Delhi High Court
Pawan Kumar Ahluwalia & Ors. vs State Of Nct Delhi & Anr. on 29 October, 2024
Author: Subramonium Prasad
Bench: Subramonium Prasad
* IN THE HIGH COURT OF DELHI AT NEW DELHI
Date of decision: 29th OCTOBER, 2024
IN THE MATTER OF:
+ CRL.M.C. 5717/2024, CRL.M.A. 21829/2024
PAWAN KUMAR AHLUWALIA & ORS. .....Petitioners
Through: Mr. Dayanan Krishnan, Sr. Advocate
with Mr. Vikram Singh, Mr. Ambar
Tewari, Mr. Varun Agarwal, Mr.
Advait Joshi, Advocates for P-1.
Mrs. Rebecca John, Sr. Advocate
with Mr. Vikram Singh, Mr. Ambar
Tewari, Mr. Varun Agarwal, Mr.
Advait Joshi, Advocates for P-2 to 6.
versus
STATE OF NCT DELHI & ANR. .....Respondents
Through: Mr. Yudhvir Singh Chauhan, APP for
the State with Mr. Anvesh Chandila,
Mr. Ujjwal Gupta, Mr. Nikhil Kunal,
Mr. Vishal Kaushik, Mr. Sushant
Chaudhary, Ms. Sunita Farswan and
Mr. Dishant Tiwari, Advocates.
Mr. Vijay Aggarwal, Mr. Rachit
Bansal, Mr. Pankush Goyal, Mr.
Kshitiz Garg, Mr. Shekhar pathak,
Ms. Barkha, Mr. Sameer Chaudhary,
Mr. Avik Sarkar, Advocates for the
Complainant.
Insp. Satish Kumar, PS EOW
CORAM:
HON'BLE MR. JUSTICE SUBRAMONIUM PRASAD
JUDGMENT
1. Petitioner has approached this Court seeking quashing of FIR
No.47/2024, dated 29.04.2024, registered at Police Station Economic
Offences Wing, for offences under Sections
409/420/467/468/471/477A/120B IPC.
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2. It is pertinent to mention that the said FIR was registered pursuant to
the Order dated 16.04.2024, passed by the learned Chief Metropolitan
Magistrate, in CT Case No. 2131/2024.
3. The Facts, leading to the present Petition, are as under:
i. That the Respondent No.2 herein, who is the daughter of one
Late Sh. Kamal Jeet Singh Ahluwalia, gave a complaint against
the Petitioners herein and other accused. Petitioners No.1 to 5
are the Directors and former Directors of M/s KJS Cement (I)
Ltd. (hereinafter referred to as “KJS”) which is a public
company limited by shares engaged in the manufacturing and
supply of building materials, including cement, engineering,
and construction, and Petitioner No.6 is the wife of Petitioner
No.1.
ii. Material on record indicates that before filing of the present
FIR, the Respondent No.2 had earlier filed FIR No.24/2024,
dated 02.04.2024, which was registered at Police Station
Economic Offences Wing, for offences under Sections
406/409/420/468/471/120B IPC, against the Petitioners herein
and other accused. In the said FIR it is stated that KJS is a part
of the KJS Group of Companies founded by the family Late
Shri Kamal Jeet Singh Ahluwalia. It is further stated in the said
FIR that KJS Group of Companies has its presence in Mining,
Iron & Steel, Power, Media, and Infrastructure Development
such as Housing, Hotels, Commercial Space Development,
Logistics, Transportation and Cement. It is stated that the
revenue of KJS Group is over Rs. 1500 Crore having a work
force of approximately 2000 workers & employees. It is further
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stated that the first cement plant of KJS Group is having a rated
clinker production capacity of 6000 million tons per day and
cement production capacity of 2.25 million tons per annum.
The plant was commissioned in March 2012. It is stated that
KJS launched its product under the brand name ‘KJS Cement’ in
July, 2012. It is further stated in the complaint that KJS is a
closely held family company conducting its affairs in the nature
of quasi-partnership.
