Madras High Court
Dr. Moksha Kalyanram Abhiramula vs M/S.Redington (India) Limited on 28 February, 2022
Author: Sathi Kumar Sukumara Kurup
Bench: Sathi Kumar Sukumara Kurup
CRL.OP.(MD)No.20346 of 2023
BEFORE THE MADURAI BENCH OF MADRAS HIGH COURT
RESERVED ON : 18.03.2024
DELIVERED ON : 14.11.2024
CORAM
THE HONOURABLE MR.JUSTICE SATHI KUMAR SUKUMARA KURUP
CRL.OP.(MD)No. 20346 of 2023
and
Crl.M.P.(MD)Nos.15878 and 15879 of 2023 & 830 of 2024
1. Dr. Moksha Kalyanram Abhiramula
2. Manushi K Shah : Petitioners/Accused 5 & 6
Vs.
M/s.Redington (India) Limited.,
Rep. by its Authorised Signatory &
Assistant Manager Mr.Barani Yadav,
C-48 B, First Floor, 11th Cross Road,
Thillai Nagar, Trichy – 620 018. : Respondent/Complainant
PRAYER: Criminal Original Petition filed under Section 482 of Criminal
Procedure Code, to call for the records in connection with S.T.C.No.6188 of
2022 on the file of the learned Judicial Magistrate-IV, Tiruchirappalli and
quash the same.
For Petitioners : Mr.G.Thalaimuthurasu
For Respondent : Mr.P.Ganapathi Subramanian
***
ORDER
https://www.mhc.tn.gov.in/judis 1/18 CRL.OP.(MD)No.20346 of 2023 This Criminal Original Petition had been filed to quash the case in S.T.C.No.6188 of 2022 on the file of the learned Judicial Magistrate-IV, Tiruchirappalli.
2. The learned Counsel for the Petitioners Thiru.G.Thalaimuthurasu submitted that the Petitioners are arraigned as Accused 5 and 6 in the private complaint under Section 138 of Negotiable Instruments Act, 1881, in S.T.C.No.6188 of 2022 preferred by the Respondent on the file of the learned Judicial Magistrate No.IV at Tiruchirappalli. The first Accused, as per the complaint, is M/s.Taashee Linux Services Private Limited represented by its Directors, 101, 12th Floor, Western Aqua Tower, Whitefields, Hitech City, Kondapur, Hyderabad, Telengana – 500 089. Mobile No.9989926182/9154910504. Taashee Linux Services Private Limited represented by its Directors, 6-3-252/2, 5th Floor, Workafella, Banjara Hills Main Road, Erram Manzil, Mada Manzil, Banjara Hills, Hyderabad, Telengana – 500 004 and its Directors. The Petitioners are arraigned as Accused-5 and Accused-6. As per the submission of the learned Counsel for the Petitioners the Petitioners/Accused-5 and Accused-6 are practising Lawyers. They were appointed to the Company – M/s.Taashee Linux Services Private Limited on 09.07.2021. In the https://www.mhc.tn.gov.in/judis 2/18 CRL.OP.(MD)No.20346 of 2023 appointment letter, the duties and responsibilities are clearly stated as follows:
“1) Duties and responsibilities
a) You will be designated as Director – Finance & Risk Management.
b) Your role will advisory only and to counsel the management.
c) As a member of the Board, you will be responsible for meeting the objectives of the Board.
d) Your scope of work would be evaluate, review and implement accounting, with internal controls check and measures and risk management measures for the Company.
e) Identify the gaps in internal accounting control and policies and suggestion possible solutions.
f) You are required to abide by the duties of Directors as provided in the Act and will devote sufficient time to the Company in performance of your role.
g) You will not be participating in the day-to-day activities of the Company and your role will only be for limited purpose i.e., for unearthing the financial fraud which is committed by Erring Directors i.e., Rajeev Satpal Lakhanpal.
Investigate and analyse past financial data from financial year 2016-17 onwards till financial year 2020-2021 and expediate the forensic audit.
h) You will be responsible for giving true and correct figures of the financial fraud which is committed by the Erring https://www.mhc.tn.gov.in/judis 3/18 CRL.OP.(MD)No.20346 of 2023 Director.
i) Identify areas of revenue leakage and mould the internal control system to provide leading indicators and curtail the revenue leakage. Review the company policies and advising management on possible risks.
j) Ensuring Company's policies and procedures comply with regulatory and ethical standards.”
