Dr. Manmohan Kumar Khanduja vs Shankar Singh Kothari
2025 Latest Caselaw 3992 Chatt

Chattisgarh High Court

Dr. Manmohan Kumar Khanduja vs Shankar Singh Kothari on 28 April, 2025

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                                                           2025:CGHC:19174
                                                                         NAFR

             HIGH COURT OF CHHATTISGARH AT BILASPUR

                              CrMP No.1028 of 2023


                           Order Reserved on 29.01.2025
                           Order Delivered on 28.04.2025
Dr. Manmohan Kumar Khanduja S/o Shri Dharampal Khanduja Aged About 67 Years
R/o House No. 36/6, Nehru Nagar (East) Bhilai, Civil, Tehsil and District Durg
Chhattisgarh.
                                                               ... Petitioner

                                         versus

Shankar Singh Kothari S/o Shri Kanhaiyalal Kothari Aged About 57 Years R/o
Kamptee Line, Beside Bhilai Scan, Rajnandgaon, Civil, Tehsil And Revenue District
Rajnandgaon Chhattisgarh.

                                                                  ... Respondent

For Petitioner : Mr. Jaydeep Singh Yadav, Advocate For Respondent : Mr. Rishabh Gupta & Mr. Aniruddha Shrivastava, Advocates appear on behalf of Mr. Manoj Paranjpe, Advocate

Hon'ble Shri Justice Arvind Kumar Verma CAV ORDER

1. The present writ petition has been filed by the petitioner on the following

prayer :

                 "(i).   Quash     the      complaint   filed    by    the

                 respondent/complainant.

(ii). Set-aside the order dated 07/07/2018 passed by the

learned Complaint JMFC, Rajnandgaon in Complaint Case

no. 1677/2018 registering the complaint u/s 138 of N. 1. Act,

1881.

(iii). Set-aside the order dated 03/01/2023 by which

cognizance of the case has been taken by the learned JMFC,

Rajnandgaon against the petitioner.

(iv). And further quash the entire criminal proceedings

arising out of e complaint the Complaint Case no.

1677/2018 against the petitioner, in the interest of justice."

2. This petition has been preferred by the petitioner under Section 482 of the

Code of Criminal Procedure, 1973 being aggrieved with the order dated

07.07.2018 in Complaint Case No.1677/2018, whereby the learned JMFC,

Rajnandgaon has registered the complaint under Section 138 of the Negotiable

Instruments Act, 1881 and the order dated 03.01.2023, wherein the learned

JMFC, Rajnandgaon has taken cognizance of the offence and continuing with

the criminal proceedings by taking evidence.

3. The brief factual background of the prosecution case is that the

respondent/complainant filed a complaint u/s 138 of the Negotiable

Instruments Act, 1881 alleging that in the year 2017, the petitioner/accused

took a loan of Rs. 35,00,000/- from the respondent/complainant and to make

repayment of the aforesaid loan amount, the petitioner's company- BSR

SUPERSPECIALITY HOSPITAL LTD. issued a cheque in favour of the

respondent bearing cheque no. 102283 for account no. 912030013576214

maintained at Axis Bank, Raipur dated 15/02/2018 for an amount of Rs.

35,00,000/- and when on 01/03/2023, the respondent/complainant presented

the said cheque in his bank- Bank of Maharashtra, Branch- Rajnandgaon, the

said cheque was dishonored on the ground that the account is closed.

Subsequently, the respondent sent a registered demand notice to the petitioner

only at his residence without arraying the company as a party and then

presented a criminal complaint before the learned JMFC, Rajnandgaon on

14/05/2018 making the petitioner as a party & accused to the said complaint

wherein the said cheque was issued by the company "BSR

SUPERSPECIALITY HOSPITAL LIMITED" without making any averments

about the wrong doing of the company or impleading the said company as an

accused. The learned JMFC, Rajnandgaon then vide order dated 07/07/2018

registered the complaint case & summons were issued for the presence of the

present petitioner and likewise on 03/01/2023, the learned JMFC,

Rajnandgaon took cognizance of the case and ordered to proceed against the

petitioner and continuing with the recording of the evidence. Hence, this

petition.

