Kiran Sharma & others v. State of Kerala & Hindustan Lubricants Co. Pvt. Ltd.

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE V.K.MOHANAN FRIDAY, THE 8TH AUGUST 2008 / 17TH SRAVANA 1930 **Crl.MC.No. 3774 of 2005 (B)** (CC.494/2004 of JUDL.MAGISTRATE OF FIRST CLASS-II, ERNAKULAM) .................... PETITIONERS/ACCUSED NOS.2,3,8,9,10,11: --------------------------------------------------- 1. MRS.KIRAN SHARMA, MANAGING DIRECTOR, CHAILESH ENTERPRISES PVT. LTD., W/O.MR.SUDHIR KUMAR SHARMA, FLAT NO.509, `VARS FANTASY', NO.33, 10TH MAIN, KODIHALLI, INDIRA NAGAR, BANBALORE. 2. MR.SUDHIR KUMAR SHARMA, CHAIRMAN, CHAILESH ENTERPRISES PVT. LTD., FLAT NO.509. `VARS FANTASY', NO.33, 10TH MAIN, KODIHALLI, INDIRA NAGAR, BANGALORE. 3. DR. P.SUDHA, DIRECTOR, CHAILESH ENTERPRISES PVT. LTD., W/O.MR.RAMKRUPA, NO. 64, MITHILA, MARUTHI LAYOUT, VIJAYA NAGAR, BANGALORE. 4. MR.TOMY SEBASTIAN, DIRECTOR, CHAILESH ENTERPRISES PVT. LTD., FLAT NO.571, `VARS FANTASY', NO.33, 10TH MAIN, KODIHALLI, INDIRA NAGAR, BANGALORE. 5. MRS. ROSEY SEBASTIAN, DIRECTOR, CHAILESH ENTERPRISES PVT. LTD., W/O.MR.TOMY SEBASTIAN, FLAT NO.571, `VARS FANTASY' NO.33, 10TH MAIN, KODIHALLI, INDIRA NAGAR, BANGALORE. CRL.M.C.NO.3774 OF 2005 :-2-: 6. MS.MELANIC SEBASTIAN, DIRECTOR, CHAILESH ENTERPRISES PVT. LTD., D/O.MR. TOMY SEBASTIAN, FLAT NO.571, `VARS FANTASY', NO.33, 10TH MAIN, KODIHALLY, INDIRA NAGAR, BANGALORE. BY ADV. SRI.S.RAJEEV ## RESPONDENTS/COMPLAINANTS: ---------------------------------------- 1. STATE OF KERALA, REPRESENTED BY THE PUBLIC PROSECUTOR, HIGH COURT OF KERALA, ERNAKULAM. 2. M/S.HINDUSTAN LUBRICANTS CO.PVT.LTD., REGISTERED OFFIE : IIND FLOOR, CORPORATION BUS STAND BUILDING, KALOOR, ERNAKULAM-682 018, A LTD. COMPANY, REPRESENTED BY ITS DULY AUTHORISED REPRESENTATIVE, MR.PRASAD.P.NAYAR, DY.GEN.MANGAR,(ADMN.)OF THE COMPANY. R1 BY PUBLIC PROSECUTOR SRI.THOMAS JOHN AMBOOKAN. SRI.P.VIJAYA BHANU FOR R2 SRI.PRASUN.S FOR R2 SRI.P.A.MOHAMMED SHAH FOR R2 THIS CRIMINAL MISC. CASE HAVING BEEN FINALLY HEARD ON 08/08/2008, THE COURT ON THE SAME DAY PASSED THE FOLLOWING: ## **V.K.MOHANAN, J.** ## **--------------------------------------------Crl.M.C.No.3774 of 2005 B --------------------------------------------Dated this the 8[th] day of August, 2008** ## **O R D E R** The accused Nos.2,3,8,9,10 and 11 in C.C.No.494 of 2004 pending before the Judicial Magistrate of First Class-II, Ernakulam are the petitioners before this Court under Section 482 of the Cr.P.C. with a prayer to quash all the proceedings in the above case. 2. The case of the petitioners can be summarised as follows:- The petitioners are members of the Director Board of the first accused – company. There was an agreement between the first accused-company and the second respondent-complainant-company regarding the dealership of Qwait-oil and it is alleged that the first accused company indebted to the second respondentcompany a total sum of Rs.22,56,372/- and towards the part payment of the said debt, the first accused company had issued a cheque dated 15.7.2003 which is produced along with this M.C. as Annxure-III for a sum of Rs.17 lakhs in favour of the complainant-company. The said **Crl.M.C. NO.3774 of 2005** ## **:-2-:** cheque was dishonoured for the reason that account was closed. Therefore, the complainant-company preferred Annexure-I complaint before the court below whereupon the court below took cognisance for the offences punishable under Sections 34,417 and 420 of the Indian Penal Code and instituted C.C.No.494 of 2004. It is the said case sought to be quashed in these proceedings. 3. I have heard the learned counsel for the petitioners as well as the second respondent and also the Public Prosecutor. 