Karnataka High Court
Indiranagar Chit Funds And Trading ... vs Dr. Vilas Hiremath on 19 July, 2022
Author: M.Nagaprasanna
Bench: M.Nagaprasanna
-1-
CRL.P No. 683 of 2021
AND
CONNCECTED MATTERS
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 19TH DAY OF JULY, 2022
BEFORE
THE HON'BLE MR JUSTICE M.NAGAPRASANNA
CRIMINAL PETITION NO. 683 OF 2021
C/W
CRIMINAL PETITION NO. 670 OF 2021
CRIMINAL PETITION NO. 682 OF 2021
CRIMINAL PETITION NO. 724 OF 2021
CRIMINAL PETITION NO. 805 OF 2021
CRIMINAL PETITION NO. 807 OF 2021
CRIMINAL PETITION NO. 809 OF 2021
CRIMINAL PETITION NO. 900 OF 2021
CRIMINAL PETITION NO. 905 OF 2021
CRIMINAL PETITION NO. 907 OF 2021
CRIMINAL PETITION NO. 911 OF 2021
CRIMINAL PETITION NO. 1012 OF 2021
CRIMINAL PETITION NO. 1443 OF 2021
IN CRIMINAL PETITION NO. 683 OF 2021
Digitally signed by
PADMAVATHI B K BETWEEN:
Location: HIGH
COURT OF
KARNATAKA
1. INDIRANAGAR CHIT FUNDS
AND TRADING COMPANY PRIVATE LIMITED
A COMPANY REGISTERED
UNDER THE COMPANIES ACT, 1956
-2-
CRL.P No. 683 of 2021
AND
CONNCECTED MATTERS
AND HAVING ITS REGISTERED OFFICE
NO.258, P.B.NO.3803
6TH CROSS, 1ST STAGE
INDIRANAGARA,
BENGALURU - 560 038
REP. BY ITS AUTHORIZED SIGNATORIES
MR. CHANDRASEKHARA BABU AND
MR. RAVI KUMAR.P.K.
2. SRI. CHANDRASEKHARA BABU
AUTHORIZED SIGNATORY OF
INDIRANAGARA CHIT FUNDS AND
TRADING COMPANY PRIVATE LIMITED,
NO.258, P.B.NO.3803
6TH CROSS, 1ST STAGE
INDIRANAGARA,
BENGALURU - 560 038
3. SRI. RAVI KUMAR P.K.
AUTHORIZED SIGNATORY OF
INDIRANAGARA CHIT FUNDS AND
TRADING COMPANY PRIVATE LIMITED,
NO.258, P.B.NO.3803
6TH CROSS, 1ST STAGE
INDIRANAGARA,
BENGALURU - 560 038
4. SRI. VAISHAK
DIRECTOR, INDIRANAGARA
CHIT FUNDS AND TRADING
COMPANY PRIVATE LIMITED,
NO.258, P.B.NO.3803
6TH CROSS, 1ST STAGE
INDIRANAGARA,
-3-
CRL.P No. 683 of 2021
AND
CONNCECTED MATTERS
BENGALURU - 560 038
...PETITIONERS
(BY SRI. UNNIKRISHNAN M., ADVOCATE)
AND:
AJITHA T.V.
762/A, 15TH B MAIN, 1ST STAGE
1ST PHASE, GOKULA
MATHIKERE
BENGALURU - 560 021
...RESPONDENT
(BY SRI. K.M. SAI APABHARANA, ADVOCATE)
THIS CRL.P IS FILED U/S.482 OF CR.P.C PLEASED TO
QUASH ALL PROCEEDINGS IN C.C.NO.4045/2019 PENDING
BEFORE THE HON'BLE XXX A.C.M.M., AT BENGALURU AS
AGAINST THESE PETITIONERS. I.A.NO.1/2020 FOR STAY.
I.A.NO.1/2020 FILED BY THE ADVOCATE FOR THE PETITIONER
PRAYING TO STAY ALL FURTHER PROCEEDINGS IN
C.C.NO.4045/2019 PENDING ON THE FILE OF THE HON'BLE
XXX A.C.M.M., AT BENGALURU PENDING DISPOSAL OF THE
ABOVE CRL.P, FOR THE REASONS STATED THEREIN.
IN CRIMINAL PETITION NO. 670 OF 2021
BETWEEN:
1. INDIRANAGAR CHIT FUNDS
AND TRADING COMPANY PRIVATE LIMITED
A COMPANY REGISTERED
UNDER THE COMPANIES ACT, 1956
AND HAVING ITS REGISTERED OFFICE
NO.258, P.B.NO.3803
-4-
CRL.P No. 683 of 2021
AND
CONNCECTED MATTERS
6TH CROSS, 1ST STAGE
INDIRANAGARA,
BENGALURU - 560 038
REP. BY ITS AUTHORIZED SIGNATORIES
MR. CHANDRASEKHARA BABU AND
MR. RAVI KUMAR.P.K.
2. SRI. CHANDRASEKHARA BABU
AUTHORIZED SIGNATORY OF
INDIRANAGARA CHIT FUNDS AND
TRADING COMPANY PRIVATE LIMITED,
NO.258, P.B.NO.3803
6TH CROSS, 1ST STAGE
INDIRANAGARA,
BENGALURU - 560 038
3. SRI. RAVI KUMAR P.K.
AUTHORIZED SIGNATORY OF
INDIRANAGARA CHIT FUNDS AND
TRADING COMPANY PRIVATE LIMITED,
NO.258, P.B.NO.3803
6TH CROSS, 1ST STAGE
INDIRANAGARA,
BENGALURU 560 038
4. SRI. VAISHAK BABU AUTHORISED SIGNATORY OF
M/S INDIRANAGARA CHIT FUNDS AND
TRADING COMPANY PRIVATE LIMITED,
NO.258, P.B.NO.3803
6TH CROSS, 1ST STAGE
INDIRANAGARA, BENGALURU - 560 038
...PETITIONERS
(BY SRI. UNNIKRISHNAN M., ADVOCATE)
-5-
CRL.P No. 683 of 2021
AND
CONNCECTED MATTERS
AND:
SRI E. HARISH
AGED ABOUT 40 YEARS
S/O EASHWAR SHET
PROPRIETOR OF
M/S SRI MANNUNATHA
JEWELLERY WORKS,
NO.1,2ND TEMPLE ROAD
15TH CROSS, MALLESWARAM
BANGALORE - 560 003.
...RESPONDENT
THIS CRL.P IS FILED U/S.482 OF CR.P.C PLEASED TO
QUASH ALL PROCEEDINGS IN C.C.NO.28134/2019 PENDING
BEFORE THE HON'BLE XV A.C.M.M., AT BENGALURU AS
AGAINST THESE PETITIONERS. I.A.NO.1/2020 FOR STAY.
I.A.NO.1/2020 FILED BY THE ADVOCATE FOR THE PETITIONER
PRAYING TO STAY ALL FURTHER PROCEEDINGS IN
C.C.NO.28134/2019 PENDING ON THE FILE OF THE HON'BLE
XV A.C.M.M., AT BENGALURU PENDING DISPOSAL OF THE
ABOVE CRL.P, FOR THE REASONS STATED THEREIN.
IN CRIMINAL PETITION NO. 682 OF 2021
BETWEEN:
1. INDIRANAGAR CHIT FUNDS
AND TRADING COMPANY PRIVATE LIMITED
A COMPANY REGISTERED
UNDER THE COMPANIES ACT, 1956
AND HAVING ITS REGISTERED OFFICE
NO.258, P.B.NO.3803
6TH CROSS, 1ST STAGE
INDIRANAGARA,
BENGALURU - 560 038
-6-
CRL.P No. 683 of 2021
AND
CONNCECTED MATTERS
REP. BY ITS AUTHORIZED SIGNATORIES
MR. CHANDRASEKHARA BABU AND
MR. RAVI KUMAR.P.K.
