Mr.Rahul Dasgupta vs The State Of Telangana
2022 Latest Caselaw 2324 Tel

          HON'BLE SRI JUSTICE K. LAKSHMAN

           CRIMINAL PETITION No.5879 OF 2018

ORDER:

Heard Mr. D.V. Sitharam Murthy, learned Senior Counsel

representing Mr. Ramachandra Rao Gurram, learned counsel for

the petitioners, Mr. M.V. Pratap Kumar, learned counsel for

respondent Nos.2 and 3 and learned Public Prosecutor appearing

on behalf of respondent No.1.

2. This Criminal Petition is filed under Section - 482 of the

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

the proceedings in C.C. No.165 of 2018 on the file of the XII

Additional Chief Metropolitan Magistrate, Hyderabad.

3. The petitioners herein are arraigned as accused Nos.3, 4

and 5 in the said C.C. The offences alleged against them are under

Sections - 406, 420, 465, 468 and 471 read with 34 of the Indian

Penal Code, 1860 (for short 'IPC').

4. General Power of Attorney Holder of respondent Nos.2

and 3 herein, Mr. Nikhil Baheti, gave a complaint to the Police,

CCS, DD, Hyderabad against the petitioners herein and other

KL,J Crl. P No.5879 of 2018

accused on 22.12.2016 and the contents of the said complaint are

as follows:

i) Respondent Nos.2 and 3 are the shareholders with 13.32%

shares each in M/s. Teckbond Laboratories Private Limited,

Hyderabad, which is hereinafter referred to as 'the Company'.

ii) The said Company is being managed by the Managing

Director and the Director, Mr. T. Bosebabu and Mr.C. Sanjeeva

Baba, accused Nos.2 and 1 respectively.

iii) Respondent Nos.2 and 3 have invested in the said

Company based on Share Purchase and Shareholders Agreement

(SPSHA), dated 27.01.2014 entered among the said Company,

respondent Nos.2 and 3 and the Shareholders of the said Company.

iv) As per Clauses - 5.4 and 5.5 of the Company, the

Company shall not take any kind of decision by or for and on

behalf of the Company whether in the Board Meeting or in the

meeting of the shareholder or otherwise, unless and until such

decision has been approved by the Investors in writing.

v) Due to the poor and mismanagement of the Board

represented by accused Nos.1 and 2, the said Company could not

KL,J Crl. P No.5879 of 2018

do the business and thereby its activity was stopped. Therefore, an

Extraordinary General Meeting of the Members of the said

Company was convened on 16.04.2016, wherein a draft Sale and

Purchase Agreement for sale of the assets of the said Company in

favour of M/s. Clininvent Research Private Limited, Kolkata

(Buyer) was proposed and was approved subject to a minimum sale

value of Rs.16.00 Crores.

vi) Pursuant to the said meeting, an Asset Transfer

Agreement (ATA) was executed among the Buyer, Company and

the Shareholders of the said Company on 24.06.2016. As per the

terms of the said agreement, Rs.16.00 Crores is the consideration

for sale of entire land, buildings and other movable and immovable

assets of the Company. The said agreement was a time bound

agreement having 60 days as the time limit (Long Stop Date), by

which, both the parties were supposed to fulfill the conditions

casted upon each of the parties.

vii) As per the said ATA, both the parties failed in meeting

their respective conditions within the Long Stop Date and

consequently the said ATA expired on 23.08.2016 resulting in

KL,J Crl. P No.5879 of 2018

termination of the Agreement and, therefore, the ATA dated

24.06.2016 and the resolution dated 16.04.2016 stand ineffective.

viii) While so, accused Nos.1 and 2 in collusion with

petitioner Nos.1 and 2 herein being Director and Managing

Director of M/s. Clininvent Research Private Limited without the

consent and knowledge of respondent Nos.2 and 3 herein,

transferred the assets of the said Company, knowing fully well that

on 01.11.2016, respondent Nos.2 and 3 herein have sent a mail to

all the above said parties informing that they should take prior

consent of respondent Nos.2 and 3 herein to proceed with the

transaction and that they refused to sign for extending time by a

supplementary agreement.

