ILESH J. VORA, J.

1. Rule. By consent of all the parties, rule is fixed forthwith.

2. Since the present petitions arise out of same set of facts and contentions and issue before this Court in all petition is also common, the same are being decided by this common judgment and order.

3. This Court has heard Mr. R.R. Marshall, learned Senior Counsel assisted by Mr. Atit Thakore, learned counsel appearing on behalf of the applicant – Umar Uvesh Sareswala, Mr. Yogesh Lakhani, learned Senior Counsel assisted by Mr. Sanjeev Thaker & Abbhist Thaker, learned counsels appearing for and on behalf of respondent No. 2 – original complainant and Mr. J.K. Shah, learned APP for the respondent No.1-State.

4. Mr. Mukesh Sheth and his family members namely Ridham Sheth, Neepa Shah, Pooja Ridham and Deena Sheth, invested Rs.20 crores in the company namely Parsholi Motor Works Pvt. Ltd., a Company incorporated under the Companies Act, 1956. The Directors of the Company and applicant herein being in charge of the management of the company, approached the Mukesh Sheth and others, as company needs fresh infusion of share capital for augmenting the working capital to sustain the operations. Parties, including the company entered into share holders agreement and share subscription agreement dated 14.04.2016. The payment worth Rs.20 crores made to the company subject to terms and conditions of the agreement. It is alleged that, the company Parsholi Motors and the persons in charge of the company, were failed to disbursed and/or allot the shares as per the agreement and accordingly, as per the clauses of the agreements, the investors are entitled to refund the amount. The complainant and others have exercised exit option and demanded the invested amount. The authorized signatory of the company vide letter dated 06.03.2017, acknowledged the due amount and assured that the company will refund the entire share application money by 15.04.2017. The company vide its communication dated 19.05.2017, issued following post dated cheques towards the refund of the share application money:

5. The aforesaid cheques issued in favour of the persons named above, were returned “únpaid’’. The statutory notice as contemplated under the N.I. Act served upon company as well as its Directors and persons in charge of the day to day affairs and management of the Company and same were replied by the company without tendering notice amount.

6. In such circumstances, five private complaints under the provision of the Negotiable Instruments Act, 1981 have been filed before the jurisdictional court at Kalol, Dist.: Gandhinagar. The particulars of the complaint are as under :

7. In the aforesaid facts, the applicant-original accused No. 3 – Umar Uvesh Sareshwala, seeks to invoke inherent powers of this Court under Article 226 of the Constitution of India, read with Section 482 of the Code of Criminal Procedure, for quashing of the aforementioned private complaints.

8. For the sake of brevity and convenience, the factual aspect mentioned in Criminal Misc. Application No. 379 of 2022 is being considered for determination of the controversy involved in these quashing petitions.

9. Facts and circumstances of the Criminal Case No. 4298 of 2019 filed by the respondent no. 2 - Mukesh Sheth are that, he along with his family members invested the tune of Rs.20 crores as a Share Application Money in Parsoli Motor Works Pvt. Ltd., out of which, contribution of the complainant was Rs.5,52,18,415/-. The Company has been arraigned as accused no. 1. The accused Nos. 2, 3 and 4 are the Directors of the accused no. 1 Company, whereas, the accused Nos. 5 and 6 are actively involved and in charge of daily management of the company and all are involved in day to day transactions / affairs of the company. It is further averred that, accused no. 2, 5 and 6, the present applicant herein had executed two agreements called as ‘Share Holders Agreement’ sand ‘Share Subscription Agreement’. Both the agreements were being executed by and between the promoters and the present complainant and his family. The present applicant – accused no. 6 had entered upon the said agreement with the complainant and his family members in the capacity as a power of attorney holder of Mohd. Habib Sareshwala, J.W. Khadija and minor Ahmed Sareshwala. The accused no. 5 – Uvesh Sareshwala signed the agreement in the capacity as power of attorney holder of the applicant herein, J.W. Fateme and minor Ashma Sareshwala. The agreement was also signed by accused no. 2 in the capacity of Director of accused no. 1 Company and power of attorney of Qudisya Sareshwala and others. In such circumstances, it is averred that, the accused nos. 2 to 6 are actively involved in the day to day affairs of the accused no. 1 Company.

