# A.K. Ravi Nedungadi & Ors v. State of U.P. & Ors

- **Citation:** (2022) 10 ILRA 471
- **Court:** High Court of Judicature at Allahabad
- **Decided:** 2022-10-13
- **Case number:** Application U/S 482 No. 72 of 2020
- **Bench:** Dinesh Kumar Singh
- **Source:** https://unisonlegal.in/judgment/allahabad-high-court/a-k-ravi-nedungadi-ors-v-state-of-u-p-ors-47751
- **Pages:** 18

## Headnote

(A) Criminal Law - The Code of Criminal
Procedure,
1973
-
Section
482
-
Inherent power - Indian Penal Code,
1860 - Section 406 420, 467, 468, 471
and 120-B - The Companies Act, 2013 -
Section 149/150 - Vicarious criminal
liability of its Directors and Shareholders
would
arise
provided
any
provision
exists in that behalf in the statute -
Individual
who
has
perpetrated
commission of offence on behalf of the
Company can be made an accused along
with the Company, if there is sufficient
evidence of his active role coupled with
criminal intent - person working in a
Company also can be made an accused
and
implicated
if
there
is
specific
role/allegation which attracts doctrine
of vicarious liability - In absence of any
of two aforesaid situations - when the
Company is offender, vicarious liability
of the Directors cannot be imputed
automatically. (Para -33,36)

(B) Criminal Law - vicarious criminal
liability - If the petitioners have not
been
involved
in
the
alleged
transactions
at
any
point
of
time,
vicarious criminal liability cannot be
fixed upon the petitioners - summoning
of an accused in a criminal case is a
serious matter - Criminal law cannot be
set in motion as the matter of course for
alleged offences. (Para -35)

Petitioners being non-executive directors - not
involved in operations - relating to production
and supply/delivery of goods of the company
or in day-to-day business of the company -
neither disclosed in FIR nor in Charge sheet -
Summoned - Supplementary charge sheet -
question - whether petitioners are personally
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. (Para -
33)

HELD:-Petitioners who are/were part time
Directors
of
Company
cannot
be
held
responsible for alleged offence committed on
behalf of Company. Nothing on record
suggest that they were responsible in any
manner for receiving the order for supply of
beer or alleged evasion of excise duty.
Continuance
of
proceedings
against
petitioners wholly unjustified and uncalled for.
472 INDIAN LAW REPORTS ALLAHABAD SERIES
Impugned proceedings quashed against the
petitioners. (Para - 44)

Application u/s 482 Cr.P.C. allowed. (E-7)

List of Cases cited:-

## Text

_Characters 0–39,964 of 58,114. This is a partial read: ask again with offset=39964 for what follows._

10 All. A.K. Ravi Nedungadi & Ors. Vs. State of U.P. & Ors.
471
the orders dated 30.9.1986 and 23.9.1975.
Even, the original affected person, who was
alive at the relevant time and died in the
year 2018, had never made any endeavour
to challenge the said order and kept silent
accepting the order passed by the Board of
Revenue and the learned Commissioner.

10. Resultantly, for the reason stated
above, there is no force in the instant writ
petition. I do not find any substance in the
submissions advanced by counsel for the
petitioners assailing the impugned orders.
The Board of Revenue has rightly rejected
the restoration application of the petitioners
on the ground of latches, which was filed
without assigning any reliable and cogent
reason for inordinate delay.

11. As such, present writ petition,
being misconceived and devoid of merits,
is dismissed. No order as to costs.
----------
(2022) 10 ILRA 471
ORIGINAL JURISDICTION
CRIMINAL SIDE
DATED: LUCKNOW 13.10.2022

BEFORE

THE HON'BLE DINESH KUMAR SINGH, J.

Application U/S 482 No. 72 of 2020

A.K. Ravi Nedungadi & Ors. ...Applicants
Versus
State of U.P. & Ors. ...Opposite Parties

Counsel for the Applicants:
Sri Baljeet Singh, Somya Chaturvedi

Counsel for the Opposite Parties:
Govt. Advocate, Sri Ashok Kumar Singh, Sri
Kapil Misra, Sri Neelesh Anand

