Gujarat High Court
Savitaben Mafatlal Patel vs State Of Gujarat on 30 January, 2025
NEUTRAL CITATION
R/CR.MA/2063/2025 ORDER DATED: 30/01/2025
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IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/CRIMINAL MISC. APPLICATION (FOR QUASHING & SET ASIDE
FIR/ORDER) NO. 2063 of 2025
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SAVITABEN MAFATLAL PATEL & ANR.
Versus
STATE OF GUJARAT & ANR.
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Appearance:
MR NK MAJMUDAR(430) for the Applicant(s) No. 1,2
MR. MANAN MAHETA, APP for the Respondent(s) No. 1
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CORAM:HONOURABLE MR. JUSTICE SANDEEP N. BHATT
Date : 30/01/2025
ORAL ORDER
1. The present application is filed for the following prayers:
"A. Be pleased to admit this petition;
B. pass appropriate order under Section 482 of the Code of Criminal Procedure and be pleased to quash and set aside the Complainant /Criminal Case No. 8355/2024 which has remained pending before the Hon'ble 3RD Add. Civil Judge and Judicial Magistrate First Class, Valsad and be pleased to quash and set aside process / summons as well as order dated 26/09/2024 under Exhibit-1, issued in connection with said Complainant /Criminal Case No. 8355/2024 by the Hon'ble 3RD Add. Civil Judge and Judicial Magistrate First Class, Valsad, in the interest of justice;
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NEUTRAL CITATION R/CR.MA/2063/2025 ORDER DATED: 30/01/2025 undefined C. Be pleased to pass appropriate interim order and be pleased to stay the further proceedings of Complainant/Criminal Case No. 8355/2024 which has remained pending before the Hon'ble 3RD Add. Civil Judge and Judicial Magistrate First Class, Valsad, pending admission and final disposal of this petition; D. any other and further order be passed in the interest of justice."
2. Heard learned advocate Mr. N.K.Majmudar for the applicants and learned APP, Mr. Manan Maheta for the respondent - State.
3. Learned advocate Mr. N.K.Majmudar for the applicants has submitted that the applicants being Directors are falsely implicated in the proceedings under Section 138 of the Negotiable Instruments Act, 1881. He has further submitted that on bare reading of the complaint filed under Section 138 of the N.I.Act, no specific averments are made in the complaint by which the applicants can be held for active participation. He further submits that no vicarious liability can be fastened on the applicants in absence of specific averments about the applicants. He has further submitted that now in view of series of judgments of the Hon'ble Apex Court as well as this Hon'ble Court, in absence of specific Page 2 of 11 Uploaded by SLOCK BAROT(HC01781) on Mon Feb 03 2025 Downloaded on : Mon Feb 03 21:53:44 IST 2025 NEUTRAL CITATION R/CR.MA/2063/2025 ORDER DATED: 30/01/2025 undefined averments in the complaint about the active participation of the accused person as Director in day to day affairs of the Company, no prosecution can be proceeded under Section 138 of the N.I.Act. He has further submitted that reading of Section 138 with Section 141 of the N.I.Act also clearly indicates that unless the Director has participated actively in the said transaction or day to day affairs of the Company, such liability cannot be fastened. Lastly, he has submitted that, even in the G.S.T. correspondence, the person who is in-charge of the Company is not the present applicants and therefore, he submits that, continuation of the proceedings pursuant to the present complaint would amount to abuse of process of law. He has relied on the judgments of the Hon'ble Apex Court in the cases of S.P.Mani and Mohan Dairy Vs. Snehalatha Elangovan reported in 2023 (10) SCC 685 as well as Ashok Shewakramani Vs. State of Andhra Pradesh reported in 2023 (8) SCC 473 and has submitted that the present case is also squarely covered by the above judgments and therefore, the Court may interfere with the proceedings filed under the provisions of Section 138 of the N.I.Act and grant interim relief as prayed for in the present application.
