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Mrs. Lata Pramod Dave Versus M/s. Mode Export Private Limited and The State of Maharashtra

2016 (5) TMI 494 - BOMBAY HIGH COURT

Offense punishable under Section 138 r/w. 141 of Negotiable Instruments Act - Petition was not the Director as the time of presentation of cheque since the resignation was tendered - Held that:- When the correctness of the contents of Form No.32 that the Petitioner has tendered her resignation on 1st January 2013 is disputed and when averments in the complaint are, prima facie, sufficient to prove involvement of the Petitioner in the alleged offence, the inherent powers of the High Court under S .....

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in the present case, like the transaction in question and issuance of cheques took place when the Petitioner was very much Director of the Company. Hence, she cannot escape of the liability from this angle also. In this view of the matter, it cannot be said that the Petitioner was not the Director when the offence was committed. Once this is so, she cannot avoid facing prosecution only on the ground of her having ceased to be the Director, when the last few acts of presentation of the cheque to .....

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ondent : Mr. Kapil Dave, i/by Mr. Santosh Thakur, Mrs. H.J. Dedia, A.P.P., JUDGMENT : 1. Rule. Rule is made returnable forthwith, by consent. 2. Heard learned counsel for both the parties and learned A.P.P. for the Respondent No.2-State. 3. By this Petition, preferred under Section 482 of Cr.P.C. and Article 227 of Constitution of India, Petitioner challenges the order dated 16th September 2013 passed by Metropolitan Magistrate, 7th Court at Dadar, Mumbai, in Criminal Complaint No.1675/SS/2013 o .....

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s of M/s. Usher Agro Limited with Respondent No.1. Accordingly, a Loan Agreement was executed by and between Respondent No.1 and Accused No.1 on 13th August 2010. The period stipulated in the said Loan Agreement was, on the request of Accused No.2, extended from time to time and finally it was renewed for 180 days from 27th August 2012 to 26th February 2013 by virtue of a Loan Agreement executed on 5th September 2012. As per the terms of the Loan Agreement, Accused No.1 issued seven post dated c .....

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h were honoured, when presented for payment by Respondent No.1. However, the last cheque bearing No.952611 for the amount of ₹ 1,50,00,000/- came to be dishonoured for the reason Payment Stopped by Drawer , vide Bank Memo dated 6th March 2013. Hence, after issuance of statutory demand notice dated 4th April 2013, Respondent No.1 filed complaint under Section 138 r/w. 141 of Negotiable Instruments Act against Accused No.1 - M/s. Swajay Finance Private Limited and its three Directors, includ .....

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cused No.4 - the present Petitioner has preferred this Writ Petition contending, inter alia, that she has ceased to be the Director of Accused No.1-Company w.e.f. 1st January 2013, in view of the resignation letter tendered by her to the said Company. Therefore, at the relevant time, when the offence was committed, she was not on the Board of Directors. Even during her tenure as Director, she had neither executed, nor signed any document on behalf of the Company. In support of her contention, th .....

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. It is urged by learned counsel for the Petitioner that, once the Petitioner has duly discharged her obligation as a Director by tendering resignation letter dated 1st January 2013 and expressed her desire to discontinue with Accused No.1 - Company and once her letter of resignation is also duly accepted and acted upon and also found reflected in Form-32 and Annual Return of Accused No.1 - Company, she can no more be held liable for any of the acts committed by Accused No.1 - Company or its Dir .....

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by contending, inter alia, that the complaint filed before the Trial Court contains sufficient averments, as required under Section 141 of Negotiable Instruments Act. The contents of the complaint clearly show that the Petitioner herein, along with the other Directors, actively participated in negotiation and in execution of the documents in respect of the loan transaction. Moreover, at the relevant time, the Petitioner was in-charge of and responsible for the conduct of the business of Accused .....

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alleged resignation tendered by the Petitioner from the post of 'Director', it is submitted that it was subsequent to the transaction in question and also subsequent to the issuance of post dated cheques. Moreover, the alleged resignation is also a disputed fact as there is every reason to believe that it was ante-dated. The copy of the Resolution passed by Accused No.1 - Company accepting her resignation, is not produced on record. Hence, according to learned counsel for Respondent No.1 .....

