Gujarat High Court
Kunda Pratap vs State Of Gujarat on 3 October, 2025
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IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/CRIMINAL MISC.APPLICATION (FOR QUASHING & SET ASIDE
FIR/ORDER) NO. 1382 of 2021
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KUNDA PRATAP
Versus
STATE OF GUJARAT & ANR.
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Appearance:
MR MANAV A MEHTA(3246) for the Applicant(s) No. 1
MR P P MAJMUDAR(5284) for the Respondent(s) No. 2
MR SOHAM JOSHI, APP for the Respondent(s) No. 1
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CORAM:HONOURABLE MR. JUSTICE J. C. DOSHI
Date : 03/10/2025
ORAL ORDER
1. This petition under section 482 of Cr.P.C is filed quash
Criminal Complaint No.40459 of 2018, whereby, the petitioner is
accused no.2 filed under section 138 read with section 142 of
Negotiable Instrument Act.
2. Facts of the case are as under :-
2.1. In the year 2015, on behalf of Accused No.1. Company, the
accused No.2 alongwith one Mr. Bhanumurthy, approached the
Complainant and solicitated urgent disbursement of funds for
developing properties by Accused No.1, i.e., M/S Commune
Properties India Pvt Ltd. With assurance and promise from
accused, the complainant had remitted an amount of
Rs.3,00,00,000/- (Rupees Three crores only) through wire
transfer to the bank account of accused no.1 company provided
by accused and they have acknowledged the receipt of said
amount. The original redemption period was 24 months and
accused have assured to pay amount of Rs.6 crores along with
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profit which shall be paid on its due date i.e. 02.04.2017. That
even after lapse of due date, complainant did not receive any
payment. Having invested huge amount, the complainant was
worried and contacted the accused immediately and enquired
about payment of legal dues under contract. At that time the
accused requested complainant to wait for some time as they
were facing some problem due to market conditions. After
exhausting all excuses and reasons, the accused had suggested
to enter into definitive agreement dated 14.11.2017, wherein
again they have accepted their liabilities and further promised to
return the due amount. Under definitive agreement signed and
executed by accused no.2 on behalf of accused no.1 company,
certain post dated cheques wee issued towards redemption
amount and overdue interest payment. As per instructions and
request of accused, complainant had presented cheque bearing
No.001308 dated 31.07.2018 drawn on HDFC Bank,
Koramanagala Branch, Bangalore for Rs.6,00,00,000/- (Rupees
Six Crores only) with his banker ICICI Bank, Baroda for
realisation of legal dues under contract. Said cheque was
dishonored for the reasons 'funds insufficient' as per banker's
memo dated 19.09.2018. Complainant send legal notice dated
15.10.2018 under sectoin 138 of NI Act informing about
dishonor of cheque. The said notice send to accused no.1 has
been returned with endoresement 'door loocked. The notice sent
to accused no.2 to his office address returned with endorsement
'refused' on 20.10.2018. Thereafter, complainant has filed
complaint under section 138 with section 142 of NI Act against
the accused before the learned Chief Judicial Magistrate Court,
Vadodara. Hence, present petition.
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3. Learned advocate Mr.Manav Mehta for the petitioner
seeking quashment of Criminal Complaint would submit that the
petitioner has resigned from Directorship of M/s.Commune
Properties India Pvt. Ltd. With effect from 30.07.2012 and
therefore, the petitioner is not Director of the company when
private complaint was filed before the learned Trial Court.
Referring to page no.32 and 33 being Form No.32 filed with ROC,
it is submitted that rebuttable document on record sufficiently
establish that when private complaint was filed under section
138 read with section 142 of NI Act, the petitioner who is arrayed
as accused no.2 was not responsible for day to day affairs of the
company and no vicarious liability can be fasten as he ceased to
be Director fo the company after 30.07.2012.
3.1. Secondly, it is submitted by learned advocate Mr.Mehta
that private complaint lacks necessary averments required to
array the petitioner as in-charge of day to day affairs of the
company and therefore, in absence of necessary averments, the
petitioner being accused no.2 cannot be prosecuted even if he
exits as Director.
3.2. Thirdly, it is submitted by learned advocate Mr.Mehta for
the petitioner that petitioner is not signatory to the cheque being
core document in filing private complaint, therefore, in absence
of the petitioner being signatory to the cheque, it cannot be
believed that petitioner is vicarious liable for affairs of the
company.
3.4. In premise of aforesaid, learned advocate Mr.Mehta relying
on judgment in the case Ashoke Mal Bafna v. M/s. Upper India
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Steel Mfg. & Engg. Co. Ltd reported in 2018 (14) SCC 202
submitted to allow the petition and quash issuance of process
against the petitioner in Criminal Complaint.
