Telangana High Court
B. Sunitha Rani, vs The State Of Telangana on 20 June, 2024
THE HONOURABLE SMT JUSTICE K. SUJANA
CRIMINAL PETITION No.10992 of 2023
ORDER:
This Criminal Petition is filed under Section 482 of the Code of Criminal Procedure, 1973 (for short 'Cr.P.C.') by the petitioner/accused No.3 seeking to quash the proceedings against her in CC.NI.No.6086 of 2022 on the file of the VIII Metropolitan Magistrate, Hyderabad, for the alleged offences punishable under Section 138 of the Negotiable Instruments Act, 1881 (for short 'NI Act') read with Section 420 of Indian Penal Code, 1860 (for short 'IPC').
2. The brief facts of the case are that the respondent No.2/de facto complainant, along with others has entered into a registered Development Agreement cum GPA dated 11.09.2014 vide document No.4646/2014 with accused No.1 - Company (hereinafter referred to as 'accused - Company') which is represented by accused No.2/Managing Director and accused No.3/petitioner/Director, for the purpose of development of their respective properties. Under the said Development Agreement, the accused - Company agreed to 2 SKS, J Crl.P.No.10992 of 2023 deliver 50% of plotted area to respondent No.2 and to construct luxury independent villas over the said plots and to deliver the same within 36 months from the date of obtaining sanction permission from HMDA. Subsequently, the accused - Company obtained permission from HMDA under permit No.17/LO/HMDA/2014 dated 30.05.2014 and formed a layout and divided the land into plots but failed to commence the construction of villas and utterly failed to abide by the terms and conditions, as agreed upon in the Development Agreement. Thereafter, the accused - Company expressed its inability to construct villas on the ground that the market conditions are not good. After elaborate discussions, the respondent No.2 along with others agreed to enter into a Supplementary Agreement with the accused - Company, under which the accused - Company agreed to allot additional net plotted area admeasuring 852 square yards to the respondent No.2 and others, in lieu of non-construction of villas.
3. In the said Supplementary Agreement dated 26.05.2017 the accused - Company stated that since it has already alienated all the plots that were allotted, the Company would pay a sum of Rs.35,000/- per square yard 3 SKS, J Crl.P.No.10992 of 2023 in respect of 852 square yards of plot to respondent No.2 and others, which comes to an amount of Rs.2,98,20,000/- payable in six monthly installments commencing from July 2017 and ending in December 2017. In addition, the accused - Company also agreed that in the event of failure to pay the total amount as stated above by December 2017, a sum of Rs.40,000/- per square yard for the balance installment amounts would be paid along with 24% per annum on the defaulted installment amounts. It is alleged that in spite of the said specific undertaking given under the Supplementary Agreement, the accused - Company failed to pay any of the installments.
4. After repeated requests and demands made by respondent No.2, the accused - Company issued cheque bearing No.000403 dated 15.05.2020 for an amount of Rs.84,00,000/- drawn on HDFC Bank, Lakdikapul Branch, Hyderabad, duly signed by accused No.2 and assured to pay the balance amount within a short period of time. Further, the accused - Company impressed the respondent No.2 that the required funds are available in their account and requested to present the cheque for realization of amount. However, when the respondent No.2 presented the 4 SKS, J Crl.P.No.10992 of 2023 said cheque, to his utter surprise, the said cheque was returned on 11.06.2020 with an endorsement "Account Blocked". Later, the respondent No.2 learnt that the said cheque was given without keeping sufficient available funds. Therefore, it is alleged that the accused No.3 being Director of accused - Company is liable for offence punishable under Section 138 of NI Act read with Section 420 of IPC for issuing cheque from blocked account without keeping sufficient available funds. Aggrieved thereby, the accused No.3/petitioner filed this petition.
5. Heard Sri G.Ashok Reddy, learned counsel for petitioner, and Sri T.Pranav Rao, learned counsel appearing for respondent No.2.
6. Learned counsel for petitioner submitted that except making a vague allegation that petitioner is liable for alleged offences by virtue of factum of holding the post of Director in the accused - Company, there are no specific allegations leveled against the petitioner. He contended that the petitioner is neither a signatory, nor a party to neither the Development Agreement, nor to the Supplementary Agreement, and that the said Agreements 5 SKS, J Crl.P.No.10992 of 2023 were entered into only between the accused - Company and respondent NO.2. He asserted that basing on mere mention that the petitioner, being Director of the accused - Company, is responsible for day to day affairs of the business, cannot be a ground to implicate the petitioner in criminal case.
