M/S. GHCL EMPLOYEES STOCK OPTION TRUSTversusM/S INDIA INFOLINE LIMITED

                        [2013) 5 S.C.R. 276


A      M/S. GHCL EMPLOYEES STOCK OPTION TRUST
                                 v.
                  MIS INDIA INFOLINE LIMITED
                (Criminal Appeal No. 488 of 2013)
                         MARCH 22, 2013
B
            [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 7. In paragraph 2 of the
    complaint, it is alleged that respondent Nos.2 to 6 are
    looking after the day-to-day affairs of the Company. With
    whom the complainant or its authorized representative
    interacted ·has also not been specified. Although in
E . paragraph 11 of t.he complaint it is alleged that the
    complainant on numerous occasions met accused Nos.2
  · to 7 and requested to refund the amount, but again the
    complainant has not made specific allegation about the
    date of meeting and whether it was an individual meeting
F · or collective meeting. Similarly, in paragraph 17 of the
    complaint, there is no allegation that a particular Director
    or Managing Director fabricated debit note. In the entire
    complaint there are bald and vague allegations against
    respondent Nos.2 to 7. [Para 12) [289-C-E]

G      . 1.2. Summoning of accused in a criminal case is a
    serious matter. Hence, criminal law cannot be set into
    motion as a matter of course. The order of Magistrate
    summoning the accused must reflect that he has applied
    his mind to the facts of the case and the law applicable
H
GHCL EMPLOYEES STOCK OPTION TRUST v. INDIA 279
             INFOLINE LIMITED
thereto. The Magistrate has to record his satisfaction with    A
regard to the existence of a prima facie case on the basis
of specific allegations made in the complaint supported
by satisfactory evidence and other material on record.
[Para 14) [289-G-H; 290-A-B]           .
                                                            B
     1.3. In the instant case, the order passed by the
Magistrate reveals that two witnesses were examined by
the complainant-appellant but none of them specifically
stated as to which of the accused committed breach of
trust or cheated the complainant except general and bald
allegations made therein. In the order issuing summons, C
the Magistrate has not recorded his satisfaction about the
prima facie case as against respondent Nos.2 to 7 and the
role played by them in the capacity of Managing Director,
Company Secretary or Directors which is sine qua non
for initiating criminal action against them. The High Gourt D
has correctly noted that issuance of summons against
respondent Nos.2 to 7 is illegal and amounts to abuse of
the process of law. [Paras 18, 19 and 21) [292-E-F; 293-
B-C; 294-B]
                                                               E
    Madhav Rao Jiwaji Rao Scindia & Ors. vs. Sambhajirao
Chandrojirao Angre & Ors. (1988) 1 SCC 692: 1988 (2) SCR
930; Punjab National Bank and Others vs. Surendra Prasad
Sinha AIR 1992 SC 1815: 1992 (2) SCR 528; Maksud
Saiyed vs. State of Gujarat and Others (2008) 5 SCC 668:       F
2007 (9) SCR 1113 and Mis. Therm ax Ltd. & Ors. ·vs. K. M.
Johny & Ors. 2011 (11) SCALE 128 - referred to.

    S.K. Alagh vs. State of Uttar Pradesh & Ors. (2008) 5
SCC 662: 2008 (2) SCR 1088 and Standard Chartered Bank
and Ors. Etc. vs. Directorate of Enforcement & Ors. AIR 2005   G
SC 2622: 2005 (1) Suppl. SCR 49 - cited.
                    Case Law Reference:
    1988 (2) SCR 930         referred to    Paras 8, 9, 15
                                                               H
    280       SUPREME COURT REPORTS             [2013) 5 S.C.R.


