CRLP/3449/2022 of Murugudu Lakshmi Narayana, Vs The State of Andhra Pradesh, on 22 September 2026

COMMON ORDER:

1. These Criminal Petitions are filed by the petitioner/Accused No.5 to quash the proceedings against him in C.C. Nos.1579 of 2020, 304 of 2019, 1658 of 2020, 891 of 2020 and 3571 of 2019 on the file of the Judicial Magistrate of First Class for Special Mobile Court, Guntur, for the offences punishable under Sections 138, 141, 142-A and 143 of the Negotiable Instruments Act, 1881 (hereinafter referred to as 'the Act').

2. The brief facts of the cases are as follows:

a) Respondent No.2/complainant in all these Criminal Petitions filed complaints under Sections 138, 141, 142-A and 143 of the Act against the petitioners on the file of Judicial Magistrate of First Class for Special Mobile Court, Guntur, on the ground that A.1 is the company, A.2 is its Managing Director and A.3 to A.7 are the Directors of A.1-Company, which is engaged in the cotton business alleging that at the request of all the accused, respondent No.2 supplied cotton on credit basis under different invoices for the business of A.1-Company. All the accused promised to make payment within the stipulated time and in default, to pay interest at 24% per annum on the unpaid sale consideration. According to the invoices, an amount of Rs.66,62,658/- was due towards principal and Rs.56,15,926/- towards interest, totalling Rs.1,22,78,584/- payable by A.1-Company. On repeated demands made by respondent No.2, accused No.2 on behalf of A.1-Company and with the consent of Accused Nos.3 to 7, issued five cheques vide 679478, dt. 04.06.2019; 240824 dt.10.06.2019; 679479 dt.06.06.2019; 769352 dt.24.06.2019 and 769369 dt. 10.05.2019 towards part-payments of the amounts due to respondent No.2 and when the complainant presented the cheques, the same were returned vide memos dated 13.06.2019, 18.06.2019,

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15.06.2019, 25.06.2019 and 27.05.2019 with the endorsement ‘FUNDS INSUFFICIENT’. Despite service of notice dated 08.07.2019 issued by respondent No.2 to all the accused, the amount was not paid. Consequently, the complaints came to be filed.

3. Heard Sri N. Ashwani Kumar, learned counsel for the petitioner/Accused No.5, Sri K.Siva Ramakrishna, learned counsel for respondent No.2 and the learned Assistant Public Prosecutor. Perused the material available on record.

4. Learned counsel for the petitioner submits that the subject matter of these Criminal Petitions is squarely covered by the order passed by a coordinate Bench of this Court in Criminal Petition No.7671 of 2021 dated 10.01.2024 and the common order in Crl.P. Nos.5902 of 2022 and batch dated 24.01.2025. Learned counsel has also filed a memo enclosing the minutes of the A.1-Company, to show that the resignation letter dated 05.07.2018 given by the petitioner/ accused No.5 is accepted by the board of directors vide resolution dated 12.08.2018.

5. It is well settled that Section 141 of the Act does not fasten criminal liability on every Director merely because such person held the office of Director. The complaint must contain the requisite averments showing that the person sought to be prosecuted was, at the relevant time, in charge of and responsible for the conduct of the business of the company. The nature and extent of such averments have to be considered in the light of the facts of each case.

6. In the present case, the material placed on record shows that the petitioner had tendered his resignation from the office of Director of A.1- Company and that the same was accepted with effect from 12.08.2018. The subject cheques were issued thereafter. The petitioner is admittedly not the signatory to the alleged cheques. The petitioner is arrayed as accused No.5

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in the alleged complaints and the details in respect of the cases are as follows: Sl. No. Criminal Petition No. C.C. No. Date of issuance of cheque and amount in Rupees Date of dishonor of cheque Date of appointmen t of the petitioner as director Date of resignation letter Date of acceptance of resignation

