Gujarat High Court
Pratap Kunda S/O Satyanarayan vs State Of Gujarat on 27 September, 2021
Author: Gita Gopi
Bench: Gita Gopi
R/CR.MA/21367/2019 ORDER DATED: 27/09/2021
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/CRIMINAL MISC.APPLICATION NO. 21367 of 2019
With
CRIMINAL MISC.APPLICATION (FOR VACATING INTERIM RELIEF) NO.
2 of 2020
In R/CRIMINAL MISC.APPLICATION NO. 21367 of 2019
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PRATAP KUNDA S/O SATYANARAYAN
Versus
STATE OF GUJARAT
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Appearance:
ADITYA R GUNDECHA(8869) for the Applicant(s) No. 1,2
MR NARENDRA L JAIN(5647) for the Applicant(s) No. 1,2
MR NIRAD D BUCH(4000) for the Respondent(s) No. 2,3
MR RAJEN R DELIWALA(2266) for the Respondent(s) No. 2,3
MRS. BHAVINI N. BUCH(5403) for the Respondent(s) No. 2,3
MS MONALI BHATT, APP (2) for the Respondent(s) No. 1
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CORAM:HONOURABLE MS. JUSTICE GITA GOPI
Date : 27/09/2021
ORAL ORDER
1. Present petition is moved under Section 482 of the Criminal Procedure Code for quashing and setting aside the Criminal Case No.4448 of 2019 registered with the learned Additional Chief Metropolitan Court No.30, Ahmedabad for the offences punishable under Section 138 and Section 141 of the Negotiable Instruments Act, 1881 (NI Act for short).
2. It is stated by the petitioners that the case has been instituted against them on 16/01/2019 which was registered through General Power of Attorney Mr.Shubhrendu Saxena. It is contended that various allegations are made with regard to the original complainants having entered into certain transactions with a company registered under the name of M/s Prisha Properties (India) Private Limited which has been Page 1 of 13 Downloaded on : Sun Jan 16 19:04:55 IST 2022 R/CR.MA/21367/2019 ORDER DATED: 27/09/2021 arraigned as accused no.1. It is stated by the complainants that they have entered into certain transactions with the company with regard to the purchase of a property and as the transaction did not go further, the complainants opted for the exit option and were thereafter issued the cheques impugned in the present complaint.
3. Mr. Narendra Jain, learned advocate for the petitioners submitted that admittedly, these three cheques have not been signed by the petitioners. The complaint in its entire body does not refer to the fact that the signatory of the complaint i.e. Mr.Shubherndu Saxena has personal knowledge of the facts of the case. Said cheques came to be dishonoured on 28/11/2018 and after issuance of notice, impugned complaint has been registered. Mr. Jain, learned advocate submitted that Learned Magistrate has not applied judicial mind to the complaint and instead chose to issue process against the petitioners. Mr. Jain, learned advocate argued that the complainant themselves in the complaint have referred to the present petitioners as being formal partners of a partnership firm and there is no averment as to how the petitioners no.1 and 2 are related to the accused no.1 company.
4. Mr. Jain, learned advocate further referred to the status of the company from the website of the Ministry of Corporate Affairs to demonstrate that the petitioners are not even directors of the accused no.1 company and therefore, stated that the order issuing process is bad in law and is required to be quashed and set aside qua the petitioners. Learned advocate for the petitioners further stated that the learned Magistrate has merely relied upon an assertion made in the Page 2 of 13 Downloaded on : Sun Jan 16 19:04:55 IST 2022 R/CR.MA/21367/2019 ORDER DATED: 27/09/2021 agreement for sale entered into between the complainants and the company for the transaction to issue process against the petitioners. He states that the agreement if perused, it only contains a narration that the petitioners were partners of a partnership firm which was later on converted into a company. There is no other averment in the entire document and only on the basis of the assumption that affairs of the company were managed by the petitioners as a Directors/Officers of the company, process of summons has been issued thus contended that the prosecution against the petitioners would be harsh, creating unnecessary hardship and trauma. Further, learned advocate for the petitioners stated that power of attorney has no personal knowledge in respect of the transaction and therefore too, the issuance of the process by the learned Magistrate is illegal and required to be quashed. To the facts of the case and when no role of the petitioners has been attributed in the complaint, which shows no connection, Mr.Jain, learned advocate for the petitioners submitted that no vicarious liability can be created by the complainants.
5. Mr. Jain, learned advocate for the petitioners has referred to the case of A. C. Narayanan vs. State of Maharashtra and another reported in (2015) 12 SCC 203 to submit that it is incumbent on the complainant to make specific assertion as to the knowledge of the power of attorney holder in the said transaction explicitly in the complaint and the power of attorney holder who has no knowledge regarding the transaction cannot be examined as a witness in the case.
