Gujarat High Court

Manoranjan Nishikanta Karmakar vs State Of Gujarat on 11 October, 2023

Bench: Sandeep N. Bhatt

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     R/CR.MA/19000/2018                                ORDER DATED: 11/10/2023

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             IN THE HIGH COURT OF GUJARAT AT AHMEDABAD

     R/CRIMINAL MISC.APPLICATION (FOR QUASHING & SET ASIDE
                   FIR/ORDER) NO. 19000 of 2018

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                     MANORANJAN NISHIKANTA KARMAKAR
                                 Versus
                           STATE OF GUJARAT
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Appearance:
MR.NANDISH H THACKAR(7008) for the Applicant(s) No. 1
MS. KRUTI M SHAH(2428) for the Respondent(s) No. 2
MR CHINTAN DAVE, APP for the Respondent(s) No. 1
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 CORAM:HONOURABLE MR. JUSTICE SANDEEP N. BHATT

                              Date : 11/10/2023

                               ORAL ORDER

1. This application is filed under Section 482 of the

Code of Criminal Procedure, 1973 (`the Code' for short) for

quashing and setting aside the complaints being Criminal Complaint No.37531 of 2017, pending before the learned 5 th

Additional Civil Judge and Additional Chief Judicial

Magistrate, Surat for the offence punishable under Section

138 read with Section 141 of the Negotiable Instruments Act

(`NI Act' for short).

2. Rule returnable forthwith. Learned Learned APP

Mr.Dave waives service of notice of rule for respondent no.1

and learned advocate Ms..Shah waives service of notice of

rule for respondent no.2-complainant.

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3. It is the case of the complainant that the accused

no.1 is limited company, accused nos.2 and 3 are directors of

the said company, accused nos.4 and 5 are additional director

and Company Secretary of the accused no.1 company; that all

the accused are responsible and connected with day-to-day

affairs and administration of the accused no.1 company; that

as the complainant company's directors wanted to set up mill

project, they contacted accused sometime in July, 2015 and

that the accused no.2 to 5 assured complainant that the

administration and management of accused no.1 company is

under their control; that on gaining trust, the complainant

booked an order and the complainant and accused were

bound to comply with the terms and conditions; that on

demand from the accused, the complainant paid advance

amount by way of cheques, which were encashed by the

accused; the accused could not meet with the terms and

conditions as agreed upon, so the complainant met accused

no.2, who assured that if the work is not done, the advance

received by the accused will be refunded; however, as the

said work was not completed by the given date, the accused

gave cheques for refund of the advance cheques, out of

which, two were cleared and two were returned unpaid; that

on contacting the accused, the accused assured that the

cheques will be cleared or else the amount will be paid

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through RTGS; however, the cheques were returned unpaid;

therefore, the demand notice was issued to the accused;

however, the same was neither replied nor complied nor

denied by the accused and therefore the impugned complaint

is filed, in which the applicant is shown as accused no.5.

The accused no.5-applicant has filed this application praying

for quashing of the said complaint qua him.

4. Heard learned advocates for the parties.

4.1 Learned advocate for the applicants Mr.Thacker

has submitted that the applicant has already resigned as the

Company Secretary of the accused no.1-company on 7.1.2013

i.e. before the alleged offence; that there are no averments in

the complaint that the applicant has participated in the day-

to-day business affairs of the company; that the complaint in

question is filed for alleged transactions as on 2017 and the

applicant was no more connected with the company; that the

applicant has also submitted necessary form no.32 to the

Registrar of Companies on 23.9.2013 along with necessary

fees; that the applicant was not signatory authority or party

to alleged contract/agreement between the parties. He,

therefore, submitted that the impugned complaint is required

to be quashed qua the applicant as the ingredients of Section

138 of the NI Act are not satisfied qua him.

