CRLP/847/2025 of L. Ramesh Vs State of Telangana. on 5 December 2025

ORDER:

This Criminal Petition is filed by the petitioner-accused No.2 seeking to quash the proceedings against him by setting aside the impugned order dated 24.09.2024 passed in CRL [/ P No 3717 of 2023 in S.T C Nl.No.346 of 202'l on the file of the learned X Judicial tVlagistrate of First Class, Manoranjan Complex, Nampally, Hyderabad (for short 'the learned trial Cou('), registered for the offence under Section 138 of the Negotiable lnstruments Act (for short 'the Nl Act').

02 Heard Sri N.Ashwani Kumar, lrr qpns6 counsel representing Sri lVl.Avinash Reddy, learner counsel for petitioner and Sri K. Ravinder Reddy, learrr d counsel for unofficial respondent No.2. perused the materi rl on record. 03(a) A complaint was filed under Se r tion 190 read with Section 200 of the Code of Criminal : rocedure, (for short, "Cr.P C.") alleging the commission of c ffences under Sections 138 and 142 of the Nl Act by the ac: rsed persons The complaint was lodged by the respondent tr: 2 before the learned trial Court in respect of the all: ;ed offences committed on 19. 11.2020 and Og.O1 .2021 t re gist of the private complaint is that the complainant and U- r , accused had maintained acquaintance and association for nore than 20 years. Owing to the said acquaintance, il-t complainant advanced certain amounts to members of th,: Lingamaneni family, namely L. Ramesh (the petitioner_accus) >d No.2), LVS Rajasekhar, and their companies. 03(b) lt is further alleged that the accur; rd Nos.2 to 4 approached the complainant seeking funds for nvestment tn 1\

real estate ventures and, in turn, promised to deliver certain properties to the complainant for the amounts received, with a furlher assurance that, in the event of their failure to deliver such properties, the amount would be repaid with interest at 18% per annum. A cheque bearing No.040421, dated 03.09.2013 for an amount of Rs.2.00 crores, drawn on Axis Bank, S.R. Nagar, Hyderabad, in favour of tt/l/s Viswaroopi Energy Private Limited i e. accused No 1, was issued and subsequently encashed through HDFC Bank, Benz Circle, Vijayawada. The complainant asseds that after waiting for nearly three years, she repeatedly approached the accused seeking repayment of the amount. Thereafter, the accused Nos.2 to 4 executed a Memorandum of Understanding (I\IOU) dated 24.06.20'16, signed by the petitioner-accused No.2 Under the said ttIOU, all creditors of the accused and their companies were collectively described as "Party A," and the debtors, including individuals and their companies, were described as "Party B." The complainant was reflected as the fifth member of Party A, while the accused No.4 was shown as the first member of Party B, and the company was shown as the third member. The consolidated liab I ty of pa(y B towards Party A was recorded as Rs.300 00 :rores, out of which the comprainant's entiflement was Rs .2 00 crores. However, the terms of the tt/OU were not honoLl ed 03(c). lt is further alleged that upon repee ted demands made by the complainant, the accused Nos 2 t: 4 expressed willingness to effect partial repayment, and the i ccused No.4 acting in the capacrty of Director of the Compe ny rssued a cheque for Rs.2.00 crores in April 2O1g l:wards part discharge of the debt. The accused rt> luested the complainant to await further instructions regardil 7 the date of presentation of the cheque, assuring that s I : would be informed once funds were arranged. The comple inant waited for approximately one and a half years and :3ain sought confirmation for presentation of the cheque. lt is ; ated that by the end of October 2020, the accused assured tt at he would intimate the complainant regarding the present rtion of the cheque and, in the event of failing to do so, she <:r ruld present the cheque at any time during November 2020.

03(d). lt is further alleged that as the complainant was unable to establish contact with the accused thereafter, she deposited the cheque in her bank on 23.11 2020. The cheque was returned unpaid on 2411.2020 along with a cheque return memo bearing the endorsement "payment stopped by drawer." Consequently, the complainant issued a statutory demand notice dated 19.122020 calling upon the accused to make payment of the cheque amount within 15 days The notice was duly served on 23. 122020 A reply notice dated 08.01 .2021 was issued by the accused and received by the complainant on 1001 .202'l As the accused failed to make payment even thereafter, the complainant filed the present complaint alleging commission of the offence under Section 138 of the Nl Act Based on the said complaint, the case was taken cognizance of and numbered as S.T.C. Nl No.346 of 2021.

04. lt is pertinent to note that a few developments subsequent to lodging of the complaint, and number of writ petitions came to be filed in the High Court for the State of

Telangana The learned Single Judge of l is Court vide common order dated 20.12.2022, passed in \A, ) No 33376 of 2021 and batch and the same is as follows: "Since all the writ petitions are filed by the petrtioners for quashing proceedings initiated under Sectio I 138 of the Negotiable Instruments Act, they are being he: d together and disposed off by way of this Common Order.

2. Heard learned counsel for the pe:i ioners and learned counsel for the 2nd respondent_de facto cr> rplainant.

Several grounds are raised rnc uding the grounds of there being no legally enforceabie < ebt and/or subsisting liability.

All these questions are mixed que:; ons of fact and law which can only be agitated before the trial Court during trial. lf the petitioners are so advised, the I can frle an application seeking discharge, in accordance v. i h law tald down by the Hon'ble Supreme court in the case I Bhushan Kumar and another v. State (NCT of Delhi) arr I another. All the grounds including the grounds raised in t re present writ may be raised.

5. Wth the above observations, a I the Writ Petitions are disposed off. No order as to costs. I s a sequel thereto, miscellaneous applications, if any, shall st: _rd closed.

05. The order of the learned Single Judg e was carried to the Hon'ble Supre{ne Court by way of SpL (: RL.) No.4330 of 2023 challenging the common orde. passed in

W.P.No.33376 of 2021 and batch. The Honourable Supreme Court by its order dated 21 .04.2023 passed the following order: "Since by the impugned order the High Court has given liberty to the petitioner to move the trial court for discharge, we do not frnd any reason to interfere with the impugned order and hence, the special leave petitions are dismissed. Pending application(s), if any, shall stand disposed of."

06. Pursuant to the drrections of the writ Court and the Honourable Supreme Court, a discharge petition tn CRL.M P.No.3717 of 2023 in CC.Nl.No 346 of 2021 (later clarified by the learned trial Court to be STC.N|.No.346 of 2021 on a query by this Court) was filed seeking discharge of the petitioner in the present criminal petition. The learned trial Court, after hearing learned counsels for both sides and considering the case vide impugned order dated 24.09.2024, held as follows: "... Several grounds were raised by the accused including there is no subsisting liability and the Hon'ble High Court gave finding that all the questions were mixed question of fact and law which can be agitated before the trral I trial. The accused was an independent n: Director in the accused company and was neve and responsible for the day to day affairs of :l company can be decided after full fledged trial o I stage. lt is settled law that a magistrate is devo r to discharge and/or drop proceedings in case/summons cases instituted on a complaint, rr proceedings in cheque dishonor case. ln view, and circumstances of the case, the petitior dismissed. ln the result, the petition is dismissed. No, ou rt during t-executive -in-charge e accused not at this of powers SU MMON S :lud ing the f the facts rs hereby osts." a 07(a). Learned counsel for the petitioner ;ubmitted that perusal of the entire complaint does noi disclose any specific averment against the petitioner-accus:d No.2 As per the Companies Act, a director is a pr rson who is appointed to the Board of Directors of a corr :any and the Board is the governing body responsible fo supervising, controlling, and directing the affairs of the r rompany and appointment of the director must be accordir ; to the Act, Articles of Association, and shareholders, resc lutions. lt is contended that in order to attract the offences; under the Nl Act, particularly under Section 141, the c() nplaint must

contain specific assertions that the petitioner-accused No.2 was, at the time of the commission of the offence, in charge of and responsible for the conduct of the business of the company. ln the absence of such averments, the mere fact that the petitioner was a Director of the company cannot render him liable for the offences under the Nl Act, as vrcaflo us liability cannot be inferred in the absence of necessary pleadings indicating his role at the relevant time 07(b). lt is further submitted that only if the petitioner- accused No.2, as a Director, was actively involved in the day- to-day affairs of the company at the time of the alleged offence, could liability be fastened upon him. lt is further contended that the complaint, as presented, is devoid of any such specific averment, and therefore, initiation of proceedings is abuse of process of law. The docket order dated 07.09.2021 passed in S.T.C.No.346 of 2021 issuing summons to the accused is bereft of reasons, and the learned Magistrate is said to have erred in issuing process without recording any basis or satisfaction for doing so.

l0 i-) 07(c) lt is further contended that the ,: rmplaint of the respondent No 2 is unsustainable as it lacl s any specific allegation regarding the acts or role of the peii ioner_accused No.2 in the conduct of the day_to_day affairs c f the company at the time of the alleged offence, which s a mandatory requirement under Section 141 0f the Nr ,r:t. rt is arso submitted that, in view of the change in circL mstances, the second petition seeking quashment of the 1 ,roceedings is maintainable 07(d) Wrth the above submissions, v,t rile praying to quash proceedings against the petitioner-ac(:r sed No 2 the learned counsel relied upon a decision of tl e Honourable Supreme Court in Hitesh Verma v. Health ( are at Home lndia Private Limited and othersl wherein : was held at Paragraph Nos.4 and 5 that: "4. There are twin requirements under sub-Sect.< n (1) of Section 1 41 of the 1 BB1 Act. ln the compte nt, it must be alleged that the person, who is soughr o be held liabte by virlue of vicaious liability, at thL> time when the offence was committed, was in charg.. of, t 12025; 7 Supreme Court Cases 623

1l and was responsible to the company for the conduct of the busrness of the company. A Director who is in charge of the company and a Director who was responsibte to the company for the conduct of the busrness, are two different aspecis. The requirement of law is that both the ingredients of sub-Section (1) of Section 141 of the 1881 Act must be incorporated in the complaint. Admittedly, there is no asseftion in the complaints that the appellant, at the time of commission of the offence, was in charge of the buslness of the company. Therefore, on a plain reading of the complaints, the appellant cannot be prosecuted with the ard of sub-Section (1) of Section 141 ofthe 1881 Act.

