M/S. SHREE MAHAVIR CARBON LTD.versusOM PRAKASH JALAN (FINANCER) & ANR.

                   [2013] 10 S.C.R. 541


          M/S. SHREE MAHAVIR CARBON LTD.                         A
                              v.
       OM PRAKASH JALAN (FINANCER) & ANR.
          (Criminal Appeal No. 1875 of 2013)
                    OCTOBER 28, 2013
                                                                 B
     [K.S. RADHAKRISHNAN AND A.K. SIKRI, JJ.]

     Judgment - Reasoned judgment - Need for - Held: The
Court while recording a decision, is supposed to record
sufficient reasons for taking the decision or arriving at a      C
particular conclusion - The reason should be such that they
demonstrate that the decision has been arrived at, on an
objective consideration - In the instant case, the High Court,
set aside the order of subordinate criminal court without
assigning any reason as to how it reached the conclusion that    D
the dispute was of civil nature - Matter remanded to High
Court- Code of Criminal Procedure, 1973 - s.482 - Penal
Code, 1860 - ss.420140614681471,

    Words and Phrases - 'Reasoning' - Meaning of.
                                                                 E
    Judicial Magistrate took cognizance of offences· ulss.
420140614681471 IPC against the respondents, on the
basis of complaint filed by the appellant-Company.
Respondents· filed application uls.482 Cr.P .C. seeking
quashing of the criminal proceedings. The High Court             F
allowed the petition setting 'aside the orders taking
cognizance, on the ground that the dispute was of civil
nature. Hence the present appeal.
    Allowing the appeal and remanding the matter.to              G
High Court, the Court

    HELD: 1.1. It is to be borne in mind that the principal
objective in giving judgment is to make an effective,
                            541                                  H
    542    SUPREME COURT REPORTS              [2013] 10 s.c.~.

A practical and workable decision. The court resolves
  conflict by determining the merits of conflicting cases,
  and by choosing between notions of justice,
  convenience, public policy, morality, analogy, and takes
  into account the opinions of other courts or writers
B (Precedents). Since the court is to come to a workable
  decision, its reasoning and conclusion must be practical,
  suit the facts as found and provide an effective, workable
  remedy to the winner. While recording the decision with
  clarity, the court is also supposed to record sufficient
c reasons in taking a particular decision or arriving at a
  particular conclusion. The reasons should be such that
  they demonstrate that the decision has been arrived at,
  on an objective consideration. [Paras 12 and 13) [549-G-
  H; 550-A-C]
D         2. In the context of legal decision-mald9g, the focus
    is to what makes something a legal valid reason. Thus,
    ''.reason would mean a justifying reason, or more simply
    a justification for a decision is a consideration, in a non-
    arbitrary ways in favour of making or accepting that
E . decision. If there is no justification in support of a
    decision, such a decision is without any reason or
    justifying reason. [Para 14) [550-C-D)
       3. In the present case, it was required by the High
  Court to take note of the arguments of the complainant
F on the basis of which compl~inant insist that ingredients
  of the particular offences alleged are prime facie
  established justifying the cognizance of the complaint
  and the arguments· of the respondents, on the basis of
  which respondents made an endeavour to demonstrate
G that it was a pure civil dispute with no elements of
  criminality attached. Thereafter, the conclusion should
  have been backed by reasons as to why the arguments
  of the complainant are merit-less and what is the rationale
  basis for accepting the case of accused persons. [Para
H 16) [550-G-H; 551 ·A]
 SHREE MAHAVIR CARBON LTD. v. OM PRAKASH               543
         JALAN (FINANCER) & ANR.
     4. The appellant/complainant sought to make a            A
complaint that the acts of the accused persons amounted
to offence since punishable u/ss. 420/406/468/471 IPC.
The Judicial Magistrate, after going through the
preliminary evidence recorded by him had chosen to take
cognizance of the matter. It was bounden duty of the          B
High Court to give appropriate and sufficient reasons on
the basis of which it arrived at a conclusion that the
dispute was merely that of accounts with no elements of
criminality. It is correct that ingredients of each of the
provisions of IPC, which is sought to be foisted upon the     c
respondents are to be prima facie established before
cognizance of the complaint is taken by the Judicial
Magistrate. H~wever, when the summoning order is
quashed holding that it is a civil dispute, various
allegations and averments made in the complaint and           D
preliminary evidence led in support thereof has to be
appropriately dealt with by the High Court. There is no
discussion worth the name, in the impugned judgment,
as to how and on what basis the High Court acceptE!d
such a plea of the respondents in recording its
conclusion that it was a case of rendition of accounts        E
simplicitor. When the High Court was setting aside the
order of the subordinate court by which the subordinate
court had taken cognizance in the matter, this could be
done after appropriately dealing with the contentions of
both the parties, more specially when it was first judicial   F
review of the orders of the Court below. [Paras 8 to 10]
[547-E-H; 548-A-C]           ____
    Hindustan Times Ltd. vs. Union of India (1998) 2 SCC
242: 1998 (1) SCR 4 - relied on.
                                                              G
                    Case Law Reference:
    1998 (1) SCR 4          relied on            Para 10
    CRIMINAL AP PELLATE JURISDICTION : Criminal Appeal
No. 1875 of 2013.                                             H
    544       SUPREME COURT REPORTS               [2013] 10 S.C.R.


