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IN THE HIGH COURT OF JUDICATURE AT BOMBAY,
NAGPUR BENCH, NAGPUR
Criminal Application No. 2763 of 2006
1) Smt. Vidya wd/o Sharadchandra Wairagade,
Aged about 52 years,
Occupation - Nil,
R/o Jaitala, Nagpur.
2) Smt. Kalpana wd/o Ashutosh Wairagade,
Aged about 47 years,
Occupation - Nil,
R/o Vanjari Nagar, Nagpur. .. APPLICANTS
.. Versus ..
1) M/s Brisk Marketing,
through its Proprietor,
Shri Jyotindra Patel, having its
office at Premium Plaza Complex,
1st Floor, Mata Mandir Road,
Dharampeth, Nagpur.
2) Wairagade Engineering Corporation,
through its Managing Partner,
Shri Shrikant Atmaram Wairagade,
3) Shri Shrikant Atmaram Wairagade,
Aged - Major, Occ.-Business,
Both 2 and 3 C/o W-5, M.I.D.C.,
Industrial Area, Hingna, Nagpur.
4) Shri Jagdishchandra Wairagade,
Aged - Major, Occ.- Retired,
R/o Ramdaspeth, Nagpur. .. NON-APPLICANTS
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Mr. A.A. Sambaray, Advocate for the applicants,
None for the non-applicants.
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CORAM:- S. S. SHINDE, J.
DATED :- 08th DECEMBER, 2009
JUDGMENT
1. This application is filed praying therein to quash and set aside the proceeding of Criminal Complaint Case No. 1081 of 2004 pending before the Special Court under Section 138 of Negotiable Instruments Act, Nagpur.
2. The applicants herein are the original accused Nos. 4 and 5 in the original proceedings. The non-applicant No.1 herein, who is complainant has supplied materials to the non-applicant No.2-
Wairagade Engineering Corporation and against the same, the managing partner, non-applicant No.3 Shri Shrikant Wairagade has issued a cheque bearing No.09440 in favour of the complainant of Rs. 8,83,425/-.
3. It was further contention of the original complainant that they have deposited the said cheque with their bankers but it was dishonoured for insufficient funds. The complainant issued the notice demanding amount of cheque to the applicants and non-applicant Nos. 2 to 4.
4. The original complainant filed a criminal complaint against ::: Downloaded on - 02/08/2016 16:57:17 ::: 3 the present applicants along with non-applicant Nos.2 and 4 under Sections 138 and 142 of the Negotiable Instruments Act, 1881 for dishonour of cheque. According to the complainant, the applicants are the partners of the non-applicant No.2-Wairagade Engineering Corporation and as such they were also made the accused.
5. The trial Court after perusal of the complaint was pleased to issue process by observing that "Heard.
ig Perused the
complaint, statement and documents placed on record. It
appears that cheque is issued by accused in favour of complainant and same is dishonoured by the Bank for insufficient funds and he failed to pay inspite of deemed service of notice by the complainant. Thus, prima facie case is made out against the accused. Hence, issue process against the accused for the offence punishable under Section 138 of the Negotiable Instruments Act on payment of P.F." Thus the process came to be issued against the accused/applicant on 20-12-2004.
6. The applicants were served and they came to know that there was alleged transaction with the non-applicant No.1 and for the same the applicants have been added as accused. As such after the service of summons, the applicants appeared before the ::: Downloaded on - 02/08/2016 16:57:17 ::: 4 lower Court and taken the bail.
7. The applicants herein filed an application before the trial Court and prayed for dismissal of the complaint on the ground that the original complainant/present non-applicant No.1 has not made out any specific case against the applicants and notice issued by the complainant and the complaint filed by the complainant is totally silent about the role of the present applicants and in absence of any specific allegations against the applicants they cannot be made accused, thus the complaint needs to be dismissed against the present applicants. Hence, this application under Section 482 of the Criminal Procedure Code filed by the applicants.
8. The learned Advocate appearing for the applicants submitted that the trial Court has not taken into consideration the case of the applicants that they have specifically stated on oath that they are not the partners of the firm and there is no material on record to show that they are the partners of the firm and related with the activities of the firm. It is further submitted that a bare perusal of the notice issued by the complainant/non-
applicant No.1 shows that it does not make any allegations against the present applicants or attribute any role to them. On ::: Downloaded on - 02/08/2016 16:57:17 ::: 5 the contrary, the notice is entirely silent about the present applicants and it does not speak about the involvement of the applicants in the day to day affairs of the firm or that the alleged cheque was issued by the consent of the applicants.
