Tmt.Prasannadevi v. State of Tamil Nadu rep by Deputy Superintendent of Police, (Economic Offence Wing), Cuddalore, Cuddalore District

IN THE HIGH COURT OF JUDICATURE AT MADRASDATE: 4.8.2009CORAMTHE HON'BLE MR.JUSTICE M.JEYAPAULCrl.R.C.No.591 of 2009andM.P.No.1of 2009 Tmt. PrasannadeviPetitionervs. State of Tamil Nadu rep by Deputy Superintendent of Police,(Economic Offence Wing),Cuddalore, Cuddalore District. RespondentCriminal Revision Case filed under sections 397 and401 Cr.P.C. to set aside the order of the Special Judge, Chennai under TNPID Act, 1997 made in Crl.M.P.No.5851 of2007 dated 19.5.2009 and discharge the petitioner from the case pending trial in C.C.No.47 of 2006 on the file of the Special Judge, Chennai under TNPID Act, 1997.For petitioner: Mr.S.AyyathuraiFor respondent :Mr.N.Kumanan, Govt. Advocate (Crl. Side)ORDERThe revision is directed by the 7th accused aggrieved by the dismissal of the petition filed under section 239 of the Code of Criminal Procedure seeking to discharge her from the criminal proceedings in C.C.No.47 of 2006.

The revision petitioner ranked as A7 has contended that she had nothing to do with the partnership firm which is facing trial along with the other accused for the offence alleged to have been committed under the Tamil NaduProtection of Interest of Depositors Act, 1997. Thefinancial institution was purely a private business venture of the deceased Balasundaram. She was not a partner. Norwas she involved in the affairs of the financial institution. The statements obtained by the respondent https://hcservices.ecourts.gov.in/hcservices/ police from various witnesses do not make out any offenceas against the petitioner. She has been implicated for the simple reason that she is the wife of the second accusedN.Kanagasabai. Therefore, the petitioner has sought for discharge from the criminal prosecution launched by the respondent.

The respondent has contended that A1 to A8committed default in repayment of deposits and interests to the de facto complainants even after maturity. Thepetitioner ranked as A7 actively participated in the business of the financial establishment inasmuch as she canvassed and collected deposits from the depositors. Itis contended that as she had taken responsibility for the management of the affairs of the financial establishment, she has been charge-sheeted by the respondent police.3. The points that arise for determination is (1)whether the petitioner, who allegedly canvassed for mobilising deposit for the financial institution is liable to answer the charge under section5 of the TNPID Act. (2) Whether the petitioner was responsible for the management of the affairs of the financial institution.

Learned counsel appearing for the petitioner would vehemently submit that the first information report does not disclose that she ever canvassed for mobilising deposits for the financial institution. He would also submit that mere canvassing for the business of the partnership firm will not amount to shouldering the responsibility of the management of the affairs of the financial institution. Therefore, he would submit that the petitioner, who has been roped in for the offence under section 5 of the TNPID Act just because she happened to bethe wife of the second accused is entitled for discharge from the criminal proceedings.

Learned Government Advocate (Criminal Side) would vehemently contend that though the first information report which set the law in motion did not disclose the specific role of the petitioner herein, the other depositors, who lost the money, have spoken to the fact that the petitioner did canvass for mobilising for the financial institution. It is his further submission that the witnesses examined by the respondent police during the course of investigation https://hcservices.ecourts.gov.in/hcservices/ have also spoken to the aforesaid specific role played by the petitioner. Canvassing for deposit for a financial institution would definitely amount to participation in the management of the affairs of the firm. Therefore, he would submit that the petitioner cannot shirk her responsibility in the management of the firm and lawfully seek for discharge.

The first information report, as such, which setthe law in motion, does not disclose the specific roleplayed by the petitioner herein. But, the witnesses examined during the course of investigation under section161 of the Code of Criminal Procedure have specifically spoken to the fact that the petitioner canvassed for deposit for the financial institution. In a police case, the court will have to weigh not only the first information report but also the statements recorded under section 161of the Code of Criminal Procedure to come to know whether any offence was made out against a particular accused. Thestatements recorded from the witnesses by the investigating agency cannot be segregated from the first information report to arrive at a decision as to whether or not a case is made out as against the accused.

The learned counsel appearing for the petitioner referred to the authority in SABITHA RAMAMURTHY v.R.B.S.CHINNABASAVARADHYA ((2006) 10 SCC 581). That was acase arisen under section 138 of the Negotiable InstrumentsAct. In the private complaint lodged by the aggrieved person on dishonour of the cheque, he did not allege that the accused was in charge of and responsible for the conduct of the business of the Company. The statement of the witnesses examined on the side of the complainant also did not speak about the charge that the accused was in charge of the affairs of the business of the Company. Therefore, the Supreme Court held that the requirement of section 141 of the Negotiable Instruments Act, 1881 was not complied with and as a result of which, the criminal proceedings as against the 6th and 8th accused therein were ordered to be quashed.

