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Allahabad High Court
Prakash Kalothiya vs State Of U.P. And Another on 8 July, 2025
HIGH COURT OF JUDICATURE AT ALLAHABAD Neutral Citation No. - 2025:AHC:107704 Court No. - 87 Case :- APPLICATION U/S 482 No. - 32964 of 2016 Applicant :- Prakash Kalothiya Opposite Party :- State of U.P. and Another Counsel for Applicant :- Fahd Iqbal Counsel for Opposite Party :- G.A.,Suresh Bahadur Singh Hon'ble Prashant Kumar,J.
1. Heard Shri V.P. Srivastava, learned Senior Advocate assisted by Shri Fahd Iqbal, learned counsel for the applicant, Shri Shashidhar Pandey, learned AGA for the State respondents, Shri Vimlendu Tripathi along with Sri Deepesh Kumar Ojha and Sri Prashant Tripathi, learned counsel for opposite party no.2 and perused the record.
2. The instant application under Section 482 Cr.P.C. has been filed with the prayer to quash / set-aside the further proceedings as well as the order dated 6.7.2016 passed by the Additional Chief Judicial Magistrate-3rd, District Ghaziabad in complaint case no. 4523 of 2015 under Sections 420, 467, 468, 471 and 120-B IPC and also the order dated 28.9.2016 passed by the Additional Sessions Judge, Court No.15, District Ghaziabad in Criminal Revision No.169 of 2016.
FACTUAL MATRIX
3. Facts in brief are that opposite party no.2 is the Managing Director of a Company known as M/s Devidyal Aluminium Industries Pvt. Ltd. (earlier known as “Hindustan Chains Pvt. Ltd.”), which had entered into an agreement with M/s Parsvnath Developers Limited (PDL) and M/s Parsvnath Buildwell Private Limited (PBPL) for constructing residential flats on the land which belonged to opposite party no.2.
4. As per the agreement it was the responsibility of the applicant and its company for construction of the residential towers and sale of the same to the prospective buyers and for that it was the responsibility of the other sister concern to get a ‘No Objection Certificate’ and other permission from all the authorities.
5. After getting all the permissions, the opposite party no.2 entered into an re-agreement known as “Assignment of Development Rights Agreement” on 28.12.2010 with M/s Parsvnath Buildwell Pvt. Ltd along with other companies. With this assignment letter a separate general power of attorney was executed by opposite party no.2 in favour of PBPL and other stakeholders to deal with all the authorities, for development of the project, on behalf of opposite part no.2. This general power of attorney was the part of the assignment agreement.
6. As per the agreement of “Assignment of Development Rights” on the land of opposite party no.2, the sale certificate of the flats was to be executed by opposite party no.2 to the prospective flat owners and the proceeds of the said flats was to be divided into ratio of 81.5% : 18.5% respectively between M/s Parsvnath Buildwell Private Limited and opposite party no.2.
7. In this agreement the time given for completion of project was 36 months, which was to end on 28.12.2013, however, there was an extension clause of six months. Even after the completion of this agreed period as well as grace period of six months a very limited work was carried out inspite of time being the essence in the agreement dated 28.12.2010. After the completion of the period when the project was not completed, a legal notice was sent on behalf of opposite party no.2 on 04.08.2014. The relevant paragraph of the notice dated 04.08.2014 is quoted hereunder:-
“6. Since the Agreement themselves are cancelled, as a necessary corollary the General Power of Attorney dated 28.12.2010 given for execution of obligations of you M/s Parsvnath Developers Limited and you M/s Parsvnath Buildwell Private Limited is also hereby cancelled and revoked”.
By this legal notice, General Power of Attorney was revoked.
