REPORTABLE

IN THE SUPREME COURT OF INDIA

CRIMINAL APPELLATE JURISDICTION

CRIMINAL APPEAL NO. 1694 OF 2008

(Arising out of SLP (Crl.) No.5672 of 2004)

R. Kalyani … Appellant

Versus

Janak C. Mehta & Ors. … Respondents

J U D G M E N T

S.B. Sinha, J.

1.Leave granted.

2.Appellant lodged a First Information Report (FIR) against the

respondents on or about 4.1.2003 under Sections 409, 420 and 468 read

with Section 34 of the Indian Penal Code.

3.First and second respondent approached the High Court for an order

for quashing of the said FIR as also the investigation initiated pursuant

thereto or in furtherance thereof. The High Court allowed the said

proceedings by reason of the impugned order dated 29.4.2004.

Mr. K.K. Mani, learned counsel appearing on behalf of the appellant,

would, in support of the appeal, contend :

(1)The High Court exercised its inherent jurisdiction under Section 482

of the Code of Criminal Procedure wholly illegally and without

jurisdiction insofar as it entered into the disputed questions of fact in

regard to the involvement of the respondents as the contents of the

first information report disclose an offence of cheating, criminal

breech of trust and forgery.

(2)While admittedly the investigation was not even complete, the High

Court could not have relied upon the documents furnished by the

defendants either for the purpose of finding out absence of mens rea

on the part of the applicants or their involvement in the case.

(3)Respondent Nos.1 and 2 herein being high ranking officers of M/s.

Shares and Securities Ltd., a company dealing in shares, were

vicariously liable for commission of the offence being in day to day

charge of the affairs thereof.

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(4)An offence of forgery being a serious one and in view of the fact that

the respondent No.2 forwarded a letter purporting to authorize the

accused No.3 to transfer shares to the National Stock Exchange, he

must be held to have the requisite intention to commit the said

offence along with the respondent No.3.

(5)In any view of the matter, the respondent No.3 being not an applicant

before the High Court, the entire criminal prosecution could not have

quashed by the High Court.

4.Ms. Indu Malhotra, learned senior counsel appearing on behalf of

Respondent No.1, on the other hand, would contend :

(a)In view of the admitted fact that a first information report had been

lodged by the respondents as against the appellant herein on

20.12.2002, i.e., much prior to the lodging of the FIR by the appellant

herein vis-à-vis the FIR lodged by the appellant herein on 4.1.2003,

the same was done with a mala fide intention.

(b)In view of the fact that the appellant herself owed a sum of Rs.13.28

lacs to the company and her group, a sum of Rs.45 lacs which is

evident from the balance sheet of the appellants, continuation of the

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criminal proceedings initiated against the respondents would be an

abuse of the process of court.

5.Mr. U.U. Lalit, learned senior counsel appearing on behalf of the

respondent No.2, supplementing the submissions of Ms. Malhotra urged :

(1)Appellant having not entered into any individual transaction with the

company and as the accounts held by her together with members of

her family were treated as group accounts and only because

respondent No.2 had forwarded a letter of the appellant dated

10.1.2002, which is alleged to be forged, to the National Stock

Exchange, the same by itself does not show that he was a party to the

forgery.

(2)In respect of the offences under general law, vicarious liability cannot

be fastened on an individual.

6.Mr. Vijay Thakur, learned counsel appearing on behalf of respondent

No.3, submitted that although his client was not an applicant before the

High Court, if the High Court having issued notice to him and quashed the

entire criminal proceedings, the impugned judgment should not be

interfered with.

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7.The legal principles in regard to quashing of a First Information

Report in view of a large number of decisions rendered by this Court are

now almost well settled.

