Prashant Tyagi And 2 Others vs State Of U.P. And Another
2023 Latest Caselaw 9539 ALL

HIGH COURT OF JUDICATURE AT ALLAHABAD
 
 

?AFR
 
Court No. - 72
 

 
Case :- APPLICATION U/S 482 No. - 11669 of 2018
 

 
Applicant :- Prashant Tyagi And 2 Others
 
Opposite Party :- State of U.P. and Another
 
Counsel for Applicant :- Sanjay Singh
 
Counsel for Opposite Party :- G.A.,Abhinav Gaur,Anoop Trivedi,Vibhu Rai
 

 
Hon'ble Mrs. Sadhna Rani (Thakur),J.

Heard learned counsel for the applicants, learned counsel for opposite party no.2 and perused the record.

By moving this application under Section 482 Cr.P.C., the prayer is made to quash summoning order dated 25.11.2016 passed by the Upper Nyayalaya Pratham, Ghaziabad in C.C. No.66/2016 under Section 138 Negotiable Instruments Act and also to set aside order dated 22.02.2018 passed by the Additional Session Judge, Court No.15, Ghaziabad in Criminal Revision No.18 of 2017.

As per facts of the case, a complaint was filed by opposite party no.2 on 13.10.2016 against the applicants and six other persons with the version that opposite party no.2 was a limited Company registered under Companies Act and Vijay Kumar son of late Sri Satpal was authorized to filed complaint on behalf of the Company. The opposite party no.2 was indulged in the business of purchasing, selling and the construction of properties. Opposite party no.1 (in the complaint) M/S C.S.K. Infrastructure Pvt. Ltd. was a registered Company. Opposite parties no.2 to 6 were its Directors and officers and opposite parties no.7 to 9 were the Company's authorized representatives. Opposite party nos.2 to 9 were responsible for all the day to day business and transactions of opposite party no.1, M/S C.S.K. Infrastructure Pvt. Ltd.

The opposite parties (in the complaint) had assured the complainant/opposite party no.2 herein that they would make available a land to the complainant/opposite party no.2 at a reasonable price. Having faith in the opposite parties the complainant/ opposite party no.2 on 16.08.2014 paid Rs. 5,00,00,000/- to the opposite parties, which were received by the opposite parties. When as per their assurance the opposite parties could not arrange the land for the complainant/opposite party no.2 and the complainant gave them a threat of lodging FIR, then opposite parties promised to pay Rs. 7,00,00,000/- in pursuance of the principal amount of Rs. 5,00,00,000/- with interest. Opposite parties issued a cheque of Rs.2,00,00,000/- in favour of the complainant/ opposite party no.2. This Cheque No.243328 valued Rs.2,00,00,000/- dated 12.07.2016 got dishonoured despite of the assurance of opposite parties that it would get encashed. The information of which was received by the complainant/opposite party no.2 on 29.08.2016 and after due procedure, a complaint under Section 420 I.P.C. was filed by the complainant/opposite party no.2 against the nine accused persons including the Company itself.

After the statements under Sections 200 Cr.P.C. and 202 Cr.P.C., the trial court vide order dated 25.11.2016 summoned all the nine accused persons to face trial under Section 138 of Negotiable Instruments Act 1881. Against this order dated 25.11.2016, three of the opposite parties/ present applicants named Prashant Tyagi, Smt. Neeta Tyagi and Smt. Shweta Tyagi, filed a revision before the Sessions Court, which was rejected vide order dated 22.02.2018.

Feeling aggrieved by the summoning order dated 25.11.2016 and revisional court's order dated 22.02.2018, the present application has been moved by the applicants Prashant Tyagi, Smt. Neeta Tyagi and Smt. Shweta Tyagi only with the version that the applicant no.1, who was earlier the Director of M/S C.S.K. Infrastructure Pvt. Ltd. had resigned from his post on 26.09.2014, much prior to the issuance of the cheque no.243328 dated 12.07.2016 to the opposite party no.2. He has filed a certified copy of the form DIR-12 (earlier known as Form 32) to this effect. He had neither signed the cheque nor the amount was received in his bank account, thus, applicant no.1 is the ex-director in the accused Company. Applicant nos.2 and 3 are the mother and sister of the applicant no.1. They had no relation with the functioning of the accused company in any manner. They could not be the in-charge and responsible for the conduct and the business of the Company. Without any specific averment that what role they have played in the functioning and the business of the accused Company they can not be implicated for the offence under Section 138 N.I. Act. The summoning order has been passed without considering section 141 of N.I. Act, hence, the prayer is made accordingly.

