Vinayak Yellojirao Kadolkar v. Shree Om Sai Enterpprises
2025-06-20
VENKATESH NAIK T.
body2025
DigiLaw.ai
ORDER : 1. Heard Sri. Nitin R.Bolabandi, learned counsel for the petitioners and Sri. D.G.Bhat, learned counsel for respondent. 2. The petitioners have filed these petitions under Section 482 of the Code of Criminal Procedure, praying to quash the entire proceedings in C.C.No.632/2020 (arising out of P.C.No.355/2020) and C.C.No.633/2020 (arising out of P.C.No.354/2020), pending on the file of learned JMFC-VIII Court, Belagavi for the offence punishable under Section 138 of Negotiable Instruments Act, 1881 (hereinafter referred to as ‘N.I. Act’ for brevity). 3. For the sake of convenience, the parties are referred to as per their ranking before the Trial Court. 4. In both the petitions, petitioner No.1 is accused No.6 whereas, petitioner No.2 is accused No.7, who died on 02.01.2025. Hence, petitions against petitioner No.2/accused No.7, is abated. 5. The brief facts of the complainant’s case in C.C.No.632/2020 is as under; The complainant is a proprietorship concern dealing in industrial scraps and pig iron. Accused No.1 is a registered company (herein after referred to as “the company”) and accused Nos.2 to 7 are the Directors of the company. Accused Nos.2 to 7 are responsible to and in charge of the company and responsible for the conduct of the business of the company and managing the day today affairs of the company. The company represented by its directors – accused Nos.2 to 7 used to buy industrial scraps and pig iron form the complainant. The complainant used to supply scraps and pig iron to the company as per the purchase orders issued by the company. As on 31.03.2018 as per the books of account maintained by the complainant, an amount of Rs.37,60,438.15 was due to the complainant by accused the company in respect of scraps and pig iron supplied by the complainant to the company. Inspite of several request of the complainant to make the payment due to him, all the accused persons on one or the other pretext, sought time. 6. On 27.10.2020, acknowledging the amount due to the complainant, the authorized signatory of the company who operates under directions and authority of accused Nos.2 to 7, with the knowledge of accused Nos.2 to 7, issued a cheque bearing No.591158 dated 27.10.2020 drawn on State Bank of India, SME Branch, Belagavi, for a sum of Rs.37,60,438.15, towards the amount due to the complainant. 7. On being presentation of the said cheque, same was returned with shara as “Account Closed”.
7. On being presentation of the said cheque, same was returned with shara as “Account Closed”. Hence, the complainant got issued a legal notice calling upon the accused persons to pay the amount due under the cheque. Inspite of service of legal notice on the accused they did not make any payment. On the contrary, they had issued untenable reply. Hence, the complainant filed a private complaint in P.C.No.335/2020 before the learned JMFC-VIII, Belagavi, for the offence punishable under Section 138 of NI Act. 8. In Crl.P.No.102807/2023, (arising out of C.C.No.633/2020), the complainant used to supply scraps and pig iron to the company. Accused Nos.2 to 7 are the Directors of the Company. As on 31.03.2018, as per the books of account maintained by the complainant an amount of Rs.10,95,862.75 was due to the complainant by the company in respect of scraps and pig iron supplied by the complainant to the company. 9. On 27.10.2020, acknowledging the amount due to the complainant, the authorized signatory of the company who operates under directions and authority of accused Nos.2 to 7, with the knowledge of accused Nos.2 to 7, issued a cheque bearing No.493754 dated 27.10.2020 drawn on State Bank of India, SME Branch, Belagavi, for a sum of Rs.10,95,862.75, towards the amount due to the complainant. 10. On being presentation of the said cheque, same was returned with shara as “Account Closed”. Hence, the complainant got issued a legal notice calling upon the accused persons to pay the amount due under the cheque. Inspite of service of legal notice to the accused did not make any payment. However, they had issued an untenable reply. Hence, the complainant filed a private complaint in P.C.No.354/2020 before the JMFC-VIII, Belagavi for the offence punishable under Section 138 of NI Act. 11. After institution of both the complaints, the Trial Court took cognizance of the offence against the accused persons in both the cases and issued process against them including the present petitioners. Taking exception of the same, petitioner No.1 - accused No.6 and petitioner No.2 – accused No.7 have filed these petitions under Section 482 of Cr.P.C. 12. The learned counsel for the petitioners in both the petitions contended that, they are innocent, they have not committed any offence, the petitioners are law abiding citizens, having no other criminal antecedents.
