IN THE HKBH coum or: KARNATAKA AT BANGALORE
DATED ms THE 5" DAY OF FEBRUARYD2'o.1:'o«hadr@smAJac'a Glass ancé Frame Wor¥<s.
Opp: $0 f\/lmicrpai Office.
BH. fioari.
Shimoga'
F%epressemed by its Partner.
Sré. SB" Ravé Ksmzar. ..
(By Sr%.C?:. Laé<shme3s%"a Rat). ACév.:= -
iN CF§EiVEiNAL PETYHON 507152007
Smt. Tagleaem Zakéya.
Aged about 3': years.
W50 MA C2::1yoom
HVNo.Ei~408;»97']
"Ahamed Manzi!"T
Khaja Coiony, 2
Gutbarga ':05. _ .. RESPDNDENT
By smviord. SiIa?§--.1;dd%§, 1_r~c:y';;
cw CRawasNA1;-iniéjjifidkiz;:,;r:.gg28.25)?20-08- 3. 2826/2008
E3{iv 8.8 925914 Knnmsfi V' 4
Aged aboué 323/ea_:'s§ V . --
S C} SM E3a33avVa:_a§é.~;ppa,. '
Rio Par?E:::Ie3nséof':,., ' "
__.S;h§.mog:;»:f:,. ' " . . RESPONDENT
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EN §i;.s3*'i'j:;.2I:%;:-:.§'z_:""i:*~_v.E":':i'iéN 282952608
Szi.S.H.'j"SiC§'dapp"é:é.
.. ,A'g.e6 ab9qf5'f years,
SEQ $.,?§ai1&iD'QaA P:'og;:r:e%0r'.
.__E%'53é:rat?'a B{;'%E§tr3EE"%L§§ C0,.
f*J_~?§__ ';TxP'.F\:$£3, Yard;
__"$"m.m;;:ga. VI RESPONQENT
{By Smifi L::$<s§'wr'1'7e:9as%1 R363. Ada-h_;:
'x'(fi'Lmju€§*;€1.é'i
Ageci ézfiscui .,3E},\;e-éa
___Fi.§jed ;=3bc.uf_ 3
_ R'="s..{\£€3ééG, 7*" F!ki..:%:«:'] . .
Ba$aves%'1w.3ra'*Nagj'€.r.
Shimoga.
aw cR:mi§:.m__ P§'*z"i1.f :Ac:>'e«: .v48éa;2ii08
8.51:7. __ Y:';;1_s3 G? AB -31l7\_'i}':r. _ ' 1.'
Rec mo: :"4« ~c:,>,::.:;fif.» 'f:"':«§fi£'.h3r3aga;'.
Erian g'al<3i":1;T
?3L'__c:1.az:=¢-?r"'{;f .t%0mey Harder,
" ._M':< _ )5' gym b?~E.} 2* Q3 E: ma :2.
533:: 3/fli,i'!"z'Z':f;5i;2f Pagha,
I ysaears.
'E§':<':%: Marszié ifipp': Boys Hasiei,
Road:
.. RESPONDEN?
. __J"::;:;A';i~; P@:xa{3E:\a? = %'
1. HESPONDEN?
the file of J.M.F.C., Thirthahalli;
Prl.C.J.M., Shimoga; ll Addl.J.M.F.C.,
Gulbarga;
l Adollcivil Judge (Sr.Dn.)
& Addl.C.J.M., :§hi.moga;
AddI.Civil Judge (
l
Sr.Dn.) 8: Addi.C.J.M.,
& Addl.C.J.lVl., Shimoga;
Addl.C.J.M., Shlmoga; I
Shimoga; I; Judge
I Addl.CivH '
Addl.Civil Z.-.'u'dge« .
Shimoga; C.J.l\/L, Shimoga; l Addl.C.J.i'M.V, §.hlAmoga;H..AtAAdd~l.Ciitlril"»Juctgge
(Sr.Dnt) i i
3. Addl.CtJ.M., shimog§';*t-....l_ Addl.(_3ivit_qJvudg:e%V(S'r.Dn.) 'Va
Addl.C.J.M., Shimoga; l Addl.Cl\(i_lr_ufJu_dge,_
(Sr'.D'n;}~l» ta" Addl.C.J.M.,
Shimoga and Civil Judgefi(Jr.Dn.}v:.,':t3<u"3X§idAl:.J._M.F.C., Bhadravathi
respectively. n
2. Ftespondents3l.are cotrrrp_lvai~nants'"a»nd- have filed
separate private
complaints gu_ndei*t.__S'ecti;;)n_ 20:U'--._ol 'C'r;'t'»';~""
:3. for an offence punishable
te..l:\4leg'o'tia_t5le lnstruments Act (
under Section .t38vVot'utl
as the 'Act') a'ntdSectioi'*.
in short referred to
Presid«ents,i accusjed..t:No.6 is the Secretary, accused Nos.7 to 9 are the
Joint Secrle.tai'lesV4and accused No.10 is the Treasurer of the first
V'
V Accused t\tos.2 to 10 personally approached the complainants
.!n_rera!ra alleging that, they have constituted a Trust in the name and
~i(}~
No.2 as the President and other trustees are inchaige and responsibie
tor the affairs of the first accused -- Trust and have committed.dthe
offence punishabie under Section t38 of the Act and Lot'
cheating punishable under Section 420 of WC.
