Holding

The Supreme Court held that the FIR did not disclose any cognizable offence and was mala fide, therefore the criminal proceedings must be quashed under Section 482 CrPC.

Summary

The appellants, former officers of the Life Insurance Corporation of India, were charged under IPC sections 420 and 409 and Stamp Act sections 64 and 69 for allegedly purchasing insurance stamps from vendors outside Uttar Pradesh, causing a loss to the State. They filed writ petitions seeking quashing of the FIR, which the Allahabad High Court dismissed, holding that the FIR disclosed a cognizable offence. On appeal, the Supreme Court examined the constitutional distribution of powers over stamp duties, noting that the Stamp Act is a Union law (Entry 91 List I) and that State rules cannot override it. The Court found that purchasing insurance stamps from any authorised vendor, whether inside or outside the State, was not prohibited by the Stamp Act or the U.P. Stamp Rules, and that the alleged conduct, even if proved, did not constitute an offence. Applying the principles of Section 482 CrPC, the Court held that the FIR was baseless, mala fide, and should be quashed. Consequently, the criminal proceedings were set aside and the appeal was allowed.

Issues considered

The validity of quashing the FIR under Section 482 of the Code of Criminal Procedure when the alleged conduct does not constitute an offence under the Stamp Act or IPC.
Whether the purchase of insurance stamps from vendors outside Uttar Pradesh violates provisions of the Indian Stamp Act, 1899 and the Uttar Pradesh Stamp Rules.
The constitutional competence of the State to prescribe rules on stamp sales in light of the Union's exclusive power under Entry 91 of List I of the Seventh Schedule.
Whether the FIR was filed with mala fide intent, constituting an abuse of process.

Legislation cited

Code of Criminal Procedure, 1973s. 482
Constitution of Indias. Article 254, s. Article 268, s. Entry 44 List III, s. Entry 63 List II, s. Entry 91 List I
Indian Penal Code, 1860s. 409, s. 420
Indian Stamp Act, 1899s. 27, s. 64, s. 69, s. 74, s. 75

Subjects

quashing of FIRSection 482 CrPCStamp Actlegislative competenceconstitutional lawmala fide prosecutioninsurance stampsjurisdiction

Judgment

[2009] 5 S.C.R. 1159

V.V.S. RAMA SHARMA & ORS. A
v.
STATE OF U.P. & ORS.
(Criminal Appeal No. 730 of 2009)
APRIL 15, 2009
8
[S.8. SINHA AND DR. MUKUNDAKAM SHARMA, JJ.]

Code of Criminal Procedure, 1973- ss. 482- Quashing
of FIR registered u/ss. 420 and 409 /PC and u/ss. 64 and 69
of Stamp Act - Allegation that LIC. officers not purchasing c
insurance stamps from Treasury office of State but from
stamp vendors, outside of State causing loss to State
.... Government - High Court rejecting quashing of FIR - Held:
High Court ought to have quashed the criminal proceedings
"- Provisions of Stamp Act and Constitution of India indicates D
untenability of the allegation made in FIR - Act of LIC officers
purchasing insurance stamps from outside the State not
inconsistent with any provisions of Stamp Act or any other
rules - Allegation in FIR even if proved by prosecution did .
not constitute any offence - Hence, order of High Court set E
aside - Stamp Act, 1899 - ss. 64 and 69 - U.P. Stamp Rules
- r. 115A - Penal Code, 1860 - ss. 420 and 409 - Constitution
of India, 1950 - Entry 91 of List, Schedule VII.
Appellants were working as officers in the Life
Insurance Corporation of India. The branch officers of LIC F
used to purchase insurance stamps in large quantity for
execution of insurance policies from the Treasury in any
district as well as from authorised licenced stamps
vendors. It is alleged that the Divisional Office of the LIC,
Varanasi did not purchase the insurance stamps from the G
Treas~ry office of U.P. but from the Stamp Vendors,
outside of State causing loss of Rs. 1,67,21,520.001· to the
State Government. FIR was registered against the

1159 H
1160 SUPREME COURT REPORTS [2009) 5 S.C.R.
~-

A appellants u/ss. 420 and 409 IPC and u/ss. 64 and 69 of
the Stamp Act, 1899 in relation to stamp purchase. ...
Appellants filed writ petitions for quashing the FIR but the
same were dismissed. Hence the present appeal.

