Jharkhand High Court
Anurag Kumar vs The State Of Jharkhand on 7 March, 2022
1
IN THE HIGH COURT OF JHARKHAND AT RANCHI
Cr.M.P. No. 326 of 2015
1. Anurag Kumar, S/o Sri Gopal Krishna Prasad, resident of GM
Bungalow, Panda Veswar Area of ECL, P.O. & P.S. Panda Veswar,
District- Burdwan, West Bengal
2. Jageshwar Narayan Gupta @ Sri J.N. Gupta, S/o Sri Sukhan Nayak,
resident of quarter No. D-1, Officers Colony, Urimari Project, P.O.
Sayal, P.S. Barka Gaon, District- Hazaribagh ... Petitioners
-Versus-
1. The State of Jharkhand
2. Pawan Kumar, Labour Enforcement Officer (Central), Koderma,
Hospital Colony, Karma, Koderma, P.O., P.S. & District- Koderma
... Opposite Parties
With
Cr.M.P. No. 2624 of 2014
Tapas Kumar Nag, S/o Late Binoy Bhushan Nag, resident of Jawahar
Nagar Colony, P.O. Jawahar Nagar, P.S. Gonda, District- Ranchi
... Petitioner
-Versus-
1. The State of Jharkhand
2. Pawan Kumar, Labour Enforcement Officer (Central), Koderma,
Hospital Colony, Karma, Koderma, P.O., P.S. & District- Koderma
... Opposite Parties
With
Cr.M.P. No. 2894 of 2014
Krishna Kamal Gangopadhyay, son of late N. B. Ganguli, M/s.
Hindustan Steel Works Construction Ltd., HSCL Building, P.O. & P.S.
Bokaro Steel City, District- Bokaro ... Petitioner
-Versus-
1. The State of Jharkhand
2. Labour Enforcement Officer (Central), Koderma, P.O., P.S. & District-
Koderma ... Opposite Parties
-----
CORAM: HON'BLE MR. JUSTICE SANJAY KUMAR DWIVEDI
-----
For the Petitioners : Mr. Anoop Kumar Mehta, Advocate
(In Cr.M.P. Nos. 326/2015 & 2624/2014)
: Mr. R.S. Mazumdar, Sr. Advocate
Mr. Nishant Kumar Roy, Advocate
(In Cr.M.P. No.2894/2014)
For the State : Mr. Md. Hatim, A.P.P. (In Cr.M.P. No.326/2015)
Mr. V.S. Sahay, A.P.P. (In Cr.M.P. No.2624/2014)
Mrs. Vandana Bharti, A.P.P. (In Cr.M.P. No.2894/2014)
For O.P. No.2 : Mr. Prashant Pallav, A.S.G.I.
-----
04/07.03.2022. Heard Mr. Anoop Kumar Mehta, learned counsel for the petitioners in
Cr.M.P. Nos.326 of 2015 and 2624 of 2014 and Mr. R.S. Mazumdar, learned
Senior counsel along with Mr. Nishant Kumar Roy, learned counsel for the
petitioner in Cr.M.P. No.2894 of 2014, Mr. Md. Hatim, Mr. V.S. Sahay and
Mrs. Vandana Bharti, learned A.P.Ps. for the State and Mr. Prasant Pallav,
learned A.S.G.I. for opposite party no.2.
2. In all these petitions, common question of facts and laws are involved
and that is why all these petitions have been heard together with the
consent of the parties.
3. In Cr.M.P. No.326 of 2015, petitioner no.1 is the General Manager of
B&K Area of Central Coalfields Limited and petitioner no.2 is the Project
Officer of the Central Coalfields Limited, in Cr.M.P. No.2624 of 2014, the
petitioner is the Director (Technical) of the Central Coalfields Limited and in
Cr.M.P. No.2894 of 2014, the petitioner Krishna Kamal Gangopadhyay is
representing M/s. Hindustan Steel Works Construction Limited.