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6. Mr. Jain, learned advocate for the petitioner further stated that the documents which has been referred herein by the complainants have not been produced before the trail court judge in support of the complaint.
7. Mr. Jain, learned advocate has also referred to the case of K.K.Ahuja vs. V. K. Vora and another reported in (2009) 10 SCC 48 wherein the Apex Court has laid down the position under Section 141 of the NI Act to support so, further reliance has been placed in case of Nikhil P. Gandhi vs. State of Gujarat reported in 2016 (4) GLR 2838, Vijay Dhanuka and others vs. Najima Mamtaj and others reported in (2014) 14 SCC 638 has been referred to submit that requirements under Section 202 of the Criminal Procedure Code has not been followed by the learned trial court judge, since the accused in the matter are not resident of the territorial jurisdiction of the Court.
8. Countering the arguments, Mr. Rajan Deliwala, learned advocate for the respondents nos.2 and 3 submitted that there are two complainants in the Criminal Case No.4448 of 2019 and they are represented by power of attorney holder and stated that the stage is yet not arise for adducing the evidence of the complainant and complainant may even examine themselves during the trial and power of attorney holder would be a witness to the trial to the facts of the knowledge which he can so as state to the transaction between the complainant and company.
9. Mr. Deliwala, learned advocate referring to the cause title of the complaint, submitted that the present petitioners Page 4 of 13 Downloaded on : Sun Jan 16 19:04:55 IST 2022 R/CR.MA/21367/2019 ORDER DATED: 27/09/2021 are arrayed as accused nos.3 and 4 and has been shown as a former partner of the partnership firm. There is specific averment with regard to the transaction which has been undertaken with M/s Prisha Properties India Private Limited.
10. Mr. Deliwala, learned advocate further submitted that accused no.1 is a company registered under the Companies Act, 1956 having their registered office at Banglore and is now operating business from the address shown in the cause title. Accused no.1 is engaged in business of construction and development of the immovable properties. Accused no.2 is authorized signatory of accused no.1 company and the complainant has very specifically stated that accused nos.2 to 7 are associated in dealings referred in the complaint and also in charge of the accused no.1 company.
11. Mr. Deliwala, learned advocate stated that accused no.1 through their officials had approached the complainants at Singapore, and the said meeting was made by the accused through Square Yards Consulting Private Limited (Singapore). Accused no.1, through their Directors, had proposed the complainants to invest in their project (Residential) namely, "Prisha Hanging Gardens" based at Bengalure (Bangalore). All the accused had also shown a very rosy picture about the said project and persuaded the complainants to invest in the said project.
12. Mr. Deliwala, learned advocate submitted that whole of the details as to the agreement of sale has been averred in the complaint. The proposal was by the accused which resulted into agreement of sale and thereafter in accordance with the Page 5 of 13 Downloaded on : Sun Jan 16 19:04:55 IST 2022 R/CR.MA/21367/2019 ORDER DATED: 27/09/2021 agreement, down payment of 10% so agreed upon by way of cheque as noted in the complaint, was duly acknowledged by the accused in the agreement of sale vide clause-4 and thereafter process of procuring home loan from Punjab National Bank, on behalf of complainants, was also undertaken by the accused and the accused had even in this regard, by way of confirmation, also sent an e-mail dated March, 9, 2017 to the complainants. Pursuantly, the PNB Housing Finance Ltd. through Punjab National Bank, Jayanagar, Bangalore branch had issued a Demand Draft No.953997 dated 26/07/2017 for Rs.99,92,700/- in favour of Prisha Properties Private Limited, accused no.1.
13. Referring to all the terms and conditions of the agreement of sale, reproduced in the complaint, Mr. Deliwala submitted that specific allegations have been made against the accused, who have failed and neglected to abide by the clause-6 of the agreement of sale. There are clear malafide intention to deceive and dupe the complainants and to misappropriate the complainant's money. He also stated that the complainant has made averments as to how the complainants were compelled to exercise the "option to exit"
as provided in clause-9 of the agreement of sale. The complainant has averred about having sent "what's up message" sent to the accused in the complaint which would be part of the evidence during the course of the trial and by way of agreement of sale dated 30/09/2018, all the accused become liable to the complainants for the buyback amount, in addition to the PRE-EMIS, which accused have been defaulting.Page 6 of 13 Downloaded on : Sun Jan 16 19:04:55 IST 2022
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14. Mr. Deliwala, learned advocate stated that necessary averments to show the involvement of the present petitioners has been made and documents in support of the averments are produced before the trial court and the court, after having examined the averments along with the documents, on verification, has ordered to issue summons against accused nos.1, 3, 4, 6 and 7.