9. The learned Advocate further submitted that the contents of the application does not attribute any role to the present applicants nor it any way speaks about the involvement of the present applicants in the transaction.
ig On the contrary, the complaint is totally silent about the involvement of the present applicants and therefore, the learned Advocate further invited my attention to the provisions of Section 141 of the Negotiable Instruments Act and submitted that the complaint are precisely states that the applicants were responsible for day to day affairs of the Company and in absence of that no further proceedings can be gone into or continued against the applicants.
10. The learned Advocate further submitted that the applicants were in no way involved in any of the transactions referred to in the complaint and it was not stated that they were in-charge of the business and was responsible for the conduct of the business of the company. In terms of Section 141 of the Negotiable Instruments Act nor was there any other allegation made against ::: Downloaded on - 02/08/2016 16:57:17 ::: 6 the applicants that they had connived with any other partner in the matter of issue of cheque.
11. The learned Advocate further invited my attention to the judgment of the Hon'ble Apex Court to contend that "person in charge" must mean that the person should be in overall control of the day-to-day business of the company or firm. The person should be a party to the policy being followed by a company and yet not be in-charge of the business of the company or may be in-charge of but not in overall charge or may be incharge of only some part of the business." The sum and substance of the arguments advanced by the learned Advocate for the applicants is that in absence of any specific statement in the complaint to the effect that the applicants are responsible and in-charge of day-to-day affairs of the company, no further proceedings whatsoever can be continued on the basis of the complaint filed by the complainant. In support of this contention, learned Advocate invited my attention to the reported judgment in the case of S.M.S. Pharmaceuticals Limited v. Neeta Bhalla and another, 2005(4) Mh.L.J. 731; Suman Madanlal Bora v.
State of Maharashtra and others, 2006(4) Mh.L.J. 369; and Katta Sujatha v. Fertilizers and Chemicals Travancore Ltd.
and another, 2003(1) Bom. C.R. 517.
::: Downloaded on - 02/08/2016 16:57:17 ::: 712. The learned Advocate for the applicants invited my attention to the paragraph 20 of the reported judgment of the Hon'ble Supreme Court in case of S.M.S. Pharmaceuticals Limited v. Neeta Bhalla and another, 2005(4) Mh.L.J. 731; paragraph 8 of the judgment of this Court in case of Suman Madanlal Bora v.
State of Maharashtra and others, 2006(4) Mh.L.J. 369; and paragraphs 5,6,7 of the judgment in case of Katta Sujatha v.
Fertilizers and Chemicals Travancore Ltd. and another, 2003(1) Bom. C.R. 517 and submitted that in view of the above mentioned pronouncements by the Hon'ble Apex Court as well as this Court, the application deserves to be allowed.
13. Though the non-applicants are duly served, none appears for the non-applicants.
14. I have heard the learned Advocate for the applicants at length. On perusal of the application, it appears that the applicants have challenged the order passed by the Special Court under Section 138 of the Negotiable Instruments Act. Though the revision is maintainable against the impugned order, there is no bar to entertain criminal application under Section 482 of the Criminal Procedure Code. The Hon'ble Supreme Court in case of Dhariwal Tobacco Products Limited and others v. State of ::: Downloaded on - 02/08/2016 16:57:17 ::: 8 Maharashtra and another, (2009) 2 SCC 370 in para 12 held that, "The Apex Court's decision already referred to above, nowhere prohibited or expressly barred to invoke Section 482 of the Criminal Procedure Code or Article 227 of the Constitution of India against the order of issuance of process".
15. The Court has held that the availability of alternate remedy of filing revision under Section 397 of Cr.P.C. could not be a ground to dismiss application under Section 482 of the Criminal Procedure Code. Therefore, the application filed by the applicants can be entertained though it is filed challenging the order of issuance of process by the Magistrate without challenging the said order in revision.
16. On careful perusal of the provisions of Section 141 of the Negotiable Instruments Act, the said Section in specific words states that "if the person committing an offence under Section 138 is a company, every person who, at the time the offence was committed, was incharge 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 ::: Downloaded on - 02/08/2016 16:57:17 ::: 9 be liable to be proceeded against and punished accordingly."
Therefore, unless there is a specific statement in the complaint to the fact that, the concerned person against whom complaint is filed, they should be in-charge of and responsible to the company in the conduct of the business of the company, in absence of specific statement to that effect, as the Hon'ble Apex Court as well as this Court in number of pronouncements has already taken a view that, no further proceedings based upon the complaint in which such statement is missing can be continued.
