Chattisgarh High Court
Jagdish Singh Saini vs Dwarikadas Rathi (Now Dead) ... on 21 March, 2022
1
AFR
HIGH COURT OF CHHATTISGARH, BILASPUR
(Order reserved on 02.03.2022)
(Order delivered on 21.03.2022)
CRMP No. 1645 of 2019
Charanjeet Singh Saini, S/o. Shri Jagdish Singh Saini, Aged About 39
Years, R/o. HIG 10, MPHB Colony, Near Post Office, Tatibandh, Raipur,
District- Raipur, Chhattisgarh.
---- Petitioner
Versus
M/s. Ispat India, Through Partner Shri Yashwardhan Agrawal, S/o. Shri
Nirmal Kumar Agrawal, R/o. Plot No. 4 & 9, Phase-2, Siltara Industries
Area, Raipur, District- Raipur, Chhattisgarh.
---- Respondent
CRMP No. 118 of 2021
1. Jagdish Singh Saini, S/o. Shri Trilok Singh Saini, Aged About 65 Years.
2. Charanjeet Singh Saini, (wrongly mentioned as Charan Singh Saini), S/o.
Jagdish Singh Saini, Aged About 34 Years.
Both Resident Of HIG 10, MP Housing Board Colony, Near Tatibandh
Gurudwara, Tatibandh, Raipur, District- Raipur (Chhattisgarh)
Other Address - (As Per Complaint) Saini Industries Limited, Siltara, Raipur
(Chhattisgarh)
---- Petitioners
Versus
1. Smt. Santoshi Agrawal, W/o. Late Shri Rajkumar Agrawal, Aged About 50
Years, Residents Of House No. 30, Recreations Road, Choubey Colony,
Raipur (Chhattisgarh)
2. Shyam Agrawal, S/o. Late Shri Rajkumar Agrawal, Aged About 25 Years,
Residents Of House No. 30, Recreations Road, Choubey Colony, Raipur
(Chhattisgarh)
3. Sammi Singh Saini, Residents Of HIG 10, MP Housing Board Colony, Near
Tatibandh Gurudwara, Tatibandh, Raipur, District- Raipur (Chhattisgarh)
---- Respondents
CRMP No. 120 of 2021
1. Jagdish Singh Saini, S/o. Shri Trilok Singh Saini, Aged About 65 Years.
2. Charanjeet Singh Saini (wrongly mentioned as Charan Singh Saini) S/o.
Jagdish Singh Saini, Aged About 34 Years.
Both Residents of HIG 10, MP Housing Board Colony, Near Tatibandh
Gurudwara, Tatibandh, Raipur, District Raipur Chhattisgarh.
Other Address (As Per Complaint) Saini Industries Limited Siltara, Raipur
Chhattisgarh.
---- Petitioners
Versus
1. Smt. Santoshi Agrawal, W/o. Late Shri Rajkumar Agrawal, Aged About 50
Years, Resident Of House No. 30, Recreation Road, Choubey Colony,
Raipur Chhattisgarh.
2. Shyam Agrawal, S/o. Late Shri Rajkumar Agrawal, Aged About 25 Years,
Resident Of House No. 30, Recreation Road, Choubey Colony, Raipur
Chhattisgarh.
3. Sammi Singh Saini, Residents Of HIG 10, MP Housing Board Colony, Near
Tatibandh Gurudwara, Tatibandh, Raipur, District Raipur Chhattisgarh.
---- Respondents
CRMP No. 605 of 2020
Charanjeet Singh Saini, S/o. Shri Jagdish Singh Saini, Aged About 39
Years, R/o. HIG 10, MPHB Colony, Near Post Office, Tatibandh, Raipur,
District- Raipur, Chhattisgarh.
---- Petitioner
Versus
Kotak Mahindra Bank Ltd., A Registered Company Under The Companies
Act. 1956, Having Its Registered Office Near Police Headquarter, G.E.
Road, District- Raipur, Chhattisgarh, Through Its Authorised Representative,
Shri Vijay Shukla, Assistant Manager.
---- Respondent
CRMP No. 625 of 2020
Charanjeet Singh Saini, S/o. Shri Jagdish Singh Saini, Aged About 39
Years, R/o. HIG 10, MPHB Colony, Near Post Office, Tatibandh, Raipur,
District - Raipur Chhattisgarh.
---- Petitioner
Versus
Kotak Mahindra Bank Ltd., A Registered Company Under The Companies
Act, 1956, Having Its Registered Office Near Police Headquarter, G.E.
Road, District Raipur, Chhattisgarh, Through Its Authorised Representative,
Shri Vijay Shukla, Assistant Manager
---- Respondent
CRMP No. 640 of 2020
Jagdish Singh Saini, S/o. Shri Trilok Singh Saini, Aged About 65 Years, R/o.
