Gujarat High Court
Savitaben Mafatlal Patel vs State Of Gujarat on 30 January, 2025
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IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/CRIMINAL MISC. APPLICATION (FOR QUASHING & SET ASIDE
FIR/ORDER) NO. 2063 of 2025
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SAVITABEN MAFATLAL PATEL & ANR.
Versus
STATE OF GUJARAT & ANR.
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Appearance:
MR NK MAJMUDAR(430) for the Applicant(s) No. 1,2
MR. MANAN MAHETA, APP for the Respondent(s) No. 1
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CORAM:HONOURABLE MR. JUSTICE SANDEEP N. BHATT
Date : 30/01/2025
ORAL ORDER
1. The present application is filed for the following
prayers:
"A. Be pleased to admit this petition;
B. pass appropriate order under Section 482 of the Code
of Criminal Procedure and be pleased to quash and set
aside the Complainant /Criminal Case No. 8355/2024
which has remained pending before the Hon'ble 3RD
Add. Civil Judge and Judicial Magistrate First Class,
Valsad and be pleased to quash and set aside process /
summons as well as order dated 26/09/2024 under
Exhibit-1, issued in connection with said Complainant
/Criminal Case No. 8355/2024 by the Hon'ble 3RD Add.
Civil Judge and Judicial Magistrate First Class, Valsad,
in the interest of justice;
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C. Be pleased to pass appropriate interim order and be
pleased to stay the further proceedings of
Complainant/Criminal Case No. 8355/2024 which has
remained pending before the Hon'ble 3RD Add. Civil
Judge and Judicial Magistrate First Class, Valsad,
pending admission and final disposal of this petition;
D. any other and further order be passed in the interest
of justice."
2. Heard learned advocate Mr. N.K.Majmudar for the
applicants and learned APP, Mr. Manan Maheta for the
respondent - State.
3. Learned advocate Mr. N.K.Majmudar for the applicants
has submitted that the applicants being Directors are falsely
implicated in the proceedings under Section 138 of the
Negotiable Instruments Act, 1881. He has further submitted
that on bare reading of the complaint filed under Section 138
of the N.I.Act, no specific averments are made in the
complaint by which the applicants can be held for active
participation. He further submits that no vicarious liability
can be fastened on the applicants in absence of specific
averments about the applicants. He has further submitted
that now in view of series of judgments of the Hon'ble Apex
Court as well as this Hon'ble Court, in absence of specific
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averments in the complaint about the active participation of
the accused person as Director in day to day affairs of the
Company, no prosecution can be proceeded under Section 138
of the N.I.Act. He has further submitted that reading of
Section 138 with Section 141 of the N.I.Act also clearly
indicates that unless the Director has participated actively in
the said transaction or day to day affairs of the Company,
such liability cannot be fastened. Lastly, he has submitted
that, even in the G.S.T. correspondence, the person who is
in-charge of the Company is not the present applicants and
therefore, he submits that, continuation of the proceedings
pursuant to the present complaint would amount to abuse of
process of law. He has relied on the judgments of the
Hon'ble Apex Court in the cases of S.P.Mani and Mohan
Dairy Vs. Snehalatha Elangovan reported in 2023 (10) SCC
685 as well as Ashok Shewakramani Vs. State of Andhra
Pradesh reported in 2023 (8) SCC 473 and has submitted
that the present case is also squarely covered by the above
judgments and therefore, the Court may interfere with the
proceedings filed under the provisions of Section 138 of the
N.I.Act and grant interim relief as prayed for in the present
application.
4. Learned APP, Mr. Maheta has submitted that
essentially the dispute is between the applicants and the
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private complainant, but it cannot be said that the complaint
does not disclose offence against the present applicants and
the applicants cannot be held liable by drawing attention
of this Court towards the complaint which is filed under
Section 138 of the N.I.Act and by relying on the paras 10
and 11 of the judgment in the case of Ashok (Supra). He
has submitted that though notice is served, the applicants
have not responded to the notice by giving proper reply.
Therefore, he has submitted that considering these aspects
and considering the judgment in the case of S.P.Mani (supra),
which is relied upon by the learned advocate for the
applicants, no relief can be granted at this stage and
therefore, he has submitted that, appropriate order may be
passed by rejecting the present application.
5. I have considered the rival submissions made at the
bar, the main contention of the applicants is that they are
not active in the day to day affairs of the company and
therefore, liability cannot be fastened by relying upon the
judgment of the Hon'ble Apex Court in the case of Ashok
Shewakramani (supra), more particularly, paras 6 to 11,
whereby, the Hon'ble Apex Court made the following
observations:
"6. It is also necessary to note the averments made in Para 8
of the complaint in which the second respondent stated that the
statutory notice of demand was not served on the accused. In
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fact, the second respondent has relied upon the returned postal
covers. Even in the affidavit in support of the complaint, the
second respondent has come out with a case that the demand
notice was not served.
7. In fact, the service of notice of demand is a condition
precedent for filing a complaint in view of clause (c) of Section
138 of the NI Act. This is one ground on which the complaint
must fail.
8. Now we come to the averments made in Para 7. Firstly, it
is stated that all the Directors were liable for the transactions
of Accused 1 Company. Secondly, it is stated that all the
accused were fully aware of the issuance of the cheques subject-
matter of the complaint, and they were also aware that the
cheques will be dishonoured. Further, it is alleged that all the
accused knew that there were no funds in the account of
Accused 1 Company.
