SRI SURESH KUMAR GOYAL AND OTHERS versus STATE OF UTTAR PRADESH AND ANOTHER on 11 January 2019

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[2019] 1 S.C.R.

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SRI SURESH KUMAR GOYAL AND OTHERS

v.

STATE OF UTTAR PRADESH AND ANOTHER

(Criminal Appeal No. 56 of 2019)

JANUARY 11, 2019

B[UDAY UMESH LALIT AND

DR. D. Y. CHANDRACHUD, JJ.]

Code of Criminal Procedure, 1973 – ss. 482 and 245(2) –Jurisdiction u/s. 482 to quash the proceedings before thecommencement of actual trial – On facts, allegation that respondentCno.2 purchased shares in his name and appellant no. 2, andappellants by forging signature of respondent no. 2, illegallyprocured bonus shares and refused to hand over the original sharesin their possession – Criminal complaint by respondent no. 2 againstappellants alleging cheating – Dismissed by the Magistrate, however,Din Revision matter remanded back – Application u/s. 482 byappellants – Disposed of, by the High Court – Thereafter, appellantsfiling application u/s. 245(2) for discharge – Rejection of, by theMagistrate holding that sufficient grounds to frame charges u/s.420, 323 and 504 IPC made out – On appeal, held: Shares rightsince the date of acquisition have always been in the custody ofEappellant No.1 and the acquisition was from the funds of appellantNo.1 – Complainant merely alleged that the funds came from hisbank account but beyond such allegations no material placed onrecord at any stage – Appellants’ stand in their application u/s.245(2)quite clear that the shares can be sold in the market and the proceedsFcan be divided between appellant No.2 and respondent No.2 –Appellant no.1 had disowned respondent No.2 and had filed civilproceedings seeking appropriate orders – Thus, the present criminalcomplaint is an attempt to wreck vengeance against appellants –Criminal complaint is an abuse of the process of court and is to bequashed – Orders passed by the courts below set aside andGapplication for discharge u/s.245(2) allowed – Respondent No.2 topay Rs.25,000/- to each appellant by way of costs for initiatingfrivolous litigation – Costs.

Rajiv Thapar v. Madan Lal Kapoor (2013) 3 SCC 330– referred to.

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Case Law Reference

(2013) 3 SCC 330referred toPara 13

CRIMINAL APPELLATE JURISDICTION: Criminal AppealNo. 56 of 2019.

From the Judgment and Order dated 29.05.2018 of the High Courtof Judicature at Allahabad in Application U/s. 482 No. 22324 of 2011.

Venkita Subramoniam T.R, Raghvendra Srivastava, Rahat Bansal,Advs. for the Appellants.

Tribindh Kumar, Subodh Jha, Amlan Kumar Ghosh, Advs. for theRespondents.

The Judgment of the Court was delivered by UDAY UMESH LALIT, J. 1. Leave granted. This appealchallenges the order dated 29.05.2018 passed by the High Court ofJudicature at Allahabad dismissing application preferred by the appellantsunder Section 482 CrPC being Application No.22324 of 2011.

2. Respondent No.2 filed Complaint No.3804 of 2009 in the Courtof 3[rd] Additional Chief Judicial Magistrate, Ghaziabad on 02.12.2009against Appellant Nos.1, 2 and 3 namely his father, brother and brother-in-law. The main allegations as set out in paragraphs 3, 4, 5, 7 and 10 ofthe Complaint were as under:- “3. THAT Complainant had purchased 2 folios consisting of 100shares of Reliance Industry. 1[st] folio was in the name of theComplainant and accused no.2 and 2[nd] folio was in the joint namesof accused no.2 and complainant. The address in these shares isHouse no. KC-102/2, Kavi Nagar, Ghaziabad. Thereafter Reliancecompany sent to complainant 100 shares in the year 1997 and 200shares of their company in this year itself.

