NEUTRAL CITATION
R/CR.MA/3657/2019 CAV JUDGMENT DATED: 31/08/2023
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IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/CRIMINAL MISC.APPLICATION NO. 3657 of 2019
With
R/CRIMINAL MISC.APPLICATION NO. 3683 of 2019
With
R/CRIMINAL MISC.APPLICATION NO. 3685 of 2019
With
R/CRIMINAL MISC.APPLICATION NO. 3686 of 2019
With
R/CRIMINAL MISC.APPLICATION NO. 3688 of 2019
With
R/CRIMINAL MISC.APPLICATION NO. 3689 of 2019
With
R/CRIMINAL MISC.APPLICATION NO. 3690 of 2019
FOR APPROVAL AND SIGNATURE:
HONOURABLE MR. JUSTICE SANDEEP N. BHATT
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1 Whether Reporters of Local Papers may be allowed to see the judgment ?
2 To be referred to the Reporter or not ?
3 Whether their Lordships wish to see the fair copy
of the judgment ?
4 Whether this case involves a substantial question
of law as to the interpretation of the Constitution of India or any order made thereunder ?
========================================================== RAMESHBHAI KALUBHAI PRAJAPATI Versus STATE OF GUJARAT ========================================================== Appearance:
MR ROHAN MAJMUDAR FOR MR NK MAJMUDAR(430) for the Applicant(s) No. 1 MR DAKSHESH MEHTA(2430) for the Respondent(s) No. 2 MR. RUSHANG D MEHTA(6989) for the Respondent(s) No. 2 NOTICE SERVED for the Respondent(s) No. 3 MR DHAWAN JAYSWAL, APP for the Respondent(s) No. 1 ========================================================== CORAM:HONOURABLE MR. JUSTICE SANDEEP N. BHATT Page 1 of 20 Downloaded on : Sun Sep 17 03:04:54 IST 2023 NEUTRAL CITATION R/CR.MA/3657/2019 CAV JUDGMENT DATED: 31/08/2023 undefined Date : 31/08/2023 COMMON CAV JUDGMENT
1. All these applications are filed under Section 482 of the Code of Criminal Procedure, 1973 (`the Code' for short) for quashing and setting aside the complaints being Criminal Complaint Nos.1299, 1300, 1301, 1302, 1303, 1305, 1306 of 2016 respectively, pending before the learned Additional Chief Metropolitan Magistrate, Court No.27, Ahmedabad under the provisions of the Negotiable Instruments Act (`NI Act' for short).
2. As the common question of facts and law are involved in these applications, at the request of learned advocates for the parties, they are heard together and disposed of by this common oral order.
3. Rule returnable forthwith. Learned APP Mr.Jayswal waives service of notice of rule for respondent no.1. Learned advocate Mr.Dakshesh Mehta waives service of notice of rule for respondent no.2.
4. These applications are filed for quashing of the complaints filed by the respondent no.2-complainant under Section 138 read with Section 141 of the NI Act for dishonour of the cheques on the ground of `funds insufficient'.
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5. Heard learned advocates for the parties.
5.1 Learned advocate for the applicant Mr.Rohan Majmudar submits that the applicant is doing business of manufacturing and trading of Red Bricks in his own name;
that the applicant has no concern with one M/s Satadhar Trading Company-respondent no.3 (`trading company' for short) herein, that the applicant was neither proprietor nor authorized signatory of said trading company; that the applicant was not connected in any manner with the said trading company; that the applicant has not entered into any kind of transaction with respondent no.2-complainant; that the applicant has not purchased any kind of goods, materials or sanitary wares from respondent no.2-complainant; that the applicant has never issued any cheque by and in the name of the trading company; that the applicant has never incurred any liability; that the applicant has never participated in the administration and business of the firm; that the cheque was never signed by the applicant; that one Tribhovanbhai Kalubhai Prajapati is the proprietor of the trading company;
that all the transactions of purchase and sale of sanitary wares are in the name of the trading company and done by its authorized signatory-proprietor namely Tribhovanbhai Kalubhai Prajapati- brother of the applicant herein; that the Page 3 of 20 Downloaded on : Sun Sep 17 03:04:54 IST 2023 NEUTRAL CITATION R/CR.MA/3657/2019 CAV JUDGMENT DATED: 31/08/2023 undefined name of the applicant is wrongly shown as proprietor of the trading company; that the notices came to be addressed in the name of the applicant before the registration of the complaints but as the applicant had never undertaken any business and he had never received any notices served by the concerned complainant.