It is further averred in the complaint that, vide letter dated 01.03.2017, the complainant, along with his family members had exercised, exist option and demanded the refund of share application money. It is averred that, on various instances, the complainant had approached accused nos. 2 to 6 for refund of share application money and every time, under one and other pretext, they avoided to make the payment. It is further averred that, the complainant and his son on various occasions demanded the due amount, either by texting on mobile or through email.

It is further averred that, vide communication dated 06.03.2017, the accused company through its signatory accused no. 2, agreed and acknowledged the refund of share application money and resolution to this effect was also passed by the Board of Directors. The accused no. 1 Company through its authorized signatory vide communication dated 19.05.2017 issued post dated cheques as referred in para-4 of this order.

It is averred in the complaint that, on 24.07.2019, the cheque in question dated 22.07.2019 drawn on ICICI Bank amounting Rs.5,52,18,415/- duly signed by accused nos. 2 and 5 was presented for realization with the Bank and same returned únpaid’ on the next date, with the endorsement “funds insufficient’’. Notice as contemplated under the was served upon the accused nos. 1 to 6 and during stipulated time, they failed to make the payment of the cheque.

It is specifically averred in the complaint that accused nos. 2,3 and 4 in their capacity as Directors of accused No. 1 company and accused Nos. 5 and 6 in capacity of POA holder of promoters of the accused no. 1 company, are jointly and severally liable to refund the said amount as per the agreement dated 14.04.2016 and did not have exercised any due diligence to prevent the commission of offence and same is committed within their knowledge.

10. In the aforesaid facts, the private complaint being CC No. 4298 of 2019 registered on 03.09.2019 and accordingly, the Additional C.J.M. Kalol, issued summons. It needs to be noted that, the oral evidence of the complainant side concluded before the trial Court. The matter is at the stage of recording further statement of the applicant accused. This petition is filed by the applicant accused at the stage of further statement.

11. Mr. R.R. Marshall, learned Senior Counsel appearing for and on behalf of the applicant raised the following contentions :

(i) The applicant herein was not involved while executing the agreements and had not played any role whatsoever in the alleged transaction. The respondent no.2-complainant despite knowing that, the applicant has no role in execution of the agreement and its compliance, intentionally made bald cursory statements in the complaint that, he was in charge of and responsible for the day to day affairs of the company without any specific averments attributed to the role of the applicant as a Director. In fact, the applicant was pursuing his study at Darul Uloom Nadwat – Ul Alma an Islamic Seminary at Lucknow and occasionally visiting his residence at Ahmedabad and therefore, it cannot be said that at the relevant time, he was in charge of day to day affairs of the accused no.1-company.

(ii) The applicant is neither signatory of the cheque nor at his instance, the cheque in question issued by the accused Company.

(iii) It is settled law that, to attract the case under Section 141, a specific role must have been played by the Director or person in charge of the company for fastening vicarious liability. In the facts of present case, the applicant was not actively involved in the day to day affairs of the company as he was pursuing his study at Lucknow and therefore, the bald averments in the complaint that the applicant was in charge of and responsible to the company for the conduct of its business without any specific role, is no sufficient for proceeding under Section 141 of the.

(iv) That, no offence as contemplated under Section 138 is made out against the applicant herein as the same is being lodged with intent to mounting pressure on the accused to settle the dispute.

12. To support the aforesaid submission, learned Counsel has relied upon the case of S.M.S. Pharmaceuticals Vs. Neeta Bhalla (MANU/SC/7125), to contend that, the person being a Director did not assign the daily management of the affairs of the company is not responsible for the conduct of business of the company. In the facts of the present case, there is no averments in the complaint as to how and in what manner the applicant is responsible for the conduct of the business of the company and therefore, initiation of the criminal proceeding against the applicant is amounts to abuse of process of law and Court.

