D.B. Mehta And Others vs State Of U.P.And Another
2012 Latest Caselaw 484 ALL

HIGH COURT OF JUDICATURE AT ALLAHABAD
 
 

?AFR 
 
Court No. - 22
 

 
Case :- CRIMINAL MISC. WRIT PETITION No. - 10523 of 2004
 

 
Petitioner :- D.B. Mehta And Others
 
Respondent :- State Of U.P.And Another
 
Petitioner Counsel :- Rajiv Gupta
 
Respondent Counsel :- Govt. Advocate,Vipin Saxena
 

 
Hon'ble Ramesh Sinha,J.

Heard Sri Rajiv Gupta, learned counsel for the petitioners, Sri Vipin Saxena, learned counsel for respondent No.2 and perused the record.

This writ petition has been filed against the order 28.7.2004,passed by Additional Sessions Judge, Fast Track Court No.3, Ghaziabad, whereby the Lower Revisional Court dismissed the revision of the petitioners against the order dated 9.5.2002 passed by Xth Additional Chief Judicial Magistrate, Ghaziabad by which the objection against the summoning order dated 24.4.2000 summoning them for trial under Section 138 Negotiable Instrument Act was rejected.

A counter affidavit has been filed by respondent No.2, to which learned counsel for the petitioners states that he does not wish to file any rejoinder affidavit.

Brief facts of the case are that M/s. Vitara Chemicals Limited is a Pharmaceutical Company, duly registered under the Companies Registration Act, 1956 and is engaged in the manufacture and trading of Drugs in bulk. The said Company was represented through its Managing Director, Umesh V. Bhatia, having its registered office at 1, Rewa Chambers, 31, New Marine Lines, Mumbai. The Company through its Managing Director entered into an agreement with opp. party No.2, M/s. Goyal MG Gases Ltd. and undertaken in terms of the said Inter-corporate Deposit Agreement with regard to providing financial assistance for the business purposes of the Company as per the terms and conditions mutually agreed between the two Companies. It appears that subsequently M/s. Vitara Chemicals Ltd. had failed to pay the outstanding amount and, therefore, the opp. party No.2 invoked the Arbitration Clause as per the terms and conditions of the said alleged Inter-corporate Deposit Agreement and thereafter an award was passed on 6.7.1999 by the Arbitrator and in accordance with award, the Company M/s. Vitara Chemicals Ltd. issued 11 post dated cheques. In discharge of the aforesaid liability, the Company M/s. Vitara Chemicals Ltd. through its Managing Director Umesh V. Bhatia, issued a cheque bearing No. 065968 dated 26.11.1999 for Rs.1,31,688/- drawn on Bank International Indonesia, Mumbai. According to the case of the complainant, the said cheque of Rs.1,31,688/- was presented for encashment by opp. party No.2 through its banker in Punjab National Bank, Chander Nagar Branch, Ghaziabad on 1.12.1999. However, the said cheque was dishonoured due to insufficiency of funds and was returned back to the drawee on 7.1.2000, which is alleged to have been received back by opp. party No.2 on 10.1.2000. Consequently, the opp. party No.2 issued notice of demand dated 21.1.2000 as per the provisions of Negotiable Instruments Act. The said notice was sent to accused Company M/s. Vitara Chemicals Ltd. at its registered office. However, in spite of the said notice, the amount of cheque was not paid. Hence a criminal complaint was filed before the Judicial Magistrate, Ghaziabad by opp. party No.2 on 21.1.2000. The learned Magistrate recorded the statement of the complainant under Section 200 Cr.P.C. and thereafter issued the process against the petitioners vide order dated 24.4.2000. On coming to know about the summoning order passed by the Magistrate, the petitioners filed their objections before the learned Magistrate against the summoning order and had brought in the knowledge of the Magistrate that neither the cheque was issued under their signature nor they had any concern whatsoever with the Company at the time when the said cheque was issued, as even prior to the date of issuance of the said cheque they all had tendered their resignation which had also been accepted. It was also specifically stated that they were not even the signatories to the agreement by which the loan was sanctioned to the Company. Even in the arbitration proceedings, the petitioners were not the party as they have severed their connections with the Company and the notice of the dishonour of cheque were also not served upon them and on the said premise, no offence whatsoever is constituted against them, therefore, the summoning order issued against them may be recalled, but the said application of the petitioners were rejected by the learned Magistrate. The accused petitioners have not obtained the bail and the said objection can only be considered at the later stage. Being aggrieved by the said order, the petitioners preferred a revision before the Sessions Judge, Ghaziabad, who also dismissed the revision of the petitioners vide order dated 28.7.2004 with a finding that the law cited in regard to present controversy is not applicable to the facts of the case and after recording the evidence under Section 244 Cr.P.C., the accused applicants may challenge the proceedings before the Court concerned. Hence being aggrieved by the order of the Lower Revisional Court dated 28.7.2004, the petitioners preferred the present writ petition before this Court.

