Bombay High Court
Shekhar Kunjbehari Shah And Ors vs The State Of Maharashtra And Anr on 2 August, 2024
Author: Neela Gokhale
Bench: A. S. Gadkari, Neela Gokhale
2024:BHC-AS:30638-DB
Gitalaxmi 2-apl-259-2019 with apl-254-2019-J.doc
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
CRIMINAL APPELLATE JURISDICTION
CRIMINAL APPLICATION (APL) NO. 259 OF 2019
Vivek Shekhar Shah,
Adult, Indian Inhabitant,
Aged: 32 years, Occupation: Business,
having his residential address at 42,
Miami Apartments, 70/A, B. Desai Road,
Mumbai-400 026. .....Applicant
Vs.
1. The State of Maharashtra
(At the instance of Colaba Police Station)
2. Byram Shroff, Adult, Indian Inhabitant,
Aged: 32 years, Occupation: Business,
having his residential address at Flat No. 5,
Sea Shells, 13, Darabsha Lane,
Napeansea Road, Mumbai-400 036. .....Respondents
WITH
CRIMINAL APPLICATION (APL) NO. 254 OF 2019
1. Shekhar Kunjbehari Shah,
Adult, Indian Inhabitant,
Aged:around 65 years,
Occupation:Business,
having his residential address
at 42, Miami Apartments, 70/A,
B. Desai Road, Mumbai-400 026.
2. Meena Shekhar Shah, Adult,
Indian Inhabitant, Aged:around 64 years,
having her residential address at 42,
Miami Apartments, 70/A, B. Desai Road,
Mumbai-400 026.
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Gitalaxmi 2-apl-259-2019 with apl-254-2019-J.doc
3. Deendayal Guljharilal Sharma,
Adult, Indian Inhabitant,
Occupation: Business, aged about 61 years,
having his residential address at
Flat No. 206, New Sagar Co-Op. Hsg.
Society Ltd., Samarth Ramdas Nagar,
Navghar Vasai Road (East), Dist. Palghar,
Maharashtra. .....Applicants
Vs.
1. The State of Maharashtra
(At the instance of Colaba Police Station).
2. Byram Shroff, Adult, Indian Inhabitant,
Aged: 32 years, Occupation: Business,
having his residential address at
Flat No. 5, Sea Shells, 13, Darabsha Lane,
Napeansea Road, Mumbai-400 036. .....Respondents
Mr. Meghashyam Kocharekar i/b Advani Law LLP for the Applicants.
Smt. Anamika Malhotra, Addl.P.P. for Respondent No. 1-State.
Mr. Rishikesh Mohite for Respondent No. 2.
P.S.I. Mr. Bagwan, Colaba Police Station, Mumbai present.
CORAM :A. S. GADKARI AND
DR. NEELA GOKHALE, JJ.
RESERVED ON : 25th JULY, 2024.
PRONOUNCED ON : 2nd AUGUST, 2024.
JUDGMENT (Per Dr. Neela Gokhale, J.) :
-
1) Rule. Rule made returnable forthwith and with the consent of
parties taken up for final hearing.
2) Applicants in both the Applications are accused in C. R. No. 44
of 2018 dated 10th April 2018 registered with Colaba Police Station,
Mumbai, lodged by the Respondent No. 2 (informant) against them for the
Gitalaxmi 2-apl-259-2019 with apl-254-2019-J.doc
offenses punishable under Sections 420, 406, 477(A) & 408 read with 34 of
the Indian Penal Code, 1860 (I.P.C.) and the subsequent charge-sheet filed
before the 8th Metropolitan Magistrate, Killa Court, Mumbai dated 28 th May
2019, have invoked jurisdiction of this Court under Section 482 of the
Criminal Procedure Code, 1973 (Cr.P.C.) by filing the present Applications
for quashing of the said crime.
