Integrated Finance Company Limited v. P.G. Thomas; and Integrated Finance Company Limited v. T.V. George, and State of Kerala

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT** **THE HONOURABLE MR.JUSTICE N.NAGARESH** **TUESDAY, THE 12[TH] DAY OF SEPTEMBER 2023/21ST BHADRA, 1945** **CRL.REV.PET NO. 1660 OF 2018** **AGAINST THE ORDER/JUDGMENT DATED 08.11.2018 IN CMP NO.7262/2018 IN CC 197/2006 OF JUDICIAL FIRST CLASS MAGISTRATE - I, ALAPPUZHA** ## **REVISION PETITIONERS/PETITIONERS/ACCUSED 1 TO 5:** - **1 INTEGRATED FINANCE COMPANY LIMITED, VAIRAMS 112, THYAGARAJA ROAD, T NAGAR, CHENNAI.** - **2 GEORGE KURUVILLA, MANAGING DIRECTOR, INTEGRATED FINANCE COMPANY LIMITED, VAIRAMS 112, THYAGARAJA ROAD, T NAGAR, CHENNAI.** - **3 P.B. APPIAH, DIRECTOR, INTEGRATED FINANCE COMPANY LIMITED, VAIRAMS 112, THYAGARAJA ROAD, T NAGAR, CHENNAI.** - **4 D.G. NAYAR, DIRECTOR, INTEGRATED FINANCE COMPANY LIMITED, VAIRAMS 112, THYAGARAJA ROAD, T NAGAR, CHENNAI.** - **5 K.J. SAMUEL, BRANCH MANAGER AND DEPOSIT CONSULTANT, INTEGRATED FINANCE COMPANY LIMITED, NACHUNGAL BUILDING, NORTH OF IRON BRIDGE, ALAPPUZHA.** **BY ADVS. R.BINDU (SASTHAMANGALAM) SRI.M.SUNILKUMAR SRI.PRASANTH M.P** Crl.R.P. Nos.1660 & 1665 of 2018 : 2 : ## **RESPONDENTS/RESPONDENT/DEFACTO COMPLAINANT AND STATE:** - **1 P.G.THOMAS, S/O. LATE P.T. THOMAS, PUTHENPURAYIL POWER HOUSE WARD, ALAPPUZHA 688 001.** - **2 STATE OF KERALA, REPRESENTED BY THE PUBLIC PROSECUTOR, HIGH COURT OF KERALA, ERNAKULAM, KOCHI 682 031.** **BY ADVS. SRI.M.P.PRASANTH, PUBLIC PROSECUTOR SRI.B.PRAMOD** **THIS CRIMINAL REVISION PETITION HAVING COME UP FOR ADMISSION ON 12.09.2023, ALONG WITH CRL.REV.PET.1665/2018, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:** Crl.R.P. Nos.1660 & 1665 of 2018 : 3 : # **IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT** **THE HONOURABLE MR.JUSTICE N.NAGARESH** **TUESDAY, THE 12[TH] DAY OF SEPTEMBER 2023/21ST BHADRA, 1945** **CRL.REV.PET NO. 1665 OF 2018 AGAINST THE ORDER/JUDGMENT DATED 08.11.2018 IN CMP NO.7261/2018 IN CC 230/2006 OF JUDICIAL MAGISTRATE OF FIRST CLASS -I, ALAPPUZHA** ## **REVISION PETITIONERS/PETITIONERS/ACCUSED 1 TO 5:** - **1 INTEGRATED FINANCE COMPANY LIMITED, VAIRAMS 112, THYAGARAJA ROAD, T NAGAR, CHENNAI.** - **2 GEORGE KURUVILA, MANAGING DIRECTOR, INTEGRATED FINANCE COMPANY LIMITED, VAIRAMS 112, THYAGARAJA ROAD, T NAGAR, CHENNAI.** - **3 P.B APPIAH, DIRECTOR, INTEGRATED FINANCE COMPANY LIMITED, VAIRAMS 112, THYARAJA ROAD, T NAGAR, CHENNAI.** - **4 D.G NAYAR, DIRECTOR, INTEGRATED FINANCE COMPANY LIMITED, VAIRAMS 112, THYAGARAJA ROAD, T NAGAR, CHENNAI.** - **5 K.J SAMUEL, BRANCH MANAGER AND DEPOSIT CONSULTANT, INTEGRATED FINANCE COMPANY LIMITED, NACHUNGAL BUILDING, NORTH IRON BRIDGE, ALAPPUZHA.** **BY ADVS. R.BINDU (SASTHAMANGALAM) SRI.M.SUNILKUMAR SRI.PRASANTH M.P** Crl.R.P. Nos.1660 & 1665 of 2018 : 4 : ## **RESPONDENTS/RESPONDENT/DEFACTO COMPLAINANT AND STATE:** **1 T.V.GEORGE, AGED 79 YEARS, S/O. THOMAS VARGHESE, THUNDATHIL HOUSE, AVALOOKUNNU (P.O), ALAPPUZHA, PIN 688 006.** **2 STATE OF KERALA, REPRESENTED BY THE PUBLIC PROSECUTOR, HIGH COURT OF KERALA, ERNAKULAM, KOCHI 682 031.** **BY ADVS. SRI.B.PRAMOD** **SRI.C.S.HRITHWIK, SENIOR PUBLIC PROSECUTOR** **THIS CRIMINAL REVISION PETITION HAVING COME UP FOR ADMISSION ON 12.09.2023, ALONG WITH CRL.REV.PET.1660/2018, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:** Crl.R.P. Nos.1660 & 1665 of 2018 : 5 : ## **N. NAGARESH, J.** ````````````````````````````````````````````````````````````` Crl. R.P. Nos.1660 and 1665 of 2018 ````````````````````````````````````````````````````````````` _Dated this the 12[th] day of September, 2023_ ## **O R D E R** ~ ~ ~ ~ ~ ~ These Criminal Revision Petitions are filed by accused Nos.1 to 5 in CC Nos.197/2006 and 230/2006 on the files of the Court of the Judicial First Class Magistrate's Court-I, Alappuzha. 