6. Learned Magistrate atter takingficogirizanceti 'irecoictdct_ the
sworn statements of the compiainar'-tsxand con.si'dering"'thfevcompliaint,
sworn statement and the materiai by the'coVrnp'iainants found
that, the complaint discioses the accused for
an offence punishabieunder Sectio--n 'i§€§;e.t'--V"and Section 420
read with Section otdei§ed";for:"rd:§;istr'atidit of case and further
ordered for issue of s_i;r'r;rrmorts._'°t.'fisAiat-t'his'gstage, these petitions have
been filed by accusef}v.No.f{4i'ri aiiivthe cases.
7. Heard"'iearrted' Ciounsei:-Séri.C.V.Nagesh for the pptitioner and
.Sri.T.N.Baghupathy,"'~.SriV.'G.L:akshmeesh Ftao, Sri.t\/tohd.Shafiuddin,
SL"i..rShastri, Sri.R.B. Deshpandet Sri.J.Gopaiakrishna,
Pinto, learned Courtsei for the compiainants.
8. 'Sri.V1C3_V.VNagesh, teamed Counsei submitted that, the petitioner
Iwas the"P_resident of the Trust. However, he has resigned to the same
1AA3§.tt.S2006 and it is accepted on 21.11.2006 and since 21.11.2008,
'V V 'petitioner is neither a President nor a trustee of the Trust. tn this regard,
5?';-»~
he referred to the dates of issue of cheques and submitted that, cheques
were issued on 15.8.2006 in ah the cases. They were presented for
encashment on 3i.1.2007, 5.2.2007, $422007, 14.2.2007,
7.2.2007, 13.2.2007, 24.ii.2006, 14.2.2007, 26.9.2006,--'.'26'._94.'20,06.,
269.2006, 189.2006 and 18.9.2008 respectively.
were dishonoured by the Bank on
152.2007, 152.2007, 7.2.2007, t»4..2.2OAt)'"?.,Ai:"2_A5..11.8088,," i9.2i,2007',--..,'
26.9.2006, 26.92006, 27.92006, aid626.9.2coéiiieisip6ciiveiii8
and legal notices were issued t4.8.2'0O7, 7.3.2007,
12.3.2007, 12.3.2007, 6.3.28flC)7,_"l8:3:i880%,:i'i.t"4;.i"2'.'_2008, 10.3.2007,
25.10.2006, 25.i0.,2rj0s.._ and 6.10.2006
respectively. petitioner in his reply has
stated that, hei.h.as" President and trusteeship
of the Trustitand. _,éetit'iv4o'ner"*.5s'neither inchargeror responsible for
the business otithei trus"t,_h'e,rice,"'_tihe allegations in the complaint do not
constitutefan o.ffence"un_r:ler Section 138 of the Act.
V "in his argument, he referred to the provisions of
V..vSections"'t88 of the Act. He relied on the provisions of Section
of the Acltiand submitted that, the cheque must have been drawn for
amount towards the discharge of whote or any part of debtor
ii--a'biii'ty. and that, merely because the cheque is issued by the trustees,
' thiativbly itself will not constitute an offence punishable under Section 138
9:?
57%;!» i r
of the Act, not even dishonour of the cheque wouid constitute an offence,
untii the amount involved in cheque is demanded by issue of Eegai notice
and despite the iegai notice, the accused had faiied to payggtldeiasame
within the stipuiated time, oniy then the offence
committed. Further, in case of offence by Company__(i:n:th'is_.:ca4se,f
Trust), the accused against whom the aEiegatio:n's are
charge and responsibie for the conduct of of trust'
date of commission of offence.
10. in these cases, Va-sfffoni the of aiieged
offence, the accused No.2 (peti.ti.o:n_e.r) nei't'h'e:r:-av-President nor was a
Trustee, hence, d.esciose these ingredients
against the xcogriizance and issue of
summons, provivsions of Section 138 read with
Section I-ditufof the i5\ct._
1, .1_%,.A' if the Trust heid: to be Company within the meaning of the
"'V.Explanation1io. Sjectvion 141 sub-section (2), every person who, at the
time.the__oifevn'ce,:wa'scommitted, was in-charge of, and is responsible to
V if the con'duct..__'of the business of the company, as weii as the company,
be deemed. to be guilty of the offence and shaii be iiabie to be
fproceedend against. if, as on the date of commission of offence, this
if ':'pe.titi.oner not being either in-charge or responsibie to the company for
,.i'
the conduct of its business, he cannot be he-id as guilty of offence
punishable under Section 138 of the Act.
