M/S R.M Diary Products (Llp) And 3 ... vs State Of U.P. And Another
2023 Latest Caselaw 10410 ALL

HIGH COURT OF JUDICATURE AT ALLAHABAD
 
 

Judgement Reserved on 06.04.2023
 
Judgement Delivered On 10.04.2023
 

 
Court No. - 67
 
Case :- APPLICATION U/S 482 No. - 11690 of 2023
 
Applicant :- M/S R.M Diary Products (Llp) And 3 Others
 
Opposite Party :- State of U.P. and Another
 
Counsel for Applicant :- Mohd. Afzal
 
Counsel for Opposite Party :- G.A.
 

 
Hon'ble Rahul Chaturvedi,J.

Heard Mohd. Afzal, learned counsel for the applicant, Sri Faraz Kazmi, learned Brief Holder for the State and perused the record.

While filing the present 482 Cr.P.C. Application, the applicants are invoking the extra ordinary powers of this Court under Section 482 Cr.P.C. assailing the legality and validity of the impugned summoning order dated 21.09.2022, passed by learned Magistrate after adhering the procedure prescribed under Chapter XV of Cr.P.C. in complaint case no. 7342 of 2022 (M/s Bansal Payal Jewels through its proprietor Rinku Bansal Vs. M/s R. M. Dairy Products and others).

Introducing the contesting parties, learned counsel for the applicants have submitted that all the individual applicants are Limited Liability Partners (LLP) of "M/s R.M.Dairy Products". The instant proceedings are under Section 138 N.I.Act pending before Special Chief Judicial Magistrate, Agra and summoning order dated 21.09.2022 passed by Additional Civil Judge (JD), Court No.6, Agra. The opposite party no.2 has filed complaint before learned Magistrate under Section 138 NI Act dated 23.06.2022 with the following averments mentioned in it. The opposite party no.2 (complainant) is a firm dealing with jewellery and ornament business. The opp. party no.2 (complainant) Mr. Rinku Bansal and one Directors of M/s. R.M.Dairy Products are having a prior acquaintance with each other and keeping in view their old relationship, one of the Directors of M/s R.M.Diary Products on 05.05.2022 have purchased the Jewellery of worth Rs. 15 lacs on credit, of which the Bill/Receipt No. BPJ/2122/092. The paragraph 4 of the above complaint is most crucial and relevant that in lieu of the ornaments purchased of worth Rs. 15 lacs, Mr. Ravi Singhal, the "authorized signatory" of M/s R.M.Dairy Products LLP have issued a cheque on the same day i.e. 05.08.2022 of Punjab National Bank from its Account No. xxxxxxxxxxx13003 for worth Rs. 15 lacs. It is mentioned in the complaint itself that Ravi Singhal is a Director of the aforesaid company as well as authorized signatory. In this capacity he issued cheque on behalf of the company M/s R.M.Dairy Products.

When the aforesaid instrument presented for its encashment on 09.05.2022, the issued cheque was dishonoured by the bank. There was no satisfactory reply was given to the opposite party no.2, left with no option on 12.05.2022 a legal notice was given but this efforts was also went in vain and till date the concerned cheque has not been honoured.

Learned counsel for the applicant has drawn the attention of the Court to the impugned summoning order dated 21.09.2022 passed by the Magistrate concerned and number of legal fallacies pointed out by the learned counsel for the applicant.

At the outset, learned counsel for the applicant has relied upon the provisions of Section 141 NI Act, which reads thus:-

"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 punished accordingly: Provided that nothing contained in this sub-section 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, he shall not be liable for prosecution under this Chapter.]

(2) Notwithstanding anything contained in sub-section (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 attributable to, any neglect on the part of, any director, manager, secretary or other officer 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."