8.We may notice some of them :

In State of Haryana & Ors. v. Bhajan Lal & Ors. [1992 Supp.(1) SCC

335], it was held :

“102. In the backdrop of the interpretation of the

various relevant provisions of the Code under

Chapter XIV and of the principles of law

enunciated by this Court in a series of decisions

relating to the exercise of the extra-ordinary power

under Article 226 or the inherent powers Under

Section 482 of the Code which we have extracted

and reproduced above, we give the following

categories of cases by way of illustration wherein

such power could be exercised either to prevent

abuse of the process of any Court or otherwise to

secure the ends of justice, though it may not be

possible to lay down any precise, clearly defined

and sufficiently channelised and inflexible

guidelines or rigid formulae and to give an

exhaustive list of myriad kinds of cases wherein

such power should be exercised.

1.Where the allegations made in the First

Information Report or the complaint, even if

they are taken at their face value and

accepted in their entirety do not prima-facie

constitute any offence or make out a case

against the accused.

2.Where the allegations in the First

Information Report and other materials, if

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any, accompanying the F.I.R. do not

disclose a cognizable offence, justifying an

investigation by police officers under

Section 156(1) of the Code except under an

order of a Magistrate within the purview of

Section 155(2) of the Code.

3. 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.

4. ….

5. Where the allegations made in the FIR or

complaint are so absurd and inherently

improbable on the basis of which no prudent

person can ever reach a just conclusion that

there is sufficient ground for proceeding

against the accused.

6. ….

7. Where a criminal proceeding is manifestly

attended with mala fide and/or where the

proceeding is maliciously instituted with an

ulterior motive for wreaking vengeance on

the accused and with a view to spite him

due to private and personal grudge.”

In Rajesh Bajaj v. State of NCT of Delhi & Ors. [(1999) 3 SCC 259],

this Court held :

“7. After quoting Section 415 of IPC learned

judges proceeded to consider the main elements of

the offence in the following lines:

6

“A bare reading of the definition of cheating

would suggest that there are two elements

thereof, namely, deception and dishonest

intention to do or omit to do something. In

order to bring a case within the first part of

Section 415, it is essential, in the first place,

that the person, who delivers the property

should have been deceived before he makes

the delivery; and in the second place that he

should have been induced to do so

fraudulently or dishonestly. Where property

is fraudulently or dishonestly obtained,

Section 415 would bring the said act within

the ambit of cheating provided the property

is to be obtained by deception.”

XXX XXX XXX

12. The High Court seems to have adopted a

strictly hyper-technical approach and sieved the

complaint through a calendar of finest gauzes for

testing the ingredients under Section 415, IPC.

Such an endeavour may be justified during trial,

but certainly not during the stage of investigation.

At any rate, it is too premature a stage for the High

Court to step in and stall the investigation by

declaring that it is a commercial transaction

simplicitor wherein no semblance of criminal

offence is involved.”

In Hamid v. Rashid alias Rasheed & Ors. [(2008) 1 SCC 474], this

Court opined :

“6. We are in agreement with the contention

advanced on behalf of the complainant appellant.

Section 482 Cr.P.C. saves the inherent powers of

the High Court and its language is quite explicit

when it says that nothing in the Code shall be

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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 the

Code, or to prevent abuse of the process of any

Court or otherwise to secure the ends of justice. A

procedural Code, however exhaustive, cannot

expressly provide for all time to come against all

the cases or points that may possibly arise, and in

order that justice may not suffer, it is necessary

that every court must in proper cases exercise its

inherent power for the ends of justice or for the

purpose of carrying out the other provisions of the

Code. It is well established principle that every

Court has inherent power to act ex debito justitiae

to do that real and substantial justice for the

administration of which alone it exists or to

prevent abuse of the process of the Court.”

In Sunita Jain v. Pawan Kumar Jain & Ors. [(2008) 2 SCC 705], it is

stated :

“In exercising its jurisdiction under Section

561-A the High Court would not embark

upon an enquiry as to whether the evidence

in question is reliable or not. That is the

function of the trial Magistrate, and

ordinarily it would not be open to any party

to invoke the High Court's inherent

jurisdiction and contend that on a

reasonable appreciation of the evidence the

accusation made against the accused would

not be sustained.”

