Supreme Court of India
S.C. GARGversusSTATE OF UTTAR PRADESH & ANR.
- Citation
- 2025 INSC 493
- Decided
- 15 April 2025
- Disposal
- Appeal(s) allowed
Holding
The criminal prosecution against the appellant is barred by res judicata and the absence of a specific allegation against him, rendering the proceedings under Section 420 IPC liable to be quashed.
Summary
The appellant, S.C. Garg, Managing Director of Ruchira Papers Ltd., was charged under Section 420 IPC for allegedly cheating respondent R.N. Tyagi after the parties had already resolved a dispute over seven dishonoured cheques under Section 138 of the Negotiable Instruments Act. The earlier NI Act case resulted in Tyagi's conviction, which was later settled by compromise and payment of the disputed amount. While the NI Act proceedings were pending, Tyagi filed a criminal complaint under Section 156(3) CrPC leading to an FIR against Garg, but the company was not named as an accused. Garg moved a petition under Section 482 CrPC to quash the chargesheet, which the High Court dismissed. The Supreme Court held that the prosecution was barred by the principle of res judicata, that the allegations were the same as Tyagi's defence in the earlier case, and that vicarious liability could not be attached to Garg without the company being prosecuted. Consequently, the Court quashed the criminal proceedings under Section 420 IPC.
Issues considered
- The applicability of the principle of res judicata to criminal proceedings involving the same factual matrix.
- Whether a managing director can be prosecuted under Section 138/420 IPC without the company being impleaded, given the provisions of Section 141 of the Negotiable Instruments Act.
- Whether the FIR and chargesheet were frivolous or vexatious, warranting quashment under Section 482 CrPC.
Legislation cited
- Code of Criminal Procedure, 1973s. 156(3), s. 482
- Indian Penal Code, 1860s. 420
- Negotiable Instruments Act, 1881s. 138, s. 141(1)
Headnote
Issue for Consideration The appellant’s petition u/s.482 of the Criminal Procedure Code, 1973 seeking quashment of Criminal Case No. 7489 of 2002 pending on the file of Chief Judicial Magistrate for offences u/s.420 of the Penal Code, 1860 was dismissed by the High Court. Headnotes† s.482 – Negotiable Instrument Act, 1881 – s.138 – Penal Code, 1860 – s.420 – The appellant’s company filed a complaint u/s.138 of the NI Act against ID Packaging and respondent no.2 in relation to the 07 dishonored cheques – The trial Court convicted
Subjects
Dishonor of chequeQuashment of Criminal ProceedingApplicability of principle of res judicata in criminal mattersVicariously prosecutedVicarious criminal liabilityFrivolous proceedingsVexatious proceedingsSection 482 of CrPC
Judgment
[2025] 5 S.C.R. 627 : 2025 INSC 493
S.C. Garg
v.
State of Uttar Pradesh & Anr.
(Criminal Appeal No. 438 of 2018)
16 April 2025
[Pankaj Mithal and Prashant Kumar Mishra,* JJ.]
Issue for Consideration
The appellant’s petition u/s.482 of the Criminal Procedure Code,
1973 seeking quashment of Criminal Case No. 7489 of 2002
pending on the file of Chief Judicial Magistrate for offences u/s.420
of the Penal Code, 1860 was dismissed by the High Court.
Headnotes†
Code of Criminal Procedure, 1973 – s.482 – Negotiable
Instrument Act, 1881 – s.138 – Penal Code, 1860 – s.420 –
The appellant’s company filed a complaint u/s.138 of the NI
Act against ID Packaging and respondent no.2 in relation
to the 07 dishonored cheques – The trial Court convicted
respondent no.2 – Respondent no.2 preferred criminal
revision – The High Court disposed of criminal revision as
well as two other proceedings between the parties basis
compromise between them – When 138 NI Act proceedings
were pending between the parties, respondent no.2 had
moved an application u/s.156 (3) CrPC seeking registration
of an FIR against appellant and company inter alia alleging
that despite payment of amount involved in 07 dishonoured
cheques, by way of separate demand drafts, appellant again
presented 11 cheques and fraudulently realised the amount
from 04 out of 11 cheques thereby cheating respondent
no.2 – FIR was registered against the appellant and not his
company – Cognizance was taken – Appellant preferred a
petition u/s.482 CrPC for quashing of the chargesheet and
the summoning order, which was dismissed by the High
Court – Correctness:
* Author
628 [2025] 5 S.C.R.
Supreme Court Reports
Held: Respondent no.2 cannot maintain a prosecution on the
basis of allegations which were precisely his defence in the
earlier proceedings wherein he was an accused – Thus, the
present criminal proceedings deserve to be quashed on this
ground alone – It is also to be seen that the business relation
was between the two companies – The cheques and the demand
drafts, as the case may be, were issued by one company to the
other company and no payment was made by respondent no.2 to
appellant individually – It is settled that s.141(1) of the Negotiable
Instruments Act, extends vicarious criminal liability to the officers
of a company by deeming fiction, which arises only when the
offence is committed by the company itself and not otherwise –
It is also settled that a person cannot be vicariously prosecuted,
especially for offences under the IPC, merely on account of the
fact that he holds a managerial position in a company without
there being specific allegations regarding his involvement in the
offence – Besides that, it will not be just enough for the court to
look into the averments made in the FIR/complaint alone for the
purpose of ascertaining whether the necessary ingredients to
constitute the alleged offence are disclosed or not – In frivolous
or vexatious proceedings, the court owes a duty to look into many
other attending circumstances emerging from the record of the
case over and above the averments and, if need be, with due care
and circumspection try to read in between the lines – The Court
while exercising its jurisdiction u/s.482 CrPC or Article 226 of the
Constitution need not restrict itself only to the stage of a case
but is empowered to take into account the overall circumstances
leading to the initiation/registration of the case as well as the
materials collected in the course of investigation – The present is
a fit case for allowing the appeal to quash the impugned criminal
proceedings instituted against the appellant for offences u/s.420
of the IPC. [Paras 20, 21, 22, 23, 24, 25]
Principle of res judicata – Applicability of principle of
res judicata in a criminal proceeding – Discussed. [Paras 13-19]
Case Law Cited
Pritam Singh & Anr. v. The State of Punjab, AIR 1956 SC
415; Bhagat Ram v. State of Rajasthan [1972] 3 SCR 303 :
(1972) 2 SCC 466; The State of Rajasthan v. Tarachand Jain
[2025] 5 S.C.R. 629
S.C. Garg v. State of Uttar Pradesh & Anr.
