M/S.Mohana Cotton Ginning ... vs The State Of Ap., Rep Pp And Anr.,
2022 Latest Caselaw 2058 AP

  THE HON'BLE SRI JUSTICE K. SREENIVASA REDDY
      CRIMINAL PETITION NOs.11172 of 2015 and
                        3938 of 2016
COMMON ORDER :
     These Criminal Petitions, under Section 482 of the

Code of Criminal Procedure, 1973 (for short "Cr.P.C."), are

filed quash the proceedings in C.C. No.582 of 2015 on the

file of the IV Additional Judicial Magistrate of First Class,

Guntur. Petitioners in Criminal Petition No.11172 of 2015

are A.3 to A.5 respectively, and the petitioners in Criminal

Petition No.3938 of 2016 are A.1, A.2 and A.6 respectively,

in the Calendar Case.


     2.    2nd   respondent   herein/complainant      filed   a

private complaint against the petitioners/accused for the

offences punishable under Sections 138 of the Negotiable

Instruments Act, 1881 (for short, 'the Act, 1881') and 409

and 420 IPC. The allegations, in brief, of the complaint

may be stated as follows:

Complainant is a limited company registered under

the provisions of the Companies Act, 1956. It used to

purchase raw cotton /lint and convert the same into yarn

in its spinning mill. It used to sell its lint in full pressed

bales and cotton yarn/yarn cones bags (packed) each

weighing a net weight of 45.36 Kgs to its different

customers of different places all over India. On 29.05.2014, the accused purchased 1800 bales/18 lots of Cof cotton

lint worth Rs.3,42,51,431/- within 21 days of site from the

complainant under 18 different invoices in between

29.05.2014 to 01.06.2014 under the above said katha on

credit and received the said goods. The accused, having

traded with the said lints, received cost of the lint from

their customers, but even after expiry of site period and

inspite of repeated requests, the accused did not pay the

price of the said 18 lots. Thereafter, A.2, representing A.1,

issued a cheque bearing No.107892, dated 18.12.2014 for

Rs.1,02,51,431/- drawn on Axis Bank, Naaz Center,

Guntur in favour of the complainant towards part payment

of the abovesaid legally enforceable debt and with an

assurance that balance would be paid in a short time. On

07.03.2015, the complainant presented the said cheque in

its account for encashment, but the said cheque was

returned with a Memo dated 09.03.2015 due to

insufficiency of funds. After complying with the essential

conditions under Section 138 of the Act, 1881, the

complainant presented the present complaint.

3. Learned counsel for the petitioners contended

that on a perusal of the complaint, there is no averment as

contemplated under Section 141 of the Act, 1881 that all

the accused are incharge of, and responsible to, conduct of day to day affairs of the company. It is further submitted

that no specific role has been attributed to each of the

accused. The learned counsel relied on a judgment in

SMS Pharmaceuticals Limited v. Neeta Bhalla & another.

The learned counsel took this Court to various paragraphs

of the said judgments and stated that it is essential that

specific role has to be attributed in the complaint to each of

the accused and merely saying that the accused are

incharge of, and responsible to, the day to day affairs of the

company would not suffice.

4. Per contra, learned counsel for 2nd respondent

contended that there is specific accusation as against the

petitioners/accused that they are incharge of, and

responsible to, the company for day to day affairs of the

company. The learned counsel took this court to certain

paragraphs of the complaint wherein there is allegation

that A.6, though not a Director, had actively involved on

behalf of other accused and is responsible for the

transactions to happen, and several dozens of messages

were sent on mobile phone to the complainant and on

behalf of himself and on behalf of the other accused.

Learned counsel relied on a decision in Savithri

Radhakrishnan v. State of Andhra Pradesh and another1 in

2017 SCC Online Hyd 716 = (2017) 2 ALD (Cri) 122 support of his contention and prayed to dismiss the

Criminal Petitions.

5. This Court perused the record. It is an admitted

fact that the accused purchased 1800 bales/18 lots of Cof

cotton lint worth Rs.3,42,51,431/- within 21 days of site

from the complainant under 18 different invoices, and the

accused sold the said cotton bales to its customers and

received the cost of the lints, and in discharge of the said

debt, A.2, representing A.1, issued the subject cheque

bearing No.107892, dated 18.12.2014 for Rs.1,02,51,431/-

drawn on Axis Bank, Naaz Center, Guntur in favour of the

complainant towards part payment of the abovesaid debt,

and when the complainant presented the said cheque, it

was dishonoured on the ground of 'insufficiency of funds'.

There is no dispute with regard to the said fact.

6. From a perusal of the complaint, it is clear that

it is clearly averred in the complaint that A.6 is husband of

A.3; A.2, A.3, A.5 and A.6 are related to each other and A.4

is their close friend, philosopher and guide; A.6 used to

represent all other accused A.2 to A.5. It is further averred

in the complaint that A.2 to A.6 are actively and physically

participating in day to day business transactions of A.1 on

their joint/collective/joint and several liability and

responsibility in respect of all the matters and affairs of A.1 company and obligations, liabilities, responsibilities and

third party claims of A.1.