4. In all these petitions, the prayer is made for quashing the entire
criminal prosecution arising out of G. Case No.09/14 corresponding to TR
No.2561 of 2014 including the order dated 20.02.2014, whereby,
cognizance of an offence under Section 23 and 24 of the Contract Labour
(Regulation and Abolition) Act, 1970 (herein after to be referred to as the
Act) against the petitioners.
5. The opposite party no.2 lodged complaint dated 24.01.2014 alleging
therein the complainant is the Labour Enforcement Officer (Central)
Koderma and an Inspector under Sub-section (1) of Section 28 of the Act
having jurisdiction over the establishment of the accused persons. The
opposite party no.2 inspected the establishment of Giridih Project of M/s
Central Coalfields Limited on 29.10.2013 and observed that in contravention
of the notification No. S.O. 2063 dated 02.07.1988 issued by the Ministry of
Labour and Employment, Government of India the accused persons had
deployed M/s Hindustan Steel Works Construction Limited for doing contract
work of hiring of HEMM for removal of OB including blast hole drilling
including blasting etc. and extraction and transportation of coal from
Kabribad Open Cast Mine to dump yard at Giridih Project of Central
Coalfields Limited. The said offences were recorded in the inspection report
cum showcause notice dated 13.11.2013 duly served on the accused
persons, but their replies were not satisfactory. As the accused persons
contravened the provisions of the Act/Rules have rendered themselves liable
for prosecution under Section 23 and 24 of the Act.
6. Mr. Anoop Kumar Mehta, learned counsel appearing for the petitioners
in Cr.M.P. Nos. 326 of 2015 and 2624 of 2014 submits that the petitioners
are the officers of the Central Coalfields Limited and they are not the
principal employer within the meaning of Section 2(1)(g)(iii) of the Act and
mechanically these petitioners have been made accused. He further submits
that the Central Coalfields Limited is not made accused and in absence of
company, the liability cannot be imposed upon the petitioners, who are
Director, General Manager and Project Officer of the Company. To buttress
his argument on the point of employer, he relied upon the judgment
rendered by this Court in the case of Swapan Ganguly v. Union of
India, reported in 2006 3 JLJR 1.
7. Paragraphs 13 and 15 of the said judgment are quoted herein below:
"13. From bare reading of the above provision of the Act, it
is clear that liability is fastened on a person was held to be in
charge of the office when the offence was detected and for
others the burden is caused upon the prosecution to show
that it was with their consent, or connivance, or that the
commission of the offence was attributable on account of
their negligent and such negligent, connivance or consent
must be shown in respect of any director, manager, managing
agent or any other officer of the company, who were not in
charge of the office alleged to the place of occurrence at the
time when the offence was detected and was holding office at
distant places from the place of occurrence.
15. There is substance in the argument advanced on behalf
of the petitioners that in spite of direction made by the Ranchi
Bench of Patna High Court in Cr. Misc. No. 736 of 1991(R) on
March 15, 1999 (sic) while setting aside the earlier cognizance
order in the present case on July 9, 1990 to take cognizance
of the offence afresh after perusal of the necessary
documents and upon being satisfied that a prima facie case
existed under Section 24 of the Act against the petitioners.
Learned Chief Judicial Magistrate has made reference to a
letter in the order impugned dated March 19, 2004, under
challenge that his attention was drawn towards the letter
dated August 8, 1986 issued by the District Manager for
registration of Food Corporation of India as principal employer
under the Act wherein District Manager had sought
guidelines. Pursuant to that, the guidelines dated August 26,
1986 was sent to the District Manager, i.e. petitioner No. 2.
