THE HONOURABLE SRI JUSTICE N.TUKARAMJI Criminal Petition No.5424 of 2024

ORDER

This Criminal Petition is filed under Section 482 of Code of Criminal Procedure, 1973 (for short, ‘the CrPC’) seeking quashment of proceedings in C.C.No.4577 of 2019 on the file of the XI Metropolitan Magistrate, Kukatpally.

2. I have heard Mr. Syed Tousif Basha, learned counsel for the petitioner, Mr.B.Naresh Kumar, learned counsel for the respondent No.1 and Mr.Jithender Rao Veeramalla, learned Additional Public Prosecutor, representing the respondent No.2-State.

3. The petitioner is arrayed as accused No.3 in C.C.No.4577 of 2019 filed under Section 142 of the Negotiable Instruments Act, 1881 (for short, ‘the NI Act’).

4. Factual matrix :

The case of respondent No. 1/complainant, in brief, is that on

02.03.2018, Bilwa Infrastructure Ltd./accused No. 1 company, entered into an agreement with the complainant for the establishment of a batching plant. A financial dispute subsequently arose regarding an alleged outstanding balance of Rs.38,43,768/-, which was later settled for Rs.24,64,300/-. In pursuance of the settlement, four post-dated cheques were issued by the Executive Director/accused No. 2, allegedly on behalf of the petitioner/accused No. 3 and accused No. 1 company. Upon presentation, all four cheques were dishonoured with the bank’s endorsement “payment stopped by drawer.” Following this, the complainant issued a statutory notice, and thereafter filed a private complaint against the company and its directors. The petitioner has been shown as Managing Director.

5. Submissions on Behalf of the Petitioner Learned counsel for the petitioner submits that the petitioner/accused No. 3 has been falsely implicated in the matter by being described as the Managing Director of accused No. 1 company. It is contended that the petitioner was neither the Managing Director nor in charge of the day-to-day affairs of accused No. 1 company. Merely holding the designation of ‘Director,’ it is argued, does not render a person liable for prosecution under the NI Act unless there are specific allegations detailing his role in the commission of the offence. In the present complaint, apart from a bald assertion that the petitioner was the Managing Director/Director, no specific averments have been made to show his involvement in the alleged offence.

It is further submitted that the petitioner was neither a party to the commercial agreement nor the drawer of the cheques, and had no role in the underlying transaction. At the relevant time, he was serving as the Chief Financial Officer of M/s Orchasp Limited, which, according to counsel, made it functionally incompatible for him to be involved in the affairs of accused No. 1 company. Continuance of the criminal proceedings against him would therefore amount to an abuse of process.

Reliance is placed on the judgment of the Hon’ble Supreme Court in K.S. Mehta v. M/s Morgan Securities and Credits Private Limited, 2025 SCC OnLine SC 492, wherein it was held that non- executive and independent directors cannot be held liable for offences under Section 138 read with Section 141 of the Negotiable Instruments Act unless specific allegations are made demonstrating their active participation in the company’s affairs at the relevant point in time.

6. Submissions on Behalf of Respondent No. 1 Learned counsel for respondent No. 1, on the other hand, contends that the petitioner is the Managing Director of M/s Orchasp Limited and that, since the company-issued cheques were dishonoured, the petitioner is liable to be prosecuted along with the other accused. The contention that the petitioner had no involvement in the transaction, it is argued, is a matter to be determined by the trial court after appreciation of evidence, and not at the present stage.

It is further pointed out that although the petitioner claims to have no connection with accused No. 1 company, he has prosecuted a writ petitions in the company’s name. Counsel also submits t