Madras High Court

P.Sarala vs K.Chezhian on 27 June, 2022

                                                                  Crl.OP.No.14711 and 14728 of 2020

                                  IN THE HIGH COURT OF JUDICATURE AT MADRAS

                                                  DATED: 27.06.2022

                                                      CORAM:

                             THE HONOURABLE MR. JUSTICE G.K.ILANTHIRAIYAN

                                          Crl.O.P.Nos.14711 and 14728 of 2020
                                                          and
                                     Crl.MP.Nos.5594, 5595, 5596 and 5597 of 2020


                     P.Sarala                                                  ... Petitioner
                                                                         (in both Crl.OPs)


                                                         Vs.

                     K.Chezhian                                         ... Respondent

(in Crl.OP.Nos.)

COMMON PRAYER: Criminal Original Petition is filed under Section 482 of the Code of Criminal Procedure, to call for the records in S.T.C Nos.330, 356 of 2019 on the file of the learned Judicial Magistrate No.I, Namakkal and quash the same.

For Petitioner : Mr.A.Padmanabhan

For Respondent : Mr.K.T.S.Sivakumar

https://www.mhc.tn.gov.in/judis Crl.OP.No.14711 and 14728 of 2020

COMMON O R D E R

These Criminal Original Petitions have been filed to quash the

proceedings in S.T.C.Nos.330 and 356 of 2019 respectively on the file of

the learned Judicial Magistrate Court-I, Namakkal, thereby taken

cognizance for the offences under Sections 138 and 142 of Negotiable

Instruments Act 1881 (herein after referred as NI Act) as against the

petitioner.

2. The learned counsel appearing for the petitioner would submit

that the respondent filed complaint for the offences punishable under

Section 138 of NI Act in which the petitioner is arrayed as 10th accused.

After receipt of the statutory notice issued under Section 138 of NI Act,

the petitioner has given a detailed reply notice stating that the petitioner

was one of the trustees of Venkataramana Educational Trust viz., the first

accused in the complaint, due to her ill health, she resigned from her

trusteeship by her resignation letter dated 28.08.2013. Therefore, she is

not at all liable for any of the offence committed by the trust or other

trustee. Her resignation letter also duly accepted by the first accused/trust

https://www.mhc.tn.gov.in/judis Crl.OP.No.14711 and 14728 of 2020

and by communication dated 01.09.2013, they resolved to accept the

resignation of the petitioner and she relieved from Venkatramana

Education Trust with effect from 01.09.2013. It was duly endorsed by

other trustees. Even after receipt of the reply notice, the respondent

lodged the impugned complaint including the petitioner as 10 th accused

and initiated proceedings for the offences punishable under Sections 138

and 142 of NI Act. Therefore, the entire proceedings is liable to to

quashed and sought for quashment of the entire proceedings.

3. Per contra, the learned counsel for appearing for the respondent

would submit that the respondent filed complaint for the offences

punishable under Sections 138 and 142 of NI Act and alleging that all the

trustees have approached the respondent on 27.08.2012 and borrowed a

sum of Rs.5,00,000/- for the improvement of the trust. In order to repay

the said amount, the accused persons have issued cheque for a sum of

Rs.5,00,000/-. It was presented for collection and the same was returned

dishonoured for the reason that “ funds insufficient” . After issued

statutory notice under Section 138 of NI Act, the respondent initiated the

present proceedings as against the accused persons. As far as the

https://www.mhc.tn.gov.in/judis Crl.OP.No.14711 and 14728 of 2020

petitioner is concerned, she is also one of the trustees and there are

specific allegations made in the complaint as such she has vicariously

liable for the offences punishable under Sections 138 and 142 of NI Act.

He further submitted that the resignation letter given by the petitioner and

the resolution passed by the first accused trust have to be tested before

the trial court and it cannot be considered before this Court that too under

Section 482 of Cr.P.C, Therefore, all the grounds raised by the petitioner

is a mixed question of fact and hence, prayed for dismissal of the quash

petition.

4. Heard Mr.A.Padmanabhan, the learned counsel appearing for

the petitioner and Mr.KTS.Sivakumar, the learned counsel appearing for

the respondent.

5. The respondent lodged complaint as against the petitioner and

others for the offence under Sections 138 and 142 of NI Act alleging that

the petitioner and other accused persons have borrowed a sum of

Rs.5,00,000/- to develop their trust. They also promised to repay by

doubled the amount which borrowed by them after several years. Only

on the request made by the respondent, after the period of five years, the

https://www.mhc.tn.gov.in/judis Crl.OP.No.14711 and 14728 of 2020

accused persons issued cheque for a sum of Rs.5,00,000/- and the same

was presented for collection. Unfortunately, the cheque was returned

dishonoured for the reason that “ the funds insufficient”. After issuing

statutory notice, the respondent initiated the present proceedings.

