M/s.GE Godavari Engineering Ltd v. The State of Telangana
Court: High Court for State of Telangana
Bench: K.SURENDER
Judgment date:
Case summary
High Court for State of Telangana judgment dated 2024-01-03. M/s.GE Godavari Engineering Ltd v. The State of Telangana. Read the judgment and case details...
Judgment text
l1 [ 32s1 ] IN THE HIGH COURT FOR THE STATE OF TELANGANA AT HYDERABAD WEDNESDAY,THE THIRD DAY OF JANUARY TWO THOUSAND AND TWENTY FOUR PRESENT THE HONOURABLE SRI JUSTICE K. SURENDER CRIMINAL PETITIO N NO:2'161 OF 2019 Between: M/s. GE Godavari Engineering Ltd, rep by its Manaqinq Direclor Mr. Balakrishna Kallappa Karande Sy. No. 655, Village piildapur S-adisivapeta Mandat, Medai District ... PET|T|ONER/ACCUSED No. i AND 1 The State of Telangana, rep. by its Public prosecutor High Court of Judicature at Hyderabad. 2 Somani lspat Pvt Ltd, A registered Company registered under Companies Act 1956 Repres^gnted by_its Manager Mr. P. Radhakrishna S/o. p. Samba Murthy, aged 46 years Office al5-2-2831A, Plot No. 9 and 10 2nd floor AN Complex, Hycierbisti, Secunderabad ... RESPONDENTS/COMPLAINANTS Petition under section 482 of cr. P.
c praying that in the circumstances stated in the Memorandum of Grounds of Criminal petition, the High Court may be pleased to quash the proceedings against the Petitioner in C. C No. 230 ol 2017 on the file of XVlll Addl. Chief Metropotitan Magistrate Secunderabad. l. A. NO: 1 OF 2019 Petition under Section 482 of Cr. p. C praying ttnt in the circumstances stated in the Memorandum of Grounds of Criminal petition,the High Court may be pleased to grant stay of all further proceedings against the petitioner in C. C No. 23o of 2o17 on the file of XVlll Addl. chief Metropolitan Magistrate secunderabad. This Petition coming on for hearing,upon perusing the Memorandum of Grounds of Criminal Petition and upon hearing the argruments of Sri N Manohar, Advocate for the Petitioner and the Addl. public proseculor on behalf of the Respondent No. and of Sri K. Aroop Kumar, Advocate for Respondent No. 2. The Court made the following: ORDER THE HON'BLE SRI K. SURENDER JUSTICE CRIMINAL PETITION No.
2151 of 2079 ORDER: This Criminal Petition is filed under Section 482 of the Code of Criminal Procedure, 7973 (f. or short 'Cr. P. C. ') by the petitioner'/accused No. 1 to quash the proceedings in C. C. No. 230 of 2017 on the file of the leamed XVIII Additional Chief Metropol. tan Magistra te, Secunderabad, registered for the offence punishable under Section 138 of Negotiable Instrument Act. 2. Hee rd learned counsel for the petitioner, Ieamed Additional Public Prosecutor for the respondent No. l-State and perused ttLe record. 3. The petitioner is accused No. 1 in the case. In the said case, accused N,rs. 2 and 3, who are directors of the petitioner Company preferred Crl. P. No. 11330 of 2017. This Court by order dated 02. 71.. 2078 quashed the proceedings against accused Nos. 2 and 3 t I on the gr<,und that the cheque issued was in the individual capacity ol accused No. 4. In the said circumstances, this Court . ) found that accused Nos.
2 and 3 were not liable and also the Company, who is accused No. 1. 4. In view of the said findings of this Court that the cheque was issued in the individual capacity of accused No. 4, the question of implica ting the Company/accused No. 1 does not arise. Further, in view of the findings in the Cr1. P. No. 1L330 of 2017 proceedings against the petitioner Company cannot be permitted to continue. 5. Accordingly, this Criminal Petition is allowed and the proceedings against the petitioner/accused No. l in C. C. No. 230 of 2Ol7 on the file of the leamed XVIII Additional Chief Metropolitan Magistrate are hereby quashed Miscellaneous applications pending, if any, in this criminal petition, shall stand closed. L SD/. P. PADMANABHA REDDY ASSISTANT REGISTRAR //TRUE COPY// SECTION OFFICER To, 1. The XVlll Addl Chief Metropolitan Magistrate Secunderabad' 2. ThestationHouseOfficer,MahankaliPolicestation,secunderabad'(Alongwitha copy of order da led 2-11-2O1A in Crl P 1 1330/2017)' 3.
