Karnataka High Court
Sri Ankit Bhuwalka vs M/S Carmel Jyothi Trust on 8 November, 2017
Author: K.N.Phaneendra
Bench: K. N. Phaneendra
1
IN THE HIGH COURT OF KARNATAKA, BENGALURU
DATED THIS THE 8TH DAY OF NOVEMBER, 2017
BEFORE
THE HON'BLE MR.JUSTICE K. N. PHANEENDRA
CRL.P. NO. 2044/2015 C/W
CRL.P. NO. 2045/2015 C/W
CRL.P. NO. 2046/2015 &
CRL.P. NO. 2047/2015
IN CRL.P. NO. 2044/2015
BETWEEN
SRI. ANKIT BHUWALKA,
M/S SHRI DURGA TRADE
LINKS PVT. LTD., BHUWALKA
CENTRE, NO.71, RESIDENCY
ROAD, 3RD CROSS,
BENGALURU - 560 025 ... PETITIONER
(BY SRI. PRABHUGOUDA B. TUMBIGI, ADV. )
AND
M/S. CARMEL JYOTHI TRUST,
A REGISTERED TRUST HAVING
ITS REGD. OFFICE AT:
CARMEL JYOTHI STUDY HOUSE,
GOTTIGERE POST,
BANNERGHATTA ROAD,
BENGALURU - 560 083.
REP. BY ITS GPA HOLDER,
FATHER SEBASTIAN AUGUSTINE ... RESPONDENT
(BY SRI. M. A. SEBASTIAN, ADV.)
2
THIS CRL.P IS FILED U/S 482 CR.P.C. PRAYING
TO QUASH THE ENTIRE PROCEEDINGS AGAINST THE
PETITIONER WHO IS THE ACCUSED NO.3 IN
C.C.NO.34297/2014 PENDING ON THE FILE OF XLII
A.C.M.M., BENGALURU AND DISMISS THE COMPLAINT.
*****
IN CRL.P. NO. 2045/2015
BETWEEN
SRI. ANKIT BHUWALKA,
M/S SHRI DURGA TRADE
LINKS PVT. LTD., BHUWALKA
CENTRE, NO.71, RESIDENCY
ROAD, 3RD CROSS,
BENGALURU - 560 025 ... PETITIONER
(BY SRI. PRABHUGOUDA B. TUMBIGI, ADV.)
AND
M/S BENEDECTINE SISTERS OF ST.LIOBA
SADAN SOCIETY, A REGD SOCIETY
HAVING ITS OFFICE AT:
HOSAPALYA, BHIMANAKUPPE VILLAGE,
KUMBALGODU POST,
BENGALURU - 560 074
REP. BY ITS GPA HOLDER,
SHRI JOSEPH GEORGE KUNNEL. ... RESPONDENT
(BY SRI. SRIKANTH S. ADV.)
THIS CRL.P IS FILED U/S 482 CR.P.C. PRAYING
TO QUASH THE ENTIRE PROCEEDINGS AGAINST THE
PETITIONER WHO IS THE ACCUSED NO.3 IN
C.C.NO.33139/2014 PENDING ON THE FILE OF XLII
A.C.M.M., BENGALURU AND DISMISS THE COMPLAINT.
*****
3
IN CRL.P. NO. 2046/2015
BETWEEN
SRI. ANKIT BHUWALKA,
M/S SHRI DURGA TRADE
LINKS PVT. LTD., BHUWALKA
CENTRE, NO.71, RESIDENCY
ROAD, 3RD CROSS,
BENGALURU - 560 025 ... PETITIONER
(BY SRI. PRABHUGOUDA B. TUMBIGI, ADV. )
AND
M/S EDUCATIONAL SOCIETY OF
THE BROTHERS OF ST.PATRICK,
A REGISTERED SOCIETY HAVING
ITS REGISTERED OFFICE AT
"PATRICK NIVAS", AMBEDKAR NAGAR,
SARJAPUR ROAD, CARMELARAM POST,
BENGALURU - 560 035,
REP. BY ITS GPA HOLDER,
SHRI JOSEPH GEORGE KUNNEL. ... RESPONDENT
(BY SRI. SRIKANTH S. ADV.)
