# Prashant Tyagi & Ors v. State of U.P. & Anr

- **Citation:** (2023) 5 ILRA 45
- **Court:** High Court of Judicature at Allahabad
- **Decided:** 2023-04-03
- **Case number:** Application U/S 482 No. 11749 of 2018
- **Bench:** Mrs. Sadhna Rani (Thakur
- **Source:** https://unisonlegal.in/judgment/allahabad-high-court/prashant-tyagi-ors-v-state-of-u-p-anr-50222
- **Pages:** 6

## Headnote

(A) Criminal Law - The Code of Criminal
Procedure,
1973
-
Section
482
-
Inherent
power
-
The
Negotiable
instruments Act, 1981 - Section 138 -
Dishonour of cheque for insufficiency,
etc., of funds in the accounts - If on the
face of the documents which are beyond
suspicion or doubt - placed by the
accused, the accusations against him
cannot stand, it would be travesty of
justice if accused is relegated to trial
and he is asked to prove his defence
before the trial court - To promote
justice or to prevent injustice or abuse
of process the Court may examine
significant materials at the prima facie
stage.(Para - 21)

Applicant no.1 resigned from Company before
issuance of cheque - cheque did not bear
their signatures - applicants were mere
shareholders - no active participation in
Company's day-to-day business - Complaint
does not specify applicants' responsibility or
in-charge for the accused company's business
conduct. (Para - 23)

HELD:-
Record
shows
that
applicants'
participation
in
the
company's
daily
functioning is absent. Therefore, it would be
travesty of justice to drag persons to face
prosecution who are not connected to the
issuance of the cheque or its dishonor.
Applicants summoned for trial under Section
138 of Negotiable Instruments Act violate
Apex
Court
mandate.
Summoning
order
quashed. (Para - 23,24,25)

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

List of Cases cited:

## Text

5 All. Prashant Tyagi & Ors.Vs. State of U.P. & Anr.
45

24. On the basis of above discussion,
the summoning of the applicants to face
trial under Section 138 of Negotiable
Instruments Act is found to be against the
mandate of law laid down by the Apex
Court in above mentioned judgments.

25. The summoning order dated
25.11.2016 passed by the Upper Nyayalaya
Pratham, Ghaziabad and the judgment
dated 22.02.2018 passed by the Additional
Session Judge, Court No.15, Ghaziabad in
criminal revision are quashed.

26. The application under Section 482
Cr.P.C. is, hereby, allowed.
----------
(2023) 5 ILRA 45
ORIGINAL JURISDICTION
CRIMINAL SIDE
DATED: ALLAHABAD 03.04.2023

BEFORE

THE HON'BLE MRS. SADHNA RANI
(THAKUR), J.

Application U/S 482 No. 11749 of 2018

Prashant Tyagi & Ors. ...Applicants
Versus
State of U.P. & Anr. ...Opposite Parties

Counsel for the Applicants:
Sri Amrendra Nath Rai, Sri Sanjay Singh

Counsel for the Opposite Parties:
G.A., Sri Abhinav Gaur, Sri Anoop Trivedi,
Sri Vibhu Rai

(A) Criminal Law - The Code of Criminal
Procedure,
1973
-
Section
482
-
Inherent
power
-
The
Negotiable
instruments Act, 1981 - Section 138 -
Dishonour of cheque for insufficiency,
etc., of funds in the accounts - If on the
face of the documents which are beyond
suspicion or doubt - placed by the
accused, the accusations against him
cannot stand, it would be travesty of
justice if accused is relegated to trial
and he is asked to prove his defence
before the trial court - To promote
justice or to prevent injustice or abuse
of process the Court may examine
significant materials at the prima facie
stage.(Para - 21)

Applicant no.1 resigned from Company before
issuance of cheque - cheque did not bear
their signatures - applicants were mere
shareholders - no active participation in
Company's day-to-day business - Complaint
does not specify applicants' responsibility or
in-charge for the accused company's business
conduct. (Para - 23)

HELD:-
Record
shows
that
applicants'
participation
in
the
company's
daily
functioning is absent. Therefore, it would be
travesty of justice to drag persons to face
prosecution who are not connected to the
issuance of the cheque or its dishonor.
Applicants summoned for trial under Section
138 of Negotiable Instruments Act violate
Apex
Court
mandate.
Summoning
order
quashed. (Para - 23,24,25)