2. SRI. CHANDRASEKHARA BABU
AUTHORIZED SIGNATORY OF
INDIRANAGARA CHIT FUNDS AND
TRADING COMPANY PRIVATE LIMITED,
NO.258, P.B.NO.3803
6TH CROSS, 1ST STAGE
INDIRANAGARA,
BENGALURU - 560 038
3. SRI. RAVI KUMAR P.K.
AUTHORIZED SIGNATORY OF
INDIRANAGARA CHIT FUNDS AND
TRADING COMPANY PRIVATE LIMITED,
NO.258, P.B.NO.3803
6TH CROSS, 1ST STAGE
INDIRANAGARA,
BENGALURU - 560 038
...PETITIONERS
(BY SRI. UNNIKRISHNAN M., ADVOCATE)
AND:
SURESH RAO
S/O S. CHANDRA RAO PAWAR
AGED ABOUT 61 YEARS
NO.1, 6TH CROSS, JAYANAGAR
BANGALORE - 560 046.
...RESPONDENT
-7-
CRL.P No. 683 of 2021
AND
CONNCECTED MATTERS
THIS CRL.P IS FILED U/S.482 OF CR.P.C PLEASED TO
QUASH ALL PROCEEDINGS IN C.C.NO.29145/2019 PENDING
BEFORE THE HON'BLE XXI A.C.M.M., AT BENGALURU AS
AGAINST THESE PETITIONERS. I.A.NO.1/2020 FOR STAY.
I.A.NO.1/2020 FILED BY THE ADVOCATE FOR THE PETITIONER
PRAYING TO STAY ALL FURTHER PROCEEDINGS IN
C.C.NO.29145/2019 PENDING BEFORE THE HON'BLE XXI
A.C.M.M., AT BENGALURU PENDING DISPOSAL OF THE ABOVE
CRL.P, FOR THE REASONS STATED THEREIN.
IN CRIMINAL PETITION NO. 724 OF 2021
BETWEEN:
1. INDIRANAGAR CHIT FUNDS
AND TRADING COMPANY PRIVATE LIMITED
A COMPANY REGISTERED
UNDER THE COMPANIES ACT, 1956
AND HAVING ITS REGISTERED OFFICE
NO.258, P.B.NO.3803
6TH CROSS, 1ST STAGE
INDIRANAGARA,
BENGALURU - 560 038
REP. BY ITS AUTHORIZED SIGNATORIES
MR. CHANDRASEKHARA BABU AND
MR. RAVI KUMAR.P.K.
2. SRI. CHANDRASEKHARA BABU
AUTHORIZED SIGNATORY OF
INDIRANAGARA CHIT FUNDS AND
TRADING COMPANY PRIVATE LIMITED,
NO.258, P.B.NO.3803
6TH CROSS, 1ST STAGE
INDIRANAGARA,
BENGALURU - 560 038
-8-
CRL.P No. 683 of 2021
AND
CONNCECTED MATTERS
3. SRI. RAVI KUMAR P.K.
AUTHORIZED SIGNATORY OF
INDIRANAGARA CHIT FUNDS AND
TRADING COMPANY PRIVATE LIMITED,
NO.258, P.B.NO.3803
6TH CROSS, 1ST STAGE
INDIRANAGARA,
BENGALURU - 560 038
4. SRI VAISHAK BABU
INDIRANAGARA CHIT FUNDS
AND TARADING COMPANY
PRIVATE LIMITED,
NO.258, P.B.NO.3803
6TH CROSS, 1ST STAGE
INDIRANAGARA,
BENGALURU - 560 038
...PETITIONERS
(BY SRI. UNNIKRISHNAN M., ADVOCATE)
AND:
DR. VILAS HIREMATH
S/O LATE VEERUPAKSHAPPA
AGED ABOUT 56 YEARS
R/AT SC 601, SAPTHAGIRI SPLENDOR
80 FEET DOUBLE ROAD
BTM 4TH STAGE
BANGALORE - 560 076
...RESPONDENT
-9-
CRL.P No. 683 of 2021
AND
CONNCECTED MATTERS
THIS CRL.P IS FILED U/S.482 OF CR.P.C PLEASED TO
QUASH ALL PROCEEDINGS IN C.C.NO.11233/2019 PENDING
BEFORE THE HON'BLE XIX A.C.M.M., BENGALURU AS AGAINST
THESE PETITIONERS. I.A.NO.1/2020 FOR STAY.
I.A.NO.1/2020 FILED BY THE ADVOCATE FOR THE PETITIONER
PRAYING TO STAY ALL FURTHER PROCEEDINGS IN
C.C.NO.11233/2019 PENDING BEFORE THE HON'BLE XIX
A.C.M.M., AT BENGALURU TILL DISPOSAL FOR THE REASONS
STATED THEREIN.
IN CRIMINAL PETITION NO. 805 OF 2021
BETWEEN:
1. INDIRANAGAR CHIT FUNDS
AND TRADING COMPANY PRIVATE LIMITED
A COMPANY REGISTERED
UNDER THE COMPANIES ACT, 1956
AND HAVING ITS REGISTERED OFFICE
NO.258, P.B.NO.3803
6TH CROSS, 1ST STAGE
INDIRANAGARA,
BENGALURU 560 038
REP. BY ITS AUTHORIZED SIGNATORIES
MR. CHANDRASEKHARA BABU AND
MR. RAVI KUMAR.P.K.
2. SRI. CHANDRASEKHARA BABU
AUTHORIZED SIGNATORY OF
INDIRANAGARA CHIT FUNDS AND
TRADING COMPANY PRIVATE LIMITED,
NO.258, P.B.NO.3803
6TH CROSS, 1ST STAGE
INDIRANAGARA,
BENGALURU 560 038
- 10 -
CRL.P No. 683 of 2021
AND
CONNCECTED MATTERS
3. SRI. RAVI KUMAR P.K.
AUTHORIZED SIGNATORY OF
INDIRANAGARA CHIT FUNDS AND
TRADING COMPANY PRIVATE LIMITED,
NO.258, P.B.NO.3803
6TH CROSS, 1ST STAGE
INDIRANAGARA,
BENGALURU 560 038
4. SRI VAISHAK BABU
INDIRANAGARA CHIT FUNDS
AND TARADING COMPANY
PRIVATE LIMITED,
NO.258, P.B.NO.3803
6TH CROSS, 1ST STAGE
INDIRANAGARA,
BENGALURU 560 038
5. SMT. GANDHIMATHI
W/O RAVIKUMAR AUTHORISED
REPRESENTATIVE INDIRANAGARA
CHIT FUNDS AND TRADING
COMPANY PRIVATE LIMITED
NO.258, 1ST STAGE
INDIRANAGAR
POST BOX NO.3803
BANGALORE - 560 038
ALSO AT NO.33,
PKAN BUILDING
OPP BDA COMPLEX
1ST STAGE,
INDIRANAGAR
- 11 -
CRL.P No. 683 of 2021
AND
CONNCECTED MATTERS
BANGALORE - 560 038.
...PETITIONERS
(BY SRI. UNNIKRISHNAN M., ADVOCATE)
AND:
DR. VILAS HIREMATH
S/O LATE VEERUPAKSHAPPA
AGED ABOUT 56 YEARS
R/AT SC 601,
SAPTHAGIRI SPLENDOR
80 FEET DOUBLE ROAD
BTM 4TH STAGE
BANGALORE - 560 076.
...RESPONDENT
THIS CRL.P IS FILED U/S.482 OF CR.P.C PLEASED TO
QUASH ALL PROCEEDINGS IN C.C.NO.17637/2019 PENDING
BEFORE THE HON'BLE XIX A.C.M.M., BENGALURU AS AGAINST
THESE PETITIONERS. I.A.NO.1/2020 FOR STAY.
I.A.NO.1/2020 FILED BY THE ADVOCATE FOR THE PETITIONER
PRAYING TO STAY ALL FURTHER PROCEEDINGS IN
C.C.NO.17637/2019 PENDING BEFORE THE HON'BLE XIX
A.C.M.M., BANGALORE, PENDING DISPOSAL OF THE ABOVE
CRL.P, FOR THE REASONS STATED THEREIN.