4. Per contra, learned advocate Mr.Majmudar for original
complainant refers to para 2 and 3 of the complaint and submits
that sufficient averments are made in the complaint to spell that
how the petitioner is responsible for daily affairs of the company
and he is in charge of day to day affairs of the company. He
would submit that necessity of section 141 of NI Act is satisfied
in the present case. It is further submitted that Definitive
agreement was executed between complainant and M/s.
Commune Properties India Pvt. Ltd.. He referred to Annexure "C"
and submitted that pursuant to definitive agreement, cheques
were issued by M/s. Commune Properties India Pvt. Ltd. in
favour of the complainant. It is submitted that in the Definitive
agreement, M/s. Commune Properties India Pvt. Ltd. is first
party and it had undertaken to honor the cheques issued
towards interest payments due etc. Learned advocate
Mr.Majmudar submitted that the petitioner has signed definitive
agreement as authorized signatory of M/s. Commune Properties
India Pvt. Ltd. And therefore, cheque which is dishonored and
subject matter of criminal complaint had been issued pursuant
to definitive agreement signed between Ms/ Commune Properties
India Pvt. Ltd. And complainant. This Definitive agreement is
executed on 14.11.2017 and since has been signed by the
petitioner, it cannot be said that the petitioner is not responsible
for M/s. Commune Properties India Pvt. Ltd. It is submitted that
whether form no.32 placed at page no.32 and 33 has been given
any effect or not permitting petitioner to be cessation of Director
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with effect from 30.07.2012 has become disputed question of
facts in presence of agreement at Annexure "C" and can be
examined during trial. It is further submitted that petitioner in
his petition has not explained in which capacity he has signed
Annexure C definitive agreement. It is submitted that prima facie
complainant has made out case to conduct trial against the
petitioner.
4.1. In aforesaid premises, it is submitted to dismiss the
petition.
5. Learned APP in private dispute of dishonor of cheque
submitted to pass necessary order.
6. In rejoinder argument, learned advocate Mr.Mehta submits
that the petitioner signed Definitive agreement, however not in
capacity of Director but he has signed Definitive agreement as he
has specially authorized to do so as employee of M/s. Commune
Properties India Pvt. Ltd. Therefore, he submits that the
petitioner cannot be arrayed as accused in criminal complaint.
7. Having heard learned advocate for both the sides and
considering documents produced on record, at the outset, let me
go through para 2 and 3 of the complaint filed by the
complainant. It reads as under :-
"2. That in the year 2015, on behalf of Accused No.1.
Company, the accused No.2 alongwith one Mr.
Bhanumurthy, approached the Complainant and solicitated
urgent disbursement of funds for developing properties by
Accused No.1, l.e., M/S Commune Properties India Pvt Ltd.
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3. That during exchange of several emalls, discussions and
phone calls. the Accused No.2 and Mr. Bhanumurthy, had
made tall claims about the Accused No.1 Company and their
successful projects. Moreover, the Accused No.2 had
represented himself as the Promoter and current Authorised
Signatory of the Accused No.1 and who is in charge of day
to day affairs of the Accused. No.1 Company and had
further promised of timely execution and returns on the
investment and requested the Complainant to invest in their
project proposed to be developed by the Accused No.1 by
offering his personal guarantee. As the Accused were
desperately in need. of funds and therefore they had
requested the Complainant to expedite the process and for
which the Accused had also provided the details of their
Bank Account. Thus, all the Accused have collectively joined
together and induced the Complainant to invest and thus the
Complainant was dragged into their project. The conduct
and actions of the Accused at that time were impressive that
the Complainant did not smell anything foul and could not
make out their malafide intentions behind their offer."
8. Plain reading of the complaint indicates that complainant
has made sufficient averments against accused no.2 and other
accused too. Averments made there are sufficient to meet with
obligation of section 141 of NI Act. It is specifically stated that
accused no.2 has represented himself as promoter of accused
no.1 and he is in-charge of day to day affairs of accused no.1
company. It is further averred in the complaint that accused
no.1 has offered personal guarantee through accused no.2.
According to this Court, sufficient averments has been made by
the complainant to continue private complaint against the
petitioner.
9. Recently, Hon'ble Apex Court in the case of HDFC Bank
Ltd. v/s. State of Maharashtra [AIR 2025 SC 2707], surveyed
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series of authorities and analyzed the issue and in para 34 to 39
held as under :-
"34. What is important to note is that the repetition of the
exact words of the Section in the same order, like a mantra
or a magic incantation is not the mandate of the law. What
is mandated is that the complaint should spell out that the
accused sought to be arrayed falls within the parameters of
Section 141(1) of the NI Act. Only then could vicarious
liability be inferred against the said accused, so as to
proceed to trial. Substance will prevail over form.