A         2008 (2) SCR 1088       cited          Para 8
          2005 (1) Suppl. SCR 49 cited           Para 9
          1992 (2) SCR 528        referred to    Para 16
          2007 (9) SCR 1113       referred to    Para 17
B
          2011 (11) SCALE 128     referred to    Paras 9, 19
        CRIMINAL AP PELLATE JURISDICTION : Criminal Appeal
    No. 488 of 2013.
C       From the Judgment & Order dated 14.12.2009 of the High
    Court of Delhi at New Delhi in CRLM No. 1892 of 2009.
                                WITH
         Criminal Appeal Nos. 489, 490, 491, 492, 493 and 494
    of 2013.
D
        Rakesh Tiku, Manjusha Wadhwa M.A. Venkata
    Subramanian for the Appellant.
        A.M. Singhvi, Jayant Bhushan, Ajay Bhargava, Vanita
  Bhargava, Ankur Khandelwal, Vinam Gupta, Khaitan and Co.,
E for the Respondent.
          The Judgment of the Court was delivered by
          M.Y. EQBAL, J. 1. Leave granted.
        2. Since these seven appeals arose out of the common
F   order passed by the Delhi High Court in seven Criminal
    Miscellaneous Cases filed by the respondents, the same have
    been heard and disposed of by this common judgment.
      3. The aforesaid seven Criminal Miscellaneous Cases
G were filed in the High Court challenging the order dated 27th
  September, 2008 passed by the Metropolitan Magistrate, New
  Delhi whereby he had summoned the respondents to face trial
  under Sections 415, 409, 34, 1208 of the Indian Penal Code
  (IPC) on a complaint filed by the appellant. These Criminal
H Miscellaneous Cases were filed s~parately in the High Court
GHCL EMPLOYEES STOCK OPTION TRUST v. INDIA 281
       INFOLINE LIMITED [M.Y. EQBAL, J.]
on behalf of the Company, namely, India lnfoline Limited, and       A
by the Managing Director, Company Secretary and other
Directors of the said Company.

       4. The appellant had filed a complaint before the
Metropolitan Magistrate alleging commission of offences under 8
the aforementioned Sections of IPC. The brief facts of the case
as set out in the complaint are as follows: The complainant
opened a Demat Account with respondent No. 1 Company,
namely, India lnfoline Limited in 2007 and placed orders from
time to time for purchase of shares and also made payments C
against its running account with the Company. The Company
allegedly Claimed outstanding debit of Rs.10.48 crores against
the complainant in its Demat Account with it. The said Company
was having a lien on 20,46, 195 shares purchased by the
complainant in that account. The respondent- Company being
accused No. 1 informed the complainant about the aforesaid· D
debit. The complainant cleared the amount outstanding against
it by making payment of Rs.10.48 crores by a cheque. Later
on, it transpired that the correct debit against the complainant
was Rs.10,22,77,522/-. It was alleged that the respondent-
Company dishonestly received a sum of Rs.25,22,477.53 from E
the complainant by making false demand. It was further alleged
 by the complainant that on receipt of the amount of Rs.10.48
 crores the respondent- accused were under legal obligation to
 transfer the shares purchased by the complainant from the Pool
Account to its Demat Account but instead of doing that and F
 refunding the ex~ess amount of Rs.25,22,477.53, they, v!de
 letter dated 14th May, 2008 asked the complainant to clear the
 debit of 5 companies, namely, (i) Carissa Investments Pvt. Ltd.
 (ii) Altar Investments Pvt. Ltd. (iii) Oval Investments Pvt. Ltd. (iv)
 Dalmia Housing Finance Ltd. (v) Dear Investment Pvt. Ltd. in G
 terms of its letter dated 1st March, 2008 failing which they would
regularize the aforementioned 5 accounts by selling the stock
of the complainant. The complainant alleged that since no letter
dated 1st March, 2008 had been written by the complainant to
the accused, it denied the averments made in their letter dated H
    282       SUPREME COURT REPORTS               [2013] 5 S.C..R.


A   14th May, 2008. The complainant further alleged that they met
    respondents Nos. 2 to 7, namely, the Managing Director, the
    Company Secretary and the Directors of respondent No. 1
    Company and requested to refund the excess amount and
    transfer its shares to Demat Account but nothing was done. The
B   complainant, therefore, alleged that the respondents have
    committed criminal breach of trust and cheating, inasmuch as
    they have sold off 8, 76,668 shares of the complainant on 23rd
    June, 2008 and misappropriated the entire sale proceeds.

C        5. The Metropolitan Magistrate after considering the
    allegations made in the complaint, documents placed on the
    record and the evidence led by the witnesses, and after being
    satisfied that a prima facie case is made out, directed issuance
    of summons against the respondents to face trial under the
    aforementioned Sections of IPC.
D
        6. Aggrieved by the said order passed by the Metropolitan
  Magistrate, New Delhi, the respondents filed separate petitions
  before the Delhi High Court challenging the issuance of
  summons against the Company, the Managing Director, the
E Company Secretary and the Directors of the Company. The
  High Court by the impugned order held that issuance of
  summons against respondents Nos. 2 to 7, namely, the
  Managing Director, the Company Secretary and the Directors
  of the Company cannot be sustained and the same are liable
F to be set aside. 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 learned Magistrate has been directed to
  proceed with the trial against respondent No. 1 M/s. India
G lnfoline Limited under other Sections of IPC.

