Sri Kagodu Thimmappa vs Sri Albert Danti on 5 February, 2010

[Cites 13, Cited by 0]

Karnataka High Court

Sri Kagodu Thimmappa vs Sri Albert Danti on 5 February, 2010

Bench: Subhash B.Adi

 

IN THE HKBH coum or: KARNATAKA AT BANGALORE
DATED ms THE 5" DAY OF FEBRUARYD2'o.1:'o«<E.V:"--lA
BEFORE    , ..
THE HONBLE l'viR.JUSTlQE suBHAsll'.B3.ADl   1' 

CRIMINAL PETlTlO'l\l_l§l__Ol.:'{O70l2_Q_(_)_.Z"' "  
c/w CFHMINAL PETITION NOS.328?l2U£J7 5o71,r2o~o7 "21'.)"a%__'_}'2_"(_)_[_2_3__'
2329/2003 2828/2008 2327/2o;a_§;_g_§_g§;_A2gpM§L_§_.=;@;:fz:__egw§mqg:g;;;qg3§4
4433/2003 4391/2ou3W,__;g§e9o/2oo8_ & --1_7;"2,_Q_l_Z'_Q__Q§_3_;

 

BETWEEN:

Sri. Kagodu Thimmappa, V
Major in age,    . 
S/o Savojf Beera Nayak, '
Presently at No.?l'V3O?;' V . A
9"' Cross, 24'? «fv'.s'a§.r__:,*--.. '
lPhase, JP. N8g--?:_3l'f_ "   ._ " 
Bangalore.+:D5_6{}..(J7'8';~I:;:,       PETlTlONER

'  ' " (Common in all petitions)

(By sn'.o;_v.NAoEs:«';':--e{.A¢v;;:_l"A  E
IN CRIMINAL Pemlon 5:570/2007

; SIL. Albert 'Da."1_tr',"a,_
7Age.d about' 58- _'ve,a'rs,
Sﬁo Jacob ~Dan_ti, . V ~ 
Raghavendra 'Eixieehsion,
' * Near Arzuradhalslurslng Home,
 ' --Soppugudd'e,. Thirthahalli Town,
V-~.__Sl=u'moga Dfsffict. .. RESPONDENT

Raghupathy, Adv.) IN CREMSNIEL F'ETiT!ON 328772007 iv!-'3 \ieer;:1'r>hadr@smAJac'a Glass ancé Frame Wor¥<s. Opp: $0 f\/lmicrpai Office.

BH. ﬁoari.

Shimoga' F%epressemed by its Partner.

Sré. SB" Ravé Ksmzar. ..

(By Sr%.C?:. Laé<shm<-->e3s%"a Rat). ACév.:= - iN CF§EiVEiNAL PETYHON 507152007 Smt. Tagleaem Zakéya.

Aged about 3': years.

W50 MA C2::1yoom HVNo.Ei~408;»97'] "Ahamed Manzi!"T Khaja Coiony, 2 Gutbarga ':05. _ .. RESPDNDENT By smviord. SiIa?§--.1;dd%§, 1_r~c:y';;

cw CRawasNA1;-iniéjjifidkiz;:,;r:.gg28.25)?20-08- 3. 2826/2008 E3{iv 8.8 925914 Knnmsﬁ V' 4 Aged aboué 323/ea_:'s§ V . --

S C} SM E3a33avVa:_a§é.~;ppa,. ' Rio Par?E:::Ie3nséof':,., ' "

__.S;h§.mog:;»:f:,. ' " . . RESPONDENT _E':';g,: Sééé L,::2'r<.z1§h--;:V:A{-§s~:esh Reaay' '&dv EN §i;.s3*'i'j:;.2I:%;:-:.§'z_:""i:*~_v.E":':i'iéN 282952608 Szi.S.H.'j"SiC§'dapp"é:é.

.. ,A'g.e6 ab9qf5'f years, SEQ $.,?§ai1&iD'QaA P:'og;:r:e%0r'.

.__E%'53é:rat?'a B{;'%E§tr3EE"%L§§ C0,.

f*J_~?§__ ';TxP'.F\:$£3, Yard;

__"$"m.m;;:ga. VI RESPONQENT {By Smiﬁ L::$<s§'wr'1'7e:9as%1 R363. Ada-h_;:

'x'(ﬁ'Lmju€§*;€1.é'i Ageci ézﬁscui .,3E},\;e-éa ___Fi.§jed ;=3bc.uf_ 3 _ R'="s..{\£€3ééG, 7*" F!<:~3r.

KS. Na:'ayana Semi & Sons.

BH Road, AA. Circie.

Séwimoga, {By Se'rT\fig;r'1eshv-war' S. Shastré. Adv} EN CRHVIINAL PETITION 4433;"2008 Sri K. Mahesh Pan.

Aged about 35 years 850 Sri. S. Ramachandra Paé, Proggrietor. Mfzs Pai Medfcals.

Baiasaj Um; E%0z:-id.

Shimoga.