He further relied upon the letter produced on behalf of the
prosecution which was furnished in Form-I by the District
Manager, i.e. petitioner No. 2 herein with reference to Column
III that he presented himself as principal employer but
certainly for the name and location of the establishment as
Food Corporation of India, district office Ranchi with the
mailing address of the. establishment at district office, 12,
Purulia Road, Ranchi and no address of Tatisilwai Depot,
Ranchi was mentioned therein claiming as the principal
employer for the said establishment. On perusal of the letter
dated August 8, 1986, reference of which has been made by
the Chief Judicial Magistrate, Ranchi the order impugned,
certainly is a communication from the District Manager, i.e.
petitioner No. 2 herein to the Assistant Labour Commissioner
(Central) under the subject "Registration of Food Corporation
of India on principal employer under C.L. (R & A) Act
regarding" in which the guidelines was sought for the
registration of Chakradharpur Depot of the Food Corporation
of India as to whether it comes within the jurisdiction of
Assistant Labour Commissioner (Central) Chaibasa or the
registration as was already made under the jurisdiction of
Assistant Labour Commissioner (Central) Ranchi would serve
the purpose for Chakradharpur also. It is nowhere mentioned
that the District Manager, Ranchi- opposite party No. 2 herein
claimed as principal employer for the Chakradharpur Depot,
rather guideline was sought with regard to jurisdiction of the
registration of the said Depot under the Act. From perusal of
both the documents upon which reliance was placed by the
Chief Judicial Magistrate for taking cognizance of the offence
against the petitioners does not indicate that either the
petitioner No. 1 or the petitioner No. 2 was in any manner
responsible for day to day work of the Tatisilwai Depot of the
Food Corporation of India or that either of the two was the
principal Mar 07 2022 Page 4 of 5 employer at the alleged
time of the detection by the prosecution party. This Court
further finds that no prima facie case is made out against the
petitioners for the offence alleged under Section 24 of the
Contract Labour (Regulation and Abolition) Act, 1970 being
the principal employer in any manner in the background that
there was no material before the Chief Judicial Magistrate to
connect the petitioners as the principal employer of the
Tatisilwai Depot of the Food Corporation of India and hence
there was no prima facie case against them for taking
cognizance of the offence under Section 24 of the Contract
Labour (Regulation and Abolition) Act, 1970. 16. Under the
circumstances, the order impugned dated March 19, 2004
passed by the Chief Judicial Magistrate, Ranchi taking
cognizance of the offence in Complaint Case No. C-III-306 of
1990 under Section 24 of the Contract Labour (Regulation and
Abolition) Act, 1970 against the petitioners is illegal and
hence it is set aside. This petition is allowed."
8. He also relied upon the judgment rendered by this Court in the case
of A.K. Sahay v. The State of Jharkhand & another , reported in 2011
2 JCR 558.
9. Paragraphs 12 and 13 of the said judgment are quoted herein below:
"12. Penal provision has to be strictly construed. A person
cannot be criminally prosecuted on vague and unspecific
allegations. The Managing Director of the B.C.C.L cannot be
held directly responsible for the alleged contravention of
Act/Rule etc of a particular colliery if there is no clear
allegation of the role of Managing Director of the B.C.C.L
constituting penal offence. Even if certain words bring some
persons within the fold of the person responsible for the
overall superintendence and control, they cannot be
prosecuted as the "Principle Employer", if there is no direct
allegation making out a case of contravention of any provision
of the Act, Rule or condition of license in the capacity of
owner, agent or Manager named for the particular mine.
13. Learned Magistrate without taking into consideration the
said legal aspect and the canon of the criminal jurisprudence
has taken cognizance of the said offences against the
petitioner against whom there is no such allegation of Mar 07
2022 Page 2 of 3 contravention of any of the provisions of the
said Act and the rules framed thereunder in the capacity of
owner, agent or Manager of the mine. I, therefore, find no
cogent material constituting the offences under Sections 23
and 24 of the said Act and sufficient ground for prosecuting
the petitioner and supporting the impugned order."
10. Mr. Mehta, learned counsel appearing for the petitioners further
submits that in the entire complaint, there is no specific allegation against
the petitioners that what has been done by the petitioners. He also submits
that in absence of any specific allegation in the complaint, it amounts to
abuse of the process of the court. He further submits that in light of Section
25 of the Act, the persons who are responsible for day to day affairs of the
Company can only be prosecuted, that too if the Company is made accused.
