IN THE HIGH COURT OF KARNATAKA, BENGALURU DATED THIS THE 20TH DAY OF FEBRUARY, 2019 BEFORE THE HON'BLE MR. JUSTICE ARAVIND KUMAR CRIMINAL PETITION NOS.3670 OF 2017, 3672 OF 2017 AND 3671 OF 2017 IN CRIMINAL PETITION NO. 3670 OF 2017 BETWEEN:
MRS.AVNEET BEDI DIRECTOR M/S.IDEB PROJECTS PRIVATE LIMITED AGED ABOUT 56 YEARS 9TH AND 10TH FLOORS DELTA TOWERS SIGMA SOFT TECH PARK NO.7 WHITE FIELD ROAD BENGALURU- 560 066 (BY SRI.ANAND MUTTALLI, ADV.,) AND:
M/S RELIANCE CAPITAL LTD., NO.37, 2ND FLOOR BRAHMANANDA COURT LALBAGH COURT BENGALURU- 560 027 REPRESENTED BY ITS POWER OF ATTORNEY HOLDER MR.RAMESH RAMU (BY SRI.B.S.SUDHIR, ADV.) …PETITIONER … RESPONDENT THIS CRIMINAL PETITION IS FILED UNDER SECTION 482 OF CR.P.C BY THE ADVOCATE FOR THE PETITIONER PRAYING THAT THIS HON’BLE COURT MAY BE PLEASED TO QUASH THE ORDER DATED: 18.03.2015 PASSED BY THE 27TH A.C.M.M., BENGALURU IN C.C.NO.8511 OF 2015 (ANNEXURE-B) AGAINST THE PETITIONER HEREIN AND ETC.
IN CRIMINAL PETITION NO. 3672 OF 2017 BETWEEN:
MRS.AVNEET BEDI DIRECTOR M/S.IDEB PROJECTS PRIVATE LIMITED AGED ABOUT 56 YEARS 9TH AND 10TH FLOORS DELTA TOWERS SIGMA SOFT TECH PARK NO.7 WHITE FIELD ROAD BENGALURU- 560 066 (BY SRI.ANAND MUTTALLI, ADV.,) AND:
M/S RELIANCE CAPITAL LTD., NO.37, 2ND FLOOR BRAHMANANDA COURT LALBAGH COURT BENGALURU- 560 027 REPRESENTED BY ITS POWER OF ATTORNEY HOLDER MR.RAMESH RAMU (BY SRI.B.S.SUDHIR, ADV.) …PETITIONER … RESPONDENT THIS CRIMINAL PETITION IS FILED UNDER SECTION 482 CR.P.C BY THE ADVOCATE FOR THE PETITIONER PRAYING THAT THIS HON’BLE COURT MAY BE PLEASED TO QUASH THE COMPLAINT FILED BY THE RESPONDENT IN C.C.NO.8526/2015 PENDING BEFORE THE XXVII ADDL. C.M.M., BANGALORE (ANNEXURE-A) AGAINST THE PETITIONER HEREIN AND QUASH THE ORDER DATED: 18.03.2015 PASSED BY THE XXVII, ADDL.C.M.M., BANGALORE IN C.C.NO.8526/2015 (ANNEXURE- B) AGAINST THE PETITIONER HEREIN AND ETC.