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ion of the Apex Court in Gunmala Sales Private Ltd. Vs. Anu Mehta, AIR 2015 SC 1072. 11. Having heard learned counsel for both the parties, it has to be stated that the law relating to the question involved in this Writ Petition is no more res integra. As Section 138 of Negotiable Instruments Act has converted civil liability for dishonour of cheque into penal liability and Section 141 of the Negotiable Instruments Act casts vicarious liability on the Director of the Company, how to deal with th .....

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out by the Directors of resigning from the directorship, in order to avoid this liability. Therefore, the second question which has engaged the attention of the Courts is, as to whether the Director, who has resigned, can be prosecuted after his resignation has been accepted by the Board of the Directors of the Company? Deciding this question, at the stage when the process issued against such Director is requested to be quashed, has however become more complex as it involves factual aspects as t .....

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also required to consider other factual aspects, like, when Form No.32 was tendered to Registrar of Companies, whether Resolution of the Board of Directors accepting the resignation was passed and the Annual Return filed by the concerned Company. The instant case involves all these factual aspects. 12. Thus, the necessary questions posed before this Court in this Petition for deciding the question whether process issued against the Petitioner by the Trial Court is just, legal and correct, are tw .....

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to answer these two questions, it would be enlightening to reproduce the provisions of Section 141 of Negotiable Instruments Act, which read as follows :- 141. Offences by Companies (1) If the person committing an offence under section 138 is a company, every person who, at the time the offence was committed, was in charge of, and was responsible to the company for the conduct of the business of the company, as well as the company, shall be deemed to be guilty of the offence and shall be liable .....

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nnivance of, or is attributable to, any neglect on the part of, any director, manager, secretary or other officer of the company, such director, manager, secretary or other officer shall also be deemed to be guilty of that offence and shall be liable to be proceeded against and punished accordingly. Explanation: For the purpose of this section (a) company means any body corporate and includes a firm or other association of individuals; and (b) director , in relating to a firm, means a partner in .....

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s of the Company. It was held therein that, there has to be specific averments to that effect, as a matter of fact, as there is no deemed liability of Director in such cases. At the same time, it is not incumbent on the Complainant to elaborate in the complaint the role played by each of the Directors in the transaction forming the subject matter of the complaint, as the individual role of the Director is exclusively within the realm of internal management of the Company. At the initial stage of .....

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gh Paintal & Anr., (2010) 3 SCC 330; N. Rangachari Vs. Bharat Sanchar Nigam Ltd., (2007) 5 SCC 108, and so many of its earlier decisions and was pleased to summarize its conclusions as follows :- 33. We may summarize our conclusions as follows : (a) Once in a complaint filed under Section 138 read with Section 141 of the N.I. Act the basic averment is made that the Director was in-charge of and responsible for the conduct of the business of the company at the relevant time when the offence w .....

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t may, despite the presence of the basic averment, quash the complaint because of the absence of more particulars about role of the Director in the complaint. It may do so having come across some unimpeachable, uncontrovertible evidence, which is beyond suspicion or doubt or totally acceptable circumstances which may clearly indicate that the Director could not have been concerned with the issuance of cheques and asking him to stand the trial would be abuse of the process of the court. Despite t .....

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peachable, uncontrovertible evidence, which is beyond suspicion or doubt or some totally acceptable circumstances, will have to be brought to the notice of the High Court. Such cases may be few and far between, but the possibility of such a case being there cannot be ruled out. In the absence of such evidence or circumstances, complaint cannot be quashed; (d) No restriction can be placed on the High Court's powers under Section 482 of the Code. The High Court always uses and must use this po .....

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necessary qua a particular Director. 16. In this legal back-drop, if one considers the averments in the complaint of the present case, they are in para No.2 of the complaint, to the effect that, Accused Nos.3 and 4 viz. Mr. Pramod Dave and Mrs. Lata Pramod Dave are Directors of the Accused No.1 Company. They were, as directed and instructed by Mr. Vinod Kumar Chaturvedi, authorized to sign and execute documents, loan agreement, pledge agreement, demand promissory note and such other documents, .....

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n. Hence the Accused Nos.2 to 4 were in charge of and responsible for the conduct of the business at relevant time when the offence was committed by the Accused. They are responsible for the issuance of the cheque which is subject matter of the present complaint and so also for their dishonour. They failed and neglected to exercise enough care and caution to ensure that the cheque issued by the Accused Company in discharge of legally enforceable debts / liability are honoured upon being presente .....

