The High Court of Karnataka has refused to quash criminal proceedings initiated against Embassy Group chairman Jitendra Virwani and others in a cheque dishonour case involving ₹400 crore.
Mr. Virwani, who is also chairman of another company named, M/s OMR Investments LLP, a limited liability company engaged in construction and development of real estate, and a few directors and authorised signatories of this company had questioned the proceedings initiated against them under the provisions of the Negotiable Instruments Act, 1881.
The proceedings was initiated based on a complaint lodged by 82-year-old Pardhanani Chatrabhuj Bassarmal of Bengaluru, who is now residing in Dubai. The complainant had alleged that the cheques issued on behalf of OMRI LLP. for ₹400 crore were dishonoured for want of sufficient fund in the bank account.
The post-dated cheques were issued to the complainant in connection with agreements between him, the Embassy Group, and the OMRI LLP., in relation to a real estate development project.
As the transaction is of ₹400 crore, the argument that the chairman and the directors of the company are not aware of the transactions and the signatories to the cheques are the only persons responsible cannot be countenanced, the court held.
“A mammoth transaction of this nature being executed without passing muster through the office-bearers of the company cannot be imagined at this juncture. The directors or the chairman cannot claim that they are not privy to the enormity of the transaction between the accused and the complainant as the complaint clearly narrates the role of persons, involved in the transaction who are made accused in the case,” the court said.
Therefore, it becomes a matter of trial for the petitioners to come out clean, if they are not involved in the transaction at all, the court said.
The court also said that the argument made on behalf of the petitioners that cheques were issued only as security and they are not against any legally recoverable or enforceable debt, does not hold water as these are disputed questions of fact and have to be tried in a full-blown trial.
