Telangana High Court
Chinnarappa Rameswar Reddy vs The State Of Telangana on 14 November, 2024
THE HONOURABLE SMT. JUSTICE K. SUJANA
CRIMINAL PETITION No.8202 OF 2024
ORDER:
This Criminal Petition is filed under Section 482 of the Code of Criminal Procedure, 1973 (for short 'Cr.P.C.')read with 528 BNSS Act, 2023 to quash the proceedings against the petitioner/accused in C.C.No.538 of 2015, on the file of the Judicial Magistrate of First Class, at Adilabad, registered for the offence punishable under Section 138 of Negotiable Instrument Act.
2. The brief facts of the case are that the de facto complainant entered into an agreement with Sri SaiBalaji Traders represented by its proprietor Nalam Manoj Kumar and it is the deal in cotton and its allied produce and has supplied to Sakhi Cottex India Limited which is represented by MD Rameshwar Reddy. The total consignment was worth Rs.1,02,041,564/- was sent to mill, as per term of the bills, they are liable to pay interest at 21% per annum. But the complainant insisted for the payment, the accused have issued the cheque bearing No.067836, dated 18.05.2015 for an amount of Rs.1,50,00,000/-, when it is presented, same was returned with an endorsement funds in sufficient and drawers signature 2 SKS,J Crl.P.No.8202 of 2024 differs. Meanwhile, he issued a legal notice about intimating about the dishonour of cheque and which was acknowledge by the accused on 14.08.2015 and that the Accused replied to the aforementioned notice stating that he has issued the above cheque but since the consignment is defective they had intimated that they issued stop payment instructions to the bank. Hence, respondent No.2 filed a complaint before the Judicial Magistrate of First Class, at Adilabad in C.C.No.538 of 2015, registered for the offence punishable under Section 138 of Negotiable Instrument Act. Aggrieved by the same, the present petition is filed.
3. Heard SriV.MuraliManohar,learned counsel for the petitioner and Sri E.Ganesh, learned Assistant Public Prosecutor for respondent No.1-State.
4. Learned counsel for the petitioner submitted that the said cheque had been issued by the petitioner as Managing Director of the Company and said cheque was returned with endorsement i.e., funds are insufficient and drawer's signature defers. Though the complainant stated that there is a reply notice by the accused company there is no such reply notice. The petitioner resigned as Director of the company on 01.12.2014 and the alleged cheque is dated 18.06.2015, which 3 SKS,J Crl.P.No.8202 of 2024 shows that he resigned as a director five months prior to the issuance of alleged cheque, and said cheque towards payment of various bills dated between 04-02-2015 to 16-02-2015 and the resignation of the petitioner is evident from the DIR 12 filed by the respondent No.3 company in its registrar of companies (ROC) return and it indicates that the facts mentioned in the impugned complaint are false and concocted. In view of the resignation of the petitioner on 01.12.2014 the petitioner was no longer an authorized signatory or representative of respondent No.3 company, who could have issued the aforementioned cheque and therefore, no liability was accrued against the petitioner.Hence, he prayed the Court to allow the Criminal Petition by quashing the proceedings against the petitioner.
5. On the other hand, learned Assistant Public Prosecutor for respondent No.1-State opposed the submissions of the learned counsel for the petitioner stating that the petitioner was Managing Director of respondent No.3 Company is a trialable issue and the petitioner is required to adduce cogent and substantial evidence to show that he was not Managing Director of respondent No.3 Company at the time of alleged offence. The petitioner relied on a document issued by Registrar of companies of Telangana, Hyderabad. In fact this document was 4 SKS,J Crl.P.No.8202 of 2024 issued on 06.04.2024 and the same cannot be relied for the purpose of quashing charges against the petitioner. In fact the State Bank of India has filed Insolvency Proceedings against the respondent No.3 company and petitioner herein vide proceeding bearing company petition No.IB/24/2021 under Section 95 of IBC in which the NCLT, Hyderabad Branch pleased to appoint one Mr.Krishnamohan Gollamudi as RP and subsequently recover proceedings have been initiated against the respondent No.3 company and the petitioner. The petitioner in order to evade the liability and avoid the conviction, came up with a false plea and forged document stating that he was not Managing Director of the respondent No.3 company had not issued any cheque, dated 08.05.2015 drawn on State Bank of India, Temple Branch, Kukatpalli. The respondent No.3 got examined Manager of the said bank as PW-2 before the trial Court and the said witness categorically stated that Ex-P-1 was issued by respondent No.3 company and the petitioner herein is the Director of said company. In fact after issuance of legal notice by this respondent the petitioner herein paid an amount of Rs.78,26,704/- and the respondent No.2 i.e. complainant informed the same during the trial and the remaining due amount is Rs.24,14,860/-. Therefore the contention of 5 SKS,J Crl.P.No.8202 of 2024 respondent No.2 that cheque was not issued in discharge of any legal liability is false, in fact the petitioner never stated before the trial Court that he never issued any cheques to the complainant company, except denying his status in the company. The petitioner who received legal notice could have issued another cheque to avoid the liability, but he intentionally failed to do so, therefore, the signature differs is not a ground to quash proceedings. Hence, prayed to dismiss the petition.