5. Accordingly, the impugned orders are set aside and the order taking cognizance of the complaints filed by the first respondent stands quashed and set aside onty as against the present appellant who is arraigned as accused no.3. We make it clear that we have made no adjudication on the merits of the complaints and a// rssues are left open to be decided by the trial court." 07(e). Further, he relied upon a decision of the Honourable Supreme Court in Sunil Bharti Mittal v. Central Bureau of lnvestigation2 wherein it was held at Paragraph Nos.48 and 52 that: ' lzor sy + scc oos t2 "48. Sine Qua Non for taking cognizance , f the offence is the application of mind by the Ma,1 strate and his satisfaction that the allegations, if p cved. would constitute an offence. lt is, therefore, imS.t rative that on a complaint or on a police repcr . the Magistrate is bound to consider the questior as to whether the sarne discloses commission of an ,> €ence and is required to form such an opinion it fitis respect. When he does so and decides ic lssue process, he shall be said to have taken cogn.; ance. At the stage of taking cognizance. llt, onty consideration before the Courl remains to c t, si6!s1 judiciously whether the material on whict the prosecution proposes to prosecLtte the ,a,; used brings out a prima facie case or not.

52. A wide discretion has been given as to g.r nt or refusal of process and it must be judicially exe. isect. A person ought not to be dragged into Court .t erely because a complaint has been filed. lf a prima facie case has been made out. the Magistrate oL.g ht to issue process and it cannot be refusecl t erely because he thinks that it is unlikely to resu,t in a conviction." 07(f). Further, he relied upon a der, :ision of the Honourable Supreme Court in Suseta padmar,; rthy Amma v. M/s. Bharti Airtel Limited wherein it was hel: at paragraph Nos.10, 12, 19, 20,24,28 and 29 that:

"!9. Accused No.3, who is a female senior citizen and the Director of Fibtel Telecom So/utions, filed Crl. O.P. No. 3470 of 2019 against CC. No. 3151 ot 2017 & Crl O.P. No. 5767 of 2019 against C.C. No. 3150 of 2017, before lhe High Courl under Secllon 482 of the CrPC for quashing of the criminal complaints qua her.

12. Aggrieved by the rejection of the petition for quashing of criminal complaints, the appellant herein filed the present appeal. Vide order dated 12th December 2022, this Courl had issued notice and stay of further proceedings qua the appellant was granted.

19. lt was held that merely because a person is a director of a company, it is not necessa4/ that he is aware about the dayloday functioning of the company. This Courl held that there is no universal rule that a director of a company is in charge of its everyday affairs. lt was, therefore, necessary, to aver as to how the director of the company was in charge of daylo-day affairs of the company or responsible to the affairs of the company. This Courl, however, clarified that lhe position of a managing director or a joint managing director in a company may be different. This Courl fufther held that these persons, as ihe desrErn ation of their office suggests, are rn charge of a company and are responsible for the conduct of the business of the company. To escape liability, they will have to prove that when the offence was committed, they had no knowledge of the offence 1,1 or that they exercised all due ditigence to prev(\ t the commission of the offence.

20. ln Pooja Ravinder Devidasanr ys. Slzrr : of Maharashtra ancl anotherl this Court obseryer, ./rus. "17. Every person connectecl with the Compa t , witt not fatt into the ambit of the provision. Time and t 1ain, it has been asserted by this Courl that onlv tose persons who were in charge of and responsi;), ) for the conduct of the business of the Company e, the time of commission of an offence wi be liaitt l for crimind action. A Director, who was not in char e of and was not responsible for the conduct .t the busrness of the Company at the relevant time. t t I not be liable for an offence under Section 141 of t e Nt Act. ln Nationat Smalt tndustries Corpn. [Na, onat Small lndustt'ies Corpn. Ltd. v. Harmeet Singh Fz ntal. (2010) s SCC 330 (2010) 1 SCC (Civ) 677 . (2) o) 2 SCC (Cri) 11131 this Courl observed (SCC p 336, paras 1 3-14) "13. Seclron 1 41 is a penal provision rt = ting vicaious liability, and which, as per set ed law nust be strictly construed. tt is lherefore, not suffict= tt to make a bald cursory statement in a complaint t I the Director (arrayed as an accused) is in charge o, and responsible to the company for the conduct t the busrness of the company without anything more s to the role of the Director. But the comptaint shout(t ipelt out as to how and in what manner Respondent 1 was in charge of or was responsible to the ac.' rsed Company for the conduct of rls busrness. Ihl.. s rn t5 consonance with strict interpretation of penal sfafu/es, especially, where such stafules create vicarious liabtlity. 1 4. A company may have a number of Directors and to make any or all the Directors as accused in a complaint merely on the basrs of a statemenl that they are in charge of and responsible for the conduct of the busrness of the company without anything more is not a sufficient or adequate fulfilmenl of the requirements under Section 141 ." (emphasis in original)

18. ln Girdhari Lal Gupta v D.H. Mehta [Girdhari Lal Gupta v. D H Mehta, (1971) 3 SCC 7Bg : 1971 SCC (Cri) 279 : AIR 1971 SC 21621 , this Courl observed that a person "in charge of a business" means that the person should be in overall control of the daylo-day buslness of the Company.

19. A Director of a company is liable to be convicted for an offence committed by the company if he/she was in charge of and was responsible to the company for the conduct of lfs busrness or if it is proved that the offence was committed with the consent or connivance of, or was attributable to any negligence on the parl of the Director concerned (see Sfale of Karnataka v. Pratap Chand [State of Karnataka v. Pratap Chand, (1981) 2 SCC 335 : 1981 SCC (Cri)

20. ln other words, the law laid down by this Court is that for making a Director of a company liable for the offences committed by the company under Secllon t6 141 of the Nl Act, there must be specific avet against the Director showing as to how and i-t manner the Director was responsible for the ct of fhe buslness of the company. 21 . ln Sabitha Ramamufthy v. t Channabasavaradhya [Sabitha Ramamufthy v. f Channabasavaradhya, (2006) 70 SCC 581 . (21 SCC (Cn) 6211 , it was held by this Court that pp. 584-85, para 7) "7. it is not necessary for the complaina, specifically reproduce the wordings of the sectr: what is required is a clear statement of fact sc enable the court to arrive at a prima facie opiniot the accused is vicariously tiable. Section 141 rti. legal fiction. By reason of the said provision, a 1tt although is not persona y liable for commi:;sit such an offence woulcl be vicariously tiable th,> Such vicarious liability can be inferred so far company registered or incorporated unde- Companies Act, 1956 is concerned only ,l requisite statements, which are required to be a r in the complaint petition, are rnade so as [o ma r accused therein vicaiously liable for the c1 committed by the company ', (emphasis supptied) By verbatim reproducing the words of the s: without a clear statement of fact supporled by 1tt evidence, so as fo make the accused vicariL liable, is a ground for quashing proceedings in,t against such person under Section 141 of the Nl t 'lenfs what tduct ac B.S. )7) 1 SCC tto t but ls fo that esa rson nof efor. lsa the the 'rred . the )nce :tion )per usly tted ct."

t7

24. ln the case of Ashoke Mal Bafna (supra), this Court observed thus: "9. To fasten vicarious liability under Section 141 of the Act on a person, the law is well settled by this Court in a catena of cases that the complainant should specifically show as to how and in what manner the accused was responsible. Simply because a person is a Director of a defaulter Company, does not make him liable under the Act. Time and again, it has been asserted by this Court that only the person who was at the helm of affairs of the Company and in charge of and responsible for the conduct of lhe busrness at the time of commission of an offence will be liable for criminal action. (See Pooia Ravinder Devidasani v. State of Maharashtra [Pooia Ravinder Devidasani v. Sfale of Maharashtra, (2014) 76 SCC 1 . (2015) 3 SCC (Civ) 384: (2015) 3 SCC (Cri) 378 AtR 2015 SC 6751 )

10. ln other words, the law laid down by thls Courf rs that for making a Director of a Company liable for the offences committed by the Company under Sectlon 141 of the Act, there must be specific averments against the Diector showing as to how and in what manner the Director was responsible for the conduct of the business of the Company."

