Ramdev Food Products Private Limited Vs. State of Gujarat AIR 2015 SC 1742

FACTS OF THE CASE 

• The  appellant  herein  has  filed  an  appeal  by  special  leave  against  the  judgement  and  Order  dated 17th January 2006 of the High Court of Gujarat. The High Court declined to interfere with the order dated 16th August, 2005, given by the First Class Judicial Magistrate, Sanand on a complaint filed by  the  appellant. 
• The  complaint  was  filed  by  the  appellant  against  fourteen  accused  for  alleged commission of offences under Sections 409 420, 406, 467, 468, 471, read with Section 120-B and 114 of the Indian Penal Code.
• The case of the appellant before the Magistrate is that it is running business of food products and had permitted M/s. New Ramdev Masala Factory, wherein accused Mr. Jasvantbhai Somabhai Patel was one of the partners, to use the trademark “Ramdev” for seven years  under agreement  dated 4th  June, 1990. However, M/s.  New Ramdev Masala  Factory was closed on 30th May, 1994.
• Accused executed forged partnership documents with the help of other accused and thereby committed the alleged offences. Here in the appellant approached the Magistrate  as  the  police  refused  to  register  a  case  and  sought  direction  for  investigation  under Section  156(3)  of  the  Code  of  Criminal  Procedure. 
• However  the  Magistrate  instead  of  directing investigation as prayed thought it fit  to conduct further inquiry under Section  202 of the Code of Criminal Procedure and sought report to the Police Sub-Inspector within thirty days. The grievance of the  appellant before the  High Court  was that in  view of  the allegation  that documents  were  in possession  of  the  accused  and  were  required  to  be  seized,  thus  the  Magistrate  should  have  been ordered an investigation under Section 156(3) instead of conducting further inquiry under Section 202.
• Thus, there was non application of mind by the Magistrate and it was also submitted that even in the course of investigation for giving the report under Section 202, police is entitled to arrest the accused, but failed to do so.
• The High Court did not accept the stand of the appellant and declined to interfere with the order given by the Magistrate.

CONTENTION

• Contention on behalf of the Appellant before the Supreme Court was that the Magistrate and the High Court erred in declining to order investigation Under Section 156(3) which was necessary in view of the allegation of forgery of documents and stamp papers by the accused to create back dated partnership deeds by forging signatures of a dead person.
• Such documents being in custody of the accused could not be otherwise produced except on arrest in the course of investigation and in accordance with Section 27 of the Evidence Act. Option of  proceeding  Under  Section  202,  as  against  Section  156(3), has  to  be  exercised  only  when evidence  has  already  been  collected  and  what  remained  to  be  decided  was  whether  there  was sufficient ground to proceed.
• And thus appellant has filed an appeal by special leave against the judgement given by the High Court. 

ISSUES 

• Whether discretion of the Magistrate to call for a report under Section 202 instead of directing investigation 156(3) is controlled by any defined parameters?
• Whether in the course of investigation in pursuance of a direction under Section 202, the Police Officer is entitled to arrest an accused?
• Whether in the present case, the Magistrate erred in seeking report under Section 156(3)? 

• PROVISIONS 

The relevant provisions of Criminal Procedure Code are:

Chapter XII of the Criminal Procedure Code have the provisions regarding the “Information to the police  and  their  powers  to  investigate”  and  that  of  chapter  XV  is  “Complaints  to  Magistrate”. Sections 156(3) and 202 are in chapter XII and XV respectively.

• 156- Police officer’s power to investigate cognizable case.
• 202-Postponement of issue of process. 

• JUDGEMENT/ ANALYSIS  

To  deal with  the  first  issue as  to  whether the  Magistrate  ought  to  have proceeded  under Section 156(3) or was justified in proceeding under Section 202(1) and what are the parameters for exercise of power under the two provisions.

Here  in  the  case  the  contention  of  the  appellant  is  that  when  there  is  allegation  of  forgery  and discovery of documents  is necessary, a Magistrate must order investigation Under Section 156(3) instead  of  proceeding  Under  Section  202.  Nature  of  cases  dealt  with  under  Section  202  is  cases where  material  available  is  not  clear  to  proceed  further.  Here  in  the  case  has  been  held  to  be primarily of civil nature. The accused is alleged to have forged partnership. Whether such forgery actually took place, whether it caused any loss to the complainant and whether there is the requisite mens  rea  are  the  questions  which  are  yet  to  be  determined.  The  Magistrate  has  not  found  clear material to proceed against the accused.

