with regards to the quashing of criminal proceedings on the merits of the case. In the backdrop of corporate crimes, this case also highlights the importance of Sections 4 and 188 of the Code under which Indian Courts have the jurisdiction to try offences committed by Indians outside the Indian territory.
FACTS OF THE CASE
The present case is an appeal against the order (dated 01.03.2000) of the High Court of Andhra Pradesh), before which the case was first presented. The High Court had refused to grant the prayer of the Appellants for quashing the proceedings that were instituted against them on the complaint petition filed by the Respondent. The Appellant and the Respondent were the Directors of a Company (M/s Spectrum Power Generation Limited) incorporated under the Indian Companies Act, 1956, with its registered office at Secunderabad, Andhra Pradesh. A complaint was filed by the Respondent alleging offences committed by the Appellants, under Section 60, 63, 68 and 68A read with Section 621 of the Indian Companies Act, 1956. The Respondent alleged that the Appellants had misrepresented and made false, misleading and deceptive statements, and by way of this misrepresentation, they had induced a large number of people to pay them money for purchasing shares of their company. Moreover they had raised nearly a million dollars from Non-Resident Indians (NRIs), siphoned off those funds into bogus companies exclusively owned by them in off-shore companies and purchased shares of the Company in India in the names of bogus off-shore companies owned or controlled by them. All this was brought to the notice of the Complainant when some of the prospective NRI investors made correspondence with the Company demanding share certificates for which they had paid huge amounts to the Appellants. Thus, the Respondents alleged that fraud had been committed by the Appellants on the company, in whose name they collected money, invested that in their own companies and those companies in turn applied and got shares at the instance of the accused persons.
The Special Judge for Economic Offences, Hyderabad, on receipt of the complaint issued summons to the Accused asking them to appear before the Court. Receiving the summons, the Accused filed a petition under Section 482 of the Code of Criminal Procedure,1973 in the High Court of Andhra Pradesh to quash the proceedings that had been initiated against them including appearance of the Petitioners before the Court. The High Court, however, refused to quash the proceedings. This order of the High Court was later raised in appeal before the Supreme Court.
The main issue that was raised before the Court in this case was that whether or not a case for quashing the complaint filed under Section 482 of the Code of Criminal Procedure (Cr.P.C.), 1973 can be made out based on the facts.
The following sections and legislations are found to be applicable in this case-
- Section 4 (2) of the Code of Criminal Procedure (Cr. P.C.), 1973- ‘All offences under any other law shall be investigated, inquired into, tried, and otherwise
dealt with according to the same provisions, but subject to any enactment for the time being in force regulating the manner or place of investigating, inquiring into, trying or otherwise dealing with such offences’.
- Section 188, Cr. P.C., 1973- ‘Offence committed outside India: When an offence is committed outside India—
(a) by a citizen of India, whether on the high seas or elsewhere; or
(b) by a person, not being such citizen, on any ship or aircraft registered in India, he may be dealt with in respect of such offence as if it had been committed at any place within India at which he may be found: Provided that, notwithstanding anything in any of the preceding sections of this Chapter, no such offence shall be inquired into or tried in India except with the previous sanction of the Central Government’.
- Section 482 of Cr.P.C.- ‘Saving of inherent power of High Court:
Nothing in this Code shall be deemed to limit or affect the inherent powers of the High Court to make such orders as may be necessary to give effect to any order under this Code, or to prevent abuse of the process of any Court or otherwise to secure the ends of justice’.
- Section 2(36), Indian Companies Act, 1956
- Section 60, Indian Companies Act, 1956
- Section 63, Indian Companies Act, 1956
- Section 63(1), Indian Companies Act, 1956
- Section 68, Indian Companies Act, 1956
- Section 68A, Indian Companies Act, 1956
- Article 226 of the Constitution of India, 1950
It was argued from the side of the Appellants that the allegations of the Respondents when taken in entirety do not make out the offences that have been alleged and since the Appellants are citizens of U.S.A, and the offences alleged in the complaint petition were committed outside the territory of India, a criminal proceeding instituted against them in the Court before the Magistrate is not maintainable. They thus claimed that the Magistrate did not have the jurisdiction to entertain the petition. From the Respondent’s side it was contended before the Court that a strong prima facie case for criminal action against the Appellants has been made out in the case, and the questions raised in the proceeding on behalf of the Appellants cannot be considered at this stage of the proceedings since they are to be determined during the hearing of the case. Also, since no case for quashing of the complaint and the proceeding initiated on its basis under Section 482 of the Criminal Procedure Code[i] (hereinafter referred to as the “Cr.P.C.”) or Article 226 of the Constitution of India had been made, the High Court had rightly dismissed the petition filed by the Appellants. The Supreme Court in this case held that the power to quash a criminal proceeding under Section 482 of Cr. P.C. is to be exercised very sparingly, with circumspection, that too in the rarest of rare cases. Since the complaint is making out a prima facie case against the Appellants, it is not liable to be quashed. Also, whether the Appellants were or were not citizens of India at the time of commission of the offences alleged and whether the offences alleged were or were not committed in this country, are questions to be considered on the basis of the evidence to be placed before the Court at the trial of the case. From Sections 4 and 188 of the Cr.P.C., it is clear that even if the offence is committed by a citizen of India outside the country, the same is subject to the jurisdiction of Courts in India[ii].
