Gujarat High Court
Tulshibhai Ishwarbhai Solanki vs State Of Gujarat on 21 August, 2023
Bench: Sandeep N. Bhatt
NEUTRAL CITATION
R/CR.MA/20135/2019 JUDGMENT DATED: 21/08/2023
undefined
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/CRIMINAL MISC.APPLICATION NO. 20135 of 2019
With
R/CRIMINAL MISC.APPLICATION NO. 20700 of 2019
With
R/CRIMINAL MISC.APPLICATION NO. 20699 of 2019
With
R/CRIMINAL MISC.APPLICATION NO. 20134 of 2019
With
R/CRIMINAL MISC.APPLICATION NO. 20695 of 2019
With
R/CRIMINAL MISC.APPLICATION NO. 20709 of 2019
With
R/CRIMINAL MISC.APPLICATION NO. 20107 of 2019
With
R/CRIMINAL MISC.APPLICATION NO. 20108 of 2019
With
R/CRIMINAL MISC.APPLICATION NO. 20722 of 2019
With
R/CRIMINAL MISC.APPLICATION NO. 20711 of 2019
FOR APPROVAL AND SIGNATURE:
HONOURABLE MR. JUSTICE SANDEEP N. BHATT
==========================================================
1 Whether Reporters of Local Papers may be allowed
to see the judgment ?
2 To be referred to the Reporter or not ?
3 Whether their Lordships wish to see the fair copy
of the judgment ?
4 Whether this case involves a substantial question
of law as to the interpretation of the Constitution
of India or any order made thereunder ?
==========================================================
TULSHIBHAI ISHWARBHAI SOLANKI
Versus
STATE OF GUJARAT
==========================================================
Appearance:
MR ANAND B GOGIA(5849) for the Applicant(s) No. 1
Page 1 of 19
Downloaded on : Sun Sep 17 01:58:05 IST 2023
NEUTRAL CITATION
R/CR.MA/20135/2019 JUDGMENT DATED: 21/08/2023
undefined
MR BB GOGIA(5851) for the Applicant(s) No. 1
MS MUSKAN A GOGIA(6624) for the Applicant(s) No. 1
MR DHAWAN JAYSWAL, APP for the Respondent(s) No. 1
MR.DISHANT K THAKKAR(7309) for the Respondent(s) No. 2
==========================================================
CORAM:HONOURABLE MR. JUSTICE SANDEEP N. BHATT
Date : 21/08/2023
COMMON ORAL JUDGMENT
1. All these applications are filed under Section
482 of the Code of Criminal Procedure, 1973 (`the Code'
for short) for quashing and setting aside the complaints
being Criminal Complaint Nos.6749 of 2015, 6759 of
2015, 6760 of 2015, 6752 of 2015, 6748 of 2015, 6762 of
2015, 6750 of 2015, 6758 of 2015, 6751 of 2015 and
6761 of 2015 respectively pending with the Court of
rd
learned 3 Additional Chief Judicial Magistrate, Rajkot,
filed under the provisions of the Negotiable Instruments
Act (`NI Act' for short).
2. As the common question of facts and law are
involved in all these applications, at the request of
learned advocates for the parties, they are heard together
and disposed of by this common oral judgment.
3. Rule. Learned APP Mr.Jayswal waives service
of notice of rule for respondent no.1 and learned
NEUTRAL CITATION
R/CR.MA/20135/2019 JUDGMENT DATED: 21/08/2023
undefined
advocate Mr.Thakkar waives service of notice of rule for
respondent no.2.
4. For the sake of convenience, the facts of
Criminal Miscellaneous Application No.20135 of 2019 are
considered, which are as under:
4.1 That a complaint is filed by the respondent
no.2 herein under the provisions of the NI Act against
the applicant stating that the original complainant had
lent different hand cash loans to M/s Shyamal
Enterprise, a partnership firm and cheques were drawn
by the above and its partners in favour of Amarbhai J
Bavariya-HUF; that in the said firm, applicant is one of
the partner along with Shri Chandreshbhai Chamanlal
Shah; that the original complainant had sent a statutory
notice to the `firm' and its partners and upon the failure
of the applicant-original accused to pay the amount due
under the cheques, the complainant instituted the
criminal complaints, which are prayed to be quashed by
way of these applications.
