Telangana High Court
Tushar R.Desai vs The State Of Telangana And Another on 25 September, 2023
Bench: K.Surender
HIGH COURT FOR THE STATE OF TELANGANA
AT HYDERABAD
*****
Criminal Petition No.5055 OF 2018
Between:
Tushar R.Desai ... Petitioner/Accused No.3
And
The State of Telangana,
Rep. by its Public Prosecutor
High Court at Hyderabad and another ... Respondent/Complainant
DATE OF JUDGMENT PRONOUNCED : 25.09.2023
Submitted for approval.
THE HON'BLE SRI JUSTICE K.SURENDER
1 Whether Reporters of Local
newspapers may be allowed to see the Yes/No
Judgments?
2 Whether the copies of judgment may
be marked to Law Reporters/Journals Yes/No
3 Whether Their Ladyship/Lordship
Wish to see their fair copy of the Yes/No
Judgment?
__________________
K.SURENDER, J
2
* THE HON'BLE SRI JUSTICE K. SURENDER
+ CRL.P. No. 5055 of 2018
% Dated 25.09.2023
# Tushar R.Desai ... Petitioner/Accused No.3
And
$ The State of Telangana,
Rep. by its Public Prosecutor,
High Court at Hyderabad and another ... Respondent/Complainant
! Counsel for the Petitioner: Sri Mohammed Omer Farooq
^ Counsel for the Respondents: Public Prosecutor for R1
Sri M.Hamsa Raj for R2
>HEAD NOTE:
? Cases referred
1
(2019) 17 Supreme Court Cases 193
2 (2011) 13 Supreme Court Cases 412
3
(2010) 10 Supreme Court Cases 479
4
(2008) 5 Supreme Court Cases 662
5
(2005) 8 Supreme Court Cases 89
6
(2015) 4 Supreme Court Cases 609
7
2021 SCC OnLine SC 1012
8
(2020) 3 Supreme Court Cases 240
9
2003 BomCR (Cri) 793
3
THE HONOURABLE SRI JUSTICE K.SURENDER
CRIMINAL PETITION No.5055 OF 2018
ORDER:
1. This Criminal Petition is filed by the petitioner/A3 seeking to
quash the proceedings in CC No.931 of 2015 on the file of VI
Additional Chief Metropolitan Magistrate, Nampally, Hyderabad.
2. The 2nd respondent, who was the Managing Director of
Andhra Pradesh State Financial Corporation, Hyderabad filed a
criminal complaint which was investigated by the Economic
Offences Wing, Crime Investigation Department, Hyderabad. The
complainant alleged that this petitioner being one of the Directors
of M/s.Asia Pacific Investment Trust Limited failed to return the
fixed deposit amount of Rs.80.00 lakhs to the Sainik Welfare
Department. The promoters who are Directors of the accused
company approached Sainik Welfare Department with a request to
invest Government funds in their Non-Banking financial
institution. They suppressed the fact that they did not have
required permission from the RBI to accept such deposits. After
obtaining deposits to the extent of Rs.80.00 lakhs in the shape of
fixed deposits, the company defaulted in repayment.
3. It is further alleged that there was a sale agreement in
between Nagarjuna Investment Trust Limited and M/s.Asia Pacific
Financial Services Limited, Kolkata and the name was changed to
M/s.Asia Pacific Investment Trust Limited on 15.09.1994. The
funds of Sainik Welfare Department were transferred into M/s.Asia
Pacific Investment Trust Limited on 20.10.1994. The said amounts
were allegedly misappropriated. Accordingly, the company M/s.Asia
Pacific Investment Trust Limited and all its Directors were charge
sheeted for the offence under Sections 409, 420 r/w Section 34 of
IPC. The petitioner worked as Director from 28.04.1994 to
10.02.1996. He along with other accused are responsible for
misappropriation of the funds.
4. Learned counsel appearing for the petitioner would submit
that there is no specific allegation against this petitioner that he
was responsible for the management of the company. Vicarious
liability is unknown to criminal law unless specified by the
enactment. The petitioner was acquitted by the Sessions Court in
Criminal Appeal No.212 of 2008 in the case filed regarding the very
same transactions by the RBI, holding that the petitioner cannot be
held responsible and vicariously liable.
5. In support of his contentions, he relied on the judgment of
Hon'ble Supreme Court in the case of Shiv Kumar Jatia v. State
of NCT of Delhi 1, wherein it is held as follows:
"19. The liability of the Directors/the controlling authorities of
company, in a corporate criminal liability is elaborately considered
by this Court in Sunil Bharti Mittal [Sunil Bharti Mittal v. CBI,
(2015) 4 SCC 609 : (2015) 2 SCC (Cri) 687] . In the aforesaid case,
while considering the circumstances when Director/person in
charge of the affairs of the company can also be prosecuted, when
the company is an accused person, this Court has held, a
corporate entity is an artificial person which acts through its
officers, Directors, Managing Director, Chairman, etc. If such a
company commits an offence involving mens rea, it would
normally be the intent and action of that individual who would act
on behalf of the company. At the same time it is observed that it is
the cardinal principle of criminal jurisprudence that there is no
vicarious liability unless the statute specifically provides for. It is
further held by this Court, an individual who has perpetrated the
commission of an offence on behalf of the company can be made
an accused, along with the company, if there is sufficient evidence
of his active role coupled with criminal intent. Further it is also
held that an individual can be implicated in those cases where
statutory regime itself attracts the doctrine of vicarious liability, by
specifically incorporating such a provision.
