High Court Cannot Conduct Factual Trial While Quashing FIR: SC

Digvijaysinh Himmatsinh Jadeja Vs State of Gujarat & Ors. (Supreme Court of India)

Summary: The Supreme Court set aside the Gujarat High Court judgment dated 05.05.2017 that had allowed the prayer for quashing FIR No. CR I/2/2015 dated 23.01.2015 registered at Police Station Gandhinagar Zone, District Gandhinagar, Gujarat. The Court held that the High Court had undertaken detailed factual examination and evaluation despite disputed questions concerning two agreements dated 25.07.2013 and 13.08.2013, their binding nature on Geetanjali Jewellery Retail Limited, and the character of 24 karat pure gold bars allegedly held in fiduciary capacity. The private respondents disputed the authority of Mr. Santosh Srivastava, stating that he had resigned on 09.12.2013, while the appellant relied on agreements, confirmation letters and statements of account signed by Mr. Srivastava and Mr. Shivendra Singh. The Supreme Court held that these were disputed factual questions requiring examination during investigation. It also noted that statements under Sections 161 and 164 of the Code had been recorded but were not considered by the High Court. The Court refrained from expressing views on the merits and directed that investigation continue uninfluenced by the findings or observations in the impugned judgment or the Supreme Court order. The appeal was accordingly allowed and the High Court judgment was set aside.

Background and Dispute

The appeal arose from the common judgment dated 05.05.2017 passed by the High Court of Gujarat at Ahmedabad in Special Criminal Application (Quashing) No. 4758 of 2015 and Special Criminal Application No.4759 of 2015, whereby the High Court allowed and accepted the prayer for quashing of First Information Report No.CR I/2/2015 dated 23.01.2015 registered at Police Station Gandhinagar Zone, District – Gandhinagar, Gujarat.

The Supreme Court observed that the High Court had undertaken a detailed factual examination and evaluation while deciding the prayer for quashing. According to the Supreme Court, such examination should not have been undertaken because disputed questions of fact arose between the parties.

The private respondent(s) had taken the plea that the two agreements dated 25.07.2013 and 13.08.2013 were not binding on Geetanjali Jewellery Retail Limited, which was a subsidiary of Gitanjali Gems Limited. The appellant – Digvijaysinh Himmatsinh Jadeja, on the other hand, submitted that the agreements were valid and binding.

It was also submitted on behalf of the appellant that under the agreement dated 13.08.2013, the private respondent(s) had agreed to return 24 karat pure gold bars for which the consideration or price had been paid, but which were in deposit with GJRL in fiduciary capacity.

Documents Relied Upon by the Appellant

The appellant drew the Supreme Court’s attention to confirmation letters signed by Mr. Santosh Srivastava as the Managing Director at GJRL and Mr. Shivendra Singh, Associate Vice-President (Finance), on behalf of GJRL.

The appellant also relied upon statements of accounts signed by the aforesaid persons. According to the appellant, these documents confirmed the fiduciary nature of the deposit.

The stand of the private respondent(s) was that Mr. Santosh Srivastava had resigned on 09.12.2013 and that the agreements executed by him were without authority.

The Supreme Court observed that these assertions were disputed factual questions. The private respondents had not disputed the signatures of Mr. Santosh Srivastava or Mr. Shivendra Singh, or their designation. Some documents were also signed by Mr. Shivendra Singh.

Sections 406 and 420 IPC and Disputed Questions of Fact

The impugned judgment referred to the requirements of Sections 406 and 420 of the Indian Penal Code, 1860. The Supreme Court stated that it was not examining those aspects in detail because facts first had to be ascertained, including the nature and character of the deposit.

The Court also took note of the contention raised on behalf of the private respondent(s) that contradictions emerged in the stand taken by the appellant – Digvijaysinh Himmatsinh Jadeja in the notice dated 15.07.2014, which referred to breach of contract, and another notice/letter dated 23.08.2014.

The Supreme Court declined to go into these aspects, observing that they were matters to be considered and examined in the investigation. It noted that a wrong may be a civil wrong or, in a given case, a civil wrong and equally constitute a criminal offence. The ingredients of a criminal offence, however, should be satisfied.

