EVEN NON COMPOUNDABLE OFFENCES CAN BE COMPOUNDED BY EXERCISING SECTION 482 OF CRIMINAL PROCEDURE CODE

J U D G M E N T

 DATED 20-07-12

 P . Sathasivam , J .

(1) Leave granted.

2) This appeal is filed against the impugned order dated 18.07.2011 passed by the High Court of Gujarat at Ahmedabad in Criminal Misc. Application No. 3999 of 2011 whereby the High Court dismissed the application filed by the appellant herein (original Accused No. 3) under Section 482 of the Code of Criminal Procedure, 1973 (in short ‘the Code’) to quash and set aside the impugned FIR No. 45 of 2011 dated 12.03.2011 lodged by Vipulbhai Harshadbhai Raja, Respondent No. 2 herein with Sanand Police Station,Ahmedabad for the offences punishable under Sections 467, 468, 471, 420 and 120-B of the Indian Penal Code, 1860 (in short ‘the IPC’).

(3) Brief facts:

(i) Respondent No. 2 herein is the President of Shri Supan Plot Owners’ Association situated at Village Nidhrad, Sanand, Ahmedabad. Certain plots of the said Association were disposed of illegally by creating false/forged documents by one Pravinbhai Gangashankar Raval (original Accused No.1) in favour of one Janakben Pravinchandra Raval (original Accused No.2) who, in turn, sold the same to one Jayrajsinh Digvijaysinh Rana, the appellant herein (original Accused No. 3).  (ii) Pursuant to the same, Respondent No. 2 herein lodged FIR No. 45 of 2011 dated 12.03.2011 alleging about the sheer collusion of all the three above named accused persons in disposing of the plots.  (iii) Being aggrieved and dissatisfied with the same, the appellant herein (Accused No.3) preferred an application under Section 482 of the Code before the High Court to quash andset aside the said FIR. The High Court, by impugned order dated 18.07.2011, dismissed the same.  (iv) Challenging the said order of the High Court, the appellant has filed the above appeal by way of special leave before this Court.
4) Heard Mr. L. Nageswara Rao, learned senior counsel for the appellant, Mrs. Hemantika Wahi, learned counsel for respondent No.1-State of Gujarat and Mr. S.B. Upadhyay, learned senior counsel for Respondent No.2 – the Complainant.

5) In view of the subsequent development, as narrated in the counter affidavit filed by Respondent No.2 in this Court, there is no need to traverse all the factual details about the allegations and the ultimate order passed by the High Court dismissing the application filed by the appellant herein under Section 482 of the Code. The following averments in the counter affidavit are relevant for disposal of the above appeal which reads as under:

“5. That after the filing of the present special leave petition, the petitioner to show his bona fides and to prove that he himself is a victim has approached the answering respondent. The answering respondent was informed by the petitioner that the petitioner himself got cheated by Pravinbhai Gangashanker Raval and Janakben Pravinchandra Raval (accused Nos. 1 & 2 in the instant case FIR No. 45/2011). The petitioner further informed the answering respondent that he shall not claim any right, title,interest over the various plots belonging to the association and accordingly he has no right or title over the same.  6. The petitioner further submitted that he was also cheated by the other accused persons who sold the properties being subject the matter of dispute to whom on the basis of forged and fabricated documents, by which no rights can be transferred legally.  7. That the petitioner further informed the answering respondent that he has also filed a police complaint against the said accused Pravinbhai Gangashanker Raval and Janakben Pravinchandra Raval (accused Nos. 1 & 2 in the instant case FIR No. 45/2011) before the Special Investigation Team, Ahmedabad, Gujarat.  8. That the petitioner further assured and has given an affidavit to the answering respondent that he will withdraw the Civil Suit bearing No. 300/2011, titled as Jayarajsingh Digvijaysingh Rana vs. Supan Plot Owners Association & Ors. filed before the City Civil Court, Ahmedabad for specific performance and declaration, accepting that the petitioner did not have any legal right, possession, title or claim over the various plots in issue as they were sold to him by Pravinbhai Gangashanker Raval and Janakben Pravinchandra Raval (accused Nos. 1 & 2 in the instant case) on the basis of forged documents. He further accepted the answering respondent to be the genuine owner of the plots in existence and with them.  9. That after considering the bona fide intention of the petitioner the answering respondent hereby has no objection if the present FIR No. 45/2011 is quashed qua the petitioner. However, this requires to be clarified that the properties allegedly transferred in favour of the petitioner shall be considered as the property of the Association and this transaction which had taken place between the accused persons is a null and void transaction through which no title, right and interest has ever been transferred and the possession of the property was and is with the Association.  10. That in view of the above and since the right, title and interest of the association is now protected as the documents showing transfer of the property in favour of the petitioner stand declared as incompetent documents, therefore, the answering respondent has no objection if the present specialleave petition is allowed and the FIR in question is quashed qua the petitioner.”

