Dismissed

C. Uma v. The State of Telangana and another

Telangana HC4 Jul 2022CRLP/5499/2022

Case brief

AI extract

What is this about?

The High Court of Telangana dismissed a Criminal Petition filed under Section 482 Cr.P.C. challenging an order appointing the petitioner, the sole surviving director, as the representative of the accused company under Section 305 Cr.P.C. holding the trial court's decision to be correct as the company requires human representation.

What did the court decide?

The Criminal Petition dismissed and pending miscellaneous petitions closed without costs.

C. Uma Vs The State of Telangana and another — Company and Corporate | Telangana HC (2022)

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HIGH COURT FOR THE STATE OF TELANGANA AT HYDERABAD

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MONDAY, THE FOURIH DAY OF JULY TWO THOUSAND AND TWENTY TWO

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PRESENT

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THE HONOURABLE DR. JUSTICE CHILLAKUR SUMALATHA

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CRIMINAL PETITION NO: 5499 OF 2022

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Between:

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C. Uma, W/o late C. Raghuram Aged 49 years, OCC. House wife Directed to represent A-7 Chakkilam Trade House limited, R/o 6-3-633/15/15/A, Jaffarali Bagh, Somajiguda Hyderabad. (The impugned orders contain ex facie Wrong description and details)

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...PETITIONER

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AND

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'1 . The State of Telangana and another, through Special Public prosecutor, For Enforcement Directorate High Court of Telangana Hyderabad.

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The Joint Director, Directorate of Enforcement, Government of lndia, 3rd Floor, Shakar Bhavan, Fateh Maidan Road, Hyderabad 500 004

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...RESPONDENTS

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Petition under Section 482 of Cr.P.C praying that in the circumstances stated in the Memorandum of Grounds of Criminal Petition, the High Court may be pleased to Quash the impugned orders dated 2910312022 in CRLMP No. 75 of 2022 in CC No. 2 of 2014 on the file of the Court of the Honble Metropolitan Sessions Judge -Cum- Special Court Under The Prevention Of Money Laundering Act2002 at Nampally Hyderabad.

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CRL.P.M.P.NO/1.A. NO: 1OF 2022

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Petition under Section 482 ot Cr.P.C praying that in the circumstances stated in the Memorandum of Grounds of Criminal Petition, the High Court may be pleased to stay all further proceedings in CC No. 2 ot 2014 on the file of the Court of the Honble Metropolitan Sessions Judge -Cum- Special Court Under The Prevention Of Money Laundering Act 2002 at Nampally Hyderabad, dispensing with personal appearance of the petitioner, pending final disposal of the above Quash Petition.

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This Petition coming on for hearing,upon perusing the Memorandum of Grounds of Criminal Petition and upon hearing the arguments of Sri G

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NARENDER RAJ ,Advocate for the Petitioner and Sri. Anil Prasad Tiwari, Standing Counsel for the Enforcement Directorate for Respondents.

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The Court made the following: ORDER

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THE HON,BLE DT. JUSTICE CHILLAKUR SUMALATHA

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CRIMINAL PETITION No.5499 of 2022

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ORDER:

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This Criminal Petition is filed under Section 482 Cr.P.C. seeking the Court to quash the order that is rendered by the Court of Metropolitan Sessions Judge, Hyderabad, in Cr1.M.P.No.75 of 2022 rn C.C.No.2 of 201.4, dated 29.O3.2022.

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Heard the submission of Sri G. Narender Raj, learned counsel for the petitioner as well as Sri Anil Prasad Tiwari, learned Special Public Prosecutor for Enforcement Directorate appearing for respondent Nos.7 and 2.

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Respondent No.2, who is the complainant, filed a petition under Section 305 Cr.P.e. seeking the Court to allow the petitioner herein to represent Accused No.7. Accused No.7 is M/s. Chakkilam Trade House Limited. The was said Company represented by late Sri Chakkilam

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2 I)r. CSI-. J C'1.P.No.5499 ot2022

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Raghuram, Managing Director. After the death of the said Managing Director, the complainant movecl an application vide Cr1.M.P.No.75 of 2022 in C.C.No.2 of 2014 under Section 305 Cr.P.C. seeking the Court to array the petitioner herein as the representee of Accused No.7 - Company. The said application was a-llou,ed vide order dated 29.03.2022. Aggrieved by the same, the representee of Accused No.7 - Company is before this Court.

