Charges to be clearly specified in the complaint: Supreme Court

In a recent decision [State of NCT of Delhi v. Rajiv Khurana] the Supreme Court has declared that it is mandatory to ensure that the criminal charges to be levelled against the accused are specified within the complaint itself and if this is not ensured that the accused cannot be compelled to face the criminal trial. The Court made a reference to its earlier decisions to state that the law to this regard was well settled and had to be scrupulously observed.

The law to this effect was explained by the Supreme Court in the following terms;

12. In Municipal Corporation of Delhi v. Ram Kishan Rohtagi & Others (1983) 1 SCC 1, the Food Inspector, Municipal Corporation filed a complaint before the Metropolitan Magistrate against the respondents alleging commission of offence under Sections 5/7, Prevention of Food Adulteration Act as the sample of food article (Morton toffees) manufactured by the Company (respondent 5) had been found by the Public Analyst to be not of the prescribed standard. The Inspector alleged in the complaint that the accused/respondents were Manager (respondent 1) and Directors (respondent 2 to 4) of the Company (respondent 5) “and as such they were incharge of and responsible for the conduct of business of accused 2 (the Company) at the time of sampling”. Pursuant to the complaint the proceedings against the respondents were commenced. But the High Court quashed the proceedings against all the respondents under Section 482, Cr.P.C. on the ground that the complaint did not disclose any offence.

13. In State of Haryana v. Brij Lal Mittal & Others (1998) 5 SCC 343, it was held that the vicarious liability of a person for being prosecuted for an offence committed under the Act by a company arises if at the material time he was incharge of and was also responsible to the company for the conduct of its business. Simply because a person is a director of the company it does not necessarily mean that he fulfils both the above requirements so as to make him liable. Conversely, without being a director a person can be incharge of and responsible to the company for the conduct of its business. From the complaint in question we, however, find that except a bald statement that the respondents were directors of the manufacturers, there is no other allegation to indicate, even prima facie, that they were incharge of the company and also responsible to the company for the conduct of its business.

14. K.P.G. Nair v. Jindal Menthol India Ltd. (2001) 10 SCC 218 was a case of this court under the Negotiable Instruments Act, 1881 and it was found that the allegations in the complaint did not either in express words or with reference to the allegations contained therein make out a case that at the time of commission of the offence the appellant was in charge of and was responsible to the company for the conduct of its business. It was held that the requirements of Section 141 of the Negotiable Instruments Act, 1881 were not met and the complaint against the accused was quashed. The same view has been taken in Katta Sujatha (Smt.) v. Fertilizers & Chemicals Travancore Ltd. & Another (2002) 7 SCC 655. 

15. The respondent placed reliance on the case of S.M.S.  Pharmaceuticals Ltd. (supra), wherein this Court has held as under:

“19. In view of the above discussion, our answers to the questions posed in the reference are as under:

(a) It is necessary to specifically aver in a complaint under Section 141 that at the time the offence was committed, the person accused was in charge of, and responsible for the conduct of business of the company. This averment is an essential requirement of Section 141 and has to be made in a complaint. Without this averment being made in a complaint, the requirements of Section 141 cannot be said to be satisfied.

(b) The answer to the question posed in subpara (b) has to be in the negative. Merely being a director of a company is not sufficient to make the person liable under Section 141 of the Act. A director in a company cannot be deemed to be in charge of and responsible to the company for the conduct of its business. The requirement of Section 141 is that the person sought to be made liable should be in charge of and responsible for the conduct of the business of the company at the relevant time. This has to be averred as a fact as there is no deemed liability of a director in such cases.

(c) The answer to Question (c) has to be in the affirmative. The question notes that the managing director or joint managing director would be admittedly in charge of the company and responsible to the company for the conduct of its business. When that is so, holders of such positions  in a company become liable under Section 141 of the Act. By virtue of the office they hold as managing director or joint managing director, these persons are in charge of and responsible for the conduct of business of the company. Therefore, they get covered under Section 141. So far as the signatory of a cheque which is dishonoured is concerned, he is clearly responsible for the incriminating act and will be covered under subsection (2) of Section 141.”