12. To support his contention, he relied on the da.te'ot"is,s»t,tVet.of
cheques and its clishonour in Cr|.P.I\tos.5070/20'Cl':7j',
2826/2008, 2828/2008, 2829/2008, 4433/2068,. 489:0/2:cj'oieI.,'4'aasryieoesV'
and 17592009 and submitted that, the res:ignat_i_on'lVof
much before the presentation of cheqvues in scrne Vcases*an'd~irt":some"
cases, before the dishonourfiof cheAqu,e:sz.__ 'T_hus,.as.on date of
commission of the offence, the"'p.e'titi,o't--1er?.:was"ttot,:a'trustee, and as such,
the learned Magistratewas notv%t.tsttified«E.in"2t.akvi,n'o7cognizance of the
offence and further petitioner. He aiso
submitted that, 2:325/éoloa, 2827/2008, 3503/2008
and 3504/2:f,:i}ut3--V,V ti1eV"'divsitonour of cheque was before his
resignation, will not constitute an offence and
when the offence is s_aio'~to haveibeen committed, this petitioner was not
faVtr=usteei,..i°Fieiying,.on thevvlproi/isions of the Act and aiso reiying on the
"mrtiitelris4u'bmi'tted that, in repiy to the legal notice, the petitioner
' V"-,-has madelliit cle.ari:'ti1'at the petitioner is not a trustee, the minimum that
requirecf}.by the complainants was to verify the necessary
'fft:l_oet}:mienit's~r,. to find out as to whether this petitioner is trustee or not or is
r__esponsible and in-charge of the affairs of the trust.
5%
:5
13. To support his contention, he relied on the reply notice and
also relied on amended Trust Deed, resignation and acceptance of
resignation and submitted that, accused N033, 5, 6, 7, 8, 9, and 10 have
not disputed the resignation and its acceptance. Even accusedwg'tT\1'os.3, 5,
6, 7. 8, 9 and 30 by their letter dated 12.5.2006 have
debt and have also informed the complainants that theyriiare
for the discharge of the debt. tn view otzthe a'drnis.sion<''byi ' T
Nos.3, 5, 6, 7', 8, 9 and 10 and in View of the
to the post or trustee and its acCep'tan'ce and trust»
deed, as on the date of commission &of"citence;tsneitherthe petitioner was
in-charge nor responsible and as such, the
complaint as against this petitioner m'isco.nco~ivedV';
14.:,:To he relied on a judgment reported in
2007(2) crrrngs- %%183(S'(3lf~i.n"the'"niatter of S.M_S.PHAFr'MACEUTICAL
LTD. ~vs--- ..NEEfA ANOTHER and submitted that, only the
ipersorivs.Ai'n--t:harge and re's'p'oVnsible for the conduct of the business of the
'fVfL,t_:Sf'_EiS on the date of the commission of offence atone
-- coutd prosecuted for the alleged offence. He also retied on the
Vi°a.,_';'udgment ~ reported in AIR 2009 SC 1013 in the matter of RUKM/NI
r§tAaV£*t{An mvs» l/IJA YA SA TARDEKAR AND erases and submitted
____"tnatV;;the High Court in exercise of power under Section 482 of Cr.P.C.
V land in the interest of justice and to arrive at a just decision can look into
('@232 g.
.-or °sA.erTHA aAMAMueTH~r' AND ANOTHER
the document produced by the accused. He also relied on a decision
reported in AIF? 2007 SC 912 in the matter of SAROJ KUMAR PODDAR
-1/s~ STATE (NOT OF DELHI) AND ANOTHER and subr.T.1itie'di..,that,
person responsible means, a person, who has signed t_ije"'ch.fequ_e :.a___nd_
submitted that, the petitioner is neither signatory to th.e..c4h'equ'e::rior i1e"is..
person in«charge and responsible for the ofthéébusién-ess_uo£,,_th?e
trust.
15. He further submitted that, of offence
committed by the company,A----..._h5'ust "t'h.e'v.:p'erson in--charge and
responsible for the conduct of..the_ of."tvhogcompany. it is not
reproduction of the: Act, but a specific
averment in the regard, he relied on the
complaints filediivby --f complainants and submitted that,
there is no specific and as regards to the persons. who
were in~charge land "r'?l5F',:Ons-?_lb3l'e~i"ifor the conduct oi' business of the
v,co.inpan\,r"rnuc_h' less allegation' against the petitioner and to support this
coritentiion, it.e"~ei'o,o"'treiied on the decision reported in 2007 sAi=2
(cni}irriNA.L) T'5é."'r"n. tiiemetter of K. SH/KANTH SINGH -1/s~ M/SNOB' TH
t§AsT 8r§C?£.Jr?laTlL£:"".§ LTD. a ANH. and 2006(6) KLJ 151 (sci in the
...VS..