HIG 10, MPHB Colony, Near Post Office, Tatibandh, Raipur, District Raipur
Chhattisgarh.
---- Petitioner
Versus
1. Dwarikadas Rathi (Now Dead) Through His Legal Heirs Gopal Das Rathi.
As Per Hon'ble Court Order Dated 05-01-2022 And 09-02-2022
2. Gopaldas Rathi, S/o. Late Shri Dwarikadas Rathi, R/o. Thelghani Naka,
Raipur Chhattisgarh.
---- Respondents
CRMP No. 1643 of 2019
Charanjeet Singh Saini, S/o. Shri Jagdish Singh Saini, Aged About 39
Years, R/o. HIG 10, MPHB Colony, Near Post Office, Tatibandh, Raipur,
District Raipur Chhattisgarh. (Revisioner)
---- Petitioner
Versus
M/s Jai Ambe Metal Works, Through Director Shri Yashwardhan Agrawal,
Son Of Shri Nirmal Kumar Agrawal, R/o. Plot No. 749/8, Behind Banjari
Temple, Rawabhata Industries Area, Raipur, District Raipur Chhattisgarh.
---- Respondent
CRMP No. 1644 of 2019
Charanjeet Singh Saini, S/o. Shri Jagdish Singh Saini, Aged About 39
Years, R/o. HIG 10, MPHB Colony, Near Post- Office, Tatibandh, Raipur,
District- Raipur, Chhattisgarh.
---- Petitioner
Versus
Sanjay Goyal, S/o. Shri Rajkumar Goyal, R/o. In Front Of Aakashwani
Tower, Near RTO Office, Rawanbhata, Bilaspur Road, Raipur, District-
Raipur, Chhattisgarh.
Presently Residing At Loha Bazaar Mandi, Govindgarh, Punjab.
Through His Power Of Attorney Holder- Mahesh Tiwari, S/o. Shri M.S.
Tiwari, R/o. In Front Of Aakashwani Tower, Near RTO Office, Rawanbhata,
Bilaspur Road, Raipur, District- Raipur, Chhattisgarh.
---- Respondent
For Petitioners : Mr. K.Rohan, Mr. Manoj Paranjpe &
Mr. Rishabh Gupta, Advocates for
the Petitioner(s).
For Respondents in CRMP No. : Mr. D.K.Gwalre, Advocate
1645 & 1643 of 2019
For Respondents in CRMP Nos. : Mr. Mayank Kumar, Advocate
640 of 2020, 120/2021 & 118
of 2021
For Respondents in CRMP No. : Mr. Sudeep Johri, Advocates
1644 of 2019.
For Respondents in CRMP Nos. : Mr. Malay Shrivastava, Advocates
605 & 625 of 2020.
Hon'ble Shri Justice Goutam Bhaduri
CAV ORDER
1. All these petitions are being heard and decided together, as the common
questions of law is raised.
2. Different complaints were filed by the respondents under Section 138 of
Negotiable Instrument Act as the cheques issued by the petitioners on
behalf of M/s. Saini Industries Limited were dishonoured for want of fund in
the account. Thereafter, the statutory notice having been served, the
repayment of the amount was not made, consequently different complaints
under Section 138 of Negotiable Instruments Act were filed.
3. The facts show that initially after filing of the complaint, objections were
raised by the petitioners by filing interlocutory applications about
maintainability of the petition. The same having been dismissed, revision
was preferred and the Sessions Judge dismissed the revision by holding
that the Directors cannot be absolved of their criminal liability, despite the
fact the company has not been arrayed as an accused. Having aggrieved
by the said order, the present petitions.
4. The legal question which arises for consideration that whether the
complaint under Section 138 of Negotiable Instruments Act without
arraigning the company as an accused would be maintainable ?
5. Mr. K. Rohan, learned counsel for the petitioners contended in the memo of
complaint the petitioners were described as either Directors of Saini
Industries Limited or on behalf of the Saini Industries. Therefore, the
company having not been made an accused, the complaint only against the
Director would not lie. Learned counsel for the petitioners would submit that
the respondents herein are very well in know of the fact that the cheques
were issued by petitioners as directors of company, which is evident from
copy of the cheques itself. He would submit that the cheques were issued
by the petitioners in the capacity of the Director of the Company M/s. Saini
Industries. Admittedly, Saini Industries being not arrayed as a party before
the Trial Court, in a result, in view of the law laid down in case of Aneeta
Hada v. Godfather Travels & Tours (P) Ltd. (2012) 5 SCC 661, the
prosecution of the like nature would not lie. He placed his reliance in (2020)
10 SCC 751, (2019) 3 SCC 797, (2018) (13) SCC 663, (2012) 5 SCC 661
and lastly (2009) 6 SCC 729 and would submit that no specific averments
have been made that what role the petitioners have played on behalf of the
company as an authorised signatory. Therefore, if the company is not made
a party as accused, the prosecution itself would not be maintainable.