A       From the Judgment and Order dated 16.01.2012 of the
    High Court of Orissa at Cuttack in Crl. M.C. No. 2818 of 2010.

        A.K. Ganguli, Chanchal Kumar Ganguli, B. Basak, George
    Varghese, Soumi Kundu for the Appellant.

B       V. Giri, Ashok Panigrahi, Yashpal Mohanty, Santosh
    Kumar, Surajit Bhaduri, Punit Jain, Christi Jain for the
    Respondents.

          The Judgment of the Court was delivered by
c
          A.K. SIKRI, J. 1. Leave granted.

        2. The appellant-company has filed a complaint registered
  as ICC No.62/2008 under Sections 420/406/468/471, Indian
  Penal Code against the respondent herein and tw6 others. After
D recording preliminary evidence, the learned JudicialMagistrate
  First Class (JMFC), Salipur, Orissa took cognizance of the
  aforesaid offence and issued summons to the accused persons
  including the respondents. On receiving the summons, the
  respondents filed applications under Section 482 of the Code.
E 1of Criminal Procedure with a prayer that orders dated 9.6.2008
  lby the learned JMFC taking cognizance of the complaint be
  quashed. It was pleaded that the complaint was with regard to
  rendition of accounts maintained by the accused persons in
  respect of business between the complainant and the accused
F persons and therefore the dispute was of civil nature. The High
  Court has allowed the said application thereby setting aside
  orders taking cognizance of the offence. It is this order which
  is challenged by the appellant-complainant in these
  proceedings.
G        3.. The impugned order is two page order. After taking note
    of facts in one paragraph, the High Court has allowed the
    application and quashed the order taking cognizance of the
    offence and the discussion leading to this judgment is
    contained in the following paragraph:
H
 SHREE MAHAVIR CARBON LTD. v. OM PRAKASH                      545
    JALAN (FINANCER) & ANR. [A.K. SIKRI, J.]
    "On perusal of the nature of allegations made in the              A
    complaint petition and \he statements given by the
    complainant and the witnesses, it is clearly disclosed that
    the dispute is civil in nature relating to settlement of the
    accounts between the parties and no offence is made out."
                                                                      B
     4. Questioning the rationality of the aforesaid order, Mr.
Ganguli, the learned senior counsel appearing for the appellant,
took us through the various paragraphs of the complaint on the
basis of which he made an attempt to demonstrate that it was
not simply a civil dispute pertaining to settlement of accounts       C
between the parties. He also argued that the High Court had
allowed. petition filed by the respondent under Section
482,Cr.P.C. without giving any reason inasmuch as the
impugned judgment hardly contained any discussion for arriving
at the conclusion.that the dispute in question was civil in nature.
Learned senior counsel, who appeared for the respondent,              D
though tried to argue that conclusion of the High Court that
dispute was· of civil nature, he candidly conceded that the
impugned judgment does not disclose as to how this finding
was arrived at and that it was a non-speaking order. He, thus,
submitted that instead of this Court examining the issue, the         E
matter be relegated back to the High Court for hearing afresh.
Mr. Ganguly also accepted this suggestion of Mr. Giri.
Accordingly, we set aside the impugned judgment and remand
the case back to the High Court to decide the same with
direction to hear afresh the petition filed by the respondent         F
under Section 482 of the Cr.P.C. and decide it on merits
without being influenced by the earlier view taken in the
impugned order dated 16.1.2012.

     5. Before we part with, we would like to observe that this       G
case necessitates making certain comments on the importance
of rationale legal reasoning in support of judicial orders. From
the extracted portion, which is the only discussion on the merits
of the matter, it can clearly be discerned that what is stated is
the conclusion and no reasons are given by the High Court for         H
    :546       SUPREME COURT REPORTS              [2013] 10 S.C.R.