In addition to this, much emphasis has been laid by the learned counsel for the applicants, that almost all directors, partners were made accused in this case, without attributing any specific and individual role in commission of the offence. The company is a juristic legal entity and directors are its different faculties functioning as per the requirement of that juristic person and on this learned counsel for the applicants relied upon the celebrated judgment of Hon'ble Apex Court in the case of SMS Pharmaceuticals Ltd. Vs. Neeta Bhalla and another reported in (2005) 8 SCC 89 whereby full Bench of Hon'ble Apex Court, replying to the reference has explained the scope and ambit of Section 141 NI Act. Paragraph 19 of the judgment is quoted herein below:-

"19. In view of the above discussion, our answers to the questions posed in the 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 in charge 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 the question posed in sub-para (b) has to be in the 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 in charge of and responsible to the company for the conduct of its business. The requirement of Section 141 is that the person sought to be made liable should be in charge 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 be in the affirmative. The question notes that the managing director or joint managing director would be admittedly in charge of the company and responsible to the company for the conduct of its business. When that is so, holders of such positions in a company become liable under Section 141of the Act. By virtue of the office they hold as managing director or joint managing director, these persons are in charge of and responsible for the conduct of business of the company. Therefore, they get covered under Section 141. So far as the 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."

It was strenuously argued by learned counsel for the applicant that in the complaint itself, there is no specific averment in consonance of mandatory provision of Section 141 of N.I.Act that at the time of offence was committed, the person accused was In-charge of, and responsible of conduct of business of company. The requirement of Section 141 N.I. Act is that persons sought to be made liable should be in the charge of and responsible of conduct of business of company at relevant point of time, without this specific averment there cannot be deemed liability of directors in such cases.

The Court has laid down his hand in the recent judgment in the case of N.Harihara Krishnan Vs. J. Thomas reported in (2018)13 Supreme Court Cases 663, its paragraph 22 is relevant to be placed :-

"The High Court failed to appreciate that the liability of the appellant (if any in the context of the facts of the present case) is only statutory because of his legal status as the DIRECTOR of DAKSHIN. Every person signing a cheque on behalf of a company on whose account a cheque is drawn does not become the drawer of the cheque. Such a signatory is only a person duly authorised to sign the cheque on behalf of the company/drawer of the cheque."

Now comparing the submissions from the present complaint, paragraph 4 of the complaint is quoted herein below:-

"४. यह कि उक्त आभूषणों की खरीद के भुगतान 15,00,000 (पंद्रह लाख रुपया मात्रा) के एवज़ में कंपनी आर. एम्. डेयरी प्रोडक्ट्स एल. एल. पी के डायरेक्टर्स चेक के अधिकृत अधोहस्ताक्षरी श्री रवि सिंघल पुत्र श्री सत्य नयायन सिंघल ने प्रार्थी/परिवादी को दिनांक 05/05/2022 का पंजाब नेशनल बैंक शाखा -विजय नगर, आगरा का चेक संख्या 342270 खाता संख्या 1656008700013003 कुल मूल्य 15,00,000/- (पंद्रह लाख रुपया मात्र) प्रदान किया एवं प्रार्थी/परिवादी को यह आश्वासन दिया कि उक्त चेक नियत दिनांक पर बैंक में प्रस्तुत करने पर आपको अपना भुगतान (रुपया) प्राप्त हो जायेगे, चूँकि प्रार्थी/परिवादी एवं कंपनी के डायरेक्टर्स के मध्य अति विश्वास का सम्बन्ध थे, इसलिए प्रार्थी/परिवादी द्वारा उक्त चेक को स्वीकार कर लिया गया एवं खरीदे गए आभूषणों को कंपनी के डायरेक्टर्स रवि सिंघल पुर्त्र श्री सत्य नारायण सिंघल को दे दिए।"

Thus it is abundantly clear that Ravi Singhal, who has issued the cheque, was the authorized signatory and helm of affairs of the company was also director and was also In-charge as "authorized signatory" on behalf of the company and therefore requirement of law under Section 141 NI Act as well as in SMS Pharmaceuticals Ltd. (supra) is fully complied with, so for as Ravi Singhal is concerned. Now coming to the validity of the summoning order dated 21.09.2022.

I have keenly perused the order impugned whereby learned Special Judge (JD), Court No.6, Agra have mentioned in his impugned order that the cheque was issued on 06.05.2022 and bank has given a memo of dishonouring the cheque on 09.05.2022. A legal notice was given on 12.05.2022 and therefore all the applicants, namely, M/s R.M.Dairy Products, Ravi Singhal, Sumal Goyal, Ram Vinod Singh, Shishir Singh, Girish Chandra Goyal, Archana Singhal and Radha Singhal are responsible and to be prosecuted under Section 138 N.I. Act.

