VIDHYA JAYAPRAKASH A. v. STATE OF KERALA, KOOL HOME BUILDERS PRIVATE LIMITED, TECHNO SKILL ENGINEERS AND CONTRACTORS PRIVATE LIMITED, AND JAYAPRAKASH A.

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT** **THE HONOURABLE MR. JUSTICE R. NARAYANA PISHARADI** **TUESDAY, THE 03RD DAY OF DECEMBER 2019 / 12TH AGRAHAYANA, 1941** ## **Crl.MC.No.6744 OF 2019(C)** **AGAINST THE PROCEEDINGS IN CC 139/2017 OF JUDICIAL MAGISTRATE OF FIRST CLASS-I, ALUVA** ## **PETITIONERS/ACCUSED NO.3:** **VIDHYA JAYAPRAKASH A., AGED 36 YEARS DIRECTOR OF M/S.TECHNOSKILL ENGINEERS AND CONTRACTORS PRIVATE LIMITED, VILANGU P.O., KIZHKKAMBALAM, ERNAKULAM DISTRICT, PIN - 683 561, RESIDING AT ARIMBOOTH HOUSE, KONDIPARAMBA, POONTHAVANAM P.O., MALAPPURAM DISTRICT -679 325.** **BY ADVS. SRI.ANOOP.V.NAIR SHRI.NIKITHA ANTONY** ## **RESPONDENTS/COMPLAINANT/ACCUSED 1 & 2:** - **1 STATE OF KERALA, REP. BY THE PUBLIC PROSECUTOR, HIGH COURT OF KERALA.** - **2 M/S.KOOL HOME BUILDERS PRIVATE LIMITED, HAVING OFFICE AT VI/56, NH 47 BYEPASS, MARADU, KOCHI - 682 304, REPRESENTED BY ITS MANAGER (CORPORATE AFFAIRS) AND AUTHORIZED SIGNATORY SAVEEN ABUBAKER.** - **3 M/S.TECHNOSKILL ENGINEERS AND CONTRACTORS PRIVATE LIMITED, VILANGU (P.O.), KIZHAKKAMBALAM, ERNAKULAM DISTRICT, PINCODE - 683 561.** Crl.M.C.No.6744/2019 2 **4 JAYAPRAKASH A., DIRECTOR OF M/S.TECHNOSKILL ENGINEERS AND CONTRACTORS PRIVATE LIMITED, VILANGU P.O., KIZHAKKAMBALAM, ERNAKULAM DISTRICT PIN - 683 561, RESIDING AT ARIMBOOTH HOUSE, KONDIPARAMBA, POONTHAVANAM P.O., MALAPPURAM DISTRICT -679 325.** **R2 BY ADV. SRI.GOKUL DAS V.V.H. R2 BY ADV. SRI.ABHILASH BHASKAR R2 BY ADV. SRI.BINU JOHN** **SRI C N PRABHAKARAN-SR PP** **THIS CRIMINAL MISC. CASE HAVING BEEN FINALLY HEARD ON 28.11.2019, THE COURT ON 03.12.2019 PASSED THE FOLLOWING:** Crl.M.C.No.6744/2019 3 ## **R.NARAYANA PISHARADI, J** ************************ Crl.M.C.No.6744 of 2019 ---------------------------------------------Dated this the 3[rd] day of December, 2019 ## **O R D E R** This is a petition filed under Section 482 Cr.P.C for quashing the proceedings against the petitioner in the case C.C.No.139/2017 on the file of the Court of the Judicial First Class Magistrate-I, Aluva. 2. The petitioner is the third accused in the aforesaid case. It is a case instituted upon the complaint (Annexure-I) filed by the second respondent for the offence punishable under Section 138 of the Negotiable Instruments Act, 1881 (hereinafter referred to as 'the Act'). 3. The material averments in Annexure-I complaint are as follows: The complainant is a private limited company engaged in the business of construction of buildings. The first accused is also a private limited company. The second and the Crl.M.C.No.6744/2019 4 third accused are actively conducting the business of the first accused company and are also responsible for day to day affairs and the management of the business of the company. An amount of Rs.5,00,000/- was due from the accused to the complainant. On demand for payment of the said amount, the first accused company issued a cheque dated 21.05.2016 for Rs.5,00,000/- to the complainant. When the complainant presented the cheque in the bank, it was returned unpaid with endorsement "funds insufficient”. The complainant sent lawyer notice to all the accused demanding payment of the amount. The accused received the notice. They jointly sent a reply containing facts against truth. They did not pay the amount to the complainant. 4. Heard learned counsel for the petitioner and also the second respondent. 5. Learned counsel for the petitioner has urged the following grounds to quash the proceedings against the petitioner. They are : (1) The cheque was allegedly issued by the second accused, who is the Managing Director of the first accused company. The petitioner has not issued any cheque to Crl.M.C.No.6744/2019 5 the complainant. (2) The petitioner has no connection with the day to day affairs of the first accused company. Therefore, she is not liable to be made an accused in the case. (3) The complaint lacks necessary averments to make the petitioner liable for any act of the first accused company. It is not stated in the complaint how the petitioner, being a Director, is connected with the alleged offence. (4) The cheque was issued as a security and there was no legally enforceable debt due to the complainant. _6. Per contra,_ learned counsel for the second respondent submitted that the complaint contains necessary averments as required under law and that the factual aspects cannot be decided in a petition filed under Section 482 Cr.P.C. 7. Section 141 of the Act deals with offences by the companies. Section 141(1) of the Act