(By Sri.R.l".-3. Desshpaﬂde. Adv.j;__ IN CRlMiNﬁ.L PETITION 48§1";'2tEG8 Sré. K. Ravmdran, . V Aged abouf 45 year_s.~:;=., S.-'o Late Sm $3. S%12i_raka}12i'ﬂ_arayana. Balsinessmara R-"0 "Gc>ki..:%:«:'] . .

Ba$aves%'1w.3ra'*Nagj'€.r.

Shimoga.

aw cR:mi§:.m__ P§'*z"i1.f :Ac:>'e«: .v48éa;2ii08 8.51:7. __ Y:';;1_s3 G? AB -31l7\_'i}':r. _ ' 1.' Rec mo: :"4« ~c:,>,::.:<_:s's.

EsiT1\,rve3':.__i,51y'(:>;ﬁf.» 'f:"':«§ﬁ£'.h3r3aga;'. Erian g'al<3i":1;T ?3L'__c:1.az:=¢-?r"'{;f .t%0mey Harder, " ._M':< _ )5' gym b?~E.} 2* Q3 E: ma :2.

533:: 3/fli,i'!"z'Z':f;5i;2f Pagha, I ysaears.

'E§':<':%: Marszié iﬁpp': Boys Hasiei, Road:

.. RESPONDEN?

. __J"::;:;A';i~; P@:xa{3E:\a? = %'

1. HESPONDEN?

the file of J.M.F.C., Thirthahalli;

Prl.C.J.M., Shimoga; ll Addl.J.M.F.C., Gulbarga;

l Adollcivil Judge (Sr.Dn.) & Addl.C.J.M., :§hi.moga;

AddI.Civil Judge ( l Sr.Dn.) 8: Addi.C.J.M., & Addl.C.J.lVl., Shimoga;

Addl.C.J.M., Shlmoga; I Shimoga; I; Judge I Addl.CivH ' Addl.Civil Z.-.'u'dge« .

Shimoga; C.J.l\/L, Shimoga; l Addl.C.J.i'M.V, §.hlAmoga;H..AtAAdd~l.Ciitlril"»Juctgge (Sr.Dnt) i i

3. Addl.CtJ.M., shimog§';*t-....l_ Addl.(_3ivit_qJvudg:e%V(S'r.Dn.) 'Va Addl.C.J.M., Shimoga; l Addl.Cl\(i_lr_ufJu_dge,_ (Sr'.D'n;}~l» ta" Addl.C.J.M., Shimoga and Civil Judgeﬁ(Jr.Dn.}v:.,':t3<u"3X§idAl:.J._M.F.C., Bhadravathi respectively. n

2. Ftespondents3l.are cotrrrp_lvai~nants'"a»nd- have filed separate private complaints gu_ndei*t.__S'ecti;;)n_ 20:U'--._ol 'C'r;'t'»';~""

:3. for an offence punishable te..l:\4leg'o'tia_t5le lnstruments Act ( under Section .t38vVot'utl as the 'Act') a'ntdSectioi'*.

in short referred to Presid«ents,i accusjed..t:No.6 is the Secretary, accused Nos.7 to 9 are the Joint Secrle.tai'lesV4and accused No.10 is the Treasurer of the first V' V Accused t\tos.2 to 10 personally approached the complainants .!n_rera!ra alleging that, they have constituted a Trust in the name and ~i(}~ No.2 as the President and other trustees are inchaige and responsibie tor the affairs of the first accused -- Trust and have committed.dthe offence punishabie under Section t38 of the Act and Lot' cheating punishable under Section 420 of WC.

6. Learned Magistrate atter takingﬁcogirizanceti 'irecoictdct_ the sworn statements of the compiainar'-tsxand con.si'dering"'thfevcompliaint, sworn statement and the materiai by the'coVrnp'iainants found that, the complaint discioses the accused for an offence punishabieunder Sectio--n 'i§€§;e.t'--V"and Section 420 read with Section otdei§ed";for:"rd:§;istr'atidit of case and further ordered for issue of s_i;r'r;rrmorts._'°t.'fisAiat-t'his'gstage, these petitions have been filed by accusef}v.No.f{4i'ri aiiivthe cases.

7. Heard"'iearrted' Ciounsei:-Séri.C.V.Nagesh for the pptitioner and .Sri.T.N.Baghupathy,"'~.SriV.'G.L:akshmeesh Ftao, Sri.t\/tohd.Shafiuddin, SL"i..rShastri, Sri.R.B. Deshpandet Sri.J.Gopaiakrishna, Pinto, learned Courtsei for the compiainants.

