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2021 DIGILAW 77 (TS)

M. Ravi Son of MBR. Murthy v. State of A. P.

2021-03-12

B.VIJAYSEN REDDY

body2021
ORDER : This criminal petition is filed to quash the proceedings in C.C.No.83 of 2012 on the file of the Special XI Metropolitan Magistrate, Erramanzil, Hyderabad, wherein the petitioner is arrayed as A2. 2. It is the case of the complainant/respondent No.2 that A1/company owes the complainant a sum of Rs.1,32,311/- and accordingly, two cheques bearing Nos.461594 and 461595 dated 27.08.2011 and 30.08.2011 were issued by A1/company towards discharge of its liability. The aforesaid cheques were dishonoured when presented for encashment. The complainant issued statutory notice dated 01.12.2011 under Section 138 of the Negotiable Instruments Act (for short ‘the Act’) and as the same evoked no response, the present complaint was filed. 3. A2 is the Vice President of A1/company. This Court is not concerned with the other accused since the quash petition is filed by A2 only. 4. Mr. Rathan Singh, learned counsel for the petitioner, submitted that the complaint is filed on vague and bald allegations with an intention to harass A2, who is no way responsible for the day-to-day affairs of A1/company. The averments in the complaint do not disclose as to how A2 is responsible for issuance of cheques. Learned counsel further submits that this case is squarely covered by the decision of the Supreme Court in S.M.S PHARMACEUTICALS v. NEETA BHALLA, (2005) 8 SCC 89 5. On the other hand, Ms. Shreya Mundra, learned counsel representing Mr. Damodar Mundra, learned counsel for the respondent No.2, submits that A2 is the Vice President of A1/company and he is involved in the day-to-day affairs of the company. More so, as on the date of the dishonour of cheques, A2 was on the rolls of A1/company as Vice President. The issue whether A2 is responsible for the day-to-day affairs of A1/company is a question of fact, which needs to be determined in the trial and such question cannot fall for consideration in exercise of extraordinary jurisdiction of this Court under Section 482 of the Criminal Procedure Code. It is not in dispute that A2 was the Vice President of A1/company when the cheques were dishonoured and A2 cannot be allowed to go scot-free. 6. On a perusal of the contents of the complaint, it is found that the averments therein are very vague so far as the role of A2 is concerned. It is not in dispute that A2 was the Vice President of A1/company when the cheques were dishonoured and A2 cannot be allowed to go scot-free. 6. On a perusal of the contents of the complaint, it is found that the averments therein are very vague so far as the role of A2 is concerned. There is no averment in the complaint as to how and in what manner A2 was responsible for the conduct of the business of the company and in regard to its functioning. Further, A2 is not the signatory of the cheques. There is no specific averment in the complaint based on which this Court can prima facie form an opinion that A2 is responsible for the day-to-day affairs of the company. The Supreme Court in S.M.S PHARMACEUTICALS’s case (1 supra) held as under: 19. In view of the above discussion, our answers to the questions posed in the reference are as under: (a) It is necessary to specifically aver in a complaint under Section 141 that at the time the offence was committed, the person accused was in charge of, and responsible for the conduct of business of the company. This averment is an essential requirement of Section 141 and has to be made in a complaint. Without this averment being made in a complaint, the requirements of Section 141 cannot be said to be satisfied. (b) The answer to the question posed in sub-para (b) has to be in the negative. Merely being a director of a company is not sufficient to make the person liable under Section 141 of the Act. A director in a company cannot be deemed to be in charge of and responsible to the company for the conduct of its business. The requirement of Section 141 is that the person sought to be made liable should be in charge of and responsible for the conduct of the business of the company at the relevant time. This has to be averred as a fact as there is no deemed liability of a director in such cases. (c) The answer to Question (c) has to be in the affirmative. The question notes that the managing director or joint managing director would be admittedly in charge of the company and responsible to the company for the conduct of its business. (c) The answer to Question (c) has to be in the affirmative. The question notes that the managing director or joint managing director would be admittedly in charge of the company and responsible to the company for the conduct of its business. When that is so, holders of such positions in a company become liable under Section 141 of the Act. By virtue of the office they hold as managing director or joint managing director, these persons are in charge of and responsible for the conduct of business of the company. Therefore, they get covered under Section 141. So far as the signatory of a cheque which is dishonoured is concerned, he is clearly responsible for the incriminating act and will be covered under sub-section (2) of Section 141. 