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  • Article 227 of the Constitution reed with section 482 of the Criminal Procedure Code,
  • section 482 of the Criminal Procedure Code read with Article 227 of the Constitution.
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  • Article 227 of the Constitution reed with section 482 of the Criminal Procedure Code,
  • section 482 of the Criminal Procedure Code read with Article 227 of the Constitution.
Smart Summary

Structured Summary of the Opinion (Puranik, J.)

Factual and Procedural Background

This petition was filed under Article 227 of the Constitution read with section 482 of the Criminal Procedure Code. The petitioner is accused No. 36 in Criminal Case No. 9 of 1986, a prosecution instituted by the 1st respondent against Kirloskar Brothers Ltd. and others. The petitioner seeks writ(s) of certiorari or other appropriate relief to quash the process issued against him by the Chief Judicial Magistrate, 1st Class, Pune dated 31 January 1986. A Rule was issued by a predecessor judge and made returnable on 16-6-1986.

The underlying complaint arises from searches conducted by the 1st respondent on 9-12-1985 into alleged evasion of central excise duty by accused No. 1 Company (Kirloskar Brothers Ltd.) and others. The complaint alleges a continuing criminal conspiracy involving accused Nos. 1 to 30 (directors and senior executives of accused No.1) and subsequently accused Nos. 31 to 37 (another company and its directors) in respect of arrangements to avoid excise duty, including arrangements regarding warranty charges and a revised price list submitted in October–November 1983.

The petitioner's factual contention is that he was a director of accused No. 31 Company only from 27-6-1976 to 29-7-1983, and that his resignation was accepted by the Registrar of Companies, with effect from 28-7-1983 (certified copy of Registrar's order placed on record). The complaint, however, alleges that accused No. 31 and its directors joined the conspiracy on dates in October–November 1983 (draft agreement dated late September 1983 is also referenced in the complainant's affidavit). The petitioner contends there is no nexus between him and the alleged joining of the conspiracy after his resignation.

Legal Issues Presented

  1. Whether the process issued against the petitioner (accused No. 36) should be quashed under Article 227 of the Constitution read with section 482 Cr.P.C., on the basis that the complaint, on its face, does not disclose grounds to implicate him because he ceased to be a director before the dates on which accused No. 31 and its directors are alleged to have joined the conspiracy.
  2. Whether this Court may take into account an undisputed public record (the Registrar of Companies' entry showing the petitioner's resignation) in exercising its powers under section 482 Cr.P.C. and Article 227 to quash proceedings.

Arguments of the Parties

Petitioner's Arguments

  • The petitioner was director of accused No. 31 Company only until 29-7-1983 (resignation period 27-6-1976 to 29-7-1983) and the Registrar of Companies' records confirm his resignation; a certified copy of that order is on record.
  • The complaint itself and its title describe the petitioner as an ex-director; hence the complainant was aware of his ex-directorship but did not record his statement or verify Registrar records prior to filing the prosecution.
  • There is no nexus between the petitioner and the alleged joining of the conspiracy by accused No. 31 Company, which according to the complaint took place in October–November 1983.
  • Allowing proceedings to continue against the petitioner, when the complaint on its face (and public records) show he ceased to be a director before the alleged joining of the conspiracy, would cause manifest injustice and needless harassment.

1st Respondent's Arguments

  • The 1st respondent submitted that one of the directors of accused No. 1 Company (Shri Gune) was also Chairman of accused No. 31 Company and thus knowledgeable of the earlier conspiracy; this fact may establish linkage between accused No. 31 and the earlier conspiracy.
  • The 1st respondent argued that the complaint does not specify a particular act of joining, and that during evidence the prosecution could show accused No. 31 had joined the conspiracy prior to 29-7-1983 (before the petitioner resigned), thereby implicating the petitioner for the relevant period.

Table of Precedents Cited

The opinion does not cite any judicial precedents (case law); it refers to statutory provisions under Article 227 of the Constitution and section 482 Cr.P.C.