4. Learned counsel for the petitioner contended that the learned Court below has

mechanically registered the complaint against the petitioner without going

through the averments made in the complaint to satisfy itself whether a case is

made out against the petitioner or not. The learned Court below ought to have

considered that, for maintaining prosecution under Section 141 of the

Negotiable Instruments Act, 1881 dealing with offences of dishonor by

companies, the arraying of a company as an accused is imperative. He further

contended that the learned Court below failed to appreciate that the Section

141 of the 1881 Act postulates 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

but in the instant case the petitioner has been arrayed in his personal capacity

wherein the registered address of the company is also not mentioned in the

cause title nor a demand notice was ever made or sent to the company's

address by the respondent. He further contended that even if the case of the

respondent is accepted, the cheque was not issued by the signatory in his

personal capacity. Hence, the complaint ought to have been instituted against

the company and its directors and not against the petitioner. In catena of

judgments it has been held that necessary averments ought to be contained in

the complaint before a person can be subjected to criminal process. It is

categorically submitted that, what is required is that the persons who are

sought to be made criminally liable should be, at the time of the offence is

committed, in charge of and responsible to the company for the conduct of the

business of the company. Thus, it is mandatory that the complaint must

disclose the necessary facts to make a person liable. In absence of such an

averment, the complaint of the respondent is not maintainable and is liable to

be rejected. He further contended that it is the humble submission of the

petitioner that the provisions of Section 141 of the N.I. Act, 1881 postulates

that the commission of the offences by the company is an express condition

precedent to attract vicarious liability of the other. It is submitted that, once the

company is 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. The prosecution of other persons under

section 138 of the N I Act is permissible only when the company is named as

an accused in the complaint. In the absence of the company being arraigned as

an accused, a complaint against the petitioner is not maintainable.

5. Reliance has been placed by the counsel on several judgments as under :

Himanshu Vs. B. Shivamurthy & Anr. reported in AIR 2019 Supreme

Court 3052, N. Harihara Krishnan Vs. J. Thomas reported in AIR 2017

Supreme Court 4125, Manmohan Kumar Khanduja (Director, BSR Super

Specialty Hospitals Ltd.) Vs. Amit Kumar reported in AIR Online 2023

CHH 220, M/s. Pepsi Foods Ltd. and another Vs. Special Judicial

Magistrate and Others reported in 1998 Cri. L.J. 1 and S.M.S.

Pharmaceuticals Ltd. Vs. Neeta Bhalla and Another reported in 2005 Cri.

L.J. 4140.

6. The institution/continuance of the criminal proceedings against the petitioner

amounts to abuse of process of Court and to secure the ends of justice,

impugned proceedings need to be quashed.

7. On the other hand, learned counsel for the respondent/complainant contended

that the cheque was not issued by the petitioner in the capacity of the Director

of the Company but in fact, the loan was taken by him in his personal capacity,

therefore, no offence can be said to have been committed by the Company.

therefore, the complainant has rightly impleaded the petitioner alone as a party

in the complaint case. Learned counsel further submit that as the present

petitioner is the Director of both the companies, therefore, he, in a deceitful

manner, has issued the cheque in the name of the concerned Company.

8. I have heard learned counsel for the parties and perused the records with

utmost circumspection.

9. Section 141 of the Negotiable Instruments Act, 1881 provides 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:

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."

10. In the matter of Himanshu Vs. B. Shivamurthy & Anr. reported in AIR 2019

Supreme Court 3052, the Hon'ble Supreme Court has held in para- 15 as

under :

"15. 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 Tor 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 the matter of N. Harihara Krishnan Vs. J. Thomas reported in AIR 2017

Supreme Court 4125, the Hon'ble Supreme Court has held as under :

"This Court in Aneeta Hada (AIR 2012 SC 2795, para 43),

had an occasion to examine the question Whether an

authorised signatory of a company would be liable for

prosecution under Section 138 of the Negotiable

Instruments Act, 1881 (for brevity "the Act") without the

company being arraigned as an accused" and held as

follows:-

"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...."

Yet the High Court reached a conclusion that the revision

filed by the petitioner is not maintainable because

DAKSHIN did not choose to challenge the trial court's

order.

The High Court failed to appreciate that the liability of the

appellant (if any in the context of the facts of the present

case) is only statutory because of his legal status as the

DIRECTOR of DAKSHIN. Every person signing a cheque

on behalf of a company on whose account a cheque is

drawn does not become the drawer of the cheque. Such a

signatory is only a person duly authorised to sign the

cheque on behalf of the company/drawer of the cheque."