Allowing the appeal, the Court
B
HELD: The Stamp Act, 1899 being a central
legislation is covered under Entry 91 of List I (Union List)
of the 7th Schedule of the Constitution of India. Rule
making power has been given to the States under ss. 74
c and 75 of the Stamp Act which deals with •power to make
rules relating to sale of stamps' and •power to make rules
generally to carry out Act' respectively. The scope of
such rule making power of the State are only upto the
extent as provided under the central law i.e. Stamp Act ...
D [Para 20) [1170-D-E]
1.2. The Stamp Rules were framed by the U.P.
Government in the year 1942. A perusal of the statement
of object of the said Rules shows that such Rules was
framed in exercise of the powers conferred by the Stamp
E Act and in pursuance of the powers conferred by the
notification of the Government of India, Finance
Department (Central Revenues) No. 9/Stamps, dated the
13th November, 1937, and in supersession of all previous
notifications of the Government of India and the Provincial
F Government in this behalf. Undoubtedly, when these
Rules were framed the present constitutional scheme
was not in place. [Para 21) (1170-F-H; 1171-A]
1.3. Under Entry 44 of List Ill of the Constitution of
G India, 1950, the power to levy stamp duty on all
documents, is concurrent. But the power to prescribe the
rate of such levy is excluded from Entry 44 of List Ill and
Is divided between Parliament and the State Legislatures.
If the Instrument falls under the categories mentioned in
H
V.V.S. RAMA SHARMA & ORS. v. STATE OF U.P. & 1161
)(
ORS.
Entry 91 of List I, the power to prescribe the rate will A
~,

belong to Parliament, and for all other instruments or
documents, the power to prescribe the rate belongs to
the State Legislature under Entry 63 of List II. Therefore,
the meaning of Entry 44 of List Ill is that excluding the
-f
power to prescribe the rate, the charging provisions of a B
law relating to stamp duty can be made both by the Union
and the State Legislature, in the concurrent sphere,
subject to Article 254 in case of repugnancy. In the instant
case, Entry 91 of List I of the 7th Schedule would be
applicable and the States do not have the power to c
circumvent a central law. [Para 22] [1171-A-D]

1A. In the instant case, the sole allegation in the FIR
against appellants is that they purchased the insurance
stamps from outside the State of UP. However, the said D .
act of the appellant cannot be said to be inconsistent with
any provisions of Stamp Act or any other rules. Allegation
made in the FIR even if proved by the prosecution does
not constitute any offence. [Para 27] [1177-B-D]

1.5. The registration of FIR shows complete non- E
application of mind as the said FIR also brings within its
ambit purchase of insurance stamps done within the
State of U.P. There cannot be any dispute with regard to
the insurance stamps which has been duly purchased
from the State of U.P. itself. The State of U.P. has sought F
to invoke s. 64 (c) of the Stamp Act to contend that the
action of appellants was 'calculated to deprive the
Government of any duty or penalty', but there is no denial
of the fact that appellants were indeed paying the duties,
. and by no means 'depriving the government of any duty G
or penalty'. So, the act of the respondent is nothing but
.... a clear case of Its mala fide intention to harass the
appellants. It is wholly Immaterial whether appellants are
purchasing the Insurance stamps from the State of U.P.
H
1162 SUPREME COURT REPORTS [2009) 5 S.C.R.

A or from any other State. Rules 115-A of the U.P. Stamp
Rules itself declares that 'Stamps which are the property
of the Central Government'. It is legally untenable to
contend that the insurance stamps must be purchased
from the State of U. P. only. It must be kept in mind that
B s. 69 ·penalty for breach of rule relating to sale of stamps
and for unauthorized sale is not applicable as the
appellants are neither the stamp vendors nor doing any
unauthorised sale of the insurance stamps. Thus, the
High Court ought to have quashed the criminal
c proceedings launched against the appellants. The order
of the High Court is liable to be set aside. [Paras 28 and
29) (1177-D-H; 1178-A-B]

Nagawwa v. Veeranna Shiva/ingappa Konjalgi (1976) 3
SCC 736; State of Haryana v. Bhajan Lal 1992 Supp. (1)
0 SCC 335; Indian Oil Corpn. v. NEPC India Ltd. (2006) 6 SCC
736 and R. Kalyani v. Janak C. Mehta and Others (2009) 1
sec 516, referred to.
Case Law Reference:
E (1976) 3 sec 736 Referred to. Para 23
1992 Supp. (1) SCC 335 Referred to. Para 24
(2006) 6 sec 736 Referred to. Para 25

F (2009) 1 sec 516 Referred to. Para 26
CRIMINAL APPELLATE JURISDICTION : Criminal Appeal
No. 730 of 2009.