iii. In the complaint it is stated that Sh. Kamal Jeet Singh
Ahluwalia passed away on 15.10.2021 leaving behind the
Respondent No.2 herein, who is his daughter; his wife and one
minor adoptive son. In the complaint it is further stated that
Late Sh. KJS Ahluwalia was holding 26.52 % shares in KJS out
of the total issued, legal and valid shareholding of KJS, but his
shareholding has been reduced to 21% at the time of his death
on 15.10.2021 due to various illegalities and fraudulent acts
committed by the accused persons by way of illegal &
fraudulent allotment of shares. It is stated in the complaint that
on the death of Late Sh. KJS Ahluwalia the shares of KJS
Ahluwalia were to be transmitted to the Respondent No.2
herein and other Class-I legal heirs of KJS Ahluwalia and a
letter dated 01.02.2022 to this effect was sent to KJS on
09.02.2022 along with email dated 09.02.2022, however,
despite receipt of the said letter the said shares have not been
transmitted in the name of the Respondent No.2 or any of the
class-I heir of KJS Ahluwalia.
iv. It is further stated in the Complaint that huge investments were
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bought into KJS Cements by Late Sh. KJS Ahluwalia ever since
its beginning from 2007. It is stated that Late Shri KJS
Ahluwalia contributed about Rs. 460 Crores in the form of
investments and extended loans of over Rs. 130 Crore in KJS
for its growth and expansion. It is stated that since the funds
were being provided by Late Shri KJS Ahluwalia alone upon
clear understanding that the shares held in individual names of
Pawan Kumar Ahluwalia and his family shall always inure to
the benefit of Late Shri KJS Ahluwalia and his immediate
family. It is stated that Pawan Kumar Ahluwalia, i.e. the
Petitioner No.1 herein, did not make any financial contribution
in the Company. It is alleged in the complaint that several
deeds were forged and fabricated in the name of Late KJS
Ahluwalia including a gift deed by which the shares of Late
KJS Ahluwalia have been transferred to his sister-in-law, i.e.
Petitioner No.6 herein. It is further alleged in the complaint that
Petitioner No.1 herein fabricated a forged resignation letter
dated 08.06.2017, by faking the signatures of Late Sh. KJS
Ahluwalia by virtue of which late KJS Ahluwalia was removed
from the Directorship of KJS. In the said FIR, the allegation of
the Complainant is that on the basis of these false and
fabricated documents, the Petitioner No.1 herein has converted
26,78,572 equity shares of KJS and got them issued in favour of
his daughters – Medha Ahluwalia and Shivangi Ahluwalia, who
have never worked for KJS and, thereby, diluting the share
holding of Late KJS Ahluwalia from 26.52% to 23.53%.
v. The Complainant, apart from stating the grievances in FIR
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No.24/2024, also gives details of various proceedings before the
NCLT pending the complaint and various demand-cum-show
cause notice which have been issued by the Directorate General
of GST, Intelligence Bhopal Zonal Unit, stating that KJS has
indulged in clandestine manufacture and supply of cement
clinker and cement without issue of invoices and without
accounting for the same in the books of accounts/records and
that the sale proceeds of such clandestine supply/sale of goods
were collected in cash that has been utilized for purchase of
unaccounted raw material like lime stone, packing material (PP
bags), jewellery, paintings and other articles and also used for
meeting travel expenses etc.,. It is stated that search operations
under Section 67 of the CGST Act, 2017 were conducted at the
premises of KJS and their suppliers, clients, and transporters
located at various place like Maihar, Satna, Katni, Allahabad,
Kanpur, Delhi during the period from 05.08.2020 to 14.08.2020
and incriminating documents, devices and gadgets were seized.
It is further stated that scrutiny of the documents and devices
indicated clandestine manufacture and supply of clinker and
cement without the cover of GST invoices. The Show Cause
Notice further states scrutiny of incriminating documents,
registers, computer hard discs, electronic data and devices
found in the factory premises, registered office, residential
premises and the premises of the dealers and transporters
revealed large scale evasion of GST by KJS and accordingly
further investigation has been carried out. It is stated that during
the course of search and seizure operations conducted the
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premises of KJS statements of employees and top management
officials were recorded which confirms under reporting of
receipt and use of lime stone in the Standard Accounting
Procedure (SAP) which is a software system application &
products in data processing (pithily put, it is an accounting
software). The Show Cause Notice also indicates unrecorded
manufacture and supply of cement and its entries in 600 SAP
(quality/development) instead of 900 (production) SAP. It is
further stated in the Show Cause Notice that during the search
operations, stock taking was done by using professional support
which revealed shortage of raw materials like coal, laterite and
PP bags indicating clandestine manufacture and supply of
clinker and cement. It is further stated that the internal audit
reports of the company indicates manipulation of SAP entries
and backdating and access to SAP to unauthorized persons.
