Trial Court Cannot Issue Summons To Accused Without Assigning Proper Reasons: Delhi High Court

Justice Amit Mahajan observed, “Merely taking note of the facts of the case and recording prima facie satisfaction, without giving any reasons for the same, is insufficient.”

The bench thus set aside the summons issued to the accused in an FIR for alleged cheating, lodged by Indiabulls Securities, noting that the summons were 'unreasoned' and issued arbitrarily.

As per the FIR, the petitioner had dishonestly and fraudulently induced the company to open an account in his name and availed the margin facility with a dishonest intention of cheating it.

The Trial Court found that a prima facie case was made out against the petitioner and issued a summons.

Petitioner, however, seeking to quash the summons, approached the High Court contending that the dispute is purely civil in nature and the company is giving a criminal colour to the same to arm-twist him.

He submitted that there was no record of any margin calls, despite which, the Trial Court issued a summons.

The High Court observed that the Trial Court had rightly taken note of the alleged inducement on the part of the petitioner for availing the margin facility, allegedly to cheat the company. However, it added that no deference was paid to the material on record, and summons were issued.

“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,” it remarked.

The Court then noted that even though the entire case rests on the allegation that the petitioner deliberately evaded payment despite due notice by way of margin calls, no particulars were pleaded in the complaint nor stated by the complainant witnesses as to when the alleged margin calls were made in relation to the dues.

“Although the learned Magistrate has recorded its satisfaction about the existence of a prima facie case in the impugned order, however, as discussed above, on a bare perusal of the complaint as well as the pre-summoning evidence, the said observation seems to be without any application of mind…Trial Court has made an overarching reference to the evidence by stating that the same discloses commission of offence under Section 420 of the IPC, without actually appreciating or scrutinizing the material,” the Court observed.

It agreed with the Petitioner that the dispute essentially relates to breach of contract, which does not give rise to the offence of cheating unless dishonest intention at the time of making the promise is shown, which was not the case herein.

“Merely because the petitioner failed to pay the margin money in response to the legal notice, the same would not prove that the petitioner's intention was to cheat the complainant company from the very inception,” the Court finally observed and quashed the summons.

Appearance: For the Petitioner : Mr. Santosh Paul, Sr. Adv. with Mr. Sriharsh N. Bundela, Ms. Aditi Rai & Mr. Akshit Kumar, Advs. For the Respondents : Mr. S. Qammar, Adv. for R-2.

Case title: Rasiklal Mohanlal Gangani v. State & Anr.

Case no.: CRL.M.C. 6012/2019

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