3) Applicant-Vivek Shekhar Shah in Criminal Application No. 259
of 2018 is the business partner of the complainant/informant. Applicants
No. 1 & 2 in Criminal Application No. 254 of 2018 are father and mother
respectively of Vivek Shah. Applicant No. 3-Deendayal Guljharilal Sharma
is the Accountant and a friend of the father of Vivek Shah. Both
proceedings are relatable to the same First Information Report (F.I.R.) and
hence the proceedings are being disposed by this common judgment and
order.
4) By an Order dated 5th March 2020, this Court has stayed the
criminal proceedings in the present F.I.R. Although formal notice was not
issued by this Court, the Respondents waived notice and appeared in the
matter.
5) Facts of the case as emerged from the F.I.R. :
5.1) Vivek Shah and the complainant/informant were friends since
college. In 2013, Vivek Shah and the complainant/informant decided to
start their own company viz. S. S. Endothermics Pvt. Ltd. engaged in the
Gitalaxmi 2-apl-259-2019 with apl-254-2019-J.doc
production of rubber chips. The company was fully operational in 2015
after acquiring requisite permissions from environmental and other
departments of Government. The parties decided to use the space owned
by the Candle Light Co. Pvt. Ltd. belonging to Vivek Shah's father as their
office. An appropriate agreement was executed between the parties and
rent of Rs. 504/- per month was to be paid by S. S. Endothermics Pvt. Ltd.
to the Candle Light Co. Pvt. Ltd. Vivek Shah and the
complainant/informant shared 50% profit and losses in the company. They
brought in Rs. 50,000/- each as paid up capital. Both the parties further
advanced an amount of Rs. 25,00,000/- each as loan to the company. Both
the parties, held designation as 'Executive Director' in the company.
5.2) The company opened a current account in the Bank of India,
Neapeansea Road, Mumbai. They also opened two Current Accounts in YES
Bank in Fort Branch, Mumbai. Both the parties gave their specimen
signatures in order to avail facility of operating the bank accounts.
However both of them authorized Deendayal Sharma to operate the said
accounts. At the relevant period Deendayal Sharma was employed as an
Accountant in the company of Vivek Shah's father. It is the contention of
complainant/informant that, since he was busy in his personal issues, he
reposed faith in Vivek Shah to look after the affairs of the company for
sometime. He even gave his signatures on the blank cheques of company.
5.3) The complainant/informant contends that, he learnt that
Gitalaxmi 2-apl-259-2019 with apl-254-2019-J.doc
Deendayal Sharma was selling confidential information regarding the
techniques etc. of S. S. Endothermics Pvt. Ltd. to another company viz.
Aradhya Eco Green LLP. He learnt that, this company in fact belonged to
Deendayal Sharma himself. Hence he insisted that, Deendayal Sharma
should be removed from the company. Vivek Shah's father refused to
terminate him and hence they decided to shift their office elsewhere.
Thereafter the complainant/informant learnt that, Deendayal Sharma was
acting on the instructions of Vivek Shah and his father. The password and
username in respect of the bank account were also found in the name of
Deendayal Sharma. The complainant/informant also found that, Vivek
Shah had transferred huge amounts from the account of the company into
his personal account and also against his credit card. Even the income-tax
and sales-tax returns of the company were not filed. When the
complainant/informant confronted Vivek Shah with this information, Vivek
Shah avoided to answer him. In fact he told him that, if he wanted any
information regarding the accounts of company, he should approach Mr.
Chaitanya Dalal, the Auditor of the company. It then transpired that, Mr.
Dalal was not the Auditor of the company and the complainant/informant
was cheated by Vivek Shah. He also found huge amounts were missing
from the company's bank account and Vivek Shah falsely told him that, the
amount was spent on business promotion activities.