THIS CRL.P IS FILED U/S 482 CR.P.C. PRAYING
TO QUASH THE ENTIRE PROCEEDINGS AGAINST THE
PETITIONER WHO IS THE ACCUSED NO.3 IN
C.C.NO.33141/2014 PENDING ON THE FILE OF XLII
A.C.M.M., BENGALURU AND DISMISS THE COMPLAINT.
*****
IN CRL.P. NO. 2047/2015
BETWEEN
SRI. ANKIT BHUWALKA,
M/S SHRI DURGA TRADE
LINKS PVT. LTD., BHUWALKA
CENTRE, NO.71, RESIDENCY
ROAD, 3RD CROSS,
4
BENGALURU - 560 025 ... PETITIONER
(BY SRI. PRABHUGOUDA B. TUMBIGI, ADV. )
AND
THE SOCIETY OF THE FRANCISCAN
SERVANTS OF MARY,
A REGISTERED SOCIETY HAVING ITS
ORIGINAL HOUSE AT
CLARE VILLE, NO.62, VICTORIA ROAD,
BENGALURU - 560 047,
REP. BY ITS GPA HOLDER,
SHRI JOSEPH GEORGE KUNNEL. ... RESPONDENT
(BY SRI. SRIKANTH S. ADV.)
THIS CRL.P IS FILED U/S 482 CR.P.C. PRAYING
TO QUASH THE ENTIRE PROCEEDINGS AGAINST THE
PETITIONER WHO IS THE ACCUSED NO.3 IN
C.C.NO.33288/2014 PENDING ON THE FILE OF XLII
A.C.M.M., BENGALURU AND DISMISS THE COMPLAINT.
*****
THESE CRIMINAL PETITIONS COMING ON FOR
ORDERS AND ADMISSIONS THIS DAY, THE COURT
MADE THE FOLLOWING:
ORDER
All the petitions arise from the common factual aspects and a common question of law is involved. Therefore, all the matters are taken up together to pass a common order.
2. The petitioner is arrayed as accused No.3 in CC Nos.34297/2014, 33139/2014, 33141/2014 and 5 33288/2014 respectively, as he is one of the Director of M/s. Shri Durga Trade Links Pvt. Ltd.,.
3. The above said Criminal cases are filed by M/s. Carmel Jyothi Trust, (respondent in CRL.P. No.2044/2015); M/s.Benedectine Sisters of St. Lioba Sadan Society (respondent in CRL.P. No.2045/2015); M/s.Educational Society of the Brothers of St. Patrick (respondent in CRL.P. No.2046/2015); and the Society of the Franciscan Servants of Mary (respondent in CRL.P. No.2047/2015), lodged the complaint u/s.200 of Cr.P.C. making allegations that the petitioner has committed an offence u/s.138 of the Negotiable Instruments Act. In all the above said Criminal Cases, M/s.Durga Trade Links Pvt.Ltd., Company is the first accused and petitioner is accused No.3.
4. The petitioner, being aggrieved by the order of taking cognizance by the learned Magistrate, has approached this court for quashing of the entire proceedings on the ground that there is no allegations of whatsoever which attract Section 138 and 141 of the Negotiable Instruments Act against the petitioner. 6 Therefore, such complaint cannot be proceeded against him.
5. I have heard the arguments of the learned counsel for the petitioner and the respondent. Perused the records.
6. It is submitted by the learned counsel for the petitioner that in order to attract Section 138 of the Negotiable Instruments Act, a strict compliance of Section 141 of Negotiable Instruments Act is required. Section 141 of Negotiable Instruments Act says that if a complaint is lodged against a company, if any of the Directors are made as parties, there must be specific allegations against such Director about his activities in the company and also the role played by him with regard to the day to day affairs of the company. If no such pleadings are there, there cannot be any further proceedings against such Director.
