Telangana High Court
Mr.Rahul Dasgupta vs The State Of Telangana on 6 June, 2022
Author: K. Lakshman
Bench: K. Lakshman
HON'BLE SRI JUSTICE K. LAKSHMAN
CRIMINAL PETITION No.5879 OF 2018
ORDER:
Heard Mr. D.V. Sitharam Murthy, learned Senior Counsel representing Mr. Ramachandra Rao Gurram, learned counsel for the petitioners, Mr. M.V. Pratap Kumar, learned counsel for respondent Nos.2 and 3 and learned Public Prosecutor appearing on behalf of respondent No.1.
2. This Criminal Petition is filed under Section - 482 of the Code of Criminal Procedure, 1973 (for short 'the Code') to quash the proceedings in C.C. No.165 of 2018 on the file of the XII Additional Chief Metropolitan Magistrate, Hyderabad.
3. The petitioners herein are arraigned as accused Nos.3, 4 and 5 in the said C.C. The offences alleged against them are under Sections - 406, 420, 465, 468 and 471 read with 34 of the Indian Penal Code, 1860 (for short 'IPC').
4. General Power of Attorney Holder of respondent Nos.2 and 3 herein, Mr. Nikhil Baheti, gave a complaint to the Police, CCS, DD, Hyderabad against the petitioners herein and other 2 KL,J Crl. P No.5879 of 2018 accused on 22.12.2016 and the contents of the said complaint are as follows:
i) Respondent Nos.2 and 3 are the shareholders with 13.32% shares each in M/s. Teckbond Laboratories Private Limited, Hyderabad, which is hereinafter referred to as 'the Company'.
ii) The said Company is being managed by the Managing Director and the Director, Mr. T. Bosebabu and Mr.C. Sanjeeva Baba, accused Nos.2 and 1 respectively.
iii) Respondent Nos.2 and 3 have invested in the said Company based on Share Purchase and Shareholders Agreement (SPSHA), dated 27.01.2014 entered among the said Company, respondent Nos.2 and 3 and the Shareholders of the said Company.
iv) As per Clauses - 5.4 and 5.5 of the Company, the Company shall not take any kind of decision by or for and on behalf of the Company whether in the Board Meeting or in the meeting of the shareholder or otherwise, unless and until such decision has been approved by the Investors in writing.
v) Due to the poor and mismanagement of the Board represented by accused Nos.1 and 2, the said Company could not 3 KL,J Crl. P No.5879 of 2018 do the business and thereby its activity was stopped. Therefore, an Extraordinary General Meeting of the Members of the said Company was convened on 16.04.2016, wherein a draft Sale and Purchase Agreement for sale of the assets of the said Company in favour of M/s. Clininvent Research Private Limited, Kolkata (Buyer) was proposed and was approved subject to a minimum sale value of Rs.16.00 Crores.
vi) Pursuant to the said meeting, an Asset Transfer Agreement (ATA) was executed among the Buyer, Company and the Shareholders of the said Company on 24.06.2016. As per the terms of the said agreement, Rs.16.00 Crores is the consideration for sale of entire land, buildings and other movable and immovable assets of the Company. The said agreement was a time bound agreement having 60 days as the time limit (Long Stop Date), by which, both the parties were supposed to fulfill the conditions casted upon each of the parties.
vii) As per the said ATA, both the parties failed in meeting their respective conditions within the Long Stop Date and consequently the said ATA expired on 23.08.2016 resulting in 4 KL,J Crl. P No.5879 of 2018 termination of the Agreement and, therefore, the ATA dated 24.06.2016 and the resolution dated 16.04.2016 stand ineffective.
viii) While so, accused Nos.1 and 2 in collusion with petitioner Nos.1 and 2 herein being Director and Managing Director of M/s. Clininvent Research Private Limited without the consent and knowledge of respondent Nos.2 and 3 herein, transferred the assets of the said Company, knowing fully well that on 01.11.2016, respondent Nos.2 and 3 herein have sent a mail to all the above said parties informing that they should take prior consent of respondent Nos.2 and 3 herein to proceed with the transaction and that they refused to sign for extending time by a supplementary agreement.
