Francis Vaidyan's Ayurveda Vaidyasala Pvt. Ltd. v. State of Kerala and ABS Channel Plus Visual Media Advertising Private Ltd

## **`IN THE HIGH COURT OF KERALA AT ERNAKULAM`** ## **`PRESENT`** ## **`THE HONOURABLE MRS. JUSTICE MARY JOSEPH`** ## **`WEDNESDAY, THE 9[TH] DAY OF MARCH 2022 / 18TH PHALGUNA, 1943`** ## **`CRL.MC NO. 1644 OF 2015`** ``` IN S.T.NO.5783/2014 OF JUDICIAL FIRST CLASS MAGISTRATE COURT-II, ALUVA ``` ## **`PETITIONERS/ACCUSED 1 TO 3:`** - `1 FRANCIS VAIDYAN'S AYURVEDA VAIDYASALA PVT LTD. NO.III/22513, KUZHUR P.O., MALA-680 734, REPRESENTED BY FRANCIS PAUL KANDAMKULATHY, AGED 37 YEARS, S/O.PAULOSE, MANAGING DIRECTOR, FRANCIS VAIDYAN'S AYURVEDA VAIDYASALA PVT. LTD, NO.III/22513, KUZHUR P.O., MALA-680 734.` - `2 FRANICS PAUL KANDAMKULATHY,AGED 37 YEARS, S/O POULOSE, MANAGING DIRECTOR, FRANCIS VAIDYAN'S AYURVEDA VAIDYASALA PVT.LTD, NO.III/22513,KUZHUR P.O.,MALA-680 734.` - `3 SIJI ABRAHAM,AGED 35 YEARS, W/O.FRANCIS PAUL KANDAMKULATHY, DIRECTOR, FRANCIS VAIDYAN'S AYURVEDA VAIDYASALA PVT.LTD, NO.III/22513, KUZHUR P.O., MALA-680 734. BY ADVS.SRI.P.G.SURESH SRI.HARISH VASUDEVAN SRI.RAJAN VISHNURAJ SRI.G.SUDHEER THURAVOOR` ## **`RESPONDENTS:`** ``` 1STATE OF KERALA REPRESENTED THROUGH THE PUBLIC PROSECUTOR, HIGH COURT OF KERALA,ERNAKULAM-682 031. 2ABS CHANNEL PLUS VISUAL MEDIA ADVERTISING PRIVATE LTD, SAI SADAN, MUSIYUM ROAD, CHEMBUKKAVU, THRISSUR, REISTERED PRIVATE LIMITED COMPANY REPRESENTED BY ITS MANAGING DIRECTOR, SATHEESH, AGED 40 YEARS, S/O.BALAN, ATHIKAI HOUSE, MUDICODE, P.O.PATTIKAD, THRISSUR DISTRICT. R2 BY ADVS. SRI.E.VIJIN KARTHIK SRI.BIJU KURIAKOSE VALLAPPILLY R1 BY SMT C.SEENA, PUBLIC PROSECUTOR ``` ``` THIS CRIMINAL MISC. CASE HAVING COME UP FOR ADMISSION ON 09.03.2022, ALONG WITH Crl.MC.1645/2015, THE COURT ON THE SAME DAY PASSED THE FOLLOWING: ``` Crl.M.C.Nos.1644 & 1645 of 2015 ``` 2 ``` ## **`IN THE HIGH COURT OF KERALA AT ERNAKULAM`** ## **`PRESENT`** ## **`THE HONOURABLE MRS. JUSTICE MARY JOSEPH`** ## **`WEDNESDAY, THE 9[TH] DAY OF MARCH 2022 / 18TH PHALGUNA, 1943`** ## **`CRL.MC NO. 1645 OF 2015`** ## **`IN S.T.NO.5998/2014 OF JUDICIAL FIRST CLASS MAGISTRATE COURT- II, ALUVA`** ## **`PETITIONER/ACCUSED 1 TO 3:`** - `1 FRANCIS VAIDYAN'S AYURVEDA VAIDYASALA PVT. LTD, NO.III/22513, KUZHUR P.O., MALA-680 734, REPRESENTED BY FRANCIS PAUL KANDAMKULATHY, AGED 37 YEARS, S/O.POULOSE, MANAGING DIRECTOR, FRANCIS VAIDYAN'S AYURVEDA VAIDYASALA PVT. LTD , NO.III/22513, KUZHUR P.O., MALA-680 734.` - `2 FRANICS PAUL KANDAMKULATHY, AGED 37 YEARS, S/O POULOSE, MANAGING DIRECTOR, FRANCIS VAIDYAN'S AYURVEDA VAIDYASALA PVT. LTD, NO.III/22513, KUZHUR P.O., MALA-680 734.` - `3 SIJI ABRAHAM, AGED 35 YEARS, W/O.FRANICS PAUL KANDAMKULATHY DIRECTOR, FRANCIS VAIDYAN'S AYURVEDA VAIDYASALA PVT. LTD , NO.III/22513, KUZHUR P.O., MALA-680 734.` ``` BY ADVS. SRI.P.G.SURESH SRI.HARISH VASUDEVAN SRI.RAJAN VISHNURAJ SRI.G.SUDHEER THURAVOOR ``` ## **`RESPONDENTS/COMPLAINANT:`** - `1 STATE OF KERALA, REP. THROUGH THE PUBLIC PROSECUTOR, HIGH COURT OF KERALA, ERNAKULAM-682 031.` - `2 ABS CHANNEL PLUS VISUAL MEDIA ADVERTISING PRIVATE LTD SAI SADAN, MUSIYUM ROAD, CHEMBUKKAVU, THRISSUR, REISTERED PRIVATE LIMITED COMPANY REPRESENTED BY ITS MANAGING DIRECTOR, SATHEESH, AGED 40 YEARS, S/O.BALAN, ATHIKAI HOUSE, MUDICODE, P.O.PATTIKAD, THRISSUR DISTRICT-680 652.` ``` R1 BY SMT C.SEENA, PUBLIC PROSECUTOR ``` ``` THIS CRIMINAL MISC. CASE HAVING COME UP FOR ADMISSION ON 09.03.2022, ALONG WITH Crl.MC.1644/2015, THE COURT ON THE SAME DAY PASSED THE FOLLOWING: ``` Crl.M.C.Nos.1644 & 1645 of 2015 ``` 3 ``` ## **ORDER** ## **Dated this the 09[th] day of March, 2022.