vi. It is stated that the Complainant filed the complaint before the
Police Station New Friends Colony by highlighting the loss
caused to the Company by clandestine manufacture and supply
of cement clinker and cement without issue of invoices and
without accounting for the same in the books of
accounts/records and using the sale proceeds for purchase of
unaccounted raw material like lime stone, packing material (PP
bags), jewellery, paintings and other articles and also used for
meeting travel expenses etc.,. It is stated that since the FIR was
not registered, an application under Section 156 (3) Cr.P.C was
filed before the learned Metropolitan Magistrate. The learned
Metropolitan Magistrate vide Order dated 16.04.2024 directed
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registration of FIR. Relevant portion of the Order dated
16.04.2024 reads as under:
“16. The allegations made in the present
complaint reveal that offence of criminal criminal
breach of trust has been committed in the present
matter and, therefore, money trail is to be
recovered to find out the actual beneficiaries of
the cheated/misappropriated amount.
Furthermore, as tax evasion is prima-facie
established, in view of ongoing investigation by
the concerned GST department officials qua the
company, therefore, offence of cheating the
company itself, and consequently its shareholders,
is also prima facie established. It also appears
likely that the alleged cheating/misappropriation
of funds of the said company could not have taken
place without connivance and conspiracy of
persons dealing with day to day affairs of the said
company and persons engaged in the business of
transportation of material, persons engaged in the
profession of creating and maintaining books of
accounts/financial report/annual report of
companies as well as persons engaged in the
business of purchasing and trading in the material
supplied by the said company. Therefore, identity
of all the persons involved in the commission of
the alleged offence may also not be in the
knowledge of the complainant in the present
matter.
17. Furthermore, allegations of forgery of documents
like fake transport bills/receipts, e-way bills etc. has
also been made in the present matter. The said forgery
as an offence requires investigation from the
perspective of expert opinion also in the form of
forensic examination.”
vii. Pursuant to the said Order, FIR No.47/2024 was registered which is
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sought to be quashed in the present Petition.
4. Learned Counsel for the Petitioner contends that FIR No.47/2024
could not have been registered because all the allegations contained in the
said complaint forms a part of the Show Cause Notice dated 31.07.2023,
issued by the Directorate General of GST. He states that till the said Show
Cause Notice is not adjudicated upon and it does not attain finality, the
present FIR could not be registered. He states that GST Act itself provides
for penalties for offences under Sections 122, 132 of the GST Act and,
therefore, the present FIR could not have been registered. It is further stated
that the Complainant/Respondent No.2 is not a shareholder of KJS and,
therefore, she has no locus standi to prefer the complaint. It is contended by
the learned Counsel for the Petitioner that the Complainant has
misrepresented that she is a shareholder of KJS. Learned Counsel for the
Petitioner further contends that a majority of the allegations in the present
FIR are a repetition of an earlier FIR, being FIR No.24/2024, and since both
the FIRs are identical, a second FIR on the very same grounds could not
have been registered. Learned Counsel for the Petitioner places reliance on
the Judgment passed by the Apex Court in Amitbhai Anilchandra Shah v.
CBI, (2013) 6 SCC 348, T.T. Antony v. State of Kerala, (2001) 6 SCC 181,
to buttress his argument.
5. Per contra, learned Counsel for Respondent No.2 states that even if
there is an overlap of allegations in both the FIRs, the present FIR is
primarily for manipulation of amounts and clandestine manufacture and
supply of cement clinker and cement without issue of invoices and without
accounting for the same in the books of accounts/records thereby causing
wrongful loss to the company. He states that both the FIRs are entirely
distinct. He states that the Complaint given by the Respondent No.2 contains
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specific instances and transactions which have to be investigated separately
and which do nor form a part of earlier FIR, being FIR No.24/2024, and,
therefore, the ratio of the Judgments of the Apex Court in Amitbhai
Anilchandra Shah (supra) and T.T. Antony (supra) will not apply. Learned
Counsel for the Respondent No.2 has taken this Court through various
portions of the Show Cause Notice to show that the Show Cause Notice also
contains facts which are outside the purview of the GST Act and which can
only be investigated by the Police.
6. Heard the Counsels for the parties and perused the material on record.
7. Material on record indicates that there is a dispute going on between
the Complainant, who is the daughter of Late Sh. KJS Ahluwalia and the
Petitioners herein.