It is contended by the learned counsel for the petitioners that the order passed by the Lower Revisional Court is illegal and against the settled provisions of the Negotiable Instruments Act and the Code of Criminal Procedure. Admittedly, the trial of the offence under the Negotiable Instruments Act shall be the summon trial and not warranted trial, therefore, the provisions of Section 244 Cr.P.C. as observed by the Lower Revisional Court would not be applicable at all. Hence, the finding given by the trial Court in this regard is therefore unsustainable and is liable to be set aside and the impugned order being illegal is also liable to be set aside. It is then urged that in fact the very initiation of the criminal proceeding particularly in regard to the petitioners is wholly illegal inasmuch as even prior to the date of the issuance of the cheque in question, the petitioners have already given their resignation which was forwarded to the Registrar of the Company in the prescribed Form-2 and was accepted with effect from 31.10.1998, 1.7.1998 and 30.6.1999, though the cheques in question were issued on 26.11.1999 when the petitioners had already resigned from the Company M/s. Vitara Chemicals Ltd. as Directors prior to the issuance of the cheques. It was then argued that the cause of action arose on 5.2.2000, hence the petitioners cannot be held liable and to prosecute for offence under Section 138 of the Negotiable Instruments Act for the dishonour of the alleged cheques which were issued after their resignation. It was further submitted by the learned counsel for the petitioners that even according to the allegations made in the complaint, there is no specific averment that the offence has been committed with the consent or connivance or attributed to any neglect on the part of the petitioners, as such the necessary ingredients for constituting the offence under Section 141 of Negotiable Instruments Act is not disclosed and as such the entire proceedings based on such complaint is liable to be quashed by this Court.

Learned counsel for the petitioners in support of his contention has placed reliance on the judgment of the Apex Court reported in (2011)1 SCC (Cri) 1139, Harshendra Kumar D. Vs. Rebatilata Koley and others, in which has been held that an Ex-Director cannot be made accountable and fastened with liability for anything done by Company after acceptance of his resignation by the Company. The Apex Court further held that if criminal complaints are allowed to proceed against the appellant, who is an Ex-Director of the Company, it would result in gross injustice and tantamount to abuse of process of Court.

On the other hand, Sri Vipin Saxena, learned counsel appearing on behalf of the respondent No.2 admitted that the petitioners are not the signatory of the cheque in question and  the petitioners have already resigned before the issuance of the cheque in question. Learned counsel further could not dispute the fact that the petitioners had no concern at all with day to day functioning of the Company and only the person who was only responsible to manage the affairs of the Company at the relevant point of time can be at most liable under Section 138 Negotiable Instruments Act read with Section 141 of the Negotiable Instruments Act.

Having considered the submissions advanced by the learned counsel for the parties, I am of the opinion that as the petitioners had already resigned prior to the date of the alleged offence committed by the Company and they have  not issued the  cheque in question in favour of respondent No.2 and further they were not responsible to the Company for the conduct  of  the business of the Company as contemplated under Section 141 of the Negotiable Instruments Act, hence the prosecution on the basis of the present complaint is wholly unwarranted.

In view of the judgment of the Apex Court in the case of Harshendra Kumar (supra), the law is absolutely clear that proceedings against the Director who had resigned prior to the offence allegedly to the Company, cannot be made liable for post his resignation.

In view of the submissions advanced by the learned counsel for the parties as well as the law laid down by the Apex Court, the impugned order passed by the Courts below are not sustainable in the eyes of law and the same are set aside. All the consequential proceedings against the petitioners in Complaint Case No.1666 of 2000 (M/s. Goyal MG Gases Ltd. Vs. M/s. Vitara Chemicals and others), pending in the Court of Xth Additional Chief Judicial Magistrate, Ghaziabad, under Section 138 Negotiable Instrument Act is hereby quashed.

It is needless to say that the trial Court shall proceed against accused the Director of the Company, who has issued the cheques in question i.e. dated 26.11.1999, in accordance with law.

In view of the above, the writ petition is allowed.

Order Date :- 19.4.2012

NS