Telangana High Court
Sri.Koppula Giridhar Reddy vs The State Of Telangana on 12 April, 2023
Bench: K.Surender
THE HONOURABLE SRI JUSTICE K.SURENDER
CRIMINAL PETITION No.1254 OF 2023
ORDER:
1. This Criminal Petition is filed to quash the complaint filed
against the petitioners/A3 and A4 in STC.N.I.No.6513 of 2022
under Section 138 of the Negotiable Instruments Act, on the
file of XII Metropolitan Magistrate, Nampally, Hyderabad.
2. The 2nd respondent filed a compliant under Section 138
of the Negotiable Instruments Act against A1 company,
A2/Managing Director and these petitioners who are also
Directors of A1 company.
3. According to the complaint, agreement to sell-cum-
General Power of Attorney was executed by A1 represented by
A2 and towards part payment, issued cheque bearing
No.000443 dated 30.01.2022 for Rs.25.00 lakhs and agreed
that the land sale transaction is subject to clearance of the
cheque. The said cheque when presented for clearance was
returned unpaid and accordingly, the 2nd respondent issued
legal notice to A1 company and also the petitioners. For not
paying the amount covered by the cheque, the present
complaint is filed by the 2nd respondent.
4. Learned counsel appearing for the petitioners would
submit that though the petitioners are Directors of A1
company, they have not dealt with the 2nd respondent in any
manner and have nothing to do with the transactions of sale
or the agreement to sell-cum-GPA. The said GPA was entered
into by A1 represented by A2 and the cheque was also issued
by A2 on behalf of A1 Company. In the said circumstances,
when there are no specific details of any kind of involvement of
the petitioners in the transactions in the complaint, the
proceedings against these petitioners have to be quashed. In
support of his contention, he relied on the judgment of the
Hon'ble Supreme Court in the case of SMS Pharmaceuticals
Ltd., v. Neeta Bhalla and another [Appeal (Crl.) 664 of 2002,
dated 20.02.2007]. In the said judgment, the Hon'ble Supreme
Court held that a person to be made vicariously liable should have
been in charge and responsible for the conduct of the business of
the company at the relevant time.
5. On the other hand, learned counsel appearing for the 2nd
respondent/complainant would submit that when notice was
issued by complainant, reply notice was also issued on behalf of
these petitioners, as such, it cannot be said that these petitioners
were unaware of the transactions and proceedings cannot be
quashed.
6. Admittedly, the Agreement to Sell-cum-GPA dated
30.10.2021 was entered into by A1 company represented by A2.
Thereafter, undated affidavit-cum-declaration was entered into by
A1 represented by A2 wherein it is mentioned that the cheque in
question was issued and the land sale transaction was subject to
the clearance of the subject cheque. The 2nd respondent/
complainant is also signatory to the said affidavit-cum-declaration
and also the agreement to sell-cum-GPA dated 30.10.2021.
7. In the complaint, there is no narration as to how these
petitioners are involved in any of the transactions with the 2nd
respondent/complainant. Admittedly, both the documents i.e.,
agreement to sell-cum-GPA dated 30.10.2021 and also the
affidavit-cum-declaration, which was executed thereafter were
signed by A2 on behalf of A1 company. The cheque in question
was also signed by A2 issued on behalf of A1 Company. No where
in the entire transactions, the involvement of these petitioners can
be inferred. No details are given in the complaint as to how these
petitioners were responsible for the execution of the said two
documents or while issuing the said cheque. Only for the reason of
reply notice being given on behalf of these petitioners along with
A1 and A2 would not entail the complainant to proceed against
these petitioners unless specific role is attributed to these
petitioners who are directors of A1 company and are made
vicariously liable for the reason of cheque being given on behalf of
A1 company signed by A2.
8. The directors of the company cannot be made vicariously
liable under Section 141 of the Negotiable Instruments Act unless it
is shown that they were responsible for on a daily basis or for any
transactions which have been undertaken on behalf of the
company. In the present case, the documents clearly indicate that
no role was played by these petitioners and further, no averments
are made in the complaint as to how these petitioners were
responsible in any of the transactions. For the said reasons, the
petitioners succeed.
9. In the result, the proceedings against the petitioners/A3 and
A4 in STC.N.I.No.6513 of 2022 under Section 138 of the
Negotiable Instruments Act, on the file of XII Metropolitan
Magistrate, Nampally, Hyderabad, are hereby quashed.
10. Accordingly, the Criminal Petition is allowed.
Consequently, miscellaneous applications, if any, shall stand
closed.
_________________
K.SURENDER, J
Date: 12.04.2023
kvs
THE HON'BLE SRI JUSTICE K.SURENDER
CRIMINAL PETITION No.1254 OF 2023
Dt.12.04.2023
kvs