** These petitions are filed under Section 482 of the Code of Criminal Procedure, 1973 (for short ‘the Cr.P.C’) seeking to quash two prosecutions launched by the 2[nd] respondent and pending as S.T.No.5783/2014 and S.T.No.5998/2014, on the files of Judicial First Class Magistrate Court No.II, Aluva (for short ‘the court below’). 2. In Crl.M.C.No.1644/2015, though a counsel has laid vakkalath for the 2[nd] respondent and his name was shown in the cause title, despite grant of several postings for hearing, the counsel concerned failed to turn up to argue the matter. 3. The contention of the learned counsel for the petitioners was that the Company was alleged as the first accused and in the cause title it was shown as represented by Siji Abraham in her capacity as Managing Director. Sri.Francis Paul Kandamkulathy was also arrayed in his capacity as Director Crl.M.C.Nos.1644 & 1645 of 2015 ``` 4 ``` of the 1[st] accused. The learned counsel has invited this Court’s attention to Annexure A3 which is FORM 32 filed before the Registrar of Companies to contend that Smt.Siji Abraham though shown in the complaint as representing the 1[st] accused company in her capacity as the Managing Director, she was not so, but only a Director of the Company. According to the learned counsel, the 2[nd] petitioner was the Managing Director of the Company at the relevant time. But instead of showing him as representing the Company, he was shown as the 3[rd] accused in his capacity as a partner of the Company. The learned counsel has also drawn this Court’s attention to the averments in the complaint and submitted that nowhere in the complaint, the role of the above persons in the affairs of the Company or their liability in the matter of issuance of the disputed cheques are described. He has read Section 141 N I Act to substantiate his contention that the Company having not been represented by it’s true Managing Director and for want of pleadings in the complaint about the position he held with reference to the Company and his involvement in the affairs of the Company, the Crl.M.C.Nos.1644 & 1645 of 2015 ``` 5 ``` ## complaint is liable to fail. ## Section 141 NI Act is apposite reference here: ## “ — **141. Offences by companies.** (1) If the person committing an offence under section 138 is a company, every person who, at the time the offence was committed, was in charge of, and was responsible to the company for the conduct of the business of the company, as well as the company, shall be deemed to be guilty of the offence and shall be liable to be proceeded against and punished accordingly: Provided that nothing contained in this sub-section shall render any person liable to punishment if he proves that the offence was committed without his knowledge, or that he had exercised all due diligence to prevent the commission of such offence: Provided further that where a person is nominated as a Director of a company by virtue of his holding any office or employment in the Central Government or State Government or a financial corporation owned or controlled by the Central Government or the State Government, as the case may be, he shall not be liable for prosecution under this Chapter. (2) Notwithstanding anything contained in sub-section (1), where any offence under this Act has been committed by a company and it is proved that the offence has been committed with the consent or connivance of, or is attributable to, any neglect on the part of, any director, manager, secretary or other officer of the company, such director, manager, secretary or other officer shall also be Crl.M.C.Nos.1644 & 1645 of 2015 ``` 6 ``` deemed to be guilty of that offence and shall be liable to be proceeded against and punished accordingly. Explanation.