The Court refrained from making detailed observations in this regard, though it had considered the notice before passing the order. The appellant’s contention was that the assertions and allegations had to be read holistically and not in a pedantic manner.

Dispute Regarding the Operational and Commercial Agreement

Another contention raised on behalf of the private respondent(s) was that the appellant – Digvijaysinh Himmatsinh Jadeja had not accounted and paid for the sale proceeds in terms of the agreement dated 13.08.2013, which was described as “Operational and Commercial Agreement.” This submission had been accepted in the impugned judgment.

The appellant took exception to this reasoning on several grounds. One of the arguments was that the reasoning did not take into account the specific clause in the agreement dated 13.08.2013, which accepted the agreement dated 25.07.2013 but did not, in any way, override the fiduciary relationship with respect to the gold bars. It was submitted that set off was not available.

The Supreme Court held that the High Court should not have examined and recorded a conclusion on disputed facts for the purpose of quashing the FIR.

Investigation and Statements Recorded

The Supreme Court recorded that, pursuant to registration of the FIR, the investigation had proceeded. The order dated 14.09.2016 passed by the High Court stated that 17 persons had been examined by the investigating officer(s) and statements under Section 161 of the Code of Criminal Procedure, 1973 had been recorded.

The High Court also noted that statements under Section 164 of the Code had been recorded. The Supreme Court observed that these statements had not been considered.

In the context of the scope of Section 482 Cr.P.C., the Supreme Court therefore held that the disputed factual issues should not have been conclusively examined by the High Court while quashing the FIR.

Contentions Concerning Priti Mehul Choksi

The Supreme Court’s attention was also drawn to paragraph 49 of the impugned judgment, with specific reference to respondent – Priti Mehul Choksi.

The Court stated that it believed those observations were general observations to the effect that a wife/spouse could not be said to be involved vicariously.

The appellant – Digvijaysinh Himmatsinh Jadeja submitted to the contrary. The Supreme Court, however, declined to make any comments, observing that it was only upon investigation that a specific role attributable to respondent – Priti Mehul Choksi, if any, would be ascertained.

Supreme Court’s Decision

In view of the disputed factual questions and the stage of the investigation, the Supreme Court held that the High Court should not have undertaken detailed factual examination and evaluation and recorded conclusions for quashing the FIR.

The Supreme Court accordingly set aside the impugned judgment and allowed the appeal.

The Court expressly clarified that its observations would not be read as comments or observations on the merits of the case. Investigation was directed to continue without being influenced by any of the findings or observations made in the impugned judgment or in the Supreme Court’s order.

The Supreme Court further clarified that, while conducting the investigation, the Investigating Officer(s) would keep in mind the rulings of the Supreme Court and High Courts interpreting Sections 406, 420, 464 and 465 etc. of the IPC.

Pending application(s), if any, were directed to stand disposed of.

Conclusion

The Supreme Court’s decision turned on the existence of disputed questions of fact concerning the agreements, the authority of the persons who executed them, the fiduciary character of the gold-bar deposit, and other factual assertions raised by the parties. The Court held that such matters should be examined in the investigation rather than conclusively determined by the High Court while exercising its jurisdiction to quash the FIR.

The Court therefore set aside the Gujarat High Court judgment and permitted the investigation to continue, while expressly directing that neither the High Court’s findings nor the Supreme Court’s observations should influence the investigation or be treated as comments on the merits.

FULL TEXT OF THE SUPREME COURT JUDGMENT/ORDER

We have heard learned counsel for the parties at some length.

The examination of the common impugned judgment dated 05.05.2017, passed by the High Court of Gujarat at Ahmedabad in Special Criminal Application (Quashing) No. 4758 of 2015 and Special Criminal Application No.4759 of 2015, allowing and accepting the prayer for quashing of First Information Report1 No.CR I/2/2015 dated 23.01.2015 registered at Police Station Gandhinagar Zone, District – Gandhinagar, Gujarat, would show that a detailed factual examination and evaluation has been undertaken. We are of the opinion that the said examination and evaluation should not have been done by the High Court. There are disputed questions of fact, as the private respondent(s) have taken a plea that the two agreements dated 25.07.2013 and 13.08.2013 are not binding on the company – Geetanjali Jewellery Retail Limited2, which is a subsidiary of Gitanjali Gems Limited. Learned counsel appearing on behalf of the appellant – Digvijaysinh Himmatsinh Jadeja in fact submits that the agreements are valid and binding. It is also submitted that in terms of the agreement dated 13.08.2013, the private respondent(s) had agreed to return 24 karat pure gold bars for which the consideration or price stood paid, but were in deposit with GJRL in fiduciary capacity.

