Summoning order must show application of mind, says Delhi HC; quashes summons against man in cheating case

New Delhi, Jun 28 (PTI) Issuing summons is a serious matter and it is imperative that such order shows due application of mind, the Delhi High Court has said while setting aside a direction summoning a man in a Rs 98 lakh cheating case.

The court said although presence of civil remedies do not preclude continuation of criminal proceedings, it is settled law that mere breach of contract does not give rise to the offence of cheating and it is to be shown that the accused had a dishonest intention at the time of making the promise.

"Issuance of summons is a serious issue and it is thus imperative that the summoning order shows due application of mind and examination of the facts of the case as well as the evidence on record," Justice Amit Mahajan said in a June 23 order.

"Merely taking note of the facts and recording prima facie satisfaction, without giving any reasons for the same, is insufficient," the high court added.

The case stemmed from a complaint filed by a company, M/S Indiabulls Securities Limited, which trades stocks, against the man under Section 420 (cheating) of the Indian Penal Code.

The man approached the high court challenging the trial court's September 28, 2013, order summoning him as an accused in the case.

In its complaint, the company alleged that the man dishonestly induced it to open an account in his name and availed the facility of margin trading, where investors borrow funds from their broker to increase their purchasing power and potentially amplify their returns, to buy shares but failed to repay the same despite multiple margin calls.

The man, in his plea before the high court, claimed that the allegations levelled against him were absurd and improbable in nature and the order was passed by the trial court mechanically without appreciating the ingredients of the offence.

It said that the company had caused losses to him by selling his shares worth Rs 7 crore without his express instructions.

While quashing the summoning order, the high court said, "Prima facie, the allegations taken at their face value, do not disclose an element of criminality and commission of a cognisable offence".

It added, "In such circumstances, continuation of proceedings against the petitioner, who is a senior citizen, would be an abuse of the process of law and merit the exercise of the jurisdiction of this court under Section 482 of the CrPC." The high court said the summons were issued without due application of mind, appreciating or scrutinising the material and the company sought to give a criminal cloak to civil proceedings for recovery of dues.

"The impugned order is unreasonable and summons have been arbitrarily issued against the petitioner. Although the magistrate has recorded its satisfaction about the existence of prima facie case in the impugned order, however on a bare perusal of the complaint as well as pre- summoning evidence, the said observation seems to be without any application of mind," the judgement said.

It added that the allegations did not disclose an element of criminality and continuation of the criminal proceedings against the man would amount to abuse of law.

The court said criminal proceedings ought not to be misused to wreak vengeance or harass the other side. PTI SKV ZMN