No precedents were cited in the provided opinion.

Court's Reasoning and Analysis

The Court proceeded by applying the well-settled principle that it may exercise its inherent power under section 482 Cr.P.C. to quash process where an ex facie reading of the complaint, without adding or subtracting facts, shows there are no grounds to sustain the complaint against the person(s) named.

Step-by-step, the Court's analysis was:

  • Establishment of the critical uncontested fact: The petitioner is described as an ex-director in the complaint title and has filed a corroborating affidavit with certified Registrar of Companies records showing he ceased to be a director of accused No. 31 Company as of 29-7-1983. The 1st respondent did not dispute this record.
  • Examination of the complaint's averments regarding when accused No. 31 and its directors joined the alleged conspiracy: Paragraphs 1–21 of the complaint relate only to accused No. 1 Company and its directors/officers (accused Nos. 1–30). The involvement of accused Nos. 31–37 is first pleaded in paragraph 22 with specific dates in paragraph 23 (price list filed 17-10-1983; arrangement to take effect 1-11-1983; board resolution approving agreement on 15-11-1983).
  • Consideration of the complainant's affidavit filed before this Court, which states that although the complaint averred joining on 15-11-1983, a draft agreement was typed on 29 or 30 September 1983. The Court observed that even if a draft existed on 30 September 1983, that would not establish joining earlier than that date.
  • Legal conclusion from the pleadings: Accepting the complainant's version as pleaded, accused Nos. 31–37 could not, on the complaint's face, be said to have joined the conspiracy before 30 September 1983. There is no coherent or supported allegation that joining took place prior to that date; the Court rejected the notion of a "formal" versus "actual" joining where criminal participation is concerned, stating joining is a question of fact and cannot be split into formal/internal acts in the manner alleged by the complainant.
  • Application to the petitioner: Because the petitioner ceased to be a director on 29-7-1983 and the complaint does not, on its face, aver joining of accused No. 31 and its directors prior to 30-9-1983 (and the complainant's own affidavit supports the later dates), there is no nexus shown in the complaint between the petitioner and the alleged conspiracy participation alleged to have begun in late 1983.
  • Procedural principle applied: Where the complaint, if taken at face value, does not disclose an offence against the accused, the court need not proceed to appreciation of evidence; continuation of proceedings would be manifestly unjust. The Court held it could consider undisputed facts ascertainable from public records (Registrar of Companies) in a section 482/Article 227 petition when those facts are not in dispute and establish that the accused cannot be implicated.
  • Conclusion from reasoning: Given the undisputed public record of resignation and the complaint's own averments about dates, there were no grounds on the face of the complaint to proceed against the petitioner.

Holding and Implications

Holding: The petition succeeds. The process issued against the petitioner (accused No. 36) and the proceedings initiated against him are quashed. The Rule is made absolute as prayed (prayers (a) and (b) of the petition). The interim stay of proceedings against the other accused stood vacated.

Implications:

  • Direct effect on the parties: The petitioner (accused No. 36) is relieved of the criminal proceedings in Criminal Case No. 9 of 1986; the process and proceedings against him are quashed, and he will not be prosecuted further on that complaint.
  • No broader legal precedent is discussed or established in the opinion beyond the application of established principles governing section 482 Cr.P.C. and Article 227 — specifically, that a court can quash proceedings where an ex facie reading of the complaint (taken with undisputed public records) shows no ground to proceed against the accused.
  • The opinion emphasizes the Court's willingness to consider undisputed public records in a section 482/Article 227 petition to prevent manifest injustice and needless harassment where the complaint, on its face, fails to implicate the accused.

Rule absolute. Petition succeeds.

    Balchandra Keshav Gadre v. Gurushant Gangadhar Kamble And Others

    Puranik, J.:— By this petition under Article 227 of the Constitution reed with section 482 of the Criminal Procedure Code, the petitioner who is accused No. 36 in Criminal Case No. 9 of 1986 by the 1st respondent against Kirloskar Brothers Ltd. and others, prays for a writ of certiorari or any other appropriate writ order or direction for quashing the process issued against the petitioner by the Chief Judicial Magistrate, 1st Class, Pune on 31st January 1986. My learned predecessor Kania, J., issued Rule end made it returnable on 16-6-1966.

