1 WP652/10 to WP655/10 IN THE HIGH COURT OF JUDICATURE AT BOMBAY CRIMINAL APPELLATE JURISDICTION CRIMINAL WRIT PETITION NO.652 OF 2010 ALONGWITH CRIMINAL WRIT PETITION NO.653 OF 2010 ALONGWITH CRIMINAL WRIT PETITION NO.654 OF 2010 ALONGWITH CRIMINAL WRIT PETITION NO.655 OF 2010 M/s Noble Resources & Trading India Pvt. Ltd. .... Petitioner. V/s Mr. Rajiv Dharnidharka, Director and others ..... Respondents. Mr. Manoj R. Khatri for the Petitioner. Mr. R.O. Agarwal along with Pankan Jain i/b P.D. Jain & Co. for Respondent No.1. Mr. P.S. Hingorani, APP for the State. CORAM: V. M. KANADE, J. DATE : 25th October, 2010 P.C.:- 1. Rule. Rule is made returnable forthwith. Respondents waive service. By consent of the Parties, Petition is taken up for final hearing. 2 WP652/10 to WP655/10 2. Heard the learned Counsel appearing on behalf of the Petitioner and the learned Counsel appearing on behalf of Respondent No.1. 3. Petitioner is the original complainant. He is challenging the judgment and order passed by the Sessions Court dated 20/01/2010 in Criminal Revision Applications filed by Respondent No.1. By the said order, the Sessions Court was pleased to allow the Revision Applications filed by the accused and the order of issuance of process against the original accused Nos. 2 – Respondent No.1 herein was quashed and set aside. 4. Brief facts are as under :- 5. Petitioner - Company entered into an agreement of Coal Sales Contract dated 1/12/2006 with the Respondent - Company and supplied various quantities of coal to the Respondent - Company. Towards the payment of the said coal which was supplied, three cheques were issued to the Petitioner of Rs 50 lakhs each by the Respondent – Company, which were dishonoured after they were deposited by the Petitioner with their Bankers. A statutory demand notice was sent. In spite of receipt of the statutory demand notice, no payment was made and, therefore, complaints were filed before the 28th Metropolitan Magistrate Court, Esplanade, Mumbai and, after the verification was 3 WP652/10 to WP655/10 recorded, the learned Magistrate was pleased to issue process. Against the said order of issuance of process passed in the said complaints, Revision Applications were filed by Respondent No.1 herein. The said Revision Applications were allowed by the Sessions Court only on the ground that Respondent No.1 herein had ceased to be a Director of the Company on account of his resignation and, as such, on the date of issuance of cheques, was no longer a Director of the Company and, therefore, was not in charge of day-to-day affairs of the Company. 6. The learned Counsel appearing on behalf of the Petitioner submitted that a specific case of the Petitioner was that the factum of resignation had to be established by the Respondent No.1 during trial. Apart from disputing the said fact, it was also the case of the Petitioner – Complainant that Respondent No.1 had played a specific role in respect of the said transaction. It is submitted that other Directors were not made accused in this complaint and only those Directors who were in charge of day-to-day affairs of the Company and who had played a specific role in the transaction were made as accused. He relied on the Division Bench Judgment of this Court in Suhas Bhand vs. State of Maharashtra1 He invited my attention to para 33 and submitted that Respondent No.1 would fall in clauses (ii) and (iii) of the said paragraph. 1 Cr.WP No.1194/08 & Cr.WP.2331/06 with Cr.WP 608/08 & Cr.WP 2330/06 decided on 18/08/2009 4 WP652/10 to WP655/10 7. On the other hand, the learned Counsel appearing on behalf of Respondent No.1 submitted that Respondent No.1 resigned on 15/3/2008. Admittedly, cheques were deposited after that date. A legal notice was issued thereafter and, as such, since the date on which the cheques were signed, Respondent No.1 was not a Director and, therefore, he could not be made liable. He submitted that resignation of Respondent No.1 as a Director was not disputed by the complainant. He further submitted that, even otherwise, since Respondent No.1 was an additional Director, he ceased to be a Director at the end of his term and, therefore, he was not concerned with the affairs of the Company, though he continued to be a consultant for and on behalf of the Company. In support of the said submission, he relied upon the judgment of this Court in Pandurang Comotim Sancoalcar vs. Suresh Prabhakar Prabhu1. He then relied upon another judgment of this Court in Dushyant D. Anjira vs. Wall Street Finance Ltd. & Anr.2 It is then submitted that though the Sessions Court had allowed the Revision Applications filed by Respondent No.1 only on the point of resignation as a Director, the further point which was raised before the Sessions Court was that there were no averments in the complaint that the Respondent No.1 was in charge of the affairs of the Company and, therefore, role of the Respondent No.1 was not mentioned in the entire complaint. 