Smt. Prasannadevi vs State of Tamil Nadu

M. Jeyapaul, J.—The revision is directed by the 7th accused aggrieved by the dismissal of the petition filed u/s 239 of the Code of Criminal

Procedure seeking to discharge her from the criminal proceedings in C.C. No. 47 of 2006.

The revision petitioner ranked as A7 has contended that she had nothing to do with the partnership firm which is facing trial alongwith the other

accused for the offence alleged to have been committed under the Tamil Nadu Protection of Interest of Depositors Act, 1997. The financial

institution was purely a private business venture of the deceased Balasundaram. She was not a partner. Nor was she involved in the affairs of the

financial institution. The statements obtained by the respondent police from various witnesses do not make out any offence as against the petitioner.

She has been implicated for the simple reason that she is the wife of the second accused N. Kanagasabai. Therefore, the petitioner has sought for

discharge from the criminal prosecution launched by the respondent.

The respondent has contended that A1 to A8 committed default in repayment of deposits and interests to the de facto complainants even after

maturity. The petitioner ranked as A7 actively participated in the business of the financial establishment inasmuch as she canvassed and collected

deposits from the depositors. It is contended that as she had taken responsibility for the management of the affairs of the financial establishment,

she has been charge-sheeted by the respondent police.

The points that arise for determination is

(1)whether the petitioner, who allegedly canvassed for mobilising deposit for the financial institution is liable to answer the charge u/s 5 of the

TNPID Act.

(2) Whether the petitioner was responsible for the management of the affairs of the financial institution.

Learned Counsel appearing for the petitioner would vehemently submit that the first information report does not disclose that she ever canvassed

for mobilising deposits for the financial institution. He would also submit that mere canvassing for the business of the partnership firm will not

amount to shouldering the responsibility of the management of the affairs of the financial institution. Therefore, he would submit that the petitioner,

who has been roped in for the offence u/s 5 of the TNPID Act just because she happened to be the wife of the second accused is entitled for

discharge from the criminal proceedings.

Learned Government Advocate (Criminal Side) would vehemently contend that though the first information report which set the law in motion

did not disclose the specific role of the petitioner herein, the other depositors, who lost the money, have spoken to the fact that the petitioner did

canvass for mobilising for the financial institution. It is his further submission that the witnesses examined by the respondent police during the course

of investigation have also spoken to the aforesaid specific role played by the petitioner. Canvassing for deposit for a financial institution would

definitely amount to participation in the management of the affairs of the firm. Therefore, he would submit that the petitioner cannot shirk her

responsibility in the management of the firm and lawfully seek for discharge.

The first information report, as such, which set the law in motion, does not disclose the specific role played by the petitioner herein. But, the

witnesses examined during the course of investigation u/s 161 of the Code of Criminal Procedure have specifically spoken to the fact that the

petitioner canvassed for deposit for the financial institution. In a police case, the court will have to weigh not only the first information report but

also the statements recorded u/s 161 of the Code of Criminal Procedure to come to know whether any offence was made out against a particular

accused. The statements recorded from the witnesses by the investigating agency cannot be segregated from the first information report to arrive at

a decision as to whether or not a case is made out as against the accused.

The learned Counsel appearing for the petitioner referred to the authority in Sabitha Ramamurthy and Another Vs. R.B.S.

Channabasavaradhya, . That was a case arisen u/s 138 of the Negotiable Instruments Act. In the private complaint lodged by the aggrieved person

on dishonour of the cheque, he did not allege that the accused was in charge of and responsible for the conduct of the business of the Company.

The statement of the witnesses examined on the side of the complainant also did not speak about the charge that the accused was in charge of the

affairs of the business of the Company. Therefore, the Supreme Court held that the requirement of Section 141 of the Negotiable Instruments Act,

1881 was not complied with and as a result of which, the criminal proceedings as against the 6th and 8th accused therein were ordered to be

quashed.

Here, in this case, though the first information report which set the law in motion did not disclose the specific allegation that the petitioner herein

was responsible for the management of the affairs of the financial institution, the statements recorded from various witnesses by the respondent

police would indicate that the petitioner canvassed for the deposit for the partnership firm. Therefore, the aforesaid ratio does not apply to the facts

and circumstances of this case.

