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IN THE HIGH COURT OF JUDICATURE AT BOMBAY
NAGPUR BENCH : NAGPUR.
CRIMINAL APPLICATION NO.3184 OF 2007
APPLICANTS: 1. Parshwa Engineering Private Limited,
having its Registered Office at Plot
No.241, Small Factory Area, Bagadganj,
Nagpur.
2. Kirit son of Babulal Mehta, aged major,
Occupation-business,
3. Bipin son of Babulal Mehta, aged - major,
Occupation-business,
Nos.2 and 3 residents of Kesharianath Co-
operative Society, Nikalas Mandir Road,
Itwari, Nagpur, Tq. & Distt. Nagpur.
-VERSUS-
RESPONDENTS: 1. State of Maharashtra
2. The National Small Industries Corporation
Limited, having its Registered Corporate
Office at NSIC Bhavan, Okhala Industrial
Estate, New Delhi, and Regional Office at
Prestige Chambers, Kalyan Street, Masjid
(East), Mumbai, to be served through its
Joint Director, Sub-Office, situated at
NDTA Complex, Block No.9, Second
Floor, Opp: Liberty Cinema, Nagpur, Tq.
& Distt. Nagpur.
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Shri M. P. Khajanchi, Advocate for the applicant.
Shri M. A. Vishwarupe, Advocate for respondent No.2.
AND
CRIMINAL APPLICATION NO.3262 OF 2007
APPLICANTS: 1. Parshwa Engineering Private Limited,
having its Registered Office at Plot
No.241, Small Factory Area, Bagadganj,
Nagpur.
2. Kirit son of Babulal Mehta, aged major,
Occupation-business,
3. Bipin son of Babulal Mehta, aged - major,
Occupation-business,
Nos.2 and 3 residents of Kesharianath Co-
operative Society, Nikalas Mandir Road,
Itwari, Nagpur, Tq. & Distt. Nagpur.
-VERSUS-
RESPONDENTS: 1. State of Maharashtra
2. The National Small Industries Corporation
Limited, having its Registered Corporate
Office at NSIC Bhavan, Okhala Industrial
Estate, New Delhi, and Regional Office at
Prestige Chambers, Kalyan Street, Masjid
(East), Mumbai, to be served through its
Joint Director, Sub-Office, situated at
NDTA Complex, Block No.9, Second
Floor, Opp: Liberty Cinema, Nagpur, Tq.
& Distt. Nagpur.
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Shri M. P. Khajanchi, Advocate for the applicant.
Shri M. A. Vishwarupe, Advocate for respondent No.2.
CORAM: A.S. CHANDURKAR, J.
DATE ON WHICH SUBMISSIONS WERE HEARD: 08-12-2017. DATE ON WHICH JUDGMENT IS PRONOUNCED: 19-12-2017. ORAL JUDGMENT :
1. Both these criminal applications filed under Section 482 of the Code of Criminal Procedure, 1973 seek quashing of the complaints filed under Section 138 of the Negotiable Instruments Act, 1881 (for short, the said Act). As common challenges are raised, the applications are decided by this common judgment.
2. The non-applicant no.2 herein is a Corporation that has filed two complaints under Section 138 of the said Act. In Criminal Application No.3184/2007, the complaint filed is Criminal Case No.6029/2005. In said complaint, the present applicants have been arrayed as the accused persons. According to the complainant, the accused Nos.2 & 3 on behalf of the accused No.1 which is a Firm had approached it for financial assistance. After verifying the relevant documents, the complainant sanctioned raw material assistance to the Firm. An agreement was entered into between the parties. Pursuant to the assistance scheme, the accused Nos.1 and 2 issued cheques bearing Nos.295294, 295295, 295296 and 295297 dated 17 th ::: Uploaded on - 19/12/2017 ::: Downloaded on - 20/12/2017 02:15:47 ::: Applns3184.07n3262.07.odt 4/11 May, 2001 These cheques issued by the accused nos.1 and 2 were dishonoured on 18-5-2001. After issuing notice under Section 138 of the said Act, the complaint came to be filed.
3. In Criminal Application No.3262/2007, the complaint bears Summary Criminal Case No.6757/2005. The cheque herein is alleged to be issued by the accused no.3 on behalf of the accused no.1. The cheque bears No.295276 dated 14-5-2001. This cheque issued by the accused no.3 was dishonoured on 16-5-2001. After issuing the notice under Section 138 of the said Act, the complaint came to be filed.
4. The learned Magistrate recorded the statement of the complainant. In Criminal Complaint Case No.6029/2005 it was stated by the General Manager of the Corporation that the cheque in question was issued by the accused No.2. In Criminal Complaint Case No.6757/2005 it was stated on oath that the cheque dated 14-5-2001 was issued by the accused No.3. On that basis process came to be issued by the learned Magistrate. Being aggrieved, the applicants who are the accused in the complaints have filed the present proceedings.