These are the lacuna in the entire criminal proceeding. On the point of not
making the Company as accused, he relied upon the judgment rendered by
the Hon'ble Supreme Court in the case of S.K. Alagh v. State of Uttar
Pradesh & others, reported in (2008) 5 SCC 662.
11. Paragraph 19 of the said judgment is quoted herein below:
"19. As, admittedly, drafts were drawn in the name of the
Company, even if the appellant was its Managing Director, he
cannot be said to have committed an offence under Section
406 of the Indian Penal Code. If and when a statute
contemplates creation of such a legal fiction, it provides
specifically therefor. In absence of any provision laid down
under the statute, a Director of a Company or an employee
cannot be held to be vicariously liable for any offense
committed by the Company itself."
12. He further relied upon the judgment rendered by the Hon'ble
Supreme Court in the case of Ravindranatha Bajpe v. Mangalore
Special Economic Zone Ltd. and Others, reported in 2021 SCC
OnLine SC 806.
13. Paragraph 27 of the said judgment is quoted herein below:
"27. As held by this Court in the case of India Infoline
Limited (supra), in the order issuing summons, the learned
Magistrate has to record his satisfaction about a prima facie
case against the accused who are Managing Director, the
Company Secretary and the Directors of the Company and the
role played by them in their respective capacities which is sine
qua non for initiating criminal proceedings against them.
Looking to the averments and the allegations in the
complaint, there are no specific allegations and/or averments
with respect to role played by them in their capacity as
Chairman, Managing Director, Executive Director, Deputy
General Manager and Planner & Executor. Merely because
they are Chairman, Managing Director/Executive Director
and/or Deputy General Manager and/or Planner/Supervisor of
A1 & A6, without any specific role attributed and the role
played by them in their capacity, they cannot be arrayed as an
accused, more particularly they cannot be held vicariously
liable for the offences committed by A1 & A6."
14. The arguments advanced by Mr. Anoop Kumar Mehta have been
adopted by Mr. Nishant Kumar Roy, learned counsel appearing for the
petitioner in Cr.M.P. No.2894 of 2014. Mr. Roy supplemented the arguments
of Mr. Mehta by way of submitting that the case in which he is appearing
only the Company has been made accused.
15. Per contra, Mr. Prashant Pallav, learned A.S.G.I. appearing for
opposite party no.2 submits that the complaint has been filed well within
time, in view of Section 27 of the Act. He further submits that the
petitioners are responsible and that is why the case has been lodged. He
also submits that sanction in terms of the Act has also been taken for
lodging the complaint against the petitioners. He relied upon the judgment
rendered by the Madras High Court in the case of K. Gowrisankaran v.
Labour Enforcement Officer (Central), Chennai & others , reported in
2002 (1) L.L.N. 1219.
16. Paragraph 32 of the said judgment is quoted herein below:
"32. It is not debated under S. 10(1) the Act, that the
power is vested with the Central Government to notify in the
Official Gazette the prohibition of the employment of contract
labour in any process, operation or other work in any
establishment. The notification in question had been issued
by the Central Government in S.O. 779(E), dated December 9,
1976. So, once there is a contravention of the said
notification, it would amount to violation of S.10(1) of the Act.
Since there is violation of S.10(1) of the Act, it would
automatically attract the penal S.23 of the Act."
