Bombay High Court
Gaurav Vijay Bhatia vs Ramnath P. Subramaniam And Anr on 14 August, 2015
Bench: V.L. Achaliya
1 APL337.2014.odt
sgp
IN THE HIGH COURT OF JUDICATURE AT BOMBAY.
CRIMINAL APPELLATE JURISDICTION
CRIMINAL APPLICATION (APL) NO. 337 OF 2014
Gaurav Vijay Bhatia
Aged about 45 years,
22, Sita Mahal, B. D. Petit Road,
Near Parsee General Hospital,
Mumbai - 400 036. ... APPLICANT
(Original Accused No. 3)
VERSUS
1. Ramnath P. Subramaniam,
302, Mahalaxmi Apartment,
Rajkamal Studio Compound,
Rajkamal Lane, Parel
Mumbai - 400 012.
2. State of Maharashtra. ... RESPONDENTS
.............
Mr Manoj S. Mohite, Advocate i/b Mr. Amol J. Phoujdar, Advocate for the
applicant
Respondent No. 1 in-person absent.
Mrs. A. A. Mane, APP for respondent/State
..............
CORAM : V. L. ACHLIYA, J.
RESERVED ON : 20/4/2015
PRONOUNCED ON : 14/08/2015
JUDGMENT:
. Rule. Rule made returnable forthwith. By consent, taken up for
final disposal at the stage of admission.
2. The applicant/accused No. 3 in the complaint has filed this
application u/s 482 of Code of Criminal Procedure (Cr.P.C.) to set aside the
order of issuance of process dt. 6/1/2014 passed in Criminal Complaint Case
No. 3752/SS/2013, by Metropolitan Magistrate, 7th Court at Dadar, Mumbai
2 APL337.2014.odt
and further to quash the said criminal proceedings to the extent of applicant.
3. Few facts leading to filing of the present application are as
under :
The complainant (respondent No. 1) herein filed criminal
complaint u/s 138 r/w 141 of the Negotiable Instruments Act, 1881 (in short
"NI Act") as against accused No. 1 - Managing Director of M/s. Tricom India
Limited and three others, which include the present applicant as Director of
accused No. 4 - Company. In the complaint filed, the complainant has
alleged that in discharge of liabilities of legitimate dues on account of part
payment towards full and final payment of I.C.D. (Inter Corporate Deposit)
Loan / re-payment of the loan by the accused to complainant, the original
accused No. 4 - Company had issued cheques to the complainant. Towards
the repayment of loan, accused No. 4 - Company issued four cheques viz.
Cheque bearing No. 009229 dt. 25.6.2013 for Rs. 2,00,000/-, Cheque bearing
No. 009230 dt. 25.7.2013 for Rs. 2,00,000/-, Cheque bearing No. 000231
dt. 25.8.2013 for Rs. 2,00,000/- and Cheque bearing No. 000232 dt. 25.9.2013
for Rs. 2,00,000/- drawn and payable from the account of accused with the
Axis Bank Ltd, Kurla (W), Mumbai - 400 070. The cheques were issued on
behalf of accused No. 4 under the signature of authorized signatory. Out of
four cheques, three cheques were presented for realization on 31/8/2013 and
fourth last one was presented for realization on 25/9/2013 with HDFC Bank
Ltd, Parel Branch, but same were dishonoured by bankers of accused with
endorsement "funds insufficient" and was communicated vide memos
dt. 3/9/2013 and 26/9/2013, respectively. According to the complainant
though he has given considerable time, the amount was not paid. Therefore
he issued notice on 27/9/2013 to all the accused through his Advocate. The
notice issued by Regd. A.D. and Speed Post was duly served upon accused
Nos. 1 to 3 on 01/10/2013 and accused No. 4 - Company on 30/9/2013. It
appears from the complaint that, accused No. 3 in the complaint sent reply dt.