6. In view of the rival submissions made by both the counsel, this Court has perused the material available on record, which shows that the C.C. pertains to the year 2015 and PW.1 to 3 are examined. Further in examination of PW1 he admitted that he has not filed any document to show that the petitioner is Managing Director of the company. The contention of the respondent counsel is that the petitioner who received legal notice could have issued another cheque to avoid liability but he was intentionally failed to do so, is not a ground to continue proceedings against the petitioner to issue another cheque and he is not liable for further criminal prosecution as he resigned before the date of the issuance of the cheque. This petitioner is not a signatory of the cheque. 6
SKS,J Crl.P.No.8202 of 2024
7. At this stage, it is relevant to note the observations made by the Apex Court in Rajesh Viren Shah Vs. Redington (India) Limited 1,where under the paragraph 4 is extracted as under:
"4. The position of law as to the liability that can be fastened upon a Director for non- realisation of a cheque is no longer res Integra. Before adverting to the judicial position, we must also take note of the statutory provision - Section 141 of the N.I.Act, which states that every person who at the time of the offence was responsible for the affairs/conduct of the business of the company, shall be held liable and proceeded against under Section 138 of the N.I. Act, with exception thereto being that such an act, if done without his knowledge or after him having taken all necessary precautions, would not be held liable. However, if it is proved that any act of a company is proved to have been done with the connivance or consent or may be attributable to (i) a director; (ii) a manager; (iii) a secretary; or (iv) any other officer - they shall be deemed to be guilty of that offence and shall be proceeded against accordingly.
8. Further, in Ramrajsingh vs. State of M.P. and Ors 2, the Apex Court observed that paragraph 4 is extracted as under
paragraph 19 is extracted 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 1 Manu/SC/0108/2024 2 Manu/SC/0593/2009 7 SKS,J Crl.P.No.8202 of 2024 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 business. The requirement of Section 141 is that the person sought to be made liable should be in charge of and responsible for the conduct of the business of the company at the relevant time. This has to be averred as a fact as there is no deemed liability of a director in such cases.
(c) The answer to Question (c) has to be in the affirmative. The question notes that the managing director or joint managing director would be admittedly in dcharge 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 virture 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.
9. As seen from the record, the resignation has taken place on 01.12.2014 and the date of issuance of the cheque is 18.06.2015, which shows that date of issuance of cheque is after resignation of the petitioner as a Director. Further in the complaint, it is mentioned that accused gave reply notice. Admitting the issuance of cheque where as the documents filed 8 SKS,J Crl.P.No.8202 of 2024 by the respondent along with written arguments shows that no reply notice filed. Further cross-examination shows that notice not served on petitioner. That apart in cross-examination of PW1 admitted that receiving of part payment of the cheque amount is not mentioned in the legal notice or complaint. Admission of PW1 in cross-examination clearly reveals that even after receiving the part of cheque amount. Complaint is filed for total amount, which defeats the case of respondent complainant. As such, he cannot be responsible for relevant point of time. Therefore, this Court is of the considered view that even if the trial is conducted, no purpose would be served and there are no other specific allegations against the petitioner.
10. Accordingly, the Criminal Petition is Allowed and the proceedings against the petitioner/accused herein in C.C.No.538 of 2015, on the file of the Judicial Magistrate of First Class, at Adilabad, are hereby quashed.
Miscellaneous applications, if any pending, shall also stand closed.
_______________ K. SUJANA, J Date: 14.11.2024 gv