28. lt can thus be seen that the only allegation against the present appellant is that the present appellant and the accused No.2 had no intention to pay the dues that they owe to the complainant. /l rs sfaled that the 2nd accused and the 3rd accused (appellant herein)

l8 are the Directors, promoters of ttte 1st accuser teinq the Company. lt is furlher avened that th= 2nrj accused is the authorized signatory, who is tn-:, arge of and responsible for the day-to-day affair:; c, the Company, i e., the 7st accused.

29. lt can thus be ctearty seen that lhen: ; no averntent to the effect that the present appeltar tts in- charge of and responsibte for the day_to_day afi.t ,rs of the Company. /t ls a/so not the case of the respo, clent that the appellant is either the Managing Dire,:, tr or the Joint Managing Director of the Company., 07(S) Further, he relied upon a del ision of the Honourable Supreme Court in Ashoke Mal Ei fna v. Upper lndia Steel Manufacturing and Engineer r g Company Limited3 wherein it was held at paragraph Nos rto 13 that "9. To fasten vicarious liability under Section r the Act on a person, the law is well set etl L 1 Court in a catena orr cases that the contple oant should specificalty show as to how and in vhat manner the accused was responsible. :;, nply because a person is a Director of defautter Con 1 any, does not make him tiable under the Act. Tirn: and again, it has been asserfed by this Cour| that or I . the person who was at the helm of affairs of the Cor t nny and in charge of and responsible for the cond,, ;t of the busrness at the time of commission of an 01 nce 1of this ' lzor 81 ta scc zoz l9 will be liable for criminal action [See : Pooia Ravinder Devidasani v. Slate of Maharashtra (2014) 16 SCC 7 . AtR 2015 SC 6751

10. ln other words, the law laid down by this Courl is that for making a Director of a Company liable for the offences committed by the Company under Seciion 141 of the Act, there must be specific averments against the Director showing as to how and in what manner the Director was responsible for the conduct of fhe buslness of the ComPanY. 11 . Turning to the case on hand, admittedly the cheques dated 28-12-2004 were issued while the appellant was Director of the Company with validity for a period of six months but during that period they were not presented for realization at the bank. The appettant has resigned as Director w.e.f 2-1-2006 and the fact of his resignation has been furnished by Form 32 to the Registrar of Companies on 24-03-2006 in conformity with the rules. Thereafter, the appellant had played no role n the activities of the default Company. This fact remains subslantiated with the Statement filed by the default Company on 20-02- 2006 wrth the Registrar of Companies that in an adveiisement of the Company seeking deposlfs (Annexure P3), only the names of three Directors of the Company were shown as involved in the wofuing of the Company and the name of appellant was not therein. tndisputably, therefore, the cheques bounced on 24-08-2006 due to insufficient funds were neither l0 issued by the appellant nor the appellant was in olved in the day to day affairs of the Company.

12. Before summoning an accused under Secl c .t 1 3g of the Act, the Magistrate is expected to exan,rt e the nature of allegations made in the comptaint i r C the evidence both orat and documentary in :;r pport thereof and then to proceed further wi[h tr r6psr application of mind to the legal principles on l/rr ssue lmpliedly, it is necessary for Courts to ensut ) strict complr,tnce of the statutory requirements as r r// as settled principles of law before making a ) )rson vicariously liabte.

13. The Superior Courts should maintain puril; t the administration of Justice and shoutd not allow i buse of the process of Court. Looking at the facts t f the present case in the light of settted principtes t law, we are of the view that lhrs is a fit case for qut;lting the contplaint. The High Couft ought to have al )wed he crirttittal rniscellaneous application of lhe ap t t ant because of tlte absence of clear particulars aboL. role of the appellant at the retevant time in the dalt t, flly affairs of the Company." 07(h) Further, he relied upon a de,r ision of the Honourable Supreme Court in M/s. JM Lab< ratories and Others v. State of Andhra pradesh and Anoll er4 wherein it was held at paragraph No.g that. o zo2s lrusc t2z

2l "9. ln the present case a/so, no reasons even for the namesake have been asslgned by the learned Magistrate. The summoning order is totally a non- speaking one. We therefore find that in light of the view taken by us in ciminal appeal arising out of SLP (Crl.) No. 2345 of 2024 tttled "INOX Air Products Limited Now Known as INOX Air Producls Private Limited and Another v. The State of Andhra Pradesh", and the legal position as has been laid down by this Couft in a catena of judgments including in the cases of Pepsi Foods Ltd. and Another v. Special Judicial Magistrate and Othersl , Sunil Bhafti Mittal v Central Bureau of lnvestigation2, Mehmood Ul Rehman v. Khazir Mohammad Tunda and Others3 and Krishna Lal Chawla and Others v. Sfale of Uttar Pradesh and Another4, the present appeal deserves to be allowed " 07(i). Further, he relied upon a decision of the Honourable Supreme Court in SMS Pharmaceuticals Ltd. V. Neeta Bhalla and Anothers wherein it was held at Paragraph Nos.4, 18 and 19 that: "!!, In the present case, we are concerned with criminal liability on account of dishonour of cheque. lt primarily falls on the drawer company and is extended to officers of the Company. The normal rule in the cases involving criminal liability is against vicarious ' 1zoos; e scc as liability, that is, no one is to be held criminall r tiable for an act of another. This normal rule is, trc r ever subject to exception on account of specific gtr :, ,rsion being made rn statutes extending liability to :. hers. Section 141 of the Act is an instance of ; 1 ecifrc provision which in case an offence under Seclr r r 738 is committed by a Company, extends criminat tt tbility for dishonour of cheque to officers of the Corn >any. Section 141 contains conditions which have c be satisfied before the tiability can be extenctt d to officers of a company. Since the provision t r ntes criminal liability, the condittons have to be s ric y complied with. The conditions are intended to ,:,sure that a person who is sought to be made vica,, tusly liable for an offence of which the principalaccr I :d l.s the Company, hatl a role to ptay in relation l, the incriminating act and furlher that such a p rson should know what is attributed to him to mttl t hint liable. ln other words. persons who had nothing o clo with the matter need not be roped in. A cotr..tany being a juristic person, all lts deeds and functio t : are result of acts of others. Therefore, officers f a Company who are responsible for acts done rt the name of the Company are sought to be r tade personally liable for acts which result in cr it tinal action being taken against the Company. lt rr, tkes every person who, at the time the offence was committed, was incharge of, and was responstt e to the Company for the conduct of business tu the Company, as wett as the Company, liable fttt the offence. The proviso fo the sub-section contains an escape route for persons who are able to prove that the offence was committed without their knowledge or that they had exercised all due diligence to prevent commission of the offence.

18. To sum up, there is almost unanimous ludicial opinion that necessary averments ought to be contained in a complaint before a persons can be subjected to criminal process. A liability under Section 141 of the Act is sought to be fastened vicariously on a person connected with a Company, the principal accused being the company itself. lt is a depafiure from the rule in crimind law against vicarious liability. A clear case shou/d be spelled out in the complaint against the person sought to be made liable. Section 1 41 of the Act contains the requirements for making a person liable under the said provision. That respondent falls within parameters of Section 1 41 has to be spelled out. A complaint has to be examined by the Magistrate in the first instance on the basis of averments contained therein. lf the Magistrate is satisfied that there are averments which bing the case within Section 141 he would issue the process. We have seen that merely being descibed as a director in a company is not sufficient to satisfy the requirement of Section 141. Even a non director can be liable under Section 141 of the AcL The averments in the complaint would also serve the purpose that the person sought to be made liable would know what is the case which is a eged against him. This wilt , nable him to meet the case at the triat.

19. ln view of the above dlscusslon, our anst ys to the questions posed in the Reference are as Ltt( er:

(a) lt is necessa4r to specifically aver in a cot plaint under Section 1 41 that at the time lhe offen; was committed, the person accusecl was in charge :,, and responsible for the conduct of business c. the company. This averment is an essenlrai requit ment of Section 141 and has to be nade in a contl laint. Without this averment being made in a compla,r ,, the requtrements of Section sallsfied 141 cannot be said t be (b) The answer to question posed in sub-para (b has to be in negative. Merely being a director i a company is not sufficient to make the person able under Section 141 of the Act. A director in a cot,l )any cannot be deemecl to be in charge of and respar;ible to the company for conduct of ifs busrness Ihe requiremenl of Section 1 41 is that the person sc ryht to be made liabte should be in charge oi and responsible for the conduct of the busrness rrt lhe company at the relevant time. This has to be avt red as a fact as there is no deemed liability of a dirert r in such cases.

