Telangana High Court
M/S R.R.M. Educational Society, And 7 … vs State Of Telangana, And Another on 21 April, 2026
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IN THE HIGH COURT FOR THE STATE OF TELANGANA
AT HYDERABAD
THE HON'BLE SMT. JUSTICE TIRUMALA DEVI EADA
CRIMINAL PETITION No.2246 OF 2020
Date: 21.04.2026
Between:
M/s.R.R.M. Educational Society
Rep. by its President & Secretary,
Mr.Kedari Joseph Sriharsha Shashank
and others ... Petitioners/
Accused
AND
The State of Telangana,
rep. by its Public Prosecutor,
High Court for the State of Telangana
at Hyderabad and another ... Respondents
::ORDER:
:
This Criminal Petition is filed by the petitioners – accused
seeking to quash the proceedings in C.C.No.5247 of 2022 on
the file of the learned Special Judicial Magistrate of First Class
(Mobile) under PCR Act-cum-II Additional Junior Civil Judge at
Hanumakonda, Hanumakonda District, registered for the
offences under Section 138 read with Section 142 of
Negotiable Instruments Act.
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2. The case of the complainant is that accused No.1 is a
registered Educational Society represented by its President
and Secretary Mr.Kedari Joseph Sriharsha Shashank, who is
arrayed as accused No.2, accused No.3 is the Vice President
and Treasurer, accused No.4 is the Joint Secretary, accused
No.5 is the correspondent, accused Nos.6 to 8 are the
members of the accused society. It is submitted that the
accused society was not having its own building to run its
college, hence, the then management committee during 2008
intended to purchase the property in the name of
M/s.R.R.M.Educational Society for the purpose of having its
own independent premises. Consequently, the then
management committee has purchased a building with a
constructed area of 75000 sft over an area of Ac.08-00 at
Patancheru by way of registered sale deed from M/s.Trans
Asia Overseas Trading Corporation for a total sale
consideration of Rs.14,50,00,000/-. M/s.R.R.M.Educational
Society was not having its own resources to meet the sale
consideration and thus, it decided to raise loans from the
complainant society i.e. Aurora Educational Society, Ravi Rishi
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Educational Society, Karshak Vidya Parishad and from their
sponsored colleges and also from one Mrs.Yashoda, W/o.late
N.Seethaiah. It is the further case of the complainant that
M/s.R.R.M.Educational Society has passed a resolution to
raise a loan amount of Rs.15,87,258/- from the complainant
society and that M/s.R.R.M.Educational Society also resolved
to repay the above said loan amount of Rs.15,87,258/- to the
complainant society on interest free basis by October, 2018.
Consequently the complainant society has passed a
corresponding resolution to accept the repayment of above
said loan on interest free basis within the stipulated time. That
acknowledging the receipt of loan amount of Rs.15,87,258/-
from the complainant society, the M/s.R.R.M.Educational
Society represented by it’s the then authorized signatory who
is accused No.9 has issued a postdated cheque dated
15.10.2018 to the complainant society, drawn on IDBI Bank,
Basheerbagh branch for a sum of Rs.15,87,258/-. It is further
submitted that in pursuance to an understanding to transfer the
management of M/s.R.R.M.Educational Society, accused
Nos.2 to 4 were admitted as members of the society with
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effect from 28.12.2012 and a new managing committee
consisting of accused Nos.2 to 4 were elected with effect from
05.09.2013. Consequently, the old committee members of
M/s.R.R.M.Educational Society including accused No.9
resigned from the executive committee and from the primary
membership of M/s.R.R.M.Educational Society and that
accused Nos.2 to 8 formed new managing committee.
Further, at the time of handing over of the managing
committee of A1 society by A2 to A8, they were well informed
about the existing liabilities of A1 towards the complainant
society and other educational societies, including the existing
outstanding bank loans. When the cheque was presented on
24.12.2018, the banker returned the same with the reason for
insufficient funds. Pursuant to the same, a legal notice was
issued on 16.01.2019 and inspite of receipt of notice, the
respondents i.e. petitioners herein have failed to pay the said
amount. Hence, the complaint has been filed vide
C.C.No.3395 of 2019.