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

List of Cases cited:

1. Smt. B Devi (Basanti Devi) Vs St. of U.P.,
2016 (94) ACC 90

2. Sunita Palita & ors. Vs M/S Panchami Stone
Qaurry, Criminal Appeal No. of 2022 [Arising out
of SLP (Crl.) No.10396 of 2019]

3. S.M.S. Pharmaceuticals Ltd. Vs Neeta Bhalla,
(2005) 8 SCC 89,

4. Harshendra Kumar D. Vs Rebatilata Koley &
ors., (2011) 3 SCC 351

5. Pooja Ravinder Devidasani Vs St. of Maha. &
anr., (2014) 16 SCC 1

(Delivered by Hon'ble Mrs. Sadhna Rani
(Thakur), J.)
46 INDIAN LAW REPORTS ALLAHABAD SERIES

1. Heard learned counsel for the
applicants, learned counsel for opposite
party no.2 and perused the record.

2. By moving this application under
Section 482 Cr.P.C., the prayer is made to
quash summoning order dated 25.11.2016
passed by the Upper Nyayalaya Pratham,
Ghaziabad in C.C. No.68/2016 under
Section 138 Negotiable Instruments Act
and also to set aside order dated 22.02.2018
passed by the Additional Session Judge,
Court No.15, Ghaziabad in Criminal
Revision No.16 of 2017.

3. As per facts of the case, a complaint
was filed by opposite party no.2 on
13.10.2016 against the applicants and six
other persons with the version that opposite
party no.2 was a limited Company
registered under Companies Act and Vijay
Kumar son of late Sri Satpal was
authorized to filed complaint on behalf of
the Company. The opposite party no.2 was
indulged in the business of purchasing,
selling and the construction of properties.
Opposite party no.1 (in the complaint) M/S
C.S.K. Infrastructure Pvt. Ltd. was a
registered Company. Opposite parties no.2
to 6 were its Directors and officers and
opposite parties no.7 to 9 were the
Company's
authorized
representatives.
Opposite party nos.2 to 9 were responsible
for all the day to day business and
transactions of opposite party no.1, M/S
C.S.K. Infrastructure Pvt. Ltd.

4. The opposite parties (in the
complaint)
had
assured
the
complainant/opposite party no.2 herein that
they would make available a land to the
complainant/opposite party no.2 at a
reasonable price. Having faith in the
opposite parties the complainant/ opposite
party
no.2
on
16.08.2014 paid
Rs.
5,00,00,000/- to the opposite parties, which
were received by the opposite parties.
When as per their assurance the opposite
parties could not arrange the land for the
complainant/opposite party no.2 and the
complainant gave them a threat of lodging
FIR, then opposite parties promised to pay
Rs. 7,00,00,000/- in pursuance of the
principal amount of Rs. 5,00,00,000/- with
interest. Opposite parties issued a cheque of
Rs.1,00,00,000/-
in
favour
of
the
complainant/ opposite party no.2. This
Cheque
No.000284
valued
Rs.1,00,00,000/- dated 15.07.2016 got
dishonoured despite of the assurance of
opposite parties that it would get encashed.
The information of which was received by
the complainant/opposite party no.2 on
29.08.2016 and after due procedure, a
complaint under Section 420 I.P.C. was
filed by the complainant/opposite party
no.2 against the nine accused persons
including the Company itself.

5. After the statements under Sections
200 Cr.P.C. and 202 Cr.P.C., the trial court
vide order dated 25.11.2016 summoned all
the nine accused persons to face trial under
Section 138 of Negotiable Instruments Act
1881. Against this order dated 25.11.2016,
three of the opposite parties/ present
applicants named Prashant Tyagi, Smt.
Neeta Tyagi and Smt. Shweta Tyagi, filed a
revision before the Sessions Court, which
was rejected vide order dated 22.02.2018.