5.2 Learned advocate for the applicant Mr.Majmudar submitted that the applicant has not signed the said cheques in individual/personal capacity as the cheques came to be issued in the name of the trading company and the applicant is not the proprietor of the said company and it is managed by the sole proprietor-brother of the applicant namely Tribhovanbhai Kalubhai Prajapati and even the bank account from which the cheques are issued runs in the name of the said trading company. He, therefore, submitted the ingredients of Section 138 of the NI Act are not made out and, therefore, these applications be allowed and the impugned complaints be quashed and set aside qua the applicant.
5.3 In support of his submissions, learned advocate Mr.Majmudar for the applicant has relied on the following decisions:
Page 4 of 20 Downloaded on : Sun Sep 17 03:04:54 IST 2023NEUTRAL CITATION R/CR.MA/3657/2019 CAV JUDGMENT DATED: 31/08/2023 undefined (1) Aparna A Shah V/s Sheth Developers Pvt.Ltd. And Ors., reported in (2013)8 SCC 71.
(2) Harshadkumar Chimanlal Shah V/s State of Gujarat reported in 2012(30) GHJ 51.
(3) Krishna Trading Company, Proprietorship Firm and 1 V/s State of Gujarat, reported in 2017(2) GLH 87.
(4) Mahendrakumar Tulsibhai Patel V/s State of Gujarat, reported in 2008(2) GCD 844.
(5) Anil Kumar V/s Abhishek Enterprise thro' Sandeep Prem Prasad Gomber Partner, reported in 2017(3) Crimes (HC)
448. (6) Pooja Ravinder Devidasani V/s State of Maharashtra reported in 2014(16) SCC 1.
(7) Ritesh Garodia V/s State of Gujarat reported in 2016(4) GLR 2994.
(8) Nileshkumar Vitthalbhai Prajapati V/s State of Gujarat, reported in 2022(1) DCR 718.
(9) Sunita Palita V/s Panchami Stone Quarry, reported in 2022-SCC-10-152.
(10) Nandlal B Chauhan V/s State of Gujarat, reported in 2022(0) ACD 575.
(11) Bharatbhai Chhaganbhai Patel V/s Dharmendra Maganlal Dabhi, reported in 2021(2) DCR 760.
Page 5 of 20 Downloaded on : Sun Sep 17 03:04:54 IST 2023NEUTRAL CITATION R/CR.MA/3657/2019 CAV JUDGMENT DATED: 31/08/2023 undefined (12) Bharatbhai Ravatbapu Va;a V/s HDFC Bank Limited, reported in 2020(1)NIJ 711.
(13) Madhusudan Mohanlal Somani V/s State of Gujarat, reported in 2017(0) JX(Guj) 372.
(14) Nilesh Yashwant Shah V/s State of Gujarat, reported in 2017(4) GLR 3064.
(15) Rahul Chaturbhai Vaghasia V/s State of Gujarat, reported in 2017(3) GLR 2386.
(16) Manoj @ Mike Ambalal Shah V/s State of Gujarat, reported in 2013(0) CrLR(Guj) 464.
(17) R.K.Das Mehrotra V/s State of Gujarat, reported in 2012(30) GHJ 202.
(18) Minar International Limited V/s State of Gujarat, reported in 2014(0) ACD 255.
(19) Anilkumar Ramniklal Patel V/s KGS Tyres Distributors Proprietor Rajeshkumar Kantilal Samani Thropoa Lalitkumar Kantilal Samani reported in 2023(0) JX (Guj) 446.
(20) Maulesh Babulal Soni V/s State of Gujarat reported in 2011(0) JX(Guj) 1476.