IN CRIMINAL PETITION NO. 3671 OF 2017 BETWEEN:
MRS.AVNEET BEDI DIRECTOR M/S.IDEB PROJECTS PRIVATE LIMITED AGED ABOUT 56 YEARS 9TH AND 10TH FLOORS DELTA TOWERS SIGMA SOFT TECH PARK NO.7 WHITE FIELD ROAD BENGALURU- 560 066 (BY SRI.ANAND MUTTALLI, ADV.,) AND:
M/S RELIANCE CAPITAL LTD., NO.37, 2ND FLOOR BRAHMANANDA COURT LALBAGH COURT BENGALURU- 560 027 REPRESENTED BY ITS POWER OF ATTORNEY HOLDER MR.RAMESH RAMU (BY SRI.B.S.SUDHIR, ADV.) …PETITIONER … RESPONDENT THIS CRIMINAL PETITION IS FILED UNDER SECTION 482 CR.P.C BY THE ADVOCATE FOR THE PETITIONER PRAYING THAT THIS HON’BLE COURT MAY BE PLEASED TO QUASH THE COMPLAINT FILED BY THE RESPONDENT IN C.C.NO.8525/2015 PENDING BEFORE THE XXVII ADDL. C.M.M., BANGALORE (ANNEXURE-A) AGAINST THE PETITIONER HEREIN AND QUASH THE ORDER DATED: 18.03.2015 PASSED BY THE XXVII, ADDL.C.M.M., BANGALORE IN C.C.NO.8525/2015 (ANNEXURE- B) AGAINST THE PETITIONER HEREIN AND ETC.
THESE CRIMINAL PETITIONS ARE COMING ON FOR ADMISSION THIS DAY, THE COURT MADE THE FOLLOWING:
COMMON ORDER Petitioner-accused No. 3 in these petitions, who is the respondent in the complaint filed under Section 200 of Cr.P.C. for the offence punishable under Section 138 of the Negotiable Instruments Act, 1881 (for short ‘the N.I. Act) is before this Court for quashing of said proceedings.
2. Respondent, in these petitions, had filed a complaint under Section 200 of Cr.P.C. read with Sections 138 and 142 of the N.I. Act contending inter alia that it is a non-banking financial company and during the course of its financial services, it has extended loan facilities to the accused persons for purchase of construction equipment for their business operations and they had agreed to repay the loan in equated monthly installments by executing the loan agreements and for repayment of said loan, cheques had been issued by them, which was presented to its Bank, has been returned with an endorsement ‘funds insufficient’ and as such, a notice under Section 138 (b) of the N.I. Act was issued demanding payment which has not been complied with and as such, the accused have committed an offence punishable under Section 138 of the N.I. Act and sought for being tried for the said offence and also sought for payment of compensation out of fine amount that may be levied as contemplated under Section 357 of Cr.P.C.
3. Petitioner having entered appearance pleaded not guilty and trial has commenced. In the midst of cross examination of the complainant witness, petitioner-accused No.3 is before this Court for quashing of said proceedings.
4. I have heard Sri Anand Muttalli, learned counsel appearing for petitioner and Sri B.S. Sudhir, learned counsel appearing for respondent. Perused the records.
5. It is the contention of Sri Anand Muttalli, learned counsel appearing for the petitioner that there is no specific allegation made by the complainant either in the complaint or in the affidavit filed in lieu of examination-in-chief to the effect that petitioner is the Director of the company or signatory to the cheques in question and as such, fixing vicarious liability by invoking Section 141 of the N.I. Act insofar as petitioner-accused No.3 is concerned is not called for and continuation of proceedings against the petitioner would be onerous and has prayed for allowing the petition. In support of his submission, he has relied upon the judgment of the Hon’ble Apex Court in the case of S.M.S. Pharmaceuticals Ltd v/s Neeta Bhalla & Anr reported in 2007(4) SCC 70.
6. Per contra, Sri.B.S. Sudhir, learned counsel appearing for respondent-complainant has drawn the attention of this Court to the complaint as well as the affidavit filed in lieu of examination-in-chief to buttress his argument that there are sufficient averments made in the complaint to establish the role of the petitioner- accused No.3 and as such, the petitioner should also be proceeded as an accused by fixing the vicarious liability. Hence, he prays for rejection of the petition.
