Dismissed

Raaja Pukhraj Jain v. the State of Maharashtra and Anr.

Bombay HC25 Jan 2019WP/986/2017

Case brief

AI extract

What is this about?

Single Judge rejected a challenge to issuance of process under Section 138 NI Act against an alleged independent director. Court held disputed résignation facts preclude immediate exemption from vicarious liability during the cheque validation period.

What did the court decide?

All writ petitions dismissed; rule discharged.

What the court decided

Raaja Pukhraj Jain Vs the State of Maharashtra and Anr. — Company and Corporate | Bombay HC (2019)

¶1

Sherla V.

¶2

wp.985.2017+20others_903..doc

¶3

IN THE HIGH COURT OF JUDICATURE AT BOMBAY CRIMINAL APPELLATE JURISDICTION

¶4

Cr. Writ Petition NO. 985 OF 2017

¶5

Raaja Pukhraj Jain ...Petitioner(s)

¶6

Versus

¶7

The State Of Maharashtra And Anr ...Respondent(s)

¶8

WITH

¶9

Cr. Writ Petition NO. 986 OF 2017

¶10

Raaja Pukhraj Jain ...Petitioner(s)

¶11

Versus

¶12

The State Of Maharashtra And Anr ...Respondent(s)

¶13

WITH

¶14

Cr. Writ Petition NO. 987 OF 2017

¶15

Raaja Pukhraj Jain ...Petitioner(s)

¶16

Versus

¶17

The State Of Maharashtra And Anr ...Respondent(s)

¶18

WITH

¶19

Cr. Writ Petition NO. 988 OF 2017

¶20

Raaja Pukhraj Jain ...Petitioner(s)

¶21

Versus

¶22

The State Of Maharashtra And Anr ...Respondent(s)

¶23

WITH

¶24

Cr. Writ Petition NO. 989 OF 2017

¶25

Raaja Pukhraj Jain ...Petitioner(s)

¶26

Versus

¶27

The State Of Maharashtra And Anr ...Respondent(s)

¶28

Page 1 of 13

¶29

Sherla V.

¶30

wp.985.2017+20others_903..doc

¶31

WITH Cr. Writ Petition NO. 990 OF 2017

¶32

Raaja Pukhraj Jain ...Petitioner(s)

¶33

Versus

¶34

The State Of Maharashtra And Anr ...Respondent(s)

¶35

WITH

¶36

Cr. Writ Petition NO. 991 OF 2017

¶37

Raaja Pukhraj Jain ...Petitioner(s)

¶38

Versus

¶39

The State Of Maharashtra And Anr ...Respondent(s)

¶40

WITH

¶41

Cr. Writ Petition NO. 992 OF 2017

¶42

Raaja Pukhraj Jain ...Petitioner(s)

¶43

Versus

¶44

The State Of Maharashtra And Anr ...Respondent(s)

¶45

WITH

¶46

Cr. Writ Petition NO. 993 OF 2017

¶47

Raaja Pukhraj Jain ...Petitioner(s)

¶48

Versus

¶49

The State Of Maharashtra And Anr ...Respondent(s)

¶50

WITH

¶51

Cr. Writ Petition NO. 994 OF 2017

¶52

Raaja Pukhraj Jain ...Petitioner(s)

¶53

Versus

¶54

The State Of Maharashtra And Anr ...Respondent(s)

¶55

Page 2 of 13

¶56

Sherla V.

¶57

wp.985.2017+20others_903..doc

¶58

WITH

¶59

Cr. Writ Petition NO. 995 OF 2017

¶60

Raaja Pukhraj Jain ...Petitioner(s) Versus

¶61

The State Of Maharashtra And Anr ...Respondent(s)

¶62

WITH

¶63

Cr. Writ Petition NO. 996 OF 2017

¶64

Raaja Pukhraj Jain ...Petitioner(s)

¶65

Versus

¶66

The State Of Maharashtra And Anr ...Respondent(s)

¶67

WITH

¶68

Cr. Writ Petition NO. 997 OF 2017

¶69

Raaja Pukhraj Jain ...Petitioner(s)

¶70

Versus

¶71

The State Of Maharashtra And Anr ...Respondent(s)

¶72

WITH

¶73

Cr. Writ Petition NO. 998 OF 2017

¶74

Raaja Pukhraj Jain ...Petitioner(s)

¶75

Versus

¶76

The State Of Maharashtra And Anr ...Respondent(s)

¶77

WITH

¶78

Cr. Writ Petition NO. 999 OF 2017

¶79

Raaja Pukhraj Jain ...Petitioner(s)

¶80

Versus

¶81

The State Of Maharashtra And Anr ...Respondent(s)

¶82

Page 3 of 13

¶83

Sherla V.