6. Per contra, learned counsel for the respondents would submit that there is
no dispute about the legal proposition, however, the petitioners were the
Directors of the company or not, it is a matter of evidence and no inference
can be drawn on this date. The reference was made to the Criminal Appeal
Nos.403-405 of 2019 and (2020) 3 SCC 794 and would submit that when
there is a disputed question arises for adjudication, the petition under
Section 482 would not be maintainable.
7. Heard learned counsel appearing for the parties and perused the
documents filed alongwith the petitions.
8. The copy of the complaint filed by the respondents shows the description of
the parties in CRMP Nos.1643/2019, 625/2020, 1644/2019 & 1645/2019,
they have been shown on behalf of Saini Industries. In CRMP No.625/2020
the certified copy of the cheque bears Saini Industries Limited and signed
by the Director. So the copy of the complaint would clearly demonstrate the
fact that different cheques were issued on behalf of Saini Industries Limited.
Admittedly, the company has not been arrayed as an accused.
9. Dealing with similar issue wherein only directors of company is made the
accused, leaving the company, the complaint under Section 138 of
Negotiable Instruments Act would not lie. In recent judgment in case of
Hindustan Unilever Ltd. v. State of Madhya Pradesh (2020) 10 SCC
751, 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 trial court to convict the
Company renders the entire conviction of the nominated
person as unsustainable."
10. Likewise in case of Himanshu v. B.Shivamurthy & Another (2019) 3 SCC
797, 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 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."
11. In case of Aneeta Hada v. Godfather Travels & Tours Private Limited
(2012) 5 SCC 661, 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 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."
12. The Supreme Court further in case of Ramraj Singh v. State of M.P.
(2009) 6 SCC 729 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.
13. Now referring back to the allegations and averments made in the complaint
under Section 138 of Negotiable Instrument Act, though the petitioners
have been described somewhere in the petition as Director in some petition
for and on behalf of Saini Industries Limited would make it clear that the
respondents were in know of the fact that with whom they are dealing. The
copy of the cheques which are produced in few of the cases would also
show that the cheques were issued on behalf of the company not in the
individual capacity of the petitioners. Consequently, in the complaint when
the company has not been arrayed as accused, the prosecution simplicitor
against the Director without making specific averments about the role
played by them would not be maintainable.
14. The petitions have been filed at the stage of framing of charges. Whether it
would be maintainable ? In order to arrive at an answer to the query, the
complaint and the orders summoning the accused is examined. Admittedly,
the company was not made an accused in the cases expect the Directors,
therefore, applying the law laid down by the Supreme Court as cited supra,
it appears that while summoning the accused, the Magistrate has failed to
see the principles of law and in turn when the objection was made, the
learned Sessions Judge also failed to take into account the principles laid
down by the Supreme Court. 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 evidence brought on record and cannot be a silent
spectator at the time of recording of preliminary evidence, the petition under
Section 482 would be maintainable for the reason that both the Courts
below have failed to take into account.
15. In the result, the present petitions are allowed. The impugned orders
passed in the following criminal revisions as also the criminal proceedings,
initiated against the respective petitioners, pending in the Court of J.M.F.C.
Raipur, are hereby quashed.
CRMP Impugned Order in Revision Criminal Case /
No. Complaint No.
1645 / 2019 Date - 17.06.2019 506 / 2012
Cr. Rev. No.172 / 2019
640 / 2020 - 174 / 2013
1643 / 2019 Date - 17.06.2019 507 / 2012
Cr. Rev No.173 / 2019
605 / 2020 - 1218 / 2012
120 / 2021 - 10723 / 2014
118 / 2021 - 10722 / 2014
1644 / 2019 Date - 01.06.2019 222 / 2017
Cr. Rev. No.204 / 2019
625 / 2020 - 9142 / 2012
16. There shall be no order as to cost(s).
Sd/-
Goutam Bhaduri
Judge
Ashok
HIGH COURT OF CHHATTISGARH, BILASPUR
CRMP No. 1645 of 2019
Charanjeet Singh Saini -Versus- M/s Ispat India
along-with
CRMP/640/2020, CRMP/1643/2019, CRMP/605/2020, CRMP/120/2021,
CRMP/118/2021, CRMP/1644/2019, CRMP/625/2020,
Head Note
A director cannot be prosecuted under Section 138 of the
Negotiable Instruments Act without the company being arraigned
as an accused.
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