—For the purposes of this section, — (a) “company” means any body corporate and includes a firm or other association of individuals; and - (b) “director”, in relation to a firm, means a partner in the firm.” Therefore when a Company, firm or association of individuals is established as committed an offences under Section 138 N I Act, the Company and every person who was in charge of and was responsible for the conduct of the business of the Company shall be deemed to be guilty of the offence and shall be proceeded against and punished accordingly. Therefore prime requirement to fasten criminal liability under Section 138 NI Act on any person in charge of and responsible for the conduct of the business of the Company is to establish that the Company, firm or association of individuals was primarily responsible for the said offence. What follows from a reading of Section 141 NI Act was that unless and until it is established that the juristic person referred to commits the offence under Section 138 of the NI Act, other person referred to in Section 141 NI Act cannot be Crl.M.C.Nos.1644 & 1645 of 2015 ``` 7 ``` proceeded against, summoned, prosecuted or convicted for the offence. Therefore, to proceed against the persons referred to under Section 141 NI Act, those persons must be shown in the cause list of the complaint with specific reference to the official capacity respectively held by them in the Company. Therefore, evenif a person holds some official capacity in the Company, his address furnished in the cause title of the complaint if omits to refer about the official post held by the person in the company but his personal address alone is shown, he cannot be made liable for the offence, evenif the Company, firm or association of individuals as the case may be, is found guilty of the offence under Section 138 NI Act. Or in other words, for the deeming provision under Section 141 NI Act to be attracted, the juristic person shall be arraigned as accused first and the persons in charge of or responsible to the Company for the conduct of the business of the Company shall also be arraigned as accused in the complaint in their official representative capacity with reference to the Company. Crl.M.C.Nos.1644 & 1645 of 2015 ``` 8 ``` 4. Therefore, not only the official representative capacity of the parties sought to be prosecuted must be shown in the complaint, but also the manner in which those persons were in charge of and responsible for the conduct of the business of the Company at the relevant time of the transaction which caused the issuance of the cheque for a monetary liability and factum of dishonour of the disputed cheque must also be described in the complaint. In order to avail the benefit of the deeming provision under Section 141 NI Act the complainant must have to aver in the complaint in specific terms that the official representative sought to be made liable for the offence committed by the Company under Section 138 NI Act, in his capacity as such, was in charge of and responsible to the Company for the conduct of it’s business, at the relevant time, the liability has arisen. 