9. Sub-section (1) of Section 141 of the NI Act required the
complainant to aver that the present appellants at the time of
the commission of the offence were in charge of, and were
responsible to the Company for the conduct of the business of
the Company. In the present case, all that the second
respondent has alleged is that the appellants were liable for
transactions of the Company and that they were fully aware of
the issuance of the cheques and dishonour of the cheques.
10. Therefore, even if we decide to take a broad and liberal
view of the pleadings in the complaint, we are unable to draw
a conclusion that compliance with the requirements of sub-
section (1) of Section 141 of the NI Act was made by the
second respondent. The most important averment which is
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required by sub-section (1) of Section 141 of the NI Act is that
the Directors were in charge of, and were responsible for the
conduct of the Company. The appellants are neither the
signatories to the cheques nor are whole-time Directors. The
decision in S.P. Mani & Mohan Dairy v. Snehalatha Elangovan
[S.P. Mani & Mohan Dairy v. Snehalatha Elangovan, (2023) 10
SCC 685 : 2022 SCC OnLine SC 1238] will have no application
as in the present case, the statutory notice was admittedly not
served to the accused. Obviously, the High Court has not
adverted to aforesaid two glaring deficiencies in the complaint.
11. In the circumstances, the appeal must succeed and the
impugned order [Ashok Shewakramani v. State of A.P., 2017
SCC OnLine Hyd 900] is quashed and set aside, only insofar as
the present appellants are concerned. Accordingly, a complaint
bearing CC No. 1 of 12 pending in the Court of Judicial
Magistrate, First Class, Nandyal is quashed only insofar as
present appellants are concerned."
5.1 Considering the ratio laid down by the abovesaid
judgment and in the said judgment, the case is that notice
which was sent under Section 138 of the N.I.Act, was not
served upon the accused person. The facts of the present case
are different as it is an undisputed position, as the learned
advocate for the applicants has also fairly conceded that the
notice is served upon the present applicants but the same
was not responded. Therefore, the aforesaid judgment relied
upon by the learned advocate for the applicants is not
helpful to the case of the present applicants.
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5.2 Now, considering the judgment in the case of S.P.Mani
and Mohan Dairy (supra), whereby, the relevant paras read
as under:
"50. The principles discernible from the aforesaid decision of this
Court in Ashutosh Ashok Parasrampuriya [Ashutosh Ashok
Parasrampuriya v. Gharrkul Industries (P) Ltd., (2023) 14 SCC
770 : 2021 SCC OnLine SC 915] are 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 some
unimpeachable and incontrovertible evidence beyond suspicion and
doubt.
54. We may also examine this appeal from a different angle. It
is not in dispute, as noted above, that no reply was given by
the respondent to the statutory notice served upon her by the
appellant. In the proceedings of the present type, it is essential
for the person to whom statutory notice is issued under Section
138 of the NI Act to give an appropriate reply. The person
concerned is expected to clarify his or her stance. If the person
concerned has some unimpeachable and incontrovertible material
to establish that he or she has no role to play in the affairs of
the company/firm, then such material should be highlighted in
the reply to the notice as a foundation. If any such foundation
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is laid, the picture would be more clear before the eyes of the
complainant. The complainant would come to know as to why
the person to whom he has issued notice says that he is not
responsible for the dishonour of the cheque.
55. Had the respondent herein given appropriate reply
highlighting whatever she has sought to highlight before us then
probably the complainant would have undertaken further enquiry
and would have tried to find out what was the legal status of
the firm on the date of the commission of the offence and what
was the status of the respondent in the firm. The object of
notice before the filing of the complaint is not just to give a
chance to the drawer of the cheque to rectify his omission to
make his stance clear so far as his liability under Section 138 of
the NI Act is concerned.
56. Once the necessary averments are made in the statutory
notice issued by the complainant in regard to the vicarious
liability of the partners and upon receipt of such notice, if the
partner keeps quiet and does not say anything in reply to the
same, then the complainant has all the reasons to believe that
what he has stated in the notice has been accepted by the
noticee. In such circumstances what more is expected of the
complainant to say in the complaint.
58. Our final conclusions may be summarised as under:
58.1. 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.
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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 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.
58.2. 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.
58.3. Needless to say, the final judgment and order would
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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.
58.4. 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."
5.3 It is required to note that the Hon'ble Apex Court has
categorically observed that the reply of the notice is required
in case where the petitioner has received the notice under
Section 138 of the N.I.Act and the petitioner is contending
that he is not liable to pay or face the prosecution under
Section 138 read with Section 141 of the N.I.Act. In the
present case, though notice is served, no response is given
and therefore, all the contentions which are raised in the
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present application can be a good defence at the time of trial
but such contentions cannot be considered at this stage, more
particularly, the application filed under Section 528 of the
Bharatiya Nagarik Suraksha Sanhita (B.N.S.S.), pari materia,
of Section 482 of the Criminal Procedure Code.
6. In view of the foregoing reasons, I am of the opinion
that the present application lacks merit and the same is
required to be dismissed, at this stage. Accordingly, the
present application is dismissed.
7. However, it is clarified that all the contentions of the
applicants on merits are kept open, which can be urged at
the time of trial.
(SANDEEP N. BHATT,J)
SLOCK BAROT