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Making his submission, learned counsel for the petitioner contends that as per Section 305 Cr.P.C., the Company would be at liberty to choose any one of its persons to represent it, but in the case on hand, the complainant himself has chosen the petitioner herein and filed application to accord permission to make Accused No.7 Company represented by the petitioner herein, which is most unjustifiable. Learned counsel for the petitioner further contended that Section 305 Cr.P.C. does not give such a power to the complainant. He further submits that it is not essential for the Company to be represented by the Managing Director only ald the

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DT, CSL. J Crl P.No.5499 of 2022

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Company would have the liberty of appointing any one of its persons as its representee and, therefore, the procedure laid down is not followed by the trial Court

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In this regard, learned counsel for the petitioner relied upon a decision of the combined High Court of Andhra Pradesh in a case between INDIA BREWERY AND DISTILLERY PVT. LTD. vs. R.K. DISTILLERIES PVT. LTD.l wherein the Court at para- 10 of the order held as follows:

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"10. In the instant case, the first respondent co-irrpany hled a private complaint against the accused company showing its Managing Director as the person representing the said company. He was not made an accused in his individual capacity though he was a signatory to the cheque. Pursuant to an authorization dt.13-a-2o12 given by the accused company one Mr. Parasram N. Ramnani styling himself as a person representing the company filed an application to substitute his name as the person representing the accused company instead of its Managing.Director Balkrishan Mankani. The said application was opposed by the first respondent herein stating that the Managing Director who is responsible for day to day affairs of the company alone has to represent the company. Under Section 3O5 Cr.P.C., it is the privilege of the accused company to authorise any person of its choice to represent the accused company. Since the Managing Director of the accused was not individually prosecuted and as the company cannot be sent to jail, no prejudice would be

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I zo r s (:) art-(ca) zt

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I)r. CSL. J (--rl l'.No 5499 of2022

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caused to either of the parties if the accused is represented by a person authorised by the accused company. The argument ol the counsel that the person who signed the cheque alonc has to represent the company and not by a stranger who has nothing to do with the issuance of a cheque cannot be accepted. In a given situation, if the person who signs the cheque and shown as a person representing the company dics, the prosecution against the company will not get abated. Steps have to be taken to substitute a person to represent the company. Therefore, the accused company has every authority to substitute a person of its choice to represent the company under Section 3O5 Cr.P.C. Even if the person who signed the cheque is made individually liable, still the accused company can be represented by a person of its choice. Both the courts have erred in holding that the Managing Director who singed and issued the cheque alone has to represent the company and that the company cannot be permitted to substitute a person of its choice."

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On the sarne aspect, the learned counsel for petitioner relied upon the decision of the High Court of Jharkhand in a case between JK SURFACE COATINGS PVT. LTD- Vs. STATE OFJHARKHAND AND ORS.z and the High Court of Madras in a case between NATIONAL COLLATERAL MANAGEMENT SERVICES LTD. Vs. STATE3

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2 z0t6 Lawsuitlthurl 1705 3 20l6 La*S,rit lMad;3t83 .--'

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Dr. CSL. J C P.No.5499 of2022

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Contradicting the submission made, the learned Standing Counsel for respondent No.2 states that the Company should be represented by aly of its persons and hitherto it was represented by its Managing Director Sri Chakkilam Raghuram. Sri Chakkilam Raghuram was also arrayed as Accused No.1 in his individual capacity. On the death of Sri Chakkilam Raghuram, there arose necessity for substituting him as far as the Company is concerned and, therefore, an application was moved and the said application was allowed, and hence, the present Criminal Petition is not maintainable

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A meticulous perusal of the impugned order dated 29.03.2022 discloses that the said order was not issued or rendered without hearing the other side. It is not in dispute that an Advocate was on record even during the hearing the said Criminal Miscellaneous Petition. At para-S of the impugned order; the trial Court had clearly narrated that the learned respondent's counsel' submitted that at the time of alleged offence, she was not incharge and responsible for the conduct of business of the company

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and, therefore, the petition is not maintainable. The trial Court observed that a perusal of the Memorandum of Association and Articles-. of Association reveals that there are only two Directors to the Company, one is late Sri Chakkilam Raghuram; and the second is the petitioner herein. It is also narrated that the Memorandum of Association also discloses that they held 5,OOO shares each. Also, the Articles of Association reveals that they shall not cease to be the Directors unless the procedure laid under the Companies Act is followed. It is also mentioned in the impugned order that the documents reveal that the petitioner_.herein filed Annual Reports along with her husband as one of the Directors of the Company. The Court observed that since there are only two Directors and one ol them expired, the other Director i.e. the ,petitioner^{hereinwouldbe a proper person to representthe} Company. In case the petitioner was not inclined to represent the Company, she ought to have filed an affidavit or at least a Memo revealing her intention to appoint another person to represent the Company. Admittedly, no such thing appears to -have been done. The Com.pany,

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D CSL, J Crl P No 5499 of2022

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1S being a non-human legal entity, required to be represented by a human being. Out of the two Directors ol the Company, one passed away, the other is the petitioner herein. She, as sole surviving Director, has not taken any steps to assign the duty of representing the Company by any of the employees of the Company. Therefore, having no other option, as submitted by learned Special Public Plosecutor, the prosecuting Agency moved an application to appoint the petitioner as the person representing the Company. Therefore, this Court is of the considered view that the trial Court did not commit any error in^passing the impugned order. Thus, this Criminal Petition is devoid of merits and the same is liable to be dismissed.

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