16. In Sabitha Ramamurthy and Another v. R.B.S. Channabasavaradhya (2006) 10 SCC 581 this court held there was absence of requisite averments in the complaint not containing any statement that the appellants were in charge of the business of the company at the material time. The statement of witness also did not specifically allege that the appellants were in charge of the business of the company. This Court held that requirement of section 141 of the Negotiable Instruments Act was not complied with and the complaint was liable to be quashed.

17. In K.K. Ahuja v. V.K. Vora and Another (2009) 10 SCC 48, this court observed that the averment in a complaint that an accused is a director and that he is in charge of and is responsible to the company for the conduct of the business of the company, duly affirmed in the sworn statement, may be sufficient for the purpose of issuing summons to him. But if the accused is not one of the persons who falls under the category of 'persons who are responsible to the company for the conduct of the business of the company', then merely by stating that 'he was in charge of the business of the company' or by stating that 'he was in charge of the day to day management of the company' or by stating that he was in charge of, and was responsible to the company for the conduct of the business of the company', he cannot be made vicariously liable under Section 141(1) of the Act. 

18. The ratio of all these cases is that the complainant is required to state in the complaint how a Director who is sought to be made an accused, was in charge of the business of the company or responsible for the conduct of company’s business. Every Director need not be and is not in charge of the business of the company. If that is the position with regard to a Director, it is needless to emphasise that in the case of non-Director officers, there is all the more necessary to state what were his duties and responsibilities in the conduct of business of the company and how and in what manner he is responsible or liable.

19. In K.K. Ahuja’s case (supra) the court summarized the position under section 141 of the Act as under:- 

(i) If the accused is the Managing Director or a Joint Managing Director, it is not necessary to make an averment in the complaint that he is in charge of, and is responsible to the company, for the conduct of the business of the company. It is sufficient if an averment is made that the accused was the Managing Director or Joint Managing Director at the relevant time. This is because the prefix “Managing” to the word “Director” makes it clear that they were in charge of and are responsible to the company, for the conduct of the business of the company.

(ii) In the case of a Director or an officer of the company who signed the cheque on behalf of the company, there is no need to make a specific averment that he was in charge of and was responsible to the company, for the conduct of the business of the company or make any specific allegation about consent, connivance or negligence. The very fact that the dishonoured cheque was signed by him on behalf of the company, would give rise to responsibility under sub-section (2) of Section 141.

(iii) In the case of a Director, secretary or manager [as defined in Section 2(24) of the Companies Act] or a person referred to in clauses (e) and (f) of Section 5 of the Companies Act, an averment in the complaint that he was in charge of, and was responsible to the company, for the conduct of the business of the company is necessary to bring the case under Section 141(1) of the Act. No further averment would be necessary in the complaint, though some particulars will be desirable. They can also be made liable under Section 141(2) by making necessary averments relating to consent and connivance or negligence, in the complaint, to bring the matter under that subsection. 

(iv) Other officers of a company cannot be made liable under sub-section (1) of Section 141. Other officers of a company can be made liable only under sub-section (2) of Section 141, by averring in the complaint their position and duties in the company and their role in regard to the issue and dishonour of the cheque, disclosing consent, connivance or negligence.

20. The court further observed that the trauma, harassment and hardship of the criminal proceedings in such cases may be more serious than the ultimate punishment, it is not proper to subject all and sundry to be impleaded as accused in a complaint against a company, even when the requirements of section 138 read with section 141 of the Act are not fulfilled. 

21. The legal position which emerges from a series of judgments is clear and consistent that it is imperative to specifically aver in the complaint that the accused was in charge of and was responsible for the conduct of business of the company. Unless clear averments are specifically incorporated in the complaint, the respondent cannot be compelled to face the rigmarole of a criminal trial.

