M/S.Muv Multitech (P) Ltd vs M/S.Ttk Health Care Limited
2021 Latest Caselaw 22243 Mad

                                                                                  CRL.O.P.No.7312 of 2014



                                      IN THE HIGH COURT OF JUDICATURE AT MADRAS

                                                        DATED : 12.11.2021

                                                                CORAM

                                    THE HON'BLE MRS.JUSTICE V.BHAVANI SUBBAROYAN

                                                    CRL.O.P.No.7312 of 2014
                                                             and
                                                     CRL.M.P.No.1 of 2014

                     M/s.MUV Multitech (P) Ltd.,
                     Represented by its Manager,
                     No.3, III Floor, TAAS Mahal,
                     No.10, Monteith Road,
                     Egmore, Chennai- 600 008.                                     ... Petitioner


                                                                 Vs.


                     M/s.TTK Health Care Limited,
                     Rep. by its Manager, Mr.M.Arumugam,
                     Printing Division,
                     No.328, G.S.T. Road, Egmore,
                     Chennai - 600 008.                                            ... Respondent




                                  Criminal Original Petition is filed under Section 482 of the Criminal

                     Procedure Code, to call for the records relating to C.C.No.21436 of 2005 on

                     the file of the Metropolitan Magistrate, Fast Track Court - I, Egmore, Chennai-

                     8 and quash the same.


                                               For Petitioner    : Mr.S.Vijayakumari Natarajan

                                               For Respondent : Mr.Prasad Vijaya Kumar


https://www.mhc.tn.gov.in/judis
                     1/14
                                                                                  CRL.O.P.No.7312 of 2014




                                                              ORDER

This Criminal Original Petition has been filed to call for the records

relating to C.C.No.21436 of 2005 on the file of the Metropolitan Magistrate,

Fast Track Court - I, Egmore, Chennai-8 and quash the same.

2. The respondent has filed a complaint against the petitioner in

C.C.No.21436 of 2005 on the file of the Metropolitan Magistrate, Fast Track

Court - I, Egmore, Chennai-8, for the offence under Section 138 of the

Negotiable Instrument Act.

3. The respondent / complainant has averred in the complaint that the

petitioner / accused has been dealing with the respondent from the month of

April 2003 for printing of his bi-monthly magazine “Animation Reporter”. The

respondent printed the magazine and supplied to the petitioner on time as per

the clause mentioned in his purchase order and sent bills to him. For the bills

raised in the Month of April 2003, the petitioner made payments on various

dates and completed paying the amount for the bill of April 2003, only by the

end of August 2003. The petitioner issued a cheque dated 02.09.2003 for

Rs.2,16,150/- and another cheque dated 25.02.2004 for Rs.75,000/-, which

were dishonoured on the ground of “insufficient funds”. When the respondent

informed the petitioner about the same, the petitioner promised to give

cheques of current date to the value of the dishonoured cheques, which the

petitioner did not honour. On 26.02.2004, the petitioner sent an e-mail to the

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CRL.O.P.No.7312 of 2014

respondent that due to their revenues being staggered, there was delay in

payment to the respondent and assured that, future payments will be on time.

Believing the petitioner, the respondent continued to work for him. The

respondent had written to the petitioner on 27.02.2004 giving a statement of

accounts and also the amounts payable as on 27.02.2004 is Rs.7,57,591/-.

When the respondent's Marketing Executive called on the petitioner on

27.02.2004, the petitioner promised that he would give the cheques for the

above values and hence, the respondent printed his magazine in the month

of February 2004 also. But the petitioner did not give the cheques mentioned

above and finally gave the cheque for only Rs.1,93,778/- vide Cheque

No.122799 dated 26.04.2004. Whenever the respondent has been calling the

petitioner or when the respondent's Marketing Executive visited his office,

either he has been promising payments, which he did not honour or he was

giving only evasive replies.