4. THAT all the accused in furtherance of their conspiracy beatthe Complainant and threw him out of the house along with hischildren in the year 1998 for mala fide reasons. They also forgedsignatures of complainant in the years 1997 and 2006 and illegallyprocured bonus shares and when complainant demanded backhis original shares and bonus shares from them, they misbehavedwith the complainant and refused to disclose anything to him. The BC

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Acomplainant is presently living in Chiranjiv Vihar with his childrenfor the sake of lives of himself and his children and also to maintainpeace in the family.

5. THAT Folio number of the shares is 068119227 and complainantis not aware of the number of 2[nd] folio and he will provide it laterBon whenever he comes to know of it. Because all the shares arein the custody of the accused. Not only this, 100 shares of M/s.Amrit Banaspati Co. Ltd., belonging to Complainant, are also inthe custody of the accused.

7. THAT all the original shares had been handed over to accusedCno.2 by the complainant after purchasing them for safe custody.

10. THAT all shares of complainant are in custody of accusedand cost of the shares is approx. Rs.4.50 Lacs.”

3. It was thus alleged that the appellants had betrayed and cheatedRespondent No.2 and were guilty of offences punishable under SectionsD406, 420, 467, 471, 323, 504, 506, 447 and 448 IPC. However, by hisorder dated 18.06.2010 the 3[rd] Additional Chief Judicial Magistrate,Ghaziabad found that no ground to summon the appellants for trial wasmade out and the complaint being devoid of merits was liable to bedismissed under Section 203 CrPC. The aforesaid order was, however,Eset aside in Criminal Revision No.179 of 2010 preferred by RespondentNo.2 by the Additional Sessions Judge, Court No.2, Ghaziabad, who byhis order dated 11.11.2010 remanded the matter with a direction to passfresh orders after granting an opportunity of hearing to Respondent No.2.The appellants being aggrieved, preferred application under Section 482CrPC being Application No.9156 of 2011 in the High Court. SaidFapplication was disposed of by the High Court on 23.03.2011 observingthat if the appellants moved an application under Section 245(2) CrPCthe same be heard and disposed of expeditiously.

4. Accordingly, an application under Section 245(2) CrPC wasmoved by the appellants. Paragraphs 6 to 15 of the application forGdischarge dealt with acquisition of shares of Reliance Industries Ltd.

“6. THAT true and correct position is that an application forallotment of 100 debentures of M/s. Reliance Polythene Limitedwas given by the co-applicant, Suresh Goyal in the year 1993.This application was filed by him for allotment of shares in the H

names of his sons i.e. Arun Kumar Goyal (i.e. the complainant)and Devinder Kumar Goyal and for which the said co-applicanthad given a cheque of his own bank.

7. THAT thereafter Reliance Polythene Limited issued 100debentures of their Company being Debenture Nos. 004959401to 004959500 vide Master Folio No.68119227 and CertificateNo.0049595 on the basis of above application of applicant SureshKumar Goyal on 15.4.1993.

8. THAT thereafter above said 100 debentures were convertedby M/s. Reliance Polythene Limited into shares and accordinglyissued 100 shares bearing Share Nos.154702201 to 154702300 inthe names of Arun Kumar Goyal (i.e. the complainant) andDevinder Kumar Goyal vide Master Folio no.68119227 andCertificate No.00545523. It is pertinent to mention here thatconversion of debentures into 100 shares vide Master FolioNo.68119227 was done by the above said company in pursuanceof their own policy and no application for this conversion wasever given by the applicant.

9. THAT later on M/s. Reliance Polythene Limited merged withM/s. Reliance Industries Limited and thereafter 25 shares of thiscompany in lieu of above said 100 shares were allotted by thecompany according to their policy bearing Share Nos. 400314745to 400314769 in the names of Arun Kumar Goyal (i.e. complainant)and Devinder Kumar Goyal vide Folio No.68119227 and CertificateNo.056387476. It is pertinent to mention here that this conversionof shares into 25 shares was also done by the Company undertheir own policy. The above shares were issued under FolioNo.68119227.

10. THAT thereafter M/s. Reliance Industries Limited issued 25shares of their company in the names of Arun Kumar Goyal (i.e.complainant) and Devinder Kumar Goyal bearing ShareNos.400314745 to 400314769 Folio No.68119227 and CertificateNo.056387476.