In State of Orissa & Anr. v. Saroj Kumar Sahoo [(2005) 13 SCC 540],

this Court stated the law, thus :

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“11. As noted above, the powers possessed by the

High Court under Section 482 of the Cr.P.C. are

very wide and the very plenitude of the power

requires great caution in its exercise. Court must

be careful to see that its decision in exercise of this

power is based on sound principles. The inherent

power should not be exercised to stifle a legitimate

prosecution. The High Court being the highest

court of a State should normally refrain from

giving a prima facie decision in a case where the

entire facts are incomplete and hazy, more so

when the evidence has not been collected and

produced before the Court and the issues involved,

whether factual or legal, are of magnitude and

cannot be seen in their true perspective without

sufficient material. Of course, no hard and fast rule

can be laid down in regard to cases in which the

High Court will exercise its extraordinary

jurisdiction of quashing the proceeding at any

stage.

XXX XXX XXX

14. It is to be noted that the investigation was not

complete and at that stage it was impermissible for

the High Court to look into materials, the

acceptability of which is essentially a matter for

trial. While exercising jurisdiction under Section

482 of the Cr.P.C., it is not permissible for the

Court to act as if it was a trial Court. Even when

charge is framed at that stage, the Court has to

only prima facie be satisfied about existence of

sufficient ground for proceeding against the

accused. For that limited Page 2274 purpose, the

Court can evaluate material and documents on

records but it cannot appreciate evidence. The

Court is not required to appreciate evidence to

conclude whether the materials produced are

sufficient or not for convicting the accused. In

Chand Dhawan (Smt.) v. Jawahar Lal and Ors.

[(1992) 3 SCC 317], it was observed that when the

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materials relied upon by a party are required to be

proved, no inference can be drawn on the basis of

those materials to conclude the complaint to be

unacceptable. The Court should not act on

annexures to the petitions under Section 482 of the

Cr.P.C., which cannot be termed as evidence

without being tested and proved.”

In Kailsah Verma v. Punjab State Civil Supplies Corporation & Anr.

[(2005) 2 SCC 571], this Court stated :

“5. In Krishnan and Anr. v. Krishnaveni and

Anr. [(1997) 4 SCC 241] this question came up

for consideration. That was a case where the

complaint was registered under Sections 420, 406

IPC. After inquiry, the police filed a report stating

that the case was essentially of a civil nature and

no offence was made out. The complainant

brought the matter to the Superintendent of Police.

As per the directions of the Superintendent of

Police, the case was investigated by the Crime

Branch and a fresh report was filed under Section

173 IPC. On receipt of the report, the Magistrate

took cognizance of the offences under Sections

420 and 406 IPC. Thereupon, the

appellant/accused filed an application for

discharge and the accused was discharged by the

Magistrate. The complainant filed a revision

before the Sessions Court and the revision was

dismissed. On further revision by the complainant,

the High Court set aside the order of the

Magistrate and directed the trial of the criminal

case on merits. This was challenged on the ground

that the second revision was not maintainable. A

Bench consisting of three Judges of this Court

held:

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‘......though the revision before the High

Court under Sub-section (1) of Section 397

is prohibited Sub-section 3 thereof, inherent

power of the High Court is still available

under Section 482 of the Code and as it is

paramount power of continuous

superintendence of the High Court under

Section 483, the High Court is justified in

interfering with the order leading to

miscarriage of justice and in setting aside

the order of the courts below’.”

However, Dr. Monica Kumar & Anr. v. State of U.P. & Ors. [2008

(9) SCALE 166], held :

“The inherent power should not be exercised to

stifle a legitimate prosecution. The High Court

being the highest court of a State should normally

refrain from giving a prima facie decision in a case

where the entire facts are incomplete and hazy,

more so when the evidence has not been collected

and produced before the Court and the issues

involved, whether factual or legal, are of

magnitude and cannot be seen in their true

perspective without sufficient material. Of course,

no hard and fast rule can be laid down in regard to

cases in which the High Court will exercise its

jurisdiction of quashing the proceeding at any

stage.”