4. It was further averred in the complaint that the petitioner / accused

had given a cheque bearing No.122762 dated 02.11.2003 drawn on Global

Trust Bank, Kilpauk Branch, Chennai-10, for a sum of Rs.2,14,550/-, which

was dishonoured, but the petitioner instructed the respondent to redeposit the

same. The respondent represented the cheque on 24.03.2004 at Canara

Bank, Pallavaram and the same was returned on 25.03.2004 and received by

the respondent on 26.03.2004 with an endorsement “Refer to Drawer”. The

respondent issued a legal notice on 05.04.2004 which was acknowledged by

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CRL.O.P.No.7312 of 2014

the petitioner. Thereafter, the respondent has filed a complaint against the

petitioner under Section 138 of the Negotiable Instruments Act, before the II

Metropolitan Magistrate Court at Egmore. Subsequently, the cheque bearing

No.122799 dated 26.04.2004 drawn on Global Trust Bank, Kilpauk Branch,

Chennai-10, for a sum of Rs.1,93,778/-, was presented on 26.04.2004 at

Canara Bank, Pallavaram and the same was dishonoured on 27.04.2004 with

an endorsement “Refer to Drawer”. The respondent caused a lawyer's notice

to be issued the petitioner on 06.05.2004 through registered post, which was

acknowledged by the petitioner on 08.05.2004, in which, the respondent had

stated that if the petitioner did not pay the cheques amount within 15 days

from the date of receipt of the notice, appropriate legal action would be taken

under Section 138 of the Negotiable Instrument Act. In spite of the said

notice, the petitioner has not come forward to settle the above said amount

and hence, he should be punished under the law.

5. The complaint preferred by the respondent is still pending on the file

of the Metropolitan Magistrate, Fast Track Court - I, Egmore, Chennai-8.

Aggrieved by the same, the petitioner has filed this Writ Petition before this

Court, stating that the summons dated 07.02.2013 issued in the above case

was addressed to M/s.MUV Multitech (P) Ltd, but it was served to the

residential address of one Hitesh V. Shah stating as if he is the Director. The

complaint has been initiated against M/s.MUV Multitech (P) Ltd. Represented

by its Manager without naming anybody. Since the summons were handed

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CRL.O.P.No.7312 of 2014

over to the company, the present manager Mr.Sanjay appeared before the

Trial Court on 25.04.2013 and filed vakalat for the company.

6. It is also stated in the petition that the complaint in C.C.No.21434 of

2005 was filed for the dishonour of Cheques given by the petitioner on

various dates for the services rendered by the respondent in printing his

magazines. In the said complaint, it has been only stated that the cheques

given by the petitioner were dishonoured, and nothing has been stated as to

who has signed the cheques. Originally, the name of the company alone was

there in the complaint, and only after the appearance of Mr.Sanjay on behalf

of the company, the cause title was corrected as the company represented by

its manager Mr.Sanjay. But no statutory notice was given to the manager

Mr.Sanjay nor summons were issued on him on behalf of the petitioner

company. The Sanjay is only an employee of the petitioner and he has not

signed the cheques mentioned above. The complaint against Mr.Sanjay is

beyond the period of limitation, and by the time when his name was added as

accused, the limitation period was over. Hence, the complaint against him is

not maintainable under the law.

7. The respondent / complainant has filed a counter affidavit denying

all the averments made in the petition, wherein, it is stated that the petitioner

company were evading service of notice on them till the Court was able to

serve the summons to Mr.Hitesh V.Shah, Director of the Company in 2013

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CRL.O.P.No.7312 of 2014

and then vakalat was filed by Mr.Sanjay, Manager of the Company. Further, it

is stated that the person who signed the cheque his name is not clear and

hence the respondent is not in the position to mention the name of the person

who has signed the cheque and thereby sent the demand notice to the

address of the company. Section 141 of the Negotiable Instrument Act

contemplates that “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 ”. Hence, the person who is in charge of the company and day to

day affairs of the business of the company will be deemed to be guilty of the

offence committed by the company. And the burden of proof lies on the

person to prove that the offence is committed without his knowledge or he

took due diligence to prevent the offence.

8. It is further stated in the counter affidavit that the petitioner nowhere

in the petition disputed the cheque or amounts to be paid to the respondent

and also he is not denied that Hitesh V. Shah is the Director of the Company.

The petitioner has stated in his petition that the complaint was filed on

21.12.2005, which is the blatant falsehood. The complaint was filed in June

2004 and got numbered in 2005, this does not mean that the complaint was

filed beyond the period of limitation. The petitioner in order to evade summon

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CRL.O.P.No.7312 of 2014

was shifting his business from place to place, and every time when the

respondent tried to go to the petitioner company, either it would be shifted or

closed. The petitioner went into hiding and it was really very difficult to trace

them and finally, the respondent found the address of the Director and served

the summon to him. The name of the person who signed the cheque is not

clear and the respondent does not know who was really in charge of the

affairs of the company at the time of issuance of the cheques and therefore

they made the manager of the company as accused in the complaint.

