Allowed

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

Karnataka HC14 Jul 2023CRL.P/1718/2019

Case brief

AI extract

What is this about?

The High Court of Karnataka quashed the complaint under Section 138 NI Act and all related proceedings against accused who had resigned from directorship prior to the cheque dishonour. The Court held that no offence was made out as the petitioners were no longer directors at the time of the event and the successor company assumed liability.

What did the court decide?

Criminal petition allowed; complaint C.C.No.2729/2018 and all proceedings thereon quashed insofar as petitioners are concerned.

Mr Syed Ali Sheriff Shahul Hameed Vs M/S Sindhu Cargo… — Cheque Dishonour | Karnataka HC (2023)

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NC: 2023:KHC:24676 CRL.P No. 1718 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. 1718 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

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2 - NC: 2023:KHC:24676 CRL.P No. 1718 of 2019

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REPRESENTED BY ITS MANAGING DIRECTOR

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ALSO AT 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 HEGDE, ADVOCATE)

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THIS CRL.P IS FILED U/S.482 CR.P.C BY THE ADVOCATE FOR THE PETITIONER PRAYING TO (a) QUASH THE COMPLAINT AND ALL PROCEEDINGS IN THE COMPLAINT, BEING C.C.NO.2729/2018 PENDING ON THE FILE OF THE XI ADDITIONAL SMALL CAUSES JUDGE AND XXXVI ACMM (SCCH12), BANGALORE AS AGAINST THE PETITIONER 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.2729/2018 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 complaint under Section 200 of Cr.P.C. for offences punishable under Section 138 of Negotiable Instruments

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3 - NC: 2023:KHC:24676 CRL.P No. 1718 of 2019

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Act, 1881. Accused Nos.2 and 3, who are before this Court, are seeking quashing of the complaint on the 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 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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NC: 2023:KHC:24676 CRL.P No. 1718 of 2019

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Heard the learned counsel for the petitioners

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and perused the material on record.

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The learned counsel for the petitioners has 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

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5 - NC: 2023:KHC:24676 CRL.P No. 1718 of 2019

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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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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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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 Private Limited acknowledging resignation 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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"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 consideration, I am of the view that the complaint registered in C.C.2729/2018 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

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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 averments made at Para 4 of the complaint which reads as under:

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"4. The complaint submits that, 1^st accused is a registered company and 2^nd and 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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7. 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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For the reasons stated supra, I proceed to pass the following:

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ORDER

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(i) The criminal petition is allowed.

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(ii) The complaint and all proceedings in C.C.No.2729/2018 pending on the file of the XI Additional Small Causes Judge and XXXVI ACMM, Bengaluru, are hereby quashed.

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Sd/JUDGE

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ALB List No.: 1 Sl No.: 28

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

Case brief

What is this about?

What did the court decide?

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

Case brief

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