Kanagendran (President, M/S Conybio Health Care (India) Pvt Ltd) v State of Kerala represented by Public Prosecutor and George Umman

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT: THE HONOURABLE MR. JUSTICE RAJA VIJAYARAGHAVAN V THURSDAY, THE 14TH DAY OF JANUARY 2016/24TH POUSHA, 1937 Crl.MC.No. 2743 of 2013 --------------------------CC 1149/2011 of JUDICIAL MAGISTRATE OF FIRST CLASS-I, ALUVA PETITIONER/ACCUSED: ------------------------------------------ KANAGENDRAN PRESIDENT, M/S CONYBIO HEALTH CARE (INDIA) PVT LTD CONYBIO HOUSE, 69 JAWAHARLAL NEHRU SALAI (100 FEET ROAD) EKKADUTHANGAL, CHENNAI BY ADVS.SRI.S.RAJEEV SRI.K.K.DHEERENDRAKRISHNAN RESPONDENTS/ STATE/ COMPLAINANT: -------------------------------------------------------------------- 1. STATE OF KERALA REPRESENTED BY THE PUBLIC PROSECUTOR HIGH COURT OF KERALA ERNAKULAM 682031 (CRIME NO 2224/2008 OF ALUVA POLICE STATION ERNAKULAM DISTRICT) 2. GEORGE UMMAN,, AGED 57 YEARS S/O A.G. UMMEN, ANJILIVEL, KOLLAM 691004 R2 BY ADV. SRI.G.HARIHARAN R2 BY ADV. SRI.PRAVEEN.H. BY PUBLIC PROSECUTOR SMT. MADHUBEN THIS CRIMINAL MISC. CASE HAVING BEEN FINALLY HEARD ON 14-012016, THE COURT ON THE SAME DAY PASSED THE FOLLOWING: Crl.MC.No. 2743 of 2013 () --------------------------- ## APPENDIX ANNEXURES ----------------------------- ANNEXURE I - COPY OF THE FIR IN CRIME NO 2224/2008 OF ALUVA POLICE STATION ANNEXURE II - COPY OF THE REFER REPORT IN CRIME NO 2224/2008 OF ALUVA POLICE STATION ANNEXURE III - COPY OF THE PROTEST COMPLAINANT FILED BY THE 2ND RESPODENT DATED 07-08-2010 ANNEXURE IV - COPY OF THE ORDER PASSED BY THE JUDICIAL MAGISTRATE OF FIRST CLASS I ALUVA, ON 01-06-2013 //True Copy// P.S To Judge ## **RAJA VIJAYARAGHAVAN.V., J** - - - - - - - - - - - - - - - - - - - - Crl.M.C.2743 of 2013 - - - - - - - - - - - - - - - - Dated 14[th] January, 2016 - - - - - - - - - - - - - - - - - - - - - - - - ## **ORDER** - 1.In this petition, filed u/s 482 of the Code of Criminal Procedure (for brevity “the Code”), the petitioner, who is the President of the 1[st] accused Company in Annexure-III complaint, seeks to quash all further proceedings in C.C.No.1149 of 2011 on the file of the Judicial Magistrate of First Class-I, Aluva, insofar as it concerns him. - 2.The relevant facts as is revealed from Annexure III complaint filed by the 2[nd] respondent before the Court below are as follows: The _de facto_ complainant, happened to participate in a seminar conducted by the 2[nd] accused at **Crl.M.C.2743/13** 2 Thiruvananthapuram. The 2[nd] accused, as the trainercum-motivator of M/s.Conybio Health Care (India) Pvt. Ltd, introduced various products manufactured by the said Company. The _de facto_ complainant was induced to believe that the products had many health benefits. The 1[st] accused is M/s.Conybio Health Care (India) Pvt. Ltd represented by its President. Enticed in no small measure by the fabulous offers, the _de facto_ complainant applied for being appointed as the stockist. On 28.11.2000, an agreement was executed and in terms of the same, a sum of Rs.2,50,000/- was deposited with the company. According to the _de facto_ complainant, the 2[nd] accused had personally met him and induced him to believe that the products manufactured by the 1[st] accused had medicinal powers and offered extraordinary remedies for various illnesses. The brochures published by the 1[st] accused also proclaimed that their products were based on **Crl.M.C.2743/13** 3 - ancient Chinese therapies. After the execution of the agreement, products worth Rs.2,50,000/- was supplied to the _de facto_ complainant. Later, the complainant came to understand that an inquiry conducted in the state of Gujarat revealed that the products had no health benefits. This fact was reported in the major newspapers as well. On inquiry with the accused, they turned volte face and claimed that no such claims were made as regards the health benefits of their products. The complainant was told that their brochures contained a disclaimer to the effect that the products have no health benefits. According to the _de facto_ complainant , the acts of the accused amount to the offence of cheating and hence the complaint. - 3.The petitioner herein is the President of the 1[st] accused and his contention is that the proceeding initiated by the 2[nd] respondent is