9. Heard the learned counsel for the petitioner and the learned counsel

for the respondent, and perused the materials available on record.

10. On perusal of the records, it is seen that the petitioner / accused is

a private limited company, which has been dealing with the respondent from

the month of April 2003 for printing its bi-monthly magazine called “Animation

Reporter”. The respondent has issued bills to the petitioner for the services

rendered by them and the petitioner also issued a cheque dated 02.09.2003

for Rs.2,16,150/- and another cheque dated 25.02.2004 for Rs.75,000/- to the

respondent. When the respondent has presented the cheques, the same

were dishonoured as “insufficient funds”. Hence, the respondent has informed

the petitioner about the same. Thereafter, the petitioner has issued a cheque

dated 26.04.2004 for Rs.1,93,778/- to the respondent, which was presented

on 26.04.2004, but the same was dishonoured on 27.04.2004 with the

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CRL.O.P.No.7312 of 2014

endorsement “Refer to Drawer”. In the interregnum, the respondent has

presented the cheque dated 02.11.2003 and the same was returned on

25.03.2004 with the endorsement “Refer to Drawer. Hence, the respondent

has issued a legal notice on 05.04.2004. In spite of the said legal notice, the

petitioner has not come forward to settle the dues. Hence, the respondent

has filed a complaint against the petitioner in C.C.No.21436 of 2005 on the

file of the Metropolitan Magistrate, Fast Track Court - I, Egmore, Chennai-8.

Aggrieved by the said complaint, the petitioner has filed this Writ Petition

before this Court.

11. The main contention of the learned counsel for the petitioner is that

the Manager, who is in charge of the petitioner company, was not issued

individual statutory notice under Section 138 and hence, he is not responsible

for the alleged dishonour of cheques. In support of the said contention, the

learned counsel for the petitioner has placed reliance on the Judgment of this

Court in Dilip S. Dhanukar Vs. India Equipment Leasing Ltd., wherein, this

Hon’ble Court has held as follows :

“14. A contention has been raised by the petitioner that he is only the Chairman of the first accused company and not the Managing Director, whereas, in the complaints, it has been specifically stated that he is the Chairman cum Managing Director and therefore this disputed question cannot be gone into in a Criminal Original Petition. But even assuming that he is the Chairman cum Managing Director of the first accused https://www.mhc.tn.gov.in/judis

CRL.O.P.No.7312 of 2014

company, in the light of the Division Bench decision reported in (2006) 2 MLJ (Crl) 990 (referred to supra), it has to be held that in the absence of statutory notice addressed to the petitioner individually the notice sent to the company will not amount to the individual notice to the petitioner and therefore the contention of the learned counsel for the petitioner has to be countenanced.”

12. Rebutting the said contention, the learned counsel for the

respondent has submitted that Section 138 does not contemplate issuance of

separate notices to the managers and therefore, no such notices are required

to be issued to the managers of the petitioner company. In support the said

submission, the learned counsel for the respondent has relied upon the

Judgment of Hon’ble Supreme Court in Kirshna Texport and Capital

Markets Limited Vs. ILA.A.Agrawal and Others, wherein, the Hon’ble

Supreme Court has held as follows :

“16. Section 141 states that if the person committing an offence under Section 138 is a Company, every director of such Company who was in charge of and responsible to that Company for conduct of its business shall also be deemed to be guilty. The reason for creating vicarious liability is plainly that a juristic entity i.e. a Company would be run by living persons who are in charge of its affairs and who guide the actions of that Company and that if such juristic entity is guilty, those who were so responsible for its affairs and who guided actions of such juristic entity must be held responsible and ought to be

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CRL.O.P.No.7312 of 2014

proceeded against. Section 141 again does not lay down any requirement that in such eventuality the directors must individually be issued separate notices under Section 138. The persons who are in charge of the affairs of the Company and running its affairs must naturally be aware of the notice of demand under Section 138 of the Act issued to such Company. It is precisely for this reason that no notice is additionally contemplated to be given to such directors. The opportunity to the drawer Company is considered good enough for those who are in charge of the affairs of such Company. If it is their case that the offence was committed without their knowledge or that they had exercised due diligence to prevent such commission, it would be a matter of defence to be considered at the appropriate stage in the trial and certainly not at the stage of notice under Section 138.