The above information in the form of counter affidavit filed by Respondent No. 2 herein before this Court shows that by bona fide efforts, the appellant, who himself being the victim at the hands of Accused Nos. 1 and 2, assured Respondent No. 2 that he will not claim any right, title and interest over various plots belonging to the Association. It is further seen that the appellant has also executed an affidavit to Respondent No. 2 stating that he will withdraw the Civil Suit bearing No. 300/2011 filed before the City Civil Court, Ahmedabad for specific performance and declaration, accepting that he did not have any legal right, possession, title or claim over the various plots in issue as they were sold to him by Accused Nos. 1 and 2 on the basis of forged documents. Respondent No.2, after satisfying the bona fide intention of the appellant, informed this Court, by way of counter affidavit, that he has no objection if the present FIR No. 45/2011 is quashed qua the appellant. Respondent No.2, in categorical terms, informed this Court that in view of the stand taken by the appellant and since the right, title and interest of the said plots of the Association is now protected as the documents showing transfer of theproperty in favour of the appellant stand declared as invalid documents, he has no objection if the present appeal is allowed and the FIR in question is quashed insofar as the appellant is concerned. Apart from the above stand of Respondent No. 2 in the form of counter affidavit, learned senior counsel appearing for him also reiterated the same.

6) It is also relevant to point out that the averments in the FIR disclosed the offences punishable under Sections 467, 468, 471, 420 and 120-B of IPC.

7) The only question for consideration before this Court at this stage is that inasmuch as all those offences are not compoundable offences under Section 320 of the Code (except Section 420 of IPC that too with the permission of the Court before which any prosecution for such offence is pending), whether it would be possible to quash the FIR by the High Court under Section 482 of the Code or by this Court exercising jurisdiction under Article 136 of the Constitution of India? 

8) The above question was recently considered by this Court in Shiji @ Pappu & Ors. vs. Radhika & Anr. (2011) 10 SCC 705. The question posed in that case was “Whether thecriminal proceedings in question could be quashed in the facts and circumstances of the case having regard to the settlement that the parties had arrived at.” After adverting to Section 482 of the Code and various decisions, this Court concluded as under:

“. It is manifest that simply because an offence is not compoundable under Section 320 CrPC is by itself no reason for the High Court to refuse exercise of its power under Section 482 CrPC. That power can in our opinion be exercised in cases where there is no chance of recording a conviction against the accused and the entire exercise of a trial is destined to be an exercise in futility. There is a subtle distinction between compounding of offences by the parties before the trial court or in appeal on the one hand and the exercise of power by the High Court to quash the prosecution under Section 482 CrPC on the other. While a court trying an accused or hearing an appeal against conviction, may not be competent to permit compounding of an offence based on a settlement arrived at between the parties in cases where the offences are not compoundable under Section 320, the High Court may quash the prosecution even in cases where the offences with which the accused stand charged are non-compoundable. The inherent powers of the High Court under Section 482 CrPC are not for that purpose controlled by Section 320 CrPC.  18. Having said so, we must hasten to add that the plenitude of the power under Section 482 CrPC by itself, makes it obligatory for the High Court to exercise the same with utmost care and caution. The width and the nature of the power itself demands that its exercise is sparing and only in cases where the High Court is, for reasons to be recorded, of the clear view that continuance of the prosecution would be nothing but an abuse of the process of law. It is neither necessary nor proper for us to enumerate the situations in which the exercise of power under Section 482 may be justified. All that we need to say is that the exercise of power must be for securing the ends of justice and only in cases where refusal to exercise that power may result in the abuse of the process of law. The High Court may be justified in declining interference if it is called upon to appreciate evidence for it cannot assume the role of an appellate court while dealing with a petition under Section 482 of the Criminal Procedure Code. Subject to the above, the High Court will have to consider the facts and circumstances of each case to determine whether it is a fit case in which the inherent powers may be invoked.” 

