Smt. Krishna Gupta vs Shri Sita Ram Singhal
2007 Latest Caselaw 2037 Del

JUDGMENT

Shiv Narayan Dhingra, J.

Crl. L.P. No. 231/2006

Leave to appeal is allowed for the reasons given therein.

Crl Appeal No. 643/2007

1. This appeal has been preferred against the order of learned Additional Sessions Judge dated 29th September, 2006 whereby he allowed a Revision filed by the respondent and set aside a notice issued under Section 251 Cr.P.C. to the respondent on a complaint under Section 138 of Negotiable Instrument Act filed by the appellant.

2. Brief facts relevant for the purpose of deciding this appeal are that the appellant filed a complaint under Section 138 against Shri Sita Ram Singhal, Secretary Sanjay Gandhi Memorial Coop., Housing Building Society Limited, R/o Sanjay Gram, Delhi Road, Gurgaon, 122001, Haryana.

3. It was alleged in the complaint that the complainant made full payment for purchase of a plot to accused in the year 1994 but accused failed to deliver the possession of the plot to complainant. Thereafter, a settlement was arrived in respect of the plot and accused agreed to pay a sum of Rs. 4,10,000/- to the complainant. In terms of this agreement cheques bearing No. 528743 dated 18.10.04 and 528744 dated 18.11.04 were issued for sums of Rs. 40,000/- and 1,00,000/- respectively as part of payment. These cheques got dishonoured and were returned to the complainant with endorsement? Funds Insufficient?. The complainant served a legal notice through her advocate on accused within a period of 15 days but no payment was made by the accused. Hence the complaint was filed.

4. After recording and appreciating pre-summoning evidence the learned MM served a notice under Section 251 Cr.P.C. on the accused/respondent against which a Revision was preferred by the respondent which was allowed by the impugned order.

5. The learned ASJ observed that the complainant, in order to succeed, has to show that it was the company that was responsible to pay and has further to show that it was accused, who was in-charge and responsible for business of company (Housing Society). In the present case the complainant has not mentioned that it was the company who was responsible to pay the cheque amount but has mentioned the name of accused Sita Ram Singhal, Secretary of the company as the person responsible. Moreover complainant has imp leaded accused in his personal capacity and it is only for the purpose of identification that he has been mentioned as Secretary. It would not amount to saying that he has been imp leaded as the Secretary of the Society. The ASJ also observed that accused has been shown to be a resident of a particular place which was not the address of the Society but was his residential address and notice was sent to accused in his personal capacity and it was not mentioned in the notice that accused was being served in the capacity of the Secretary of the Society. It was not stated in the complaint or in the notice that housing society was liable to make the payment of the aforesaid amount to the respondent and it was Society who issued the cheques. The cheques were signed by the accused in the capacity of Secretary of the Society and not in his individual capacity, so he could not be made accused in his individual capacity.

6. A Court while considering the complaints and cases before it cannot ignore the practical aspects of the dealing between the parties. It is not to be forgotten that accused was Secretary of a Housing Society and it was he who signed the cheques and issued the cheques. The entire complaint shows that it was accused who had dealing with the complainant. It is evident that complainant had been face to face with the accused and complainant knew only accused as the person who was dealing about allotment of plots of society and ultimately when plot was not allotted it was he who agreed for refund of the amount and issued the cheques in question. In case of Housing Societies, it is normally the Secretary of the Housing Society who acts on behalf of the society and deals with members or applicants. Where cheqeus are issued by Secretary of Housing Society he becomes personally liable to punishment if the cheques are dishonoured. Section 141 makes it abundantly clear:

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 the 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.

7. Reading of above provision of Section 141(1) and (2) of Negotiable Instrument Act would show that where commission of an offence under Section 138 is attributable to any Director, Manager, Secretary or Officer of the company, such officer is deemed to be guilty of that offence and is liable to be proceeded against and punished accordingly. The learned ASJ wrongly presumed that in order to prove the offence under Section 138 of Negotiable Instrument Act having been committed by the accused, the complainant would have to show that it was the company who committed the offence. The complainant can prove the commission of the offence by accused irrespective of the fact whether the complainant impleads the company as an accused or not. Company is a juristic person. It acts only through normal human beings. Where a Secretary of the Group Housing Society gives assurances of allotment of a plot and receives money on behalf of the society and later on when plot is not allotted and he issues cheqeus for refund of the money, he, being responsible for acts of company is liable to be punished under Negotiable Instrument Act if the cheques are dishonoured. He as a Secretary of the Society cannot escape the liability under Section 138. In the present case, there is no dispute that the accused was Secretary of the Society and he issued the cheques. The accused, therefore, can be held liable for commission of the offence under Section 138 of Negotiable Instrument Act.

8. A notice served under Section 138 cannot become invalid if the notice is issued in the individual name of Secretary or Director in respect of dishonour of the cheques nor the notice becomes invalid if it is sent at residential address of the Secretary or Director. There is no legal requirement that a notice has to be served upon a a Director or a Secretary only at the address of the company. A notice can be served upon the Director or the Secretary even at his residential address. When a complainant gives details of the cheques issued by a person and mentions about dishonour of the cheques, the person who issued the cheque can be presumed to be aware of the fact whether he issued the cheques in his individual capacity or in a capacity of the Secretary.

9. It is settled law that procedure is handmaid of justice. The hyper technicalities cannot be allowed to defeat the substantive justice, more so when there is no particular requirement that a notice must mention the position held by an individual in the company. If an individual who signed the cheques is informed about the dishonour of the cheques, even if it is not mentioned in the notice that he was Secretary of the Company/Group Housing Society, the notice will remain a valid notice.

10. I consider that the order of the learned ASJ merits setting aside. The appeal is hereby allowed. The order of learned ASJ dated 29th September, 2006 is set aside. The notice under Section 251 Cr.P.C. given to the respondent was legally correct. The Trial Court is directed to proceed with the complaint.

11. Parties are directed to appear before the Trial Court on 5th November, 2007.