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

- **Citation:** (2023) 8 ILRA 1209
- **Court:** High Court of Judicature at Allahabad
- **Decided:** 2023-04-03
- **Case number:** Application U/S 482. No.11738 of 2018
- **Bench:** Mrs. Sadhna Rani (Thakur
- **Source:** https://unisonlegal.in/judgment/allahabad-high-court/prashant-tyagi-ors-v-state-of-u-p-anr-50519
- **Pages:** 7

## Headnote

(A) Criminal Law - The Code of Criminal
Procedure, 1973 - Section 482 - Inherent
power - Negotiable Instruments Act 1881
- Section 138, 141 - 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 - Liability depends on the role
one plays in the affairs of a Company and
not on designation or status - If the
accused's
documents
are
beyond
suspicion or doubt, relegating them to
trial would be travesty of justice - court
may examine significant materials at the
prima facie stage to promote justice.(Para
-16)

Applicant no.1 resigned from company before
the issuance of a cheque - cheque did not bear
signatures of any of the applicants - applicants
were merely shareholders on the date of
issuance - no active participation in the
company's day-to-day business - complaint does
not specify how the applicants were in-charge
1210 INDIAN LAW REPORTS ALLAHABAD SERIES
or responsible for the company's business
conduct. (Para-23 )

HELD:-Participation of applicants not found in
the day to day functioning of the Company. 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. Summoning of applicants to
face trial under Section 138 of Negotiable
Instruments Act found to be against the
mandate of law laid down by Apex Court.
Summoning order and judgment passed in
criminal revision quashed. (Para-23,24,25)

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

List of Cases cited:-

## Text

8 All. Prashant Tyagi & Ors. Vs. State of U.P. & Anr.
1209
made the petitioner to wait for nearly 2
years 5 months in challenging the dismissal
order under Sec. 482 Cr. P.C., after his
entering appearance in the above petitions
is not forthcoming. The complainant did
not choose to act promptly to exercise his
right of appeal, thereby abandoned that
right. In such view of the matter, this court
is of the considered view the right accrued
to the accused on extinguishment of
complainant's right cannot be taken away
by converting the criminal petitions into
appeals.

18. The authority, therefore, is preponderant, may be of persuasive, that an
order under Section 256(1) of the Code is
appealable under Section 378 (4) of the
Code, and, therefore, an application under
Section 482 of the Code would not lie
against that order. It has to be challenged
by way of an appeal against acquittal
subject to all requirements of the law as to
leave, limitation et cetera.

19. This Court is of opinion that
where a specific remedy of appeal is
provided by the Code against a particular
kind of order, fair and square, it would be a
most anomalous exercise of the inherent
powers of the Court to permit the litigant to
forsake his statutory remedy envisaged
under the law and fall back upon Section
482 of the Code to seek relief.

20. In the circumstances, the
preliminary objection raised on behalf of
opposite party no. 2 by learned Counsel is
upheld and this application under Section
482 of the Code is rejected on the ground
of maintainability.

21. The applicant will have liberty to
prefer an appeal under Section 378(4) of
the Code, if so advised.
----------
(2023) 8 ILRA 1209
ORIGINAL JURISDICTION
CRIMINAL SIDE
DATED: ALLAHABAD 03.04.2023

BEFORE

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

Application U/S 482. No.11738 of 2018

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

Counsel for the Applicants:
Sri Amrendra Nath Rai, Sri Prabhat Kumar,
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 - Negotiable Instruments Act 1881
- Section 138, 141 - 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 - Liability depends on the role
one plays in the affairs of a Company and
not on designation or status - If the
accused's
documents
are
beyond
suspicion or doubt, relegating them to
trial would be travesty of justice - court
may examine significant materials at the
prima facie stage to promote justice.(Para
-16)

Applicant no.1 resigned from company before
the issuance of a cheque - cheque did not bear
signatures of any of the applicants - applicants
were merely shareholders on the date of
issuance - no active participation in the
company's day-to-day business - complaint does
not specify how the applicants were in-charge
1210 INDIAN LAW REPORTS ALLAHABAD SERIES
or responsible for the company's business
conduct. (Para-23 )

HELD:-Participation of applicants not found in
the day to day functioning of the Company. 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. Summoning of applicants to
face trial under Section 138 of Negotiable
Instruments Act found to be against the
mandate of law laid down by Apex Court.
Summoning order and judgment passed in
criminal revision 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.)

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.71/2016 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.30 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
8 All. Prashant Tyagi & Ors. Vs. State of U.P. & Anr.
1211
Rs.1,00,00,000/-
in
favour
of
the
complainant/ opposite party no.2. This
Cheque
No.000286
valued
Rs.1,00,00,000/- dated 14.07.2016 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
his post on 26.09.2014, much prior to the
issuance of the cheque no.000286 dated
14.07.2016 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 in-charge 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 14.07.2016. 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
1212 INDIAN LAW REPORTS ALLAHABAD SERIES
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.

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 14.07.2016. 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
8 All. Prashant Tyagi & Ors. Vs. State of U.P. & Anr.
1213
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.

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
1214 INDIAN LAW REPORTS ALLAHABAD SERIES
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
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
8 All. Jaypal & Anr. Vs. State of U.P. & Anr.
1215
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) 8 ILRA 1215
ORIGINAL JURISDICTION
CRIMINAL SIDE
DATED: ALLAHABAD 25.04.2023

BEFORE

THE HON'BLE MRS. MANJU RANI
CHAUHAN, J.

Application U/S 482. No. 12016 of 2023

Jaypal & Anr. ...Applicants
Versus
State of U.P. & Anr. ...Opposite Parties

Counsel for the Applicants:
Sri Rajat Kumar Shukla

Counsel for the Opposite Parties:
G.A.

(A) Criminal Law - The Code of Criminal
Procedure, 1973 - Section 482 - Inherent
power - Indian Penal Code, 1860 -
Sections
302,
120B
,
fundamental
foundations of criminal justice system in
India - accused of an offence has to be
present during the entire process of the
criminal trial - ex-parte trial is alien to the
Indian legal system - fair trial enshrined in
Article 21 of the Constitution of India -
presence of the accused is necessary both
for the framing of the charge and for
recording of evidence during the trial -
issuance
of
non-bailable
warrants
interferes with personal liberty and the
Courts should be extremely careful before
issuing non-bailable warrants - warrants,
either bailable or non-bailable, should
never be issued without proper scrutiny of
facts
and
complete
application
of
mind.(Para - 11,16)

Summoning order was passed - applicants filed
a criminal revision - rejected by an order -
applicants filed a writ petition under Article 227
challenging revisional order - contention - no
knowledge of summoning order and date for
their appearance - Magistrate has no right to
issue bailable or non-bailable warrants without
sufficient service. (Para -19 )

HELD:-
Applicants
were
aware
of
the
summoning order and non-bailable warrant, and
were dishonestly or fraudulently avoiding court
appearance. Court issued non-bailable warrants,
indicating no illegality or infirmity in the orders
impugned. (Para-20,21)

Application u/s 482 Cr.P.C. dismissed. (E7)

List of Cases cited:-

1. Inder Mohan Goswami & anr. Vs St. of
Uttaranchal & ors., 2007 AIR SCW 6679