3 APL337.2014.odt
11/10/2013 through his Advocate denying his liability, as Exh. H to
complaint. Since the payment towards the cheques dishonoured was not
made by the accused, the complainant has filed complaint. The complaint
appears to be filed on 11/11/2013. Learned Metropolitan Magistrate on
consideration of the complaint documents filed on record pleased to issue
process u/s 138 r/w 141 of the NI Act, against the accused persons making it
returnable on 26/02/2014. Being aggrieved by the said order, the
applicant/accused No. 3 has filed the present application u/s 482 of the Code
of Criminal Procedure to set aside the order passed by Ld. Metropolitan
Magistrate and further to quash the criminal proceedings to the extent of the
applicant.
4. I have heard the submissions advanced by Mr Manoj S. Mohite,
learned Counsel appearing on behalf of the applicant and Mrs Mane, learned
APP for respondent/State. Respondent No. 1 in-person has not caused his
presence, though served.
5. By referring the contents of the complaint filed by the
complainant, the learned Counsel for the applicant has contended that on the
face of the complaint filed, no prima facie case has been made out for
issuance of process u/s 138 r/w 141 of NI Act, as against the
applicant/accused No. 3. By referring the provisions of Section 141 of NI
Act, the learned Counsel has submitted that, in order to attract the vicarious
liability u/s 141 of NI Act, it is obligatory on the part of the complainant to
specifically plead as to how and in what manner the accused was guilty of
commission of offence u/s 138 r/w 141 of the NI Act. It is pointed out that
the facts pleaded in the complaint nowhere make out any case to attract the
vicarious liability of the applicant for the alleged dishonour of cheque and
commission of offence u/s 138 of NI Act. It is submitted that, in order to
attract offence u/s 138 r/w 141 of NI Act, there must be specific averments. It
is not sufficient to make a bald statement in complaint that the Director
4 APL337.2014.odt
i.e. accused in the complaint is incharge or/and responsible for the conduct of
the business of the Company. In support of the contention that the averments
made in the complaint are not sufficient to attract the offence u/s 138 r/w 141
of NI Act as against the applicant/accused No. 3, the learned Counsel has
relied upon the decision of the Hon'ble Apex Court in the case of National
Small Industries Corp. Ltd. Vs. Harmeet Singh Paintal & Anr. reported in
2010 ALL MR (Cri) 921 (S.C.) and further relied upon the decision of the
Hon'ble Apex Court in the case of Pooja Ravinder Devidasani Vs. State of
Maharashtra reported in 2015 ALL MR (Cri) 419 (S.C.). Learned Counsel
for the applicant has further assailed the order passed by the learned
Metropolitan Magistrate with contention that the order has been passed in a
gross non-application of mind and without any material available on record.
Learned Counsel has submitted that, neither the complaint nor the documents
filed by the complainant remotely disclose that the applicant was concerned
with the day-to-day affairs of the Company or anyway responsible for the
conduct of the business of the Company. In the entire complaint, the
complainant has not attributed any role to the applicant except alleging that
he is one of the Directors. The learned Counsel submitted that the accused
No. 3 has responded to the notice. In the notice sent by applicant to
respondent No. 1, it has been specifically informed that the present applicant
is no more Director of the Company, still the process was issued against the
applicant / accused No. 3.
6. In order to appreciate the submissions advanced, I have
thoroughly perused the averments made in the complaint so as to attract the
vicarious liability of the applicant / accused No. 3 in commission of offence
u/s 138 r/w 141 of NI Act. In my view, on the face of the complaint, no case
for issuance of process u/s 138 r/w 141 of NI Act have been made out against
the applicant / accused No. 3. In this context, it is useful to refer to the
averments made in para Nos. 2, 3, 5, 7, 11 and 14.