6. Per contra, learned APP for respondent no.1-state has objected these applications and submitted that this Court should not exercise its powers by interfering with the Page 6 of 20 Downloaded on : Sun Sep 17 03:04:54 IST 2023 NEUTRAL CITATION R/CR.MA/3657/2019 CAV JUDGMENT DATED: 31/08/2023 undefined proceedings of recovery of amount and the proceedings initiated under Section 138 of the Act are perfectly justified.
7. Learned advocate Mr.Mehta for respondent no.2-
complainant has submitted that all the consignments are delivered in the name of the trading company Rameshbhai Prajapati-present applicant since 2013 and the applicant is playing active role in the business of the trading company;
that the legal notices were served on the trading company and the applicant, which were duly served; that the summons issued by the learned Metropolitan Magistrate Court, Ahmedabad is also served on the said address; that the applicant has introduced himself as owner of the said trading company since its inception and if any change is made, it was not intimated to the respondent no.2-company; that since 2013, the material is delivered, invoices are raised in the name of the Satadhar Trading Company Rameshbhai Prajapati and initially cheques were issued by him and were honoured; that since 2013 time to time every invoices and business documents were addressed in the name of the applicant and till 2018 neither the applicant nor his brother made any efforts to correct the proprietary details supplied to respondent no.2-complainant and notice under Section 138, summons to accused of complaint filed in 2016, bailable warrant of the said complaint and all orders are delivered to Page 7 of 20 Downloaded on : Sun Sep 17 03:04:54 IST 2023 NEUTRAL CITATION R/CR.MA/3657/2019 CAV JUDGMENT DATED: 31/08/2023 undefined the applicant at the very same address and that was never objected and denied before filing of these applications; that even though the complaints were filed in the year 2016, these applications are filed in the year 2019; that the name of the applicant is available on several web platforms and on several websites as owner of the said trading company; that the respondent no.3 and the applicant are real brothers and are acting in the business of Satadhar Trading Company.
7.1 Learned advocate Mr.Mehta, therefore, submitted that since the matter does not only involve issues of Section 138 of the NI Act but involves an outright financial fraud committed by the applicant in conjugation with his brother, the facts of which are subject matter of trial and this Court should not exercise inherent powers under Section 482 of the Code, which otherwise, should be exercised sparingly. He, therefore, prayed to dismiss these applications.
7.2 In support of his submissions, learned advocate Mr.Mehta has relied on the following decisions:
(1) Rohit Chunubhai Mehta V/s Gujarat State Fertilizer Co.Ltd. And another, reported in 2004 Cri.L.J.2298. (2) Ayyubkhan Kalekhan Pathan V/s State of Gujarat, reported in 2022(2) DCR 525.
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8. I have considered the rival submissions and perused the material on record. I have also considered the order passed by this Court on 28.3.2019, which is reproduced hereunder and thereafter the affidavit-in-reply dated 22.8.2023 filed by the respondent no.2 against the further affidavit of the applicant.
"1. Respondent No.3 is not served so far. The Direct Service has been effected.
2. Let the said service be effected without fail by the petitioner. Over and above the regular mode, service shall also be effected by way of registered post A.D. to the respondent No.3.
3. Matter has been substantially heard. Further hearing shall take place on 03.04.2019. To be listed in the first 30 matters.
4. Direct service today is permitted."
9. At the outset, the provisions of Sections 138, 141 and 142 of the NI Act are required to be seen, which read as under:
"138. Dishonour of cheque for insufficiency, etc., of funds in Page 9 of 20 Downloaded on : Sun Sep 17 03:04:54 IST 2023 NEUTRAL CITATION R/CR.MA/3657/2019 CAV JUDGMENT DATED: 31/08/2023 undefined the account.
Where any cheque drawn by a person on an account maintained by him with a banker for payment of any amount of money to another person from out of that account for the discharge, in whole or in part, of any debt or other liability, is returned by the bank unpaid, either because of the amount of money standing to the credit of that account is insufficient to honour the cheque or that it exceeds the amount arranged to be paid from that account by an agreement made with that bank, such person shall be deemed to have committed an offence and shall without prejudice to any other provisions of this Act, be punished with imprisonment for "a term which may extend to two year", or with fine which may extend to twice the amount of the cheque, or with both:
Provided that nothing contained in this section shall apply unless
(a) The cheque has been presented to the bank within a period of six months from the date on which it is drawn or within the period of its validity, whichever is earlier.