        7. Dissatisfied with the aforesaid order passed by the
    High Court, the complainant has preferred these appeals by
    special leave.

H         8. Mr. Rakesh Tiku, learned senior counsel appearing for
GHCL EMPLOYEES STOCK OPTION TRUST v. INDIA 283
       INFOLINE LIMITED [M.Y. EQBAL, J.]
the appellant assailed the impugned order passed by the High A
Court as being illegal and wholly without jurisdiction. Learned
counsel first contended that the High Court has gravely erred
in law in taking into consideration probable defence of the
accused, which was tendered at the time of the hearing of the
petitions under Section 482 Cr.P.C. questioning the legality of B
the summoning order passed by the learned Magistrate.
 Learned counsel submitted that the High Court has failed to
appreciate that the allegations against the Managing Director,
Company Secretary and other Directors of the Company
 (accused Nos. 2 to 7) in the original complaint were not based c .
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. According to the
 learned senor counsel, the High Court exceeded its jurisdiction
 under Section 482 Cr.P.C. by entering into the merits of the
                                                                    0
 case observing that there were no material against the accused
 so as to proceed against them under Sections 406, 409, 420,
477A, 34 and 1208 of l.P.C. Learned counsel submitted that
the appellant is a registered Trust created by M/s. G.H.C.L., a
 Company registered under the Companies Act, for the benefit
 of eligible employees of the Company for transfer of Company's E
 equity shares. It was contended that accused Nos. 2 to 7, who
 were Managing Director, Company Secretary and Directors of
 the Company are involved in the day-to-day activities of the
 Company and responsible for the conduct and business of the
 said Company. Lastly, it was submitted that there is a specific F
 allegation and averment in the complaint that the complainant
 had been interacting with the Directors of the Company and,
 therefore, there was sufficient material for issuance of summons
 against them. Learned counsel put reliance on the decisions
 of this Court in Madhav Rao Jiwaji Rao Scindia & Ors. vs. G
 Sambhajirao Chandrojirao Angre & Ors. (1988) 1 SCC 692
 and S. K. Alagh vs. State of Uttar Pradesh & Ors. (2008) 5
 sec 662.
     9. Per contra, Dr. Abhishek Manu Singhvi, learned senior     H
    284      SUPREME COURT REPORTS                 [2013] 5 S.C.R.


A   counsel appearing for the respondents in all the cases at the
    very outset submitted that the High Court has correctly quashed
    the criminal proceedings initiated against the Managing
    Director, the Company Secretary and other Directors of the
    Company holding that there cannot be vicarious liabiiity; and
s   moreover, the complainant needs to specifically allege the act/
    complaint of/against the individual Director and what role such
    individual Director had played. Learned counsel submitted that
    the complainant made a general averment that respondent
    Nos. 2 to 7 were responsible for day-to-day affairs of the
c   Company without specifying the exact role played by them in
    the transaction. It was contended that the appellant-complainant
    is seeking to make new allegations supplemented by new
    documents to show that the order passed by the Magistrate
    summoning the respondents was justified. Nowhere in the
D   complaint, the appellant-complainant mentioned the details of
    the alleged meeting and discussion with respondents Nos. 2
    to 7 or even alleged that which of the appellant's authorized
    representative met the Managing Director or Directors of the
    Company and vague allegations have been made stating that
    on numerous occasions the appellant's representative met
E   accused Nos. 2 to 7 which is not sufficient for summoning them
    in a criminal proceedings. Dr. Singhvi then contended that at
    the outset the alleged letter dated 1st March, 2008 has been
    treated by the High Court for all practical purposes in favour of
    the respondents which is grossly incorrect when the High Court
F   by arriving at its decision has proceeded on the assumption
    that.the letter dated 1st March, 2008 was not written by Shri
    Bhuwneswar Mishra to the respondent Company. Referring
    various decisions of this Court, Dr. Singhvi submitted that a
    mere bald statement that respondents Nos. 2 to 7 were in
G   charge of the Company and responsible for day-to-day affairs
    of the Company is not sufficient, but the complaint must contain
    specific averments and allegations against each and every
    Director of the Company. Lastly, it was contended that the
    dispute raised by the complainant is purely a civil dispute.
H   Further, the parties have already put their disputes before the
GHCL EMPLOYEES STOCK OPTION TRUST v. INDIA 285
       INFOLINE LIMITED [M.Y. EQBAL, J.]