5 APL337.2014.odt
"2) I say that pursuant to valuable consideration and in
discharge of liabilities of legitimate dues on account of part
payment towards full and final payment of I.C.D. (Inter
Corporate Deposit) Loan/Repayment of Loan by the accused to
me the Complainant. That towards the payment of the said dues,
on account of part payment towards full and final payment of
I.C.D. (Inter Corporate Deposit) Loan/Repayment of Loan
accused are liable to pay a sum of Rs. 11,00,000/- therein, the
Accused above issued part payment against said final payment
by four Cheques in discharge of debts in favour of me drawn on
Axis Bank Ltd, Kurla (W), Mumbai - 400 070 the details whereof
is set out hereunder: -
Cheque No. Date Amount
009229 25.6.2013 Rs. 2,00,000/-
009230 25.7.2013 Rs. 2,00,000/-
000231 ig 25.8.2013 Rs. 2,00,000/-
000232 25.9.2013 Rs. 2,00,000/-
------------------------
Rs. 8,00,000/-
Copies of the above Cheques bearing No. 009229
dated 25.6.2013 for Rs. 2,00,000/-, Cheque No. 009230
dated 25.7.2013 for Rs. 2,00,000/-, Cheque No. 000231
dated 25.8.2013 for Rs. 2,00,000/- and Cheque No. 000232
dated 25.9.2013 for Rs. 2,00,000/- drawn on Axis Bank Ltd,
Kurla (W), Mumbai - 400 070 are annexed as Exhibit - A to A-3
with this Complaint.
3) I say that the three chques of aforesaid Cheques was
deposited on 31.8.2013 for realization with Banker HDFC
BANK Ltd, Parel branch which is annexed as exhibit - B and the
same was returned dishonoured by the Banker for want of funds
for the reasons "Funds Insufficient", as the Accused had not
arranged for the funds in his Account. Hereto annexed the
copies of the Cheque Return Memos dated 3.9.2013 issued by
Axis Bank Ltd Mumbai service Branch to Axis Bank Ltd Lower
parel as Exhibit C to C-2 & the cheque return memos dated
3.9.2013 of HDFC Bank Ltd., Mumbai clearing branch to me
through my banker H.D.F.C. Bank Ltd which are exhibits - D &
D-2 respectively. I say that the cheque return memos received by
me on 6.9.2013.
5) I say that after receipt of dishonoured Cheques from the
Banker, my Advocate by his Notice dated 27.9.2013 recorded all
the aforesaid facqts and called upon the Accused to pay the
6 APL337.2014.odt
amount of the said dishonoured Cheques of Rs. 8,00,000/- within
the statutory period. Hereto annexed and marked as Exhibit - G
the copy of said Advocate's Notice dated 27.9.2013.
7) I say that the said Speed post packet & Registered A/D
Packets addressed to the Accused No. 1 at the above address
was received by the accused No. 1 on 1.10.2013 and the
Registered A.D. on or around 1.10.2013 and given the Speed
post acknowledgement on 1.10.2013. Hereto to annexed and
marked as Exhibit - H-2 & H-3, the acknowledged copies of
Speed post acknowledgement dated 1.10.2013 & Registered
Postal Acknowledgement by the accused No. 1.
11) I say that the Accused No. 3 sent the reply dated
11.10.2013 through his advocate and denied (without furnishing
any document in support) his liability in the present matter
which reply is annexed as Exhibit - I.
14) I say that the Complaint is not barred by Law of
Limitation as the demand notice dated 27.9.2013 sent by Speed
post & Registered A. D. n 27.9.2013 to all the accused after the
receipt of the dishonoured cheques on 3.9.2013 & 26.9.2013 and
the said notice sent by Speed post envelope received by the
accused No. 1 on 1.10.2013 and the other accused received same
either on 30.9.2013 or on 1.10.2013. I say that the notice
addressed to the accused at the Accused No. 4's Office address
by Speed post returned with remark "left" as per the
endorsement dated 28.9.2013 and this Hon'ble Court has
jurisdiction to entertain and try this Complaint as the
Complainant is residing within the jurisdiction of this Hon'ble
Court and the demand notice sent from the residential address of
the Complainant demanding the dishonoured cheques amount
and the cause of action arises are within the jurisdiction of this
Hon'ble Court.