(c) The answer to question (c) has to be in affirma ive. The question notes that the Managing Direcht Joint Managing charge of the Director company would be admitted,l and responsible to or in the company for conduct of ils busrness. When that is so,

z5 holders of such posrtions in a company become liable under Section 141 of the Act. By viftue of the office they hold as Managing Director or Joint Managing Director. these persons are in charge of and responsble for the conduct of business of the company. Therefore, they get covered under Section 141 . So far as signatory of a cheque which is dishonoured is concemed, he is clearly responsible for the incriminating act and will be covered under sub-secllon (2) of Section 141 ." O7(i) Further, he reiled upon a decision of the Honourable Supreme Court in Expeditious Trial of Cases under Section 138 of the Nl Act, 1881 lN RE Suo Motu Writ Petition (Crt.) No. 2 of 20206 wherein it was held at Paragraph Nos.8, 9, 17 to21,24.1,24.6 and24.7 that "8. The learned Amici Curiae submitted that Section 1 43 of the Act provides that Seclions 262 to 265 of the Code shall apply for the trial of all offences under Chapter XVll of the Act. The second proviso empowers the Magistrate to conveft the summary trial to summons trial, if he is of the opinion that a sentence of impnsonment exceeding one year may have to be passed or that it is undesirable to try the case summarily, after recording reasons. The leamed Amici Curiae have brought to the notice of this Court that summary trials are routinely convefted to " lzozt; t6 Supreme Court Cases 116

summons bials in a nechanicat manne.. The suggesllons ntade by him in his preliminary not t that the High Courls should issue practice direction.; o the trial courls for recording cogent and sufficient / I rsons before conveiing a summary trial to summo t : triat have been accepted by the High Courts.

9. Secllon 1 43 of the Act has been introducet. ,1 the year 2002 as a step-in aid for quick dispt,: al of complaints filed under Seclion 13g of the Act t t this stage, it is necessary to refer to Chapter XXt f the Code which deats with summary triats. tn a cas( trie(j summarily tn which the accused does not pleao ,,uilty, it is sufficient for the Magistrate to reco, r the subslance of the evidence and deliver a juc1t1 nent, containing a brief statement of reasons f : hrs findings. There is a restriction that the procedLt e for summary trials under Section 262 is not to be t l oliect for any senle/)ce of imprisonment exceedinq hree months. However, Seclions 262 to 265 of the )ode were made applicable ,as far as may be, for lrist f 6y1 offence under Chapter XVlt of the Act, notwilhstandng anything contained in the Codt; lt is only in a case where the Magistrate is of the or nion that it may be necessary to sentence the accuse I for a term exceeding one year that the complaint st,i ll be tried as a summons trial. From the responsr s of various High Couds, it is clear that the converstc t by the trial courls of comptaints under Section 13t, ,rom summary trial to summons triat is being mechanically without reasons being recorded ' 'one The result of such conversion of complaints under Section 138 from summary trial to summons trial has been contributing to the delay in disposal of the cases. Further, the second proviso to Section 143 mandates that the Magistrate has to record an order spelling out the reasons for such conversion. The object of Secfion 143 of the Act is quick disposal of the complaints under Section 138 by following the procedure prescribed for summary trial under the Code, to the extent posslb/e. The discretion conferred on the Magistrate by the second proviso to Seclion 143 is to be exercised with due care and caution, after recording reasons for convefting the trial of the complaint from summary trial to summons trial. Othervvise, the purpose for which Secilon 143 of the Act has been introduced would be defeated. We accept the suggesflons made by the learned Amici Curiae in consultation with the High Couris. The High Courts may issue practice directions to the Magistrates to record reasons before convefting trial of complaints under Section 138 from summary trial to summons trial in exercise of power under the second proviso to Section 143 of the Act.

17. ln K.M. Mathew v. State of Kerala [K.M. Mathew v. State of Kerala, (1992) 1 SCC 217 : 1992 SCC (Cri) 881 , this Couft dealt with the power of the Magistrate under Chapter XX of the Code after the accused enters appearance in response lo the summons issued under Section 204 of the Code. lt was held that the accused can plead before the Magistrate that the process against him ought not to hav<t issued and the Magistrate may drop the proce t if he is satisfied on reconsideration of the col that there is no offence for which the accusert be tried. This Couft was of the opinion that there requirement of a specifrc provision for fhe Ma,,, to drop the proceedings and as the order isstLtr process is an interim orcler and not a judgmerrt be varied or recatted. The observation in K.M. Nti [K.M. Mathew v. State of Kerata, (1gg2) 1 SCC 1992 SCC (Cri) BSI that no specific provision rt , required for recalting an erroneous order of is.; process was held to be contrary to the scheme L Code in Adatat prasact v. Rooptal Jindat IA Prasad v. Rooplat Jindal, (2004) Z SCC 338 SCC (Cri) 19271 . lt was observed therein t,k a order taking cognizance can only be subject_mat, a proceeding under Section 482 of the Cott, subordinate criminal courts have no inherent pc There is also no power of review conferred on lhe couris by the Code. As thete is no specific pro t for recalling an erroneous order by the trial coutl judgment in K.M. Mathew [K M Mathew v. Stai Kerata, (1992) 1 SCC 217 . 1sg2 SCC (Cri) BBr held to be not laying down correct law. The que,: whether a person can seek discharge in a sumir case u/as considered by this Courl in Subramar Sethuraman y. Sfate of Maharashtra [Subramar, Sethuraman v. State of Maharashtra, (2004) 13 { 324 : 2O05 SCC (Cri) 2421 . The taw taid dov,t been dings olaint :oulC ls no ;trate 1 the t can thevt ?17 . I Llz l-s eof f the lalai ,_004 the tr of as ,ryer. trial ;ion the tof 4/a s tion lns 'um lJm (/ (- in

Adalat Prasad [Adalat Prasad v. Rooplal Jindal, (2004) 7 SCC 338 : 2004 SCC (Cri) 19271 was reiterated.

18. lt was contended by the learned Amici Curiae that a holistic reading oF Secllons 251 and 258 of the Code, along with Section 143 of the Act, should be considered to confer a power of review or recall of the lssuance of process by the trial couft in relation to complaints filed under Section 1 38 of the AcL He referred to a judgment of this Couft in Meters & lnstruments (P) Ltd. v. Kanchan Mehta [Meters & lnstruments (P) Ltd. v. Kanchan Mehta, (2018) 1 SCC 560 (2018) 1 SCC (Civ) 405 : (2018) 1 SCC (Cn) 4771 which reads as follows (SCC p. 568, para 11) "11. Whtle it is true that in Subramanium Sethuraman v. Sfale of Maharashtra [Subramanium Sethuraman v. State of Maharashtra, (2004) 73 SCC 324 : 2005 SCC (Cri) 2a2l this Courl observed that once the plea of the accused is recorded under Section 252CrPC, the procedure contemplated under Chapter XX CrPC has to be followed to take the trial to its logical conclusion, the said judgment was rendered as per statutory provisions prior to the 2002 Amendment. The statutory scheme post-20o2 Amendment as considered in Mandvi Coop. Bank [Mandvi Coop. Bank Ltd. v. Nimesh B. Thakore, (2010) 3 SCC 83 : (2010) 1 SCC (Civ) 625 . (2010) 2 SCC (Cri) 1l and J V. Baharuni [J.V. Baharuni v. Sfafe of Gujarat, (2014) 10 SCC 494:(2015) 1 SCC (Cri) 1l has brought about a change in law and it needs to be recognised. After the 2002 Amendment, Sect,c.r 143 of the Act confers implied power on the Magist, zte to discharge the accused if the complainc i rs compensated to the satisfaction of the court. vhere the accusecl tenders the cheque amount with ,r ,erest and reasonable cost of titigation as assesserl r y fhe courl Such an interpretation was cons/sle nt v.,t h the intention of legislature The court has to balar t e the rights of the complainant and the accusecl anc! e so to enhance access fo justice. Basic object of the: aw is to enhance credibility of the cheque lranssctr,.t ts fi,7 providing speedy remedy to the complainant w Ujout intending to punish the drawer of the cheque v hose conduct is reasonable or where compensation t t the complainant meets the ends of justice ApprL.;,,riate order can be passed by the couri in exercise f its inherent power under Seclron 143 of the Acf w.t :h is different from compounding by consena of S_;2 1is5 Thus, Section 2SBCrpC which enables procee<1tr 1s to be stopped in a summons case, even though ;.rc y speaking is not applicabte to complainl cases, iilce the provisions of CrpC are appticabte ,,so far a ; may be", the pinciple of the said provision is applicz l re to a complaint case covered by Section 1 43 of t Act which contemplates applicabitity of summary trial provisions, as far as posslb/e i.e. with such det.i ttion as may be necessary for speedy triat in the contrt: t.,,

19. ln Meters & tnstruments [Meters & lnstrumer;t (p) Ltd. v. Kanchan Mehta, (2O1A) l SCC 560 : (2C.,5) 1 SCC (Civ) 405. (2018) 1 SCC (Cri) 4771 , this (curl 3l was of the opinion that Section 143 of the Act confers implied power on the Magistrate to discharge the accused, if the complainant is compensated to the satisfaction of the cour7. On that analogy, it was hetd that apaft from compounding by the consent of the parties, the trial couft has the jurisdiction to pass appropriate orders under Secflon 143 in exercise of its inherent power. Reliance was placed by this Coutt on Section 258 of the Code to empower the triat courls lo pass suitable orders.