17. If the requirement that such individual notices to the directors must additionally be given is read into the concerned provisions, it will not only be against the plain meaning and construction of the provision but will make the remedy under Section 138 wholly cumbersome. In a given case the ordinary lapse or negligence on part of the Company could easily be rectified and amends could be made upon receipt of a notice under Section 138 by the Company. It would be unnecessary at that point to issue notices to all the directors, whose names the payee may not even be aware of at that stage. Under Second proviso to Section 138, the notice of demand has to be made within 30 days of the dishonour of cheque and the third proviso gives 15 days time to the drawer to make the payment of the amount and escape the penal consequences. Under clause (a) of Section 142, the complaint must be filed within one month of https://www.mhc.tn.gov.in/judis

CRL.O.P.No.7312 of 2014

the date on which the cause of action arises under the third proviso to Section 138. Thus a complaint can be filed within the aggregate period of seventy five days from the dishonour, by which time a complainant can gather requisite information as regards names and other details as to who were in charge of and how they were responsible for the affairs of the Company. But if we accept the logic that has weighed with the High Court in the present case, such period gets reduced to 30 days only. Furthermore, unlike proviso to clause (b) of Section 142 of the Act, such period is non-extendable. The summary remedy created for the benefit of a drawee of a dishonoured cheque will thus be rendered completely cumbersome and capable of getting frustrated.

18. In our view, Section 138 of the Act does not admit of any necessity or scope for reading into it the requirement that the directors of the Company in question must also be issued individual notices under Section 138 of the Act. Such directors who are in charge of affairs of the Company and responsible for the affairs of the Company would be aware of the receipt of notice by the Company under Section 138. Therefore neither on literal construction nor on the touchstone of purposive construction such requirement could or ought to be read into Section 138 of the Act.”

13. Now it has to be seen as to whether the contention put forth by the

learned counsel for the petitioner on the basis of the decision relied upon by

him is sustainable.

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CRL.O.P.No.7312 of 2014

14. At the outset, it has to be pointed out that after the complaint was

filed under Section 138 of the Negotiable Instruments Act, on 07.02.2013, the

Metropolitan Magistrate at Chennai, issued summon to one Hitesh V. Shah,

who was the Director of the petitioner company. On receipt of the summon,

one Sanjay, who is the Manager of the petitioner company, entered

appearance before the Court below and copies were served to him.

15. The contention raised by the learned counsel for the petitioner that

the present Manager of the petitioner company was not issued individual

statutory notice under Section 138, cannot be countenanced for the reason

that, in the decision relied on by the learned counsel for the respondent, the

Hon'ble Supreme Court has specifically held that if the person committing an

offence under Section 138 is a company, every Director of such company

who was in charge of that company for conduct of its business shall be

deemed to be guilty. Further, the Hon'ble Supreme Court has held that the

persons who are in charge of the affairs of the company must naturally be

aware of the demand notice issued to the company. Hence, no separate

notice is required to be given to such persons. Moreover, it has been held by

the Hon'ble Supreme Court that if the contention of the accused is that the

offence was committed without their knowledge or that they had exercised

due diligence to prevent such commission, the same would be considered

only at the time of trial and not at the stage of notice under Section 138.

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CRL.O.P.No.7312 of 2014

16. Admittedly, in this case, the liability of the petitioner company has

not been discharged and also it is not denied that Mr.Hitesh V. Shah is the

Director of the company. The Manager, who is in charge of the petitioner

company, has entered appearance before the Court below only on receipt of

the summon issued to the Director Mr. Hitesh V. Shah and hence, no

separate notice is required to be issued to him under Section 138 of the Act.

Hence, this Court is of the view that the complaint in C.C.No.21436 of 2005

on the file of the Metropolitan Magistrate, Fast Track Court - I, Egmore,

Chennai-8, shall be proceeded before the Trial Court.

17. Since the matter is of the year 2003, the Magistrate is hereby

directed to complete the trial within a period of six months from the date of

receipt of a copy of this order. The petitioner is at liberty to produce all the

documents they rely upon to prove their case.

18. In view of the above, this Criminal Original Petition is dismissed. No

costs. Consequently, connected miscellaneous petition is closed.

12.11.2021 raja Index : yes/no Internet : yes/no Speaking Order/Non-Speaking Order

To

The Metropolitan Magistrate, Fast Track Court - I, Egmore, Chennai-8.

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CRL.O.P.No.7312 of 2014

V.BHAVANI SUBBAROYAN.J.,

raja

CRL.O.P.No.7312 of 2014 and CRL.M.P.No.1 of 2014

12.11.2021

https://www.mhc.tn.gov.in/judis