Madhavrao Digamber Rasane And ... vs State Of Maharashtra And Anr.
2004 Latest Caselaw 1184 Bom

JUDGMENT

Naresh H. Patil, J.

1. This criminal writ petition is filed under Article 227 of the Constitution and under Section 482 of the Code of Criminal Procedure.

2. The petitioners contend that the original accused No. 1-"Amdar Balasaheb Thorat Nagari Sahakari Patsanstha Maryadit" (hereinafter referred to as "the society") is a registered Co-operative Credit Society under the provisions of the Maharashtra Cooperative Societies Act. Its functions are to accept savings and term deposits and offer loans to borrowers. The original accused No. 2 is the Chairman of the accused No. 1-society. The accused No. 3 is the Manager of the society. Original accused Nos. 4 to 17 are the Directors of the society.

3. A complaint was filed by respondent No. 2 herein, Rasiklal Shantilal Ratadia in the Court of the Judicial Magistrate, First Class, Sangamner which was numbered as Criminal Case No. 1360 of 1997 for an offence punishable under Section 138 of the Negotiable Instruments Act and Section 420 of the Indian Penal Code. In short, the complainant in his complaint alleged that the society accepted Rs. 85,105/- as short term deposit with interest. Out of that amount, the society returned an amount of Rs. 50,000/- to the complainant by a cheque bearing No. 202961 dated 10.6.1997 to the complainant which was signed by accused No. 2 Ramesh Chopda as Chairman of the society and accused No. 3 Arjun Gite as Manager of the society. The accused Nos. 2 and 3 assured the complainant that the said cheque would be honoured. The complainant thereafter submitted the cheque for clearance but it was returned on 20.9.1997 due to insufficiency of funds.

4. The complainant thereafter issued notice dated 29.9.1997 to all the accused person Nos. 1 to 7 through his lawyer and demanded the amount for which the cheque was issued. The notice was received by the accused persons on 30.9.1997.

5. It is further alleged in the complaint that the society was not possessing sufficient amount and this fact was known to the accused Nos. 2 to 17 and in spite of the knowledge of the same with an intention to deceive and with ulterior motive the accused issued cheque in favour of the complainant and deceived him and thereby committed serious offence. This complaint was filed on 16.10.1997. Verification of the complainant was recorded by the learned Magistrate and process was issued against the accused persons.

6. The original accused Nos. 4 to 7, 9, 10 and 12 prayed for recall of the process issued against them under Section 138 of the Negotiable Instruments Act and Section 420 of the Indian Penal Code by filing application dated 20.3.1998. The learned Judicial Magistrate, First Class, Sangamner by an order dated 15.4.1999 rejected the said application.

7. The said seven accused persons preferred Criminal Revision Application No. 334 of 2000 to the Sessions Court. The learned ad hoc Additional Sessions Judge, Sangamner by judgment and order dated 17.6.2003 dismissed the said criminal revision application.

8. The learned Counsel for the petitioners submitted that an omnibus statement is made in the complaint which cannot be basis to issue process against the accused persons. On the allegations made in the complaint no offence is made out under the provisions of Section 138 of the Negotiable Instruments Act and Section 420 of the Indian Penal Code. The Board of Directors is not responsible for the day-to-day business of the society. They are to look after and lay down only policy matters. The complaint lacks better particulars for attracting penal provisions of law as against the petitioners. To support his submissions, the learned Counsel Mr. A.S. Bajaj, has placed reliance on the following judgments--Municipal Corporation of Delhi v. Ram Kishan Rohtagi, AIR 1983 SC 67; Katta Sujatha v. Fertilizers & Chemicals Travancore Ltd., II (2004) SLT 873=II (2004) CCR 94 (SC)=(2002) 7 SCC 655; and P. Rajarathinam v. State of Maharashtra, (2000)10 SCC 529.

9. Per contra, learned Counsel appearing for the respondent No. 2-complainant, submitted that reading of complaint discloses a case to proceed against the accused persons and, therefore, the process was rightly issued against the accused by the Trial Court. The pleas which are raised by the petitioners in this writ petition can be raised at an appropriate stage before the Trial Court and the disputed questions of fact need not be gone into in the present writ petition by this Court. He placed reliance in the case of Anil Hada v. Indian Acrylic Ltd., X (1999) SLT 1=IV (1999) CCR 285 (SC)=(2000)1 SCC 1.

10. The respondent No. 2-complainant filed affidavit-in-reply and stated therein that the Directors are primarily liable for the affairs of the society. The plea that some of the Directors had resigned cannot be considered at this stage and there is nothing on record to support the contention of some of the accused persons. It is further contended that the Directors were having knowledge of the day-to-day business and, therefore, they are responsible for the dishonour of the cheque.

11. In the matter of Municipal Corporation of Delhi (supra), relied on by Mr. Bajaj, learned Counsel for the petitioner, the Apex Court considered the prosecution lodged under the Prevention of Food Adulteration Act, 1954 against a Company, its Directors and Manager. The proceedings were quashed only against the Directors but the proceedings against the Manager were continued. This ruling is not applicable to the facts of the present case.

12. In the matter of K.P.G. Nair (supra) the Apex Court held:

"8. From a perusal of Section 141, it is evident that in a case where a company committed offence under Section 138 then not only the company but also every person who at the time when the offence was committed, was in charge of and was responsible to the company for the conduct of the business of the company shall be deemed to be guilty of the offence and liable to be proceeded against and published accordingly. It follows that a person other than the company can be proceeded against under those provisions only if that person was in charge of and was responsible to the company for the conduct of its business.