Learned counsel for the appellant – Digvijaysinh Himmatsinh Jadeja has also drawn our attention to documents in the form of confirmation letters, which are signed by Mr. Santosh Srivastava as the Managing Director at GJRL and Mr. Shivendra Singh, Associate Vice-President (Finance), on behalf of GJRL, as well as the statement of accounts, which again is signed by the aforesaid persons. These documents, it is submitted, confirm the fiduciary nature of the deposit.

The stand of the private respondent(s) is that Mr. Santosh Srivastava had resigned on 09.12.2013, and the agreements executed by him were without authority.

But these assertions noted above are disputed factual questions. The private respondents have not disputed the signatures of Mr. Santosh Srivastava or Mr. Shivendra Singh, or their designation. Some documents are also signed by Mr. Shivendra Singh

The impugned judgment refers to the requirements of Sections 406 and 420 of the Indian Penal Code, 18603. We are not examining the said aspects in detail, as first, facts have to be ascertained, including the nature and character of the deposit.

We must also take note of the contention raised by the learned counsel for the private respondent(s) that there are contradictions emerging in the stand taken by the appellant – Digvijaysinh Himmatsinh Jadeja in the notice dated 15.07.2014, which refers to breach of contract and another notice/letter dated 23.08.2014.

We should not go into these aspects, as it is a matter to be considered and examined in the investigation. A wrong may be civil wrong, or in a given case be a civil wrong and equally constitute a criminal offence. The ingredients of a criminal offence should be satisfied. We would refrain to make detailed observations in this regard, though we have considered the said notice before passing this order. The contention of the appellant – Digvijaysinh Himmatsinh Jadeja is that assertions and all allegations have to read holistically and not in a pedantic manner.

Another contention raised by the learned counsel for the private respondent(s) is that the appellant – Digvijaysinh Himmatsinh Jadeja has not accounted and paid for the sale proceeds in terms of the agreement dated 13.08.2013, which has been described as “Operational and Commercial Agreement.” This submission on behalf of the private respondent(s) has been accepted in the impugned judgment.

The appellant – Digvijaysinh Himmatsinh Jadeja has taken an exception to the said reasoning on several grounds. One of the arguments is that the reasoning does not take into account the specific clause in the agreement dated 13.08.2013, which agreement in fact accepts the agreement dated 25.07.2013, but does not, in any way, override the fiduciary relationship with respect to the gold bars. Set off, it is submitted, is not available. Suffice it is to observe that the High Court should not have examined and recorded conclusion on the disputed fact to quash the FIR. At this stage, we record that pursuant to the registration of the FIR, the investigation had proceeded. The order dated 14.09.2016 passed by the High Court states that 17 persons had been examined by the investigating officer(s) and statements under Section 161 of the Code of Criminal Procedure, 19734 had been recorded. The High Court notes that statements under Section 164 of the Code had also been recorded. These were not considered.

Our attention is drawn to paragraph 49 of the impugned judgment, with specific reference to respondent – Priti Mehul Choksi. We believe that these observations are general observations to the effect that a wife/spouse could not be said to be involved vicariously. The appellant – Digvijaysinh Himmatsinh Jadeja submits to the contrary. We would not like to make any comments as it is only upon investigation, that a specific role attributable to respondent – Priti Mehul Choksi, if any, would be ascertained.

In view of the aforesaid, the impugned judgment is set aside and the appeal is allowed in the above terms.

The observations in this order will not be read as comments or observations on the merits of the case. Investigation will continue without being influenced by any of the findings or observations made in the impugned judgment or in the present order. We also clarify that while conducting the investigation, the Investigating Officer(s) will keep in mind the rulings of this Court and High Courts interpreting Sections 406, 420, 464 and 465 etc. of the IPC.

Pending application(s), if any, shall stand disposed of.

Notes:

1 For short “FIR”

2 For short “GJRL”

3 For short “IPC”

4 For short “Code”