Calcutta High Court (Appellete Side)

Abdul Mannan vs Md. Mobarak & Anr on 1 September, 2023

                  IN THE HIGH COURT AT CALCUTTA

                     (Criminal Revisional Jurisdiction)

                              Appellate Side

Present:

The Hon'ble Justice Shampa Dutt (Paul)

                            CRR 1107 of 2020

                              Abdul Mannan

                                    Vs.

                           Md. Mobarak & Anr.


For the petitioner                  : Mr. Debojyoti Deb,
                                      Mr. Avishek Roy Chowdhury,
                                      Ms. Somdyuti Parekh.

For the State                       : Ms. Rita Datta.

Hearing concluded on                : 07.08.2023

Judgment on                         :   01.09.2023



Shampa Dutt (Paul), J.:

  1.

The present revision has been preferred praying for quashing of

proceedings in connection with complaint case No. C/752 of 2019

(corresponding to T.R. No.169/2019) under Section 138 of the

Negotiable Instruments Act, 1881, currently pending before the Court

of the learned Judicial Magistrate, 5th Court at Alipore, South 24

Parganas.

2. The petitioner is one of the Directors of M/s. Ashika Infra Projects

Private Limited, a registered private limited company.

3. In course of business dealings, the opposite party had approached the

petitioner's company M/s. Ashika Infra Projects Private Limited for

some business ventures and the company had decided to enter into

some dealings with the opposite party. Accordingly, the opposite party

had made some investments with the company although, as in

business dealings, there was no guarantee of any specified profits.

4. In course of such business dealings, an undated account payee

cheque was issued by the petitioner on behalf of the company. The

cheque in issue, naturally, contained the stamp and seal of the

company. Since the company had no immediate obligation to repay

any invested amount, the complainant was simply handed a security

cheque.

5. The complainant's/opposite party's case in a nutshell is to the effect:-

That he had invested a sum of Rs.5.5 lacs (in three installments) in the

company of the petitioner on the assurance of getting lucrative returns

towards share of profits. It was further alleged in the petition of

complaint that in order to liquidate the liabilities, the petitioner had

handed over an account payee cheque bearing number 386692 drawn

on Industrial India Bank, Kolkata Branch dated 10.12.2018 and the

said cheque contained the signature of the petitioner and the seal of the

company. The cheque, on being presented, was returned with the

endorsement „Funds Inssuficient‟ and in spite of sending a legal notice

to the petitioner to repay, the petitioner did not pay the opposite

party/complainant.

6. The petitioner states that the allegations in the complaint are totally

false and were leveled simply to extract money from the petitioner.

The petitioner is one of the Directors of the company and business

decisions are taken by the company and not the petitioner

unilaterally. A decision to hand over a security cheque, to the

complainant was issued on the advice of the company and the

petitioner had no individual interest in the same. The petitioner had

signed as a mere signatory without any special interest in the affairs

of the company which was not made a party to the proceedings.

7. That although the cheque was issued by the petitioner on behalf of

the company namely M/s. Ashika Infra Projects Private Limited,

'demand notice' under the provisions of Section 138 of Negotiable

Instruments Act, 1881 (hereinafter referred to as the said Act) was not

issued to the Company. The petitioner was stunned and taken aback

to receive copy of the complaint (without annexure) from which it

transpired that the proceeding under the Act of 1881 was initiated

only against the petitioner and the company was left out. It is relevant

to mention that the cheque in question was issued by the petitioner

signing as the Director of the company.

8. The petitioner states that the demand notice dated 27.12.2018 issued

by the opposite party would reveal that the petitioner was referred to

as one of the Directors and it was admitted on behalf of the opposite

party that the account payee cheque in question contained the seal of

the company. The petitioner states that the complainant/opposite

party could not have come up with the proceedings without

incorporating the petitioner's company name M/s. Ashika Infra

Projects Private Limited as an accused person. It appears that the

opposite party has failed to implead the company as a party in the

proceedings which is mandatory, even though the complainant has

specifically reflected in his complaint that the cheque in question

contained the stamp of the company and the petitioner was one of its

Director. The petitioner states that the proceedings initiated by the

complainant is not maintainable since the company has not been

made a party.

9. The petitioner states that the Hon'ble Supreme Court of India in

Himanshu -versus- B. Shivamurthy & Another, (2019) 3 SCC 797,

on January 17, 2019, has laid down that:-

"In the absence of the company being arraigned as an accused, a complaint against the appellant was therefore not maintainable. The appellant had signed the cheque as a Director of the company and for and on its behalf. Moreover, in the absence of a notice of demand being served on the company and without compliance with the proviso to Section 138, the High Court was in error in holding that the company could now be arraigned as an accused."