8. The sanction of the map by the Ghaziabad Development Authority (in short “GDA”), which was approved on 17.03.2007, expired after five years on 16.03.2012 because the project was not completed in time for which the builders had moved an application on 08.01.2015 requesting for the revalidation of the map, which was rejected by the GDA vide order dated 26.08.2015. The order dated 26.08.2015 is quoted hereunder:-
गाजियाबाद निकास प्राधिकरण
विकास पथ, गाजियाबाद।
पत्रांक दिनांक: सेवा में, श्री संजीव जैन (अधिकृत हस्ताक्षरी) मैं हिन्दुस्तान चेन्स प्रा०लि० "पार्श्वनाथ एक्जोद्विका 149, जी०डी०रोड अर्थल, गाजियाबाद।
विषय:-मानचित्र सं0 1169/टी.एम.ए./जी.एच./2006 दिनांक 15.2.07 के ग्राम अर्थला एक्जोद्विका के सम्बन्ध में।
कृपया उपरोक्त विषयक आपके पत्र दिनांक 3.7.15 के सम्बन्ध में सूचित करना है कि प्रश्नगत प्रकरण में विधिक राय के अनुसार एसाइन्मेन्ट आफ डवलपमेन्ट राईटस एग्रीमेन्ट के पैरा 15(1) के अनुसार अनुबन्ध दिनांक 20.12.15 के अनुसार परियोजना पूर्ण करने की अवधि 30 थी जिसमें 6 माह का ग्रेस पीरिएट दिये जाने का प्राविधान है तथा 17(2) के अनुसार अनुबन्ध के प्राविधानों के तथ्यों की आपसी सहमति से निस्तारित किये जाने की व्यवस्था है। उक्त सम्बन्ध में कोई विवरण पत्रावली पर उपलब्ध नहीं है। ऐसी स्थिति में अनुबन्ध समाप्त है। साथ ही यह भी सूचित करना है कि मानचित्र सं० 1169/टी.एम.ए./ जी.एच./2006 दिनांक 15.2.07 के समयावधि 6 वर्ष के लिए थी जो समाप्त हो चुकी है अतः आपके प्रार्थना पत्र पर विचार किया जाना संभव नहीं है।
भवदीय,
आर०सी०पाण्डेय
नगर नियोजक
9. There were two foreign investors by the name of Anuradha SA Investments LLC based on Mauritius and Anuradha Ventures Limited based on Cyprus, who showed interest and invested in this project. There was investors agreement also executed between PDL, Investor, the promoters of PDL and PBPL. By this agreement, PDL was appointed as the Project Manager for day to day management of the project and PBPL was given the task of obtaining approvals, construction, sales, marketing, meeting and all statutory compliances etc. As per the agreement, the investors got two seats in the board of PBPL, one of them is the applicant herein, who was nominated by the investors as an additional director of PBPL as an investor nominee director on 07.01.2011 thereafter, the applicant started discharging its duties.
10. It is alleged that M/s Parsvnath Buildwell Private Limited could not succeed in getting the earlier sanctioned map (which had lapsed with efflux of time) re-approved, now hatched a conspiracy by forging the letter head of opposite party no.2 applied for further extension of the earlier agreement executed on 28.12.2010 on forged letter of “Hindustan Chains Pvt. Ltd.” dated 08.07.2015, which was presented before the Chief Architect Town Planner of Ghaziabad Development Authority which was rejected. The said letter head was different from the letter head addressed by opposite party no.2 on earlier occasion to GDA dated 20.10.2006 and 01.02.2007.
11. When opposite party no.2 came to know about that letter, they informed the GDA that this is a forged letter and no further request should be entertained by the builders on behalf of opposite party no.2 as the agreement and General Power of Attorney was revoked.
12. The opposite party no.2 feeling duped because of the forged letter head filed before the GDA claiming to be their filed an application under Section 156 (3) Cr.P.C.
13. Meanwhile, the prospective flat buyers, who had invested a huge amount having realized that they have been duped and nothing is coming up some of them have approached the Consumer Forum and some of them before the other authorities. Under the pressure, it is alleged that the developers had moved a forged letter on 08.07.2015.
14. In the aforesaid application, after adducing evidence summons were issued on 06.07.2016. The same have been assailed by means of instant application.