20. Section 143 of the Act manclates that the provisions of summary trial of the Code shall appty "as far as may be" to trials of complaints under Sectlon 138. Section 258 of the Cocle empowers the Magistrate to stop the proceedings at any stage for reasons to be recorded in writing and pronounce a judgment of acquittal in any summons case rnsllluled othenuise than upon complaint. Section 258 of the Code is not applicable to a summons case instituted on a complaint. Therefore, Section 2SB cannot come into play in respect of the complaints fited under Section 138 of the Act. The judgment of this Couft in Meters & lnstruments [Meters & lnstruments (p) Ltd. v. Kanchan Mehta, (2018) 7 SCC 560 : (2018) 1 SCC (Civ) 405:(2018) 1 SCC (Cri) 4771 insofar as it conferred power on the tnat courl to discharge an accused is not good law. Supporl taken from the words "as far as may be" in Section 143 of the Act is inappropriate. The words "as far as may be" in Secfion 143 are used only in respect of appticability of

Seclions 262 to 265 of the Code and the sun,nary procedure to be followed for trials uncler Chapter yVll. Conferring power on the courl by reading ,;,ftain words into provisions is impermissible. A Jurtge not rewrite a statute, neither to enlarge nor lo co, it. Whatever temptations lhe stafesrnans hip of t making might wisely suggest, construction eschew interpolation and evisceration. He rnt,s read in by way of creation I J. Frankfufter, Of Lav Men : Papers and Addresses of Felix Frankfu-, The Judge's duty is to interpret and apply the tav to change it to meet the Judge's idea of whal _,t requires [Duporl Stee/s Lid. v. Sirs, (1980) 1 WLf (1980) 1 Atl ER 529 (HL)I The couft canno, words to a statute or read words into it which ar there [Union of lndia v. Deoki Nandan Aggarwal Supp (1) SCC 323 : 1992 SCC (L&S) 2481.

21. A close scrutiny of the judgmenfs of thls ()r Adalat Prasad [Adalat Prasad v. Rooptal .tt (2004) 7 SCC 338 : 2004 SCC (Cri) 1927t Subramanium Sethuraman [Subram,t Sethuraman y. Stafe of Maharashtra, (2004) 13 324 : 2005 SCC P0 2421 would show that th= not warrant any reconsideration. The trial courl ce be conferred with inherent power either to revi= recall the order of lssuance of process. As above, this Court, in its anxiety to cut down dela the disposal of complaints under Section 13g applied Sectlon 258 to hotd that the trial court hut power to discharge the accused even for rea. llusl 'tract tiicy- rrusl ' not and )r l . not sfuce adcl I not '992 '11 in tdal, and tium )LU tdo tnot 1/ Or leld 's In has the ons other than payment of compensation. However, amendment to the Act empowering the trial couri to reconsider/recall summons may be considered on the recommendation of the Committee constituted by this Court which shall look into this aspect as well.

24.1. The High Courls are requested to rssue practice directions to the Magistrates Io record reasons before converTing tial of complaints under Section 138 of the Act from summary trial to summons trial.

24.6. The judgments of this Courl in Adalat Prasad [Adalat Prasad v. Rooplal Jindal, (2004) 7 SCC 338 . 2004 SCC (Cri) 19271 and Subramanium Sethuraman [Subramanium Sethuraman v. Stafe of Maharashtra, (2004) 13 SCC 324 : 2005 SCC (Cri) 2421 have interpreted the law correctly and we reiterate that there is no inherent power of trial courts to review or recall the issue of summons. Ihls does not affect the power of the trial court under Section 322 of the Code to revisit the order of rssue of process in case it is brought to the court's notice that it lacks jurisdiction to try the complaint.

24.7. Section 258 of the Code ls not applicable to complaints under Section 1 38 of the Act and findings to the contrary in Meters & lnstruments [Meters & lnstruments (P) Ltd. v. Kanchan Mehta, (2018) 1 SCC 560 : (2018) 1 SCC (Civ) 405 : (2018) 1 SCC (Cri) 4771 do not lay down conect law. To conclusively deal with this aspect, amendment to the Act empowering the trial courts to reconsider/recall summons in respect of complaints under Section 138 shall be l4 considered by the Committee constituted by art rder of this Court dated 10-3-2021 [Expeditious -t al of Cases Under Section 138 of Nl Act 1gg1 , tn re, 2021 SCC OnLine SC 3541." 07(k). Further, he relied upon a' dr.. ;ision of the Honourable Supreme Court in Muskan Ente4a,r'ses y. Stafe of PunjabT wherein it was held at paragraph Nos.14 to 20 that '14. The procedural laws governing c;i proceedings and civil proceedings in our countr quite dissimilar, though the rule of audi a,! partem and a procedure that is both fai,. reasonable to both/all parties for rendering justi,> at the heart of both the Cr. p.C. and the Procedure Code, 19084. The principle of res jurlt traceable in Section 1 1 of the CpC, does r r apply to criminal proceedings nor is there provision in the Cr P.C. akin to Order XXlll Ruk, CPC. While Section 114 of the CpC read with ( XLVII thereof empowers the civil coutis to ex,t the power of review, Secllon 362, Cr. p.C. be review- A close reading of Secfions 4g2, Cr. p.(:. 115, CPC would also reftect that the purposes st to be achieved by exercising the high courts' int e powers, which the respective procedural laws s are also at variance. prudence and propiety in tinal 'are )ram and 'are Civil :ata, ;ther any | (3), rde r clse sa and tght rent )ve, the 2024 SCC Online SC 4'107

1. decision-making process, thus, make it imperative for the high courts to not confuse the procedural laws governing ciminal and civil proceedings.

15. The legal position as to whether a second petition under Section 482, Cr. P.C. would be maintainable or not is no longer res integra. We may notice a few declslons of this Courl on the point.

16. /n S.M.S. Pharmaceuticals Ltd. v. Neeta Bhattau, a decision arising out of the N.l. Act, the relevant high couft had given the pafty the liberly to avail any remedy in law, if available, at the time of withdrawing her petition under section 482, Cr. P C. This Court, observed that the high court would have the inherent power to decide any successive petition under section 482 and that it is not denuded of that power by the principle of res judicata.

17. That the pinciple of res judicata has no application in a criminal proceeding was reiterated by this Couft in Devendra v. S/afe of U.P E.

18. Recently, this Court in Bhisham Lal Verma v. State of {J.P.E, has again held that there is no btanket rule against filing of successive petition under section 482, Cr. P.C. before the high court. lt was also held that if such a petition is filed, it must be seen whether there was any change in facts or circumstances, necessitating the filing of such petition.

19. Section 482, Cr. P.C., on its own terms, saves fhe inherent powers of the high court to make such orders as may.be necessary fi to give effect to any order under the Cr. P.C., or (ii) to prevent dbuse of the process of any cout7, or (iii) to secure the c t justice. Change of law can legitimately be regatt a vital cltange in circumstance ctothing the hig\ with the power, competence and jurisdiclir enteftain the subsequent petition notwithstand,r fact that the earlier petition was withdrawn t obtaining any leave, subject to the saftsf recorded by the high court that the order prayel the subsequent petition ought to be made, int,t either to prevent abuse of the process of any cc to secure the ends of justice.

20. Thus, in our considered opinion, the con:l view taken by High CourT to hotd that the app. were required to obtain the leave of the Judge had dismissed the earlier petition prior to filin subsequent petition is clearly untenable ar c warranted in law. lt is noted that the appe an,: applied a second time before the High Coutt when the iaw on interpretation of Section 14g, At. was laid down somewhat differen y in Jat Bhandari (supra) and not on any other ground. t not a review in disguise that the appellants attet but their endeavour was to impress the High Co have the law, curren y governing the field, t, applied in their case. ln terms of the authc referred to above, the subsequent petition wa: nigh maintainable." Cs of :d as court nto g the thout ction for in alia, trt or icted lants who , the not had only Act rboo WAS oted rt to ,be Ities uell- 0B(a). On the other hand, Iearned cc,l nsel for the unofficial respondent No.2 submitted that this; is the fourth round of litigation, and that under the Nl Act, cases are required to be disposed of within six months. lt is contended that the very purpose and object of the Act would be defeated if such litigation is permitted to continue for years together. lt is further submitted that the complainant's family, being in association and acquaintance with the family of the accused, advanced money, and the same is clearly reflected in the complaint, which specifically refers to the name of the petitioner-accused No.2 and contains an averment that the petitioner-accused No.2, along with accused Nos 3 and 4, approached the complainant seeking money for investment purposes lt is further submitted that the specific role of the petitioner-accused No.2 in the transaction is evident from the averment that all the accused assured the complainant that, in the event of failure to repay the money, they would be liable to pay the amount with interest al 18o/o per annum, and it was only after such assurance and promise by all the accused that cheque No.040421 was issued and subsequently encashed