[1974] 1 SCR 146 : (1974) 3 SCC 72; Sharad Kumar Sanghi v.
Sangita Rane [2015] 2 SCR 145 : (2015) 12 SCC 781; Dayle
De’ Souza v. Government of India [2021] 11 SCR 511 : (2021)
20 SCC 135; Delhi Race Club (1940) Ltd. & Ors. v. State of
Uttar Pradesh & Anr. [2024] 8 SCR 670 : (2024) SCC OnLine
SC 2248 – relied on.
Devendra & Ors. v. State of Uttar Pradesh & Anr. [2009] 7 SCR
872 : (2009) 7 SCC 495; Muskan Enterprises & Anr. v. The State of
Punjab & Anr., 2024 INSC 1046; Sambasivam v. Public Prosecutor,
Federal of Malaya, (1950) AC 458; Iqbal @ Bala & Ors. v. State
of Uttar Pradesh & Ors. (2023) 8 SCC 734 – referred to.
List of Acts
Negotiable Instruments Act, 1881; Penal Code, 1860; Code of
Criminal Procedure, 1973
List of Keywords
Dishonor of cheque; Quashment of Criminal Proceeding;
Applicability of principle of res judicata in criminal matters;
Vicariously prosecuted; Vicarious criminal liability; Frivolous
proceedings; Vexatious proceedings; Section 482 of CrPC.
Case Arising From
CRIMINAL APPELLATE JURISDICTION: Criminal Appeal No.
438 of 2018
From the Judgment and Order dated 28.04.2017 of the High Court of
Judicature at Allahabad in Crl. Misc. Application No. 10531 of 2002
Appearances for Parties
Advs. for the Appellant:
Siddharth Aggarwal, Sr. Adv., Ms. Garima Bajaj, Vishwajeet Singh
Bhatti, Ms. Vismita Diwan, Sajal Awasthi, S. S. Nehra, Chetan
Sharma.
Advs. for the Respondents:
Vikas Bansal, Dr. Vijendra Singh, Deepak Goel, Shailesh Sharma,
M/S. Gaur & Nehra Law Firm, Prafulla Kumar Behera, S S Nehra,
Dr. K S Bhati, Sanjay Singh, Vikrant Nehra, H L Nimba.
630 [2025] 5 S.C.R.
Supreme Court Reports
Judgment / Order of the Supreme Court
Judgment
Prashant Kumar Mishra, J.
1. Challenge in this Criminal Appeal is to the final judgment and order
dated 28.04.2017 passed by the High Court of Judicature at Allahabad
whereby the appellant’s petition under Section 482 of the Criminal
Procedure Code, 19731 seeking quashment of Criminal Case No. 7489
of 2002 pending on the file of Chief Judicial Magistrate, Ghaziabad
for offences under Section 420 of the Indian Penal Code, 18602,
has been dismissed.
2. Brief facts necessary for disposal of the criminal appeal are that the
appellant/S.C. Garg3 was the Managing Director of the Company
Ruchira Papers Ltd.4 which was engaged in manufacturing craft
papers. The Company had business dealings with ID Packaging, a
partnership concern of respondent no. 2/R.N. Tyagi5. In conduct of
business between two entities, the parties used to maintain a running
account and Tyagi used to issue cheques from time to time in favour
of ID Packaging. Between 22.12.1997 to 30.01.1998, Tyagi issued 11
cheques which were initially dishonoured due to insufficiency of funds
in the account. To maintain business relations, both the parties agreed
to present the 11 cheques again at a later stage upon instructions
from Tyagi. In relation to the liabilities other than the amount involved
in the 11 cheques, Tyagi made payment by issuing 03 demand drafts
in the name of the appellant’s company. On 08.06.1998, 11 cheques
were again presented for encashment upon which only four cheques
were cleared leaving the remaining 07 cheques to be dishonoured
again. The appellant’s company filed a complaint under Section 138
of the Negotiable Instruments Act, 18816 against ID Packaging and
Tyagi in relation to the 07 dishonoured cheques.
1 ‘Cr.P.C.’
2 ‘IPC’
3 ‘Garg’
4 ‘Company’
5 ‘Tyagi’
6 ‘NI Act’
[2025] 5 S.C.R. 631
S.C. Garg v. State of Uttar Pradesh & Anr.
3. On 25.10.2002, the learned Magistrate convicted Tyagi for offence
under Section 138 of the NI Act. His defence, that there is no
enforceable debt as the amount involved in 07 cheques has already
been paid through the demand drafts, was rejected with a specific
finding that the demand drafts pertained to other liabilities of Tyagi
to the company and were not towards liquidating the liability arising
under the cheques in question. Tyagi was sentenced to imprisonment
till rising of Court and pay fine of Rs. 3,20,385/- (i.e. cumulative
amount of the 7 dishonoured cheques). The appeal preferred by
Tyagi challenging his conviction under Section 138 of the NI Act was
dismissed by the learned Additional Sessions Judge on 17.03.2005
by affirming the finding, conviction and sentence awarded to him.
4. Tyagi and his Company/ID Packaging challenged the appellate order
by preferring criminal revision and vide order dated 10.10.2012
the High Court disposed of criminal revision as well as two other
proceedings between the parties basis compromise between them.