8. 'Sri.V1C3_V.VNagesh, teamed Counsei submitted that, the petitioner Iwas the"P_resident of the Trust. However, he has resigned to the same 1AA3§.tt.S2006 and it is accepted on 21.11.2006 and since 21.11.2008, 'V V 'petitioner is neither a President nor a trustee of the Trust. tn this regard, 5?';-»~ he referred to the dates of issue of cheques and submitted that, cheques were issued on 15.8.2006 in ah the cases. They were presented for encashment on 3i.1.2007, 5.2.2007, $422007, 14.2.2007, 7.2.2007, 13.2.2007, 24.ii.2006, 14.2.2007, 26.9.2006,--'.'26'._94.'20,06., 269.2006, 189.2006 and 18.9.2008 respectively. were dishonoured by the Bank on 152.2007, 152.2007, 7.2.2007, t»4..2.2OAt)'"?.,Ai:"2_A5..11.8088,," i9.2i,2007',--..,' 26.9.2006, 26.92006, 27.92006, aid626.9.2coéiiieisip6ciiveiii8 and legal notices were issued t4.8.2'0O7, 7.3.2007, 12.3.2007, 12.3.2007, 6.3.28ﬂC)7,_"l8:3:i880%,:i'i.t"4;.i"2'.'_2008, 10.3.2007, 25.10.2006, 25.i0.,2rj0s.._ and 6.10.2006 respectively. petitioner in his reply has stated that, hei.h.as" President and trusteeship of the Trustitand. _,éetit'iv4o'ner"*.5s'neither inchargeror responsible for the business otithei trus"t,_h'e,rice,"'_tihe allegations in the complaint do not constitutefan o.ffence"un_r:ler Section 138 of the Act. V "in his argument, he referred to the provisions of V..vSections"'t88 of the Act. He relied on the provisions of Section of the Acltiand submitted that, the cheque must have been drawn for amount towards the discharge of whote or any part of debtor ii--a'biii'ty. and that, merely because the cheque is issued by the trustees, ' thiativbly itself will not constitute an offence punishable under Section 138 9:?

57%;!» i r of the Act, not even dishonour of the cheque wouid constitute an offence, untii the amount involved in cheque is demanded by issue of Eegai notice and despite the iegai notice, the accused had faiied to payggtldeiasame within the stipuiated time, oniy then the offence committed. Further, in case of offence by Company__(i:n:th'is_.:ca4se,f Trust), the accused against whom the aEiegatio:n's are charge and responsibie for the conduct of of trust' date of commission of offence.

10. in these cases, Va-sfffoni the of aiieged offence, the accused No.2 (peti.ti.o:n_e.r) nei't'h'e:r:-av-President nor was a Trustee, hence, d.esciose these ingredients against the xcogriizance and issue of summons, provivsions of Section 138 read with Section I-ditufof the i5\ct._ 1, .1_%,.A' if the Trust heid: to be Company within the meaning of the "'V.Explanation1io. Sjectvion 141 sub-section (2), every person who, at the time.the__oifevn'ce,:wa'scommitted, was in-charge of, and is responsible to V if the con'duct..__'of the business of the company, as weii as the company, be deemed. to be guilty of the offence and shaii be iiabie to be fproceedend against. if, as on the date of commission of offence, this if ':'pe.titi.oner not being either in-charge or responsibie to the company for ,.i' the conduct of its business, he cannot be he-id as guilty of offence punishable under Section 138 of the Act.

12. To support his contention, he relied on the da.te'ot"is,s»t,tVet.of cheques and its clishonour in Cr|.P.I\tos.5070/20'Cl':7j', 2826/2008, 2828/2008, 2829/2008, 4433/2068,. 489:0/2:cj'oieI.,'4'aasryieoesV' and 17592009 and submitted that, the res:ignat_i_on'lVof much before the presentation of cheqvues in scrne Vcases*an'd~irt":some"

cases, before the dishonourﬁof cheAqu,e:sz.__ 'T_hus,.as.on date of commission of the offence, the"'p.e'titi,o't--1er?.:was"ttot,:a'trustee, and as such, the learned Magistratewas notv%t.tsttified«E.in"2t.akvi,n'o7cognizance of the offence and further petitioner. He aiso submitted that, 2:325/éoloa, 2827/2008, 3503/2008 and 3504/2:f,:i}ut3--V,V ti1eV"'divsitonour of cheque was before his resignation, will not constitute an offence and when the offence is s_aio'~to haveibeen committed, this petitioner was not faVtr=usteei,..i°Fieiying,.on thevvlproi/isions of the Act and aiso reiying on the "mrtiitelris4u'bmi'tted that, in repiy to the legal notice, the petitioner ' V"-,-has madelliit cle.ari:'ti1'at the petitioner is not a trustee, the minimum that requirecf}.by the complainants was to verify the necessary 'fft:l_oet}:mienit's~r,. to find out as to whether this petitioner is trustee or not or is r__esponsible and in-charge of the affairs of the trust. 5% :5

13. To support his contention, he relied on the reply notice and also relied on amended Trust Deed, resignation and acceptance of resignation and submitted that, accused N033, 5, 6, 7, 8, 9, and 10 have not disputed the resignation and its acceptance. Even accusedwg'tT\1'os.3, 5, 6, 7. 8, 9 and 30 by their letter dated 12.5.2006 have debt and have also informed the complainants that theyriiare for the discharge of the debt. tn view otzthe a'drnis.sion<''byi ' T Nos.3, 5, 6, 7', 8, 9 and 10 and in View of the to the post or trustee and its acCep'tan'ce and trust» deed, as on the date of commission &of"citence;tsneitherthe petitioner was in-charge nor responsible and as such, the complaint as against this petitioner m'isco.nco~ivedV';

