Ramesh Kumar Singhania Alias R. K. ... vs Manish Shukla
2022 Latest Caselaw 5395 Chatt

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                                                              NAFR


         HIGH COURT OF CHHATTISGAH , BILASPUR

                     Cr.M.P. No. 921 of 2020

                  Order Reserved on 17.08.2022

                  Order delivered on 25.08.2022

     1. Ramesh Kumar Singhania alias R.K. Singhania (Chartered
     Accounted), aged about 55 years, son of Late Nathulal
     Singhania, resident of 205, Samta Colony, Raipur, Tehsil &
     District Raipur (C.G.)

     2.   Lalit Singhania, aged about 62 years, son of Late Nathulal
     Singhania, resident of 28, College Road, Choubey Colony,
     Raipur, Tehsil & District Raipur (C.G.)

                                           ---- Petitioners/Accused

                              Versus

     Manish Shukla, aged about 35 years, son of Baldao Prasad
     Shukla, resident of Plot No. 784, Sundar Nagar, Raipur, Tehsil &
     District Raipur (C.G.)

                                       ----Respondent/complainant



For Petitioners             : Mr. Ankur Agrawal, Advocate.
For Respondent              : Mr. Manoj Parnajpe, Advocate.


            Hon'ble Shri Justice N.K. Chandravanshi

                          Order [C.A.V.]

1.   This petition under Section 482 of the Code of Criminal
Procedure, 1978 (for short "the Cr.P.C.) has been preferred against
order dated 22.05.2020 passed by 10th Additional Sessions Judge,
Raipur in Criminal Revision No. 709/2019 whereby order dated
1.11.2018 [order of registration of criminal complaint case under
Section 138 of The Negotiable Instruments Act, 1881] and subsequent
order/proceedings dated 21.10.2019 were upheld.
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2.    Facts

of the case, in brief, is that respondent/complainant filed a complaint under Section 138 of The Negotiable Instruments Act, 1881 (henceforth "NI Act") alleging inter alia that petitioners, who are directors and authorized signatory of Ramshwar Industries Ltd. has obtained an amount of Rs.5,000/- through Book No. 27, Receipt No. 656 on 13.8.1997, to return the aforesaid amount, petitioners issued cheque to the tune of Rs.3,78,000/- on 15.08.2018 in favour of respondent/complainant, which was dishonoured by the Bank with endorsement that "No such account". Despite statutory notice issued to the petitioners, the amount was not paid by them, hence, aforesaid complaint case was filed by him before Judicial Magistrate, First Class, Raipur (C.G.)

3. Vide order dated 1.11.2018, learned trial Court registered the case against the petitioners and one other co-accused. After appearance of the petitioners on 21.10.2019, particulars of the offence was stated to the petitioners and the case was fixed for evidence by the learned trial Court.

4. Order of registration of complaint dated 1.11.2018 and subsequent order / proceedings dated 21.10.2019 was assailed by petitioners vide Criminal Revision No. 709/2019, which was dismissed by 10th Additional Sessions Judger, Raipur, hence, this petition under Section 482 of the Cr.P.C.

5. This petition has been filed by the petitioners raising various grounds i.e. complainant has never disclosed that when, where and by whom the alleged cheque was given; alleged cheque has not been issued by the petitioners, when alleged amount was given to the petitioners, has not been disclosed. All these grounds raised by the petitioners are factual aspect of the case, which could be considered and decided by adducing evidence before the trial Court. During course of arguments, learned counsel for the petitioners insisted on the ground raised in this petition that alleged complaint has not been filed as per provisions contained in Section 141 of the NI Act, 1881.

6. Learned counsel for the petitioners would submit that alleged cheque was issued by the Directors / Authorized Signatory of Rameshwar Industries Limited, thus, alleged offence has been committed by the Company but the said Company i.e. Rameshwar Industry Limited has not been impleded as accused in the complaint case filed by the respondent. All the accused persons have been shown as Director of Rameshwar Industries Limited but without impleding aforesaid Company as accused in the complaint, the complaint filed by the respondent is not maintainable. Thus, the complaint case since its inception is not in accordance with law, hence, order of registration of complaint dated 01.11.2018 and subsequent order/proceeding dated 21.10.2019 passed by learned trial Court and upheld by the appellate Court is perverse and contrary to law, hence, it is prayed that this petition may be allowed by setting aside the impugned order dated 22.05.2020 passed by the 10th Additional Sessions Judge, Raipur, as also the criminal proceedings initiated against the petitioners/accused pending in the court of Judicial Magistrate, First Class, Raipur may be quashed. In support of his submissions, learned counsel appearing for the petitioners placed reliance upon the order dated 21.03.2022 passed by Coordinate Bench of this Court in Cr.M.P. No. 1645 of 2019 [Charanjeet Singh Saini v. M/s. Ispat India, Through Partner Shri Yashwant Agrawal] and other connected matters wherein it has been held that the "Director cannot be prosecuted under Section 138 of the Negotiable Instruments Act, 1881 without the company being arraigned as an accused".