9) On going through the factual details, earlier decision, various offences under Section 320 of the Code and invocation of Section 482 of the Code, we fully concur with the said conclusion. In the case on hand, irrespective of the earlier dispute between Respondent No. 2- the complainant and the appellant being Accused No. 3 as well as Accused Nos. 1 and 2 subsequently and after getting all the materials, relevant details etc., the present appellant (Accused No. 3) sworn an affidavit with bona fide intention securing the right, title and interest in favour of Respondent No.2 herein-the Complainant. In such bona fide circumstances, the power under Section 482 may be exercised. Further, in view of the settlement arrived at between Respondent No. 2-the complainant and the appellant (Accused No. 3), there is no chance of recording a conviction insofar as the present appellant is concerned and the entire exercise of trial is destined to be an exercise in futility. Inasmuch as the matter has not reached the stage of trial, we are of the view that the High Court, by exercising the inherent power under Section 482 of the Code even in offences which are not compoundable under Section 320, may quash the prosecution. However, as observed in Shiji (supra), the power under Section 482 has to be exercised sparingly and only in cases where the High Court is, for reasons to be recorded, of the clear view that continuance of the prosecution would be nothing but an abuse of the process of law. In other words, the exercise of power must be for securing the ends of justice and only in cases where refusal to exercise that power may result in the abuse of the process of law.

10) In the light of the principles mentioned above, inasmuch as Respondent No. 2-the Complainant has filed an affidavit highlighting the stand taken by the appellant (Accused No. 3) during the pendency of the appeal before this Court and the terms of settlement as stated in the said affidavit, by applying the same analogy and in order to do complete justice under Article 142 of the Constitution, we accept the terms of settlement insofar as the appellant herein (Accused No. 3) is concerned.

11) In view of the same, we quash and set aside the impugned FIR No. 45/2011 registered with Sanand Police Station, Ahmedabad for offences punishable under Sections 467, 468, 471, 420 and 120-B of IPC insofar as the appellant (Accused No. 3) is concerned. The appeal is allowed to the extent mentioned above.

CHANGES IN CONSOLIDATED FOREIGN DIRECT INVESTMENT POLICY ( IIIrd Edition) APRIL, 2011

The Department of Industrial Policy and Promotion, Ministry of Commerce & Industry, Government of India, has issued, as expected,  its Circular 1 of 2011 dated 31^st of March, 2011. This is the third edition of the Consolidated Foreign Direct Investment (FDI) policy effective from 1 April 2011 and will 2011 supersedes the previous Circular 2 of 2010. Following are main changes introduced by the revised FDI policy:

1. NO PRIOR APPROVAL REQUIRED FOR PREVIOUS JOINT VENTURE/ COLLABORATIONS:

The revised FDI policy has done away with the prior approval requirement (from Government, FIPB) for venture/ technology transfer/ trademark agreement by Non-residents who had existing joint ventures / technology transfer/ technical collaboration in the same field as on 12 January 2005.

Even in case where the agreement/ MOU has been entered before April 1, 2011, and the investment is undertaken post April 1, 2011, it could be argued that no FIPB approval would be required as the actual investment is flowing post the effective date.

Further, the requirement for incorporating a ‘conflict of interest’ clause in the Joint Venture Agreement has been done away with for ventures/ technical collaboration post 12 January 2005,

2. PRICING OF CONVERTIBLE INSTRUMENTS:

The earlier FDI policy required that the conversion price of equity convertible instruments (debentures, preference shares) to be determined upfront at the time of issue of such convertible instruments. With an intention as to provide better valuation based on performance, but as per the revised FDI Policy permits the flexibility to determine the conversion price of such instruments at the time of actual conversion using a conversion formula for such convertible instruments subject to FEMA/SEBI guidelines on pricing.

The change would enable upside benefits on improved performance of businesses to accrue to Indian promoters of these companies.

3. ISSUE OF SHARES PERMITTED AGAINST SPECIFIED NON-CASH CONSIDERATIONS    UNDER APPROVAL ROUTE:

In addition issue of equity shares for ECB/lump-sum fee/Royalty into equity under the Approval Route, the revised FDI policy now permits issue of equity / equity convertible instruments under the Government / Approval route in the following categories:

§ Import of capital goods/ machinery/ equipment (including second-hand machinery) subject of the approval of the FIPB based on fulfillment of herein mentioned conditions :

1. Such import in accordance with the Export/ Import Policy issued by Government of India and as defined by Director General of Foreign Trade /FEMA provisions relating to imports

2. Independent valuation of the capital goods/machinery/equipments (including second-hand machinery) by a third party entity, to be done by an independent valuer from the country of import plus production of copies of documents/ certificates issued by the customs authorities towards assessment of the fair value of such imports.

3. Due disclosure of the beneficial ownership and identity of the Importer Company as well as overseas entity.

4. Conversion period within 180 days from date of shipment of goods.

§  Pre-operative/ Pre-incorporation expenses (including payments of rent etc.) subject of the approval of the FIPB based on fulfillment of herein mentioned conditions:

1. Foreign Inward Remittance Certificate, required to be submitted, in relation to remittance of funds by the overseas promoters for the expenditure incurred.

