Anish Kasturbhai Shah vs The State Of Telangana

       THE HONOURABLE SRI JUSTICE K.SURENDER


     CRIMINAL PETITION NOS. 6885 AND 6936 OF 2022

COMMON ORDER:

1.   Since the criminal petitions are filed in same calendar case,

they are being heard together and disposed of by way of this

Common Order.

2.   Criminal Petition Nos.6936 of 2022 is preferred by A3 and

Criminal Petition No.6885 of 2022 is preferred by A4 in

C.C.N.I.No.2032 of 2022 on the file of VIII Metropolitan

Magistrate, Manoranjan Complex, Hyderabad.

3.   The facts of the case are as follows:

     a) The complainant alleged in the complaint stating that

A1 company      represented by A2 to A7, are the Managing

Director, Directors, Executive Directors, CFO, Secretary, who are

authorized Signatories and all are in charge of and responsible

for the conduct of day to day affairs of the A1 company.       A1

company approached the complainant with the consent and

knowledge of the A2 to A7 for borrowing funds through Inter

Corporate Deposit and based on such representation, the

complainant advanced a sum of Rs.50,00,000/- to A1 company

on 25.05.2016, on assurance made by all the accused that they

will repay   the said amount within three months along with
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interest @ 14.5% per annum on or before 04.10.2016 being the

maturity date.

       b) After receiving the said amount, A1 executed a Demand

Promissory Note dated 05.07.2016 in favour of the complainant

for a sum of Rs.51,62,678/- towards the principal amount and

also towards the accumulated interest thereon. The said Inter

Corporate Deposit Receipt dated 05.07.2016 was signed by A6

and A7 on behalf of A1 company with the knowledge and

consent of other accused. All the accused to clear the principal

amount and interest amount, have issued two cheques bearing

Nos.658198 & 658197 for Rs.50,00,000/- & 1,62,678/- both

dated 03.10.2016, drawn on Punjab National Bank, Large

Corporate Branch, Ashram Road, Ahmedabad, Gujarat to clear

the legally valid debt. When the said cheques were presented, the

same    were     dishonored   with   an   endorsement   as   'funds

insufficient' vide memo dated 02.11.2016. As such, legal notice

was issued to A1 to A7 to the address of A1 company.

4.     Learned counsel for petitioner submits that there are

absolutely no specific allegations which are leveled against the

petitioners to prosecute them under Section 138 of the

Negotiable Instruments Act and unless there are specific

allegations regarding the role played by them in the transactions,
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they cannot be prosecuted for the offence under Section 138 of

the Negotiable Instruments Act.

5.        The petitioners/A4 & A3 in Crl.P.No.6885 and 6936 of

2022 respectively, being non executive directors in A1 company

have no role in the day to day affairs of A1 company and in the

entire complaint, there are absolutely no allegations regarding

their involvement in the transactions in question. The Hon'ble

Supreme Court in the case of Pooja Ravinder Devidasani v.

State of Maharashtra1, held as follows:

          "17. ....... Non-executive Director is no doubt a custodian of the governance
      of the company but is not involved in the day-to-day affairs of the running of its
      business and only monitors the executive activity. To fasten vicarious liability
      under Section 141 of the Act on a person, at the material time that person shall
      have been at the helm of affairs of the company, one who actively looks after the
      day-to-day activities of the company and is particularly responsible for the
      conduct of its business. Simply because a person is a Director of a company, does
      not make him liable under the NI Act. Every person connected with the Company
      will not fall into the ambit of the provision. Time and again, it has been asserted
      by this Court that only those persons who were in charge of and responsible for
      the conduct of the business of the Company at the time of commission of an
      offence will be liable for criminal action. A Director, who was not in charge of
      and was not responsible for the conduct of the business of the Company at the
      relevant time, will not be liable for an offence under Section 141 of the NI Act."



6.        As seen from the averments in the complaint, A4 and

A3 are the Directors, against whom it is alleged in the

complaint that they were responsible for the day to day

affairs of the company. Omnibus and vague allegations are

made           in     the      complaint            attributing         knowledge           of

transactions to all the directors.                        It is highly improbable
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    (2014) 16 SCC 1
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and the statement made in the complaint appears to have

been made only for the purpose of implicating all the

directors in the case, which is being prosecuted by the 2nd

respondent.

7. For the reasons aforementioned, it is apparent that the petitioner/A4 in Criminal Petition No.6885 of 2022 and petiitioner/A3 Criminal Petition No.6936 of 2022 respectively, have no role at all in the entire transactions, the judgment of the Hon'ble Supreme Court in the case of Pooja Ravinder Devidasani v. State of Maharashtra (supra) is squarely applicable to the present facts and accordingly, the proceedings against petitioners/A4 and A3 in Crl.P.No.6885 and 6936 of 2022 respectively in CC.N.I.No.2032 of 2022 on the file of VIII Metropolitan Magistrate, Manoranjan Complex are hereby quashed.

8. In the result, all the Criminal Petitions are allowed.

_________________ K.SURENDER, J Date: 27.10.2022 kvs 5 THE HON'BLE SRI JUSTICE K.SURENDER CRIMINAL PETITION NOS. 6885 AND 6936 OF 2022 Dt.27.10.2022 kvs 6