¶84

wp.985.2017+20others_903..doc

¶85

WITH

¶86

Cr. Writ Petition NO. 1000 OF 2017

¶87

Raaja Pukhraj Jain ...Petitioner(s) Versus

¶88

The State Of Maharashtra And Anr ...Respondent(s)

¶89

WITH

¶90

Cr. Writ Petition NO. 1001 OF 2017

¶91

Raaja Pukhraj Jain ...Petitioner(s)

¶92

Versus

¶93

The State Of Maharashtra And Anr ...Respondent(s)

¶94

WITH

¶95

Cr. Writ Petition NO. 1002 OF 2017

¶96

Raaja Pukhraj Jain ...Petitioner(s)

¶97

Versus

¶98

The State Of Maharashtra And Anr ...Respondent(s)

¶99

WITH

¶100

Cr. Writ Petition NO. 1003 OF 2017

¶101

Raaja Pukhraj Jain ...Petitioner(s)

¶102

Versus

¶103

The State Of Maharashtra And Anr ...Respondent(s)

¶104

WITH

¶105

Cr. Writ Petition NO. 1004 OF 2017

¶106

Raaja Pukhraj Jain ...Petitioner(s)

¶107

Versus

¶108

The State Of Maharashtra And Anr ...Respondent(s)

¶109

Page 4 of 13

¶110

Sherla V.

¶111

wp.985.2017+20others_903..doc

¶112

WITH

¶113

Cr. Writ Petition NO. 1005 OF 2017

¶114

Raaja Pukhraj Jain ...Petitioner(s) Versus

¶115

The State Of Maharashtra And Anr ...Respondent(s)

¶116

Mr.Jitenra Bakliwal for the Petitioner in all petitions

¶117

Ms.Veera Shinde, APP, for the Respondent – State

¶118

Mr.M.G. Shukla for Respondent No.2

¶119

CORAM: MRS.MRIDULA BHATKAR, J.

¶120

DATED: 25^th January, 2019

¶121

PC:-

¶122

Rule. Mr.Patil, the learned APP and Mr.Shukla waive notice on behalf of respondent State and respondent No.2 respectively. By consent of the parties, Rule made returnable forthwith and heard finally.

¶123

The petitioner in all these Writ Petitions is one and the same and facing prosecution under sections 138 r/w 141 of the Negotiable Instruments Act and hence, all these petitions are being disposed of by this one and common order.

¶124

The process is issued vide various orders passed in October,

¶125

2013 on different dates by the 20^th Court, Mazgaon, Mumbai in 21

¶126

Page 5 of 13

¶127

Sherla V.

¶128

wp.985.2017+20others_903..doc

¶129

complaints. It is convenient to give a chart detailing all the cases of issuance of process in the criminal complaints as follows:

¶130

W.P. No.	Complaint No. (CC No.)	Court	Cheque Amount	Process Date	Complainant Name
985/17	1047/SS/2013	20^thCourt, Mazgaon Court, Mumbai	Rs. 20,00,000	18/10/2013	Neena Ashok Shah
986/17	1048/SS/2013	20^thCourt, Mazgaon Court, Mumbai	Rs. 25,00,000	18/10/2013	Menka V. Kelkar
987/17	1000/SS/2013	20^thCourt, Mazgaon Court, Mumbai	Rs. 10,00,000	5/10/2013	Dilip Kumar Nagpal
988/17	1001/SS/2013	20^thCourt, Mazgaon Court, Mumbai	Rs. 7,00,000	5/10/2013	Ram Chand Nagpal
989/17	1002/SS/2013	20^thCourt, Mazgaon Court, Mumbai	Rs. 10,00,000	5/10/2013	Ramchand Nagpal
990/17	1003/SS/2013	20^thCourt, Mazgaon Court, Mumbai	Rs. 10,00,000	5/10/2013	Atmaram Broking Co. Pvt. Ltd.
991/17	1004/SS/2013	20^thCourt, Mazgaon Court, Mumbai	Rs. 10,00,000	5/10/2013	Suresh Atmaram Nagpal
992/17	1049/SS/2013	20^thCourt, Mazgaon Court, Mumbai	Rs. 10,00,000	31/10/2013	Madhusudhan B. Agarwal
993/17	1033/SS/2013	20^thCourt, Mazgaon Court, Mumbai	Rs. 7,50,000	17/10/2013	Kamlesh Lamba
994/17	1034/SS/2013	20^thCourt, Mazgaon Court, Mumbai	Rs. 10,00,000	17/10/2013	Kamlesh Lamba
995/17	1035/SS/2013	20^thCourt, Mazgaon Court, Mumbai	Rs. 15,00,000	17/10/2013	Kamlesh Lamba
996/17	1036/SS/2013	20^thCourt, Mazgaon Court, Mumbai	Rs. 7,50,000	17/10/2013	Kamlesh Lamba
997/17	1037/SS/2013	20^thCourt, Mazgaon Court, Mumbai	Rs. 15,00,000	17/10/2013	Kamlesh Lamba
998/17	1038/SS/2013	20^thCourt,	Rs. 5,00,000	17/10/2013	Geeta Jagasia

¶131

Page 6 of 13

¶132

Sherla V.