08(b) lt is further submitted that an MOU, referred to as a "Consolidated tVOU,'was executed betwee- the creditors and the accused and their companies on 24 06 I 016, and that the petitioner-accused No 2 was a signatory to t re said IVOU. It is also submitted that the petitioner-accused I lo.2 was fully aware of the transactions and had played an a< live role as a Director of the company, which is further ev c ent from the reply notice issued by the accused to the :omplainant,s statutory notice. lt is contended that the complzr rt specifically attributes a role to the petitioner-accused No 2 rs a Director, which stands fortified by his execution of the /OU As the MOU dated 24062016 stood dishonoured, he accused Nos.2 to 4 came forward for partial repaymerl of the debt, and the accused No 4 in his capacity as Direcrt r of accused No.'1 -company, issued a cheque for Rs.2.O0 crc.es in favour of the complainant in April, 2019 08(c). lt is further submitted that upon the < omplainant's request, the accused informed her that she sh:.rld wait until the end of October, 2020, by which time they vv ruld intimate i9 the date on which the cheque could be presented, and that failing such intimation, the complainant could present the cheque in November,2O2O. Based on this assurance given by the accused No.4 in his capacity as Director, the cheque was presented on 23.11 2020, but it was returned unpaid, as reflected in the cheque return memo daled 24.11.2020, thereby constituting an offence under Section 138 of the Nl Act. Though a statutory demand notice was issued and a reply notice was furnished, the accused failed to make payment 08(d) lt is thus submitted that a cumulative reading of the complaint demonstrates that the petitioner-accused No.2 had complete knowledge of the transactions in his capacity as Director and that he played an actrve role, and that the transactions took place only on the request of the accused Nos.2 to 4. lt is further submitted that the legal notice issued to all accused prior to initiation of proceedings was never denied, including the role of the petitioner-accused No.2. lt is contended that for fastening vicarious liability under Section

C) 141 of the Nl Act, the specific averments i r the complaint regarding the role of the petitioner_accused I o 2, the nature of the transactions, the absence of denial in esponse to the legal notice, and the admission reflected in I e reply, clearly establish that the petitioner_accused No 2 hir I knowledge of and participated in the transactions, being a r rgnatory to the r\40u. 08(e) With the above submissions, vu tile praying to dismiss the criminal petition, he relied upon €r Cecision of the Honourable Supreme Court in HDFC Bank L.i _nited v. State of Maharashtra and anothers wherein il was held at Paragraph Nos.4 to 6, lZ, 17, 19,23,34, 35 t,. , 39 that: "4. Since the complaint has been quashed c.t the ground of lack of adequate averments, it a;ll be necessary to extract the crucial avermenls r, t are made in the comptaint._ "2. That, Accused No 7 is a Company registere I anrl incorporated under the provisions ot . tdian Companies Act, 2013 [existing within the pun.i w of Companies Act, 1g56l and having it registerc,t and corporate office at the address mentioned afc r *aicl and engaged in the busines.s of sa/e of car: an<l ' 2ozs tNSc 259

spare pafts manufactured by Hyundai Motors (l) Ltd Accused rVos 2 to 4 are the Directors of Accused No 1 Company and is responsible for its day to day affairs, management and working of the Accused No 1 Company fudhermore the Accused No 3 is the signatory of the dishonored cheque.

3. That, Accused No 1, through Accused Nos 2 to 4, had approached the complainant above named for grant of credit facility in the form of Revolving Loan Facility as lnventory Funding for the working capital requirements That after due deliberation and negotiations with Accused Nos 2 to 4 the complainant granted the Revolving Loan facility initially to the extent of Rs 5,00,00,000/ (Rupees Five Crores only) |nventory funding Rs 3.00 Crores + lnventory Funding Adhoc: Rs 2.00 Crores vide sanction letter dated 09.08.2014 Hereto annexed and marked as Exhibit B is the copy of said Sanction letter dated 09. 08.2014 for Revolving Loan Facility granted to Accused No. 1 .

4. That, upon fufiher request made by Accused No. 1, complainant had enhanced the said facility from Rs 5.00 Crore lo Rs. 6.00 Crores vide sanction letter dated 27.10.2015 The said facilities were fufther enhanced from Ra 6.00 Crores to Rs 6.50 Crores vide sanction tetter dated 22.02.2016 and lastly the said facility was enhanced from Rs 6.50 Crores to Rs 8.00 Crores vide sanction letter dated 12.09.2016. Hereto annexed and marked as Exhibit C-1 to Exhibit C-3 are the copies of sanction tetter dated 27.1C. r.015, 22.02.201 6 and 1 2.09.201 6 respectivety

5. The Loan account of Accused No. 1 maintain ,d by complainant was numbered as loan a..ount No.02400450029354. That in consideration of g-, nt of the said facilities, accused(s) had executed ve .ious loan and security documents in favor of Comtrtl: nant from time-to time inter alia accepting the terrns and conditions of respective documents lt is sub.r itted that the Accused No. 1 lastty, amongst other, etr :red into Loan agreement with Complainant on 11.09. ,016 and executed Demand promissory Note for a sr n ol Rs. 8,00,00,000/- on 20.09.201 6 Hereto annexe t and marked as Exhibit'D-1 lS the copy of Supplent, ntal and Amendatory Loan Agreement dated 17.09 :016 and Exhibit' D2" is the Demand promissory, , lote dated 20 09 2016.

6. Be that as it may, the Complainanl sfales ta, the sanctioned/renewed credit facitities were duty ttt.i iled and utilized by the Accused without any demur. The Complainant further states that after availing the aforementioned credit facitities, Accused No. 1 it,ted to maintain the account with Complainant Bank in the manner agreed to nd defaulted in making timely repayments.

7. Thus, owing to the faiture on the paft of Accuse,t(s) to repay the outstanding dues on time, ther by willfully defaulting in the same, Complainant vas constrained to ctassify the account of the AccLr, ed No. 7 as a Non-performrng Asset on 27.03.201t in accordance with the guidelines issued by the Reserve Bank of lndia from time to time. B. That, complainant slafes thal despite various oral and written reguesfs, the Accused failed to regularize and maintain the account. lt is submitted that Accused ' Company did not pay any heed to the requests and reminders of the Complainant and willfully neglected discharging their obligations thereby depriving the Complainant its legitimate dues."

5. lt will be noticed that in Para 2 of the complaint quoted above, it has been categorically averred as under: "Accused Nos. 2 to 4 are the directors of the accused no.1 - company and is responsible for its day-to-day affairs, management and working of the accused no.1 - company. Furthermore, the accused no. 3 is the signatory of the dishonored cheque". (Emphasis supplied)

6. Not only this, it is fufther averred in Para 3 that accused no. 1 (the company) through accused nos. 2 to 4 had approached the complainant above named for grant of credit facility in the form of Revolving Loan Facility as inventory funding for the working capital requirements. lt has been stated:- "That, after, due detiberation and negotiations with Accused nos. 2 to 4, the Complainant granted the Revolving Loan facility initially to the extent of . . ....".

12. We have heard learned Senior Counsel/Counsel for the pafties and perused the records. Learned

Senior Counsel for the appellant contends t, perusal of the averments in the complaint reec the documents filed leave no manner of doubt ttl respondent no.2 - Ranjana Sharma was in cha-, and was responsible for the conduct of the bus of the company inasmuch as she had pafticipt,t the negotiations and was authorized to sign t relevant documents and her peiormance gua-i was also taken. ln view of this, tearned .j Counsel contends that the High Courl tuas justified in quashing the complaint insofar a: respondent no.2-Ranjana Sharma was concerne (

17. lt will be noticed that Section 141 of the ttt employs the phrase "was in charge of, arrct responsible to the company for the conduct ,) busrness of the company". lnsofar as the asp? vicaious liability is concemed, in the present r the averments made are to the following effect. . "Accused Nos. 2 fo 4 are the Directors of Acc No.1 Company" and "ls responsible for its day-t: affairs, management and working of the AcL:, No.1-Company"

19. Before we adverl to S. M. S. pharmaceutrc (supra), it will be useful to refer to the meaning L.t word "in charge of'. p.Ramanatha Aiyar,s Adve t Law Lexicon defines the word ,,in charge or follows:- "A person "in charge of' and responsible tc company for the conduct of the busrness o. 'at a witlt t the 'e of, ness >d in rthe ntee tnior not the Act WAS the lof ase, 'sed day 'sed r/s-/ the ced as the the company must be a person in overall control of the daylo-day business of the company or firm".

