High Court
Facts
( 1 ) 16 cri wp 1271.23IN THE HIGH COURT OF JUDICATURE AT BOMBAYBENCH AT AURANGABAD16 CRIMINAL WRIT PETITION NO. 1271 OF 2023Sou. Kanchan Ankush PalveAge: 36 Years, Occ: Business,R/o Shriram, Plot No.91, Aishwarya Nagari,Pipeline Road, Shriram Chowk, Savedi,Ahmednagar....PETITIONERV/s.1. Athare Patil Memorial Hospital &Research Centre Pvt. Ltd., having its registered office at Savedi,Ahmednagar, Through its Managing Director,Dr. Anil Suryabhan AthareAge: 69 Years, Occ: Medical Practitioner,R/o: Opp. Zopadi Canteen,Nagar- Manmad Road, Savedi, Ahmednagar.2.Shri Gautam Swami Hospital & ResearchCentre Private Ltd., having its registered office at, Survey No. 86/A1, Plot No. 91, Aishwarya Nagari, Savedi, Ahmednagar.At present: T.P. No.4 Plot No.47-1, 2, 3, 4Crystal Hospital, Savedi Road, Ahmednagar.3.Shri Gautam Swami Hospital & ResearchCentre Private Ltd., Through its Director,Shri. Ganesh Sarjerao FasaleAge: 34 Years, Occ: Business,R/o: Flat No. 204, om Residency,Opp. Gaikwad Hospital, Tapovan Road,Savedi, Ahmednagar.4.Shri Gautam Swami Hospital & ResearchCentre Private Ltd., through its Director,Dr. Dnyaneshwar Narayan Darade
Legal Reasoning
( 8 ) 16 cri wp 1271.23was followed in Ashutosh Ashok Parasampuriya and Anr. V. Gharrkul Industries Pvt.Ltd. And Others, 2021 SCC OnLine SC 915.8.We find the High Court, in the impugned order to have elaborately discussedthe principles of law in regard to the quashing of such proceedings but, however, notdealt with the factual matrix. Ex facie, we find that the complainant has not placed anymaterials on record indicating complicity of the present appellant(s) in the allegedcrime. Particularly, when the appellant(s) had no role in the issuance of the instrument,which is evident from Form 32 (Exh.P.59) issued much prior to the date on which thecheque was drawn and presented for realisation.”10.In Sunita Palita and Others Vs. Panchami Stone Quarry, AIR 2022SC 3548; 2022 (10) SCC 152, the Hon’ble Supreme Court held that Director ofa company, who was not In-charge or responsible for the conduct of thebusiness of the company at the relevant time, would not be liable under thoseprovisos. As per the decision of the SMS Pharmaceuticals Limited cited(supra), the liability under section 138/141 of the N.I. Act arises from being In-charge of and responsible for the conduct of the business of the company at therelevant time when the offence was committed and not on the basis of merelyholding a designation or office in a company. It would be a travesty of justiceto drag Directors, who may not be even be connected with the issuance of acheque or dishonour thereof, such as Director, (Personnel), Director (HumanResources Development) etc., into criminal proceedings under the N.I. Act, onlybecause of their designation. ( 9 ) 16 cri wp 1271.2311.In Ajay Rampal Sarda Vs. Pankaj Ravilal Shah and another, 2021All M.R. (Cri) 284: 2021 (3) Mh.L.J.(Cri) 50, the Hon’ble Supreme Court heldthat in absence of averments in the complaint under Section 138 that at thetime of commission of an offence, the person accused was in-charge of theconduct of business of the firm and responsible for issuance of cheque. Merelybecause, the applicant was the partner in the partnership firm is not sufficientto make him liable for offence under N.I. Act, particularly, when no specificrole is attributed to the applicant in the complaint. The applicant cannot bedeemed to be in-charge of and responsible for the conduct of the day to dayaffairs of the business. The requirement is that the person sought to be liable,should be in charge of and responsible for the conduct of the business of thefirm at the relevant time. 12.In the case in hand, it prima facie appears that on 01.08.2022, theinstrument involved in the present petition came to be issued, however, thepresent Petitioner/Accused No.3 resigned from the post of Directorship of ShriGautam Swami Hospital & Research Centre Private Ltd., w.e..f 20.08.2021.The Board of Directors of the Respondent No.2/Company accepted resignationof the Petitioner/Accused No.3 and necessary entry has been effected with theRegistrar under the Companies Act prior to issuance of the instrument involvedin the complaint. Therefore, prima facie it appears that on the day of theissuance of the cheque, the present Petitioner/Accused No.3 was not holding ( 10 ) 16 cri wp 1271.23any post in the Respondent No.2/Firm and was also not responsible for thetransaction. Therefore, considering the law laid down in cases cited supra,continuation of proceedings as against the present Petitioner would certainlyamount to abuse of process of law. 13.In view of above discussion, the Writ Petition is hereby allowed.The Complaint bearing SCC No. 7209/2022 only in respect of the presentPetitioner/Accused No.3 pending on the file of the learned Additional CJM(Court No.15), Ahmednagar is hereby quashed and set aside. Consequently, theorder of issuance of process dated 14.12.2022 as far as present Petitioner isconcerned is also quashed and set aside. Accordingly, Rule is made absolute inabove terms. The trial of SCC No. 7209/2022 is hereby expedited. No order asto costs. [Y.G. KHOBRAGADE, J.]mub