When the criminal revision challenging his conviction was pending,
the sentence was suspended upon deposit of R. 3,20,385/-. The High
Court disposed of three different proceedings between the parties
by observing thus in paragraph nos. 5 & 6 of the order:
“5. When these petition/appeal/ revision were taken up
today, Sh. R.N. Tyagi, who is present in Court along with
his counsel Sh. Rampal Tyagi and Ashok Tyagi expressed
his desire to put an end to the entire controversy on the
condition that the amount deposited by him in this Court by
demand draft pursuant to the orders passed in the Criminal
Revision (supra) along with interest be paid to M/s Ruchira
Papers in full satisfaction of all their claims, subject matter of
criminal appeal No. 752 of 2002, CMPMO No. 305 of 2012
and in Civil Suit No. 47/1 of 2005/01, titled as M/s Ruchira
Papers versus M/s I.D. Packings, decreed on 23.09.2005.
Statement of Sh. R.N. Tyagi, who is present in Court, to
this effect has been recorded separately, which statement
has been accepted by Sh. Sanjeev Sood, learned counsel
on behalf of M/s Ruchira Papers.
6. In these circumstance, all three cases are being disposed
of the following directions:
632 [2025] 5 S.C.R.
Supreme Court Reports
a) Criminal Appeal No.752 of 2002, titled M/s
Ruchira Papers Ltd., versus M/s I.D. Packings
and another is disposed of as not pressed.
b) Criminal Revision No. 52 of 2005, titled M/s
I.D. Packings and another versus M/s Ruchira
Papers and another is disposed of with the
directions that the amount lying deposited
in FDR A/c No. 042704PR00001211 dated
11.09.2012 along with interest satisfies the entire
claim of the respondents M/s Ruchira Papers
subject matter of the revision.
c) CMPMO No. 305 of 2012, titled R.N. Tyagi and
another versus M/s Ruchira Papers ltd., is also
disposed of with this direction that the decree
passed in Civil Suit No.47/1 of 2005/01, titled
M/s Ruchira Papers versus M/s I.D. packing
shall stand fully satisfied on the FDR along with
interest having been paid to respondents M/s
Ruchira Papers Limited.
d) The registry is directed to remit the amount
of aforesaid FDR account along with interest
accrued thereon to the bank account of M/s
Ruchira Papers Limited for which purpose
they shall submit the photocopy of their current
account to the Registry.”
5. From the above extracted order of the High Court, it appears that
Garg had instituted a suit for recovery of the amount involved under
the 07 dishonoured cheques in which ex-parte decree was passed
and that too has been compromised upon payment of Rs. 3,20,385/-
by Tyagi to Garg.
6. When 138 NI Act proceedings were pending between the parties,
Tyagi moved an application under Section 156 (3) Cr.P.C. seeking
registration of an FIR against Garg and company inter alia alleging
that despite payment of amount involved in 07 dishonoured
cheques, by way of separate demand drafts, Garg again presented
11 cheques and fraudulently realised the amount from 04 out of
11 cheques thereby cheating Tyagi. FIR No. 549 of 1998 (present
[2025] 5 S.C.R. 633
S.C. Garg v. State of Uttar Pradesh & Anr.
FIR) came to be registered against Garg based upon the above
allegations. However, the company was not made an accused in
this FIR. The chargesheet filed against Garg on account of being
the Managing Director of the Company and Mukesh Kumar Behal,
director of M/s. M.V. Agency is again without joining the company.
The learned Magistrate took cognizance of the alleged offence and
summoned the accused persons including the appellant vide order
dated 19.06.2002. Garg preferred a petition under Section 482 Cr.P.C.
for quashing of the chargesheet and the summoning order dated
19.06.2002 which has been dismissed by the High Court under the
impugned judgment and order.
7. Mr. Siddharth Aggarwal, learned senior counsel appearing for the
appellant would vehemently urge that the appellant cannot be
prosecuted for an offence allegedly committed by the company
without arraying it as an accused that too without making any
specific allegation against Garg. He would submit that the impugned
prosecution has been instituted as a counterblast to the concluded
proceedings under Section 138 of the NI Act in which Tyagi was
convicted and it eventually concluded by way of compromise before
the High Court. It is also argued that the summoning order is without
any reasoning showing complete non-application of mind.
8. Per contra, Mr. Vikas Bansal, learned counsel appearing for the
respondent would submit that it is a subject matter of trial as to
whether Garg encashed the amount involved in 04 cheques despite
having received the amount by way of demand drafts separately
given to him by Tyagi after all the cheques were dishonoured on the
first occasion. According to him, it is a clear case of receiving double
payment for the same dues, thus, committing cheating.
9. Having heard learned senior counsel for the parties and upon perusal
of the material on record we are satisfied that the appeal deserves
to be allowed, and the impugned chargesheet/criminal proceedings
deserve to be quashed on the reasoning hereafter stated.
10. It is to be noted that in 138 NI Act proceedings against Tyagi, he
raised a specific defence that there is no outstanding debt qua 07
cheques as the amount involved therein has already been paid
by separate demand drafts. Learned Magistrate in its order dated
25.10.2002 rejected the said defence by recording a finding that no
634 [2025] 5 S.C.R.
Supreme Court Reports
request was made by Tyagi to the complainant company to return
the bounded cheques to the accused company when the demand
drafts were allegedly sent by the accused persons to the complainant
company. The Trial Magistrate specifically recorded a finding in
paragraph No. 16 in the following manner:
“16. Moreover, it may be stated that the accused company
was having business dealing with the complainant
company. The complainant company has also placed on
record the copy of statement of account Ex. P-16 pertaining
to the transaction of the accused firm with the complainant
company. In the said statement of account, the impugned
demand draft No. 859562 for Rs. 55,000/- D.D. No. 859879
for Rs. 50,000/- D.D. No. 859797 for Rs. 50,000/-, D.D.
No. 4123761 for Rs. 1,50,000/- and D.D. No. 860060 for
Rs. 1,11,357/- have been accounted for against liability
of accused person and ultimately, liability of the accused
firm to the tune of Rs. 3,31,151/- is shown outstanding in
favour of the complainant company. From this statement
of account Ex.P-16, to can be safety presumed that
these demand drafts pertaining to some other liability
of the accused persons and these demand drafts were
not issued to liquidate the liability of impugned cheques
Ex.P-2 to Ex.P-8.”