23. The following principles are deducible from the said judgment.

(i) "Section 141 contains conditions which have to be safisfled before the liability can be extended to officers of a company. Srnce the provision creates criminal liability, the conditions have to be strictly complied with. The conditions are intended to ensure that a person who is sought to be made vicariously liable for an offence of which the principal accused ls the company, had a role to play in relation to the incriminating act and fufther that such a person should know what is attributed to him to make him liable". [See Para 4]

(ii) "There is nothing which suggests that simply by being a director in a company, one is supposed to discharge padicular functions on behalf of a company- It happens that a person may be a director in a company but he may not know anything about the day-to-day functioning of the company. As a director he may be attending meetings of the Board of Directors of the company where usually they decide policy matters and guide the course of business of a company. lt may be that a Board of Directors may appoint sub-committees consisfrng of one or two directors out of the Board of the company who may be made responsible for the daylo-day functions of the company. These are matters which form paft of resolutions of the Board of Directors of a company.

Nothing is oral. What emerges from this is tha the role of a director in a company is a question o; fact depending upon the peculiar facts in each t ase. There is no universal rule that a director of a cort )any is in charge of its everyday affairs" [See Para 8] (Emphasis suppli: J)

(iii) "Mere use of a particular designation of an o frcer without more, may not be enough by way t' an averment in a complaint. When the requireme t in Secllon 1 41 , which extends the liability to offic,> s of the company, is that such a person should t t in charge of and responsible to the company for cor Tuct of busrness of the company, how can a perso, be subjected to liability of ciminal prosecution witt. t ut it being averred in the complaint that saflsfles f, ose requirements. Not every person connected ui h a company is made liable under Section 141 . Liab;l ly is cast on persons who may have something to do with the transaction complained of. A person who ; in charge of and responsible for conduct of busine:s of a company would naturally know why the cheqt t in question was issued and why it got dishonorr, ed". [See Para 8] (Emphasis supplied)

(iv) "What is required is that the persons who are sought to be made ciminally liable under Sectiort 141 should be, at the time the offence was committe, I, in charge of and responsible to the company for the conduct of the business of lhe company. l:,ery person connected with the Company shall nct fa within the ambit of the provision. lt is only tl xe persons who were in charge of and responsible for the conduct of buslness of the company at the time of commission of an offence, who will be liable for ciminal action. lt follows from this that if a director of a company who was not in charge of and was not responsible for the conduct of the busrness of the company at the relevant time will not be liable under the provision". [See Para 10] (Emphasis supplied)

(v) "Therefore, in order to bring a case within Secflon 141 of the Act, the complaint musl disc/ose lhe necessary facts which make a person liable". [See Para 121

34. What is impoftant to note is that the repetition of the exact words of the Secflon in the same order, like a mantra or a magic incantation is not the mandate of the law. What is mandated is that the complaint should spell out that the accused sought to be arrayed falls within the parameters of Section 141(1) of the Nl Act. Only then could vicarious liability be inferred against the said accused, so as lo proceed to tial. Substance will prevail over form.

35. Strong reliance is placed on Siby Thomas (supra) by leamed counsel for the respondent No.2 to contend that in the absence of the words "was in charge of', the present case agarnsl respondent No.2 cannot be proceeded. We are unable to countenance the said submission. This Court, in Siby Thomas (supra), on facts, found that on an overall reading of the complaint it did not dlsc/ose any clear and specific 4R under:- ^58.2 The comptainanl r.s suppose d to knon, onty generally as to who were in charge of the affat .s of role to the appellant_accused therein. lt was urlher held that what was aveffed was only that the ac:used being paftners are responsible for the clay_ o_day conduct of busrness of the company. This i: rcstty different from the averments in the present c. se as drscussed hereinabove ln this case, it is r learly averred that the respondent No.2 along w;t t te accused Nos. 3 and 4 being directors were responsible for its day_to_day affairs, man.t(tt meti and working of accused No.1 _ Conpany. Hen: t, the judgment in Siby Thomas (supra) can be of no t ttp to the responclent No.2 as the case turned on t,! own facls.

37. Recently, this Coud in S.p. Mani and Mohart Dairy vs Dr. Snehalatha Etangovan, (2023) 70 SC(_ 685, after reiterating the principle that it was not nec= ;sary to reprcduce the language of Section 141 verb t im in the complaint fLtrther reiterated the hoklt, J in K.K.Ahuja vs V.K. Vora and Another, (2009) 1O SCC

48. ln K.K.Ahuja (supra), it was held that insc t tr as the director was concerned, an averment t the complaint that he was in charge of, anc, was responsible to the company, for the conduct c, the busmess of the company was enough and no tr rther averment was necessa/y though some parlicule r ; will be desirable. Thereafter, this Court in S.p. trlani (supra), in para 58.2 of the judgment conclude j as

the company or firm, as the case may be. The other administrative matters would be within the special knowledge of the company or the firm and those who are in charge of it. ln such circumstances, the complainant is expected to allege that the persons named in the complaint are in charge of the affairs of the companylfirm. lt is only the Directors of the company or the partners of the firm, as the case may be, who have the special knowledge about the role they had played in the company or the partners in a firm to show before the Coutl that at the relevant point of time they were not in charge of the affairs of the company. Adveftence to Seclions 138 and Sectlon 141 , respectively, of the N/ Acf shows that on the olher elements of an offence under Section 138 being satisfied, the burden is on the Board of Directors or the officers in charge of the affairs of the company/partners of a firm to show that they were not liable to be convicted. The existence of any special circumstance that makes them not liable is something that is peculiarly within their knowledge and it is for them to establish at the tial to show that at the relevant time they were not in charge of the affairs of the company or the firm."

39. Applying the said legal position to the facts of the present case, ff is found that the averments in the complaint set out hereinabove against the respondent No.2 - Mrs. Ranjana Sharma fulfill the requirement of Secfion 1 41 (1) of the Nl Act, and this is not a case where tial against her can be abofted by quashment of proceedings. The High Couft was con tr letely unjustified in quashing the proceedings against I er." 09 This Court has duly taken note of ti e submissions advanced by the learned counsel on both rides and has carefully perused the entire nraterial available () I record 10 Before adverting to the facts of tre case, it is pertinent to note that the petitioner ha: earlier filed W P No 33376 of 2021 and batch seeking qui shment of the proceedings The said writ petition was disr tissed without entering into the merits of the matter, while gra nting liberty to the petitioner to approach the learned trial Cct rt by way of a discharge petition under Section 258 of the )r.p C., which order was subsequently affirmed by the Hc,r ,ble Supreme Court. At this .luncture, it is relevant to oL,l erve that the Honourable Constitution Bench consisting of ive Judges of the Supreme Court, in the Suo Motu pror; >edlngs (cited supra), categorically held that Section 2Sg of :l re Cr.p.C. has no application to complaints instituted under :iection 13g of the Nl Act On that basis, the learned trial Court, by the o 5l impugned order dated 24.09.2024 passed tn CRL.M.P.No.3717 of 2023 in S.T.C.N| No.346 of 2021, dismissed the petitioner's discharge petition. ln view of the aforesaid facts and circumstances, and having regard to the settled legal position laid down by the Hon'ble Supreme Court in Muskan (cited supra), this Court is of the considered view that owing to the changed circumstances, the present second petition seeking quashment is maintainable

11. On perusal of the record, it is apparent that a complaint under Section 200 Cr.P.C. for the offence under Sections 138 and 142 of Nl Act was presented by the complainant before the learned trial Court, and the same came to be numbered as STC.No.346 of 2021. Accused are four in number The accused No.1 is M/s. Viswaroopi Energy Private Limited represented by the accused Nos.2 to 4. The present case is concerned with regard to the petitioner- accused No.2. lt is pertinent to take note of the fact that in the entire record, there is no specific averment that the petitioner- accused No.2 was in-charge of the day-to-day affairs of the accused No.1-company and the role of the t) rectors is not specifically pleaded or averred in the compla r t. The entire case is upon the propositron that the petitione. accused No.2 is liable for prosecution under Nr Act being a l)irector of the company. As per the law laid down by the Hc,r ,ble Supreme Court in catenae of decisions, there is no d I pute that the accused No.'1 -company is liable to be prr secuted and punished for criminar offences. rt is arso a setr rrd propositron of law that the criminal intent of a group of pers,r ns who guide the business of a company can be imputed tr> the company itself. lt is in this backdrop that Sections 13g end .141 of the Negotiable lnstruments Act ntust be understooci

12. lt is apt to extract the provisions rr rder Sections 138 and 141 of the Nl Act for better understandrr rg: "1 38. Dishonour of cheque for insufficiency, e,L ., of funds in the account: Where any cheque drawr, 5y a person on an account maintained by him v,, h a banker for payment of any amount of mone r to another person from out of that account fcr the discharge, in whole or in paft, of any debt or r ther liability, is returned by the bank unpaid, e ther because of the amount of money standing t: the credit of that account is insufficient to honour the cheque or that it exceeds the amount arranged to be paid from that account by an agreement made with that bank, such person shall be deemed to have committed an offence and shall, without prejudice to any other provisions of this Act, be punished with imprisonment for a term which may be extended to two years, or with fine which may extend to twice the amount of the cheque, or with both: Provided that nothing contained in this section shall apply unless- (B)the cheque has been presented to the bank within a period of six months from the date on which it is drawn or within the period of its validity, whichever is earlier: @)the payee or the holder in due course of . the cheque, as the case may be, makes a demand for the payment of the said amount of money by giving a notice in writing, to the drawer of the cheque, [within thirty days of the receipt of information by him hom the bank regarding the return of the cheque as unpaid; and (p)the drawer of such cheque fails to make the payment of the said amount of money to the payee or, as the case may be, to the holder in due course of the cheque. within fifteen days of the receipt of the said notice. Explanation.-For the purposes of fhls section, "debt or other liability" means a tegally enforceable debt or other liability.