F?_,_t3,tS;.£V'HAf\/NABASAVARADHYA. Further he relied on a decision
reported in (.2005) 8 sec 89 in the matter of
ti}
'L,
era
--l(1~
8.M.S.PHAf3'MACEUTlCAL8 LTD. «»~«vs-- NEETA BHALLA AND
ANOTHER and submitted that, it is not the designation or the status of
the parties, but it is the person, who is in--charge and responsiVbie_:'of_ the
conduct of the business of the company, which constitutes'a«n"o:ffence,y_
not every Director or the person in the company._.~l~~l»e_:'ialsso-Lre!.ied_on.D
another decision reported in (2008) 3 (Q!-4"?l)jj.-citilfiéén'
DOM FINANCIAL SERVICES Lv»",l'~'v'H"TED'V"tj1./.§'3- J.f}!.§C%'A.FiEAEN:'; ."/liiirtii.
ANOTHER and submitted that, mulstciiearlyllidislclose as
regard to the persons in-charge.g_and_«"responsibvE'e.for tnemconduct of the
business of the company as onthe of of offence and
this being the reqt.eirernent Act without these
allegations the specific allegation
making eveiyl"'rtr-uisitele'tars;"an:'acc'used"'in"§his complaint is neither in
consonance'~~.wit'h"_ 138 nor Section 141 of the
Act. And suchxa«._4corriplvaintAprirn.a"'facfe does not constitute any offence,
__rror Magistrate' couid.lh'a-veV__ta_l<en the cognizance ot the offence alleged.
--T:o»,tavE€Ve«.cognizance of the offence, the allegation in the
l t'».compl--ai.n:t mustmfcoinstitute an offence and once the court takes
.co'gnizance' tinder Section 196 of Cr.P.C. before it could register a case
process, it must satisfy that there is a prima facie case to
..__procexed against the accused and particularly when the offence alteged is
'punishable under Section 138 of the Act, the complaint must disclose all
the ingredients of Section 138 of N.l,Act and if it is Company, the
ingredients of Section 141 of N.l.Act. if the ingredients prima facie are
not present in the complaint, no offence punishable under Sectionr§r38 of
i\t.i.Act could be alleged against the accused and submE't*t--ed;th__at',
comptaint as it is read with the material produced,,al'o'n..g ia.a.a_¢,
considered in the light of the provisionsizhof Seotivoiiis arid of
N.l.Act, it wili not make out any case _agains--tAthi_s petitiioner'. "Pve1tit'i'o,ne;=,Vg
having resigned as a Trustee much before the oftence,.'.atie'geVdV to have
been constituted, no complaint could.it'a'yevrbeeVrt~fi_led agairist"him.
17. He further submitte,dt-that,.there._m'u'st intention to cheat
and the intentionéfltov wi:ii,arE,sex amount is not paid,
that wouid be ontygoipi iiegial Vnotiice was issued and in repiy
to the lega:_:vnotiVc_e responsible, had not made the
payment, éntentionyof'"of"'cheating arises and not before that.
VOH then'oth,er_____hand, learned Counsei appearing for the
A"r_espo'ndents '~¢o.ompiainants submitted that, as per the Trust Deed, the
pelt'it~i.oneVr'is"the_»President of the Trust and he being an E><--l\/linister, who
V ted the"oth*er. 'trustees, on his promise, the complainants made the
and some of them supptied the materiai, when the
':_c'ompl'ain'ants teamt that the protect of medical college is not likeiy to
.:,'_"commence and there was no sign of any progress, they doubted the
'bonafides of the accused and insisted for payment, in response to the
demand, the accused issued the cheques to the complainants. lt is also
submitted that the accused were in--charge and responsible for the
conduct of the business of the trust. ln this regard, they reliednonhthe
Trust Deed itself and submitted that, under the trust deed,
are coilectively responsibie for the conduct of business.