3. The Accused-6 was appointed on the same date – 09.07.2021. The duties and responsibilities were stated as follows:
“1) Duties and responsibilities
a) You will be designated as Director – Compliance.
b) Your role will advisory only and to counsel the management.
c) As a member of the Board, you will be responsible for meeting the objectives of the Board.
d) Your scope of work would be evaluate, review gaps in compliance of the Company and suggest possible solutions.
e) You are required to abide by the duties of Directors as provided in the Act and will devote sufficient time to the Company in performance of your role.
f) You will not be participating in the day-to-day activities of the Company and your role will only be for limited purpose i.e., for unearthing statutory gaps that aided financial fraud committed by Erring Director i.e., Rajeev Satpal Lakhanpal. Investigate and analyse all issues related to https://www.mhc.tn.gov.in/judis 4/18 CRL.OP.(MD)No.20346 of 2023 compliance such as statutory filings, conversion process from erstwhile firm to company and expediate the forensic audit.
g) You will be responsible for identifying the loss caused due to non-compliance or delayed compliance committed by the Erring Director. ”
4.Subsequently, Accused-5 and Accused-6 have resigned as per the proceedings of the Company, which reads as follows:-
“EXTRACT OF THE RESOLUTIONS PASSED AT THE MEETING OF BOARD OF DIRECTORS OF TAASHEE LINUX SERVICES PRIVATE LIMITED HELD ON WEDNESDAY, THE 30th DAY OF MARCH 2022 AT 11:00 AM. AT THE REGISTERED OFFICE OF THE COMPANY SITUATED AT 101. WORKAFELLA, 12TH FLOOR WESTERN AQUA TOWER, HITECH CITY, KONDAPUR, HYDERABAD-500081. TELANGANA, INDIA Resignation of Mr. Moksha Kalyanram Abhiramula as a Director- Professional "RESOLVED THAT pursuant to the provisions of Section 168 of the Companies Act, 2013 and other applicable provisions, if any read with rules made thereunder (including any statutory modification(s) or re- enactment(s) thereon for the time being in force), the resignation of Mr. Moksha Kalyanram Abhiramula, Director (DIN:
07768457) from the directorship of the Company is hereby accepted and noted with effect from 30th Day of March, 2022. The effective date of resignation and effective date of relieving is confirmed as mentioned in the resignation letter received by the Company dated 28-02-2022.
RESOLVED FURTHER THAT the Board hereby places on record its appreciation for the assistance and guidance provided by Mr. Moksha Kalyanram Abhiramula during his tenure as Director of the Company.
RESOLVED FURTHER THAT any Director of the Company be and is hereby severally authorised to sign, file requisite e-forms with the concerned Registrar of Companies. Hyderabad and to do all such acts, deeds matters and things as may be necessary from time to time in this regard to bring the above resolutions into effect."
https://www.mhc.tn.gov.in/judis 5/18 CRL.OP.(MD)No.20346 of 2023 //CERTIFIED TRUE COPY// For TAASHEE LINUX SERVICES PRIVATE LIMITED Sd/-
ABHISHEK DATT DIRECTOR DIN: 08739640” “EXTRACT OF THE RESOLUTIONS PASSED AT THE MEETING OF BOARD OF DIRECTORS OF TAASHEE LINUX SERVICES PRIVATE LIMITED HELD ON WEDNESDAY, THE 30th DAY OF MARCH 2022 AT 11:00 AM. AT THE REGISTERED OFFICE OF THE COMPANY SITUATED AT 101. WORKAFELLA, 12TH FLOOR WESTERN AQUA TOWER, HITECH CITY, KONDAPUR, HYDERABAD-500081. TELANGANA, INDIA Resignation of Ms. Manushi Kalpesh Shah as a Director-Professional "RESOLVED THAT pursuant to the provisions of Section 168 of the Companies Act, 2013 and other applicable provisions, if any read with rules made thereunder (including any statutory modification(s) or re- enactment(s) thereon for the time being in force), the resignation of Ms. Manushi Kalpesh Shah, Director (DIN: 07768469) from the directorship of the Company is hereby accepted and noted with effect from 30th Day of March, 2022. The effective date of resignation and effective date of relieving is confirmed as mentioned in the resignation letter received by the Company dated 28-02-2022.