ix) Without obtaining written consent and without amending the ATA, accused No.1 executed a registered sale deed on 01.11.2016 in favour of M/s. Clininvent Research Private Limited in respect of the land admeasuring Acs.4.30 guntas out of total extent of Acs.7.7½ guntas for Rs.4,10,93,000/- and the same was registered on 03.11.2016 i.e., after receipt of the email sent by respondent Nos.2 and 3 herein. This is purely a fraud conducted 5 KL,J Crl. P No.5879 of 2018 by accused Nos.1 and 2 in connivance with petitioner Nos.1 and 2 herein. The said document was brought into existence by altering the original resolution without any authority and by producing as if accused No.1 has power to register the sale deed.
x) The said document was brought into existence without the consent and knowledge of respondent Nos.2 and 3 by playing a mischief so as to cheat them knowing the fact fully well that it will not create any absolute title to the purchaser except to cause loss to respondent Nos.2 and 3 and their intention was to conciliate the property being valuable security to make use of the same before the Authorities and the Banks to obtain loan and to manage the property. Thus, the said sale deed is a forged document, and all the accused including the petitioners herein have committed aforesaid the offences.
5. With the aforesaid allegations, he requested the police to take necessary action against the accused including the petitioners herein.
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6. On receipt of the said complaint, the Police have registered a case in Crime No.272 of 2016 under Sections - 420, 406, 465, 468 and 471 read with 34 of IPC, and proceeded with investigation.
7. During the course of investigation, the police have examined as many as 14 witnesses of which, LW.1 is the complainant, LWs.2 and 3 are the eye-witnesses, respondent Nos.2 and 3 herein, LWs.4 to 12 are circumstantial witnesses and LWs.13 and 14 are the panch witnesses. After collecting the material and recording the statements of the witnesses, the police have filed charge sheet against accused Nos.1 to 5, which includes the petitioners herein for the aforesaid offences. The same was taken on file vide C.C. No.165 of 2018 by the learned XII Additional Chief Metropolitan Magistrate, Hyderabad for the aforesaid offences and proceeded with trial.
8. While the things stood thus, the petitioners herein, who are accused Nos.3 to 5 in the said C.C., filed the present criminal petition to quash the proceedings in the said C.C. against them. 7
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9. Mr. D.V. Sitharam Murthy, learned senior counsel appearing on behalf of the petitioners would submit that the petitioners herein are only employees of the Purchaser - M/s. Clininvent Research Private Limited and the Asset purchase was not done by them in their personal capacity, as such, there can be no personal liability on them. He would further submit that when respondent Nos.2 and 3 intend to proceed against any Officer of the Purchaser, it is essential to make requisite allegations to constitute vicarious liability as held by the Hon'ble Supreme Court in Sharad Kumar Sanghi v. Sangita Rane1 and Sunil Bharti Mittal v. Central Bureau of Investigation2.
i) Learned senior counsel would further submit that the main contention of respondent Nos.2 and 3 is that there was a breach of contract, more particularly Clauses - 5.4 and 5.5 of SPSHA and the same cannot give rise to criminal prosecution for cheating. The charge sheet fails to make out a case that the petitioners herein had a dishonest intention at the very beginning of the transaction between the Purchaser and the Company. In 1 . (2015) 12 SCC 781 2 . (2015) 4 SCC 609 8 KL,J Crl. P No.5879 of 2018 support of the same, he has relied on the decision in Hridaya Ranjan v. State of Bohar3.
ii) He would further submit that transfer of asset was effected after the approval of all the shareholders including respondent Nos.2 and 3 herein on 16.04.2016 and thereafter, the ATA was also executed among the Company, Purchase and the Shareholders of M/s. Teckbond on 24.06.2016. Further, as per the agreement, there was a long stop date fixed for getting no due certificates from creditors. Subsequently, at the request of the Company, the date was sought to be extended. Thus, the completion of transaction after the expiry of long stop date and waiver of requirement for getting no due certificate etc., are purely contractual in nature. More so, it was solely the responsibility of the shareholders and the Company to fulfill the conditions precedent and that the requirement of a stipulation for a long stop date was actually for the benefit of the purchaser, to take a decision as to withdraw from the agreement or not, upon fulfillment / non- fulfillment of the conditions precedent.