8. Apart from FIR No.24/2024, proceedings are pending before the
NCLT and this Court is not adverting into those proceedings at this juncture
for the reason that they are germane to the issue before this Court. A
comparative chart has been filed by the Petitioner highlighting the
similarities between FIR No.24/2024 and the present FIR. The same is being
reproduced below:
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Undoubtedly, there is an over-lap in the two FIRs. The allegations in FIR
No.24/2024 are a part of the present FIR as well but this Court is of the
opinion that those facts are only relevant to bring out the history of the case.
The present FIR has been filed primarily after the Show-Cause Notice has
been issued by the GST wherein certain additional facts have come to light
which could not have been acknowledged in FIR No.24/2024.
9. FIR No.24/2024 was filed primarily containing Allegations regarding
ousting of the complainant and her family members from management and
control of KJS to gain control over the company by the accused and stating
as to how the shareholding of Sh. Lt. KJS Ahluwalia was reduced from
26.52% to 21% at the time of his death and also stating how in the event of
his demise those shares were to be transferred to the complainant and a letter
to that effect along with an email was sent to KJS of which nothing has been
done and she hasn’t even received a reply. Complainant also explains how
Accused No. 1 represented himself to be eligible to take care of the
company alone and how he is entitled to be given authority and
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responsibility. Allegations regarding creation of forged, false, and/or
fabricated documents are explained via explaining the documents and the
situations surrounding the creation and fabrication of those, i.e. gift deeds
and resignation letter of Lt. Sh. KJS Ahluwalia from KJS cements. The first
gift deed in question is dated 10.03.2017 for gift of unsecured loan of huge
amount in favor of Accused No. 1 by forging signatures of the deceased and
how he misused the forged gift deed in an unauthorized manner to issue
debentures to himself misusing his position and how this needs to be
investigated as he diluted the deceased’s shareholding in this process. The
FIR also talks about the forged and fabricated resignation letter of the
deceased from KJS dated 08.06.2017 by faking his signatures and by
removing him from directorship of KJS. It is stated that the difference in
signature in the mentioned documents and actual signature is so stark that it
is evident to the naked eye that the signatures are nowhere similar and
forged, complainant also states that she even obtained opinion from a
Forensic Handwriting expert who concluded similarly that the signatures are
different and seem forged, copy of forensic report has also been attached
with the FIR. Questions regarding the gift deed dated 27.09.2017 based on
Power of Attorney dated 08.08.2000 in which Accused No. 1 transfers
shares of Lt. Sh. KJS Ahluwalia in favor of Accused No. 9 are also brought
up, questioning its jurisdiction and maintainability on merits also stating that
despite the gift deed being almost 6 years old, it has not been acted upon till
date and shareholding of the deceased has not been transferred to Accused
No. 9. Accused No. 1 has acted maliciously for his greed and to the benefit
of his family as stated by the complainant in connivance with other accused
by creating false and forged documents and continuing to do so to support
them and alleging that they might keep doing so. FIR No.24/2024 does not
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include the complaint regarding the offence of misappropriation.
10. On the other hand, FIR No.47/2024 while giving out a background of
the company primarily talks about how the accused persons have sold a
substantial quantity of cement and clinker in clandestine manner without
recording the same in the books of accounts of the company, and how they
have misappropriated the property and assets of the company causing
wrongful losses to the company and shareholders while committing criminal
breach of trust. She substantiates all these claims with the help of a Demand-
cum-Show-Cause Notice vide No. 24/DGGI/BhZU/JD/GST/2023-24 dated
31.07.2023. She further states that the sale proceeds from clandestine supply
and sale of goods in cash was used for purchase of unaccounted raw
materials like limestone, packing material, jewelry, and paintings relying on
the show cause notice for proof. She also mentions the findings of the GST
department to support her case by mentioning the amount up to which they
have evaded GST highlighting the losses to the shareholders and the public
exchequer. She supplements the allegations by highlighting the roles of the
accused which have led to this situation. She additionally states that they
indulged in illegal and fraudulent transactions of removal and
misappropriation of company stocks and inventory and also falsification of
the records and accounts of the company while siphoning funds of the
company by showing and booking false and fictitious salary payments to the
family members of the Accused No.1 without rendering of any services, she
has also attached the details of the salary and consultancy fees thus paid.
11. The Complaint highlights the loss caused to the Company by
clandestine manufacture and supply of cement clinker and cement without
issue of invoices and without accounting for the same in the books of
accounts/records and using the sale proceeds for purchase of unaccounted
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raw material like lime stone, packing material (PP bags), jewellery,
paintings and other articles and also used for meeting travel expenses etc.,
by the Petitioners herein.