7. Thus, bare perusal of the aforesaid averments noway satisfy the
ingredients of Section 141 of NI Act, to attract the vicarious liability of the
applicant/accused No. 3. The entire averments made in the complaint if read
in its totality, then at the most the role attributed to the applicant in
commission of offence is that he was one of the Directors of the Company at
the time of alleged transaction. In the instant case, the fact is not in dispute
7 APL337.2014.odt
that the cheques in question have not been signed by applicant / accused No.
3. So also the applicant / accused No. 3 has not been described as Managing
Director or person in-charge of and responsible for the conduct of business
and affairs of accused No. 4-Company. According to the complainant, the
applicant was Non-executive Director and he has resigned way back in the
year 2012 i.e. on 26/3/2012, much before the cause of action arose for filing
of the complaint. Section 141 of NI Act, being a penal provision creating
vicarious liability needs to be strictly construed. In this context, it is useful to
refer the decision of the Hon'ble Apex Court in the case of Pooja Ravinder
Devidasani (supra) and in particular paragraph 17 thereof, wherein it is held
as under:
"17. ............ To fasten vicarious liability under Section 141 of the
Act on a person, at the material time that person shall have been
at the helm of affairs of the Company, one who actively looks after
the day-to-day activities of the Company and particularly
responsible for the conduct of its business. Simply because a
person is a Director of a Company, does not make him liable
under the N.I. Act. Every person connected with the Company will
not fall into the ambit of the provision. Time and again, it has
been asserted by this Court that only those persons who were in
charge of and responsible for the conduct of the business of the
Company at the time of commission of an offence will be liable for
criminal action. A Director, who was not in charge of and was not
responsible for the conduct of the business of the Company at the
relevant time, will not be liable for an offence under Section 141
of the N.I. Act. In National Small Industries Corporation, [2010
ALL MR (Cri) 921 (S.C.)] (supra) this Court observed:
"Section 141 is a penal provision creating vicarious
liability, and which, as per settled law, must be strictly construed.
It is therefore, not sufficient to make a bald cursory statement in a
complaint that the Director (arrayed as an accused) is in charge
of and responsible to the company for the conduct of the business
of the company without anything more as to the role of the
Director. But the complaint should spell out as to how and in
what manner Respondent 1 was in charge of or was responsible to
the accused Company for the conduct of its business. This is in
consonance with strict interpretation of penal statutes, especially,
where such statutes create vicarious liability. A company may
have a number of Directors and to make any or all the Directors
as accused in a complaint merely on the basis of a statement that
they are in charge of and responsible for the conduct of the
business of the company without anything more is not a sufficient
8 APL337.2014.odt
or adequate fulfillment of the requirements under Section 141.
8. In paragraph 28 and 30 of the judgment in the case of Pooja
(supra), the Apex Court has held as under :
"28. In the entire complaint, neither the role of the appellant in
the affairs of the Company was explained nor in what manner the
appellant is responsible for the conduct of business of the
Company, was explained. From the record it appears that the
trade finance facility was extended by the Respondent No. 2 to the
default Company during the period from 13th April, 2008 to 14th
October, 2008, against which the Cheque were issued by the
Company which stood dishonoured. Much before that on 17 th
December, 2005 the appellant resigned from the Board of
Directors. Hence, we have no hesitation to hold that continuation
of the criminal proceedings against the appellant under Section
138 read with Section 141 of the N. I. Act is a pure abuse of
process of law and it has to be interdicted at the threshold.
30. Putting the criminal law into motion is not a matter of
course. To settle the scores between the parties which are more in
the nature of a civil dispute, the parties cannot be permitted to
put the criminal law into motion and Courts cannot be a mere
spectator to it. Before a Magistrate taking cognizance of an
offence under Section 138/141 of the N.I. Act, making a person
vicariously liable has to ensure strict compliance of the statutory
requirements. The Superior Courts should maintain purity in the
administration of Justice and should not allow abuse of the
process of the Court. The High Court ought to have quashed the
complaint against the appellant which is nothing but a pure
abuse of process of law."
