Sheetal Amit Patil & Anr vs The State Of West Bengal
2021 Latest Caselaw 3188 Cal

                                      1



                   IN THE HIGH COURT AT CALCUTTA

                  CRIMINAL REVISIONAL JURISDICTION

Present:

THE HON'BLE JUSTICE JAY SENGUPTA

                           C.R.R. 2295 Of 2019
                         Sheetal Amit Patil & Anr.
                                  Versus
                         The State of West Bengal



For the Petitioners            : Mr. Ujjwal Gandhi
                                Mr. Rishi Bhuta
                                Mr. Gunjan Thakkar


For the Opposite Party No. 2 : Mr. Dipanjan Dutt
                                Ms. Trini Joarder


Lastly heard on               : 17.03.2021
Judgment on                   : 11.06.2021




JAY SENGUPTA, J:


1.

This is an application praying for quashing of a proceeding in a

complaint case being Case No. CC-3444 of 2016 under Section 138 read

with Section 141 of the Negotiable Instruments Act presently pending before

the learned Judicial Magistrate, 4th Court, Alipore, South 24 Parganas.

2. The petitioner nos. 1 and 2 are the accused nos. 8 and 9, respectively

before the learned Trial Court while the opposite party is the complainant in

this case. On 19.08.2016 the opposite party filed a petition of complaint

against the petitioners and other co-accused including the partnership firm

in which the present petitioners were also partners. On 09.09.2016, process

was issued against the present petitioners and the other co-accused.

3. Learned counsel appearing on behalf of the petitioners submitted as

follows. First, the petitioners were neither signatories to the cheque nor

parties to the agreements in question. Secondly, there were incomplete

averments in the petition of complaint so far as the roles of the present

petitioners were concerned. In the petition of complaint it was merely

averred that all the accused were the partners at the accused partnership

firm looking after its day to day business affairs and responsible for each

and every business conduct at the relevant time when the offence was

committed. However, this fell sort of the specific averments about the role of

the accused that had to be made in a petition of complaint as per the ratio

of the Hon'ble Apex Court as laid down in S.M.S. Pharmaceuticals Limited

vs. Neeta Bhalla & Anr., (2005) 8 SCC 89. Merely being a partner in a firm

would not make the petitioners accused in this case. On this, reliance was

further placed on the decisions of the Hon'ble Apex Court in National Small

Industries Corporation Limited vs. Harmeet Singh Paintal & Anr., (2010) 3

SCC 330, Pooja Ravindra Devidasani vs. State of Maharashtra, (2014) 16

SCC 1 and Saroj Kumar Poddar vs. State (NCT of Delhi) & Anr., 2007 Cr.L.J.

1419. On this point, reliance was also placed on the decisions of the Hon'ble

Delhi High Court in Shivam Minerals Limited vs. State, AIR Online 2019

DEL 1257, Shyam Narayan Mishra & Ors. vs. State, 2014 (1) ADR 750, the

Hon'ble Calcutta High Court in Srabonti Ganguli vs. IDBI, 2014 ACD 629

(Cal), the Hon'ble Chhattisgarh High Court in Gita Singh & Ors. vs.