ix) Without obtaining written consent and without amending

the ATA, accused No.1 executed a registered sale deed on

01.11.2016 in favour of M/s. Clininvent Research Private Limited

in respect of the land admeasuring Acs.4.30 guntas out of total

extent of Acs.7.7½ guntas for Rs.4,10,93,000/- and the same was

registered on 03.11.2016 i.e., after receipt of the email sent by

respondent Nos.2 and 3 herein. This is purely a fraud conducted

KL,J Crl. P No.5879 of 2018

by accused Nos.1 and 2 in connivance with petitioner Nos.1 and 2

herein. The said document was brought into existence by altering

the original resolution without any authority and by producing as if

accused No.1 has power to register the sale deed.

x) The said document was brought into existence without

the consent and knowledge of respondent Nos.2 and 3 by playing a

mischief so as to cheat them knowing the fact fully well that it will

not create any absolute title to the purchaser except to cause loss to

respondent Nos.2 and 3 and their intention was to conciliate the

property being valuable security to make use of the same before the

Authorities and the Banks to obtain loan and to manage the

property. Thus, the said sale deed is a forged document, and all the

accused including the petitioners herein have committed aforesaid

the offences.

5. With the aforesaid allegations, he requested the police to

take necessary action against the accused including the petitioners

herein.

KL,J Crl. P No.5879 of 2018

6. On receipt of the said complaint, the Police have

registered a case in Crime No.272 of 2016 under Sections - 420,

406, 465, 468 and 471 read with 34 of IPC, and proceeded with

investigation.

7. During the course of investigation, the police have

examined as many as 14 witnesses of which, LW.1 is the

complainant, LWs.2 and 3 are the eye-witnesses, respondent Nos.2

and 3 herein, LWs.4 to 12 are circumstantial witnesses and LWs.13

and 14 are the panch witnesses. After collecting the material and

recording the statements of the witnesses, the police have filed

charge sheet against accused Nos.1 to 5, which includes the

petitioners herein for the aforesaid offences. The same was taken

on file vide C.C. No.165 of 2018 by the learned XII Additional

Chief Metropolitan Magistrate, Hyderabad for the aforesaid

offences and proceeded with trial.

8. While the things stood thus, the petitioners herein, who

are accused Nos.3 to 5 in the said C.C., filed the present criminal

petition to quash the proceedings in the said C.C. against them.

KL,J Crl. P No.5879 of 2018

9. Mr. D.V. Sitharam Murthy, learned senior counsel

appearing on behalf of the petitioners would submit that the

petitioners herein are only employees of the Purchaser - M/s.

Clininvent Research Private Limited and the Asset purchase was

not done by them in their personal capacity, as such, there can be

no personal liability on them. He would further submit that when

respondent Nos.2 and 3 intend to proceed against any Officer of

the Purchaser, it is essential to make requisite allegations to

constitute vicarious liability as held by the Hon'ble Supreme Court

in Sharad Kumar Sanghi v. Sangita Rane1 and Sunil Bharti

Mittal v. Central Bureau of Investigation2.

i) Learned senior counsel would further submit that the

main contention of respondent Nos.2 and 3 is that there was a

breach of contract, more particularly Clauses - 5.4 and 5.5 of

SPSHA and the same cannot give rise to criminal prosecution for

cheating. The charge sheet fails to make out a case that the

petitioners herein had a dishonest intention at the very beginning of

the transaction between the Purchaser and the Company. In

. (2015) 12 SCC 781

. (2015) 4 SCC 609

KL,J Crl. P No.5879 of 2018

support of the same, he has relied on the decision in Hridaya

Ranjan v. State of Bohar3.

ii) He would further submit that transfer of asset was

effected after the approval of all the shareholders including

respondent Nos.2 and 3 herein on 16.04.2016 and thereafter, the

ATA was also executed among the Company, Purchase and the

Shareholders of M/s. Teckbond on 24.06.2016. Further, as per the

agreement, there was a long stop date fixed for getting no due

certificates from creditors. Subsequently, at the request of the

Company, the date was sought to be extended. Thus, the

completion of transaction after the expiry of long stop date and

waiver of requirement for getting no due certificate etc., are purely

contractual in nature. More so, it was solely the responsibility of

the shareholders and the Company to fulfill the conditions

precedent and that the requirement of a stipulation for a long stop

date was actually for the benefit of the purchaser, to take a decision

as to withdraw from the agreement or not, upon fulfillment / non-

fulfillment of the conditions precedent.