Form the Judgment & Order dated 03.08.2006 of the High
G Court of Allahabad at Allahabad in Crl. Misc. W.P.
No.8967,10514 & 7227 of 2004.

M.N. Rao, A.V. Rangam and Buddy A. Ranganadhan for
the Appellant.
H
' V.V.S. RAMA SHARMA & ORS. v. STATE OF U.P. & 1163
)(
ORS.
Dinesh Dwivedi, Manoj Kr. Dwivedi, Vandana Mishra, A
-t· Manish Srivastava and Prateek Dwivedi (for Gunnam
Venkateswara Rao) for the Respondents.

The Judgment of the Court was delivered by
y DR. MUKUNDAKAM SHARMA, J. 1. Leave granted. 8

2. This appeal arises out of the final order dated 3.8.2006
passed by the High Court of Allahabad at Allahabad in Criminal
Misc. Writ Petitions Nos. 8967, 10514 and 7227 of 2004
whereby the above three separate writ petitions filed by the c
appellants herein were dismissed. In the said writ petitions the
appellants herein challenged the FIR registered against them
under Sections 420 and 409 of the Indian Penal Code, 1860
(in short 'IPC') and under Sections 64 and 69 of the Indian
Stamp Act, 1899 (in short 'Stamp Act'). D
3. Brief facts necessary for the purpose of disposal of
present appeal are as follows:
Appellants herein were working as officers in different
capacities at relevant point of time in the Life Insurance E
Corporation of India (in short 'UC') and were then posted iil
different offices in the State of Uttar Pradesh. All the three
appellants have since retired from the service of the UC.

4. It has been stated that various branch offices of the UC
, F
in the course of their business have to purchase large quantity
of adhesive stamps for affixation on their policies and for
issuing receipts etc. While the stamps used for receipts are
the normal revenue stamps, the stamps used in respect of the
• policies issued by UC are special 'insurance stamps' which are
affixed at the rates fixed under the Stamps Act. G

-' 5. For the purposes of execution of insurance policies by
the UC, under the law at the relevant point of time, on a sum of
Rs. 1,000/- the rate of ·stamp duty' is fixed at 40 paise on each
H
1164 SUPREME COURT REPORTS (2009] 5 S.C.R.
..
A policy. In order to execute the insurance policies promptly, from
time to time, heavy purchases of insurance stamps are stated ,. ._
to be done by the UC. The UC used to purchase the same from
the Treasury in any district as well as from authorised licensed
stamp vendors.
B
6. On 30.07.2004, a First Information Report (in short 'FIR')
bearing Crime No. 271/04 was lodged against the appellants
at Police Station Bhelupura, Tehsil Sadar, District Varanasi for
the offences punishable under Sections 420/409 of IPC and
c under Sections 64/69 of the Stamps Act in relation to the
purchase of certain stamps. A perusal of the FIR shows that it
was lodged on the basis of a letter bearing No. 11912/Stamps-
693(P)/2002-2003(83-84) dated 26.06.2004 written by the
Commissioner, Stamps, U.P., Allahabad and letter No. 237245-
6 (2003-04) Mu, Ra, La. dated 28.7.2004 written by the
D Commissioner, Varanasi Division, the UC, Varanasi has not
purchased the Insurance Stamps from the Treasury office of U.P.
but the same was purchased from the Stamp Vendors, outside
of State, which caused loss of Rs. 1,67,21,520.00/- to the State
Government.
E
7. The appellants herein approached the Allahabad High
Court for quashing of the aforesaid Fl R. However, the High Court
on 03.08.2006 dismissed all the three writ petitions vide three
separate but identical orders holding that the FIR prima facie
F discloses the commission of cognizable offence and there was
no ground of interference.
8. Aggrieved by the said orders of the High Court, the
appellants have preferred the present appeal. It was contended
by the appellants that the FIR was lodged only on the directions
G of the higher authorities for the purpose of arresting the present
appellants so as to humiliate and harass them. It has been
submitted that the provisions of the Stamp Act and relevant ..
provisions of Constitution clearly indicates the untenability of the
allegations made in the FIR.
H
)t'
V.V.S. RAMA SHARMA & ORS. v. STATE OF U.P. & 1165
ORS. [DR. MUKUNDAKAM SHARMA, J.]
9. It is the case of the appellant that purchasing of stamps A
assumes urgency because the insurance contract must be
executed along with insurance policies at the earliest possible
time and immediately on receipt of the first premium and if there
is any delay in issuing the insurance stamps and if in the
i meantime there is a death of life assured, then difficulties arise B
regarding payment of insurance money/claim. As there are
various sources for purchase of insurance stamps viz. from the
Treasury of any district throughout the State and also from any
duly authorised licensed stamp vendors, the UC is entitled to
purchase the insurance stamps from any such stamp vendors c
throughout the country. It has been submitted that there is no
prohibition under the law and in the Stamp Act which mandates
that the UC will purchase the insurance stamps only from a
particular district or from a particular State.