IN CRIMINAL PETITION NO. 807 OF 2021
BETWEEN:
1. INDIRANAGAR CHIT FUNDS
AND TRADING COMPANY PRIVATE LIMITED
A COMPANY REGISTERED
UNDER THE COMPANIES ACT, 1956
AND HAVING ITS REGISTERED OFFICE
- 12 -
CRL.P No. 683 of 2021
AND
CONNCECTED MATTERS
NO.258, P.B.NO.3803
6TH CROSS, 1ST STAGE
INDIRANAGARA,
BENGALURU - 560 038
REP. BY ITS AUTHORIZED SIGNATORIES
MR. CHANDRASEKHARA BABU AND
MR. RAVI KUMAR.P.K.
2. SRI. CHANDRASEKHARA BABU
AUTHORIZED SIGNATORY OF
INDIRANAGARA CHIT FUNDS AND
TRADING COMPANY PRIVATE LIMITED,
NO.258, P.B.NO.3803
6TH CROSS, 1ST STAGE
INDIRANAGARA,
BENGALURU - 560 038
3. SRI. RAVI KUMAR P.K.
AUTHORIZED SIGNATORY OF
INDIRANAGARA CHIT FUNDS AND
TRADING COMPANY PRIVATE LIMITED,
NO.258, P.B.NO.3803
6TH CROSS, 1ST STAGE
INDIRANAGARA,
BENGALURU - 560 038
...PETITIONERS
(BY SRI. UNNIKRISHNAN M., ADVOCATE)
AND:
CHANDRAKUMAR.C
S/O SRI P. CHELLAPPAN
- 13 -
CRL.P No. 683 of 2021
AND
CONNCECTED MATTERS
AGED ABOUT 53 YEARS
R/AT NO.1,
CHELLAPPANA BUILDING
N.R. COLONY
HAL POST
BANGALORE - 560 017
ALSO PRESENTLY R/AT NO.01,
SUPRITH VILLA, 9TH CROSS
DODDANEKKUNDI
CHANNAPPANAHALLI
BANGALORE - 560 037.
...RESPONDENT
(BY SRI. DILIP KUMAR, ADVOCATE)
THIS CRL.P IS FILED U/S.482 OF CR.P.C PLEASED TO
QUASH ALL PROCEEDINGS IN C.C.NO.57176/2019 PENDING
BEFORE THE HON'BLE XXXIV A.C.M.M., BENGALURU AS
AGAINST THESE PETITIONERS. I.A.NO.1/2020 FOR STAY.
I.A.NO.1/2020 FILED BY THE ADVOCATE FOR THE PETITIONER
PRAYING TO STAY ALL FURTHER PROCEEDINGS IN
C.C.NO.57176/2019 PENDING BEFORE THE HON'BLE XXXIV
A.C.M.M., BANGALORE, PENDING DISPOSAL OF THE ABOVE
CRL.P, FOR THE REASONS STATED THEREIN.
IN CRIMINAL PETITION NO. 809 OF 2021
BETWEEN:
1. INDIRANAGAR CHIT FUNDS
AND TRADING COMPANY PRIVATE LIMITED
A COMPANY REGISTERED
UNDER THE COMPANIES ACT, 1956
- 14 -
CRL.P No. 683 of 2021
AND
CONNCECTED MATTERS
AND HAVING ITS REGISTERED OFFICE
NO.258, P.B.NO.3803
6TH CROSS, 1ST STAGE
INDIRANAGARA,
BENGALURU 560 038
REP. BY ITS AUTHORIZED SIGNATORIES
MR. CHANDRASEKHARA BABU AND
MR. RAVI KUMAR.P.K.
2. SRI. CHANDRASEKHARA BABU
AUTHORIZED SIGNATORY OF
INDIRANAGARA CHIT FUNDS AND
TRADING COMPANY PRIVATE LIMITED,
NO.258, P.B.NO.3803
6TH CROSS, 1ST STAGE
INDIRANAGARA,
BENGALURU - 560 038
3. SRI. RAVI KUMAR P.K.
AUTHORIZED SIGNATORY OF
INDIRANAGARA CHIT FUNDS AND
TRADING COMPANY PRIVATE LIMITED,
NO.258, P.B.NO.3803
6TH CROSS, 1ST STAGE
INDIRANAGARA,
BENGALURU - 560 038
4. SRI. VAISHAK BABU
AUTHORIZED SIGNATORY OF
M/S INDIRANAGARA CHIT FUNDS AND
TRADING COMPANY LIMITED,
NO.258, P.B.NO.3803
6TH CROSS, 1ST STAGE
INDIRANAGARA,
- 15 -
CRL.P No. 683 of 2021
AND
CONNCECTED MATTERS
BENGALURU - 560 038
...PETITIONERS
(BY SRI. UNNIKRISHNAN M., ADVOCATE)
AND:
SRI. E. HARISH
S/O ESHWAR SHET
AGED ABOUT 40 YEARS
PROPRIETOR OF
M/S . SRI MANJUNATHA
JEWELLERY WORKS,
NO.1, 2ND TEMPLE ROAD
15TH CROSS
MALLESHWARAM
BANGALORE - 560 003
...RESPONDENT
(BY SRI. HARI KUMAR, ADVOCATE)
THIS CRL.P IS FILED U/S.482 OF CR.P.C PLEASED TO
QUASH ALL PROCEEDINGS IN C.C.NO.5014/2019 PENDING
BEFORE THE HON'BLE XXX A.C.M.M., BENGALURU AS AGAINST
THESE PETITIONERS. I.A.NO.1/2020 FOR STAY.
I.A.NO.1/2020 FILED BY THE ADVOCATE FOR THE PETITIONER
PRAYING TO STAY ALL FURTHER PROCEEDINGS IN
C.C.NO.5014/2019 PENDING BEFORE THE HON'BLE XXX
A.C.M.M., BANGALORE, PENDING DISPOSAL OF THE ABOVE
CRL.P, FOR THE REASONS STATED THEREIN.
- 16 -
CRL.P No. 683 of 2021
AND
CONNCECTED MATTERS
IN CRIMINAL PETITION NO. 900 OF 2021
BETWEEN:
1. INDIRANAGAR CHIT FUNDS
AND TRADING COMPANY PRIVATE LIMITED
A COMPANY REGISTERED
UNDER THE COMPANIES ACT, 1956
AND HAVING ITS REGISTERED OFFICE
NO.258, P.B.NO.3803
6TH CROSS, 1ST STAGE
INDIRANAGARA,
BENGALURU - 560 038
REP. BY ITS AUTHORIZED SIGNATORIES
MR. CHANDRASEKHARA BABU AND
MR. RAVI KUMAR.P.K.
2. SRI. CHANDRASEKHARA BABU
AUTHORIZED SIGNATORY OF
INDIRANAGARA CHIT FUNDS AND
TRADING COMPANY PRIVATE LIMITED,
NO.258, P.B.NO.3803
6TH CROSS, 1ST STAGE
INDIRANAGARA,
BENGALURU - 560 038
3. SRI. RAVI KUMAR P.K.
AUTHORIZED SIGNATORY OF
INDIRANAGARA CHIT FUNDS AND
TRADING COMPANY PRIVATE LIMITED,
NO.258, P.B.NO.3803
6TH CROSS, 1ST STAGE
INDIRANAGARA,
- 17 -
CRL.P No. 683 of 2021
AND
CONNCECTED MATTERS
BENGALURU - 560 038
...PETITIONERS
(BY SRI. UNNIKRISHNAN M., ADVOCATE)
AND:
SRI BABU MANI
S/O MUNIYAPPA
AGED ABOUT 41 YEARS
FLAT AT#304 C-BLOCK
GAJANANA SUMUKH APARTMENTS
HOODI
BANGALORE - 560 048
...RESPONDENT
THIS CRL.P IS FILED U/S.482 OF CR.P.C PLEASED TO
QUASH ALL PROCEEDINGS IN C.C.NO.7918/2019 PENDING
BEFORE THE HON'BLE XIX A.C.M.M., BANGALORE.
I.A.NO.1/2020 FOR STAY. I.A.NO.1/2020 FILED BY THE
ADVOCATE FOR THE PETITIONER PRAYING TO STAY ALL
FURTHER PROCEEDINGS IN C.C.NO.7918/2019 PENDING ON
THE FILE OF THE HON'BLE XIX A.C.M.M. BANGALORE FOR THE
REASONS STATED THEREIN.