5. Without an averment of the nature being incorporated in the complaint filed under Section 142 read with Section 141 NI Act, the prosecution will not be successful. Only if officials were in charge of and responsible for the conduct of the business of the Company at the relevant time when the disputed cheque was Crl.M.C.Nos.1644 & 1645 of 2015 ``` 9 ``` issued and bounced, then alone the complainant can seek for a prosecution under Section 138 NI Act against them. It is also the burden of the complainant in such cases to establish that the official representative of the Company was holding charge of the business of the Company and was responsible for the conduct of the business of the Company. 6. It is noticed that the complaint was taken on file of the court sufficiently earlier and the accused entered appearance only on summons being served on them. Petitions on hand are preferred by the accused thereafter. Amendment to incorporate material aspects liable to change the very nature of the complaint is impermissible under law after cognizance is taken and accused appeared on summons being served on him. 7. Apart from the above the petitioners relied on a copy of FORM 32 containing particulars of appointment of Managing Director, Directors, Manager and Secretary and the changes among them or consent of candidate to act as a Managing Director or Director or Manager or Secretary of a Company and/or undertaking to take and pay for qualification shares, Crl.M.C.Nos.1644 & 1645 of 2015 ``` 10 ``` which is produced alongwith the petitions on hand as Annexure A3 wherein Mrs.Siji Abraham who represents the Company in the prosecutions as Managing Director was shown only as a partner of the Company, appointed with effect from 27.01.2012. Petitioners have also produced a photocopy of the certified true copy of the resolution passed at the meeting of the Board of Directors of Francis Ayurveda Vaidyasala Pvt.Ltd at the registered office of the Company at Mala on 20.01.2012, alongwith the petition on hand as Annexure A4, wherefrom it is revealed that Mr.Francis Paul K, Director of the Company has consented to act as the new Managing Director of the Company and the Company resolved to appoint him as such with effect from 21.01.2012. Complaints to launch the prosecutions are filed in the year 2014. 8. Mr.Francis Paul K being the Managing Director of 1[st] accused Company as on the date of transaction alleged by the complainant, the Company, the prime accused, ought to have been represented by him in his capacity as the Managing Director of the Company. But, in the complaint the Company Crl.M.C.Nos.1644 & 1645 of 2015 ``` 11 ``` was represented by Mrs.Siji Abraham as it’s Managing Director, who at the relevant time of transaction was only a director of the Company. Therefore, the complainant failed to array the officials in their true officiating capacities. The 3[rd] accused as per the complaint ought to have been shown as representing the Company in his capacity as Managing Director and the 2[nd] accused ought to have been shown as the director of the company in accordance with their capacities as such in the year, 2014. The circumstances projected undoubtedly would defeat the prosecution case. ## 9. In **Kuruvilla K Thomas v. State of Kerala and Others** [2019 (5) KHC 458] relied on by the learned counsel for the petitioners this Court has already held: “7. Annexure A1, does not incorporate a recital that the petitioner herein was in charge of and was responsible to the company for the conduct of its business. In S.M.S Pharmaceuticals Ltd supra, the Apex Court has dealt with the essential requirements of S. 141 N I Act and held that it is necessary to specifically aver in the complaint under S. 142 read with S.141 N I Act that at the time when the offence was committed the person arrayed as accused was in charge of and responsible for the conduct of business of the company. The Court has also