11. The above finding of the Trial Magistrate was affirmed by the
Sessions Court in its order dated 17.03.2005 by observing thus in
paragraph No. 16
“16. …… I have closely scrutinised the evidence of DW1
and DW2, the statement of the aforesaid witnesses does
not inspire confidence particularly in view of the facts that
the accused himself did not appear in the witness box to
state so. From the statement of account Ext.P16 placed
on record by the complainant company, it can be gathered
that the demand drafts No. 859562 for Rs. 55,000/-
859797 for Rs.50,000/-, 4123761 for Rs. 1,50,000/- and
860060 for Rs.1,11,356/- have been accounted for against
liability of the accused persons and ultimately, liability of
the accused firm to the tune of Rs. 3,31,151/- which is
[2025] 5 S.C.R. 635
S.C. Garg v. State of Uttar Pradesh & Anr.
shown outstanding in favour of the complainant company.
Therefore, from the statement of account Ext.P16 it can
be presumed that these demand drafts were pertaining to
some other liability of the appellants and were not issued
to liquidate the liability of the impugned cheques Ext.P2
to Ext. P8”
12. It is thus apparent that the finding recorded by the jurisdictional
criminal court in 138 NI Act proceedings between the parties would be
binding to both the parties in any subsequent proceedings involving
the same issue.
13. The question as to the applicability of principle of res judicata in
criminal matters have been considered by this Court in several
decisions. In the matters of Pritam Singh & Anr. vs. The State
of Punjab,7 Bhagat Ram vs. State of Rajasthan8 & The State of
Rajasthan vs. Tarachand Jain,9 this Court has consistently laid down
the principle that the principle of res judicata is equally applicable in
criminal matters. However, in two later decisions, namely, Devendra
& Ors. vs. State of Uttar Pradesh & Anr.10 and Muskan Enterprises
& Anr. Vs. The State of Punjab & Anr.11 in which one of us was a
member (Justice Prashant Kumar Mishra), this Court observed in
the context of maintainability of second petition under Section 482
Cr.P.C. that principle of res judicata has no application in a criminal
matter. Considering divergence of opinion, it would be appropriate
for us to have deeper examination and reading of the law laid down
by this Court in the earlier decisions.
14. In Pritam Singh (supra), a three Judge Bench of this Court
speaking through Natwarlal Harilal Bhagwati, J. placing reliance
on Sambasivam vs. Public Prosecutor, Federal of Malaya,12
decided by a Bench of Five Judges of the Judicial Committee,
opined that maxim res judicata is no less appliable to criminal than
7 AIR 1956 SC 415
8 (1972) 2 SCC 466
9 (1974) 3 SCC 72
10 (2009) 7 SCC 495
11 (2024) INSC 1046
12 (1950) AC 458
636 [2025] 5 S.C.R.
Supreme Court Reports
to civil proceedings. In the said matter, accused Pritam Singh was
earlier tried for an offence under the Arms Act basing recovery of
a weapon from him. In the said case Pritam Singh was acquitted.
In a subsequent trial, the same recovery was again sought to be
used by the prosecution as one of the circumstances in an offence
of murder. In these set of facts, this Court recorded the following
findings as to the applicability of principle of res judicata in criminal
matters:
“15. In regard to the recovery of Ex. P-14 the learned
Additional Sessions Judge had not put any reliance on
the acquittal of the accused by the learned Additional
Sessions Judge, Faridkot, of the offence under the Arms
Act, observing that any expression of opinion contained
in the judgment was not only not binding on him but was
irrelevant under the Indian Evidence Act.
On a perusal of the evidence led by the prosecution in this
behalf he had held that the recovery of Ex. P-14 was proved
against the accused and considered that as connecting
Pritam Singh Lohara with the incident. The High Court,
on the other hand, relied upon the observations of Lord
MacDermott at p.479 in Sambasivam v. Public Prosecutor,
Federal of Malaya, 1950 A.C. 458(A):-
“The effect of a verdict of acquittal pronounced by a
competent Court on a lawful charge and after a lawful
trial is not completely stated by saying that the person
acquitted cannot be tried again for the same offence.
To that it must be added that the verdict is binding and
conclusive in all subsequent proceedings between the
parties to the adjudication.
The maxim ‘res judicata pro veritate accipitur’ is no less
applicable to criminal than to civil proceedings. Here,
the appellant having been acquitted at the first trial on
the charge of having ammunition in his possession, the
prosecution was bound to accept the correctness of
that verdict and was precluded from taking any steps to
challenge it at the second trial.”
[2025] 5 S.C.R. 637
S.C. Garg v. State of Uttar Pradesh & Anr.
15. In Bhagat Ram (supra), a two Judge Bench of this Court speaking
through H.R. Khanna, J. again applied and approved Sambasivam
(supra) and Pritam Singh (supra).
16. Thereafter in Tarachand Jain (supra), this Court referred to Bhagat
Ram (supra) and Sambasivam (supra) to hold thus:
“13. ……….The question as to what is the binding effect
of a decision in subsequent proceedings of the same
original matter was considered by this Court in the case
of Bhagat Ram v. State of Rajasthan, [(1972) 2 SCC 466 :
1972 SCC (Cri) 751] and it was held that the principle
of res judicata is also applicable to criminal proceedings
and it is not permissible in the subsequent stage of the
same proceedings to convict a person for an offence in
respect of which an order for his acquittal has already
been recorded. Reliance in this context was placed upon
the observations of the Judicial Committee in the case of
Samba Sivam v. Public Prosecutor, Federation of Malaya.
