Bombay High Court
Chandrashekhar Balasubramanyam vs Vistra Itcl (India) Limited And Anr on 29 January, 2024
Author: N. J. Jamadar
Bench: N. J. Jamadar
2024:BHC-AS:6014
33-apl-757-2023.doc
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
CRIMINAL APPELLATE JURISDICTION
CRIMINAL APPLICATION NO.757 OF 2023
Chandrashekar Balasubramanyam ...Applicant/
(Ori. Accd.No.3)
vs.
M/s. Vistra ITCL (India) Limited and Anr. ...Respondents
Mr. Ashish Verma a/w. Mr. Govind Gupte and Mr. Dhanraj Lodha,
for the Applicant.
Mr. S.R. Agarkar, APP, for the Respondent/State.
CORAM : N. J. JAMADAR, J.
DATE : JANUARY 29, 2024
P.C.:
1. Heard the learned counsel for the parties.
2. This application under section 482 of the Code of Criminal
Procedure, 1973 calls in question the legality, propriety and
correctness of an order of issue of process dated 6 th July, 2022 for
an offence punishable under section 138 of the Negotiable
Instruments Act, 1881 (the Act, 1881) in Criminal Complaint No.
1505470/SS/2021 filed by complainant/respondent No. 1.
3. The respondent No. 1 is engaged in the business of, inter alia,
providing trusteeship services in relation to debentures issued by
companies in India. M/s. Tierra Farm Assets Company Private
Limited (accused No. 1) is a company incorporated under the
Companies Act. Accused No. 1 entered into a Debenture Trust Deed
dated 17th December, 2015, pursuant to which the accused No. 1 had
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issued 25,000 debentures each having face value of Rs. 20/-. Under
the said Debenture Trust Deed, the complainant was appointed as
debenture trustee in relation to debentures. Towards discharge of
liability to pay an amount of Rs. 44,44,444/- as the principal
amount on 30th September, 2019 to the debenture trustees, the
accused No. 1 had issued cheaque drawn on Karnataka Bank
Limited, Sadashivnagar, Bangalore in the sum of Rs. 44,44,444/-
payable on 30th September, 2019. The cheque was dishonored on
presentment. Despite the service of demand notice, accused No. 1
failed and neglected to pay the amount covered by the dishonored
cheque.
4. The complainant thus lodged a complaint for an offence
punishable under sections 138 read with 141 of the Act, 1881 with
the allegations that the applicant/accused No. 3 and Ramesh
Gowda, the accused No. 2, were the Directors and in-charge of and
responsible for the day to day conduct of the business of accused No.
1 company. By the impugned order dated 6th July, 2022, the learned
Magistrate issued the process.
5. Mr. Verma, the learned counsel for the applicant, submitted
that the learned Magistrate committed an error in issuing the
process against the applicant, by invoking the provisions under
section 141 of the Act, 1881 as the applicant is a non-executive
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director in the company and there are no averments which spell out
the role of applicant/accused No. 3 in the commission of the alleged
offences. It was submitted that the company has passed resolution
in the year 2012 itself that the applicant will not be responsible for
any or all debts, liabilities of the company, the applicant being a
non-executive director. Attention of the Court was invited to the
copy of resolution dated 15th March, 2012 and form No. 32 which
indicate that the applicant was a non-executive director of the
accused No. 1.
6. I have perused the averments in the complaint. Prima facie,
there are adequate averments in the complaint to the effect that the
accused Nos. 2 and 3 were the directors of the accused No. 1 -
company and were in-charge of and responsible to the company for
day to day conduct of the affairs of the company. In paragraph No.
15, there are specific averments to that effect.
7. The learned counsel for the applicant submitted that the
complaint lacks particulars of the role of the applicant. Mere
averments in the complaint without spelling out of the role of the
applicant, especially when the applicant is a non-executive director,
according to learned counsel, is not sufficient. Reliance was placed
on the judgment of the Supreme Court in the case of Sunita Palita
and Others vs. M/s. Panchami Stone Quarry 1. In the said case, after
1 (2022) 10 Supreme Court Cases 152.
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adverting to the previous precedents including the judgments in the
cases of National Small Industries Corpn. vs. Harmeet Singh
Paintal2 and Pooja Ravinder Devidasani vs. State of Maharashtra
and Anr.3 it was enunciated that the impleadment of Directors of
the accused company merely on the basis of a statement that they
are in-charge of and responsible for the conduct of the business of
the company without anything more, is not a sufficient or adequate
fulfillment of the requirement under Section 141 of the Act, 1881.
8. Prima facie, there is material to show that the applicant is a
non-executive director of the accused No. 1 company. However, the
fact that the accused No. 1 is a private limited company with only
two directors i.e. accused Nos. 2 and 3, cannot be lost sight of. The
question as to whether the company had resolved that the applicant
shall not be responsible for any or all debts, obligations and
liabilities of the company and whether on that count the liability
cannot be fastened on the applicant by invoking section 141 of the
Act, 1881 would be a matter for adjudication at the trial.
9. Prima facie, there are adequate averments in the complaint to
the effect that the applicant was charge of and responsible for the
day to day business of the company at the time when the offence
was committed. Whether there was an internal understanding
2 (2010) 3 SCC 330.
3 (2014) 16 SCC 1.
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between the directors of the accused No. 1 would essentially be a
matter of indoor management. Such averments are sufficient for the
learned Magistrate to issue process as has been held in Gunmala
Sales Private Limited vs. Anu Mehta and Others 4. In the case of
K.K. Ahuja vs. V.K. Vora5 it has been held that the mere fact that the
applicant was a non-executive director by itself is not sufficient to
jettison away the complaint in the face of the averments which meet
requirements of section 141 of the Act, 1881.
10. Of course, the applicant would have the opportunity to
demonstrate at the trial that he was not responsible for the conduct
of the business of the company and consequently for the
commission of the offence under section 138 of the Act, 1881.
11. Thus, the application does not deserve to be entertained.
12. Application stands rejected.
(N. J. JAMADAR, J.)
4 (2015) 1 Supreme Court Cases 103.
5 (2009) 10 SCC 48.
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