management of the Trust in terms of the¥Jdoc:u'men"ts is
Trust and under the provisions of tndian:4'f7.rAus--t_zAct,i.g'e'tyfegry'
equally in--cinarge and responsible and"s«teVt/ery dvecisionuof is
collective decision of the trustees. \/tfh'en*.t.hje'uirlist [)fleed"rr'i'at<es it ctear
that all the trustees are responsible of the Trust and
the financial transac.tion:s':-opeiiateg@:;th.ith'e"cognsenjtvyivot the President and
Secretaty, petiti;o'ne'r_««..being is responsible for the
conduct of ithe=tru--st. if
19. _regards__.tojfthe"*-altetged resignation of the petitioner is
concerned,tearned._:Ccurisel"'-forvthe respondents seriously disputed the
fiéaine. this regard';"'they also pointed out that, this Court under
Secti"on cannot go into the disputed facts as it requires an
i evidence. ltis 'also; submitted that, whether he has resigned or not is a
f°a..4matter of eviidence and cannot be gone into at this stage. Apart from
._this, itisalso contended that: offence atleged against the petitioner is not
V"-..__"onlyV'gpunishable under Section 138 of N.l.Act, but is also punishable
thunder Section 420 of IPC and the dishonest intention is clear from the
P' we
conduct of the petitioner himself, as he being the President, he induced
all the complainants to part with money and the material on the promise
that the Medical College will be established and the amount would be
paid immediately. When the said institution is not established___despite
iapse of several years, when these complainants approaelt.ed~w. the
petitioner and other trustees, they had promised that, themedi'cVé1lg:'c_olle.ge.V
would be established and in this regard, they also.'pr'omised"tthat, .
would pay. It is against their promise, the1..:cheque?s were.'issued;:.___'Assn
the date of issue of the cheques, the i-n__tentio""r:. of the was clear".
that they were not intended to honourviétheb ptomise. turn to cheat
the complainants, with a dish,_o"nest.'lntentii'o«n_,».th'e.y issuedthe cheques,
which they were aware that thehcheques :wo--'u'ld bejVd'i--shonoured for want
of fund. F.a'Ct*that"j;the«f:é:,; wa"s.,n'o ifundflniifhe account and despite that,
cheques were 'issued the dishonest intention on the part of
all the accusedand,sdbmititedtthat, the averments in the complaint, the
.swornstaten*ient and '--the____d_ocuments produced along with the complaint
fafcr'e,vdiscto:s'e the offence punishable under Section 138 of l\l.l.Act
and Sectifon' of ;
z regards to the reply given by the petitioner, learned
'€":eu'rlsel_.éappearing for the complainants submitted that, the amendment
of Trustlieed or resignation was only with an intention to see that the
upetitiioner escapes the liability. Petitioner himself being the President
and it is mainly at his instance, the amounts having been paid to absolve
himsetf from the said obligation knowing futlwell that the recovery is not
possible otherwise, has issued. the repty to the legal notice,i.,vh'o_we_ver,
along with the repty, no such material was produced.
21, To support their case, they also-retied ,on7_a decisionireportned '
in AIF? 2005 so 2506 and submitted that, wh_etherii't'h,e -~aVccusie'd..#ar'e_g
responsibte or not, is a matter whichreouigred to be gone in'to'"at"the trial"
and not a case to be considered at they_fhrgeshot.d'. ln'th'is.rega§rd, teamed
Counsel referred to the complaintavierrrtrehitsz"a'ndg:submitted that, in the
comptaint, a specific attegvationyistriadst'h.at,__acc'used"hlos.2 to 10 in their
respective capacity,3..they:'t'a'r'e _.anj_d,responsible for the affairs of
the Trust and this the prima facfe case for
the offence .138 of N.l.Act. They also relied on
a judgment Viiireported' "Supreme 626 in the matter of
N.r:2ANoA,criAei'ii';vs«vi§mi=2A'r SANCHAF? MGAM LIMITED and
:-',subrrtttte'd-itha-tgnwhether theiitrustees are responsibte or not, it is a matter
ofievidencei to be estabtished during the course of the trial
' if '«...v.and not a'tVithisV.stag.e'iVand it is burden on the trustees to prove the same.
is._also contended that, even otherwise, the trial court has power to
rr_iat{e outhéjase for any other offence based on the atlegation and the
rriatieriats. Hence, based on the attegecf documents produced in these
if petitions and which are disputed, the proceeding may not be quashed.
Y ;
22. The points that arise for consideration in these petitions are:
(7) Whether this Court in exercise of power under Section
482 of Cr.P.C. could go into the question as to whether
the person is in-charge and responsible for the conduct.._ot
business by considering the disputed document produced
in these petitions?
(2) Whether there is prima tacie materiai for :"
punishable under Section 138 of Negotiabie__instrurnents S'
Act and Section 420 of i.P.C_? 5 * I
23. in all these criminat petitions, pé'tiAtioi't_er"is aCo_us.e,o .Nc.§:2«.g'h.--d._
he is shown as President of first accused-.7 Trust. V V
24. Facts
, which are not_dEspt;itéd=areuthat, theiicornptainants —
respondents had ctairned certain an:o’un.ts;:’fro_rh’:the vTr_ust_, alleging that,
the Trust is duet’t.QAV.AttternVf§:.;t’t~ is”-also riot”‘in'”dispute that, on behait of the
first accused-.5 Trust, “issued to the complainants and they
were dishohoured,thereatter.._ ‘the~~’i’comptainants had issued notice and
for non–pa§yme’i*tt ot the amo_u_nt, the complaints have been tiied.
