Anil Bhalla Vs State NCT of Delhi & Ors. (Delhi High Court)
Summary: Delhi High Court set aside the summoning order dated 06.01.2022 issued against Anil Bhalla and other accused in proceedings arising from FIR No. 0174/2018 registered under Sections 406, 420 and 120B IPC concerning alleged misappropriation of investments in a real estate project.
The petitioner, who was a director of Emaar MGF Land Limited from 25.09.2009 to 06.04.2018, contended that he was a non-executive independent director and was never involved in the company’s day-to-day management or control. Relying upon Sunil Bharati Mittal v. CBI, Shiv Kumar Jatia v. State of NCT of Delhi, Maksud Saiyed v. State of Gujarat and Pepsi Foods Ltd. v. Special Judicial Magistrate, he argued that directors could not be made vicariously liable for IPC offences without a specific statutory provision or material showing their direct involvement, and that summons could be issued only after due application of mind.
The High Court observed that the Trial Court’s summoning order did not refer to the role of any individual accused or identify even prima facie the material on the basis of which they were sought to be summoned. Rather than keeping the petition under Section 482 CrPC pending, the High Court set aside the summoning order and directed the Trial Court to reconsider the matter afresh in accordance with law, while reserving the parties’ rights and contentions.
Cases Discussed
- Sunil Bharti Mittal v. CBI, (2015) 4 SCC 609 (Supreme Court) — Relied upon by the petitioner to contend that directors or officers cannot be made vicariously liable for an offence attributed to a company in the absence of a statutory provision or material establishing their individual involvement.
- Shiv Kumar Jatia v. State of NCT of Delhi, (2019) 17 SCC 193 (Supreme Court) — Relied upon by the petitioner in support of the contention against fastening criminal liability upon a director merely by virtue of the position held in the company.
- Maksud Saiyed v. State of Gujarat and Others, (2008) 5 SCC 668 (Supreme Court) — Relied upon by the petitioner for the proposition concerning absence of vicarious liability of company directors without a specific statutory provision and requisite allegations.
- Pepsi Foods Limited and Another v. Special Judicial Magistrate and Others, (1998) 5 SCC 749 (Supreme Court) — Relied upon by the petitioner to submit that issuance of summons in criminal proceedings places a burden upon the accused and requires due application of mind.
FULL TEXT OF THE JUDGMENT/ORDER OF DELHI HIGH COURT
The proceedings in the matter have been conducted through video conferencing.
CRL.M.A. 8766/2022 (for exemption)
Exemption allowed, subject to all just exceptions.
The application stands disposed of.
CRL.M.C. 2071/2022 & CRL.M.A. 8765/2022
1. Issue notice. Mr. Amit Chadha, learned Additional Public Prosecutor, accepts notice on behalf of the respondent No. 1-State. Mr. Piyush Singh, learned counsel, accepts notice on behalf of the respondent Nos. 2 and 3.
2. By way of the present petition under Section 482 of the Code of Criminal Procedure, 1973 [“CrPC”], the petitioner seeks quashing of FIR No. 0174/2018, dated 31.08.2018, registered at Police Station Economic Offences Wing, under Sections 406/420/120B of the Indian Penal Code, 1860 [“IPC”] and consequential proceedings arising therefrom.
3. The allegation in the FIR is that a company by the name of Emaar MGF Land Limited [“the company”] induced investors to put money into a real estate project in Gurugram, Haryana. The respondent Nos. 2 and 3 also invested in the said project. However, it is alleged that the flats have not been handed over to the said respondents in time and the funds invested by them have been misappropriated by the company.
4. The petitioner has been named as an accused in the FIR as he was a director of the company. The charge sheet has also since been filed, in which, as far as the role of the petitioner is concerned, it is stated as follows: –
” Role of Anil Bhalla (Director):- He was director in the alleged company since 25.09.2009 to 06.04.2018. The money was received from the complainant by the alleged company from May, 2011 to April, 2016. During the relevant period of cheating, he was director in the alleged company and being a director, he is found actively involved into the day to day affairs of the company alongwith other directors. Thus, sufficient evidences have surfaced against him to Chargesheet in the present case.”
5. By an order dated 06.01.2022, the Chief Metropolitan Magistrate, Patiala House Courts, New Delhi, has issued summons to the accused, including the company. The relevant extracts of the summoning order are as follows: –
“Charge sheet along with documents perused.
I take cognizance of the offence u/s 420/406/120B IPC against the accused persons. Let summons be issued against accused Shravan Gupta, Shipa Gupta, Siddhartha Gupta, Abhiram Seth, Anil Bhalla, Gyanendra Nath Bajpai, Gautam Khaitan, Sanjay Malhotra, Bharat Bhushan Garg and accused/company M/s. EMAAR India Ltd. to be executed through IO of the case for 10.05.2022.”
6. Mr. Dayan Krishnan, learned Senior Counsel for the petitioner, submits that the petitioner was an independent director of the company under the relevant provisions of the Companies Act, 1956 and the Companies Act, 2013. He was appointed as a director of the company on 25.09.2009 and demitted office on 06.04.2018. He submits that the petitioner was never in day-to-day management or control of the company’s affairs and served only as a non-executive independent director. Mr. Krishnan relies upon the judgments of the Supreme Court in Sunil Bharati Mittal vs. CBI (2015) 4 SCC 609 [paragraph Nos. 41 to 44], Shiv Kumar Jatia vs. State of NCT of Delhi (2019) 17 SCC 193 [paragraph Nos. 19, 21 and 22], and Maksud Saiyed vs. State of Gujarat and Others (2008) 5 SCC 668 [paragraph No. 13 and 15] in support of his contention that, in case of an allegation of an offence against a company, its directors or officers cannot be made by vicariously liable in the absence of a specific statutory provision in this regard. Mr. Krishnan points out that the offences in the present case are all offences under the IPC, which does not provide for any such vicarious liability. As far as the individual accused are concerned, they would be liable to criminal proceedings only in the event of any independent and direct involvement This is a digitally signed order. The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 28/09/2026 at 11:57:55 in the offences in question. Mr. Krishnan also relies upon the judgment of the Supreme Court in Pepsi Foods Limited and Another vs. Special Judicial Magistrate and Others (1998) 5 SCC 749 to submit that the issuance of summons in criminal proceedings is in itself a burden upon the accused and ought to be undertaken only after due application of mind. Having regard to the contents of the summoning order dated 06.01.2022, Mr. Krishnan submits that the Trial Court has failed to apply its mind as to the material against each of the individual accused in the charge sheet, and as to whether they are liable to be summoned.
7. Mr. Chadha and Mr. Singh submit that these contentions of the petitioner ought to be raised before the Trial Court and the Trial Court may consider the same, rather than the matter being entertained at this stage under Section 482 of the CrPC.
8. Having heard learned counsel for the parties, I am of the view that the Trial Court is required to revisit the question of the persons or entities against whom summons are required to be issued. The summoning order does not refer to the role of any of the individual accused or identify the material, even prima facie, upon which they are sought to be summoned. As far as the petitioner is concerned, for example, neither the charge sheet nor the materials placed before the Trial Court have been adverted to.
9. I am of the view that the appropriate course in these circumstances, rather than to keep the matter pending in this Court at this preliminary stage, is to set aside the summoning order dated 06.01.2022 with a direction upon the Trial Court to consider the matter afresh in accordance with law and pass a fresh summoning order as necessary in the facts and circumstances of the present case.
10. The petition, alongwith the pending application, is disposed of with these directions. It is made clear that the rights and contentions of the parties before the Trial Court are reserved.
