Bombay High Court
Vijay Tata Ravipati vs Mediascope Publicitas (India) ... on 13 October, 2017
Bench: Prakash Deu Naik
rpa 1/31 apl-1248-16.doc
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
CRIMINAL APPELLATE JURISDICTION
CRIMINAL APPLICATION NO.1248 OF 2016
Vijay Tata Ravipati .. Applicant
V/s.
Mediascope Publicitas (India) Pvt.
Ltd. & Anr. .. Respondents
......
Mr.Ashwin Vaish i/b. Mr.Balvendra Singh, Advocate for the
Applicant.
Mr.Mahendra V. Swar, Advocate for Respondent No.1.
Mrs.P.P. Shinde, APP for Respondent - State.
......
CORAM : PRAKASH D. NAIK, J.
JUDGMENT RESERVED ON : SEPTEMBER 1, 2017
JUDGMENT PRONOUNCED ON : OCTOBER 13, 2017
JUDGMENT :
The applicant has preferred this application under
Section 482 of the Code of Criminal Procedure challenging the
proceedings in the criminal complaint lodged by the respondent
no.1 before the Court of Metropolitan Magistrate 33rd Court at
Ballard Pier, Mumbai. The proceedings are numbered as CC
No.1194/SS/2015.
2 The brief facts alleged in the complaint are as follows:
rpa 2/31 apl-1248-16.doc
(a) The accused no.1 is a private limited company of whom
accused no.2 is the authorized signatory and C.F.O. while
accused no.3 is the signatory to the subject cheque. The
accused nos.4 and 5 are the directors of accused no.1.
(b) The accused nos. 2 to 5 are looking after day to day affairs
of accused no.1. Accused nos.2, 4 and 5 have dealt with the
complainant company in respect to subject transaction of
the complaint in terms of consideration aspect. Accused
nos.2 to 5 in connivance with each other have committed
the offence by intentionally dishonouring the subject
cheque.
(c) The accused no.1 through accused nos.2, 4 and 5 had
approached the complainant company for publication of an
advertisement in the news paper for publication of accused
no.1 in the news paper, "KHALEEJ TIMES", Dubai on 20 th,
21st, 22nd and 23rd November, 2014.
(d) On instructions from accused no.1 through accused nos.2,
4, and 5, the complainant company have fulfilled their
obligations by publishing the advertisement on behalf of
rpa 3/31 apl-1248-16.doc
accused no.1 in the news paper "KHALEEJ TIMES", Dubai.
The complainant, thereafter, raised the invoices bearing
no.215912 dated 24th November, 2014 for Rs.6,84,250/-,
215916 dated 24th November, 2014 for Rs.2,97,500/- and
215918 dated 24th November, 2014 for Rs.4,16,500/-.
(e) Towards discharge of liability against the aforesaid
invoices, the accused issued At Par Cheque bearing
no.138703 dated 13th January, 2015 for Rs.13,70,286/-
drawn on Axis Bank Limited in favour of complainant
company.
(f) The complainant presented the aforesaid cheques for
encashment with their bankers, viz. BNP Paribas, Mumbai
on 24th February, 2015. The said cheque was dishonoured
and returned to the complainant along with bank memo
with an endorsement "Funds Insufficient".
(g) The complainant issued notice of demand under the
Negotiable Instruments Act. The notice dated 25 th March,
2015 was dispatched by Registered Post A.D. to the
accused. All the accused have received the legal notice on
30th March, 2015.
rpa 4/31 apl-1248-16.doc
(h) Inspite of the receipt of notice accused failed and neglected
to pay dishonoured cheque amount. Hence, the complaint
was filed before the aforesaid Court on 14th May, 2015.