(A) Criminal Law - The Code of Criminal
Procedure,
1973
-
Section
482
-
Inherent power - Indian Penal Code,
1860 - Section 406 420, 467, 468, 471
and 120-B - The Companies Act, 2013 -
Section 149/150 - Vicarious criminal
liability of its Directors and Shareholders
would
arise
provided
any
provision
exists in that behalf in the statute -
Individual
who
has
perpetrated
commission of offence on behalf of the
Company can be made an accused along
with the Company, if there is sufficient
evidence of his active role coupled with
criminal intent - person working in a
Company also can be made an accused
and
implicated
if
there
is
specific
role/allegation which attracts doctrine
of vicarious liability - In absence of any
of two aforesaid situations - when the
Company is offender, vicarious liability
of the Directors cannot be imputed
automatically. (Para -33,36)

(B) Criminal Law - vicarious criminal
liability - If the petitioners have not
been
involved
in
the
alleged
transactions
at
any
point
of
time,
vicarious criminal liability cannot be
fixed upon the petitioners - summoning
of an accused in a criminal case is a
serious matter - Criminal law cannot be
set in motion as the matter of course for
alleged offences. (Para -35)

Petitioners being non-executive directors - not
involved in operations - relating to production
and supply/delivery of goods of the company
or in day-to-day business of the company -
neither disclosed in FIR nor in Charge sheet -
Summoned - Supplementary charge sheet -
question - whether petitioners are personally
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. (Para -
33)

HELD:-Petitioners who are/were part time
Directors
of
Company
cannot
be
held
responsible for alleged offence committed on
behalf of Company. Nothing on record
suggest that they were responsible in any
manner for receiving the order for supply of
beer or alleged evasion of excise duty.
Continuance
of
proceedings
against
petitioners wholly unjustified and uncalled for.
472 INDIAN LAW REPORTS ALLAHABAD SERIES
Impugned proceedings quashed against the
petitioners. (Para - 44)

Application u/s 482 Cr.P.C. allowed. (E-7)

List of Cases cited:-
1. Sunita Palita Vs M/s Panchami Stone Quarry,
(2022) SCC Online SWC 945

2. Shiv Kumar Jatia Vs St. of NCT of Delhi,
(2019) 17 SCC 193

3. Ramveer Upadhyay & anr. Vs St. of U.P. &
anr. (2022) SCC Online SC 484

4. Pepsi Foods Ltd. Vs Special Judicial
Magistrate, (1998) 5 SCC 749

5. Sunil Bharti Mittal Vs CBI, (2015) 4 SCC 609

(Delivered by Hon'ble Dinesh Kumar Singh , J.)

1. The present petition under Section
482 Cr.P.C. has been filed seeking quashing
of the entire proceedings of Case Crime
No.5694 of 2019 (State Vs. United
Breweries Limited and others), arising out
of FIR No.0260 of 2018 initially registered
under Section 406 IPC, Police Station
Husainganj,
District
Lucknow
against
Akhil Sharda, Branch Manager (Sales)
Uttar Pradesh and Uttarakhand, Himanshu
Tiwari and Arvind Padhi of M/s United
Breweries Limited, office address at 626,
6th Floor, DLF, Tower-B, DDA, District
Center, Jasaula, New Delhi-110044 having
bond at Chapraula, G.T. Road, Tehsil
Dadri, Noida-201301. During the course of
investigation, Sections 420, 467, 468, 471
and 120-B IPC were added.

2. A challenge has also been made to
the summoning order dated 3.4.2019 issued
pursuant to the supplementary charge sheet
dated 24.3.2019, upon which the learned Ist
Additional Chief Judicial Magistrate, Court
No.25, Lucknow took cognizance vide
order dated 3.4.2019 and summoned the
petitioners for facing the trial.

3.

The
petitioners
have
also
challenged the judgment and order dated
24.12.2019 passed by the Additional
Sessions Judge, Court No.1, Lucknow in
Criminal Revision No.379 of 2019 filed by
the petitioners against the order of
cognizance and summoning dated 3.4.2019
passed by the learned trial court.

4. The facts of the case, in brief, are
that
the
United
Breweries
Limited
(Hereinafter referred to as "the Company")
is
a
company
registered
under
the
provisions of the Companies Act, 1956
having its registered office at UB Tower,
VB
City,
24,
Vittal
Mallya
Road,
Bangalure, Karnataka. The company is
engaged in manufacture and sale of beer
and other alcoholic beverages in India and
worldwide. Petitioner Nos.1, 3, 5, 6, 7, 8
and
9
are
part-time
non-executive
Directors, whereas petitioner nos.2 and 4
are former non-executive directors, whose
term got completed on 4.9.2019 in the
company. The specific stand of the
petitioners in paragraph 30 of the petition is
that the petitioners being non-executive
directors, are not involved in operations
relating to production and supply/delivery
of goods of the company or in day-to-day
business of the company.