(b) The payee or the holder induce course of the cheque, as the case may be, makes a demand for the payment of the said amount of money by giving a notice, in writing, to the drawer, of the cheque, "within thirty days" of the receipt of information by him from the bank regarding the return of the cheques as unpaid, and Page 10 of 20 Downloaded on : Sun Sep 17 03:04:54 IST 2023 NEUTRAL CITATION R/CR.MA/3657/2019 CAV JUDGMENT DATED: 31/08/2023 undefined
(c) The drawer of such cheque fails to make the payment of the said amount of money to the payee or, as the case may be, to the holder in due course of the cheque, within fifteen days of the receipt of the said notice.
Explanation: For the purpose of this section, "debt or other liability"
means a legally enforceable debt or other liability."
"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 proceeded against and punished accordingly: Provided that nothing contained in this subsection 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:
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, Page 11 of 20 Downloaded on : Sun Sep 17 03:04:54 IST 2023 NEUTRAL CITATION R/CR.MA/3657/2019 CAV JUDGMENT DATED: 31/08/2023 undefined he shall not be liable for prosecution under this Chapter. (2) Notwithstanding anything contained in subsection (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 attribute to, any neglect on the part of, any director, Manager, secretary, or other office 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 relating to a firm, means a partner in the firm."
142. Cognizance of offences.--
[(1)] Notwithstanding anything contained in the Code of Criminal Procedure, 1973 (2 of 1974),--
(a) no court shall take cognizance of any offence punishable under section 138 except upon a complaint, in writing, made by the payee or, as the case may be, the holder in due course of the cheque;
(b) such complaint is made within one month of the date on which the cause of action arises under clause (c) of the proviso to section 138: 2 [Provided that the cognizance of a Page 12 of 20 Downloaded on : Sun Sep 17 03:04:54 IST 2023 NEUTRAL CITATION R/CR.MA/3657/2019 CAV JUDGMENT DATED: 31/08/2023 undefined complaint may be taken by the Court after the prescribed period, if the complainant satisfies the Court that he had sufficient cause for not making a complaint within such period;]
(c) no court inferior to that of a Metropolitan Magistrate or a Judicial Magistrate of the first class shall try any offence punishable under section 138.].
[(2) The offence under section 138 shall be inquired into and tried only by a court within whose local jurisdiction,--
(a) if the cheque is delivered for collection through an account, the branch of the bank where the payee or holder in due course, as the case may be, maintains the account, is situated; or
(b) if the cheque is presented for payment by the payee or holder in due course, otherwise through an account, the branch of the drawee bank where the drawer maintains the account, is situated.
Explanation.--For the purposes of clause (a), where a cheque is delivered for collection at any branch of the bank of the payee or holder in due course, then, the cheque shall be deemed to have been delivered to the branch of the bank in which the payee or holder in due course, as the case may be, maintains the account.] [142A. Validation for transfer of pending cases.-- (1) Notwithstanding anything contained in the Code of Page 13 of 20 Downloaded on : Sun Sep 17 03:04:54 IST 2023 NEUTRAL CITATION R/CR.MA/3657/2019 CAV JUDGMENT DATED: 31/08/2023 undefined Criminal Procedure, 1973 (2 of 1974) or any judgment, decree, order or direction of any court, all cases transferred to the court having jurisdiction under sub-section (2) of section 142, as amended by the Negotiable Instruments (Amendment) Ordinance, 2015 (Ord. 6 of 2015), shall be deemed to have been transferred under this Act, as if that sub-section had been in force at all material times. (2) Notwithstanding anything contained in sub-section (2) of section 142 or sub-section (1), where the payee or the holder in due course, as the case may be, has filed a complaint against the drawer of a cheque in the court having jurisdiction under sub-section (2) of section 142 or the case has been transferred to that court under sub-section (1) and such complaint is pending in that court, all subsequent complaints arising out of section 138 against the same drawer shall be filed before the same court irrespective of whether those cheques were delivered for collection or presented for payment within the territorial jurisdiction of that court.