3 On 9th July, 2015, the verification statement was
recorded. The affidavit in compliance of Section 202 of Cr.P.C.
was filed. On 10th July, 2015 the process was issued against the
accused for an offence punishable under Section 138 read with
141 of the Negotiable Instruments Act. It was observed while
issuing the process that verification statement of the complainant
is recorded. The accused being resident of place beyond the
territorial jurisdiction of the Court, inquiry under Section 202 of
Cr.P.C. is held. The complaint filed in furtherance of allegations
made in the complaint. Since the applicant was not attending the
proceedings after service of summons, the complainant preferred
an application for issuing proclamation on 18th March, 2016. The
learned Magistrate vide order dated 18 th March, 2016, issued
proclamation against the applicant and accused no.3.
4 Learned counsel for the applicant made the following
submissions:
(i) The complaint has been filed on incorrect facts such as
rpa 5/31 apl-1248-16.doc
showing the applicant as the CFO. The applicant is not
connected with accused no.1 company in any manner. He
is neither the signatory, nor CFO or director of the
respondent no.1 company.
(ii) The trial Court has mechanically issued process against
the applicant. The process was issued on the basis of the
statement of the company's authorized representative who
has personally not witnessed a single fact and is unable to
particularize the role of the accused.
(iii) There are contrary versions with regard to the role of the
applicant in the complaint, notice and the verification
statement.
(iv) The trial Court has not followed the provisions of Section
202 of the Cr.P.C. in proper perspective. The summoning
order does not disclose any application of mind. There is
non compliance of the provisions of Section 202 of the
Cr.P.C. (as amended),which is mandatory since the
applicant is residing out of the jurisdiction of the trial
Court.
rpa 6/31 apl-1248-16.doc
(v) The applicant does not fall under any category as
enumerated under section 138 read with Section 141 of
the Negotiable Instruments Act. The applicant cannot be
held vicariously liable for the liability of the accused no.1.
(vi) In the complaint accused no.2 has been referred to Vijay
Murthy and it is alleged that the accused no.2 is the
authorized signatory and C.F.O. of accused no.1. In the
notice issued by the complainant company it is stated that
the addressee no.2 is the signatory to the cheque. In the
verification statement, it was stated that accused no.2 is
the signatory to the cheque. It is also stated that as per the
instructions from accused no.1 through accused nos.3 and
4, complainant company have published the advertisement
in the newspaper "KHALEEJ TIMES", Dubai, in favour of
accused no.1 company. It is submitted that the complainant
is not sure about the role of the applicant.
(vii) It is submitted that the applicant is not the signatory to the
cheque nor he is C.F.O. or Director of the accused no.1
company. It is submitted that the applicant has not acted in
any manner in the entire transaction.
rpa 7/31 apl-1248-16.doc
(viii) It is further submitted that the complaint is filed by Shri
Girish Joshi on behalf of the complainant company claiming
to be authorised representative of the complainant
company. He had no knowledge of the transactions and,
therefore, the complaint is not maintainable in law. He is
not witness to any transactions, and, therefore, was unable
to specify the role of the accused.
(ix) It is further submitted that to invoke the vicarious liability
vide Section 141 of the Negotiable Instruments Act, there
has to be an averments in the complaint that 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. The
aforesaid provisions also contemplate that 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. It is submitted that there is no
rpa 8/31 apl-1248-16.doc
requisite averement in the complaint to invoke vicarious
liability against the applicant, holding him responsible for
the liability of accused no.1 company.
(x) It is submitted that the applicant is the resident of
Bangalore. The complaint is filed at Mumbai. In the order
issuing process that there is reference of inquiry being
conducted under Section 202 of the Cr.P.C., the same is not
conducted within the intent and object of said provisions.
There is nothing to indicate that there was application of
mind on the part of the trial court for compliance of
Section 202 of Cr.P.C.
(xi) There is no material on record to establish that the
applicant has played any role in the entire transaction. The
order issuing process has been passed in most mechanical
manner without application of mind and without
ascertaining that the applicant is not liable in any manner
for commission of the said offence.