nothing but an abuse of process **Crl.M.C.2743/13** 4 of Court for various reasons and the same is to be brought to a termination. - 4.I have heard the learned counsel appearing for the petitioner and also the learned Public Prosecutor. No one appears for the 2[nd] respondent when the case was taken up for hearing today. - 5.The learned counsel appearing for the petitioner submitted at the outset, that on an earlier occasion, the petitioner had preferred a complaint before the learned Magistrate which was referred to the police u/s 156(3) of the Code and on its basis, crime No.2224 of 2008 was registered. The said complaint was later referred by the police on the ground that the allegations leveled are false and also because of the fact that the dispute was primarily of a civil nature. According to the learned counsel, the instant complaint **Crl.M.C.2743/13** 5 preferred in protest to the refer report suffers from the same vices. - 6.The learned counsel would further submit that a mere perusal of the averments in the complaint would reveal that the allegations are all directed against the 2[nd] accused. It was the 2[nd] accused who had conducted the seminar and gave assurance about the medicinal effects of the products manufactured by the company. According to the learned counsel, there is absolutely no allegation in the complaint as to how the Company was responsible for the acts or omissions of the 2[nd] accused as the principle of vicarious liability cannot be applied to criminal law, unless, of course, such a provision is incorporated in any special statute which governs the issue. - 7.The learned counsel, referring to Annexure-IV order, **Crl.M.C.2743/13** 6 submitted that the offence as against the 2[nd] accused has been compounded and the 2[nd] accused has been acquitted u/s 320(8) of the Code on the basis of an application filed by the 2[nd] respondent/complainant. The learned counsel would point out that when the case of the complainant is that the 2[nd] accused was the person who had induced him to enter into the agreement with the company, the compounding of the offence as against the 2[nd] accused would undeniably stifle his case, and the continuance of prosecution as against the 1[st] accused/Company would be nothing but an abuse of process of Court. It is further submitted as the 2[nd] respondent has not raised any specific allegation pointing fingers at the petitioner, in view of the composition entered into, the proceedings against the petitioner is liable to be quashed. **Crl.M.C.2743/13** 7 - 8.I find merit in the contentions raised by the learned counsel appearing for the petitioner. Annexure-IV order would reveal that insofar as the 2[nd] accused is concerned, the offence has been compounded by the complainant and he has been acquitted of all charges. When the allegation of inducement is directed primarily against the 2[nd] accused, and when case of the complainant cannot be segregated between accused Nos.1 and 2, the composition of offence, as against the 2[nd] accused would undeniably inflict a fatal blow on the case of the _de facto_ complainant and make the continuance of proceedings as against the 1[st] accused nothing but an empty formality. - 9.It is relevant to note that S. 320 (1) envisages that the offence punishable under the sections of the Indian Penal Code, specified in the first two columns of the Table can be compounded by the person mentioned in **Crl.M.C.2743/13** 8 the third column. In the same manner, S.320 (2) of the Code speaks about those offence which could be compounded with the permission of the Court by the persons mentioned in the third column. In other words, S. 320(1) and (2) of the Code envisages that it is the offence that is compounded and not the accused. Indeed, Section 320 (8) of the Code stipulates that the composition of an offence u/s 320 of the Code shall have the effect of acquittal of the accused "with whom the offence has been compounded". However, the words, “the accused with whom the offence has been compounded” cannot be interpreted to mean that the offence can be compounded against individual accused, more so, in a case of instant nature . One cannot fail to note that the allegation in the complainant essentially is that the the 2[nd] respondent was induced to become the stockist of the