¶133

wp.985.2017+20others_903..doc

¶134

		Mazgaon Court, Mumbai
999/17	1050/SS/2013	20^thCourt, Mazgaon Court, Mumbai	Rs. 10,00,000	31/10/2013	Purushottam B. Agarwal – HUF
1000/17	1051/SS/2013	20^thCourt, Mazgaon Court, Mumbai	Rs. 10,00,000	31/10/2013	Purushottam B. Agarwal – HUF
1001/17	1093/SS/2013	20^thCourt, Mazgaon Court, Mumbai	Rs. 20,00,000	31/10/2013	Atmaram And Sons .
1002/17	1094/SS/2013	20^thCourt, Mazgaon Court, Mumbai	Rs. 6,00,000	31/10/2013	Atmaram and Sons.
1003/17	1095/SS/2013	20^thCourt, Mazgaon Court, Mumbai	Rs. 7,00,000	31/10/2013	Atmaram and Sons .
1004/17	1096/SS/2013	20^thCourt, Mazgaon Court, Mumbai	Rs. 9,00,000	31/10/2013	Atmaram and Sons .
1005/17	1097/SS/2013	20^thCourt, Mazgaon Court, Mumbai	Rs.7,00,000	31/10/2013	Atmaram and Sons .

¶135

The complainant has received 21 cheques from the company which is respondent No.1 in all the criminal complaints. Respondent Nos.2 to 11 in all the complaints are the Chairman, Managing Director, Joint Managing Director, Directors and General Manager or Chief Financial Officer of Respondent No.1 company. All the 21 cheques were issued in favour of the complainant in 2013. As the cheques were dishonoured, a statutory notice was issued by the complainant. Reply was given denying the liability

¶136

Page 7 of 13

¶137

Sherla V.

¶138

wp.985.2017+20others_903..doc

¶139

by the respondents in the complaint and thereafter, all these complaints were filed and the orders of issuance of process were issued.

¶140

Learned Counsel for the petitioner has submitted that he is challenging the orders of issuance of process only on one point that the petitioner who is accused No.4 in all the complaints was only a non-executive independent additional director of the company. In support, he relied on Form No.32 under the Companies Act where the status of the petitioner/accused No.4 is shown as an additional director and his designation is shown as additional director and the category as independent. He relied on the online resignation form for the same submitted by the petitioner/accused. He argued that in the entire complaint, no specific role is attributed to the petitioner and for the issuance of process, it is necessary for the complainant to give specific role to the person. No process can be issued against an independent or additional director, who has no role in the working of the company. The person, who has expertise or has special knowledge in that field, is appointed as an independent or additional director. This fact is to be considered in the Writ Petitions. In support, he relied

¶141

Page 8 of 13

¶142

Sherla V.

¶143

wp.985.2017+20others_903..doc

¶144

on the judgment of the Supreme Court in the case of Pooja Ravinder Devidasani vs. State of Maharashtra¹ . He submitted that in this case, the High Court had committed an error and therefore, the Supreme Court has set aside the order of the High Court confirming the order of issuance of process against the independent non-executive director. He further relied on the judgment of a learned Single Judge of this Court in a group of Writ Petitions being Writ Petition No.834 of 2014 and others (Alok Sharma & Ors. vs. State of Maharashtra & Ors.) decided on 10.2.2015. He also relied on the judgment of a learned Single Judge of this Court dated 7.11.2017 in Writ Petition No.661 of 2017 (Raaja Pukhraj Jain vs. The State of Maharashtra & anr.). He submitted that in the said Writ Petition, the cheque was issued by the present accused No.1 company.

¶145

Learned Counsel for Respondent No.2/original complainant while opposing these petitions has submitted that the complainant has averred against the petitioner/accused specifically that the fact that he was an independent non-executive additional director is disputed seriously by the complainant. He pointed out the date of the resignation is much later than the issuance of cheques.

¶146

1 2015 ALL MR (Cri.) 419 (SC)

¶147

Page 9 of 13

¶148

Sherla V.