5. Shri M. P. Khajanchi, learned Counsel for the applicants stated that though the cheques in question were issued in the year 1998, the complaint had been filed on 3-7-2001. The cheques were presented beyond the period of six months as stipulated by Section ::: Uploaded on - 19/12/2017 ::: Downloaded on - 20/12/2017 02:15:47 ::: Applns3184.07n3262.07.odt 5/11 138 proviso (a) of the said Act. The complaints were therefore barred by limitation. It was then submitted that necessary averments with regard to the role played by the accused persons had not been pleaded in the complaint. It was not stated as to who was incharge of and responsible for the conduct of business of the firm. Vague averments stating that the accused Nos. 2 and 3 were the Directors of the Company had been made. These averments did not satisfy the statutory as well as legal requirements. It was further urged that the accused no.3 had resigned as a Director on 3-1-2000. The offence having been committed subsequently he could not have been arrayed as an accused. He referred to Form No.32 maintained under the Companies Act, 1956 in that regard. It was further submitted that the complaint was filed by the Corporation through its Joint Manager. However, no authorization in his favour issued by the Company had been placed on record. Similarly, the Articles of Association were also not placed on record. The order issuing process was therefore bad in law as the same had been issued on the basis of verification of the person who was not authorized to represent the Company. No list of witnesses proposed to be examined by the complainant was filed as required by Section 204 of the Code. The endorsement made on the verification that the same had been read and it was correct indicated that the verification was not recorded before the learned Magistrate and hence, it was no verification in the ::: Uploaded on - 19/12/2017 ::: Downloaded on - 20/12/2017 02:15:47 ::: Applns3184.07n3262.07.odt 6/11 eyes of law. On these counts, it was submitted that the complaints filed under Section 138 of the said Act were defective and the proceedings were liable to be quashed. In any event the order issuing process did not indicate the application of judicious mind on the part of the learned Magistrate. In support of his submissions, the learned Counsel placed reliance on the following decisions:
(1) S. M. S. Pharmaceuticals Ltd. Vs. Neeta Bhalla and another (2005) 8 SCC 89.
(2) S. M. S. Pharmaceuticals Ltd. Vs. Neeta Bhalla and another (2007) 4 SCC 70.
(3) Sabitha Ramamurthy and another Vs. R. B. S.
Channabasavaradhya (2006) 10 SCC 581.
(4) N. K. Wahi vs. Shekhar Singh and others (2007) 9 SCC
481.
(5) Pooja Ragvinder Devidasani vs. State of Maharashtra and
another (2014) 16 SCC.
(6) Saroj Kumar Poddar vs. State (NCT of Delhi) and another
(2007) 3 SCC 693.
(7) Ashok Bampato Pagui vs. Agecia Real Canacona Pvt. Ltd.
and another 2007(6) Mh.L.J. 94.
(8) (Dr.) Rajan Sanatkumar Joshi vs. Rajnikant Govindlal
Shah & anr. 2007 SCC OnLine Guj 40.
(9) Bhiku Yeshwant Dhangat and others vs. Baban Maruti
Barate and another 2000(4) Mh.L.J. 861.
6. Shri M. A. Vishwarupe, learned Counsel for the complainant supported the order issuing process and submitted that all legal requirements as stipulated by Section 138 of the said Act were satisfied. The challenges as raised was based on various ::: Uploaded on - 19/12/2017 ::: Downloaded on - 20/12/2017 02:15:47 ::: Applns3184.07n3262.07.odt 7/11 disputed questions and unless the evidence was recorded the same could not be adjudicated. The challenge in fact was premature. The accused persons ought to have appeared before the learned Magistrate and they could have raised all the defences before the trial Court. The averments as made in the complaint were sufficient and it satisfied the legal requirements. It was therefore necessary that the complaints were tried and the challenge was not liable to be entertained at this stage. He, therefore, submitted that both the criminal applications deserve to be rejected.
7. I have heard the learned Counsel for the parties at length and I have perused documents filed on record. In Criminal Case No.6029/2005, it has been pleaded that the cheques in question dated 17-5-2001 were signed by the accused Nos.1 and 2. The accused No.1 is the Firm while the accused No. 2 is shown as its Director. There is further statement that the accused Nos.2 and 3 are the Directors of the Firm in question and they were responsible for the acts of the accused No.1. This fact has been reiterated in the verification statement dated 16-1-2002.