4. Learned APP, Mr. Maheta has submitted that essentially the dispute is between the applicants and the Page 3 of 11 Uploaded by SLOCK BAROT(HC01781) on Mon Feb 03 2025 Downloaded on : Mon Feb 03 21:53:44 IST 2025 NEUTRAL CITATION R/CR.MA/2063/2025 ORDER DATED: 30/01/2025 undefined private complainant, but it cannot be said that the complaint does not disclose offence against the present applicants and the applicants cannot be held liable by drawing attention of this Court towards the complaint which is filed under Section 138 of the N.I.Act and by relying on the paras 10 and 11 of the judgment in the case of Ashok (Supra). He has submitted that though notice is served, the applicants have not responded to the notice by giving proper reply. Therefore, he has submitted that considering these aspects and considering the judgment in the case of S.P.Mani (supra), which is relied upon by the learned advocate for the applicants, no relief can be granted at this stage and therefore, he has submitted that, appropriate order may be passed by rejecting the present application.
5. I have considered the rival submissions made at the bar, the main contention of the applicants is that they are not active in the day to day affairs of the company and therefore, liability cannot be fastened by relying upon the judgment of the Hon'ble Apex Court in the case of Ashok Shewakramani (supra), more particularly, paras 6 to 11, whereby, the Hon'ble Apex Court made the following observations:
"6. It is also necessary to note the averments made in Para 8 of the complaint in which the second respondent stated that the statutory notice of demand was not served on the accused. In Page 4 of 11 Uploaded by SLOCK BAROT(HC01781) on Mon Feb 03 2025 Downloaded on : Mon Feb 03 21:53:44 IST 2025 NEUTRAL CITATION R/CR.MA/2063/2025 ORDER DATED: 30/01/2025 undefined fact, the second respondent has relied upon the returned postal covers. Even in the affidavit in support of the complaint, the second respondent has come out with a case that the demand notice was not served.
7. In fact, the service of notice of demand is a condition precedent for filing a complaint in view of clause (c) of Section 138 of the NI Act. This is one ground on which the complaint must fail.
8. Now we come to the averments made in Para 7. Firstly, it is stated that all the Directors were liable for the transactions of Accused 1 Company. Secondly, it is stated that all the accused were fully aware of the issuance of the cheques subject- matter of the complaint, and they were also aware that the cheques will be dishonoured. Further, it is alleged that all the accused knew that there were no funds in the account of Accused 1 Company.
9. Sub-section (1) of Section 141 of the NI Act required the complainant to aver that the present appellants at the time of the commission of the offence were in charge of, and were responsible to the Company for the conduct of the business of the Company. In the present case, all that the second respondent has alleged is that the appellants were liable for transactions of the Company and that they were fully aware of the issuance of the cheques and dishonour of the cheques.
10. Therefore, even if we decide to take a broad and liberal view of the pleadings in the complaint, we are unable to draw a conclusion that compliance with the requirements of sub- section (1) of Section 141 of the NI Act was made by the second respondent. The most important averment which is Page 5 of 11 Uploaded by SLOCK BAROT(HC01781) on Mon Feb 03 2025 Downloaded on : Mon Feb 03 21:53:44 IST 2025 NEUTRAL CITATION R/CR.MA/2063/2025 ORDER DATED: 30/01/2025 undefined required by sub-section (1) of Section 141 of the NI Act is that the Directors were in charge of, and were responsible for the conduct of the Company. The appellants are neither the signatories to the cheques nor are whole-time Directors. The decision in S.P. Mani & Mohan Dairy v. Snehalatha Elangovan [S.P. Mani & Mohan Dairy v. Snehalatha Elangovan, (2023) 10 SCC 685 : 2022 SCC OnLine SC 1238] will have no application as in the present case, the statutory notice was admittedly not served to the accused. Obviously, the High Court has not adverted to aforesaid two glaring deficiencies in the complaint.
