THE HONOURABLE SRI JUSTICE K.SURENDER
CRIMINAL PETITION NOS. 5345 OF 2018, 6892 & 6939 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 No.5345 of 2018 is preferred by A8,
Criminal Petition No.6892 of 2022 is preferred by A3 and Criminal
Petition No.6939 of 2022 is preferred by A4 for quashing the
proceedings in C.C.N.I.No.2031 of 2022 on the file of VIII
Metropolitan Magistrate, Manoranjan Complex, Hyderabad under
Section 138 of the Negotiable Instruments Act.
3. The facts of the case are as follows:
a) The Complainant/respondent No. 2 Company - M/s.
K.C.J. Properties Private Limited filed the present complaint under Section 200 of the Code of Criminal Procedure against the petitioners and other directors, alleging that they have committed the offence punishable under Section 138 of the Negotiable Instruments Act. According to the complaint, accused No.1 represented by accused Nos.2 to 12, who are the Managing 2 Director, Directors, Executive Directors, CFO, Secretary, and authorized Signatories, being responsible for the conduct of day to day business, have approached the respondent No. 2 - Complainant Company and borrowed a sum of Rs.50 lakhs on 25.05.2016 assuring that they would pay the said amount with interest @ 14.5% per annum payable on or before 23.08.2016.
b) Accused No.1 Company has executed demand pronote dated 25.05.2016 for a sum of Rs.51,60,890/- towards principal amount including interest in favour of the respondent No.2 - Complainant Company. Accused No.1 Company has issued two cheques bearing Nos.170404 and 170405 dated 22.08.2016 for Rs.50,00,000/- and Rs.1,60,890/- respectively drawn on Punjab National Bank, Large Corporate Branch, Ashram Road, Ahmedeabad, Gujarat. Both the cheques when presented were returned dishonored for the reason of "Funds Insufficient" vide memo dated 29.08.2016.
c) The respondent No. 2 - Complainant Company issued legal notice dated 10.09.2016 asking accused No.1 and others to pay the money under the cheques within a period of 15 days from the date of receipt of the notice. The notice was received on 12.09.2016 and accused have given false and frivolous replies denying the 3 allegations. The respondent No.2 - Complainant Company has filed a complaint before the learned VI Additional Chief Metropolitan Magistrate, Nampally at Hyderabad under Section 138 of the Negotiable Instruments Act. Cognizance of the case was taken against accused Nos.1 to 12 including the petitioners.
4. It is argued by the counsel for the petitioner/A8 in Criminal Petition No.5345 of 2018 that he resigned from the company and was intimated to the ROC on 15.09.2015 which was long before the date of offence which is 25.05.2016.
5. Counsel for petitioner/A3 in Criminal Petition No.6892 of 2022 and petitioner/A4 in Criminal Petition No.6939 of 2022, argued that though they were directors of A1 company, 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, it is 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 1 (2014) 16 SCC 1 4 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. A2 is the Managing Director and A12 and A13 are the signatories to the cheques and promissory note. It can be accepted 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 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/A8 in Criminal Petition No.5345 of 2018 had resigned even before the transactions in question. The two petitioners, who are A3 and A4 in Criminal Petition Nos.6892 and 6939 of 2022 respectively are Directors, however the complaint mentions that they were responsible. Mentioning that the petitioners were responsible would not suffice. They 5 should have been in-charge and handled the 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/A8, A3 and A4 in Criminal Petition Nos.5345 of 2018, 6892 and 6939 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 6 THE HON'BLE SRI JUSTICE K.SURENDER CRIMINAL PETITION NOS. 5345 OF 2018, 6892 & 6939 OF 2022 Dt.27.10.2022 kvs