11. THAT later on Reliance Industries Limited divided its companyinto 4 companies, whose names are mentioned hereinafter, undertheir Policy and issued 50 shares each in the joint names of ArunKumar Goyal (i.e. complainant) and Devinder Kumar Goyal –

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(a) Reliance Energy Ventures Limited: Folio No.001486420,Certificate No. 000148642, Share Nos.0007302483 to0007302532 dated 27.1.2006 – Total No. of shares 50.

(b) Reliance Communication Ventures Limited: FolioNo.001486420, Certificate No.(Illegible) Share Nos. (Illegible)dated (Illegible) – total no. of shares 50.

(c) Reliance Resources Limited: Folio No.001486420,Certificate No.000148642, Share Nos. 0007302483 to0007302532 dated 27.1.2006 – Total No. of shares 50.

(d) Reliance Capital Ventures Limited: Folio No.001486420,Certificate No.000148642, Share Nos. 0007302483 to0007302532 dated 27.1.2006 – Total No. of shares 50.

12. THAT thereafter 3 new Companies were formed in the namesof Reliance Capital Limited, Reliance Energy Limited and ReliancePower Limited under the Company Policy after merging all theabove named 4 companies and following shares were issued inthe joint names of Arun Kumar Goyal (i.e. complainant) andDevinder Kumar Goyal –

(a) M/s. Reliance Capital Limited: Master Folio No.102341601,Certificate No.016334160, share Nos. 0225139303 to0225139305 = 2 Shares.

(b) M/s. Reliance Energy Limited: Master Folio No.102341601,Certificate no. 015734160, share Nos.0213764143 to0213764145 = 3 Shares.

(c) M/s. Reliance Power Limited: Master Folio No.20148620,Certificate no. (Illegible), share Nos. 23978999076 to2397899087 = 12 Shares.

13. THAT thereafter M/s. Reliance Industries Limited under itsCompany policy issued 50 bonus shares in the joint names of ArunKumar Goyal (i.e. complainant) and Devinder Kumar Goyal videFolio No.608119227, Certificate No.622733328, ShareNos.002226357219 to 00222357268 dated 28.11.2009.

14. THAT in this manner it would be apparent from the abovefacts that 100 shares of Reliance Industries Co.; 2 shares ofReliance Capital Limited; 3 shares of Reliance Energy Limited;and 12 shares of Reliance Power Limited have been issued in the

joint names of Arun Kumar Goyal (i.e. complainant) and DevinderKumar Goyal. These shares were sent by the company at HouseNo.KC-102/2, Kavi Nagar, Ghaziabad i.e. the address maintainedin their records. The originals of all the above shares are availablewith Devinder Kumar Goyal. In this manner, it would be apparentfrom the above that neither the applicants nor the complainanthave purchased these shares from the open market. All the shareshave been allotted by the company in lieu of the money paid bySuresh Kumar Goyal (i.e. father of Arun Kumar Goyal andDevinder Kumar Goyal) although these shares have been issuedby company in the joint names of Arun Kumar Goyal and DevinderKumar Goyal. None of the applicants had given any applicationin writing for collecting bonus shares nor any one of them everattempted to sell any of these shares. Therefore allegation of thecomplainant that applicants have obtained bonus shares bycheating and/or by forging his signatures, is patently wrong andfalse and accused emphatically deny the same. (illegible).

15. THAT it thus becomes evident from perusal of above factsthat no shares have been purchased by Arun Kumar Goyal eitherfrom the Company or from the open market.”

5. Similarly, the acquisition of shares of M/s. Amrit VanaspatiCompany Ltd. was also dealt with and it was asserted:- “18. THAT all the above shares are in joint names. It is pertinentto mention here that no one can either sell or transfer the shareswhich are in the joint names nor anyone can change the address,unless and until both the shareholders agree and sign for this.

