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TMI Blog2023 (4) TMI 500X X X X Extracts X X X X X X X X Extracts X X X X ..... y of the income tax returns for the Assessment Year 2017-18 filed by the applicant Zafar Sareshwala would show that at the relevant time, he was serving with the accused no.1- company as a Chief Operating Officer (Sales Marketing). It is duty of the applicant to produce the copy of power of attorney, to substantiate the allegations leveled in the complaint. It is his duty to explain why he had signed two agreements as an authorized signatory. Considering his power to sign the agreement as authorized signatory and attorney of the promoters would rise reasonable inference that at the relevant time, he was representing the accused no.1 company and its promoters and was involved in day to day affairs of the company and having knowledge about the entire transaction including the return of cheque. Thus, this Court is of prima-facie opinion that, the averments in the complaint are sufficient for the purpose of summoning the applicant herein and the trial Court has rightly issued summons. The criminal complaint pending before the trial Court is at the stage of completion as the matter is at the stage of recording further statement of the accused-applicant. In light of the settled p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tors and the persons in-charge of the company, were failed to disbursed and/or allot the shares as per the agreement and accordingly, as per the clauses of the agreements, the investors are entitled to refund the amount. The complainant and others have exercised exit option and demanded the invested amount. The authorized signatory of the company vide letter dated 06.03.2017, acknowledged the due amount and assured that the company will refund the entire share application money by 15.04.2017. The company vide its communication dated 19.05.2017, issued following post dated cheques towards the refund of the share application money: Name Amount Cheque No. Bank Ridham Mukeshbhai Sheth 5,32,28,415=00 005619 ICICI Bank Mukeshbhai Rasiklal Sheth 5,52,18,415=00 005620 ICICI Bank Nipaben Shah 2,98,33,240=00 005621 ICICI Bank Pooja Ridhambhai Sheth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the complainant was Rs.2,98,33,240/-. The Company has been arraigned as accused no. 1. The accused Nos. 2, 3 and 4 are the Directors of the accused no. 1 Company, whereas, the accused Nos. 5 and 6 are actively involved and incharge of daily management of the company and all are involved in day to day transactions / affairs of the company. It is further averred that, accused no. 2, 5 and 6, the present applicant herein had executed two agreements called as Share Holders Agreement and Share Subscription Agreement . Both the agreements were being executed by and between the promoters and the present complainant and her family. The present applicant accused no. 6 had entered upon the said agreement with the complainant and her family members in the capacity as a power of attorney holder of Mohd. Habib Sareshwala, J.W. Khadija and minor Ahmed Sareshwala. The accused no. 5 Uvesh Sareshwala signed the agreement in the capacity as power of attorney holder of Umar Sareshwala, J.W. Fateme and minor Ashma Sareshwala. The agreement was also signed by accused no. 2 in the capacity of Director of accused no. 1 Company and power of attorney of Qudisya Sareshwala and others. In such circum ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... petition is filed by the applicant accused at the stage of further statement. 11. Mr. R.R. Marshall, learned Senior Counsel appearing for and on behalf of the applicant raised the following contentions : (i) The applicant herein has been arraigned as accused no. 6 mainly on the ground that, he was the signatory of the two agreements. It is in this context, he argued that, the applicant herein being an elder person of the family and POA of the promoters-cum-share holders signed it for and on behalf of the accused, however, on perusing the agreements, it does not transpires that the applicant herein is Director or Representative of the Company. Thus, therefore, merely applicant being a signatory of the agreement, it cannot be said that he was director or representative of the company or involved in day to day affairs of the company. (ii) The applicant already resigned as a Director of the Company with effect from 01.02.2013 and same was approved by the Board of Directors and notified to the ROC in a prescribed form (Form No. 32) and same is produced at page-101 and 103 of this writ petition. Thus, it is evident that, at relevant time, the applicant herein neither holding ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 09) 10 SCC 148, National Small Industries Corporation Vs. Harmitsinh Paintal, (2010) 3 SCC 330), it was held that, impleadment of Directors or persons of an accused Company, on the basis of the statement that, they are incharge of and responsible for the conduct of the business of the company, without anything more, does not fulfill the requirement of Section 141 of the N.I. Act. 13. In view of the aforesaid contentions, learned Senior Counsel would submit that the allegations in the complaint even if they are taken at their face value, and accepted in their entirety, do not prima-facie constitute an offence or make out a case against the accused herein. The powers to interdict a proceedings either at the threshold or at the inter-mediation stage of trial, is inherent in a High Court on the broad principle that, the allegations made in the FIR or Criminal Complaint, prima-facie do not disclose a triable offence, there can be no reason as to why the accused should be made to a suffer the agony of a legal proceedings. Thus, considering the peculiar facts and circumstances of the present case, case is made out for the exercise of inherent powers under Section 482 of the Code ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 482. 