Dismissed

Venkata Vasudev v. M/S. Gandhar Oil Refinery India Ltd. and Another

Telangana HC10 Oct 2023CRLP/9724/2015

Case brief

AI extract

What is this about?

The High Court dismissed multiple Criminal Petitions under Section 482 Cr.P.C seeking quashal of proceedings for cheque dishonour under the Negotiable Instruments Act. The Court held that the petitioner, serving as Executive Director at the relevant time, was liable and the petition was premature.

What did the court decide?

The Criminal Petitions seeking quashal of criminal proceedings were dismissed.

Venkata Vasudev Vs M/S. Gandhar Oil Refinery India Ltd… — Money Laundering | Telangana HC (2023)

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HIGH COURT FOR THE STATE OF TELANGANA AT HYDERABAD

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TUESDAY,THE TENTH DAY OF OCTOBER TWO THOUSAND AND TWENTY THREE

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PRESENT

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THE HONOURABLE SRI JUSTICE E.V. VENUGOPAL

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CRIMINAL PETITION NO: 9726 9706 9715 9724 9725 9727 AND 97280F 2015

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COMMON C.T. lN ALL CRL.Ps. : Between:

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Venkata Vasudev (Venkata Kuppi Vasudev) Executive Director lvl/s. Bheema Cements Ltd. DNo.6-3-652lClA, Flal No. 5-A Kautilya, Amrutha Estates Somajiguda, Hyderabad-500082-

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...PETlTlON ERYACC USE D No.9 AND

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M/s. Gandhar Oil Refinery lndia Ltd-, Rep. by its authorized signatory Vicepresident (Marketing) Mr. Vaddadi Bhanoji S/o Late Sri Vaddadi Babu Rao Head Office situated at 1001, Unique Towers Off. At S V Road, Goregaon-West, [,lumbai-400062 Maharashtra Branch Office situated #14-37-19 Flat No. GE, Lakshmi Enclave, Gokhale Road, l,4aharanipeta, Visa'khapatnam

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... RESPONDENT/COMPLAINANT

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The State of Telangana.,rep.,PP, High Court at Hyderabad

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...RESPONDENT/RESPONDENT

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CRL.P.No.9726 of 2015

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Petition under Section 482 of Cr.P.C praying that in the circumstances stated in the Memorandum of Grounds o{ Criminal Petition, the High Court may be pleased to call for records quash the proceedings in CC. No. 65 ot 2015 (2263 of 2O14) on the file of the XXIV Special lvlagistrate at Erramanzil.

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CRL.P.M.P. NO: 9781 OF 201s

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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 grant stay of all proceedings including the appearance of the Petitioner / Accused No. 9 in C.C. No. 65 of 2015 (2263 of 2014) on the file of the XXIV Special Magistrate at Erramanzil, pending disposal of the quash petition, in the 'interest of justice.

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l I I l i I I I I I I I I I I II I I IiI i I I l : t

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CRL.P.No9706 of²⁰¹⁵

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PetitionunderSection4S2ofCr.P.Cprayingthatinl,heCircumstances stated in the lrrlemorandum^{of Grounds of criminalPetition,the High court may} be pleased to call^{for records quash the proceedings in CC No 66 of 2015 (2264} of 2o14) on the file^{of the XXIV Special Magistrateat Erramanzil'} CRL.P.M.P. NO^: 976s^{OF 2015}

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PetilionunderSection482ofCr.P.Cprayingthatinthecircumstances stated in the Memorandum^{of Grounds of criminalPetition,thelligh court may be} pleasedtograntstayofallproceedingsincludingtheappearanceofthePetitioner /AccusedNo.ginC.C.No'66of2015(2264ot2014)onthefileoftheXX|V Special h/agistrate^{at Erramanzil, pending disposalof the quash petition, in the} 'interest of justice-

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c RL.P.No9715 of²⁰¹⁵

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PetitronunderSection4S2ofCr.P.Cprayingthatinthecircumstances stated in the^{fi/emorandum of Groundsof criminal Petition,the High court may} be pleased to call^{for records quash the proceedingsin CC No' 69 of 2015 \2267} of 2O14) on the^file of^{the XXIV Special Magistrateat Erramanzil'}

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CRL.P. M.P. NO:^{9773 OF 2015}

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PetitionUnderSection4B2ofCr.P.Cprayingthatinthecircumstances stated in the^{lr,4emorandumof Groundsof criminalPetition,the High court may be} pleasedtograntStayofallproceedingsincludingtheappearanceofthePetitioner /AccusedNo.ginC.C.No-69of2015(2267ot2014)onthefileoftheXX|V Special Magistrate^{at Erramanzil, pending disposalof the quash petition'in the} interest of^justice.