Taking exception of the same, petitioner No.1 - accused No.6 and petitioner No.2 – accused No.7 have filed these petitions under Section 482 of Cr.P.C. 12. The learned counsel for the petitioners in both the petitions contended that, they are innocent, they have not committed any offence, the petitioners are law abiding citizens, having no other criminal antecedents. Petitioners are neither the Directors nor the Partners of the company and they are not authorized signatory to cheques in question, same were issued by the Managing Director (accused No.2) of the company, hence, the provisions of Section 141 of N.I.Act not applicable to the petitioners. The presence of petitioners is not at all required in this case, thus, the initiation of criminal proceedings against the petitioners are purely abuse of process of law. Hence, prayed to quash the proceedings. 13. Learned counsel for the petitioners in support of his submission relied upon two judgments in the case of Sunita Palita & others Vs. M/s Panchami Stone Quarry, SLP (Crl.) No. 10396/2019 and in the case of Siby Thomas Vs. Somany Ceramics Ltd. SLP (Crl.) No. 12/2020 . 14. The learned counsel for the respondent submits that, petitioners are also directors of the company, thus, they are also vicariously liable, as accused No.2 has issued cheques for and on behalf of the company. The petitioners have neither disputed in reply notice dated 26.11.2020 issued to the counsel for the complainant nor in the original suit in O.S.No.26/2021, as to their directorship. Now the petitioners are disputing question of fact, which cannot be gone into under Section 482 of Cr.P.C. Thus, prayed to dismiss the petition. 15. On perusal of the material available on record, it appears that, as per the contents of complaint, accused Nos.2 to 7 representing the Company, have issued cheques in respect of the transaction held between the complainant and the company in respect of supply of scrap material and pig iron and acknowledged the receipt of the debt and thus, accused Nos.2 to 7 have issued cheque in favour of the complainant and same were dishonored. 16. On perusal of cheques at Exs.P.1 in both the cases, it appears that it was issued in the name of the company. It bears the signature of authorized signatory of the company.
16. On perusal of cheques at Exs.P.1 in both the cases, it appears that it was issued in the name of the company. It bears the signature of authorized signatory of the company. Exs.P.31 and P.32 – Memorandum of Articles discloses that accused Nos.6 and 7 are the directors of the company and cheques in question have been issued in the name of the company. Therefore, there is a material against petitioners – accused Nos.6 and 7 to proceed against them for the offence under Section 138 of NI Act. 17. Learned counsel for the respondent/complainant vehemently contended in both the petitions that, in both the complaints, the complainants have clearly described the role of accused Nos.6 and 7 and their liability to pay the amount. Hence, learned counsel relied upon Section 141 (2) of the NI Act. 18. Section 141 (2) of NI Act, reads as follows: "141(2) - Notwithstanding anything contained in sub-section (1), where any offence under this Act has been committed by a company and it is proved that the offence has been committed with the consent or connivance of, or is attributable to, any neglect on the part of, any director, manager, secretary or other officer of the company, such director, manager, secretary or other officer shall also be deemed to be guilty of that offence and shall be liable to be proceeded against and punished accordingly. Explanation.— For the purposes of this section — (a) “company” means anybody corporate and includes a firm or other association of individuals; (b) “director” in relation to a firm, means a partner in the firm. 19. Whereas, in order to attract Section 141 (2) of N.I.Act against accused Nos.6 and 7, complainants have placed Ex.P.31 and P.32, the copies of Memorandum of Articles of the company, wherein they have clearly shown as directors of the company. As per the contents of Ex.P.31 and P.32 for the business or affairs of the company, all directors are responsible. 20. From perusal of the reply notice dated 26.11.2020, issued by the learned counsel for accused Nos.6 and 7 is concerned, wherein they have stated that they are the directors of the company and nowhere, they have disputed their status in the company. 21.