IN CRIMINAL PETITION NO. 905 OF 2021
BETWEEN:
1. INDIRANAGAR CHIT FUNDS
AND TRADING COMPANY PRIVATE LIMITED
A COMPANY REGISTERED
UNDER THE COMPANIES ACT, 1956
AND HAVING ITS REGISTERED OFFICE
- 18 -
CRL.P No. 683 of 2021
AND
CONNCECTED MATTERS
NO.258, P.B.NO.3803
6TH CROSS, 1ST STAGE
INDIRANAGARA,
BENGALURU - 560 038
REP. BY ITS AUTHORIZED SIGNATORIES
MR. CHANDRASEKHARA BABU AND
MR. RAVI KUMAR.P.K.
2. SRI. CHANDRASEKHARA BABU
AUTHORIZED SIGNATORY OF
INDIRANAGARA CHIT FUNDS AND
TRADING COMPANY PRIVATE LIMITED,
NO.258, P.B.NO.3803
6TH CROSS, 1ST STAGE
INDIRANAGARA,
BENGALURU - 560 038
3. SRI. RAVI KUMAR P.K.
AUTHORIZED SIGNATORY OF
INDIRANAGARA CHIT FUNDS AND
TRADING COMPANY PRIVATE LIMITED,
NO.258, P.B.NO.3803
6TH CROSS, 1ST STAGE
INDIRANAGARA,
BENGALURU - 560 038
4. SRI. VAISHAK BABU
AUTHORIZED SIGNATORY OF
M/S INDIRANAGARA CHIT FUNDS AND
TRADING COMPANY LIMITED,
NO.258, P.B.NO.3803
6TH CROSS, 1ST STAGE
INDIRANAGARA,
- 19 -
CRL.P No. 683 of 2021
AND
CONNCECTED MATTERS
BENGALURU - 560 038
...PETITIONERS
(BY SRI. UNNIKRISHNAN M., ADVOCATE)
AND:
SRI. E. HARISH
AGED ABOUT 40 YEARS
S/O ESHWAR SHET
PROPRIETOR OF
M/S . SRI MANJUNATHA
JEWELLERY WORKS,
NO.1, 2ND TEMPLE ROAD
15TH CROSS
MALLESHWARAM
BANGALORE - 560 003
...RESPONDENT
(BY SRI. HARISH KUMAR, ADVOCATE)
THIS CRL.P IS FILED U/S.482 OF CR.P.C PLEASED TO
QUASH ALL PROCEEDINGS IN C.C.NO.6367/2019 PENDING
BEFORE THE HON'BLE XXX A.C.M.M., BANGALORE AS AGAINST
THESE PETITIONERS. I.A.NO.1/2020 FOR STAY.
I.A.NO.1/2020 FILED BY THE ADVOCATE FOR THE PETITIONER
PRAYING TO STAY ALL FURTHER PROCEEDINGS IN
C.C.NO.6367/2019 PENDING ON THE FILE OF THE HON'BLE
XXX A.C.M.M. BANGALORE PENDING DISPOSAL OF THE ABOVE
CR.P FOR THE REASONS STATED THEREIN.
- 20 -
CRL.P No. 683 of 2021
AND
CONNCECTED MATTERS
IN CRIMINAL PETITION NO. 907 OF 2021
BETWEEN:
VAISHAK BABU
MANAGER OF INDIRANAGAR
CHIT FUNDS AND TRADING
COMPANY PRIVATE LIMITED,
REGISTERED OFFICE NO.258,
P.B.NO.3803, 6TH CROSS,
1ST STAGE, INDIRANAGARA
BANGALORE - 560 038
...PETITIONER
(BY SRI. UNNIKRISHNAN M., ADVOCATE)
AND:
E. HARISH
S/O ESHWAR SHET
AGED ABOUT 40 YEARS
NO.1, 2ND TEMPLE ROAD
15TH CROSS
MALLESHWARAM
BANGALORE - 560 003
...RESPONDENT
THIS CRL.P IS FILED U/S.482 OF CR.P.C PLEASED TO
QUASH ALL PROCEEDINGS IN C.C.NO.5012/2019 PENDING
BEFORE THE HON'BLE XXX A.C.M.M., BANGALORE.
I.A.NO.1/2020 FOR STAY. I.A.NO.1/2020 FILED BY THE
ADVOCATE FOR THE PETITIONER PRAYING TO STAY ALL
FURTHER PROCEEDINGS IN C.C.NO.5012/2019 PENDING
- 21 -
CRL.P No. 683 of 2021
AND
CONNCECTED MATTERS
BEFORE THE HON'BLE XXX A.C.M.M. BANGALORE FOR THE
REASONS STATED THEREIN.
IN CRIMINAL PETITION NO. 911 OF 2021
BETWEEN:
1. INDIRANAGAR CHIT FUNDS
AND TRADING COMPANY PRIVATE LIMITED
A COMPANY REGISTERED
UNDER THE COMPANIES ACT, 1956
AND HAVING ITS REGISTERED OFFICE
NO.258, P.B.NO.3803
6TH CROSS, 1ST STAGE
INDIRANAGARA,
BENGALURU - 560 038
REP. BY ITS AUTHORIZED SIGNATORIES
MR. CHANDRASEKHARA BABU AND
MR. RAVI KUMAR.P.K.
2. SRI. CHANDRASEKHARA BABU
AUTHORIZED SIGNATORY OF
INDIRANAGARA CHIT FUNDS AND
TRADING COMPANY PRIVATE LIMITED,
NO.258, P.B.NO.3803
6TH CROSS, 1ST STAGE
INDIRANAGARA,
BENGALURU - 560 038
3. SRI. RAVI KUMAR P.K.
AUTHORIZED SIGNATORY OF
INDIRANAGARA CHIT FUNDS AND
TRADING COMPANY PRIVATE LIMITED,
- 22 -
CRL.P No. 683 of 2021
AND
CONNCECTED MATTERS
NO.258, P.B.NO.3803
6TH CROSS, 1ST STAGE
INDIRANAGARA,
BENGALURU 560 038
...PETITIONERS
(BY SRI. UNNIKRISHNAN M., ADVOCATE)
AND:
SMT. NAGARATHNA
W/O ESHWAR SHET
AGED ABOUT 60 YEARS
NO.1, 2ND TEMPLE ROAD
15TH CROSS
MALLESWARAM
BANGALORE - 560 003
...RESPONDENT
(BY SRI. HARISH KUMAR, ADVOCATE)
THIS CRL.P IS FILED U/S.482 OF CR.P.C PLEASED TO
QUASH ALL PROCEEDINGS IN C.C.NO.5011/2019 PENDING
BEFORE THE HON'BLE XXX A.C.M.M., BANGALORE.
I.A.NO.1/2020 FOR STAY. I.A.NO.1/2020 FILED BY THE
ADVOCATE FOR THE PETITIONER PRAYING TO STAY ALL
FURTHER PROCEEDINGS IN C.C.NO.5011/2019 PENDING ON
THE FILE OF THE HON'BLE XXX A.C.M.M. BANGALORE, FOR
THE REASONS STATED THEREIN.
IN CRIMINAL PETITION NO. 1012 OF 2021
BETWEEN:
1. INDIRANAGAR CHIT FUNDS
AND TRADING COMPANY PRIVATE LIMITED
- 23 -
CRL.P No. 683 of 2021
AND
CONNCECTED MATTERS
A COMPANY REGISTERED
UNDER THE COMPANIES ACT, 1956
AND HAVING ITS REGISTERED OFFICE
NO.258, P.B.NO.3803
6TH CROSS, 1ST STAGE
INDIRANAGARA,
BENGALURU 560 038
REP. BY ITS AUTHORIZED SIGNATORIES
MR. CHANDRASEKHARA BABU AND
MR. RAVI KUMAR.P.K.
