SATISH MENON vs STATE OF GUJARAT & ANR.

The present petition is filed by the petitioner under

section 482 of the Code of Criminal Procedure, 1871 [" Cr.PC "

for brevity] for quashing and setting aside the complaint, being

Criminal Case No. 926/2011 pending in the court of Ld. Chief

Metropolitan Magistrate(N.I.Act Court No.7), Ahmedabad and

all further consequential proceedings arising therefrom, qua

the present petitioner.

The facts leading to filing of the present petition are

as under;

2.1 The petitioner was appointed as a Executive

Director (Sales) in Corporate office of M/s. Wetell Everest Cap

Solutions Pvt. Ltd. (Original accused no.1) based at 224-225,

Shreeram Tower, Kingsway, Sadar, Nagpur, on 16.04.2009.

The letter of appointment, intimating the same was duly

signed by Chairman-cum-Managing Director of the Company,

viz., Mr. Amardeep Singh Thakur (Ori. Accused no.4).

Thereafter, the petitioner, vide letter dated 04.03.2010,

tendered resignation as Executive Director (Sales), which was

accepted by the Board of Directors and Company and the

petitioner ceased to be a Executive Director with effect from

05.03.2010. Meanwhile, an agreement was executed between

the respondent no.2 and M/s. Wetell Everest Cap Solution Pvt.

Ltd. on 22.07.2009, in pursuant to which, the respondent no.2

invested Rs. 2,00,000/- in the said company with a return on

investment of Rs. 6,000/- per month for the next 36 months

and pay back of principal amount at the end of 36th Months

was agreed upon in the said agreement.

2.2 It is further stated that as stated by the respondent

no.2 in his complaint of Criminal Case No. 926/2011, the

breach of contract was committed by not adhering to the

terms and conditions agreed upon and not paying the return

on investment. Having committed breach of contract,

respondent no.2 called upon the original accused to end the

agreement and demanded all the dues. Thus, the accused no.4

regretted the same and assured to fulfill the conditions of the

agreement, but failed to do so. Thereafter, respondent no.2

called off the said deal and demanded his investment back and

thus, cheque bearing No. 024169, drawn on Axis Bank Ltd,

Priority Branch, Hyderabad-34, dated 02.07.2010 was issued to

the respondent no.2. A request was made to the respondent

no.2 to deposit the said cheque on 27.12.2010 and thus, the

cheque was deposited with the respondents banker namely the

Kalupur Commercial Co-op. Bank Ltd, Ahmedabad for

realization. But, the said cheque was dishonoured, and the

reason assigned being "Account Blocked", and the same was

informed to the respondent no.2 by his banker on 28.12.2010.

Thereafter, the respondent no.2 approached the original

accused, but there was no response from them. Thus, a legal

notice was sent to the original accused on 29.12.2010 under

section 138(B) of the Negotiable Instruments Act, 1881

through RPAD and UPC Post, which was received only by

original accused no.1. Neither did the original accused no.2 to

4 (including the present petitioner) claimed the notice nor has

made any payment till date, and therefore, the respondent

no.2 filed the impugned complaint.

Heard Mr. Maulik N. Shah, learned advocate

appearing for the petitioner, Mr. PV Patadiya, learned

advocate appearing for the respondent no.2 and learned APP

Shri KP Raval for the respondent no.1-State.

It is submitted by Mr. Maulik N. Shah, learned

advocate for the petitioner that the petitioner has not

committed any offence, as alleged in the Criminal Case No.

926/2011 filed in the court of learned Metropolitan Magistrate

(N. I. Act Court No.7), Ahmedabad, for the offence punishable

under Section 138 of the Negotiable Instruments Act. The

petitioner is unnecessarily dragged into criminal proceedings.

It is further argued that the petitioner was appointed as

Executive Director (Sales) in the Corporate Office of Wetell

Everest Cap Solutions Pvt. Ltd. and resigned from the said post

on 4th March, 2010. His resignation was accepted with effect

from 5th March, 2010. That, he was not a part of the Company,

when the alleged offence was committed. The cheque in

dispute was issued by the Company to the respondent no.2 on

2nd July, 2010 and was deposited on 27th December, 2010 and

it was dishonoured on 28th December, 2010. That, vicarious

liability can not be fastened upon the shoulder of the

petitioner, as he was not incharge of, and responsible to the

Company for the conduct of the business of the company.

That, he was not concerned with the day to day activities of

the Company during all these times, as he ceases to be a

Director from 5th March, 2010 with effect from 14th April, 2010.

That, the offence was allegedly committed under Section 138

of the Negotiable Instruments Act on 28th December, 2010, i.e.

after 8 months of the resignation of the petitioner. As the

petitioner was neither a Director nor an employee, nor in any

way concerned with affairs of Wetell Everest Cap Solutions Pvt.