In Lalita Kumari v. Govt. of U.P. (2014) 2 SCC 1, it was held that Registration  of  FIR  is  mandatory  under  Section  154  of  the  Code  if  the  information  discloses commission of a cognizable offence and no preliminary inquiry is permissible in such a situation. If the information received does not  disclose a cognizable offence but indicates the necessity  for an inquiry,  a  preliminary  inquiry  may  be  conducted  only  to  ascertain  whether  cognizable  offence  is disclosed or not.

In Joginder Kumar v. State of U.P. (1994) 4 SCC 260 it was ruled that, an arrest cannot be made on a mere allegation of offence against a person or in a routine manner. Constitutional rights of a person mandate that he not be arrested on simple suspicion of complicity in an offence. It cannot be made  without  a  reasonable  satisfaction  reached  after  some  investigation  is  made  as  to  the genuineness of the complaint.

In Anil  Kumar  v. M.K. Aiyappa  (2013) 10  SCC  705, the court  observed  the  requirement of  the application of mind by the Magistrate before exercising jurisdiction Under Section 156(3) and held that where jurisdiction is exercised on a complaint filed in terms of Section 156(3) or Section 200 Code of Criminal Procedure, the Magistrate is required to apply his mind. The application of mind by the Magistrate should be reflected in the order. The mere statement that he has gone through the  complaint,  documents  and  heard  the  complainant,  as  such,  as  reflected  in  the  order,  will  not  be sufficient.  After  going  through  the  complaint,  documents  and  hearing  the  complainant,  what weighed  with  the  Magistrate  to  order  investigation  Under  Section  156(3)  Code  of  Criminal Procedure,  should  be  reflected  in  the  order,  though  a  detailed  expression  of  his  views  is  neither required nor warranted.

Thus  power  under Section  202  is  of  different  nature.  Report  sought  under the  said provision  has limited purpose of deciding “whether or not there is sufficient ground for proceeding”. We answer the  first  question  by  holding  that  the  direction  Under  Section  156(3)  is  to  be  issued,  only  after application of mind by the Magistrate. When the Magistrate does not take cognizance and does not find it necessary to postpone instance of process and finds  a case made out  to proceed forthwith, direction  under  the  said  provision  is  issued.  In  other  words,  where  on  account  of  credibility  of information available, or weighing the interest of justice it is considered appropriate to straightaway direct  investigation,  such  a  direction  is  issued.  Cases  where  Magistrate  takes  cognizance  and postpones  issuance  of  process  are  cases  where  the  Magistrate  has  yet  to  determine  “existence  of sufficient ground to proceed”. Subject to these broad guidelines  available from the scheme of the Code, exercise of discretion by the Magistrate is guided by interest of justice from case to case.

To  deal  with  the  second  question  regarding  the  power  of  the  police  to  arrest  in  the  course  of investigation  under Section  202  with  a  view to  give its  report  to  the  Magistrate to  enable  him  to decide  whether  a  case  to  proceed  further  existed.  Careful  examination  of  scheme  of  the  Code reveals that in such situation power of arrest is not available with the police.

Nature  of  cases  dealt  with  Under  Section  202  is  cases  where  material  available  is  not  clear  to proceed further. The Magistrate  is in  session of  the matter having  taken the  cognizance. He has to decide  whether  there  is  ground  to  proceed  further.  If  at  such  premature  stage  power  of  arrest  is exercised by police, it will be contradiction in terms.

In M.C. Abraham v. State of Maharashtra (2003) 2 SCC 649, it was observed that  the arrest of an accused is a part of the investigation and is within the discretion of the investigating officer. Section 41 of the Code of Criminal Procedure provides for arrest by a police officer without an order from a Magistrate  and  without  a  warrant.  The  section  gives  discretion  to  the  police  officer  who  may, without an order from a Magistrate and even without a warrant, arrest any person in the situations enumerated in that section. The police officer in the course of investigation can arrest any person who  has been  concerned  with  any  cognizable offence  or  against whom  reasonable  complaint  has been made or credible information has been received, or a reasonable suspicion exists of his having been so concerned. Obviously, he is not expected to act in a mechanical manner and in all cases to arrest the accused as soon as the report is lodged. In appropriate cases, after some investigation, the investigating  officer  may  make  up  his  mind  as  to  whether  it  is  necessary  to  arrest  the  accused person. At that stage the court has no role to play. Since the power is discretionary, a police officer is not always bound to arrest an accused even if the allegation against him is of having committed a cognizable offence. Since an arrest is in the nature of an encroachment on the liberty of the subject and does affect the reputation and status of the citizen, the power has to be cautiously exercised.