7. On the other hand, learned counsel for the respondent/complainant would submit that complaint case pending before learned trial Court is summons trial case, wherein provision of getting discharge has not been contemplated under Chapter XX of the Cr.P.C., as has been decided by Hon'ble Apex Court in the case of Subramanium Sethuraman v. State of Maharashtra 1, therefore, order impugned dated 22.05.2020 passed by 10th Upper Sessions Judge, Raipur affirming the order dated 01.11.2018 and subsequent 1 AIR 2004 SC 4711

order/proceedings dated 21.10.2019 passed by the trial Court is well reasoned order,, which do not call for any interference in the instant petition. It is further submitted that if the petitioners have any grievance in respect of registration of complaint, then they could have filed writ petition directly before this Court for quashing of complaint case, but they choose to challenge both the orders passed by learned trial Court by filing revision petition under Sections 397 & 399 of the Cr.P.C. before the Additional Sessions Judge, Raipur and after rejection of that revision petition, they have filed present petition, hence, the petitioners are not entitled to get any relief, as sought for by them.

8. I have heard learned counsel appearing for the parties and perused the order impugned passed by both the courts below including other material available on record.

9. A perusal of complaint filed by respondent/complainant before learned trial Court would go to show that all three accused persons (including both the petitioners) have been arraigned as accused showing them Director of Rameshwar Industries Limited. Subject cheque has been issued by the Director/Authorized signatory of Rameshwar Industries Limited but aforesaid Company has not been arraigned in the complaint as an accused whereas, as has been stated above that alleged cheque has been issued on behalf of Company i.e. Rameshwar Industries Limited and all the accused persons have also been arraigned as Director of aforesaid Company, thus, it is clear that subject cheque was not issued by accused persons in their individual capacity.

10. Section 141 of the NI Act, 1881 contemplates the provisions for offence under Section 138 of the NI Act in cheque bounce cases, which reads thus :-

"Section 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:

[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 of 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 purpose 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.

11. Learned counsel for the petitioners heavily contended that since cheque has been issued by or on behalf of the Company, therefore, complaint case filed by the respondent does not deserve to be registered.

In such case, wherein only Directors of Company is made accused, leaving the company, the complaint under Section 138 of the NI Act would not lie. In the case of Hindustan Unilever Ltd. v. State of Madhya Pradesh 2 , at para 23 the Court held the person who is in charge of and responsible to the company for the conduct of business would be guilty of the offence. Para 23 is reproduced hereinbelow :

"23. Clause (a) of sub-section (1) of Section 17 of the Act makes the person nominated to be in charge of and responsible to the company for the conduct of business and the company shall be guilty of the offences under clause (b) of sub- section (1) of Section 17 of the Act. Therefore, there is no material distinction between Section 141 of the NI Act and Section 17 of the Act which makes the company as well as the nominated person to be held guilty of the offences and/or liable to be proceeded and punished accordingly.

Clauses (a) and (b) are not in the alternative but conjoint. Therefore, in the absence of the company, the nominated person cannot be convicted or vice versa. Since the Company was not convicted by the trial court, we find that the finding of the High Court to revisit the judgment will be unfair to the appellant-nominated person who has been facing trial for more than last 30 years. Therefore, the order of remand to the trial court to fill up the lacuna is not a fair option exercised by the High Court as the failure of the

2 (2020) 10 SCC 751

trial court to convict the Company renders the entire conviction of the nominated person as unsustainable."

12. Likewise in case of Himanshu v. B.Shivamurthy & Another 3 , the Supreme Court held that commission of offence by the company is an express condition precedent to attract the vicarious liability of others and the word "as well as the company" makes it clear when the company can be prosecuted, then only the persons mentioned in the other categories could be vicariously liable for the offence subject to the averments in the petition and proof thereof that the company is a juristic person. At para 7, 8, 9,10, 12 & 13 held as under :

"7. The first submission on behalf of the appellant is no longer res integra. A decision of a three-Judge Bench of this Court in Aneeta Hada v. Godfather Travels and Tours Private Limited (2012) 5 SCC 661 governs the area of dispute. The issue which fell for consideration was whether an authorized signatory of a company would be liable for prosecution under Section 138 of the Negotiable Instruments Act, 1881 without the company being arraigned as an accused. The three Judge Bench held thus: (SCC p.688 para 58)-

"58. Applying the doctrine of strict construction, we are of the considered opinion that commission of offence by the company is an express condition precedent to attract the vicarious liability of others. Thus, the words "as well as the company" appearing in the section make it absolutely unmistakably clear that when the company can be prosecuted, then only the persons mentioned in the other categories could be vicariously liable for the offence

3 (2019) 3 SCC 797

subject to the averments in the petition and proof thereof. One cannot be oblivious of the fact that the company is a juristic person and it has its own respectability. If a finding is recorded against it, it would create a concavity in its reputation. There can be situations when the corporate reputation is affected when a director is indicted."