5. Petitioner no.10 is the Company
Secretary and authorized representative of
the company, but he is also not involved in
operations relating to production and
supply/delivery of the goods of the
company. In paragraph 31 of the petition,
the particulars of the petitioners such as
their designation, nature of work, their
dates of appointment in the company as
non-executive directors and the company
10 All. A.K. Ravi Nedungadi & Ors. Vs. State of U.P. & Ors.
473
secretary are given in a tabular form, which
would read as under:-

Sl.
No.
Name
Designation Date of
Appoint
ment/
Cessation
1.
A.K.
Ravi
Nedunga
di
NonExecutive
Director
09.08.202
2
2.
Chhaganl
al Jain
Former NonExecutive
Independent
Director
27.01.200
3
(04.09.20
19)
3.
Sunil
Kumar
Alagh
Former NonExecutive
Independent
Director
29.04.200
5
4.
Chugh
Yoginder
Pal
Former NonExecutive
Independent
Director
29.04.200
5
(04.09.20
19)
5.
Madhav
Narayan
Bhatkuly
Former NonExecutive
Independent
Director
26.10.200
9
6.
Kiran
Mazumda
r Shaw
Former NonExecutive
Independent
Director
26.10.200
9
7.
Stephen
Friedhel
m
Genlich
Former NonExecutive
Independent
Director
02.07.201
0
8.
Christiaa
n A J Van
Steengerg
en
NonExecutive
Director
08.11.201
7
9.
Rudolf
Gijsbert
NonExecutive
14.11.201
8
Servaas
Van Den
Brink
Director
10.
Govind
Rangraja
n Iyengar
Company
Secretary
16.05.202
2

6. Opposite party no.2 is Manager of
Licensee Firm F.L.2B (Beehive Alcoveb)
and this firm is engaged in business of sale
of Beer etc, after purchasing the same from
the company and other manufacturers.

7. As per the contents of the FIR
lodged on a complaint of opposite party
no.2
at
Police
Station
Husainganj.
Lucknow on 15.9.2018 against three
employees of the company named in the
FIR, the complainant placed an order for
three trucks of Beer on 7.9.2018 and on
11.9.2018 through e-mail to Akhil Sharda,
Branch Manager (Sales) Uttar Pradesh and
Uttarakhand
and
made
payment
of
Rs.65,66,152/-
on
7.9.2028
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 the payment for there
trucks of Beer, Akhil Sharda did not ensure
the supply of the ordered Beer nor any
proper reply was being given. The
complainant was apprehensive that three
employees named in the FIR had no
intention to supply the ordered Beer and
they wanted to misappropriate the amount
paid by the complainant as under the
Excise Rules, the supply was to be made
within 72 hours of the order.

8. The first charge sheet was filed by
the investigating officer on 10.2.2019
against the four accused persons, namely,
Akhil Sharda, Himanshu Tiwari, Arvind
Padhi and the United Breweries Limited,
474 INDIAN LAW REPORTS ALLAHABAD SERIES
the company, under Sections 406, 420, 467,
468, 471 and 120-B IPC alleging that the
four accused had prepared forged and
fabricated documents in furtherance of the
criminal conspiracy, and have caused loss
to the excise revenue of the Government of
Uttar Pradesh and, they had also cheated
the
complainant.
Thereafter,
two
supplementary
charge
sheets
dated
24.3.2019 and 27.6.2019 came to be
submitted by the investigation officer.

9. In the first supplementary charge
sheet dated 24.3.2019, name of the
petitioners got figured as accused for
committing the offences under Sections
406, 420, 467, 468, 471 and 120-B IPC. It
is alleged that the petitioners together and
in furtherance of criminal conspiracy had
committed financial crime and these
accused petitioners are habitual offenders
against whom the offences under Sections
406, 420, 467, 468, 471 and 120-B IPC are
very well made out on the basis of the
evidence collected during the course of
investigation.

10. Second supplementary charge
sheet came to be filed against Abdul
Haque, Happy Arora and Vivek Tiwari of
three transport companies, namely, Sical
Logistics Limited, New Fatehpur Calcutta
Transport Company and Tiwari Transport
Company respectively, and against the
officers and share holders of the company
alleging that they had prepared forged truck
numbers and the driving licenses.