It has been held in K. Srikanth Singh Vs. North East Securities Ltd. and Another, as follows:

It is not in dispute that for showing a vicarious liability of a Director of a Company, upon the complaint it is incumbent to plead that the accused

was responsible to the Company for the conduct of the business of the Company. No such allegation having been made in the Complaint Petition,

in our opinion, the High Court was not correct in passing the impugned judgment. The allegation contained in the Complaint Petition was that all the

accused Directors participated in the negotiations for obtaining financial help for the accused No. 1, which in our opinion, would not give rise to an

inference that the appellant was responsible for day-to-day affairs of the Company.

That was a case arisen u/s 138 of the Negotiable Instruments Act. The private complaint procedure is being adhered to while taking

cognizance. Further, the Supreme Court has not held therein that the statements of the complainant and the other witnesses examined on his side

will have no relevance to decide as to whether any case was made out. But, here, in the instant case, based on the complaint given by the de facto

complainant, investigation was taken up by the respondent police and witnesses were examined. Therefore, as already observed by this Court, the

first information report cannot be dissected from the statements recorded by the investigating agency from the witnesses. Further, the first

information report is not an encyclopaedia which is supposed to contain all the relevant particulars regarding a particular subject.

In view of the above facts and circumstances, the court finds that even if the first information report does not disclose the exact role played by

the accused, the accused can be charge-sheeted if the witnesses examined by the prosecuting agency come out with serious allegation disclosing

commission of offence. It appears that the prosecuting agency, on the assumption that canvassing spree undertaken by the petitioner herein would

amount to shouldering the responsibility of the management of the affairs of the firm, laid a charge sheet as against the petitioner also.

The fact remains that the petitioner was not a partner of the partnership firm charged in this case u/s 5 of the TNPID Act. The only allegation

levelled by the witnesses examined on the side of the prosecuting agency is that the petitioner canvassed for deposits for the financial institution. To

invoke the penal provision u/s 5 of the TNPID Act, one should shoulder the responsibility of managing the affairs of the financial firm or company. I

find that the provision u/s 5 of the TNPID Act has been drafted very carefully. A person who merely manages the affairs of a firm or a company

viz., Clerks, Accountants, Office Assistants, who are just paid servants would not be responsible for the management in the sense that they are not

answerable to the claim made against the financial firm. In other words, a person, who simply manages the affairs of a firm, cannot be said to have

taken the responsibility of answering the allegation of mis-management of the affairs of the firm. The Clerks, Accountants and Office Assistants

come under the said category. They have been given a role to manage the affairs of the partnership firm, but, they are not responsible for the mis-

management of the firm when the same is under challenge by a third party. All the persons who manage the affairs of the financial institution need

not necessarily be responsible for the management of the affairs of the institution. What is required u/s 5 of the TNPID Act is that the person

charged should have been responsible for the management of the affairs of the institution. The persons who simply manages the affairs of the

financial institution as paid servant fall out the ambit and scope of the aforesaid provision of law.

The canvassing agents, as such, cannot be held responsible for the management of the affairs of the firm. A canvassing agent may contribute his

mite by mobilising funds for the financial firm on contract basis for payment of brokerage or service charges. But, by no stretch of imagination, we

can say that such a person shoulders the responsibility of the management of the affairs of the firm. A canvassing agent gives a rosy picture about

the firm to mobilise the deposit. It is only the depositors who shall verify the veracity of such embellished version regarding the performance of a

firm and the financial soundness thereof with the person who is responsible for the management of the firm and offer his deposit.

Sometimes, all family members, who have nothing to do with the financial bungling of the institution are roped in on the mere allegation that they

started canvassing for deposit for the financial institution. Such a practice should be stopped forthwith as otherwise innocent victims just because

they happened to be the relatives of the mis-managed financial institution would be roped in and they have to undergo the ordeal of criminal trial.

In view of the above facts and circumstances, the court having deprecated the practice of implicating the innocent relatives of the persons who

are responsible for the management of the affairs of the firm, it is held that the Clerks, Accountants and Office Assistants who are working in the

financial institution as well as the canvassing agents shall not be prosecuted for the offence u/s 5 of the TNPID Act as they do not shoulder the

responsibility for the management or mis-management of the affairs of the firm or company. The Trial Court has improperly dismissed the plea of

the petitioner for discharge on the ground that there are allegations in the statements recorded by the investigating agency from the witnesses that

the petitioner did canvass for the deposit for the financial institution.

Therefore, the order passed by the the Special Judge, Chennai under TNPID Act, 1997 stands set aside and the petitioner is discharged from

the criminal proceedings in C.C. No. 47 of 2006 and as a consequence, the criminal revision case stands allowed. The connected Miscellaneous

Petition stands closed.