V ailege that the accused No.1 is a Trust and
S VH…»accused__No.2:<ipetitiioner herein is the President and other accused are
bearers of the Trust. it is not in dispute that the Trust is registered.
deedis produced aiong with the complaint. From the deed of trust,
V' _i_t_"a'ppears that, one Sreecfhar l\/1.8., sto late Srinivasamurthy S.N.i was
_the.author of the Trust, same was registered in the name and style as
-73s
“Shivappanayaka institute of Medical Sciences (S/MS) The
rectification of Trust Deed was registered on 1.t2.2004, this petitioner
was co-opted as Trustee and President of the Trust by the Boagrd of
Trustees.
26. Under the terms of the Trust Deed,’ Trust’.w’il’i”be:’_ay p’errnanent’= ,
body and the trustees are collectiveiy responsible for all Tthe”aff’ai:,:~;r,_’_of:.the
trust inciuding the financiaf matter.7Tru_st is entitled t.o”iopen_, rn;aintlain:”i.
and operate on bank accounts in the’ina_rne.VVof event of
trustee vacating the office retirement, death or
any other reason, thelegal iraoutd be entitled to
become a trustee. trustees’ exceed more than 9
members. The properties and affairs of the
medical at! the meetings of the Trust
shail be called by absence Vice President. At the
discretion of the4″Presideynt or tvhef Secretary, any member ot the Trust or
“any author§_sed..y_person’may represent Trust in all tegal proceedings.
Fromthete.rrns’of:’the trust deed, what appears is that ail the Trustees
witl be coltectiveljfyrresponsible for the affairs of the Trust.
AA _27… Complainants have alleged that, accused No.1 – Trust aiong
y\iith”acciused Nos.2 to 10 have committed an offence punishable under
Vi’:’~.S.eetion 138 of the Negotiable instruments Act interafia alleging that,
” -. «accused Nos.2 to to were in-charge and responsible of the affairs of the
Trust and in terms of Section 141 of the Act, they are Eiable for the
offence punishabfe under Section 138 of the Act. The learned
Magistrate considering the averments made in the compiain.tV’a’rtd_g_the
material produced along with the same, has registered _
and has ordered for issue of summons to the accused. ‘
28. Main contentions raised are as u”ndet’f:_’_’i ~
(1) The petitioner was not a”P_res.ldentr’erVa .Trustee’a–t..th’e
time of commission of the offence, _
(2) Complaint being againsgt l_thej_’ ._No.t — Trust,
vicarious liability wouldV’a:rise’_onVly against..t§’7e person in.
charge and responsib/eg fofrytneg rcoitduct business of the
Trust anti”n4OF3ag–alnst’all’the Trustees.,’
(3) As-~on dategof the offence, petitioner
had resigne:.:f-«to'”the’office of? President as well as to the
post of Trustee’ ainci h’e.__is ‘ not liable for prosecution;
(4); ‘f’h.-Ls. Court _in’exercise of power under Section 482 of
‘- C: can interfere with the proceedings by looking into
‘ -..th’e_Vdocurnents produced by the petitioner to meet the
ends”_of_ju~sti”ce,”
V Thvispg Court can quash the proceedings, if the materials
.. produced by the complainants prima facie do not
it v tconsti’tute an offence and continuing the proceedings
wou/d amount to abuse of the process of court and
further, defence document could be looked into to secure
the ends of justice. i . 3
29. it is not in dispute that the complaint is basically against the
accused No.1 -~m Trust and other accused are made iiable vicariousiy,
which is akin to the normal criminal proceedings, as theA.a’ccVu’sed.V’ar.e
made iiable for the offence committed by the Trust.
30. in case of an offence committe;d’AAby:,the
three categories of the person ( ‘-which”1corn_rnitte;d.u
offence; (2) every one, who was in–ch’arr.g_e» and was ‘responsible for the
business of the company and ‘{3} anymo_ther__ is Director or
Manager or a Secretary or’ with whose
connivance or due: has committed an
offence. in this i’t..ji:-sJno.t company registered under the
Companies /\c–tV,~ ho:w.e’veri;§:,by o’f’E’xpia§nation to Section 141 of the
Negotiable also covered within the meaning of
Company.