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Inherent power to extend time: Supreme Court

In a recent decision [D.V. Paul v.Manisha Lalwani] the Supreme Court has declared that it is inherent power of a court to extend time for ensuring performance of an act. Referring to Section 148 of the Code of Civil Procedure (which regulates the procedure of civil courts) the Supreme Court observed that the civil courts have the discretion to extend time to allow compliance. The Bench inter alia observed as under;

16. In so far as the first aspect is concerned Section 148 of the CPC, in our opinion, clearly reserves in favour of the Court the power to enlarge the time required for doing an act prescribed or allowed by the Code of Civil Procedure. Section 148 of the Code may at this stage be extracted:- 

“148. Enlargement of time. Where any period is fixed or granted by the Court for the doing of any act prescribed or allowed by this Code, the Court may, in its discretion, from time to time, enlarge such period not exceeding thirty days in total, even though the period originally fixed or granted may have expired.” 

17. A plain reading of the above would show that when any  period or time is granted by the Court for doing any act, the Court has the discretion from time to time to enlarge such period even if the time originally fixed or granted by the Court has expired. It is evident from the language employed in the provision that the power given to the Court is discretionary and intended to be exercised only to meet the ends of justice. Several decisions of this Court have explained the ambit and scope of the powers exercisable under Section 148 of the CPC. In Mahanth Ram Das v. Ganga Das, 1961 (3) SCR 763, this Court observed:

“Section 148 of the Code, in terms, allows extension of time, even if the original period fixed has expired, and Section 149 is equally liberal. A fortiori, those sections could be invoked by the applicant, when the time had not actually expired. That the application was filed in the vacation when a Division Bench was not sitting should have been considered in dealing with it even on 13.7.1954, when it was actually heard. The order, though passed after the expiry of the time fixed by the original judgment, would have operated from 8.7.1954. How undesirable it is to fix time peremptorily for a future happening which leaves the Court powerless to deal with events that might arise in between, it is not necessary to decide in this appeal. These orders turn out, often enough to be inexpedient. Such procedural orders, though peremptory (conditional decrees apart) are in essence, in terrorem, so that dilatory litigants might put themselves in order and avoid delay. They do not, however, completely estop a Court from taking note of events and circumstances which happen within the time fixed. For example, it cannot be said that, if the appellant had started with the full money ordered to be paid and came well in time but set upon and robbed by thieves the day previous, he could not ask for extension of time, or that the Court was powerless to extend it. Such orders are not like the law of the Medes and the Persians. Cases are known in which Courts have moulded their practice to meet a situation such as this and to have restored a suit or proceeding, even though a final order had been passed.”

18. To the same effect is the decision of this Court in Chinnamarkathian v. Ayyavoo, 1982 (1) SCC 159, where this Court declared that the scope and exercise of the jurisdiction to grant time to do a thing, in the absence of a specific provision to the contrary curtailing, denying or withholding such jurisdiction, the jurisdiction to grant time would inhere in its ambit the jurisdiction to extend time initially fixed by it. The Court also called in the principle of equity when circumstances are to be taken into account for fixing a length of time within which a certain action is to be taken, the Court retains itself the jurisdiction to re-examine the alteration or modification which may necessitate extension of time. The following passage from the decision is apposite: 

“It is well accepted principle statutorily recognized in Section 148 of the Code of Civil Procedure that where a period is fixed or granted by the Court for doing any act prescribed or allowed by the Code, the Court may in its discretion from time to time enlarge such period even though the period originally fixed or granted may expire. If a Court in exercise of the jurisdiction can grant time to do a thing, in the absence of a specific provision to the contrary curtailing, denying or withholding such jurisdiction, the jurisdiction to grant time would inhere in its ambit the jurisdiction to extend time initially fixed by it. Passing a composite order would be acting in disregard of the jurisdiction in that while granting time simultaneously the Court denies to itself the jurisdiction to extend time. The principle of equity is that when some circumstances are to be taken into account for fixing a length of time within which a certain action is to be taken, the Court retains to itself the jurisdiction to reexamine the alteration or modification of circumstances which may necessitate extension of time. If the Court by its own act denies itself the jurisdiction to do so, it would be denying to itself the jurisdiction which in the absence of a negative provision, it undoubtedly enjoys.” 