15. The learned Judge, in the order has observed that the cheque issued was returned on the account maintained in the name of accused no.1 company. The cheque bears the signature of accused no.6 Amarnath Devaki and for the involvement of accused no.6 and 7, the complainant has submitted document no.20 being a company master data of accused no.1 company alleged to have been obtained from the official website of ROC, where accused nos.6 and 7 are recorded to be director of the company.
15.1. For accused no.3 and accused no.4 who are petitioners in the present matter, it has been observed by the learned Judge that the complainant has submitted document of agreement of sale vide serial no.2 wherein referring to the details stipulated in para para-1 to 4 of page-3, the learned Judge has recorded that argument of learned advocate for the complainant who submitted that accused no.3 and 4 are the key persons handling the affairs of the accused no.1 company and bears responsibility for and on behalf of the accused no.1 company, accordingly both these accused are vicariously liable for the offence under the complaint. The learned Judge thus found the submission of learned advocate qua accused nos.3 and 4 just and sufficient.
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16. For the involvement of accused no.2 in the complaint, the learned Judge observed that the learned advocate for the complainant has relied upon document of agreement of sale vide para no.2 of page-1 who submitted that, main transaction with the complainant was entered into by accused no.2 for and on behalf of accused no.1 and that is how he was represented in the affairs and business of the accused no.1 company. The learned Judge found the submission of the advocate of the petitioner having perused the averments in the complaint and chief examination read with the documents of agreement of sale as just and sufficient, but on perusal of the documents, the learned Judge found that only having entered into alleged transaction with the complainant merely as an authorized person for and on behalf of accused no.1 company, no reason appears to believe that at the relevant point of time he was holding any key post attached to the affairs and conduct of the business of the company. The learned Judge further found that there was no specific pleading against the accused no.2 nor found any pleading that accused no.2 was signatory to the impugned cheque. After making relevant observation with regard to other co-accused, summons was issued against accused nos.1, 3, 4, 6 and 7 under Section 204 of the Indian Penal Code read with Section 138 and 141 of the Negotiable Instruments Act.
17. The learned Trial Court Judge thus gave specific reasons why he considered issuance of summons against present petitioners who are accused nos.3 and 4 in the complaint. The learned Judge did not find fit to issue any summons against the accused nos.2 and 5. The learned Judge also did Page 8 of 13 Downloaded on : Sun Jan 16 19:04:55 IST 2022 R/CR.MA/21367/2019 ORDER DATED: 27/09/2021 not find any specific averments in the complaint nor find any documentary evidence to support the cause and to believe that accused no.5 was holding any key post attached to the affairs and business of the company.
18. Section 141 of the Negotiable Instruments Act is reproduced herein under:
"141 Offences by companies. --
(1) If the person committing an offence under section 138 is a company, every person who, at the time the offence was committed, was in charge of, and was responsible to the company for the conduct of the business of the company, as well as the company, shall be deemed to be guilty of the offence and shall be liable to be proceeded against and punished accordingly: Provided that nothing contained in this sub-section shall render any person liable to punishment if he proves that the offence was committed without his knowledge, or that he had exercised all due diligence to prevent the commission of such offence: [Provided further that where a person is nominated as a Director of a company by virtue of his holding any office or employment in the Central Government or State Government or a financial corporation owned or controlled by the Central Government or the State Government, as the case may be, he shall not be liable for prosecution under this Chapter.] (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."Page 9 of 13 Downloaded on : Sun Jan 16 19:04:55 IST 2022
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19. The provision is bifurcated into two parts and it creates constructive liability of a person for the conduct of the business of the company.
20. In the case of K. K. Ahuja (supra), the Hon'ble Apex Court has laid down the position of Section 141 as stated herein under:
"27. The position under section 141 of the Act can be summarized thus :
(i) If the accused is the Managing Director or a Joint Managing Director, it is not necessary to make an averment in the complaint that he is in charge of, and is responsible to the company, for the conduct of the business of the company. It is sufficient if an averment is made that the accused was the Managing Director or Joint Managing Director at the relevant time. This is because the prefix `Managing' to the word `Director' makes it clear that they were in charge of and are responsible to the company, for the conduct of the business of the company.