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3. Heard the submissions of Sri Sricharan Telaprolu,
learned counsel for the petitioners and Sri Tarun G.Reddy,
learned counsel for respondent No.2.
4. The learned counsel for the petitioners has submitted
that the entire averments in the complaint if examined do not
constitute any offence against the petitioners/A1 to A8 to
constitute an offence under 138 of NI Act. He further
submitted that the loan obtained is in the name of fictitious
society and the current account opened with the documents
relating to the fictitious society, belongs to A9 and his other
family members but not related to A1 to A8. He further
submitted that the constitution of new executive committee is
with Mr.N.Anudeep as President and also change of registered
address of accused No.1, in pursuance to the meeting held on
10.09.2009 was submitted to the Registrar of Societies on
17.09.2009 and the corresponding entries were taken on
record by the Registrar of Societies on 16.12.2009, as such
the availability of certified copy of those entries can be made
only after 16.12.2009, however the fabricated byelaws created
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for the purpose of claiming the fictitious society through
Mr.N.Ramesh Babu as the founder president from 08.09.1999
and submitted to IDBI bank for securing term loan and for
opening current account during September, 2009 itself shows
that the said account do not pertain to accused No.1 and that
they are fictitious accounts being operated by accused No.9
and his other family members, thus, neither A1 nor A2 to A8
have nothing to do with the claim of the complainant. Thus,
there is no case at all to be kept pending against the
petitioners herein and that continuation of proceedings would
be an abuse of process of law. He further submitted that there
is no acknowledgment of debt by A2 to A8 on behalf of A1 and
that there is no legally enforceable debt to which A2 to A8 can
be held liable, therefore in the absence of legally enforceable
debt, the ingredients of 138 of NI Act would not get attracted
and hence, on that count the proceedings in C.C.No.5247 of
2022 cannot be continued, he therefore, prayed to quash the
proceedings against the petitioners.
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5. The learned counsel for respondent No.2 submitted that
the present petition itself is not maintainable and that Section
482 of Cr.P.C. cannot be invoked to go into the details of the
functioning of the society, the existence of the old body and the
taking over of the society by the new management committee
so on and so forth. He further submitted that the complaint
discloses prima facie case against the society and its
management committee and thus, the proceedings are to
continue before the trial Court. The fabrication of byelaws and
the allegation of fictitious society if any are to be decided
during the course of trial. He therefore, prayed to dismiss the
petition.
6. In reply to the said arguments, learned counsel for the
petitioners has submitted that there are legal grounds on which
the petition is entitled to be allowed and that the transactions
pertain to 2008 when the petitioners were not the directors,
hence, on that ground alone the petitioners are to be exempted
from any liability, thus, the proceedings cannot be continued.
7. Perused the record.
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8. The allegations in the complaint point out a prima facie
case under Section 138 of Negotiable Instruments Act. The
contention of the petitioners counsel is that the petitioners are
not the members of the A1 society as on the date of resolution
passed by the earlier members to buy the property by
obtaining loan. In pursuance to which, the cheque is issued
and that there is no acknowledgment of debt by the current
members. Admittedly, the petitioners herein are the existing
members of the M/s.R.R.M.Educational Society and the
cheque is of the year 2018. Admittedly, the petitioners herein
joined the society in 2012 and further, the executive committee
on 05.09.2013. As per the written submissions filed by the
petitioners counsel, the petitioners also admit that the cheque
is a post dated cheque issued by the previous authorized
signatory, accused No.9.
9. The only contention of the petitioners counsel is that
there is an absence of acknowledgment, i.e., the current
members have not acknowledged the debt that was incurred
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by the earlier management when the management of the
society was handed over to the existing members.
