The main legal point established in the judgment is that criminal proceedings cannot be used to settle civil disputes, and vicarious liability of directors requires specific averments showing their involvement in the alleged offences.

ORDER :

With a prayer to quash the proceedings that are pending against the petitioners in Crime No.376 of 2012 of Langer House Police Station, the present quash petition is filed invoking Section 482 Cr.P.C. The petitioners are arrayed as accused 1 to 5 in the First Information Report. The contents of the First Information Report also reveals that basing on the complaint filed by the 2nd respondent herein, who is a Senior Manager in Enso Secutrack Limited, against the petitioners herein before the Court of VI Additional Chief Metropolitan Magistrate, Nampally, the Criminal law was set into motion.

2. The complaint given was forwarded to the Station House Officer, Langer House Police Station, for investigation and report, whereby the case was registered.

3. Heard the submission of Sri Sharad Sanghi, who appeared for the petitioners. Also, heard the submission of Sri P.Krishna Reddy, who appeared for the 2nd respondent/de facto complainant. Further heard the submission of learned Assistant Public Prosecutor who represented the 1st respondent. In the light of the factual scenario as referred supra and the relief sought for, the point that emerges for consideration is,

Whether there exists any justifiable grounds to invoke the power granted under Section 482 Cr.P.C. and to quash the proceedings that are pending against the petitioners in Crime No.376 of 2012 of Langer House Police Station, Hyderabad, as prayed for.

4. The case of the 2nd respondent (hereinafter be referred as “the complainant”) is that, it is a Company duly incorporated under the Indian Companies Act, 1956 and is engaged in the business of manufacturing and trading of Cash Counting Machines, Cash Registering Machines, Electronic Security Systems, etc. There exists business relationship between the complainant and the petitioners (all the petitioners hereinafter be referred as “the accused”) since long time. The 1st accused used to supply machines from time to time basing upon the requirement and order placed by the complainant. The complainant used to send blank cheques without mentioning the date and amount. Sometimes, the complainant used to send cheques by mentioning only amount but without mentioning date. Taking advantage of the same, the accused played fraud. The complainant ordered some machines and while ordering those machines, it forwarded two cheques bearing Nos.164651 and 164652 drawn on ICICI Bank, Hyderabad. In addition to that, the complainant paid Rs.26,70,690/- and also transferred a sum of Rs.25,00,000/-. Further, there was an advance amount of Rs.1,70,690/- which was lying with the accused. However, the 1st accused, all of a sudden, raised invoices in the name of the complainant for a sum of Rs.1,49,17,500/- and Rs.89,00,000/- totaling Rs.2,38,17,500/-. The complainant received the same through courier. The said invoices were acknowledged by one of the Directors by name Sri Hanuman Mal Tater. By making false promise, the accused got the invoices signed. But indeed, no machines were delivered to the complainant. These acts clearly demonstrate that the accused’s company intentionally took signature of the Director only to cheat the complainant. The 1st accused sent a communication to the complainant indicating that it is going to present the cheques. Immediately, the complainant sent a mail to the accused No.1 stating that they have not received any machines. The complainant also informed the 1st accused that in the absence of receipt of any goods, the question of honouring the cheques, does not arise. In addition to that, the accused’s company was also informed that they are forced to inform their bankers to give “Stop payment instructions”. But having knowledge of the same, a legal notice was issued under Section 138 of the Negotiable Instruments Act. However, the provisions of Negotiable Instruments Act does not attract in the light of the stand taken by the complainant. Thus, the accused’s company and its Directors played fraud and cheated the co