12. In the considered opinion of this Court the contention of the learned
Counsel for the Petitioner that the present FIR could not have been
registered as GST Act itself provides for penalties for offences under
Sections 122, 132 of the GST Act cannot be accepted because the offence
under GST Act would not include misappropriation of funds and
conversation of those funds for the personal use of the Petitioners herein
which resulted in wrongful loss to the Company and its shareholders. It,
therefore, cannot be said that both the FIRs arise out of the same cause of
action or that the issue raised in the second FIR, i.e. FIR No.47/2024 can be
dealt with under the provisions of the GST Act. There are specific
allegations in the Show Cause Notice that the sale proceeds of such
clandestine supply/sale of goods were collected in cash that has been utilized
for purchase of unaccounted raw material like lime stone, packing material
(PP bags), jewellery, paintings and other articles and also used for meeting
travel expenses etc. There are specific allegations in the Show Cause Notice
against Petitioner No.1 herein. Relevant portion of the Show Cause Notice
bringing out specific allegations against the Petitioner No.1 herein are being
reproduced herein and the same reads as under:
“13 Shri Pawan Kumar Ahluwalia Vice Chairman and
Managing Director (hereinafter referred to as the
Noticee No.2) was the overall incharge of the factory
and being a key management personal was at the helm
of all affairs including the clandestine activities of the
Noticec No.1. The ultimate beneficiary of all
clandestine activities of the Noticee No.1 appears to
have gone to the Noticee No 2. Shri B.K. Tripathy. Shri
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K.S. Singhvi and Shri Satyendra Rai who were involved
in clandestine activities. all directly reported to him.
All of them were directly involved in clandestine supply
of clinker and cement and collection of cash and its
further disposal. From the Whatsapp chat of Shri
Satyendra Rai (Exhibit-CIII) with Shri Pawan Kumar
Ahluwalia. it appears that he reported all the minute
details to Shri Pawan Kumar Ahluwalia on daily
hourly basis and sought his permission for all sales.
receipts and payments including cash receipts and
payments in cash. The Noticee No.1 vide office order
dated 22.04.2020. Mr Satyendra Rai. CFO was
ordered to functionally report to Shri Pawan
Ahluwalia.MD and administratively to Shri KS Singhvi
(Exhibit-CIV).The whatsapp chat between Shri
Satyendra Rai and Shri Pawan Ahluwalia shows that
he was seeking administrative approval from Shri
Pawan Ahluwalia for all financial transactions of the
company and also reporting to him the cash collection.
The whatsapp chat between Shri M.K.Jain and Shri
Pawan Ahluwalia shows that he got information about
the quantity of crushed lime stone and the working of
the crasher on daily basis on the basis of entries in the
manual crusher hopper register. This establish the fact
that Shri Pawan Kumar Ahluwalia was directly
involved in the day to day management of the company,
all clandestine activities including monitoring of
collection of cash though he had claimed not to involve
in day to day work of company. As per the entries in
the cash book and as confirmed by Shri K.S.Singhvi
and Shri B.K Tripathy. Shri B.K. Tripathy used to
receive cash collected from the dealers and
transporters. Cash has also been given to the wife and
children of Shri Pawan Kumar Ahluwalia. Shri Pawan
Kumar Ahluwalia, used the cash received against the
sale of clandestinely manufactured clinker and cement
for arranging the foreign trips and marriage of his
daughter as well as for buying jewellery. All the
persons like Shri B.K. Tripathi. K.s.Singhvi. Satyendra
Rai etc.. involved in clandestine supply of clinker and
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cement directly reported to him. …”
13. All the abovementioned allegations are outside the purview of GST
Act and can be only looked into in a criminal case.
14. Similarly there are other allegations that gold and silver coins have
been purchased from the sale proceeds and the same has not been accounted
for either in the Show Cause Notice or in the FIR No.24/2024.
15. It is pertinent to mention that FIR No.24/2024 is primarily regarding
fabrication of documents for ousting the Complainant and other class-I heir
of Late KJS Ahluwalia from the Company by forging and fabricating the
documents. Whereas the present FIR pertains to misappropriation of funds
of the Company for personal use. The contention of the learned Counsel for
the Petitioner that the Complainant is not the shareholder of the Company
and, therefore, she does not have the locus standi to file the Complaint
cannot be accepted. The allegation in the present FIR is regarding
misappropriation of funds of the Company and any person who has interest
in the company can give the information to the Police and since these
allegations constitute a cognizable offence, the Police has to investigate into
the allegations. Material on record also indicates that there are several
proceedings pending before the NCLT regarding transfer of shares of the
Company and, therefore, it cannot be said that the Complainant does not
have any locus standi to initiate the proceedings under IPC.