A    holding that dispute between the parties is civil in nature. The
    complainant in its complaint had made various specific
    allegations of cheating, siphoning of funds and falsification of
    accounts etc. In the complaint filed by the appellant, the appellant
    averred that it is engaged in the business of manufacturing and
B sale of low ash phos metallurgical coke. The appellant entered
    into a tripartite agreement dated 08.04.2003 with Om Prakash
    Jalan respondent No.1 herein and Mr. Rajeev Maheshwari- _
    Respondent No.3 herein. In this agreement Respondenf Nos.1/
    and 3 agreed to provide sufficient funds for expansion of the
c coke oven plant owned by the appellant and in consideration
    thereof the respondents were to be allotted 70% of the existing
    shares of the appellant company while 30% of its shares were
                         I

    to be retained by the existing shareholders. It was also agreect-
  )hat the Board of Directors of the appellant Company would be
D · reconstituted with three directors consisting of one nominee of
    the appellant company, and one nominee each from the
    respondent companies. Respondent No.1 was to become the
    Managing Director of the Company. It was further agreed
    between the parties that while the respondent would bring in
    the additional' working capital for operation and expansion of
E the plant but one of the contracting parties shall be entitled to
    withdraw any profits till such time there is enough working
    capital in the company.

       6. It was further agreed that the profit and loss as earned
F for the new expansion would be shared in the same ratio till
  31st March 2004 and thereafter on the total plant would also
  be shared in the same ratio. Pursuant to the said agreement
  the control and management of the appellant company and its
  Coke Oven Plant was virtually taken over by the respondents
G while they remained responsible to both the Company and its
  existing shareholders who have been running the business
  since the inception of the company till the execution of the
  tripartite agreement.

           7. As per the allegation in the complaint, no sooner the
H
  SHREE MAHAVIR CARBON LTD. v. OM PRAKASH                     547
     JALAN (FINANCER) & ANR. [A.K. SIKRI, J.]
  respondents assumed control over the business of the               A
_ appellant company, the respondents started indulging in large
  scale fraudulent transactions for and on behalf of the company,
  subjecting the appellant company to great loss and
  consequences and also foisted civil and criminal liabilities on
  the company as well as its Directors and shareholders. Large       B
  amount of money from the appellant company's account was
  allegedly siphoned out in favour of third parties without the
  appellant company having any transaction with them. Large
  amounts were also allegedly deposited in the appellant
  company's account in cash purportedly received by them from        c
  third parties, thus making the appellant company, its directors
  and shareholders liable for violation of laws and commission
  of crime.· It was also alleged that large sums of money was also
  siphoned out from bank accounts of the appellant company and
  paid to third parties without the company entering into any        0
  transaction with them.

      8. In the complaint instances of siphoning of the funds by
 the accused persons to its own company have been given. On
 this basis, the appellant/complainant sought to make a
 complaint that the aforesaid acts of the accused persons            E
 amounted to offence since punishable under Sections
 419,420,406,486,471 of the IPC.

      9. The JMFC after going through the preliminary evidence
 recorded by him had chosen to take cognizance of the matter.        F
 Challenge a.gainst this order has been accepted by the High
 Court it becomes the bounden duty of the High Gou.rt to give
 appropriate and sufficient reasons on the basis of which it
 arrived at a conclusion, the dispute was merely that of accounts
 with no elements of criminality. We are conscious of the legal      G
 position that Ingredients of each of the provisions of IPC, which
 is sought to be foisted upon the respondents are to be prima
 facie established before cognizance of the complaint is taken
 by the Judicial Magistrate. However, when the summoning
 order is quashe~ holding tF.iat it is a civil dispute, various      H
    548        SUPREME COURT REPORTS                 [2013] 10 S.C.R.


A allegations and averments made in· the complaint and
  preliminary evidence led in support thereof has to be
  appropriately dealt with by the High Court. We are not
  commenting upon the merits of these allegations. However,
  there is no discussion worth the name, in the impugned
B jl!dgment, as to how and on what basis the High Court
  accepted such a plea of the respondents herein, in recording
  its conclusion that it was a case of rendition of accounts
  simplicitor.

       10. After all the High Court was setting aside the order of
C the Subordinate Court by which Subordinate Court had taken
  cognizance in the matter. This could be done after appropriately
  dealing with the contentions of both the parties, more specially
  when it was first judicial review of the orders of the Court below.
  In Hindustan Times Ltd. Vs. Union of India; (1998) 2 SCC 242,
D this Court made pertinent observation in the context:

          "In an article on Writing Judgments, Justice Michael Kirby
          (1990) 64 Austr L.J p.691) of Australia, has approached
          the problem from the point of the litigant, the legal
E         profession, the subordinate Courts/tribunals, the brother
          Judges and the Judge's own conscience. To the litigant,
          the duty of the Judge is to uphold his own integrity and let
          the losing party know why he lost the case. The legal
          profession is entitled to have it demonstrated that the
F         Judge had the correct principles in mind, had properly
          applied them and is entitled to examine the body of the
          judgment for the learning and precedent that they provide
          and for the reassurance of the quality of the judiciary which
          is still the centre-piece of our administration of justice. It
          does not take long for the profession to come to know,
G
          including through the written pages of published judgments,
          the lazy Judge, the Judge prone to errors of fact, etc. The
          reputational considerations are important for the exercise
          of appellate rights, for the Judge's own self discipline, for
          attempts at improvement and the maintenance of the
H
 SHREE MAHAVIR CARBON LTD. v. OM PRAKASH                       549
    JALAN (FINANCER) & ANR. [A.K. SIKRI, J.]
    integrity and quality of our judiciary. From the point of view     A
    of other Judges, the benefit that accrues to the lower
    hierarchy of Judges and tribunals is of utmost importance.
    Justice Asprey of Australia has even said in Petit v.
    Dankley (1971) (1) NSWLR 376 (CA) that the failure of a
    Court to give reasons is an encroachment upon the right            B
    of appeal given to a litigant.

    It was finally ~tated:

           "In our view. the satisfaction which a reasoned
    judgment gives to the losing party or his lawver is the test       C
    of a good judgment. Disposal of cases is no doubt
    important but quality of the judgment is equally, if not more,
    important. There is no point in shifting the burden to the
    higher Court either to support the judgment by reasons or
    to' consider the evidence or law for the first time to see if      D
    the judgment needs a reversal.

           In that case, the order of dismissal of the writ petition
     by the High Court was affirmed by us but the task fell on
     the Supreme Court, to inform the appellant why it had lost        E
     the case in the High Court."

     11. In the present case, we have avoided to do this
exercise and have not gone into the merits of the case to find
out whether the conclusion of the High Court is correct or not,
as the counsel for both the parties have agreed for remand of          F
the matter.

     12. It is no where suggested by us that the judgment should
be too lengthy or prolix and disproportionate to the issue
involved. However, it is to be borne in mind that the principal        G
objective in giving judgment is to make an effective, practical
and workable decision. The court resolves conflict by
determining the merits of conflicting cases, and by choosing
between notions of justice, convenience, public policy, morality,
analogy, and takes into account the opinions of other courts or
                                                                       H
    550-     SUPREME COURT REPORTS                 [2013) 10 S.C.R.


A   writers (Precedents). Since the Court is to come to a workable
    decision, its reasoning an conclusion must be practical, suit the
    facts as found and. provide and effective, workable remedy to
    the winner.

         13. We are of the opinion that while recording the decision
8
    with clarity, the Court is also supposed to record sufficient
    reasons in taking a particular decision or arriving at a particular
    conclusion. The reasons should be such that they demonstrate
    that the decision has been arrived at on a objective
    consideration.                                     \
c
       14. When we talk of giving "reasons" in support of a
  judgment, what is meant by "reasons"? In the context of legal
  decision making, the focus is to what makes something a legal
  valid reason. Thus, "reason would mean a justifying reason, or
D more simply a justification for a decision is a consideration, in
  a non-arbitrary ways in favour of making or accepting that
  decision. If there is no justification in support of a decision, such
  a decision is without any reason or justifying reason.

E        15. We are not entering into a jurisprudential debate on
    the appropriate theory of legal reasoning. It is not even a
    discourse on how to write judgments. Our intention is to simply
    demonstrate the importance of legal reasoning in support of a
    particular decision. What we have highlighted is that instant is
    a case or arriving at a conclusion, in complete absence of
F   reasons, what to talk of adequate or good reasons that justifying
    that conclusion.

       16. In the given case, it was required by the High Court to
  take note of the arguments of the complainant on the basis of
G which complainant insist that ingredients of the particular
  offences alleged are prime facie established justifying the
  cognizance of the complaint and the arguments of the
  respondents herein on the basis of which respondents made
  an-endeavour to demonstrate that it was a pure civil dispute
H with no elements of criminality attached. Thereafter, the
 SHREE MAHA\llR CARBON LTD. v. OM PRAKASH                   551
    JALAN (FINANCER) & ANR. [A.K. SIKRI, J.] '
conclusion should have been backed by reasons as to why the       A
arguments of the complainant are merit less and what is the
rationale basis for accepting the case of accused persons. We
hope that this aspect would be kept in mind by the High Court
while deciding the case afresh.
                                                                  B
    17. Accordingly, this appeal is allowed and the impugned
order is set aside with direction as aforesaid. No costs.

K.K.T.                                       Appeal allowed.