Prashant Tyagi vs State of U. P. - 2023 Supreme(All) 2369

Judicial Analysis Court Copy Headnote Facts Arguments Court observation

2023 Supreme(All) 2369

IN THE HIGH COURT OF ALLAHABAD
SADHNA RANI ( THAKUR ), J.
Prashant Tyagi And 2 Others - Applicants
Versus
State of U.P. and Another - Opposite Parties
APPLICATION U/S 482 NO. 11738 OF 2018.
Decided On : 03-04-2023

Advocates appeared:
For the Applicant : Amrendra Nath Rai, Prabhat Kumar, Sanjay Singh.
For the Opposite Party : G.A., Abhinav Gaur, Anoop Trivedi, Vibhu Rai.

Headnote:(A) Negotiable Instruments Act, 1881 - Section 138 - Application to quash summoning order - Summoning order against directors and shareholders of a company without specific allegations of responsibility in the commission of the offence is untenable - The court emphasized that mere shareholder status does not imply liability; active participation is essential. (Paras 22-24)

Facts of the case:
The applicants were summoned in relation to a cheque dishonour case where the cheque was allegedly issued by the company after one applicant resigned, and others were merely shareholders with no direct involvement.

Findings of Court:
The summoning order was quashed as the court found no evidence of the applicants’ active participation in the company’s business during the relevant period.

Issues: Whether the applicants could be summoned under Section 138 when they were not actively involved in the company at the time of the cheque issuance.

Ratio Decidendi: The court ruled that directors or shareholders can only be held liable for offences committed if they were in charge of the business at the time of the offence, affirming that resignation prior to the cheque issuance absolves liability.

Result: Application allowed.

Table of Content
1. application to quash summoning order. (Para 2 , 3 , 4)
2. details of the complaint and prior orders. (Para 5 , 6)
3. counter-affidavit asserting liability of applicants. (Para 7 , 8)
4. arguments regarding knowledge and responsibility. (Para 10 , 11 , 12 , 19)
5. judicial analysis of corporate liability. (Para 13 , 14 , 18 , 20)
6. court's decision on summoning order. (Para 22 , 24)

JUDGMENT

Mrs. Sadhna Rani (Thakur), J.

Heard learned counsel for the applicants, learned counsel for opposite party no.2 and perused the record.

2. By moving this application under Section 482 Cr.P.C., the prayer is made to quash summoning order dated 25.11.2016 passed by the Upper Nyayalaya Pratham, Ghaziabad in C.C. No.71/2016 under Section 138 Negotiable Instruments Act and also to set aside order dated 22.02.2018 passed by the Additional Session Judge, Court No.15, Ghaziabad in Criminal Revision No.30 of 2017.

3. As per facts of the case, a complaint was filed by opposite party no.2 on 13.10.2016 against the applicants and six other persons with the version that opposite party no.2 was a limited Company registered under Companies Act and Vijay Kumar son of late Sri Satpal was authorized to filed complaint on behalf of the Company. The opposite party no.2 was indulged in the business of purchasing, selling and the construction of properties. Opposite party no.1 (in the complaint) M/S C.S.K. Infrastructure Pvt. Ltd. was a registered Company. Opposite parties no.2 to 6 were its Directors and officers and opposite parties no.7 to 9 were the Company's authorized representatives. Opposite party nos.2 to 9 were responsible for all the day to day business and transactions of opposite party no.1, M/S C.S.K. Infrastructure Pvt. Ltd.

4. The opposite parties (in the complaint) had assured the complainant/opposite party no.2 herein that they would make available a land to the complainant/opposite party no.2 at a reasonable price. Having faith in the opposite parties the complainant/ opposite party no.2 on 16.08.2014 paid Rs. 5,00,00,000/- to the opposite parties, which were received by the opposite parties. When as per their assurance the opposite parties could not arrange the land for the complainant/opposite party no.2 and the complainant gave them a threat of lodging FIR, then opposite parties promised to pay Rs. 7,00,00,000/- in pursuance of the principal amount of Rs. 5,00,00,000/- with interest. Opposite parties issued a cheque of Rs.1,00,00,000/- in favour of the complainant/ opposite party no.2. This Cheque No.000286 valued Rs.1,00,00,000/- dated 14.07.2016 got dishonoured despite of the assurance of opposite parties that it would get encashed. The information of which was received by the complainant/opposite party no.2 on 29.08.2016 and after due procedure, a complaint under Section 420 I.P.C. was filed by the complainant/opposite party no.2 against the nine accused persons including the Company itself.

5. After the statements under Sections 200 Cr.P.C. and 202 Cr.P.C., the trial court vide order dated 25.11.2016 summoned all the nine accused persons to face trial under section 138 of Negotiable Instruments Act 1881. Against this order dated 25.11.2016, three of the opposite parties/ present applicants named Prashant Tyagi, Smt. Neeta Tyagi and Smt. Shweta Tyagi, filed a revision before the Sessions Court, which was rejected vide order dated 22.02.2018.

6. Feeling aggrieved by the summoning order dated 25.11.2016 and revisional court's order dated 22.02.2018, the present application has been moved by the applicants Prashant Tyagi, Smt. Neeta Tyagi and Smt. Shweta Tyagi only with the version that the applicant no.1, who was earlier the Director of M/S C.S.K. Infrastructure Pvt. Ltd. had resigned from his post on 26.09.2014, much prior to the issuance of the cheque no.000286 dated 14.07.2016 to the opposite party no.2. He has filed a certified copy of the form DIR-12 (earlier known as Form 32) to this effect. He had neither signed the ch