10. On the other hand, it is the case of the respondent that D
if the stamps are permitted to be purchased from any other
State other than the State in which the instrument is to be first
executed, it shall not only cause huge loss of revenue to the
State in which the instrument is executed but would also render
the rules framed by the State Government for regulation of sale E
and supply of the stamps and the administrative machinery
established therein as futile and meaningless. It is also the case
that it would further prevent the State Government from
examining as to whether the stamps are fake or genuine.
F
11. The law which governs the rate of payment of 'stamp
duty' in respect of policies of insurance and certain other
transactions has been dealt under Entry 91 of List 1 (Union List)
of 7th Schedule to the Constitution of India (in short
·constitution'). It reads as follows: G

::....,, "91. Rates of stamp duty in respect of bills of exchange,
cheques, promissory notes, bills of lading, letters of credit,
policies of insurance, transfer of shares, debentures,
proxies and receipts."
H
1166 SUPREME COURT REPORTS [2009] 5 S.C.R.
"·
A 12. Our attention has been drawn towards Entry 63 of List
II (State List) of 7thSchedule which provide for power to the
State Legislatures in regard to the rate of 'stamp duty' other
than those specified in List I (Union List).

B "63. Rates of stamp duty in respect of documents other
than those specified in the provisions of List I with regard \

to rates of stamp duty."

13. Other relevant entry which has been cited is Entry 44
of List Ill (Concurrent List) which excludes 'rates of stamp duty'.
c
"44. Stamp duties other than duties or fees collected by
means of judicial stamps, but not including rates of stamp
duty."

14. The above-mentioned various entries in the three lists
D are the fields of legislation with regard to stamps. They are
designed to define and delimit the respective areas of
legislative competence of the Union and State Legislatures.
Under Entry 44 of List Ill, the power to levy stamp duty on all
documents, is concurrent. But the power to prescribe the rate
E of such levy is excluded from Entry 44 of List Ill and is divided
between Parliament and the State Legislatures. If the instrument
falls under the categories mentioned in Entry 91 of List I, the
power to prescribe the rate will belong to Parliament, and for
all other instruments or documents, the power to prescribe the
F rate belongs to the State Legislature under Entry 63 of List II.
Therefore, the meaning of Entry 44 of List Ill is that excluding
the power to prescribe the rate, the charging provisions of a
law relating to stamp duty can be made both by the Union and
the State Legislature, in the concurrent sphere, subject to Article
G 254 in case of repugnancy.

15. With regards to the policies of life insurance the rates
"4,.
of stamp duty have been stipulated by Parliament in the
Schedule I to the Stamp Act though the proceeds thereof are
H
---<
~
V.V.S. RAMA SHARMA & ORS. v. STATE OF U.P. &1167
>· ORS. [DR. MUKUNDAKAM SHARMA, J.]

assigned to the States under Article 268 of the Constitution. It A
reads as follows:

"268. Duties levied by the Union but collected and
appropriated by the States.-

r (1) Such stamp duties and such duties of excise on B
medicinal and toilet preparations as are mentioned in the
"
' Union List shall be levied by the Government of India but
shall be collected-

(a) in the case where such duties are leviable within any c
[Union territory], by the Government of India, and (b) in other
cases, by the States within which such duties are
respectively leviable.