Here, in this case, though the first information report which set the law in motion did not disclose the specific allegation that the petitioner herein was responsible for the management of the affairs of the financial institution, the statements recorded from various witnesses by the respondent police would indicate that the petitioner canvassed for the deposit for the partnership firm. Therefore, the aforesaid ratio does not apply to the https://hcservices.ecourts.gov.in/hcservices/ facts and circumstances of this case.

It has been held in SRIKANTH SINGH,K. v. NORTH EASTSECURITCS LTD. (2007 (4) CTC 765) as follows:-"It is not in dispute that for showing avicarious liability of a Director of aCompany, upon the complaint it is incumbent to plead that the accused was responsible to the Company for the conduct of the business of the Company. No such allegation having been made in the Complaint Petition, in our opinion, the High Court was not correct in passing the impugned judgment. Theallegation contained in the ComplaintPetition was that all the accusedDirectors participated in the negotiations for obtaining financial help for the accused No.1, which in our opinion, would not give rise to an inference that the appellant was responsible for day-to-day affairs of the Company. "

That was a case arisen under section 138 of the Negotiable Instruments Act. The private complaint procedure is being adhered to while taking cognizance. Further, the Supreme Court has not held therein that the statements of the complainant and the other witnesses examined on his side will have no relevance to decide as to whether any case was made out. But, here, in the instant case, based on the complaint given by the de factocomplainant, investigation was taken up by the respondent police and witnesses were examined. Therefore, as already observed by this court, the first information report cannot be dissected from the statements recorded by the investigating agency from the witnesses. Further, the first information report is not an encyclopaedia which is supposed to contain all the relevant particulars regardinga particular subject.

In view of the above facts and circumstances, the court finds that even if the first information report does not disclose the exact role played by the accused, the accused can be charge-sheeted if the witnesses examined by the prosecuting agency come out with serious allegation disclosing commission of offence. It appears that the prosecuting agency, on the assumption that canvassing spree https://hcservices.ecourts.gov.in/hcservices/ undertaken by the petitioner herein would amount to shouldering the responsibility of the management of the affairs of the firm, laid a charge sheet as against the petitioner also.

The fact remains that the petitioner was not apartner of the partnership firm charged in this case under section 5 of the TNPID Act. The only allegation levelled by the witnesses examined on the side of the prosecuting agency is that the petitioner canvassed for deposits for the financial institution. To invoke the penal provision under section 5 of the TNPID Act, one should shoulder the responsibility of managing the affairs of the financial firm or company. I find that the provision under section 5of the TNPID Act has been drafted very carefully. A person who merely manages the affairs of a firm or a company viz.,Clerks, Accountants, Office Assistants, who are just paid servants would not be responsible for the management in the sense that they are not answerable to the claim made against the financial firm. In other words, a person, who simply manages the affairs of a firm, cannot be said to have taken the responsibility of answering the allegation of mis-management of the affairs of the firm. The Clerks, Accountants and Office Assistants come under the said category. They have been given a role to manage the affairs of the partnership firm, but, they are not responsible for the mis-management of the firm when the same is under challenge by a third party. All the persons who manage the affairs of the financial institution need not necessarily be responsible for the management of the affairs of the institution. What is required under section5 of the TNPID Act is that the person charged should have been responsible for the management of the affairs of the institution. The persons who simply manages the affairs of the financial institution as paid servant fall out theambit and scope of the aforesaid provision of law.

The canvassing agents, as such, cannot be held responsible for the management of the affairs of the firm.A canvassing agent may contribute his mite by mobilising funds for the financial firm on contract basis for payment of brokerage or service charges. But, by no stretch of imagination, we can say that such a person shoulders the responsibility of the management of the affairs of the firm. A canvassing agent gives a rosy picture about the firm to mobilise the deposit. It is only the depositors who shall verify the veracity of such embellished version regarding the performance of a firm and the financial soundness thereof with the person who is responsible for https://hcservices.ecourts.gov.in/hcservices/ the management of the firm and offer his deposit.

Sometimes, all family members, who have nothing todo with the financial bungling of the institution are roped in on the mere allegation that they started canvassing for deposit for the financial institution. Such a practice should be stopped forthwith as otherwise innocent victims just because they happened to be the relatives of the mis-managed financial institution would be roped in and they have to undergo the ordeal of criminal trial.

In view of the above facts and circumstances, the court having deprecated the practice of implicating the innocent relatives of the persons who are responsible for the management of the affairs of the firm, it is held that the Clerks, Accountants and Office Assistants who are working in the financial institution as well as the canvassing agents shall not be prosecuted for the offence under section 5 of the TNPID Act as they do not shoulder the responsibility for the management or mis-management of the affairs of the firm or company. The Trial Court has improperly dismissed the plea of the petitioner for discharge on the ground that there are allegations in the statements recorded by the investigating agency from the witnesses that the petitioner did canvass for the deposit for the financial institution.