Gujarat High Court
Satish Menon vs State Of Gujarat & on 2 March, 2017
Equivalent citations: 2017 CRI. L. J. 2076, (2018) 183 ALLINDCAS 368 (GUJ), 2017 ACD 712 (GUJ), 2017 CRILR(SC MAH GUJ) 380, (2017) 2 NIJ 494, (2017) 3 BANKCAS 484, (2017) 4 GUJ LR 3385, (2017) 3 CRIMES 500
Author: B.N. Karia
Bench: B.N. Karia
R/CR.MA/16198/2011 CAV JUDGMENT
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
CRIMINAL MISC.APPLICATION (FOR QUASHING & SET ASIDE
FIR/ORDER) NO. 16198 of 2011
FOR APPROVAL AND SIGNATURE:
HONOURABLE MR.JUSTICE B.N. KARIA
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1 Whether Reporters of Local Papers may be allowed to see
the judgment ?
2 To be referred to the Reporter or not ?
3 Whether their Lordships wish to see the fair copy of the
judgment ?
4 Whether this case involves a substantial question of law as
to the interpretation of the Constitution of India or any order
made thereunder ?
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SATISH MENON....Applicant(s)
Versus
STATE OF GUJARAT & 1....Respondent(s)
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Appearance:
MR MAULIK N SHAH, ADVOCATE for the Applicant(s) No. 1
MR PV PATADIYA, ADVOCATE for the Respondent(s) No. 2
MR KP RAVAL, APP for the Respondent(s) No. 1
RULE SERVED for the Respondent(s) No. 2
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CORAM: HONOURABLE MR.JUSTICE B.N. KARIA
Date : 02/03/2017
CAV JUDGMENT
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HC-NIC Page 1 of 14 Created On Fri Mar 03 00:48:27 IST 2017 R/CR.MA/16198/2011 CAV JUDGMENT
1. The present petition is filed by the petitioner under section 482 of the Code of Criminal Procedure, 1871 ["Cr.PC"
for brevity] for quashing and setting aside the complaint, being Criminal Case No. 926/2011 pending in the court of Ld. Chief Metropolitan Magistrate(N.I.Act Court No.7), Ahmedabad and all further consequential proceedings arising therefrom, qua the present petitioner.
2. The facts leading to filing of the present petition are as under;
2.1 The petitioner was appointed as a Executive Director (Sales) in Corporate office of M/s. Wetell Everest Cap Solutions Pvt. Ltd. (Original accused no.1) based at 224-225, Shreeram Tower, Kingsway, Sadar, Nagpur, on 16.04.2009. The letter of appointment, intimating the same was duly signed by Chairman-cum-Managing Director of the Company, viz., Mr. Amardeep Singh Thakur (Ori. Accused no.4). Thereafter, the petitioner, vide letter dated 04.03.2010, tendered resignation as Executive Director (Sales), which was accepted by the Board of Directors and Company and the petitioner ceased to be a Executive Director with effect from 05.03.2010. Meanwhile, an agreement was executed between the respondent no.2 and M/s. Wetell Everest Cap Solution Pvt. Ltd. on 22.07.2009, in pursuant to which, the respondent no.2 Page 2 of 14 HC-NIC Page 2 of 14 Created On Fri Mar 03 00:48:27 IST 2017 R/CR.MA/16198/2011 CAV JUDGMENT invested Rs. 2,00,000/- in the said company with a return on investment of Rs. 6,000/- per month for the next 36 months and pay back of principal amount at the end of 36th Months was agreed upon in the said agreement.
2.2 It is further stated that as stated by the respondent no.2 in his complaint of Criminal Case No. 926/2011, the breach of contract was committed by not adhering to the terms and conditions agreed upon and not paying the return on investment. Having committed breach of contract, respondent no.2 called upon the original accused to end the agreement and demanded all the dues. Thus, the accused no.4 regretted the same and assured to fulfill the conditions of the agreement, but failed to do so. Thereafter, respondent no.2 called off the said deal and demanded his investment back and thus, cheque bearing No. 024169, drawn on Axis Bank Ltd, Priority Branch, Hyderabad-34, dated 02.07.2010 was issued to the respondent no.2. A request was made to the respondent no.2 to deposit the said cheque on 27.12.2010 and thus, the cheque was deposited with the respondents banker namely the Kalupur Commercial Co-op. Bank Ltd, Ahmedabad for realization. But, the said cheque was dishonoured, and the reason assigned being "Account Blocked", and the same was informed to the respondent no.2 by his banker on 28.12.2010. Page 3 of 14 HC-NIC Page 3 of 14 Created On Fri Mar 03 00:48:27 IST 2017 R/CR.MA/16198/2011 CAV JUDGMENT Thereafter, the respondent no.2 approached the original accused, but there was no response from them. Thus, a legal notice was sent to the original accused on 29.12.2010 under section 138(B) of the Negotiable Instruments Act, 1881 through RPAD and UPC Post, which was received only by original accused no.1. Neither did the original accused no.2 to 4 (including the present petitioner) claimed the notice nor has made any payment till date, and therefore, the respondent no.2 filed the impugned complaint.
