Rajendra Swami vs State Of Orissa And Another .... Opp. ...
2025 Latest Caselaw 1975 Ori

Orissa High Court

Rajendra Swami vs State Of Orissa And Another .... Opp. ... on 1 August, 2025

Author: Chittaranjan Dash

Bench: Chittaranjan Dash

      IN THE HIGH COURT OF ORISSA AT CUTTACK
                    CRLMC No. 3234 of 2017

  Rajendra Swami                  ....                       Petitioner
                                           Mr. S.S. Das, Sr. Advocate
                                           Mr. R.K. Malick, Advocate
                                -versus-

  State of Orissa and another     ....                    Opp. Parties
                                          Mrs. Siva Mohanty,
                                                    Mohanty ASC
                                  Mr. Ashok Mohanty, Sr. Advocate
                                                     for O.P. No.2


                           CORAM:
  THE HON'BLE
          BLE MR. JUSTICE CHITTARANJAN DASH

                  Date of Judgment: 01.08.2025

Chittaranjan Dash, J.

1. The Petitioner, namely Rajendra Swami, Director of Right Step Media Services Private Limited, has filed this application challenging the legality of the order of cognizance dated 03.09.2016 passed by the learned S.D.J.M.(S), Cuttack in connection with 1CC Case No. 746 of 2016, wherein the the learned court took cognizance of the offence under Section 138 of the N.I. Act and directed the Petitioner to appear and answer the accusation, initially by issuance of a bailable warrant and subsequently by issuance of an N.B.W. vide order dated 30.08.2017.

30.08.

2. The background facts of the case are that the Complainant is the proprietor of the firm, namely M/s. Fast Communication, an INS-accredited accredited agency engaged in the media publicity business

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throughout India, having its office at Markat Nagar, C.D.A., Cuttack.

tack. The accused is a company in the name and style of M/s. Right Step Media Services Pvt. Ltd., represented through its Director, Rajendra Kumar Swami, having its office near Mataji Mandir, Soorsagar Lake, Bikaner, Rajasthan, who is also the Director of Docoss Multimedia Private Ltd., engaged in the business of media activation and sale of mobile handsets. Pursuant to a mutual agreement between the parties, the said companies appointed the Complainant, i.e., M/s. Fast Communication, as their authorised advertisement vertisement agency for creating and publishing advertisements of Docoss Mobile and other media companies for a valid period of two years from the date of publication of the first advertisement, i.e., 27th April, 2016.

3. According to the complaint, one of the Directors, Mr. Rajendra Swami @ Rajendra Kumar Swami, requested the authorised staff, namely Mr. Manish Ahuja, of the Complainant firm to publish advertisements in different newspapers circulated throughout India. Pursuant to the release order issued by the t said accused, the advertisements were published in Dainik Bhaskar, Rajasthan Patrika, Indian Express, and Dainik Bhaskar's web portal within the stipulated time.

time

4. The aforesaid advertisements were published at a cost of ₹88,50,000/- (Rupees Eighty-Eight Eighty Lakhs Fifty Thousand only) and, in discharge of the said liability, four cheques were issued, namely:

(i) Cheque No. 874240 dated 15.06.2016 for ₹56,50,000/-

(Rupees Fifty-Six Fifty Six Lakhs Fifty Thousand only),

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(ii) Cheque No. 874239 dated 05.05.2016 for ₹11,00,000/- (Rupees ees Eleven Lakhs only),

(iii) Cheque No. 000051 dated 10.05.2016 for ₹9,00,000/-

(Rupees Nine Lakhs only), and

(iv) Cheque No. 000052 dated 20.06.2016 for ₹12,00,000/-

(Rupees Twelve Lakhs only), totalling ₹88,50,000/- (Rupees Eighty-Eight Eighty Eight Lakhs Fifty Thousand only), only) drawn on UCO Bank, Bikaner Branch, Bikaner, Rajasthan, in favour of the Complainant.