Jaiprakash, CDJ 2019 CH 8C100, the Hon'ble Jharkhand High Court in

Puranmal Agarwal & Ors. vs. State of Jharkhand & Anr. in CRMP No. 804 of

2012, the Hon'ble Gujarat High Court in Anil Kumar vs. Abhisekh

Enterprise & Anr., 2018 ACD 121 (Guj) and the Hon'ble Kerala High Court

in P. Rajagopalan vs. P.C. Jose & Anr., 2017 ACD 59 (KER). Lastly, it was

contended that there was complete non-compliance of Section 202 of the

Code inasmuch as no enquiry was undertaken despite the fact that the

accused petitioners were admittedly staying beyond the territorial

jurisdiction of the learned Trial Court. The learned Trial Court only

examined the complainant under Section 200 of the Code and did not direct

an enquiry as contemplated under the amended provision of Section 202 of

the Code. The enquiry as contemplated under Section 202 of the Code was

mandatory. On this, reliance was placed on the decisions of the Hon'ble

Apex Court in the cases of K.T. Joseph vs. State of Kerala & Anr, (2009) 15

SCC 199, National Bank of Oman vs. Barakara Abdul Aziz & Anr, (2013) 2

SCC 488, Abhijit Pawar vs. Hemant Madhukar Nimbalkar, AIR 2017 SC 267

and Birla Corporation Limited vs. Adventz Investments and Holdings

Limited, 2019 SCC On-Line SC 682. It was contended that Section 202 was

not only mandatory in respect of Penal Code offences, but also in respect of

offences under Section 138 of the Negotiable Instruments Act. Disputing the

ratio laid down by the Division Bench of the Hon'ble High Court at Calcutta

in S.S. Binu vs. State of West Bengal, 2018 SCC On-Line (Cal) 1741, it was

contended that the affidavit of evidence, as contemplated under Section 145

of the Negotiable Instruments Act could not be a surrogate for an enquiry

under Section 202 of the Code. Reliance was further placed on the decision

of the Hon'ble Bombay High Court in Parth Bhadresh Mehta vs. State of

Maharashtra, 2019 SCC OnLine Bom 405, the Hon'ble Calcutta High Court

in Anu Mehta vs. Gunmala Sales Private Limited, 2013 ACD 1113 (Cal), the

Hon'ble Karnataka High Court in Babu Rao Chinchasur vs. Anjana

Shathaveer in Criminal Petition No. 7269 of 2015 and of the Hon'ble Gujarat

High Court in Vir Retail Pvt. Ltd. vs. State of Gujarat & Anr., 2014 ACD 537

(GUJ). In view of these, the impugned proceeding ought to be quashed so far

as the present petitioners were concerned.

4. Learned counsel appearing on behalf of the complainant/opposite

party no. 2 submitted as follows. The case arose out of the dishonour of a

cheque for a sum of Rs. 3 Crores issued by the accused towards part

discharge of their liability to the complainant company. There was a clear

averment made at paragraph 3 of the petition of complaint that all the

accused including the present petitioners were partners of the said firm and

were looking after its day-to-day business for each and every business

conduct at the relevant time when the offence was committed. As such, it

satisfied the requirement of the decisions of the Hon'ble Apex Court that in

order to arraign the directors of an accused company or the partners of an

accused firm as accused in a case for dishonour of a cheque, it had to be

averred that the said persons were in charge of and responsible for the

concerned for the day-to-day running of its business. There were no magic

words which were to be used in showing the involvement of the partners or

directors. In the facts of the present case, sufficient averments were made in

the petition of complaint to warrant the addition of the petitioners as

accused. Looking after its day-to-day business affairs was equivalent to the

phrase "in charge of". On the point that no magic words were required for

satisfying the requirement, reliance was placed on the decisions of the

Hon'ble Apex Court in K.P.G. Nair vs. Jindal Menthol India Limited (2001)

10 SCC 218, Monaben Ketanbhai Shah vs. State of Gujarat (2004) 7 SCC

15. On the question that averments made in the petition of complaint in the

present case constituted requisite averments, reliance was placed on the

decisions of the Hon'ble Apex Court in Paresh P. Rajda vs. State of

Maharashtra, (2008) 7 SCC 442, Rallis India Limited vs. Poduru Vidya

Bhusan, (2011) 13 SCC 88, T.N. News Print and Papers Ltd. vs. D.

Karunakar, (2016) 6 SCC 78, A.R. Radha Krishna vs. Dasari Deepthi (2019)

15 SCC 550. On this, reliance was also placed on the decision of the Hon'ble

Calcutta High Court in Ashwini Kumar Singh vs. Panchami Stone Quarry,

(2019), SCC OnLine Cal 4491 and Sharad Madhav Kulkarni vs. Midaas

Construction Company Private Limited, 2019 SCC OnLine Cal 4492. On the

question that the decision in S.M.S. Pharmaceuticals Limited (supra) did not

prescribe any specific form of the basic averments, reliance was placed on

the decision of the Hon'ble Apex Court in the case of A.K. Singhania vs.

