IN THE HIGH COURT OF KARNATAKA AT BANGALORE BEFORE THE HON BLE MR. JUSTICE S.N.SATYANARAYANA

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1 1 IN THE HIGH COURT OF KARNATAKA AT BANGALORE DATED THIS THE 1 ST DAY OF JULY 2014 BEFORE THE HON BLE MR. JUSTICE S.N.SATYANARAYANA BETWEEN: CRIMINAL PETITION NO.627 OF 2010 C/W CRIMINAL PETITION NO.628 OF 2010 MS.RENUKA RAMNATH, W/O LATE MR.V.RAMNATH, AGED ABOUT 49 YEARS, R/O C WING, 14 TH FLOOR, LOWER PAREL, MUMBAI (DIRECTOR, SUBHIKSHA TRADING SERVICE LIMITED) (BY SRI.K.SHASHI KIRAN SHETTY, ADV.) PETITIONER IN CRL.P.NO.627/2010 BETWEEN: MR.RAJEEV BAKSHI, S/O MR.BALKRISHNA BAKSHI, AGED ABOUT 53 YEARS, R/O C 30, 2 ND FLOOR, WEST END, RAU TALU MARG, NEW DELHI (DIRECTOR, SUBHIKSHA TRADING SERVICE LIMITED) PETITIONER IN CRL.P.NO.628/2010 (BY SRI.K.SHASHI KIRAN SHETTY, ADV.)

2 2 AND: HASHAM INVESTMENTS AND TRADING COMPANY PVT. LTD., HP HOUSE, 5 JAMNABHOOMI MARG, FORT, MUMBAI , REPRESENTED BY AUTHORIZED SIGNATORY SHRI SAMBASIVAM KAILASAM, AND ITS CORPORATE OFFICER AT NO.134, DODDAKANNELLI, SARJAPUR ROAD, BANGALORE COMMON RESPONDENT IN BOTH THE PETITIONS. (BY SRI.RAJENDRA HOLLA, ADV.) *-*-*-*-*-*-*-*-*-* These petitions are filed under Section 482 of the Code of Criminal Procedure, praying to set aside the order dated 7 th November, 2009 passed by the XIII ACMM, at Bangalore in Complaint No.25456/2009 in PCR No.19281/2009 on the file of XIII ACMM, Bangalore (vide Annexure-B), quash the complaint in Complaint No.25456/2009 in PCR No.19281/2009 on the file of XIII ACMM, Bangalore registering C.C.No.25456/2009 (vide Annexure-A) and to the personal appearance of the petitioner in C.C.No.25456/2009 in PCR No.19281/2009 on the file of the XIII ACMM., Bangalore, be dispensed with. These petitions coming on for Final Hearing this day, the Court made the following:

3 3 O R D E R Accused Nos.3 and 4 in C.C.No.25456/2009 on the file of XIII ACMM Court, Bangalore, have come up in these two petitions seeking quashing of the proceedings initiated against them. Admittedly, the proceeding in C.C.No.25456/2009 is pursuant to a complaint filed by respondent herein in PCR No.19281/2009 for the alleged offences punishable under Section 138 read with Section 141 of the Negotiable Instruments Act. It is seen that the complaint is with reference to dishonour of five cheques issued by the first accused company in favour of common respondent in these two petitions, who is the complainant in C.C.No.25456/ The fact that the aforesaid five cheques are with reference to a legal debt due from the first accused company in favour of the complainant is not in dispute. It is further not in dispute that all cheques are dated and are issued with reference to money which was due to be paid on The aforesaid five cheques when presented for

4 4 realisation, came to be dishonoured. In respect of which a common notice was issued to petitioners herein who are accused Nos.3 and 4 in C.C.No.25456/2009. In the notice which was issued on behalf of the complainant, it is stated that the business of M/s.Subhiksha Trading Services Limited is conducted by these two Directors nominated by the ICICI and that they were incharge of the day today business of the Company, which had invested the required funds for functioning of M/s.Subhiksha Trading Services Limited, first accused. 3. It is seen that the notice which was issued by the complainant on is replied by the petitioners on In the reply it is specifically contended that as on the date the cheques were presented for realisation, they had ceased to be the Directors on the Board of M/s.Subhiksha Trading Services Limited, the first accused by virtue of the resignation tendered by them on It is in this background when the complaint was initiated against all the Directors, they have come up in these petitions seeking quashing of the complaint on the ground that they

5 5 were not incharge of the functioning of the first accused and they are not vicariously liable and accordingly the complaint is required to be quashed. 4. In support of the same, learned counsel for the petitioners, Sri.K.Shashi Kiran Shetty would rely upon three Judgments, first of which is in the matter of K.K.Ahuja Vs. V.K.Vora and another reported in (2009) 10 SCC 48, second one is in the matter of Saroj Kumar Poddar Vs. State (NCT of Delhi) and another reported in AIR 2007 SC 912 and the third one is the Judgment of the learned Single Judge of this Court in the matter of M/s. Mother Care (India) Limited (In Liquidation), Rep. by the Official Liquidator, Bangalore Vs. Prof. Ramaswamy P.Aiyar reported in ILR 2004 KAR 1081 and also the unreported Judgment of the High Court of Madras in the matter of Ms.Renuka Ramnath Vs Ms.Bala Deshpande dated On going through all these Judgments, it is seen that the learned counsel for the petitioners is trying to rely upon the first Judgment, which is with reference to a matter where

6 6 the Deputy General Manager of a Book Business Industry having more than 100 branches issuing cheques which are bounced was sought to be impleaded as if he is responsible to the Company for the conduct of its business. While considering this, their Lordship had held as under: 28. If a mere reproduction of the wording of Section 141(1) in the complaint is sufficient to make a person liable to face prosecution, virtually every officer/employee of a company without exception could be impleaded as accused by merely making an averment that at the time when the offence was committed they were in charge of and were responsible to the company for the conduct and business of the company. This would mean that if a company had 100 branches and the cheque issued from one branch was dishonoured, the officers of all the 100 branches could be made accused by simply making an allegation that they were in charge of and were responsible to the company for the conduct of the business of the company. That would be absurd and not intended under the Act.