7. A reading of Section 141 of the N.I. Act would indicate that persons who are sought to be criminally made liable for the offence committed by a company should be at the time of offence committed in- charge of and responsible for the conduct of business of the company and every person so connected with the company would not fall within the ambit of said provision automatically, but only those persons who are in-charge of and responsible for the conduct of the business of the company at the time of commission of offence will be liable for criminal action. A person not holding any office or designation of the company may also be liable if he satisfies the requirement of Section 141 of the N.I. Act namely being in-charge and responsible for the conduct of business of the company at the relevant point of time. When the commission of offence occurs, liability always depends on the one who is placed in-charge of the affairs of the company and not based on his/her designation. Likewise, merely being a Director of the company is not sufficient to make a person liable under Section 141 of the N.I. Act. A Director in the company cannot be deemed to be in- charge of and responsible for the conduct of business of the accused company. To put it differently, the requirement of Section 141 of N.I. Act is that persons sought to be made liable should be in-charge of and responsible for the conduct of business of the company at the relevant point of time, inasmuch as where the offence is committed by a company for fixing vicarious liability such person who was in-charge and responsible for the conduct of its business as well as the company would be deemed to be guilty of such offence namely, vicarious liability is created under Section 141 of N.I. Act. Thus, in such circumstance, it will have to be examined or ascertained from the averments or allegations made in the complaint, as to whether such persons who are arraigned as accused and made vicariously liable for the said offence were incharge and responsible for the conduct and business of the company or not. This proposition is supported by the law laid down by the Hon’ble Apex Court in the case of S.M.S. Pharmaceuticals Ltd., stated supra. However, at the same time, a sweeping statement made in the complaint would also not suffice, if the Directors are to be made parties to the proceedings for fixing vicarious liability. It is a trite law that role of such Directors are required to be stated in the complaint itself.
8. It is in the aforestated background, the complaint in question will have to be examined. Once a complaint is filed under Section 138 of the N.I. Act read with Section 142 of the N.I. Act, alleging that offence has been committed by a company and its Directors are also liable to be prosecuted. The basic averment shall be made that such Director/s was/were in-charge of and responsible for the conduct of the business of the company at the relevant time when the offence was committed. If such averments are found, proceedings would go on. When the accused approaches the Court with a prayer for quashing of the proceedings by invoking Section 482 of Cr.P.C., Court would examine the complaint and the averments made in the complaint and on an over-all reading of the complaint if it would disclose that the basic averment of accused as Directors were incharge of the affairs of the company is stated it would be sufficient to proceed with trial against such Directors and Court would refuse to quash the proceedings.
9. The complaint in question when perused, would clearly indicate that complainant has specifically stated the following facts in paragraph No.7, which reads as under:
7. The Complainant submits that the Accused No.2 being the Managing Director and accused No.3 being the Director of the accused No.1 Company are actively involved in the day-to-day affairs of the Accused No.1. The Accused No.2 and 3 have signed the above said cheque, as Authorized Signatories.
10. Even in examination-in-chief, complainant has specifically stated that accused Nos.2 and 3 have signed the cheque in question. The plea in the deposition of the complainant – PW.1 reads as under:
7. I state that the Accused No.2 being the Managing Director and the Accused No.3 being the Director of the Accused No.1 Company are actively involved in the day-to-day affairs of the Accused No.1. The Accused No.2 and 3 have signed the above said cheque, as Authorized Signatories.
11. In the examination-in-chief dated 27.12.2016, PW.1 has stated to the following effect:
“¤¦.2gÀ°ègÀĪÀ 3£Éà DgÉÆæAiÀÄ gÀÄdĪÀ£ÀÄß £ÉÆÃr UÀÄgÀÄw¹zÀÄÝ CzÀ£ÀÄß ¤¦.2(©) JAzÀÄ”
12. Though, Sri Anand Muttalli, learned counsel appearing for the petitioner would draw the attention of the Court to the cross examination dated 04.04.2017, whereunder, PW.1 has admitted that cheque in question does not contain the signature of accused Nos.2 and 3, it would be a defence available to the accused as provided under the first provision to Section 141 of the N.I. Act to seek for acquittal of such accused. Thus, on a comprehensive reading of the pleading as well as deposition, this Court is of the considered view that it is not a fit case where this Court will have to exercise jurisdiction under 482 of Cr.P.C. to quash the proceedings. It is made clear that no opinion is expressed on the merits. It is open for both the parties to substantiate their respective claims in that regard before the trial Court in the pending proceedings. Subject to these observations, these petitions stand dismissed.
Sd/-
JUDGE BS