11. Petitioner no.5, Rudolf Gijsbert
Servaas Van Den Brink was appointed as
non-executive
director
only
on
14.11.2018. Petitioner No.8, Christiaan A
J Van Steenbergen and petitioner no.9
Stephen F Gerlich are permanently
residing abroad.

12. Opposite party no.2 placed a
demand order for two trucks load of Beer
through e-mail, total 2360 cases to the
company on 7.9.2018. 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 opposite
party
party
no.2,
was
initiated
on
10.9.2018.
In
pursuance
of
the
indent/demand order dated 7.9.2018 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 (Form FL-36) was issued by the
concerned Excise Officer on 11.9.2018 for
supply
of
Beer
by
13.9.2018.
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 Nos.UP32 HN 3209 and
UP32 FN 8048.

13. It is the case of the petitioners that
the company sent the entire goods/Beer in
respect to the demand order dated 7.9.2018
loaded aforesaid two trucks provided by its
registered
transporter
namely,
Sical
Logistics Limited having GPS system in
those trucks as mandated by the Excise
Department's Track and Trace Policy. It is
further said that Sical Logistics Limited,
registered transporter of the company, had
arrangement for providing trucks for
transportation services with New Fatehpur
Calcutta Transport Company, who in turn
hires trucks from open market. In this
particular
transaction,
New
Fatehpur
Calcutta Transport Company had hired
Truck Nos.UP32 HN 3209 and UP32 FN
8048 from Tiwari Transport Company for
10 All. A.K. Ravi Nedungadi & Ors. Vs. State of U.P. & Ors.
475
delivery of consignment of opposite party
no.2 at Lucknow.

14. The aforesaid two trucks had to
reach the destination on 13.9.2018. 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 kilometer 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 13.9.2018. QTS
Solutions Private Limited sent a message
through e-mail on 14.9.2018 at 4.15 PM of
one Mr. Dharam Chand, Depot In-charge of
the company.

15. It is stated 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 Kms. 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
13.9.2018.

16. 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.

17. The fact of 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 7.9.2018 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 nonsupply of Beer and civil proceedings would
be initiated for the losses suffered. After
consent was given by the licensee on
22.9.2018, fresh Form FL-36 was issued by
the concerned Excise Officer on 22.9.2018
itself and Beer was supplied on 22.9.2018
against the order dated 7.9.2018 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 24.9.2018,
which were accepted by the licensee,
however, acknowledgment 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.

18. The licensee had also placed
another order dated 11.9.2018 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
476 INDIAN LAW REPORTS ALLAHABAD SERIES
be arranged and the transport Form FL-36
could not be issued, the licensee on
15.9.2018 modified its original order dated
11.9.2018 through e-mail instructing that
the ordered beer be delivered at Lucknow
instead of Varanasi. After receipt of revised
order on 15.9.2018 with changed location,
the vehicle was arranged and Form FL-36
was issued by the concerned Excise Officer
on 17.9.2018 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 No.UP81 BT
5285 from Aligarh to Lucknow and the
consignment of beer was delivered and
received by the licensee on 19.9.2018. It is
stated that the goods were duly delivered as
per
the
orders
dated
7.9.2018
and
11.9.2018.

19. This Court in its detail interim
order dated 17.1.2020 has noted the
undisputed facts as under:-

"It is undisputed that for resupply of the Beer, excise duty was duly
paid to the Excise department, after which
F.L. 36 was issued and the goods were
supplied by the Company, which was duly
received by the informant's side. It is also
undisputed that initially, in Case Crime No.
260 of 2018 (supra), final report was
prepared by the Investigating Officer on
13.10.2018. (Conclusion of the final report
is
appended
at
page
183
of
the
application). However, on the request of the
Ashok Kumar Jaiswal, investigation was
transferred to the Crime branch and charge
sheet was prepared by the 2nd Investigating
Officer on 10.02.2019 with the observation
that there is a loss of U.P. Excise revenue.
The charge sheet was prepared against the
Company, Akhil Sharda, Arvind Padhi and
Himanshu Tiwari with the allegation that
by preparing a forged documents, the
Company cheated the informant and also
cause U.P. excise revenue loss. Thereafter,
impugned supplementary charge sheet was
prepared against the applicants on 24th
March, 2019, which is annexed at pages 55
to 70 of the application."