4. Reiterating the contention raised in this Crl.M.C., the learned counsel submitted that except the vague and general allegations against the petitioners, there is no specific allegation against the petitioners to attract any of the ingredients of the section of the offences raised against the petitioners. In order to substantiate the above contention, the learned counsel took me through Annexure-I complaint. According to the counsel, the main allegations are only against first accused company and certain other Directors who were ## **Crl.M.C. NO.3774 of 2005** ## **:-3-:** shown as accused Nos.2,3,4,5,6,7 and 8. According to counsel, the allegations against the accused are not sufficient to prosecute them for the offences mentioned in the complaint. It is also the case of counsel for the petitioners that though in the complaint, mention was made in general against all accused, absolutely there is no allegation, not even mentioned the name of accused Nos.9,10,11 anywhere in the complaint and no overt act is alleged against them. Therefore, according to the counsel for the petitioners, the complaint against the petitioners will not lie and the court below has committed wrong in taking cognisance against the petitioners and therefore, the complaint is liable to be dismissed as far as it is against the petitioners. 5. Per contra, the learned counsel for the second respondent submits that there are sufficient averments in the complaint against all the accused and to convince this Court, the learned counsel invited my attention to the averments contained in paragraphs 8,9 and 10 of the complaint. In support of her contention, that since the ## **Crl.M.C. NO.3774 of 2005** ## **:-4-:** petitioners are members of the Board of Directors of first accused company, no specific allegation is necessary, she very much relied upon the decision of this Court in **Mammootti** v. **Rajaji Mathew Thomas** reported in 2006(3) KLT 335. 6. I have carefully considered the rival contentions advanced by both the counsel and closely perused the documents and materials available on record. There is no dispute regarding the circumstances which led to the filing of Annexure-I complaint. It is the specific case of the petitioners which reiterated by the counsel that there is no specific averment and no avert act alleged against the accused/petitioners in order to attract any of the offences raised against the petitioners. In fact, the second respondent filed a complaint with certain allegations of the commission of offence of criminal conspiracy, but the the court below took cognisance only for the offences under Sections 34,417 and 420 of the I.P.C. Now, the present petition is preferred by the petitioners who are accused **Crl.M.C. NO.3774 of 2005** ## **:-5-:** Nos.2,3,8,9,10 and 11 in the case pending before the court below. The contention of the petitioners as well as the counsel for them is to the effect that as there is no specific contention or allegation against the petitioners, the cognisance taken by the court below is wrong and the continuation of the proceedings will amount to abuse of process of the court. I am unable to accept the entire contentions especially, with respect to petitioners, who are accused Nos.2,3 to 8. In paragraph 4 of the complaint, it is alleged that the complainant was earlier made believe that accused Nos.4 to 7 are the Directors and they are managing the business of the first accused company and the fifth accused is the Managing Director. It is also averred in para 5 of the complaint that Accused Nos.5 and 6 represented to the complainant that there will be sufficient fund in the Bank account to honour the cheque at the time of presentation of the cheque and the cheque was issued upon such assertion by accused 5 and 6. It is also mentioned in para 5 that a legal notice was sent to accused Nos.1 and 4 to 7. In paragraph 8 of the ## **Crl.M.C. NO.3774 of 2005** ## **:-6-:** complaint, it is further submitted that with deliberate intention to cheat the complainant, the fifth accused on behalf of the first accused issued a cheque signed by him to the complainant as part of their criminal conspiracy and common intention. It is also the case of the complainant that the complainant came to know that the accused Nos.2 to 8 are close relatives also. But simply for the reason that the accused are close relatives, no criminal liability can be fastened against them. But, in the case of Accused Nos.9,10 and 11, nothing is alleged to show meeting of minds. On going through paragraph 9 of the complaint, it is seen stated that the complainant accepted the cheque as per the representations of 5th and 6th accused on behalf of the 1st accused company. It is also the case of the complainant that the