7. Learned counsel for petitioner specifically contended that as per the complaint averments, though the date of offence is the date of presentation of the cheque i.e., 10.06.2020; the date of dishonor of cheque is 11.06.2020 and the date of issuance of notice is 19.06.2020; it is important to look into the fact that the petitioner resigned from accused - Company with effect from 10.03.2020, as such, none of the allegations can be attributed against her by any stretch of imagination. He further contended that the material averments that are required to be incorporated in terms of sub-section (1) of Section 141 of NI Act, are nowhere found in the complaint averments. He reiterated that the petitioner has resigned from the post of Director of accused - Company., much prior to the issuance of cheque and the proceedings against her are liable to be quashed in accordance with the 6 SKS, J Crl.P.No.10992 of 2023 law laid down by the Hon'ble Supreme Court in Anita Malhotra Vs. Apparel Export Promotion Council 1.
8. In support of the said contentions, learned counsel for the petitioner relied on the judgment of the Hon'ble Supreme Court in the case of Ashok Shewakramani Vs. State of Andhra Pradesh 2 whereunder, it was categorically held that 'every person who is sought to be roped in by virtue of sub-section (1) of Section 141 of the Negotiable Instruments Act, 1881 must be a person who at the time the offence was committed, was in charge of and was responsible to the Company for the conduct of business of the company'. He further relied upon the judgment of the Hon'ble Supreme Court in the case of S.P. Mani & Mohan Dairy Vs. Dr.Snehalatha Elangovan 3, whereunder, it was observed that the primary responsibility is on the complainant to make the basic and specific averments in the complaint so as to make the accused vicariously liable. He lamented that even as per the case of respondent No.2, the petitioner is said to be allegedly liable only for the sole reason that he held the 1 (2012) 1 SCC 520 2 (2023) 8 SCC 473 3 (2022) SCC OnLine 1238 7 SKS, J Crl.P.No.10992 of 2023 post of Director in the accused - Company, but the basic requirement of there being specific allegations against the petitioner being absent, he prayed this Court to allow the Criminal Petition by quashing the proceedings against the petitioner.
9. On the other hand, learned counsel appearing for respondent No.2, submitted that the allegations against the accused - Company are serious in nature as the said Company has cheated respondent No.2 and many other people on the pretext of developing and handing over plots to them. He asserted that the matter requires full-fledged trial as the petitioner/accused No.3, has been the Director of the accused - Company during the execution of Development Agreement and the Supplementary Agreement, as well. He reiterated that though the dates of issuance of cheque and its presentation are different, as the cheque was issued during the period of petitioner itself, she is liable for the offence. Therefore, prayed this Court to dismiss the Criminal Petition.
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10. Having regard to the rival submissions made and on going through the material placed on record, it is to be noted that the primary contention of the learned counsel for the petitioner is that the petitioner/accused No.3 is not the Director of the accused - Company as he resigned from the said post and is no way concerned with the day to day affairs of the business of accused - Company, as such, she is not responsible for any of the acts of the accused - Company and that being so, no case can be made out against the petitioner for the alleged offences punishable under Section 138 of NI Act and Section 420 of IPC.
11. As seen from the record, though the name of petitioner/accused No.3 is mentioned in the legal notice dated 19.06.2020 it is noted that the petitioner/accused No.3 is not aware of any day to day affairs of the business of accused - Company in view of her resignation vide resignation letter dated 01.03.2020. Perusal of the material placed on record reveals that the petitioner/accused No.3 submitted resignation letter on 01.03.2020 the same was approved vide letter dated 09.03.2020 accepting the resignation of petitioner/accused No.3 with effect from 9 SKS, J Crl.P.No.10992 of 2023 10.03.2020. However, though learned counsel for respondent No.2 contended that the cheque issued to respondent No.2 was issued prior to the said resignation, it is pertinent to note that the same was presented on 10.06.2020 and thereafter, the same was dishonored on 11.06.2020. Therefore, keeping in view the fact that the resignation of petitioner/accused No.3 was approved with effect from 10.03.2020 and the same was also intimated to the Registrar of Companies vide Form No.DIR-12.
12. At this stage, it is pertinent to note the observation made by the Hon'ble Supreme Court in the case of Ashok Shewakramani (supra 2) wherein, in paragraph No.22 it is held as under:
"22. In the light of sub-section (1) of Section 141, we have perused the averments made in the complaints subject-matter of these three appeals. The allegation in Para 1 of the complaints is that the appellants are managing the Company and are busy with day-to-day affairs of the Company. It is further averred that they are also in charge of the Company and are jointly and severally liable for the acts of Accused 1 Company. The 10 SKS, J Crl.P.No.10992 of 2023 requirement of sub-section (1) of Section 141 of the NI Act is something different and higher. Every person who is sought to be roped in by virtue of sub-section (1) of Section 141 of the NI Act must be a 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. Merely because somebody is managing the affairs of the Company, per se, he does not become in charge of the conduct of the business of the Company or the person responsible for the Company for the conduct of the business of the Company. For example, in a given case, a manager of a Company may be managing the business of the Company. Only on the ground that he is managing the business of the Company, he cannot be roped in based on sub-section (1) of Section 141 of the NI Act."