6.
Feeling
aggrieved
by
the
summoning order dated 25.11.2016 and
revisional court's order dated 22.02.2018,
the present application has been moved by
the applicants Prashant Tyagi, Smt. Neeta
Tyagi and Smt. Shweta Tyagi only with the
version that the applicant no.1, who was
earlier
the
Director
of
M/S
C.S.K.
Infrastructure Pvt. Ltd. had resigned from
5 All. Prashant Tyagi & Ors.Vs. State of U.P. & Anr.
47
his post on 26.09.2014, much prior to the
issuance of the cheque no.000284 dated
15.07.2016 to the opposite party no.2. He
has filed a certified copy of the form DIR12 (earlier known as Form 32) to this
effect. He had neither signed the cheque
nor the amount was received in his bank
account, thus, applicant no.1 is the exdirector in the accused Company. Applicant
nos.2 and 3 are the mother and sister of the
applicant no.1. They had no relation with
the functioning of the accused company in
any manner. They could not be the incharge and responsible for the conduct and
the business of the Company. Without any
specific averment that what role they have
played in the functioning and the business
of the accused Company they can not be
implicated for the offence under Section
138 N.I. Act. The summoning order has
been passed without considering section
141 of N.I. Act, hence, the prayer is made
accordingly.

7. Counter affidavit has been filed on
behalf of the opposite party no.2, wherein it
has been mentioned that all the applicants
alongwith
co-accused
persons
are
the
shareholders of the Company and belong to the
one and the same family. The present applicant
Prashant Tyagi is the son of Ram Sevak Tyagi,
applicant no.2 Smt. Neeta Tyagi is the wife of
Ram Sevak Tyagi and applicant no.3 Smt.
Shweta Tyagi, is the wife of Gaurav/ daughter
of Ram Sevak Tyagi and Ram Sevak, is the
person who is the authorized representative of
the accused company and had issued the
cheque in favour of the complainant/ opposite
party no.2 on 15.07.2016. When an annual
general meeting was called on 30.08.2013 the
shares of all the shareholders in the disputed
Company were as under:-

8. Ram Sewak Tyagi was having
20000 shares, Prashant Tyagi applicant
no.1 was having 25000, Smt. Neeta Tyagi
was having 20000 and Smt. Shweta Tyagi
was having 10000 and Ram Kishan is said
to have 5000 shares, thus, all the applicants
here are the shareholders of the accused
Company.

9. All the applicants are the blood
relatives of Ram Sevak Tyagi and Ram
Kishan, is the brother-in-law of Ram
Sevak, who is the master mind of the
aforesaid fraud. Ram Sevak was handling
the financial as well as accounts affairs of
the Company alongwith other Directors and
the shareholders of the Company and was
acting as authorized signatory of the
Company on behalf of the Directors,
authorized representatives as well as other
shareholders of the Company. All the
applicants are the over all incharge of the
day to day business of the Company. A
revision of the applicants was also rejected
by the trial court. Applicant no.1 is a Joint
Director of the Company and still a
Director of the Company and for a very
short time he was not there on the Board of
Directors. All the applicants looking after
the day to day business/ functions of the
Company
and
being
the
authorized
representatives of the Company are liable
for the offence, hence, cognizance has been
rightly taken by the court.

10. The applicants filed a rejoinder
affidavit wherein the version of the counter
affidavit was denied and the version of the
complaint was reiterated.

11. Learned counsel for the applicants
has argued that the trial court has not gone
through the Section 141 of N.I. Act, which
deals with the offences by the companies.
Without going through this section the
impugned order cannot be said to be a
complete and affective order.
48 INDIAN LAW REPORTS ALLAHABAD SERIES

12. It is further submitted that the
applicant no.1 had resigned on 26.09.2014,
while impugned cheque is said to have
been issued on 15.07.2016. Regarding his
resignation Form DIR-12 has been filed,
which is a public document. Applicant
nos.2 and 3 are the mere shareholders in the
Company and are the ladies. Their
participation cannot be said to be active in
the Company and in the complaint there is
bald averment that the accused nos.2 to 6
being the Directors and shareholders of the
Company are responsible for the day to day
business of the accused Company. Accused
No.7 to 9 including applicant no.2 and 3
are the authorized representatives of the
Company and thus all the accused persons
including all the three applicants are
responsible for all the transactions and
overall business of the Company. But no
particulars or the specific role of the
persons, which must be explained in the
complaint, has been explained. Admittedly
the cheque was not issued by any of the
applicants. The applicant no.2, the mother
of the applicant no.1 is a senior citizen.
Hence, the prayer is made accordingly.