17. In view of the submissions of the learned counsel for the parties, the
Court has gone through the materials on the record. It is an admitted fact
that in Cr.M.P. No.326 of 2015, petitioner no.1 is the General Manager of
B&K Area of Central Coalfields Limited and petitioner no.2 is the Project
Officer of the Central Coalfields Limited and in Cr.M.P. No.2624 of 2014, the
petitioner is the Director (Technical) of the Central Coalfields Limited. The
Central Coalfields Limited is not made accused and in absence of Company,
only the petitioners have been made accused. Section 25 of the Act
stipulates that the persons who are responsible for day to day affairs of the
Company are liable to be prosecuted. In the case in hand, nothing specific
has been disclosed as to how these petitioners, so far as the Central
Coalfields Limited is concerned, were looking into day to day affairs of the
Company. Moreover, the Company is not made accused and in absence of
the Company, the petitioners are not responsible, as held by the Hon'ble
Supreme Court in the case of S.K. Alagh (supra).
18. Section 2(1)(g)(iii) of the Act provides that the principal employer in
relation to a mine would be the owner or agent of the mine and where a
person has been named as the Manager of the mine, the person so named.
For ready reference, Section 2(1)(g)(iii) of the Act is quoted herein below:
"2(1)(g)(iii) in a mine, the owner or agent of the mine and
where a person has been named as the manager of the mine,
the person so named."
19. There is no allegation in the complaint that these petitioners are the
Manager of the mine, in view of Section 2(1)(g)(iii) of the Act. They are not
the principal employer as under that Section only the Manager of the mine
is responsible.
20. So far as the submission of Mr. Prashant Pallav is concerned with
regard to the fact that M/s Hindustan Steel Works Construction Limited
complaint has been made against, which is accused no.4 in the complaint
case and cognizance has been taken against the company through the
petitioner in Cr.M.P. No.2894 of 2014, there is no disclosure of the fact that
the petitioner in Cr.M.P. No.2894 of 2014 is responsible for day to day affairs
of the company in view of Section 25 of the Act.
21. The argument of Mr. Prashant Pallav with regard to sanction for filing
of the complaint is concerned, that is not required to be decided in these
cases as it is not controverted whether the person has authorised to file the
complaint or not.
22. The argument of Mr. Prashant Pallav with regard to limitation under
Section 27 of the Act is also not relevant for deciding these cases as it is an
admitted fact that the complaint has not been filed within time. The
judgment relied by Mr. Prashant Pallav in the case of K. Gowrisankaran
(supra) is on different point, which has dealt with S.10(1) of the Act.
23. Section 2(1)(g)(iii) of the Act is very specific on the point of principal
employer. So far as the mine is concerned, where only the Manager of the
mine is said to be principal employer. The petitioners in Cr.M.P. Nos.326 of
2015 and 2624 of 2014 are the officers of the company and the company
namely Central Coalfields Limited is not made accused in the complaint
case.
24. The Court has perused the cognizance order dated 20.02.2014 in
which it has not been disclosed what are the prima facie materials against
these petitioners for taking cognizance under alleged sections of the Act.
The offence by the Manager of the mine and its satisfaction is required to
be disclosed in the cognizance order. A reference may be made to the case
of Sunil Bharti Mittal v. C.B.I, reported in (2015) 4 SCC 609.
Paragraph no.48 of the said judgment is quoted as under:
"48. Sine qua non for taking cognizance of the offence is
the application of mind by the Magistrate and his satisfaction
that the allegations, if proved, would constitute an offence. It
is, therefore, imperative that on a complaint or on a police
report, the Magistrate is bound to consider the question as to
whether the same discloses commission of an offence and is
required to form such an opinion in this respect. When he
does so and decides to issue process, he shall be said to have
taken cognizance. At the stage of taking cognizance, the only
consideration before the court remains to consider judiciously
whether the material on which the prosecution proposes to
prosecute the accused brings out a prima facie case or not."
25. Recently, the Hon'ble Supreme Court has considered the case arising
out of Minimum Wages Act in the case of Dayle De'souza v.