signatory of the cheque is ceased to be a Director and the account of the accused No.1 is closed, and had the said fact been disclosed to the complainant without suppression, the complainant would not have accepted the cheque. It is further alleged in the very same paragraph of the **Crl.M.C. NO.3774 of 2005** ## **:-7-:** complaint that the complainant believes that all accused above named conspired together to cheat the complainant and deliberately with fraudulent intentions made arrangements to resign accused No.5, signatory to the cheque and accused No.6 from the Directorship of the company before the presentation of the cheque and some new persons were made to enter in the Director Board of company and deliberately with fraudulent and dishonest intentions closed the bank account of the first accused company as per their criminal conspiracy and common intention. Hence, it is specifically submitted that even now fifth and six accused are managing the business of the first accused. In para 10, it is also stated that accused Nos.2 and 3 are respectively the present Managing Director and the Chairman of the first accused company and accused Nos.9 to 11 are the newly appointed Directors. The accused Nos.4,7 and 8 are also present Directors of the first accused company. Therefore, the complainant is aware of the fact that accused Nos.9 to 11 are newly inducted Directors and ## **Crl.M.C. NO.3774 of 2005** ## **:-8-:** they were not the Directors of the company at the time of the alleged transaction. Therefore, especially when the complainant admits that accused Nos.9 to 11 were not members of the company at the time of the alleged transaction, it is incumbent on the complainant to specifically plead their role in the commission of the offences, if any. 7. From the above quoted allegations contained in Annexure-I complaint, it is clear that absolutely there is no allegation against accused Nos.9,10 and 11 who are the petitioners 4,5 and 6 herein. It is also clear that regarding the actual transaction and overt act, the complainant was very particular to raise such overt act against such person responsible for the overt act and wherever necessary, specific allegations are raised with respect to those accused. Paragraph 9 contained the general allegation against all the accused. For convenience, the same is quoted again which runs as follows:- ## **Crl.M.C. NO.3774 of 2005** ## **:-9-:** “9...................................................................The complainant believes that all accused above named conspired together to cheat the complainant and deliberately with fraudulent intentions made arrangements to resign the accused No.5, signatory to the cheque and the accused No.6 from the Directorship of the company before the presentation of the cheque and some new persons were made to enter in the director board of the company and deliberately with fraufulent and dishonest intentions closed the bank account of the 1 st accused company as per their criminal conspiracy and common intention...........” (emphasis supplied) From the above, it can be seen that except against accused Nos.2, 3 and 8 among the petitioners, there is no allegation against accused 9,10,11 who are petitioners 4,5 and 6. The complainant is very much aware of the fact that certain Directors were inducted and certain others were allowed to go out from the affairs of the company. To attract any penal liability against accused Nos.9,10 and 11, no factual averments are made in the complaint as to when the cheque was presented, when the accused Nos.9,10 and 11 were ## **Crl.M.C. NO.3774 of 2005** ## **:-10-:** inducted to the company and the others were allowed to go out. Therefore, mere vague and general allegations that there was common intention and conspiracy to cheat the complainant, are not sufficient to attract penal liability against accused 9,10 and 11. It is also relevant to note that though certain allegations to attribute offence under Section 120B are raised in the complaint, in the complaint itself, sections of offences limited to Sections 34,417 and 420 of I.P.C. and there is no request to proceed against the accused for the commission of offence under Section 120B of the I.P.C. The above