5. Heard learned advocates for the parties.
NEUTRAL CITATION
R/CR.MA/20135/2019 JUDGMENT DATED: 21/08/2023
undefined
5.1 Learned advocate Mr.Gogia for the applicant
submitted that the cheques in question has been issued
by the signatory on behalf of the firm namely Shyamal
Enterprise; that the statutory notice was issued on behalf
of Amarbhai J Bavariya-HUF and addressed to M/s
Shyamal Enterprise i.e. the partnership firm and Shri
Tulsibhai Ishwarbhai Solanki-the present applicant as a
partner of Shyamal Enterprise and Shri Chandreshbhai
Chamanlal Shah as partners of the said firm; the
alleged cheques are said to have been drawn and issued
in favour of Shri Amar J Bavariya HUF by M/s
Shyamal Enterprise through its partners; however, the
partnership firm and its partners are not arraigned as
accused in the said criminal complaints and they are
filed against the applicant in his personal capacity and
not against the above firm and its partners; that the
cheques were drawn in favour of Shri Amar J Bavariya,
HUF, whereas the criminal complaints are filed by Shri
Amar J Bavariya in his personal capacity; that the
statutory notice issued was returned unserved with postal
endorsement `left' and therefore it cannot said to have
been served on the applicant. He, therefore, prayed to
exercise the inherent powers under Section 482 of the
NEUTRAL CITATION
R/CR.MA/20135/2019 JUDGMENT DATED: 21/08/2023
undefined
Code and allow these applications and quash the
impugned complaints.
5.2 In support of his submissions, learned advocate
for the applicant has relied on the decision in the case
of Anil Hada V/s Godfather Travels and Tours
Pvt.Limited with Aneeta Hada V/s State with Ebay India
Pvt. Ltd. V/s State with Avnish Bajaj V/s State, reported
in (2012)5 SCC 661.
6. Per contra, learned APP Mr.Jayswal for
respondent no.1-state and learned advocate Mr.Thakkar
for respondent no.2-complainant have objected these
applications and submitted that this Court should not
exercise its powers by interfering with the proceedings of
recovery of huge amount and the proceedings initiated
under Section 138 of the Act are perfectly justified.
They, therefore, prayed to dismiss these applications.
7. I have considered the rival submissions and
perused the material on record.
8. At the outset, the provisions of Sections 138
NEUTRAL CITATION
R/CR.MA/20135/2019 JUDGMENT DATED: 21/08/2023
undefined
and 141 of the NI Act are required to be seen, which
read as under:
"138. Dishonour of cheque for insufficiency, etc., of funds in
the account.
Where any cheque drawn by a person on an account
maintained by him with a banker for payment of any
amount of money to another person from out of that account
for the discharge, in whole or in part, of any debt or other
liability, is returned by the bank unpaid, either because of
the amount of money standing to the credit of that account
is insufficient to honour the cheque or that it exceeds the
amount arranged to be paid from that account by an
agreement made with that bank, such person shall be
deemed to have committed an offence and shall without
prejudice to any other provisions of this Act, be punished
with imprisonment for "a term which may extend to two
year", or with fine which may extend to twice the amount
of the cheque, or with both:
Provided that nothing contained in this section shall apply
unless
(a) The cheque has 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.
(b) The payee or the holder induce course of the cheque, as
the case may be, makes a demand for the payment of the
NEUTRAL CITATION
R/CR.MA/20135/2019 JUDGMENT DATED: 21/08/2023
undefined
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 cheques as unpaid, and
(c) The drawer of such cheque fails to make the 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.
Explanation: For the purpose of this section, "debt or other
liability"
means a legally enforceable debt or other liability."
"141 Offences by companies. (1) If the person committing
an offence under section 138 is a company, every person
who, at the time theoffence 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 proceeded against and punished
accordingly:
Provided that nothing contained in this subsection 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
NEUTRAL CITATION
R/CR.MA/20135/2019 JUDGMENT DATED: 21/08/2023
undefined
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 subsection (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 attribute
to, any neglect on the part of, any director, Manager,
secretary, or other office 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 relating to a firm, means a partner in the
firm."