2. The 1[st] petitioner in the Crl.R.P. is an incorporated Finance Company. The 2[nd] petitioner is the Managing Director and petitioners 3 and 4 are Directors. The 5[th] petitioner is the Branch Manager and Deposit Consultant. 3. The respondents/complainants alleged that the 1[st] petitioner-Company was accepting deposits from the public offering higher rate of interest. The petitioners represented that they are accepting deposits strictly in accordance with Crl.R.P. Nos.1660 & 1665 of 2018 : 6 : the supervision and control of the Reserve Bank of India. Believing the petitioners, the complainant in Crl.R.P. No.1660/2018 deposited ₹3 lakhs and the complainant in Crl.R.P. No.1665/2018 deposited ₹2 lakhs. The deposits were made from August, 2002 to April, 2005. The petitioners paid interest only upto April, 2005. The complainants came to know that the RBI has prohibited the Company from accepting any deposits. The complainants alleged that the petitioners have cheated them and had dishonestly and fraudulently induced them to part with the money by making false representations. 4. The petitioners state that even going by the allegations in the complaint, an offence punishable under Section 420 of the Indian Penal Code was not made out against the revision petitioners. The revision petitioners in order to meet the capital requirements of the Company, issued bonds which were not prohibited by the RBI. The bond certificates were issued to the complainants. Crl.R.P. Nos.1660 & 1665 of 2018 : 7 : 5. After the evidence of the complainants, the accused filed CMPs seeking discharge under Section 245 Cr.P.C. stating that there was no deception as alleged in the complaint. The petitioners further stated that issuance of bond certificates will not amount to acceptance of deposits as alleged. The petitioners contended that the court below has failed to consider the question of law urged by the revision petitioners and dismissed the application for discharge filed by the petitioners holding that the court need not delve into the question whether Exts.P1 to P3 were bonds or deposits at this stage. Aggrieved by the orders rejecting discharge petitions, the petitioners are before this Court. 6. The counsel for the petitioners argued that no charge can be framed against petitioners 2 to 4, who are Directors of the Company. They do not have any vicarious liability. This Court in the judgment in _**Govind M.S. and others v. State of Kerala and others** [2020 (1) KLT 228]_ has held that when Company is the offender, vicarious Crl.R.P. Nos.1660 & 1665 of 2018 : 8 : liability of Directors cannot be imputed automatically, in the absence of any statutory provision to that effect. 7. In the judgment in _**Ashok Kumaran @ Sabu C. v. State of Kerala** [2023 (4) KHC 545]_ , this Court held that it is the cardinal principle of criminal jurisprudence that there is no vicarious liability unless statute specifically provides so. A corporate entity is an artificial person which acts through its officers, Directors, Managing Director, Chairman, etc. If such a Company commits an offence involving mens rea, it would normally be the intent and action of that individual who would act on behalf of the Company. 8. The learned counsel for the petitioners further relied on the judgment of the Apex Court in _**Susheel Sethi and another v. State of Arunachal Pradesh and others** [(2020) 3 SCC 240]_ to urge that in the absence of specific allegations and averments in complaint that accused had fraudulent or dishonest intention at the time of entering into the contract, it cannot be said that even a _prima facie_ case for offence under Section 420 IPC is made out. In the case Crl.R.P. Nos.1660 & 1665 of 2018 : 9 : of the petitioners, admittedly, against the amount paid by the complainants, they were receiving interest as agreed. It is only after a prohibitory order of the Reserve Bank of India that the Company stopped payment of interest. Therefore, mens rea cannot be imputed on the petitioners. At any rate, the Directors of the Company cannot be held criminally liable. 