    2. In another Criminal Writ Petition No. 335 of 1986 filed by Shri Marathe accused No. 17 in Criminal Case No. 9 of 1986 I have delivered my order on 21-7-1986. The said Shri Marathe is accused No. 17 in the complaint case filed by the 1st respondent. Even though the present petition also arises out of the same complaint case, I am delivering this separate order as the facts relating to this petitioner, accused No. 36 are slightly different.

    3. The facts relevant for the purpose of this present petition and the circumstances under which the petitioner is seeking the relief of quashing of process may be stated briefly as follows:

    4. The 1st respondent, who is the complainant on information received and on reasonable belief that accused No. 1 Company was evading payment of central excise duty searched the off ices of the Company, its factories and its branch offices as well as the residences of some of the Directors on 9-12-1985.

    5. Accused Nos. 2 to 18 are directors of accused No. 1 Company. Accused Nos. 19 end 30 are Senior Executive Officers in accused No. 1 Company, while accused No. 31 is a separate company and accused Nos. 32 to 36 were the Directors of the said Company, accused No. 37 being the Secretary of the sard Company. According to the allegations in the complaint all these Directors were in charge of end were responsible for conduct of the business of respective Companies, accused No. 1 and 31. According to the prosecution after investigation and inspection of several documents seized it transpired that accused No. 1 Company and its Directors and Senior Executive Officers accused Nos. 2 to 36 had conspired together and had evaded excise duty on the compressors manufactured by accused No. 1 Company. We are not at present concerned with other allegations in so far as accused Nos. 1 to 30 are concerned. The other part of the prosecution case is that accused Nos. 1 to 30 having successfully evaded the Central excise duty, but not being satisfied with the said modus operandi hit upon yet another plan. In para 22 of the complaint the 1st respondent alleges that on 17-10-1983 accused No. 1 filed an application with a revised price list in Part I and II for hermetically sealed compressors. In substance accused No. 1 informed the Assistant Collector of Central Excise that the price list in Part I was applicable to stray customers such as email scale industrial units and dealers. Accused No. 1 further informed that till that time the price of compressor was inclusive of warranty charges but that under the new price list they had decided to supply compressors to this class of buyers without warranty charges as the price list was submitted after reducing warranty charges. Accused No. 1 further informed that in effect they would not receive any money on account of warranty charges nor would they get any moray from anybody but instead warranty would be given by accused No. 31 Company which is a separate entity. This, price list was approved by the Assistant Collector of Central Excise on the footing and on the basis that the representation made by accused No. 1 which was to the effect that Kirloskar Brothers Ltd. was not going to get any amount towards warranty charges which were to be collected by accused No. 31 end that it was accused No. 3 who was to be responsible for monitoring quality control, was correct.

    6. In para 23 the complaint further alleges, that the said price list with such arrangement was finally approved and the said arrangement was to come into effect on 1-11-1983. He further alleges that the entire collusive arrangement which was reflected in the said agreement which was executed by accused No. 1 on the one hand and accused No. 31 on the other-was a document which was circulated to the Board of Directors of accused No. 1 and after such circulation the matter was taken up before the Board which passed a resolution on 15-11-1983 approving the agreement which was sought to be entered into between the parties i.e accused No. 1 and accused No. 31.