In similar terms, the Court further held: (SCC p.688, para 59)

"59. 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 categories 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.

8. The judgment of the three-Judge Bench has since been followed by a two-Judge Bench of this Court in Charanjit Pal Jindal vs. L.N. Metalics (2015) 15 SCC 768. There is merit in the second submission which has been urged on behalf of the appellant as well. The proviso to Section 138 contains the pre-conditions which must be fulfilled before an offence under the provision is made out. These conditions are: (i) presentation of the cheque to the bank within six months from the date on which it is drawn or within the period of its validity, whichever is earlier; (ii) a demand being made in writing by the payee or holder in due course by the issuance of a notice in writing to the drawer of the cheque within thirty days of the receipt of information

from the bank of the return of the cheques; and (iii) the failure of the drawer to make payment of the amount of money to the payee or the holder in due course within fifteen days of the receipt of the notice.

9. In MSR Leathers vs. S. Palaniappan (2013) 1 SCC 177, this Court held thus : (SCC p.188 para

12)-

"12. The proviso to Section 138, however, is all important and stipulates three distinct conditions precedent, which must be satisfied before the dishonour of a cheque can constitute an offence and become punishable. The first condition is that the cheque ought to have been presented to the bank within a period of six months from the date on which it is drawn or within the period of its validity, whichever is earlier. The second condition is that the payee or the holder in due course of the cheque, as the case may be, ought to make a demand for the payment of the said amount of money by giving a notice in writing, to the drawer of the cheque, within thirty days of the receipt of information by him from the bank regarding the return of the cheque as unpaid. The third condition is that the drawer of such a cheque should have failed to make payment of the said amount of money to the payee or as the case may be, to the holder in due course of the cheque within fifteen days of the receipt of the said notice. It is only upon the satisfaction of all the three conditions mentioned above and enumerated under the proviso to Section 138 as clauses (a), (b) and (c) thereof that an

offence under Section 138 can be said to have been committed by the person issuing the cheque."

10. The importance of fulfilling these conditions has been adverted to in a recent judgment of a two-Judge Bench of this Court in N. Harihara Krishnan vs. J. Thomas (2018) 13 SCC 663. Adverting to the ingredients of Section 138, the Court observed as follows:

"26. ....Obviously such complaints must contain the factual allegations constituting each of the ingredients of the offence under Section 138. Those ingredients are: (1) that a person drew a cheque on an account maintained by him with the banker; (2) that such a cheque when presented to the bank is returned by the bank unpaid; (3) that such a cheque was presented to the bank within a period of six months from the date it was drawn or within the period of its validity whichever is earlier; (4) that the payee demanded in writing from the drawer of the cheque the payment of the amount of money due under the cheque to payee; and (5) such a notice of payment is made within a period of 30 days from the date of the receipt of the information by the payee from the bank regarding the return of the cheque as unpaid."

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."

13. In case of Aneeta Hada v. Godfather Travels & Tours

Private Limited 4, the Supreme Court held that in order to maintain a

prosecution against the Director, the company would be a necessary

party. At para 3, 7, 58 & 59, the Court held as under :

"3. The core issue that has emerged in these two appeals is whether the company could have been made liable for prosecution without being impleaded as an accused and whether the directors could have been prosecuted for offences punishable under the aforesaid provisions without the company being arrayed as an accused.

7. While assailing the said order before the two-

Judge Bench, the substratum of argument was that as the Company was not arrayed as an accused, the legal fiction created by the legislature in Section 141 of the Act would not get attracted. It was canvassed that once a legal fiction is created by the statutory provision against the Company as well as

4 (2012) 5 SCC 661

the person responsible for the acts of the Company, the conditions precedent engrafted under such deeming provisions are to be totally satisfied and one such condition is impleadment of the principal offender.