16. It is well settled that High Court should be slow in interfering with the
criminal proceedings at the initial stage. The Apex Court in Sanapareddy
Maheedhar Seshagiri v. State of A.P., (2007) 13 SCC 165, has observed as
under:
“31. A careful reading of the abovenoted judgments
makes it clear that the High Court should be extremely
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cautious and slow to interfere with the investigation
and/or trial of criminal cases and should not stall the
investigation and/or prosecution except when it is
convinced beyond any manner of doubt that FIR does
not disclose commission of any offence or that the
allegations contained in FIR do not constitute any
cognizable offence or that the prosecution is barred by
law or the High Court is convinced that it is necessary
to interfere to prevent abuse of the process of the
Court. In dealing with such cases, the High Court has
to bear in mind that judicial intervention at the
threshold of the legal process initiated against a
person accused of committing offence is highly
detrimental to the larger public and societal interest.
The people and the society have a legitimate
expectation that those committing offences either
against an individual or the society are expeditiously
brought to trial and, if found guilty, adequately
punished. Therefore, while deciding a petition filed for
quashing FIR or complaint or restraining the
competent authority from investigating the allegations
contained in FIR or complaint or for stalling the trial
of the case, the High Court should be extremely careful
and circumspect. If the allegations contained in FIR or
complaint disclose commission of some crime, then the
High Court must keep its hands off and allow the
investigating agency to complete the investigation
without any fetter and also refrain from passing order
which may impede the trial. The High Court should not
go into the merits and demerits of the allegations
simply because the petitioner alleges malus animus
against the author of FIR or the complainant. The
High Court must also refrain from making imaginary
journey in the realm of possible harassment which may
be caused to the petitioner on account of investigation
of FIR or complaint. Such a course will result in
miscarriage of justice and would encourage those
accused of committing crimes to repeat the same.
However, if the High Court is satisfied that the
complaint does not disclose commission of any offence
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or prosecution is barred by limitation or that the
proceedings of criminal case would result in failure of
justice, then it may exercise inherent power under
Section 482CrPC.””
17. In Gorige Pentaiah v. State of A.P., (2008) 12 SCC 531, the Apex
Court has observed as under:
“12. This Court in a number of cases has laid down the
scope and ambit of courts’ powers under Section 482
CrPC. Every High Court has inherent power to act ex
debito justitiae to do real and substantial justice, for
the administration of which alone it exists, or to
prevent abuse of the process of the court. Inherent
power under Section 482 CrPC can be exercised:
(i) to give effect to an order under the Code;
(ii) to prevent abuse of the process of court; and
(iii) to otherwise secure the ends of justice.
Inherent powers under Section 482 CrPC though wide
have to be exercised sparingly, carefully and with
great caution and only when such exercise is justified
by the tests specifically laid down in this section itself.
Authority of the court exists for the advancement of
justice. If any abuse of the process leading to injustice
is brought to the notice of the court, then the court
would be justified in preventing injustice by invoking
inherent powers in absence of specific provisions in the
statute.”
18. In State of A.P. v. Golconda Linga Swamy, (2004) 6 SCC 522, the
Apex Court has held as under:
“5. Exercise of power under Section 482 of the Code in
a case of this nature is the exception and not the rule.
The section does not confer any new powers on the
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High Court. It only saves the inherent power which the
Court possessed before the enactment of the Code. It
envisages three circumstances under which the
inherent jurisdiction may be exercised, namely : (i) to
give effect to an order under the Code, (ii) to prevent
abuse of the process of court, and (iii) to otherwise
secure the ends of justice. It is neither possible nor
desirable to lay down any inflexible rule which would
govern the exercise of inherent jurisdiction. No
legislative enactment dealing with procedure can
provide for all cases that may possibly arise. Courts,
therefore, have inherent powers apart from express
provisions of law which are necessary for proper
discharge of functions and duties imposed upon them
by law. That is the doctrine which finds expression in
the section which merely recognises and preserves
inherent powers of the High Courts. All courts,
whether civil or criminal, possess in the absence of any
express provision, as inherent in their constitution, all
such powers as are necessary to do the right and to
undo a wrong in course of administration of justice on
the principle quando lex aliquid alique concedit,
conceditur et id sine quo res ipsa esse non potest (when
the law gives a person anything, it gives him that
without which it cannot exist). While exercising powers
under the section, the Court does not function as a
court of appeal or revision. Inherent jurisdiction under
the section though wide has to be exercised sparingly,
carefully and with caution and only when such exercise
is justified by the tests specifically laid down in the
section itself. It is to be exercised ex debito justitiae to
do real and substantial justice for the administration of
which alone courts exist. Authority of the court exists
for advancement of justice and if any attempt is made
to abuse that authority so as to produce injustice, the
court has power to prevent such abuse. It would be an
abuse of the process of the court to allow any action
which would result in injustice and prevent promotion
of justice. In exercise of the powers court would be
justified to quash any proceeding if it finds that
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initiation or continuance of it amounts to abuse of the
process of court or quashing of these proceedings
would otherwise serve the ends of justice. When no
offence is disclosed by the complaint, the court may
examine the question of fact. When a complaint is
sought to be quashed, it is permissible to look into the
materials to assess what the complainant has alleged
and whether any offence is made out even if the
allegations are accepted in toto.”