. AIR 2000 SC 2341

KL,J Crl. P No.5879 of 2018

iii) Learned senior counsel would also submit that in the

Extraordinary General Body Meeting dated 16.04.2016, the

shareholders have given the power to accused No.1 to negotiate,

settle the terms and conditions and the most advantageous price

subject to a minimum of Rs.16.00 Crores for sale of the

Company's property bearing Sy.Nos.168, 170A, 170AA, 173/1 and

171/1A, situated at Anantharam Village, Jinnaram Mandal, Medak

District, having an area of Acs.7.5 guntas and to sign and execute

the requisite sale agreement, sale deed and such other documents as

may be found necessary, modify and amend the documents so

executed where necessary and present the documents so signed by

him on behalf of the Company for registration before the Registrar

or Sub-Register of Assurances and admit execution of the

documents and do all such other acts, deeds and things as are

incidental or consequential thereto. Further, Clause 18.4 of the

ATA allows the amendment to come into force when it is executed

in writing by both the parties. In view of the same, there is no

requirement for obtaining consent of the shareholders to amend the

terms of ATA.

KL,J Crl. P No.5879 of 2018

iv) He would further submit that the allegation that accused

Nos.1 and 2 without consent and knowledge of respondent Nos.2

and 3 herein in collusion with the petitioners herein sold out the

assets of the Company to M/s. Clininvent Research Private Limited

by creating two false letters extending the Long Stop Date is

incorrect and contrary to the legal evidence. None of the witnesses

examined by the police would speak on the said aspect. Further,

ATA contains an arbitration clause and the allegations made by

respondent Nos.2 and 3 would amount to shareholders' dispute

under Companies Act which needs to be adjudicated by NCLT.

Respondent Nos.2 and 3 herein have already approached the NCLT

by filing C.P. No.5/241/HDB/2017 against the petitioners herein

and accused Nos.1 and 2 and the NCLT vide order dated

11.02.2020 rejected the claim made by them. This one

circumstance is enough to come to a conclusion that there was no

cheating, forgery or fabrication of documents etc., as alleged by

respondent Nos.2 and 3.

v) The learned senior counsel would further submit that the

contents of the charge sheet would not attract the offences under

KL,J Crl. P No.5879 of 2018

IPC and at the most the same would come under the provisions of

the Companies Act which respondent Nos.2 and 3 had already

availed vide C.P. No.5/241/HDB/2017 and became unsuccessful.

The Investigating Officer has not conducted the investigation

properly.

vi) With the aforesaid submissions, he sought to quash the

proceedings against the petitioners in the aforesaid C.C.

10. On the other hand, Mr. M.V. Pratap Kumar, learned

counsel for respondent Nos.2 and 3, would submit that there are

specific allegations against the petitioners herein and the role

played by them in the commission of offences is also specifically

mentioned. The Investigating Officer has collected the material

and recorded the statements of the witnesses under Section - 161 of

the Cr.P.C. and then only filed the charge sheet. The learned

Magistrate having gone through the contents of the charge sheet

and having found prima facie case against the petitioners herein

and other accused with regard to the commission of offences, took

the cognizance of the aforesaid offences and issued summons.

Further, the defences taken by the petitioners cannot be considered

KL,J Crl. P No.5879 of 2018

at this stage in a petition filed under Section - 482 of the Cr.P.C.

and the same have to be tried and decided by the trial Court after

full-fledged trial. With the said submissions, he sought to dismiss

the criminal petition.

11. Learned Public Prosecutor would contend that after

receipt of the complaint and on registration of FIR, the

Investigating Officer has conducted investigation. During the

course of investigation, he had collected the material and recorded

the statements of the witnesses under Section - 161 of the Cr.P.C.

The Investigating Officer has considered all the aspects and then

only filed the charge sheet against the petitioners and other accused

for the aforesaid offences. With the said submissions, he sought to

dismiss the criminal petition.