(2) The proceeds in any financial year of any such duty
leviable within any State shall not form part of the D
Consolidated Fund of India, but shall be assigned to that
State"
..
" 16. Now, it would be useful at this stage to discuss relevant
provisions of the Stamp Act. E

"27. Facts affecting duty to be set forth in instrument-
(1) The consideration (if any) and all other facts and
circumstances affecting the chargeability of any instrument
with duty, or the amount of the duty with which it is
F
chargeable, shall be fully and truly set forth therein.
"
64. Penalty for omission to comply with provisions
of section 27 - Any person who, with intent to defraud the
Government, -
G
,.. (a) executes any instrument in which all the facts and
y. circumstances required by section 27 to be set forth in
such instrument are not fully and truly set forth ; or

{b) being employed or concerned in or about the
H
1168 SUPREME COURT REPORTS (2009] 5 S.C.R.

A preparation of any instrument, neglects or omits fully and
truly to set forth therein all such facts and circumstances ;
or

(c) does any other act calculated to deprive the Government
of any duty or penalty under this Act, shall be punishable
B
with fine which may extend to five thousand rupees.

69. Penalty for breach of rule relating to sale of
stamps and for unauthorized sale-

c (a) Any person appointed to sell stamps who
disobeys any rule made under section 74, and

(b) any person not so appointed who sells or offers
for sale any stamp (other than a [ten naye paise or five
naye paise] adhesive stamp), shall be punishable with
D imprisonment for a term which may extend to six months,
or with fine which may extend to five hundred rupees, or
with both."

17. Section 64 of the Stamp Act provides for the penalty
E in case of omission to comply with the provisions of Section
27. On the other hand, Section 69 deals with the penalty to be
imposed for breach of rule relating to sale of stamps and for
unauthorised sales.

F 18. Pursuant to rule making powers given to States under
Section 74 and 75 of the Stamp Act, the State of U. P. has
made rules called the United Provinces Stamp Rules, 1942 (in
short ·Stamps Rules'. Our attention has been drawn towards
Rule 3 of the Stamp Rules which provides the description of
stamps as follows:
G
"Rule 3. Description of Stamps. - (1) Except as
otherwise provided by the Indian Stamp Act, 1899 or by
these rules-

H (i) all duties with which any instrument is chargeable shall
V.V.S. RAMA SHARMA & ORS. v. STATE OF U.P. & 1169
.. ORS. [DR. MUKUNDAKAM SHARMA, J.]
be paid and such payment shall be indicated on such A
instrument by means of stamps issued by the Government
for the purposes of the Act, and

(ii) a stamp which by any word or words on the face of it
is appropriated to any particular kind of instrument shall
B
not be used for an instrument of any other kind.

(2) There shall be three kinds of stamps for indicating the
payment of duty with which instruments are chargeable,
namely:-
c
(a) impressed stamps, that is to say stamped papers
bearing the words 'Indian non- judicial' printed thereon,
which have been sold by a person duly authorised in that
behalf as hereafter provided to any person for his use in
accordance with these rules: D
Provided that no stamp shall be deemed to be sold unless
it is clearly bears the name and address of the authorised
vendor thereof and of the person to whom it is sold;

(b) impressed stamps bearing the word 'Hundi' printed or E
embossed thereon; and
'
(c) adhesive stamps bearing the words 'Special
adhesive', 'Insurance', 'Foreign Bill', 'Share Transfer',
'Notarial', 'Brokers note', 'agreement' or 'revenue' printed
F
thereon:

Provided always that the stamps of the above descriptions
over-printed with the words 'Uttar Pradesh' or the letters
'U.P.' shall continue to be used for payment of duty till
such time as the State Government does not prohibit G --
their use."
(emphasis underlined)

19. Further, Rule 115-A of the Stamps Rules provides for H
1170 SUPREME COURT REPORTS [2009] 5 S.C.R.

A the mode of sale of such stamps. It reads as follows:

"Rule 115-A. Stamps which are the property of the central
Government and which are required to be sold to the public
through post offices, e.g., Central Excise, Revenue
stamps, Defense/or National savings stamps, shall be
B
obtained by post offices from local and branches and
depots and sold to the public in the same manner as
ordinary postage stamps.

Tobacco Excise duty labels and insurance agent license
c fee stamps shall be sold to the public of local and branch
depots at which they are stocked."

