The Supreme Court Bench of Justice NV Ramana, Justice Mohan B Shantanagoudar and Justice Indira Banerjee were hearing an appeal against the order of the Telangana High Court which had quashed the complaint against the directors of the Company which was accused of dishonoring 6 cheques of Rs. 25 Lakhs each and one cheque of Rs. 30 Lakhs.

The Counsel for the Appellants argued that the High Court was unjustified in in invoking its powers under Section 482 CrPC by quashing the complaint against the Directors in spite of the Appellant making an evident case against the Directors, which was evident of the cognizance taken by the Trial Court. It further submitted that the Directors had connived and intentionally issued the cheques which were dishonored by way of instructing the Bank to “Stop Payment”.

The Counsel for the Respondents argued that the Directors were not responsible as they were merely non-executory directors and had no key role in conducting the day-to-day business of the Company and that by merely being a Director cannot constitute that such persons are deemed to be in-charge or responsible for the conduct of the Company’s business.

On hearing the arguments advanced, the Bench observed that the High Court was not justified in exercising its powers under Section 483 CrPC and set aside the order of the High Court. The Bench relied on its judgment in Gunamala Sales Private Limited v. Anu Mehta and Ors., (2015) 1 SCC 103 and observed as follows:

“9………..In a case pertaining to an offence under S. 138 and S. 141 of the Act, the law requires that the complaint must contain a specific averment that the Director was in charge of, and responsible for, the conduct of the company’s business at the time when the offence was committed. The High Court, in deciding a quashing petition under S. 482, Cr.P.C., must consider whether the averment made in the complaint is sufficient or if some unimpeachable evidence has been brought on record which leads to the conclusion that the Director could never have been in charge of and responsible for the conduct of the business of the company at the relevant time. While the role of a Director in a company is ultimately a question of fact, and no fixed formula can be fixed for the same, the High Court must exercise its power under S. 482, Cr.P.C. when it is convinced, from the material on record, that allowing the proceedings to continue would be an abuse of process of the Court.”


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