The Allahabad High Court while allowing an application said that even if the company has gone into insolvency, the directors cannot escape the liabilities.
A Single Bench of Justice Prashant Kumar passed this order while hearing an application under section 482 filed by Dinesh Hariram Valecha.
The application under Section 482 CrPC has been filed by the applicant praying to quash the summoning order dated 23.10.2019 and the entire proceeding of the Complaint Case under Section 138 of Negotiable Instruments Act, 1881, Police Station- Kotwali, DistrictEtawah pending before the Court of Additional Chief Judicial Magistrate, Etawah.
The opposite party no 2 had a business relation with the applicant, it was in between December, 2014 to July, 2015, where several work orders were placed by Valecha Engineering Limited (VEL) for KERB laying and PCC laying.
During the course of the business, VEL paid a certain amount to opposite party no 2, however, there was a balance of Rs 7,18,65,987/- which was to be paid by VEL to opposite party no 2.
In pursuance of this payment, VEL issued a cheque dated 11.10.2017 drawn on SBI, Shastri Chauraha, Etawah for an amount of Rs 6,50,00,000/- (six crores and fifty lakhs) crores in favour of opposite party no 2. When the said cheque was presented it was dishonoured on 22.11.2017 with a remark “insufficient funds” and was sent to the opposite party no 2 vide return memo dated 23.11.2017. After bouncing of the cheque, opposite party no 2 requested VEL to pay the bounced cheque amount when, VEL did not make the said payment, the opposite party no 2 was constrained to issue a legal notice on 16.12.2017 through its lawyer which was delivered to VEL on 18.12.2017.
Even after getting the notice, VEL did not make the payment and hence, the opposite party no 2 was left with no other option but to file a complaint on 08.01.2018 under Section 138 of the Negotiable Instruments Act in the Court of Second Judicial Magistrate, Etawah.
The Court after being satisfied that the court had jurisdiction and the complaint was within time, fixed 10.04.2018 for statement under Section 200 CrPC. After 20 hearings and after a gap of one and a half years, notices were issued on 23.10.2019 against Valecha Engineering Limited, and other directors, and also against Shyam M Bulbule who was the authorised signatory of the cheque (the applicant herein is one of the whole-time Director of the Company). The matter was next listed on 30.11.2019, thereafter, the accused did not appear in the court and the bailable warrant was issued.
On 13.10.2020, since the accused were not appearing before the court, hence, the court issued a non-bailable warrant. On 20.10.2020, the matter was again listed and the accused did not appear. Again on 10.11.2020, the accused did not appear before the court.
It was on 27.11.2020, the accused Vijay Kumar, Anil S. Korpe, Tarun Dutt had appeared and granted bail. When the matter was next listed on 30.11.2020, the three accused who earlier appeared, did not appear nor sought for exemption from appearance, hence, NBW was issued against them. On 14.12.2020, again, these three accused did not appear and NBW was issued against them and summons were issued against the rest of the accused.
On 10.03.2021, few of the accused appeared through counsel. The court held that the three accused who were on bail had not appeared in the court nor did they file an exemption application. A notice was issued to the surety. Since the applicant was not appearing, an application was filed against the accused under Sections 82 & 83 of CrPC. On 20.03.2021, the accused again did not appear nor sent any exemption, so the court directed to proceed against them under Section 82 & 83 of CrPC. In spite of that, again, on 01.04.2021, the accused did not appear and NBW continued. It was only on 26.02.2021, where an application for exemption from appearance on behalf of Vijay Kumar Himmatlal Modi, Anil S. Korpe and Tarun Dutt was filed. On 05.03.2021, their exemption was allowed the next date fixed on 10.03.2021 and on 20.03.2021, the exemption application of the three accused was rejected and fresh NBW was issued and police commissioner was directed to serve the same, and on 01.04.2021, the accused did not appear.
On 07.01.2022, for the first time after four years of filing the complaint, the applicant -Dinesh H Valecha appeared in the court and sought his bail and the same was granted.
“Keeping these principles in mind, it is to be seen as to whether the petition under Section 482 CrPC is maintainable or not.
The High Court has issued the Circulars to all the Judicial Magistrates to take care of the speedy disposal of trial in criminal cases but apparently, the Trial Court herein has not followed the Circular and did not bother to take adequate care for the service of summons, bailable warrants, and that was the reason, it took so much time to serve the applicant.
It is shocking to see how the trial court has been proceeding in this case. This Court vide order dated 09.09.2020 has directed the trial court to complete the trial expeditiously preferably within a period of six months but the trial court apparently has not followed the directions of this court. They chose to simply adjourn the case and further, exempted all the Directors from appearance and did not proceed with the matter. The conduct of the Trial Court is actually contemptuous in nature.
That, in view of the aforesaid facts and circumstances, it is clear that the applicant and other directors had been playing all the tricks under the hat to delay the trial. Even if the company has gone into insolvency, the directors cannot escape the liabilities.
So, the question whether a person is a Director incharge of the affairs of the company at the relevant time, can only be judged during the course of trial and the complaint cannot be quashed in the proceedings drawn under Section 482 CrPC”, the Court observed while dismissing the petition.
The Court directed the trial Court to proceed with the trial by conducting day to day hearing and not granting any kind of unnecessary adjournments nor granting exemption from appearance to the directors. The Court further directed that the trial should be completed within a period of three months.