14.:,:To he relied on a judgment reported in 2007(2) crrrngs- %%183(S'(3lf~i.n"the'"niatter of S.M_S.PHAFr'MACEUTICAL LTD. ~vs--- ..NEEfA ANOTHER and submitted that, only the ipersorivs.Ai'n--t:harge and re's'p'oVnsible for the conduct of the business of the 'fVfL,t_:Sf'_EiS on the date of the commission of offence atone

-- coutd prosecuted for the alleged offence. He also retied on the Vi°a.,_';'udgment ~ reported in AIR 2009 SC 1013 in the matter of RUKM/NI r§tAaV£*t{An mvs» l/IJA YA SA TARDEKAR AND erases and submitted ____"tnatV;;the High Court in exercise of power under Section 482 of Cr.P.C. V land in the interest of justice and to arrive at a just decision can look into ('@232 g.

.-or °sA.erTHA aAMAMueTH~r' AND ANOTHER the document produced by the accused. He also relied on a decision reported in AIF? 2007 SC 912 in the matter of SAROJ KUMAR PODDAR

-1/s~ STATE (NOT OF DELHI) AND ANOTHER and subr.T.1itie'di..,that, person responsible means, a person, who has signed t_ije"'ch.fequ_e :.a___nd_ submitted that, the petitioner is neither signatory to th.e..c4h'equ'e::rior i1e"is.. person in«charge and responsible for the ofthéébusién-ess_uo£,,_th?e trust.

15. He further submitted that, of offence committed by the company,A----..._h5'ust "t'h.e'v.:p'erson in--charge and responsible for the conduct of..the_ of."tvhogcompany. it is not reproduction of the: Act, but a specific averment in the regard, he relied on the complaints filediivby --f complainants and submitted that, there is no specific and as regards to the persons. who were in~charge land "r'?l5F',:Ons-?_lb3l'e~i"ifor the conduct oi' business of the v,co.inpan\,r"rnuc_h' less allegation' against the petitioner and to support this coritentiion, it.e"~ei'o,o"'treiied on the decision reported in 2007 sAi=2 (cni}irriNA.L) T'5é."'r"n. tiiemetter of K. SH/KANTH SINGH -1/s~ M/SNOB' TH t§AsT 8r§C?£.Jr?laTlL£:"".§ LTD. a ANH. and 2006(6) KLJ 151 (sci in the ...VS..

F?_,_t3,tS;.£V'HAf\/NABASAVARADHYA. Further he relied on a decision reported in (.2005) 8 sec 89 in the matter of ti} 'L, era

--l(1~

8.M.S.PHAf3'MACEUTlCAL8 LTD. «»~«vs-- NEETA BHALLA AND ANOTHER and submitted that, it is not the designation or the status of the parties, but it is the person, who is in--charge and responsiVbie_:'of_ the conduct of the business of the company, which constitutes'a«n"o:ffence,y_ not every Director or the person in the company._.~l~~l»e_:'ialsso-Lre!.ied_on.D another decision reported in (2008) 3 (Q!-4"?l)jj.-citilfiéén' DOM FINANCIAL SERVICES Lv»",l'~'v'H"TED'V"tj1./.§'3- J.f}!.§C%'A.FiEAEN:'; ."/liiirtii. ANOTHER and submitted that, mulstciiearlyllidislclose as regard to the persons in-charge.g_and_«"responsibvE'e.for tnemconduct of the business of the company as onthe of of offence and this being the reqt.eirernent Act without these allegations the specific allegation making eveiyl"'rtr-uisitele'tars;"an:'acc'used"'in"§his complaint is neither in consonance'~~.wit'h"_ 138 nor Section 141 of the Act. And suchxa«._4corriplvaintAprirn.a"'facfe does not constitute any offence, __rror Magistrate' couid.lh'a-veV__ta_l<en the cognizance ot the offence alleged.

--T:o»,tavE€Ve«.cognizance of the offence, the allegation in the l t'».compl--ai.n:t mustmfcoinstitute an offence and once the court takes .co'gnizance' tinder Section 196 of Cr.P.C. before it could register a case process, it must satisfy that there is a prima facie case to ..__procexed against the accused and particularly when the offence alteged is 'punishable under Section 138 of the Act, the complaint must disclose all the ingredients of Section 138 of N.l,Act and if it is Company, the ingredients of Section 141 of N.l.Act. if the ingredients prima facie are not present in the complaint, no offence punishable under Sectionr§r38 of i\t.i.Act could be alleged against the accused and submE't*t--ed;th__at', comptaint as it is read with the material produced,,al'o'n..g ia.a.a_¢, considered in the light of the provisionsizhof Seotivoiiis arid of N.l.Act, it wili not make out any case _agains--tAthi_s petitiioner'. "Pve1tit'i'o,ne;=,Vg having resigned as a Trustee much before the oftence,.'.atie'geVdV to have been constituted, no complaint could.it'a'yevrbeeVrt~fi_led agairist"him.