ARGUMENT ON BEHALF OF THE APPLICANT
15. Learned counsel for the applicant submits that the applicant was a non-executive director and was not involved in the day to day affairs of the company and was not paid any salary or remuneration or even director sitting fees, he only attended the board meetings and got nothing to do with the day to day working of the company nor had anything to do with the alleged letter. The day to day affair like management of the project approvals, construction, sales, marketing, meeting and all statutory compliances were assigned to the PDL and the applicant is not the director of the PDL, hence, the applicant cannot be summoned for an act, which the director of some other company had performed. To buttress his argument learned counsel for the applicant has placed reliance on the Project Management Agreement wherein it is clearly stated that it was the duty of the Project Management Company to clear all the permissions/approvals from the Regulatory Authority and ensure overall compliance by the company with applicable laws affecting the facility, to coordinate architectural and engineering designing and master planning.
16. He further submits that for the same set of dispute, Arbitration Proceedings are there and there is no rational for initiating Criminal Proceedings for the same set of dispute.
17. He further submits that since prima facie no case has been made out against the applicant so he should not be put to face the hardships of the trial. To buttress his argument, learned counsel for the applicants has placed reliance on the judgement of Hon’ble Apex in the case of Maa Annamalai Vs. State of Karnataka and another1 in which it has been held that in absence of basic ingredients, no person be compelled to face the criminal prosecution. The relevant paragraph of said judgement are quoted hereunder:-
“We have carefully considered the rival contentions. It emerges that:
a) In the instant case, the appellant ceased to be a Director of the company from 27.12.1997 whereas the alleged offences, if any, were committed during the period from 24.5.1998 to 17.9.1999.
b) Admittedly, there are no allegations against the appellant in the First Information Report.
c) The company had invited investment from the depositors to invest in the business/benefit funds after receiving due approval of the scheme from the Reserve Bank of India. Therefore, in any event, the element of cheating as alleged cannot be made out by any stretch of imagination.
d) The complainant/respondent no.2 submitted in writing to this Court that he does not want to proceed against the appellant because according to him the appellant has been inadvertently included as an accused by the Investigating Officer. He further mentioned in the letter that he had already received 55% of the deposited amount from the Official Liquidator and he did not want to proceed against the appellant.
e) Even assuming that there could have been a vicarious liability thrust on the appellant, even then there cannot be any such vicarious liability in absence of any allegations and material to show that the appellant was in-charge of or responsible for the conduct of the company’s business which had given rise to the offence. From any angle of the matter, the appellant cannot be compelled to face the criminal trial in this case.
42. The inherent power should not be exercised to stifle the legitimate prosecution but at the same time no person be compelled to face criminal prosecution if basic ingredients of the alleged offence against him are altogether absent.
43. On consideration of the totality of the facts and circumstances of this case, the impugned judgment of the High Court is set aside and the appeal is allowed and the proceedings initiated against the appellant on the basis of the complaint registered as CC 22656 of 2001 pending before the Xth Addl. Chief Metropolitan Magistrate, Bangalore, are quashed.”
18. He further submits that the responsibility to get all the permissions was that of the project company and any letter written for getting permission from the GDA was not in the domain and responsibility of the applicant, and hence, there is no reason for him to write the alleged letter, and no offence as alleged is said to have been made out against the applicant.
19. He further submits that the investor (who is represented by the applicant) is also duped by the developers PDL & PBPL as they have lured the investor to invest the money in to project and has siphoned off the entire money of both the investor and the buyers and has duped them all.
20. Learned counsel for the applicants further relied on the judgement of Hon’ble Apex Court in the case of Shiv Kumar Jatia Vs. State of NCT of Delhi2 wherein it has been held that Indian Penal Code does not contain any provision that for attaching vicarious liability on the part of the Managing Director or the Director of the Company when the company is an accused. Hence, until and unless the company is made a party no proceeding can be initiated against the applicant.
ARGUMENT ON BEHALF OF OPPOSITE PARTY NO.2
21. Per contra, Sri Vimlendu Tripathi, learned counsel for opposite party no.2 submits that the claim of the applicant about his non-involvement in the day-to-day management of the project is patently false because of the definition clause and terms of Investment Agreement & Project Management Agreement dated 21.12.2010, according to which the PBPL has been defined as ‘Company’ and PDL has been defined as ‘Project Manager’ and it is provided in Clause 10 that if the ‘Project Manager’ commits default under this agreement, the ‘Company’ PBPL shall have remedy provided under Clause 10.2 to terminate the agreement by giving written notice thereof to the Project Manager, PDL, hence, the company, PBPL had overall controlling authority over the Project Manager, PDL. He further submits that despite the default on the part of ‘Project Manager’ PDL no action was taken by the PBPL as the applicant being the director of PBPL was part and parcel of the evil design of co-accused persons, which demonstrate offence of criminal conspiracy on his part.
