TMI Blog2019 (1) TMI 571X X X X Extracts X X X X X X X X Extracts X X X X ..... iability under Section 141 of the Negotiable Instruments Act and the contentions of the accused can be agitated only at the time of trial. - The decisions relied upon by the learned Counsel for the petitioners can be distinguished on the basis of factual matrix of the present case. Petitions dismissed. - CRIMINAL WRIT PETITION NO. 972 OF 2014 WITH CRIMINAL WRIT PETITION NO. 973 OF 2014, 834 OF 2016 and 835 OF 2016 - - - Dated:- 10-1-2019 - PRAKASH D. NAIK, J. Mr. Chetan Akerkar for Petitioner in Criminal WP No.972 of 2014 and Criminal WP No.973 of 2014. Mr. Aabad Ponda a/w Abhay Dhadiwal i/b A.S. Khan Associates for Petitioner in Criminal WP No.834 of 2016 and Criminal WP No.835 of 2016. Mr. Benny Joseph i/b BJ Law Offices LLP R 1 in Criminal WP No.972 of 2014 and Criminal WP No.973 of 2014 and R 2 in Criminal WP No.834 of 2016 and Criminal WP No.835 of 2016. Mr. Y. M. Nakhwa, APP for the State. .. JUDGMENT : 1. The petitioners in all these petitions have invoked Article 227 of the Constitution of India and inherent powers of this Court under Section 482 of the Code of Criminal Procedure, 1973 challenging the order issuing process and the impugned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... / . Cheque No.767676 dated 20th November, 2009 was issued for an amount of ₹ 1,85,77,745/ and Cheque No.767677 dated 24th November, 2009 was issued for an amount of ₹ 15,60,63,799/ . The said cheques when presented for realisation were dishonored on 18th November, 2009, 21st November, 2009 and 25th November, 2009 respectively with reasons insufficient funds. The complainant issued statutory notice dated 15th December, 2009 calling upon accused Nos. 1 to 4 to make the payment. Although notice was duly served, the accused Company failed to make the payment of the amount due under the dishonoured cheques. Accused No.2 (Petitioner in Criminal Writ Petition No. 834 of 2016) replied to the statutory notice contending that he has resigned from Directorship of accused No.1 Company. Accused No.2 is the signatory to the agreement dated 30th May, 2007 executed between the complainant Company and the accused Company in pursuance to Board resolution dated 24th May, 2007 and liable to be protected in the present complaint. The complaint was filed in the year 2010. Process was issued under Section 138 of the Negotiable Instruments Act, by order dated 13th August, 2010. 4. The case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er were explained to him. He was supposed to work under the directions of other Directors. Accused No.3 had forwarded letter dated 8th October, 2010. It was mentioned that the said petitioner and one Asif Syed were Directors of the Company prior to take over by the present Directors and he has no personal holding in the said Company and was a Director on a professional basis. It is submitted that the complaint does not spell out the role played by the said petitioner and thus he cannot be vicariously liable for the acts of accused No.1 Company. Learned Counsel for the said petitioner relied upon the following decisions : (i) Pooja Ravinder Devidasani Vs. State of Maharashtra and another (2014) 16 SCC 1. (ii) National Small Industries Corporation Limited Vs. Harmeet Singh Paintal and another (2010) 3 SCC 330. 7. Learned Counsel Mr. Ponda appearing for the petitioner in Criminal Writ Petition No. 834 of 2016 and Criminal Writ Petition No.835 of 2016 submitted that the learned Magistrate has mechanically issued process without applying mind to the facts. It is submitted that at the time of commission of offence the petitioner was not In charge and responsible for day ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f such court shows non application of mind. 8. Learned Counsel for the petitioner in the aforesaid petition relied upon the following decisions : (i) Anita Malhotra Vs. Apparel Export Promotion Council and another (2012) 1 SCC 520. (ii) Gunmala Sales Private Limited Vs. Anu Mehta and others (2015) 1 SCC 103. 9. Learned Counsel for the respondent Mr. Joseph submitted that there are sufficient averments in the complaint showing involvement of the accused. It is submitted that it is not necessary to mention further details with regard to the involvement of the accused in the complaint as the averments in the complaint are sufficient to invoke Section 141 of the Negotiable Instruments Act. The order issuing process is passed in the year 2010 and the petitioner in Criminal Writ Petition No. 972 of 2014 and Criminal Writ Petition No.973 of 2014 has approached this Court belatedly. The petitioner in the other petitions viz Criminal Writ Petition No. 834 of 2016 and Criminal Writ Petition No.835 of 2016 had preferred revision application before the Sessions Court which were rejected by assigning cogent reasons. It is submitted that the name of the petitioner in Crimi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tatutory notice it is stated that he has resigned from Directorship on 30th June, 2007. The petitioner has executed agreement dated 30th May, 2007 and pursuant to the said agreement the petitioner and other Directors had agreed to abide by the terms and conditions of the agreement dated 30th May, 2007. He was fully involved in the transaction by signing and executing of the