Arbitrator and the arbitration proceedings are pending for         A
hearing. Under these circumstances, according to Dr. Singhvi,
the criminal proceedings are nothing but an abuse of the
process of court. Learned counsel put reliance on the decisions
of this Court in the cases of Madhav Rao Jiwaji Rao Scindia
& Ors. vs. Sambhajirao Chandrojirao Angre & Ors. (1988) 1          B
SCC 692, S.K. Alagh vs. State of Uttar Pradesh & Ors. (2008)
5 SCC 662, M/s. Therrnax Ltd. & Ors. vs. K. M. Johny & Ors.
2011 (11) SCALE 128 and Standard Chartered Bank and Ors.
Etc. vs. Directorate of Enforcement & Ors. AIR 2005 SC 2622.
     10. We have carefully considered the submissions of the C
learned counsel on either side. The various decisions relied
upon by the learned counsel appearing on either side have
been considered by us. It is not necessary to quote extensively
various passages from several judgments except a few which D
are relevant and touching the issue directly on the point raised
in these appeals.

    ·.11. In order to appreciate the rival contentions made by
the learned counsel, we would like to refer hereinbelow some
of the relevant paragraphs of the complaint in order to find ou~   E
as to whether those averments constitute offences under
Sections 406/409/420/477A/34/120B, IPC:

     "2) That the Accused No. 1 is the Company registered
     under the Companies Act, 1956. The accused deal in
     securities and are the registered stock brokers and agents    F
     with the National Stock Exchange India Ltd. and also with
     Bombay Stock Exchange Ltd. It also has their branch
     office in Delhi. That the Accused Nos. 2 to 6 are the
     Directors of the accused company and accused No. 7 is
     Secretary of the accused No. 1 Company and are looking        G
     after day to day affairs of the company and are/were
     responsible for conduct and business of the accused No.
     1 and at some or the other time interacted with the
     complaint. The employees of accused No. 1 act as per the
     direction given by the accused Nos. 2 to 7 from time to       H
    286         SUPREME COURT REPORTS                [2013] 5 S.C.R.


A         time. They in connivance with each other in order to fulfill
          the malafide intention and in order to make illegal gain has
          cheated the petitioner company and in· breach of trust also
          sold the shares worth Rs. Nine crores approximately.

          (3) That the trustees of the Complainant at the request of
B
          the GHCL opened a Demat Account No. (DP ID and Client
          ID is IN302269- 120107581) with accused No. 1 on
          11.9.2007 and transferred the shares acquired in the said
          account after entering into Broker- Client Agreement.
c         (4) That after opening the Demat account, the complainant
          kept on placing orders for purchase of share on the
          accused and made payments against the running account
          from time to time.

D         · (5) That the Accused No. 1 vide letter dated 30.4.2008
            informed the complainant that there is an outstanding debit
            of Rs.10.48 crores against the complainant and the
            20,46, 195 quantity of GHCL shares acquired by the
            Complainant shall be free from lien after clearing the debit
            in their account. The relevant portion of the letter is
E
            reproduced as under:-

           "lt is hereby informed that your trading account with client
           code EMPTRUST is having an outstanding debit of
           Rs.10.48 crores. Further, the 20,46, 195 quantity of GHCL
F          share bought by you shall be free from lien after clearing
           the debit in the account."                                  ·

           xxxxxxxxx
           (9) That instead of transferring the share to the Demat
G          account of the complainant and refunding the excess
           amount of Rs.25,22,477.53, the Accused vide a letter
           dated 14.5.2008 to the complainant asked to· clear the
           debit of the following companies:

H          (a) Carissa Investments Pvt. Ltd.
GHCL EMPLOYEES STOCK OPTION TRUST                v. INDIA 287
      . INFOLINE LIMITED.[M.Y. EQBAL, J.]
    (b) Altar Investments Pvt. Ltd'.                               A
    (c) Oval lnvestmerits Pvt. Ltd.

    (d) Dalmia Housing Finance Ltd.