products of the company by the 2[nd] accused by **Crl.M.C.2743/13** 9 extolling the virtues of the products. The allegation also reveals that the case of the complainant is that the act of deception practiced by the 2[nd] accused was in his capacity as the agent/officer of the Company. In **Sunil Bharati Mittal v. Union of India (2015 (4) SCC 609 )** , the Hon'ble Apex Court, after taking note of the law laid down in **Iridium India Telecom Ltd. v. Motorola Inc (2010 KHC 4809)** and **Standard Chartered Bank v. Directorate of Enforcement (2005 KHC 888) : (2005 (4) SCC 530),** has held that if a person or group of persons who control the affairs of the company commit an offence with a criminal intent, their criminality can be imputed to the company as well as they are "alter ego" of the company. In that view of the matter , when the 2[nd] respondent compounds the offence against the 2[nd] accused, the benefits of composition cannot be denied to the 1[st] accused as the 1[st] accused was roped in only **Crl.M.C.2743/13** 10 because of the alleged inducement practiced by the 2[nd] accused for and on behalf of the 1[st] accused. - 10.Further, it is trite that the Court takes cognizance of the offence and not the offender and that being the settled principle of law, what is compounded is not an offence committed by an individual accused but the very offence itself. In the facts of the instant case, composition of the offence as against one of the accused and his acquittal of all charges will take out the life blood of the prosecution against the 1[st] accused. - 11.Of course, S. 257 of the Code coming under Chapter XX relating to trial of summons cases by Magistrate, contemplates a situation wherein the complainant with the permission of the concerned Magistrate may withdraw the complaint against all or some of the **Crl.M.C.2743/13** 11 accused. The said provision _stricto senso_ will not apply to the facts of the instant case for obvious reasons. More over, Annexure IV order leaves no manner of doubt that the offence against the 2[nd] accused has been compounded by the _de facto_ complainant and the composition of an offence under the section has the effect of an acquittal of the accused with whom the offence has been compounded. 12.On facts, a perusal of Annexure-III complaint would reveal that the allegations are all directed as against the 2[nd] accused and the complainant has no case whatsoever that the 1[st] accused/Company or the petitioner, who is alleged to be its President, had any role to play in appointing the complainant as a stockist of the company. Further more, a perusal of the complaint would reveal that for the amount of Rs.2,50,000/- handed over by the petitioner to the **Crl.M.C.2743/13** 12 Company, products worth Rs.2.5 Lakhs were handed over to him. It does not appear from the complaint that there was any intention to deceive at the initial stage or at any stage thereafter. It appears that the dispute essentially is about his failure to reap profits in the business and the conclusion arrived at by the police earlier, pursuant to investigation that the case essentially is of a civil nature cannot be found fault with. In view of Annexure-IV order of composition against the 2[nd] accused, the possibility of recording a conviction against the petitioner after a protracted trial is extremely bleak. - 13.To sum up, this Court is of the view that the petitioner has made out a case for premature termination of the prosecution and the extraordinary powers u/s 482 of the Code has to be exercised to prevent the abuse of process. There is no doubt in my **Crl.M.C.2743/13** 13 mind that the continuance of prosecution against the petitioner is actuated by _mala fides_ . The allegations contained in the complaint do not constitute offence u/s 420 of the IPC as against the petitioner herein or the 1[st] accused. Further more, the compounding of the offence against the 2[nd] accused will sound the death knell of the complaint. 14.In the above circumstances, all further proceedings as against the petitioner pending as C.C.No.1149 of 2011 on the file of the JFCM-I, Aluva, is quashed invoking extraordinary powers of this Court u/s 482 of the Code. Crl.M.C is allowed as above. ## **Sd/RAJA VIJAYARAGHAVAN.V. Judge** Mrcs/14.1.2016 //True Copy// P.S To Judge