Arguments
( 2 ) 16 cri wp 1271.23Age: 45 Years, Occ: Doctor,R/o: Shikshak Colony,Malibabhulgaon, Pathardi, Ahmednagar.5.Shri Gautam Swami Hospital & ResearchCentre Private Ltd., Through its Director,Dr. Jitendra Chaganrao DhavaleAge: 45 Years, Occ: Doctor,R/o: Katorewadi, Kamargaon,Tal: Nagar, Dist: Ahmednagar.6.Shri Gautam Swami Hospital & ResearchCentre Private Ltd., Through its Director,Laxmikant Vinayak PargaonkarAge: 46 Years, Occ: Service,R/o: Gauri, House No. 13/B, AnandbanColony, Pipeline Road, Near BajarangHigh School, Savedi, Ahmednagar.7. Shri Gautam Swami Hospital & ResearchCentre Private Ltd., Through its Director,Dr. Yuraj TakaleAge: 32 Years, Occ: Doctor,R/o: Hanumantgaon, Chikhali,Tal: Aashti, District: Beed...RESPONDENTS.....Mr. Kothari Pratik P. a/w. Ms. Nandini Chittal, Advocate for the PetitionerMr. Vikram R. Dhorde, Advocate for the Respondent No.1Mr. S.R. Zambare, Advocate for the Respondent No.7..…CORAM : Y.G. KHOBRAGADE, J.DATE :06.01.2025ORAL JUDGMENT:-1.Rule. Rule made returnable forthwith. Heard finally with theconsent of both the sides at the stage of admission. ( 3 ) 16 cri wp 1271.232.By the present petition the under Article 226 and 227 of theConstitution of India read with Section 482 of the Cr.P.C., the Petitioner hasprayed for quashment of criminal proceeding bearing SCC No.7209/2022pending on the file of the learned Additional CJM, Ahmednagar (Court No.15)for the offence punishable under Section 138 of the Negotiable InstrumentsAct, 1881.3. The present Petitioner is the Original Accused No.3 and presentRespondent No.1 is the Original Complainant in criminal proceeding bearingSCC No. 7209/2022. For the sake of brevity, the parties to the present petitionare referred in their original capacity.4.Having regard to the submissions canvassed on behalf of both thesides, I have gone through the record. It is a matter of record that chequeNo.064826 was issued on 01.08.2022 for an amount of Rs. 17,80,000/-(Seventeen Lakhs Eighty Thousand Rupees only) drawn on Federal Bank,Branch Ahmednagar in favour of the Complainant from the account of CrystalHospital and Research Centre, which is sister concern firm of Shri GautamSwami Hospital & Research Centre Private Ltd. The present Petitioner/OriginalAccused No.3 was impleaded as one of the Director of Shri Gautam SwamiHospital & Research Centre Private Ltd. The Complainant alleged that otheraccused along with the present Petitioner are Directors of the Shri Gautam ( 4 ) 16 cri wp 1271.23Swami Hospital & Research Centre Private Ltd., which is registered under theprovisions of the Companies Act, 1956.5.The learned counsel appearing for the Petitioner canvassed that on20.08.2021, the present Petitioner/Original Accused No.3 resigned from theDirectorship of the Shri Gautam Swami Hospital & Research Centre Private Ltd.and her resignation was already accepted by the Board of Directors andnecessary entry was already taken by the Registrar under the Companies Act on20.08.2021. The cheque in question has been issued on 01.08.2022 i.e.subsequent to the resignation of the Petitioner from the post of Director.Therefore, continuation of proceeding against the present Petitioner wouldamount to abuse of process of law and the Petitioner is not concerned with theday to day transaction of the Accused-Company, hence, prayed for quashmentof the proceeding as well as the order of issuance of process as against thePetitioner/Accused No. 3.6.To buttress these submissions, the learned counsel appearing forthe Petitioner placed reliance on the case of Pooja Ravinder Devidasani V/s.State of Maharashtra; AIR 205 SC 675, wherein, the Hon’ble Supreme Courthas held in paragraph Nos. 27 to 30 as under:“27. Unfortunately, the High Court did not deal the issue in a properperspective and committed error in dismissing the writ petitions by holdingthat in the Complaints filed by the Respondent No. 2, specific avermentswere made against the appellant. But on the contrary, taking the complaint ( 5 ) 16 cri wp 1271.23as a whole, it can be inferred that in the entire complaint, no specific role isattributed to the appellant in the commission of offence. It is settled law thatto attract a case under Section 141 of the N.I. Act a specific role must havebeen played by a Director of the Company for fastening vicarious liability.But in this case, the appellant was neither a Director of the accusedCompany nor in charge of or involved in the day to day affairs of theCompany at the time of commission of the alleged offence. There is noteven a whisper or shred of evidence on record to show that there is any actcommitted by the appellant from which a reasonable inference can be drawnthat the appellant could be vicariously held liable for the offence with whichshe is charged.28. In the entire complaint, neither the role of the appellant in the affairsof the Company was explained nor in what manner the appellant isresponsible for the conduct of business of the Company, was explained.From the record it appears that the trade finance facility was extended bythe Respondent No. 2 to the default Company during the period from 13thApril, 2008 to 14th October, 2008, against which the Cheques were