    (e) Dear Investment Pvt. Ltd.                                  B
     The aloresaid letter by the Accused though dated
    '14.5.2008 was received by the complainant on 28.5.2008. ·
     In fact, the above said letter was predated as evident from
     the postal stamp on the envelop which bears the date C
   . posting as 21.5.-2008.

    xxxxxxxxx
    (11) That the complainant on numerous occasions met the
    Accused Nos. 2. to 7-and requested to refund the excess . D
    amount and to transfer its share to Demat Account,
    however the meetings as well as various communications
    with the accused failed to bring any result. The complainant
    also requested to the Accused to withdraw the fictitious
    claim/adjustment as desired by It in their letter dated
    14.5.2008. However,.instead the accused vide its letter E
    dated 9.6.2008 again· intimatf;ld the complainants to
    regularize the accounts of the aforesaid companies by
    selling the stocks in the Complainant's accounts as
    instmcted vide ·1etter dated 1.3.2008 alleged to be signed
    by one of the trustees of the complainant Mr. Bhuwneshwar F
    Mishra.                               ·

    )()()(   )()()(               )()()(   .
    (14) That all the accused no~ only received the excess G
    amount but misappropriated the s.ame, which they
    invariably refused to refund and instead constantly started
    intimidating ~he complainant to discharge the liabilities of
    the aforesaid companies mentioned in their _letters dated
    14.5.2008 and 9.6.2008 ·whereas the complainant was            H
     288       SUPREME COURT REPORTS                  [2013] 5 S.C.R


A          under no such legal obligation to clear the debits of these
           companies for the reason thatthese five companies are
           separate legal entities and there is no relation whatsoever
           with the complainant. All the accused were fully aware that
           complainant is under !10 obligation to pay any amount
B          alleged to be payable from the other companies.
           xxx . xxxxxx
         (16) That it has now been learned that the accused despite
          having no legal right, has illegally, without any authorization,
c        and in order to cheat the complainant sold off 876668
       . shares on 23.6.2008 of the Complainant trust in the open
         market. The Complainant received SMS on 24.6.2008
         about the said sale. The trust has suffered a huge monetaty
         loss on account of this illegal disposal of stocks of the
D.       ~complainant by the accused. The shares were lying/kept
         with the accused for the purpose of DEMATINC, to.account
         of complainant ·and as evident from their own letter dated
         30.4.2008 they had no lien once the payment was -made
         and thus accused in connivance· with each other committed
E        breach of trust and caused unlawful loss to the complainant
         and this also offence of cheating.

         (17) That accused by raising the false and fabric~ted debit
       . note induced the complainant to deposit a huge amount
       .of Rs.10.48. crores, which as per their own admission i.e.
F
         statement of account is excess to the tune .of
         Rs.25,22,477.53. The accused have thereby rendered
         themselves liable to be prosecuted by this Hon'ble Court
         under Section 477A of the Indian Penal Code.
G          (18) That the accused in connivance with each other have
           further dishonestly transferred/misappropriated funds
           obtained on the pretext. of some unaccounted debit and
           further the accased despite having no legal rigtit has .
           illegally without any authorization, sold off 876668 shares
H          on 23.6.2008 of the Complainant lrust'in the open market
 GHCL EMPLOYEES STOCK OPTION TRUST v. INDIA289
      , INFOLINE L:IMITED [M.Y. EQBAL, J.]
     without any prior intimation to the complainant and has            A
     misappreprrated the sale proceeds for wrongful gain since
     the shares never kept wi~h them in trust. By disposing of
     the said shares wi~hout any prior consent or intimation
     clearly reflects that the accused dishonestly
     misappropriated the shares in trust with the Accused and           B
     thus liable to be prosecuted-under the provisions of section
     406 of the Indian Penal Code, 1860."

        12. From bare perusal of the complaint and the allegations
  made therein, we do oot-find in any of the paragraphs thatthe C
  complainant has made specific allegations against respondent
 Nos.2'to 7. In paragraph 2 of the complaint, it is alleged that ·
  respondent Nos.2 to 6 are looking after fhe day-to-day affairs
  of the Company. With whom the complainant or its authorized
  representative interacted has also not been specified. Although
  in:paragraph 11 of the complaint it is alleged that the D
  complainant on numerous occasions met accused Nos.2 to 7
· and requ_ested to refund the amount, but again the complainant
  has not made specific aliegation about the date of meeting and
  whether it was an individual meeting or collective meeting.
  '$imi\arly, in paragraph 17 of the complaint, there is no allegation E
   that a particular Director or Managing Director fabricated debit ,
   note. In the entire complaint there are bald and vague
   allegations against respondent Nos.2 to 7.