2. SRI. CHANDRASEKHARA BABU
AUTHORIZED SIGNATORY OF
INDIRANAGARA CHIT FUNDS AND
TRADING COMPANY PRIVATE LIMITED,
NO.258, P.B.NO.3803
6TH CROSS, 1ST STAGE
INDIRANAGARA,
BENGALURU 560 038
3. SRI. RAVI KUMAR P.K.
AUTHORIZED SIGNATORY OF
INDIRANAGARA CHIT FUNDS AND
TRADING COMPANY PRIVATE LIMITED,
NO.258, P.B.NO.3803
6TH CROSS, 1ST STAGE
INDIRANAGARA,
BENGALURU 560 038
4. VAISHAK BABU
AUTHORISED SILGNATORY OF
M/S INDIRANAGAR CHIT FUNDS
AND TRADING COMPANY LTD,
NO.258, P.B.NO.3803
- 24 -
CRL.P No. 683 of 2021
AND
CONNCECTED MATTERS
6TH CROSS, 1 STAGE
INDIRANAGARA
BANGALORE - 560 038
...PETITIONERS
(BY SRI. UNNIKRISHNAN M., ADVOCATE)
AND:
M/S SRI MANJUNATHA JEWELLERY WORKS
REPRESENTED BY ITS
PROPRIETOR OF
SRI E. HARISH
S/O ESHWAR SHET
AGED ABOUT 40 YEARS
NO.1, 2ND TEMPLE ROAD
15TH CROSS
MALLESWARAM
BANGALORE - 560 003
...RESPONDENT
THIS CRL.P IS FILED U/S.482 OF CR.P.C PLEASED TO
QUASH ALL PROCEEDINGS IN C.C.NO.5013/2019 PENDING
BEFORE THE HON'BLE XV A.C.M.M., BANGALORE AS AGAINST
THESE PETITIONERS. I.A.NO.1/2020 FOR STAY. I.A.NO.1/2020
FILED BY THE ADVOCATE FOR THE PETITIONER PRAYING TO
STAY ALL FURTHER PROCEEDINGS IN C.C.NO.5013/2019
PENDING ON THE FILE OF THE HON'BLE XV A.C.M.M.
BANGALORE, FOR THE REASONS STATED THEREIN.
IN CRIMINAL PETITION NO. 1443 OF 2021
BETWEEN:
1. INDIRANAGAR CHIT FUNDS
AND TRADING COMPANY PRIVATE LIMITED
- 25 -
CRL.P No. 683 of 2021
AND
CONNCECTED MATTERS
A COMPANY REGISTERED
UNDER THE COMPANIES ACT, 1956
AND HAVING ITS REGISTERED OFFICE
NO.258, P.B.NO.3803
6TH CROSS, 1ST STAGE
INDIRANAGARA,
BENGALURU 560 038
REP. BY ITS AUTHORIZED SIGNATORIES
MR. CHANDRASEKHARA BABU AND
MR. RAVI KUMAR.P.K.
2. SRI. CHANDRASEKHARA BABU
AUTHORIZED SIGNATORY OF
INDIRANAGARA CHIT FUNDS AND
TRADING COMPANY PRIVATE LIMITED,
NO.258, P.B.NO.3803
6TH CROSS, 1ST STAGE
INDIRANAGARA,
BENGALURU 560 038
3. SRI. RAVI KUMAR P.K.
AUTHORIZED SIGNATORY OF
INDIRANAGARA CHIT FUNDS AND
TRADING COMPANY PRIVATE LIMITED,
NO.258, P.B.NO.3803
6TH CROSS, 1ST STAGE
INDIRANAGARA,
BENGALURU 560 038
...PETITIONERS
(BY SRI. UNNIKRISHNAN M., ADVOCATE)
- 26 -
CRL.P No. 683 of 2021
AND
CONNCECTED MATTERS
AND:
DR. N.SRINIVAS REDDY
S/O SRI C. NANJUNDA REDDY
AGED ABOUT 51 YEARS
R/AT NO.2, MIGH
1ST STAGE, KHB COLONY
BASAVESHWARANAGAR
BANGALORE - 560 079
...RESPONDENT
(BY SRI. UMESHA R., ADVOCATE)
THIS CRL.P IS FILED U/S.482 OF CR.P.C PLEASED TO
QUASH ALL PROCEEDINGS IN C.C.NO.10835/2019 PENDING
BEFORE THE HON'BLE XXII A.C.M.M., BANGALORE AS
AGAINST THESE PETITIONERS. I.A.NO.1/2020 FOR STAY.
I.A.NO.1/2020 FILED BY THE ADVOCATE FOR THE PETITIONER
PRAYING TO STAY ALL FURTHER PROCEEDINGS IN
C.C.NO.10835/2019 PENDING ON THE FILE OF THE HON'BLE
XXII A.C.M.M. BANGALORE, PENDING DISPOSAL OF THE
ABOVE CRL.P FOR THE REASONS STATED THEREIN.
THESE CRIMINAL PETITIONS, COMING ON FOR FURTHER
HEARING, THIS DAY, THE COURT MADE THE FOLLOWING:
ORDER
The petitioners - Company, its directors and Authorised Signatories thereof, are before this Court calling in question proceedings instituted against them in C.C.Nos.4045/2019, 5014/2019, 6367/2019 and 5013/2019, pending before the XXX Additional Chief Metropolitan Magistrate, Bengaluru, in
- 27 -
CRL.P No. 683 of 2021AND CONNCECTED MATTERS C.C.No.28134/2019, pending before the XV Additional Chief Metropolitan Magistrate, Bengaluru, in C.C.Nos.11233/2019 and 17637/2019 both pending before the XIX Additional Chief Metropolitan Magistrate, Bengaluru, for the offence punishable under Section 138 of the Negotiable Instruments Act, 1881 ('the NI Act' for short).
2. The petitioners in all these cases are common but the complainants are different. The issues that arise in the petitions are also common. Therefore, they are taken up together and considered by this common order with the consent of parties.
3. The 1st petitioner is 'Indiranagar Chit Funds and Trading Company Private Limited' ('the Company' for short) and 2nd and 3rd petitioners are authorized signatories to the instruments involved in the transaction. The 4th petitioner is the Director of the Company. The respondents are the complainants.
- 28 -
CRL.P No. 683 of 2021AND CONNCECTED MATTERS
4. Brief facts that lead the petitioners to this Court in all these petitions, as borne out from the respective pleadings, are as follows:-
The 1st petitioner/company, a registered Chit Fund under the provisions of the Companies Act, 1956 in the year 1976 claims to have had more than 5,000 satisfied customers.
Owing to the slump in the financial market, as is contended, the transactions became difficult to be fulfilled by the petitioners. The petitioners contend that instead of focusing on recoveries, they started repaying the customers whose chits had matured by borrowing heavily with huge rate of interest, which resulted in financial pressure over the Company as subscribers to chits did not bid for the chit for a long time and the borrowing had to be done to disburse dividends to customers.
5. Several proceedings come to be initiated on several disputes being generated between the parties one of which is a proceeding under Section 138 of the NI Act. Complaints come
- 29 -
CRL.P No. 683 of 2021AND CONNCECTED MATTERS to be registered by the complainants invoking Section 200 of the Cr.P.C. for offences punishable under Sections 138 and 141 of the NI Act. The learned Magistrate takes cognizance of the offences and issues summons to the petitioners and the proceedings are pending in C.C.No.4045/2019, which are different in all these cases as narrated in the respective petitions.
6. Things standing thus, insolvency proceedings were also initiated against the petitioners by invoking Section 9 of the Insolvency and Bankruptcy Code, 2016 ('the Code' for short) seeking to initiate Corporate Insolvency Resolution Process against the 1st petitioner/Company on the ground that it has committed a default for a total amount of Rs.20,22,000/- as on 10-04-2017. The said proceeding is pending and a Resolution Professional was appointed in terms of the Code and moratorium was declared against the company. The period of moratorium was also over and the Company was directed to be liquidated and the liquidation process was in progress. It is at that juncture, the petitioners have knocked the doors of this
- 30 -
CRL.P No. 683 of 2021AND CONNCECTED MATTERS Court in these petitions calling in question the pendency of proceedings under NI Act, on the ground that once the matter is seized by the National Company Law Tribunal, the proceedings for the offences punishable under the NI Act could not be continued.
7. Heard Sri M. Unnikrishnan, learned counsel appearing for the petitioners and Smt. K.M.Sai Apabharana, learned counsel appearing for the respondents.
8. The learned counsel representing the petitioners would vehemently contend that once moratorium is declared or liquidation proceedings are in progress, no proceedings under the NI Act can be permitted to be continued either against the Company or against the office bearers of the Company as the Company is facing a proceeding for insolvency and liquidation.