One CC to Sri N. Manohar, Advocate [OPUC] 4. TwoCCstoPublicProsecutor,HighCourtforthestateofTelangana(oUT) 5. Two CD Copies oAc BJLB NS x HIGH,:OURT DATED:03101t2024 ORDER 'r -'. lr. -- . 1''t:i CRLP. No. ,t161 of 2019 ,r n [[i] i:l . |, i l i I Lr- :. ,- ,i 't{ ' . , ii {) i CRIMINAI. PETITION IS ALLOWED (- ISvl* NS HON'BLE Dr. JUSTICE B. SlvA SANIC{R. r{ RAO CRIMINAL PETI'I'tON No. l1330 of 2017 ORDER The petitioners to the quash petilion are A. 2 and A. 3 among four accused in C. C. No. 3454 ol20l6 initially on the file of the XI Additional Chiel Metropolitan Magistrate, Secunderabad, re-numbered as C. C. No-230 o[ 20 l7 pending on the file of the XVIII Additionat Chief Metropolitan Magistrate, Secunderabad. It is a private complaint case lronl the complaint of the 2nd respondenG complainant entity for the ollcnce under Section 138 of the Negotiable Instruments Act, l8lJ I (tbr short, 'the NI Act') issued by A.
4 in his individual capacity though he was arrayed in the private complaint case as by name and rcllrred as Managing Director of A. l M/s. C. E. Godavari Engineering Limited (M/s. GEGEL) by showing A. l as IWs. GEGEL, representcd by its Managing Director- Balakrishna Kallappa Karandc and A. 2 and A. 3/Bommi Reddy Vidyanath Reddy and Mr. Visanathan Srinivasan both referred as directors of IWs. CEGEL. In the complaint, it is averred that there were business dealings with A. I company by the complainant entity and A. I is represented by its MLrnaging Director/A. 4, A. 2 and A. 3 are the Directors of A. l company and it is on credit basis the material at their request supplied for which l'allen due by 05. 12. 2015 Rs. 33,05,806/- and for the outstaniling lbr the dembnds, Managing Director/A. 4 of A. t company approached lhe complainant along with A. 2 and A. 3/Directors and issued his personal cheque bearing Crl. P. 1\o. I1330 of 201 7 No. 000066 dated 07. 10. 201(r. fbr Rs.
13,04,814/- drawn on HDFC belorrgs to A. 4 towards pall payrnclt ot'thc said outstanding and it is at the request of the accuscd pclsons. Thc complainant when presented for collection on 07. I0. 2016 sarne was retumed dishonoured on 10. 10. 20 I 6 as pcr irrrinration of funds insufficient and for th3 statutory notice issucd with rcctilication notice in corrr:ction of the wrongly mentioned earlier. accused received and failed to pay, therety claimed liabte. 2. The Ieamed Magistra(c has taken cognizance. Now the impugnment is even taken on lace valuc, A. t company is not a drawer of the cheque much less, rcprcscutcd by A. 4 to make A. 2 and A. 3 liable, leave about no specific allcgations to make every director respontible in the absencc of'plcading required o[ responsible for day-to-day affairs a. s per the lettcr and sl)irit of Section l4l of the Nl Act and the reby the proceedings arc liahlc to bc quashcd. 3. \Vhereas, learned counscl tirr. the 2'"i .
respondent-complainant supported the cognizancc order saying if at all there is anything, it is left opt:n for raising any defence lirr the Court to try and having waited I through from the cognizancc taken in the year 2016, the quash p:tition frled in 201 7 is liablc to be dismissed. 4. H eard and peruscd the ntaterial on record. 5. Stption 14l of the N[ Acl reads as follows: l4l Offenccs by cornpanics. Crl. P. No.