[1950 AC 458] In Bhagat Ram case [(1972) 2 SCC 466 :
1972 SCC (Cri) 751] a Single Judge of the High Court to
whom a limited question had been referred because of a
difference of opinion between two Judges of the Division
Bench, not only decided the question referred to him, he
also interfered with the acquittal of the accused regarding
certain offences in respect of which an order for acquittal
had already been made earlier by the Division Bench. It
was held that it was not within the competence of the Single
Judge to reopen the matter and pass the above order of
conviction in the face of the earlier order of the Division
Bench for acquittal. Although Bhagat Ram case [(1972) 2
SCC 466 : 1972 SCC (Cri) 751] related to acquittal, the
principle laid down in that case, in our opinion, holds good
in a case like the present wherein the question is about
the binding effect of the earlier Division Bench judgment
regarding the validity of the sanction for the prosecution
of the accused-respondent.”
17. We shall now have a look at the subsequent matters Devendra
(supra) and Muskan Enterprises (Supra) wherein it is held that
638 [2025] 5 S.C.R.
Supreme Court Reports
principle of res judicata is not applicable in criminal proceedings. In
Devendra (supra) was a case where after dismissal of first petition
under Section 482 Cr.P.C. seeking quashing of the FIR, the appellants
therein preferred another application under Section 482 Cr.P.C., after
the Magistrate took cognizance of the matter, which was dismissed
by the High Court. In this Court, it was argued by the opposite party
that the first order of the High Court dismissing the petition under
Section 482 Cr.P.C. would operate as res judicata. Negating the said
argument, a two Judge Bench of this Court held in para 25 as under:
“25. Mr. Das, furthermore, would contend that the order
of the High Court dated 17-10-2005 would operate as res
judicata. With respect, we cannot subscribe to the said
view. The principle of res judicata has no application in
a criminal proceeding. The principles of res judicata as
adumbrated in Section 11 of the Code of Civil Procedure
or the general principles thereof will have no application
in a case of this nature.”
18. In Muskan Enterprises (supra), similar was the position. The first
petition under Section 482 Cr.P.C. was dismissed as withdrawn
without liberty obtained to apply afresh, the High Court dismissed
the second petition under Section 482 Cr.P.C. as not maintainable.
Referring to Devendra (supra), a two Judge Bench of this Court
of which one of us was a member (Prashant Kumar Mishra, J.)
observed thus in para 17:
“17. That the principle of res judicata has no application
in a criminal proceeding was reiterated by this Court in
Devendra vs. State of U.P.”
19. Reading three earlier decisions vis-à-vis the two later decisions
parallelly, we do not think that considering the context and the stage
of the proceedings in which the matters stood and agitated before
this Court, there is any diversion in the applicability of the principle
of res judicata. While three earlier decisions in Pritam Singh
(Supra), Bhagat Ram (supra) and Tarachand Jain (supra) were
decided basis acquittal in previous trial, the subsequent decision
in Devendra (supra) and Muskan Enterprises (supra) have been
decided at the stage of quashing petition under Section 482 Cr.P.C.,
thus, in both the matters, there was no final adjudication of merits.
[2025] 5 S.C.R. 639
S.C. Garg v. State of Uttar Pradesh & Anr.
While in Devendra (supra), the first petition was for quashing of
the FIR and the second petition was preferred after the Magistrate
took cognizance of the matter; in Muskan (supra), the first petition
was dismissed as withdrawn whereas the second petition was held
not maintainable due to earlier withdrawal without any liberty. Thus,
these two cases are totally distinguishable.
In addition, it is important to bear that Sambasivam (supra) was
decided by Five Judges of the Judicial Committee and Pritam Singh
(supra) was decided by a three Judge Bench, whereas all subsequent
decisions have been rendered by the two Judges Bench. Therefore,
Pritam Singh (supra) is binding insofar as the issue concerning the
applicability of principle of res judicata in a criminal proceeding is
concerned.
20. For the above reason it is absolutely clear that Tyagi cannot maintain
a prosecution on the basis of allegations which were precisely his
defence in the earlier proceedings wherein he was an accused.
Thus, the present criminal proceedings deserve to be quashed on
this ground alone.
21. It is also to be seen that the business relation was between the two
companies. The cheques and the demand drafts, as the case may be,
were issued by one company to the other company and no payment
was made by Tyagi to Garg individually. In Sharad Kumar Sanghi
vs. Sangita Rane13 this Court held thus in paragraph 11 & 13:
“11. In the case at hand as the complainant’s initial
statement would reflect, the allegations are against the
Company, the Company has not been made a party and,
therefore, the allegations are restricted to the Managing
Director. As we have noted earlier, allegations are vague
and in fact, principally the allegations are against the
Company. There is no specific allegation against the
Managing Director. When a company has not been arrayed
as a party, no proceeding can be initiated against it even
where vicarious liability is fastened under certain statutes. It
has been so held by a three-Judge Bench in Aneeta Hada
13 (2015) 12 SCC 781
640 [2025] 5 S.C.R.
Supreme Court Reports
v. Godfather Travels and Tours (P) Ltd. (2012) 5 SCC 661
in the context of the Negotiable Instruments Act, 1881.
***
13. When the company has not been arraigned as an
accused, such an order could not have been passed.
We have said so for the sake of completeness. In the
ultimate analysis, we are of the considered opinion that
the High Court should have been well advised to quash
the criminal proceedings initiated against the appellant
and that having not been done, the order is sensitively
vulnerable and accordingly we set aside the same and
quash the criminal proceedings initiated by the respondent
against the appellant.”
22. Again in the matter of Dayle De’ Souza vs. Government of India14
this Court held thus in para 22 to 30:
“22. There is yet another difficulty for the prosecution in
the present case as the Company has not been made an
accused or even summoned to be tried for the offence. The
position of law as propounded in State of Madras v. C.V.
Parekh (1970) 3 SCC 491, reads: (SCC p. 493, para 3)
“3. The learned counsel for the appellant, however,
sought conviction of the two respondents on the
basis of Section 10 of the Essential Commodities
Act under which, if the person contravening an
order made under Section 3 (which covers an
order under the Iron and Steel Control Order,
1956), is a company, every person who, at the
time the contravention was committed, was in
charge of, and was responsible to, the company
for the conduct of the business of the company
as well as the company, shall be deemed to be
guilty of the contravention and shall be liable to
be proceeded against and punished accordingly.