Complainant

5. Out of the said four cheques, two, namely Cheque No. 874239 dated 05.05.2016 for ₹11,00,000/- (Rupees Eleven Lakhs only) and Cheque No. 000051 dated 10.05.2016 for ₹9,00,000/- (Rupees Nine Lakhs only), amounting to ₹20,00,000/-

₹20,00,000/ (Rupees Twenty Lakhs only), were presented before the Complainant's bank and honoured. However, the remaining two cheques, i.e., Cheque No. 874240 dated 15.06.2016 for ₹56,50,000/- (Rupees Fifty-Six Fifty Lakhs Fifty Thousand only) and Cheque No. 000052 dated 20.06.2016 for ₹12,00,000/-

₹12,00,000/ (Rupees Twelve Lakhs only), totalling ₹68,50,000/- (Rupees Sixty-Eight Sixty Eight Lakhs Fifty Thousand only), when presented before the payee's bank, i.e., IDBI Bank, CDA Branch, Sector-9, 9, CDA, Cuttack, on 13.07.2016, were dishonoured for the reason "Funds Insufficient". The payee's bank intimated the Complainant of the dishonour vide memo dated 13.07.2016.

13.07.2016

6. Upon receipt of such intimation, the Complainant issued two legal notices on 15.07.2016, 1 one to Docoss Multimedia Pvt.

Ltd. at Jaipur, Rajasthan, and another to Right Step Media Services Pvt. Ltd. at Bikaner, Rajasthan, Rajasthan in accordance with Section 138(b)

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of the N.I. Act, calling upon the accused companies and their Directors to pay the the dishonoured cheque amounts. However, neither the companies nor the Directors replied to the legal notices nor made payment of the dishonoured cheque amounts, for which the Complainant filed a complaint before the learned court, whereupon cognizance was taken and process was issued against the Petitioner.

7. Mr. S.S. Das, learned Senior Advocate appearing for the Petitioner, assailed the impugned order primarily on the ground that the order dated 03.09.2016 is erroneous both in fact and in law. It was contended ded that the complaint, while arraying the Petitioner under Section 141 of the N.I. Act, did not implead the company as an accused and, in the absence of the company, no vicarious liability could be fastened on the Petitioner. Consequently, the Director could uld not have been held liable for the offence under Section 138 read with Section 141 of the N.I. Act. It was further contended that in the case of a private limited company, the Director has only limited liability and acts on behalf of the company, and therefore, therefore, in the absence of the company as a party, the entire proceeding stood vitiated and was liable to be quashed in view of the decision in D.J. Rastogi v. State of U.P. & Another reported in 2014 (1) Civil Law Journal 462.

462. The impugned order was further assailed on the ground that, as per the case of the Opposite Party No. 2, the cheque was issued in Bikaner, the entire transaction took place in Jaipur and Bikaner, the agreement was executed in Bikaner, Docoss Company was situated in Jaipur, and Right Step Company was in Bikaner. Consequently, a complaint was already filed before the learned ACMM, Jaipur. Therefore, in

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view of the aforesaid complaint before the ACMM, Jaipur, the complaint before the S.D.J.M.(S), Cuttack lacked lacked jurisdiction to entertain the matter. It was also contended that the complaint petition was not specific as to when the transaction took place so as to confer territorial jurisdiction upon the court for the alleged complaint. The impugned order was also also challenged on the ground that the authorised signatory of the Opposite Parties, having colluded with the Opposite Parties, had already instituted a complaint case in connection with Siprapath P.S. Case No. 466 of 2016 on the very same facts but under a different different statute, and therefore, the present complaint was not maintainable. Mr. Das, learned Senior Advocate, also argued that the Petitioner was neither a Director of Docoss Mobile at the relevant time nor was he involved at the time of publication and placing placing of the order or even at the time of filing of the complaint on 10.08.2016. Hence, the liability of Docoss Mobile at the relevant time could not attract the offence, and the Petitioner, who at no point of time looked after the affairs of Docoss Mobile Mobile Company, could not be made liable for the offence under the N.I. Act. It was further submitted that there was no averment in the complaint indicating that the Petitioner, being a Director, was responsible for the day-to-day day day affairs of the company.