9. In the light of discussion made in foregoing paras, I am of the
view that the complaint filed by the complainant makes out no case for
issuance of process u/s 138 r/w 141 of N.I. Act, against the applicant/accused
No. 3. Ld. Metropolitan Magistrate appears to have passed the order
mechanically. Learned Metropolitan Magistrate has not taken any pains to
read the complaint and the documents relied on to find out as to whether a
prima facie case has been made out or not to attract the vicarious liability of
the applicant as contemplated u/s 138 r/w 141 of NI Act. No doubt, the
detailed enquiry is not contemplated at the stage of exercise of powers under
9 APL337.2014.odt
Section 204 of Cr.P.C., but, certainly the magistrate is bound to consider as to
whether the facts averred in the complaint and the documents, if any, relied
make out a prima facie case for issuance of process u/s 138 r/w 141 of NI Act.
It is pertinent to note that in the instant case, there are specific averments
made in the complaint itself in paragraph 11 that the accused No. 3 had
replied the notice and denied his liability in the matter annexed as Exhibit I to
complaint. The copy of that reply appears to have been produced along with
the complaint as Exh. I. However, the Magistrate has not taken any pains to
go through the contents of the said notice. It is the say of the applicant that,
the notice was duly replied by him through his Advocate on 11/10/2013. In
reply sent to the notice, the applicant has specifically stated that the applicant
was appointed as Non-executive Director and he had resigned from the
Company on 26/3/2012, which was accepted by the Board of Directors and
also intimated in prescribed proforma i.e. Form No. 32 to the Registrar of the
Company. Not only this, the applicant has also informed about recording of
this fact in the 20th Annual Report of accused No. 4 - Company for the
financial year 2011-12. In spite of that the learned magistrate has passed the
order of issuance of process as against the applicant / accused No. 3. The
order passed by learned Metropolitan Magistrate, which is impugned in this
petition, reads as under:
"ORDER BELOW EX-1
1. Complainant is present along with counsel.
Complainant has filed affidavit Exh. 3 by way of verification
in view of recent judgment delivered by Hon'ble Bombay High
Court in a case between Rajesh B. Chalke Vs State of
Maharashtra and 1 other reported in 2011(1) Mh.L.J. 244.
2. Perused the complaint, documents attached there to
and the statement of the complainant on oath. Acording to the
complainant, accused No. 4 is a Private Limited Company.
The accused no. 1 is the Managing Director of accused No. 4.
The accused No. 2 and 3 are the directors and Authorized
Signatories of accused no. 4. The accused Nos. 1 to 3 are all
persons who were in charge of and responsible for the
conduct of the business of the accused No. 1, its day-to-day
10 APL337.2014.odt
affairs and administration and functioning at all relevant
times and at the time of commission of offence. Complainant
has reiterated the case as per complaint averments in the
affidavit Exh. 3. The complainant has made out prima facie
case against the accused for an offence punishable under
Section 138 r/w 141 of Negotiable Instruments Act. Hence
issue process agaisnt the accused for the offence punishable
under Section 138 r/w 141 of Negotiable Instruments Act,
returnable on 26.02.2014. Complainant to supply all the
documents tot he accused. Summons to be served through
R.P.A.D. or Speed Post. Case be tried as summons case.
Sd/-
( R. B. Bhagwat )
Metropolitan Magistrate,
Mumbai. ig 7th Court, Dadar, Mumbai.
Date : 06.1.2014."
Thus, the bare perusal of order passed by Metropolitan
Magistrate leads to conclusion that the order has been passed without
perusing the contents of complaint and documents relied in support of
complaint particularly the reply notice in reply sent by applicant/accused No.
3 on 11/10/2013, which was produced as Exhibit H to complaint. It is a
glaring case of non-application of mind. Hence, in my view, the order is not
sustainable in law.