14 (2021) 20 SCC 135
[2025] 5 S.C.R. 641
S.C. Garg v. State of Uttar Pradesh & Anr.
It was urged that the two respondents were
in charge of, and were responsible to, the
Company for the conduct of the business of
the Company and, consequently, they must
be held responsible for the sale and for thus
contravening the provisions of clause (5) of the
Iron and Steel Control Order. This argument
cannot be accepted, because it ignores the first
condition for the applicability of Section 10 to
the effect that the person contravening the order
must be a company itself. In the present case,
there is no finding either by the Magistrate or
by the High Court that the sale in contravention
of clause (5) of the Iron and Steel Control
Order was made by the Company. In fact, the
Company was not charged with the offence at
all. The liability of the persons in charge of the
Company only arises when the contravention is
by the Company itself. Since, in this case, there
is no evidence and no finding that the Company
contravened clause (5) of the Iron and Steel
Control Order, the two respondents could not
be held responsible. The actual contravention
was by Kamdar and Vallabhdas Thacker and
any contravention by them would not fasten
responsibility on the respondents. The acquittal
of the respondents is, therefore, fully justified.
The appeal fails and is dismissed.”
23. However, this proposition was later deviated from in
Sheoratan Agarwal v. State of M.P. (1984) 4 SCC 352. This
case pertained to the pari materia provision under Section
10 of the Essential Commodities Act, 1955. The Court held
that any one among : the company itself; every person in-
charge of and responsible to the company for the conduct
of the business; or any Director, manager, secretary or other
officer of the company with whose consent or connivance
or because of whose neglect offence had been committed,
could be prosecuted alone. However, the person in-charge
642 [2025] 5 S.C.R.
Supreme Court Reports
or an officer of the company could be held guilty in that
capacity only after it has been established that there has
been a contravention by the company as well. However,
this will not mean that the person in-charge or an officer
of the company must be arraigned simultaneously along
with the company if he is to be found guilty and punished.
24. Relying upon the reasoning in Sheoratan Agarwal and
limiting the interpretation of C.V. Parekh (1970) 3 SCC 491,
this Court in Anil Hada v. Indian Acrylic Ltd.(2000) 1 SCC
1 had held that: (Anil Hada case, SCC pp. 7-8, para 13)
“13. If the offence was committed by a company
it can be punished only if the company is
prosecuted. But instead of prosecuting the
company if a payee opts to prosecute only
the persons falling within the second or third
category the payee can succeed in the case
only if he succeeds in showing that the offence
was actually committed by the company. In such
a prosecution the accused can show that the
company has not committed the offence, though
such company is not made an accused, and
hence the prosecuted accused is not liable to
be punished. The provisions do not contain a
condition that prosecution of the company is sine
qua non for prosecution of the other persons who
fall within the second and the third categories
mentioned above. No doubt a finding that the
offence was committed by the company is sine
qua non for convicting those other persons. But
if a company is not prosecuted due to any legal
snag or otherwise, the other prosecuted persons
cannot, on that score alone, escape from the
penal liability created through the legal fiction
envisaged in Section 141 of the Act.”
25. However, subsequent decisions of this Court have
emphasised that the provision imposes vicarious liability
by way of deeming fiction which presupposes and requires
[2025] 5 S.C.R. 643
S.C. Garg v. State of Uttar Pradesh & Anr.
the commission of the offence by the company itself as it
is a separate juristic entity. Therefore, unless the company
as a principal accused has committed the offence, the
persons mentioned in sub-section (1) would not be liable
and cannot be prosecuted. Section 141(1) of the Negotiable
Instruments Act, extends vicarious criminal liability to the
officers of a company by deeming fiction, which arises
only when the offence is committed by the company itself
and not otherwise. Overruling Sheoratan Agarwal and Anil
Hada, in Aneeta Hada v. Godfather Travels & Tours (P)
Ltd.(2012) 5 SCC 661, a three-Judge Bench of this Court
expounding on the vicarious liability under Section 141 of
the Negotiable Instruments Act, has held : (Aneeta Hada
case, SCC pp. 686 & 688, paras 51 & 59)
“51. We have already opined that the decision in
Sheoratan Agarwal runs counter to the ratio laid down
in C.V. Parekh which is by a larger Bench and hence,
is a binding precedent. On the aforesaid ratiocination,
the decision in Anil Hada has to be treated as not
laying down the correct law as far as it states that
the Director or any other officer can be prosecuted
without impleadment of the company. Needless to
emphasise, the matter would stand on a different
footing where there is some legal impediment and the
doctrine of lex non cogit ad impossibilia gets attracted.
***
59. In view of our aforesaid analysis, we arrive at
the irresistible conclusion that for maintaining the
prosecution under Section 141 of the Act, arraigning
of a company as an accused is imperative. The other
categories of offenders can only be brought in the
drag-net on the touchstone of vicarious liability as
the same has been stipulated in the provision itself.
We say so on the basis of the ratio laid down in C.V.
Parekh which is a three-Judge Bench decision. Thus,
the view expressed in Sheoratan Agarwal does not
correctly lay down the law and, accordingly, is hereby
644 [2025] 5 S.C.R.
Supreme Court Reports
overruled. The decision in Anil Hada is overruled with
the qualifier as stated in para 51. The decision in Modi
Distillery (1987) 3 SCC 684 has to be treated to be
restricted to its own facts as has been explained by
us hereinabove.”
26. The proposition of law laid down in Aneeta Hada was
relied upon by this Court in Anil Gupta v. Star India (P)
Ltd.(2014) 10 SCC 373: (Anil Gupta case, SCC pp. 379-
80, para 13)
“13. In the present case, the High Court by the
impugned judgment dated 13-8-2007 held that
the complaint against Respondent 2 Company
was not maintainable and quashed the summons
issued by the trial court against Respondent
2 Company. Thereby, the Company being not
a party to the proceedings under Section 138
read with Section 141 of the Act and in view of
the fact that part of the judgment referred to by
the High Court in Anil Hada has been overruled
by a three-Judge Bench of this Court in Aneeta
Hada, we have no other option but to set aside
the rest part of the impugned judgment whereby
the High Court held that the proceedings against
the appellant can be continued even in absence
of the Company. We, accordingly, set aside that
part of the impugned judgment dated 13-8-2007
passed by the High Court so far as it relates
to the appellant and quash the summons and
proceeding pursuant to Complaint Case No.
