Hyeoksoo Son v. Moon June Seok

Citation: LL 2025 (4) SC 53 : 2025 INSC 474
Court: Supreme Court of India
Bench: Sanjay Karol, J.; Ahsanuddin Amanullah, J.
Date of Judgment: April 8, 2025
Case Type: Criminal Appeal (Arising out of SLP(Crl.) No. 6917 of 2024)
Appeal From: High Court of Karnataka, Bengaluru, Judgment dated February 19, 2024 (CRLP No. 5599/2023)

Criminal Procedure – Section 482 Cr.P.C. – Quashing of Criminal Proceedings – Scope of Inherent Powers – Prima Facie Case.

Allegations of financial fraud involving misappropriation of Rs. 10,18,54,894.80 by accused, including respondent (CFO), through misrepresentation of GST liabilities – High Court quashed proceedings against respondent citing lack of evidence.

Held

Inherent powers under Section 482 Cr.P.C. must be exercised sparingly, without assessing veracity of allegations or conducting mini-trial – Corroborated statements of respondent and co-accused admitting receipt of Rs. 1,80,00,000, along with respondent’s role in company finances, established prima facie case – Quantum of money involved irrelevant for quashing.

High Court’s order set aside, proceedings revived.

State of Haryana v. Bhajan Lal, followed – Neeharika Infrastructure Pvt. Ltd. v. State of Maharashtra, relied on.

Facts

• Parties: The appellant, Hyeoksoo Son, is the authorized representative of Daechang Seat Automotive Pvt. Ltd., a company manufacturing seat equipment for KIA cars. The respondent, Moon June Seok, was the Chief Financial Officer (CFO) of the company and is accused No. 5 in the criminal proceedings.
• Allegations: The company alleged that N.K. Associates, its financial advisors, misrepresented that the company owed Rs. 9,73,96,225.80 in input tax credit to the GST Department. The company transferred Rs. 10,18,54,894.80 to N.K. Associates and Terminus, believing these were for GST payments. It was later discovered that no such GST liability existed, and the funds were misappropriated.
• Investigation: An FIR was registered on December 11, 2022 (Crime No. 287/2022) at Sanjay Nagar Police Station for offences under Sections 406, 408, 409, 418, 420, 120B read with 34 of the Indian Penal Code, 1860. A chargesheet was filed on March 18, 2023, and cognizance was taken on April 6, 2023.
• High Court Proceedings: The respondent approached the Karnataka High Court under Section 482 Cr.P.C., seeking to quash the proceedings. The High Court quashed the charges against the respondent, citing lack of prima facie evidence and his limited role as a forwarding agent.

Issues

1. Was the Karnataka High Court justified in quashing the criminal proceedings against Moon June Seok under Section 482 Cr.P.C.?
2. Did the allegations and evidence establish a prima facie case against the respondent for the alleged offences?

Arguments

Appellant’s Arguments

• The High Court’s inherent powers under Section 482 Cr.P.C. should be exercised sparingly, and courts cannot conduct a mini-trial to assess the veracity of allegations (reliance on Neeharika Infrastructure Pvt. Ltd. v. State of Maharashtra).
• The respondent, as CFO, played a significant role in the company’s finances and was a vital link in the alleged fraud, not merely a forwarding agent.
• The respondent’s receipt of Rs. 1,80,00,000 in cash, corroborated by his own statement and that of accused No. 1 (Nikhil Kumar Singh), establishes a prima facie case.
• The quantum of the bribe (Rs. 1,80,00,000) is irrelevant for quashing proceedings (Niranjan Hemchandra Sashittal v. State of Maharashtra).

Respondent’s Arguments

• There is no direct evidence against the respondent, and reliance on a co-accused’s statement is impermissible (CBI v. V.C. Shukla).
• As CFO, the respondent had an administrative role due to language barriers and lacked dominion over company funds, making Section 409 IPC inapplicable.
• An eight-month delay in filing the FIR casts doubt on the allegations’ veracity.
• The respondent only forwarded bills to the Managing Director, who approved payments, and thus had no active role in the alleged fraud.

Judgment

• Supreme Court’s Reasoning:
  • The court reiterated the principles governing Section 482 Cr.P.C. from State of Haryana v. Bhajan Lal, which lists seven circumstances for quashing proceedings, emphasizing that allegations must be taken at face value to determine a prima facie case.
  • The respondent’s own statement admitted receiving Rs. 1,80,00,000 in cash from accused No. 1, corroborated by the latter’s statement, establishing a prima facie connection.
  • The respondent’s role in appointing accused No. 2 (Ritesh Merugu) and sharing financial details without formal agreements raised suspicions about his involvement.
  • The court emphasized the need to protect foreign investors’ interests while upholding the principle of “innocent until proven guilty.” Quashing proceedings at this stage was premature given the significant sums involved.
• Decision: The Supreme Court allowed the appeal, set aside the High Court’s judgment, and revived the criminal proceedings (C.C. No. 8373/2023) before the III Additional Chief Metropolitan Magistrate, Bengaluru. The parties were directed to appear on April 16, 2025.