(xii) The trial court has failed to appreciate the provisions of law
enunciated in the various decisions of the Hon'ble Supreme
Court as well as by this Court.
rpa 9/31 apl-1248-16.doc
(xiii) In view of Consent Terms executed between the parties the
proclamation ought not to have been issued against the
applicant. The complainant cannot rely upon the E-mails
in support of complaint. It is, therefore, submitted this
Court in exercise of the inherent powers under Section 482
of Cr.P.C. may quash and set aside the proceedings.
5 Learned counsel for the applicant placed reliance
upon the following decisions in support of his submissions:
(1) National Bank of Oman Vs. Barakara Abdul Aziz1;
(2) Sunil Bharti Mittal Vs. CBI2;
(3) Standard Chartered Bank Vs. State of UP3;
(4) A.C. Narayanan Vs. State of Maharashtra & Anr.4;
(5) Facebook India Online Services Vs. Vinay Rai5;
(6) M/s.Pepsi Food Ltd. Vs. Special Judicial Magistrate6;
(7) Net Core Solutions Pvt. Ltd. Vs. Pinnacle Teleservices Ltd.7
6 The learned counsel for the respondent no.1
1 (2013) 2 SCC 488
2 AIR 2015 SC 923
3 AIR 2016 SC 1750
4 (2014) 11 SCC 790
6 AIR 1998 SC 128
7 2012(3) Mh.L.J. 724
rpa 10/31 apl-1248-16.doc
submitted that there is no substance in the submissions advanced
by the advocate for the applicant. The applicant is absconding
since long. The trial Court has issued proclamation against him.
The applicant has been impleaded as an accused in several
complaints filed by respondent no.1. He has not appeared before
the trial Court and initially warrant was issued against the
applicant which was followed by proclamation. It is submitted
that the complaint makes out prima facie case for issuance of
process and thereby the trial Court has issued process against
him. It is submitted that in the notice issued to the applicant,
role has been attributed to the applicant. In the notice it has been
stated that the applicant - accused was looking after day to day
affairs of the accused no.1 company and have dealt with the
complainant in respect to subject transaction. It is also stated
that he had acted in connivance with the other accused. It is
submitted that in the complaint also similar averments are made
against the applicant. On the basis of the averments, the
verification statement and the affidavit tendered by the
complainant, learned Magistrate has issued process against the
applicant. It is submitted that the applicant has not been
impleaded as an accused in the complaint as director of the
accused no.1, but, as one of the person who was looking after the
rpa 11/31 apl-1248-16.doc
day to day affairs of accused no.1. It is, therefore, submitted that
sufficient averments to invoke Section 141 of the Negotiable
Instruments Act was reflected in the complaint, notice and the
verification statement on the basis of which the applicant was
summoned by the trial Court. It is further submitted that there is
evidence to establish the connivance of the applicant in the
subject transaction which led to dishonour of cheque. The
evidence includes E-mails exchanged between the parties which
are being relied upon by the complainant. It is submitted that the
complainant be given an opportunity to lead evidence and
prosecute the accused in the said offence. At this stage, there
cannot be any adjudication on the contents of the E-mails or its
admissibility in evidence.
7 It is further submitted that the complaint is filed by
Shri Girish Joshi who is the authorized representative of the
complainant-company. In the complaint it has been categorically
stated that he has personal knowledge in respect of the facts and
this case as well as on the basis of record with the complainant
company, he will be able to depose and lead evidence. The
complainant has relied upon the resolution passed by the
complainant company resolving that the company would initiate
rpa 12/31 apl-1248-16.doc
legal proceedings under Section 138 of the Negotiable
Instruments Act against such parties and for such matters may be
deemed necessary and for the said purpose the company
authorizes Shri Girish Joshi and others to sign all documents for
and on behalf of the company including complaint, suits,
verifications, affidavit etc. in connection with any proceedings
under Section 138 of the Negotiable Instruments Act. It is
submitted that the applicant was instrumental in drawing the
consent terms to settle the matter between the parties. The said
Consent Terms are annexed to the application. It is submitted
that although the applicant is not signatory to the said consent
terms, the applicant has participated in the talks of settlement.