10. It is further stated that the Hon'ble Apex Court similarly in

Aneeta Hada -versus- Godfather Travels And Tours Private

Limited, (2012) 5 SCC 661, has laid down that "in view of our

aforesaid analysis, we arrive at the irresistible conclusion that for

maintaining the prosecution under Section 141 of the Act,

arraigning of a company as an accused is imperative. The other

categorories of offenders can only be brought in the drag-net on

the touchstone of vicarious liability as the same has been

stipulated in the provision itself."

11. In the instant case, notice under the provisions of Section 138

of the Act of 1881 was never sent to the company. Accordingly,

proceedings were also never initiated against the company M/s.

Ashika Infra Projects Private Limited, though the petitioner has

admittedly issued the cheque on behalf of the company.

12. The petitioner states that the learned Judicial Magistrate, 5th

Court at Alipore, South 24 Parganas (hereinafter referred to as the

learned Magistrate) caused grave miscarriage of justice in taking

cognizance and issuing summons against the petitioner. The learned

Magistrate miserably failed to appreciate that, proceedings under

Section 138 of the Act of 1881 could not have been initiated solely

against the petitioner. The learned Magistrate further failed to

appreciate, that in view of the decisions of the Hon'ble Apex Court,

the proceedings in this case will not be maintainable since notice

under Section 138 of the Act of 1881 was not sent to the company

and the company was also not impleaded as a party to the

proceedings.

13. Mr. Debojyoti Deb, learned counsel for the petitioner has

submitted that 'Notice' under Section 138 of the Act of 1881 was

never issued to the company.

14. The company was not made a party to the proceedings under

Section 138/141 of the Act of 1881 which itself makes the

proceedings non-maintainable.

15. It is further submitted that it would clearly transpire from the

contents of the cheque, as well as the complaint that the opposite

party/complainant was in a business relationship with the company

namely M/s. Ashika Infra Projects Private Limited and the petitioner

was one of its Director.

16. It is also stated that the continuance of the instant proceedings

would be serious misuse and abuse of the process of law and hence,

the same is liable to be quashed for the ends of justice.

17. As service could not be effected upon the opposite

party/complainant the State was directed to do the same

through the local Police Station.

18. Ms. Rita Datta, learned counsel for the State has placed the

report. As per the report, it appears that the opposite

party/complainant left the address on record about 7-8 years ago

and his present whereabouts are not known.

19. On perusal of the materials on record, it appears from the

petition of complaint that in paragraph 3 it has been stated as

follows:-

"That the accused person is a Director of M/s. Ashika Infra Projects Pvt. Ltd. and has office at 55/3, Kayesta Para Main Road, P.S. Garfa, Kolkata-700 078, and running his business."

But the said company has not been made an accused in the

complaint case nor was any notice served upon the company

under Section 138 of the N.I. Act.

20. The petitioner is the sole accused/opposite party in the

complaint case, having signed the cheque as Director of the company

and for and on its behalf.

21. Paragraph 11, 12 & 13 of the judgment of the Supreme Court in

Himanshu vs. B. Shivamurthy & Anr. (Supra) has been relied upon

on behalf of the petitioner, where the Court held:-

"11. In the present case, the record before the Court indicates that the cheque was drawn by the appellant for Lakshmi Cement and Ceramics Industries Ltd., as its Director. A notice of demand was served only on the appellant. The complaint was lodged only against the appellant without arraigning the company as an accused.

12. The provisions of Section 141 postulate that if the person committing an offence under Section 138 is a company, every person, who at the time when the offence was committed was in charge of or 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.

13. In the absence of the company being arraigned as an accused, a complaint against the appellant was therefore not maintainable. The appellant had signed the cheque as a Director of the company and for and on its behalf. Moreover, in the absence of a notice of demand being served on the company and without compliance with the proviso to Section 138, the High Court was in error in holding that the company could now be arraigned as an accused."

22. The facts in the present case is very similar to the case, in

Himanshu vs. B. Shivamurthy & Anr. (Supra).

23. In the present case:-

a) The company has not been made an accused nor was any

notice served upon the company.

b) The petitioner has been made an accused as the Director of the

company, who signed and issued the cheque for and on behalf

of the company.

24. Therefore, in the absence of the company being arraigned as an

accused, a complaint against the petitioner is not maintainable

Himanshu vs. B. Shivamurthy & Anr. (Supra).

25. CRR 1107 of 2020 is thus allowed.