698 of 2001 qua the appellant.”
27. In Sharad Kumar Sanghi v. Sangita Rane (2015) 12
SCC 781, this Court observed that : (SCC p. 785, paras
11 & 13)
“11. In the case at hand as the complainant’s
initial statement would reflect, the allegations
are against the Company, the Company has
not been made a party and, therefore, the
[2025] 5 S.C.R. 645
S.C. Garg v. State of Uttar Pradesh & Anr.
allegations are restricted to the Managing
Director. As we have noted earlier, allegations
are vague and in fact, principally the allegations
are against the Company. There is no specific
allegation against the Managing Director. When
a company has not been arrayed as a party,
no proceeding can be initiated against it even
where vicarious liability is fastened under certain
statutes. It has been so held by a three-Judge
Bench in Aneeta Hada v. Godfather Travels &
Tours (P) Ltd. in the context of the Negotiable
Instruments Act, 1881.
***
13. When the company has not been arraigned
as an accused, such an order could not have
been passed. We have said so for the sake
of completeness. In the ultimate analysis, we
are of the considered opinion that the High
Court should have been well advised to quash
the criminal proceedings initiated against the
appellant and that having not been done, the
order is sensitively vulnerable and accordingly
we set aside the same and quash the criminal
proceedings initiated by the respondent against
the appellant.”
28. This position was again clarified and reiterated by this
Court in Himanshu v. B. Shivamurthy (2019) 3 SCC 797.
The relevant portion of the judgment reads thus : (SCC
pp. 799-802, paras 6-7 & 12-13)
“6. The judgment of the High Court has been
questioned on two grounds. The learned
counsel appearing on behalf of the appellant
submits that firstly, the appellant could not be
prosecuted without the company being named
as an accused. The cheque was issued by the
company and was signed by the appellant as
its Director. Secondly, it was urged that the
646 [2025] 5 S.C.R.
Supreme Court Reports
observation of the High Court that the company
can now be proceeded against in the complaint
is misconceived. The learned counsel submitted
that the offence under Section 138 is complete
only upon the issuance of a notice of demand
and the failure of payment within the prescribed
period. In absence of compliance with the
requirements of Section 138, it is asserted, the
direction of the High Court that the company
could be impleaded/arraigned at this stage is
erroneous.
7. The first submission on behalf of the
appellant is no longer res integra. A decision
of a three-Judge Bench of this Court in
Aneeta Hada v. Godfather Travels & Tours (P)
Ltd. governs the area of dispute. The issue
which fell for consideration was whether an
authorised signatory of a company would be
liable for prosecution under Section 138 of the
Negotiable Instruments Act, 1881 without the
company being arraigned as an accused. The
three-Judge Bench held thus : (SCC p. 688,
para 58)
‘58. Applying the doctrine of strict
construction, we are of the considered
opinion that commission of offence by
the company is an express condition
precedent to attract the vicarious
liability of others. Thus, the words
“as well as the company” appearing
in the section make it absolutely
unmistakably clear that when the
company can be prosecuted, then
only the persons mentioned in the
other categories could be vicariously
liable for the offence subject to the
averments in the petition and proof
thereof. One cannot be oblivious
[2025] 5 S.C.R. 647
S.C. Garg v. State of Uttar Pradesh & Anr.
of the fact that the company is a
juristic person and it has its own
respectability. If a finding is recorded
against it, it would create a concavity in
its reputation. There can be situations
when the corporate reputation is
affected when a Director is indicted.’
In similar terms, the Court further
held : (Aneeta Hada case , SCC p.
688, para 59)
‘59. In view of our aforesaid
analysis, we arrive at the irresistible
conclusion that for maintaining the
prosecution under Section 141 of
the Act, arraigning of a company
as an accused is imperative. The
other categories of offenders can
only be brought in the drag-net on
the touchstone of vicarious liability
as the same has been stipulated in
the provision itself.’
***
12. The provisions of Section 141 postulate
that if the person committing an offence under
Section 138 is a company, every person, who at
the time when the offence was committed was
in charge of or was responsible to the company
for the conduct of the business of the company
as well as the company, shall be deemed to be
guilty of the offence and shall be liable to be
proceeded against and punished.
13. In the absence of the company being
arraigned as an accused, a complaint against the
appellant was therefore not maintainable. The
appellant had signed the cheque as a Director of
the company and for and on its behalf. Moreover,
648 [2025] 5 S.C.R.
Supreme Court Reports
in the absence of a notice of demand being
served on the company and without compliance
with the proviso to Section 138, the High Court
was in error in holding that the company could
now be arraigned as an accused.
29. Applying the same proposition of law as laid down
in Aneeta Hada, this Court in Hindustan Unilever Ltd. v.
State of M.P. (2020) 10 SCC 751 applying pari materia
provision in the Prevention of Food Adulteration Act, 1954,
held that : (Hindustan Unilever case, SCC p. 762, para 23)
“23. Clause (a) of sub-section (1) of Section 17
of the Act makes the person nominated to be in
charge of and responsible to the company for
the conduct of business and the company shall
be guilty of the offences under clause (b) of sub-
section (1) of Section 17 of the Act. Therefore,
there is no material distinction between Section
141 of the NI Act and Section 17 of the Act which
makes the company as well as the nominated
person to be held guilty of the offences and/or
liable to be proceeded and punished accordingly.