l l3l0 of20l7 (l) Ifthe person comurillttrg an ollence under section 138 is a cotnpany, every person rvho, at tlte tilne the offence v/as committed, was in cltarge ot, artd was rcqlonstble to the company for the conduct ol rlte busincss ol tlre cornpany, as well as the company, shall be deerled to bc guilty of tlre offence and shall be liable to be agarnst and punished accordingly: Proceeded Provided that notlting contairtcd in this sub-section shall render any person liable to pttnishlnent if he proves that the offence was comtnitted rvithoLrt his knowledge, or that he had exercised all due diligence lr) prevent tlre commission of such offence: a lunher tltat wltete a person is nominated as [Provided office or Director of a cotnpany by virtuc of his holding any Sta(e Govemment or a employment io the Central C()vclnlnent or financial corporation owncd or c()ntrolled by the Central Govemment or the State Covcrnlnent, as the case may be, he shall not be liable lor prosecutiorr undcr this Chapter'] (2) Notwithstanding anylhing c()rrtained in sub-section (l), where any offence under this Act ltas been committed.
by a company and it is proved thar the oUence has been committed with the consent or connivancc ol, or is- attributable to, any neglect on the part of, any tlirector, manager, secretary or other officer of the company, such rlitector, tttanager, secretary or other officer shall also be deemed to tre guilty of that offence and shall be liable to be proceeded against and punished accordingly. Explanation. - For the purposes of this section,- - (a) "company" means arry body corporate and includes a firm or other association ol individuals; and (b) "director", in relation to a firttr, means a partner in the tirm. ] -l D.. SSRB. J Crl. P. l\o. l l-r-r0 of 201 7 6. Section 138 olthe Nl Acl particularly llS(b) reads as follows 138 Dishonour of chc<1uc lirt insullicicncy, ctc. , of funds in tlre account.
any ohcque drarvn by a porson on an account -Wherc maintained by hirn with a hankcr lirr' payncnt of any amount of moncy to another pclsou lhrur out of llrat account for thc discharge, in whole or in parl. of any debt or other liabrlity, is retumed by tlre bank urrpaid.
cithcr becausc of the amount of mon€y standing to the crcdit ()l lltat account is insufficient t<r honour the cheque or tltat it cxccc(ls tllc atnount arranged to bc :aid from that account hy arr aqrcerrrcnt nrade with that bank, ;uch person shall be dccruc<l to havc conrnittcd an offence and ;hall, without prejudicc to any othcr provisions of this Act, be punished with imprisonrncnt ftrr' [a tcrm which rnay be extended lo two years], or with finc which rray cxtend to twice the amount of the cheque, or with botlr: Provided that nothing contained in this section shall apply unless (, the cheque has heen prcsented to the bank within a period of six months lronr the dalc on whiclr it is drawn or within dre period of its validity, whichcvcl is earlier; (1, the Davee or the holdcr it due course of the cheque, as rt be tna denraud for tlr n of thc 4 nount of monev by sivrne a noticc in writinc. to the drawer of 2o th e cheq ue.
[*i thin thirty davsl ol'the rcceipt of information by hi m fiom the bank resarding thc rcturn of (he cheoue as unoaid: ard (:, the drawer of such chcrluc fails to rnake the payment of th: said amount ofrnoney to thc paycc or, as the case may be, to thr: holder in due course ol thc clrcquc. within fifteen days of the receipt of tlre said noticc. ,,debt Explanatron- - tor thc purposes of tlris section, or other liabiliry" rneans a lcgallv cnforceablc debt or other lia )ility. l Crl,P. No. l l. l. l0 ot 2017 7. Coming to the facts, a pcrusal ol the clieque in question from the account stands in the individual natnc of A. 4 Balakrishna Kallappa Karande. Merely because A. 4 is Managing Director of A. l company, it cannot be said that the cheque was issued by the company from his signature when the cheque issucd tiom his individual account and not in the company account.