Gujarat State Fertilizer Company limited, (2013) 16 SCC 630. Now, on the

question of compliance of Section 202 of the Code, the authoritative

pronouncement by an Hon'ble Division Bench of this Court in S.S. Binu vs.

State of West Bengal, (2018) SCC OnLine Cal 1741, inter alia, laid down that

in cases falling under Section 138 read with Section 141 of the Negotiable

Instruments Act, the learned Magistrate was not mandatorily required to

comply with provisions of Section 202(1) before issuing summons to an

accused residing outside the territorial jurisdiction of the Learned

Magistrate concerned. This decision of a Division Bench being binding on

this Court, the revisional application of the petitioner was sure to fail. On

the question of binding nature of precedents, reliance was placed on

Tribhuvandas Purshottamdas Thakur vs. Ratilal Motilal Patel, (1968) 1 SCC

455 and Commissioner of Income Tax vs. Thana Electricity Supply Limited,

(1993) SCC OnLine Bom 591. The decisions relied upon by the petitioner in

Udai Shankar Awasthi (supra), Abhijit Pawar (supra), National Bank of

Oman (supra) had all been considered in S.S. Binu (supra). So far as the

ratio laid down in the case of K.T. Joseph was concerned, there was nothing

to indicate its applicability to a proceeding under the Negotiable Instruments

Act. Similarly, the decision in Birla Corporation Ltd. (supra) was also

distinguishable on facts as the same concerned Penal Code offences. The

decision in K.S. Joseph (supra) too did not pronounce as to whether Section

202 of the Code was mandatory or not. Being partners of the accused firm,

in charge of and responsible its business at the material point, the

petitioners would have to face the impugned proceeding under Section 138

read with Section 141 of the Negotiable Instruments Act.

5. I heard the submissions of the learned counsels appearing on behalf

of the accused petitioners and the complainant/opposite party no.2 and

perused the revision petition, the affidavits and the written notes filed.

6. First, it is an admitted position that the petitioners were not the

signatories to the cheque in question. However, they were the partners in

the co-accused partnership firm.

Whether the averments made in the petition of complaint are sufficient

to arraign the present petitioners as accused:

7. It is trite law that merely being a partner in a firm would not make the

petitioners accused in a case for dishonour of cheque issued by the said

firm. In view of the decision of the Hon'ble Apex Court in SMS

Pharmaceuticals Limited (supra) and the subsequent decisions pronounced

in this regard, necessary averments are to be made in the petition of

complaint that the petitioners were in charge of and responsible to the

concerned artificial entity for the daily running of its business.

8. In SMS Pharmaceuticals Case (supra), a Three Judges' Bench of the

Hon'ble Apex Court laid down as under-

"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 141 of 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."

9. However, it has also been made sufficiently clear by the Hon'ble

Supreme Court in A.K. Singhania (supra) that no specific form of the

required averments is prescribed. There is no necessity to reproduce the

exact words 'in charge of' and 'responsible to'. Actually, it has to be seen

whether in the facts of a particular case, sufficient averments of facts were

made in the petition of complaint so as to warrant arraignment of the

partners, being in charge of or responsible to the firm, as accused in a

proceeding against a partnership firm.

10. In this regard, the expression used in SMS Pharmaceuticals Ltd. Case

(supra) at para 19(b) that "This has to be averred as a fact.........." assumes

immense significance.

11. It is evidently pertinent to refer to the relevant portions of the decision

in A.K. Singhania's Case (supra), as quoted below-

"14. From a plain reading of the aforesaid provision it is evident that

every person who at the time the offence was committed was in

charge of and responsible to the company shall be deemed to be

guilty of the offence under Section 138 of the Act. In the face of it,

will it be necessary to specifically state in the complaint that the

person accused was in charge of and responsible for the conduct of

the business of the company? In our opinion, in the case of offence

by the company, to bring its Directors within the mischief of Section

138 of the Act, it shall be necessary to allege that they were in charge

of and responsible to the conduct of the business of the company. It

is a necessary ingredient which would be sufficient to proceed

against such Directors. However, we may add that as no particular

form is prescribed, it may not be necessary to reproduce the words of

the section. If reading of the complaint shows and the substance of

accusation discloses necessary averments, that would be sufficient to

proceed against such of the Directors and no particular form is

necessary. However, it may not be necessary to allege and prove that,

in fact, such of the Directors have any specific role in respect of the

transaction leading to issuance of cheque. Section 141 of the Act

makes the Directors in charge of and responsible to the company "for

the conduct of the business of the company" within the mischief of

Section 138 of the Act and not particular business for which the

cheque was issued. We cannot read more than what has been

mandated in Section 141 of the Act."

