Allowed

Starwing Developers Private Ltd. , v. the State of Maharashtra and Anr.

Bombay HC16 Mar 2023WP/1159/2015

Case brief

AI extract

What is this about?

The High Court allowed writ petitions quashing orders of the Revisional Court that set aside summonses issued under Section 138 NI Act. The Court held that specific averments in the complaint were sufficient and the revisional court erred in intervening based on possibilities regarding actual day-to-day management or residence.

What did the court decide?

Rule made absolute setting aside the revisional court order; interlocutory applications disposed.

Starwing Developers Private Ltd. , Vs the State of… — Cheque Dishonour | Bombay HC (2023)

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Nikita

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IN THE HIGH COURT OF JUDICATURE AT BOMBAY CRIMINAL APPELLATE JURISDICTION

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WRIT PETITION NO.1158 OF 2015

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Starwing Developers Private Ltd,
through Its Director Jitendra N. Vora
V/s.

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The State of Maharashtra & Anr.

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… Petitioner

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… Respondents

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WITH WRIT PETITION NO.1159 OF 2015

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Starwing Developers Private Ltd.… Petitioner
V/s.

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The State of Maharashtra & Anr.

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… Respondents

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WITH INTERIM APPLICATION NO.3968 OF 2022 IN

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WRIT PETITION NO.1159 OF 2015

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Starwing Developers Private Ltd.
Through Its Director Rajeev Dube… Applicant
V/s.
The State of Maharashtra & Anr.… Respondent

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WITH WRIT PETITION NO.1160 OF 2015

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Starwing Developers Private Ltd through
Its Director Jitendra N. Vora

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… Petitioner

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V/s.

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The State of Maharashtra & Anr.… Respondent

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WITH INTERIM APPLICATION NO.3970 OF 2022 IN

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WRIT PETITION NO.1160 OF 2015

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Starwing Developers Private Ltd.
Through Its Director Rajeev Dube… Applicant
V/s.
The State of Maharashtra & Anr.… Respondent

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… Respondent

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WITH WRIT PETITION NO.1161 OF 2015

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Starwing Developers Private Ltd through
Its Director Jitendra N. Vora
V/s.

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The State of Maharashtra & Anr.… Respondent

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WITH INTERIM APPLICATION NO.3969 OF 2022 IN

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WRIT PETITION NO.1161 OF 2015

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Starwing Developers Private Ltd.
Through Its Director Rajeev Dube… Applicant
V/s.
The State of Maharashtra & Anr.… Respondent

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Mr. Ujjawal Gandhi a/w Neha Patil a/w Mr. Ashish
Debey a/w K.R. Shah a/w Gunjan Thakkar a/w Anurag
Ghag a/w Saakshi Jha for the petitioners.

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Mr. P. Ranjan i/b Halai and Co. for respondent No.2

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Mr. M.G. Patil, APP for the State.

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CORAM:AMIT BORKAR, J.

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DATED:MARCH 16, 2023

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P.C.:

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1.These petitions are directed against the order of the
Revisional Court, setting aside the order of issuance of process in a

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complaint under Section 138 of the Negotiable Instruments Act,
1881. The order of issuance of the process has been set aside
mainly on the following grounds:

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I) The complainant has failed to explain who amongst the
accused company directors took an active role in the matter;

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II) The revision applicant is a permanent resident of Pune.
However, the accused No.1 is being functioning from New
Delhi.

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III) Brother of the revision applicant is dealing with day to
day affairs of the company. The brother of the applicant
signed the cheques in question. Therefore, there is every
possibility that the brother is in charge of day-to-day affairs.

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IV) The Revision applicant is the formal director of the
accused No. 1/company.

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2.The scope of inquiry in revision challenging order of issuance
of process is to consider based on material available with the
Magistrate on the date of issuance of process to ascertain whether
the material along with the averments in the complaint is sufficient
prima facie to attract ingredient of offences under Section 138,
read with Section 141 of Negotiable Instruments Act,1881. In the
facts of the case, the accused No. 1/company is the drawer of the
cheque, and the rest of the accused, i.e., accused No. 2 and 3, are
liable under Section 141(1) of Negotiable Instrument Act 1881,
subject to making specific averments in the complaint as mandated
and interpreted by the Apex Court in the case of SMS
PharmaceuticalsV. Neeta Bhalla, reported in AIR (2005) SC

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3512.

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3.Averments in the complaint made against the accused No. 2
and 3 (including revision applicant) are as under:

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“The Accused No.2 and 3 are the Directors of the accused
No.1 company, and are in charge of and responsible to the
day to day affairs, management and business conduct of the
accused No.1 company. The complainant states that at the
relevant point when the offence was committed each of the
accused No.2 and accused No.3 were in charge of the affairs
of the accused No.1 company and are liable and responsible
for all the decisions and conduct of the business of the
accused No. 1 company.”

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4.The averments quoted above, in my opinion, at the stage of
the issuance of process, are sufficient to proceed with the
complaint against accused Nos.2 and 3. Whether the revision
applicant took an active role in the affairs of the company and
whether the brother of the revision applicant was only in-charge
director of the company needsto be adjudicated during the trial.

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5.The revisional Court states that the complaint has failed to
explain who took an active role amongstthe directors. In my
opinion, once the necessary averments are made in the complaint,
the case for issuance of process under Section 138 of the
Negotiable Instruments Act, 1881 has been made out. The order of
issuance of process cannot be interfered with in revision based on
the possibility that the brother of the revision applicant is dealing
with day-to-day affairs. It is well settled that if there is an
unimpeachable document produced on record to show that the
director of a company against whom specific averments are made

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in the complaint as required under Section 141 is not in-charge
and responsible for the day-to-day affairs of the company, he needs
to be proceeded with in a complaint under Section 138 of
Negotiable Instruments Act 1881. The finding of the revisional
court is based on ipse dixit that since the revisional applicant is
permanently residing in Pune, she cannot attend day-to-day
functioning and affairs in Delhi. Suchinterference is not legally
permissible at the stage of the issuance of process.

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6.The concept of the formal director is aliento the
jurisprudence of company law. The director can be either executive
or non-executive. However, he can be an independent director
subject to furnishing such proof. The Revisional Court can
adjudicate upon such issue; however, in the absence of the concept
of a formal director, the Revisional Court on that ground could not
have interfered with the order of issuance of process.

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7.Therefore, in my opinion, the Revisional Court has exercised
its jurisdiction with material irregularity resulting in miscarriage of
justice. The petitioner has made out a case for setting aside the
order.

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8. The writ petitions, therefore, deserve to be allowed.

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9. Rule is made absolute in terms of prayer clause (c) in all the writ petitions. No costs.

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10. In view of the disposal of the writ petitions, all interlocutory
applications do not survive and are disposed of accordingly.

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(AMIT BORKAR, J.)

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Starwing Developers Private Ltd. , v. the State of Maharashtra and Anr.

Case brief

What is this about?

What did the court decide?

Starwing Developers Private Ltd. , v. the State of Maharashtra and Anr.

Case brief

What is this about?

What did the court decide?

What the court decided

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