19. Reference may also be made to the decisions of this Court in Jogdhayan v. Babu Ram, 1983 (1) SCC 26, Johri Singh v. Sukh Pal Singh, 1989 (4) SCC 403 and Ganesh Prasad Sah Kesari v. Lakshmi Narayan Gupta, 1985 (3) SCC 53.

20. In Salem Advocate Bar Association, T.N. v. Union of India, 2005 (6) SCC 344, this Court had an occasion to examine whether the restriction placed by the amendment of Section 148 on the power of the Court to grant extension of time beyond 30 days was reasonable. This Court held that a power that is inherent in the Court to pass orders that it considers necessary for meeting the ends of justice and preventing abuse of the process of the Court cannot be taken away by putting an upper limit on the period for which an extension can be granted. Extension beyond the maximum period of 30 days was accordingly held permissible in the following words: 

“The amendment made in Section 148 affects the power of the Court to enlarge time that may have been fixed or granted by the Court for the doing of any act prescribed or allowed by the Code. The amendment provides that the period shall not exceed 30 days in total. Before amendment, there was no such restriction of time. Whether the Court has no inherent power to extend the time beyond 30 days is the question. We have no doubt that the upper limit fixed in Section 148 cannot take away the inherent power of the Court to pass orders as may be necessary for the ends of justice or to prevent abuse of process of the Court. The rigid operation of the section would lead to absurdity. Section 151 has, therefore, to be allowed to operate fully. Extension beyond maximum of 30 days, thus, can be permitted if the act could not be performed within 30 days for reasons beyond the control of the party. We are not dealing with a case wheretime for doing an act has been prescribed under the provisions of the Limitation Act which cannot be extended either under Section 148 or Section 151. We are dealing with a case where the time is fixed or granted by the court for performance of an act prescribed or allowed by the court.”

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What is an 'appeal'? Supreme Court explains

The right to challenge the legality or validity of an order passed by a court or a tribunal before a higher forum is traditionally understood to be an appeal.  Under common law appeal is a right conferred by a statute and does not exist unless so provided. Once provided, appeal is a matter of right (as compared to a petition) to the appellant so long as the relief claimed is within the four corners of the appellate provision. In a recent decision [James Joseph v. State of Kerala] the Supreme Court has culled out the the principles relating to appeals and explained them broadly in six bullets.

The Bench inter alia explained as under;

16. We may therefore formulate the following principles with reference to appeals :

(i) An appeal is a proceeding where an higher forum reconsiders the decision of a lower forum, on questions of fact and questions of law, with jurisdiction to confirm, reverse, modify the decision or remand the matter to the lower forum for fresh decision in terms of its directions.

(ii) The appellate jurisdiction can be limited or regulated by the legislature and its extent has to be decided with reference to the language employed by the statute conferring the appellate jurisdiction. 

(iii) The width of jurisdiction or the limitations on jurisdiction with reference to an appeal, does not depend on whether the appeal is a first appeal or a second appeal, but depends upon the limitations, if any, placed by the statute conferring the right of appeal.

(iv) If the Legislature’s intention is to limit the jurisdiction in an appeal, it may indicate such limits in the provision providing for appeal. Alternatively, it may expressly or impliedly incorporate the provisions of section 100 of the Code, into the provision for appeals.

(v) Generally statutory provisions for appeals against original orders or decrees (that is, first appeals) will not have any limitations and therefore rehearing on both law and fact is contemplated; and statutory provisions for appeals against appellate orders (that is, second appeals) will be restricted to questions of law. But such restriction is not on account of any legal principle that all second appeals should always be with reference to questions of law, but would depend upon the wording of the statute placing the restrictions upon the scope of second appeal.

(vi) Where the statute does not place any limitations or restrictions in regard to the scope and width of the appeal, it shall be construed that the appeal provides a right of rehearing on law as well as facts. If the Legislature enacts a self contained provision for second appeals, without any limitation upon the scope of the second appeal and excludes the possibility of reading the provision of section 100 of the Code, into such provision, then, it will not be permissible to read the limitations of section 100 of the Code into the special provision.

