Allowed

Mr Syed Ali Sheriff Shahul Hameed v. M/S Sindhu Cargo Services Pvt. Ltd.

Karnataka HC14 Jul 2023CRL.P/1717/2019

Case brief

AI extract

What is this about?

This criminal petition sought quashing of proceedings under S.138 NI Act against two directors after their resignations were accepted. The court held that if petitioners were not directors at the time of alleged dishonour, no offence was made out, thus ordering quashing of the complaint and proceedings against them.

What did the court decide?

The complaint and all proceedings in C.C.No.2727/2018 are hereby quashed insofar as the petitioners are concerned.

Mr Syed Ali Sheriff Shahul Hameed Vs M/S Sindhu… — Company and Corporate | Karnataka HC (2023)

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NC: 2023:KHC:24676 CRL.P No. 1717 of 2019

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IN THE HIGH COURT OF KARNATAKA AT BENGALURU

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DATED THIS THE 14^TH DAY OF JULY, 2023

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BEFORE

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THE HON'BLE MR JUSTICE SACHIN SHANKAR MAGADUM CRIMINAL PETITION NO. 1717 OF 2019

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BETWEEN:

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MR SYED ALI SHERIFF SHAHUL HAMEED

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SON OF SYED ALI SHERIFF, AGED ABOUT 59 YEARS, RESIDING AT NO.23, UNITED INDIA COLONY, 1^ST MAIN ROAD, F-2, 1^ST FLOOR, KODAMBAKKAM, CHENNAI-600024

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MR FIAZ

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Digitally signed by CHAITHRA A Location: HIGH COURT OF KARNATAKA

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SON OF SYED ALI SHERIFF SHAHUL HAMEED AGED ABOUT 29 YEARS, RESIDING AT 46, ARMSTRONG ROAD, HEATHMONT VIC 3135, SAID TO BE RESIDING AT NO.23, UNITED INDIA COLONY, 1^ST MAIN ROAD, F-2, 1^ST FLOOR, KODAMBAKKAM, CHENNAI-600024 …PETITIONERS

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(BY MISS. SNEHA NAGARAJ, ADVOCATE)

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AND:

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M/S SINDHU CARGO SERVICES PVT LTD HAVING ITS CORPORTE OFFICE AT BLOCK NO. 3, SINDHU LOGISTIC PARK, NO.34, NELLAKUNTE, NEAR MVIT COLLEGE BETTAHALASURU, HUNSEMARANAHALLI (POST) , BANGALORE SOUTH TALUK BANGALORE-562157 REPRESENTED BY ITS MANAGING DIRECTOR

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NC: 2023:KHC:24676 CRL.P No. 1717 of 2019

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ALSO AT

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NO.111 AND 114, CONNECTION POINT, 1^ST FLOOR, AIRPORT EXIT ROAD, BANGALORE-560017

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…RESPONDENT

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(BY SRI.SUBRAMANYA HEDGE, ADVOCATE)

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THIS CRL.P IS FILED U/S.482 CR.P.C BY THE ADVOCATE FOR THE PETITIONER PRAYING TO 1. QUASH THE COMPLAINT AND ALL PROCEEDINGS IN THE COMPLAINT BEING C.C.NO.2727/2018 PENDING ON THE FILE OF THE XI ADDITIONAL SMALL CAUSES JUDGE AND XXXVI A.C.M.M., (SCCH-12), BANGALORE AS AGAINST THE PETITIONERS AND ETC.,

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THIS PETITION, COMING ON FOR ADMISSION, THIS DAY, THE COURT MADE THE FOLLOWING:

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ORDER

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The captioned petition is filed by accused Nos.2 and 3 seeking quashing of the complaint registered in C.C.No.2727/2018 pending on the file of the XI Additional

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Small Causes Judge and XXXVI ACMM, Bengaluru.

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The facts leading to the case are as under:

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The respondent-complainant has filed a private

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complaint under Section 200 of Cr.P.C. for offences punishable under Section 138 of Negotiable Instruments Act, 1881. Accused Nos.2 and 3, who are before this Court, are seeking quashing of the complaint on the

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3 - NC: 2023:KHC:24676 CRL.P No. 1717 of 2019

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ground that they have already resigned to the post of Directors and their resignations have been accepted by the concerned authority w.e.f. 17.10.2017. The petitioners also claim that the change in management was communicated to the respondent-complainant vide communication dated 30.10.2017 by the new directors. In the said communication, the new directors in fact claimed to have taken charge over the management of the company and they have acknowledged that their company M/s. Seven Star Container Lines Private Limited has done business with respondent-organization. The new directors

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have also acknowledged that the cheques were issued by the previous management towards outstanding payments. The petitioners have also placed on record the documents wherein the resignation of the present petitioners is acknowledged and their resignations were approved by the Board of Directors w.e.f. 17.10.2017.

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Heard the learned counsel for the petitioners and perused the material on record.

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NC: 2023:KHC:24676 CRL.P No. 1717 of 2019

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The learned counsel for the petitioners has

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placed reliance on the following judgments:

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"1. National Small Industries Corp. Ltd. Vs. Harmeet Singh Paintal & Ors - 2010 (3) SCC 330.

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2. K.Srikanth Singh Vs. North East Securities Ltd & Ors - 2007 (12) SCC 788.

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3. Alka N Shah Vs. State of Gujarat & Anr - 2001 (2) GLR 1020."