    7. In para 24 it is alleged by the complainant that accuse No. 31 to 37 was an organization which came in Bombay which was completely under the control of accused No. 1 to 30 as could be found from the fact that one of the Kirloskars is a members of the Board and accused No. 23 was a trusted and confidential man of accused No. 1. It is further alleged in the complaint that in fact the amount of warranty collected by accused No. 31 Company and its directors was siphoned back to the principal Company accused No. 1. Thus the main gravamen as is shown at the end of para 36 of the complaint on behalf of the prosecution is as follows:

    “All Officers and executives i.e Accused Nos. 19 to 30, both inclusive, ware parties to the said continuing criminal conspiracy which was hatched at the registered office of the accused No. 1 at Pune and Karad to commit the offence of the evasion and Accused No. 31 and Accused Nos. 32 to 37, both inclusive, all Directors of Accused No. 31 Joined the cold continuing conspiracy and aided and abetted accused Nos. 1 to 30 in the commission of the said offences and pursuant to the conspiracy end in consequence of aiding and abetting by accused Nos. 31 to 37, the offence of evasion of Central Excise duty…….”

    8. Thus in short the prosecution case is that initially a conspiracy was hatched by accused Nos. 1 to 30 and subsequently the other company and its directors viz. accused Nos. 31 to 37 joined the said conspiracy and continued the same.

    9. The contention of the petitioner is that no doubt he was one of the directors of accused No. 31 Company, but he was its director for the period 27-6-1976 to 29-7-1983. He resigned the post of the director and his resignation was duly accepted by the Register of Companies and the change report has been duly notified that the petitioner accused No. 36 ceased to be the director of accused No. 31 with effect from 28-7-1983. A certified copy of the order of the Registrar is placed on record. According to the petitioner the prosecution alleges that accused No. 31 Company joined the conspiracy on 17-10-1983 and as such the petitioner who had ceased to be the director had no concern with the decision to join the said conspiracy allegedly taken by accused No. 31 Company and its directors. Shri K.M Desai, learned Counsel for the petitioner had further drawn my attention to the fact that the petitioner accused No. 36 has been sty ted as ex-director even in the title head of the complaint fired by the first respondent. He urged that the complainant was aware that the petitioner is the ex-director and yet without recording his statement and without verifying from the record of the Registrar of Companies as to when he resigned from the Directorship the complainant has hastened to file the prosecution. Shri Desai also contended that the process issued against the petitioner is liable to be quashed on the ground that there was no nexus between any of the acts of accused No. 36 as alleged in joining of the conspiracy by accused No. 31 Company.

    10. Shri S.G Samant appearing for the 1st respondent opposed the petition mainly on the ground that one of the Directors of Accused No. 1 Company Shri Gune was also the Chairman of accused No. 31 Company and he was, therefore, in the know of the earlier conspiracy hatched between accused No. 1 to 30. He further submitted that no specific case of joining of conspiracy has been stated in the complaint and the prosecution would be able to show during the evidence that accused No. 31 Company had joined the conspiracy much prior to 29-7-1983 i.e before the petitioner resigned from the Directorship and that he would be, therefore, guilty as far as that period is concerned.

    11. It is well settled that this Court can exercise its inherent powers under section 482 of the code to quash the process issued in the complaint case, if ex-facie reading of the complaint without adding or subtracting any facts from the same con lead to the conclusion that there are no grounds for substantiating that complaint against all or any of them. It is an admitted position that the petitioner accused No. 36 is ex-director of the Company as the title of the complaint itself shows. The petitioner has also filed the affidavit reiterating the same supported by the certified copies of the records of the Registrar of Companies, which averment has not been refused by the first respondent, it is, therefore, clearly established that the petitioner was no longer concerned with the running of the business of the company accused No. 31 as from 29-7-1983.

    12. Therefore, in view of the fact that petitioner accused No. 36 ceased to be the Director of the Company accused No. 31 from 29-7-1983. It is to be seen whether there are any allegations in the complaint averring that Company accused No. 31 and its directors joined the conspiracy of accused No. 1 Company and its Directors any time before the petitioner ceased to be the Director, i.e any time before 29-7-1983.