10. The learned petitioners counsel submits that the certified
copy of certificate of registration submitted by the IDBI bank
before DRT discloses that the byelaws of the society annexed
to the certificate of registration portray the location of the
society as G2, SBI Colony, Bagh Amberpet, Hyderabad and
the contention of the petitioner counsel is that they are the fake
byelaws. He referred to the declaration submitted by the then
members wherein it is mentioned that N.Ramesh Babu is the
President, N.Yashoda is the Vice-president, N.Raja Babu is
the General Secretary, N.Sulochana is the Joint Secretary and
N.Manjusha is the Treasurer, contending that they run contrary
to the original bye-laws filed by the petitioner. According to the
petitioners counsel, the original bye-laws submitted for
registration are handwritten and it discloses that the President
is P.Narayan Reddy, vice-president is P.Vinatha Reddy,
General Secretary is A.Mahesh Reddy, Joint Secretary is
A.Bhupathi and Treasurer is A.Radha. Thus, the counsel
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contends that since the debt incurred itself is in pursuance of
fake bye-laws and the cheque issued in discharge of the same
is signed by the then authorized secretary i.e. accused No.9,
the petitioners herein who are the existing members who came
into the society from 2013 cannot be fastened with any liability
under the said cheque. The genuineness of the bye-laws
cannot be adjudged by this Court and it is a triable issue.
11. The disputed cheque is issued by M/s.R.R.M.Educational
Society signed by authorized signatory and it is dated
15.10.2018. Admittedly, the authorized signatory is accused
No.9 who left the society in 2012 and the society was taken
over by the new members who are the petitioners herein.
Thus, it is a post dated cheque and the signatory would be
liable in case of a post dated cheque as it was held in Sunil
Todi v. State of Gujarat1.
12. The learned counsel for the petitioners contention is that
the ingredients of Section 141 of NI Act have to be fulfilled to
1
(2022) 16 SCC 762
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fix up the liability on the existing members of the society for the
acts of the prior members.
13. He relied on the decision of the Apex Court in
S.M.S.Pharmaceuticals Ltd., v. Neeta Bhalla and another 2,
wherein it was held at para No.19 as follows:
“In view of the above discussion, our answers to the questions posed in
the reference are as under:
(a) It is necessary to specifically aver in a complaint under Section
141 that at the time the offence was committed, the person accused was
in charge of, and responsible for the conduct of business of the
company. This averment is an essential requirement of Section 141 and
has to be made in a complaint. Without this averment being made in a
complaint, the requirements of Section 141 cannot be said to be
satisfied.
(b) The answer to question posed in sub-para (b) has to be in the
negative. Merely being a director of a company is not sufficient to make
the person liable under Section 141 of the Act. A director in a company
cannot be deemed to be in charge of and responsible to the company for
conduct of its business. The requirement of Section 141 is that the
person sought to be made liable should be in charge of and responsible
for the conduct of the business of the company at the relevant time. This
has to be averred as a fact as there is no deemed liability of a director in
such cases.
(c) The answer to Question (c ) has to be in affirmative. The question
notes that the managing director or joint managing director would be
admittedly in charge of the company and responsible to the company for
conduct of its business. When that is so, holders of such positions in a
company become liable under Section 141 of the Act. By virtue of the
office they hold as managing director or joint managing director, these
persons are in charge of and responsible for the conduct of business of
the company. Therefore, they get covered under Section 141. So far as
signatory of a cheque which is dishonoured is concerned, he is clearly
responsible for the incriminating act and will be covered under sub-
section (2) of Section 141.”
2
(2005) 8 Supreme Court Cases 89
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14. He further relied on National Small Industries
Corporation Limited v. Harmeet Singh Paintal and
another 3, wherein it was held at para No.39 as follows:
“39. From the above discussion, the following principles emerge:
(i) The primary responsibility is on the complainant to make
specific averments as are required under the law in the complaint so as
to make the accused vicariously liable. For fastening the criminal liability,
there is no presumption that every Director knows about the transaction.
(ii) Section 141 does not make all the Directors liable for the
offence. The criminal liability can be fastened only on those who, at the
time of the commission of the offence, were in charge of and were
responsible for the conduct of the business of the company.