fact itself is sufficient to show that the complainant itself was not particular and not sticking on the allegations. Since the complainant admits that Accused Nos.9 to 11 are admitted as members after the alleged transaction, it is an unshifted burden on the complainant to specifically plead the role, if any, played by the above accused. Therefore, according to me, there is no proper and sufficient allegation against accused Nos.9,10 and 11 who are petitioner Nos.4,5 and 6 in this ## **Crl.M.C. NO.3774 of 2005** ## **:-11-:** Crl.M.C. to take cognisance against them under Sections 34,417 and 420 of I.P.C. 8. Learned counsel for the complainant, the **'** second respondent, on the strength of the **Mammootti s case** (cited supra) submitted that being the members of the Director Board of the first accused company, no specific allegations are necessary to prosecute them for the offences alleged against them. I have gone through the decision cited supra. In the said decision, this Court had held that “ **in the absence of any statutory provision, it is not possible to limit the liability of the Directors who are in charge of and responsible to the company for the conduct of the business so far as it relates to the prosecution for publication of defamatory statement by a Company......** ”. So the facts involved in the above case are entirely different from the present one. Even in prosecution for the offence under Section 138 of the N.I.Act, the settled position of law is that unless there is specific allegation regarding the role of the Director Board with respect to ## **Crl.M.C. NO.3774 of 2005** ## **:-12-:** the running of the company, no complaint will lie against those Directors. As pointed out by learned counsel for the petitioners, under Section 138, a statutory liability can be fixed only with the help of Section 141 of the N.I.Act. But in the present case, the allegation is with respect to the commission of certain offences under the provisions of the Indian Penal Code. Therefore, the role of each accused in the commission of offence is to be pleaded specifically and the overt act also should be stated separately. Therefore, if such pleadings or allegations are absent, it cannot be said that ingredients of alleged offences are constituted. The requirement of such specific pleadings assumes more relevance and importance in the particular facts and circumstances of the present case, especially when the complaint contains the specific allegation with respect to the other accused. Since there is no vicarious penal liability or statutory offence, specific pleadings of allegations with respect to each accused are absolutely necessary. In the case on hand, the complainant admits and aware that accused ## **Crl.M.C. NO.3774 of 2005** ## **:-13-:** Nos.9 to 11 have become the members of the Director Board of the 1[st] accused-company after the alleged transaction, and therefore, in the absence of specific pleadings regarding the role of those accused, no penal liability can be fastened against them. Therefore, the decision relied on by counsel for the second respondentcomplainant is not helpful for it to save the complaint against accused Nos.9,10 and 11, considering the particular facts involved in this case. 9. In the light of the above facts and circumstances, I am of the view that the complaint does not disclose any offence against accused Nos.9,10 and 11 who are petitioners 4,5 and 6 in this Crl.M.C. and therefore, the continuation of the proceedings against them in the court below will amount to abuse of process of the court and therefore, the complaint and the proceedings to the extent it is against accused Nos.9,10 and 11 who are petitioners 4,5 and 6 herein are quashed. ## **Crl.M.C. NO.3774 of 2005** **==> picture [37 x 9] intentionally omitted <==** The Crl.M.C. is allowed in favour of petitioners 4,5 and 6 and the same is dismissed as against other petitioners. sd/- **V.K.Mohanan, Judge** MBS/ -True Copy- P.A.to Judge. ## **Crl.M.C. NO.3774 of 2005** **:-15-:** **V.K.MOHANAN, J.** -------------------------------------------Crl.R.P.NO. OF 200 -------------------------------------------O R D E R DATED: -6-2008 ## **Crl.M.C. NO.3774 of 2005** **:-16-:**