Judicial Analysis Court Copy Headnote Facts Arguments Court observation

2022 Supreme(Bom) 788

IN THE HIGH COURT OF JUDICATURE AT BOMBAY
N.J. Jamadar, J.
Anil Kumar Singhal & Anr. – Applicants
Versus
State of Maharashtra & Ors. – Respondents
Criminal Application No. 1353 of 2019
Decided On : 19-08-2022

Advocates:
Advocate Appeared:
For the Petitioner: Mr. Aadil Parsurampuria, Ms. Kejeshri Thakar, Mr. Aalam Parsurampuria, Prashant Parsurampuria
For the Respondent: Mr. Ansh Karnawat, Mr. Nikhil Rajani, Ms. Jyoti Sanap, M/s. V. Deshpande Co., Mr. A. R. Patil

The liability of the persons who are sought to be prosecuted by invoking the provisions contained in section 141 of the Act, 1881 is fairly crystallized. The court emphasized the need for basic averments in the complaint to demonstrate the liability of the accused and the absence of peculiar circumstances supported by material of unimpeachable character to demonstrate otherwise.

Headnote:
section 482 - Quashing of Process - Code of Criminal Procedure, 1973 - [NEGOTIABLE INSTRUMENTS ACT, 1881] - 138, 141 - Summary: The court dismissed the application under section 482 of the Code of Criminal Procedure, 1973 seeking to quash the order of issue of process for an offence punishable under section 138 read with 141 of Negotiable Instruments Act, 1881. The court found that the complaint contained basic averments to make out the liability of the applicants and there were no peculiar circumstances supported by material of unimpeachable character to demonstrate that they were not in-charge of or responsible to the conduct of the business of the company at the time of the commission of the offences.
Fact of the Case:

The complainant, a bank, extended financial facilities to the accused company. The accused company defaulted in payment, and the complainant lodged a complaint under section 138 read with 141 of the Act, 1881 against the accused company's directors, including the applicants. The applicants sought to quash the process, claiming they were not in-charge of or responsible for the company's conduct at the time of the alleged offences.
Finding of the Court:

The court found that the complaint contained basic averments to make out the liability of the applicants and there were no peculiar circumstances supported by material of unimpeachable character to demonstrate that they were not in-charge of or responsible to the conduct of the business of the company at the time of the commission of the offences.
Issues: Whether the applicants were in-charge of or responsible for the conduct of the business of the company at the time of the alleged offences.
Ratio Decidendi: The court held that the complaint contained basic averments to make out the liability of the applicants and there were no peculiar circumstances supported by material of unimpeachable character to demonstrate that they were not in-charge of or responsible to the conduct of the business of the company at the time of the commission of the offences.
Final Decision: The application seeking to quash the process was dismissed by the court.

JUDGEMENT :

1. Rule. Rule made returnable forthwith and, with the consent of the counsels for the parties, heard finally.

2. This application under section 482 of the Code of Criminal Procedure, 1973 seeks to quash and set aside the order of issue of process dated 26th June, 2019 for an offence punishable under section 138 read with 141 of Negotiable Instruments Act, 1881 passed by the learned Metropolitan Magistrate, 58th Court, Bandra, Mumbai in CC No. 25/SS/2019, qua the applicants.

3. Shorn of superfluities, the background facts leading to this application, can be stated as under :-

a] Gupta Synthetics Limited (accused No.1) is a company incorporated under the Companies Act, 1956. The applicants herein, Anil Kumar Singhal (accused No.4) and Meenu Maheshwari (accused No.5) are the Directors of Gupta Synthetics Limited (accused No.1), apart from Mohan Gupta (accused No.2) and Prakash Gupta (accused No.3). Avinash Shah (accused No.6) is the company secretary.

b] ING Vysya Bank Limited, which merged with Kotak Mahindra Bank Limited, the complainant herein (“the Bank”) had extended various financial facilities to Gupta Synthetics Limited (accused No.1). A proceeding, Original Application No. 114 of 2012, was filed by ING Vysya Bank Limited before Debt Recovery Tribunal, Mumbai (DRT) for recovery certificate. Post merger of the ING Vysya Bank with Kotak Mahindra Bank, the complainant Bank instituted a Company Petition No. 184 of 2016 in this Court for winding up of Gupta Synthetics Limited (accused No.1).

c] In Original Application No. 114 of 2012 before the DRT consent terms were executed between the complainant and the defendants including accused Nos. 1 to 3. It was inter alia aknowledged that defendants were jointly and severely liable to pay to the complainant a sum of Rs. 45,01,52,126/-. The defendants No. 1 to 5 therein also agreed to pay a sum of Rs. 15,11,00,000/- to the complainant as per the schedule stipulated in paragraph No. 9 of the consent terms from 31st December, 2016 to 31st March, 2020. In accordance with the terms of settlement, post dated cheques were issued under a covering letter dated 21st December, 2016. DRT disposed of the proceedings in accordance with the aforesaid consent terms. Likewise, the Company Petition No. 184 of 2016 also came to be disposed of by the orders dated 10th January, 2017 and 18th January, 2017.

d] The accused No. 1 company committed default in payment of the amounts in accordance with the terms of the settlement. The complainant asserts as of 31st October, 2017 accused No. 1 and guarantors had paid the complainant a sum of Rs. 2,17,81,599/- only. Thereafter, the accused No. 1 made a further payment of Rs. 30 lakhs. Claiming that on account of the default on the part of the accused No. 1 in discharging the liability incurred under the consent terms, the entire claim amount became due and payable, the complainant deposited the cheques bearing No. 000821 drawn for Rs. 25 lakhs payable on 31st August, 2018; No.000841 drawn for Rs.1,40,00,000/- payable on 30th September, 2018; No.000823 drawn for Rs.39 lakhs payable on 31st October, 2018, with its banker, on 15th November, 2018, and No.000824 drawn for Rs. 39 lakhs, on 31st November, 2018. All the cheques were returned un-encashed on account of insufficiency of funds.

e] A demand notice was addressed on 11th December, 2018. It was duly served on accused Nos. 1 to 6 in between 12th October, 2018 to 17th December, 2018. Since the demands therein were not complied with, the complainant was constrained to lodge the complaint. By an order dated 26th June, 2019 the learned Metropolitan Magistrate was persuaded to issue the process against the applicants and the co-accused for an offence punishable under section 138 read with 141 of the Act, 1881.

4. The applicants have invoked the inherent jurisdiction of this Court asserting that the applicants were neither in-charge of nor responsible to the company for the conduct of its business at the time of