Sujatha Annangi vs The State Of Telangana And Another
2023 Latest Caselaw 610 Tel

     THE HONOURABLE SRI JUSTICE K.SURENDER

 CRIMINAL PETITION Nos.10978, 10979, 10980, 10981
                and 10990 OF 2022

COMMON ORDER:

1.   Since     the    petitioner/A3     and      the     2nd

respondent/defacto complainant and also the grounds

raised in all these petitions are one and the same, all the

criminal petitions are being disposed by way of this

Common Order.

2. Criminal Petition No.10978 of 2022 is filed to quash

the proceedings against the petitioner/A3 in C.C.No.494 of

2021 on the file XI Additional Chief Metropolitan Magistrate

at Secunderabad.

3. Criminal Petition No.10979 of 2022 is filed to quash

the proceedings against the petitioner/A3 in C.C.No.488 of

2021 on the file XI Additional Chief Metropolitan Magistrate

at Secunderabad.

4. Criminal Petition No.10980 of 2022 is filed to quash

the proceedings against the petitioner/A3 in C.C.No.495 of

2021 on the file XI Additional Chief Metropolitan Magistrate

at Secunderabad.

5. Criminal Petition No.10981 of 2022 is filed to quash

the proceedings against the petitioner/A3 in C.C.No.489 of

2021 on the file XI Additional Chief Metropolitan Magistrate

at Secunderabad.

6. Criminal Petition No.10990 of 2022 is filed to quash

the proceedings against the petitioner/A3 in C.C.No.497 of

2021 on the file XI Additional Chief Metropolitan Magistrate

at Secunderabad.

7. The 2nd respondent/defacto complainant filed

complaint under Section 138 of the Negotiable Instruments

Act stating that the services of their Company for

transportation and freight regarding the imports of the

shipments of A1 Company were availed at various locations.

The complainant had duly and diligently transported and

delivered all the material consignments. For the said reason,

invoices were raised and duly accepted by the accused. In

discharge of the total outstanding amounts, cheques were

issued on behalf of A1 signed by A2. The said cheques when

presented for clearance were returned unpaid for the reason

of 'insufficient funds' in all the cases.

8. Notice was issued and the company/A1 failed to repay

the said amount, for which reason, complaints are filed for

prosecution under section 138 R/W 141 of Negotiable

Instruments Act.

9. Learned counsel appearing for the petitioner/A3 would

submit that the petitioner is arrayed as accused No.3 and

the averment against the Petitioner in all the complaints is

as follows:

6. "The Accused No.1 is a Company and Accused No.2 & 3 are the Directors of the company and both Accused No.2 & 3 are in-charge of and liable to the Company for its day to day operations. The offence has been committed with the consent and connivance of Accused Nos.2 & 3 and therefore both Accused 2 & 3 are liable for the offence along with Accused No.1."

10. Learned counsel submits that a vague allegation of

being responsible for affairs of company is made, which is

not sufficient to prosecute the petitioner. He relied on the

judgment of Hon'ble Supreme Court in the case of Sunita

Palita & others v. M/s.Panchami Stone Quarry arising out of

SLP (Crl.) No.10396 of 2019, dated 01.08.2022, wherein the

Hon'ble Supreme Court held as follows:

20. 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 NI Act, there must be specific averments against the Director showing as to how and in what manner the Director was responsible for the conduct of the business of the company."

11. On the other hand, learned counsel appearing for the

2nd respondent submits that the law regarding vicarious

liability of persons in a Company or Firm has been settled in

the latest judgment of Hon'ble Supreme Court in the case of

S.P.Mani and Mohan Dairy v. Dr.Snehalatha Elangovan1,

wherein it is held as follows:

"46. When in view of the basic averment process is issued the complaint must proceed against the Directors or partners as the case may be. But, if any Director or Partner wants the process to be quashed by filing a petition under of the Code on the ground that only a bald averment is made in the complaint and that he is really not concerned with the issuance of the cheque, he must in order to persuade the High Court to quash the process either furnish some sterling incontrovertible material or acceptable circumstances to substantiate his contention. He must make out a case that making him stand the trial would be an abuse of process of court. He cannot get the complaint quashed merely on the ground that apart from the basic averment no particulars are

2022 SCC OnLine SC 1238

given in the complaint about his role, because ordinarily the basic averment would be sufficient to send him to trial and it could be argued that his further role could be brought out in the trial.

Quashing of a complaint is a serious matter. Complaint cannot be quashed for the asking. For quashing of a complaint, it must be shown that no offence is made out at all against the Director or Partner.

47. Our final conclusions may be summarised as under:

a.) The primary responsibility of the complainant is to make specific averments in the complaint so as to make the accused vicariously liable. For fastening the criminal liability, there is no legal requirement for the complainant to show that the accused partner of the firm was aware about each and every transaction. On the other hand, the first proviso to subsection (1) of the Act clearly lays down that if the accused is able to prove to the satisfaction of the Court that the offence was committed without his/her knowledge or he/she had exercised due diligence to prevent the commission of such offence, he/she will not be liable of punishment.

b.)........

c.).......

d.) If any Director wants the process to be quashed by filing a petition under of the Code on the ground that only a bald averment is made in the complaint and that he/she is really not concerned with the issuance of the cheque, he/she must in order to persuade the High Court to quash the process either furnish some sterling incontrovertible material or acceptable circumstances to substantiate his/her contention. He/she must make out a case that making

him/her stand the trial would be an abuse of process of Court."