7 7 6. In the instant case, the facts being slightly different in the petitioners herein being put on the Board of M/s.Subhiksha, the 1 st accused mainly to control and manage the business of the said company to protect the interest of ICICI Bank, which had invested in first accused company, therefore the aforesaid Judgment would not enure to the benefit of the petitioners as they were said to be directly incharge of the business of 1 st accused company for and on behalf of ICICI. Now coming to the second Judgment, which is in the matter of Saroj Kumar Poddar Vs. State (NCT of Delhi) and another reported in AIR 2007 SC 912, the relevant paragraph at 12 would support the case of the complainant inasmuch as the first accused Company is run by the Venture Funds Management Company Limited, namely ICICI, therefore the defence which is taken that they are just nominated Directors on the Board of M/s.Subhiksha Trading Services Limited would not support their case seeking quashing of the proceedings, for the reason that their nomination is neither ornamental nor a mere formality. Since their nomination is to protect the interest of holding

8 8 Company, which has invested the funds to run the said company through the supervision of their Directors. 7. The third Judgment, which is relied upon by the petitioners is in the matter of M/s.Mother Care (India) Limited (In Liquidation), Rep.by the Official Liquidator, Bangalore Vs. Prof. Ramaswamy P.Aiyar reported in ILR 2004 KAR 1081, to seek quashing of the complaint. The said ruling is with reference to date of resignation of the Directors and when it would come into effect. The fact which is required to be established in this proceeding is, whether the petitioner, who is the Director of first respondent company in the Court below, submitted the resignation before the dishonour of the cheques in question and whether the same was accepted by the Board? In the aforesaid Judgment, what was under consideration was whether the resignation in said proceedings was unilateral in character; that is the resignation coming into force on tendering letter for resignation or bilateral in nature; that is the same is required to be accepted when tendered. With the facts on record being different from the facts in the said Judgment, the same would

9 9 not enure to the benefit of the petitioners. Therefore until the petitioners establish the same in trial, they cannot claim that they had tendered resignation prior to dishonour of cheque and the same is accepted by 1 st accused. 8. Now coming to the Judgment with reference to the very same petitioner as Director of M/s.Subhiksha Trading Services Limited, the first accused Company, the petitioners said to have secured the relief of quashing the proceedings with reference to dishonour of cheques relating to Development Credit Bank Limited, at the hands of Madras High Court. After going through all the four Judgments, it is clearly seen that except the fourth Judgment, which is rendered by the High Court of Madras, the facts in the present case is totally different from the facts as stated in the aforesaid three cases. In the instant case, there is a clear attempt on the part of the petitioners herein to escape the clutches of law. It appears, in the proceedings before Madras High Court, the same stand was taken as in the present case. The petitioners pleaded resignation from the post of Director without producing the relevant documents to support the

10 10 same. By accepting the pleadings the High Court of Madras granted the relief of quashing in the matter pertaining to Ms.Renuka Ramnath and others. However, in the instant case, when this Court went beyond the submission regarding representation that they have tendered their resignation through their venture capital company, it is clearly seen that there is nothing on record to show that their resignation being tendered and accepted. In a public limited company, whenever a person either appointed as a Director or subsequently tender his resignation, the same would be informed to ROC by filing prescribed form, which would indicate the date on which such appointment is made and the date on which resignation is tendered. 9. Nodoubt, the Judgment rendered in the matter of M/s. Mother Care (India) Limited (In Liquidation), Rep. by the Official Liquidator, Bangalore Vs. Prof. Ramaswamy P.Aiyar reported in ILR 2004 KAR 1081, would support the case of the petitioners, provided they furnish the required documents from the ROC to demonstrate the date when they submitted resignation. It is but natural the day on which it is submitted

11 11 would be reflected in the form that would be filed before the ROC to show the date of tendering the resignation. If such a document is furnished, then this Court would have considered the status of petitioner Nos.1 and 2 whether they continued as Directors as on the date when cheques were presented and dishonoured or not. 10. In the instant case, no such document is produced with regard to tendering of resignation prior to On the contrary a letter is sought to be produced to demonstrate that the resignation was much earlier to the date of dishonour of cheques. It is seen that an attempt is being made by the petitioners, their employers, namely M/s. ICICI Venture Funds Management Company Limited, in trying to rescue these two petitioners from facing the criminal trial. The documents which are produced does not either support the stand that they are not involved in day today business of the first accused and that their resignation was much prior to the cheques were dishonoured.

12 In that view of the matter, this Court find it difficult to accept that the complaint as against them is required to be quashed. In any event, this Court would observe that the petitioners have right to produce all the documents in the trial to be conducted by the learned Magistrate to demonstrate that they were not incharge of the day today affairs of the business and also demonstrate with appropriate documents that as on the date of the dishonour of cheques, they were not on the Board of the Company. With these observations, both the petitions are dismissed. In view of the dismissal of these petitions, question of considering the impleading application does not arise and accordingly it is dismissed. RS/AGV. Sd/- JUDGE.

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