7. The learned counsel for the 2nd respondent submitted that the petitioner/A-2 is the Vice President of A1/Company. There is a presumption against the petitioner and deemed liability which he has to rebut during the trial. The judgment of the Hon’ble Supreme Court in S.M.S PHARMACEUTICALS’s case (1 supra) cannot be read out of context. The petitioner has approached this Court with unclean hands by not disclosing the fact that the discharge petition filed by him before the Court below in Crl.MP. No.929 of 2013 in C.C. No.83 of 2012 was dismissed. The Hon’ble Supreme Court in recent decisions held that it is not necessary to reproduce the language in Section 141 of the Act, and it would suffice if basic averments are made in the complaint. If the complaint contains the averments against accused it has to be taken in plural sense and individual allegations against each of the accused is not necessary. The learned counsel relied on several decisions, which are discussed herein below: In GUNMALA SALES (P) LIMITED Vs. ANU MEHTA, (2015) 1 Supreme Court Cases 103, it was held by the Hon’ble Supreme Court in paras 34, 34.1, 34.2, 34.3 and 34.4, which read as under: “34. We may summarize our conclusions as follows: 34.1. Once in a complaint filed under Section 138 read with Section 141 of the NI Act the basic averment is made that the Director was in charge of and responsible for the conduct of the business of the company at the relevant time when the offence was committed, the Magistrate can issue process against such Director; 34.2. Once in a complaint filed under Section 138 read with Section 141 of the NI Act the basic averment is made that the Director was in charge of and responsible for the conduct of the business of the company at the relevant time when the offence was committed, the Magistrate can issue process against such Director; 34.2. If a petition is filed under Section 482 of the Code for quashing of such a complaint by the Director, the High Court may, in the facts of a particular case, on an overall reading of the complaint, refuse to quash the complaint because the complaint contains the basic averment which is sufficient to make out a case against the Director. 34.3. In the facts of a given case, on an overall reading of the complaint, the High Court may, despite the presence of the basic averment, quash the complaint because of the absence of more particulars about role of the Director in the complaint. It may do so having come across some unimpeachable, uncontrovertible evidence which is beyond suspicion or doubt or totally acceptable circumstances which may clearly indicate that the Director could not have been concerned with the issuance of cheques and asking him to stand the trial would be abuse of the process of the court. Despite the presence of basic averment, it may come to a conclusion that no case is made out against the Director. Take for instance a case of a Director suffering from a terminal illness who was bedridden at the relevant time or a Director who had resigned long before issuance of cheques. In such cases, if the High Court is convinced that prosecuting such a Director is merely an arm-twisting tactics, the High Court may quash the proceedings. It bears repetition to state that to establish such case unimpeachable, uncontrovertible evidence which is beyond suspicion or doubt or some totally acceptable circumstances will have to be brought to the notice of the High Court. Such cases may be few and far between but the possibility of such a case being there cannot be ruled out. In the absence of such evidence or circumstances, complaint cannot be quashed; 34.4. No restriction can be placed on the High Court’s powers under Section 482 of the Code. Such cases may be few and far between but the possibility of such a case being there cannot be ruled out. In the absence of such evidence or circumstances, complaint cannot be quashed; 34.4. No restriction can be placed on the High Court’s powers under Section 482 of the Code. The High Court always uses and must use this power sparingly and with great circumspection to prevent inter alia the abuse of the process of the Court. There are no fixed formulae to be followed by the High Court in this regard and the exercise of this power depends upon the facts and circumstances of each case. The High Court at that stage does not conduct a mini trial or roving inquiry, but, nothing prevents it from taking unimpeachable evidence or totally acceptable circumstances into account which may lead it to conclude that no trial is necessary qua a particular Director.” In G. RAMESH v. KANIKE HARISH KUMAR UJWAL AND ANOTHER, 2019 SCC ONLINE SC 577, it was held in paras 14, 17 and 18, which read as under: “14. The issue is whether there are sufficient averments in the complaint to meet the requirement of Section 141(1). This is a matter which has to be determined on a holistic reading of the complaint. From the averments in the complaint, the case of the complainant is that the partnership firm of which the first respondent is a partner had obtained contracts for data entry, which were being sub-contracted to the complainant. The accused are alleged to have obtained a caution deposit of Rs 1,00,000 and to have assigned the job of data entry to the complainant. After completing the job of data entry, the accused issued two cheques dated 1 November 2010 and 18 December 2010 for the amount of Rs 2,00,000 and Rs 2,50,000 respectively. On presentation, the cheques were returned due to insufficiency of funds. It was thereafter that the first respondent is alleged to have transferred an amount of Rs 1,00,000 from his account on 8 February 2011 and 10 February 2011. The complaint contains the statement that the parties are related. Thereafter, two further cheques were issued by the managing partner on 30 May 2011 and 19 July 2011 each in the amount of Rs 2,00,000. The complaint contains the statement that the parties are related. Thereafter, two further cheques were issued by the managing partner on 30 May 2011 and 19 July 2011 each in the amount of Rs 2,00,000. After the cheques were returned unpaid due to insufficiency of funds, the complainant is alleged to have informed the accused who are stated to have assured him that both the cheques would be honoured on re-presentation in the month of July 2011. 