679478, 04.06.2019 15 lakhs 13.06.2019 28.06.2018 05.07.2018 12.08.2018

240824 10.06.2019 10 lakhs 18.06.2019 28.06.2018 05.07.2018 12.08.2018

679479 06.06.2019 15 lakhs 15.06.2019 28.06.2018 05.07.2018 12.08.2018

769352, 24.06.2019 15 lakhs 25.06.2019 28.06.2018 05.07.2018 12.08.2018

769369, 10.05.2019 10 lakhs 27.05.2019 28.06.2018 05.07.2018 12.08.2018

7. Thus, as on the date of issuance of the subject cheques, the petitioner had ceased to be a Director of A.1-Company. The material placed before this Court, particularly the minutes of the company relied upon by the petitioner, constitutes unimpeachable material for the limited purpose of examining whether continuation of the criminal proceedings against the petitioner would amount to an abuse of the process of the Court.

8. In the absence of any specific material showing that the petitioner was in charge of and responsible for the conduct of the business of A.1-Company on the relevant date, and in view of the admitted position that he had ceased to be a Director with effect from 12.08.2018 and was not a signatory to the subject cheques, the statutory requirements for proceeding against him under Section 141 of the Act are not made out.

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9. Learned counsel for the petitioner relied upon the following judgments: I) SMS Pharmaceuticals Limited v. Neeta Bhalla 1, wherein the Hon'ble Supreme Court held that liability under Section 141 of the Act arises on account of the conduct, act or omission of a person and not merely by reason of holding an office or position in a company. II) Anita Malhotra v. Apparel Export Promotion Council and another2, wherein the Hon'ble Supreme Court considered the liability of a former Director and held, in the facts of that case, that a person who had resigned before the commission of the offence could not be held responsible merely on the basis of his former directorship. III). Gunmala Sales Pvt. Ltd. v. Anu Mehta and others 3, having considered the scope of interference under Section 482 Cr.P.C. in proceedings against Directors of a company, Hon’ble Supreme Court observed, inter alia, that where the complaint contains only general averments that the Directors were in charge of and responsible for the conduct of the business of the company, the Court may examine whether there are unimpeachable or incontrovertible circumstances showing that a particular Director was not in charge of and responsible for the conduct of the business at the relevant time.

10. It is settled principle of law that while exercising jurisdiction under Section 482 Cr.P.C., the High Court does not conduct a mini-trial or a roving inquiry; however, it is not precluded from considering unimpeachable evidence or totally acceptable circumstances which may demonstrate that continuation of the proceedings against a particular Director would amount to an abuse of the process of the Court.

11. The continuation of the proceedings against the petitioner, in the circumstances of the present case, would therefore serve no useful purpose.

1 (2005) 8 SCC 89 2 (2012) 1 SCC 520 3 2015 (1) SCC 103

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Permitting such proceedings to continue against a person who had ceased to be a Director before the issuance of the cheques, without the requisite foundational averments and material connecting him with the commission of the offence, would amount to an abuse of the process of the Court.

12. The jurisdiction under Section 482 Cr.P.C. is to be exercised sparingly and with great circumspection. At the same time, the power is intended to prevent abuse of the process of the Court and to secure the ends of justice. The present case falls within the category where interference is warranted, having regard to the unimpeachable material relating to the petitioner's cessation as a Director before the relevant transaction.

13. In view of the above discussion and having regard to the principles laid down by the Hon'ble Supreme Court in the decisions referred to above, coupled with the date of resignation of the petitioner, this Court is of the considered view that the proceedings against the petitioner/Accused No.5 in the respective Calendar Cases cannot be sustained.

14. In the result, these Criminal Petitions are allowed, and the proceedings against the petitioner/ accused No.5 in C.C. Nos.1579 of 2020, 304 of 2019, 1658 of 2020, 891 of 2020 and 3571 of 2019 on the file of the Judicial Magistrate of First Class for Special Mobile Court, Guntur, for the offences punishable under Sections 138, 141, 142-A and 143 of the Negotiable Instruments Act, 1881, are be and hereby quashed. As a sequel thereto, the pending miscellaneous petitions, if any, shall stand closed. __________________________ JUSTICE SUNITHA GANDHAM 23.09.2026 Knl