7. The question that arises for consideration is

merely stating the basic averments that a Director was

incharge of, and responsible to, the conduct of business of

the company, would suffice or else a specific accusation

showing as to how such Director is responsible for conduct

of business of the company should also be made in the

complaint ?

8. In this regard, it is pertinent to extract Section

141 of the Act, 1881.

"141. Offences by companies.--

(1) If the person committing an offence under section 138 is a company, every 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, as well as the company, shall be deemed to be guilty of the offence and shall be liable to be proceeded against and punished accordingly:

Provided that nothing contained in this sub-section shall render any person liable to punishment if he proves that the offence was committed without his knowledge, or that he had exercised all due diligence to prevent the commission of such offence:

Provided further that where a person is nominated as a Director of a company by virtue of his holding any office or employment in the Central Government or State Government or a financial corporation owned or controlled by the Central Government or the State Government, as the case may be, he shall not be liable for prosecution under this Chapter.

(2) Notwithstanding anything contained in sub-section (1), where any offence under this Act has been committed by a company and it is proved that the offence has been committed with the consent or connivance of, or is attributable to, any neglect on the part of, any director, manager, secretary or other officer of the company, such director, manager, secretary or other officer shall also be deemed to be guilty of that offence and shall be liable to be proceeded against and punished accordingly. Explanation.--For the purposes of this section, -- (a) "company" means anybody corporate and includes a firm or other association of individuals; and (b) "director", in relation to a firm, means a partner in the firm."

9. A perusal of Section 141 of the Act, 1881 i.e.

offences by the companies, Section 141 (1) specifically

contemplates that if the person committing the offence is a

company, every person who at the relevant point of time,

was incharge of, and was responsible to, the company for

conduct of the business of the company, as well as the

company, shall be deemed to be guilty of the offence and

shall also liable to be proceeded against and punished

accordingly. In the case on hand, A.3 to A.5 are the

Directors of A.1 company and they are incharge of, and

responsible to, the day to day affairs of the company.

There is no dispute with regard to the fact that such an

averment has been mentioned in the complaint as far as

A.3 to A.5 are concerned. It is further averred in the complaint that A2 to A.6 are actively and physically

participating in all the day to day business transactions of

A.1. It is pertinent to mention here that A.2 issued the

subject cheque on behalf of A.1 company, and A.6 was

actively participating in the business transactions to

happen, and he, on behalf of the other accused, sent

several dozens of messages on mobile phone to the

complainant and on behalf of himself and on behalf of the

other accused. Having regard to the aforesaid specific

averments in the complaint, this aspect has to be

considered during the course of trial and it is a premature

stage where this Court would not be in a position to

conduct a roving enquiry to go into the details of the

transactions that have taken place. Admittedly, prima

facie, the basic ingredients of Section 141 (1) of the Act,

1881 has been satisfied and the ground that the specific

role has to be stated in the complaint, is not necessary.

10. A.1 is a company and A.2 is a person who signs

cheques on behalf of A.1, and A.3 to A.5 would all come

within the purview of Section 141 (1) of the Act, 1881 where

the basic averments would suffice to come to a conclusion

that they are responsible for conduct of the business of the

company. In respect of these accused, it is not necessary

that a specific role has to be attributed as against them in view of the complicity of the accused as prima facie case

has been made out going by the accusation that contained

in the complaint.

11. As far as A.6 is concerned, this Court feels that

a specific role is attributed as against A.6. It is essential

that a specific role has to be attributed in the complaint as

against A.6 is concerned, for the reason that prima facie he

comes within the purview of Section 141 (2) of the Act,

1881. A perusal of the complaint and the additional

material papers which were filed by 2nd respondent goes to

show that there are certain messages which have been

issued by A.6 to the complainant and certain letters were

written by A.6 to the complainant. On a perusal of the said

messages and letters would prima facie go to show that he

was actively involved in respect of the transactions that

took place in between the complainant and the accused,

and he is the main person who saw the transactions to

happen. Truth or otherwise of the said accusations that

are made in the complaint has to be established in the

course of trial, and it is a premature stage where this Court

is not inclined to go into the details of the case. This Court

cannot conduct a roving enquiry with regard to the truth or

otherwise of the allegations made. In view of the same,

there are no merits in the present Criminal Petition.

12. The Criminal Petitions are, accordingly,

dismissed.

Consequently, miscellaneous applications pending, if

any, shall stand closed.

____________________________ K.SREENIVASA REDDY, J .04.2022 DRK THE HON'BLE SRI JUSTICE K. SREENIVASA REDDY

COMMON ORDER IN

CRIMINAL PETITION NOs.11172 of 2015 and 3938 of 2016

.04.2022

DRK