3 . AIR 2000 SC 2341 9 KL,J Crl. P No.5879 of 2018
iii) Learned senior counsel would also submit that in the Extraordinary General Body Meeting dated 16.04.2016, the shareholders have given the power to accused No.1 to negotiate, settle the terms and conditions and the most advantageous price subject to a minimum of Rs.16.00 Crores for sale of the Company's property bearing Sy.Nos.168, 170A, 170AA, 173/1 and 171/1A, situated at Anantharam Village, Jinnaram Mandal, Medak District, having an area of Acs.7.5 guntas and to sign and execute the requisite sale agreement, sale deed and such other documents as may be found necessary, modify and amend the documents so executed where necessary and present the documents so signed by him on behalf of the Company for registration before the Registrar or Sub-Register of Assurances and admit execution of the documents and do all such other acts, deeds and things as are incidental or consequential thereto. Further, Clause 18.4 of the ATA allows the amendment to come into force when it is executed in writing by both the parties. In view of the same, there is no requirement for obtaining consent of the shareholders to amend the terms of ATA.
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iv) He would further submit that the allegation that accused Nos.1 and 2 without consent and knowledge of respondent Nos.2 and 3 herein in collusion with the petitioners herein sold out the assets of the Company to M/s. Clininvent Research Private Limited by creating two false letters extending the Long Stop Date is incorrect and contrary to the legal evidence. None of the witnesses examined by the police would speak on the said aspect. Further, ATA contains an arbitration clause and the allegations made by respondent Nos.2 and 3 would amount to shareholders' dispute under Companies Act which needs to be adjudicated by NCLT. Respondent Nos.2 and 3 herein have already approached the NCLT by filing C.P. No.5/241/HDB/2017 against the petitioners herein and accused Nos.1 and 2 and the NCLT vide order dated 11.02.2020 rejected the claim made by them. This one circumstance is enough to come to a conclusion that there was no cheating, forgery or fabrication of documents etc., as alleged by respondent Nos.2 and 3.
v) The learned senior counsel would further submit that the contents of the charge sheet would not attract the offences under 11 KL,J Crl. P No.5879 of 2018 IPC and at the most the same would come under the provisions of the Companies Act which respondent Nos.2 and 3 had already availed vide C.P. No.5/241/HDB/2017 and became unsuccessful. The Investigating Officer has not conducted the investigation properly.
vi) With the aforesaid submissions, he sought to quash the proceedings against the petitioners in the aforesaid C.C.
10. On the other hand, Mr. M.V. Pratap Kumar, learned counsel for respondent Nos.2 and 3, would submit that there are specific allegations against the petitioners herein and the role played by them in the commission of offences is also specifically mentioned. The Investigating Officer has collected the material and recorded the statements of the witnesses under Section - 161 of the Cr.P.C. and then only filed the charge sheet. The learned Magistrate having gone through the contents of the charge sheet and having found prima facie case against the petitioners herein and other accused with regard to the commission of offences, took the cognizance of the aforesaid offences and issued summons. Further, the defences taken by the petitioners cannot be considered 12 KL,J Crl. P No.5879 of 2018 at this stage in a petition filed under Section - 482 of the Cr.P.C. and the same have to be tried and decided by the trial Court after full-fledged trial. With the said submissions, he sought to dismiss the criminal petition.
11. Learned Public Prosecutor would contend that after receipt of the complaint and on registration of FIR, the Investigating Officer has conducted investigation. During the course of investigation, he had collected the material and recorded the statements of the witnesses under Section - 161 of the Cr.P.C. The Investigating Officer has considered all the aspects and then only filed the charge sheet against the petitioners and other accused for the aforesaid offences. With the said submissions, he sought to dismiss the criminal petition.