9.Propositions of law which emerge from the said decisions are :

(1)The High Court ordinarily would not exercise its inherent jurisdiction

to quash a criminal proceeding and, in particular, a First Information

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Report unless the allegations contained therein, even if given face

value and taken to be correct in their entirety, disclosed no cognizable

offence.

(2)For the said purpose, the Court, save and except in very exceptional

circumstances, would not look to any document relied upon by the

defence.

(3)Such a power should be exercised very sparingly. If the allegations

made in the FIR disclose commission of an offence, the court shall

not go beyond the same and pass an order in favour of the accused to

hold absence of any mens rea or actus reus.

(4)If the allegation discloses a civil dispute, the same by itself may not

be a ground to hold that the criminal proceedings should not be

allowed to continue.

10.It is furthermore well known that no hard and fast rule can be laid

down. Each case has to be considered on its own merits. The Court, while

exercising its inherent jurisdiction, although would not interfere with a

genuine complaint keeping in view the purport and object for which the

provisions of Sections 482 and 483 of the Code of Criminal Procedure had

been introduced by the Parliament but would not hesitate to exercise its

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jurisdiction in appropriate cases. One of the paramount duties of the

Superior Courts is to see that a person who is apparently innocent is not

subjected to persecution and humiliation on the basis of a false and wholly

untenable complaint.

11.In the aforementioned backdrop, we may now examine as to whether

the FIR lodged by the appellant makes out any case for proceeding against

the respondent.

12.We may, for the said purpose, notice the ingredients of Section 420

and 406 of the Indian Penal Code.

The ingredients of Section 420 of the Indian Penal Code are as

follows:

i) Deception of any persons;

ii) Fraudulently or dishonestly inducing any person to deliver any

property; or

iii) to consent that any person shall retain any property and finally

intentionally inducing that person to do or omit to do anything which

he would not do or omit.

Section 406 of the Indian Penal Code reads, thus :

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“406. Punishment for criminal breach of trust.

—Whoever commits criminal breach of trust shall

be punished with imprisonment of either

description for a term which may extend to three

years, or with fine, or with both.”

In Popular Muthiah v. State represented by Inspector of Police

[(2006) 7 SCC 296], it was opined :

“While exercising its appellate power, the

jurisdiction of the High Court although is limited

but, in our opinion, there exists a distinction but a

significant one being that the High Court can

exercise its revisional jurisdiction and/ or inherent

jurisdiction not only when an application therefore

is filed but also suo motu. It is not in dispute that

suo motu power can be exercised by the High

Court while exercising its revisional jurisdiction.

There may not, therefore, be an embargo for the

High Court to exercise its extraordinary inherent

jurisdiction while exercising other jurisdictions in

the matter. Keeping in view the intention of the

Parliament, while making the new law the

emphasis of the Parliament being 'a case before the

court' in contradistinction from 'a person who is

arrayed as an accused before it' when the High

Court is seized with the entire case although

would exercise a limited jurisdiction in terms of

Section 386 of the Code of Criminal Procedure,

the same, in our considered view, cannot be held

to limit its other powers and in particular that of

Section 482 of the Code of Criminal Procedure in

relation to the matter which is not before it.”

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13.LKP Shares and Securities Ltd. (the Company) is a company

registered and incorporated under the Indian Companies Act, 1956.

Whereas respondent No.1 is its President, the second respondent is its

Branch Coordinator. Both of them are stationed at Bombay which is its

headquarters. It has many branches including the one at Chennai. Every

branch is said to be an independent entity.

14.Respondent No.3 who has been arrayed as accused No.3 in the FIR

was the Branch Manager of the company at Chennai. Indisputably, all

interactions and transactions by and between the appellant and the company,

if any, were made by the complainant only with the respondent No.3.

15.A bare perusal of the First Information clearly goes to show that

authorisedly or unauthorisedly, respondent No.3 was operating the

appellant’s account. It is furthermore not in dispute that she and her family

members were operating six accounts with the company, the details whereof

are as under :

Sl. No. Name Account No.