1 2003 Company Cases Vol. 113, page 600 2 AIR 2001 Bombay 655 5 WP652/10 to WP655/10 He submitted that even in the verification the role of Respondent No.1 is not mentioned and, therefore, provisions of section 141 of the Negotiable Instruments Act were not attracted and, on that ground also, the process was liable to be quashed. Counsel for Respondent No.1 also contended that the Petition was bad for misjoinder of parties since original accused No.3 was not made party-respondent. 8. On the other hand, the learned Counsel appearing on behalf of the Petitioner submitted that the Petitioner had disputed the resignation of Respondent No.1 as a Director and further contended that after the resignation, he had continued to be in charge of the affairs of the Company. He submitted that, therefore, Respondent No.1 will have to prove his resignation at the time of the trial and, on that ground, process could not be quashed at this stage. In support of the said submission, he relied upon the judgment in Suhas Bhand1 (supra). He submitted that ratio of the judgments on which reliance is placed by the learned Counsel appearing on behalf of Respondent No.1 would not apply to the facts of the present case since in the case of Dushyant D. Anjira2 (supra), the Form No.32 was not challenged by the complainant. He submitted that the Division Bench of this Court in Suhas Bhand (supra) had noticed the said judgment and had noted that since the complainant had not challenged the fact of resignation, the 1 Cr.WP 1194/08 & Cr.WP 2331/06 with Cr.WP 608/08 & Cr.WP 2330/06 2 AIR 2001 Bombay 655 6 WP652/10 to WP655/10 learned Single Judge has observed that in such cases by mere production of certified copy of Form No.32, the Director would be required to be discharged from the proceedings. He further submitted that on the same ground the ratio of the judgment in the case of Pandurang Comotim Sancoalcar vs. Suresh Prabhakar Prabhu1 would not apply to the facts of the present case. So far as the second ground is concerned, it is submitted that it was not open for Respondent No.1 to urge this ground in the Writ Petition filed by the Petitioner since the Sessions Court had not taken into consideration the said ground and the said submission was deemed to be rejected by the Sessions Court. He invited my attention to the complaint. He submitted that though there were number of Directors in the said Company, only Respondent No.1 and accused No.3 were made parties to the complaint since they were in charge of day-to-day affairs of the Company. He submitted that this is not a case where Petitioner had chosen to falsely implicate the other Directors and, therefore, it could not be said that the complaint was filed with malafide intention against Respondent No.1. 9. After having heard both the Counsel at length, I am of the view that there is some substance in the submissions made by the learned Counsel appearing on behalf of the Petitioner. The Division Bench of this Court in Suhas Bhand2 (supra) has, after taking into consideration various 1 2001 Cri. L.J. 2945 2 Cr.WP 1194/08 & Cr.WP 2331/06 with Cr.WP 608/08 & Cr.WP 2330/06 7 WP652/10 to WP655/10 judgments of the Apex Court, this Court and other High Courts has observed in its judgment in para 33 as under:- “33. A reading of these judgments makes for the following legal propositions with regard to the resignation of a Director of a registered Company:- (i) If the accused in a criminal prosecution under Section 138 of the Negotiable Instruments Act produces a certified copy of Form No.32 certified by the ROC and there is no dispute of the factum of his resignation, the accused is entitled to be discharged from the prosecution. (ii) If his resignation is not accepted or admitted by the complainant upon production of the certified copy of Form No.32, the accused would have to prove the truth of the contents of the said certified copy i.e. the factum of his resignation. Such accused cannot be discharged simplicitor upon production of a certified copy of Form No.32. (iii) If the complainant produces any evidence 8 WP652/10 to WP655/10 showing the continuance of the accused as Director of the Company after the date of the resignation claimed by him as per the certified copy of Form No.32 produced by him, such accused cannot be discharged simplicitor upon