a.i_j.”~Triie Apgex Cioiurfin a judgment rendered by three i-lon’ble
“rep’o:rted* 2005(8) SOC 89 in the matter of
Z”»..___srvi.s;er¥i’AHn/rA’téi:frj’TrcALs LIMITED -vs- NEETA BHALLA AND
ANOTHER‘ while considering the question as regards to the requirement
Vto”.conAstiit’u.te an offence punishable under Section 138 by the Company
has that, the persons responsible for conduct of business of the
company are generally referred as Directors, Managers, Secretaries,
c
[J
‘J:
Managing Directors, etc., and it is not sufficient to simply state in a
complaint that a particular person was a director of the company at the
time the offence was committed and nothing more. Referring to the role
of a Director in a Company under Section 2 ctause the
Companies Act, the Apex Court observed that:
” . . . . . . . mere use of a parti’cular designation__oi’–an’ officer 9
without more, may not be enough b__v…way of an iai/errnentin
a complaint. When the requirement in Section-1’l.4t_fV,’–which’
extends the liability to officers of a :Company, is._tha_t’ such–.ai1.c_’
person should be in charge of and “responsible to they ‘
company for the conduct of ‘business of the cofr_npariy,_how
can a person be subjected to liability of cifmirial prosecution
without it being at/erred in the complaint that he s}atisfies
those requirements. fl”i’.OI every ‘p_e’r.so’n_ connected” with a
company is made liable tinder Secti’on_’t4 _ Liability is cast
on persons who may have =.sornething»…to-. do with the
transaction com.plai’ned.of., _A.pe.rson tit/h.o is Iincharge of and
responsible _ii::r_ conduct of ‘busine,ss._ of a company would
naturally know wily thecheoue in._quest.”on was issued and
why it got di’s’i’rono-u”:i_jed. __
However, insofar as’Managiing._:Dire~ctor or a Joint Managing Director of
the Cotnpany is 4ccncerned,ithe°A’pex Court at para~9 observes as under:
V-‘T9? The position eta’ ‘managing director or a joint managing
, ‘ . director at company may be different. These persons, as
* gthe. de_signa.ti’o’n of their office suggests, are in charge of a
._ “-company’ are responsible for the conduct of the
A gbiusinesssiofirthe company. in order to escape liability such
persons -may have to bring their case within the proviso to
Section 141(1), that is, they will have to prove that when the
_ Vt offense was committed they had no lrnowledde of the
V offence or that they exercised all due diligence to prevent the
‘ ‘»-commission of the offence.”
( underlined by me)
This judgment is followed in another judgment reported in (2007) 2 SCC
(CR!) 444 in the matter of EVEREST ADVERTISING (P) LTD. –vs–
STATE, GOVT. OF NCT OF DELHI AND OTHERS. By virtue of the
office of the Managing Director or the Joint Managing Director,g–“they are
deemed to be in charge and responsibte for the conduct
of the company.
32. In this case, the Trust Deed disctosesfjthuaat thAe*peti.t’iognVe.ris a ‘
President and he has been enitru_sted”‘wit’h the.”‘i~*esoo’nsit§gitity’ of
conducting business meeting. Apartthis, Deed discloses
that, it is the collective respo:t1si_bitit3}lot_ithezgtrustees. iricese of a Trust
registered under the provisions ot_thi.e_Vlndia_n.:iiT’vir.i;;’st__’Act, all the Trustees
are cotlectively respionsible tor Trust. if the Deed of
Trust is aione cons:r:Fer_e:d..A it .cle«avrty_sl1ows that, petitioner as a President
is in chargeand Tresponsi’b–leV4io_r.the conduct of affairs of the Trust along
with other trusteesn ‘-
‘ _33…_Howei’ier, the case of the petitioner is that, he was not a
PresidentVno’r”_*iTrugstee as on the date of commission of the offence. in
this re’g.ard–V4’he “referred to the dates of issue of cheques, dishonour and
it notice and reply in respect of Criminal Petition i\ios.507’Oi’20071
gtg~g.5t;7i’r2oo7, 2826/2008, 2828/2008, 2829/2008, 4433/2008, 489012008,
O 489ii2008 and 1759/2009. He submitted that, ati the cheques issued to
D’ these complainants are dated 15.8.2006 and they were dishonoured in
February 2007 and November 2006. Legai notices are issued in
February 2007, March 2007′ and in one case. December 2006.
However, in response to the iegai notice. petitioner has caused a reply
and in the repiy, he has speoiticaiiy averred that, petitioner is vno..i_on.ger a
President of the Trust and on account of enormous irreguE.a’i*i.ti_es;_.ar:d
impropriety found in the administration of the said Trust._h’e_ha.s:’tendered’b
his resignation on i3.ii.2oos. He aiso aiibeyged”‘t_hat,A’he–i.s._;notAy_tvhe
signatory to the cheque nor he is resp_onsibieto’r. the”aftairs”ot’ the «Trust’.a
As far as repiy given by the petitioner ‘i’s;co»ncerned.J_ _it”di.scio’s.esHhis stand
as regard to his resignatiori._A_on’.'”tf3.”‘i andivvfrom the dates
mentioned by the iearned Counset toiojthe as regards to the
iegal notice issue.d«–.t:;y-.thée.A’ corrj’piai.na’nts’_uin “the above mentioned
petitions, they’/”rare;é;ubse;:iuen’t.to~-the re’sign:ation.