13. While, learned counsel for the
opposite party no.2 opposed the version of
the learned counsel for the applicants and
submitted that the applicants are the
shareholders in the Company and family
members of Ram Sevak, who is said to
have issued the impugned cheque and
being the wife, son and daughter of the
person issuing cheque all the applicants
must have knowledge of the works done by
Ram Sevak Tyagi, accused no.7 in the
complaint. As the whole fraud/ cheating has
been done with the consent and connivance
of the applicants, so with the help of
section 141 of the N.I. Act all the
applicants would be liable for the acts done
by the Company. The defence of the
applicants cannot be adjucated at this stage
of summoning. Liability of the applicants
can only be decided after the evidence,
because as per sub-section 2 of Section 141
of the Act if the offence is found to be
proved committed with the consent or
connivance of the applicants they shall also
be liable for the same and punished
accordingly. Thus for proving the offence
of the applicants evidence of the parties is
to be adduced and at this nascent stage the
liability of the applicants cannot be fixed.

14. Placing reliance over the judgment
of this Court in Smt. B Devi (Basanti Devi)
Versus State of U.P., 2016 (94) ACC 90, it
is argued by the learned counsel for
opposite party no.2 that at the stage of
summoning, defence of the accused which
they may adduce subsequently cannot be
seen since there was no occasion to look
into such probable defence, which may
come when the accused would appear and
place their case before the magistrate. At
the stage of issuing summons Court has to
see whether a prima facie commission of
offence has been shown and appropriate
material has come justifying summoning of
the
accused
persons
against
whom
complaint has been made. The role
assigned to the applicants in clear and
specific words is referred in paragraph 4 of
the complaint, that all the accused persons
are responsible for the day to day business
and functioning of the Company.

15. On the basis of this judgment, it is
further argued that all the officers of the
Company are responsible for the acts done
in the name of Company and are sought to
be made personally liable for the acts
which resulted in criminal action being
taken against the Company. Thus, it is
claimed that all the applicants are liable to
face trial under the aforesaid sections.
5 All. Prashant Tyagi & Ors.Vs. State of U.P. & Anr.
49

16. Learned counsel for the applicants
drew the attention of the Court towards the
judgment in Sunita Palita & Others Versus
M/S Panchami Stone Qaurry, Criminal
Appeal No. of 2022 [Arising out of SLP
(Crl.) No.10396 of 2019], decided on
01.08.2022 and the judgment in S.M.S.
Pharmaceuticals Ltd. v. Neeta Bhalla,
(2005) 8 SCC 89, mentioned therein
wherein para-10 the Apex Court held that-

"every person connected with the
company shall not fall within the ambit of
the provision. It is only those persons who
were in charge of and responsible for
conduct of business of the company at the
time of commission of an offence, who will
be liable for criminal action. It follows
from this that if a director of a Company
who was not in charge of and was not
responsible for the conduct of the business
of the company at the relevant time, will
not be liable under the provision. The
liability arises from being in charge of and
responsible for the conduct of business of
the company at the relevant time when the
offence was committed and not on the basis
of merely holding a designation or office in
a company. Conversely, a person not
holding any office or designation in a
Company may be liable if he satisfies the
main requirement of being in charge of and
responsible for conduct of business of a
Company at the relevant time. Liability
depends on the role one plays in the affairs
of a Company and not on designation or
status."

17. The attention of the Court is
further
drawn
towards
judgment
in
Harshendra Kumar D. Versus Rebatilata
Koley & Others, (2011) 3 Supreme Court
Cases 351 wherein it was held by the Apex
Court that as dishonour of the cheques
through the complainant banker was
subsequent to his resignation so the
applicant no.1 could not be said to have any
concern with the Company at that time.

18. It is further argued by the learned
counsel for the applicants that mere bald
averment in the complaint that the
"applicants are looking after the day to day
business of the Company, hence, they are
liable for the offence committed" is not
enough to prove the offence. This averment
is devoid of any particulars.