said agreement dated 30th may, 2007 under which the liability is accrued to the accused Company and the subject cheques were issued in pursuant thereof. Thus, the petitioner was managing the day to day affairs of the accused Company. He has attended several meetings for and on behalf of accused Company with representative of respondent No.2 Company from time to time. It is submitted that the order of process has been challenged after lapse of two years. The petitioner was controlling stake in the Company whereby he was managing the affairs of the Company and had a great control over operations and business transactions of the Company. He had been manipulating the equity share holdings. The petitioners Company had filed separate Form 20B in the year 2010 with the Registrar of the Companies. The first Form 20B was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fabricating documents to siphone. It is submitted that the complainant is not admitting the resignation of the petitioner. A document is created with mala fide intention to absorb and escape from all the liabilities. It is submitted that the issues raised by the petitioner can be agitated at the time of trial and the same cannot be considered at this stage. 11. The learned Counsel for the respondent relied upon the following decisions : (i) Gunmala Sales Pvt. Ltd. Vs. Anu Mehta and others (2015) 1 SCC 103. (ii) Standard Chartered Bank Vs. State of Maharashtra and others (2016) 6 SCC 62. 12. The petitioner in Criminal Writ Petition No. 972 of 2014 and Criminal Writ Petition No.834 of 2016 are prosecuted for the offence under Section 138 of the Negotiable Instruments Act vide C.C. No.5836/SS/2015 whereas the petitioners in Criminal Writ Petition No.973 of 2014 and Criminal Writ Petition No.835 of 2016 are prosecuted for the offence under Section 138 of the Negotiable Instruments Act vide C.C. No.5835/SS/2015. 13. That the impugned complaint viz C.C. No.5836/SS/2015 was filed by the complainant on 1st February, 2010. In paragraph 2 of the said complaint it is st ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and are responsible for conduct of day to day affairs of accused No.1 Company at the relevant time. Transaction take placed and the offence were committed by the Company, therefore accused Nos. 2 to 4 are liable for the offence committed by the respondent No.1 under Section 138 read with 141 of the Negotiable Instruments Act. The trial Court issued the process against the accused for the said offence. 14. The petitioners in Criminal Writ Petition No. 973 of 2014 and Criminal Writ Petition No. 835 of 2016 have challenged the proceedings in C.C. No.5835/SS/2015. The petitioners were impleaded as accused Nos. 4 and 2 in the said complaint. The similar contentions are raised by the petitioners in these petitions. Paragraph 2 of the complaint mentions that accused No.1 is a private limited Company and accused Nos. 2 to 4 are the Directors of accused No.1 who were and are In charge of and are responsible for the conduct of day to day affairs of accused No.1 Company. The present offence was committed by accused No.1 within the knowledge, consent and in connivance of accused Nos. 2 to 4 who were fully responsible for the offence and are jointly and severally liable to be prosecuted and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... asis of Form32, accused No.2 cannot claim that he has no concern whatsoever with the conduct of business with accused No.1 after 30th June, 2007. The Court further observed that in the order dated 16 th September, 2015 passed by the High Court in Summary Suit No.2600 of 2012 arising out of the transactions, subject matter of complaints, request of accused No.2 to de link his name from the array of defendants has been rejected holding him connected with the said transactions, which fact also shows that accused No.2 is responsible for the cheque transactions which is subject matter of complaints. There are specific allegations in the complaint that the accused No.2 signed the agreement dated 30th May, 2007 which is the foundation of the complaints. The resolution dated 24th May, 2007 of the Board of Directors of accused No.1 has been produced on record, whereby accused No.2 alone was authorised to sign the documents on behalf of accused No.1. The accused No.2 was In charge of and responsible for the conduct of day to day affairs of accused No.1 when the cheques in question was signed by accused No.3 on behalf of accused No.1. The business of accused No.1 was conducted in the premise ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the complainant thereby providing collateral security for and on behalf of the accused No.1 Company. The accused No.4 stood guarantor to the transaction by executing personal guarantee dated 24th July, 2007 thereby guaranteeing the payment of amount stated in agreement for guarantee dated 24th July, 2007. The reliance is placed on the personal guarantee dated 24th July, 2007. The petitioner has full and ample liberty to contest his defense in the trial and the proceedings need not be quashed in exercise of writ jurisdiction or inherent powers under Section 482 of Cr.P.C. The petitioner accused No.4 was aware and involved in availing the financial accommodation and credit facility to accused No.1 in terms of agreement dated 30th May, 2007. He was involved in