58. Applying the doctrine of strict construction, we are of the considered opinion that commission of offence by the company is an express condition precedent to attract the vicarious liability of others. Thus, the words "as well as the company" appearing in the Section make it absolutely unmistakably clear that when the company can be prosecuted, then only the persons mentioned in the other categories could be vicariously liable for the offence subject to the averments in the petition and proof thereof. One cannot be oblivious of the fact that the company is a juristic person and it has its own respectability. If a finding is recorded against it, it would create a concavity in its reputation. There can be situations when the corporate reputation is affected when a director is indicted.

59. 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 categories 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. We say so on the basis of the ratio laid down in State of Madras v. C.V. Parekh [(1970) 3 SCC 491 : 1971 SCC (Cri) 97] which is a three-Judge Bench decision. Thus, the view expressed in Sheoratan Agarwal v. State of M.P. [(1984) 4 SCC 352 : 1984 SCC (Cri)

620] does not correctly lay down the law and, accordingly, is hereby overruled. The decision in Anil Hada v. Indian Acrylic Ltd. [(2000) 1 SCC 1 : 2001 SCC (Cri) 174] is overruled with the qualifier as stated in paragraph 51. The decision in U.P. Pollution Control Board v. Modi Distillery [(1987) 3 SCC 684 : 1987 SCC (Cri) 632] has to be treated to be restricted to its own facts as has been explained by us hereinabove."

14. The Supreme Court further in case of Ramraj Singh v. State of M.P. 5 held that to launch a prosecution against the alleged Directors there must be a specific allegation in the complaint as to the part played by them in the transaction. It held that there should be clear and unambiguous allegation as to how that the Directors are incharge and responsible for the conduct of the business of the company.

15. Now, reverting back into the facts of present case, it is quite vivid that subject cheque has been issued by or on behalf of Company i.e. Rameshwar Industries Limited by its Director/Authorized Signatory. The petitioners have been arraigned as accused showing them the Directors of aforesaid Company. Thus, it is evidently clear that subject cheque has not been issued by the petitioners/accused persons in their individual capacity, therefore, considering the provisions of law and the dictum given by Hon'ble Supreme Court in the aforesaid cases that since aforesaid Company has not been arraigned as an accused in the complaint, the prosecution simplicitor against the Directors without making specific averments with regard to the role played by petitioners/accused persons would not be maintainable.

16. So far as, contention of learned counsel for the respondent/complainant that the case pending before the trial Court is case of summons trial, wherein provisions of discharge has not been contemplated, the petitioners have not filed present petition to quash the

5 (2009) 6 SCC 729

complaint case, rather they have challenged the orders passed by the learned trial Court and upheld by the appellate Court, hence, the petitioners are not entitled to get any relief as sought for by them.

17. This Court does not impress with the aforesaid contentions of learned counsel for the respondent, as the petitioners have not only challenged the order of registration of complaint case dated 01.11.2018 and subsequent order dated 21.10.2019 by filing revision petition challenging its legality, propriety and correctness before learned Additional Sessions Judge but when the same was rejected, then they have filed instant petition under Section 482 of the Cr.P.C. before this Cour. As has been stated above, that since subject cheque has been issued by or on behalf of Company by its Director /authorised signatory and the petitioners/accused persons have been arraigned in the complaint case showing them Directors of the aforesaid Company but the Company has not been arraigned as accused, therefore, order of registration of complaint case dated 1.11.2018 and subsequent order/ proceedings dated 21.10.2019 is ab initio illegal and void because while passing the aforesaid orders, the Magistrate has completely failed to see the principles of law and in turn when the revision was filed, learned Additional Sessions Judge also failed to take into account the principles of law laid down by the Supreme Court. Relief as sought for by the petitioners in the revision petition & present petition itself show that they have prayed to quash the order of registration of complaint and subsequent proceedings pending before the Magistrate and result of quashing of that orders itself quash the proceedings initiated by the Magistrate. Therefore, applying the principles as has been decided in case of Pepsi Foods Limited & Anr. v. Special Judicial Magistrate (1998) 5 SCC 749, which mandates that the Magistrate has to carefully scrutinize the material and evidence brought on record and cannot be a silent spectator at the time of recording of preliminary evidence, the petitioners are entitled to get relief as sought for by them under the provisions of Section 482 of the Cr.P.C.

18. Resultantly the present petition is allowed. Order dated 1.11.2018 and subsequent order/proceeding dated 21.10.2019 passed by Judicial Magistrate, First Class, Raipur in Criminal Case No. 5780 of 2018 and the impugned order dated 22.5.2020 passed by 10th Additional Sessions Judge, Raipur in Criminal Revision No. 709/2019 are set aside, consequently criminal proceedings initiated against the petitioners/accused persons in the court of Judicial Magistrate, First Class, Raipur are hereby quashed.

19. There shall be no order as to cost(s).

Sd/-

(N.K.Chandravanshi) Judge

D/-