2. The Statutory Auditor will Verify and certify the pre-incorporation/pre-operative expenses.

3. Payments made directly by the foreign investor to the company will be eligible for issuance of equity shares. Accordingly, but any payments made through third parties will not be eligible for issuance of equity shares.

4. Equity shares should be issued within the stipulated period of 180 days

Provided such issue is in compliance with specified conditions including special resolution of the company and pricing guidelines.

But it does not address the issuance of shares in lieu of other forms of non cash consideration such as services rendered and import of raw materials/trade payables.

4. Guidelines relating to Down-Stream investments:

The revised FDI policy now there are only two categories of Companies namely – ‘companies owned or controlled by foreign investors’ and ‘companies owned and controlled by Indian residents’.

The earlier categorization of companies as ‘investing companies’, ‘operating companies’ and ‘investing-cum-operating companies’ find no mention.

5. Agriculture Sector Specific policy for FDI:

In the Agriculture Sector, the revised FDI policy now permits Development and production of Seeds and planting material without the stipulation of having to do so under controlled conditions.

5. Other Major changes:

Issuance of warrants:

Circular 1 of 2011 has clarified that FIPB approval would be required only for issuance of warrants and

partly paid shares, since these are not part of capital. The Government has clarified that the policy for issuance of warrants is under review. Thus, further changes can be expected.

Investment into a Venture Capital Fund ("VCF")

A Foreign Venture Capital Investor registered with the Securities and Exchange Board of India ("SEBI") can invest in a SEBI registered domestic VCF subject to Reserve Bank of India regulations and FDI Policy. In case the entity undertaking VCF activity is a Trust registered under the Indian Trust Act, 1882, the investment is subject to obtaining an approval from the FIPB. But any other form of investment into a trust is not permitted under the existing regulations. However, in case VCF is set up as a company, then a person resident outside India (including an individual NRI) can invest in such a VCF subject to pricing guidelines, reporting requirements, minimum capitalization norms, etc.

Trading of items sourced from Micro and Small Enterprises ("MSE")

Wholesale trading of items sourced from MSE’s has been placed under 100 % automatic route and now no approval from FIPB is required.

CONCLUDING REMARKS:

The revised FDI policy is a bold and effective effort from the point of foreign investor. Further it will forward the process of liberalization further and would assist in fast inflow of FDI into the Country. However, other changes were also expected such as permit foreign investment into Limited Liability Partnerships (the new policy provides that the Government is reviewing its policy to allow FDI in LLPs), liberalization of the policy on investment into real estate, as well as clarifications required on certain provisions of the current policy regarding lock-in on original investment, and several other subjects on which draft discussion papers were released earlier for public comments. It is important that these areas are also taken up the Government for liberalization so as to make India as one of the most favorable FDI destinations in the world.

NEW FORM FOR ANNUAL RETURN BY INDIAN COMPANIES ON FOREIGN LIABILITIES AND ASSETS REPORTING REPLACED THE PART B OF FORM FC-GPR:

The Reserve Bank of India (RBI) vide A.P. (DIR Series) Circular No. 45 dated 15th of March 2011, has replaced the Part B of the Form FC-GPR by a separate Form i.e. ‘Annual Return on Foreign Liabilities and Assets’ so as to take in to account of the inward and outward statistics relating to Foreign Direct Investment (FDI) in a more extensive way and to line up with the international standards.

Main Features:

§  Requirement of submitting Part B of Form FC - GPR has been replaced with the submission of the new form “Annual Return on Foreign Liabilities and Assets”.

§  The Annual Return should be submitted by July 15th of every year to the Director, Department of Statistics and Information Management (DSIM), Reserve Bank of India, Mumbai, instead of 31st July every year, as provided earlier.

§  The Balance Sheet for the reporting year required to be enclosed along with the return.

§  Every Indian company which have received FDI and/or made Overseas Investment in the previous year(s) including the current year required to submit the abovesaid return.

§  These directions shall take effect from 15th March, 2011.

§  The information given in the return should be based on audited balance sheet. But where the return is filed on the basis of unaudited BS, then the audited balance sheet shall also be submitted in duly. Further any discrepancy found in reported figures,  then a revised return is required to be submitted by the company on the basis of audited balance sheet along with a copy of the audited balance sheet.

CORPORATE LAWS UPDATES: SUPREME COURT RULES THAT THERE IS A PRESUMPTION OF...