Counter affidavit has been filed on behalf of the opposite party no.2, wherein it has been mentioned that all the applicants alongwith co-accused persons are the shareholders of the Company and belong to the one and the same family. The present applicant Prashant Tyagi is the son of Ram Sevak Tyagi, applicant no.2 Smt. Neeta Tyagi is the wife of Ram Sevak Tyagi and applicant no.3 Smt. Shweta Tyagi, is the wife of Gaurav/ daughter of Ram Sevak Tyagi and Ram Sevak, is the person who is the authorized representative of the accused company and had issued the cheque in favour of the complainant/ opposite party no.2 on 12.07.2016. When an annual general meeting was called on 30.08.2013 the shares of all the shareholders in the disputed Company were as under:-

Ram Sewak Tyagi was having 20000 shares, Prashant Tyagi applicant no.1 was having 25000, Smt. Neeta Tyagi was having 20000 and Smt. Shweta Tyagi was having 10000 and Ram Kishan is said to have 5000 shares, thus, all the applicants here are the shareholders of the accused Company.

All the applicants are the blood relatives of Ram Sevak Tyagi and Ram Kishan, is the brother-in-law of Ram Sevak, who is the master mind of the aforesaid fraud. Ram Sevak was handling the financial as well as accounts affairs of the Company alongwith other Directors and the shareholders of the Company and was acting as authorized signatory of the Company on behalf of the Directors, authorized representatives as well as other shareholders of the Company. All the applicants are the over all incharge of the day to day business of the Company. A revision of the applicants was also rejected by the trial court. Applicant no.1 is a Joint Director of the Company and still a Director of the Company and for a very short time he was not there on the Board of Directors. All the applicants looking after the day to day business/ functions of the Company and being the authorized representatives of the Company are liable for the offence, hence, cognizance has been rightly taken by the court.

The applicants filed a rejoinder affidavit wherein the version of the counter affidavit was denied and the version of the complaint was reiterated.

Learned counsel for the applicants has argued that the trial court has not gone through the Section 141 of N.I. Act, which deals with the offences by the companies. Without going through this section the impugned order cannot be said to be a complete and affective order.

It is further submitted that the applicant no.1 had resigned on 26.09.2014, while impugned cheque is said to have been issued on 12.07.2016. Regarding his resignation Form DIR-12 has been filed, which is a public document. Applicant nos.2 and 3 are the mere shareholders in the Company and are the ladies. Their participation cannot be said to be active in the Company and in the complaint there is bald averment that the accused nos.2 to 6 being the Directors and shareholders of the Company are responsible for the day to day business of the accused Company. Accused No.7 to 9 including applicant no.2 and 3 are the authorized representatives of the Company and thus all the accused persons including all the three applicants are responsible for all the transactions and overall business of the Company. But no particulars or the specific role of the persons, which must be explained in the complaint, has been explained. Admittedly the cheque was not issued by any of the applicants. The applicant no.2, the mother of the applicant no.1 is a senior citizen. Hence, the prayer is made accordingly.

While, learned counsel for the opposite party no.2 opposed the version of the learned counsel for the applicants and submitted that the applicants are the shareholders in the Company and family members of Ram Sevak, who is said to have issued the impugned cheque and being the wife, son and daughter of the person issuing cheque all the applicants must have knowledge of the works done by Ram Sevak Tyagi, accused no.7 in the complaint. As the whole fraud/ cheating has been done with the consent and connivance of the applicants, so with the help of section 141 of the N.I. Act all the applicants would be liable for the acts done by the Company. The defence of the applicants cannot be adjucated at this stage of summoning. Liability of the applicants can only be decided after the evidence, because as per sub-section 2 of Section 141 of the Act if the offence is found to be proved committed with the consent or connivance of the applicants they shall also be liable for the same and punished accordingly. Thus for proving the offence of the applicants evidence of the parties is to be adduced and at this nascent stage the liability of the applicants cannot be fixed.

Placing reliance over the judgment of this Court in Smt. B Devi (Basanti Devi) Versus State of U.P., 2016 (94) ACC 90, it is argued by the learned counsel for opposite party no.2 that at the stage of summoning, defence of the accused which they may adduce subsequently cannot be seen since there was no occasion to look into such probable defence, which may come when the accused would appear and place their case before the magistrate. At the stage of issuing summons Court has to see whether a prima facie commission of offence has been shown and appropriate material has come justifying summoning of the accused persons against whom complaint has been made. The role assigned to the applicants in clear and specific words is referred in paragraph 4 of the complaint, that all the accused persons are responsible for the day to day business and functioning of the Company.

On the basis of this judgment, it is further argued that all the officers of the Company are responsible for the acts done in the name of Company and are sought to be made personally liable for the acts which resulted in criminal action being taken against the Company. Thus, it is claimed that all the applicants are liable to face trial under the aforesaid sections.