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be found in the order passed by the Magistrate of issuing process against the Petitioner, as the Magistrate was justified in doing so. Hence, as on overall reading of the complaint, those averments are sufficient to make out case against the Petitioner, this Court should, as held by the Apex Court in the case of Gunmala Sales Private Ltd. (Supra), refuse to quash the complaint under Section 482 of Cr.P.C. 18. In view of clause (c) of Para 33 of the Apex Court Judgment, this Court may, despite p .....

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rector who had resigned long before issuance of cheques. However, as emphasized by the Apex Court, such circumstance must be established on the basis of unimpeachable and uncontrovertible evidence, which is beyond suspicion or doubt. Thus, according to Apex Court, though there is no restriction on the High Court's powers under Section 482 of Cr.P.C., those powers are always required to be used sparingly and with great circumspection to prevent, inter alia, the abuse of the process of the Cou .....

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Annual Return and Form-32 to substantiate her case that she has tendered her resignation w.e.f. 1st January 2013; it was accepted by the Company and accordingly given effect to by the Registrar of Companies. 20. If the fact of her tendering the resignation was not disputed and there was uncontrovertible and unimpeachable evidence on record to prima facie prove that she has actually tendered the resignation on the date on which it was given i.e. 1st January 2013, then, as held in the above said .....

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, prima facie, go to prove that it was not tendered actually on that day but subsequent thereto. Just in order to escape from the clutches of Section 141 of Negotiable Instruments Act, it is shown ante-dated. It is pertinent to note that, if Petitioner had really tendered her resignation on 1st January 2013 itself, on the receipt of the statutory demand notice dated 4th April 2013 issued by Respondent No.1, she would have immediately replied to it bringing on record the fact that she has already .....

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y. If she had really resigned on 1st January 2013, they would have replied to the statutory demand notice bringing this fact on record. However, none of them have done so, which makes it necessary to draw an inference that, even till April, 2013, when the statutory demand notice was issued, there was no such resignation of Petitioner on record, nor it was acted upon. 22. Further it is pertinent to note that the summons of the complaint was issued to the Petitioner on the address of Accused No.1, .....

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roves that Form No.32, along with Annual Return, was submitted to the Registrar of Companies on 22nd August 2013 and not immediately on the receipt of her alleged resignation in January 2013. In this respect it is material to note that, though the copy of the Annual Return is produced on record by the Petitioner, the copy of the Resolution passed by the Board of Directors of Accused No.1-Company accepting her resignation letter is not produced on record, to show that it was accepted and acted up .....

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ubmission advanced by learned counsel for Respondent No.1 that, the relevant period for deciding the liability of the Director for the act committed by the Company is not only when the cheque was dishonoured, but also when the disputed transaction was entered into, and from time to time thereafter like at the time of issuance of the cheque in question, presentation of said cheque in Bank etc. In the instant case, the averments in the complaint go to reveal that the transaction in question was en .....

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the date of her resignation, two were honoured. The third cheque, which is disputed one, though dated 27th January 2013, it being a post-dated cheque, it has to be inferred that it was issued along with six other cheques and the first postdated cheque is dated 27th September 2012; therefore, necessarily implying that, when these post-dated cheques, including the dispute cheque, were issued, Petitioner was very much the Director of the Company. Therefore, from this angle also, the Petitioner can .....

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acts cannot be separated from one another. They together constitute the offence under Section 138 of Negotiable Instruments Act. It is the combination of all these acts, which gives rise to the commission of the offence under the said Section. Therefore, if the relevant date for attracting vicarious liability of the Director under Section 141 of the Negotiable Instruments Act is, at the time the offence was committed , then, as the offence of Section 138 of Negotiable Instruments Act comprises .....

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the last few acts of presentation of the cheque to the Bank and its dishonour took place. 27. Thus, when the correctness of the contents of Form No.32 that the Petitioner has tendered her resignation on 1st January 2013 is disputed and when averments in the complaint are, prima facie, sufficient to prove involvement of the Petitioner in the alleged offence, the inherent powers of the High Court under Section 482 of Cr.P.C., which are to be invoked sparingly and in exceptional circumstances, cou .....

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