states that 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 Crl.M.C.No.6744/2019 6 proceeded against and punished accordingly. ## 8. In **SMS Pharmaceuticals Limited v. Neeta Bhalla :** **AIR 2005 SC 3512** , the Supreme Court has considered the scope of the provision contained in Section 141 of the Act and the following principles have been laid down: (1) It is necessary to specifically aver in a complaint under Section 141 that at the time the offence was committed, the person accused was in charge of, and responsible for the conduct of business of the company. This averment is an essential requirement of Section 141 and has to be made in a complaint. Without this averment being made in a complaint, the requirements of Section 141 cannot be said to be satisfied. (2) Merely being a director of a company is not sufficient to make the person liable under Section 141 of the Act. A director in a company cannot be deemed to be in charge of and responsible to the company for conduct of its business. The requirement of Section 141 of the Act is 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. This has to be averred as a fact as there is no Crl.M.C.No.6744/2019 7 deemed liability of a director in such cases. (3) But, the Managing Director or Joint Managing Director would be admittedly in charge of the company and responsible to the company for conduct of its business. When that is so, holders of such positions in a company become liable under Section 141 of the Act. By virtue of the office they hold as Managing Director or Joint Managing Director, these persons are in charge of and responsible for the conduct of business of the company. Therefore, they get covered under Section 141 of the Act. (4) So far as signatory of a cheque which is dishonoured is concerned, he is clearly responsible for the incriminating act. 9. All decisions, subsequent to **SMS Pharmaceuticals** (supra), on the point were considered by the Apex Court in ## **Gunmala Sales Private Limited v. Anu Mehta : AIR 2015 SC** ## **1072** , and it has been held as follows : _“When in view of the basic averment process is issued the complaint must proceed against the Directors. But, if any Director wants the process to be quashed by filing a petition under Section 482 of the Code on the ground that only a bald averment is made in the_ Crl.M.C.No.6744/2019 8 _complaint and that he is really not concerned with the issuance of the cheque, he must in order to persuade the High Court to quash the process either furnish some sterling uncontrovertible material or acceptable circumstances to substantiate his contention. He must make out a case that making him stand the trial would be abuse of the process of Court. He cannot get the complaint quashed merely on the ground that apart from the basic averment no particulars are given in the complaint about his role, because ordinarily the basic averment would be sufficient to send him to trial and it could be argued that his further role could be brought out in the trial. Quashing of a complaint is a serious matter. Complaint cannot be quashed for the asking. For quashing of a complaint it must be shown that no offence is made out at all against the Director”._ Thereafter, the Apex Court summarised the principles as follows: _“a) Once in a complaint filed under Section 138 read with Section 141 of the N.I. Act the basic averment is made that the Director was in charge of and responsible for the conduct of the business of the company at the relevant time when the offence was committed, the Magistrate can issue_ Crl.M.C.No.6744/2019 9 ## _process against such Director;_ _b) If a petition is filed under Section 482 of the Code for quashing of such a complaint by the Director, the High Court may, in the facts of a particular case, on an overall reading of the complaint, refuse to quash the complaint because the complaint contains the basic averment which is sufficient to make out a case against the Director. c) In the facts of a given case, on an overall reading of the complaint, the High Court may, despite the presence of the basic averment, quash the complaint because of the absence of more particulars about role of the Director in the complaint. It may do so having come across some unimpeachable, uncontrovertible evidence which is beyond suspicion or doubt or totally acceptable circumstances which may clearly indicate that the Director could not have been concerned with the issuance of cheques and asking him to stand the trial would be abuse of the process of the Court. Despite the presence of basic averment, it may come to a conclusion that no case is made out against the Director. Take