3. Heard Mr. Maulik N. Shah, learned advocate appearing for the petitioner, Mr. PV Patadiya, learned advocate appearing for the respondent no.2 and learned APP Shri KP Raval for the respondent no.1-State.
4. It is submitted by Mr. Maulik N. Shah, learned advocate for the petitioner that the petitioner has not committed any offence, as alleged in the Criminal Case No. 926/2011 filed in the court of learned Metropolitan Magistrate (N. I. Act Court No.7), Ahmedabad, for the offence punishable under Section 138 of the Negotiable Instruments Act. The petitioner is unnecessarily dragged into criminal proceedings. It is further argued that the petitioner was appointed as Executive Director (Sales) in the Corporate Office of Wetell Everest Cap Solutions Pvt. Ltd. and resigned from the said post Page 4 of 14 HC-NIC Page 4 of 14 Created On Fri Mar 03 00:48:27 IST 2017 R/CR.MA/16198/2011 CAV JUDGMENT on 4th March, 2010. His resignation was accepted with effect from 5th March, 2010. That, he was not a part of the Company, when the alleged offence was committed. The cheque in dispute was issued by the Company to the respondent no.2 on 2nd July, 2010 and was deposited on 27th December, 2010 and it was dishonoured on 28th December, 2010. That, vicarious liability can not be fastened upon the shoulder of the petitioner, as he was not incharge of, and responsible to the Company for the conduct of the business of the company. That, he was not concerned with the day to day activities of the Company during all these times, as he ceases to be a Director from 5th March, 2010 with effect from 14th April, 2010. That, the offence was allegedly committed under Section 138 of the Negotiable Instruments Act on 28th December, 2010, i.e. after 8 months of the resignation of the petitioner. As the petitioner was neither a Director nor an employee, nor in any way concerned with affairs of Wetell Everest Cap Solutions Pvt. Ltd., and hence, there is no question of vicarious liability of the petitioner. That, no liability has been assigned upon the petitioner in the impugned complaint in Criminal Case No. 926/2011. That, there is no specific allegation against the petitioner for holding him liable for the offence, as alleged in the complaint. That, he has wrongly been involved in the Page 5 of 14 HC-NIC Page 5 of 14 Created On Fri Mar 03 00:48:27 IST 2017 R/CR.MA/16198/2011 CAV JUDGMENT present transaction, making him part of said offence. That, no case is made out against the present petitioner for the offence punishable under section 138 of the Negotiable Instruments Act, as he has not issued the impugned cheque towards any legally enforceable debt, or in discharge of any other liability. That, no ingredients of Section 138 of the Negotiable Instruments Act are attracted against the petitioner. That, no notice has been served upon the petitioner under Section 138 of the Negotiable Instruments Act. After his resignation, necessary fee in respect of Form No. DIR-11 was paid by the petitioner with penalty on 12th February, 2015 and was forwarded to the Registrar of Companies. In support of his arguments, learned advocate Mr. Maulik N. Shah appearing for the petitioner has placed reliance upon a decision of Karnataka High Court in case of Mother Care (India) Ltd Vs. Prof. Ramaswamy P. Aiyar reported in 2004 51 SCL 243 Kar. Ultimately, he has requested to quash the impugned complaint, being Criminal Case No. 926/2011 pending before the Court of Metropolitan Magistrate (N.I. Act Court No.7), Ahmedabad, in the interest of justice, qua the present petitioner.