11. In the circumstances, the appeal must succeed and the impugned order [Ashok Shewakramani v. State of A.P., 2017 SCC OnLine Hyd 900] is quashed and set aside, only insofar as the present appellants are concerned. Accordingly, a complaint bearing CC No. 1 of 12 pending in the Court of Judicial Magistrate, First Class, Nandyal is quashed only insofar as present appellants are concerned."
5.1 Considering the ratio laid down by the abovesaid judgment and in the said judgment, the case is that notice which was sent under Section 138 of the N.I.Act, was not served upon the accused person. The facts of the present case are different as it is an undisputed position, as the learned advocate for the applicants has also fairly conceded that the notice is served upon the present applicants but the same was not responded. Therefore, the aforesaid judgment relied upon by the learned advocate for the applicants is not helpful to the case of the present applicants. Page 6 of 11 Uploaded by SLOCK BAROT(HC01781) on Mon Feb 03 2025 Downloaded on : Mon Feb 03 21:53:44 IST 2025
NEUTRAL CITATION R/CR.MA/2063/2025 ORDER DATED: 30/01/2025 undefined 5.2 Now, considering the judgment in the case of S.P.Mani and Mohan Dairy (supra), whereby, the relevant paras read as under:
"50. The principles discernible from the aforesaid decision of this Court in Ashutosh Ashok Parasrampuriya [Ashutosh Ashok Parasrampuriya v. Gharrkul Industries (P) Ltd., (2023) 14 SCC 770 : 2021 SCC OnLine SC 915] are that the High Court should not interfere under Section 482 of the Code at the instance of an accused unless it comes across some unimpeachable and incontrovertible evidence to indicate that the Director/partner of a firm could not have been concerned with the issuance of cheques. This Court clarified that in a given case despite the presence of basic averments, the High Court may conclude that no case is made out against the particular Director/partner provided the Director/partner is able to adduce some unimpeachable and incontrovertible evidence beyond suspicion and doubt.
54. We may also examine this appeal from a different angle. It is not in dispute, as noted above, that no reply was given by the respondent to the statutory notice served upon her by the appellant. In the proceedings of the present type, it is essential for the person to whom statutory notice is issued under Section 138 of the NI Act to give an appropriate reply. The person concerned is expected to clarify his or her stance. If the person concerned has some unimpeachable and incontrovertible material to establish that he or she has no role to play in the affairs of the company/firm, then such material should be highlighted in the reply to the notice as a foundation. If any such foundation Page 7 of 11 Uploaded by SLOCK BAROT(HC01781) on Mon Feb 03 2025 Downloaded on : Mon Feb 03 21:53:44 IST 2025 NEUTRAL CITATION R/CR.MA/2063/2025 ORDER DATED: 30/01/2025 undefined is laid, the picture would be more clear before the eyes of the complainant. The complainant would come to know as to why the person to whom he has issued notice says that he is not responsible for the dishonour of the cheque.
55. Had the respondent herein given appropriate reply highlighting whatever she has sought to highlight before us then probably the complainant would have undertaken further enquiry and would have tried to find out what was the legal status of the firm on the date of the commission of the offence and what was the status of the respondent in the firm. The object of notice before the filing of the complaint is not just to give a chance to the drawer of the cheque to rectify his omission to make his stance clear so far as his liability under Section 138 of the NI Act is concerned.
56. Once the necessary averments are made in the statutory notice issued by the complainant in regard to the vicarious liability of the partners and upon receipt of such notice, if the partner keeps quiet and does not say anything in reply to the same, then the complainant has all the reasons to believe that what he has stated in the notice has been accepted by the noticee. In such circumstances what more is expected of the complainant to say in the complaint.
