bsb IN IN IN THE HIGH COURT OF JUDICATURE AT BOMBAY THE HIGH COURT OF JUDICATURE AT BOMBAY THE HIGH COURT OF JUDICATURE AT BOMBAY CRIMINAL CRIMINAL CRIMINAL APPELLATE JURISDICTION APPELLATE JURISDICTION APPELLATE JURISDICTION CRI. CRI. CRI. APPLICATION NO. 659 OF 2008 APPLICATION NO. 659 OF 2008 APPLICATION NO. 659 OF 2008 TO TO TO CRI. CRI. CRI. APPLICATION NO. 670 OF 2008 APPLICATION NO. 670 OF 2008 APPLICATION NO. 670 OF 2008 Amit B. Shah & ors. ... Applicants (in all applications) v/s 1. The Bank of Rajasthan Ltd. 2. The State of Maharashtra ... Respondents Mr.A.P.Mundargi i/by PDS Legal for the applicants. Mr.Subhash Jha with Mr.Yashpal Thakur i/by Paras Kuhad & Associates for the respondent No.1. Mr.Y.M.Nakhawa, A.P.P. for the respondent No.2 State. CORAM: CORAM: CORAM: SMT.NISHITA MHATRE, J. SMT.NISHITA MHATRE, J. SMT.NISHITA MHATRE, J. DATED: DATED: DATED: 12TH JUNE, 2008 12TH JUNE, 2008 12TH JUNE, 2008 P.C. P.C. P.C.: 1. These applications have been filed for quashing the process issued against the applicants who are accused Nos.3 to 7 before the 23rd Court at Esplanade, Mumbai, in several criminal complaints. 2. Cheques worth Rs.3.5 crores altogether in the aforesaid applications have been issued and signed by the accused No.3. These cheques were dishonoured. The demand for payment of the cheques was made by the Bank 2 of Rajasthan, the respondent No.1 herein. Since the amounts were not paid, the Bank instituted several criminal complaints. Each complaint is in respect of two cheques worth Rs.10 lacs. 3. The main contention raised by the learned counsel for the applicants is that proceedings before the Metropolitan Magistrate are required to be stayed in view of the fact that there is a dispute as to whether the Bank is entitled to the sum of Rs.3.5 crores. It is submitted that loans were secured by the applicants. These loans were re-structured twice by the Corporate Debt Restructuring Empowered group (for short C.D.R.). After restructuring of the loans, it was agreed that the amount payable to Bank of Rajasthan would be less than the amount actually borrowed from it. Since the Bank was aggrieved by the order, it filed an appeal and the appellate authority decided in favour of the Bank holding that it was entitled to recover the entire amount loaned. Aggrieved by this decision, the applicants had filed Writ Petition No.1509 of 2006 before this Court. This Court on 22.6.2006, while admitting the petition, directed the petitioners i.e. the applicants herein to deposit an amount of Rs.2.34 crores and permitted the Bank to withdraw the amount. The learned counsel for the applicants contends that as 3 it is yet to be decided whether Bank of Rajasthan is entitled to be paid Rs.3.5 crores, the criminal proceedings should be stayed. 4. On the other hand, it is submitted by the learned counsel for the bank that the offence has already been committed, once there was a dishonour of cheques and the demand for payment was not complied with. He submits that no other document except the complaint could be considered at this stage in order to ascertain whether the proceedings before the Magistrate Court should be stayed. He relied on the judgment in the case of State State State of of of Bihar and anr. v/s P.P.Sharma & anr., reported in Bihar and anr. v/s P.P.Sharma & anr., reported in Bihar and anr. v/s P.P.Sharma & anr., reported in 1992 1992 1992 Supp.(1) SCC 222. Supp.(1) SCC 222. Supp.(1) SCC 222. 5. In my opinion, there is no need to stay the criminal proceedings. The powers of this Court under section 482 of the Cr.P.C. are to be exercised very sparingly and with circumspection. In my opinion, this is not a case where this power should be used. There are disputed questions of fact as to whether the amount which is payable to the Bank is Rs.3.5 crores or less. However, this is not a forum before which these disputes can be agitated. Once a cheque has been issued and dishonoured and the prosecution has led evidence to prove that an offence has been committed, the onus would shift on the 4 accused to prove, if possible, before the Trial Court that the criminal proceedings against him were initiated without any basis. 