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CRL.P .No9724 of²⁰¹⁵

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PetitionUndersection4B2ofCr.P.Cprayingthatinthecircumstances stated in the Memorandum^{of Grounds of criminalPetition,the High court may} be pleased to call^{for records and quash the proceedings in CC No 71 of 2015} (2269 of 2014) on the file of^{the XXIV Special Magistrate at Erramanzil} CRL.P.M.P. NO: 9779^{OF 2015}

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Petition under Section^{482 of Cr'P.Cprayingthat in thecircumstances} stated in the l,4emorandum^{of Grounds of Criminal Petition,the High Court may be} pleased to grant stay of all^{proceedings including the appearance of the Petitioner}

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/ Accused No. 9 in C.C. No. 71 of 2O15 (2269 of 20141 on the file of the XXIV Special Magistrate at Erramanzil, pending disposal of the quash petition, in the interest of justice.

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CRL.P.No.9725 of 2015 :

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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 call for records and quash the proceedings in CC. No.67 of 2015 (2265 ot 2O14) on the file of the XXIV Special Magistrate at Erramanzil. CRL.P.M.P. NO: 9780 OF 2015

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Petition under Section 482 of Cr. P.C praying that in the circumstances stated in the lvlemorandum of Grounds of Criminal Petition,the High Court may be pleased to grant stay of all proceedings including the appearance of the Petitioner / Accused No. 9 in C-C. No.67 ot 2015 (2265 of 2O14) on the file of the XXIV Special Magistrate at Erramanzil, pending disposal of the quash petition, in the interest of^justrce.

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CRL.P.No.9727 of 2015 :

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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 call for records and quash the proceedings in CC. No.70 ol 2015 (2268 of 2O141 on the file of the XXIV Special Magistrate at Erramanzil. CRL.P.M.P. NO: 9782 OF 2015

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Petition under Sectron 482 of Cr.P.C praying that in the circumstances stated in the [,lemorandum of Grounds of Criminal Petition,the High Court may be pleased to grant stay of all proceedings including the appearance of the Petitioner / Accused No. 9 in C-C. No.70 ot 2015 (2268 of 2014) on the file of the XXIV Special Magistrate at Erramanzil, pending disposal of the quash petition, in the interest of JUStice.

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CRL.P.No.9728 of 2015 :

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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 call for records and quash the proceedings in CC. No-68 of 2015 (2266 oI 2O141 on the fite of the XXIV Special Magistrate at Erramanzil.

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CRL.P.M.P. NO:9783 OF 2015

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Petition under Section 482 of Cr.P.C^praying thatⁱⁿ the^{circumstances} stated in the Memorandum of Grounds of Criminal^{Petition,the High Court may be} pleased to grant stay of all proceedings including the appearanc,: of the Petitioner / Accused No. 9 in C.C. No.68 o'f 2015⁽²²⁶⁶ ot 2014) on^{the file of the XXIV} Special trrlagistrate at Erramanzii,^pending disposal of the^{qua:;h petition, in the} interest of^justice.

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These Petitions are coming on for hearing,upon^perusing the^l\4emorandum of Grounds of Criminal Petition and upon hearing thL'^argumentsof Sri K.Annapurna Reddy, Advocate for the Petitioner in all tlre Crl.Ps^andof Sri K.Rama Rao, Counsel Rep. Sri V.R.Avula, for^{RespondentNo.1 in all Crl.Ps} and of Public Prosecutor on behalf of the Respondent No.2^{in a} I^Crl.Ps.

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The Court made the following: ORDER

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THE HONOURABLE SRI JUSTICE E. V. VENUGOPAL

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CRIMINAL BETITION Nos.-!f O6_ 97L5,9724 9725.9726 914_anil^{922_8__9|2q1€}

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COMMON ORDER:

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Sincc thc issuc involvcd in alJ tl,rcsc Cnminal petitions is one and thc sarne, thcv arc bcrr-rg hcaud tog(jthe r and disoosed of br, rr,ar of' common order.

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Criminal Pctition Nos.9726, 9706, 97 15.9724.9725, 9727 and !)72t3 ot' 12015 are lllc:cl sccking to cali for rlre r.ccords and quash thc pro<:ecdings againsl thc petitioner- herein rn C^{(1.Nos.65,66,69,'iI.67,70} and tr8 oi2OII> rcspecirvciv on rhe fiic ol-thc lc:irrrrcd XXIV Spc.<:rlrJ Magistrtrt. at F)ri.:rr.anzil {for sl-rort,^'t.hc trial Cou ri") and pass srrclr othcr ordcr or orde rs.