1.Mr. A Sridhar A555

2.Mr. Dinesh D D316

3.Mrs. Dhanam B0002

4.Ms. Kalyani R. K0004

5.Jayamani S. J0001

6.M/s. R.S.R. Securities Limited R0014

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16.It is admitted that the appellant and her husband were Directors of

M/s. R.S.R. Securties Ltd. It is furthermore conceded that the respondent

No.3 and the brother of the appellant herein, when the company was in great

financial difficulties, became the Directors of the said M/s. RSR Securities

Ltd. It also stands admitted that the respondent No.3 resigned from the post

of Branch Manager on or about 25.10.2002.

17.The records before us also show that Demat Fixed Accounts were

being operated by Sridhar, brother of the appellant. It does not appear that

any transaction involving purchase and sale of any share was entered into by

and between the appellant and the company at any point of time, although

the accounts of the RSR Securities had been opened for trading in shares.

18.Apparently, the First Information Report does not contain any

allegation against the appellant No.1.

19.The principal allegations therein are only against the third respondent

which may be enumerated hereinafter :

(1)He, without the knowledge and consent of the complainant with mala

fide intention, operated the account maintained in her name.

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(2)He promised to take over the liabilities of the company’s account R-

14 and at his instance only the appellant and her husband resigned

from the company and he and Mr. Sridhar became the Directors.

(3)Accused No.3 promised to pay a sum of Rs.9.57 lacs being the

balance in the account K-4 and also Rs.11.97 lacs being the value of

shares purchased in the account as early as 1999 but not delivered in

time, but he failed and or neglected to do so.

Paragraph 11 of the said First Information which is material for our

purpose reads as under :

“11.The complainant submits that the 3

rd

accused in R-14 account without the knowledge

and consent of the complainant caused liabilities

in the said account and even after taking over the

said liabilities by the 3

rd

accused by inducting

himself as director of the company now with

ulterior intentions, fabricated a letter dated

10.1.2002 purported to have been written by the

complainant by forging signature of the

complainant, thereby trying to misappropriate the

money due to the complainant from the personal

account and also the 1

st

and 2

nd

accused who are

responsible for the day to day management and

affairs of the company as responsible persons of

the company, liable for the act of 3

rd

accused who

is a manager in their company.”

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20.It was also alleged therein that the appellant came to learn that the

second accused had forwarded a letter dated 10.1.2002 to the national Stock

Exchange which is said to be a forged and fabricated letter, the contents

whereof are :

“Pursuant to the discussions my brother Mr. A.

Sridharan had with you regarding settlement of all

outstanding payments in the accounts which we

were operating.

I request you to transfer the credit balance

of Rs.9,57,037.16 from my personal account

No.K004 to adjust the debit balance of

Rs.21,08,420.45 in our company SRI R.S.R.

Securities account No.R104. Any further debit

balance after adjustment as above will be

recoverable against the company.”

21.Whereas, thus, no allegation whatsoever has been made against the

respondent No.1, the only allegation against the respondent No.2 was that

he had forwarded the said letter dated 10.1.2002 to National Stock

Exchange. The act of forgery on/or fabrication of the said letter had been

attributed to Respondent No.3.

Respondent Nos.1 and 2 herein were sought to be proceeded against

on the premise that they are vicariously liable for the affairs of the company.

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22.As Mr. Mani had time and again referred to the allegations relating to

forgery of the said document dated 10.1.2002, we may also notice a

disturbing fact. Before lodging the said First Information, a notice was

issued by the appellant against the respondents herein on 15.10.2002,

whereas the address of respondent Nos.1 and 2 were shown as 404,

Embassy Centre, Nariman Point, Mumbai – 400 021 and 302, Veena

Chambers, 21, Dalal Street, Fort, Mumbai – 400 001 respectively.

However, in the complaint petition, they were shown to be residents of

Chennai.

23.In the aforementioned factual backdrop, we although do not agree

with the approach of the High Court, concur with its conclusion.

The allegations contained in the First Information Report, therefore,

do not disclose an offence against the respondent Nos 1 and 2. They have

in their individual capacity been charged for commission of offences of

cheating, criminal breach of trust and forgery.