17. He further submitte,dt-that,.there._m'u'st intention to cheat and the intentionéﬂtov wi:ii,arE,sex amount is not paid, that wouid be ontygoipi iiegial Vnotiice was issued and in repiy to the lega:_:vnotiVc_e responsible, had not made the payment, éntentionyof'"of"'cheating arises and not before that. VOH then'oth,er_____hand, learned Counsei appearing for the A"r_espo'ndents '~¢o.ompiainants submitted that, as per the Trust Deed, the pelt'it~i.oneVr'is"the_»President of the Trust and he being an E><--l\/linister, who V ted the"oth*er. 'trustees, on his promise, the complainants made the and some of them supptied the materiai, when the ':_c'ompl'ain'ants teamt that the protect of medical college is not likeiy to .:,'_"commence and there was no sign of any progress, they doubted the 'bonafides of the accused and insisted for payment, in response to the demand, the accused issued the cheques to the complainants. lt is also submitted that the accused were in--charge and responsible for the conduct of the business of the trust. ln this regard, they reliednonhthe Trust Deed itself and submitted that, under the trust deed, are coilectively responsibie for the conduct of business. management of the Trust in terms of the¥Jdoc:u'men"ts is Trust and under the provisions of tndian:4'f7.rAus--t_zAct,i.g'e'tyfegry' equally in--cinarge and responsible and"s«teVt/ery dvecisionuof is collective decision of the trustees. \/tfh'en*.t.hje'uirlist [)ﬂeed"rr'i'at<es it ctear that all the trustees are responsible of the Trust and the financial transac.tion:s':-opeiiateg@:;th.ith'e"cognsenjtvyivot the President and Secretaty, petiti;o'ne'r_««..being is responsible for the conduct of ithe=tru--st. if

19. _regards__.tojfthe"*-altetged resignation of the petitioner is concerned,tearned._:Ccurisel"'-forvthe respondents seriously disputed the ﬁéaine. this regard';"'they also pointed out that, this Court under Secti"on cannot go into the disputed facts as it requires an i evidence. ltis 'also; submitted that, whether he has resigned or not is a f°a..4matter of eviidence and cannot be gone into at this stage. Apart from ._this, itisalso contended that: offence atleged against the petitioner is not V"-..__"onlyV'gpunishable under Section 138 of N.l.Act, but is also punishable thunder Section 420 of IPC and the dishonest intention is clear from the P' we conduct of the petitioner himself, as he being the President, he induced all the complainants to part with money and the material on the promise that the Medical College will be established and the amount would be paid immediately. When the said institution is not established___despite iapse of several years, when these complainants approaelt.ed~w. the petitioner and other trustees, they had promised that, themedi'cVé1lg:'c_olle.ge.V would be established and in this regard, they also.'pr'omised"tthat, . would pay. It is against their promise, the1..:cheque?s were.'issued;:.___'Assn the date of issue of the cheques, the i-n__tentio""r:. of the was clear". that they were not intended to honourviétheb ptomise. turn to cheat the complainants, with a dish,_o"nest.'lntentii'o«n_,».th'e.y issuedthe cheques, which they were aware that thehcheques :wo--'u'ld bejVd'i--shonoured for want of fund. F.a'Ct*that"j;the«f:é:,; wa"s.,n'o ifundﬂniifhe account and despite that, cheques were 'issued the dishonest intention on the part of all the accusedand,sdbmititedtthat, the averments in the complaint, the .swornstaten*ient and '--the____d_ocuments produced along with the complaint fafcr'e,vdiscto:s'e the offence punishable under Section 138 of l\l.l.Act and Sectifon' of ;

z regards to the reply given by the petitioner, learned '€":eu'rlsel_.éappearing for the complainants submitted that, the amendment of Trustlieed or resignation was only with an intention to see that the upetitiioner escapes the liability. Petitioner himself being the President and it is mainly at his instance, the amounts having been paid to absolve himsetf from the said obligation knowing futlwell that the recovery is not possible otherwise, has issued. the repty to the legal notice,i.,vh'o_we_ver, along with the repty, no such material was produced. 21, To support their case, they also-retied ,on7_a decisionireportned ' in AIF? 2005 so 2506 and submitted that, wh_etherii't'h,e -~aVccusie'd..#ar'e_g responsibte or not, is a matter whichreouigred to be gone in'to'"at"the trial"

and not a case to be considered at they_fhrgeshot.d'. ln'th'is.rega§rd, teamed Counsel referred to the complaintavierrrtrehitsz"a'ndg:submitted that, in the comptaint, a specific attegvationyistriadst'h.at,__acc'used"hlos.2 to 10 in their respective capacity,3..they:'t'a'r'e _.anj_d,responsible for the affairs of the Trust and this the prima facfe case for the offence .138 of N.l.Act. They also relied on a judgment Viiireported' "Supreme 626 in the matter of N.r:2ANoA,criAei'ii';vs«vi§mi=2A'r SANCHAF? MGAM LIMITED and :-',subrrtttte'd-itha-tgnwhether theiitrustees are responsibte or not, it is a matter ofievidencei to be estabtished during the course of the trial ' if '«...v.and not a'tVithisV.stag.e'iVand it is burden on the trustees to prove the same. is._also contended that, even otherwise, the trial court has power to rr_iat{e outhéjase for any other offence based on the atlegation and the rriatieriats. Hence, based on the attegecf documents produced in these if petitions and which are disputed, the proceeding may not be quashed. Y ;