Ratio Decidendi

• Courts exercising powers under Section 482 Cr.P.C. must not delve into the veracity of allegations or conduct a mini-trial; they should only assess if a prima facie case exists.
• Corroborated statements of the accused and co-accused, combined with their roles in the company, can establish a prima facie case sufficient to proceed to trial.
• The quantum of money involved in an alleged offence is not a ground for quashing proceedings.

Obiter Dicta

• The court expressed surprise at the respondent (CFO) and accused No. 1 (a chartered accountant) not formalizing their financial relationship, which involved sharing sensitive company data.
• The rule of law must balance protecting foreign investments with ensuring fair treatment of the accused.

Significance

This judgment reinforces the cautious approach courts must adopt when exercising inherent powers under Section 482 Cr.P.C., particularly in cases involving significant financial fraud. It underscores that prima facie evidence, including corroborated statements, is sufficient to sustain criminal proceedings, leaving the determination of guilt to the trial process.

Multiple Choice Questions (MCQs)

1. What was the primary issue before the Supreme Court in Hyeoksoo Son v. Moon June Seok & Anr.?
   a) Whether the respondent was guilty of criminal breach of trust
   b) Whether the High Court was justified in quashing criminal proceedings against the respondent under Section 482 Cr.P.C.
   c) Whether the company was liable for GST payments
   d) Whether the respondent was a public servant under Section 409 IPC Answer: b) Whether the High Court was justified in quashing criminal proceedings against the respondent under Section 482 Cr.P.C.
2. Which legal provision was invoked by the respondent to quash the criminal proceedings in the Karnataka High Court?
   a) Section 156(1) Cr.P.C.
   b) Section 482 Cr.P.C.
   c) Section 155(2) Cr.P.C.
   d) Section 420 IPC Answer: b) Section 482 Cr.P.C.
3. What was the alleged amount misappropriated in the case?
   a) Rs. 1,80,00,000
   b) Rs. 7,26,25,840
   c) Rs. 10,18,54,894.80
   d) Rs. 9,73,96,225.80 Answer: c) Rs. 10,18,54,894.80
4. Which case was relied upon by the Supreme Court to outline the circumstances for exercising powers under Section 482 Cr.P.C.?
   a) CBI v. V.C. Shukla
   b) State of Haryana v. Bhajan Lal
   c) Dipakbhai Jagdishchandra Patel v. State of Gujarat
   d) Niranjan Hemchandra Sashittal v. State of Maharashtra Answer: b) State of Haryana v. Bhajan Lal
5. What role did the respondent, Moon June Seok, hold in Daechang Seat Automotive Pvt. Ltd.?
   a) Managing Director
   b) Chief Financial Officer
   c) Accounts Manager
   d) Financial Advisor Answer: b) Chief Financial Officer
6. What was the Supreme Court’s ruling regarding the Karnataka High Court’s decision?
   a) Upheld the quashing of proceedings
   b) Set aside the High Court’s order and revived the proceedings
   c) Directed a fresh investigation
   d) Acquitted the respondent Answer: b) Set aside the High Court’s order and revived the proceedings
7. According to the Supreme Court, what should courts avoid when exercising powers under Section 482 Cr.P.C.?
   a) Taking allegations at face value
   b) Conducting a mini-trial to assess the veracity of allegations
   c) Considering corroborated statements of the accused
   d) Reviving criminal proceedings Answer: b) Conducting a mini-trial to assess the veracity of allegations
8. What evidence was found sufficient by the Supreme Court to establish a prima facie case against the respondent?
   a) The FIR alone
   b) Corroborated statements of the respondent and co-accused
   c) Recovery of Rs. 9,69,000 from the respondent’s residence
   d) The company’s financial records Answer: b) Corroborated statements of the respondent and co-accused

Frequently Asked Questions (FAQs)