The applicant has played major role in the transactions and in
respect to the issuance of the cheques which were dishonoured.
The complainant is relying upon several E-mails which shows the
involvement of the applicant. It is the case of the complainant
that the applicant and other directors of accused no.1 company
had approached the complainant for publication of advertisement
in the news paper "KHALEEJ TIMES" and in pursuant to the
instructions from the accused, the complainant had verified its
obligation of publishing the advertisement. The accused no.1 had
in all issued 27 cheques which were dishonoured for which 27
rpa 13/31 apl-1248-16.doc
separate notices were issued and, thereafter, 27 complaints are
filed against the accused including the applicant. The notice was
issued to the applicant at the address of the accused no.1
company addressing him as Mr.Vijay Murthy which has been
accepted which shows the connection of the applicant in the said
company. It is submitted that the applicant have dealt with the
complainant company along with others in respect to subject
transactions of the present complaint. It is submitted that several
E-mails were exchanged between the parties which shows the
connivance of the applicant in the transactions which is the
subject matter of the complaint. In the reply filed by respondent
no.1, several such E-mails are placed on record. It is stated that
the complainant company had forwarded an E-mail to the
applicant informing that the cheques will be presented as per his
instructions which E-mail is purportedly replied by the applicant
stating that the said cheques can be deposited. Several other E-
mails are annexed to the said reply which according to the
complainant shows involvement of the applicant. Consent Terms
are also annexed to the said reply which according to the
complainant were approved and finalized by the applicant. The
applicant has also annexed the consent terms to the present
application as well as the E-mails which were allegedly sent by
rpa 14/31 apl-1248-16.doc
the complainant to the applicant. Said E-mails have been
addressed to the applicant with regard to the booking of the
advertisement in the Khaleej Times. According to respondent
no.1, the said documents which are placed on record by the
applicant in this application also shows the active involvement of
the applicant in the subject transaction. It is, therefore, submitted
that the application is devoid of merits and the same may be
dismissed.
9 I have perused the documents on record. The
complaint was filed through the authorized representative of the
respondent no.1 Shri Girish Joshi. His authorization is supported
by the resolution passed by the complainant company. The
complaint also specifically mentions that the representative has
personal knowledge in respect of the facts of the case as well as
on the basis of record with complainant company. The verification
statement also mentions that Shri Joshi has been appointed by
the complainant company by passing Board Resolution,
authorizing him to file complaint and lead evidence against the
accused as he knows the facts of the case. In view of the above,
there is no infirmity in the filing of the complaint of Shri Girish
Joshi as authorized representative of respondent no.1.
rpa 15/31 apl-1248-16.doc
10 In the case of A.C. Narayanan (Supra) relied upon
by the counsel for the applicant, the Apex Court has considered
the issue relating to filing of complaint under Section 138 of the
Negotiable Instruments Act to power of attorney holder or legal
representatives. It was also under consideration whether a power
of attorney holder can be verified on oath under 200 of the Code
and/or whether specific averments as to the knowledge of the
power of attorney holder in the transaction must be explicitly
asserted in the complaint and whether the power of attorney
holder can verify the complaint on oath if he fails to exert
explicitly to the knowledge of the complaint on the basis of
presumption of knowledge. In paragraph no.26 of the said
decision it is observed that it is an exception to a well-settled
position that criminal law can be put in motion by any one and
under the statute one stranger to transaction in question, namely,
legal heir etc. can also carry forward the pending criminal
complaint or initiate the criminal action if the original
complainant dies. Keeping in mind various situations like inability
as a result of sickness, old age, death or staying abroad of the
payee or holder in due course to appear and depose before the
Court in order to prove the complaint, it is permissible for the
power of attorney holder or for the legal representatives to file a
rpa 16/31 apl-1248-16.doc
complaint and/or continue with the pending criminal complaint
for and on behalf of the payee or holder in due course. However,
it is expected that such power of attorney holder or legal
representatives shall have knowledge about the transaction in
question so as to able to bring on record the truth of the
grievance/offence, otherwise no criminal justice could be
achieved in case payee or holder in due course is unable to sign,
appear or depose as complainant in the aforesaid circumstances.