5. On the other hand, learned advocate Mr. P.V. Patadiya appearing for the respondent no.2 vehemently Page 6 of 14 HC-NIC Page 6 of 14 Created On Fri Mar 03 00:48:27 IST 2017 R/CR.MA/16198/2011 CAV JUDGMENT opposed the arguments advanced for and on behalf of the petitioner and submitted that letter of appointment in favour of the petitioner as Executive Director (Sales) produced on record, seems to be forged one. As the date of appointment of the petitioner is shown as 16th April, 2009, whereas from the record of the Ministry of Corporate Affairs, the date of appointment is shown as 1st August, 2009. That, the petitioner is continued in the Company as a Director till today, as per the record of Ministry of Corporate Affairs. That, Form No. 32, which was required to be filled up under the Companies Act, 1956, is not filed by the Company till today, and respondent no.2 is not informed that petitioner has resigned as Director from the Company. That, the petitioner has not placed anything on record to show that he had resigned from the Company. That, it is presumed that the petitioner is continuing as Executive Director (Sales) of the Company. That, notice to the petitioner was sent by RPAD as well as UPC, which was served at the address of the company, in which, the name of the petitioner as Executive Director(Sales) continues. That, it cannot be said that the petitioner is not liable for the business affairs of the Company at all. He has placed his reliance on the on the decision of Hon'ble Supreme Court of India passed in Malwa Cotton and Spinning Mills Limited V/s. Virsa Singh Sidhu Page 7 of 14 HC-NIC Page 7 of 14 Created On Fri Mar 03 00:48:27 IST 2017 R/CR.MA/16198/2011 CAV JUDGMENT and Others reported in "2008(0) GLHEL-SC 42012", holding that effect of delay in presentation of form No. 32 before the Registrar of Companies is essentially a matter of trial. That, whether the petitioner intimated the Company and whether there was any resolution accepting the resignation of the petitioner are matters, in respect of which, evidence had to be led. That, question of resigning from the Directorship of the company cannot be decided in the present petition filed under Section 482 of the Code of Criminal Procedure, as it is a pure question of fact, which is required to be adjudicated by the learned trial Court and this Court cannot take evidence summarily, which ought to be led elaborately before the trial Court. That, the case of the respondent no.2 is squarely covered by a decision of Hon'ble Supreme Court rendered in the case of Malwa Cotton and Spinning Mills Limited V/s. Virsa Singh Sidhu and Others reported in "2008(0) GLHEL-SC 42012". In this case, it was held by the Hon'ble Supreme Court that when fact of resignation and its correctness have been disputed and not accepted by the respondent no.2- complainant thus, quashing of proceedings would be improper. Hence, it was requested by Mr. PV Patadiya, learned advocate for the respondent no.2 to dismiss the present petition.
6. Learned APP Mr. KP Raval appearing for the Page 8 of 14 HC-NIC Page 8 of 14 Created On Fri Mar 03 00:48:27 IST 2017 R/CR.MA/16198/2011 CAV JUDGMENT respondent no.1 has supported the arguments advanced by learned advocate Mr. PV Patadiya appearing for the respondent no.2 and submitted that the liability of the petitioner would not come to an end, even though, he has resigned from the Company from the post of Executive Director (Sales). That, resignation itself is doubted by the respondent no.2, as it was not accepted by the Company and Form no.32 was not forwarded by him in time to the Registrar of Companies. That, the petitioner shall also be vicariously liable for the day-to-day affairs of the Company. That, he has not produced on record any letter of forwarding his resignation to the Company and the appointment date is differed from the letter produced on record and the record of Ministry of Corporate Affairs. As the question of facts is required to be adjudged by leading evidence before the learned trial Court and hence, it cannot be decided in the proceedings under Section 482 of the Code. At the end of his arguments, he requested to dismiss the present petition.