13. In view of the aforesaid contentions, learned Senior Counsel would submit that the allegations in the complaint even if they are taken at their face value, and accepted in their entirety, do not prima-facie constitute an offence or make out a case against the accused herein. The powers to interdict a proceedings either at the threshold or at the intermediation stage of trial, is inherent in a High Court on the broad principle that, the allegations made in the FIR or Criminal Complaint, prima-facie do not disclose a triable offence, there can be no reason as to why the accused should be made to a suffer the agony of a legal proceedings. Thus, considering the peculiar facts and circumstances of the present case, case is made out for the exercise of inherent powers under Section 482 of the Code and the proceedings may be quashed as under the law, the applicant has no liability towards the disputed cheques.

14. On the other hand, learned Senior Counsel Mr. Yogesh Lakhani appearing for the respondent no. 2 – original complainant herein has submitted that, specific averments are being made by the complainant to attract the provision of Section 141 of the N.I. Act. The applicantaccused no.3 is actively involved in the day to day affairs of the business of the company and the same has been averred in the complaint which is sufficient to attract the provision of Section 141 of theand therefore, the learned trial Court while issuing summons, has considered the averments of the complaint made against the applicant. The factual aspect raised in the form of defence cannot be considered at this stage as it is a matter of adjudication by the trial Court. In such circumstances, when the proceedings is at the fag end, more particularly at the stage of recording the further statement of the applicant-accused, no case is made out for exercising inherent powers under Section 482 of the Code.

15. In the aforesaid contentions, learned Senior Counsel Mr. Lakhani would submit that, when the basic averments to attract section 141 of the N.I. Act are made in the complaint, which is sufficient to make out a case against the applicant herein and therefore, when the trial is at the fag end, the High Court at this stage would not enter into disputed facts and therefore, no any exceptional case is made out by the applicant to exercise the inherent powers under Section 482.

16. Before arriving at any conclusion, it would be appropriate to first scrutinize relevant provision of Section 141 of the N.I. Act which reads as under:

"141. Offences by companies (1) If the person committing an offence under section 138 is a company, every person who, at the time the offence was committed, was in charge of, and was responsible to the company for the conduct of the business of the company, as well as the company, shall be deemed to be guilty of the offence and shall be liable to be proceeded against and punished accordingly:

PROVIDED that nothing contained in this sub-section shall render any person liable to punishment if he proves that the offence was committed without his knowledge, or that he had exercised all due diligence to prevent the commission of such offence.

(2) Notwithstanding anything contained in sub-section (1), where any offence under this Act, has been committed by a company and it is proved that the offence has been committed with the consent or connivance of, or is attributable to, any neglect on the part of, any director, manager, secretary or other officer of the company, such director, manager, secretary or other officer shall also be deemed to be guilty of that offence and shall be liable to be proceeded against and punished accordingly."

17. In the case of S.M.S. Pharmaceuticals Limited vs. Nita Bhalla reported in (AIR 2005 SC 3512), the Full Bench of the Supreme Court examined the ambit and scope of Section 141 of the N.I. Act. It is held that, section 138 casts criminal liability punishable with imprisonment or fine or with both on a person who issue a cheque towards discharge of a debt or liability as a whole or in part. Section 141, extends such criminal liability in a case of a company to every person who at the time of offence was in charge of and was responsible for the conduct of the business of the company. By deeming provision contained in Section 141 of thesuch person is vicariously liable to be held guilty for the offence under Section 138 and punished accordingly. The normal rule in cases involving criminal liability is that, no one is to be held criminal liable for an act of another. This normal rule is however subject to exception on account of specific provision being made in the statutes extending liability to others. Section 141 of theis an instance of specific provision which in case an offence under Section 138 is committed by a company, extends criminal liability for dishonour of cheques to officers of the company. Section 141 contains conditions which have to be satisfied before the liability can be extended to the officers of a company. Since the provisions creates criminal liability, the conditions have to be strictly complied with. The conditions are intended to ensure that, a person who is sought to be made vicariously liable for an offence of which the principal accused is the company, had a role to play in relation to the incriminating act and further that, such a person should know what is attributed to him to make him liable. In other words, persons who had nothing to do with the matter need not be roped in. A company being a juristic person, all its deeds and functions are the result of acts of others. Therefore, officers of a company who are responsible for acts done in the name of the company are sought to be made personally liable for acts which result in criminal action being taken against the company. It makes every person who, at the time of offence was committed, was in charge of, and was responsible to the company for the conduct of business of the company, as well as the company liable for the offence. The proviso to the subsection contains an escape route without their knowledge or that they had exercised all due diligence to prevent commission of the offence.