It was observed that filing of complaint under Section 138 of the
Negotiable Instruments Act through power of attorney holder is
perfectly legal and competent. It is required by the complainant
to make specific ascertain as to the knowledge of the power of
attorney holder in the said transaction explicitly in the complaint
and the power of attorney holder who has no knowledge
regarding the transaction cannot be examined as a witness in
their case. The Apex Court in this decision was primarily
considering the effect of complaint filed by the power of attorney
and examination of the power of attorney holder in the said
proceedings. In the impugned complaint, which has been
specifically stated that Shri Girish Joshi is the authorized
representative of the complainant company and he has personal
knowledge in respect to the facts of this case as well as on the
rpa 17/31 apl-1248-16.doc
basis of record with the complainant company, he will be able to
depose and lead evidence. He was also authorized by the
complainant company to file complaint by passing appropriate
resolution. This fact was stated in the verification statement as
well as the affidavit filed before the Court. In the circumstances,
there is no substance in the submissions advanced by the
applicant that the complaint through authorized representatives
was not maintainable as he has no personal knowledge of the
transaction.
11 The other submission advanced by the advocate for
the applicant about the contradictions in the complaint, demand
notice and verification statement qua the role of applicant in the
subject transaction is a matter which can be considered during
the trial and the proceedings cannot be quashed on that ground.
Learned counsel further contended that the applicant is residing
beyond the jurisdiction of the trial Court and, therefore, it was
mandatory to conduct an inquiry in accordance with the amended
provisions of Section 202 of the Code of Criminal Procedure.
It was argued that although in the order issuing process there is
a reference to invoking Section 202 of the Cr.P.C, no inquiry was
conducted in proper perspective. In the case of National Bank
rpa 18/31 apl-1248-16.doc
of Oman (Supra), the Supreme Court has considered the aspect
of carrying out such an inquiry as per the said amended
provisions of Cr.P.C. The said decision is related to the offences
under the Indian Penal Code. In the Judgment of this Court in the
case of Netcore Solution Private Limited Vs. Vinay Rai 8, it
was held that the trial Court ought to have postponed the
issuance of process in view of the mandatory provisions for
inquiry under Section 202 of the Cr.P.C., as the petitioner therein
were residents of Mumbai and the proceedings were initiated in
the Court at Nagpur. The said decision was however, was related
to the offence under Section 138 of Negotiable Instruments Act.
This Court in several decisions have consistently taken a view
that in the proceedings under Section 138 of the Negotiable
Instruments Act, it is not mandatory to hold an inquiry under
Section 202 of the Cr.P.C. in the event the accused are residing
beyond the jurisdiction of the Court. In any case, it has to be
noted that in the present case the trial Court had invoked Section
202 of Cr.P.C. which is apparent from the order issuing process.