20. Placing reliance on the above-mentioned rules, it was
contended on behalf of the State of U.P. that the acts of the
0 appellants of purchasing insurance stamps from outside the
State was contrary to above-mentioned rules. However, one
cannot lose sight of the fact that the Stamp Act being a central
legislation is covered under List I (Union List) of the 7th
Schedule of the Constitution. Rule making power has been
E given to the States under Section 74 and 75 of the Stamp Act
which deals with 'power to make rules relating to sale of
stamps' and 'power to make rules generally to carry out Act'
respectively. The scope of such rule making power of the State
are only upto the extent as provided under the central law i.e.
F Stamp Act.
21. In the case at hand, the Stamp Rules were framed by
the U.P. Government in the year 1942. A perusal of the
statement of object of the said Rules shows that the such Rules
was framed in exercise of the powers conferred by the Stamp
G Act and in pursuance of the powers conferred by the notification
of the Government of India, Finance Department (Central
Reyenues) No. 9/Stamps, dated the 13th November, 1937, and
in supersession of all previous notifications of the Government
of India and the Provincial Government in this behalf.
H Undoubtedly, when these Rules were framed the present
V.V.S. RAMA SHARMA & ORS. v. STATE OF U.P. &1171
ORS. [DR. MUKUNDAKAM SHARMA, J.]
constitutional scheme was not in place. A
22. As mentioned earlier, Under Entry 44 of List Ill, the
power to levy stamp duty on all documents, is concurrent. But
the power to prescribe the rate of such levy is excluded from
Entry 44 of List Ill and is divided between Parliament and the B
State Legislatures. If the instrument falls under the categories
mentioned in Entry 91 of List I, the power to prescribe the rate
will belong to Parliament, and for all other instruments or
documents, the power to prescribe the rate belongs to the State
Legislature under Entry 63 of List II. Therefore, the meaning of C
Entry 44 of List Ill is that excluding the power to prescribe the
rate, the charging provisions of a law relating to stamp duty can
be made both by the Union and the State Legislature, in the
concurrent sphere, subject to Article 254 in case of repugnancy.
So, in the case at hand, it is Entry 91 of List I of the 7th
Schedule which would be applicable and the States do not have D
the power to circumvent a central law.
23. As far as quashing of FIR is concerned, the scope of
power under Section 482 CrPC has been explained in a series
of decisions by this Court. In Nagawwa v. Veeranna E
Shivalingappa Konjalgi, (1976) 3 SCC 736, it was held that
the Magistrate while issuing process against the accused
should satisfy himself as to whether the allegations in the
complaint, if proved, would ultimately end in the conviction of
the accused. It was held that the order of Magistrate issuing F
process against the accused could be quashed under the
following circumstances: (SCC p. 741, para 5)

"(1) Where the allegations made in the complaint or the
statements of the witnesses recorded in support of the
same taken at their face value make out absolutely no case G
against the accused or the complaint does not disclose
the essential, ingredients of an offence which is alleged
against the accused;
(2) Where the allegations made in the complaint are H
1172 SUPREME COURT REPORTS [2009] 5 S.C.R.

A patently absurd and inherently improbable so that no
prudent person can ever reach a conclusion that there is
sufficient ground for proceeding against the accused;

(3) Where the discretion exercised by the Magistrate in
issuing process is capricious and arbitrary having been
B
based either on no evidence or on materials which are
wholly irrelevant or inadmissible; and

(4) Where the complaint suffers from fundamental legal
defects, such as, want of sanction, or absence of a
c complaint by legally competent authority and the like."