18. In light of the settled law propounded by the Apex Court and considering the peculiar facts and circumstances of the present case, the issue arise for determination, whether the proceedings of private complaint are liable to be quashed in exercise of extra ordinary and inherent jurisdiction

19. Heard at length learned counsel for the respective parties and perused the contents of the complaint and material placed on record.

20. It is the contention raised by the applicant that, at relevant time, the applicant was pursuing his study at Lucknow and therefore, merely holding the position of Director would not itself sufficient to attract the provision of Section 141 of the. From the complaint, it appears that, specific averments are made by the complainant to attract the provision of Section 141 of the N.I. Act. So far the contention with regard to study of the applicant undertaken by him at Lucknow is concerned, he may prove the said aspects by leading evidence before the trial Court. In the case of Gunmala Sales Private Limited vs. Navkar Infra Projects reported in (2014 0 AIJEL-SC 55840), it is held by the Apex Court that complaint cannot be quashed on the ground that apart from basic averments, no particulars are given.

21. The accused no.2 to 6 belongs to business family and doing their business jointly. Thus, this Court is of prima-facie opinion that, the averments in the complaint are sufficient for the purpose of summoning the applicant herein and the trial Court has rightly issued summons. The criminal complaint pending before the trial Court is at the stage of completion as the matter is at the stage of recording further statement of the accused-applicant. It is open to the applicant to lead the evidence before the trial Court to show that, he had no role to play in the alleged transaction, nor, in any manner, he was involved in the day to day affairs of the business of the company – accused no.1 and he having no knowledge about the alleged act of the company.

22. The grounds for quashing a criminal proceeding discussed by the Apex Court in several judgments including State of Haryana vs. Bhajan Lal (AIR 1992 SC 604). In the case of Bhajanlal (supra), the Apex Court gave a note of caution, on the powers of quashing of criminal proceeding. In para103, it is held that, the power of quashing a criminal proceeding should be exercised vary sparingly and with circumspection and that too, in the rarest of rare case; that the Court will not be justified in embarking upon an inquiry as to the reliability or genuineness or otherwise of the allegations made in the complaint and that the extra ordinary or inherent powers do not confer an arbitrary jurisdiction on the Court to act accordingly to its whim and caprice.

23. In light of the settled principle of law and applying it to the facts of the present case, this Court is of considered opinion that, the averments made in the complaint are sufficient to summon the applicant herein and at this stage, it cannot be said that, prima-facie, no offence is made out against the applicant. This Court, therefore, find no merits in the applications. Hence, all the applications stand dismissed. Rule is discharged. Interim relief stands vacated forthwith.

24. It is needless to say that, the observations made hereinabove is confined to determination of the issue raised in the present applications and the trial Court shall decide the case on its own merits without being influenced by the observations made herein.

25. After the judgement is pronounced, learned advocate Mr. Atit Thakore requests to continue the interim relief to enable the applicant to approach higher forum. Learned advocates for respondents objected to the request made by learned advocate for the applicant. Initially, no interim relief was granted but after conclusion of the arguments of the parties and when the matters were fixed for orders, the Court has directed the trial Court not to proceed further with the cases. In view of the reasons for dismissal of the applications, the request for extension of the interim relief is not acceded to. Registry is directed to keep a copy of this order in each matter.