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4.2 In support of his submissions, learned advocate

Mr.Thacker has relied on the following decisions:

(1) Anil Khadkiwala V/s State (Government of NCT of Delhi) and Another, reported in (2019)17 SCC 294;

(2) Gunmala Sales Private Limited V/s Anu Mehta and Others, reported in (2015)1 SCC 103;

(3) Ashoke Mal Bafna V/s Upper India Steel Manufacturing And Engineering Company Limited reported in (2018) 14 SCC 202;

(4) Pooja Ravinder Devidasani V/s State of Maharashtra and another, reported in (2014) 16 SCC 1;

(5) Anita Malhotra V/s Apparel Export Promotion Council and Another, reported in (2012) 1 SCC 520;

(6) Harshendra Kumar D. V/s Rebatilata Koley and Others, reported in (2011) 3 SCC 351;

(7) M.A.A.Annamalai V/s State of Karnataka reported in (2010)8 SCC 524;

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(8) Anilkumar Ramniklal Patel V/s KGS Tyres Distributors Proprietor Rajeshkumar Kantilal Samani Thro POA Lalitkumar Kantilal Samani, passed in Criminal Miscellaneous Application No.9121 of 2019;

(9) Manojkumar Ramnikbhai Rajivadia (Patel) V/s State of Gujarat, passed in Criminal Miscellaneous Application No.15360 of 2019;

(10) Pushpaben Vishny Singhal, Director of Mansa Cynthetix Pvt. Ltd. V/s State of Gujarat passed in Criminal Miscellaneous Application No.30275 of 2017;

(11) Arjun Daljit Walia V/s State of Gujarat passed in Criminal Miscellaneous Application No.6986 of 2013;

(12) Aloke Kumar Banerjee V/s The Indsutrial development Bank of India Ltd. And Another passed in Criminal Miscellaneous Application No.14784 of 2007;

(13) Alibaba Nabibasha V/s Small Farmers Agri-Business Consortium and Ors., reported in 2020 SCC Online Del 1250;

(14) Dr.J.S.Gambhir V/s Milennium Health Institute and Diagnostics Pvt. Ltd., reported in 2014 SCC Online Del 658;

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(15) Saroj Kumar Jhunjhunwala V/s State of West Bengal and Anr., reported in 2007 SCC Online Cal 196;

(16) Mansoor Ali Khan Pataudi V/s Ram Niranjan Kedia Tours and Travels Pvt. Ltd., reported in 2005 SCC Online Bom 1694;

(17) S.B.Shankar V/s M/s Amman Steel Corporation, Trichirapalli, rep. By Power of Attorney Holder R.M.Ravichandran reported in 2002 1 CTC 227;

(18) Dushyant D Anjaria V/s M/s Wall Street Finance Limited and Anr. Reported in 2001(1) Mh.L.J.;

(19) Jayesh R Mor V/s State of Gujarat, reported in 1999 SCC Online Guj 167;

(20) S.S.Lakshmana Pillai V/s Registrar of Companies and Another, reported in 1976 SCC Online Mad 197;

(21) T.Murari V/s The State (The Asst.Registrar of Companies), reported in 1976 46 CompCas 613 Mad.

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(22) Ghcl Employees Stock Option Trust V/s India Infoline Limited, reported in 2013 STPL(Web) 240 SC;

(23) Loknath Bhattacharya Managing Director and Anr. V/s State of Gujarat and Anr, reported in 2009(1) GLH 540;

(24) Central Bank of India V/s M/s Asian Global Ltd., reported in AIR 2010 SC 2835;

(25) All Cargo Movers (I) Pvt.Ltd. V/s Dhanesh Badarmal Jain, reported in 2007(14) SCC 776.

(26) Order dated 20.9.2023 passed in Criminal Miscellaneous Application No.5468 of 2019;

5. Per contra, learned APP for respondent no.1-state has objected these applications and submitted that this Court

should not exercise its powers by interfering with the

proceedings of recovery of amount and the proceedings

initiated under Section 138 of the Act are perfectly justified.

6. Learned advocate Ms.Shah for respondent no.2-

complainant has opposed this application and submitted that

the factum of resignation of the applicant is disputed on the

basis of the present status report of the accused no.1-

company on MCA portal as such report dated 24.2.2020 still

reflects the name of the applicant as working company

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secretary along with the fact that the applicant is still

