THE HONOURABLE SRI JUSTICE K.SURENDER
CRIMINAL PETITION No.1254 OF 2023
ORDER:
1. This Criminal Petition is filed to quash the complaint filed against the petitioners/A3 and A4 in STC.N.I.No.6513 of 2022 under Section 138 of the Negotiable Instruments Act, on the file of XII Metropolitan Magistrate, Nampally, Hyderabad.
2. The 2nd respondent filed a compliant under Section 138 of the Negotiable Instruments Act against A1 company, A2/Managing Director and these petitioners who are also Directors of A1 company.
3. According to the complaint, agreement to sell-cum- General Power of Attorney was executed by A1 represented by A2 and towards part payment, issued cheque bearing No.000443 dated 30.01.2022 for Rs.25.00 lakhs and agreed that the land sale transaction is subject to clearance of the cheque. The said cheque when presented for clearance was returned unpaid and accordingly, the 2nd respondent issued legal notice to A1 company and also the petitioners. For not 2 paying the amount covered by the cheque, the present complaint is filed by the 2nd respondent.
4. Learned counsel appearing for the petitioners would submit that though the petitioners are Directors of A1 company, they have not dealt with the 2nd respondent in any manner and have nothing to do with the transactions of sale or the agreement to sell-cum-GPA. The said GPA was entered into by A1 represented by A2 and the cheque was also issued by A2 on behalf of A1 Company. In the said circumstances, when there are no specific details of any kind of involvement of the petitioners in the transactions in the complaint, the proceedings against these petitioners have to be quashed. In support of his contention, he relied on the judgment of the Hon'ble Supreme Court in the case of SMS Pharmaceuticals Ltd., v. Neeta Bhalla and another [Appeal (Crl.) 664 of 2002, dated 20.02.2007]. In the said judgment, the Hon'ble Supreme Court held that a person to be made vicariously liable should have been in charge and responsible for the conduct of the business of the company at the relevant time.
3
5. On the other hand, learned counsel appearing for the 2nd respondent/complainant would submit that when notice was issued by complainant, reply notice was also issued on behalf of these petitioners, as such, it cannot be said that these petitioners were unaware of the transactions and proceedings cannot be quashed.
6. Admittedly, the Agreement to Sell-cum-GPA dated 30.10.2021 was entered into by A1 company represented by A2. Thereafter, undated affidavit-cum-declaration was entered into by A1 represented by A2 wherein it is mentioned that the cheque in question was issued and the land sale transaction was subject to the clearance of the subject cheque. The 2nd respondent/ complainant is also signatory to the said affidavit-cum-declaration and also the agreement to sell-cum-GPA dated 30.10.2021.
7. In the complaint, there is no narration as to how these petitioners are involved in any of the transactions with the 2nd respondent/complainant. Admittedly, both the documents i.e., agreement to sell-cum-GPA dated 30.10.2021 and also the affidavit-cum-declaration, which was executed thereafter were signed by A2 on behalf of A1 company. The cheque in question was also signed by A2 issued on behalf of A1 Company. No where 4 in the entire transactions, the involvement of these petitioners can be inferred. No details are given in the complaint as to how these petitioners were responsible for the execution of the said two documents or while issuing the said cheque. Only for the reason of reply notice being given on behalf of these petitioners along with A1 and A2 would not entail the complainant to proceed against these petitioners unless specific role is attributed to these petitioners who are directors of A1 company and are made vicariously liable for the reason of cheque being given on behalf of A1 company signed by A2.
8. The directors of the company cannot be made vicariously liable under Section 141 of the Negotiable Instruments Act unless it is shown that they were responsible for on a daily basis or for any transactions which have been undertaken on behalf of the company. In the present case, the documents clearly indicate that no role was played by these petitioners and further, no averments are made in the complaint as to how these petitioners were responsible in any of the transactions. For the said reasons, the petitioners succeed.
9. In the result, the proceedings against the petitioners/A3 and A4 in STC.N.I.No.6513 of 2022 under Section 138 of the 5 Negotiable Instruments Act, on the file of XII Metropolitan Magistrate, Nampally, Hyderabad, are hereby quashed.
10. Accordingly, the Criminal Petition is allowed. Consequently, miscellaneous applications, if any, shall stand closed.
_________________ K.SURENDER, J Date: 12.04.2023 kvs 6 THE HON'BLE SRI JUSTICE K.SURENDER CRIMINAL PETITION No.1254 OF 2023 Dt.12.04.2023 kvs