20. Sri G.S. Chaturvedi, learned
Senior
Advocate
representing
the
petitioners has submitted that the opposite
parties have not denied the averments made
in paragraphs 30 and 31 of the petition, and
if there is no evidence brought on record to
show any involvement of the petitioners in
the alleged offence, the criminal liability
cannot be fixed only on the allegation that
the accused are directors/share holders of
the company without disclosing any role
played by such a person in the entire
transaction, which form part of the offence
and subject matter of the FIR, and the
charge sheet. He has further submitted that
the impugned proceedings against the
petitioners are nothing but a sheer abuse of
process of law and Court and are
manifestly
unjust
and
illegal.
The
investigation has also been closed, and no
further investigation is pending in the
offence and the continuation of the
proceedings against the petitioners would
result only in their further harassment for
alleged offences, which are not made out
against them inasmuch as there is no
evidence
against
them
for
their
involvement in any manner for commission
of alleged offences.

21. Sections 2(47), 149 and 150 deal
with the independent directors which read
as under :-

"2(47)
"independent
director"
means an independent director referred to
in sub-section (6) of section 149;
10 All. A.K. Ravi Nedungadi & Ors. Vs. State of U.P. & Ors.
477

149. Company to have Board of
Directors.__(1) Every company shall have
a
Board
of
Directors
consisting
of
individuals as directors and shall have--

(a) a minimum number of three
directors in the case of a public company,
two directors in the case of a private
company, and one director in the case of a
One Person Company; and

(b)
a
maximum
of
fifteen
directors:

Provided that a company may
appoint more than fifteen directors after
passing a special resolution:

Provided further that such class
or classes of companies as may be
prescribed, shall have at least one woman
director.

(2) Every company existing on or
before the date of commencement of this
Act shall within one year from such
commencement
comply
with
the
requirements of the provisions of subsection (1).

[(3) Every company shall have at
least one director who stays in India for a
total period of not less than one hundred
and eighty-two days during the financial
year:

Provided that in case of a newly
incorporated company the requirement
under
this
sub-section
shall
apply
proportionately at the end of the financial
year in which it is incorporated];

(4) Every listed public company
shall have at least one-third of the total
number
of
directors
as
independent
directors and the Central Government may
prescribe
the
minimum
number
of
independent directors in case of any class
or classes of public companies.

Explanation.-- For the purposes
of this sub-section, any fraction contained
in such one-third number shall be rounded
off as one.

(5) Every company existing on or
before the date of commencement of this
Act shall, within one year from such
commencement or from the date of
notification of the rules in this regard as
may be applicable, comply with the
requirements of the provisions of subsection (4).

(6) An independent director in
relation to a company, means a director
other than a managing director--

or a whole-time director or a
nominee director,

(a) who, in the opinion of the
Board, is a person of integrity and
possesses
relevant
expertise
and
experience;

(b) (i) who is or was not a
promoter of the company or its holding,
subsidiary or associate company;

(ii)
who
is
not
related
to
promoters or directors in the company, its
holding, subsidiary or associate company;

(c)
who
has
or
had
no
2[pecuniary
relationship,
other
than
remuneration as such director or having
transaction not exceeding ten per cent. of
478 INDIAN LAW REPORTS ALLAHABAD SERIES
his total income or such amount as may be
prescribed,] with the company, its holding,
subsidiary or associate company, or their
promoters, or directors, during the two
immediately preceding financial years or
during the current financial year;

3[(d) none of whose relatives--

(i) is holding any security of or
interest in the company, its holding,
subsidiary or associate company during the
two immediately preceding financial years
or during the current financial year:

Provided that the relative may
hold security or interest in the company of
face value not exceeding fifty lakh rupees
or two per cent. of the paid-up capital of
the company, its holding, subsidiary or
associate company or such higher sum as
may be prescribed;

(ii) is indebted to the company, its
holding, subsidiary or associate company
or their promoters, or directors, in excess
of such amount as may be prescribed
during the two immediately preceding
financial years or during the current
financial year;

(iii) has given a guarantee or
provided any security in connection with
the indebtedness of any third person to the
company,
its
holding,
subsidiary
or
associate company or their promoters, or
directors of such holding company, for such
amount as may be prescribed during the
two immediately preceding financial years
or during the current financial year; or

(iv) has any other pecuniary
transaction
or
relationship
with
the
company, or its subsidiary, or its holding or
associate company amounting to two per
cent. or more of its gross turnover or total
income singly or in combination with the
transactions referred to in sub-clause (i),
(ii) or (iii);]

(e) who, neither himself nor any
of his relatives

(i) holds or has held the position
of a key managerial personnel or is or has
been employee of the company or its
holding, subsidiary or associate company
in any of the three financial years
immediately preceding the financial year in
which he is proposed to be appointed;

4[Provided that in case of a
relative who is an employee, the restriction
under this clause shall not apply for his
employment
during
preceding
three
financial years.]