(iii) Vicarious liability can be inferred against a company
registered or incorporated under the Companies Act, 1956 only if the
requisite statements, which are required to be averred in the
complaint/petition, are made so as to make accused therein vicariously
liable for offence committed by the company along with averments in the
petition containing that the accused were in charge of and responsible
for the business of the company and by virtue of their position they are
liable to be proceeded with.
(iv) Vicarious liability on the part of a person must be pleaded
and proved and not inferred.
(v) If the accused is a Managing Director or Joint Managing
Director then it is not necessary to make specific averment in the
complaint and by virtue of their position they are liable to be proceeded
with.
(vi) If the accused is a Director or an Officer of a company who
signed the cheques on behalf of the company then also it is not
necessary to make specific averment in the complaint.
(vii) The person sought to be made liable should be in charge of
and responsible for the conduct of the business of the company at the
relevant time. This has to be averred as a fact as there is no deemed
liability of a Director in such cases.”
15. He also relied on Pooja Ravinder Devidasani v. State
of Maharashtra and another 4, wherein it was held at para
Nos.17, 18 and 19 as follows:
3
(2010) 3 Supreme Court Cases 330
4
(2014) 16 SCC 1
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Managing Director, was appointed as a Director of the Company-M/S
Elite International Pvt. Ltd. on 1-7-2004 and had also executed a Letter
of Guarantee on 19-1-2005. The cheques in question were issued
during April, 2008 to September, 2008. So far as the dishonor of
Cheques is concerned, admittedly the cheques were not signed by the
appellant. There is also no dispute that the appellant was not the
Managing Director but only a non-executive Director of the Company.
Non-executive Director is no doubt a custodian of the governance of the
Company but does not involve in the day-to-day affairs of the running of
its business and only monitors the executive activity. 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, does not make him liable under
the N.I. Act. Every person connected with the Company will not fall into
the ambit of the provision. Time and again, it has been asserted by this
Court that only those persons who were in charge of and responsible for
the conduct of the business of the Company at the time of commission of
an offence will be liable for criminal action. A Director, 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 for an offence
under Section 141 of the N.I. Act. In National Small Industries
Corporation (supra) this Court observed:
“Section 141 is a penal provision creating vicarious liability, and which,
as per settled law, must be strictly construed. It is therefore, not sufficient
to make a bald cursory statement in a complaint that the Director
(arrayed as an accused) is in charge of and responsible to the company
for the conduct of the business of the company without anything more as
to the role of the Director. But the complaint should spell out as to how
and in what manner Respondent 1 was in charge of or was responsible
to the accused Company for the conduct of its business. This is in
consonance with strict interpretation of penal statutes, especially, where
such statutes create vicarious liability.
A company may have a number of Directors and to make any or all the
Directors as accused in a complaint merely on the basis of a statement
that they are in charge of and responsible for the conduct of the business
of the company without anything more is not a sufficient or adequate
fulfillment of the requirements under Section 141.
18. In Girdhari Lal Gupta Vs. D.H. Mehta & Anr. (1971) 3 SCC 189, this
Court observed that a person ‘in charge of a business’ means that the
person should be in overall control of the day to day business of the
Company.
19. A Director of a Company is liable to be convicted for an offence
committed by the Company if he/she was in charge of and was
responsible to the Company for the conduct of its business or if it is
proved that the offence was committed with the consent or connivance
of, or was attributable to any negligence on the part of the Director
concerned.”
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16. He further relied on the decision of the Apex Court in
Gunmala Sales Private Limited v. Navkar Promoters
Private Limited 5, wherein it was held at para Nos.34.1, 34.2,
34.3 and 34.4 as follows:
“34.1. Once in a complaint filed under Section 138 read
with Section 141 of the NI Act the basic averment is made that the
Director was in charge of and responsible for the conduct of the business
of the company at the relevant time when the offence was committed,
the Magistrate can issue process against such Director;
34.2. If a petition is filed under Section 482 of the Code for
quashing of such a complaint by the Director, the High Court may, in the
facts of a particular case, on an overall reading of the complaint, refuse
to quash the complaint because the complaint contains the basic
averment which is sufficient to make out a case against the Director.