9. Now, if the facts of the present case are
perused, it clearly transpires from the record that the
cheques in question have been issued by signatory on
behalf of the firm viz. Shyamal Enterprise in favour of
Amar J Bavariya, HUF; the statutory notice is issued by
NEUTRAL CITATION
R/CR.MA/20135/2019 JUDGMENT DATED: 21/08/2023
undefined
Amarbhai J Bavariya, HUF to the said partnership firm
and its partners, however, the criminal complaints are
filed by Amar J Bavariya in his individual capacity and
against the applicant in his personal capacity.
10. In the case of Anil Hada (supra), it is held by
the Hon'ble Apex Court in paragraphs 39, 42 and 43 as
under:
"39. It is to be borne in mind that Section 141 of the Act
is concerned with the offences by the company. It makes the
other persons vicariously liable for commission of an offence
on the part of the company. As has been stated by us
earlier, the vicarious liability gets attracted when the
condition precedent laid down in Section 141 of the Act
stands satisfied. There can be no dispute that as the
liability is penal in nature, a strict construction of the
provision would be necessitous and, in a way, the warrant.
42. We have referred to the aforesaid passages only to
highlight that there has to be strict observance of the
provisions regard being had to the legislative intendment
because it deals with penal provisions and a penalty is not
to be imposed affecting the rights of persons whether juristic
entities or individuals, unless they are arrayed as accused.
It is to be kept in mind that the power of punishment is
NEUTRAL CITATION
R/CR.MA/20135/2019 JUDGMENT DATED: 21/08/2023
undefined
vested in the legislature and that is absolute in Section 141
of the Act which clearly speaks of commission of offence by
the company. The learned counsel for the respondents have
vehemently urged that the use of the term as well as in
the Section is of immense significance and, in its tentacle, it
brings in the company as well as the director and/or other
officers who are responsible for the acts of the company
and, therefore, a prosecution against the directors or other
officers is tenable even if the company is not arraigned as
an accused. The words as well as have to be understood in
the context. In Reserve Bank of India v. Peerless General
Finance and Investment Co. Ltd. And others it has been
laid down that the entire statute must be first read as a
whole, then section by section, clause by clause, phrase by
phrase and word by word. The same principle has been
reiterated in Deewan Singh and others v. Rajendra Prasad
Ardevi and others and Sarabjit Rick Singh v. Union of
India. 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
NEUTRAL CITATION
R/CR.MA/20135/2019 JUDGMENT DATED: 21/08/2023
undefined
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.
43. 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 dragnet 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 C.V.Parekh (AIR 1971 SC 447) (supra) which is a
threeJudge Bench decision. Thus, the view expressed in
Sheoratan Agarwal, (AIR 1984 SC 1824) (supra) does not
correctly lay down the law and, accordingly, is hereby
overruled. The decision in Anil Hada, (AIR 2000 SC 145 :
1999 AIR SCW 4228) (supra) is overruled with the qualifier
as stated in paragraph 37 the decision in Modi Distilleries,
(AIR 1988 SC 1128) (supra) has to be treated to be
restricted to its own facts as has been explained by us
hereinabove."
11. It is also fruitful to refer to the judgment
rendered by the Hon'ble Apex Court in the case of
S.P.Mani and Mohan Dairy V/s Dr.Snehalatha Elangovan
NEUTRAL CITATION
R/CR.MA/20135/2019 JUDGMENT DATED: 21/08/2023
undefined
reported in 2022 SCC Online SC 1238, more particularly,
paragraphs 40, 41 and 47, which read as under:
"40.The principles discernible from the aforesaid decision of
this Court in the case of Ashutosh Ashok Parasrampuriya
(supra) is that the High Court should not interfere under
Section 482 of the Code at the instance of an accused
unless it comes across some unimpeachable and
incontrovertible evidence to indicate that the Director/
partner of a firm could not have been concerned with the
issuance of cheques. This Court clarified that in a given
case despite the presence of basic averments, the High
Court may conclude that no case is made out against the
particular Director/ partner provided the Director/partner is
able to adduce someunimpeachable and incontrovertible
evidence beyond suspicion and doubt.