7. Considering the facts of the case, submissions made by learned advocates of the respective parties and documentary evidence produced on the record by either side, it is a undisputed fact that the petitioner was appointed as Executive Director (Sales) of Wetell Everest Cap Solutions Pvt. Page 9 of 14 HC-NIC Page 9 of 14 Created On Fri Mar 03 00:48:27 IST 2017 R/CR.MA/16198/2011 CAV JUDGMENT Limited at Hyderabad. There is some difference in the appointment date of the petitioner as Executive Director (Sales) viz., such as 16th April, 2009 and 1st August, 2009 shown in the appointment letter as well as in record of the Ministry of Corporate Affairs, respectively. It is a submission of the petitioner that he has resigned from the Company vide letter dated 4th March, 2010 from the Directorship of the Company, which was accepted by the Board of Directors, and the Company relieved the petitioner from the post and he ceased to be a Director with effect from 5th March, 2010. It is pertinent to note that the resignation letter given by the petitioner dated 4th March, 2010 is not produced on record by the petitioner, though some of the correspondence accepting resignation from the petitioner and resolution passed by the Company are produced on the record, relieving the petitioner from the post of Director. As per the Board resolution, it was resolved that the Company had received the resignation of Satish Menon from the post of Executive Director (Sales)/Director of Wetell Everest Cap Solutions Limited vide resignation letter dated 4th March, 2010 and it was resolved by the Company, after due deliberation at the Board meeting that it was accepted with effect from 5th March, 2010. The respondent no.2 has challenged the aforesaid resolution Page 10 of 14 HC-NIC Page 10 of 14 Created On Fri Mar 03 00:48:27 IST 2017 R/CR.MA/16198/2011 CAV JUDGMENT passed by the Company stating that the petitioner is continued as a Director in the Company and no such letter was received by him from the company, as alleged that the petitioner had resigned from the post. It is further contended by the respondent no.2 that Company had never informed him about receiving of any letter from the petitioner resigning from the Company. Therefore, the question of resignation from the Directorship of the Company cannot be decided in the present petition filed under Section 482 of the Code, because it is a question of fact, which is required to be adjudicated by the trial court. It is also pertinent to note that being a Director, the petitioner was obliged to present and forward the Form No. 32 to the Registrar of Companies, but it was not forwarded by the petitioner, in time. Later on, it appears that by paying necessary fees and additional charges, it was received by Ministry of Corporate Affairs on 12th February, 2015 stating that the petitioner has resigned from the Company as Executive Director (Sales) of the Company, but when the respondent no.2 has not accepted and challenged it by saying that the petitioner is still continued as Executive Director of the Company and he had never received letter dated 4 th March, 2010 about the resignation of the petitioner from the Directorship of the Company and not received any letter or Page 11 of 14 HC-NIC Page 11 of 14 Created On Fri Mar 03 00:48:27 IST 2017 R/CR.MA/16198/2011 CAV JUDGMENT information from the company accepting the prayer of the petitioner. Thus, this factual aspect would not be decided or cannot be decided by the High Court in an application filed under section 482 of the Code of Criminal Procedure and it can only be decided by the trial court by recording necessary evidence from the either sides. In case of Mother Care(India) Ltd v/s. Prof. Ramaswamy P. Aiyar (Supra), it is held that merely because the Company has not filed Form No.32, as required to be filed and same is not registered with the Registrar of Companies, it cannot be said that the applicant continues to be the Director of the company under liquidation.
8. From the other side, learned advocate Mr. PV Patadiya for the respondent no.2 has relied a decision in case of Malwa Cotton and Spinning Mills Limited V/s. Virsa Singh Sidhu and Others (Supra), in which also, the respondent no.1 therein had raised a ground that he had resigned from the Directorship before cheques were issued and the petition was allowed on the ground that no specific allegation against other accused person was made. It was held by the Apex Court that the fact of resignation and its correctness have been established in the trial Court, and therefore, the High Court could not have made the impugned judgment, while dealing with application under Section 482 of the Code. It was further Page 12 of 14 HC-NIC Page 12 of 14 Created On Fri Mar 03 00:48:27 IST 2017 R/CR.MA/16198/2011 CAV JUDGMENT held that what was the effect of delayed presentation of Form No. 32 before the Registrar of Companies was essentially a matter of trial and whether the respondent therein had intimated company and whether there was any resolution made accepting his resignation were matters in respect of which, evidence had to be led, and therefore, quashing of proceeding so far as the petitioner therein is concerned is improper and order of the High Court was set aside by allowing the appeal.
9. Here also, resignation of the petitioner and resolution passed by the Company, accepting resignation of the petitioner, is disputed by the respondent no.2, which is a factual aspect. Forwarding of Form No. 32 by the petitioner to the Registrar of Companies would also be a matter of trial, and therefore, this Court cannot enter into the facts of the case, or the dispute, while deciding application for discharge under section 482 of the Code, and therefore, liability, if any, of the petitioner with the Company shall be decided by the trial court, on leading of evidence by either sides and not by this Court, at this juncture. Hence, the present petition fails and is hereby dismissed.
10. Interim relief granted earlier by this court in terms of Para 8(C) of the petition stands vacated henceforth. Notice Page 13 of 14 HC-NIC Page 13 of 14 Created On Fri Mar 03 00:48:27 IST 2017 R/CR.MA/16198/2011 CAV JUDGMENT is discharged with no order as to costs.
(B.N. KARIA, J.) ksdarji Page 14 of 14 HC-NIC Page 14 of 14 Created On Fri Mar 03 00:48:27 IST 2017