(3) If, on the date of the commencement of the Negotiable Instruments (Amendment) Act, 2015 (26 of 2015), more than one prosecution filed by the same payee or holder in due course, as the case may be, against the same drawer of cheques is pending before different courts, upon the said fact having been brought to the notice of the court, such court shall transfer the case to the court having jurisdiction under Page 14 of 20 Downloaded on : Sun Sep 17 03:04:54 IST 2023 NEUTRAL CITATION R/CR.MA/3657/2019 CAV JUDGMENT DATED: 31/08/2023 undefined sub-section (2) of section 142, as amended by the Negotiable Instruments (Amendment) Ordinance, 2015 (Ord. 6 of 2015), before which the first case was filed and is pending, as if that sub-section had been in force at all material times.]
10. The contentions raised by learned advocate for the applicant that the applicant is not the proprietor of the said trading company from which account the cheques which are dishonoured have been issued and that the applicant's brother is the proprietor and therefore the complaint filed against the applicant under Section 138 of the NI Act cannot be carried further as he is not responsible for the purchase/sale of goods from the respondent no.2-complainant and for the payments made/to be made to the respondent no.2-complainant are not admitted and controverted by learned advocate for the respondent no.2-complainant and considering the documents produced by both sides on the record, which means they are all disputed question of facts which are required to be decided in the trial Court. The ratio of judgments cited by the learned advocates are binding to this Court but looking to the disputed questions involved in the present matters, all the contentions raised by the applicant can be decided after proper trial. The contentions raised by learned advocates for the parties are more in the form of proving the factual aspects of the matter by leading documentary evidence, which Page 15 of 20 Downloaded on : Sun Sep 17 03:04:54 IST 2023 NEUTRAL CITATION R/CR.MA/3657/2019 CAV JUDGMENT DATED: 31/08/2023 undefined this Court cannot go into at this stage of quashing of the complaint. The service of notice under Section 138 of the NI Act before filing the complaints is also disputed and if it is assumed that the same is served, then the applicant chose not to reply to the said notice with all these contentions.
Further, the applicant has also waited till 2019 before filing these applications for quashing of the complaints even though the complaints are filed in the year 2016. This Court cannot conduct mini trial or roving inquiry at the stage of exercising the powers under Section 482 of the Code and therefore, this Court cannot exercise the powers under Section 482 of Code at this initial stage. The applicant has failed to produce some impeachable and incontrovertible evidence beyond suspicion or doubt at this stage of quashing of the complaints. All the contentions raised are in the form of defence, which can be considered after appreciating evidence in full fledged trial of the impugned complaints. In fact, trial is also proceeded further during pendency of these applications.
11. At this stage, it is also fruitful to refer to the judgment rendered by the Hon'ble Apex Court in the case of S.P.Mani and Mohan Dairy V/s Dr.Snehalatha Elangovan reported in 2022(13) Scale, page 543, more particularly, paragraphs 43 and 46, which read as under:
Page 16 of 20 Downloaded on : Sun Sep 17 03:04:54 IST 2023NEUTRAL CITATION R/CR.MA/3657/2019 CAV JUDGMENT DATED: 31/08/2023 undefined "43. In the case on hand, we find clear and specific averments not only in the complaint but also in the statutory notice issued to the respondent. There are specific averments that the cheque was issued with the consent of the respondent herein and within her knowledge. In our view, this was sufficient to put the respondent herein to trial for the alleged offence. We are saying so because the case of the respondent that at the time of issuance of the cheque or at the time of the commission of offence, she was in no manner concerned with the firm or she was not in- charge or responsible for day-to-day affairs of the firm cannot be on the basis of mere bald assertion in this regard. The same is not sufficient. To make good her case, the respondent herein is expected to lead unimpeachable and incontrovertible evidence. Nothing of the sort was adduced by the respondent before the High Court to get the proceedings quashed. The High Court had practically no legal basis to say that the averments made in the complaint are not sufficient to fasten the vicarious liability upon the respondent by virtue of Section 141 of the NI Act.