9. Counsel entered appearance on behalf of respondents 1 and 2 and resisted the Criminal Revision Petitions. The counsel for the respondents submitted that in the complaint, the complainants have specifically made allegations against the petitioners, which allegation would constitute offence under Section 420. At any rate, whether the allegation/charge is groundless, that alone need to be considered at the stage of a discharge application. No detailed evaluation of materials or possible defences needs to be undertaken. 10. I have heard the learned counsel for the petitioners and the learned counsel representing the Crl.R.P. Nos.1660 & 1665 of 2018 : 10 : contesting respondents. I have also heard the learned Public Prosecutor representing the State. 11. At the outset, it must be stated that the petition for discharge filed by the petitioners does not contain an argument that the Directors of a Company cannot be proceeded against for the offences committed by the Company. The counsel for the respondents made available a notification of the Reserve Bank of India dated 18.01.2005 published in newspapers, wherein it has been notified for the information of the public that the Reserve Bank of India, in exercise of powers conferred on it under Section 45MB(1) of the Reserve Bank of India Act, 1934, has prohibited the Company from accepting deposits from any person, in any form whether by way of fresh deposits or renewal of the existing deposits or otherwise, until further orders. As regards the complainant in Crl.R.P. No.1660/2018, it is alleged that the petitioners have accepted money from the complainants after the notification dated 18.01.2005. Crl.R.P. Nos.1660 & 1665 of 2018 : 11 : 12. In the complaints filed by the respondents, the complainants have specifically stated that in addition to various factors, from the conduct and behaviour of the accused, the complainants realised that they have dishonestly misappropriated, fraudulently converted and misapplied the money entrusted to the accused persons by the complainants for their own use. 13. When the complainants have so made specific allegation against the Managing Director and Directors also, the court below could not have marshalled the evidence and conducted a mini trial for discharging the petitioners in a proceedings for discharge. At the stage of discharge, a trial court is expected only to assess whether the materials available before the court are sufficient to disclose commission of any offence. The court is not expected to assess whether the accused have committed the offence, at the stage of discharge. In that view of the matter, I do not find any reason to interfere with the orders impugned by the petitioners in Crl.R.P. Nos.1660 & 1665 of 2018 : 12 : these Criminal Revision Petitions. The Criminal Revision Petitions are therefore dismissed. Sd/- **N. NAGARESH, JUDGE** aks/11.09.2023 Crl.R.P. Nos.1660 & 1665 of 2018 : 13 : ## **APPENDIX OF CRL.REV.PET 1660/2018** ## **REVISION PETITIONERS' ANNEXURE** **ANNEXURE 1** **TRUE COPY OF THE ABOVE COMPLAINT IN C.C. NO. 197/2005 DATED 10.10.2005 ON THE FILES OF THE JFCM COURT-1, ALAPPUZHA** Crl.R.P. Nos.1660 & 1665 of 2018 : 14 : ## **APPENDIX OF CRL.REV.PET 1665/2018** ## **REVIEW PETITIONERS' ANNEXURE** **ANNEXURE - 1** **TRUE COPY OF THE ORDER PASSED BY THE JUDICIAL FIRST CLASS MAGISTRATE – I, ALAPPUZHA IN CMP NO.7261/2018 IN C.C NO. 230/2006 DATED 08.11.2018.**