35. Strong reliance is placed on Siby Thomas (supra) by
learned counsel for the respondent No.2 to contend that in
the absence of the words "was in charge of", the present
case against respondent No.2 cannot be proceeded. We are
unable to countenance the said submission. This Court, in
Siby Thomas (supra), on facts, found that on an overall
reading of the complaint it did not disclose any clear and
specific role to the appellant-accused therein. It was further
held that what was averred was only that the accused
being partners are responsible for the day-to-day conduct of
business of the company. This is vastly different from the
averments in the present case as discussed hereinabove. In
this case, it is clearly averred that the respondent No.2 along
with the accused Nos. 3 and 4 being directors were
responsible for its day-to-day affairs, management and
working of accused No.1 - Company. Hence, the judgment in
Siby Thomas (supra) can be of no help to the respondent
No.2 as the case turned on its own facts.
36. The other aspect of the matter canvassed by the learned
counsel for the respondent No.2 is that not only are the basic
averments as enshrined in Section141 to be mandatorily
incorporated but also the specific role be attributed to the
persons who are mere directors or employees of the
company. We are unable to agree with the submission of the
learned counsel.
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37. Recently, this Court in S.P. Mani and Mohan Dairy vs.
Dr. Snehalatha Elangovan, (2023) 10 SCC 685, after
reiterating the principle that it was not necessary to
reproduce the language of Section 141 verbatim in the
complaint further reiterated the holding in K.K.Ahuja vs. V.K.
Vora and Another, (2009) 10 SCC 48. In K.K. Ahuja (supra),
it was held that insofar as the director was concerned, an
averment in the complaint that he was in charge of, and was
responsible to the company, for the conduct of the business
of the company was enough and no further averment was
necessary though some particulars will be desirable.
Thereafter, this Court in S.P. Mani (supra), in para 58.2 of
the judgment concluded as under:-
"58.2. The complainant is supposed to know only
generally as to who were in charge of the affairs of the
company or firm, as the case may be. The other
administrative matters would be within the special
knowledge of the company or the firm and those who
are in charge of it. In such circumstances, the
complainant is expected to allege that the persons
named in the complaint are in charge of the affairs of
the company/firm. It is only the Directors of the
company or the partners of the firm, as the case may
be, who have the special knowledge about the role they
had played in the company or the partners in a firm to
show before the Court that at the relevant point of time
they were not in charge of the affairs of the company.
Advertence to Sections 138 and Section 141,
respectively, of the NI Act shows that on the other
elements of an offence under Section 138 being
satisfied, the burden is on the Board of Directors or the
officers in charge of the affairs of the company/partners
of a firm to" show that they were not liable to be
convicted. The existence of any special circumstance
that makes them not liable is something that is
peculiarly within their knowledge and it is for them to
establish at the trial to show that at the relevant time
they were not in charge of the affairs of the company or
the firm."
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38. As was rightly held therein, the administrative role of
each director would be within the special knowledge of the
company or the director of the firm and it is for them to
establish that they were not in charge of the affairs of the
company. In view of this, the contention of the learned
counsel for the respondent No.2 that the specific role
attributed to the directors should be set out in the complaint
does not merit acceptance. Reliance has been placed on
National Small Industries Corporation Limited vs. Harmeet
Singh Paintal and Another, (2010) 3 SCC 330 by the learned
counsel for the respondent No.2 in support of the proposition
canvassed. We are unable to countenance the said
submission. If the learned counsel by the said submission
seeks to contend that the complainant in a Section 138
complaint is obliged to plead administrative matters which
are especially within the knowledge of the company and the
directors, then he is completely wrong in the understanding
of the ingredients of Section 141. As held in K.K. Ahuja
(supra) and reiterated in S.P. Mani (supra), the complainant
is supposed to know only generally as to who are in charge
of the affairs of the company. Harmeet Singh Paintal (supra)
when it holds in para 22 that "further, in order to fasten the
vicarious liability in accordance with Section 141, the
averment as to the role of the Directors concerned should be
specific. The description should be clear and there should be
some unambiguous allegations as how the Directors
concerned were alleged to be in charge of and were
responsible for the conduct of the affairs of the company"
should be understood to only mean vis-à-vis the transaction
concerning the issue of the cheque, in question, which are
within the knowledge of the complainant. K.K. Ahuja (supra)
where it holds that "in the case of a Director, secretary or
manager [as defined in Section 2(24) of the Companies Act]
or a person referred to in clauses (e) and (f) of Section 5 of
the Companies Act, an averment in the complaint that he
was in charge of, and was responsible to the company, for
the conduct of the business of the company is necessary to
bring the case under Section 141(1) of the Act. No further
averment would be necessary in the complaint, though some
particulars will be desirable. They can also be made liable
under Section 141(2) by making necessary averments
relating to consent and connivance or negligence, in the
complaint, to bring the matter under that sub-section" sets
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out the correct legal position. A harmonious reading of the
judgments in K.K. Ahuja (supra), Harmeet Singh Paintal
(supra) and S.P. Mani (supra) brings out the position that
there is no obligation on the complainant to plead in the
complaint as to matters within the special knowledge of the
company or the directors or firm about the specific role
attributed to them in the company.
