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S. CHANDRA SHEKHARGUNTUR PRABHAKAR

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CASE NO.:

Appeal (crl.) 664 of 2002

PETITIONER:

S.M.S. Pharmaceuticals Ltd

RESPONDENT:

Neeta Bhalla & Anr

DATE OF JUDGMENT: 20/02/2007

BENCH:

S.B. Sinha & Markandey Katju

JUDGMENT:

J U D G M E N T

S.B. Sinha, J.

Appellant herein is a company registered and incorporated under the

Companies Act. Respondent No. 1 was a Director of a company known as

M/s. Direct Finance and Investment Ltd., New Delhi. She allegedly

submitted her resignation on 15.04.1994.

Against the said company, the Managing Director thereof, Respondent

No. 1 herein as also another director, a complaint petition was filed by the

appellant alleging that the Company represented by its Managing Director

had called for inter-corporate deposit for a short period of 15 days to the

extent of rupees two crores and to such a proposal it agreed. The rate of

interest for such deposit was stipulated at 25% per annum therefor payable

within 15 days. A promissory note was executed by the accused No. 2 on

behalf of the Company. The date of maturity of the said deposit was fixed

on 15.03.1995. Upon expiry of the period of deposit, the accused \026

Company represented by its Managing Director allegedly issued a cheque

for a sum of rupees two crores as also a cheque for a sum of Rs. 1,58,219.00

and another cheque for a sum of Rs. 8,33,334.00 drawn on Canara Bank,

Janpath, New Delhi. All the cheques were dated 15.08.1996. The cheques

for Rs. 8,33,334.00 and Rs. 1,58,219.00 represented the interest part on the

deposit of rupees two crores for 15 days. The said cheques upon

presentation were dishonoured on the ground of insufficient funds. It stands

accepted that a notice dated 21.09.1996 was issued by the appellant asking

the accused No. 1 \026 Company to pay the said sum. The said notice was

served upon the accused Nos. 2 and 3, viz., the Managing Director and

another Director of the Company. Respondent No. 1 who was arrayed as the

accused No. 4 in the complaint petition was however not served with any

notice. The address of Respondent No. 1 herein \026 accused No. 4 was shown

as the Director of the Company being resident of 353, Bhera Enclave, Outer

Ring Road, Delhi \026 110 041. We may, however, notice that in the complaint

petition her address had been shown to be Outer Ring Road, Paschin Vihar,

Delhi \026 110 041.

In the complaint petition the allegations made inter alia are as under:

"The Accused No. 1 is a duly incorporated

Company, having its registered office at the

address mentioned above, represented by the

Director, Accused no. 2. The accused No. 3 and 4

are also the Directors of the Accused No. 1

company and the accused 2 to 4 are actively

involved in the management of the affairs of the

Accused No. 1 Company."

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Appellant along with the said complaint petition annexed a purported

resolution dated 15.02.1995 authorizing the Managing Director of the

Company to execute the promissory note which reads as under:

"RESOVED THAT the Company to avail an Inter

Corporate Deposit of Rs. 2 Crores (Rupees Two

Crores Only) for 15 days @ 25% p.a. from Reddy

Nagar, Hyderabad and that Mr. Rajiv Anand,

Director be and is hereby authorized to sign and

execute Demand Promissory Note, Post Dated

Cheques and other documents as may be required

by M/s. SMS Pharmaceuticals Ltd. on behalf of the

Company and deliver the same to M/s. SMS

Pharmaceuticals Ltd.

RESOVED FURTHER THAT Mr. Rajiv Anand,

Director of the Company be and is hereby

authorized to affix common seal of the Company

on such documents and papers as may be required

in this connection pursuant to the Articles of

Association of the Company."

In the said proceedings, a petition for discharge was filed by

Respondent No. 1 which was rejected by the learned Trial Judge. A revision

petition filed thereagainst was also