M/S. GHCL EMPLOYEES STOCK OPTION TRUST versus M/S INDIA INFOLINE LIMITED

Citation: [2013] 5 S.C.R. 276 · Decided: 22-03-2013 · Supreme Court of India · Bench: P. SATHASIVAM · Disposal: Dismissed

Cited by 2 judgment(s) · see the full citation network in Lexace

Judgment (excerpt)

[2013) 5 S.C.R. 276 
A 
M/S. GHCL EMPLOYEES STOCK OPTION TRUST 
B 
v. 
MIS INDIA INFOLINE LIMITED 
(Criminal Appeal No. 488 of 2013) 
MARCH 22, 2013 
[P. SATHASIVAM AND M.Y. EQBAL, JJ.] 
Code of Criminal Procedure, 1973 - s.482 - Complaint 
case - Issuance of summons - Quashing of - Respondent 
c no.1-compf!ny dealt with securities and were registered stock 
brokers and agents - Appellant opened a Demat Account with 
respondent no.1-company - Respondent nos.2 to 7 were 
Managing Director, Company Secretary and Directors of 
respondent no.1-company - Complaint filed by appellant 
0 
alleging that the respondents committed criminal breach of 
trust and cheating, inasmuch as they sold off 8, 76, 668 shares 
of the appellant and misappropriated the entire sale proceeds 
- Metropolitan Magistrate summoned the respondents to face 
trial under ss.415, 409, 34, 1208 - Criminal proceedings 
initiated against respondent nos.2 to 7 - Quashed by High 
E Court - Justification - Held: Justified - Order of Magistrate 
summoning the accused must reflect that he has applied his 
mind to the facts of the case and the law applicable thereto -
Magistrate has to record his satisfaction with regard to the 
existence of a prima facie case on the basis of specific 
F allegations made in the complaint supported by satisfactory 
evidence and other material on record - On facts, the order 
passed by the Magistrate reveals that two witnesses were 
examined by the complainant but none of them specifically 
stated as to which of the accused committed breach of trust 
G or cheated the complainant except general and bald 
allegations made therein - In the order issuing summons, the 
Magistrate did not record his satisfaction about the prima facie 
case as against respondent Nos.2 to 7 and the role played 
H 
276 
GHCL EMPLOYEES STOCK OPTION TRUST v. INDIA 277 
INFOLINE LIMITED 
by them in the capacity of Managing Director, Company A 
Secretary or Directors of the company which is sine qua non 
for initiating criminal action against them - Issuance of 
summons against respondent Nos. 2 to 7 was therefore illegal 
and amounted to abuse of the process of law - Penal Code, 
1860 -
SS. 415, 409, 34 and 1208. 
B 
Respondent no.1-company dealt with securities and 
were registered stock brokers and agents. The appellant 
·opened a Demat Account with respondent no.1-company, 
and placed orders from time to time for purchase of 
shares and also made payments against its running C 
account with the Company. Respondent nos.2 to 7 were 
Managing Director, Company Secretary and Directors of 
respondent no.1-company. Subsequently, the appellant 
filed a complaint alleging that the respondents committed 
criminal breach of trust and cheating, inasmuch as they 
D 
sold off 8,76,668 shares of the appellant and 
misappropriated the entire sale proceeds. The 
Metropolitan Magistrate summoned the respondents to 
face trial under Sections 415, 409, 34, 1208 of IPC. 
Challenging the order passed by the Metropolitan 
E 
Magistrate, seven Criminal Miscellaneous Cases under 
Section 482 CrPC were separately filed on behalf of 
respondent no.1-company, and respondent nos. 2 to 7. 
The High Court by the impugned order held that 
F 
issuance of summons against respondents Nos. 2 to 7 
cannot be sustained. So far as· respondent No.1-
company is concerned, the High Court held that issuance 
of summons as against the Company under Section 415 
IPC also cannot be sustained. The Magistrate was directed 
G 
to proceed with the trial against respondent No. 1 under 
other Sections of IPC. 
In the instant appeals, the appellant contended that 
the High Court gravely erred in law in taking into 
H 
278 
·SUPREME COURT REPORTS 
[2013] 5 S.C.R. 
A consideration probable defence of the accused-
respondents, which was tendered at the time of the 
hearing ot the petitions under Section 482 Cr.P.C. 
questioning the legality of the summoning order passed 
by the Magistrate; and that the High· Court failed to 
B appreciate that the allegations against respondent nos. 
2 to 7 were not based on any vicarious liability but on the 
. specific allegations of their having conspired together to 
cheat and commit breach of trust, which is supported by 
documentary evidence. 
c 
· Dismissing the appeals, the Court 
HELD: 1.1. From bare perusal of the complaint and 
the allegations made therein, it is clear that the 
. complainant-appellant has not made specific allegations 
D against respondent Nos.2 to

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