held that the person sought to be made liable should be in charge of and responsible for the conduct of the business of the company at the relevant time. In Gunmala Sales Private Ltd. supra, the Apex Court has Crl.M.C.Nos.1644 & 1645 of 2015 ``` 12 ``` held that when a company is arrayed as an accused in a prosecution under S.138 read with S.141 N I Act, a basic averment must be there that the person representing the company was in charge of and responsible to the company for the conduct of the business of the company at the relevant time when the offence was committed.” (emphasis supplied) This Court has observed in the judgment above that a recital that the respondents therein were in charge of and responsible to the Company for the conduct of the business, if not incorporated in the complaint the essential requirements under Section 141 NI Act cannot be said to have been complied with. Only when the role of the person arrayed as accused in their respective capacities were shown in the complaint, the prosecution under Section 138 NI Act can be successfully culminated. In the case on hand, not only that the official status of the petitioners are shown wrongly in the complaint but also averments regarding the role played by them in the respective capacities in the conduct of the Company were not recited in the complaint and in that context, both Crl.M.C’s are only to be allowed. The complaints lodged to launch prosecutions are only to fail. Crl.M.C.Nos.1644 & 1645 of 2015 ``` 13 ``` 10. Prosecutions filed by the 2[nd] respondent and taken on file by Judicial First Class Magistrate Court No.II, Aluva and pending on it’s file as S.T.No.5783/2014 and 5998/2014 are only to fail for the reasons. In the result, Crl.M.Cs are allowed. Prosecutions registered on the files of Judicial First Class Magistrate Court No.II, Aluva and pending there as S.T.Nos.5783/2014 and 5998/2014 are quashed. Sd/- **MARY JOSEPH** **JUDGE** NAB Crl.M.C.Nos.1644 & 1645 of 2015 ``` 14 ``` ## **`APPENDIX OF CRL.MC 1644/2015`** ``` PETITIONER’S ANNEXURES: ``` ``` ANNEXURE-A1 ``` ``` THE CERTIFIED COPY OF THE COMPLAINT FILED BY THE COMPLAINT AS S.T.NO.5783/2014 BEFORE THE HONOURABLE JUDICIAL FIRST CLASS MAGISTRATE COURT NO.II, ALUVA. ``` ``` ANNEXURE-A2 ``` - `THE TRUE COPY OF THE CHEQUE FOR RS.1,60,967/- BEARING NO.411304 DATED 22.09.2012 OF THE STATE BANK OF TRAVANCORE, ERNAKULAM BRANCH.` - `ANNEXURE-A3` ``` THE TRUE COPY OF THE RELEVANT PAGE OF THE FORM 32 ISSUED FROM THE REGISTRAR OF COMPANIES STATING THAT THE 3RD PETITIONER IS APPOINTED AS THE DIRECTOR OF THE COMPANY. ``` - `ANNEXURE-A4` - `THE TRUE COPY OF THE RESOLUTION PASSED AT THE MEETING OF THE BOARD OF DIRECTORS OF THE 1ST PETITIONER COMPANY DATED 20.01.2012.` ``` RESPONDENT’S ANNEXURES:NIL ``` Crl.M.C.Nos.1644 & 1645 of 2015 ``` 15 ``` ## **`APPENDIX OF CRL.MC 1645/2015`** ``` PETITIONER’S ANNEXURES: ``` ``` ANNEXURE A1THE CERTIFIED COPY OF THE COMPLAINT FILED BY THE COMPLAINT AS ST NO.5998/2014 BEFORE THE HONOURABLE JUDICIAL FIRST CLASS MAGISTRATE COURT NO.II, ALUVA. ``` - `ANNEXURE A2 THE TRUE COPY OF THE CHEQUE FOR RS.1,60,967/- BEARING NO.411306 DATED 29.09.2012 OF THE STATE BANK OF TRAVANCORE, ERNAKULAM BRANCH.` ``` ANNEXURE A3 ``` - `THE TRUE COPY OF THE RELEVANT PAGE OF THE FORM 32 ISSUED FROM THE REGISTRAR OF COMPANIES STATING THAT THE 3RD PETITIONER IS APPOINTED AS THE DIRECTOR OF THE COMPANY.` - `ANNEXURE A4` - `THE TRUE COPY OF THE RESOLUTION PASSED AT THE MEETING OF THE BOARD OF DIRECTORS OF THE 1ST PETITIONER COMPANY DATED 20.01.2012.` ``` RESPONDENT’S ANNEXURES:NIL ``` ``` //TRUE COPY// ``` ``` P A TO JUDGE ```