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Railway to pay compensation for fall of passenger: Supreme Court

In a recent decision [Jameela v. Union of India] the Supreme Court has declared that it is not permissible for the Railways to deny compensation to the kin of those passenger who have fallen from the train. It was argued by the Department that the passenger was negligent in standing at the gate of the rail compartment in a moving train and thus there was no liability to pay compensation. The Bench, however, declared otherwise. Holding that it was not uncommon for the passenger to stand on the gates, the Supreme Court declared that unless there was intent to commit a criminal act, the liability to pay compensation could not be denied.

The Supreme Court inter alia observed as under;

5. We are of the considered view that the High Court gravely erred in holding that the applicants were not entitled to any compensation under section 124A of the Act, because the deceased had died by falling down from the train because of his own negligence. First, the case of the Railway that the deceased M. Hafeez was standing at the open door of the train compartment in a negligent manner from where he fell down is entirely based on speculation. There is admittedly no eyewitness of the fall of the deceased from the train and, therefore, there is absolutely no evidence to support the case of the Railway that the accident took place in the manner suggested by it. Secondly, even if it were to be assumed that the deceased  fell from the train to his death due to his own negligence it will not have any effect on the compensation payable under section 124 A of the Act.

6. Chapter XIII of the Railways Act, 1989 deals with the Liability of Railway Administration for Death and Injury to Passengers due to Accidents. Section 123, the first section of the Chapter, has the definition clauses. Clause (c) defines “untoward incident” which insofar as relevant for the present is as under:

“123 (c) untoward incident means-
(1) (i) xxxxxxxx
(ii) xxxxxxxx
(iii) xxxxxxxx
(2) the accidental falling of any passenger from a train carrying passengers.”

Section 124A of the Act provides as follows: 

“124A. Compensation on account of untoward incident. - When in the course of working a railway an untoward incident occurs, then whether or not there has been any wrongful act, neglect or default on the part of the railway administration such as would entitle a passenger who has been injured or the dependant of a passenger who has been killed to maintain an action and recover damages in respect thereof, the railway administration shall, notwithstanding anything contained in any other law, be liable to pay compensation to such extent as may be prescribed and to that extent only for loss occasioned by the death of, or injury to, a passenger as a result of such untoward incident: 

Provided that no compensation shall be payable under this section by the railway administration if the passenger dies or suffers injury due to -
(a) suicide or attempted suicide by him;
(b) self-inflicted injury;
(c) his own criminal act;
(d) any act committed by him in a state of intoxication or insanity;
(e) any natural cause or disease or medical or surgical treatment unless such treatment becomes necessary due to injury caused by the said untoward incident.
Explanation - For the purposes of this section, "passenger" includes -
(i) a railway servant on duty; and
(ii) a person who has purchased a valid ticket for travelling by a train carrying passengers, on any date or a valid platform ticket and becomes a victim of an untoward incident.” 

7. It is not denied by the Railway that M. Hafeez fell down from the train and died while travelling on it on a valid ticket. He was, therefore, clearly a “passenger” for the purpose of section 124A as clarified by the Explanation. It is now to be seen, that under section 124A the liability to pay compensation is regardless of any wrongful act, neglect or default on the part of the railway administration. But the proviso to the section says that the railway administration would have no liability to pay any compensation in case death of the passenger or injury to him was caused due to any of the reasons enumerated in clauses (a) to (e). 

8. Coming back to the case in hand, it is not the case of the Railway that the death of M. Hafeez was a case of suicide or a result of self-inflicted injury. It is also not the case that he died due to his own criminal act or he was in a state of intoxication or he was insane, or he died due to any natural cause or disease. His falling down from the train was, thus, clearly accidental.

9. The manner in which the accident is sought to be reconstructed by the Railway, the deceased was standing at the open door of the train compartment from where he fell down, is called by the railway itself as negligence. Now negligence of this kind which is not very uncommon on Indian trains is not the same thing as a criminal act mentioned in clause (c) to the proviso to section 124 A. A criminal act envisaged under clause (c) must have an element of malicious intent or mens rea. Standing at the open doors of the compartment of a running train may be a negligent act, even a rash act but, without anything else, it is certainly not a criminal act. Thus, the case of the railway must fail even after assuming everything in its favour.