5.4) On closer examination the complainant/informant learnt that,
Gitalaxmi 2-apl-259-2019 with apl-254-2019-J.doc
an amount of Rs. 2,00,000/- was being credited as monthly salary to the
account of Vivek Shah while an amount of Rs. 20,000/- only was credited
to his own account as salary. The complainant/informant further contends
that, Vivek Shah has siphoned money to the tune of Rs. 61,45,610.30 from
their company and has used the same to pay the credit card bills of his
parents. He has also siphoned an amount of Rs. 1,42,87,674/- recording
that the said amount was used to pay Sales Tax. Thus the
complainant/informant states that, Vivek Shah, his parents and Deendayal
Sharma have conspired to siphon off money from the company's account by
recording bogus entries in the Books of Account. Hence he has filed the
present complaint with the Police.
6) We have heard the learned counsels appearing for both the
parties and perused the record with their assistance. Mr. Meghashyam
Kocharekar, learned counsel appears for the Applicants in both the
Applications. Mr. Rishikesh Mohite, learned counsel appears for the
complainant/informant and Ms. Anamika Malhotra, learned Addl.P.P.
represents the State.
7) While defending Vivek Shah, Mr. Kocharekar contends as
follows :
a. The complainant/informant has deliberately failed to
disclose proceedings initiated by him before the National Company
Law Tribunal (N.C.L.T.) and the F.I.R. is not maintainable at all. Even
Gitalaxmi 2-apl-259-2019 with apl-254-2019-J.doc
the police authorities are aware of the N.C.L.T. proceedings but they
have not taken the same into consideration.
b. The F.I.R. is only an after thought and counterblast to the
police complaint dated 24th November 2017 filed by Vivek Shah.
c. A Company Petition bearing Special Case No. 1 of 2018
pending before the Sessions Court, Greater Mumbai is filed under
Section 447 of the Companies Act, 2013. According to Mr.
Kocharekar this itself is an offense and the proceedings have been
stayed by this Court in separate proceedings. It is contended that, the
complainant/informant is filing multiple proceedings in respect of
same allegations and it is thus forum shopping.
d. It is denied that Vivek Shah has siphoned any amount
from the company since the alleged amount is much less than the
profits made by the company.
e. It can not be believed that, the complainant/informant
would leave 367 blank cheques in the custody of Vivek Shah.
f. It is argued that, Vivek Shah was induced to make
payments to the complainant/informant's girlfriend through his own
credit card and the complainant/informant has not repaid this
amount but have been debited as expense of the company.
g. The disproportionate salary was the idea conceived by
the complainant/informant himself to avoid payment of income-tax.
Gitalaxmi 2-apl-259-2019 with apl-254-2019-J.doc
h. The complainant/informant himself has manipulated and
misappropriated the accounts of company and illegally siphoned off
the said amounts. It is further argued that, the
complainant/informant himself has engaged in several illegal
activities such as, forging valuable documents, misusing blank
cheques and blank letter-heads of the company bearing Vivek Shah's
signature and the present F.I.R is only an attempt to extract and
extort money from Vivek Shah.
i. Thus no offense as alleged is made out from the F.I.R.
and hence the F.I.R. deserves to be quashed.
8) While defending the parents of Vivek Shah and Deendayal
Sharma, Mr. Kocharekar additionally contends as follows :
a. These Applicants are completely oblivious and unaware
of the issue and have no personal involvement in the dispute between
the complainant/informant and Vivek Shah. They have been
unnecessarily and falsely implicated in this case.
b. There was never any understanding between the parties
that, Deendayal Sharma shall not start his own company and this
does not constitute any offense.
c. Vivek Shah's father is merely a landlord of S. S.
Endothermics's premises and his mother is only a housewife. Thus
neither of them are connected to the business of
Gitalaxmi 2-apl-259-2019 with apl-254-2019-J.doc
complainant/informant and Vivek Shah. Moreover they have no
personal knowledge of their dispute, nor are they connected with the
same.
d. The dispute is purely commercial in nature and no
criminality is involved. Hence the proceedings against the Applicants
deserve to be quashed.