24. In State ofHaryana v. Bhajan Lal, 1992 Supp. (1) SCC
335, a question came up for consideration as to whether
quashing of the FIR filed against the respondent Bhajan Lal for
0 the offences under Sections 161 and 165 IPC and Section 5(2)
of the Prevention of Corruption Act was proper and legal.
Reversing the order passed by the High Court, this Court
explained the circumstances under which such power could be
exercised. Apart from reiterating the earlier norms laid down
E by this Court, it was further explained that such power could be
exercised where the allegations made in the FIR or complaint
are so absurd and inherently improbable on the basis of which
no prudent person can ever reach a just conclusion that there
is sufficient ground for proceeding against the accused. It
observed as follows in para 102:
F
"102. In the backdrop of the interpretation of the various
relevant provisions of the Code under Chapter XIV and of
the principles of law enunciated by this Court in a series
of decisions relating to the exercise of the extraordinary
G power under Article 226 or the inherent powers under
Section 482 of the Code which we have extracted and
reproduced above, we give the following categories of
cases by way of illustration wherein such power could be
exercised either to prevent abuse of the process of any
H
V.V.S. RAMA SHARMA & ORS. v. STATE OF U.P. & 1173
ORS. [DR. MUKUNDAKAM SHARMA, J.]
court or otherwise to secure the ends of justice, though it A
may not be possible to lay down any precise, clearly
defined and sufficiently channelised and inflexible
guidelines or rigid formulae and to give an exhaustive list
of myriad kinds of cases wherein such power should be
~~~. 8
I
(1) Where the allegations made in the first information
report or the complaint, even if they are taken at their face
value and accepted in their entirety do not prima facie
constitute any offence or make out a case against the C
accused.

(2) Where the allegations in the first information report and
other materials, if any, accompanying the FIR do not
disclose a cognizable offence, justifying an investigation
by police officers under Section 156(1) of the Code except D
under an order of a Magistrate within the purview of
Section 155(2) of the Code.

(3) Where the uncontrcverted allegations made in the FIR
or complaint and the evidence collected in support of the E
same do not disclose the commission of any offence and
make out a case against the accused.

(4) Where, the allegations in the FIR do not constitute a
cognizable offence but constitute only a non-cognizable
offence, no investigation is permitted by a police officer F
without an order of a Magistrate as contemplated under
Section 155(2) of the Code.

(5) Where the allegations made in the FIR or complaint are
so absurd and inherently improbable on the basis of which G
no prudent person can ever reach a just conclusion that
there is sufficient ground for proceeding against the
accused.
(6) Where there is an express legal bar engrafted in any
H
1174 SUPREME COURT REPORTS (2009) 5 S.C.R.

A of the provisions of the Code or the concerned Act (under
which a criminal proceeding is instituted) to the institution
and continuance of the proceedings and/or where there is
a specific provision in the Code or the concerned Act,
providing efficacious redress for the grievance of the
B aggrieved party.

(7) Where a criminal proceeding is manifestly attended
with mala fide and/or where the proceeding is maliciously
instituted with an ulterior motive for wreaking vengeance
on the accused and with a view to spite him due to private
c and personal grudge."

25. This Court in the case of Indian Oil Corpn. v. NEPC
India Ltd., (2006) 6 SCC 736, at page 747 has observed as
under:
0
"12. The principles relating to exercise of jurisdiction under
Section 482 of the Code of Criminal Procedure to quash
complaints and criminal proceedings have been stated
and reiterated by this Court in several decisions. To
mention a few--Madhavrao Jiwajirao Scindia v.
E
Sambhajirao Chandrojirao Angre, State of Haryana v.
Bhajan Lal, Rupan Deol Bajaj v. Kanwar Pal Singh Gill,
Central Bureau of Investigation v. Duncans Agro
Industries Ltd., State of Bihar v. Rajendra Agrawal/a,
Rajesh Bajaj v. State NCT of Delhi, Medchl Chemicals
F & Pharma (P) Ltd. v. Biological E. Ltd., Hridaya Ranjan
Prasad Verma v. State of Bihar, M. Krishnan v. Vijay
Singh and Zandu Pharmaceutical Worl<'s Ltd. v. Mohd.
Sharaful Haque .. The principles, relevant to our purpose
are:
G
(i) A complaint can be quashed where the allegations
made in the complaint, even if they are taken at their face
value and accepted in their entirety, do not prima facie
constitute any offence or make out the case alleged
H against the accused.
V.V.S. RAMA SHARMA. & ORS. v. STATE
. OF U.P. & 1175
ORS. [DR. MUKUNDAKAM SHARMA, J.]
For thiS purpose, the complaint has to be examined as a A
whole, but without examining the merits of the allegations.
Neither a detailed inquiry nor a meticulous analysis of the
material nor an assessment of the reliability or
genui11eness of the allegations in the complaint, is
warranted while examining prayer for quashing of a B
complaint.

(ii) A complaint may also be quashed where it is a clear
abuse of the process of the court, as when the criminal
proceeding is found to have been initiated with mala tides/ C
malice for wreaking vengeance or to cause harm, or where
the allegations are absurd and inherently improbable.

(iii) The power to quash shall not, however, be used to stifle