Ltd., and hence, there is no question of vicarious liability of the

petitioner. That, no liability has been assigned upon the

petitioner in the impugned complaint in Criminal Case No.

926/2011. That, there is no specific allegation against the

petitioner for holding him liable for the offence, as alleged in

the complaint. That, he has wrongly been involved in the

present transaction, making him part of said offence. That, no

case is made out against the present petitioner for the offence

punishable under section 138 of the Negotiable Instruments

Act, as he has not issued the impugned cheque towards any

legally enforceable debt, or in discharge of any other liability.

That, no ingredients of Section 138 of the Negotiable

Instruments Act are attracted against the petitioner. That, no

notice has been served upon the petitioner under Section 138

of the Negotiable Instruments Act. After his resignation,

necessary fee in respect of Form No. DIR-11 was paid by the

petitioner with penalty on 12th February, 2015 and was

forwarded to the Registrar of Companies. In support of his

arguments, learned advocate Mr. Maulik N. Shah appearing for

the petitioner has placed reliance upon a decision of Karnataka

High Court in case of Mother Care (India) Ltd Vs. Prof.

Ramaswamy P. Aiyar reported in 2004 51 SCL 243 Kar.

Ultimately, he has requested to quash the impugned

complaint, being Criminal Case No. 926/2011 pending before

the Court of Metropolitan Magistrate (N.I. Act Court No.7),

Ahmedabad, in the interest of justice, qua the present

petitioner.

On the other hand, learned advocate Mr. P.V.

Patadiya appearing for the respondent no.2 vehemently

opposed the arguments advanced for and on behalf of the

petitioner and submitted that letter of appointment in favour of

the petitioner as Executive Director (Sales) produced on

record, seems to be forged one. As the date of appointment of

the petitioner is shown as 16th April, 2009, whereas from the

record of the Ministry of Corporate Affairs, the date of

appointment is shown as 1st August, 2009. That, the petitioner

is continued in the Company as a Director till today, as per the

record of Ministry of Corporate Affairs. That, Form No. 32,

which was required to be filled up under the Companies Act,

1956, is not filed by the Company till today, and respondent

no.2 is not informed that petitioner has resigned as Director

from the Company. That, the petitioner has not placed

anything on record to show that he had resigned from the

Company. That, it is presumed that the petitioner is continuing

as Executive Director (Sales) of the Company. That, notice to

the petitioner was sent by RPAD as well as UPC, which was

served at the address of the company, in which, the name of

the petitioner as Executive Director(Sales) continues. That, it

cannot be said that the petitioner is not liable for the business

affairs of the Company at all. He has placed his reliance on the

on the decision of Hon''ble Supreme Court of India passed in

Malwa Cotton and Spinning Mills Limited V/s. Virsa Singh Sidhu

and Others reported in "2008(0) GLHEL-SC 42012", holding

that effect of delay in presentation of form No. 32 before the

Registrar of Companies is essentially a matter of trial. That,

whether the petitioner intimated the Company and whether

there was any resolution accepting the resignation of the

petitioner are matters, in respect of which, evidence had to be

led. That, question of resigning from the Directorship of the

company cannot be decided in the present petition filed under

Section 482 of the Code of Criminal Procedure, as it is a pure

question of fact, which is required to be adjudicated by the

learned trial Court and this Court cannot take evidence

summarily, which ought to be led elaborately before the trial

Court. That, the case of the respondent no.2 is squarely

covered by a decision of Hon''ble Supreme Court rendered in

the case of Malwa Cotton and Spinning Mills Limited V/s. Virsa

Singh Sidhu and Others reported in "2008(0) GLHEL-SC

42012". In this case, it was held by the Hon''ble Supreme Court

that when fact of resignation and its correctness have been

disputed and not accepted by the respondent no.2-

complainant thus, quashing of proceedings would be improper.

Hence, it was requested by Mr. PV Patadiya, learned advocate

for the respondent no.2 to dismiss the present petition.

Learned APP Mr. KP Raval appearing for the

respondent no.1 has supported the arguments advanced by

learned advocate Mr. PV Patadiya appearing for the

respondent no.2 and submitted that the liability of the

petitioner would not come to an end, even though, he has

resigned from the Company from the post of Executive

Director (Sales). That, resignation itself is doubted by the

respondent no.2, as it was not accepted by the Company and

Form no.32 was not forwarded by him in time to the Registrar

of Companies. That, the petitioner shall also be vicariously

liable for the day-to-day affairs of the Company. That, he has

not produced on record any letter of forwarding his resignation

to the Company and the appointment date is differed from the

letter produced on record and the record of Ministry of

Corporate Affairs. As the question of facts is required to be

adjudged by leading evidence before the learned trial Court

and hence, it cannot be decided in the proceedings under

Section 482 of the Code. At the end of his arguments, he

requested to dismiss the present petition.