22. The points that arise for consideration in these petitions are:

(7) Whether this Court in exercise of power under Section 482 of Cr.P.C. could go into the question as to whether the person is in-charge and responsible for the conduct.._ot business by considering the disputed document produced in these petitions?

(2) Whether there is prima tacie materiai for :"

punishable under Section 138 of Negotiabie__instrurnents S' Act and Section 420 of i.P.C_? 5 * I

23. in all these criminat petitions, pé'tiAtioi't_er"is aCo_us.e,o .Nc.§:2«.g'h.--d._ he is shown as President of first accused-.7 Trust. V V

24. Facts, which are not_dEspt;itéd=areuthat, theiicornptainants -- respondents had ctairned certain an:o'un.ts;:'fro_rh':the vTr_ust_, alleging that, the Trust is duet't.QAV.AttternVf§:.;t't~ is"-also riot"'in'"dispute that, on behait of the first accused-.5 Trust, "issued to the complainants and they were dishohoured,thereatter.._ 'the~~'i'comptainants had issued notice and for non--pa§yme'i*tt ot the amo_u_nt, the complaints have been tiied. V ailege that the accused No.1 is a Trust and S VH...»accused__No.2:<ipetitiioner herein is the President and other accused are bearers of the Trust. it is not in dispute that the Trust is registered. deedis produced aiong with the complaint. From the deed of trust, V' _i_t_"a'ppears that, one Sreecfhar l\/1.8., sto late Srinivasamurthy S.N.i was _the.author of the Trust, same was registered in the name and style as

-73s "Shivappanayaka institute of Medical Sciences (S/MS) The rectification of Trust Deed was registered on 1.t2.2004, this petitioner was co-opted as Trustee and President of the Trust by the Boagrd of Trustees.

26. Under the terms of the Trust Deed,' Trust'.w'il'i"be:'_ay p'errnanent'= , body and the trustees are collectiveiy responsible for all Tthe"aff'ai:,:~;r,_'_of:.the trust inciuding the financiaf matter.7Tru_st is entitled t.o"iopen_, rn;aintlain:"i. and operate on bank accounts in the'ina_rne.VVof event of trustee vacating the office retirement, death or any other reason, thelegal iraoutd be entitled to become a trustee. trustees' exceed more than 9 members. The properties and affairs of the medical at! the meetings of the Trust shail be called by absence Vice President. At the discretion of the4"Presideynt or tvhef Secretary, any member ot the Trust or "any author§_sed..y_person'may represent Trust in all tegal proceedings. Fromthete.rrns'of:'the trust deed, what appears is that ail the Trustees witl be coltectiveljfyrresponsible for the affairs of the Trust. AA _27... Complainants have alleged that, accused No.1 - Trust aiong y\iith"acciused Nos.2 to 10 have committed an offence punishable under Vi':'~.S.eetion 138 of the Negotiable instruments Act interafia alleging that, " -. «accused Nos.2 to to were in-charge and responsible of the affairs of the Trust and in terms of Section 141 of the Act, they are Eiable for the offence punishabfe under Section 138 of the Act. The learned Magistrate considering the averments made in the compiain.tV'a'rtd_g_the material produced along with the same, has registered _ and has ordered for issue of summons to the accused. '

28. Main contentions raised are as u"ndet'f:_'_'i ~ (1) The petitioner was not a"P_res.ldentr'erVa .Trustee'a--t..th'e time of commission of the offence, _ (2) Complaint being againsgt l_thej_' ._No.t -- Trust, vicarious liability wouldV'a:rise'_onVly against..t§'7e person in.

charge and responsib/eg fofrytneg rcoitduct business of the Trust anti"n4OF3ag--alnst'all'the Trustees.,' (3) As-~on dategof the offence, petitioner had resigne:.:f-«to'"the'office of? President as well as to the post of Trustee' ainci h'e.__is ' not liable for prosecution; (4); 'f'h.-Ls. Court _in'exercise of power under Section 482 of '- C: can interfere with the proceedings by looking into ' -..th'e_Vdocurnents produced by the petitioner to meet the ends"_of_ju~sti"ce,"

V Thvispg Court can quash the proceedings, if the materials .. produced by the complainants prima facie do not it v tconsti'tute an offence and continuing the proceedings wou/d amount to abuse of the process of court and further, defence document could be looked into to secure the ends of justice. i . 3

29. it is not in dispute that the complaint is basically against the accused No.1 -~m Trust and other accused are made iiable vicariousiy, which is akin to the normal criminal proceedings, as theA.a'ccVu'sed.V'ar.e made iiable for the offence committed by the Trust.