6. No liability can be fastened on applicants 2 to 5, according to the learned counsel. He relies on the decision of the Supreme Court in the case of N.K.Wahi N.K.Wahi N.K.Wahi v/s v/s v/s Shekhar Singh & ors., reported in (2007) 9 SCC 481, Shekhar Singh & ors., reported in (2007) 9 SCC 481, Shekhar Singh & ors., reported in (2007) 9 SCC 481, which which which was subsequently reiterated in the case of SMS was subsequently reiterated in the case of SMS was subsequently reiterated in the case of SMS Pharmaceuticals Pharmaceuticals Pharmaceuticals Ltd. v/s Neeta Bhalla & anr., reported Ltd. v/s Neeta Bhalla & anr., reported Ltd. v/s Neeta Bhalla & anr., reported in in in (2007) 4 SCC 70. (2007) 4 SCC 70. (2007) 4 SCC 70. The averments in the complaint are insufficient to implicate the applicants 2 to 5, urges the learned counsel. In the case of Rangachari v/s Rangachari v/s Rangachari v/s Bharat Bharat Bharat Sanchar Nigam Ltd., reported in the case of Sanchar Nigam Ltd., reported in the case of Sanchar Nigam Ltd., reported in the case of (2007) (2007) (2007) 5 SCC 108, 5 SCC 108, 5 SCC 108, the Supreme Court considered whether the following averments in the complaint are sufficient to implicate the directions of the Company: "That accused 1 is a company incorporated under the Companies Act. Accused 2 and 3 are its Directors. They are in charge of and responsible to accused 1 for conduct of business of accused 1 Company. They are jointly and severally liable for the acts of accused 1." 5 The Court held that the Directors of a Company cannot be deemed to be in charge of and responsible for the Company in the conduct of its business in the context of Section 141 of the Negotiable Instruments Act by noting that the judgment in S.M.S.Pharmaceuticals S.M.S.Pharmaceuticals S.M.S.Pharmaceuticals (supra), is binding. The Court concluded by observing thus:- "27. We think that, in the circumstances, the High Court has rightly come to the conclusion that it is not a fit case for exercise of jurisdiction under Section 482 of the Code of Criminal Procedure, for quashing the complaint. In fact, an advertence to Sections 138 and 141 of the Negotiable Instruments Act shows that on the other 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 to show that they are not liable to be convicted. Any restriction on their power or 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 trial such a restriction or to show that at the relevant time they were not in charge of the affairs of the Company. 6 Reading the complaint as a whole, we are satisfied that it is a case where the contentions sought to be raised by the appellant can only be dealt with after the conclusion (sic commencement) of the trial." 7. In the case of Prafulla Maheshwari & ors. v/s State Prafulla Maheshwari & ors. v/s State Prafulla Maheshwari & ors. v/s State of of of Maharashtra & anr., decided on 1.11.2007 in Criminal Maharashtra & anr., decided on 1.11.2007 in Criminal Maharashtra & anr., decided on 1.11.2007 in Criminal Writ Writ Writ Petition No.2110 of 2006 Petition No.2110 of 2006 Petition No.2110 of 2006, a learned Single Judge of this Court has considered all the aforesaid judgments and has held that there can be no hard and fast rule which can be laid down in regard to the cases in which the High Court will exercise its extraordinary jurisdiction of quashing the criminal proceedings at any stage. The learned Judge has observed that the powers of the High Court under Section 482 of the Code of Criminal Procedure being very wide, require to be exercised with great caution. The High Court should normally refrain from giving a prima facie decision in a case where the entire facts are incomplete and hazy and also when the evidence is not completely led and produced before the Court and the issues involved cannot be seen in the true perspective without sufficient material. 7. In my view, considering the averments contained in 7 the complaint as a whole, it cannot be said that applicant Nos.2 to 5 are not implicated in the complaint by the respondents. There are sufficient grounds available in the complaint for the Magistrate to issue process. Therefore, the order issuing process cannot be faulted. The Sessions Court in revision has considered the matter in its proper perspective and there are no infirmities in the order requiring this Court to quash the process issued against the applicants. 8. All criminal applications rejected.