RESOLVED FURTHER THAT the Board hereby places on record its appreciation for the assistance and guidance provided by Ms. Manushi Kalpesh Shah during their tenure as Director of the Company.
RESOLVED FURTHER THAT any Director of the Company be and is hereby severally authorised to sign, file requisite e-forms with the concerned Registrar of Companies. Hyderabad and to do all such acts, deeds matters and things as may be necessary from time to time in this regard to bring the above resolutions into effect."
//CERTIFIED TRUE COPY// For TAASHEE LINUX SERVICES PRIVATE LIMITED https://www.mhc.tn.gov.in/judis 6/18 CRL.OP.(MD)No.20346 of 2023 Sd/-
ABHISHEK DATT DIRECTOR DIN: 08739640”
5.As per the Form No.DIR-12, the resignation of the first Petitioner/Accused-5 is recorded vide columns 'xvii – xix' as “In case of cessation – Hereby confirmed that the above mentioned Director is not associated with the Company with effect from 03.03.2022 due to Resignation u/s. 168”. The resignation of Accused-6 is also recorded vide columns 'xvii – xix' as “In case of cessation – Hereby confirmed that the above mentioned Director is not associated with the Company with effect from 03.03.2022 due to Resignation u/s. 168”. Therefore, by the time the complaint was filed, they were not the Directors of the Company. Also, they were not appointed as Directors or whole time Directors. They were appointed only to advise the Company regarding financial and risk management, to unearth the financial fraud committed by erring Director - Rajeev Satpal Lakhanpal, inspect and analyse the past financial data from financial year 2020 till 2021 and expediate the forensic audit and they had resigned subsequently. Therefore, they are in no way connected with the cheque transactions involving M/s.Taashee Linux Service Private Limited and the Complainant – M/s.Redington (India) Limited. Also the learned https://www.mhc.tn.gov.in/judis 7/18 CRL.OP.(MD)No.20346 of 2023 Counsel for the Petitioners submitted that the Petitioners were not responsible for issuance of cheque or they were not signatory to the cheques on behalf of M/s.Taashee Linux Services Private Limited. Therefore, the pleadings in the complaint that all the Directors of the Company are jointly and severely liable for the bouncing of the cheque for the offences under Section 138 of the Negotiable Instruments Act, 1881 will not hold the Petitioners liable. The Petitioners were only appointed to advise the Company regarding financial and risk management, to unearth the financial fraud committed by erring Director - Rajeev Satpal Lakhanpal, inspect and analyse the past financial data from financial year 2020 till 2021 and expediate the forensic audit. Therefore, by the appointment of the Petitioners as Advisers and Directors they cannot be held liable. Therefore, the complaint in S.T.C.No.6188 of 2022 as against the Petitioners/Accused Nos.5 and 6 is to be quashed and this Criminal Original Petition is to allowed.
6. In support of his contention, the learned Counsel for the Petitioners/Accused-5 and Accused-6 relied on the reported decision of the Hon'ble Supreme Court in 2011 (3) SCC 351 [Harshendra Kumar D vs. Rebatilata Koley Etc] wherein it is held as under:-
https://www.mhc.tn.gov.in/judis 8/18 CRL.OP.(MD)No.20346 of 2023 “22. Criminal prosecution is a serious matter; it affects the liberty of a person. No greater damage can be done to the reputation of a person than dragging him in a criminal case. In our opinion, the High Court fell into grave error in not taking into consideration the uncontroverted documents relating to appellant's resignation from the post of Director of the Company. Had these documents been considered by the High Court, it would have been apparent that the appellant has resigned much before the cheques were issued by the Company. As noticed above, the appellant resigned from the post of Director on March 2, 2004. The dishonoured cheques were issued by the Company on April 30, 2004, i.e., much after the appellant had resigned from the post of Director of the Company. The acceptance of appellant's resignation is duly reflected in the resolution dated March 2, 2004. Then in the prescribed form (Form No. 32), the Company informed to the Registrar of Companies on March 4, 2004 about appellant's resignation. It is not even the case of the complainants that the dishonoured cheques were issued by the appellant. These facts leave no manner of doubt that on the date the offence was committed by the Company, the appellant was not the Director; he had nothing to do with the affairs of the Company. In this view of the matter, if the criminal complaints are allowed to proceed against the appellant, it would result in gross injustice to the appellant and tantamount to an abuse of process of the court.”