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llc,r'd ivls. l(. Annapu'ru Rcdd_r, lc:rr^cct r:.Lirrsr:l lor tl-re poiiti()ncr. v[r'- K. Ilama iRaro, lt:ar,.-.c] c,r,rrr;ci rt'1>rcsen tir-r g Mr- '. R. Ar',-rla, lc;arncd counsel lo:- r.csponcicr)t No_ I and 1,4r. 'rzirrath Ali, lcarncd Assist^nt [)r:ltlic l,rosccuL,r appearing lor thr: rcspontlcnt statc.

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Ir.r- tlrr; sakc c;l convcni<_'ncc, th<: fucts rrr Cr.irnrrri.rl pctition No.979(r ol 20 I 5 arc <iiscutsscct [rcrcur rrJ<;r:

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5 The brief facts of thc case are that rcsponcler-rt No. I is the Company registered under the Indian Companiet; r\ct, 1956 and doing business in the nanre and st-vle ol M / s.^(iangadhar Oil rn Refinery lnciia Limited, dcaling m:rnulacturing mineral oils, liquid paraffin, petroleum^jel11'. rubbcr proccss oils, industrial and automotive lubricants. transformcr clils and supply of Indonesian Steam Coal ald Soutl-r Airican steam^,roal

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Accused No.3 is thc Comparl registered undcr the Indian Companies Act, i956 and cloing business in the name and style of M/s. Bheema Cements Limitcd Accuscd Nos.4. 5, 6,7,8 and 9 are the Chairman, Merr;rgine [)rrector. WhoL<: time Director, Director, Director and Exc-cutivc L)ircc[or ol the said Company respectivell,. Accused No.3 is onc ol thc cLlstome rs of respondent No.I Company and lor tht' sal<c ol- br-tsiucss, th: Company used to purchase Indonesian str:um coal and South Aiican steam coal on credit from respor1dcnt l',"o.1^]t-r' placing 1>urchase orders. Accordingly, respondt:r-tt No.l Cotllran-t' uscd to sr-rpply the same from Visakhapatnam [)ort rrncl^{(ianq:rvar-am} [)or-t to the plant of accused No.3 compan-y at [?anraJ)Lrr.rm, Mclla,:hcrul'u Maldal, Nalgonda District, Andhr:r Plirclcsl't. Iior thc said supplies accused No.3^useci to trt:tlir' l).n-t I)a\ Iut'ttts off^rrt d on^{by u'ay of} letter of credit/RTCS/PDC rrncl^{nrairrtait-ting thc running account}

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with the client since 2O 1 I . Respondent No. I company submits that after adjusting all the amounts paid by'accused as per the ledger maintained by respondent No. l, an amount of Rs.4,O8,75,201/- is due as on 30.1O.20 13.

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7 . On repeated demands made by respondent No.l, accused Nos.1 and 2 being the authorized signatories of accused No.3 issued the cheques bearing Nos. 0296 19, 029620, 02962I, 029622, C29623 and 029624 dated 30.10.2013^for Rs.5O,00,OOO/- respectively ancl cheque No. 029625 dated 30.10.2013 for Rs.51,12,983/- drar.r'n on Corporation^Bank, Lxge Corporate Branch (109O) Hyderabad in favour^of respondent No.1 towards part payment of the^outstanding balance amount due to respondent No. l.

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B. On presentation, the said cheques^r,r'ere dishonoured with an endorsement "Insufficient Funds"^vide cheque return^Memos dated 01.11.2013. After intimation about the^{same, accusedhave} made part payment of Rs.33,00,OO0/^- and as per instructions given by the accused, respondent No. I presented the said cheques for collection on 17.O1.2O14^thror,rgh its Banker^HDFC Bank Limited, cheques deposited in l-IDFC Bar-rk, Jagadamba Branch, Visakhapatnam, but again, the said cheques^were

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returned with an endorsemcnt^{"Account freezed} /^Rlocked"vide cheque return memo dated 18.01.2014 and the^said intimation was received b1, respondent No.1 from thei Bankers^on 1O.O2.2O14 . Evcn after thc said dishonour of cheques,^the accused agairr made some part payment for a sum of Rs.2,45,0OO/- on differcnt dates.

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Respondcnt No.l, aggrieved by the said dishonour of cheque filed C.C.No.65 ol 20 15 before the trial Court stating that the accused have committed the offence purrishable under Sections. 138 and 142 ol the Negotiable Instruments Act, 188 I and accused Nos.l, 2, 4 to 9 are^jointly and severally liable for the acts done bv the z.rccuseci No.3 Company and prayed to award the compensation of double the amount of cheque. As against the said C.C.No.65 ol 20 15, the present Criminal .Petition is Iiled praying to quash the impugned proceedings.