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It would be useful for this Court to refer to the letter dated 30.10.2017 addressed by Seven Star Container Lines Private Limited to the respondentcompany. The relevant portion of the communication reads as under:

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"We wish to confirm that we are the new Directors/Owners of "Sever Star Container Lines Private Limited" with effect from 17/10/2017. All the statutory formalities are over including intimation to the Bank about the change of management and authorized signatories.

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Our company has done business with your organization and issued cheques by the previous management towards outstanding payments as follows;

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1. Cheque No:316004 dated 30.09.2017 drawn on Axis Bank LTD kodambakkam bank for Rs. 9,00,000 (Nine lakh rupees only).

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NC: 2023:KHC:24676 CRL.P No. 1717 of 2019

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2. Cheque No. 316061 dated 31.10.2017 drawn on Axis Bank LTD kodambakkam bank for Rs.9,00,000 (Nine lakh rupees only).

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3. Cheque No. 316010 dated 30.11.2017 drawn on Axis Bank LTD kodambakkam bank for Rs.9,00,000 (Nine lakh rupees only).

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4. Cheque No. 316007 dated 30.12.2017 drawn on Axis Bank LTD kodambakkam bank for Rs.9,00,000 (Nine lakh rupees only).

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5. Cheque No. 316008 dated 31.01.2018 drawn on Axis Bank LTD kodambakkam bank for Rs.9,00,000 (Nine lakh rupees only).

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6. Cheque No. 316009 dated 28.02.2018 drawn on Axis Bank LTD kodambakkam bank for Rs 9,00,000 (Nine lakh rupees only).

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The first cheque which was due on 30/09/2017 was honoured and also taken steps to honour the 2^nd cheque dt.31/10/2017.

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As per our understanding with the old management, we have agreed and accepted to take over the current business with assets & liabilities of the company including the responsibility of honouring the balance 4 (Four) cheque payments mentioned above.

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Hence, In lieu of the said four cheques which were given to your organization, we will give you new cheques as per the details given below (a copy of cheque leaves are being enclosed to this letter).

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1.Cheque No:316101 dated 30.11.2017 drawn on Axis Bank LTD kodambakkam bank for Rs. 9,00,000 (Nine lakh rupees only).

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2.Cheque No:316105 dated 31.12.2017 drawn on Axis Bank LTD kodambakkam bank for Rs. 9,00,000 (Nine lakh rupees only).

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NC: 2023:KHC:24676 CRL.P No. 1717 of 2019

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3.Cheque No:316103 dated 31.01.2018 drawn on Axis Bank LTD kodambakkam bank for Rs. 9,00,000 (Nine lakh rupees only).

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4.Cheque No:316104 dated 28.02.2018 drawn on Axis Bank LTD kodambakkam bank for Rs. 9,00,000 (Nine lakh rupees only).

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Under these circumstances, we request your organization to hand over the above mentioned cheques and take back new cheques in lieu of the old cheques and oblige. Please replace the cheques within a week from this letter."

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I would also deem it fit to cull out relevant

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portion of the Board resolutions passed by the Seven Star

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Private Limited acknowledging resignations of accused Nos.2 and 3, who are petitioners before this Court. The same read as under:

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"RESIGNATION OF Mr S.S.FIAZ (DIRECTOR)

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"RESOLVED THAT resignation of MR.S.S.FIAZ (Director), from the Board of Directors of the Company, be and is hereby accepted with effect from 17^th OCTOBER 2017.

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FURTHER RESOLVED THAT for the purpose of giving effect to this resolution, MR. ASMATHULLA KHAN AND SIRAJ R, Directors of the Company be and is hereby authorized to do all acts, deeds, matters and things as deem necessary, proper or desirable and to sign and execute all necessary documents, applications and returns along with filing of necessary E-form with the Registrar of Companies."

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NC: 2023:KHC:24676 CRL.P No. 1717 of 2019

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"RESIGNATION OF Mr SYED ALI SHERIFF SHAUL HAMEED AS MANAGING DIRECTOR

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"RESOLVED THAT resignation of Mr.SYED ALI SHERIFF SHAUL HAMEED (Managing Director), from the Board of Directors of the Company, be and is hereby accepted with effect from 17^th OCTOBER 2017. FURTHER RESOLVED THAT for the purpose of giving effect to this resolution, MR. ASMATHULLA KHAN AND SIRAJ R, Directors of the Company be and is hereby authorized to do all acts, deeds, matters and things as deem necessary, proper or desirable and to sign and execute all necessary documents, applications and returns along with filing of necessary E-form with the Registrar of Companies."

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If these two clinching documents are taken into

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consideration, I am of the view that the complaint registered in C.C.2727/2018 pending on the file of the XI Additional Small Causes Judge and XXXVI ACMM, Bengaluru, are liable to be quashed insofar as the petitioners are concerned. If on the date of alleged dishonour of cheques, petitioners are not found to be the directors, then no offence is made out against the petitioners. I have also taken cognizance of the

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NC: 2023:KHC:24676 CRL.P No. 1717 of 2019

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averments made at Para 4 of the complaint, which reads

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as under:

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"4. The complainant submits that, 1^st accused is a registered company and 2^nd to 5^th accused are the directors of company. The complainant submits that during the course of business the Accused has availed the services of complainant Company and for the services so rendered, the complainant Company has maintained running account on credit inter alia agreeing to pay the Transport Charges within 15 days from the date of the Invoice together with interest accrued thereon calculated from the date of the respective Invoices / bills as per the business terms and conditions."

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Even if the allegations at Paragraph 4 of the

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complaint are gone through, there are no specific allegations against these petitioners. Even on this count, the proceedings are liable to be quashed.

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