34.3. In the facts of a given case, on an overall reading of the
complaint, the High Court may, despite the presence of the basic
averment, quash the complaint because of the absence of more
particulars about the role of the Director in the complaint. It may do so
having come across some unimpeachable, uncontrovertible evidence
which is beyond suspicion or doubt or totally acceptable circumstances
which may clearly indicate that the Director could not have been
concerned with the issuance of cheques and asking him to stand the trial
would be abuse of process of court. Despite the presence of basic
averment, it may come to a conclusion that no case is made out against
the Director. Take for the instance a case of a Director suffering from a
terminal illness who was bedridden at the relevant time or a Director who
had resigned long before issuance of cheques. In such cases, if the High
Court is convinced that prosecuting such a Director is merely an arm-
twisting tactics, the High Court may quash the proceedings. It bears
repetition to state that to establish such case unimpeachable,
uncontrovertible evidence which is beyond suspicion or doubt or some
totally acceptable circumstances will have to be brought to the notice of
the High Court. Such cases may be few and far between but the
possibility of such a case being there cannot be ruled out. In the absence
of such evidence or circumstances, complaint cannot be quashed;
34.4. No restriction can be placed on the High Court’s powers
under Section 482 of the Code. The High Court always uses and must
use this power sparingly and with great circumspection to prevent inter
alia the abuse of the process of the Court. There are no fixed formulae to
be followed by the High Court in this regard and the exercise of this
power depends upon the facts and circumstances of each case. The
High Court at that stage does not conduct a mini trial or roving inquiry,
but nothing prevents it from taking unimpeachable evidence or totally
acceptable circumstances into account which may lead it to conclude
that no trial is necessary qua a particular Director.”
5
(2015) 1 SCC
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17. He also relied on the decision of the Apex Court in
Aneeta Hada v. Godfather Travels and Tours Private
Limited6, wherein it was held at para Nos.58 and 59 as
follows:
“58. Applying the doctrine of strict construction, we are of the
considered opinion that commission of offence by the company is an
express condition precedent to attract the vicarious liability of others.
Thus, the words “as well as the company” appearing in the section make
it absolutely unmistakably clear that when the company can be
prosecuted, then only the persons mentioned in the other categories
could be vicariously liable for the offence subject to the averments in the
petition and proof thereof. One cannot be oblivious of the fact that the
company is a juristic person and it has its own respectability. If a finding
is recorded against it, it would create a concavity in its reputation. There
can be situations when the corporate reputation is affected when a
director is indicted.
59. In view of our aforesaid analysis, we arrive at the
irresistible conclusion that for maintaining the prosecution under Section
141 of the Act, arraigning of a company as an accused is imperative. The
other categories of offenders can only be brought in the drag-net on the
touchstone of vicarious liability as the same has been stipulated in the
provision itself. We say so on the basis of the ratio laid down in C.V.
Parekh [(1970) 3 SCC 491: 1971 SCC (Cri) 97] which is a three-Judge
Bench decision. Thus, the view expressed in Sheoratan Agarwal [(1984)
4 SCC 352: 1984 SCC (Cri) 620] does not correctly lay down the law
and, accordingly, is hereby overruled. The decision in Anil Hada [(2000)
1 SCC 1 : 2001 SCC (Cri) 174] is overruled with the qualifier as stated in
para 51. The decision in Modi Distilleries [(1987) 3 SCC 684: 1987 SCC
(Cri) 632] has to be treated to be restricted to its own facts as has been
explained by us hereinabove.”
18. He also relied on the decision of the Apex Court in Pepsi
Foods Ltd., v. Special Judicial Magistrate 7, wherein it was
held at para No.28 as follows.
6
(2012) 5 Supreme Court Cases 661
7
(1998) 5 Supreme Court Cases 749
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“28. Summoning of an accused in a criminal case is a serious matter.
Criminal law cannot be set into motion as a matter of course. It is not that
the complainant has to bring only two witnesses to support his
allegations in the complaint to have the criminal law set into motion. The
order of the Magistrate summoning the accused must reflect that he has
applied his mind to the facts of the case and the law applicable thereto.