12. In view of the aforesaid rival submissions, it is not in

dispute that respondent Nos.2 and 3 are the shareholders of the said

Company having 13.32% shares each. It is also not in dispute that

the said Company and respondent Nos.2 and 3 had passed a

resolution to sell the property of the Company to M/s. Clininvent

Research Private Limited. The only dispute that was raised by

KL,J Crl. P No.5879 of 2018

respondent Nos.2 and 3 in their complaint is that accused including

the petitioners herein did not adhere to the terms and conditions of

the ATA dated 24.06.2016 for the reason that in ATA it was

mentioned about Long Stop Date i.e., by 22.08.2016, the entire

process with regard to the sale of assets of the Company to M/s.

Clininvent Research Private Limited should have been completed.

In case, the said process could not be completed by the said date,

the said agreement would stand terminated. The accused did not

complete the said sale process by the Long Stop Date, and there

was no extension of Long Stop Date. In view of the same, transfer

of the assets of the Company in favour of the Purchaser is nothing

but illegal. According to the learned senior counsel, all the said

contentions raised by respondent Nos.2 and 3 before the NCLT

were rejected in C.P. No.5/241/HDB/2017 vide order dated

11.02.2020.

13. Further, the allegation that the accused did not adhere to

the terms and conditions of ATA dated 24.06.2016, whether the

Company had obtained the consent of respondent Nos.2 and 3 for

extension of Long Stop Date after its expiry, whether the sale

KL,J Crl. P No.5879 of 2018

process was done in terms of the said ATA dated 24.06.2016 and

that the accused never forged and fabricated any document, much

less the resolution and that the petitioners herein are only

employees of the Purchaser Company and they did not do anything

in their personal capacity etc., are all triable issues which are to be

adjudicated by the trial Court after full-fledged trial, but not by this

Court in a petition filed under Section - 482 of the Cr.P.C.

14. In a given set of facts and circumstances, a contractual

dispute, apart from giving rise to cause of action for seeking

remedy under Companies Act, may also involve the criminal acts.

The nature and scope of civil proceedings are different

from criminal proceedings and mere fact that complaint relates to a

company's transaction or breach of contract for which

a civil remedy is availed, is not by itself a ground to quash

the criminal proceedings. The only test which has to be adopted is

to find out as to whether the allegations in the complaint disclose

the criminal offence or not.

15. In support of his contentions, learned Senior Counsel

has relied upon the following decisions:

KL,J Crl. P No.5879 of 2018

i) In Hridaya Ranjan Pd. Verma3 rendered by the Apex

Court, the accused did not disclose to the complainant that one of

their brothers had filed a partition suit which was pending as on the

date of execution of sale deeds by them in favour of the

complainant in respect of the property. The facts of the said case

are totally different to the facts of the case on hand and the said

decision does not helpful to the petitioners.

ii) In Sushil Sethi v. The State of Arunachal Pradesh4

rendered by the Apex Court, the accused provided inferior quality

material in contravention with the provisions of the contract which

stipulated specific percentages of nickel and chromium to be used.

Then, the complainant lodged a complaint on which, the

Investigating Officer examined the case and filed the charge sheet.

In the said case, the accused therein alleged that they were not

aware about the filing of the FIR and the charge sheet against them

till the year 2017 and on being aware of the FIR and the charge

sheet, they preferred a petition under Section - 482 of the Cr.P.C.

In the present case, it is not the case of the petitioners herein that

they were unaware of the criminal proceedings initiated by

KL,J Crl. P No.5879 of 2018

respondent Nos.2 and 3 herein. The facts of the said case are

different to the case on hand and, therefore, this decision is not

helpful to the petitioners herein.