Secfion 141 of Nl Act is as follows: "141 . Offences by companies:_ (1) lt the : >rson committing an offence under Section 73t ls a company, every person who. at the time of rt,.s1166 was committed. was in charge of, anr, was responsible to, the company for the conduct t f the busrness of the company, as well as the cor.t nny, shall be deemed to be guilty of the offence an:; shall be liable to be proceeded against and pu,; shed accordingly. Provided lhat nothirtg contained rn tltt : sLlb_ section shall render any person tiable to punish,r tnt if he proves that the offence was committed with.t i his knowledge, or that he had exercised att due dil,( 2nce to prevent the commission of such offence [Provided further that where a person is nominat, cl as a director of a company by viftue of his holdir 1 any office or employment in the Centrat Governnt: tt or State Government or a financiat corporation onr t td or controlled by the Central Government or the )tate Goventment, as lhe case ntay be, he shalt lt t be liable for prosecution under this Chapterl.

(2) Notwithstanding anything contained in sub_ sec(1 ), where any offence under this Act has een committed by a company and it is proved th ) the offence has been committed with the consr,r t or connivance of, or is attibutable to, any neglect o the pad of, any director, manager, secretary or r ther officer of the company, such director, mani ger, secretary or other officer shall also be deemed t t be y\, 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 anybody corporate and includes a firm or other association of individuals; and (b) "director'', in relation to a firm, means a padner in the firm." 13 The proviso clearly stipulates that when a person, which is a company, commits an offence, certain categories of persons who are Directors, lVanaging Partners, Joint Managing Partners who are in-charge as well as the Company would be deemed to be punishable under Sections 138 and 141 of the Act. Thus, that being the statutory intent which is very plain and simple, it is perceptible that the provisions of the Nl Act make the functionaries of the company or the company to be liable and this is by a deeming fiction. The word "deemed" used under Section 141 of Nl Act applies to the company and also to the persons responsible for the acts of the company. This crystallizes the criminal liability and vicarious liability of a person who is running the affairs of the company and who is in-charge of the company What averments should be required to make a person vicariously liable have been dealt by JLrcll iments of the Hon'ble Supreme Court Court in SMS phanne :euticals Ltd.\ case cited supra holdrng that the criminal liait ity on account of dishonor of cheque under the Negotiable I rstruments Act primarily fails on the company that issued ti e cheque and extends to its officers of the company, r nly if certain conditions ouflined in Section 141 of the Nl ti:t are met and as there is no specific provrsion extending lrability to the officers, the conditions incorporated in Sectio- j41 of Nl Act have to be satisfied Since the .provision r:r =ates criminal liability, the conditions have to be stricfly conr, rlied with. The conditions are intended to ensure that a perso- who is sought to be made vicariously liable for an offenc,: of which the principal accused is the Company, had a - rle to play in relation to the incriminating act and further tha: such a person should know what is attributed to him to make him liable. ln other words, persons who had nothing to do v ith the matter need not be roped in. A company being a jurltic person, all its deeds and functions are result of acts of otht rs. Therefore, officers of a company who are responsibre f. acts done in the name of the Company are sought to be made personally Iiable for acts which result in criminal action being taken against the Company. lt makes every person who, at the time the offence was committed, was in-charge of, and was responsible to the Company for the conduct of business of the Company, as well as the Company, liable for the offence

14. Now coming to the facts of the present case on hand, insofar as the petitioner-accused No 2 is concerned, it is apparent that the petitioner-accused No.2 is not a signatory to the cheque in question, which was allegedly issued tn discharge of part of liability of the accused No.1-company. As seen from the record, there was a MOU dated 24.06.2016 executed in favour of creditors, in which the petitioner's name appears as a signatory

15. ln view of the facts and circumstances of the case, it is relevant to note the definitions of 'director' and 'managing director' as per the Companies Act, section 2(34) "directo/' means a director appointed to the Board of a company. Admittedly, the cheque upon which the complaint is founded

was issued by the accused trlo.1_company an: signed by the accused No.4 who is alleged to have been e Director The cheque was issued as part payment and was lresented only in November 2O2O and returned unpaid -he complaint principally relies upon the petitioner's positior as a ,Director, and his being a signatory to the MOU. Hcl ,ever, it is an admitted fact that the petitioner_accused No 2 I as signed the IVOU and that the underlying transaction is aI o undisputed Whrle the parties are always at liberty to pur:; re appropriate civil remedies for resolution of their disputes, flr : rnvocation of criminal liabilrty requires strict satisfaction of t re ingredients mandated under Section .141 of the NI Act.

16. As observed supra, in order o meet the requlrement under Section 141 of the Nl Act lre role of the petitioner-accused No 2 that he was dealing vr lh the day_to_ day affairs of the company has to be estab|s red. But the complaint does not contain specific factrr tl averments describing the petitioner_accused No 2 functicr al role in the company's day{o-day affairs at the time thr: cheque was issued or at the time of presentation. There is no detailed averment as to how the petitioner-accused No.2 was "in charge of' the conduct of the business, what responsibilities he discharged, whether he was an executive or managing director, or what specific acUomission attributable to him caused or led to issuance/presentation/stop payment of the cheque. The complaint must contain specific factual averments showing how and in what manner the accused was in charge of the affairs of the company or responsible for its conduct of business at the relevant time

17. As seen from the summoning docket order dated 07 09.2021 passed in STC No.346 of 2021, it is a non- speaking one and there are no recorded reasons addressing whether the complaint, read with the documents, discloses a prima facie case that the petitioner-accused No.2 was 'in charge of' or responsible for the conduct of the dayto-day affairs of the company's business. The learned Magistrate has not recorded the application of judicial mind as to whether the particularised averments necessary to proceed against a director were present or not. The complaint cr es not plead the factual particulars necessary to infer that th: petrtioner as a 'Director', who was in charge of and responsitt e for conduct of the business of the company at the relevanr rme. Merely reciting the statutory language or stating the c esignation of 'Director', or relying upon execution of a con;rnsual IVIOU, cannot, in absence of further particulars, sustai I a prima facie conclusion of culpabillty under Section 141 of tlr r Nl Act. The law requires that when a Magistrate takes co ynizance and issues process, there must be evidence of jucii: al application of mind that the averments disclose a prima facie offence against the accused. A mechanical issuancer of summons without reasons in the face of the requirement ( f Section 141 is impermissible

18. ln view of the aforesaid facts and : rcumstances, and having regard to the well-setfled prirr iples of law enunciated by the Hon'ble Supreme Court ir :he decisions referred supra, this court is of the considered'o rinion that the essential ingredients required to constitute the tffence under r\ 6l Section 138 of the Nl Act are not made out against the petitioner-accused No.2, ln that view of the matter, the impugned order dated 24.09.2024 passed IN CRL M.P.No 3717 of 2023 in S T C Nl No 346 of 2021 is liable to be set aside and the same is set aside. Thbrefore the continuation of criminal proceedings against the petitioner- accused No.2, and subjecting him to the rigor of trial, would amount to an abuse of the process of law, and the same are liable to be quashed 19 Accordingly, this Criminal Petition is allowed and the criminal proceedings against the petitioner-accused No.2 in S T C NI.No.346 of 2021 on the file of the learned X Judicial Magistrate of First Class, [Vlanoranjan Complex, Nampally, Hyderabad, are hereby quashed As a sequel, pending miscellaneous applications, if any, shall stand closed SD/.C.DEEPIKA ASslsrANrdiGlsrRAR /TTRUE COPY/' SECTION OFFICER oneFair"*l#,t[il-",l,lli,?11"t';:i","" jliwADrsRrDEvr

1. The X Judicial HYderabad' Magistrate of First Class' Manoranjan Complex' Nampally' 2 1 1 LR copies ion of lndia Ministry of Law' Justice and company

3. The Under Secretary' Un To, Affairs. New Delhi t, I i

4 The Secretary, Telangana Advocates Association Librt l High Court for the State of Telangana, Uign Court Buildings at Hyderabad 5 Two CCs to the Public Prosecutor, Staie of Telangana ligh Courl Buildings' at Hyderabad (OUT) 6 One'CC Sri Ir,'1. Avlnash Reddy, Advocate TOPUC]

i. One CC Sri K. Ravinder Reddy, Advocate IOPUC] 8 Two CD Copies DL/PSL w

\) \ HIGH COURT DATED:05/1 212025

ORDER

CRLP.No.847 of 2025 ALLOWING THE CRIMINAL PETITION \ , r1: STA 14- O,: ,} '2 ILC ?Ui i,\

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