12. Learned counsel submits that having discussed several

judgments of Hon'ble Supreme Court, their Lordships in

S.P.Mani and Mohan Dairy v. Dr.Snehalatha Elangovan's

case (supra) held that if any Director wants to succeed in

Section 482 Cr.P.C application for quashing the

proceedings, he/she must persuade by furnishing

incontrovertible material or circumstances to show that they

have nothing to do with the transactions in question.

13. Learned counsel further argued that the averment that

this petitioner was also responsible for the day to day affairs

of the company is sufficient to criminally prosecute her and

the defence that she is not responsible for the transactions,

can be assailed during the course of trial. For the said

reason, the petition lacks bonafides and accordingly, prayed

to dismiss the petitions.

14. Having perused the complaint, there are several

transactions in between the Complainant Company and A1-

Company. The complainant-company was apparently

interacting with A1 company for the payments to be made

on the basis of invoices over a period of time. However, the

outstanding in all the cases pertaining to two invoices dated

25.04.2019 for Rs.33,44,507/- and invoice dated

17.05.2019 for Rs.7,67,000/-. Against the partial discharge

of the the outstanding towards two invoices, 16 cheques

were issued for a total amount of Rs.34,84,619/-. The

present five cases are filed aggrieved by the non payment of

the amounts by the banks covered under the said sixteen

cheques.

15. Section 141 is a penal provision creating vicarious

liability. In the said circumstances, making bald cursory

statement in a complaint that the Director, who is arrayed

as an accused, was in charge of and responsible to the

company for conduct of the business without anything more

as to the role of such director may not be sufficient. The

company may have number of Directors and to make any or

all the Directors as accused in a complaint merely on the

basis of a statement that they are in charge of and

responsible for the conduct of the business of the company

without anything more is not a sufficient or adequate

fulfillment of the requirements under Section 141 of the

Negotiable Instruments Act. Petitioner is wife and according

to the Counsel she has nothing to do with the transactions

of A1 company.

16. Though, there are constant transactions in between A1

company and the complainant company, there is not even a

single occasion that has been mentioned by the complainant

company to suggest that the petitioner/A3 herein, who is

the wife of A2 had at any point of time either interacted with

any of the personnel of the complainant company or in any

manner paid any amounts or transacted the business in

any manner on behalf of the A1-company. Several invoices

were raised over a period of time. When there are several

transactions in between the complainant company and A1

company and not a single instance given wherein the

petitioner has in any manner interacted or transacted in

any kind of business with the complainant company, it

cannot be said that this petitioner/A3 was responsible for

running the day today affairs of A1 company. The three

Judge bench of the Hon'ble Supreme Court In

S.M.S.Pharmaceuticals Limited v. Neeta Bhalla and

another2, which was also considered in the case of

S.P.Mani's case held as follows:

"18. To sum up, there is almost unanimous judicial opinion that necessary averments ought to be contained in a complaint before a persons can be subjected to criminal process. A liability under Section 141 of the Act is sought to be fastened vicariously on a person connected with a Company, the principal accused being the company itself. It is a departure from the rule in criminal law against vicarious liability. A clear case should be spelled out in the complaint against the person sought to be made liable. Section 141 of the Act contains the requirements for making a person liable under the said provision. That respondent falls within parameters of Section 141 has to be spelled out. A complaint has to be examined by the Magistrate in the first instance on the basis of averments contained therein. If the Magistrate is satisfied that there are averments which bring the case within Section 141, he would issue the process. We have seen that merely being described as a director in a company is not sufficient to satisfy the requirement of Section 141. Even a non director can be liable under Section 141 of the Act. The averments in the complaint would also serve the purpose that the person sought to be made liable would know what is the case which is alleged against him. This will enable him to meet the case at the trial."

17. The circumstances in the present case clearly indicate

that the petitioner was never involved in any of the ongoing

business transactions in between the Complainant

Company and A1. As held by the Hon'ble Supreme Court in

S.P.Mani's case, 'acceptable circumstances' can form basis

to quash the proceedings under section 482 CRPC in a

(2005) 8 Supreme Court Cases 89

criminal prosecution of a person made liable with the aid of

section 141 NI Act. Viewed from any angle, the proceedings

against the petitioner/A3, who is wife of A2 has to be

quashed on the basis of material available on record.

18. In the result, proceedings against the petitioner/A3 in

C.C.No.494 of 2021, C.C.No.488 of 2021, C.C.No.495 of

2021, in C.C.No.489 of 2021 and C.C.No.497 of 2021 on the

file XI Additional Chief Metropolitan Magistrate at

Secunderabad, are hereby quashed.

19. Accordingly, all the Criminal Petitions are allowed.

Miscellaneous applications pending, if any, shall stand

closed.

__________________ K.SURENDER, J Date: 07.02.2023 kvs

THE HON'BLE SRI JUSTICE K.SURENDER

CRIMINAL PETITION Nos.10978, 10979, 10980, 10981 and 10990 OF 2022

Dated: 07.02.2023

kvs