He has to examine the nature of allegations made in the complaint and
the evidence both oral and documentary in support thereof and would
that be sufficient for the complainant to succeed in bringing charge home
to the accused. It is not that the Magistrate is a silent spectator at the
time of recording of preliminary evidence before summoning of the
accused. The Magistrate has to carefully scrutinise the evidence brought
on record and may even himself put questions to the complainant and
his witnesses to elicit answers to find out the truthfulness of the
allegations or otherwise and then examine if any offence is prima facie
committed by all or any of the accused.”
19. He further relied on the decision of the Apex Court in
Vineet Kumar v. State of Uttar Pradesh8, wherein it was held
at para No.41 as follows:
“41. Inherent power given to the High Court under Section 482 CrPC is
with the purpose and object of advancement of justice. In case solemn
process of Court is sought to be abused by a person with some oblique
motive, the Court has to thwart the attempt at the very threshold. The
Court cannot permit a prosecution to go on if the case falls in one of the
categories as illustratively enumerated by this Court in State of
Haryana v. Bhajan Lal [1992 Supp (1) SCC 335 : 1992 SCC (Cri) 426] .
Judicial process is a solemn proceeding which cannot be allowed to be
converted into an instrument of operation or harassment. When there are
materials to indicate that a criminal proceeding is manifestly attended
with mala fide and proceeding is maliciously instituted with an ulterior
motive, the High Court will not hesitate in exercise of its jurisdiction
under Section 482 CrPC to quash the proceeding under Category 7 as
enumerated in State of Haryana v. Bhajan Lal [1992 Supp (1) SCC 335 :
1992 SCC (Cri) 426] , which is to the following effect : (SCC p. 379, para
102)
“102. … (7) Where a criminal proceeding is manifestly attended
with mala fide and/or where the proceeding is maliciously instituted with
an ulterior motive for wreaking vengeance on the accused and with
a view to spite him due to private and personal grudge.”
Above Category 7 is clearly attracted in the facts of the present
case. Although, the High Court has noted the judgment of State of
Haryana v. Bhajan Lal [1992 Supp (1) SCC 335 : 1992 SCC (Cri) 426] ,
but did not advert to the relevant facts of the present case, materials on
8
(2017) 13 Supreme Court cases 369
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which final report was submitted by the IO. We, thus, are fully satisfied
that the present is a fit case where the High Court ought to
have exercised its jurisdiction under Section 482 CrPC and quashed the
criminal proceedings.”
20. A perusal of the resolution dated 25.09.2008 reveals that
all the members have resolved to procure the entire land of
Ac.8.14 guntas along with buildings of 80,000 to 85,000 Sq.fts
at IDA, Patancheru for Rs.14.50 crores towards cost of land
and buildings and to incur an amount of RS.1.50 crores
towards the repairs and maintenance and for shifting of Vanjari
Seethaiah Memorial Engineering College from Bandlaguda to
IDA, Patancheru and further resolved to procure the buildings
only after the land conversion from industrial zone to
institutional zone by the landlord and it was discussed about
the finances of the society and it was resolved to take financial
help from the sister concerned societies, to approach the
Banks to get the financial help for purchase of the above
property and it was resolved to authorize Mr.N.Raja Babu,
General Secretary to deal with the affairs of the company in
this regard. Thus, the contention of the petitioner is that the as
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on the date of the said resolution, the petitioners were not the
members of the society.
21. It is pertinent to extract Section 141 of the Negotiable
Instruments Act, 1881 for the sake of reference:
“141. Offences by companies.–(1) If the person committing an offence
under section 138 is a company, every person who, at the time the
offence was committed, was in charge of, and was responsible to, the
company for the conduct of the business of the company, as well as the
company, shall be deemed to be guilty of the offence and shall be liable
to be proceeded against and punished accordingly: Provided that nothing
contained in this sub-section shall render any person liable to
punishment if he proves that the offence was committed without his
knowledge, or that he had exercised all due diligence to prevent the
commission of such offence:
6 [Provided further that where a person is nominated as a Director of a
company by virtue of his holding any office or employment in the Central
Government or State Government or a financial corporation owned or
controlled by the Central Government or the State Government, as the
case may be, he shall not be liable for prosecution under this Chapter.](2) Notwithstanding anything contained in sub-section (1), where any
offence under this Act has been committed by a company and it is
proved that the offence has been committed with the consent or
connivance of, or is attributable to, any neglect on the part of, any
director, manager, secretary or other officer of the company, such
director, manager, secretary or other officer shall also be deemed to be
guilty of that offence and shall be liable to be proceeded against and
punished accordingly.