        13. There is no dispute with regard to the legal proposition    F
  that the case of breach of trust or cheating are both a civil wrong
· and a crimirial offence, but under certain situations wnere the
  act alleged would predominantly be a civil wrong, such an acl
  does not constitute a criminal offence.               ·

      14. Be that as it may, as held by this Court, summoning G
 of accused in a criminal case is a serious matter. Hence,
 criminal law cannot be set into motion as a matter of course.
 The 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. The .Magistrate has· to record his . H
    290 ·    SUPREME COURT REPORTS                (2013) 5 S.C.R.


A   satisfaction witli regard to the existence of a prima facie case
    on the basis of specific.allegations made in the complaint
    supported by satisfactory evidence and other material on
    record.

B        15. Inthe c2se of M?dhavrao Jiwaji Rao Scindia and
    Another Etc. vs. Sambhajirao Chandrojirao Angre and Others
    Etc. AIR 1988 SC 709, this Cpurt held as u.nder: .

         "7.The legal position is well-settled that when a prosecut~on
         at the initial stage is asked to be quashed, the test to be
c        applied by the court is as to whether the uncohtroverted
         allegations. as made prima facie establish. the offence. It
         is also for the court to take into consideration any speci~I
         features which appear in a particular case to ·consider
         whether it is expedient and in the interest of justice to
D        permit a prosecution to continue. This is so on the basis
       . that the court cannot be utilised for any oblique purpose
         and where in the opinion of the court chances of an ultimate
         conviction is bleak and, therefore, .no useful' purpose is ·
         likely to be served by allowing a criminal prosecution to
         continue, the court may while taking into consideration the
         special facts of a case also quash the proceeding even
         though it may be at a preliminary stage."

        16. In the case of Punjab National Bank and Others vs.
   Surendra Prasad Sinha, AIR 1992 SC 1815, a complaint was
F lodged by the complainant for prosecution under Sections 409,
   109 and 1'14, IPC against the Chairman, the Managing. Director
   of the Bank and a host of "officers alleging, inter alia, that as
   against the loan granted to one Sriman Narain Dubey the
   complainant and his wife stood as guarantors and executed
G Security Bond and handed over' Fixed Deposit Receipt. Since
   the principal debtor defaulted in payment of debt, the B.ranch
 . Manager of the Bank on maturity of the said fixed deposit
   adjusted a part offh~ amount against the said loan. The
   complainant alleged that the debt became barred by limitation
H and, therefore, the liability of the guarantors also stood
 GHCL EMPLOYEES STOCK OPTION TRUST v. INDIA 291
        INFOLINE LIMITED [M.Y. EQBAL, J.]
  extingui~hed: It was, therefore, alleged that the officers of the       A
  Bank criminally embezzled the said amount with dishonest
  intention fo save theni·selves from finan~ial obligation. The
  Magistrate without adverting whether the allegations in the
  complaint prime facie make out an offence charged for, in a
  mechanical mariner, issued the process against all the accused          s
  persons. The High Court refused to quash the complaint and
  the matter finally came to this Court. Allowing the appeal and
. quashing the complaint, this Court held as under:

        "5. It is also salutary to note that judicial process should      C
        not be arr instrument of oppression or needless
   · · harassment. The complaint was laid iinpleadin_g the
        Chairman, the Managing Director of the Bank by name and
     · a host of officers. there Hes responsibility and duty qn the
      . Magistracy to find whether the concerned accused should.
        be legally responsible for the offence charged for. Only on       D
        ~atisfying that the law casts liability or creates offence
        against the juristic person or the persons impleaded then
        only process would be issued. At thaf stage t_he  oourt   would
        be circumspect and judicious in exercising discretion and
        sfiou1d take an the relevant facts and circumstances into         E
        consideration before issuing process lest it would be an
        instrument in the hands of the private complainant as
        vendetta to harass the petsons needlessly. Vindication of
        majesty of justice and .maintenance of law·and order Jn the
        society are the prime objects of criminal-j.ustice but it would   F
        not be the means to wreak· per~onal veAgeance.
         Considered from aRy angle we find that the respondent had
        abused the process arid laid complaint against all the
       .appellants without any°prima facie case to harass them for
        vendetta."                                                        G

       17. In the case of Maksud Saiyed vs; State of Gujarat and
 Others (2008) 5 SCC 668, this Court while discussing vicarious
 liability obse,rved as under :-     ·

            ."13. Where a jurisdiction is exercised on a complaint        H
    292       SUPREME COURT REPORTS                 [2013) 5 S.C.R.