In Emperor v. Bikha Moti AIR (1938) it was held that when a Magistrate has referred a complaint to the police for investigation under Section 202, it is not competent to the police to investigate the offence complained  of  independently of  the  Magistrate’s direction  and  send up  the  accused for  a trial upon a charge-sheet.

Thus the police have no rights to arrest in the course of investigation under Section 20 of the Code.

The  last  question  is  whether  in  the  present  case  the  Magistrate  ought  to  have  proceeded  under Section 156(3) instead of Section 202. The Magistrate has given reasons, which have been upheld by the High Court. The case has been held to be primarily of civil nature. The accused is alleged to have forged partnership. Whether such forgery actually took place, whether it caused any loss to the complainant  and  whether  there  is  the  requisite  mens  rea  are  the  questions  which  are  yet  to  be determined. The Magistrate has not found clear material to proceed against the accused. Even a case for summoning has not yet been found. While a transaction giving rise to cause of action for a civil action may also involve a crime in which case resort to criminal proceedings may be justified, there is judicially acknowledged tendency in the commercial world to give colour of a criminal case to a purely commercial transaction.

In Chandra Deo Singh v. Prokash Chandra Bose, 1964 (1) SCR 693 it was held that at the stage of enquiry under Section 202 CrPC, the test was whether there was sufficient ground for proceeding and not whether there was sufficient ground for conviction.

In Vadilal Panchal v. Dattatraya Dulaji Ghadigaonker AIR (1960) SC 1113 it was observed that the Section 202 says that the Magistrate may, if he thinks fit, for reasons to be recorded in writing, postpone the issue of process for compelling the attendance of the person complained against and direct an inquiry for the purpose of ascertaining the truth or falsehood of the complaint. Thus the order of the Supreme Court should be upheld as there is no error found in the view taken by the Magistrate and the High Court in ordering an inquiry under Section 202 of the code instead of  Section  156(3)  .Herein  the  police  cannot  exercise  power  of  arrest  in  the  course  of  submitting report under Section 202. I agree to the judgement, in cases where prima facie has no evidence to prove the allegations against the accused it is not right to arrest the accused as it infringes the constitutional rights of the accused and  also affects the  reputation  of the  accused.  Here  in  this  case  the  appellant prima  facie  has  no evidence to prove his allegations  and thus  whether or not  a forgery has happened could be found only after the completion of civil proceedings going on regarding this matter, thus the decision of the  Magistrate to  conduct  an  inquiry  was apt  as  that  would  help  him proceed  further  and  to  find whether there is any ground for the allegations raised by the appellant.

• CONCLUSION 

In this case the Supreme Court has upheld the judgement given by the High Court and Magistrate, to conduct an inquiry under Section 202 of the Code instead of Section 156(3) and also stated that the police cannot exercise power of arrest in the course of submitting a report under Section 202. 

The Supreme Court in this case has come up with the following guidelines:

The  Supreme  Court  here  in  the  case  has  laid  down  that  in  a  case  prompt  registration  of  FIR  is mandatory,  checks  and  balances  on  power  of  police  are  equally  important.  Power  of  arrest  or  of investigation is not mechanical; it requires application of mind in the manner provided. Existence of power and its exercise are different. Thus there should be a delicate balance maintained between the interest of society and liberty of an individual. Also the commercial offences have been put under the category of cases where FIR may not be warranted without enquiry.

It  was  also  observed  that  a  Magistrate  has  discretion  either  to  direct  registration  of  a  case  under Section 156(3) or to conduct inquiry himself as the situation may warrant. This discretion is to be exercised by  the  Magistrate in  his  wisdom  and  having  regard  to  the  nature  of  material  available. Direction under Section 156(3) to register a criminal case and to investigate is to be exercised where the magistrate is satisfied that prima facie a cognizable offence has been committed.