7. The learned Counsel for the Petitioners/Accused-5 and Accused-6 also relied on the reported decision of the Hon'ble Supreme Court in 2005 (8) SCC 89 [S.M.S.Pharmaceuticals Ltd., vs. Neeta Bhalla and another] wherein it is held as under:-
“In view of the above discussion, our answers to the questions posed in the Reference are as under:
(a) ...
(b) The answer to question posed in sub-para (b) has to be in 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 https://www.mhc.tn.gov.in/judis 9/18 CRL.OP.(MD)No.20346 of 2023 company cannot be deemed to be in charge of and responsible to the company for 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.”
8. The learned Counsel for the Respondent Thiru.P.Ganapathi Subramanian objected to the line of arguments made by the learned Counsel for the Petitioners stating that the Petitioners were also Directors of the Company. As per the Registrar of Company the details of the Directors downloaded by the Respondent and only after ensuring all the Directors of the Company were on the Board on the date of bouncing of the cheque, the Directors jointly and severely responsible for the offence under Section 138 of Negotiable Instruments Act, 1881. Therefore, the statutory notice was issued. After receipt of statutory notice, the Accused Nos.5 and 6 had given explanation which is considered as lame excuse. Therefore, the complaint was preferred. Accused-5 and Accused-6 had received the remuneration of Rs.75,000/- (Rupees Seventy Five Thousand only) each per month. Therefore, they are liable. The explanation that they are not liable as they are involving only with regard to unearth the financial fraud committed by the Director Rajeev Satpal Lakhanpal is not true. What had been raised in this Petition is to be treated as valuable defence available to the Accused https://www.mhc.tn.gov.in/judis 10/18 CRL.OP.(MD)No.20346 of 2023 which is to be exercised only during trial and not at this stage. Further, the contention of the learned Counsel for the Petitioners that the Petitioners were appointed only for the purpose of unearth the financial fraud committed by the Director Rajeev Satpal Lakhanpal and they are not responsible for the day-to-day affairs of the Company is a defence that cannot be considered under Section 482 of Cr.P.C.
9. In support of his contention, the learned Counsel for the Respondent relied on the decision of the Hon'ble Supreme Court reported in (2007) 5 SCC 108 [N.Rangachari vs. Bharat Sanchar Nigam Ltd.,] wherein it is held as follows:-
“Negotiable Instruments Act, 1881 – Sections 141 and 138 – Dishonour of cheque – Offence by Company – Proceedings against Director of Company – Propriety – Where complaint clearly alleged that the named Directors were in charge of and responsible to the Company for the conduct of its business, held, High Court rightly refused to quash it under Section 482 Cr.P.C., - Questions whether the Accused at the relevant time were not in charge of the affairs of the Company or any restriction on their power or existence of any special circumstance made them not liable to be convicted, could be considered during trial – Criminal Procedure Code, 1973, Section 482 – Corporate Laws – Companies Act, 1956, Section 291 – Evidence Act, 1872, Section 106.” Therefore, the learned Counsel for the Respondent seeks dismissal of this Criminal Original Petition as having no merits.
https://www.mhc.tn.gov.in/judis 11/18 CRL.OP.(MD)No.20346 of 2023 Point for consideration:
Whether the private complaint filed in STC.No. 6188 of 2022 on the file of the learned Judicial Magistrate No.IV, Tiruchirappalli is to be quashed?
10. Heard the learned Counsel for the Petitioners and the learned Counsel for the Respondent and perused the documents.
11. On consideration of the submission made by the learned Counsel for the Petitioners and the learned Counsel for the Respondent and on perusal of the documents, it is found that the Petitioners are arraigned as Accused-5 and Accused-6 in STC.No.6188 of 2022. Both the Petitioners are the practicing lawyers. They were inducted as Directors of the first Accused Company – M/s.Taashee Linux Services Private Limited. The Respondent/De-facto Complainant had in the complaint mentioned that all the Directors of the Company are jointly and severally responsible for all the liabilities of the Company as it existed as on the date. All the Accused have failed and neglected to pay the amount due on the dishonoured cheque within 15 days after receipt of the notice of the dishonour. It is the further contention of the learned Counsel for the Petitioners that the Petitioners were appointed by the first Accused Company – M/s.Taashee Linux https://www.mhc.tn.gov.in/judis 12/18 CRL.OP.(MD)No.20346 of 2023 Services Private Limited as Directors for the specific purpose mentioned in the appointment letter.