10. We are, therefore, constrained to interfere in the matter. The judgment and order of the High Court coming under appeal is set aside and the judgment and order of the Tribunal is restored. Since a period of more than 10 years has already elapsed from the date of the judgment of the Tribunal, the compensation money along with interest need not be kept in fixed deposits, but should be paid to the appellants in the ratio fixed by the Tribunal. The payment must be made within 2 months from today. 

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If not denied, accepted: High Court

In a recently reported decision [Asha Kapoor v. Hari Om Sharda (2010) 171 DLT 743] the Delhi High Court has explained the underlying rule in civil litigation that averments made by one party unless specifically refuted would be deemed to be accepted. The principle which is now firmly embedded in as much as determination of civil suits, in terms of Order 8 of the Code of Civil Procedure, was explained by the High Court to be one of seminal importance. 

The Bench inter alia observed as under;

15. Thus, as per written statement of petitioner it is apparent that, she has nowhere specifically denied that she has not acquired vacant and physical possession of premises no. C-91, IIIrd Floor, West, Gorakh Park Ext. Shahadra, Delhi. 16. Order VIII Rule 3, 4 and 5 of the Code of Civil Procedure (for short as 'Code') read as under;

“3. Denial to be specific.- It shall not be sufficient for a defendant in his written statement to deny generally the ground alleged by the plaintiff, but the defendant must deal specifically with each allegation of fact of which he does not admit the truth, except damages. 

4. Evasive denial- Where a defendant denies an allegation of fact in the plaint, he must not do so evasively, but answer the point of substance. Thus, if it is alleged that he received a certain sum of money, it shall not be sufficient to deny that he received that particular amount, but he must deny that he received that sum or any part thereof, or else set out how much he received. And if an allegation is made with diverse circumstances, it shall not be sufficient to deny it along with those circumstances. 

5. Specific denial-[(1)] Every allegation of fact in the plaint, if not denied specifically or by necessary implication, or stated to be not admitted in the pleading of the defendant, shall be taken to be admitted except as against a person under disability; Provided that the Court may in its discretion require any fact so admitted to be proved otherwise than by such admission. (2) Where the defendant has not filed a pleading, it shall be lawful for the Court to pronounce judgment on the basis of the fact contained in the plaint, except as against a person under a disability, but the Court may, in its discretion, require any such fact to be proved. (3) In exercising its discretion under the proviso to sub-rule (1) or under sub-rule (2), the Court shall have due regard to the fact whether the defendant could have, or has, engaged a pleader. (4) Whenever a judgment is pronounced under this rule, a decree shall be drawn up in accordance with such judgment and such decree shall bear the date on which the judgment was pronounced.]”

17. The effect of Order 8 Rule 3 read along with rr 4 and 5 of the Code is that, defendant is bound to deal specifically with each allegation of fact not admitted by him; he must either deny or state definitely that the substance of each allegation is not admitted. The main allegations which form the foundation of the suit should be dealt with in that way and expressly denied. Facts not specifically dealt with will be taken to be admitted under Order 8 Rule 5 of the Code. 

18. Order 8 Rule 5 of the Code is known as doctrine of non-traverse which means that where a material averment is passed over without specific denial, it is taken to be admitted. The rule says that any allegation of fact must either be denied specifically or by necessary implication or there should be a statement that the fact is not admitted. If the plea is not taken in that manner, then the allegation should taken to be admitted. 

19. Supreme Court in M. Venkataraman Hebbar (D) By L.RS. Vs. M. Rajgopal Hebbar & Ors. 2007 (5) SCALE 598, observed;

“Thus, if a plea which was relevant for the purpose of maintaining a suit had not been specifically traversed, the Court was entitled to draw an inference that the same had been admitted. A fact admitted in terms of Section 58 of the Evidence Act need not be proved.”

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