24.As there had never been any interaction between the appellant and

them, the question of any representation which is one of the main

ingredients for constituting an offence of cheating, as contained in Section

415 of the Indian Penal Code, did not and could not arise.

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25.Similarly, it has not been alleged that they were entrusted with or

otherwise had dominion over the property of the appellant or they have

committed any criminal breach of trust.

So far as allegations in regard to commission of the offence of forgery

are concerned, the same had been made only against the respondent No.3

and not against the respondent No.2. Sending a copy thereof to the National

Stock Exchange without there being anything further to show that the

respondent No.2 had any knowledge of the fact that the same was a forged

and fabricated document cannot constitute offence.

Allegations contained in the FIR are for commission of offences

under a general statute. A vicarious liability can be fastened only by reason

of a provision of a statute and not otherwise. For the said purpose, a legal

fiction has to be created. Even under a special statute when the vicarious

criminal liability is fastened on a person on the premise that he was in-

charge of the affairs of the company and responsible to it, all the ingredients

laid down under the statute must be fulfilled. A legal fiction must be

confined to the object and purport for which it has been created.

In Sham Sunder & Ors. v. State of Haryana [(1989) 4 SCC 630], this

Court held :

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“9. But we are concerned with a criminal liability

under penal provision and not a civil" liability.

The penal provision must be strictly construed in

the first place. Secondly, there is no vicarious

liability in criminal law unless the statute takes

that also within its fold. Section 10 does not

provide for such liability. It does not make all the

partners liable for the offence whether they do

business or not.”

Yet again, in Radhey Shyam Khemka & Anr. v. State of Bihar

[(1993) 3 SCC 54], the law has been laid down by this Court, thus :

“6. But, at the same time, while taking cognizance

of alleged offences in connection with the

registration, issuance of prospectus, collection of

moneys from the investors and the

misappropriation of the fund collected from the

share-holders which constitute one offence or

other under the Penal Code, court must be satisfied

that prima facie and offence under the Penal Code

has been disclosed on the materials produced

before the court. If the screening on this question

is not done properly at the stage of initiation of the

criminal proceeding, in many cases, some

disgruntled share-holders may launch prosecutions

against the promotors, directors and those in

charge of the management of the company

concerned and can paralyse the functioning of

such company. It need not be impressed that for

prosecution for offences under the Penal Code the

complainant has to make out a prima fade case

against the individuals concerned, regarding their

acts and omissions which constitute the different

ingredients of the offences under the Penal Code.

It cannot be overlooked that there is a basic

difference between the offences under the Penal

Code and acts and omissions which have been

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made punishable under different Acts and statutes

which are in nature of social welfare legislations.

For framing charges in respect of those acts and

omissions, in many cases, mens rea is not an

essential ingredient; the concerned statue imposes

a duty on those who are in charge of the

management, to follow the statutory provisions

and once there is a breach or contravention, such

persons become liable to be punished. But for

framing a charge for an offence under the Penal

Code, the traditional rule of existence of mens rea

is to be followed.”

In Hira Lal Hari Lal Bhagwati v. CBI, New Delhi [(2003) 5 SCC

257], it has been held :

“32. Likewise the ingredients of Section 420 of

the Indian Penal Code are also not made out.

There is no reason as to why the appellants must

be made to undergo the agony of a criminal trial

as has been held by this Court in the case of G.

Sagar Suri and Anr. v. State of U.P. and Ors.

[(2000) 2 SCC 636]. In this, this Court held that.

"Jurisdiction under Section 482 of the Code

has to be exercised with great care. In

exercise of its jurisdiction the High Court is

not to examine the matter superficially. It is

to be seen if a matter, which is essentially of

a civil nature, has been given a cloak of

criminal offence. Criminal proceedings are

not a short cut of other remedies available in

law. Before issuing process a criminal court

has to exercise a great deal of caution. For

the accused, it is a serious matter.”

39. It is settled law, by catena of decisions, that for

establishing the offence of cheating, the

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complainant is required to show that the accused

had fraudulent or dishonest intention at the time of

making promise of representation. From his

making failure to keep up promise subsequently,

such a culpable intention right at the beginning

that is at the time when the promise was made

cannot be presumed.”