22. He further submits that the defence of the applicant that he was not connected with the day-to-day affairs of the companies PDL & PBPL is not supported by any unimpeachable/uncontroverted memorandum/certificate and the same is a matter of fact and is in the realm of the trial Court depending upon appreciation of evidence.
23. He further submits that the stand that companies PDL & PBPL have not been arraigned as accused in the complaint case, is also not tenable because a prima facie offence of forgery, cheating and criminal conspiracy is established against the applicants. He also submitted that it is specifically stated in the memo of complaint dated 09.11.2015 that these five persons are responsible for all the works of two companies PDL & PBPL.
24. Lastly it has been submitted that in view of factual and legal aspects, the summoning order dated 06.07.2016 and order dated 28.09.2016 dismissing the Criminal Revision No.169 of 2016 are well reasoned order, hence, the instant application is liable to be dismissed.
FINDINGS OF THE COURT
25. Heard learned counsel for the parties and perused the record.
26. Evidently, applicant happens to be a representative of the investor Anuradha Ventures Limited, who had invested in the project. As an investor to safeguard the interest of investors along with other stakeholders that is PDL and PBPL, Parsvnath Associates Pvt. Ltd and Paradeep Jain, had entered into an agreement on 21.12.2010 wherein it was agreed that M/s Anuradha Ventures Ltd and Anuradha Investments Ltd would invest money in the company, and to safeguard the investors interest two board seats would be given in the project company i.e. PBPL to the investors.
27. The applicant happened to be one of the directors, who was given a seat on behalf of the foreign investors, along with the investment agreement a separate project management agreement was executed between the PBPL and Anuradha Investments Ltd in which the PBPL, who was responsible to complete the project, however, there was another company, namely PDL, who was called the project company. The agreement clearly laid down about the other project company, and the role assigned to the other project company namely PDL was to seek required permissions, approval from regulatory authority and other authorities to ensure over all compliances. For ready reference the relevant paragraphs of the Project Management Agreement are quoted hereunder:-
“ENGAGEMENT OF THE PROJECT MANAGER
2.1 Engagement of the Project Manager- The Company hereby engages the Project Manager for the day to day management of the execution and the supervision of the Facility in connection with the design, development and construction of the Facility in accordance with the Business Plan and the terms and conditions of this Agreement and the Development Rights Agreement. The Project Manager shall have the overall responsibility for the management of the execution and supervision of the Facility.
2.2 Acceptance by the Project Manager- The Project Manager hereby accepts its engagement by the Company, and agrees to perform the Services and fulfil other responsibilities under this Agreement for the benefit of and on behalf of the Company, subject to and in accordance with the terms and provisions of this Agreement.
2.3 Reporting function: The Project Manager shall comply with the specified reporting functions set forth in this Agreement, and shall assist the Company in providing the information and documentation that the Company is obligated to provide under any agreements affecting the design, development and construction of the Facility and generally shall prepare, monitor and assist the Company in the implementation of the Business Plan for the Facility.”
NATURE OF ENGAGEMENT/SERVICES
3.1 Description of Services. The Services to be rendered by the Project Manager to the Company pursuant to this Agreement are set forth in Schedule D. attached hereto.
3.2 Status of the Project Manager. In the performance of its duties and obligations under this Agreement, the Project Manager shall at all times during the term of this Agreement be an independent contractor and not have or be deemed to have any principal-agent relationship with the Company. For the avoidance of doubt, it is clarified that the Project Manager shall not have the authority to bind the Company or the Investor without their prior writte approval in that regard.