Section 482 of the Cr.P.C. pertains to the inherent powers of the High Court, which it may exercise for the prevention of abuse of any Court process or to secure the ends of justice[iii]. In the case of State of Bihar v. Murad Ali Khan and Ors.[iv] the Supreme Court had observed :”It is trite that jurisdiction under Section 482 CrPC, which saves the inherent power of the High Court, to make such orders as may be necessary to prevent abuse of the process of any Court or otherwise to secure the ends of justice, has to be exercised sparingly and with circumspection. In exercising that jurisdiction the High Court should not embark upon an enquiry whether the allegations in the complaint are likely to be established by evidence or not. That is the function of the Trial magistrate when the evidence comes before him. Though it is neither possible nor advisable to lay down any inflexible nor advisable to lay down any inflexible rules to regulate that jurisdiction, one thing, however, appears clear and it is that when the High Court is called upon to exercise this jurisdiction to quash a proceeding at the stage of the Magistrate taking cognizance of an offence the High Court is guided by the allegations, whether these allegations, set out in the complaint or the charge-sheet, do not in law constitute or spell out any offence and that resort to criminal proceedings would, in the circumstances, amount to an abuse of the process of the Court or not.” A similar view was also expressed by the Apex Court in the cases of State of Haryana and Ors. v. Bhajan Lal and Ors.[v], and Mahavir Prasad Gupta and Anr. v. State of National Capital Territory of Delhi and Ors.[vi] In these cases, the Supreme Court said that the power to quash criminal proceedings is a power that is to be used very rarely, judiciously and sparingly. The Court cannot be said to be justified in conducting an enquiry as to the reliability or genuineness of the allegations made in the FIR or the complaint, and the extraordinary or inherent powers do not confer an arbitrary jurisdiction on the Court to act according to its whim or caprice. In its earlier cases, the Supreme Court has guided that the power to quash investigation must be applied only when no other remedy was available.[vii]
In the case of Rajinder Chand Abrol v. State of H.P.,[viii] it was held that quashing of proceedings before the investigation is completed would be premature and thus is not in the interest of justice. The Supreme Court in the case of State of Punjab v. Devinder Kumar,[ix] observed that the Court shall not quash the criminal proceedings on slender grounds.
It was contended by the Appellants that the relevant sections of the Indian Companies Act, 1956 were not applicable to them as the Appellants are the citizens of USA and they are the Directors of the overseas company which has been incorporated and functioning abroad and that the offer for investment was made to NRIs in USA. The Supreme Court said that after reading of the complaint petition and the materials produced by the Complainant under the light of the relevant sections of the Indian Companies Act, 1956, prima facie offences are made out against the Appellants. The Court also said that whether or not the Appellants were citizens of India at the time of committing the offence, and whether or not the alleged offences were committed in India, were questions that would be considered based on the evidences produced at the trial of the case for which an enquiry into the facts is required. Such questions cannot be considered at the preliminary stage for the purpose of quashing the complaint and the proceeding initiated on its basis. Also, it is clearly stated under sections 4 (2) and 188 of Cr.P.C., that even if an offence is committed by an Indian outside the territory of India, the offence is subject to the jurisdiction of Courts in India[x]. In the case of Mobarik Ali Ahmed v. State of Bombay[xi], the Supreme Court held that that corporeal presence of the accused in the country is not essential to assert the criminal jurisdiction. Thus, even if an Indian commits an offence outside India, Indian Courts will have the jurisdiction to try that offence.
Thus, the Supreme Court held that the High Court of Andhra Pradesh was correct in refusing to quash the complaint petition and the proceedings initiated on its basis, and thus the appeal of the Appellants was dismissed as being devoid of any merits.
In my opinion, the Supreme Court made a very just and sound decision in upholding the judgment of the High Court of Andhra Pradesh and dismissing the appeal. The High Court’s power to quash criminal proceedings under Section 482 of Cr.P.C.is a power that is to be used as an exception, in the rarest of rare cases. Only if the Court feels that some grave injustice has been done, or there has been abuse of a Court process, can the Court invoke these powers. It is not the task of the Court to go into the genuineness and reliability of allegations made in every complaint or FIR. Such questions may only be answered in the course of the proceedings. Since prima facie offences could be made out from the complaint , later questions like whether or not the Appellants were citizens of India at the time of commission of the offence, and whether or not the alleged offences were committed in India, were questions that would be considered based on the evidences produced during the trial. To that end, an enquiry into the facts is required. Therefore, it was correct of the Apex Court to not quash the proceedings initiated on the basis of the complaint petition. Nevertheless, Section 4 and 188 of the Cr.P.C empower the Indian Courts to try offences that have been committed by Indian citizens outside the territory of India.
RESEARCH TOOLS USED
- BOOKS- Ratanlal and Dhirajlal, The Code of Criminal Procedure, 20th Edition, Lexis Nexis
- JOURNALS- Indian Streams Research Journal, Vol 3 Issue 9 Oct 2013, ISSN No: 2230-7850
- INTERNET SOURCES-
Edited by Raghavi Viswanath
[i] Code of Criminal Procedure,1973
[ii] A.V. Mohan Rao and Anr. v. M. Kishan Rao and Anr, AIR 2002 SC 2653
[iii] Ratanlal & Dhirajlal, The Code of Criminal Procedure, 20th Edition, Lexis Nexis
[iv] 1989 CriLJ 1005
[v] 1993 CriLJ 1042
[vi] 2000 CriLJ 4665
[vii] Madhu Limaye v. State of Maharashtra, AIR 1978 SC 47
[viii] 1995 CrLJ 800( HP)
[ix] AIR 1983 SC 545
[x] Central Bank of India Ltd. v. Ram Narain, 1955 CriLJ 152
[xi] 1957 CriLJ 1346