20. From perusal of the reply notice dated 26.11.2020, issued by the learned counsel for accused Nos.6 and 7 is concerned, wherein they have stated that they are the directors of the company and nowhere, they have disputed their status in the company. 21. Learned counsel for the petitioners – accused Nos.6 and 7 contended that on 12.01.2018 itself, accused Nos.6 & 7 have entered in to an agreement with person who is responsible for the affairs of the company and thus, accused Nos.6 & 7 away from the affairs of the company. But, learned counsel for petitioner has not placed any material before the Court to substantiate that accused Nos.6 & 7 were tendered their resignation either to the company or to the Registrar of Companies and no board resolution is placed on record at this juncture. 22. In these cases, the petitioners simply disputing their status in the affairs of the company. On perusal of material available on record and the above proposition of law, whenever question of fact is disputed, such case cannot be quashed under Section 482 of Cr.P.C. The Hon’ble Apex Court in the case of Rajeshbhai Muljibhai Patel and others Vs. State of Gurarat and another , Crl. Appeal Nos. 251-252/2020 disposed of on 10.02.2020 , held that “when disputed question of facts are involved which need to be adjudicated after the parties adduce evidence, the complaint under Section 138 of NI Act, ought not to have been quashed by the High Court by taking recourse to Section 482 of Cr.P.C”. 23. In a case pertaining to an offence under Sections 138 and 141 of the N.I.Act, the law requires that, the complaint must contain a specific averment that the director was in charge of, and responsible for, the conduct of the company’s business at the time when the offence was committed. Whereas in the instant cases, the complainants have clearly disclosed that, the petitioners being the directors of the company was in-charge of, and responsible for, the conduct of the Company's business at the time when the offence was committed. On the contrary, the petitioners have not placed any material to substantiate their contention. 24.
Whereas in the instant cases, the complainants have clearly disclosed that, the petitioners being the directors of the company was in-charge of, and responsible for, the conduct of the Company's business at the time when the offence was committed. On the contrary, the petitioners have not placed any material to substantiate their contention. 24. In deciding a quashing of proceedings under Section 482 of Cr.P.C., the Court must consider whether the averment made in the complaint is sufficient or if some unimpeachable evidence has been brought on record, which leads to the conclusion that the director could never have been in charge of and responsible for the conduct of the business of the company at the relevant time. The similar ratio is laid down by the Hon'ble Apex Court, in the case of A.D. Radha Krishna Vs. Dasari Deepthi & Ors . 2019 SCC Online 357. 25. The Hon'ble Apex Court, in the case of Gunmala Sales (P) Ltd. v. Anu Mehta , (2015) 1 SCC 103 , held that, "if an accused wants the process under Sections 138 and 141 of the N.I.Act to be quashed by filing a petition under Section 482 Cr.P.C., he must make out a case that, making him stand in the trial would be an abuse of process of Court". 26. Admittedly, in the instant case, the petitioners, who are the directors of the company and the company has issued cheque, therefore the complainant has been prosecuted the accused persons under Section 138 of NI Act. Thus, they are responsible even in case of joint liability. 27. Learned counsel for the petitioner relied upon Siby Thomas‘s case cited supra, wherein the Hon’ble Apex Court observed that, the petitioner Siby Thomas who tendered resignation to the company. Therefore, the Hon’ble Apex Court quashed the entire proceedings against him, whereas in the instant case, accused Nos.6 & 7 have not at all tendered their resignation to the company. Therefore, the decision cited supra in Siby Thomas’s case is not aptly applicable to the case in hand. 28. Therefore, accused Nos.6 & 7 who are the directors of the company, they are responsible, thus, there are no merits in these petitions. Accordingly, both the criminal petitions are dismissed. Looking into to the age of the litigation, the Trial Court is directed to expedite the matters without adjourning unnecessarily.
28. Therefore, accused Nos.6 & 7 who are the directors of the company, they are responsible, thus, there are no merits in these petitions. Accordingly, both the criminal petitions are dismissed. Looking into to the age of the litigation, the Trial Court is directed to expedite the matters without adjourning unnecessarily. Any observations made in this order are only for the purpose of deciding these criminal petitions; the Trial Court shall not be influenced by the observations made in this order.