34. zLearned– Cou_i’n.siei’.._:ia’poearing for the compiainants have
seriousiy_disput€:d theyaiieged'”resignation given by the petitioner and
:_f”‘i\,a_ve Aythaitgfl’th–e—«aiieged resignation is produced in these
Vpeititiwons». intention to circumvent the iiabéiity. Aiong with
these«criminatiiipétitions, the Detitioner has produced addendum to the
itteed out dated 12″‘ November 2006 registered on 22″” November
‘vv’h.erein it is stated that the petitioner has resigned from the Board
trustees on 13.11.2006 and the Board of Trustees accepted the
“-«resignation in a meeting heid on 21.11.2006. However, this addendum
to the Deed of Trust is not the part of the record before the learned
Magistrate. The material that was available before the teamed
Magistrate was a complaint, sworn statement, dishonouredxC’h_e’ques,
notice and reply, Reply is given in Aprit 2007 and;subs§>d_uéntty.,
Question that arises for consideration is, as to whether could,
consider these defence documents at this stage 3in’«_ex*er’ci_se.ggoffpotrtier
under Section 482 of CLPICH?
35. Magistrate is not required into document
at the time of framing of charg’e.:f:tf’teAhfas frame the charge
only on the basis otthge pro-s’ecutionV’-ntateri’at.1V”.tiofwever, in case of
exercise of :Se:c:tion 482 Cr,P.C., the
Apex Court SC 128 in the matter of
it/I/S.PEPSi m~–vs- SPECIAL JUDICIAL
MAGiSTFiA’TE_i1′.ND’ OTi¥iEi7t_S;._g:’reférring to the earlier decision of the
Apex ceutt tepo}’tettitt- t’e9§2 sftijtap (1) scc 335 in the matter of STATE
oi”? HA’r2.irA»N,4 4l>vs– euajziiii LAL has observed as under:
= it tssettied that High Court can exercise its power of
A ,iudicia.i review in criminal matters. in State of Haryana v.
Bhajan Lat, 1992 Supp (1) SCC 335, this Court examined
the Vextraordinary power under Art.226 of the Constitution
is and also the inherent powers under 8.482 of the Code
, tit’/i_ht’ch it said could be exercised by the High Court either to
“prevent abuse of the process of any Court or otherwise to
secure the ends of justice. White iaying down certain
guidelines where the Court wiii exercise iurisdicti’on under
these provisions, it was atso stated that these guidelines
could not be mfiexibie or laying rigid formuiae to be foiloweo’
43. in this case, complainants allege that the petitioner is a
President of the Trust. Trust deed discloses that the President is
responsible for the affairs of the Trust. By virtue of the office that the
petitioner holds, he becomes in-charge and responsible of the conduct of
the business of the Trust. The cheque is also issued by
is dishonoured and even after the legal notice, the amount
These materials are before the learned l\[la’gis’t–rate.”., ‘i_’aci’e.,twhe3se T
materials do disclose the offence alleged Slectiicnigi’ :38
Section M? of N.l.Act.
44. As far as the resignation,and”the*-.amended–..Tru§st Deed is
concerned, no doubt, these doCuz_.nent,s in these petitions,
but the complainants”–.__ resoondents_”h§*»r_6′ serziioxusly disputed these
documentsuandiyxhave the resignation has come into
existence after the ‘d,iVsfiofrtoui°..,_::o’fr”some of the cheques. ln these
circumstances, itiumavy not’ be”pro”per for this Court to rely on the disputed
and give a rih’d’i’ng.
._ Court can look into the documents or evidence
it produced by-..thevd’efence side, to achieve the purpose of securing justice
ifH”in4.4’orr.V_Epreventing; the abuse of process of the court. To invoke the
there must be clinching and clear material and not on
‘.,’_4Cl’§s»pu§ted documents. When there is a serious dispute as regard to the
“evidence produced by the petitioner, in my opinion, it may not be safe to
*6”?
V33.
refy on those documents. if these documents are ignored, I find that the
materiat produced along with the comptaints and averments made in the
comptaints ,ori’ma facie show the offence atleged.
46. in view of the above circumstances, E am jopvinion
the order of the tria! court does not call for t’nte’r«fete’nce;« 9.
Accordingly, these petitionsVfai.t_and are d»i’simis:sVed.
KNM/~