39. Applying the said legal position to the facts of the
present case, it is found that the averments in the complaint
set out hereinabove against the respondent No.2 - Mrs.
Ranjana Sharma fulfill the requirement of Section 141(1) of
the NI Act, and this is not a case where trial against her can
be aborted by quashment of proceedings. The High Court
was completely unjustified in quashing the proceedings
against her."
10. The petitioner tried to put the case that he has resigned as
Director with effect from 30.07.2012. The petitioner referred to
Form No.32 to buttress his contention that on the day of filing of
complaint, he was no more acting as Director of accused no.1
company and therefore, he cannot be held vicariously liable.
Undisputed document is produced at Annexure-C, which is
Definitive agreement executed between accused no.1 company
and complainant. This Definitive agreement has been signed by
the petitioner on behalf of accused no.1 company on 14.11.2017
in capacity of authorized signatory. If the petitioner has resigned
as Director of company, question arises how he become
authorized signatory and signed Definitive agreement on behalf
of the company accused no.1 that too in the year 2017. There is
no answer to this question. The petition is silent on this issue.
11. Learned advocate Mr. Mehta for the petitioner tried to
explain that the petitioner, in capacity of employee of accused
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no.1 company signed Definitive agreement. However, no such
averments is found in the petition. As against such aspect,
position of facts in para 2 and 3 of the complaint reproduced
herein-above, complainant has made categoric averments
against the petitioner.
12. I may refer to judgment of Hon'ble Apex Court in the case
of Rallis India Ltd. v/s. Poduru Vidya Bhushan [(2011) 13
SCC 88], in para 10, it is held as under :-
"10. Thus, in the light of the aforesaid averments as found
by us in the Criminal Complaint, we are of the considered
opinion that sufficient averments have been made against
the Respondents that they were the partners of the firm, at
the relevant point of time and were looking after day to day
affairs of the partnership firm. This averment has been
specifically mentioned by the Appellant in the complaint
even though denied by the Respondents but the burden of
proof that at the relevant point of time they were not the
partners, lies specifically on them. This onus is required to
be discharged by them by leading evidence and unless it is
so proved, in accordance with law, in our opinion, they
cannot be discharged of their liability. Consequently, High
Court committed an error in discharging them. Also, at the
cost of repetition, by virtue of their own submissions before
the High Court (reproduced in Para 6 above), the
Respondents have admitted the fact that the Appellant had
referred to them in their capacity as partners who were
incharge of the affairs of the firm in the initial complaints.
The question as to whether or not they were partners in the
firm as on 31.03.2004, is one of fact, which has to be
established in trial. The initial burden by way of averment in
the complaint has been made by the Appellant."
13. In juxtaposition of aforesaid facts, whether the petitioner
has vicarious liability or not for the act and omission on behalf of
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accused no.1 company has become issue of disputed question of
facts. It is admitted position of law that disputed question of
facts cannot be analyzed during quashing proceedings.
14. Another aspect requiring consideration at this juncture
that before lodging private complaint under section 138 of NI
Act, complainant has issued statutory notice, this notice has not
been replied by the petitioner or any other accused. Thus, failure
to reply statutory notice under section 138 of NI Act lead to
inference that there is merit in the complainant's version. In the
case of Tedhi Singh vs Narayan Dass Mahant [2022 (6) SCC
735] held that initial burden is on accused to reply with demand
notice. In earlier judgment in the case of M/S M. M. T. C. Ltd. &
Anr vs M/S Medchl Chemicals & Pharma P. Ltd. [2002 (1)
SCC 234], it has been specifically held that if statutory notice is
not replied, it has to be presumed that cheque was issued
towards liability.
15. Considering ratio laid down by Hon'ble Apex Court,
advancement of submission of learned advocate for the petitioner
that he is not Director of company and in no way vicariously
liable for the offence committed by the company, prima facie
appears to be afterthought and can be good defence but cannot
be reason to quash the complaint.
16. Insofar as judgments relied by learned advocate Mr.Mehta
for the petitioner is concerned, it would not render any
assistance to the petitioner.
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17. In view of above, the petitioner fails to make out case to
warrant interference in issuance of process.
18. For the reasons stated herein-above, the petition stand
dismissed. Rule is discharged. Interim relief granted earlier, if
any, stands vacated.
(J. C. DOSHI,J)
SATISH