(ii) is or has been an employee or
proprietor or a partner, in any of the three
financial years immediately preceding the
financial year in which he is proposed to be
appointed, of

(A) a firm of auditors or company
secretaries in practice or cost auditors of
the company or its holding, subsidiary or
associate company; or

(B) any legal or a consulting firm
that has or had any transaction with the
company,
its
holding,
subsidiary
or
associate company amounting to ten per
cent. or more of the gross turnover of such
firm;

(iii) holds together with his
relatives two per cent. or more of the total
voting power of the company; or
10 All. A.K. Ravi Nedungadi & Ors. Vs. State of U.P. & Ors.
479

(iv) is a Chief Executive or director,
by whatever name called, of any nonprofit
organisation that receives twenty-five per cent.
or more of its receipts from the company, any
of its promoters, directors or its holding,
subsidiary or associate company or that holds
two per cent. or more of the total voting power
of the company; or

(f) who possesses such other
qualifications as may be prescribed.

(7) Every independent director shall
at the first meeting of the Board in which he
participates as a director and thereafter at the
first meeting of the Board in every financial
year or whenever there is any change in the
circumstances which may affect his status as
an independent director, give a declaration
that he meets the criteria of independence as
provided in sub-section (6).

Explanation.-- For the purposes of
this section, nominee director means a director
nominated by any financial institution in
pursuance of the provisions of any law for the
time being in force, or of any agreement, or
appointed by any Government, or any other
person to represent its interests.

(8) The company and independent
directors shall abide by the provisions
specified in Schedule IV.

(9)
Notwithstanding
anything
contained in any other provision of this Act,
but subject to the provisions of sections 197
and 198, an independent director shall not be
entitled to any stock option and may receive
remuneration by way of fee provided under
sub-section (5) of section 197, reimbursement
of expenses for participation in the Board and
other meetings and profit related commission
as may be approved by the members.

5[Provided that if a company has
no profits or its profits are inadequate, an
independent
director
may
receive
remuneration, exclusive of any fees payable
under sub-section (5) of section 197, in
accordance with the provisions of Schedule V.]

(10) Subject to the provisions of
section 152, an independent director shall hold
office for a term up to five consecutive years
on the Board of a company, but shall be
eligible for reappointment on passing of a
special resolution by the company and
disclosure of such appointment in the Board's
report.

(11)
Notwithstanding
anything
contained in sub-section (10), no independent
director shall hold office for more than two
consecutive terms, but such independent
director shall be eligible for appointment
after the expiration of three years of ceasing
to become an independent director:

Provided that an independent
director shall not, during the said period
of three years, be appointed in or be
associated with the company in any other
capacity, either directly or indirectly.

Explanation.-- For the purposes
of sub-sections (10) and (11), any tenure
of an independent director on the date of
commencement of this Act shall not be
counted as a term under those subsections.
(12) Notwithstanding anything contained
in this Act,--

(i) an independent director;

(ii) a non-executive director not
being
promoter
or
key
managerial
personnel,
480 INDIAN LAW REPORTS ALLAHABAD SERIES

shall be held liable, only in
respect of such acts of omission or
commission by a company which had
occurred with his knowledge, attributable
through Board processes, and with his
consent or connivance or where he had not
acted diligently.

(13) The provisions of subsections (6) and (7) of section 152 in
respect of retirement of directors by
rotation
shall
not be
applicable
to
appointment of independent directors.

150. Manner of selection of
independent directors and maintenance of
data bank in independent directors.__

(1) Subject to the provisions
contained in sub-section (6) of section 149,
an independent director may be selected
from a data bank containing names,
addresses and qualifications of persons
who are eligible and willing to act as
independent directors, maintained by any
body, institute or association, as may by
notified by the Central Government, having
expertise in creation and maintenance of
such data bank and put on their website for
the use by the company making the
appointment of such directors:

Provided that responsibility of
exercising due diligence before selecting a
person from the data bank referred to
above, as an independent director shall lie
with
the
company
making
such
appointment.

