Sri Sanjay Dattatray Balerao, v. The State Of Telangana.,

HON'BLE DR. JUSTICE B. SIVA SANKARA RAO CRIMINAL PETITION No.2368 of 2017 ORDER:

The petitioner is the sole accused of C.C.No.172 of 2016 on the file of I Special Magistrate Court, Cyberabad at Malkajgiri, for the offence under Section 138 of Negotiable Instruments Act (for short 'the Act') outcome of the private complaint filed by the 2nd respondent-complainant.

As per said private complaint averments, complainant approached the accused in 2013 for purchase of flat No.1004 of 10th floor in the apartment for Rs.71,00,000/- and out of which, the complainant paid Rs.54,90,000/- from 11.04.2013 to 31.03.2015 which is pursuant to the undertaking to complete the construction of the apartment and to deliver possession before 2014 and the accused agreed to pay interest for any delay in delivering possession by completion of construction and however, accused did not even commence the work and for the said amount repayment with interest, the accused issued 2 cheques vide bearing No.053193 dated 31.03.2016 drawn on TJSB Bank, Rabodi, Thane, for Rs.54,90,000/- principal amount and another cheque bearing No.053194 of even date drawn on same bank for Rs.

13,17,600/- towards interest and when the complainant presented the cheques through Corporation Bank, Sainikpuri Branch, on 24.06.2016, those were returned dishonoured for insufficiency of funds and bank intimation received on 29.06.2016. The accused entered MOU on 24.04.

cheques issued are for legally enforceable debt and thereby from the cause of action the complaint filed for the offence committed by him after statutory notice acknowledged by the accused. The Memorandum of Understanding shows between the complainant-Chileveru Prameela Reddy as 2nd party and M/s. Aditya Enterprises Project Vartak Nagar, through its Associate Sanjay Dattatray Bhalerao (for short 'M/s. Aditya Enterprises'). The MOU was dated 24.04.2015 as per the stamp of treasury office of Thane, Maharastra and the receipt for Rs.3,40,000/- vide cheque No.455458 dated 11.04.2013 received from complainant is acknowledged by M/s. Aditya Enterprises and signed by the accused by mentioning as associate and for the other cash receipt of Rs.42,50,000/- was also acknowledged by the accused mentioned as associate of M/s. Aditya Enterprises.

The 2 cheques in question which are subject matter of the criminal case for the offence under Section 138 of the Act, one for Rs.54,90,000/- and other for Rs.13,17,600/- were signed by the accused as authorized signatory of M/s. Aditya Enterprises, the registered notice from the dishonour of cheques on behalf of the complainant to the accused Sanjay Dattatray Bhalerao dated 13.07.2016 and as per the complainant, the accused received and acknowledged said notice on 27.07.2016 and failed to pay with no reply even.

Coming to the quash petition contentions mainly impugning the sustainability of the private complaint cognizance order are that the alleged amounts paid to M/s. Aditya Enterprises which is a registered partnership firm, a juristic person to be treated as

company under Section 141 of the Act and without impleading the company as accused in the complaint, the complainant cannot sustain the prosecution by impleading the drawer of the cheque on behalf of the company and the continuation of proceedings are abuse of process and liable to be quashed.

The learned counsel for the quash petitioner reiterated the same. The notice even sent to the 2nd respondent, there is no response to the proof of service by appearance, hence taken as heard.

Section 141 of the Act which speaks of offence by companies reads as follows:

"Section 141 Offences by companies. -

(1) If the person committing an offence under section 138 is a company, every person who, at the time the offence was committed, was in charge of, and was responsible to the company for the conduct of the business of the company, as well as the company, shall be deemed to be guilty of the offence and shall be liable to be proceeded against and punished accordingly:

Provided that nothing contained in this sub-section shall render any person liable to punishment if he proves that the offence was committed without his knowledge, or that he had exercised all due diligence to prevent the commission of such offence: [Provided further that where a person is nominated as a Director of a company by virtue of his holding any office or employment in the Central Government or State Government or a financial corporation owned or controlled by Central Government or the State Government, as the case may be, he shall not be liable for prosecution under this Chapter.]

(2) Notwithstanding anything contained in sub-section (1), where any offence under this Act has been committed by a company and it is proved that the offence has been committed with the consent or connivance of, or is attributable to, any neglect on the part of, any director, manager, secretary or other officer of the company, such director, manager, secretary or other officer shall

also be deemed to be 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 any body corporate and includes a firm or other association of individuals; and (b) "director", in relation to a firm, means a partner in the firm." From the above every person who, at the time the offence was committed, was in charge of, and was responsible to the company for the conduct of the business of the company, as well as the company, shall be deemed to be guilty of the offence and shall be liable to be proceeded against and punished accordingly.