16. Before arriving at any conclusion, it would be appropriate to first scrutinize relevant provision of Section 141 of the N.I. Act which reads as under: 141. Offences by companies (1) If the person committing an offence under section 138 is a company, every person who, at the time the offence was committed, was in charge of, and was responsible to the company for the conduct of the business of the company, as well as the company, shall be deemed to be guilty of the offence and shall be liable to be proceeded against and punished accordingly: PROVIDED that nothing contained in this subsection shall render any person liable to punishment if he proves that the offence was committed without his knowledge, or that he had exercised all due diligence to prevent the commission of such offence. (2) Notwithstanding anything contained in subsection (1), where any offence under this Act, has been committed by a company and it is proved that the offence has been committed with the consent or connivance of, or is attributable to, any neglect on the part of, any director, manager, secretary or other officer of the company, such director, manager, secretary or other of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any for the conduct of business of the company, as well as the company liable for the offence. The proviso to the subsection contains an escape route without their knowledge or that they had exercised all due diligence to prevent commission of the offence. 18. In the case of S.M.S. Pharmaceuticals (supra), the following questions were referred for determination: (a) Whether for purposes of Section 141 of the Negotiable Instruments Act, 1881, it is sufficient if the substance of the allegation read as a whole fulfills the requirements of the said section and it is not necessary to specifically state in the complaint that the person accused was in charge of, or responsible for, the conduct of the business of the company. (b) Whether a director of a company would be deemed to be in charge of, and responsible to, the company for conduct of the business of the company and, therefore, deemed to be guilty of the offence unless he proves to the contrary. (c) Even if it is held that specific averments are necessary, whether in the absence of such averments the signatory of the cheque and /or the managing directors or joint managing director who admittedly would be in charg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... laint and material placed on record. 22. It is the contention raised by the applicant that, at relevant time, he had signed two agreements for and on behalf of promoters, except this, he had no role to play in the alleged offence and therefore, his case would not fall under Section 141 of the Act and ingredients are not satisfied. The applicant herein has been arraigned as accused no.6 in the complaint. From the complaint, it appears that, the accused no.2, 3 and 4 are Directors of accused no.1 company. It is averred that, the accused no.5 and 6 i.e. present applicant and one Uvesh Yunush are actively involved in day to day transaction/affairs of the company and authorized signatory of the accused no.1. It is further averred in complaint that, accused no.2, 5 and 6 had entered upon two agreements, in the capacity as a power of attorney holder of the promoters and authorized signatory. It is further averred that, they approached the complainant for financial aid to infuse fresh capital and after paying a substantial amount totaling Rs.20 crores, the accused no.1 to 6 failed to allot the shares and finally, issued cheques, as referred above for discharge of their liability. 23. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ould be exercised vary sparingly and with circumspection and that too, in the rarest of rare case; that the Court will not be justified in embarking upon an inquiry as to the reliability or genuineness or otherwise of the allegations made in the complaint and that the extra ordinary or inherent powers do not confer an arbitrary jurisdiction on the Court to act accordingly to its whim and caprice. 25. In light of the settled principle of law and applying it to the facts of the present case, this Court is of considered opinion that, the averments made in the complaint are sufficient to summon the applicant herein and at this stage, it cannot be said that, prima-facie, no offence is made out against the applicant. This Court, therefore, find no merits in the applications. Hence, all the applications stand dismissed. Rule is discharged. Interim relief stands vacated forthwith. 26. In view of disposal of main applications, interim applications would not survive and stand disposed of accordingly. It is needless to say that, the observations made hereinabove is confined to determination of the issue raised in the present applications and the trial Court shall decide the case on its ..... X X X X Extracts X X X X X X X X Extracts X X X X
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