Maskud Saiyed as appellant vs. State of Gujarat as respondents, before S.B. Sinha and H.S. Bedi,JJ. Criminal appeal no.1248 of 2007, decided on September 18,2007.
. Respondent No. 2 is a former Chairman-cum-Managing Director of Dena Bank. He is presently the Chairman and Managing Director of Bank of Baroda, Mumbai. Respondent Nos. 3 to 11 are Directors of Dena Bank. Appellant is a Director of Nagami Nicotine Pvt. Ltd. (hereinafter referred to as "the Company"). He had transactions with the Company and had taken loan from Dena Bank. As loans were not paid, admittedly, an original application was filed against him before the Debts Recovery Tribunal, Ahmedabad for recovery of a sum of Rs. 120.13 lakhs from the Company.
3. The Bank floated a public issue of 8 crores equity shares of Rs. 10/- each for cash at a premium of Rs. 17/- i.e. at a price of Rs. 27/- each. Prospectus was published for the purpose of public issue and therein some false and misleading information had been given with regard to sanction limits, the dues and export bills of the Company. It was alleged that the Company had committed an offence punishable under Sections 120B, 425, 191, 192, 177, 181 as also 500 Of the India penal Code. . A criminal complaint was filed before the Chief Judicial Magistrate, Vadodara by the appellant alleging:
"(A) Following false, fabricated and fraudulent documents illegally and dishonestly misused by Shri G.C. Garg in the absence of the sanction letters of the Bank along with its stipulated sanctioned terms and conditions for the sanctioned so called credit facilities, evidently acceptance of Complainant's Company for the stipulated sanctioned terms and conditions does not exist. Hence following false, fabricated and fraudulent dishonestly and purposefully misused documents with malafide intention are illegal, invalid and not maintainable. Thus, Shri G.C. Garg solemnly affirmed and signed the verification of the aforesaid Original Application by dishonestly making false claim under Section 209 by giving false and fabricated statements, information and evidences under Sections 177, 181, 191, 192, 196, 200,470 and 471 of IPC."
An order under Sub-section (3) of Section 156 of the Code of Criminal Procedure was passed by the learned Chief Judicial Magistrate relying on or on the basis of allegations made in the said complaint petition. The learned Chief Judicial Magistrate by an order dated 28.02.2005 directed the police authorities to investigate the complaint. Respondent filed an application under Section 482 of the Code of Criminal Procedure for quashing the complaint and the investigation on 10.05.2005. By reason of the impugned judgment dated 9.01.2006, the said application has been allowed.
The Court observed that where a jurisdiction is exercised on a complaint petition filed in terms of Section 156(3) or Section 200 of the Code of Criminal Procedure, the Magistrate is required to apply his mind. Indian Penal Code does not contain any provision for attaching vicarious liability on the part of the Managing Director or the Directors of the Company when the accused is the Company. The Learned Magistrate failed to pose unto himself the correct question viz. as to whether the complaint petition, even if given face value and taken to be correct in its entirety, would lead to the conclusion that the respondents herein were personally liable for any offence. The Bank is a body corporate. Vicarious liability of the Managing Director and Director would arise provided any provision exists in that behalf in the statute. Statutes indisputably must contain provision fixing such vicarious liability. Even for the said purpose, it is obligatory on the part of the complainant to make requisite allegations which would attract the provisions constituting vicarious liability.