12. In the matter of Manmohan Kumar Khanduja (Director, BSR Super

Specialty Hospitals Ltd.) Vs. Amit Kumar reported in AIR Online 2023

CHH 220, the Hon'ble Supreme Court has held in para-8 & 9 as under :

"8.Reverting back to the facts of the present case, it is

indisputable that the cheque was issued in the Capacity of

an authorized signatory of BSR Health Ventures Private

Limited and the said cheque was not issued from a personal

account and also the name of the company has been

wrongly mentioned since 'BSR Super Specialty Hospitals

Ltd' and 'BSR Health Ventures Private Ltd' are two separate

entities and the existence of both the companies are

different and distinct. Further, the cheque was issued in the

name of BSR Health Ventures Private Ltd., however, the

notice was issued and the complaint was filed against the

Director of BSR Super Specialty Hospitals Ltd.

9.In view of the aforesaid discussion, since a wrong notice

has been served and a wrong party has been made and

further, the Company has also not been arrayed as an

accused, the continuation of the criminal proceeding against

the petitioner would amount to abuse of the process of law."

13. In the matter of M/s. Pepsi Foods Ltd. and another Vs. Special Judicial

Magistrate and Others reported in 1998 Cri. L.J. 1, the Hon'ble Supreme

Court has held in para-28 as under :

"28.Summoning of an accused in a criminal case is a

serious matter. Criminal law cannot be set into motion as a

matter of course. It is not that the complainant has to bring

only two witnesses to support his allegations in the

complaint to have the criminal law set into motion. The

order of the Magistrate summoning the accused must reflect

that he has applied his mind to the facts of the case and the

law applicable thereto. He has to examine the nature of

allegations made in the complaint and the evidence both

oral and documentary in support thereof and would that be

sufficient for the complainant to succeed in bringing charge

home to the accused. It is not that the Magistrate is a silent

spectator at the time of recording of preliminary evidence

before summoning of the accused. Magistrate has to

carefully scrutinies the evidence brought on record and may

even himself put questions to the complainant and his

witnesses to elicit answers to find out the truthfulness of the

allegations or otherwise and then examine if any offence is

prima facie committed by all or any of the accused."

14. In the matter of S.M.S. Pharmaceuticals Ltd. Vs. Neeta Bhalla and Another

reported in 2005 Cri. L.J. 4140, the Hon'ble Supreme Court has held in para-

6, 12 & 14 as under :

"6. Section 203 of the Code empowers a Magistrate to

dismiss a complaint without even issuing process. It uses

the words "after considering" and "the Magistrate is of

opinion that there is no sufficient ground for proceeding".

These words suggest that the Magistrate has to apply his

mind to a complaint at the initial stage itself and see

whether a case is made out against the accused persons

before issuing process to them on the basis of the

complaint. For applying his mind and forming an opinion as

to whether there is sufficient ground for proceeding, a

complaint must make out a prima facie case to proceed.

This, in other words, means that a complaint must contain

material to enable the Magistrate to make up his mind for

issuing process. If this were not the requirement,

consequences could be far reaching. If a Magistrate had to

issue process in every case, the burden of work before

Magistrates as well as harassment caused to the respondents

to whom process is issued would be tremendous. Even

Section 204 of the Code starts with the words "if in the

opinion of the Magistrate taking cognizance of an offence

there is sufficient ground for proceeding......" The words

"sufficient ground for proceeding" again suggest that

ground should be made out in the complaint for proceeding

against the respondent. It is settled law that at the time of

issuing of the process the Magistrate is required to see only

the allegations in the complaint and where allegations in the

complaint or the charged-sheet do no constitute an offence

against a person, the complaint is liable to be dismissed.

12. While analysing Section 141 of the Act, it will be seen

that it operates in cases where an offence Cunder Section

138 is committed by a company. The key words which

occur in the Section are "every person". These are general

words and take every person connected with a company

within their sweep. Therefore, these words have been

rightly qualified by use of the words "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 etc." 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 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.

14. The conclusion is inevitable that the liability arises on

account of conduct, act or omission on the part of a person

and not merely on account of holding an office or a position

in a company. Therefore, in order to bring a case within

Section 141 of the Act the complaint must disclose the

necessary facts which make a person liable."

15. In view of the provisions of Section 141 of N.I. Act and the well settled

principles of law, it is apparent that the complainant should have impleaded

the Company- BSR SUPERSPECIALITY HOSPITAL LTD as a party

respondent in the complaint case before the JMFC.

16. In such eventuality, the orders dated 07.07.2018 and 03.01.2023 are set aside

and the case is remanded back to the trial Court for fresh adjudication and the

petitioner shall file appropriate application before the trial Court and the

learned trial Court after taking into consideration the objection raised by the

petitioner, the same shall decide on its own merits without prejudice to the

order of this Court.

17. Accordingly, the instant CrMP stands disposed of.

Sd/-

(Arvind Kumar Verma) Judge

Vasant