58. Our final conclusions may be summarised as under:
58.1. The primary responsibility of the complainant is to make specific averments in the complaint so as to make the accused vicariously liable. For fastening the criminal liability, there is no legal requirement for the complainant to show that the accused partner of the firm was aware about each and every transaction. Page 8 of 11 Uploaded by SLOCK BAROT(HC01781) on Mon Feb 03 2025 Downloaded on : Mon Feb 03 21:53:44 IST 2025
NEUTRAL CITATION R/CR.MA/2063/2025 ORDER DATED: 30/01/2025 undefined On the other hand, the first proviso to sub-section (1) of Section 141 of the Act clearly lays down that if the accused is able to prove to the satisfaction of the Court that the offence was committed without his/her knowledge or he/she had exercised due diligence to prevent the commission of such offence, he/she will not be liable of punishment.
58.2. The complainant is supposed to know only generally as to who were in charge of the affairs of the company or firm, as the case may be. The other administrative matters would be within the special knowledge of the company or the firm and those who are in charge of it. In such circumstances, the complainant is expected to allege that the persons named in the complaint are in charge of the affairs of the company/firm. It is only the Directors of the company or the partners of the firm, as the case may be, who have the special knowledge about the role they had played in the company or the partners in a firm to show before the Court that at the relevant point of time they were not in charge of the affairs of the company. Advertence to Sections 138 and Section 141, respectively, of the NI Act shows that on the other elements of an offence under Section 138 being satisfied, the burden is on the Board of Directors or the officers in charge of the affairs of the company/partners of a firm to show that they were not liable to be convicted. The existence of any special circumstance that makes them not liable is something that is peculiarly within their knowledge and it is for them to establish at the trial to show that at the relevant time they were not in charge of the affairs of the company or the firm.
58.3. Needless to say, the final judgment and order would Page 9 of 11 Uploaded by SLOCK BAROT(HC01781) on Mon Feb 03 2025 Downloaded on : Mon Feb 03 21:53:44 IST 2025 NEUTRAL CITATION R/CR.MA/2063/2025 ORDER DATED: 30/01/2025 undefined depend on the evidence adduced. Criminal liability is attracted only on those, who at the time of commission of the offence, were in charge of and were responsible for the conduct of the business of the firm. But vicarious criminal liability can be inferred against the partners of a firm when it is specifically averred in the complaint about the status of the partners "qua" the firm. This would make them liable to face the prosecution but it does not lead to automatic conviction. Hence, they are not adversely prejudiced if they are eventually found to be not guilty, as a necessary consequence thereof would be acquittal. 58.4. If any Director 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 made in the complaint and that he/she is really not concerned with the issuance of the cheque, he/she must in order to persuade the High Court to quash the process either furnish some sterling incontrovertible material or acceptable circumstances to substantiate his/her contention. He/she must make out a case that making him/her stand the trial would be an abuse of process of Court." 5.3 It is required to note that the Hon'ble Apex Court has categorically observed that the reply of the notice is required in case where the petitioner has received the notice under Section 138 of the N.I.Act and the petitioner is contending that he is not liable to pay or face the prosecution under Section 138 read with Section 141 of the N.I.Act. In the present case, though notice is served, no response is given and therefore, all the contentions which are raised in the Page 10 of 11 Uploaded by SLOCK BAROT(HC01781) on Mon Feb 03 2025 Downloaded on : Mon Feb 03 21:53:44 IST 2025 NEUTRAL CITATION R/CR.MA/2063/2025 ORDER DATED: 30/01/2025 undefined present application can be a good defence at the time of trial but such contentions cannot be considered at this stage, more particularly, the application filed under Section 528 of the Bharatiya Nagarik Suraksha Sanhita (B.N.S.S.), pari materia, of Section 482 of the Criminal Procedure Code.
6. In view of the foregoing reasons, I am of the opinion that the present application lacks merit and the same is required to be dismissed, at this stage. Accordingly, the present application is dismissed.
7. However, it is clarified that all the contentions of the applicants on merits are kept open, which can be urged at the time of trial.
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