30. in case of an offence committe;d'AAby:,the three categories of the person ( '-which"1corn_rnitte;d.u offence; (2) every one, who was in--ch'arr.g_e» and was 'responsible for the business of the company and '{3} anymo_ther__ is Director or Manager or a Secretary or' with whose connivance or due: has committed an offence. in this i't..ji:-sJno.t company registered under the Companies /\c--tV,~ ho:w.e'veri;§:,by o'f'E'xpia§nation to Section 141 of the Negotiable also covered within the meaning of Company.

a.i_j."~Triie Apgex Cioiurfin a judgment rendered by three i-lon'ble "rep'o:rted* 2005(8) SOC 89 in the matter of Z"»..___srvi.s;er¥i'AHn/rA'téi:frj'TrcALs LIMITED -vs- NEETA BHALLA AND ANOTHER' while considering the question as regards to the requirement Vto".conAstiit'u.te an offence punishable under Section 138 by the Company has that, the persons responsible for conduct of business of the company are generally referred as Directors, Managers, Secretaries, c [J 'J:

Managing Directors, etc., and it is not sufficient to simply state in a complaint that a particular person was a director of the company at the time the offence was committed and nothing more. Referring to the role of a Director in a Company under Section 2 ctause the Companies Act, the Apex Court observed that:

" . . . . . . . mere use of a parti'cular designation__oi'--an' officer 9 without more, may not be enough b__v...way of an iai/errnentin a complaint. When the requirement in Section-1'l.4t_fV,'--which' extends the liability to officers of a :Company, is._tha_t' such--.ai1.c_' person should be in charge of and "responsible to they ' company for the conduct of 'business of the cofr_npariy,_how can a person be subjected to liability of cifmirial prosecution without it being at/erred in the complaint that he s}atisfies those requirements. fl"i'.OI every 'p_e'r.so'n_ connected" with a company is made liable tinder Secti'on_'t4 _ Liability is cast on persons who may have =.sornething»...to-. do with the transaction com.plai'ned.of., _A.pe.rson tit/h.o is Iincharge of and responsible _ii::r_ conduct of 'busine,ss._ of a company would naturally know wily thecheoue in._quest."on was issued and why it got di's'i'rono-u":i_jed. __ However, insofar as'Managiing._:Dire~ctor or a Joint Managing Director of the Cotnpany is 4ccncerned,ithe°A'pex Court at para~9 observes as under:

V-'T9? The position eta' 'managing director or a joint managing , ' . director at company may be different. These persons, as * gthe. de_signa.ti'o'n of their office suggests, are in charge of a ._ "-company' are responsible for the conduct of the A gbiusinesssiofirthe company. in order to escape liability such persons -may have to bring their case within the proviso to Section 141(1), that is, they will have to prove that when the _ Vt offense was committed they had no lrnowledde of the V offence or that they exercised all due diligence to prevent the ' '»-commission of the offence."

( underlined by me) This judgment is followed in another judgment reported in (2007) 2 SCC (CR!) 444 in the matter of EVEREST ADVERTISING (P) LTD. --vs-- STATE, GOVT. OF NCT OF DELHI AND OTHERS. By virtue of the office of the Managing Director or the Joint Managing Director,g--"they are deemed to be in charge and responsibte for the conduct of the company.

32. In this case, the Trust Deed disctosesfjthuaat thAe*peti.t'iognVe.ris a ' President and he has been enitru_sted"'wit'h the."'i~*esoo'nsit§gitity' of conducting business meeting. Apartthis, Deed discloses that, it is the collective respo:t1si_bitit3}lot_ithezgtrustees. iricese of a Trust registered under the provisions ot_thi.e_Vlndia_n.:iiT'vir.i;;'st__'Act, all the Trustees are cotlectively respionsible tor Trust. if the Deed of Trust is aione cons:r:Fer_e:d..A it .cle«avrty_sl1ows that, petitioner as a President is in chargeand Tresponsi'b--leV4io_r.the conduct of affairs of the Trust along with other trusteesn '-