(ii)In the case of a director or an officer of the company who signed the cheque on behalf of the company, there is no need to make a specific averment that he was in charge of and was responsible to the company, for the conduct of the business of the company or make any specific allegation about consent, connivance or negligence. The very fact that the dishonoured cheque was signed by him on behalf of the company, would give rise to responsibility under sub-section (2) of Section 141.
(iii) In the case of a Director, Secretary or Manager (as defined in Sec. 2(24) of the Companies Act) or a person referred to in clauses
(e) and (f) of section 5 of Companies Act, an Page 10 of 13 Downloaded on : Sun Jan 16 19:04:55 IST 2022 R/CR.MA/21367/2019 ORDER DATED: 27/09/2021 averment in the complaint that he was in charge of, and was responsible to the company, for the conduct of the business of the company is necessary to bring the case under section 141(1).
No further averment would be necessary in the complaint, though some particulars will be desirable. They can also be made liable under section 141(2) by making necessary averments relating to consent and connivance or negligence, in the complaint, to bring the matter under that sub-section.
(iv)Other Officers of a company can not be made liable under sub-section (1) of section 141. Other officers of a company can be made liable only under sub-section (2) of Section 141, be averring in the complaint their position and duties in the company and their role in regard to the issue and dishonour of the cheque, disclosing consent, connivance or negligence."
21. Thus, as per the position summarized in the above referred case of K. K. Ahuja (supra), if the accused is Managing Director or Joint Managing Director, it is not necessary to make an averments in the complaint to that effect. It would be sufficient to refer that person as a Managing Director or Joint Managing Director of the relevant time since the very effect of the post would make it clear that they were in charge of and are responsible for the company, for the conduct and affairs of the company. In a case, where the Director or an officer of the company who has signed the cheque on behalf of the company, there would not be any need to make any specific averments that they were in charge of and responsible to the company for the conduct of the business of the company nor would necessary to make any specific allegation about consent, connivance or negligence. The very fact that the dishonoured cheque was signed by him on behalf of the company would give rise to the responsibility Page 11 of 13 Downloaded on : Sun Jan 16 19:04:55 IST 2022 R/CR.MA/21367/2019 ORDER DATED: 27/09/2021 under Sub-Section (2) of Section 141 of the NI Act.
22. The Apex Court thereafter in the said para, has considered the definition of the Director, Secretary or Manager as provided under the Companies Act and has specifically laid down that in case of such a person, it would be very much necessary to make averments in the complaint that those persons as defined under the Companies Act as Director and Manager were in charge of and responsible for the conduct of the business of the company, to bring their case under Section 141 (1) of the Act. No further averments would be necessary but it is desirable that some particulars are laid down. Such Directors, Secretaries or Managers as defined under the Companies Act can also be made liable under Section 141(2) of the NI Act by making necessary averments relating to their consent and connivance or negligence to bring that matter under the said sub-section. It is also made clear that other officers of the company cannot be made liable under Sub-Section (1) of Section 141 of the NI Act, while those officers can be proceeded in accordance with sub-section (2) of Section 141 of the NI Act, by averring in the complaint their position and duties in the company and their role in regard to the issue and dishonour of the cheque, disclosing consent, connivance or negligence.
23. Here, in this case, the learned Trial Court Judge, has specifically dealt with the averments made by the complainant and the documents referred and has categorized the role of each of the accused before ordering issuance of the summons against accused nos.1, 3, 4, 6 and 7 of the complaint. Role of the petitioner nos.1 and 2 as accused nos.3 and 4 has been Page 12 of 13 Downloaded on : Sun Jan 16 19:04:55 IST 2022 R/CR.MA/21367/2019 ORDER DATED: 27/09/2021 specified in the complaint and the learned Judge has taken cognizance of the fact and as rightly issued the summons against those accused.
24. Further, learned advocate for the petitioners has raised the issue about issuance of process against the accused persons under Section 202 of the Criminal Procedure Code beyond the territorial limits of the Court. Those are issues not required to be dealt with under Section 482 of the Criminal Procedure Code.
25. Thus, this Court does not find any reason to interfere in the matter. In the result, present application is dismissed. Notice stands discharged. Interim relief is vacated.
26. After the dictation of the order, learned advocate for the petitioners prayed to stay the execution of the order and prayed for extension of the interim stay so as to grant time to challenge the present order.
27. The said request is not acceded by this Court, since it is stated by learned advocate Mr. Buch for the respondents, that the trial is to commence but because of pendency of this matter, it could not be proceeded.
28. In view of aforesaid, no order is required to be passed in Criminal Misc. Application No.2 of 2020 and the same stands disposed of accordingly.
(GITA GOPI,J) ila Page 13 of 13 Downloaded on : Sun Jan 16 19:04:55 IST 2022