Specific Averments in the complaint:
41.In Gunmala Sales Private Limited (supra), this Court
after an exhaustive review of its earlier decisions on Section
141 of the NI Act, summarized its conclusion as under:
"a) Once in a complaint filed under Section 138 read with
Section 141 of the NI Act the basic averment is made that
the Director was in charge of and responsible for the
conduct of the business of the company at the relevant time
when the offence was committed, the Magistrate can issue
NEUTRAL CITATION
R/CR.MA/20135/2019 JUDGMENT DATED: 21/08/2023
undefined
process against such Director;
b) If a petition is filed under Section 482 of the Code for
quashing of such a complaint by the Director, the High
Court may, in the facts of a particular case, on an overall
reading of the complaint, refuse to quash the complaint
because the complaint contains the basic averment which is
sufficient to make out a case against the Director;
c) In the facts of a given case, on an overall reading of the
complaint, the High Court may, despite the presence of the
basic averment, quash the complaint because of the absence
of more particulars about role of the Director in the
complaint. It may do so having come across some
unimpeachable, incontrovertible evidence which is beyond
suspicion or doubt or totally acceptable circumstances which
may clearly indicate that the Director could not have been
concerned with the issuance of cheques and asking him to
stand the trial would be abuse of the process of the court.
Despite the presence of basic averment, it may come to a
conclusion that no case is made out against the Director.
Take for instance a case of a Director suffering from a
terminal illness who was bedridden at the relevant time or
a Director who had resigned long before issuance of cheques.
In such cases, if the High Court is convinced that
prosecuting such a Director is merely an armtwisting tactics,
the High Court may quash the proceedings. It bears
repetition to state that to establish such case unimpeachable,
incontrovertible evidence which is beyond suspicion or doubt
NEUTRAL CITATION
R/CR.MA/20135/2019 JUDGMENT DATED: 21/08/2023
undefined
or some totally acceptable circumstances will have to be
brought to the notice of the High Court. Such cases may be
few and far between but the possibility of such a case being
there cannot be ruled out. In the absence of such evidence
or circumstances, complaint cannot be quashed;
d) No restriction can be placed on the High Court's powers
under Section 482 of the Code. The High Court always uses
and must use this power sparingly and with great
circumspection to prevent inter alia the abuse of the process
of the Court. There are no fixed formulae to be followed by
the High Court in this regard and the exercise of this
power depends upon the facts and circumstances of each
case. The High Court at that stage does not conduct a mini
trial or roving inquiry, but nothing prevents it from taking
unimpeachable evidence or totally acceptable circumstances
into account which may lead it to conclude that no trial is
necessary qua a particular Director."
47.Our final conclusions may be summarised as under:-
a.) The primary responsibility of the complainant is to make
specific averments in the complaint so as to make the
accused vicariously liable. For fastening the criminal liability,
there is no legal requirement for the complainant to show
that the accused partner of the firm was aware about each
and every transaction. On the other hand, the first proviso
to sub-section (1) of Section 141 of the Act clearly lays
down that if the accused is able to prove to the satisfaction
NEUTRAL CITATION
R/CR.MA/20135/2019 JUDGMENT DATED: 21/08/2023
undefined
of the Court that the offence was committed without his/her
knowledge or he/she had exercised due diligence to prevent
the commission of such offence, he/she will not be liable of
punishment.
b.) The complainant is supposed to know only generally as
to who were in charge of the affairs of the company or
firm, as the case may be. The other administrative matters
would be within the special knowledge of the company or
the firm and those who are in charge of it. In such
circumstances, the complainant is expected to allege that the
persons named in the complaint are in charge of the affairs
of the company/firm. It is only the Directors of the company
or the partners of the firm, as the case may be, who have
the special knowledge about the role they had played in the
company or the partners in a firm to show before the court
that at the relevant point of time they were not in charge
of the affairs of the company. Advertence to Sections 138
and Section 141 respectively of the NI Act shows that on
the other elements of an offence under Section 138 being
satisfied, the burden is on the Board of Directors or the
officers in charge of the affairs of the company/partners of a
firm to show that they were not liable to be convicted. The
existence of any special circumstance that makes them not
liable is something that is peculiarly within their knowledge
and it is for them to establish at the trial to show that at
the relevant time they were not in charge of the affairs of
the company or the firm.