' _33..._Howei'ier, the case of the petitioner is that, he was not a PresidentVno'r"_*iTrugstee as on the date of commission of the offence. in this re'g.ard--V4'he "referred to the dates of issue of cheques, dishonour and it notice and reply in respect of Criminal Petition i\ios.507'Oi'20071 gtg~g.5t;7i'r2oo7, 2826/2008, 2828/2008, 2829/2008, 4433/2008, 489012008, O 489ii2008 and 1759/2009. He submitted that, ati the cheques issued to D' these complainants are dated 15.8.2006 and they were dishonoured in February 2007 and November 2006. Legai notices are issued in February 2007, March 2007' and in one case. December 2006. However, in response to the iegai notice. petitioner has caused a reply and in the repiy, he has speoiticaiiy averred that, petitioner is vno..i_on.ger a President of the Trust and on account of enormous irreguE.a'i*i.ti_es;_.ar:d impropriety found in the administration of the said Trust._h'e_ha.s:'tendered'b his resignation on i3.ii.2oos. He aiso aiibeyged"'t_hat,A'he--i.s._;notAy_tvhe signatory to the cheque nor he is resp_onsibieto'r. the"aftairs"ot' the «Trust'.a As far as repiy given by the petitioner 'i's;co»ncerned.J_ _it"di.scio's.esHhis stand as regard to his resignatiori._A_on'.'"tf3."'i andivvfrom the dates mentioned by the iearned Counset toiojthe as regards to the iegal notice issue.d«--.t:;y-.thée.A' corrj'piai.na'nts'_uin "the above mentioned petitions, they'/"rare;é;ubse;:iuen't.to~-the re'sign:ation.

34. zLearned-- Cou_i'n.siei'.._:ia'poearing for the compiainants have seriousiy_disput€:d theyaiieged'"resignation given by the petitioner and :_f"'i\,a_ve Aythaitgﬂ'th--e---«aiieged resignation is produced in these Vpeititiwons». intention to circumvent the iiabéiity. Aiong with these«criminatiiipétitions, the Detitioner has produced addendum to the itteed out dated 12"' November 2006 registered on 22"" November 'vv'h.erein it is stated that the petitioner has resigned from the Board trustees on 13.11.2006 and the Board of Trustees accepted the "-«resignation in a meeting heid on 21.11.2006. However, this addendum to the Deed of Trust is not the part of the record before the learned Magistrate. The material that was available before the teamed Magistrate was a complaint, sworn statement, dishonouredxC'h_e'ques, notice and reply, Reply is given in Aprit 2007 and;subs§>d_uéntty., Question that arises for consideration is, as to whether could, consider these defence documents at this stage 3in'«_ex*er'ci_se.ggoffpotrtier under Section 482 of CLPICH?

35. Magistrate is not required into document at the time of framing of charg'e.:f:tf'teAhfas frame the charge only on the basis otthge pro-s'ecutionV'-ntateri'at.1V".tiofwever, in case of exercise of :Se:c:tion 482 Cr,P.C., the Apex Court SC 128 in the matter of it/I/S.PEPSi m~--vs- SPECIAL JUDICIAL MAGiSTFiA'TE_i1'.ND' OTi¥iEi7t_S;._g:'reférring to the earlier decision of the Apex ceutt tepo}'tettitt- t'e9§2 sftijtap (1) scc 335 in the matter of STATE oi"? HA'r2.irA»N,4 4l>vs-- euajziiii LAL has observed as under:

= it tssettied that High Court can exercise its power of A ,iudicia.i review in criminal matters. in State of Haryana v. Bhajan Lat, 1992 Supp (1) SCC 335, this Court examined the Vextraordinary power under Art.226 of the Constitution is and also the inherent powers under 8.482 of the Code , tit'/i_ht'ch it said could be exercised by the High Court either to "prevent abuse of the process of any Court or otherwise to secure the ends of justice. White iaying down certain guidelines where the Court wiii exercise iurisdicti'on under these provisions, it was atso stated that these guidelines could not be mfiexibie or laying rigid formuiae to be foiloweo'

43. in this case, complainants allege that the petitioner is a President of the Trust. Trust deed discloses that the President is responsible for the affairs of the Trust. By virtue of the office that the petitioner holds, he becomes in-charge and responsible of the conduct of the business of the Trust. The cheque is also issued by is dishonoured and even after the legal notice, the amount These materials are before the learned l\[la'gis't--rate."., 'i_'aci'e.,twhe3se T materials do disclose the offence alleged Slectiicnigi' :38 Section M? of N.l.Act.

44. As far as the resignation,and"the*-.amended--..Tru§st Deed is concerned, no doubt, these doCuz_.nent,s in these petitions, but the complainants"--.__ resoondents_"h§*»r_6' serziioxusly disputed these documentsuandiyxhave the resignation has come into existence after the 'd,iVsfiofrtoui°..,_::o'fr"some of the cheques. ln these circumstances, itiumavy not' be"pro"per for this Court to rely on the disputed and give a rih'd'i'ng.

._ Court can look into the documents or evidence it produced by-..thevd'efence side, to achieve the purpose of securing justice ifH"in4.4'orr.V_Epreventing; the abuse of process of the court. To invoke the there must be clinching and clear material and not on '.,'_4Cl'§s»pu§ted documents. When there is a serious dispute as regard to the "evidence produced by the petitioner, in my opinion, it may not be safe to *6"?

V33.

refy on those documents. if these documents are ignored, I find that the materiat produced along with the comptaints and averments made in the comptaints ,ori'ma facie show the offence atleged.

46. in view of the above circumstances, E am jopvinion the order of the tria! court does not call for t'nte'r«fete'nce;« 9. Accordingly, these petitionsVfai.t_and are d»i'simis:sVed. KNM/~

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