12. In the present case, averments were made at paragraph 3 of the

petition of complaint that all the accused including the present petitioners

were partners of the said firm looking after its day to day business affairs

and responsible for each and every business conducts at the relevant time

when the offence was committed. Looking after its day to day business

affairs as partners and responsible for each and every business conducts of

the firm at the relevant time are clearly equivalent to being in charge of and

responsible to the concern for the conduct of its business.

13. Therefore, after going through the petition of complaint and reading it

as a whole, this Court is of the view that sufficient averments of facts were

made in the instant petition of complaint so as to arraign the present

petitioners as accused in this case.

Compliance of Section 202 of the Code of Criminal Procedure:

14. It appears that no enquiry, in clear terms, was undertaken by the

learned Trial Court as per the amended provision of Section 202 of the Code

despite the fact that the accused petitioners were admittedly staying beyond

the territorial jurisdiction of the learned Trial Court.

15. The question whether Section 202 of the Code is mandatory in respect

of a proceeding under Section 138 of the Negotiable Instruments Act or not

is now well settled. In Re: Expeditious trial of cases under Section 138 of

N.I. Act, 1881, reported in 2021 SCC Online SC 325, a Constitution Bench

of the Hon'ble Apex Court, inter alia, held as follows:

"24. The upshot of the above discussion leads us to the following

conclusions:

................

2) Inquiry shall be conducted on receipt of complaints under Section

138 of the Act to arrive at sufficient grounds to proceed against the

accused, when such accused resides beyond the territorial jurisdiction

of the Court.

3) For the conduct of inquiry under Section 202 of the Code, evidence

of witnesses on behalf of the complainant shall be permitted to be

taken on affidavit. In suitable cases, the Magistrate can restrict the

inquiry to examination of documents without insisting for examination

of witnesses.

..................."

16. Therefore, as the law requires that an enquiry be held under Section

202 of the Code if the accused stayed outside the Court's jurisdiction, such

enquiry has to be undertaken in clear terms and the Learned Trial Court,

after making such enquiry whether by taking evidence on affidavit or by

restricting the enquiry to examination of documents or not, is required to

decide whether there are sufficient grounds to issue process against the

accused. In the present case, the learned Trial Court did not do so. In view

of the same, the order issuing process and the subsequent orders passed by

the learned Trial Court in the present case ought to be set aside and the

matter remanded back so that the learned Trial Court can proceed afresh

from the stage of enquiry under Section 202 of the Code.

17. For the reasons recorded earlier regarding the averments made in the

petition of complaint for arraigning the present petitioners as accused, this

Court is satisfied with the said averments. Therefore, the prayer of the

petitioners for quashing of the proceeding is refused.

18. However, since no mandatory enquiry was undertaken in clear terms

under Section 202 of the Code even through the accused resided beyond the

territorial jurisdiction of the learned Trial Court, the order issuing process

and the subsequent orders passed by the learned Trial Court are set aside

and the matter is remanded back to the learned Trial Court for proceeding

afresh from the stage of enquiry as contemplated under Section 202 of the

Code.

19. As the proceeding has remained pending for quite long, the learned

Trial Court is requested to conclude the proceeding as expeditiously as

possible without granting any unnecessary adjournment to any of the

parties.

20. With these observations, the revisional application is disposed of.

21. However, there shall be no order as to costs.

22. Urgent Photostat certified copies of this judgment may be delivered to

the learned Advocates for the parties, if applied for, upon compliance of all

formalities.

(Jay Sengupta, J)

P. Adak