3.3 Only those persons who are employees of the Project Manager or bona fide subcontractors, contractors engaged by the Project Manager (“Personnel”) and any other consultants employed by the Project Manager in accordance with the provisions of this Agreement, shall be deputed by the Project Manager to provide the Services under this Agreement. The Personnel of the Project Manager deputed to the Company for providing the Services shall not be considered as the Company’s employees or agents and the Project Manager shall be fully responsible for the acts undertaken by the Personnel, subject to any limitations of Tability set forth in this Agreement. The Project Manager shall be solely responsible for the payment of compensation to the Personnel and the Personnel shall not be entitled to any of the benefits available to the Company’s employees. The Project Manager, and not the Company, shall be solely responsible for payment of all applicable statutory payments with respect to the Personnel, including without limitation, workmen’s compensation, disability benefits, or for withholding Taxes for the Personnel.
3.4 The Project Manager shall ensure that all contractors or sub-contractors appointed by it comply with the terms and conditions of all registrations, licences) permissions and approvals required by all applieable employment/ labour laws with respect to their respective personnel. The Project Manager shall ensure compliance with all Applicable Laws and regulations with respect to worker’s compensation, social security, unemployment insurance, hours of labour, wages, working conditions, and other employer-employee related subjects with respect to the Personnel. The Project Manager shall appoint a full time manager in relation to the Services to be provided to the Company (“Designated Person”).”
28. As per Clause 3.1 the services to be rendered by the Project Manager to the Company pursuant to this Agreement are set forth in Clause (B) of Schedule D of the agreement. Relevant Clause (B) of Schedule D is as follows:-
(i) Liasoning activities and seeking the required permits and approvals from regulatory and local authorities;
(ii) Ensuring overall compliance by the Company with Applicable Laws affecting the Facility;
(iii) To coordinate architectural and engineering designing and master planning;”
29. From the perusal of the above documents shows that all permissions approvals was the responsibility of the PDL and assuming if any forged and fabricated document has been filed, it is the PDL or its officers/director, who are responsible for doing the same would have filed. The applicant has got nothing to do with the PDL as he only happens to be the director of PBBL, hence, the proceeding initiated against the applicant is nothing but a pure abuse of process of law as there is nothing against him. Even assuming there was any fabrication in the document, the company, which was responsible to get the permission, can only be hauled up, and not the investors. (or nominee director on behalf of the investor).
CONCLUSION
30. It is a fit case for interference under Section 482 Cr.P.C as there is a pure abuse of process of law. The applicant has been made a party in the complaint specially when there was no role assigned to him and apparently neither he had any role in the alleged incident.
31. Since the applicant was the nominee director on behalf of the foreign investor and had nothing to do with the day to day working of the company and the entire responsibility of getting the permission from GDA was with the project company in which the applicant was neither a director nor had any say in it. Even otherwise it cannot be assumed that the applicant would have any role in placing the forged letter with the GDA, as it was the sole liability of the other project companies to get the permission.
32. The case of the applicant is different from the applicants in Application U/S 482 Cr.P.C. No.32420 of 2016 and 31885 of 2016, who were the directors of the Project Company.
33. Apparently, no prima facie case is said to have been made out against the applicant.
34. Hon’ble Supreme Court in the matters of State of Haryana Vs. Bhajan Lal3, has held that only those cases in which no prima facie case is made out can be considered in an application under Section 482 Cr.P.C.
35. The principle laid down by the Hon’ble Supreme Court in the above mentioned judgement has been reiterated in the matters of M/s Neeharika Infrastructure Pvt. Ltd. vs. State of Maharashtra4, R.P. Kapur Vs. State of Punjab5, State of Bihar Vs. P.P.Sharma6, and lastly, Zandu Pharmaceutical Works Ltd. Vs. Mohd. Saraful Haq and another7
36. The applicant herein falls under the guidelines laid down by Hon’ble Supreme Court in the above-mentioned judgements.
37. Since no prima facie offence is made out against the applicant, the instant application is allowed and the order dated 06.07.2016 passed by the Additional Chief Judicial Magistrate-III, District Ghaziabad in Complaint Case No. 4523 of 2015, under Sections 420, 467, 468, 471 and 120-B IPC as well as the order dated 28.9.2016 passed by the Additional Sessions Judge, Court No.15, District Ghaziabad in Criminal Revision No.169 of 2016 including entire proceedings of aforesaid complaint case are hereby quashed.
Order Date :- 8.7.2025
S.P.
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