9) Per-contra, Mr. Rishikesh Mohite brought to our attention the
bank statements showing transfer of amounts from the account of company
in the personal account of Vivek Shah. He also pointed to statements
showing amounts from the company accounts being diverted towards
payment of credit card bills of the parents of Vivek Shah. Mr. Mohite places
reliance on the forensic audit report submitted by the Chartered
Accountants M/s. Singrodia and Co. LLP, which finding clearly demonstrates
that, the credit card payments claimed to be in the nature of business
promotion expenses is totally unsubstantiated. The service and other
charges claimed to have been paid by Vivek Shah is also disproved. Other
explanations given by the Applicants have been rejected in the forensic
audit report. Mr. Mohite also placed reliance on the statement of Mr.
Dhabale which corroborates the complainant/informant's narration. He
thus submits that, the Applicants have misappropriated the funds of
company for their private use and have dishonestly used the same for
purposes other than for which they were lawfully entrusted in their custody.
Gitalaxmi 2-apl-259-2019 with apl-254-2019-J.doc
Hence he prays that, the Applications be dismissed.
10) Ms. Malhotra, learned Adl.P.P also opposed the Applications
and supported the case of complainant/informant.
11) A plain but careful reading of the F.I.R. clearly reveals specific
and categoric allegations against the Applicants and the manner in which
the said amounts have been allegedly siphoned. A detailed statement of the
money siphoned and used for personal purposes of Vivek Shah including
payment of the credit card bills of his parents is contained in the F.I.R. Even
if the contention of Mr. Kocharekar that, the parents of Vivek Shah had no
role in paying their own credit cards' bills from the account of the company
is to be accepted, the fact remains that they have financially benefited by
accepting the proceeds of crime. Whether it was within their knowledge
and consent is an issue which will be decided by adducing evidence before
the trial Court.
12) The statement of one Mr. Pankaj Dhabale, another employee of
the company having designation of Export-Import Manager also shows the
involvement of the parents of Vivek Shah. He clearly states that, bank
officials had visited the company to recover credit card outstanding bills of
Vivek Shah and his father. So also Mina Shah, Vivek Shah's mother used to
also visit the office of company and used to sit in the office. Mr. Dhabale
also corroborated the contention of the complainant/informant that, the
complainant/informant was compelled to undertake a comprehensive
Gitalaxmi 2-apl-259-2019 with apl-254-2019-J.doc
inspection of the Books of Account of the company as there were many
discrepancies in the same.
13) The statements of account on record also indicate that, the
funds have been transferred from the company's account to the personal
account of Vivek Shah and also to the credit card accounts of his parents.
The order dated 15th February 2024 passed by the N.C.L.T. shows that, the
name of company is struck off. Hence the N.C.L.T. has refused to pass any
Orders against a struck off company. It is thus clear from the documents on
record that, the company is not carrying on any business or operation for a
period of two years preceding the financial year of 2017-2018. Mr.
Kocharekar has no explanation regarding the reasons of striking off the
name of company from the Registrar of Companies register save and except
that, the company had failed to furnish its books of accounts and income-
tax returns to the Registrar of Companies.
14) The law with regard to exercise of jurisdiction under Section
482 of Cr.P.C. to quash complaints and criminal proceedings has been
succinctly summarized by the Supreme Court in the case of M/s. Indian Oil
Corporation v. M/s. NEPC India Limited and Others 1 after considering the
earlier precedents. It will be apposite to refer to the following observations
of this Court in the said case, which read thus :
"12. The principles relating to exercise of jurisdiction under
1. (2006)6 Supreme Court Cases 736 : 2006 INSC 452.
Gitalaxmi 2-apl-259-2019 with apl-254-2019-J.doc
Section 482 of the Code of Criminal Procedure to quash
complaints and criminal proceedings have been stated and
reiterated by this Court in several decisions. To mention a few--
Madhavrao Jiwajirao Scindia v. Sambhajirao Chandrojirao Angre
[(1988) 1 SCC 692 : 1988 SCC (Cri) 234], State of Haryana v.