He would contend that the Apex Court in the case of P.MOHANRAJ AND OTHERS v. SHAH BROTHERS ISPAT PRIVATE LIMITED reported in (2021) 6 SCC 258, has
- 31 -
CRL.P No. 683 of 2021AND CONNCECTED MATTERS considered this issue and has absolved the companies against whom liquidation proceedings were pending adjudication before the judicial fora.
9. On the other hand, the learned counsel representing the respondents would vehemently refute the submissions to contend that the Apex Court in the case of P.MOHANRAJ (surpa) has clearly held against the petitioners and not in favour of the petitioners. Therefore, the proceedings against the corporate debtor that is the 1st petitioner herein alone would be covered by the judgment in the case of P.MOHANRAJ (supra) and not other beneficiaries of the Company, be it under a moratorium or under liquidation. They would seek dismissal of the petitions.
10. In reply, the learned counsel for the petitioners would tacitly admit the position of law with regard to P.MOHANRAJ (supra) but would contend that the 4th petitioner who is not a Director of the Company is arrayed into these proceedings in
- 32 -
CRL.P No. 683 of 2021AND CONNCECTED MATTERS which, he has no knowledge of what has happened in the company. Merely because his name figured in one of the transactions, he has been dragged into these proceedings. The learned counsel for the respondents would admit this position qua the 4th petitioner is concerned and none others as there are direct allegations against them.
11. I have given my anxious consideration to the submissions made by the respective learned counsel and perused the material on record.
12. The afore-narrated business of the company, its transactions and the reason for the investors to approach the concerned Court invoking Section 200 of the Cr.P.C. are all a matter of record. One of the investors initiating proceedings under Section 9 of the Code is also a matter of record. The issue is, whether proceedings under the NI Act should be permitted to be continued against the petitioners in the light of
- 33 -
CRL.P No. 683 of 2021AND CONNCECTED MATTERS moratorium being clamped upon the company or the company being in the process of liquidation?
13. The issue need not detain this Court for long or delve deep into the matter. The Apex Court in the case of P.MOHANRAJ (supra) considers the very issue and holds as follows:
"41. Section 32-A cannot possibly be said to throw any light on the true interpretation of Section 14(1)(a) as the reason for introducing Section 32-A had nothing whatsoever to do with any moratorium provision. At the heart of the section is the extinguishment of criminal liability of the corporate debtor, from the date the resolution plan has been approved by the adjudicating authority, so that the new management may make a clean break with the past and start on a clean slate. A moratorium provision, on the other hand, does not extinguish any liability, civil or criminal, but only casts a shadow on proceedings already initiated and on proceedings to be initiated, which shadow is lifted when the moratorium period comes to an end. Also, Section 32-A(1) operates only after the moratorium comes to an end. At the heart of Section 32-A is the IBC's goal of value maximisation and the need to obviate lower recoveries to creditors as a result of the corporate debtor continuing to be exposed to criminal liability.
42. Unfortunately, Section 32-A is inelegantly drafted. The second proviso to Section 32-A(1)
- 34 -CRL.P No. 683 of 2021
AND CONNCECTED MATTERS speaks of persons who are in any manner in charge of, or responsible to the corporate debtor for the conduct of its business or associated with the corporate debtor and who are, directly or indirectly, involved in the commission of "such offence" i.e. the offence referred to in sub-section (1), "as per the report submitted or complaint filed by the investigating authority ...". The report submitted here refers to a police report under Section 173 CrPC, and complaints filed by investigating authorities under special Acts, as opposed to private complaints. If the language of the second proviso is taken to interpret the language of Section 32-A(1) in that the "offence committed" under Section 32-A(1) would not include offences based upon complaints under Section 2(d) CrPC, the width of the language would be cut down and the object of Section 32-A(1) would not be achieved as all prosecutions emanating from private complaints would be excluded. Obviously, Section 32-A(1) cannot be read in this fashion and clearly includes the liability of the corporate debtor for all offences committed prior to the commencement of the corporate insolvency resolution process. Doubtless, a Section 138 proceeding would be included, and would, after the moratorium period comes to an end with a resolution plan by a new management being approved by the adjudicating authority, cease to be an offence qua the corporate debtor.
... ... ...
84. Clearly, therefore, given the hybrid nature of a civil contempt proceeding, described as "quasi- criminal" by several judgments of this Court, there is nothing wrong with the same appellation "quasi- criminal" being applied to a Section 138 proceeding for the reasons given by us on an analysis of Chapter XVII of the Negotiable Instruments Act. We, therefore, reject the learned Additional Solicitor
- 35 -CRL.P No. 683 of 2021
AND CONNCECTED MATTERS General's strenuous argument that the appellation "quasi-criminal" is a misnomer when it comes to Section 138 proceedings and that therefore some of the cases cited in this judgment should be given a fresh look.
After consideration of entire spectrum of the Code, the Apex Court formulates the issue whether natural persons are covered by Section 14 of the Code and answers as follows:
"101. As far as the Directors/persons in management or control of the corporate debtor are concerned, a Sections 138/141 proceeding against them cannot be initiated or continued without the corporate debtor--see Aneeta Hada [Aneeta Hada v. Godfather Travels & Tours (P) Ltd., (2012) 5 SCC 661: (2012) 3 SCC (Civ) 350: (2012) 3 SCC (Cri) 241]. This is because Section 141 of the Negotiable Instruments Act speaks of persons in charge of, and responsible to the Company for the conduct of the business of the Company, as well as the Company. The Court, therefore, in Aneeta Hada [Aneeta Hada v. Godfather Travels & Tours (P) Ltd., (2012) 5 SCC 661: (2012) 3 SCC (Civ) 350: (2012) 3 SCC (Cri) 241] held as under: (SCC pp.
686-88, paras 51, 56 & 58-59) "51. We have already opined that the decision in Sheoratan Agarwal [Sheoratan Agarwal v. State of M.P., (1984) 4 SCC 352:
1984 SCC(Cri) 620] runs counter to the ratio laid down in C.V. Parekh [State of Madras v. C.V. Parekh, (1970) 3 SCC 491:
1971 SCC (Cri) 97] which is by a larger Bench and hence, is a binding precedent. On the aforesaid ratiocination, the decision in Anil
- 36 -CRL.P No. 683 of 2021
AND CONNCECTED MATTERS Hada [Anil Hada v. Indian Acrylic Ltd., (2000) 1 SCC 1 : 2001 SCC (Cri) 174] has to be treated as not laying down the correct law as far as it states that the Director or any other officer can be prosecuted without impleadment of the Company. Needless to emphasise, the matter would stand on a different footing where there is some legal impediment and the doctrine of lex non cogit ad impossibilia gets attracted.
***
56. We have referred to the aforesaid passages only to highlight that there has to be strict observance of the provisions regard being had to the legislative intendment because it deals with penal provisions and a penalty is not to be imposed affecting the rights of persons, whether juristic entities or individuals, unless they are arrayed as accused. It is to be kept in mind that the power of punishment is vested in the legislature and that is absolute in Section 141 of the Act which clearly speaks of commission of offence by the Company. The learned counsel for the respondents have vehemently urged that the use of the term "as well as" in the section is of immense significance and, in its tentacle, it brings in the Company as well as the Director and/or other officers who are responsible for the acts of the Company and, therefore, a prosecution against the Directors or other officers is tenable even if the Company is not arraigned as an accused. The words "as well as" have to be understood in the context.
***
58. Applying the doctrine of strict construction, we are of the considered opinion that commission of offence by the Company is
- 37 -CRL.P No. 683 of 2021
AND CONNCECTED MATTERS an express condition precedent to attract the vicarious liability of others. Thus, the words "as well as the Company" appearing in the section make it absolutely unmistakably clear that when the Company can be prosecuted, then only the persons mentioned in the other categories could be vicariously liable for the offence subject to the averments in the petition and proof thereof. One cannot be oblivious of the fact that the Company is a juristic person and it has its own respectability. If a finding is recorded against it, it would create a concavity in its reputation. There can be situations when the corporate reputation is affected when a Director is indicted.