12. In view of the aforesaid rival submissions, it is not in dispute that respondent Nos.2 and 3 are the shareholders of the said Company having 13.32% shares each. It is also not in dispute that the said Company and respondent Nos.2 and 3 had passed a resolution to sell the property of the Company to M/s. Clininvent Research Private Limited. The only dispute that was raised by 13 KL,J Crl. P No.5879 of 2018 respondent Nos.2 and 3 in their complaint is that accused including the petitioners herein did not adhere to the terms and conditions of the ATA dated 24.06.2016 for the reason that in ATA it was mentioned about Long Stop Date i.e., by 22.08.2016, the entire process with regard to the sale of assets of the Company to M/s. Clininvent Research Private Limited should have been completed. In case, the said process could not be completed by the said date, the said agreement would stand terminated. The accused did not complete the said sale process by the Long Stop Date, and there was no extension of Long Stop Date. In view of the same, transfer of the assets of the Company in favour of the Purchaser is nothing but illegal. According to the learned senior counsel, all the said contentions raised by respondent Nos.2 and 3 before the NCLT were rejected in C.P. No.5/241/HDB/2017 vide order dated 11.02.2020.
13. Further, the allegation that the accused did not adhere to the terms and conditions of ATA dated 24.06.2016, whether the Company had obtained the consent of respondent Nos.2 and 3 for extension of Long Stop Date after its expiry, whether the sale 14 KL,J Crl. P No.5879 of 2018 process was done in terms of the said ATA dated 24.06.2016 and that the accused never forged and fabricated any document, much less the resolution and that the petitioners herein are only employees of the Purchaser Company and they did not do anything in their personal capacity etc., are all triable issues which are to be adjudicated by the trial Court after full-fledged trial, but not by this Court in a petition filed under Section - 482 of the Cr.P.C.
14. In a given set of facts and circumstances, a contractual dispute, apart from giving rise to cause of action for seeking remedy under Companies Act, may also involve the criminal acts. The nature and scope of civil proceedings are different from criminal proceedings and mere fact that complaint relates to a company's transaction or breach of contract for which a civil remedy is availed, is not by itself a ground to quash the criminal proceedings. The only test which has to be adopted is to find out as to whether the allegations in the complaint disclose the criminal offence or not.
15. In support of his contentions, learned Senior Counsel has relied upon the following decisions:
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i) In Hridaya Ranjan Pd. Verma3 rendered by the Apex Court, the accused did not disclose to the complainant that one of their brothers had filed a partition suit which was pending as on the date of execution of sale deeds by them in favour of the complainant in respect of the property. The facts of the said case are totally different to the facts of the case on hand and the said decision does not helpful to the petitioners.
ii) In Sushil Sethi v. The State of Arunachal Pradesh4 rendered by the Apex Court, the accused provided inferior quality material in contravention with the provisions of the contract which stipulated specific percentages of nickel and chromium to be used.
Then, the complainant lodged a complaint on which, the Investigating Officer examined the case and filed the charge sheet. In the said case, the accused therein alleged that they were not aware about the filing of the FIR and the charge sheet against them till the year 2017 and on being aware of the FIR and the charge sheet, they preferred a petition under Section - 482 of the Cr.P.C. In the present case, it is not the case of the petitioners herein that they were unaware of the criminal proceedings initiated by 16 KL,J Crl. P No.5879 of 2018 respondent Nos.2 and 3 herein. The facts of the said case are different to the case on hand and, therefore, this decision is not helpful to the petitioners herein.