Bhajan Lal [1992 Supp (1) SCC 335 : 1992 SCC (Cri) 426],
Rupan Deol Bajaj v. Kanwar Pal Singh Gill [(1995) 6 SCC 194 :
1995 SCC (Cri) 1059], Central Bureau of Investigation v.
Duncans Agro Industries Ltd. [(1996) 5 SCC 591 : 1996 SCC
(Cri) 1045], State of Bihar v. Rajendra Agrawalla [(1996) 8 SCC
164 : 1996 SCC (Cri) 628], Rajesh Bajaj v. State NCT of Delhi
[(1999) 3 SCC 259 : 1999 SCC (Cri) 401], Medchl Chemicals &
Pharma (P) Ltd. v. Biological E. Ltd. [(2000) 3 SCC 269 : 2000
SCC (Cri) 615], Hridaya Ranjan Prasad Verma v. State of Bihar
[(2000) 4 SCC 168 : 2000 SCC (Cri) 786], M. Krishnan v. Vijay
Singh [(2001) 8 SCC 645 : 2002 SCC (Cri) 19] and Zandu
Pharmaceutical Works Ltd. v. Mohd. Sharaful Haque [(2005) 1
SCC 122 : 2005 SCC (Cri) 283]. The principles, relevant to our
purpose are :
(i) A complaint can be quashed where the allegations made
in the complaint, even if they are taken at their face value and
accepted in their entirety, do not prima facie constitute any
offense or make out the case alleged against the accused. For
this purpose, the complaint has to be examined as a whole, but
without examining the merits of the allegations. Neither a
detailed inquiry nor a meticulous analysis of the material nor an
assessment of the reliability or genuineness of the allegations in
the complaint, is warranted while examining prayer for quashing
of a complaint.
Gitalaxmi 2-apl-259-2019 with apl-254-2019-J.doc
(ii) A complaint may also be quashed where it is a clear
abuse of the process of the court, as when the criminal
proceeding is found to have been initiated with malafides/malice
for wreaking vengeance or to cause harm, or where the
allegations are absurd and inherently improbable.
(iii) The power to quash shall not, however, be used to stifle
or scuttle a legitimate prosecution. The power should be used
sparingly and with abundant caution.
(iv) The complaint is not required to verbatim reproduce the
legal ingredients of the offense alleged. If the necessary factual
foundation is laid in the complaint, merely on the ground that a
few ingredients have not been stated in detail, the proceedings
should not be quashed. Quashing of the complaint is warranted
only where the complaint is so bereft of even the basic facts
which are absolutely necessary for making out the offense.
(v) A given set of facts may make out :
(a) purely a civil wrong; or
(b) purely a criminal offense; or
(c) a civil wrong as also a criminal offense.
A commercial transaction or a contractual dispute, apart from
furnishing a cause of action for seeking remedy in civil law, may
also involve a criminal offense. As the nature and scope of a civil
proceeding are different from a criminal proceeding, the mere
fact that the complaint relates to a commercial transaction or
breach of contract, for which a civil remedy is available or has
been availed, is not by itself a ground to quash the criminal
proceedings. The test is whether the allegations in the complaint
disclose a criminal offense or not."
Gitalaxmi 2-apl-259-2019 with apl-254-2019-J.doc
15) The factual matrix in the present case as prima-facie appearing
from the charge-sheet discloses commission of alleged offenses. In fact
from the perusal of the F.I.R. itself, we had initially given an opportunity to
the Applicants to seek alternate remedy available in the Cr.P.C. However
Mr. Kocharekar on instructions was keen to proceed with the hearing on
merits.
15.1) From the material available on record, we have no hesitation in
holding that, the commission of cognizable offense is made out. In this
view of the matter, both the Applications are dismissed.
15.2) Rule is accordingly discharged.
(DR. NEELA GOKHALE, J.) (A. S. GADKARI, J.)
GITALAXMI KRISHNA
KRISHNA KOTAWADEKAR
KOTAWADEKAR Date:
2024.08.02
15:15:42 +0530