Clauses (a) and (b) are not in the alternative
but conjoint. Therefore, in the absence of the
company, the nominated person cannot be
convicted or vice versa. Since the Company was
not convicted by the trial court, we find that the
finding of the High Court to revisit the judgment
will be unfair to the appellant-nominated person
who has been facing trial for more than last 30
years. Therefore, the order of remand to the
trial court to fill up the lacuna is not a fair option
exercised by the High Court as the failure of
the trial court to convict the Company renders
the entire conviction of the nominated person
as unsustainable.”
30. In terms of the ratio above, a company being a juristic
person cannot be imprisoned, but it can be subjected to
[2025] 5 S.C.R. 649
S.C. Garg v. State of Uttar Pradesh & Anr.
a fine, which in itself is a punishment. Every punishment
has adverse consequences, and therefore, prosecution
of the company is mandatory. The exception would
possibly be when the company itself has ceased to
exist or cannot be prosecuted due to a statutory bar.
However, such exceptions are of no relevance in the
present case. Thus, the present prosecution must fail
for this reason as well.”
23. Similarly in the matter of Delhi Race Club (1940) Ltd. & Ors. vs.
State of Uttar Pradesh & Anr.15, this Court has held that a person
cannot be vicariously prosecuted, especially for offences under the
IPC, merely on account of the fact that he holds a managerial position
in a company without there being specific allegations regarding his
involvement in the offence. The following has been held in paras
13 and 14:
“13. This Court has time and again reminded that
summoning of an accused in a criminal case is a serious
matter. Criminal law cannot be set into motion as a matter
of course. It is not that the complainant has to bring only
two witnesses to support his allegations in the complaint
to have the criminal law set into motion. The order of
the Magistrate summoning the accused must reflect that
he has applied his mind to the facts of the case and the
law applicable thereto. He has to examine the nature of
allegations made in the complaint and the evidence both
oral and documentary in support thereof. It is not that the
Magistrate is a silent spectator at the time of recording of
preliminary evidence before summoning of the accused.
The Magistrate has to carefully scrutinise the evidence
brought on record and may even himself put questions
to the complainant and his witnesses to elicit answers to
find out the truthfulness of the allegations or otherwise
and then examine if any offence is prima facie committed
by all or any of the accused. [See: Pepsi Foods Ltd. v.
Special Judicial Magistrate, (1998) 5 SCC 749].
15 (2024) SCC online SC 2248
650 [2025] 5 S.C.R.
Supreme Court Reports
14. Where a jurisdiction is exercised on a complaint petition
filed in terms of Section 156(3) or Section 200 of the
CrPC, the Magistrate is required to apply his mind. The
Penal Code does not contain any provision for attaching
vicarious liability on the part of appellants Nos. 2 and
3, respectively herein who are none other than office
bearers of the appellant No. 1 Company. When appellant
No. 1 is the Company and it is alleged that the company
has committed the offence then there is no question of
attributing vicarious liability to the office bearers of the
Company so far as the offence of cheating or criminal
breach of trust is concerned. The office bearers could be
arrayed as accused only if direct allegations are levelled
against them. In other words, the complainant has to
demonstrate that he has been cheated on account of
criminal breach of trust or cheating or deception practised
by the office-bearers. The 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
appellants Nos. 2 and 3 herein were personally liable for
any offence. The appellant No. 1 is a body corporate.
Vicarious liability of the office bearers would arise provided
any provision exists in that behalf in the statute. Statutes
indisputably must contain provision fixing such vicarious
liabilities. 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.”
24. This Court in Iqbal @ Bala & Ors. vs. State of Uttar Pradesh &
Ors.16 has underlined the court’s duty to look into the FIR closely
and with care when the challenge is thrown on the ground that the
prosecution is manifestly frivolous or vexatious. The following is held
in paras 9, 10 and 11:
“9. At this stage, we would like to observe something
important. Whenever an accused comes before the court
16 (2023) 8 SCC 734
[2025] 5 S.C.R. 651
S.C. Garg v. State of Uttar Pradesh & Anr.
invoking either the inherent powers under Section 482 of
the Code of Criminal Procedure (CrPC) or extraordinary
jurisdiction under Article 226 of the Constitution to get
the FIR or the criminal proceedings quashed essentially
on the ground that such proceedings are manifestly
frivolous or vexatious or instituted with the ulterior motive
for wreaking vengeance, then in such circumstances the
court owes a duty to look into the FIR with care and a
little more closely.
10. We say so because once the complainant decides
to proceed against the accused with an ulterior motive
for wreaking personal vengeance, etc. then he would
ensure that the FIR/complaint is very well drafted with all
the necessary pleadings. The complainant would ensure
that the averments made in the FIR/complaint are such
that they disclose the necessary ingredients to constitute
the alleged offence. Therefore, it will not be just enough
for the court to look into the averments made in the FIR/
complaint alone for the purpose of ascertaining whether
the necessary ingredients to constitute the alleged offence
are disclosed or not.
11. In frivolous or vexatious proceedings, the court owes
a duty to look into many other attending circumstances
emerging from the record of the case over and above
the averments and, if need be, with due care and
circumspection try to read in between the lines. The Court
while exercising its jurisdiction under Section 482CrPC
or Article 226 of the Constitution need not restrict itself
only to the stage of a case but is empowered to take into
account the overall circumstances leading to the initiation/
registration of the case as well as the materials collected
in the course of investigation. Take for instance the case
on hand. Multiple FIRs have been registered over a period
of time. It is in the background of such circumstances the
registration of multiple FIRs assumes importance, thereby
attracting the issue of wreaking vengeance out of private
or personal grudge as alleged.”
652 [2025] 5 S.C.R.
Supreme Court Reports
25. For all the aforestated reasons, we unhesitatingly conclude that the
present is a fit case for allowing the appeal to quash the impugned
criminal proceedings instituted against the appellant for offences
under Section 420 of the IPC. Accordingly, Criminal Case No. 7489
of 2002 arising out of Crime No. 13 of 1998 pending in the Court
of Chief Judicial Magistrate, Ghaziabad is quashed. The appeal is
allowed.
Result of the case: Appeal Allowed.
†
Headnotes prepared by: Ankit Gyan
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