19. THAT no other shares have been purchased except the aboveshares. Therefore, the allegations of complainant that he willfurnish details/information of one other folio as and when hebecomes aware of that, are patently wrong, false and baselessand applicants emphatically deny such allegations.

20. THAT it is thus evident from the above facts that all the sharesallotted by M/s. Reliance Industries have been issued in the jointnames of Arun Kumar Goyal (i.e. complainant) and DevinderKumar Goyal. Resultantly Complainant and Devinder KumarGoyal have equal share in the above shares. Originals of all theseshares are in the possession of Devinder Kumar Goyal.

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21. THAT similarly shares allotted by M/s. Amrit VanaspatiCompany are also in the joint names of Arun Kumar Goyal (i.e.complainant) and Devinder Kumar Goyal and consequently boththe complainant and Devinder Kumar Goyal have equal shares inthem. The originals of these shares are also in possession ofDevinder Kumar Goyal.

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22. THAT Anil Kumar Garg has absolutely nothing to do with thiscase. He is the real Son-in-law of Suresh Kumar Goyal and thatis why he too has been falsely implicated in this case.

23. THAT Suresh Kumar Goyal and Devinder Kumar Goyal evenCoffered the Complainant-Arun Kumar Goyal to collect money ofhis half share in the above shares after selling them in the openmarket. But he is not ready for this offer. He is not entitled todemand all the shares.”

6. The application for discharge was rejected by the AdditionalDChief Judicial Magistrate, Court No.3, Ghaziabad vide his order dated14.06.2011. While so rejecting, it was observed that sufficient groundsto frame charges under Sections 420, 323 and 504 IPC were made out.

7. The aforesaid order was challenged by the appellants by filingapplication under Section 482 CrPC namely Application No.22324 ofE2011. The High Court noted the contentions on behalf of the appellantsas under:

“As applicant no. 1 was not happy with the conduct of the oppositeparty no.2, he disowned him and also filed O.S. No.406 of 2007 inthe court of Civil Judge (Senior Division), Ghaziabad for a decreeof declaration. A criminal complaint was also initiated by applicantFno.1 against the opposite party no.2 under Sections 420, 406, 409,321, 323, 385, 442 IPC.

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On 2.12.2009, the opposite party no. 2 filed a Complaint CaseGNo.3884 of 2009 against the applicants on the ground that oppositeparty no. 2 had purchased shares from the Reliance Industries inthe name of complainant and applicant no. 2. It is further allegedin the complaint that in the year 1997 and in the year 2006 bymaking forged signature of the complainant bonus shares werereceived by the applicants and original shares were also in the H

possession of the applicants. In spite of demand same has notbeen handed over to the complainant. It is further alleged in thecomplaint that applicants with mala fide intention on 9.10.2007sent a letter to the company which was received to the companyon 10.10.2007 and thereafter complainant on 15.8.2009 and17.8.2009 sent mails to the company in this regard.

It is submission of the learned counsel for the applicants that shareswere purchased by the applicant no. 1, although they were also inthe name of opposite party no.2. At no point of time any forgeryhas been committed and preparation of any act cannot be termedas forgery.”

8. However, the High Court observed that in a petition underSection 482 CrPC disputed questions of fact could not be gone into andwhether the shares were purchased by the appellants or by RespondentNo.2 was a matter of evidence and as such no interference was calledfor. The aforesaid application was thus dismissed by the High Court on29.05.2018, which decision is presently under challenge.

9. In support of the appeal, it was submitted that the instantcomplaint was a counter blast after Appellant No.1 had disownedRespondent No.2 by issuing an advertisement in the newspaper andswearing an affidavit to that effect; and after he had filed a civil suitseeking injunction against Respondent No.2 from coming to the houseof the appellants and causing any hindrance; and after a criminal complaintwas filed by the Appellant No.1 against Respondent No.2. It wassubmitted that as disclosed in the application under Section 245(2) CrPC,the entire funding for acquisition of the shares in question had comefrom Appellant No.1 in the year 1992-1993 when Respondent No.2 wasa youngster aged about 24 years. In support of the assertion that theacquisition was from the funds of Appellant No.1, the photocopies of theconcerned bank accounts were also placed on record. On the otherhand, the learned counsel for Respondent No.2 reiterated the submissionthat the issue of ownership was essentially a question of fact which hadto be decided in the pending complaint and that the matter ought not tobe entertained in an application for discharge. In support of thesubmission that Respondent No.2 had acquired those shares from hisown funds, reliance was placed upon a typewritten extract showing debitentries of Rs.1250/-, Rs.1250/- and Rs.500/- dated 04.05.1993,08.06.1994 and 15.10.1994 which extract was however without anydetails.

