IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 11TH DAY OF APRIL, 2019 BEFORE THE HON’BLE MR.JUSTICE JOHN MICHAEL CUNHA CRIMINAL PETITION NO.7023/2013 Between:
1. Mrs.Renu Singh W/o Mr.Anil Kumar Singh Aged about 38 years 2. Mr.Shyam Nandan Singh S/o late Shri Ramakanth Singh Aged about 66 years 3. Mr.Sunil Kumar Singh S/o Mr. Shyam Nandan Singh Aged about 33 years 4. Mr.Amresh Kumar Singh S/o Mr.Shyam Nandan Singh Aged about 30 years All are residing at:
H.No.41-143/1, Pipe Line Road Sanjay Puri Nagar, Jagathgitigutta Ranga Reddy, Andhra Pradesh – 500037. … Petitioners (By Sri.Venkatraman Naik, Advocate for Sri.Nagendra Naik R, Advocate) And:
M/s.Basudeo Enterprises Pvt. Ltd., Company registered under the Companies Act, 1956 Having its Principal Place of Business No.35, D.V. Colony, Minister Road Secunderabad – 500 003 Andhra Pradesh. Represented by its Authorized Signatory Lalithkumar Ramsisaria and also registered office at 37/12-1, Archana Complex, 4th Cross, Lal Bagh Road, Bengaluru – 560027. ...Respondent (By Sri.Prakash T.Hebbar, Advocate) This Criminal Petition is filed under Section 482 of Cr.P.C., praying to quash the proceedings in C.C.No.13657/2013 on the file of the XV ACMM, Bengaluru in so far as the petitioners are concerned and etc.
This Criminal Petition coming on for Admission this day, the Court made the following:
O R D E R Proceedings are initiated against the petitioners under Section 138 of NI Act for dishonour of cheque issued by the accused No.1 company namely M/s.Samsaa Rubber & Polymers Private Limited. The said company is arrayed as accused No.1 and its Managing Director as accused No.2.
Petitioners herein are arrayed as accused Nos.3 to 6 in their capacity as the Directors of the accused No.1 company.
2. Learned counsel for the petitioners submits that the alleged liability was due by accused No.1 company. Petitioners were not involved in the day to day affairs of the management of the company and there are no averments attracting or satisfying the requirements of Section 142 of NI Act so as to proceed against the petitioners for the alleged offences committed by the Company. Further, he submits that the cheque in question is dated 10.12.2012 whereas accused Nos.4, 5 and 6 ceased to be the Directors of accused No.1 company with effect from 28.02.2011 as reflected in Form No.32 submitted before the Registrar of Companies. As such, the prosecution of the petitioners is illegal and amounts to abuse of process of Court.
3. Refuting the above submissions, the learned counsel appearing for respondent No.1 would submit that the petitioners herein are the members of the same family and they formed a company by name M/s.Samsaa Rubber & Polymers Private Limited. All the petitioners were actively involved in the day to day affairs of the company. Necessary averments to this effect are made in para No.11 of the complaint. The cheque in question was issued in discharge of the liability which had arisen much earlier to accused Nos.3 to 6 resigned as Directors. Hence, the prosecution of the petitioners is well maintainable in view of Section 141 of NI Act. Thus, he prays for dismissal of the petition.
4. Considered the submissions and perused the materials on record.
5. The case of the complainant is that towards discharge of debt or liability due by accused No.1 company, the cheque in question was issued by the accused No.1 company. It is not in dispute that the cheque was signed by accused No.2 as the Managing Director of accused No.1 company. No doubt, the petitioners are arrayed as co-accused as the Directors of the accused No.1 company, but, the law is well settled that merely on account of the accused being the Directors of the company, cannot be proceeded for the offence under Section 138 or 141 of NI Act unless as Directors they were in charge and were responsible to the conduct of the business of the company.
6. As pointed out by the learned counsel for the petitioners, in paragraph No.11 of the complaint it is averred that accused Nos.3 to 6 were the Directors of the company and were involved in the above liability of the said company. The involvement in the liability is distinct from the liability for the offences committed by the company or its Directors. By virtue of Section 141 of NI Act, if the offence is committed by the Company, every person who at the time when offence was committed, was in charge and was responsible to the company for the conduct of the business of the company renders himself liable for the act of the company.
7. In the instant case, undisputedly the company was managed by its Managing Director namely accused No.2. If the petitioners herein were also involved in the active management of the affairs of the Company, there was no necessity to designate accused No.2 as the Managing Director by the company. The very fact accused No.2 was appointed as the Managing Director of the company, it goes without saying that the entire management and the conduct of the day to day affairs of the company was vested with the Managing Director and not with other directors. That apart, as already stated above, there are no clear averments in the complaint that the petitioners herein were also involved in the management and in charge and were responsible to the company for the conduct of the business of the company. On the other hand, the allegation is to the effect that “accused Nos.4 to 6 are also involved in the above liability of the said company”. The said liability even if incurred by the petitioners, may render them liable for civil consequences, but cannot render them liable for consequences of dishonour of the cheque. In view of Section 141 of the Act, only by the persons who were responsible for the conduct of the business as on the date of issuance of the cheque namely accused No.2 would be liable for the acts of the company. The records produced before the Court indicate that as on the date of the commission of the offence, accused Nos.3 to 6 had ceased to be the Directors of accused No.1 company. The documents produced before this Court are unimpeachable documents, which could be relied upon to hold that as on the date of the commission of the offence, accused Nos.3 to 6 were not the Directors of the said company. Since the cheque in question was issued by accused No.2 as the Managing Director of accused No.1 company, in my view, only accused Nos.1 and 2 are liable for prosecution for the dishonour of the cheque in question. Consequently, the prosecution of the petitioners namely accused Nos.3 to 6 for the alleged offences, being illegal and abuses of process of Court is liable to be quashed. Accordingly, the petition is allowed. The impugned proceedings in C.C. No.13657/2013 pending on the file of XV ACMM, Bengaluru are hereby quashed only in so far as the petitioners (accused Nos.3 to 6) are concerned. The proceedings shall proceed against accused Nos.1 and 2 in accordance with law.
As proceedings are pending before the trial Court since 2013, trial Court is directed to expedite the proceedings and conclude the trial within an outer limit of six months from the date of communication of this order.
Sd/-
JUDGE NBM