NEUTRAL CITATION
R/CR.MA/20135/2019 JUDGMENT DATED: 21/08/2023
undefined
c.) Needless to say, the final judgement and order would
depend on the evidence adduced. Criminal liability is
attracted only on those, who at the time of commission of
the offence, were in charge of and were responsible for the
conduct of the business of the firm. But vicarious criminal
liability can be inferred against the partners of a firm when
it is specifically averred in the complaint about the status of
the partners 'qua' the firm. This would make them liable to
face the prosecution but it does not lead to automatic
conviction. Hence, they are not adversely prejudiced if they
are eventually found to be not guilty, as a necessary
consequence thereof would be acquittal.
d.) If any Director wants the process to be quashed by
filing a petition under Section 482 of the Code on the
ground that only a bald averment is made in the complaint
and that he/she is really not concerned with the issuance of
the cheque, he/she must in order to persuade the High
Court to quash the process either furnish some sterling
incontrovertible material or acceptable circumstances to
substantiate his/her contention. He/she must make out a
case that making him/her stand the trial would be an abuse
of process of Court."
12. In the cases on hand, the contents of the
statutory notices and the criminal complaints do not
match each other, the parties to whom the notices are
NEUTRAL CITATION
R/CR.MA/20135/2019 JUDGMENT DATED: 21/08/2023
undefined
issued are also not the same as that of the impugned
complaints, when the cheques are said to have been
issued by the partnership firm by its partners, all of
them i.e. the partnership firm and its partners are
required to be arrayed as accused in the complaint,
which is admittedly not done in these cases. Therefore,
the ingredients of Sections 138 and 141 of the NI Act
are not satisfied.
13. It is also relevant to refer to the judgment of
the Hon'ble Apex Court in the case of Inder Mohan
Goswami and Another versus State of Uttaranchal
reported in (2007) 12 SCC 1, more particularly para : 23
& 24 thereof, which read as under :
"23. This Court in a number of cases has laid
down the scope and ambit of courts' powers
under Sec. 482 CrPC. Every High Court has
inherent power to act ex debito justitiae to do
real and substantial justice, for the
administration of which alone it exists, or to
prevent abuse of the process of the court.
Inherent power under Sec. 482 CrPC can be
exercised:
NEUTRAL CITATION
R/CR.MA/20135/2019 JUDGMENT DATED: 21/08/2023
undefined
[(i) to give effect to an order under the Code;]
[(ii) to prevent abuse of the process of court,
and]
[(iii) to otherwise secure the ends of justice.]
24. Inherent powers under Sec. 482 CrPC
though wide have to be exercised sparingly,
carefully and with great caution and only when
such exercise is justified by the tests specifically
laid down in this section itself'. Authority of the
court exists for the advancement of justice. If
any abuse of the process leading to injustice is
brought to the notice of the court, then the
court would be justified in preventing injustice
by invoking inherent powers in absence of
specific provisions in the statute. Discussion of
decided cases."
14. In view of above settled position of law and
after considering the facts as alleged in the impugned
complaints and circumstances of the present case,
whereby it is an admitted position that notice under
Section 138 of the NI Act is issued to partnership firm
and other persons whereas in the complaint filed under
NEUTRAL CITATION
R/CR.MA/20135/2019 JUDGMENT DATED: 21/08/2023
undefined
Section 138 of the NI Act, only applicant is arrayed as
accused, which is not maintainable in the eye of law,
continuation of further proceedings pursuant to the said
complaints will cause greater hardships to the applicant
and no fruitful purpose would be served if such further
proceedings are allowed to be continued. The Court must
ensure that criminal prosecution is not used as
instrument of harassment or for seeking private vendetta
or with ulterior motive to pressurise accused or to settle
the score.
15. Resultantly, all these applications are allowed.
The Criminal Case Nos. 6749 of 2015, 6759 of 2015,
6760 of 2015, 6752 of 2015, 6748 of 2015, 6762 of 2015,
6750 of 2015, 6758 of 2015, 6751 of 2015 and 6761 of
rd
2015 respectively pending with the Court of learned 3
Additional Chief Judicial Magistrate, Rajkot, are hereby
quashed and set aside qua the applicant. Rule is made
absolute. Direct service is permitted.
(SANDEEP N. BHATT,J)
SRILATHA