19. In Zandu Pharmaceutical Works Ltd. v. Mohd. Sharaful Haque,
(2005) 1 SCC 122, the Apex Court has held as under:
“11. The scope of exercise of power under Section 482
of the Code and the categories of cases where the High
Court may exercise its power under it relating to
cognizable offences to prevent abuse of process of any
court or otherwise to secure the ends of justice were set
out in some detail by this Court in State of Haryana v.
Bhajan Lal [1992 Supp (1) SCC 335 : 1992 SCC (Cri)
426] . A note of caution was, however, added that the
power should be exercised sparingly and that too in
rarest of rare cases. The illustrative categories
indicated by this Court are as follows : (SCC pp. 378-
79, para 102)“102. (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 any, accompanying
the FIR do not disclose a cognizable offence,
justifying an investigation by police officers under
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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) Where, the allegations in the FIR do not
constitute a cognizable offence but constitute only
a non-cognizable offence, no investigation is
permitted by a police officer without an order of a
Magistrate as contemplated under Section 155(2)
of the Code.
(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) Where there is an express legal bar engrafted
in any of the provisions of the Code or the Act
concerned (under which a criminal proceeding is
instituted) to the institution and continuance of the
proceedings and/or where there is a specific
provision in the Code or the Act concerned,
providing efficacious redress for the grievance of
the aggrieved party.
(7) Where a criminal proceeding is manifestly
attended with mala fides 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.”
As noted above, the powers possessed by the High
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Court under Section 482 of the Code 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. [See Janata Dal v. H.S. Chowdhary
[(1992) 4 SCC 305 : 1993 SCC (Cri) 36] and Raghubir
Saran (Dr.) v. State of Bihar [AIR 1964 SC 1 : (1964)
2 SCR 336 : (1964) 1 Cri LJ 1] .] It would not be
proper for the High Court to analyse the case of the
complainant in the light of all probabilities in order to
determine whether a conviction would be sustainable
and on such premises arrive at a conclusion that the
proceedings are to be quashed. It would be erroneous
to assess the material before it and conclude that the
complaint cannot be proceeded with. In a proceeding
instituted on complaint, exercise of the inherent powers
to quash the proceedings is called for only in a case
where the complaint does not disclose any offence or is
frivolous, vexatious or oppressive. If the allegations set
out in the complaint do not constitute the offence of
which cognizance has been taken by the Magistrate, it
is open to the High Court to quash the same in exercise
of the inherent powers under Section 482 of the Code.
It is not, however, necessary that there should be
meticulous analysis of the case before the trial to find
out whether the case would end in conviction or
acquittal. The complaint has to be read as a whole. If it
appears that on consideration of the allegations in the
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light of the statement made on oath of the complainant
that the ingredients of the offence or offences are
disclosed and there is no material to show that the
complaint is mala fide, frivolous or vexatious, in that
event there would be no justification for interference by
the High Court. When an information is lodged at the
police station and an offence is registered, then the
mala fides of the informant would be of secondary
importance. It is the material collected during the
investigation and evidence led in court which decides
the fate of the accused person. The allegations of mala
fides against the informant are of no consequence and
cannot by themselves be the basis for quashing the
proceedings. [See Dhanalakshmi v. R. Prasanna
Kumar [1990 Supp SCC 686 : 1991 SCC (Cri) 142] ,
State of Bihar v. P.P. Sharma [1992 Supp (1) SCC 222
: 1992 SCC (Cri) 192 : AIR 1991 SC 1260] , Rupan
Deol Bajaj v. Kanwar Pal Singh Gill [(1995) 6 SCC
194 : 1995 SCC (Cri) 1059] , State of Kerala v. O.C.