6. It is seen from the complaint, on 23.03.2019 the respondent

issued statutory notice under Section 138 of NI Act to all the accused

persons. The said notice was duly received by the petitioner herein ie.,

10th accused in the complaint and she also issued reply notice dated

23.03.2019. In the reply notice, she categorically stated that she was one

of the trustees of the Venkatramana Educational Trust and she was

unable to travel to the place of the trust because of her health issues. She

also stated that she was not able to devote attention to the activities of the

trust as such she expressed her desire to resign from the trust office, by a

letter dated 28.08.2013. On receipt of the same, the first accused by

resolution dated 01.09.2013, accepted her resignation letter and she was

relived from the first accused trust with effect from 01.09.2013. In fact,

all the trustee were endorsed the said resolution dated 01.09.2013.

https://www.mhc.tn.gov.in/judis Crl.OP.No.14711 and 14728 of 2020

7. According to the respondent, before five years from the date of

issuance of cheque, the accused persons had approached the respondent

and assured that if she invested the amount with the first accused trust,

they will return double amount within a period of five years. The

respondent believed the words of the accused persons and on 27.08.2012,

she paid a sum of Rs.5,00,000/- to develop the trust. Thereafter on

30.01.2019, the accused persons have issued the alleged cheque for a

sum of Rs.5,00,000/-. Therefore, on the date of issuance of cheque viz.,

30.01.2019, the petitioner has already been relieved from her trusteeship

from the first accused trust. In fact, she was relieved from her trusteeship

as early as on 01.09.2013, it is also proved by her reply notice dated

23.03.2019. After receipt of the reply notice, the respondent failed to

send any rejoinder to the petitioner by denying the said averments made

in the reply notice. It shows that the respondent accepted the reply notice

sent by the petitioner herein. Therefore, the petitioner cannot be held

liable for the offences under Sections 138 and 142 of the N.I.Act .

8.It is relevant to relay upon the judgment reported in 2012 Crl.

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L.J. 625 in the case of Anita Malhotra Vs. Apparel Export Promotion

council & Anr., in which the Hon'ble Supreme Court of India held as

follows:-

"15) This Court has repeatedly held that in case of a Director, complaint should specifically spell out how and in what manner the Director was in charge of or was responsible to the accused Company for conduct of its business and mere bald statement that he or she was in charge of and was responsible to the company for conduct of its business is not sufficient.

[Vide National Small Industries Corporation Limited vs. Harmeet Singh Paintal and Another, (2010) 3 SCC 330]. In the case on hand, particularly, in para 4 of the complaint, except the mere bald and cursory statement with regard to the appellant, the complainant has not specified her role in the day to day affairs of the Company. We have verified the averments as regard to the same and we agree with the contention of Mr. Akhil Sibal

https://www.mhc.tn.gov.in/judis Crl.OP.No.14711 and 14728 of 2020

that except reproduction of the statutory requirements the complainant has not specified or elaborated the role of the appellant in the day to day affairs of the Company. On this ground also, the appellant is entitled to succeed."

9. The another judgment reported in AIR 2017 SC 2854 in the

case of Ashoke Mal Bafna Vs. M/s. Upper India Steel Mfg. & Engg.

Co. Ltd., which reads as follows :-

"10. To fasten vicarious liability under Section 141 of the Act on a person, the law is well-settled by this Court in a catena of cases that the complainant should specifically show as to how and in what manner the accused was responsible.

Simply because a person is a Director of defaulter Company, does not make him liable under the Act. Time and again, it has been asserted by this Court that only the person who was at the helm of affairs of the company and in-charge of and responsible for the conduct of the business at the time

https://www.mhc.tn.gov.in/judis Crl.OP.No.14711 and 14728 of 2020

of commission of an offence will be liable for criminal action [see : Pooja Ravinder Devidasanl V. State of Maharashtra & Ors., AIR 2015 SC 675]

11. In other words, the law laid down by this Court is that for making a Director of a company liable for the offences committed by the Company under Section 141 of the Act, there must be specific avernments against the Director showing as to how and in what manner the Director was responsible for the conduct of the business of the Company"

The above judgments are squarely applicable to the case on hand and the

entire proceedings cannot be sustained as against the petitioner herein.

Therefore, the petitioner need not go for ordeal of the trial and the entire

proceeding is liable to be quashed as against the petitioner.

10. In view of the above discussion, these Criminal Original

Petitions stand allowed and the proceedings in S.T.C.Nos.330 and 356

of 2019 respectively on the file of the learned Judicial Magistrate Court-I,

Namakkal are hereby quashed insofar as the petitioner is concerned. The

https://www.mhc.tn.gov.in/judis Crl.OP.No.14711 and 14728 of 2020

trial court is directed to proceed with the trial as far as other accused

persons are concerned and pass orders in accordance with law.

Consequently, connected miscellaneous petitions are closed.