Learned counsel for the applicants drew the attention of the Court towards the judgment in Sunita Palita & Others Versus M/S Panchami Stone Qaurry, Criminal Appeal No. of 2022 [Arising out of SLP (Crl.) No.10396 of 2019], decided on 01.08.2022 and the judgment in S.M.S. Pharmaceuticals Ltd. v. Neeta Bhalla, (2005) 8 SCC 89, mentioned therein wherein para-10 the Apex Court held that-

"every person connected with the company shall not fall within the ambit of the provision. It is only those persons who were in charge of and responsible for conduct of business of the company at the time of commission of an offence, who will be liable for criminal action. It follows from this that if a director of a Company 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 under the provision. The liability arises from being in charge of and responsible for the conduct of business of the company at the relevant time when the offence was committed and not on the basis of merely holding a designation or office in a company. Conversely, a person not holding any office or designation in a Company may be liable if he satisfies the main requirement of being in charge of and responsible for conduct of business of a Company at the relevant time. Liability depends on the role one plays in the affairs of a Company and not on designation or status."

The attention of the Court is further drawn towards judgment in Harshendra Kumar D. Versus Rebatilata Koley & Others, (2011) 3 Supreme Court Cases 351 wherein it was held by the Apex Court that as dishonour of the cheques through the complainant banker was subsequent to his resignation so the applicant no.1 could not be said to have any concern with the Company at that time.

It is further argued by the learned counsel for the applicants that mere bald averment in the complaint that the "applicants are looking after the day to day business of the Company, hence, they are liable for the offence committed" is not enough to prove the offence. This averment is devoid of any particulars.

In judgment Pooja Ravinder Devidasani Versus State of Maharashtra & Anr., (2014) 16 SCC 1, the Apex Court held that 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 particularly responsible for the conduct of its business. Simply because a person is a Director of a Company.....Every person connected with the Company will not fall into the ambit of the provision.

Thus, it is argued that the applicant no.1 was not a Director of the Company on the date when the cheque was issued and regarding his resignation Form DIR-12 has been placed on record. Applicant nos.2 and 3 are admittedly mere shareholders in the Company. They cannot be said to actively participate in the working of the Company.

So far as the argument of the learned counsel for the opposite party no.2 that a defence of the applicants shall be seen at the time of arguments is concerned in this regard, the Apex Court opined in judgment Harshendra Kumar D. Versus Rebatilata Koley & Others (supra) that if on the face of the documents which are beyond suspicion or doubt - placed by the accused, the accusations against him cannot stand, it would be travesty of justice if accused is relegated to trial and he is asked to prove his defence before the trial court. In such a matter, for promotion of justice or to prevent injustice or abuse of process, the Court may look into the materials which have significant bearing on the matter at prima facie stage.

If we go through the judgment in Smt. B Devi (Basanti Devi) Versus State of U.P. (supra) placed by the learned counsel for opposite party no.2, the facts of that case are different from the facts of the present case, wherein as per facts of that case the cheques were issued in the presence of the petitioner and other Directors, while in the present case cheques were never issued in the presence of the complainant rather till then applicant no.1 had resigned from the Company. While as per facts of the case of Smt. B Devi (Basanti Devi) Versus State of U.P. (supra) the resignation and the documents with regard to the resignation were alleged to be the forged documents, but in the case in hand resignation of applicant no.1 has not been challenged, hence, the counsel for the opposite party no.2 cannot take benefit of the judgment of this Court, in the presence of various Apex Court judgments placed above by the counsel for the applicants.

Thus on the basis of the discussion and the judgments placed above, it is found that applicant no.1 had resigned from the Company much prior to the issuance of the cheque in question. Admittedly, the cheque did not bear the signatures of any of the applicants. On the date of issuance of the cheque the applicants were mere the shareholders of the Company. There was no active participation of the applicants in the day to day business and transactions of the Company and in the complaint itself, it is not mentioned that as to how and in what manner the applicants were in-charge or were responsible to the accused Company for the conduct of its business. Thus, in the opinion of the Court, as on the face of the record, participation of the applicants is not found in the day to day functioning of the Company, hence, on the basis of the version that the defence would be seen at the time of evidence, it would be travesty of justice to drag the persons to face the prosecution who are no way connected with the issuance of the cheque or its being dishonour thereof.

On the basis of above discussion, the summoning of the applicants to face trial under Section 138 of Negotiable Instruments Act is found to be against the mandate of law laid down by the Apex Court in above mentioned judgments.

The summoning order dated 25.11.2016 passed by the Upper Nyayalaya Pratham, Ghaziabad and the judgment dated 22.02.2018 passed by the Additional Session Judge, Court No.15, Ghaziabad in criminal revision are quashed.

The application under Section 482 Cr.P.C. is, hereby, allowed.

Order Date :- 3.4.2023

Radhika