59. In view of our aforesaid analysis, we arrive at the irresistible conclusion that for maintaining the prosecution under Section 141 of the Act, arraigning of a company as an accused is imperative. The other categories of offenders can only be brought in the dragnet on the touchstone of vicarious liability as the same has been stipulated in the provision itself. We say so on the basis of the ratio laid down in C.V. Parekh [State of Madras v. C.V. Parekh, (1970) 3 SCC 491: 1971 SCC (Cri) 97] which is a three-Judge Bench decision. Thus, the view expressed in Sheoratan Agarwal [Sheoratan Agarwal v. State of M.P., (1984) 4 SCC 352: 1984 SCC (Cri) 620] does not correctly lay down the law and, accordingly, is hereby overruled. The decision in Anil Hada [Anil Hada v. Indian Acrylic Ltd., (2000) 1 SCC 1: 2001 SCC (Cri) 174] is overruled with the qualifier as stated in para
51. The decision in Modi Distillery [U.P. Pollution Control Board v. Modi Distillery, (1987) 3 SCC 684 : 1987 SCC (Cri) 632] has
- 38 -
CRL.P No. 683 of 2021AND CONNCECTED MATTERS to be treated to be restricted to its own facts as has been explained by us hereinabove."
102. Since the corporate debtor would be covered by the moratorium provision contained in Section 14 IBC, by which continuation of Sections 138/141 proceedings against the corporate debtor and initiation of Sections 138/141 proceedings against the said debtor during the corporate insolvency resolution process are interdicted, what is stated in paras 51 and 59 in Aneeta Hada [Aneeta Hada v. Godfather Travels & Tours (P) Ltd., (2012) 5 SCC 661: (2012) 3 SCC (Civ) 350:
(2012) 3 SCC (Cri) 241] would then become applicable. The legal impediment contained in Section 14 IBC would make it impossible for such proceeding to continue or be instituted against the corporate debtor. Thus, for the period of moratorium, since no Sections 138/141 proceeding can continue or be initiated against the corporate debtor because of a statutory bar, such proceedings can be initiated or continued against the persons mentioned in Sections 141(1) and (2) of the Negotiable Instruments Act. This being the case, it is clear that the moratorium provision contained in Section 14 IBC would apply only to the corporate debtor, the natural persons mentioned in Section 141 continuing to be statutorily liable under Chapter XVII of the Negotiable Instruments Act.
Conclusion
103. In conclusion, disagreeing with the Bombay High Court and the Calcutta High Court judgments in Tayal Cotton (P) Ltd. v. State of Maharashtra [Tayal Cotton (P) Ltd. v. State of
- 39 -
CRL.P No. 683 of 2021AND CONNCECTED MATTERS Maharashtra, 2018 SCC OnLine Bom 2069 :
(2019) 1 Mah LJ 312] and MBL Infrastructions Ltd. v. Manik Chand Somani [MBL Infrastructions Ltd. v. Manik Chand Somani, 2019 SCC OnLine Cal 9097] , respectively, we hold that a Sections 138/141 proceeding against a corporate debtor is covered by Section 14(1)(a) IBC.
104. Resultantly, the civil appeal is allowed and the judgment under appeal is set aside. However, the Sections 138/141 proceedings in this case will continue both against the Company as well as the appellants for the reason given by us in paras 101 and 102 above as well as the fact that the insolvency resolution process does not involve a new management taking over. We may also note that the moratorium period has come to an end in this case."
(Emphasis supplied) The Apex Court at the afore-quoted paragraphs considers that as far as Directors/persons in management or control of the corporate debtors are concerned, proceedings under Sections 138 or 141 of the NI Act against them cannot be initiated or continued without the corporate debtor being a party. In conclusion at paragraph No.103, the Apex Court holds that proceedings under Sections 138 or 141 in the case therein will continue both against the Company as well as the appellant for
- 40 -
CRL.P No. 683 of 2021AND CONNCECTED MATTERS the reasons given in paragraphs 101 and 102 as well as the fact that insolvency resolution process does not involve a new management taking over. The moratorium clamped therein had already come to an end. On those factors the Apex Court holds that the proceedings against the petitioners would not be stalled but be permitted to be continued. The Apex Court in a later judgment in the case of NARINDER GARG AND OTHERS v. KOTAK MAHINDRA BANK LIMITED AND OTHERS reported in 2022 SCC OnLine SC 517, has held as follows:
"WRIT PETITION (CIVIL) NO. 93 OF 2022
1. The instant writ petition has been filed seeking following reliefs:
"a) Issue Writ of mandamus, Order or Direction or any other appropriate writ, quashing the Criminal Complaints mentioned in para 2.46 of the Writ Petition filed against the Petitioner Company/Corporate Debtors and its Directors under Section 138 of the Negotiable Instruments Act, 1881 pending before concerned the Judicial Magistrate/Chief Metropolitan Magistrate/Judicial Magistrate of 1st Class in view of the order dated 18.3.2020 passed by the National Company Law Tribunal, Chandigarh in C.A. No. 610 of 2019 in CP (IB) No. 119/Chd/CHD/2018 by which the Resolution Plan was approved by the CoC
- 41 -CRL.P No. 683 of 2021
AND CONNCECTED MATTERS under Section 30(4) of the Code and as the Respondent Complainants has accepted the approved Resolution Plan; or in the alternative
b) Issue Writ of mandamus, Order or Direction or any other appropriate writ, quashing the Criminal Complaint mentioned in para 2.46 of the Writ Petition which were initiated after the order of moratorium dated 13.11.2018 passed by the National Company law Tribunal, Chandigarh in CP (IB) No. 119/Chd/Chd/2018, as it cannot be proceeded even if the old management and its Director takes over the Corporate Debtor in view of the findings rendered in the Judgment of this Hon'ble Court in Civil Appeal No. 10355 of 2018."
2. The case of the petitioners was before the Bench which was considering the matter in P. Mohanraj & other connected matters. However, the case was de-tagged pursuant to order dated 02.02.2021.
3. In P. Mohanraj v. Shah Brothers Ispat Private Limited, (2021) 6 SCC 258, a Bench of three-Judges of this Court considered the matter whether a corporate entity in respect of which moratorium had become effective could be proceeded against in terms of Sections 138 and 141 of the Negotiable Instruments Act, 1881 ("the Act" for short).
4. A subsidiary issue was also about the liability of natural persons like a Director of the Company. In paragraph 77 of its judgment, this Court observed that the moratorium provisions contained in Section 14 of the Insolvency and
- 42 -
CRL.P No. 683 of 2021AND CONNCECTED MATTERS Bankruptcy Code, 2016 would apply only to the corporate debtor and that the natural persons mentioned in Section 141 of the Act would continue to be statutorily liable under the provisions of the Act.
5. It is submitted by Mr. Gopal Sankaranarayanan, learned Senior Advocate that the resolution plan having been accepted in which the dues of the original complainant also figure, the effect of such acceptance would be to obliterate any pending trial under Sections 138 and 141 of the Act.
6. The decision rendered in P. Mohanraj is quite clear on the point and, as such, no interference in this petition is called for.
7. This writ petition is, therefore, dismissed.
WRIT PETITION (CIVIL) NO. 300 OF 2020
8. In view of the order passed in Writ Petition (Civil) No. 93 of 2022, this writ petition is also dismissed."
(Emphasis supplied) A three Judge Bench of the Apex Court clarified P.MOHANRAJ (supra) and held that proceedings against the Director would continue and proceedings against the corporate debtor would not. The afore-quoted provisions of law are on the face of it applicable to the issue in the case at hand.
Therefore, the corporate debtor, the 1st petitioner herein cannot
- 43 -
CRL.P No. 683 of 2021AND CONNCECTED MATTERS seen to be absolved in its entirety from the proceedings, but the proceedings will have to be kept in suspended animation, subject to further orders of the proceedings pending before the National Company Law Tribunal. Insofar as petitioner Nos.2 and 3 are concerned, they are the Directors and signatories to the instruments involved in the transactions or the documents involved in the transaction. Therefore, they cannot take shelter under the judgment in the case of P.MOHANRAJ (supra) to contend that the proceedings cannot be permitted to be continued against them. The Apex Court in the case of P.MOHANRAJ (supra) clearly permitted proceedings to continue against the company as well as the Directors in those peculiar facts of the case. But, clarified the position in the judgment in the case of NARINDER GARG (supra) wherein, the proceedings against the corporate debtor were not permitted to continue.