A         petition filed in terrt}s of Section 156(3) or Section 200 of
          the Code of Criminal Procedure, the Magistrate is required
          to apply his mind. Ttie Penal Code does not contain any
          provision for attaching vicarious liability on the part of the
          Managing Director or the Directors gfthe Company when
8         the accused is the Company. The learned Magistrate fa~ed
          to pose unto himself the correct que.stion 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
c         offence. The Bank is a body corporate. Vicarious liability ·
          of the Managirrg Director and- Director would ar1se
          provided any provision exists in that behalf in the statute.
          Statutes indisputably must contain provision fixing such
          vicarious liabnities. Even for .the said purpose, it is·
          obligatory on the part of the complainant to ma;ke requisite
D
          allegations which would attract the pra'ltisiohs constituting
          vicarious llability."                  ·

          18. ·From. bare perusal of the order passed by the
    Magistrate, it reveals that two witnesses including one of the
E trustees were examine~ by the complainant but none .of them
    specifically stated as to which of the accused committed
    breach. of trust or cheated the complainant except general and
  . bald allegations made therein. While ordering issuance of
    summons,·
     .
                  the .learned Magistrate
                                      . conch.ided as u.nder :-
F
              · "The complainant has submitted tllat the accused
       · Nos.2 to 6 are the directors of the company and accused
          No.7 ls the secretary of the company and were. looking
          after the day to d_ay affai~s of the company and were also
          responsible for ccmcfuct and business ofthe accused No.1
G
        . and. some 'time or the other have interacted with ·the
          complainant.
               I have heard arguments on behalf of the complainant
       · ancf perused the record. From the a11egations raised,
H        docume_nts placed on record and the evidence. led by the. ·
GHCL EMPLOYEES STOCK OPTION TRUST v. INDIA 293
       INFOLINE LIMITED [M.Y. EQBAL, J.]
     witnesses, prima facie an offence u/s 415, 409/34/1208         A
     is made out. Let all the accused hence be summoned to
   . face trial under the aforesaid sections on PF/RC/Speed
     Post/courier for 2.12.2008."

     19. In the order issuing summons, the learned Magistrate       B
has not recorded his satisfaction about the prima facie case
as against respondent Nos.2 to 7 and the role played by them
in the capacity of Managing Director, Company Secretary or
Directors which is sine qua non for initiating criminal action
against them. Recently, in the case of Mis. Thertnax Ltd. & Ors.    C
vs. K.M. Johny & Ors. 2011 (11) SCALE 128, & -0rs. while
dealing with a similar case, this Court held as under :-

            "20. Though Respondent No.1 has roped all the
     appellants in a criminal case without their specific role or
   . participation in ·the alleged offence with tbe sole purpose    D
     of settling his dispute with appellant-Company by initiating
     the criminal prosecution, it is pointed out that appellant
     Nos. 2 to 8 are the Ex-Chairperson, Ex-Directors and
     Senior Managerial Personnel of appellant No.1 -
     Company; who do not bave any personal role in the              E
     allegations and claims of Respondent No.1. There 'is also
     no specific allegation with regard to their role

            21. Apart from· the fact that the complaint lacks
     necessary ingredients of Sections 405, 406, 420 read with
     Section 3"4 IPC, it is to be noted that the concept of .F
     'vicarious liability' is unknown to criminal law. As observed
     earlier, there is no specific allegation made against any
     person but the members of the Board and senior
     executives are joined as tbe persons looking after the
     management and business of the appellant-Company."            G

     20, As stated above, the decisions relied upon by the
counsel for the appellant and the respondents need not be
discussed as the law has been well settled by those decisions
                                            .       '
                                                                    H
    294        SUPREME COURT REPORTS                [2013] 5 ·S.C.R.


A   as to the power and duty of the Magistrate while issuing
    summons in a complaint case.

          21. In the instant case the High Court has correctly noted
    that issuance of summons against respondent Nos.2 to 7 is
    illegal and amounts to abuse of the process of law. The order
8
    of the High Court, therefore, needs no interferenee by this Court.

        22. For the aforesaid reasons, we find no merit i.n th~se
    appeals, w_hich are accordingly dismissed.      ·

C   8.8.8. ·                                    Appeals dismissed.