13. Having regard to the above extracted portion, it is noted that every person who is sought to be roped in by virtue of sub-section (1) of Section 141 of NI Act, must be a person who at the time the offence was committed, was in charge of and was responsible to the Company for the conduct of business of the company. Reverting back to the facts of the case on hand, it is to be noted that the 11 SKS, J Crl.P.No.10992 of 2023 resignation of petitioner/accused No.3 was approved with effect from 10.03.2020 whereas, the date of dishonor of cheque is 11.06.2020 and the same clearly shows that the petitioner/accused No.3 was not in charge of the affairs of accused - Company as on the date of incident.
14. That apart, it is imperative to note the observation made by the Hon'ble Supreme Court in S.P. Mani (supra 3). The relevant paragraph No.47 reads as under:
"47. At this stage, we should look into the decision of this Court in K.K. Ahuja v. V.K. Vora [K.K. Ahuja v. V.K. Vora, (2009) 10 SCC 48 :
(2009) 4 SCC (Civ) 1 : (2010) 2 SCC (Cri) 1181] , wherein this Court discussed the principles of vicarious liability of the officers of a company in respect of dishonour of a cheque and held : (SCC pp. 61-62, para 27) "27. The position under Section 141 of the Act can be summarised thus:
(i) If the accused is the Managing Director or a Joint Managing Director, it is not necessary to make an averment in the complaint that he is in charge of, and is responsible to the company, for the conduct of the business of the company. It is 12 SKS, J Crl.P.No.10992 of 2023 sufficient if an averment is made that the accused was the Managing Director or Joint Managing Director at the relevant time. This is because the prefix "Managing" to the word "Director" makes it clear that they were in-charge of and are responsible to the company, for the conduct of the business of the company.
(ii) In the case of a Director or an officer of the company who signed the cheque on behalf of the company, there is no need to make a specific averment that he was in charge of and was responsible to the company, for the conduct of the business of the company or make any specific allegation about consent, connivance or negligence. The very fact that the dishonoured cheque was signed by him on behalf of the company, would give rise to responsibility under sub-section (2) of Section 141.
(iii) In the case of a Director, Secretary or Manager [as defined in Section 2(24) of the Companies Act] or a person referred to in clauses (e) and (f) of Section 5 of the Companies Act, an averment in the complaint that he was in charge of, and was responsible to the company, for the conduct of the business of the company is necessary to bring the case under Section 141(1) of the Act. No further averment would be necessary in the complaint, 13 SKS, J Crl.P.No.10992 of 2023 though some particulars will be desirable. They can also be made liable under Section 141(2) by making necessary averments relating to consent and connivance or negligence, in the complaint, to bring the matter under that sub-section.
(iv) Other Officers of a company cannot be made liable under sub-section (1) of Section 141. Other officers of a company can be made liable only under sub-section (2) of Section 141, by averring in the complaint their position and duties in the company and their role in regard to the issue and dishonour of the cheque, disclosing consent, connivance or negligence."
(emphasis supplied)
15. Taking into account the above extracted portion, it is to be noted that in the case on hand, as well, the respondent No.2 has to make specific allegations against the petitioner/accused No.3 to make her vicariously liable, whereas, it is needless to mention that she resigned from the post of Director of accused - Company and as such, she had nothing to do with the day to day affairs of the accused - Company.
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16. At this juncture, it is important to note the observation made by the Hon'ble Supreme Court in Anita Malhotra (supra 1). The relevant paragraph No.23 reads as under:
"23. In the light of the above discussion and of the fact that the appellant has established that she had resigned from the Company as a Director in 1998, well before the relevant date, namely, in the year 2004, when the cheques were issued, the High Court, in the light of the acceptable materials such as the certified copy of the annual return dated 30-9-1999 and Form 32 ought to have exercised its jurisdiction under Section 482 and quashed the criminal proceedings. We are unable to accept the reasoning of the High Court and we are satisfied that the appellant has made out a case for quashing the criminal proceedings. Consequently, Criminal Complaint No. 993/1 of 2005 on the file of ACMM, New Delhi, insofar as the appellant herein (A-3) is concerned, is quashed and the appeal is allowed."
17. In the present case, it is undisputed fact that the cheque was dishonored on 11.06.2020 whereas, the petitioner/accused No.3 has submitted her resignation 15 SKS, J Crl.P.No.10992 of 2023 letter on 01.03.2020 and the same was approved vide letter dated 09.03.2020 approving the resignation with effect from 10.03.2020.
18. In view of the aforesaid discussion, this Court is of the opinion that there is no force in any of the contentions leveled against the petitioner/accused No.3 and that the proceedings initiated against the petitioner/accused No.3 are liable to be quashed.
19. IN THE RESULT, this Criminal Petition is allowed and the proceedings initiated against the petitioner/accused No.3 in CC.NI.No.6086 of 2022 on the file of the VIII Metropolitan Magistrate, Hyderabad, are hereby quashed.
Miscellaneous applications, if any pending, shall also stand closed.
_______________ K. SUJANA, J Date:20.06.2024 PT