¶149

wp.985.2017+20others_903..doc

¶150

Perused the complaint. There are specific averments against the accused Nos.2 to 11. It is averred that they all were present whenever the discussions and meetings were held in respect of loan transactions. It is also mentioned that though the accused No.2 has signed all the cheques, representations were made by all the accused Nos.2 to 11 to the complainant for advancing the loan. There are total 21 loan transactions. All the cheques were dishonoured. The present petitioner/accused was appointed as the director on 13.2.2012. The cheques were issued in the year 2013. As per the case, he resigned from the company on 26.9.2013. However, the cheques were dishonoured earlier to that and the complainant has issued statutory demand notices dated 10.8.2013 and they were received on 12.8.2013. Thus, the resignation was given after receiving the legal notice from the complainant.

¶151

It is true that if at all, there is non-executive independent director, the law under section 141 is settled that the person, who has an expertise having special knowledge is taken in the company for his guidance and if at all he is not involved in the day to day activities of the company, he cannot be held responsible for

¶152

Page 10 of 13

¶153

Sherla V.

¶154

wp.985.2017+20others_903..doc

¶155

the act done by the other active directors, without his knowledge. In such a manner, the vicarious liability cannot be saddled on the non-executive independent director. However, whether a person is non-executive and independent director or not is disputed and if it is not clearly shown, then, this Court cannot give benefit to the petitioner/accused on the basis of only the law settled by this Court and the apex Court.

¶156

In the case of Pooja Ravinder Devidasani vs. State of Maharashtra (supra), the Supreme Court had set aside the order of the High Court as the issue was not dealt with in a proper perspective. It was also mentioned that no specific role was attributed to the appellant in the said case. The Supreme Court in the said case held that the appellant was neither a Director of the accused company nor in-charge of or involved in the day to day affairs of the company at the time of commission of the alleged offence. In the present case, as discussed above, the date of issuance of cheque was earlier to the date of the resignation of the petitioner. Moreover, my attention is dawn to exhibit A and also exhibit D to this petition, which is form No.32 where at one stage, the designation is declared as additional director and category is

¶157

Page 11 of 13

¶158

Sherla V.

¶159

wp.985.2017+20others_903..doc

¶160

shown as independent and in the resignation letter, the designation is shown as director and the category is kept blank. If this discrepancy in the form filled up by the petitioner is pointed out at this stage, this Court cannot accept the submissions of the learned Counsel and believe that the petitioner/accused No.4 was an independent director. This becomes a disputed fact which cannot be decided and considered at the stage of issuance of process.

¶161

In the case of Alok Sharma & Ors. (supra) , a learned Single Judge of this Court had after reproducing section 149(6) of the Companies Act, where independent director is defined, has further elaborated in para 5 the said definition which cannot be disputed. An additional director or independent director may be an expert so also other directors also be experts and having special knowledge. So, the fact that he was working as an independent director and was not concerned with the day to day activity and when the cheques were issued, he had no knowledge, this fact is to be proved to establish the status of the petitioner as an independent non-executive additional director.

¶162

Page 12 of 13

¶163

Sherla V.

¶164

wp.985.2017+20others_903..doc

¶165

Similarly, in the case of Raaja Jain (supra), the present petitioner/accused was the petitioner in the said matter wherein this Court relied on the case of Alok Sharma (supra) in which form No.32 was shown and which disclosed that he was appointed on 13.2.2012 and he resigned on 26.9.2013, however, it is evidence and the learned Judge has also further mentioned that in para 7 of the judgment that it is further evidence from from No.32 that he has further mentioned that the records reveal that the applicant herein was not associated with the company in September 2011 i.e., on the date of the initial transactions. It is not applicable to the present case, if the chronology of the issuance of dishonouring of the cheque, dates of notices, issuance of notices and the date of resignation by the petitioner are taken into account.

¶166

In the circumstances, there is no merit in these petitions and accordingly, all the petitions are dismissed. Rule stands discharged accordingly.

¶167

(MRS. MRIDULA BHATKAR,J.)

¶168

Page 13 of 13

Raaja Pukhraj Jain v. the State of Maharashtra and Anr.

Case brief

What is this about?

What did the court decide?

What the court decided

Raaja Pukhraj Jain v. the State of Maharashtra and Anr.

Case brief

What is this about?

What did the court decide?

What the court decided

A compact analysis

Issues for consideration

Cases cited

Statutes considered

Parties & counsel

Coram

Case details

Similar cases

Billu Poma Rathod and Others Vs the State of Maharashtra

Billu Poma Rathod and Others Vs the State of Maharashtra

Rahul Shedge Vs the Intelligence Officer and Anr.

Rajesh Jiledar Singh Vs the State of Maharashtra

Raaja Pukhraj Jain Vs the State of Maharashtra and Anr.

Raaja Pukhraj Jain Vs the State of Maharashtra and Anr.