9. It is true, as submitted by Mr. Arora, that the words of Section 141(1) need not be incorporated in a complaint as magic words but it cannot also be disputed that substance of the allegations read as a whole should answer and fulfil the requirements of the ingredients of the said provision (for being proceeded against for an offence which he is alleged to have committed). On the above premise, it is clear that the allegations made in the complaint do not either in express words or with reference to the allegations contained therein make out a case that at the time of commission of the offence the appellant was in charge of and was responsible to the Company for the conduct of its business."

In the case in hand, the complainant in para 4 of this complaint has specifically and in express words alleged against all the accused persons of the society about they having knowledge of insufficiency of funds with the society. Hence the present ruling is also not of any help to the petitioners.

13. In the matter of P. Rajarathinam (supra) the Apex Court held that it would be for the Court concerned to pass appropriate orders at the time of framing of charge. Thus, the facts of this cited case are different from the facts of the case in hand.

14. The reliance placed by the learned Counsel for the petitioner on Katta Sujatha (supra) is also not of help to him as the facts of that case relates to a partnership firm.

15. As regards the reliance placed by the learned Counsel for the respondent No. 2-complainant, Mr. S.K. Shinde, on the judgment of the Apex Court in Anil Hada, (supra), the Apex Court while considering the provisions of Section 141 of the Act, held:

"9. It must be pointed out at the outset that the offender in Section 138 of the Act is the drawer of the cheque. He alone would have been the offender thereunder if the act did not contain other provisions. It is because of Section 141 of the Act that penal liability under Section 138 is cast on other persons connected with the company. It is necessary to extract Section 141 of the Act which is as under--

"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 commit-ted, was in charge of, and was responsible to the company of 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.

(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.'

11. Normally an offence can be committed by human beings who are natural persons. Such offence can be tried according to the procedure established by law. But there are offences which could be attributed to juristic persons also. If the drawer of a cheque happens to be a juristic person like a body corporate it can be prosecuted for the offence under Section 138 of the Act. Now there is no scope for doubt regarding that aspect in view of the clear language employed in Section 141 of the Act. In the expanded ambit of the word 'company' even firms or any other associations of persons are included and as a necessary adjunct thereof a partner of the firm is treated as director of that company."

16. The petitioners/accused are the Directors of the society which was involved in exercise of accepting term deposits and offering loan amounts to borrowers. The complainant contended in the complaint that the accused No. 2 as the Chairman and the accused No. 3 as the Manager of the society not only issued the cheque by signing it in favour of the complainant but even assured him of its clearance. As regards the other accused who are the Directors, the complainant stated that they were knowing that the society did not possess sufficient amount and still they permitted issuance of cheque and deceived the complainant with ulterior motive. The plea advanced on behalf of the petitioners is that some of the Directors had already resigned and being Directors they are not supposed to know the day-to-day business or transactions of the society. The plea of this nature would involve some evidence to be led. At this stage, the Court considering the issuance of process will have to see whether the complainant has made out a case to proceed against the accused persons.

17. Even if the petition is considered to be a petition filed under Section 482 of the Cr.P.C., this Court while exercising said power would consider as to whether the complainant had made out a case to proceed against the accused persons without adding or substracting anything from the complaint. Said power has to be used sparingly with caution and circumspection. The exercise of power has to be in exceptional and deserving cases. Reliance can be placed on a judgment of the Apex Court in the matter of K.M. Mathew v. K.A. Abraham, III (2002) CCR 237 (SC)=V (2002) SLT 30=(2002) 6 SCC 670, wherein it is held:

"21. It is true that judicial process should not be an instrument of oppression or needless harassment and the Magistrate while taking cognizance should be satisfied that there is a prima facie case against the accused and at that he should be circumspect and judicious in exercising discretion and should take all relevant facts into consideration before issuing process and that vindication of majesty of justice and maintenance of law and order in the society are the prime objects of criminal justice and it shall not be the means to wreak vengeance, but, at the same time,

the inherent power of the Court under Section 482 of the Code of Criminal Procedure should be very sparingly and cautiously used only when the Court comes to the conclusion that there would be manifest injustice or there would be abuse of the process of the Court, if such power is not exercised. So far as the order of cognizance by a Magistrate is concerned, the inherent power can be exercised when the allegations in the First Information Report or the complaint together with the other materials collected during investigation taken at their face value, do not constitute the offence alleged. At that stage, it is not open for the Court either to shift the evidence or appreciate the evidence and come to the conclusion that no prima fade is made out" (See State of Bihar v. Rajendra Agrawalla, (1996)8 SCC 164).

"Unless a grave illegality is committed, the superior Court should not interfere. They should allow the Court which is seized of the matter to go on with it. There is always an Appellate Court to correct the errors. One should keep in mind the principle behind Section 465, Cr.P.C. Any and every irregularity or infraction of a procedural provision cannot constitute a ground for interference by a superior Court unless such irregularity or infraction has caused irreparable prejudice to the party and requires to be corrected at that stage itself. Frequent interference by superior Courts at the interlocutory stage tends to defeat the ends of justice instead of serving those ends. It should not be that a man with enough means is able to keep the law at bay. That would mean the failure of the very system."

18. In the case in hand, the petitioners are entitled to resort to appropriate remedies before the Trial Court even after putting their appearance wherein their plea that some of the Directors had resigned and that they were not knowing the day-to-day transactions of the society could be raised. At this stage it will not be appropriate to go into the said defences raised on behalf of some of the accused.

19. No case is made out for grant of the reliefs as prayed for by the petitioners. The petition, therefore, fails and it is accordingly dismissed. Rule is discharged.