17. In the present case, it is evident from the relevant paragraphs of the complaint which have been extracted above that the complaint contains a sufficient description of (i) the nature of the partnership; (ii) the business which was being carried on; (iii) the role of each of the accused in the conduct of the business and, specifically, in relation to the transactions which took place with the complainant. At every place in the averments, the accused have been referred to in the plural sense. Besides this, the specific role of each of them in relation to the transactions arising out of the contract in question, which ultimately led to the dishonour of the cheques, has been elucidated. 18. The complaint contains a recital of the fact that the first set of cheques were returned for insufficiency of funds. It is alleged that the first respondent transferred an amount of Rs 1,00,000 on 8 February 2011 and 10 February 2011. The complaint also contains an averment that after the second set of cheques were dishonoured, the accused assured the complainant that they will be honoured on re-presentation in the month of July 2011. The averments are sufficient to meet the requirement of Section 141(1).” In Gunmala’s case (2 supra) the Hon’ble Apex Court has taken into consideration the judgment of S.M.S PHARMACEUTICALS’s case (1 supra) and held that the ratio laid down therein still holds the field (see para 27). The averments are sufficient to meet the requirement of Section 141(1).” In Gunmala’s case (2 supra) the Hon’ble Apex Court has taken into consideration the judgment of S.M.S PHARMACEUTICALS’s case (1 supra) and held that the ratio laid down therein still holds the field (see para 27). In the facts and circumstances available in GUNMALA’S case (2 supra) the Hon’ble Apex Court held that the averment that all the Directors of the Company are responsible for day to day affairs of the Company would suffice to continue prosecution against them and no clear case was made out, at the material time, that the Directors were not in charge of and were not responsible for the conduct of the business of the Company by referring to or producing any incontrovertible or unimpleachable evidence which is beyond suspicion or doubt or any totally acceptable circumstances. 8. Now coming to the facts of the present case, it is not in dispute that the petitioner accused No.2 was shown in cause title as Vice President. There is no averment that the petitioner is Director of the Company. Apart from that, there is no averment in the entire complaint that all the accused are responsible for day to day affairs of the Company. Thus basic reading of the complaint would not prima facie disclose commission of any offence, so as to prosecute the petitioner for the offence under Section 138 read with 141 of the Act. 9. Further submission of the learned counsel Ms. Shreya Mundra is that this Court may not exercise extraordinary jurisdiction under Section 482 Cr.P.C. since the petitioner approached this Court with unclean hands. The petitioner having suffered an adverse order in discharge petition does not disclose the same. The learned counsel placed on record the order dated 19.09.2013 passed in Crl.MP. No.929 of 2013 in C.C. No.83 of 2012 by the XI Special Magistrate, Secunderabad. The discharge petition was dismissed on the ground that unless all the accused appear and examined under Section 251 Cr.P.C., no discharge petition can be entertained in a summons case. 10. In SUBRAMANIUM SETHURAMAN Vs. STATE OF MAHARASHTRA AND ANOTHER, (2004) 13 Supreme Court Cases 324 it was held by the Hon’ble Apex Court that the discharge petition in summons case is not maintainable. Thus dismissal of the discharge petition would not have any bearing on the decision in this criminal petition. 10. In SUBRAMANIUM SETHURAMAN Vs. STATE OF MAHARASHTRA AND ANOTHER, (2004) 13 Supreme Court Cases 324 it was held by the Hon’ble Apex Court that the discharge petition in summons case is not maintainable. Thus dismissal of the discharge petition would not have any bearing on the decision in this criminal petition. It is settled law that a Court exercising equitable jurisdiction may decline to grant relief to the party if he or she approaches the Court with unclean hands or indulged in suppressing of facts. However, such suppression should be of material facts. In the instant case dismissal of discharge petition cannot be considered to be a material fact. As stated above, the dismissal of discharge petition is totally immaterial for this Court since this Court is not examining the correctness or otherwise of the order in the discharge petition. The learned counsel Ms. Shreya Mundra relied on the judgment of the Hon’ble Supreme Court in K.D. SHARMA Vs. STEEL AUTHORITY OF INDIA LIMITED AND OTHERS, MANU/SC/3371/2008. The said case arose out of writ petition relating to tenders. It was held in para 26, which reads as under: 26. A prerogative remedy is not a matter of course. While exercising extraordinary power a Writ Court would certainly bear in mind the conduct of the party who invokes the jurisdiction of the Court. If the applicant makes a false statement or suppresses material fact or attempts to mislead the Court, the Court may dismiss the action on that ground alone and may refuse to enter into the merits of the case by stating "We will not listen to your application because of what you have done". The rule has been evolved in larger public interest to deter unscrupulous litigants from abusing the process of Court by deceiving it. The judgment of the Hon’ble Supreme Court in K.D. SHARMA (5 supra) is not applicable to the facts of the present case, more so, since the alleged suppression is not with regard to any material fact. 11. In view of the above observations, this Court holds that continuance of proceedings against the petitioner would amount to gross abuse of process of law. Accordingly, the criminal petition is allowed quashing the proceedings in C.C.No.83 of 2012 on the file of the Special XI Metropolitan Magistrate, Erramanzil, Hyderabad, as against A2. Pending miscellaneous applications, if any, shall stand closed.