20. Though there are allegations of negligence on the part of the
hotel and its officers who are incharge of day-to-day affairs of the
hotel, so far as appellant-Accused 2 Shiv Kumar Jatia is
concerned, no allegation is made directly attributing negligence
with the criminal intent attracting provisions under Sections 336,
338 read with Section 32 IPC. Taking contents of the final report
as it is we are of the view that, there is no reason and justification
to proceed against him only on ground that he was the Managing
Director of M/s Asian Hotels (North) Ltd., which runs Hotel Hyatt
Regency. The mere fact that he was chairing the meetings of the
company and taking decisions, by itself cannot directly link the
allegation of negligence with the criminal intent, so far as
appellant-Accused 2. Applying the judgment in Sunil Bharti
Mittal [Sunil Bharti Mittal v. CBI, (2015) 4 SCC 609 : (2015) 2 SCC
(Cri) 687] we are of the view that the said view expressed by this
Court, supports the case of appellant-Accused 2."
(2019) 17 Supreme Court Cases 193
6. He also relied on the following judgments: i) Thermax
Limited and others v. K.M.Johny and others 2; ii) Maharashtra
State Electricity Distribution Company Limited and another v.
Datar Switchgear Limited and others 3; iii) S.K.Alagh v. State
Uttar Pradesh and others 4; iv) S.M.S.Pharmaceuticals Limited v
Neeta Bhalla and another 5; v) Sunil Bharti Mittal v. Central
Bureau of Investigation 6; vi) Dayle De'souza v. Government of
India through Deputy Chief Labour Commissioner (C) and
another 7; Sushil Sethi and another v. State of Arunachal
Pradesh and others 8 and Mr.Homi Phiroz Ranina and others v.
The State of Maharshtra and others 9 to support his argument
that Director of a Company cannot be made vicariously liable
unless specific overt acts are attributed to the Director.
7. On the other hand, it was argued on behalf of the
respondents that it is for the trial Court to decide whether an
offence is made against the petitioner or not.
8. It is admitted that the Reserve Bank of India had earlier
lodged a complaint against M/s.Asia Pacific Investment Trust
(2011) 13 Supreme Court Cases 412
(2010) 10 Supreme Court Cases 479
(2008) 5 Supreme Court Cases 662
(2005) 8 Supreme Court Cases 89
(2015) 4 Supreme Court Cases 609
2021 SCC OnLine SC 1012
(2020) 3 Supreme Court Cases 240
2003 BomCR (Cri) 793
Limited. This petitioner was added as A4 in the said complaint. The
XIV Additional Chief Metropolitan Magistrate, Hyderabad convicted
the petitioner herein under Section 58B R/W 58C of Reserve Bank
of India Act. The petitioner preferred appeal before the learned
Metropolitan Sessions Judge, Hyderabad vide Criminal Appeal
No.212 of 2008. The learned Sessions Judge found that this
petitioner was practicing as an Advocate at Mumbai since the year
1974 and it is not the case of the RBI that contrary to the
provisions of the Advocates Act and Maharashtra Bar Council
Rules petitioner became full time director of A1 company and was
looking after the day-to-day affairs of the A1 company. Further,
since the evidence did not disclose that this petitioner was in any
manner responsible for the affairs of the company, Criminal Appeal
was allowed vide judgment dated 30.04.2009.
9. In the present charge sheet filed by the Economic Offences
Wing, on the basis of the complaint of the 2nd respondent, the
petitioner has been added as accused only for the reason of being
one of the Directors of M/s.Asia Pacific Investment Trust Limited.
Not even a single incident is narrated whereby this petitioner had
in any manner acted on behalf of M/s.Asia Pacific Investment Trust
Limited for obtaining fixed deposits. Further, there is no allegation
that this petitioner had in any manner dealt with any of the
officials of the Sainik Welfare Department for the transfer of the
amounts to the company. Petitioner cannot be made vicariously
liable when there are no specific allegations that are alleged against
him. Placing reliance on the judgment of Hon'ble Supreme Court in
Shiv Kumar Jatia v. State of NCT of Delhi's case (supra), the
petitioner cannot be tried only for the reason of being Director of
the company.
10. In the result, the proceedings against the petitioner in CC
No.931 of 2015 on the file of VI Additional Chief Metropolitan
Magistrate, Nampally, Hyderabad, are hereby quashed.
11. Accordingly, the Criminal Petition is allowed. Consequently,
miscellaneous applications pending, if any, shall stand dismissed.
__________________
K.SURENDER, J
Date: 25.09.2023
Note: LR copy to be marked.
B/o.kvs
THE HON'BLE SRI JUSTICE K.SURENDER
CRIMINAL PETITION No.5055 OF 2018
Dt. 25.09.2023
kvs