17. On careful perusal of the complaint, which is placed on the record from page 15 to 19 at Annexure-2, there is nothing stated in the said complaint except that "the offence punishable under Section 138 of the Negotiable Instruments Act is made out against all the accused persons and they deserve to be punished in accordance with law."
18. The Hon'ble Supreme Court in case of S.M.S.
Pharmaceuticals Limited v. Neeta Bhalla and another, 2005(4) Mh.L.J. 731 in para 20 held as under;-
"In view of the above discussion, our answers to the questions posed in the ::: Downloaded on - 02/08/2016 16:57:17 ::: 10 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 incharge 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 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 incharge 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 incharge 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 ::: Downloaded on - 02/08/2016 16:57:17 ::: 11 be in affirmative. The question notes that the Managing Director or Joint Managing Director would be admittedly incharge of the company and responsible to the company 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 incharge 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."
19. This Court in case of Suman Madanlal Bora v. State of Maharashtra and others, 2006(4) Mh.L.J. 369 in paragraph 8 reads thus:-
"The Supreme Court has rendered its decision in the aforesaid matter in the context of the phraseology of section 141 of the Negotiable Instruments Act.
Section 141 deals with offences by
companies. Whenever the person
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committing an offence under section 138 is company then every person who at the time the offence was committed was in-
charge of and/or responsible to the company for the conduct of the business of the company as well as company shall be deemed to be guilty of the offences and shall be liable to be proceeded and punished accordingly. As to when an offence under section 138 is committed is clear from a reading thereof. It is upon the bank.
the cheque being returned "unpaid" by In the instant case, the complaint is completely silent about this material aspect. The complaint does not state at the time when the cheque was returned unpaid/dishonoured, the petitioner was in any way in-charge of and was responsible for the conduct of the business of the company or to the company. It is only thereupon that a prima facie conclusion can be drawn about the guilt of the partner of the firm who issues a cheque and which is dishonoured. It is not necessary to refer to the Supreme Court decision because after going through averments in the complaint on the touchstone of section 141, in my view, as far as petitioner is concerned, complaint cannot proceed.
::: Downloaded on - 02/08/2016 16:57:17 ::: 13No offence is committed by the petitioner when admittedly it is not shown that on the date of commission of offence, petitioner was in-charge of and responsible to or conducting business of the firm. Complaint, therefore, discloses no offence and allowing the same to proceed as far as petitioner is concerned would be a clear abuse of the process of the Court. Therefore, the complaint being not disclosing an offence and even otherwise to secure the ends of justice by not allowing a 62 years old ex-partner to be dragged in criminal Court. Rule is made absolute in terms of prayer clause
(a). Complaint stands quashed as far as petitioner is concerned."
20. The Hon'ble Supreme Court in case of Katta Sujatha v.
Fertilizers and Chemicals Travancore Ltd. and another, 2003(1) Bom. C.R. 517 in paras 5, 6 and 7 held as under :-
"(5). In short the partner of a firm is liable to be convicted for an offence committed by the firm if he was in charge of and was responsible to the firm for the conduct of the business of the firm or if it is proved that the offence was committed with the consent or ::: Downloaded on - 02/08/2016 16:57:17 ::: 14 connivance of, or was attributable to any neglect on the part of the partner concerned.
(6). To the same effect is the decision of this Court in (K.P.G. Nair v. Jindal Menthal India Ltd.), 2001(5) Bom.C.R.
(S.C.)555: 2002 DoCh.(S.C.)222: 2001(10) S.C.C. 218 : 2000(6) SCALE 578 and (Anil Hada v. Indian Acrylic Ltd.), 2005(5) Bom.C.R.(S.C.) 391 :
2000(1) S.C.C. 1 : J.T. 1999(9) S.C. 223. Examined in the light of the decisions and the law enunciated, we find no case as such has been made out for proceeding against the appellant.
(7) The appeal is allowed and the order of the High Court is set aside so far as the appellant before us is concerned. Proceedings in the criminal case are quashed insofar as the appellant before us is concerned."
21. On perusal of the judgment cited (Supra) and more particularly, paragraphs which are cited by the learned Advocate for the applicants, the present application deserves to be allowed. On perusal of the complaint, there is nothing to indicate that at the time when the cheque was returned unpaid ::: Downloaded on - 02/08/2016 16:57:17 ::: 15 dishonoured, the applicants were in any way incharge of and was responsible for the conduct of the business of the Company or to the Company. Therefore, the application is allowed in terms of prayer clause (3). The proceedings of the Criminal Complaint Case No.1081 of 2004 qua the present application are quashed and set aside. The rule is made absolute.
JUDGE adgokar ::: Downloaded on - 02/08/2016 16:57:17 :::