or scuttle a legitimate prosecution. The power should be
used sparingly and with abundant caution. D

(iv) The complaint is not required to verbatim reproduce
the legal ingredients of the offence alleged. If the necessary
factual foundation is laid in the complaint, merely on the
ground that a few ingredients have not been stated in detail, E
the proceedings should not be quashed. Quashing of the
complaint is warranted only where the complaint is so
bereft of even the basic facts which are absolutely
necessary for making out the offence.
).

(v) A given set of facts may make out: (a) purely a civil F
wrong; or (b) purely a criminal offence; or (c) a civil wrong
as also a criminal offence. A commercial transaction or a
contractual dispute, apart from furnishing a cause of action
for seeking remedy in civil law, may also involve a criminal
offence. As the nature and scope of a civil proceeding are G
different from a criminal proceeding, the mere fact that the
complaint relates to a commercial transaction or breach
of contract, for which a civil remedy is available or has
been availed, is not by itself a ground to quash the criminal
proceedings. The test is whether the allegations in the H
1176 SUPREME COURT REPORTS [2009] 5 S.C.R.

A complaint disclose a criminal offence or not."

26. This Court has recently in R. Kalyani v. Janak C.
Mehta and Others, (2009) 1 SCC 516, observed as follows: .

"15. Propositions of law which emerge from the said v
B decisions are:

(1) The High Court ordinarily would not exercise its inherent
jurisdiction to quash a criminal proceeding and, in
particular, a First Information Report unless the allegations
c contained therein, even if given face value and taken to be
correct in their entirety, disclosed no cognizable offen~e.

(2) For the said purpose, the Court, save and except in
very exceptional circumstances, would not look to any
D
document relied upon by the defence.
.....
(3) Such a power should be exercised very sparingly. If the
allegations made in the FIR disclose commission of an
offence, the court shall not go beyond the same and pass
an order in favour of the accused to hold absence of any
E mens rea or actus reus.

(4) If the allegation discloses a civil dispute, the same by
itself may not be a ground to hold that the criminal
proceedings should not be allowed to continue.
F 16. It is furthermore well known that no hard and fast rule
can be laid down. Each case has to be considered on its
own merits. The Court, while exercising its inherent
jurisdiction, although would not interfere with a genuine
complaint keeping in view the purport and object for which
G the provisions of Sections 482 and 483 of the Code of
Criminal Procedure had been introduced by Parliament but ...
would not hesitate to exercise its jurisdiction in appropriate
cases. One of the paramount duties of the superior courts
is to see that a person who is apparently innocent is not
H
:r V.V.S. RAMA SHARMA & ORS. v. STATE OF U.P. & 1177
ORS. [DR. MUKUNDAKAM SHARMA, J.]
subjected to persecution and humiliation on the basis of P
a false and wholly untenable complaint."

27. In the case at hand, it has been stated in the FIR that
the Divisional Office of the LIC, Varanasi has not purchased
the Insurance stamps from the Treasury office of U.P. but the E
same was purchased from the Stamp Vendors, outside of State,
which caused loss to the State exchequer to the tune of Rs.
1,67,21,520.00/- to the state government. So, the sole
allegation against the appellants is that they have purchased
the insurance stamps from outside the State of UP. However, C
as we have already noted that the said act of the appellant
cannot be said to be inconsistent with any provisions of the
Stamp Act or any other rules. So, the allegation made in the
FIR even if proved by the prosecution does not constitute any
offence.
[
28. Further, the registration of FIR shows complete non-
application of mind as the said FIR also brings within its ambit
purchase of insurance stamps done within the State of U.P.
There cannot be any dispute with regard to the insurance
stamps which has been duly purchased from the State of U.P. E
itself. As already noted, the State of U.P. has sought to invoke
Section 64 (c) of the Stamp Act to contend that the action of
appellants was ·calculated to deprive the Government of any
duty or penalty', but there is no denial of the fact that appellants
were indeed paying the duties, and by no means 'depriving the ~
government of any duty or penalty'. So, the act of the respondent
is nothing but clear a case of its mala fide intention to harass
the appellants herein. It is wholly immaterial whether appellants
are purchasing the insurance stamps from the State of U.P. or
from any other State. In fact, as mentioned earlier, Rules 115- C
A of the U.P. Stamp Rules itself declares that 'Stamps which
are the property of the central Government'. That being the legal
position, it is legally untenable to contend that the insurance
stamps must be purchased from the State of U. P. only. Further,·
it must be kept in mind that Section 69 of the Stamps Act will
~
i

1178 SUPREME COURT REPORTS [2009] 5 S.C.R.

A also have no application as, admittedly, the appellants are
neither the stamp vendors nor doing any unauthorised sale of
the insurance stamps. Keeping this in mind, the High Court
ought to have quashed the criminal proceedings launched
against the appellants.
B
29. Hence, the decision of the High Court is liable to be
set aside and ·accordingly, we set it aside. The appeal is
accordingly allowed.

N.J. Appeal allowed.