Kuttan [(1999) 2 SCC 651 : 1999 SCC (Cri) 304 : AIR
1999 SC 1044] , State of U.P. v. O.P. Sharma [(1996)
7 SCC 705 : 1996 SCC (Cri) 497] , Rashmi Kumar v.
Mahesh Kumar Bhada [(1997) 2 SCC 397 : 1997 SCC
(Cri) 415] , Satvinder Kaur v. State (Govt. of NCT of
Delhi) [(1999) 8 SCC 728 : 1999 SCC (Cri) 1503 : AIR
1999 SC 3596] and Rajesh Bajaj v. State NCT of Delhi
[(1999) 3 SCC 259 : 1999 SCC (Cri) 401] .]
20. In State of Maharashtra v. Arun Gulab Gawali, (2010) 9 SCC 701, the
Apex Court has observed as under:
“13. The power of quashing criminal proceedings has
to be exercised very sparingly and with circumspection
and that too in the rarest of rare cases and the Court
cannot be justified in embarking upon an enquiry as to
the reliability or genuineness or otherwise of
allegations made in the FIR/complaint, unless the
allegations are so patently absurd and inherently
improbable so that no prudent person can ever reach
such a conclusion. The extraordinary and inherent
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powers of the Court do not confer an arbitrary
jurisdiction on the Court to act according to its whims
or caprice. However, the Court, under its inherent
powers, can neither intervene at an uncalled for stage
nor can it “soft-pedal the course of justice” at a
crucial stage of investigation/proceedings. The
provisions of Articles 226, 227 of the Constitution of
India and Section 482 of the Code of Criminal
Procedure, 1973 (hereinafter called as “CrPC”) are a
device to advance justice and not to frustrate it. The
power of judicial review is discretionary, however, it
must be exercised to prevent the miscarriage of justice
and for correcting some grave errors and to ensure
that stream of administration of justice remains clean
and pure. However, there are no limits of power of the
Court, but the more the power, the more due care and
caution is to be exercised in invoking these powers.
(Vide State of W.B. v. Swapan Kumar Guha [(1982) 1
SCC 561 : 1982 SCC (Cri) 283 : AIR 1982 SC 949] ,
Pepsi Foods Ltd. v. Special Judicial Magistrate
[(1998) 5 SCC 749 : 1998 SCC (Cri) 1400] , G. Sagar
Suri v. State of U.P. [(2000) 2 SCC 636 : 2000 SCC
(Cri) 513 : AIR 2000 SC 754] and Ajay Mitra v. State
of M.P. [(2003) 3 SCC 11 : 2003 SCC (Cri) 703] )”
21. In State of Odisha v. Pratima Mohanty, (2022) 16 SCC 703, the Apex
Court has held as under:
“8.2. It is trite that the power of quashing should be
exercised sparingly and with circumspection and in
rare cases. As per the settled proposition of law while
examining an FIR/complaint quashing of which is
sought, the court cannot embark upon any enquiry as
to the reliability or genuineness of allegations made in
the FIR/complaint. Quashing of a complaint/FIR
should be an exception rather than any ordinary rule.
Normally the criminal proceedings should not be
quashed in exercise of powers under Section 482CrPC
when after a thorough investigation the charge-sheet
has been filed. At the stage of discharge and/or
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considering the application under Section 482CrPC
the courts are not required to go into the merits of the
allegations and/or evidence in detail as if conducting
the mini-trial. As held by this Court the powers under
Section 482CrPC are very wide, but conferment of
wide power requires the court to be more cautious. It
casts an onerous and more diligent duty on the Court.”
22. The investigation is at a nascent stage. This Court is of the opinion
that the second FIR, i.e. FIR No.47/2024, which is sought to be quashed is
based on different set of facts and facts which have come to light after filing
of FIR No.24/2024, which are not covered in the earlier FIR. This Court is
of the opinion that the scope of both the FIRs are different and only
background facts in the two FIRs, which trace the history of the dispute, are
common. The fact that there is some over-lap between the two FIRs does not
mean that they arise out of same cause of action and, therefore, the second
FIR would not be maintainable.
23. In view of the above, the Petition is dismissed along with the pending
application(s), if any.
SUBRAMONIUM PRASAD, J
OCTOBER 29, 2024
Rahul/JP
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