issuedby the Company which stood dishonored. Much before that on 17thDecember, 2005 the appellant resigned from the Board of Directors. Hence,we have no hesitation to hold that continuation of the criminal proceedingsagainst the appellant under Section 138 read with Section 141 of the N.I.Act is a pure abuse of process of law and it has to be interdicted at thethreshold.29. So far as the Letter of Guarantee is concerned, it gives way for acivil liability which the respondent No. 2-complainant can always pursuethe remedy before the appropriate Court. So, the contention that the chequesin question were issued by virtue of such Letter of Guarantee and hence theappellant is liable under Section 138 read with Section 141 of the N.I. Act,cannot also be accepted in these proceedings.30. Putting the criminal law into motion is not a matter of course. Tosettle the scores between the parties which are more in the nature of a civildispute, the parties cannot be permitted to put the criminal law into motionand Courts cannot be a mere spectator to it. Before a Magistrate takingcognizance of an offence under Section 138/141 of the N.I. Act, making aperson vicariously liable has to ensure strict compliance of the statutoryrequirements. The Superior Courts should maintain purity in theadministration of Justice and should not allow abuse of the process of theCourt. The High Court ought to have quashed the complaint against theappellant which is nothing but a pure abuse of process of law.” ( 6 ) 16 cri wp 1271.237.Per contra, the learned counsel appearing for the RespondentNo.1/Complainant canvassed in vehemence that at the time of issuance of thecheque, present Petitioner was the Director of the Accused/Respondent No.1-Company and was responsible for day to day affairs of the Company, therefore,the present Petitioner was impleaded as Accused No.3. Hence prayed fordismissal of the petition. The learned counsel for the Respondent No.7 hasprayed for passing suitable orders.8.Needless to say that Respondent No.1/ Original Complainant fileda complaint bearing SCC No. 7209/2022 for the offence punishable u/s 138 ofthe Negotiable Instruments Act alleging that the premises constructed on plotNo.47 ad-measuring 30,000 sq.ft was given on lease to Shri Gautam SwamiHospital & Research Centre Pvt. Ltd. Company on certain terms and conditions.On 01.08.2022, a cheque bearing No. 064826 was issued in favour of theRespondent No.1/ Original Complainant for an amount of Rs. 17,80,000/-(Seventeen Lakhs Eighty Thousand Rupees only) drawn on Federal Bank,Branch Ahmednagar for discharge of legal liability. However, said cheque wasreturned unpaid with bank return memo on 06.10.2022. On 21.10.2022, themandatory notice was issued to the accused persons including the Petitioner.After mandatory compliance, complaint under Section 138 of the N.I. Act cameto be instituted. ( 7 ) 16 cri wp 1271.239.In Rajesh Viren Shah Vs. Radington (India) Ltd., 2024 AIR (SCW)1047; 2024 (3) Mh.L.J. 650, the Hon’ble Supreme Court held that since thecheque was issued after acceptance of the resignation of the Appellant-Directorand no allegation is levelled against the Appellant, so merely being a Directorof Company, the Appellant cannot be prosecuted for the offence under Section138 /141 of the N.I. Act, and observed in paragraph Nos.5, 6, 7 and 8 asunder:-“5. Coming to the judicial position, we notice a judgment of this Court in MonabenKetanbhai Shah v. State of Gujarat, (2004) 7 SCC 15 wherein it was observed that:-“The primary responsibility is on the complainant to make necessaryaverments in the complaint so as to make the accused vicariously liable. Forfastening the criminal liability, there is no presumption that every partnerknows about the transaction. The obligation of the appellants to prove that atthe time the offence was committed they were not in charge of and were notresponsible to the firm for the conduct of the business of the firm, would ariseonly when the complainant makes necessary averments in the complaint andestablishes that fact…” 6.A Bench of three learned Judges in S.M.S. Pharmaceuticals Ltd. v. NeetaBhalla and Anr., (2005) 8 SCC 89 observed:-“18. To sum up, there is almost unanimous judicial opinion that necessaryaverments ought to be contained in a complaint before a person can besubjected to criminal process. A clear case should be spelled out in thecomplaint made against the person sought to be made liable. Section 141 of theAct contains the requirements for making a person liable under the saidprovision. That the respondent falls within the parameters of Section 141 has tobe spelled out…” 7.We also notice this Court to have observed, in regards to the exercise of theinherent powers under Section 482, CrPC, in cases involving negotiable instrumentsthat interference would not be called for, in the absence of “some unimpeachable,incontrovertible evidence which is beyond suspicion or doubt or totally acceptablecircumstances which may clearly indicate that the Director could not have beenconcerned with the issuance of cheques and asking him to stand the trial would beabuse of process of Court.” This principle as held in S.M.S. Pharmaceuticals (supra)