46. When in view of the basic averment process is issued the complaint must proceed against the Directors or partners as the case may be. But if any Director or Partner wants the process to be quashed by filing a petition under Section 482 of the Code on the ground that only a bald averment is Page 17 of 20 Downloaded on : Sun Sep 17 03:04:54 IST 2023 NEUTRAL CITATION R/CR.MA/3657/2019 CAV JUDGMENT DATED: 31/08/2023 undefined made in the complaint and that he is really not concerned with the issuance of the cheque, he must in order to persuade the High Court to quash the process either furnish some sterling incontrovertible material or acceptable circumstances to substantiate his contention. He must make out a case hat making him stand the trial would be an abuse of process of court. He cannot get the complaint quashed merely on the ground that apart from the basic averment no particulars are given in the complaint about his role, because ordinarily the basic averment would be sufficient to send him to trial and it could be argued that his further role could be brought out in the trial. Quashing of a complaint is a serious matter. Complaint cannot be quashed for the asking. For quashing of a complaint, it must be shown that no offence is made out at all against the Director or Partner."
12. It is also fruitful to refer to the judgment in the case of S.Krishnamoorthy V/s Chellammal reported in (2015)4 SCC 559, wherein the Hon'ble Apex Court has held in paragraphs nos.5,7 and 8 of which read as under:
"5. The above defence of the respondent (accused) before the High Court, in the petition filed under Section 482 of the Code, is nothing but absolutely factual in nature, which is neither admitted by the complainant, nor apparent on the face of the record. Such type of disputed factual defences Page 18 of 20 Downloaded on : Sun Sep 17 03:04:54 IST 2023 NEUTRAL CITATION R/CR.MA/3657/2019 CAV JUDGMENT DATED: 31/08/2023 undefined could have been appreciated only by the trial court, after the parties led their evidence. In our opinion, the High Court committed grave error of law in examining the allegations and counter allegations which are disputed and factual in nature in a proceeding under Section 482 of the Code.
7. In view of the above position of law, we have no option but to set aside the order passed by the High Court as it has entered into highly disputed questions of fact and concluded that the material before it was sufficient to cause reasonable suspicion in the case of the complainant. That is not the ground on which powers under Section 482 of the Code can be exercised by the High Court.
8. Therefore, the appeal is allowed. The impugned order dated 5.8.2009 passed by the High Court of Judicature at Madras in Criminal O.P. No. 7989 of 2009 is hereby set aside. The Criminal complaint (CC No. 120 of 2007) pending before the Judicial Magistrate, Dharapuram, shall stand revived. The trial court shall proceed in accordance with law."
13. The decision relied on by learned advocate for the applicant in the case of Aparna A Shah (supra) will not helpful in the facts of the present case as the facts therein are with regard to joint account holder of the account from Page 19 of 20 Downloaded on : Sun Sep 17 03:04:54 IST 2023 NEUTRAL CITATION R/CR.MA/3657/2019 CAV JUDGMENT DATED: 31/08/2023 undefined which the cheques were issued and in the case on hand, it is of a proprietorship firm and sole proprietor.
14. In view of above discussion as well as settled position of law and after considering the facts as alleged in the complaint filed under Section 138 of the NI Act and circumstances of the present case and considering the disputed question involved in the matters which are required to be tested by a proper trial of the matters, I am of the opinion that this is not a fit case to exercise the inherent powers under Section 482 of the Code and quash the impugned complaints. Let the trial Court decide all the contentions raised by the parties after giving proper opportunity to the parties in the proceedings of trial of respective Criminal Complaint Nos.1299, 1300, 1301, 1302, 1303, 1305, 1306 of 2016 respectively, pending before the learned Additional Chief Metropolitan Magistrate, Court No.27, Ahmedabad, in accordance with law and as expeditiously as possible, preferably within a period of 8 (eight) months from today, i.e. on or before 30 th April, 2024.
15. Resultantly, all these applications are dismissed.
Rule is discharged. Interim relief, if any, stands vacated.
(SANDEEP N. BHATT,J) SRILATHA Page 20 of 20 Downloaded on : Sun Sep 17 03:04:54 IST 2023