Once the cheque is not issued in the company account by any of the Dirc'ctors or Managing Director, as the case may be, the company cannol be thc drawer. Once the company cannot be drawer, the queslion ol vicarious liability of its directors, particularly A. 2 and A. 3, leave about without even specific allegation as to they are responsible fbr day-lo-day aflairs of the company to be made vicariously liable the array o[ thenr by lastening liability for the offence under Section 138 NI Act does not arise. That is also the law laid down by the Apex Court in Aparna S. Shah v. Sheth Developers Private Limited and anothert, particularly from the paras 15 to lE for more clarity reproduced hereunder: l5) Mr. Mukul Rohtagi, learned senior counsel for respondent No.
l, by drawing our attention to the definition of "person" in Section 3(42) ol the General Clauses Act, 1897 submitted that in view of various circurrstances mentioned, the appellant herein being wi t'e, is liable fbl criminal prosecution. He also submitted that in view ol the explanation in Section l4l(2) of the N. I. Act, thc appellart wif'e is being prosecuted as' an association ofindividual. In our view, all the above,contentions are unacceptable since it was ncver tltc case of respondent No. 1 in the complaint filed before lealned Magistrate that tlre appellant '(2orl)riscc7r t r. SSRR. J Crl. P. No. I l-ll0 of20l7 wrfe is being prosecuted as an assocration of rndividuals and. therefore, on this ground aloue. tlrc above subnrission is liablc to bc rejected. Since, tlris cxprcssiorr has not becn dcfined, tlre sanre has to be interprcted ejusdenr gcncris having regard to tlre purpose of the principlc rrf vicarious liability incorporated in .. association Section l4l.
The terlls "complai t". "persons" o[ persons" "cornpany" and "direcrors- have been explained by this Court in Raghu lakshminarayan ts. Fine-l'ubcs. (2007) 5 SCC 103. 16) Thc abovc discussion wrrh rcl-erence ro Section I38 and rhe materials culled out frorn thc statutory notice, reply, copy of lhe complaint, order, issuancc ol-proccss etc. , clearly show that only the drawer of thc chcque bcirrg responsible for the same. l'7) In addition to our conclusron, it is useful to refer sonre of t re decisions rendered by various l{igh Courts on this issue. l8) lrarned Single . ludge o1' the Madras High Court in frevendra Pundir vs. Rajcndra Prasad Maurya, proprietor, Satyamev Exports S/o. Sri Rama Shankar Maurya,200g Crirninal Law Journal 777, following dccisions of this Court, has concluded thus: "7. This Court is of thc consi<lcrcd view rhat the above proposition of law laid down lry the l{bn'ble Apex Court in the decision citcd supra rs squarely applicable to the facts of the instant casc.
Evcn in this case, as already pointed out, the first accuscd is admittedly the sol€ l proprietrix of (hc conccrn namely, . ,Kamakshi Enterprises" and as suoh, lhc questioo of the second accused to be vicariously held liable for tlre offence said to have been comrnittcd by tltc lirst accused under Section 138 of the Negotiablc Instrunrcnts Act not at all arise... After saying so, learncd Srrrglc Judge, quashed thc proceedings initiatcd against the petitioncr rherein and '1 Crl. P. No. l ll-10 ot:017 permitted lhe Judicial Maqisrrate l() proceed and expedite the trial in respect of otltcrs. 8. Having regard to the 2$1rt'c. it is dlawer of the chequc A. 4 in his individuat capacity liable lor what hc issued lbr the amounts due by A. l compaay even undertaken t() bcar Lhe liability by him individually and even any allegations of the credit transactions with company or for the demands of A. l to A. 4. A. 4 issued the cheque tiom his account and the cheque presented altcr intimation to A.
2 to A. 4, wilt not make A. 2 and A. 3 liable along with A. 4. nruch less of thc company, as any civil liability for the credit purchases by the company and their Directors including A. l to A. 4 lbr that civil liability is different from the criminal liability for the dislronour of the cheque as the cheque was drawn only by A. 4 in his individual capacity and not by the company, much less from thc company account. 9. Having regard to the above the criminal petition is allowed, quashing the proceedings against tht: petitioners/A. 2 and A. 3 in C. C. No. 230 of 2017 on the lite ol the XVIII Additional Chief Metropolitan Magistrate, Secunderabad. The bail bonds of the petitioners/A. 2 and A. 3 shall stand cancelled. ' Miscellaneous petitions pcnding, il any, shall stand closed. Dr. B. SIVA SANKARA RAO' J 2d November 201 8 mar
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