14. A learned single Judge of the High Court of Madras in the judgment rendered on 03-01-2022 in the case of NAG LEATHERS PRIVATE LIMITED AND OTHERS v. MUZAIN
- 44 -
CRL.P No. 683 of 2021AND CONNCECTED MATTERS HIDES AND OTHERS reported in 2022 SCC OnLine Mad 205, following the judgment of P.MOHANRAJ (supra) quashes the proceedings insofar as it concerns the 1st petitioner -
company therein, the corporate debtor and permits proceedings to be continued against individual Directors of the Company.
The High Court of Madras has held as follows:
"7. Heard rival submissions of both sides and also perused the materials available on record.
8. It is not in dispute that the cheques issued to the complainant's Company were dishonored with an endorsement "Payment Stopped by the Drawers". In that regard, the 1st petitioner Company had issued a letter to the respondent through their counsel stating about the initiation of insolvency process by National Company Law Tribunal (for short 'NCLT') against the 1st petitioner Company and due to which, the nd nd 2 accused/2 petitioner was unable to honor the post dated cheques issued in favour of the respondent Company. Inspite of the communication of the 1st petitioner Company regarding the insolvency process, the complainant has presented the cheques for collection, which was dishonored and thereby filed the complaint against the 1st petitioner Company.
9. Notwithstanding the above said fact, in the decision of P. Mohanraj (supra), the Hon'ble Supreme Court has, in the wake of declaration of moratorium by the Tribunal under the Insolvency and Bankruptcy Code, in paragraph no. 103 of the said judgment, held as under:
- 45 -CRL.P No. 683 of 2021
AND CONNCECTED MATTERS "103. Since the Corporate debtor would be covered by the moratorium provision contained in Section 14 of the IBC, by which continuation of Section 138/141 proceedings against the corporate debtor and initiation of Section 138/141 proceedings against the said debtor during the corporate insolvency resolution process are interdicted, what is stated in paragraphs 51 and 59 in Aneeta Hada (supra) would then become applicable.
The legal impediment contained in Section 14 of the IBC would make it impossible for such proceeding to continue or be instituted against the corporate debtor. Thus, for the period of moratorium, since no Section 138/141 proceeding can continue or be initiated against the corporate debtor because of a statutory bar, such proceedings can be initiated or continued against the persons mentioned in Section 141(1) and (2) of the Negotiable Instrument Act. This being the case, it is clear that the moratorium provision contained in Section 14 of the IBC would apply only to the corporate debtor, the natural persons mentioned in Section 141 continuing to be statutorily liable under Chapter XVII of the Negotiable Instruments Act."
10. From a perusal of the above, it is evident that there is a categorical finding recorded by the Apex Court that the moratorium provision contained in Section 14 of the Insolvency Bankruptcy Code, would apply only to corporate debtor, the natural persons mentioned in Section 141 continuing to be statutorily liable under Chapter XVII of the Negotiable Instrument Act and thereby, it
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CRL.P No. 683 of 2021AND CONNCECTED MATTERS is clearly settled that the criminal liability of natural persons in case of complaint filed under Section 138 and 141 of the Negotiable Instrument Act, 1881 would survive, but would not be attracted against the company. The decision of the Hon'ble Supreme Court is squarely covers the case on hand.
11. In the case on hand, the insolvency process was initiated by NCLT on 10.07.2017 and moratorium has been declared under the Insolvency and Bankruptcy Code. Therefore, as held by the Hon'ble Supreme Court, the moratorium was only in respect of the corporate debtor and not in respect of the directors/management and therefore, the petitioners 2 and 3 as natural persons, are liable for prosecution. However, in view of declaration of moratorium by NCLT, the prosecution as against the company cannot be allowed to continue.
12. Therefore, this Court is inclined to quash the proceedings in respect of st 1 petitioner and insofar as the petitioners 2 and 3 are concerned, this Court is of the opinion that the issue is a triable issue and it requires appreciation of evidence and this Court cannot decide the same in exercise of its jurisdiction under Section 482 of Criminal Procedure Code. It is left open to the petitioners 2 and 3 to raise all the grounds before the Court and the same shall be considered on its own merits and in accordance with law. Therefore, this Court is not inclined to interfere with the proceedings pending before the Court below."
(Emphasis supplied)
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CRL.P No. 683 of 2021AND CONNCECTED MATTERS In the light of the judgment rendered by the Apex Court in the case of P.MOHANRAJ (supra) as clarified in NARINDER GARG (supra) and the judgment of the High Court of Madras, permitting further proceedings to continue against the 1st petitioner would become contrary to the said judgments.
15. Insofar as the 4th petitioner is concerned, a perusal at the complaints registered by the complainants would indicate no role being played by the 4th petitioner even to its minutest sense except giving an omnibus statement that accused Nos.2 to 4 are in-charge and responsible for the day-to-day affairs of the Company. It is not in dispute that the complaint nowhere narrates any role of the 4th petitioner. Petitioner Nos.2 and 3 are signatories to the instruments or the documents and they are the Managing Director and the Director who were in-charge of the business of the company. Reference being made to the judgment of the Apex Court in the case of S.M.S. PHARMACEUTICALS LIMITED v. NEETA BHALLA AND
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CRL.P No. 683 of 2021AND CONNCECTED MATTERS ANOTHER reported in (2005) 8 SCC 89, in the circumstances becomes apposite. The Apex Court therein has held as follows:
"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
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CRL.P No. 683 of 2021AND CONNCECTED MATTERS 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."
(Emphasis supplied) Therefore, if the complaint is noticed qua the judgments rendered by the Apex Court in the case of SMS PHARMACEUTICALS (supra), permitting further proceedings to continue against the 4th petitioner would become an abuse of the process of law. Therefore, the proceedings against the 4th petitioner require to be obliterated.
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CRL.P No. 683 of 2021AND CONNCECTED MATTERS
16. For the aforesaid reasons, I pass the following:
ORDER
(i) Criminal Petitions are allowed in part.
(ii) The proceedings against petitioner No.1/corporate debtor in all the petitions except Crl.P.No.907/2021, petitioner No.1 in Cr.P.No.907/2021 and petitioner No.4 in Crl.P.Nos.683/2021, 670/2021, 724/2021, 805/2021, 809/2021, 905/2021 and 1012/2021, impugned in all these petitions, stand quashed.
(iii) These petitions insofar as they concern petitioner No.2 and 3 in all the petitions and petitioner No.5 in Crl.P.No.805/2021 stand dismissed resulting in continuation of proceedings against them in all these cases.
(iv) The respondents are at liberty to move the liquidator for redressal of their grievances, who shall take up further proceedings in accordance with law.
Sd/-
JUDGE nvj List No.: 1 Sl No.: 112
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CRL.P No. 683 of 2021AND CONNCECTED MATTERS IN THE HIGH COURT OF KARNATAKA AT BENGALURU [INDIRANAGAR CHIT FUNDS AND TRADING COMPANY PRIVATE LTD VS. AJITHA T V] MNPJ 07.12.2022 ORDER ON 'BEING SPOKEN TO' The matters were heard and disposed by an order dated 19.07.2022.
Learned counsel appearing for the petitioners has moved a memo for 'being spoken to' on the score that one of the criminal petitions in the batch of the petitions - Crl.P.No.907/2021, was wrongly tagged and has sought recalling of the said order and restoration of the petition.
When the memo was taken up for consideration, the learned counsel for the petitioner made a submission that the petition in Crl.P.No.907/2021 be delinked, order be recalled, petition be restored and be dismissed as withdrawn as the petitioner would not want to pursue the petition any further.
Placing the submission on record, the Crl.P.No.907/2021, which was disposed by the order dated 19.07.2022, stands recalled, petition gets restored and is delinked from the batch of petitions and in view of the submission made by the learned counsel for the petitioner, the petition is disposed as withdrawn.
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CRL.P No. 683 of 2021AND CONNCECTED MATTERS This order be treated as part and parcel of the order dated 19.07.2022.
Sd/-
JUDGE SJK List No.: 1 Sl No.: 1