{[See also Vir Prakash Sharma v. Anil Kumar Agarwal & Anr. [(2007) 7

SCC 373]}.

26.Although the legal principle that a penal statute must receive strict

construction, it is not in doubt or dispute, we may notice some authorities in

this behalf.

In Section 263 of the Francis Bennion's Statutory Interpretation it is

stated :

“A principle of statutory interpretation embodies

the policy of the law, which is in turn based on

public policy. The Court presumes, unless the

contrary intention appears, that the legislator

intended to conform to this legal policy. A

principle of statutory interpretation can therefore

be described as a principle of legal policy

formulated as a guide to legislative intention.”

Maxwell in The Interpretation of Statutes (12

th

Edn) says:

"The strict construction of penal statutes seems to

manifest itself in four ways: in the requirement of

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express language for the creation of an offence; in

interpreting strictly words setting out the elements

of an offence; in requiring the fulfillment to the

letter of statutory conditions precedent to the

infliction of punishment; and in insisting on the

strict observance of technical provisions

concerning criminal procedure and jurisdiction."

In Craies and Statute Law (7

th

Edn. At p. 529) it is said that penal

statutes must be construed strictly. At page 530 of the said treatise, referring

to U.S. v. Wiltberger, [(1820) 2 Wheat (US) 76], it is observed, thus :

“The distinction between a strict construction and

a more free one has, no doubt, in modern times

almost disappeared, and the question now is, what

is the true construction of the statute? I should say

that in a criminal statute you must be quite sure

that the offence charged is within the letter of the

law. This rule is said to be founded on the

tenderness of the law for the rights of individuals,

and on the plain principle that the power of

punishment is vested in the Legislature, and not in

the judicial department, for it is the Legislature,

not the Court, which is to define a crime and

ordain its punishment.”

In Tuck v. Priester, [(1887)] 19 QBD 629] which is followed in

London and County Commercial Properties Investments v. Attn Gen.,

[(1953) 1 WLR 312], it is stated:

"We must be very careful in construing that

section, because it imposes a penalty. If there is a

24

reasonable interpretation, which will avoid the

penalty in any particular case, we must adopt

that construction. Unless penalties are imposed

in clear terms they are not enforceable. Also

where various interpretations of a section are

admissible it is a strong reason against adopting a

particular interpretation if it shall appear that the

result would be unreasonable or oppressive."

Blackburn, J. in Wills v. Thorp said [(1875) LR 10 QB 383]:

“When the Legislature imposes a penalty, the

words imposing it must be clear and distinct.”

27.If a person, thus, has to be proceeded with as being variously liable

for the acts of the company, the company must be made an accused. In any

event, it would be a fair thing to do so, as legal fiction is raised both against

the Company as well as the person responsible for the acts of the Company.

28.For the reasons aforementioned, we do not find any legal infirmity in

the impugned judgment. Before parting with this case, however, we must

clarify one aspect of the matter.

Respondent No.3, arrayed as accused No.3 in the First Information

Report, did not file any application under Section 482 of the Code of

Criminal Procedure. We do not know under what circumstances, the High

Court directed service of the notice on him. Nowhere in the impugned

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judgment, High Court found that the allegations contained in the First

Information Report against the respondent No.3 also do not disclose

commission of any cognizable offence. It is one thing to say that he has not

committed the same but it is another thing that the High Court’s jurisdiction

under Section 482 of the Code of Criminal Procedure could have been

invoked at this stage.

29.In view of our findings aforementioned, we have no other option but

to hold that the High Court in its judgment cannot be said to have covered

the case of the respondent No.3. The investigation against him, therefore,

shall continue. However, it will be open to him to take appropriate defences

at appropriate stages as are permissible in law.

30.The appeal is dismissed with the aforementioned observations.

……………………………….J.

[S.B. Sinha]

..…………………………..…J.

[Aftab Alam]

New Delhi;

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October 24, 2008

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