    13. As stated earlier, paragraphs 1 to 21 only refer to the allegations of conspiracy for evasion of excise duty only against accused No. 1 Company and its directors and officers i.e accused Nos. 1 to 30. For the first time in para 22 of the complaint it is mentioned that the first group of accused Nos. 1 to 30 hit upon yet another plan. It is then specifically alleged that on 12th December 1983 accused No. 1 Company took stops to file on application for the revised price list of the compressors. In the said price list it was stated that accused No. 1 Company under, the new price list to would not be charging warranty charges and that instead warranty will be given by the other Company accused No. 31 which is a separate entity.

    14. According to the further allegations in para 23 this new arrangement between accused No. 1 Company and accused No. 31, Company was brought into effect from 1-11-1983 though the resolution approving this arrangement was passed subsequently on 16-11-1983 by accused No. 1 Company.

    15. Thus it is clear from the allegations in the complaint itself that accused No. 31 Company and its Directors joined the conspiracy of the first accused and its directors on 17-10-1983, 11-11-1983 end 15-11-1983. Ever otherwise it transpires from, the affidavit of the complainant filed before this Court on 3-4-1986 es follows:

    “…. …although in the complaint it was averred that accused Nos. 31 to 37 had joined the conspiracy on 15-11-1983, it appears that the draft agreement of the said warranty agreement was typed on 29th or 30th September 1983.”

    16. It therefore the draft agreement was made on 30th September 1983 it is obvious that the said draft agreement could not have been made unless the instructions in that behalf had been given earlier. It lasted significant to bear in mind that although formally accused Nos. 31 to 37 Joined the said conspiracy on 15-11-1983 the price list was filed by accused No. 31 before the jurisdictional Assistant Collector on 17-10-1983 which became effective on 1-11-1983, that is, at any rate 14 days before the formal agreement dated 15-11-1883 was executed.

    17. Accepting the complainant a version as it is, it cannot be said that accused Nos. 31 to 37 joined in any conspiracy before 30th September 1983. It is not understood as to what the complainant means by saying that accused Nos. 31 to 37 formally joined the conspiracy on 15-11-1983. In tact such an averment is totally baseless. Joining of ??? which is a criminal act to a question of fact and there cannot be internal joining of conspiracy and formal joining of conspiracy. Thus from the averments made in the complaint this alleged joining of conspiracy by accused Nos. 31 to 37 cannot be at any rate before ???-9-1983.

    18. In view of the undisputed fact that petitioner accused No. 36 ceased to be a director of accused No. 31 Company as on 29-7-1983 and further fact that the petitioner accused No. 36 was described as ex-director of accused No. 31 Company, which is ex-facie proved, establishes, that the petitioner had nothing to do with the alleged joining of conspiracy of participation in such conspiracy from 30-9-1983. Thus when the allegations in the complaint even if ??? at their face value and accepted in thaw entirety do not constitute an offence alleged, then in such cases no question of appreciating evidence arises. It would be legitimate for this Court to hold that it would be manifestly unjust to allow process of the Criminal Court to be issued against the accused who cannot by any stretch of imagination be implicated in the trial.

    19. Since the complainant knew that the petitioner had ceased to be the director of the Company and the date of his resignation from the board of directors can easily be located from the public records of the Registrar of Companies end in this ??? since this fact is undisputed, it would be manifestly unjust to allow the process of law to take its own course against such background. In a given case if the fact can be ascertained from the public records and ts either Intentionally or inadvertently omitted from the allegation in the complaint, but subsequently established before this Court without any dispute, then such a fact can be taken Into consideration in a petition winter section 482 of the Criminal Procedure Code read with Article 227 of the Constitution. To allow the proceedings to continue against the petitioner would be to continue needless harassment of the petitioner costing him time, money end mental agony, it is therefore, a fit case where this Court can exercise its inherent power to meet the ends of justice at this at aga itself.

    20. In the result, therefore, the petition succeeds. The process issued against the petitioner end the proceedings initiated against him are hereby quashed. Rule absolute as per prayers (a) and (b) of the petition. Interim stay of the proceedings or against the other accused stands vacated.

    21. Petition succeeds.

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    Balchandra Keshav Gadre v. Gurushant Gangadhar Kamble And Others
    (Aug 18, 1986)