(2)
The
appointment
of
independent director shall be approved by
the company in general meeting as
provided in sub-section (2) of section 152
and the explanatory statement annexed to
the notice of the general meeting called to
consider
the
said
appointment
shall
indicate the justification for choosing the
appointee for appointment as independent
director.

(3) The data bank referred to in
sub-section (1), shall create and maintain
data
of
persons
willing
to
act
as
independent director in accordance with
such rules as may be prescribed.

(4) The Central Government may
prescribe the manner and procedure of
selection of independent directors who fulfil
the
qualifications
and
requirements
specified under section 149."

22. Sri Chaturvedi has further submitted
that the petitioners are independent nonexecutive directors of the company, they are in
no manner responsible for day-to-day affairs
of the company. Under the scheme of the
Companies Act, such directors are engaged in
the company for their expertise and special
knowledge in a particular discipline and they
are not responsible and in-charge of the
management of the company. The nonexecutive director is not involved in the dayto-day affairs of the company or running of its
business. Such director is not at all responsible
for the day-to-day running of business of the
company. There is no evidence collected
during the course of investigation to suggest
that the petitioners, who are non-executive
directors and the secretary of the company, are
responsible for conduct of the business of the
company. He has, therefore, submitted that
continuation of the proceedings against the
petitioners is nothing but a gross abuse of
process of the Court and to secure the ends of
justice, the impugned proceedings are liable to
be quashed.

23. In support of his contention,
learned counsel for the petitioners has
10 All. A.K. Ravi Nedungadi & Ors. Vs. State of U.P. & Ors.
481
placed relation upon the recent judgement
of the Supreme Court in the case of Sunita
Palita Vs. M/s Panchami Stone Quarry,
(2022) SCC Online SWC 945.

24. On the other hand, Sri Prashant
Chandra, learned Senior Advocate assisted
by Ms. Radhika Singh, learned counsel for
opposite party no.2 has submitted that the
initial charge sheet filed against Akhil
Sharda and three others in the present case,
was challenged before this Court in a
petition under Section 482 Cr.P.C. being
Criminal Misc. Case No.2005 of 2019 and
this Court vide judgement and order dated
6.3.2020 quashed the charge sheet. Against
the said order dated 6.3.2020, Criminal
Appeal Nos.840 and 841 of 2020 were filed
before the Supreme Court and the Supreme
Court directed for restoration of the
proceedings before the trial court. The
Supreme Court has observed in its
judgment and order dated 11.7.2022 that
the
High
Court
has
not
properly
appreciated and/or considered the larger
conspiracy and that both the FIR Nos.260
of 2018 and 227 of 2019 relating to
disappearance of the trucks loaded with
beer and by forging the documents etc. for
evasion of excise duty are interconnected.
It had come during the investigation that
there were other instances of disappearance
of the trucks loaded with beer indicating
that there was syndicate operating with
connivance of the company and its officers
and the modus operandi which had been
adopted for evasion of the excise duty, was
a serious matter. Therefore, involvement of
the petitioners would not be ruled out at
this stage.

25. Learned counsel for opposite
party no.2 has further submitted that
considering the judgement and order dated
11.7.2022 passed by the Supreme Court,
any
interference
in
the
impugned
proceedings against the petitioners, would
be overreaching the decision of the
Supreme Court. He has also submitted that
even if it is assumed that there is some
distinction in the facts of the present case
than the facts of Case Crime No.205 of
2019, the only course open to the
petitioners would be to seek an appropriate
direction from the Supreme Court. Whether
the petitioners have a criminal intent and
direct nexus with the alleged offence, is a
matter of trial. The responsibility of the
director is a matter, which is to be
examined only during the trial. There is a
charge of criminal conspiracy levelled
against all the directors of the company for
consistent disappearance of the trucks
coupled with evasion of the excise duty,
their involvement and the role played by
each director can be decided only in a trial.

26. In support of the aforesaid
submission, learned counsel for opposite
party no.2 has placed reliance upon the
judgment of the Supreme Court rendered in
the case of Shiv Kumar Jatia Vs. State of
NCT of Delhi, (2019) 17 SCC 193.