10. In the light of the discussion made in the foregoing paragraphs, I
have no hesitation to hold that, on the face of the complaint, no case was
made out for issuance of process u/s 138 r/w 141 of the NI Act as against the
applicant/accused No. 3. The order passed by the learned Magistrate appears
to be passed without application of mind and due consideration of averments
made in the complaint. The averments made in the complaint make out no
case to attract the vicarious liability of the applicant / accused No. 3 for
commission of offence u/s 138 r/w 141 of NI Act.
11. The applicant has approached with a case that he was
Non- executive Director of the Company. He has resigned as a Director of the
11 APL337.2014.odt
Company on 26/3/2012. The resignation of the applicant was accepted in the
Board of Directors meeting held on 14/5/2012. The fact in respect of the
resignation of the applicant was duly intimated in a prescribed proforma
i.e. Form No. 32, to the Registrar of the Company on 14/5/2012. This was
also reflected in the 20th Annual Report of the Company for the fiscal year
2011-12 published on 24/11/2012. In support of this submission, the
applicant has produced on record the following documents.
(i) Copy of resignation.
(ii) Copy of Resolution dt. 14/5/2012 passed in the meeting of Board of
Directors.
(iii) Copy of notice given to the Registrar of the Company in a prescribed
proforma i.e. Form No. 32.
(iv) Copy of 20th Annual Report of the Company for the financial year
2011-12.
(v) Copy of reply notice dt. 11/10/2013 sent to complainant through his
Advocate by the applicant.
12. As per the complaint, the cause of action for filing of the
complaint arose on 11/11/2013. There is no dispute as to the fact that the
cheques in question were issued on 25/6/2013, 25/7/2013, 25/8/2013 and
25/9/2013. Those were dishonoured on 3/9/2013 and 26/9/2013. The notice
of demand was issued on 27/9/2013 and cause of action for filing of
complaint arose on 11/11/2013. Thus, the act of dishonour of cheque has
taken place much after the resignation tendered by the applicant / accused No.
3. Learned Counsel for the applicant has placed reliance upon the decision of
the Hon'ble Apex Court in the case of Anita Malhotra Versus Apparel Export
Promotion Council and Another reported in (2012) 1 SCC 520. In a case
based upon similar facts, the Apex Court has held that in exercise of
jurisdiction u/s 482 of Cr.P.C., if on the face of documents relied upon by
accused which are beyond suspicion of doubt, if it is considered that
accusation against accused cannot stand, the High Court can consider such
documents in exercise of jurisdiction u/s 482 of Cr.P.C. In paragraph 20 of the
said Judgment, the Hon'ble Apex Court has observed as under :
12 APL337.2014.odt
"20. As rightly stated so, though it is not proper for the
High Court to consider the defence of the accused or
conduct a roving enquiry in respect of merits of the
accusation, but if on the face of the document which is
beyond suspicion or doubt, placed by the accused and if it is
considered that the accusation against her cannot stand, in
such a matter, in order to prevent injustice or abuse of
process, it is incumbent on the High Court to look into those
document/documents which have a bearing on the matter
even at the initial stage and grant relief to the person
concerned by exercising jurisdiction under Section 482 of
the Code."
13. Thus, in view of the fact that the document placed on record by
the applicant, the genuineness of which is not in doubt and disputed by
respondent No. 1, clear case has been made out that the applicant has resigned
as a Director of accused No. 4 - Company much prior to dishonour of cheque
and cause of action for filing of the criminal complaint. The defence of the
applicant is duly supported with the documentary evidence. Therefore, the
order of issuance of process u/s 138 r/w 141 of NI Act, deserves to be set
aside and proceeding is liable to be quashed to the extent of applicant.
14. I am, therefore, inclined to allow the application in terms of
prayer clause 'A' to the extent of applicant / accused No. 3 and same is
accordingly allowed.
15. Rule made absolute in above terms with no order as to costs.
[ V. L. ACHLIYA, J. ]