day to day affairs of accused No.1 Company as he has attended various meetings with the representatives of accused No.1 Company. He has personally involved in the transaction. The complainant has filed similar reply in Criminal Writ Petition No. 973 of 2014. Considering the averments made in the complaint and the evidence put forth by the complainant, it would be necessary to give an opportunity to the complainant to adduce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ling stake in the Company whereby they jointly possess 100% equity share capital of the Company with 45% shares each. Reliance is placed on annual returns filed by the Company for the year 2008 2009. It is further stated that the accused No.2 was managing the affairs of the Company having control over operations and business transactions of accused No.1. The Company filed two separate Form 20B in 2010. The first Form 20B has been signed on 30th September, 2010 in which accused Rahul Bhomavat has been shown possessing 81000 shares and his wife possessing 9000 equity shares in the Company. Subsequently, the accused No.1 Company filed Form 20B on 22nd October, 2010 in which accused No.2 along with his wife possess 90000 equity shares in the Company. He moved a special notice pursuant to Section 282 of the Companies Act as a shareholder of the Company for removal of Director of Board of Directors on 10th August, 2010. The resolution for removal of Director of the Company was passed on 11th August, 2010 pursuant to special notice under Section 282 of the Companies Act. 19. From all the above circumstances it is apparent that there is direct nexus between the Company and the accused N ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tions filed with ROC and other correspondence unequivocally establish that, as they were signed by the said petitioner (Accused No.4), he was incharge of the day to day administration and affairs of accused No.1. The petitioner (Accused No.2) has admitted in his statement recorded by Enforcement Directorate that accused No.4 and his wife were 100% shareholders of accused No.1. 22. The petitioners had relied upon the decision in the case of Pooja Devidasani (supra), which deals with the requirement of Section 141 of the Negotiable Instruments Act, wherein it is observed that the complaint does not disclose the role of the appellant in the affairs of the Company nor in what manner he is responsible for the conduct of business of the Company was explained. The Court has also observed that the letter of guarantee gives way for a civil liability. Similar view was expressed in the case of National Small Industries Corporation Limited (supra). In the said decision it was observed that Section 141 is a penal provision creating vicarious liability and which, as per settled law, must be strictly construed. It is therefore, not sufficient to make a bald cursory statement in a complaint tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e time the offence was committed, the person accused was in charge of, and responsible for the conduct of business of the Company. This averment is an essential requirement of Section 141 and has to be made in a complaint. Without this averment being made in a complaint, the requirements of Section 141 cannot be said to be satisfied. The Court then considered the averment made in the complaint which was under challenge before the Court which is quoted in paragraph 31 of the said decision and in paragraph 32 it was observed that the averments clearly meet the requisite test. Accused No.1 is the Company, Accused Nos. 2 and 3 are the Chairman and Managing Director respectively and Accused Nos. 6 and 7 were signatory to the cheques. Accused Nos. 4 and 5 were whole time Directors and the assertion is that they were In charge of day to day business of the Company and all of them had with active connivance, mischievously and intentionally issued the cheques in question. 23. In the impugned complaints which are subject matter of these petitions. There are averments as referred to above. It is stated that accused Nos. 2 to 4 are the Directors of accused No.1 Company who were and are In c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bserved that despite presence of basic averments the High Court may quash the proceedings because of the absence of more particulars about role of Director in the company and it may also having come across some unimpeachable, incontrovertible 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 trial would be abuse of process of Court. This decision is also referred to in the case of Standard Chartered Bank (supra). The complainant has pointed out the involvement of the accused No.2 in the Company and contended that the accused No.2 has been controlling the Company. He was signatory to the agreement dated 30th May, 2007. He had actively participated in the accused No.1 Company. He along with his wife was 100% shareholder in the Company. Various other factors were placed on record by the learned Counsel for the complainant. The petitioner accused No.2 has filed rejoinder to the reply filed by the complainant. The contentions therein will be the matter of evidence to be tested during trial. The decisions relied upon by the learned ..... X X X X Extracts X X X X X X X X Extracts X X X X
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