The Lucknow Bench of the Allahabad High Court while disposing an application said that a Director, MD or Chairman can be made an accused along with Company only if there is sufficient material to prove his active role coupled with criminal intent.
A Single Bench of Justice Shamim Ahmed passed this order while hearing an application under Section 482 filed by Shekhar Ramamurthy.
The application under section 428 CrPC has been filed by the applicant-Shekhar Ramamurthy, seeking following prayer:-
“Wherefore it is most respectfully prayed that in the aforesaid facts and circumstances the application preferred under section 482 Cr.P.C may kindly be allowed and the quashment of Order dated 17.10.2022 alongwith all consequential proceedings and effects arising out of FIR Under Section 406, 420, 467, 468, 471 and 120-B of IPC P.S Hussain Ganj, District Lucknow, pending before the court of ACJM-III may kindly be quashed along with all consequential proceedings in respect of the applicant in the interest of justice.”
Counsel for the applicant submitted that the facts of the case are that the United Breweries Limited (UBL) is a company registered under the provisions of Companies Act, 1956, having its registered office at U.B Tower V.B City 24, Vittal Mallya Road, Bangalure, Karnataka. The Company is engaged in manufacturing and sale of beer and other alcoholic beverages in India and worldwide.
That the applicant was working with UBL as Managing Director and a First Information Report was lodged on 16.09.2018 by the informant Sanjeev Jaiswal wherein certain allegations regarding some business disputes were made against three persons, namely, Akhil Sarda, Himanshu Tewari and Arvind Padhi. During the course of time applicant ceased to be a Director of the aforesaid company w.e.f 31.07.2020 upon his superannuation and the information about his leaving the company was filed with the Ministry of Corporate Affairs in Form DIR-12 as required under the Companies Act, 2013.
As per the contents of the FIR lodged on a complaint. moved by opposite party No 2 at Police Station Husainganj, Lucknow, on 15.9.2018 and as per the case setup the complainant placed an order for three trucks of Beer on 07.09.2018 and on 11.09.2018 through e-mail to Akhil Sharda, Branch Manager (Sales) Uttar Pradesh and Uttarakhand and made payment of Rs 65,66,152/ on 7.9.2018 and Rs 27,32,750 on 11.9.2018, total amount of Rs 92,98,902/ by his banker, Federal Bank Limited, Cantt Road Lucknow.
Despite making of payment for three trucks of Beer, Akhil Sarda did not ensure the supply of the ordered Beer, nor any proper reply was given by him. The complainant was apprehensive that three employees named in the FIR had not intention to supply the ordered Beer and they wanted to misappropriate the amount paid by the complainant and as per Excise Rules, the supply was to be made within 72 hours of the order.
The opposite party No 2 placed a demand order for two trucks load of Beer through e-mail, total 2360 cases to the company on 07.09.2018. This e-mail was also sent to the Assistant Excise Commissioner Web Distillery, Aligarh. As the next two days, i.e, Saturday and Sunday were holidays, the process for supply of goods for which order was placed by the opposite party party No 2 was initiated on 10.9.2018.
In pursuance of the indent/ demand order dated 07.09.2018 placed by opposite party No 2, the Company directed its transporter Sical Logistics Limited to arrange vehicles for delivery of goods from its godown located at Noida to the Licensee at Lucknow.
The transport permit was issued by the concerned Excise Officer on 11.9.2018 for supply of Beer by 13.09.2018. The consignment of Beer was dispatched on 11.9.2018 for delivery to the Licensee at Lucknow after payment of excise duty in advance through transporter of the company by Truck.
The aforesaid two trucks had to reach the destination on 13.9.2018. And on 13.9.2018, location of both the trucks was tracked through GPS upto the outer limit of the Lucknow city, which was near about one and a half kilometre from the hotel Ramada Palace of opposite party No 2 and, thereafter, the GPS device of both trucks lost contact with GPS Tracker Agency, namely, QTS Solutions Private Limited after 11.41 hours on 13.09.2018. QTS Solutions Private Limited sent a message through e-mail on 14.9.2018 at 4.15 PM of one Dharam Chand, Depot In-charge of the company.
It is further submitted that Ashok Kumar Jaiswal, who manages the business of opposite party No 2, also runs Hotel Ramada, Near Bani Junabganj, Banthara, Lucknow, which is located at a distance of 1.5 kilometres from the place from where the trucks loaded with Beer went missing and which is specifically the same place from where the GPS fitted in the trucks stopped giving the track of the two trucks on 13.09.2018.
The Depot In-charge also informed to the officers of the company as well as the transporter, Sical Logistics Limited about the loss of trucks. The officers of the company also inquired about the trucks’ location from opposite party No 2 through telephone, but opposite party No 2 informed the company that the trucks had not yet reached the designated place i.e 18, Station Road, Lucknow.
It was further submitted that the trucks loaded with Beer from the Depot of the company going missing, was brought to the notice of the District Excise Officer, who directed the company on 14.9.2018 to lodge the FIR at Police Station Badalpur, Gautam Budh Nagar.