CORPORATE LAWS UPDATES: SUPREME COURT RULES THAT THERE IS A PRESUMPTION OF...: "The Supreme Court in its ruling on the live-in relationship has ruled that there is a presumption of marriage between those who are in live-..."

SEBI Proposed XBRL Reporting For Mutual Funds:

It is a very good move by SEBI to have XBRL Reporting (extensible business  reporting language system). Basicly it is a language for electronic communication of business and financial data which is revolutionising business reporting around the world. It offers major benefits to all those who have to create, transmit, use or analyse such information. XBRL  provides standardized business reporting tool which enables easy scrutiny of bulk documents without delay, This reporting system have number of advantages not only for SEBI and other regulatory , investigating bodies to monitor any alleged irregularities if any in affairs of companies and market intermediaries also for general investor to have real time basis information.
Currently SEBI prososed XBRL reporting for mutual funds, it should be expanded for other segements also on phase wise basis.

SUPREME COURT RULES THAT THERE IS A PRESUMPTION OF MARRIAGE BETWEEN THOSE WHO ARE IN LIVE-IN RELATIONSHIP FOR A LONG TIME:

The Supreme Court in its ruling on the live-in relationship has ruled that there is a presumption of marriage between those who are in live-in relationship for a long time and this cannot be termed as 'walking-in and walking-out' relationship.


A bench comprising Justices P Sathasivam and Dr B S Chauhan, gave the ruling while dismissing an appeal in a property dispute.

The case pertains to the property of Chandra Deo Singh who was in jail from 1945 to 1947.

Singh, whose first wife died in 1945, had live-in relationship with another woman Shakuntala, till his death on December 31, 1979.

All the lower courts ruled in favour of the children born out of this live-in relationship.


Mr Madan Mohan Singh, who is his son by the first wife and others, challenged the judgement of Allahabad High Court on the grounds that Shakuntala was not formally married to their late father.

Justice Chauhan, in his judgement for the bench noted 'The live-in relationship if continued for such a long time cannot be termed in as 'walk in and walkout' relationship and there is a presumption of marriage between them which the appellant failed to rebut'.

CAPITAL EXPENDITURE INVESTMENT BY CORPORATE INDIA LIKELY TO OVERSHOOT LAST YEAR’S LEVEL OF Rs. 3, 44,633 CRORE:

CAPITAL EXPENDITURE INVESTMENT BY CORPORATE INDIA LIKELY TO OVERSHOOT LAST YEAR’S LEVEL OF Rs. 3, 44,633 CRORE:

As per RBI study Capital expenditure investment by the Corporate India is likely to overshoot last year’s level of Rs. 3,44,633 Crore.

In the latest monthly bulletin of RBI stated that the positive effect of improved outlook of domestic demand, increasing capacity utilization and rebound in profits besides comfortable credit conditions on investment decisions indicate that the corporate were expected to come up with at least a new investment intentions of around Rs.77,264 Crore to meet the growing demand. This along with the capital expenditure planned for the year should match the 2009-10 level, the study says.

Further report said the capital expenditure that might have been incurred in 2009-10 of all companies covered in the study worked out to a substantial amount of Rs. 344,633 Crore, of which Rs. 182,134 Crore was envisaged by 1,070 new projects added to the database by financial year 2009-10 .

Capital expenditure planned to be spent in financial year 2010-11 aggregated to Rs. 267,369 Crore. If the companies did not defer the investment decisions and adhere to their investment plans this pipeline investment was expected to maintain the momentum of investment during the year.

As per the RBI despite the uncertain economic outlook occurring largely in the second half of 2008-09, the corporate appeared to have continued with their optimistic investment plan on the basis of robust demand conditions of earlier years.

Though there were a number of projects that reported delay or scaling back, the information with banks on projects coming up for assistance suggested the rise in capital expenditure by 35.7 % in 2008-09. The intentions were seemed to have been largely revised in next year as reflected in a lower seven per cent rise in envisaged capital investment in 2009-10 despite rebound in key economic parameters.

The RBI report said a subdued bank credit growth during large part of 2009-10 was to some extent offset by higher funds mobilization through IPOs, private placements and mutual funds. Expansion in industrial production, exports and corporate profits, particularly in the second half of last fiscal reflected a broad based recovery in demand conditions.

With the strength in credit conditions and business confidence, the companies’ investment intentions surged further, it said, adding that led by rise in large sized projects, the total envisaged cost of projects sanctioned assistance by banks and financial institutions in last fiscal Rs. 556,011 Crore far surpassed the previous high Rs. 333,039 Crore in 2008-09.

Deepak Chaudhary
B.A.LL.B., CS Executive
Corporate Lawyer