Considering the facts of the case, submissions

made by learned advocates of the respective parties and

documentary evidence produced on the record by either side,

it is a undisputed fact that the petitioner was appointed as

Executive Director (Sales) of Wetell Everest Cap Solutions Pvt.

Limited at Hyderabad. There is some difference in the

appointment date of the petitioner as Executive Director

(Sales) viz., such as 16th April, 2009 and 1st August, 2009

shown in the appointment letter as well as in record of the

Ministry of Corporate Affairs, respectively. It is a submission of

the petitioner that he has resigned from the Company vide

letter dated 4th March, 2010 from the Directorship of the

Company, which was accepted by the Board of Directors, and

the Company relieved the petitioner from the post and he

ceased to be a Director with effect from 5th March, 2010. It is

pertinent to note that the resignation letter given by the

petitioner dated 4th March, 2010 is not produced on record by

the petitioner, though some of the correspondence accepting

resignation from the petitioner and resolution passed by the

Company are produced on the record, relieving the petitioner

from the post of Director. As per the Board resolution, it was

resolved that the Company had received the resignation of

Satish Menon from the post of Executive Director

(Sales)/Director of Wetell Everest Cap Solutions Limited vide

resignation letter dated 4th March, 2010 and it was resolved by

the Company, after due deliberation at the Board meeting that

it was accepted with effect from 5th March, 2010. The

respondent no.2 has challenged the aforesaid resolution

passed by the Company stating that the petitioner is continued

as a Director in the Company and no such letter was received

by him from the company, as alleged that the petitioner had

resigned from the post. It is further contended by the

respondent no.2 that Company had never informed him about

receiving of any letter from the petitioner resigning from the

Company. Therefore, the question of resignation from the

Directorship of the Company cannot be decided in the present

petition filed under Section 482 of the Code, because it is a

question of fact, which is required to be adjudicated by the trial

court. It is also pertinent to note that being a Director, the

petitioner was obliged to present and forward the Form No. 32

to the Registrar of Companies, but it was not forwarded by the

petitioner, in time. Later on, it appears that by paying

necessary fees and additional charges, it was received by

Ministry of Corporate Affairs on 12th February, 2015 stating

that the petitioner has resigned from the Company as

Executive Director (Sales) of the Company, but when the

respondent no.2 has not accepted and challenged it by saying

that the petitioner is still continued as Executive Director of the

Company and he had never received letter dated 4 th March,

2010 about the resignation of the petitioner from the

Directorship of the Company and not received any letter or

information from the company accepting the prayer of the

petitioner. Thus, this factual aspect would not be decided or

cannot be decided by the High Court in an application filed

under section 482 of the Code of Criminal Procedure and it can

only be decided by the trial court by recording necessary

evidence from the either sides. In case of Mother Care(India)

Ltd v/s. Prof. Ramaswamy P. Aiyar (Supra), it is held that

merely because the Company has not filed Form No.32, as

required to be filed and same is not registered with the

Registrar of Companies, it cannot be said that the applicant

continues to be the Director of the company under liquidation.

From the other side, learned advocate Mr. PV

Patadiya for the respondent no.2 has relied a decision in case

of Malwa Cotton and Spinning Mills Limited V/s. Virsa Singh

Sidhu and Others (Supra), in which also, the respondent no.1

therein had raised a ground that he had resigned from the

Directorship before cheques were issued and the petition was

allowed on the ground that no specific allegation against other

accused person was made. It was held by the Apex Court that

the fact of resignation and its correctness have been

established in the trial Court, and therefore, the High Court

could not have made the impugned judgment, while dealing

with application under Section 482 of the Code. It was further

held that what was the effect of delayed presentation of Form

No. 32 before the Registrar of Companies was essentially a

matter of trial and whether the respondent therein had

intimated company and whether there was any resolution

made accepting his resignation were matters in respect of

which, evidence had to be led, and therefore, quashing of

proceeding so far as the petitioner therein is concerned is

improper and order of the High Court was set aside by allowing

the appeal.

Here also, resignation of the petitioner and

resolution passed by the Company, accepting resignation of

the petitioner, is disputed by the respondent no.2, which is a

factual aspect. Forwarding of Form No. 32 by the petitioner to

the Registrar of Companies would also be a matter of trial, and

therefore, this Court cannot enter into the facts of the case, or

the dispute, while deciding application for discharge under

section 482 of the Code, and therefore, liability, if any, of the

petitioner with the Company shall be decided by the trial court,

on leading of evidence by either sides and not by this Court, at

this juncture. Hence, the present petition fails and is hereby

dismissed.

Interim relief granted earlier by this court in terms

of Para 8(C) of the petition stands vacated henceforth. Notice

is discharged with no order as to costs.