27. Learned counsel for opposite
party no.2 has further submitted that the
reliance placed by the learned counsel for
the petitioners on the case of Sunita Palita
(supra) is not appropriate as the said case
was arising out of a complaint and not from
the FIR. The necessity to be precise and
specific in the complaint, cannot be
compared within the generality of an FIR
inasmuch as the FIR is not an encyclopedia
of facts, and it is not expected from a
victim to give every detail of the incident
either in the FIR or in the brief history
given to the doctor. The said case of Sunita
Palita (supra) was a case under Section 141
of Negotiable Instrument Act and the same
482 INDIAN LAW REPORTS ALLAHABAD SERIES
is not relevant to the facts of the present
case.

28. Learned counsel for opposite
party no.2 has further submitted that nonexecutive director not being a promoter or a
team managerial personnel can be held
liable in respect of such acts of omission or
commission by a company which had
occurred with his knowledge, attributable
through Board proceedings, and with his
consent or connivance or where he had not
acted diligently as provided under subsection 12 (ii) of Section 149 of the
Companies Act. He has also submitted that
the charge sheet discloses the connivance
of all the directors and, therefore, to quash
the proceedings only on the ground that the
petitioners are non-executive directors,
would frustrate the very trial. Merely
because one or two directors have taken a
plea of being far away from the place of
incident, all the petitioners cannot be
discharged or exempted from facing the
trial. The trial alone can determine the
extent of involvement and conspiracy for
which there cannot be any evidence which
can be seen before the commencement of
the trial. The complicity is all what is
required to be present and this attribute is
conspicuously glaring on the face of record.
He has further submitted that the Supreme
Court consistently has held not to nip the
trial in the bud. (paragraph 30 of Ramveer
Upadhyay and another Vs. State of U.P.
and another (2022) SCC Online SC 484)

29. Learned counsel for opposite
party no.2 has further submitted that there
is a charge of criminal conspiracy under
Section 120-B IPC. The doctrine of
attribution and imputation has to be
applied. The degree of control exercised by
a person, can only be determined upon trial.
The charge of conspiracy is not amenable
to examination under Section 482 Cr.P.C as
it is the domain of the trial court to weigh
the evidence and come to a conclusion as to
the degree of the control exercised by the
person and in doing so the principle of alter
ego is applied. Here the question is not of
vicarious liability inasmuch as all the
directors were involved, including the
petitioners, and they conspired, which is
evident from detailed discussions in the
board meetings, in which even the
agreement between the tainted transporters
and the company had been ratified. The
agreement
with
the
transporter
was
executed with the consent and sanction of
all the high officials of the company,
including the petitioners. The directors had
full knowledge of the repercussions of the
conscious decision they had taken on
account of which the criminal acts were
committed, and in fact were being
committed, as is apparent from regular
disappearances of trucks loaded with beer.
A systematic activity in the company
cannot be without the knowledge, consent
and
connivance
of
the
petitioners-
directors. He has further submitted that this
Court while exercising the power under
Section 482 Cr.P.C., should not weigh the
evidence. This Court should allow the trial
to proceed in which the complicity of the
petitioners can be determined. This Court is
not required to interfere by holding a
roving inquiry. He has also submitted that
in view of the judgement of the Supreme
Court dated 11.7.2022, the petition is liable
to be dismissed.

30. I have heard Mr. G.S. Chaturvedi,
learned Senior Advocate, assisted by Mr.
Purnendu Chakravarthy and Mr. Baljeet
Singh, appearing for the petitioners, Mr.
V.K. Shahi, learned Additional Advocate
General and Mr. Anurag Varma, learned
Additional
Government
Advocate,
representing opposite party nos.1, 3 and 4,
10 All. A.K. Ravi Nedungadi & Ors. Vs. State of U.P. & Ors.
483
as well as Mr. Prashant Chandra, learned
Senior Advocate, assisted by Ms. Radhika
Singh, Advocate, representing opposite
party no.2.

31. 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 Cr.P.C, 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.

32. In the present case the facts, as
noted above, are not in dispute. The
petitioners
are/were
part-time
nonexecutive Directors of the Company.
Neither the FIR nor the charge-sheet would
disclose as to how and what manner the
petitioners were responsible for the day-today conduct of business of the Company or
otherwise responsible in its day to day
functioning.

33. The question which arises for
consideration in the present case is that
whether the petitioners are personally 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 the 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.

34. In the facts of the present case, it
is not in dispute that order for supply of
beer by respondent No.2 was placed
through Ahkil Sarda, Depot Manager.