1. What was the background of the case Hyeoksoo Son v. Moon June Seok & Anr.?
   The case involved allegations of financial fraud by Daechang Seat Automotive Pvt. Ltd., a company manufacturing car seat equipment. The company was misled by its financial advisors, N.K. Associates, into believing it owed Rs. 9,73,96,225.80 in GST input tax credit. The company transferred Rs. 10,18,54,894.80 to N.K. Associates and Terminus, which was allegedly misappropriated. The respondent, Moon June Seok, the company’s CFO, was accused of conspiring in the fraud.
2. Why did the Karnataka High Court quash the proceedings against Moon June Seok?
   The High Court quashed the proceedings under Section 482 Cr.P.C., finding no prima facie evidence against Moon June Seok. It noted that he was a salaried employee with a limited role as a forwarding agent, not directly involved in the misappropriation, and that the alleged bribe of Rs. 1,80,000 (as per the High Court’s error) was too meager to indicate conspiracy.
3. What was the Supreme Court’s rationale for overturning the High Court’s decision?
   The Supreme Court held that the High Court erred in quashing the proceedings, as courts under Section 482 Cr.P.C. should not conduct a mini-trial or assess the truth of allegations. The corroborated statements of the respondent and co-accused, admitting receipt of Rs. 1,80,00,000, along with the respondent’s role as CFO and his appointment of a co-accused, established a prima facie case sufficient for trial.
4. What legal principles did the Supreme Court rely on in this case?
   The Court relied on State of Haryana v. Bhajan Lal to outline the seven circumstances for quashing proceedings under Section 482 Cr.P.C. It also cited Neeharika Infrastructure Pvt. Ltd. v. State of Maharashtra to emphasize that courts must take allegations at face value and avoid testing their veracity at the quashing stage.
5. What was the significance of the respondent’s statement in the case?
   The respondent’s statement, admitting receipt of Rs. 1,80,00,000 in cash from co-accused Nikhil Kumar Singh, was crucial. It was corroborated by the co-accused’s statement, establishing a prima facie connection and justifying the continuation of criminal proceedings.
6. How did the Supreme Court address the respondent’s claim of being only a forwarding agent?
   The Court rejected this claim, noting the respondent’s role as CFO and his involvement in appointing a co-accused as Accounts Manager. The informal sharing of financial details without formal agreements further raised suspicions about his involvement.
7. What broader implications did the Supreme Court highlight in its judgment?
   The Court emphasized the need to protect foreign investors’ interests, given the large sums involved, while ensuring the accused’s right to be presumed innocent until proven guilty. It underscored the balance between investor protection and fair trial rights.
8. What was the final outcome of the Supreme Court’s judgment?
   The Supreme Court set aside the Karnataka High Court’s judgment, revived the criminal proceedings (C.C. No. 8373/2023) before the III Additional Chief Metropolitan Magistrate, Bengaluru, and directed the parties to appear on April 16, 2025.

Referred Cases

Below is a list of the cases referred to in the judgment Hyeoksoo Son v. Moon June Seok & Anr. (LL 2025 (4) SC 53) along with their importance in the context of the judgment:

1. State of Haryana v. Bhajan Lal (1992 Supp (1) SCC 335)
   • Reference in Judgment: Paragraphs 10, 11
   • Importance: This case is a cornerstone for delineating the scope of inherent powers under Section 482 Cr.P.C. The Supreme Court relied on its seven-point framework to determine when criminal proceedings can be quashed. The judgment emphasized that quashing is justified only in specific circumstances, such as when allegations do not prima facie constitute an offence or are inherently improbable. In this case, the Court used these principles to assess whether the Karnataka High Court’s decision to quash proceedings against the respondent was justified, concluding that a prima facie case existed, making quashing inappropriate.
2. Neeharika Infrastructure Pvt. Ltd. v. State of Maharashtra (2021 SCC OnLine SC 315)
   • Reference in Judgment: Paragraphs 8.1(ii), 10
   • Importance: This case clarified and expanded on the principles from Bhajan Lal, reinforcing that courts exercising Section 482 Cr.P.C. powers should not conduct a mini-trial or evaluate the reliability of allegations. The Supreme Court cited it to support the appellant’s argument that the High Court erred by delving into the veracity of allegations rather than assessing whether a prima facie case was made out. It underscored the need to take allegations at face value at the quashing stage.
3. Priti Saraf & Ors. v. State of NCT of Delhi & Ors. (2021 SCC OnLine SC 258)
   • Reference in Judgment: Paragraph 8.1(ii)
   • Importance: This case was cited to bolster the principle that courts under Section 482 Cr.P.C. should not test the truth or falsity of allegations, which is a matter for trial. It supported the appellant’s contention that the High Court’s inquiry into the genuineness of the chargesheet allegations was improper, as the focus should have been on whether the allegations disclosed a prima facie offence.
4. Kaptan Singh v. State of U.P. (2021 SCC OnLine SC 947)
   • Reference in Judgment: Paragraph 8.1(ii)
   • Importance: This case reiterated the limited scope of Section 482 Cr.P.C., emphasizing that courts should not engage in a detailed examination of evidence at the quashing stage. The Supreme Court referenced it to argue that the High Court’s decision to quash proceedings based on a lack of direct evidence against the respondent was flawed, as a prima facie case was sufficient to proceed to trial.
5. Niranjan Hemchandra Sashittal v. State of Maharashtra (2010 SCC OnLine SC 1087)
   • Reference in Judgment: Paragraph 8.1(iii)
   • Importance: This case was cited to counter the High Court’s observation that the alleged bribe amount (Rs. 1,80,000, as erroneously noted by the High Court) was too meager to warrant charges. The Supreme Court relied on it to assert that the quantum of money involved in an offence, whether high or low, is not a valid ground for quashing criminal proceedings, thereby supporting the continuation of the case against the respondent.
6. Surinder Kumar Khanna v. Intelligence Officer, Directorate of Revenue Intelligence (2018 SCC OnLine SC 1744)
   • Reference in Judgment: Paragraph 6
   • Importance: This case was relied upon by the respondent to argue that a co-accused’s statement alone cannot form the basis for implicating an accused. The Supreme Court, however, distinguished this by noting that the respondent’s own statement corroborated the co-accused’s statement, establishing a prima facie connection. This case was significant in addressing the respondent’s defense but was overridden by the presence of corroborative evidence.
7. CBI v. V.C. Shukla (1998 (3) SCC 410)
   • Reference in Judgment: Paragraph 8.2(iv)
   • Importance: Cited by the respondent, this case supports the principle that a co-accused’s voluntary statement cannot be the sole basis for conviction. The Supreme Court found this argument inapplicable at the quashing stage, as the respondent’s own statement and other circumstantial evidence (e.g., his role as CFO) provided sufficient grounds for a prima facie case, shifting the burden to trial for determining guilt.
8. Dipakbhai Jagdishchandra Patel v. State of Gujarat & Anr. (2019 SCC OnLine SC 559)
   • Reference in Judgment: Paragraph 8.2(iv)
   • Importance: This case was referenced by the respondent to argue that reliance on a co-accused’s statement is legally impermissible. The Supreme Court countered this by emphasizing that the respondent’s own admission of receiving Rs. 1,80,00,000, corroborated by the co-accused, justified continuing the proceedings, highlighting that such issues are to be resolved at trial, not during quashing.
9. Karan Talwar v. State of Tamil Nadu (2019 SCC OnLine SC 1390)
   • Reference in Judgment: Paragraph 8.2(iv)
   • Importance: Cited by the respondent to support the contention that a co-accused’s statement alone cannot sustain charges. The Supreme Court rejected this defense, noting that the combination of the respondent’s statement, the co-accused’s statement, and other circumstantial evidence (e.g., the respondent’s role in appointing a co-accused) established a prima facie case, making quashing inappropriate.
10. P.M. Lokanath v. State of Karnataka (2023 SCC OnLine SC 1275)
    • Reference in Judgment: Paragraph 10
    • Importance: This case was cited to reinforce the principles from Bhajan Lal and Neeharika Infrastructure, emphasizing the cautious exercise of Section 482 Cr.P.C. powers. It supported the Supreme Court’s view that the High Court’s quashing of proceedings was premature, as the allegations and evidence disclosed a cognizable offence warranting trial.
11. Karuppudayar v. State (2023 SCC OnLine SC 1354)
    • Reference in Judgment: Paragraph 10
    • Importance: This case was referenced to uphold the limited scope of interference under Section 482 Cr.P.C., aligning with the principle that courts should not quash proceedings when a prima facie case is made out. It reinforced the Supreme Court’s decision to revive the proceedings against the respondent.
12. Naresh Aneja v. State of U.P. (2023 SCC OnLine SC 1487)
    • Reference in Judgment: Paragraph 10
    • Importance: This case was cited to support the consistent application of Bhajan Lal principles, emphasizing that quashing is warranted only in exceptional circumstances. It aided the Supreme Court in concluding that the High Court’s decision to quash the proceedings did not align with these principles, given the prima facie evidence against the respondent.

Summary of Importance

The referred cases collectively shaped the Supreme Court’s analysis by:

• Providing a framework for the exercise of inherent powers under Section 482 Cr.P.C. (Bhajan Lal, Neeharika Infrastructure, etc.).
• Clarifying that courts should not assess the truth of allegations at the quashing stage but focus on whether a prima facie case exists (Priti Saraf, Kaptan Singh).
• Establishing that the quantum of money involved is irrelevant for quashing (Niranjan Hemchandra Sashittal).
• Addressing the respondent’s defense regarding the inadmissibility of co-accused statements, which was overridden by the presence of corroborative evidence (Surinder Kumar Khanna, CBI v. V.C. Shukla, etc.).
• Reinforcing the need for a trial to determine guilt when prima facie evidence exists, protecting both the accused’s rights and public interest (P.M. Lokanath, Karuppudayar, Naresh Aneja).

These cases were pivotal in guiding the Court to set aside the High Court’s order and revive the criminal proceedings, ensuring that the allegations of significant financial fraud were tested through a full trial.