12. The Petitioners offered to resign from the Company. The same was approved by the Board of Directors on 30.03.2022 by Board Resolution and was registered on the office of M/s.Taashee Linux Services Private Limited. The Registrar of Companies had uploaded it on the web-site. Therefore, with effect from 30.03.2022, both the Petitioners, Accused-5 and Accused-6 as per the complaint, are not the Directors of the Company. They are not signatories to the cheque issued to the Respondent. As per the appointment letter, the Petitioners/Accused-5 and Accused-6 are not in- charge of the day-to-day affairs of the Company. They are in-charge of providing legal and financial advise regarding the conduct of one of the Directors.
13. Under those circumstances, when the Petitioners are not the signatories to the cheque and when they are not appointed by the Company for the day-to-day affairs of the Company, but appointed only for offering professional, financial and legal advise, the general term used by the Respondent/Complainant that all the Directors of the Company are jointly https://www.mhc.tn.gov.in/judis 13/18 CRL.OP.(MD)No.20346 of 2023 and severely responsible for the liability of the Company cannot be invoked against the Petitioners herein.
14. The contention of the learned Counsel for the Respondent/De- facto Complainant placing reliance on the reported decision in (2007) 5 SCC 108 [N.Rangachari vs. Bharat Sanchar Nigam Ltd.,] will not help the Respondent's case. The contention of the learned Counsel for the Respondent that the Petitioners herein, as Directors of the Company, were paid monthly salary of Rs.75,000/- and they were Directors of the Company, when the transaction between the Complainant and the Accused had taken place cannot be pressed into service for bouncing of a cheque. The arguments of the learned Counsel for the Respondent is rejected. The reliance placed by the Respondent will also not help the case of the Respondent.
15. In the light of the reported decisions in (1) 2011 (3) SCC 351 [Harshendra Kumar D vs. Rebatilata Koley Etc] and (2) 2005 (8) SCC 89 [S.M.S.Pharmaceuticals Ltd., vs. Neeta Bhalla and another], the Accused-5 and 6 even though were appointed as Directors of the Company their services were not appointed for the day-to-day affairs of the Company, https://www.mhc.tn.gov.in/judis 14/18 CRL.OP.(MD)No.20346 of 2023 but only for offering professional, financial and legal advice, the general term that all the Directors of the Company are jointly and severely responsible for the liability of the Company cannot be invoked mechanically. There is no pleading or evidence regarding involvement of each of the Directors in bouncing of cheque. Under those circumstances, the arguments of the learned Counsel for the Respondent are rejected in the light of the above reported decisions.
16. In the light of the above discussion, the point for consideration is answered in favour of the Petitioners and against the Respondent. The Petitioners are not liable for the bouncing of cheques. The private complaint filed in S.T.C.No.6188 of 2022 on the file of the learned Judicial Magistrate No.IV, Tiruchirappalli is to be quashed.
In the result, this Criminal Original Petition is allowed. The complaint in S.T.C.No.6188 of 2022 on the file of the learned Judicial Magistrate No.IV, Tiruchirappalli is hereby quashed as against the Petitioners/Accused-5 and Accused-6 only. The learned Judicial Magistrate No.IV, Tiruchirappalli shall proceed with the trial as against the other Accused in S.T.C.No.6188 of 2022 and dispose of the same as per law. https://www.mhc.tn.gov.in/judis 15/18 CRL.OP.(MD)No.20346 of 2023 Consequently, the connected miscellaneous petitions are closed.
14.11.2024 Index: Yes/No Internet: Yes/No Speaking Order/Non-speaking Order MM/SRM To The learned Judicial Magistrate-IV, Tiruchirappalli.
https://www.mhc.tn.gov.in/judis 16/18 CRL.OP.(MD)No.20346 of 2023 SATHI KUMAR SUKUMARA KURUP, J.
MM/SRM https://www.mhc.tn.gov.in/judis 17/18 CRL.OP.(MD)No.20346 of 2023 Order made in CRL.OP.(MD)No. 20346 of 2023 14.11.2024 https://www.mhc.tn.gov.in/judis 18/18