The Court has recorded the verification statement of the
complainant as well as considered the affidavit filed by the
complainant and, thereafter, issued the process. In the order
8 2012(1)Bom.C.R.(Cri.)788
rpa 19/31 apl-1248-16.doc
issuing process it is observed that the accused being resident of
beyond the territorial jurisdiction of the Court, inquiries under
Section 202 of Cr.P.C. were held. Complainant filed affidavit in
support of allegations made in the complaint and also filed ROC
record and after going through the record of the case, the
complaint satisfies the requisite ingredients. It is argued that the
trial Court has not conducted an inquiry within the purview of
Section 202 of the Code of Criminal Procedure. It is pertinent to
note that no specific mode of inquiry is provided under Section
202 of Cr.P.C. Apart from that this Court has observed that it is
not mandatory to hold such an inquiry in relation to the
proceedings under Section 138 of the Negotiable Instruments
Act. In Bansilal Kabra Vs. Global Trade Finance Ltd. 9 this
Court has held that if Section 202 of Cr.P.C. is made applicable to
complaints under Section 138 of Negotiable Instruments Act, it
would defeat the very purpose behind enactment of the said
provision. The Magistrate can exercise his discretion and decide
whether to issue process, dismiss the complaint after recording
verification of the complainant and his witnesses, if any, or
postpone the issuance of process and in a given case hold further
inquiry depending on facts of each case. No compliance would
9 2010 ALL MR (Cri) 3168
rpa 20/31 apl-1248-16.doc
not vitiate the process if there is material to indicate application
of mind. Similar view was taken in another decision of this Court
in Criminal Application No.716 of 2015, 717 of 2015 and
718 of 2015 (Dr.(Mrs.) Rajul Ketan Raj Vs. Reliance Capital
Ltd. & Anr. In the said decision, this Court has also taken note of
decision in Netcore Solutions Pvt. Ltd. (Supra), relied upon by
the advocate for the applicant in this application. The Court also
referred to decisions of the Apex Court in the case of Vijay
Dhanuka Vs. Najma Mamitaj10 and National Bank of Oman's
(Supra) case while considering scope of Section 202 of Cr.P.C.
qua Section 138 of Negotiable Instruments Act. I am in
agreement with the view taken by this Court that the amended
provisions of Section 202 of Cr.P.C. referred to above as per
Section 138 of Negotiable Instruments Act is only directory.
12 The submissions of the counsel for the applicant is
that there are no requisite averments to invoke Section 141 of the
Negotiable Instruments Act against the applicant. In the
complaint it is stated that accused nos.2 to 5 are looking after day
to day affairs of the accused no.1 company and that the accused
have dealt with complainant company in respect of subject
10 2014 ALL MR (Cri) 1924 (SC)
rpa 21/31 apl-1248-16.doc
transaction of the complaint in terms of consideration aspect and
they have acted in connivance with each other to dishonour the
subject cheque. The accused nos.2, 4 and 5 had approached the
complainant for publication of advertisement in the newspaper
"KHALEEJ TIMES", Dubai, at the instance of accused no.1 and on
instructions of the said accused, the complainant had fulfilled the
obligations by publishing the advertisement. It is, therefore,
apparent that the complaint attributes role to the applicant. It is
the contention of the applicant that he is not concerned with the
accused no.1 company in any manner. In the light of the aforesaid
averments, case was made out for issuance of process against the
applicant. It is not the case of the complainant that the applicant
is one of the director of the company. However, the complainant
have stated that the applicant is one of the person who was
looking after day to day affairs of accused no.1 and participated
the transaction as stated herein-above. It may be that in the
notice and verification statements it was stated that the applicant
is the signatory to the cheque, but, the complaint clearly
attributes the role of signatory to the subject cheque to the
accused no.3. The verification statement also states that the
advertisement was published at the instance of accused nos.3 and
4. However, the verification statement categorically mentions that
rpa 22/31 apl-1248-16.doc
applicant and other accused were looking after day to day affairs
of accused no.1 and has dealt with complainant company in
respect to the subject transaction of the present complaint.
Merely on account of such contradictions the proceedings cannot
be quashed. There is consistency in the allegations of the
complainant that the applicant was participating in day to day
affairs of the accused no.1 company. In these circumstances it
would be pertinent to embark upon Section 141 of the Negotiable
Instruments Act, which reads 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 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:
rpa 23/31 apl-1248-16.doc
[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.
