A.V. MOHAN RAO AND ANR. versus M. KISHAN RAO AND ANR.

Citation: [2002] SUPP. 1 S.C.R. 175 · Decided: 16-07-2002 · Supreme Court of India · Bench: D.P. MOHAPATRA · Disposal: Dismissed
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Judgment (excerpt)

I 
A.V. MOHAN RAO AND ANR. 
A 
v. 
M. KISHAN RAO AND ANR. 
JULY 16, 2002 
'[D.P. MOHAPATRA AND K.G. BALAKRISHNAN, JJ.] 
B 
Code of Criminal Procedure, 1973-Section 482-Power of quashing 
criminal complaint and proceedings-Scope of-Held, the power is to be 
exercised sparingly with circumspection in the rarest of rare cases-Constitution c 
of India, 1950-Artic/e 226. 
Sections 4 and I 88-0jfences committed by citizen of India outside the 
country-Held, are subject to jurisdiction of Courts in India. 
Companies Act, 1956-Sections 60, 63, 68, 68-A and 62 I-Offences- D 
Allegation-Complaint-Petition for quashing the complaint at preliminary 
stage-Plea that allegation even prima facie not made out and jurisdiction of 
Courts in India denied-Held, ii is not correct that a/legations were not made 
out even prima facie-Pleas being of involved nature need inquiry into facts 
and could be considered on the basis of evidence at the trial. 
Words and Phrases-'Prospectus '-Meaning of in the context of Section 
2(36) of Companies Act, 1956. 
E 
Respondent No. I (complainant) filed complaint against appellants 
(accused) alleging offences under Sections 60, 63, 68 and 68-A read with 
Section 621 of Companies Act, 1956. The allegation was that appellants F 
who were Directors of a Power Company in India induced various Non-
Resident Indians (NRis) to pay them money for purchase of shares of the 
company and after collecting the funds from several NRis siphoned off 
the same into bogus companies exclusively owned by them in off-shore 
companies and purchased shares of the power company in India in the G 
name of the bogus off-shore companies and NRis were not given any 
shares. 
After receipt of the complaint, when the Special Judge for Economic 
Offences issued summons to the appellants-accused for their personal 
appearance in the Court, the appellants filed petition under Section 482 H 
175 
176 
SUPREME COURT REPORTS [2002) SUPP. l S.C.R. 
A Cr.P.C. in the High Court for quashing thie proceedings before Special 
Judge on the ground that the complaint was not maintainable as the same 
did not make out any of the offences alleged by the complainant; and that 
the Companies Act has no application on them as they were not citizens 
of India at the time of commission of the offences and the offences alleged 
B were not committed in the country. The fietition was contested on the 
ground that the question raised by the accused could be considered only 
at the trial after evidence was placed; that in the context of the facts and 
circumstances of the case the power under Section 482 Cr.P.C. could not 
be exercised to quash the complaint and terminate proceedings at the 
preliminary stage. High Court declined to quash the complaint and 
C dismissed the petition under Section 482 Cr.P.C. Hence the present appeal. 
Dismissing the appeal, the Court 
HELD: 1. Power of quashing a c:riminal complaint and the 
proceeding initiated on its basis under Section 482 of the Cr.P.C. or Article 
D 226 of the Constitution is to be exerci!ied very sparingly and with 
circumspection and that too in the rarest •of rare cases. (183-8) 
State of Bihar v. Murad Ali Khan and Ors., (1988) 4 SCC 655; State 
of Haryana and Ors. v. Bhajan Lal and Ors., (1992) Supp. 1 SCC 335; 
Mahavir Prasad Gupta and Anr. v. State of National Capital Territory of 
E Delhi and Ors., [2000) 8 sec 115, referred to. 
2. Reading of the complaint petition and the materials produced by 
the complainant with it in the light of provisions in sections 60, 63, 68 and 
68-A of Companies Act, 1956, it cannot be said that the allegations made 
in the complaint taken in entirety do not make out, even prima facie, any 
F of the offences alleged in the complaint petition. The allegations made are 
serious in nature and relate to the Power Company, registered under the 
Act having its head office in this country. Whether the appellants were 
or were not citizens of India at the tim•~ of commission of the offences 
alleged and whether the offences alleged were or were not committed in 
G this country, are questions to be c;onsidered on the basis of the evidence 
to be placed before the Court at the trial of the case. The questions raised 
are of involved nature, determination of which requires enquiry into facts. 
Such questions cannot be considered at the preliminary stage for the 
purpose of quashing the complaint and the proceeding initiated on its basis. 
From Sections 4 and 188 Cr.P.C. it is
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