7. The learned counsel for the respondent in all the cases argued before this court that, there is sufficient allegations in the complaint to show the exact 7 role of the petitioner herein and it is specifically alleged that the accused persons including the petitioner have been running the Company i.e., M/s.Shri Durga Trade Links Pvt.Ltd., and they have jointly issued the cheque for repayment of the legally enforceable debt. Therefore,all the Directors are also liable for the prosecution.
8. Before adverting to the factual aspects of the case as pleaded in the complaint, it is just and necessary to bear in mind the provisions of the Negotiable Instruments Act, which are relevant to be quoted here. Section 141 of the Negotiable Instruments Act is the relevant provision which reads thus:
"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.8
Provided xxxx"
Sub clause (2) of Section 141 of the Negotiable Instruments Act, specifically says that -
"Notwithstanding anything contained in sub section (1), if any allegations are made against the Company and if it is proved that the offence has been committed with the consent or in 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. Therefore, in order to prove the said offence, there must be a specific allegations in the complaint which attract the above said provisions."
In this background, it is worth to refer a decision of the Hon'ble Apex Court reported in [2009 (10) SCC 48] between K.K. Ahuja Vs. V.K. Vora, wherein the Hon'ble Apex Court has observed that:
"Dishonour of cheque - offence by company - Vicarious liability of persons of the company - When arises - Essential 9 averments in complaint, requirement of - Held, persons/officers who were in charge of and also responsible for the conduct of business of the company, are vicariously liable for offences of company. Hence, no specific averment in complaint as to role of each is required - Duly affirmed sworn statement to that effect, may be sufficient - However, complaint against persons/officers who were either not responsible for conduct of business of the company, or were not in charge of the company should be specific as to their position, duties and role in the issue of said dishonoured cheque disclosing consent, connivance or negligence."
The Hon'ble Apex Court has also observed at paragraphs 28 & 29 that:
"If a mere reproduction of the wording of Section 141(1) in the complaint is sufficient to make a person liable to face prosecution, virtually every officer/employee of a company without exception could be impleaded as accused by merely making an averment that at the time when the offence was committed they were in charge of and were responsible to the company for the conduct and business of the company. That would be absurd and 10 not intended under the Act. As the trauma, harassment and hardship of criminal proceedings in such cases, may be more serious than the ultimate punishment, it is not proper to subject all and sundry to be impleaded as accused in a complaint against a company, even when the requirements of Section 138 read with Section 141 of the Act are not fulfilled."
In another decision reported in 2015 SAR (CRIMINAL) 288 between POOJA RAVINDER DEVIDASANI VS. STATE OF MAHARASHTRA & ANOTHER, the Hon'ble Apex Court has observed with reference to Sections 138 and 141 of the Negotiable Instruments Act, in the following manner:
"Negotiable Instruments Act, 1881 - Secs. 138, 141 - Offence under Section 138 committed by a company- For fastening vicarious liability on a person/Director- Conditions to be satisfied-Cheques dishonoured not signed by the accused who had even resigned long before the issuance of the cheques in question - Accused admittedly was not Managing Director but only a non- executive Director of the Company, who is no 11 doubt a custodian of the governance of the Company but does not involve in the day-to- day affairs of the running of its business and only monitors the executive activity - To fasten vicarious liability under Section 141 of the Act on a person, at the material time that person should have been at the helm of affairs of the Company, one who actively looks after the day-to-day activities of the Company and particularly responsible for the conduct of its business - Merely because a person is a Director of a Company, does not make him liable under Section 141 of the NI Act-Every person connected with the Company does not fall into the ambit of the provision-Time and again it has been asserted by the Supreme Court that only those person who were in charge of and responsible for the conduct of the business of the Company at the time of commission of an offence will be liable for criminal action - A Director who was not incharge of and was not responsible for the conduct of the business of the Company at the relevant time will not be liable for an offence under Section 141 of the Act-A person 'in-charge of a business' means that the person should be in overall control of the day-to-day business of the Company-For 12 making a Director of a Company liable for the offences committed by the Company under Section 141 of the Act, there must be specific averments against the Director showing as to how and in what manner the Director was responsible for the conduct of the business of the Company-Summoning of an accused, in a criminal case is a serious matter-Criminal law cannot be set into motion as a matter of course-Order of the Magistrate summoning the accused must reflect that he has applied his mind to the facts of the case and the law applicable thereto."