19. In judgment Pooja Ravinder
Devidasani Versus State of Maharashtra
& Anr., (2014) 16 SCC 1, the Apex Court
held that to fasten vicarious liability under
Section 141 of the Act on a person, at the
material time that person shall have been at
the helm of affairs of the Company, one
who actively looks after the day-to-day
activities of the Company and particularly
responsible for the conduct of its business.
Simply because a person is a Director of a
Company.....Every person connected with
the Company will not fall into the ambit of
the provision.

20. Thus, it is argued that the applicant
no.1 was not a Director of the Company on
the date when the cheque was issued and
regarding his resignation Form DIR-12 has
been placed on record. Applicant nos.2 and
3 are admittedly mere shareholders in the
Company. They cannot be said to actively
participate in the working of the Company.

21. So far as the argument of the
learned counsel for the opposite party no.2
that a defence of the applicants shall be
seen at the time of arguments is concerned
in this regard, the Apex Court opined in
judgment Harshendra Kumar D. Versus
Rebatilata Koley & Others (supra) that if
on the face of the documents which are
50 INDIAN LAW REPORTS ALLAHABAD SERIES
beyond suspicion or doubt - placed by the
accused, the accusations against him cannot
stand, it would be travesty of justice if
accused is relegated to trial and he is asked
to prove his defence before the trial court.
In such a matter, for promotion of justice or
to prevent injustice or abuse of process, the
Court may look into the materials which
have significant bearing on the matter at
prima facie stage.

22. If we go through the judgment in
Smt. B Devi (Basanti Devi) Versus State of
U.P. (supra) placed by the learned counsel
for opposite party no.2, the facts of that
case are different from the facts of the
present case, wherein as per facts of that
case the cheques were issued in the
presence of the petitioner and other
Directors, while in the present case cheques
were never issued in the presence of the
complainant rather till then applicant no.1 had
resigned from the Company. While as per facts
of the case of Smt. B Devi (Basanti Devi)
Versus State of U.P. (supra) the resignation and
the documents with regard to the resignation
were alleged to be the forged documents, but in
the case in hand resignation of applicant no.1
has not been challenged, hence, the counsel for
the opposite party no.2 cannot take benefit of
the judgment of this Court, in the presence of
various Apex Court judgments placed above by
the counsel for the applicants.

23. Thus on the basis of the discussion
and the judgments placed above, it is found
that applicant no.1 had resigned from the
Company much prior to the issuance of the
cheque in question. Admittedly, the cheque
did not bear the signatures of any of the
applicants. On the date of issuance of the
cheque the applicants were mere the
shareholders of the Company. There was no
active participation of the applicants in the
day to day business and transactions of the
Company and in the complaint itself, it is not
mentioned that as to how and in what manner the
applicants were in-charge or were responsible to
the accused Company for the conduct of its
business. Thus, in the opinion of the Court, as on
the face of the record, participation of the
applicants is not found in the day to day
functioning of the Company, hence, on the basis
of the version that the defence would be seen at
the time of evidence, it would be travesty of
justice to drag the persons to face the prosecution
who are no way connected with the issuance of
the cheque or its being dishonour thereof.

24. On the basis of above discussion, the
summoning of the applicants to face trial under
Section 138 of Negotiable Instruments Act is
found to be against the mandate of law laid down
by the Apex Court in above mentioned
judgments.

25.
The
summoning
order
dated
25.11.2016 passed by the Upper Nyayalaya
Pratham, Ghaziabad and the judgment dated
22.02.2018 passed by the Additional Session
Judge, Court No.15, Ghaziabad in criminal
revision are quashed.

26.The application under Section 482
Cr.P.C. is, hereby, allowed.
----------
(2023) 5 ILRA 50
ORIGINAL JURISDICTION
CRIMINAL SIDE
DATED: ALLAHABAD 03.04.2023

BEFORE

THE HON'BLE MRS. SADHNA RANI
(THAKUR), J.

Application U/S 482 No. 11753 of 2018

Prashant Tyagi & Ors. ...Applicants
Versus
State of U.P. & Anr. ...Opposite Parties