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A10. This Court adjourned the matter to enable the parties to arriveat an amicable settlement whereafter the appellants agreed to withdrawall the cases filed by them against Respondent No.2 on the conditionthat similar such cases filed by Respondent No.2 against them also bewithdrawn, giving quietus to all the proceedings between the parties.Respondent No.2, however, did not agree to the proposal.B

11. The thrust of the allegations in the complaint is that the sharesin question were acquired from the funds of the complainant, thoughthey have always stood in the names of the complainant and his brother.It is also accepted that the shares have always been in the custody ofthe father i.e. Appellant No.1. Beyond mere allegation that the fundsCfor acquisition came from his bank account, nothing has even beensuggested by the complainant. The entries dated 04.05.1993, 08.06.1994and 15.10.1994 relied upon by him are much after the issuance of 100debentures by Reliance Polythene Ltd. on 15.04.1993. As detailed inthe application under Section 245(2) CrPC the basic acquisition wasDthese 100 debentures which investment, with the passage of time, gotconverted and progressed to the present level. The complainant wasnot even aware of these details. The allegations of beating andintimidation are of the year 1998 and completely devoid of any substance.The question is: are these aspects sufficient to invoke the jurisdiction todischarge the appellants or should the appellants be made to go throughEthe rituals and rigour of trial.

12. While dealing with the jurisdiction under Section 482 CrPC toquash the proceedings at the stage of issuance of process, or at thestage of committal, or at the stage of framing of charges, that is to saybefore the commencement of actual trial, in the light of material placedFon record by the accused, this Court in Rajiv Thapar and Others v.Madan Lal Kapoor[1 ]laid down as under:- “28. The High Court, in exercise of its jurisdiction under Section482 CrPC, must make a just and rightful choice. This is not astage of evaluating the truthfulness or otherwise of the allegationsGlevelled by the prosecution/complainant against the accused.Likewise, it is not a stage for determining how weighty thedefences raised on behalf of the accused are. Even if the accusedis successful in showing some suspicion or doubt, in the allegationslevelled by the prosecution/complainant, it would be impermissible H 1 (2013) 3 SCC 330

to discharge the accused before trial. This is so because it wouldresult in giving finality to the accusations levelled by the prosecution/complainant, without allowing the prosecution or the complainantto adduce evidence to substantiate the same. The converse is,however, not true, because even if trial is proceeded with, theaccused is not subjected to any irreparable consequences. Theaccused would still be in a position to succeed by establishing hisdefences by producing evidence in accordance with law. There isan endless list of judgments rendered by this Court declaring thelegal position that in a case where the prosecution/ complainanthas levelled allegations bringing out all ingredients of the charge(s)levelled, and have placed material before the Court, prima facieevidencing the truthfulness of the allegations levelled, trial mustbe held.

29. The issue being examined in the instant case is the jurisdictionof the High Court under Section 482 CrPC, if it chooses to quashthe initiation of the prosecution against an accused at the stage ofissuing process, or at the stage of committal, or even at the stageof framing of charges. These are all stages before thecommencement of the actual trial. The same parameters wouldnaturally be available for later stages as well. The power vestedin the High Court under Section 482 CrPC, at the stages referredto hereinabove, would have far-reaching consequences inasmuchas it would negate the prosecution’s/complainant’s case withoutallowing the prosecution/complainant to lead evidence. Such adetermination must always be rendered with caution, care andcircumspection. To invoke its inherent jurisdiction under Section482 CrPC the High Court has to be fully satisfied that the materialproduced by the accused is such that would lead to the conclusionthat his/their defence is based on sound, reasonable, and indubitablefacts; the material produced is such as would rule out and displacethe assertions contained in the charges levelled against the accused;and the material produced is such as would clearly reject andoverrule the veracity of the allegations contained in the accusationslevelled by the prosecution/ complainant. It should be sufficient torule out, reject and discard the accusations levelled by theprosecution/complainant, without the necessity of recording anyevidence. For this the material relied upon by the defence shouldnot have been refuted, or alternatively, cannot be justifiably refuted, ABC