Explanation.-- For the purposes of this section,
--
(a) "company" means any body corporate
and includes a firm or other association of
individuals; and
(b) "director", in relation to a firm,
means a partner in the firm.]"
rpa 24/31 apl-1248-16.doc
On perusal of the aforesaid provisions it is clear that
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. It is crystal clear
that if the person who commits an offence under Section 138 of
the Act is a company the company as well as other person in
charge of or responsible to the company for the conduct of
business of company at the time of commission of offence is
deemed to be guilty of the offence. It creates constructive liability
on the person responsible for the conduct of business of the
company. It would be appropriate to refer to the observation by
the Apex Court in the decision of Standard Chartered Bank. In
paragraph nos.16 and 17 of the said decision the Supreme Court
had analysed the earlier decision in SMS Pharmaceuticals Vs.
Neeta Bhalla & Anr.11 as follows:
16 After so stating, the Court adverted to the
complaint filed under Section 138 of the Act
and opined that the complaint should make out
a case for issue of process. As far as the officers
responsible for conducting the affairs of the
company are concerned, the Court referred to
11 (2005) 3 BLJR 2108 (SC)
rpa 25/31 apl-1248-16.doc
various provisions of the Companies Act, 1956
and analysed Section 141 of the Act to lay down
as follows:-
"What is required is that the persons who
are sought to be made criminally liable under
Section 141 should be, at the time the offence
was committed, in charge of and responsible to
the company for the conduct of the business of
the company. Every person connected with the
company shall not fall within the ambit of the
provision. It is only those persons who were in
charge of and responsible for the conduct of
business of the company at the time of
commission of an offence, who will be liable for
criminal action. It follows from this that if a
director of a company 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 under the provision. The
liability arises from being in charge of and
responsible for the conduct of business of the
company at the relevant time when the offence
was committed and not on the basis of merely
holding a designation or office in a company.
Conversely, a person not holding any office or
designation in a company may be liable if he
satisfies the main requirement of being in
charge of and responsible for the conduct of
rpa 26/31 apl-1248-16.doc
business of a company at the relevant time.
Liability depends on the role one plays in the
affairs of a company and not on designation or
status. If being a director or manager or
secretary was enough to cast criminal liability,
the section would have said so. Instead of
"every person" the section would have said
"every director, manager or secretary in a
company is liable"..., etc. The legislature is
aware that it is a case of criminal liability which
means serious consequences so far as the
person sought to be made liable is concerned.
Therefore, only persons who can be said to be
connected with the commission of a crime at
the relevant time have been subjected to
action".
17 After so stating, the Court placed reliance on
sub-Section 2 of Section 141 of the Act for
getting support of the aforesaid reasoning as
the said sub-Section envisages direct
involvement of any Director, Manager,
Secretary or other officer of a company in the
commission of an offence. The Court proceeded
to observe that the said provision operates
when in a trial it is proved that the offence has
been committed with the consent or connivance
or is attributable to neglect on the part of any
of the holders of the offices in a company. It has
rpa 27/31 apl-1248-16.doc
also been observed that provision has been
made for directors, managers, secretaries and
other officers of a company to cover them in
cases of their proved involvement. It is because
a person who is in charge of and responsible
for conduct of business of a company would
naturally know why a cheque in question was
issued and why it got dishonoured and
simultaneously it means no other person
connected with a company is made liable under
Section 141 of the Act. The liability arises, as
the three-Judge Bench opined, on account of
conduct, act or omission on the part of an
officer and not merely on account of holding
office or position in a company and, therefore,
in order to bring a case within Section 141 of
the Act, the complaint must disclose the
necessary facts which makes a person liable. In
the said case, the Court has referred to the
decisions in Secunderabad Health Care Ltd. v.
Secunderabad Hospitals (P) Ltd.[7], V. Sudheer
Reddy v. State of A.P.[8], R. Kanan v. Kotak
Mahindra Finance Ltd.[9], Lok Housing ad
Constructions Ltd. v. Raghupati Leasing and
Finance Ltd.[10], Sunil Kumar Chhaparia v.