Therefore, on meticulous understanding of the above said ruling, with reference to Section 141 of Negotiable Instruments Act, it is clear that, while filing the complaint against the company, there must be a foundation to be laid in the complaint itself with regard to the requirement of law. Now, let me consider, whether in the complaint any details have been given in compliance with Section 141 of the Negotiable Instruments Act, as quoted by the Hon'ble Apex Court in the aforesaid two decisions.
13
9. In all the above private complaints, it is specifically stated that the complainant is a Trust, registered in accordance with law, has entered into a contract for the construction of school building etc., In this regard, they require some steel for the project. The complainant's Trust have entered into a contract with Accused No.1 Company by name M/s.Durga Trade Links Pvt.Ltd., for the purpose of supply of steel and they made advance payment also. The first accused M/s.Durga Trade Links Pvt. Ltd., has entered into an agreement for supply of steel and also received some advance amount in this regard. But, accused No.1 did not comply with the requirement as per the agreement and thereby violated the terms of the agreement. Therefore, the complainant demanded for refund of the excess amount paid by the complainants along with interest. In this context, it is alleged that the first accused Company has authorized Accused No.2 Ajay Kumar Bhuwalka, who represented the Company to issue cheque for the excess amount paid by the Company. It is also alleged in the complaint that as per 14 the directions of the other Directors of the Company, Accused No.2, has entered into an agreement or contract and issued various cheques for the amount payable to the complainant. It is specifically alleged in the complaint that all the accused persons being the Directors or incharge of running the affairs of the accused Company on day today business and jointly issued cheque for the legally enforceable debt, due to the complainants. Except this sentence, no other material has been placed in the complaint averments to show that what exactly the role of the present petitioner and what was his duty assigned in the A1-Company and what exactly the role played by him is not stated, except stating that A3 and A4 have authorized A2 to act on behalf of the company and to issue the cheques. Except that no other averments are available in the complaint.
10. As I have already narrated the guidelines of the Hon'ble Apex Court in the above said decision, mere allegations that all the accused persons are the Directors and they are looking after the affairs of the 15 Company is not sufficient in order to attract the provision of Section 138 of Negotiable Instruments Act coupled with Section 141 of Negotiable Instruments Act. The above said averment made in the complaint itself is insufficient to draw any inference at the initial stages or presumption of offence against the accused person against the petitioners that the petitioner was also incharge of the Company and he has been engaged in the day to day affairs of the company and in any other manner he has been specifically involved in connection with these transactions, in particular about these cases. In the absence of such averments in the complaint as stated by the Hon'ble Apex Court, it virtually becomes harassment to all the Directors to appear before the court and to face the prosecution.
11. It suffice to say that when the Company has been made as a party as Accused No.1 and it has been effectively represented by its Director Sri Ajay Kumar Bhuwalka - Accused No.2, the purpose of filing the complaint would be accomplished by the complainant by proceeding against the company and the relevant 16 authorized Director. Therefore, in the absence of such pleadings in the complaint, in my opinion, such proceedings cannot be continued against the petitioner herein, though he is a Director of the first accused Company.
Under the above said circumstances, I proceed to pass the following:
ORDER The petitions are allowed. All further proceedings in -
CC Nos. (1) 34297/2014; (2) 33139/2014; (3) 33141/2014 and (4) 33288/2014 pending on the file of the XLII Addl. CMM, Bengaluru, respectively in so far as this petitioner is concerned, are hereby quashed.
As the matter is of the year 2014, the trial Court is directed to expedite and dispose of the same as expeditiously as possible, against other accused.
Sd/-
JUDGE PL*