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SUPREME COURT REPORTS

being material of sterling and impeccable quality. The materialrelied upon by the accused should be such as would persuade areasonable person to dismiss and condemn the actual basis of theaccusations as false. In such a situation, the judicial conscienceof the High Court would persuade it to exercise its power underSection 482 CrPC to quash such criminal proceedings, for thatwould prevent abuse of process of the court, and secure the endsof justice.

30. Based on the factors canvassed in the foregoing paragraphs,we would delineate the following steps to determine the veracityof a prayer for quashment raised by an accused by invoking thepower vested in the High Court under Section 482 CrPC:

30.1. Step one: whether the material relied upon by the accusedis sound, reasonable, and indubitable i.e. the material is of sterlingand impeccable quality?

30.2. Step two: whether the material relied upon by the accusedwould rule out the assertions contained in the charges levelledagainst the accused i.e. the material is sufficient to reject andoverrule the factual assertions contained in the complaint i.e. thematerial is such as would persuade a reasonable person to dismissand condemn the factual basis of the accusations as false?

30.3. Step three: whether the material relied upon by the accusedhas not been refuted by the prosecution/complainant; and/or thematerial is such that it cannot be justifiably refuted by theprosecution/complainant?

30.4. Step four: whether proceeding with the trial would result inan abuse of process of the court, and would not serve the ends ofjustice?

30.5. If the answer to all the steps is in the affirmative, the judicialconscience of the High Court should persuade it to quash suchcriminal proceedings in exercise of power vested in it under Section482 CrPC. Such exercise of power, besides doing justice to theaccused, would save precious court time, which would otherwisebe wasted in holding such a trial (as well as proceedings arisingtherefrom) specially when it is clear that the same would notconclude in the conviction of the accused.”

13. In the present case the shares in question, right since the dateof acquisition have always been in the custody of Appellant No.1. Thematerial on record is absolutely clear that the acquisition was from thefunds of Appellant No.1. The complainant has merely alleged that thefunds came from his bank account but beyond such allegations no materialhas been placed on record at any stage. The stand taken by the appellantsin their application under Section 245(2) CrPC is quite clear that theshares can be sold in the market and the proceeds can be divided betweenAppellant No.2 and Respondent No.2. If Respondent No.2 is insistingon having complete ownership in respect of the concerned shares, thematter must first be established before a competent forum. We haveconsidered the material on record through the steps indicated in RajivThapar v. Madan Lal Kapoor (supra) and are convinced that the instantcase calls for interference under Section 482 CrPC. Further, from thefacts that Appellant No.1 had disowned Respondent No.2 and had filedcivil proceedings seeking appropriate orders against them, we are alsoconvinced that the present criminal complaint is nothing but an attemptto wreck vengeance against the father, brother and the brother in law ofthe complainant. The instant criminal complaint is an abuse of the processof Court and is required to be quashed.

14. We, therefore, allow this appeal, set aside the orders passedby the Courts below and allow the application for discharge under Section245(2) CrPC in complaint No.3804 of 2009 on the file of third AdditionalChief Judicial Magistrate, Ghaziabad.

15. Since we have found that the initiation of complaint was not abona fide exercise, we direct Respondent No.2 to pay a sum ofRs.25,000/- (Rupees twenty five thousand only) within two months fromtoday to each of the appellants by way of costs for initiating frivolouslitigation.

Nidhi Jain

Appeal allowed.

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