This Court has gone through the entire impugned summoning order and I have got no hesitation to submit that this summoning order is not cryptic order without any application of judicial mind but cursory in nature, whereby the concerned court have passed this order in a most mechanical and negligent way. This is apparently clear that this order of summoning cannot be sustain in the eye of law, so far as relates to Suman Goyal, Ram Vinod Singh, Shishir Singh, Girish Chandra Goyal, Archana Singh and Radha Singh. Neither there is any allegation in the complaint nor all of the aforesaid persons are involved in commission of the offence. The Court wonders that there name have been inserted with particular motive and purpose.

In addition to this, learned counsel for the applicant has relied upon the judgment of Hon'ble Apex Court in the case of Lallan Kumar Singh and others Vs. State of Maharashra reported in 2022 LiveLaw (SC) 833, paragraph 28 is quoted herein below:-

"28. The order of issuance of process is not an empty formality. The Magistrate is required to apply his mind as to whether sufficient ground for proceeding exists in the case or not. The formation of such an opinion is required to be stated in the order itself. The order is liable to be set aside if no reasons are given therein while coming to the conclusion that there is a prima facie case against the accused. No doubt, that the order need not contain detailed reasons. A reference in this respect could be made to the judgment of this Court in the case of Sunil Bharti Mittal vs. Central Bureau of Investigation9, which reads thus:

"51. On the other hand, Section 204 of the Code deals with the issue of process, if in the opinion of the Magistrate taking cognizance of an offence, there is sufficient ground for proceeding. This section relates to commencement of a criminal proceeding. If the Magistrate 9 (2015) 4 SCC 609 taking cognizance of a case (it may be the Magistrate receiving the complaint or to whom it has been transferred under Section 192), upon a consideration of the materials before him (i.e. the complaint, examination of the complainant and his witnesses, if present, or report of inquiry, if any), thinks that there is a prima facie case for proceeding in respect of an offence, he shall issue process against the accused.

52. A wide discretion has been given as to grant or refusal of process and it must be judicially exercised. A person ought not to be dragged into court merely because a complaint has been filed. If a prima facie case has been made out, the Magistrate ought to issue process and it cannot be refused merely because he thinks that it is unlikely to result in a conviction.

53. However, the words "sufficient ground for proceeding" appearing in Section 204 are of immense importance. It is these words which amply suggest that an opinion is to be formed only after due application of mind that there is sufficient basis for proceeding against the said accused and formation of such an opinion is to be stated in the order itself. The order is liable to be set aside if no reason is given therein while coming to the conclusion that there is prima facie case against the accused, though the order need not contain detailed reasons. A fortiori, the order would be bad in law if the reason given turns out to be ex facie incorrect."

Taking the help of aforesaid beacon light of aforesaid judgments, it is urged by the counsel for the applicant that the impugned summoning order is liable to be set aside so far as it relates to Suman Goyal, Ram Vinod Singh, Shishir Singh, Girish Chandra Goyal, Archana Singhal and Radha Singh. So far as Ravi Singhal is concerned, he is authorized signatory on behalf of the M/s R.M.Diary Products and R.M.Dairy Products a juristic person and is authorized signatories, Ravi Singhal and the company named above are liable to be prosecuted for the alleged offence under Section 138 N.I.Act.

So far as applicability of the reason is concerned, in the proceeding under Negotiable Instrument Act, there is little scope for attributing the good reason for satisfying for recording its satisfaction, being a purely technical enactment, if the impugned orders mentions the date of issuances of cheque, the memo of cheque, the legal notice and its service with special reference that the said cheque was issued by the person in discharge of legally enforceable liability and while issuing the summoning order if all the aforesaid boxes are ticked affirmatively then, the concerned Magistrate has no other option but to take cognizance of the offence under Section 138 N.I.Act. The impugned order cannot be said to be cryptic one and therefore the present 482 Cr.P.C. application is partly allowed to the extent that the proceeding against Suman Goyal, Ram Vinod Singh, Shishir Singh, Girish Chandra Goyal, Archana Singhal and Radha Singh is hereby quashed and proceeding under Section 138 N.I. Act and shall proceed against M/s. R.M.Dairy Products and Ravi Singhal unabetted till its logical conclusion.

Order Date :- 10th.4.2023

Abhishek Sri.