Telangana High Court
Anish Kasturbhai Shah vs State Of Telangana on 27 October, 2022
Bench: K.Surender
THE HONOURABLE SRI JUSTICE K.SURENDER
CRIMINAL PETITION NOS. 5345 OF 2018, 6892 & 6939 OF 2022
COMMON ORDER:
1. Since the criminal petitions are filed in same calendar case,
they are being heard together and disposed of by way of this
Common Order.
2. Criminal Petition No.5345 of 2018 is preferred by A8,
Criminal Petition No.6892 of 2022 is preferred by A3 and Criminal
Petition No.6939 of 2022 is preferred by A4 for quashing the
proceedings in C.C.N.I.No.2031 of 2022 on the file of VIII
Metropolitan Magistrate, Manoranjan Complex, Hyderabad under
Section 138 of the Negotiable Instruments Act.
3. The facts of the case are as follows:
a) The Complainant/respondent No. 2 Company - M/s.
K.C.J. Properties Private Limited filed the present complaint under
Section 200 of the Code of Criminal Procedure against the
petitioners and other directors, alleging that they have committed
the offence punishable under Section 138 of the Negotiable
Instruments Act. According to the complaint, accused No.1
represented by accused Nos.2 to 12, who are the Managing
Director, Directors, Executive Directors, CFO, Secretary, and
authorized Signatories, being responsible for the conduct of day to
day business, have approached the respondent No. 2 -
Complainant Company and borrowed a sum of Rs.50 lakhs on
25.05.2016 assuring that they would pay the said amount with
interest @ 14.5% per annum payable on or before 23.08.2016.
b) Accused No.1 Company has executed demand pronote
dated 25.05.2016 for a sum of Rs.51,60,890/- towards principal
amount including interest in favour of the respondent No.2 -
Complainant Company. Accused No.1 Company has issued two
cheques bearing Nos.170404 and 170405 dated 22.08.2016 for
Rs.50,00,000/- and Rs.1,60,890/- respectively drawn on Punjab
National Bank, Large Corporate Branch, Ashram Road,
Ahmedeabad, Gujarat. Both the cheques when presented were
returned dishonored for the reason of "Funds Insufficient" vide
memo dated 29.08.2016.
c) The respondent No. 2 - Complainant Company issued legal
notice dated 10.09.2016 asking accused No.1 and others to pay the
money under the cheques within a period of 15 days from the date
of receipt of the notice. The notice was received on 12.09.2016 and
accused have given false and frivolous replies denying the
allegations. The respondent No.2 - Complainant Company has filed
a complaint before the learned VI Additional Chief Metropolitan
Magistrate, Nampally at Hyderabad under Section 138 of the
Negotiable Instruments Act. Cognizance of the case was taken
against accused Nos.1 to 12 including the petitioners.
4. It is argued by the counsel for the petitioner/A8 in Criminal
Petition No.5345 of 2018 that he resigned from the company and
was intimated to the ROC on 15.09.2015 which was long before the
date of offence which is 25.05.2016.
5. Counsel for petitioner/A3 in Criminal Petition No.6892 of
2022 and petitioner/A4 in Criminal Petition No.6939 of 2022,
argued that though they were directors of A1 company, in the
entire complaint, there are absolutely no allegations regarding their
involvement in the transactions in question. The Hon'ble Supreme
Court in the case of Pooja Ravinder Devidasani v. State of
Maharashtra1, it is held as follows:
"17. ....... Non-executive Director is no doubt a custodian of the governance of
the company but is not involved in the day-to-day affairs of the running of its
business and only monitors the executive activity. To fasten vicarious liability under
Section 141 of the Act on a person, at the material time that person shall have been at
the helm of affairs of the company, one who actively looks after the day-to-day
activities of the company and is particularly responsible for the conduct of its
business. Simply because a person is a Director of a company, does not make him
liable under the NI Act. Every person connected with the Company will not fall into
(2014) 16 SCC 1
the ambit of the provision. Time and again, it has been asserted by this Court that
only those persons who were in charge of and responsible for the conduct of the
business of the Company at the time of commission of an offence will be liable for
criminal action. A Director, who was not in charge of and was not responsible for the
conduct of the business of the Company at the relevant time, will not be liable for an
offence under Section 141 of the NI Act."
6. A2 is the Managing Director and A12 and A13 are the
signatories to the cheques and promissory note. It can be
accepted that they were responsible for the day to day affairs
of the company. Omnibus and vague allegations are made in
the complaint attributing knowledge of transactions to all the
directors. It is highly improbable and the statement made in
the complaint appears to have been made only for the purpose
of implicating all the directors in the case, which is being
prosecuted by the 2nd respondent.
7. For the reasons aforementioned, it is apparent that the
petitioner/A8 in Criminal Petition No.5345 of 2018 had
resigned even before the transactions in question. The two
petitioners, who are A3 and A4 in Criminal Petition Nos.6892
and 6939 of 2022 respectively are Directors, however the
complaint mentions that they were responsible. Mentioning
that the petitioners were responsible would not suffice. They
should have been in-charge and handled the transactions. The
judgment of the Hon'ble Supreme Court in the case of Pooja
Ravinder Devidasani v. State of Maharashtra (supra) is squarely
applicable to the present facts and accordingly, the proceedings
against petitioners/A8, A3 and A4 in Criminal Petition Nos.5345 of
2018, 6892 and 6939 of 2022 on the file of VIII Metropolitan
Magistrate, Manoranjan Complex are hereby quashed.
8. In the result, all the Criminal Petitions are allowed.
_________________
K.SURENDER, J
Date: 27.10.2022
kvs
THE HON'BLE SRI JUSTICE K.SURENDER
CRIMINAL PETITION NOS. 5345 OF 2018, 6892 & 6939 OF 2022
Dt.27.10.2022
kvs