for instance a case of a Director suffering from a terminal illness who was bedridden at the relevant time or a Director who had resigned long before issuance of cheques. In such cases, if the High Court is convinced that_ Crl.M.C.No.6744/2019 10 _prosecuting such a Director is merely an armtwisting tactics, the High Court may quash the proceedings. It bears repetition to state that to establish such case unimpeachable, uncontrovertible evidence which is beyond suspicion or doubt or some totally acceptable circumstances will have to be brought to the notice of the High Court. Such cases may be few and far between but the possibility of such a case being there cannot be ruled out. In the absence of such evidence or circumstances, complaint cannot be quashed;_ _d) No restriction can be placed on the High Court's powers under Section 482 of the Code. The High Court always uses and must use this power sparingly and with great circumspection to prevent inter alia the abuse of the process of the Court. There are no fixed formulae to be followed by the High Court in this regard and the exercise of this power depends upon the facts and circumstances of each case. The High Court at that stage does not conduct a mini trial or roving inquiry, but, nothing prevents it from taking unimpeachable evidence or totally acceptable circumstances into account which may lead it to conclude that no trial is necessary qua a particular Director”._ 10. Now I shall consider whether the averments in Crl.M.C.No.6744/2019 11 Annexure-I complaint meet the requirements under law to impose vicarious liability upon the petitioner for the offence allegedly committed by the first accused company. 11. Admittedly, the petitioner was a Director of the first accused company at the time of issuing of the cheque. The relevant averments in the complaint, implicating the petitioner for the offence, are as follows: _“The first accused is also a private limited company. The second and the third accused are actively conducting the business of the said company and are also responsible for day to day affairs and management of the business of the said company”._ 12. The averment required to be made under law is that the accused was “in charge of, and was responsible to the company for the conduct of the business of the company”. In my view, the averment in Annexure-I complaint, which is extracted above, substantially amounts to the averment required to be made. Once this basic averment is made in the complaint, it is for the petitioner/accused to produce in this Court sterling, Crl.M.C.No.6744/2019 12 unimpeachable and uncontrovertible evidence which is beyond suspicion to persuade this Court to quash the proceedings against him/her in the case. The petitioner herein has not produced any such sterling, unimpeachable and uncontrovertible material before this Court. It necessarliy follows that the prayer made by her for quashing the proceedings against her in the case cannot be allowed (See **Radha Krishna v. Dasari Deepthi : AIR 2019 SC 2518** ). 13. Annexure-III is the copy of the notice sent by the complainant to the accused. There is a recital in Annexure-III notice as follows: _“That second and third among you are actively conducting the business of the said company and are also responsible for day to day affairs and management of the business of the said company”._ 14. Annexure-IV is the reply notice sent by the accused to Annexure-III notice. In Annexure-IV notice, the aforesaid recital in Annexure-III is not denied. This is another circumstance in favour of the complainant. Crl.M.C.No.6744/2019 13 15. Factual disputes raised by the petitioner that the cheque was issued as security and there was no legally enforceable debt etc cannot be decided in a petition under Section 482 Cr.P.C. They are matters to be proved or disproved by adducing evidence during the trial of the case. 16. The discussion above leads to the conclusion that the prayer in the petition cannot be allowed. Consequently, the petition is dismissed. (sd/-) **R.NARAYANA PISHARADI, JUDGE** jsr Crl.M.C.No.6744/2019 14 ## **APPENDIX** **PETITIONER'S EXHIBITS:** **ANNEXURE I** **TRUE COPY OF THE COMPLAINT SUBMITTED BY THE COMPLAINANT BEFORE THE HON'BLE JFCM COURT-I.** ## **ANNEXURE II** **TRUE COPY OF THE AGREEMENT ENTERED UPON BETWEEN THE COMPLAINANT AND THE 3RD RESPONDENT HEREIN.** ## **ANNEXURE III** **TRUE COPY OF THE LEGAL NOTICE 20/06/2016 SENT BY THE COMPLAINANT TO THE RESPONDENT 3 & 4.** ## **ANNEXURE IV** **TRUE COPY OF THE REPLY NOTICE DATED 05/07/2016 ISSUED BY THE PETITIONER AND THE RESPONDENTS 3 AND 4.** **RESPONDENTS' EXHIBITS : NIL** **TRUE COPY** **PS TO JUDGE**