It is the case of the quash petitioner/accused of not liable without impleadment of the firm by virtue of the provisos of Section 141(1) of the Act supra, though he cannot otherwise claim any lack of knowledge from the legal notice served on him as Managing Partner of the firm and the MOU also refers him as such it is by virtue of the statutory legal fiction every person in charge of the affairs of the company deemed liable as also laid down in Aneeta Hada Vs. Godfather Travels & Tours Private Limited1.

Coming to the specific allegation in the complaint referred supra, it is the complainant approached the accused Sanjay Dattatray Bhalerao in 2013 for purchase of the flat and stated paid the amounts to him for purchase of the flat as part of the consideration that could not be completed and undertook to pay interest for not handing over by completion of construction for not started and even MOU speaks the entity M/s. Aditya Enterprises represented by the accused as its associate. This Court in this regard held in Narendra Kurangi and Others Vs.

India Agritech (P) Limited, Hyderabad and Another2 that mere serving of notice and silence with no reply no way make the Director of the Company liable in the absence of specific accusation of responsible for the day to day affairs by referring also to some of the Constitution Bench expressions of the Apex Court among Standard Chartered Bank Vs.

Directorate of Enforcement3, Iridium India Telecom Limited Vs. Motorola Inc.4, Sunil Bharti Mittal Vs. CBI5 and Aneeta Hada (II) supra besides SMS Pharmaceuticals Limited Vs. Neeta Bhalla6. In Aneeta Hada (II) supra of the Constitution Bench by referring to most of above expressions, besides holding the expression in Anil Hada Vs.

India Accrelic Limited7, as not good law and also it is made clear as held in Aneeta Hada (I) in 2008 that without the company is impleaded as accused, the proceedings against others cannot sustain from the very wording of Section 141 of the Act of "as well as the company" makes it unmistakably clear that when the company can be prosecuted, then only persons mentioned in the other categories could be vicariously liable and arraying the company as accused is imperative for other categories of offenders to be brought into the dragnet on the touch stone of vicarious liability. The later two Judge Bench of the Apex Court in Anil Gupta Vs. Star India Private Limited8 approved Aneeta Hada (II) by overruling Anil Hada and also by referring to U.P. Pollution Board Vs. Modi Distillery9 and State of Madras Vs. C.V. 2 2016 (1) ALD (Crl.)

Parekh10, besides Saroj Kumar Poddar Vs. State11, National Small Industries Corporation Vs. Harmeet Singh12 and Central Bank of India Vs. Asian Global Limited13, Poojari Ravinder Devi Dasani Vs. State of Maharashtra14.

Here coming back to the facts as per the complainant from the complaint averments, the complainant approached the accused Sanjay Dattatray Bhalerao in 2013 and paid the amounts to him and the receipts passed by the accused on behalf of M/s. Aditya Enterprises and no doubt the cheques in question issued is from the account of M/s. Aditya Enterprises signed by the accused. Having regard to the above and from the principle referred supra for the cheques in question issued by M/s. Aditya Enterprises signed by the accused not individually but on behalf of M/s. Aditya Enterprises as its associate being responsible to the day to day affairs of the company, the company is also the necessary party and without impleadment of M/s. Aditya Enterprises, prosecution against accused is not sustainable. However that itself is not a ground to quash the proceedings in the facts on hand but for to drive to invoke Section 142 of the Act by filing petition for delayed impleadment of the company.

Having regard to the above and from the proviso of Section 142 (1) of the Act provides that even after the prescribed period of limitation the Magistrate Court can take cognizance if the 10 (1970) 3 SCC 491 11 (2007) 3 SCC 693 12 (2010) 3 SCC 330 13 2010 (2) ALD (Crl.) 564 (SC) 14 AIR 2015 SC 675

complainant satisfies the Court that there is sufficient cause for not making the complaint within such period. With that analogy the complainant is to be given liberty to implead M/s. Aditya Enterprises as 1st accused by rectifying the array of the sole accused Sanjay Dattatray Bhalerao as 2nd accused. Accordingly and in the result, the Criminal Petition is allowed to that extent by remanding the matter back to the trial Court and the complainant is given liberty to file application for impleadment of M/s. Aditya Enterprises invoking Section 142 (1) proviso of the amended Act with delay condonation and the trial Court to decide the same on own merits.

Consequently, miscellaneous petitions, if any shall stand closed.

_____________________________________ JUSTICE Dr. B.SIVA SANKARA RAO Date: 17.08.2017 ska