production of such certified copy of Form No.32. He would have to lead evidence to prove the factum of his resignation. Similarly the complainant would be entitled to prove the factum of his continuing as Director. The trial under Section 138 read with Section 141 of the Negotiable Instruments Act would, therefore, proceed.” In my view, ratio of the judgment of the Division Bench is binding on this Court. In the present case, Petitioner has disputed the resignation of Respondent No.1 as a Director. It is strenuously urged that no reply was filed to the Revision Applications filed by Respondent No.1 and there is no specific denial to his resignation. The fact remains that in para 7 of its order the Sessions Court has recorded submissions of Respondent No.1. Para 7 of the said order reads as under:- “7. Submissions in rival is that of correctness of the order by the learned trial 9 WP652/10 to WP655/10 Judge. Attention is invited to the pleadings in the complaint. From the first page of the complaint at the bottom there is specific mention that accused Nos. 2 and 3 are directors and looking after business and affairs of the company, shown their active involvement, consequently, legal liability for accused no.1 company. Next submission is pointing out the pleadings in the revision that, applicant has made aversion of his continuance in the company as consultant of which he was director. Applicant being continued in the service of the company, statutory notice issued in the address of the company is good and valid service. Submission of non-service of him holds no water. Next point of the argument is that, accused No.2 has complete knowledge, he was director at the time of entering into a contract. Contract is in continuance and for considerable long time. It is transaction in Crores and each cheque has been issued of the amount over and above Rs 50 lacs. If the applicant No.2 is not responsible he can lead the evidence before the court and can get relief from the trial court. It is, therefore, the revision applications being devoid of merits 10 WP652/10 to WP655/10 needs to be dismissed.” It is thus obvious that no reply has been filed. The fact of resignation of Respondent No.1 and his continuance in the Company as a consultant has been specifically urged before the Sessions Court. It cannot be therefore said that the complainant had not disputed the fact of resignation of Respondent No.1 as a Director. Since this is a disputed question of fact, it will have to be established by Respondent No.1 during trial by leading evidence. So far as the question of averments in the complaint are concerned, the complainant has not added other Directors as accused and has added only respondent No.1 and accused No.3 being Directors of the Company since they were in charge of the day-to-day affairs of the Company and therefore necessary averments for the purpose of attracting the provisions of section 141, in my view, can be found in the said complaint. So far as the submission regarding non-joinder of the parties is concerned, as rightly pointed out by the learned Counsel for the Petitioner, no relief is claimed against original accused No.3 and, therefore, he is not necessary and proper party in this Writ Petition. Therefore, the said submission cannot be accepted. The Sessions Court erred in relying on the judgment in Dushyant D. Anjira1 (supra), and Pandurang Comotim Sancoalcar vs. Suresh Prabhakar Prabhu2 since ratio of the said judgments does not apply to the facts of the 1 AIR 2001 Bombay 655 2 2003 Company Cases Vol. 113, page 600 11 WP652/10 to WP655/10 present case. The Sessions Court has also erred in holding that facts and circumstances on record indicate that accused Nos.2 i.e. Respondent No.1 herein cannot be said to be under legal obligation for bouncing of cheque. 10. Thus, the impugned order passed by the Sessions Court is set aside. Writ Petition is allowed in terms of prayer clause (a). Rule is made absolute accordingly. Hearing of the trial is expedited. Respondent No.1 however is exempted from appearing in the Trial Court. If his plea is not recorded, he may be permitted to record his plea through his advocate. Even his statement under section 313 of Cr.P.C. may be recorded through his advocate provided he gives an undertaking that he shall not dispute his identity and correctness of the evidence recorded by the Trial Court in his absence and also correctness of the answers given to the questions in the statement recorded under section 313 of the Cr.P.C. The learned Magistrate may follow the procedure under the amended section 313 sub-clause (5) of the Cr.P.C. (V. M. KANADE, J.)