Explanation.–For the purposes of this section, —
(a) “company” means any body corporate and includes a firm or other
association of individuals; and
(b) “director”, in relation to a firm, means a partner in the firm.”
22. The petitioners are the members of the M/s.R.R.M.
Educational Society, hence, the society and its members are
arrayed as parties to the proceedings. The only contention of
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the petitioners is that they were not the members of the society
at the time of issuance of cheque.
23. The liability of the existing members is subject to the
conditions laid down in Section 141 of the NI Act. The
members of the society would not be automatically liable for
the acts of others, but such liability is based on the role and
responsibility in the society, as it would be in the case of
directors of a company. Mere membership does not create
liability.
24. As far as the liability of the present existing members is
concerned, the Court has to examine the role played by them
in the day to day affairs of the society. It will not be within the
knowledge of the de facto complainant to know exactly about
the role played by the members, as the same pertains to the
internal affairs of the society and would be within the
knowledge of the petitioners themselves. Thus, the said point
can be raised in their defence before the trial Court, but this
Court cannot decide the said issue.
ETD,J
Crl.P.No.2246_2020
20
25. The primary contention of the petitioners counsel is that
the existing members have not acknowledged the debt while
taking over the management of the society.
26. In N.Rangachari v. Bharat Sanchar Nigam Ltd.,9 the
Apex Court held at Para No.27 as follows:
“27. We think that, in the circumstances, the High Court has rightly come
to the conclusion that it is not a fit case for exercise of jurisdiction under
Section 482 of the Code of Criminal Procedure for quashing the
complaint. In fact, an advertence to Sections 138 and 141 of the
Negotiable Instruments Act shows that on the other elements of an
offence under Section 138 being satisfied, the burden is on the Board of
Directors or the officers in charge of the affairs of the company to show
that they are not liable to be convicted. Any restriction on their power or
existence of any special circumstance that makes them not liable is
something that is peculiarly within their knowledge and it is for them to
establish at the trial such a restriction or to show that at the relevant time
they were not in charge of the affairs of the Company. Reading the
complaint as a whole, we are satisfied that it is a case where the
contentions sought to be raised by the appellant can only be dealt with
after the conclusion (sic commencement) of the trial”.
27. In the present case, the case of the petitioners is that
they were not the members of the society at the time of
issuance of the cheque. However, it is the contention of the
complainant that the cheque was issued by accused No. 9 to
discharge the loan that was taken by the society for purchasing
the building to run the educational institution. The petitioners
herein are the existing members of the society running the
9
(2007) 5 Supreme Court Cases 108
ETD,J
Crl.P.No.2246_2020
21
institution. Hence, the internal affairs among the existing
members and the erstwhile members, and the fact as to the
acknowledgment of debt by the existing members from the
erstwhile members, are matters to be adjudicated at the time
of trial. The said contention is also a triable issue. Thus, the
matter needs adjudication before the trial Court. Hence, it is
not just and proper to quash the proceedings. However, it is
deemed appropriate to dispense with the attendance of the
petitioners before the trial Court.
28. Accordingly, this Criminal Petition is disposed of
dispensing with the presence of the petitioners before the trial
Court provided that she is represented by a counsel before the
trial Court on every date of hearing and shall appear before the
trial Court whenever her presence is required during the
course of trial.
Miscellaneous applications pending, if any, shall stand
closed.
____________________________
JUSTICE TIRUMALA DEVI EADA
Date: 21.04.2026
ns