When the whereabouts of the trucks were not known, on 21.9.2018 the company requested consent of the licensee, opposite party No 2, through e-mail for re-supply of Beer against the order dated 07.09.2018 as the consent was required for issuance of transport permit (FL-36) afresh. The consent for re-supply was given by opposite party No 2 through e-mail on 22.9.2018. The licensee also informed the company that criminal proceedings have already been initiated at Police Station Husainganj, Lucknow with regard to non supply of Beer and civil proceedings would be initiated for the losses suffered.
After consent was given by the licensee on 22.09.2018, fresh Form FL-36 was issued by the concerned Excise Officer on 22.09.2018 itself and Beer was supplied on 22.09.2018 against the order dated 07.09.2018 after payment of excise duty in advance through transporter of the company. The supply of goods/ Beer were delivered at the address of the licensee at Lucknow on 24.09.2018, which were accepted by the licensee, however, acknowledgement was not given by the licensee even after receipt of the goods.
As the licensee did not acknowledge the delivery of goods, the drivers of the trucks contacted Excise Department and the Excise Inspector was deputed to verify the delivery of beer. The concerned Excise Officer inspected the location of the licensee and submitted his report dated 27.9.2018 that Beer ordered was duly received by the licensee at his premises.
It was further submitted that the licensee had also placed another order dated 11.09.2018 at 8:30 PM through e-mail for delivery of 1180 cases of Beer at Varanasi.
Since the vehicles of transportation of Beer to Varanasi could not be arranged and the transport Form FL-36 could not be issued, the licensee on 15.09.2018 modified its original order dated 11.09.2018 through e-mail instructing that the ordered beer be delivered at Lucknow instead of Varanasi. After receipt of revised order on 15.09.2018 with changed location, the vehicle was arranged and Form FL-36 was issued by the concerned Excise Officer on 17.09.2018 and on the same day, consignment of beer was dispatched after payment of excise duty in advance through transporter of the company, namely, Buland Logistic Limited by Truck from Aligarh to Lucknow and the consignment of beer was delivered and received by the licensee on 19.09.2018.
It is stated that the goods were duly delivered as per the orders dated 07.09.2018 and 11.09.2018.
The Court said that the powers of the High Court to quash criminal proceedings in exercise of its jurisdiction under Section 482 Cr.P.C is well known. The High Court may not enter into determination of the disputed questions of fact at the stage of its exercise of powers under section 482 CrPC, however, the Court may examine and take note of the facts and allegations in order to find out whether the impugned proceedings are in abuse of the process of the court and law and their continuance would result in miscarriage of justice or not.
The Court observed that,
In the case the facts, as noted above, are not in dispute. The FIR and the charge-sheet discloses as to how and in what manner the applicant was responsible for day-to-day conduct of business of the Company or otherwise responsible in its day-to-day functioning.
The question which arises for consideration in the case is that whether the applicant was liable for any offence even if the allegations in the FIR and charge sheet are taken on their face value to be correct in entirety. The Company is a body incorporated under the Companies Act. Vicarious criminal liability of its Directors and Shareholders would arise provided any provision exists in that behalf in the statute. The Statute must contain provision fixing such a vicarious liability. Even for the said purpose, it would be obligatory on part of the complainant and the investigating agency to make requisite allegations and collect evidence in support thereof which would attract provisions constituting vicarious liability.
In the facts of the case, it is not in dispute that order for supply of beer by complainant/opposite party No 2 was placed through Akhil Sarda, Depot Manager.
The applicant was the Managing Director who has been appointed under the provisions of Section 149/ 150 of the Companies Act, 2013, having regard to his qualification, expertise etc. If the applicant was involved in the alleged transaction at any point of time, vicarious criminal liability can be fixed upon the applicant.
Thus, the Court is of the view that all the contentions raised by the applicant’s counsel relate to disputed questions of fact. The court has also been called upon to adjudge the testimonial worth of prosecution evidence and evaluate the same on the basis of various intricacies of factual details which have been touched upon by the counsel. The veracity and credibility of material furnished on behalf of the prosecution has been questioned and false implication has been pleaded. In the process of invoking its inherent jurisdiction, the court cannot be persuaded to have a pre trial before the actual trial begins.
The submissions made by the counsel call for adjudication on pure questions of fact which may be adequately adjudicated upon only by the trial court and while doing so even the submissions made on points of law can also be more appropriately gone into by the trial court in the case.
However, in view of the above discussions and observations, the Court directed that the applicant shall appear before the concerned court below, within a period of three weeks and move an application claiming discharge, the concerned court below shall after hearing the counsel for the parties decide the aforesaid discharge application on merits in accordance with law within a period which shall not exceed a period of three months without granting any unnecessary adjournment to either of the parties, unless there is some legal impediment or unless there is any order passed by the higher court staying the proceedings of the case.
The Court further directed that till the disposal of the aforesaid discharge application no coercive action shall be taken against the applicant.
With the above observations and directions, the Court disposed of the application filed by the applicant under Section 482 CrPC.