iii) In Ashok Giri v. State5 rendered by the Madras High

Court, the accused while working in the complainant's company,

M/s. Vaishnovi Infrastructure Engineering Private Limited, looked

after the Accounts Administration, Income Tax, Bank Job, New

Auditors, Customers, Suppliers and ERP New Software etc. The

accused misappropriated the money illegally for his personal

benefits and that the Company was irregular in repaying to Vijaya

Bank for the credit facilities availed, for which personal property of

the complainant was given as security. Accused did not show the

accounts to the complainant. On verification, it was found that

several charges were made against the properties of the company

without any valid resolution of the company. Thus, the accused

therein committed the offence of falsifying accounts,

mismanagement, cheating and misappropriation. Thus, the facts of

the said case are also different from the facts of the case on hand

. (2020) 3 SCC 240

. 2019-2-LW (Crl.) 712

KL,J Crl. P No.5879 of 2018

and, therefore, this decision is not helpful to the case of the

petitioners, and so also the decision in Doraisamy v. The State6.

iv) In Mitesh Kumar J. Sha v. The State of Karnataka7, a

Joint Development Agreement for developing a particular property

with the accused company was executed and therefore, a General

Power of Attorney was also executed apart from Supplementary

Agreement specifying their respective shares in undivided area and

super built up area. Further, MOU was entered into by the

complainant with the builder company. Thereafter, as some

disputes arose between them, the complainant revoked the GPA on

the ground that the Company did not adhere to the terms of the

Joint Development Agreement and then initiated criminal

proceedings. The facts of the said case are not akin to the facts of

the present case and, therefore, the said decision is also not helpful

to the petitioners herein.

16. As stated above, prima facie, there are specific

allegations made by respondent Nos.2 and 3 in their complaint and

the Investigating Officer having conducted investigation by

. 2019 (3) MLJ (Crl) 60

KL,J Crl. P No.5879 of 2018

collecting the material and recording the statements of the

witnesses under Section - 161 of the Cr.P.C. and considering the

same, filed the charge sheet. Truthfulness or otherwise of the

allegations are not fit to be gone into at this stage as it is always a

matter of trial as held by the Hon'ble Supreme Court in Kamal

Shivaji Pokarnekar v. The State of Maharashtra8, wherein the

Apex Court has categorically held that quashing criminal

proceedings was called for only in a case where complaint did not

disclose any offence, or was frivolous, vexatious, or oppressive. If

allegations set out in complaint did not constitute offence of which

cognizance had been taken by Magistrate, it was open to the High

Court to quash the same. It was not necessary that, a meticulous

analysis of case should be done before trial to find out whether the

case would end in conviction or acquittal. If it appeared on a

reading of the complaint and consideration of allegations therein,

in light of the statement made on oath that the ingredients of the

offence are disclosed, there would be no justification for the High

Court to interfere. The defences that might be available, or

facts/aspects which when established during trial, might lead to

. 2021 (2) ALD (Crl.) 719

KL,J Crl. P No.5879 of 2018

acquittal, were not grounds for quashing a complaint at the

threshold. At that stage, the only relevant question was whether

averments in the complaint spell out ingredients of a criminal

offence or not. The Court has to consider whether complaint

discloses any prima facie offences that were alleged against the

respondents. Correctness or otherwise of the said allegations has to

be decided only during trial. At the initial stage of issuance of

process, it was not open to Courts to stifle proceedings by entering

into merits of the contentions made on behalf of the accused.

Criminal complaints could not be quashed only on the ground that,

allegations made therein appear to be of a civil nature. If

ingredients of offence alleged against Accused were prima facie

made out in complaint, criminal proceeding shall not be

interdicted.

17. In Skoda Auto Volkswagen India Private Limited v.

The State of Uttar Pradesh9, the Apex Court referring to the

earlier judgments rendered by it has categorically held that the

High Courts in exercise of its inherent powers under Section - 482

. AIR 2019 SC 847

. AIR 2021 SC 931

KL,J Crl. P No.5879 of 2018

of Cr.P.C has to quash the proceedings in criminal cases in rarest

of rare cases with extreme caution.

18. Moreover, the petitioners herein have not made out any

ground to quash the proceedings in the aforesaid C.C. Thus, the

present petition is devoid of merits and the same is liable to be

dismissed.

19. The present Criminal Petition is accordingly dismissed.

As a sequel thereto, Miscellaneous Petitions, if any, pending

in the Criminal Petition stand closed.

____________________ K. LAKSHMAN, J th 6 June, 2022 Mgr