Dakka Eshwaraiah[11], State of Haryana v. Brij
Lal Mittal[12], K.P.G. Nair v. Jindal Menthol
India Ltd.[13], Katta Sujatha v. Fertilizers &
Chemicals Travancore Ltd.[14] and eventually
rpa 28/31 apl-1248-16.doc
expressed thus:-
"A liability under Section 141 of the Act
is sought to be fastened vicariously on a person
connected with a company, the principal
accused being the company itself. It is a
departure from the rule in criminal law against
vicarious liability. A clear case should be
spelled out in the complaint against the person
sought to be made liable. Section 141 of the Act
contains the requirements for making a person
liable under the said provision. That the
respondent falls within the parameters of
Section 141 has to be spelled out. A complaint
has to be examined by the Magistrate in the
first instance on the basis of averments
contained therein. If the Magistrate is satisfied
that there are averments which bring the case
within Section 141, he would issue the process.
We have seen that merely being described as a
director in a company is not sufficient to satisfy
the requirement of Section 141. Even a non-
director can be liable under Section 141 of the
Act. The averments in the complaint would also
serve the purpose that the person sought to be
made liable would know what is the case which
is alleged against him. This will enable him to
meet the case at the trial".
rpa 29/31 apl-1248-16.doc
In the light of the aforesaid observations, it will have
to be seen that the applicant is one of the person whose is
concerned with the day to day affairs of the company. As stated
in complaint the applicant is looking after day to day affairs of
accused no.1. He has dealt with complainant company in respect
of subject transaction. He has acted in connivance with other in
dishonour of cheque. The complainant must be given an
opportunity to prove the same by leading the evidence before the
trial Court. The proceedings cannot be quashed at the threshold.
13 The other submission of the counsel for the applicant
that the E-mails, electronic evidence relied upon by the
complainant cannot be considered in view of Section 65B of the
Indian Evidence Act, 1872. Reliance was placed on the decision of
the Delhi High Court in the case of Facebook India Online
Services (Supra). In the said case, the trial was conducted and
the issue was relating to how a documents in the electronic form
has to be proved in the light of a certificate which is required to
be issued by the person/authority in whose custody the device in
which the document was stored in an electronic form that the
printout generated has been through the device and reflects an
information stored in electronic form in the ordinary course or
rpa 30/31 apl-1248-16.doc
through the testimony of the person who generates the printout
from the device in which the same is stored. The stage to
appreciate the evidence is yet to come. The trial Court is required
to apply its mind while issuing process and the said order cannot
be passed mechanically as observed by the Apex Court in the
case of M/s.Pepsi Foods Ltd. (Supra) which is relied upon by
the advocate for the applicant. On perusal of the order, I do not
find any reason to interfere in the order issuing process passed
by the trial Court. I have perused the reply filed by the advocate
for the complainant and the documents in the form of E-mail
being relied upon by the complainant. According to the
respondent no.1 the E-mails were exchanged between the parties
which shows the complicity of the applicant in the subject
transaction. The said E-mails and its veracity has to be tested in
evidence during the course of trial. Prima facie case is made out
showing involvement/participation of the applicant in the said
transaction. It is pertinent to note that the applicant has annexed
some of the E-mails and the copy of consent terms to the
application. According to the complainant, applicant is
responsible for dishonour of about 27 cheques and several
complaints have been filed by the respondent no.1 in which the
applicant is accused and he did not appear before the trial Court,
rpa 31/31 apl-1248-16.doc
and, hence proclamation has been issued against him declaring
him as absconding.
14 In the light of the aforesaid observations, I do not find
that the applicant has made out any case for quashing the
proceedings by invoking the inherent powers under Section 482
of the Code of Criminal Procedure, and, hence, the petition
deserves to be dismissed.
15 Hence, I pass the following order:
:: O R D E R ::
(a) Criminal Application No.1248 of 2016 is
rejected;
(b) It is clarified that the observations made in
this order is for considering the present
application and the trial Court shall not be
influenced by the observations during the
trial.
(PRAKASH D. NAIK, J.)