authorized signatory of the company as his name is included

as one of the authorized signatory of the said company; that

even as per the resignation letter submitted by the applicant,

the date of resignation is with effect from 31.12.2012,

whereas in form no.32 it is shown as 10.9.2013; that there is

a reference of resolution 03 dated 31.12.2012 of the board of

directors authorizing the person to submit the said form,

however, the said resolution is not placed on record; that as

per the certificate produced by company secretary at page

no.49 of the compilation, it refers of resignation of the

applicant from the post of Vice President (finance) and

company secretary and therefore, as per the said document,

the applicant was also holding the post of vice-president,

which aspects are to be dealt with at the time of trial; that

there is a specific averment in paragraph 3 of the complaint

that all accused are responsible and connected with day-to-

day affairs of the company and are maintaining and

operating the bank account at relevant time and accused

nos.2 to 5 were incharge of and were responsible for accused

no.1 company for the conduct of its business; that the

Company Master Data produced on record at page no.46

along with the reply shows that the applicant as an

authorized signatory and Company Secretary from 22.5.2003

and there is no end date mentioned. She, therefore,

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submitted that all these aspects are required to be tested at

the time of trial and, therefore, this application may be

dismissed.

6.1 In support of her submissions, she has relied on

the following decisions:

(1) Suhas Bhand & etc V/s State of Maharashtra and Anr., reported in (2009) 3 Bomcr (Cri) 784, more particularly, paragraphs 7, 8, 9, 10, 33 and 34.

(2) Malwa Cotton and Spinning Mills Ltd. V/s Virsa Singh Sidhu and Ors., reported in AIR 2008 SC 3273, more particularly, paragraphs 9,10 and 12.

(3) Bharat Kumar Modi and Others V/s M/s Pennar Peterson Securities Ltd. And others, reported in (1999) BankJ 914, more particularly, paragraphs 18, 19 and 20.

(4) Order dated 22.3.2017 passed in Criminal Miscellaneous Application No.390 of 2014.

7. I have considered the rival submissions and

perused the material on record.

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8. At the outset, the provisions of Sections 138 and

141 of the NI Act are required to be seen, which read as

under:

"138. Dishonour of cheque for insufficiency, etc., of funds in the account.

Where any cheque drawn by a person on an account maintained by him with a banker for payment of any amount of money to another person from out of that account for the discharge, in whole or in part, of any debt or other liability, is returned by the bank unpaid, either because of the amount of money standing to the credit of that account is insufficient to honour the cheque or that it exceeds the amount arranged to be paid from that account by an agreement made with that bank, such person shall be deemed to have committed an offence and shall without prejudice to any other provisions of this Act, be punished with imprisonment for "a term which may extend to two year", or with fine which may extend to twice the amount of the cheque, or with both:

Provided that nothing contained in this section shall apply unless

(a) The cheque has been presented to the bank within a period of six months from the date on which it is drawn or within the period of its validity, whichever is earlier.

(b) The payee or the holder induce course of the cheque, as the case may be, makes a demand for the payment of the

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said amount of money by giving a notice, in writing, to the drawer, of the cheque, "within thirty days" of the receipt of information by him from the bank regarding the return of the cheques as unpaid, and

(c) The drawer of such cheque fails to make the payment of the said amount of money to the payee or, as the case may be, to the holder in due course of the cheque, within fifteen days of the receipt of the said notice.

Explanation: For the purpose of this section, "debt or other liability"

means a legally enforceable debt or other liability."

"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 proceeded against and punished accordingly: Provided that nothing contained in this subsection 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

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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 subsection (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 attribute to, any neglect on the part of, any director, Manager, secretary, or other office 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 any body corporate and includes a firm or other association of individuals; and

(b) "Director", in relating to a firm, means a partner in the firm."

8. Keeping in mind the aforesaid provisions, if the

facts of the present case are perused, it transpires from the

material on record that the applicant has resigned as a

director of the company much before the issuance of cheques,

however, the complainant has produced the Company Master

Data along with the affidavit-in-reply to show that the

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applicant was the Company Secretary and authorized

signatory of the company at the time of commission of

alleged offences, which is to be considered as a disputed fact;

that the statutory notice was issued by the complainant on

25.7.2017 which was served on the applicant on

26.7.2017/27.7.2017, however, the same was not replied by the

applicant, which is an admitted fact, to clear his stand that

he has resigned as Company Secretary of the company and

he is not responsible for the day-to-day affairs of the

company; the said contention is taken for the first time in

this application which ought to have been taken at the time

of giving reply to the notice itself; the certificate produced at

page no.49 refers of the resignation of the applicant from the

post of Vice President (finance) and company secretary, which

also creates a doubt of the post the applicant holds in the

said company. Ratio of each judgments relied on by applicant

is binding to this Court but not applicable in the facts of the

present case whereby the documents relied on by the

applicant is controverted by another documents by

complainant at this stage. This Court cannot conduct mini

trial or roving inquiry at the stage of exercising the powers

under Section 482 of of the Code and therefore, this Court

cannot exercise the powers under Section 482 of Code at this

stage of trial.