iii) In Ashok Giri v. State5 rendered by the Madras High Court, the accused while working in the complainant's company, M/s. Vaishnovi Infrastructure Engineering Private Limited, looked after the Accounts Administration, Income Tax, Bank Job, New Auditors, Customers, Suppliers and ERP New Software etc. The accused misappropriated the money illegally for his personal benefits and that the Company was irregular in repaying to Vijaya Bank for the credit facilities availed, for which personal property of the complainant was given as security. Accused did not show the accounts to the complainant. On verification, it was found that several charges were made against the properties of the company without any valid resolution of the company. Thus, the accused therein committed the offence of falsifying accounts, mismanagement, cheating and misappropriation. Thus, the facts of the said case are also different from the facts of the case on hand 4 . (2020) 3 SCC 240 5 . 2019-2-LW (Crl.) 712 17 KL,J Crl. P No.5879 of 2018 and, therefore, this decision is not helpful to the case of the petitioners, and so also the decision in Doraisamy v. The State6.
iv) In Mitesh Kumar J. Sha v. The State of Karnataka7, a Joint Development Agreement for developing a particular property with the accused company was executed and therefore, a General Power of Attorney was also executed apart from Supplementary Agreement specifying their respective shares in undivided area and super built up area. Further, MOU was entered into by the complainant with the builder company. Thereafter, as some disputes arose between them, the complainant revoked the GPA on the ground that the Company did not adhere to the terms of the Joint Development Agreement and then initiated criminal proceedings. The facts of the said case are not akin to the facts of the present case and, therefore, the said decision is also not helpful to the petitioners herein.
16. As stated above, prima facie, there are specific allegations made by respondent Nos.2 and 3 in their complaint and the Investigating Officer having conducted investigation by 6 . 2019 (3) MLJ (Crl) 60 18 KL,J Crl. P No.5879 of 2018 collecting the material and recording the statements of the witnesses under Section - 161 of the Cr.P.C. and considering the same, filed the charge sheet. Truthfulness or otherwise of the allegations are not fit to be gone into at this stage as it is always a matter of trial as held by the Hon'ble Supreme Court in Kamal Shivaji Pokarnekar v. The State of Maharashtra8, wherein the Apex Court has categorically held that quashing criminal proceedings was called for only in a case where complaint did not disclose any offence, or was frivolous, vexatious, or oppressive. If allegations set out in complaint did not constitute offence of which cognizance had been taken by Magistrate, it was open to the High Court to quash the same. It was not necessary that, a meticulous analysis of case should be done before trial to find out whether the case would end in conviction or acquittal. If it appeared on a reading of the complaint and consideration of allegations therein, in light of the statement made on oath that the ingredients of the offence are disclosed, there would be no justification for the High Court to interfere. The defences that might be available, or facts/aspects which when established during trial, might lead to 7 . 2021 (2) ALD (Crl.) 719 19 KL,J Crl. P No.5879 of 2018 acquittal, were not grounds for quashing a complaint at the threshold. At that stage, the only relevant question was whether averments in the complaint spell out ingredients of a criminal offence or not. The Court has to consider whether complaint discloses any prima facie offences that were alleged against the respondents. Correctness or otherwise of the said allegations has to be decided only during trial. At the initial stage of issuance of process, it was not open to Courts to stifle proceedings by entering into merits of the contentions made on behalf of the accused. Criminal complaints could not be quashed only on the ground that, allegations made therein appear to be of a civil nature. If ingredients of offence alleged against Accused were prima facie made out in complaint, criminal proceeding shall not be interdicted.
17. In Skoda Auto Volkswagen India Private Limited v. The State of Uttar Pradesh9, the Apex Court referring to the earlier judgments rendered by it has categorically held that the High Courts in exercise of its inherent powers under Section - 482 8 . AIR 2019 SC 847 9 . AIR 2021 SC 931 20 KL,J Crl. P No.5879 of 2018 of Cr.P.C has to quash the proceedings in criminal cases in rarest of rare cases with extreme caution.
18. Moreover, the petitioners herein have not made out any ground to quash the proceedings in the aforesaid C.C. Thus, the present petition is devoid of merits and the same is liable to be dismissed.
19. The present Criminal Petition is accordingly dismissed. As a sequel thereto, Miscellaneous Petitions, if any, pending in the Criminal Petition stand closed.
____________________ K. LAKSHMAN, J th 6 June, 2022 Mgr