Government Of India, through Deputy Chief Labour Commissioner
(c) And Another [CRIMINAL APPEAL NO. OF 2021 (ARISING OUT OF SPECIAL
LEAVE PETITION (CRL.) NO. 3913 OF 2020) . Paragraph nos.19, 22, 23, 24, 25
and 27 of the said judgment are quoted herein below:
"19. There is yet another difficulty for the prosecution in the
present case as the Company has not been made an accused
or even summoned to be tried for the offence. The position of
law as propounded in State of Madras v. C.V. Parekh and
Another: (1970) 3 SCC 491., reads:
"3. Learned Counsel for the appellant, however, sought
conviction of the two respondents on the basis of
Section 10 of the Essential Commodities Act under
which, if the person contravening an order made under
Section 3 (which covers an order under the Iron and
Steel Control Order, 1956), is a company, every person
who, at the time the contravention 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
contravention and shall be liable to be proceeded
against and punished accordingly. It was urged that the
two respondents were in charge of, and were
responsible to, the Company for the conduct of the
business of the Company and, consequently, they must
be held responsible for the sale and for thus
contravening the provisions of clause (5) of the Iron
and Steel Control Order. This argument cannot be
accepted, because it ignores the first condition for the
applicability of Section 10 to the effect that the person
contravening the order must be a company itself. In the
present case, there is no finding either by the
Magistrate or by the High Court that the sale in
contravention of clause (5) of the Iron and Steel
Control Order was made by the Company. In fact, the
Company was not charged with the offence at all. The
liability of the persons in charge of the Company only
arises when the contravention is by the Company itself.
Since, in this case, there is no evidence and no finding
that the Company contravened clause (5) of the Iron
and Steel Control Order, the two respondents could not
be held responsible. The actual contravention was by
Kamdar and Vallabhdas Thacker and any contravention
by them would not fasten responsibility on the
respondents. The acquittal of the respondents is,
therefore, fully justified. The appeal fails and is
dismissed."
22. However, subsequent decisions of this Court have
emphasised that the provision imposes vicarious liability by
way of deeming fiction which presupposes and requires the
commission of the offence by the company itself as it is a
separate juristic entity. Therefore, unless the company as a
principal accused has committed the offence, the persons
mentioned in sub-section (1) would not be liable and cannot
be prosecuted. Section 141(1) of the Negotiable Instruments
Act, extends vicarious criminal liability to the officers of a
company by deeming fiction, which arises only when the
offence is committed by the company itself and not otherwise.
Overruling Sheoratan Agarwal and Anil Hada, in Aneeta Hada
v. Godfather Travels and Tours Private Limited, (2012) 5 SCC
661. A 3-judge bench of this court expounding on the
vicarious liability under Section 141 of the Negotiable
Instruments Act, has held:
"51. We have already opined that the decision in
Sheoratan Agarwal runs counter to the ratio laid down
in C.V. Parekh which is by a larger Bench and hence, is
a binding precedent. On the aforesaid ratiocination, the
decision in Anil Hada has to be treated as not laying
down the correct law as far as it states that the
Director or any other officer can be prosecuted without
impleadment of the company. Needless to emphasise,
the matter would stand on a different footing where
there is some legal impediment and the doctrine of lex
non cogit ad impossibilia gets attracted.
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 C.V. Parekh
which is a three-Judge Bench decision. Thus, the view
expressed in Sheoratan Agarwal does not correctly lay
down the law and, accordingly, is hereby overruled.
The decision in Anil Hada is overruled with the qualifier
as stated in para 51. The decision in Modi Distillery has
to be treated to be restricted to its own facts as has
been explained by us hereinabove."
23. The proposition of law laid down in Aneeta Hada (supra)
was relied upon by this Court in Anil Gupta v. Star India
Private Limited and Another (2014) 10 SCC 373.
"13. In the present case, the High Court by the
impugned judgment dated 13-8-2007 [Visionaries
Media Network v. Star India (P) Ltd., Criminal Misc.