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Learncd counscl [or the petitioner submitted that the petitioner is not responsiblc for the activities of the company such as issuance of chcquc to creditors. Though the petitioner entered ir-rto the rolls o[ thc Company as Executive Director, none of the ROC records sho$' the pctitioner as Executive Director. The petitioner is neither zr siqn;rtor-r' to the cheque nor responsible to

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the day to day activities of accused No.3. As such learned counsel submitted that the petitioner cannot be made liable for the cheque amount as alleged in the complaint. She contended that accused No.3 is due of arrears of salar5z to an extent of Rs. 1,34,98,451/- to the petitioner and the same is on record vide letter dated 31.03.2014. Therefore, submits that the petitioner is passing through a financial crisis on account of non-payment of salary. However, learned counsel for the petitioner relied upon the decisions of the Hon'ble Supreme Court in Sunita Patita & Others Vs. M/s. Panchami Stone Quarryl, Dilip Hariramani Vs. Bank of Barodaz and Ashok Shewakramani & Others Vs. State of Andhra Pradesh and anothers to substantiate her contention. Therefore, seeks to allow the Criminal Petition.

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Learned counsel for respondent No. 1 filed counter affidavit stating that the petitioner is the Director of the accused No.3 Compan,r' and had been in active helm of affairs of the company for the l'cason that the purchase orders raised on behalf of accused No.3 rr,ere dr-rly signed by petitioner. Therefore, thc petitioner is jointl_v and severally liable for the acts of the accusecl No.3 Companr'. He lurther contended that the petitioner

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'^{A.,",,,guu, ,l SLI'(Crl)r..o l{)39() ol} -1019^{(late(t 01.O8.2022} r,/\risin8 orrr ,,l sl.l'lcrlt N{, 6r1 ol ..1(l-ll (lated09052022 r Crrnloal .ft)r).al No 87{l of 2(123 dar.d 03 Ot} 2023

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addressed a letter dated 26. 1 1.20 13 to the complainant claiming to be the Executive Director of accused No.3 Comltanv admitting thc liability. Further, petitioner admitted in Crl.l\4. P.N o.2287 of 2O15 in Crime No.212 of 2075 liled before the Court of learned Sessions Judge for Economic Offences, at Hyderabad that he rvorkcd as Executive Director in the year, 2Ol4 and later became 2O"l' share holder. Thereafter, resigned from l-ris post on 31.O1.2014 and the sarne was accepted and the petitioner rvas relieved on 31.03.2014. In fact, the cheque in cluestion rvas issued on 30.10.2013. In view of the above, the conrention of the petitioner that he was not connected with the :rffairs of thc company is not tenable. It was submitted that the contentior] raised by the petitioner is a question of fact and dccided during Lhe course of trial. Therefore, seeks to dism is-.; tl-rc Criminal Petition.

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Learned Assistant Public Prosecutor subrnitted that the petitioner u,ers actively connected with the affairs oI t].rc compan-r. as on the date of issuance of cheque. Therefore, Iizrble for tl-rc affairs of the company. Hence, seeks to pass appropl-iette ordcrs.

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A perusal of the record shows that this Crrr-rrl_ vide order datad i'9.O1.2016 dispensed ',,ith the appearanr:e of thc petitioner

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before the trial Court rp to 29.04.2016. The copy of cheque^filed bv the petitioner along with the Criminal Petition nould clearl-v shorv that the cheque in question was issued^on 30.10.2013^by the authorized signatory of the company with the^active connivance of the petitioner, who^was the then^{Executive Director} of accused No.3 Company. As an Executive^Director,the petitioner is responsible to the Company for the conduct^and business ol the Company.

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While relying upon the records of Registrar o[^C<.rmpanv Affairs, learned counsel for the petitioner would^{submit tl-rat it is} an established fact that the petitioner is not^{an authorized} signatorlr for the affairs of accused Company^as his^{nameis not} shoq,n in the said records. Therefore,^prosecuting the^petitioner rvould render an abuse of process of law. This contention^does not find any merit for consideration by this Court^{in the absence} of anv shield provided in the N.I.Act on^{that aspect. Moreover, it} can bc inferred that R.O.C. records doesn't authenticatc^{the role} of thc Directors except that the recorded^{authorizecl signutories} r-rnder R.O.C. records are designated to deal^{n'ith the necessary} provisions contemplated under the Companies^{Act \f} ith^Registrar of Com pany Affairs and not on the affairs of^{the bu siness}

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transactions of the legal entities particularlf in relar-ion to N.l.Act. It is pertinent to mention Section 291 ol Compar-ries Act, 1956.