In so far as Criminal Case No.6757/2005 is concerned, the cheque in question is dated 14-5-2001 which is said to be issued by the accused No.3 on behalf of the accused No.1. The accused Nos.2 and 3 are stated to be the Directors of the accused No.1 Firm. These facts are reiterated in the verification statement. ::: Uploaded on - 19/12/2017 ::: Downloaded on - 20/12/2017 02:15:47 :::
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8. In S. M. S. Pharmaceuticals Ltd. (supra), it was held by the Hon'ble Supreme Court that in the complaint filed under the provisions of the said Act, the averment that at the time the offence was committed the accused in question was incharge of and responsible for the conduct of business of the Company has to be made. When such averments are missing, the requirements of Section 141 of the said Act cannot be said to be satisfied. There can be no deemed liability of a Director in such cases. However, in so far as the Managing Director or Joint Managing Director and the signatory of a cheque that is dishonoured, they would be responsible for the incriminating act and would be covered under Section 141(2) of the said Act.
From the aforesaid decision, it is clear that in the complaint there have to be specific averments describing the role played by the accused persons and the manner in which they are responsible for the conduct of business. However, the same is not the case with regard to the signatory of a cheque. As noted above, in Criminal Case No.6029/2005 there is a specific averment that the cheque in question was issued by the accused No.2. In Criminal Case No.6757/2005, the cheque in question was issued by the accused no.3. Thus, on the basis of aforesaid decision these accused signatories cannot be discharged on the premise that they have been generally described as Directors of the Company. The ratio of the ::: Uploaded on - 19/12/2017 ::: Downloaded on - 20/12/2017 02:15:47 ::: Applns3184.07n3262.07.odt 9/11 aforesaid decision would, however, assist the accused No.3 in Criminal Case No.6029/2005 and the accused No.2 in Criminal Case No.6757/2005. On account of their general description, said Directors would be entitled to contend that there are no necessary averments in that regard against them.
9. As regards the other contention that the cheques in question were issued in the year 1998 while the complaints had been filed in the year 2001 is concerned, said contention cannot be accepted as in both the complaints, the date of the cheque has been clearly mentioned as 17-5-2001 and 14-5-2001 respectively. Thus, prima facie the complaints appear to have been filed within a period of six months as stipulated by Section 138 proviso (a) of the said Act.
10. As regards the contention that the accused No.3 had resigned as a Director on 3-1-2000 as per Form No.32 maintained under the Companies Act, 1956, it is to be noted that said accused No.3 is a signatory to the cheque that is the subject matter of Criminal Complaint Case No.6757/2005. Thus, even if it is to be accepted that the accused No.3 had resigned on 3-1-2000 as Director, he being a signatory to the cheque that is the subject matter of Criminal Complaint Case No.6757/2005 cannot be ignored and the aspect of resignation cannot assist his case at least at this stage.
The absence of list of witnesses being furnished as required by Section 204(2) of the Code as well as absence of ::: Uploaded on - 19/12/2017 ::: Downloaded on - 20/12/2017 02:15:47 ::: Applns3184.07n3262.07.odt 10/11 authorization on the part of the Joint Manager to file the complaint can at the most affect the order issuing process. The complaint itself cannot be quashed on that count. As held in Bhiku Yeshwant Vs. Baban Maruti and others (supra) failure to furnish list of witnesses would vitiate the order issuing process. Similarly, in Ashok Bampto Pagui (supra) absence of valid authorization was held to vitiate the order of the learned Magistrate issuing process.
11. I, therefore, find that the complaints as such are not liable to be quashed in the entirety. Complaint Case No.6029/2005 is liable to be quashed only qua accused No.3 while Complaint Case No.6757/2005 is liable to be quashed qua accused No.2. The order issuing process on both the complainants however is liable to be set aside with a direction to the learned Counsel to reconsider the matter in the light of the decisions referred to herein above.
12. Accordingly, the following order is passed: (1) Complaint Case No.6029/2005 stands quashed as against the accused No.3. The order dated 23-1-2002 passed below Exhibit-1 in that complaint is set aside and the learned Judicial Magistrate First Class, Nagpur is directed to reconsider the matter afresh and in accordance with law.
(2) Complaint Case No.6757/2005 stands quashed as against the accused No.2. The order dated 23-1-2002 passed below Exhibit-1 in that complaint is set aside and the learned Judicial Magistrate First ::: Uploaded on - 19/12/2017 ::: Downloaded on - 20/12/2017 02:15:47 ::: Applns3184.07n3262.07.odt 11/11 Class, Nagpur is directed to reconsider the matter afresh and in accordance with law.
(3) The complaints shall be decided on their own merits and in accordance with law. The criminal applications are partly allowed in aforesaid terms with no order as to costs.
JUDGE /MULEY/ ::: Uploaded on - 19/12/2017 ::: Downloaded on - 20/12/2017 02:15:47 :::