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9. At this stage, it is also fruitful to refer to the

judgment rendered by the Hon'ble Apex Court in the case of

S.P.Mani and Mohan Dairy V/s Dr.Snehalatha Elangovan reported in 2022(13) Scale, page 543, more particularly,

paragraphs 43 and 46, which read as under:

"43. In the case on hand, we find clear and specific averments not only in the complaint but also in the statutory notice issued to the respondent. There are specific averments that the cheque was issued with the consent of the respondent herein and within her knowledge. In our view, this was sufficient to put the respondent herein to trial for the alleged offence. We are saying so because the case of the respondent that at the time of issuance of the cheque or at the time of the commission of offence, she was in no manner concerned with the firm or she was not in- charge or responsible for day-to-day affairs of the firm cannot be on the basis of mere bald assertion in this regard. The same is not sufficient. To make good her case, the respondent herein is expected to lead umimpeachable and incontrovertible evidence. Nothing of the sort was adduced by the respondent before the High Court to get the proceedings quashed. The High Court had practically no legal basis to say that the averments made in the complaint are not sufficient to fasten the vicarious liability upon the respondent by virtue of Section 141 of the NI Act.

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46. When in view of the basic averment process is issued the complaint must proceed against the Directors or partners as the case may be. But if any Director or Partner wants the process to be quashed by filing a petition under Section 482 of the Code on the ground that only a bald averment is made in the complaint and that he is really not concerned with the issuance of the cheque, he must in order to persuade the High Court to quash the process either furnish some sterling incontrovertible material or acceptable circumstances to substantiate his contention. He must make out a case hat making him stand the trial would be an abuse of process of court. He cannot get the complaint quashed merely on the ground that apart from the basic averment no particulars are given in the complaint about his role, because ordinarily the basic averment would be sufficient to send him to trial and it could be argued that his further role could be brought out in the trial. Quashing of a complaint is a serious matter. Complaint cannot be quashed for the asking. For quashing of a complaint, it must be shown that no offence is made out at all against the Director or Partner."

10. It is also fruitful to refer to the judgment in the

case of S.Krishnamoorthy V/s Chellammal reported in (2015)4

SCC 559, wherein the Hon'ble Apex Court has held in

paragraphs nos.5,7 and 8 of which read as under:

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"5. The above defence of the respondent (accused) before the High Court, in the petition filed under Section 482 of the Code, is nothing but absolutely factual in nature, which is neither admitted by the complainant, nor apparent on the face of the record. Such type of disputed factual defences could have been appreciated only by the trial court, after the parties led their evidence. In our opinion, the High Court committed grave error of law in examining the allegations and counter allegations which are disputed and factual in nature in a proceeding under Section 482 of the Code.

7. In view of the above position of law, we have no option but to set aside the order passed by the High Court as it has entered into highly disputed questions of fact and concluded that the material before it was sufficient to cause reasonable suspicion in the case of the complainant. That is not the ground on which powers under Section 482 of the Code can be exercised by the High Court.

8. Therefore, the appeal is allowed. The impugned order dated 5.8.2009 passed by the High Court of Judicature at Madras in Criminal O.P. No. 7989 of 2009 is hereby set aside. The Criminal complaint (CC No. 120 of 2007) pending before the Judicial Magistrate, Dharapuram, shall stand revived. The trial court shall proceed in accordance with law."

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11. In view of above discussion as well as settled

position of law and after considering the facts as alleged in

the complaint filed under Section 138 of the NI Act and

circumstances of the present case and considering the

disputed question involved in the matters, as there is no

unimpeachable and incontrovertible evidence coming forth to

substantiate the say of the applicant that he has resigned

much prior to the date of the offence, the said disputed facts

are required to be tested by a proper trial of the matters