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Section 291 of thc Companres Act,^{'1956 provides} that subic( t to the provisions ofthat Act, the Boarcl of Directors ola conrpanl, shall Irc entitled to exercise all such porlers and to clo all sucl] acts and things, as the Company is authorisc to excrcrse antl do. A Clompany though a lcgal entity can act onli' through rts Boar<l of Direcl,)rs. Thc settled position of lan,is that a Managrng [)irector is Prinrir facie it.r charge of and rcsponsiblc for thc compan's ltrsiness an<l :rflrtir s and can be prosecuted for offenccs bY ttrc Cornparrr'. But insofzrr as other Directors are concerned, they can lle prosecutcd onh rf thel rrere in charge of and rcsponsiblc for thc corr(lLrct of tl'rc conrpanr''s brrsiness-

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The Apex Court in Sunil Bharti Mittal Vs. Central Bureau of lnvestigationa held that no doubt, a corporar e entity is an artificial person which acts througl-r its olficr:rs, Directors, Managing Director, Chairman etc. If such a compan/ commits an offence involving mens rea, it riould normallv bc the intent and action of that individuai who t'ould act on behali of the company. It would be more so, when the criminal act is thzLt of conspiracy. However, at the same timc, it is the cardir-ral principle of criminal jurisprudence that there is no vicanous liabil: tS unless the statute specifically provicies so

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Having regard to the submissior-rs rradc^l)' bcth the learned counsel ancl upon considering thc <lecisiorts of the Hon'ble

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n (2015) {.Suprerre Couft Cascs (r09

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Supleme Court cited (supra 4l and Standard Chartered Bank Vs. State of Maharashtra and Otherss, A.K. Singhania Vs, Gujarat State Fertilizer Company Limited and another6, K. K. Ahuja Vs. V. K. Vora and anotherz and upon perusing the letter CCL/MD/5OO/2OOS dated 13.05.2005 issued by the Coromandel Cements Limited which is erstu-thile Company of M/s. Bheema Cements Limited whereby, the petitioner has been promoted and re-designated as president with effect from 01.04.2005, clearly stating that he shall be part of Management ancl in charge of day to day running of the Compan)r and all the Department Heads were to report to him and his main thrust aleas would be hnance, projects and any other specific assignments given from time to time, this Court is of the opinion that the petitioner is the Executive Director of accused No.3 company at tlre releval'rt point of time and he is responsible for the day-to day aflairs of the companjr u.hen the allegecl offence <sup>.as committed. Hence, it can be averred that the petitioner herein being in activc connivance in relation to the affairs ol thc company, mischievously and intentionally issued the cl-reque in question in favour of the Bank concerned. Therefore, the pctitioner is also vicariously liable

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'^{1ZO t fr1 O Sulrrerne CourtCaJes 62}

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6 (2O,3) I5 Suprcme Court Cas.:: 6.1,) ? (2O09) tO Suplcme Coort ('irscs 4f3

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under Scction i4I of N l. Act as he is respcnsiblc to the company for the conduct and busincss of thc company ancl also in charge of business o[ lhe company. To put it differentiy, to 1tc vicariously Iiable under sub-section (i) of Scction 141, a^pelsorr should fulfil the "iegal requirement" ol being .t persoir in larv (under the statute governing companies) responsible to the cornpany fol the conduct of thc business of the company arld also fulfil the "factual requirement" oI being a person in charge ol the business of the compan.,'

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In thc prcsent casc on hartd, if at o-1l. the^peLitioner is^r-rot liable as Exec:utor Director, he has to avei- and prove his case before the trial Court. The rcal truth would be elicited only upon completion of a full-fledged trial. But the petitioner, instead of facing trial, filcd the Crirrinal Petition at a^prermature stage seeking to quash the impugr-rcd proceedings.^{'J'her'efore,} the Criminal Petitior-r is devoid of merit and^liable to^{be rlismissed.}

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Therefore, thc Crin.rir-ral Petition |to.9726 of 2015^is dismissed accordingly

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As the Criminal Petition No. 9726 of 2015 is dismissed.^{As a} sequel to this order, other similar Criminal Petitions Nos. 9706, 97 15,9724,9725,9727 and 9728 of 2015 also st:rrrd dismissed

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Needless to mention, the petitioner 15 at liberty to workout

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remedies as available under law

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Miscellaneous Petitions, pending if any, sha-lt stand closed

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Sd/- AV.S. PRASAD

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ASSISTANT REGISTRAR

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