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

- **Citation:** (2023) 5 ILRA 1896
- **Court:** High Court of Judicature at Allahabad
- **Decided:** 2023-04-03
- **Case number:** Application u/s 482 No. 11742 of 2018
- **Bench:** Mrs. Sadhna Rani (Thakur
- **Source:** https://unisonlegal.in/judgment/allahabad-high-court/prashant-tyagi-ors-v-state-of-u-p-anr-opp-parties-50291
- **Pages:** 7

## Headnote

Criminal Law - Criminal Procedure Code,
1973 - Section 482 - Entire proceedings
under section 138 Negotiable Instruments
Act under challenge- Allegation- Opposite
parties
issued
cheque
in
favour
of
complainant-
cheque
dishonouredapplicants
had
resigned
from
the
directorship on the date the cheque was
issued- for promotion of justice or to
prevent injustice or abuse of process-
Court may look into the materials which
have significant bearing on the matter at
prima facie stage- applicant no.1 had
resigned from the Company much prior to
the issuance of the cheque in question-
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- no
active participation of the applicants in
the day to day business and transactions
of the Company-complaint also silent
about the role of the applicants- travesty
of justice to drag the persons to face the
prosecution- no way connected with the
issuance of the cheque or its being
dishonour
thereof-summoning
order
quashed-Application allowed.

HELD:
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 incharge 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
5 All. Prashant Tyagi & Ors. Vs. State of U.P. & Anr.
1897
way connected with the issuance of the cheque
or its being dishonour thereof.

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.

Application allowed. (E-14)

List of Cases cited:

## Text

1896 INDIAN LAW REPORTS ALLAHABAD SERIES
male of female. Neither any direct evidence
nor last seen evidence nor PM report is
available. Mobile number, basis of the case
is not in the name of the applicant which
can only be decided during the trial and its
validity might be seen under Section 482
Cr.P.C to some extent.

Since the applicant has also
challenged
the
legality
of
entire
proceeding, of the concerned Criminal
Case, hence this application is maintainable
under Section 482 Cr.P.C.

O R D E R

a) This application under 482
Cr.P.C is held to be maintainable. It is
made clear that this Court has not touched
the merit of this case.

b) List on 08th May, 2023, for
hearing on merit, before the appropriate
Bench.

c) The interim stay order passed
on 17.02.2023, shall continue till the next
date of listing.
----------
(2023) 5 ILRA 1896
ORIGINAL JURISDICTION
CRIMINAL SIDE
DATED: ALLAHABAD 03.04.2023

BEFORE

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

Application u/s 482 No. 11742 of 2018

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

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

Counsel for the Opp. Parties:
G.A., Sri Abhinav Gaurav, Sri Anoop Trivedi, Sri
Vibha Rai
Criminal Law - Criminal Procedure Code,
1973 - Section 482 - Entire proceedings
under section 138 Negotiable Instruments
Act under challenge- Allegation- Opposite
parties
issued
cheque
in
favour
of
complainant-
cheque
dishonouredapplicants
had
resigned
from
the
directorship on the date the cheque was
issued- for promotion of justice or to
prevent injustice or abuse of process-
Court may look into the materials which
have significant bearing on the matter at
prima facie stage- applicant no.1 had
resigned from the Company much prior to
the issuance of the cheque in question-
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- no
active participation of the applicants in
the day to day business and transactions
of the Company-complaint also silent
about the role of the applicants- travesty
of justice to drag the persons to face the
prosecution- no way connected with the
issuance of the cheque or its being
dishonour
thereof-summoning
order
quashed-Application allowed.

HELD:
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 incharge 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
5 All. Prashant Tyagi & Ors. Vs. State of U.P. & Anr.
1897
way connected with the issuance of the cheque
or its being dishonour thereof.

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.

Application allowed. (E-14)

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], decided on
01.08.2022

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

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

5.
Pooja
Ravinder
Devidasani
Vs
St.of
Maharashtra & 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.67/2016
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.15 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.000283
valued
Rs.1,00,00,000/- dated 30.06.2016 got
dishonoured despite of the assurance of
1898 INDIAN LAW REPORTS ALLAHABAD SERIES
opposite parties that it would get encashed.
The information of which was received by
the complainant/opposite party no.2 on
08.09.2016 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.000283 dated
30.06.2016 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 30.06.2016. 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
5 All. Prashant Tyagi & Ors. Vs. State of U.P. & Anr.
1899
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 30.06.2016. 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.
1900 INDIAN LAW REPORTS ALLAHABAD SERIES

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
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
5 All. Prashant Tyagi & Ors. Vs. State of U.P. & Anr.
1901
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
manner the applicants were in-charge or
were responsible to the accused Company
1902 INDIAN LAW REPORTS ALLAHABAD SERIES
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 1902
ORIGINAL JURISDICTION
CRIMINAL SIDE
DATED: LUCKNOW 11.05.2023

BEFORE

THE HON'BLE SHAMIM AHMED, J.

Application u/s 482 No. 7907 of 2022

Shekhar Ramamurthy ...Applicant
Versus
State of U.P. & Anr. ...Opp. Parties

Counsel for the Applicant:
Purnendu Chakravarty, Pranjal Jain

Counsel for the Opp. Parties:
G.A., Nilish Anand, Radhika Singh
Criminal Law - Criminal Procedure Code,
1973 - Section 482 - - Indian Penal Code,
1860 -Sections 406, 420, 467, 468, 471 &
120-B - entire proceeding challengedapplicant
was
mere
director
of
the
company-
appointed
under
Sections
149/150 of the Companies Act, 2013-he
had no role in the alleged transactions-
mandate of Section 305(2) Cr.P.C. not
followed- under Section 482 Cr.P.C. High
Court may examine and take note of the
facts and allegations- to ascertain the
genuineness
of
the
impugned
proceedings-vicarious
liability
may
be
fixed-if the applicant was involved in
alleged transaction at any point of time-
an Officer, Director, Managing Director or
Chairman of the Company can be made an
accused along with the Company- only if
there is sufficient material to prove his
active role coupled with criminal intent-
all
the
contentions
raised
by
the
applicant's counsel relate to disputed
questions of fact-the court below is not
expected to examine and assess in detail
the material placed on record-at stage of
issuing process- quashing of charge sheet,
summoning order and entire proceedings
can also be done only if it does not
disclose any offence or if there is any legal
bar which prohibits the proceedings on its
basis-prayer
for
quashing
refusedapplicant directed to move discharge
application
-application
disposed
of.
(Paras 42,46, 49, 52, 53, 54 and 55)

HELD:
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. (Para 42)

Thus, an Officer, Director, Managing Director or
Chairman of the Company can be made an
accused along with the Company only if there is