Case No. 2380 of 2004, decided on 13-8-2007 (Del)]
held that the complaint against Respondent 2 Company
was not maintainable and quashed the summons
issued by the trial court against Respondent 2
Company. Thereby, the Company being not a party to
the proceedings under Section 138 read with Section
141 of the Act and in view of the fact that part of the
judgment referred to by the High Court in Anil Hada
has been overruled by a three-Judge Bench of this
Court in Aneeta Hada, we have no other option but to
set aside the rest part of the impugned judgment
[Visionaries Media Network v. Star India (P) Ltd.,
Criminal Misc. Case No. 2380 of 2004, decided on 13-
8-2007 (Del)] whereby the High Court held that the
proceedings against the appellant can be continued
even in absence of the Company. We, accordingly, set
aside that part of the impugned judgment dated 13-8-
2007 [Visionaries Media Network v. Star India (P) Ltd.,
Criminal Misc. Case No. 2380 of 2004, decided on 13-
8-2007 (Del)] passed by the High Court so far as it
relates to the appellant and quash the summons and
proceeding pursuant to Complaint Case No. 698 of
2001 qua the appellant."
24. In Sharad Kumar Sanghi v. Sangita Rane (2015) 12 SCC
781, this Court observed that:
"11. In the case at hand as the complainant's initial
statement would reflect, the allegations are against the
Company, the Company has not been made a party
and, therefore, the allegations are restricted to the
Managing Director. As we have noted earlier, allegations
are vague and in fact, principally the allegations are
against the Company. There is no specific allegation
against the Managing Director. When a company has
not been arrayed as a party, no proceeding can be
initiated against it even where vicarious liability is
fastened under certain statutes. It has been so held by
a three-Judge Bench in Aneeta Hada v. Godfather
Travels and Tours (P) Ltd. in the context of the
Negotiable Instruments Act, 1881.
xx xx xx
13. When the company has not been arraigned as an
accused, such an order could not have been passed.
We have said so for the sake of completeness. In the
ultimate analysis, we are of the considered opinion that
the High Court should have been well advised to quash
the criminal proceedings initiated against the appellant
and that having not been done, the order is sensitively
vulnerable and accordingly we set aside the same and
quash the criminal proceedings initiated by the
respondent against the appellant."
25. This position was again clarified and reiterated by this
Court in Himanshu v. B. Shivamurthy and Another. (2019) 3
SCC 797 The relevant portion of the judgment reads thus:
"6. The judgment of the High Court has been
questioned on two grounds. The learned counsel
appearing on behalf of the appellant submits that
firstly, the appellant could not be prosecuted without
the company being named as an accused. The cheque
was issued by the company and was signed by the
appellant as its Director. Secondly, it was urged that the
observation of the High Court that the company can
now be proceeded against in the complaint is
misconceived. The learned counsel submitted that the
offence under Section 138 is complete only upon the
issuance of a notice of demand and the failure of
payment within the prescribed period. In absence of
compliance with the requirements of Section 138, it is
asserted, the direction of the High Court that the
company could be impleaded/arraigned at this stage is
erroneous.
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 & Tours
(P) Ltd. governs the area of dispute. The issue which
fell for consideration was whether an authorised
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."
xx xx xx
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."
27. In terms of the ratio above, a company being a juristic
person cannot be imprisoned, but it can be subjected to a
fine, which in itself is a punishment. Every punishment has
adverse consequences, and therefore, prosecution of the
company is mandatory. The exception would possibly be when
the company itself has ceased to exist or cannot be
prosecuted due to a statutory bar. However, such exceptions
are of no relevance in the present case. Thus, the present
prosecution must fail for this reason as well."
26. In view of the above facts and reasons, these petitions succeed. The
entire criminal prosecution arising out of G. Case No.09/14 corresponding to
TR No.2561 of 2014 including the order dated 20.02.2014, pending in the
Court of the learned S.D.J.M., Giridih, so far as these petitioners are
concerned, is hereby, quashed.
27. Accordingly, these petitions stand allowed and disposed of.
28. Pending I.A., if any, also stands disposed of.
(Sanjay Kumar Dwivedi, J.)
Ajay/