In the absence of such an averment, no liability could be fastened upon him for the alleged dishonour of the cheque. Accordingly, the cognizance of offences implicating the Petitioner was beyond jurisdiction and, being illegal, was liable to be quashed

8. Mr. Ashok Mohanty, learned Senior Advocate appearing on behalf of the Opposite Parties, countered the submissions advanced

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by the learned counsel for the Petitioner. Drawing the attention of this Court to the factual position, he submitted that the plea of non-

non service ice of notice on the Petitioner is wholly false. He contended that the Petitioner, having duly received the notice, approached the Hon'ble Supreme Court in S.L.P. No. 3020/2018, seeking transfer of the case from the jurisdiction of the Court at Cuttack to Bikaner. The Hon'ble Supreme Court, having declined the said prayer, directed the Petitioner to deposit the entire cheque amount. Therefore, the argument advanced on behalf of the Petitioner that no notice was served either on the companies or on the Directors Direc stands nullified. Mr. Mohanty further submitted that the Petitioner, being a Director of the companies, was responsible for their day-to-

day day affairs and was also the signatory to the cheques, making him liable for the offence. The submission that no specific specific averment was made in the complaint regarding his responsibility in the day-to-day day affairs of the company, according to him, was made only to evade liability. He also drew the attention of this Court to the transfer petition filed before the Hon'ble Supreme Court by the Petitioner, wherein he had not only corresponded as Director of Right Step Media Services Pvt. Ltd. but had also received communications on behalf of the said company relating to the business transactions. The legal notice issued to the the Petitioner clearly revealed his name as Director of Right Step Media Services Pvt. Ltd. as well as of Docoss Multimedia Pvt. Ltd. The averments made by the Petitioner in the transfer petition further depicted his position as Director of M/s. Right Step Media Services Pvt. Ltd. and M/s. Docoss Multimedia Pvt. Ltd., as well as his authority to engage M/s. Fast

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Communication for publishing advertisements in different newspapers circulated throughout India.

India

9. Having regard to the contentions of the parties as raised in course of the hearing, the the Petitioner has challenged the order dated 03.09.2016 primarily on the grounds that the prosecution is not maintainable under Sections 138 and 141 of the N.I. Act without arraying the company as an accused; that the complaint complaint lacks any averment showing that the Petitioner was in charge of and responsible for the conduct of the company's business; that no statutory notice under Section 138 of the N.I. Act was served on the company; and that there was no legally enforceable debt or liability either against the Petitioner personally or against the company, the Board of Directors having never authorised him to issue the cheques in question

10. On consideration of the pleadings and submissions of the parties, the challenge to the order order of cognizance dated 03.09.2016 essentially gives rise to three issues for determination, namely:

(i) whether the prosecution under Sections 138 and 141 of the N.I. Act is not maintainable for want of impleadment of the company as an accused;

(ii) whether the complaint lacks necessary averments showing that the Petitioner was in charge of and responsible for the conduct of the company's business and whether no statutory notice was served as required under Section 138(b) of the N.I. Act; and

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(iii) whether there was no legally enforceable debt or liability either against the Petitioner personally or against the company, it being contended that the Board of Directors had never authorised him to issue the cheques in question.

These issues are examined hereinafter.

hereina

11. For Issue (i), the he Petitioner contends that the prosecution is not maintainable as the company, Right Step Media Services Pvt. Ltd., has not been arrayed as an accused, and therefore, no vicarious liability can be fastened upon him under Section 141 of the N.I. Act. However, the record reveals that the Opposite Party has impleaded all the Directors as parties to the complaint and has also taken steps to implead the company itself. Even assuming there was any initial omission, the law recognises that such such omission is curable and that the complainant may take steps even at a subsequent stage to bring the company on record, so long as the cognizance of the offence itself is based on legally sustainable grounds. In fact, the Opposite Party has stated to have ha already moved to include the company as an accused, and nothing prevents the complainant from amending the cause title even at this stage to cure the defect, if any.

The object of Section 141 is to fasten liability upon those who were in charge of and responsible responsible for the conduct of the company's business when the offence was committed, apart from the company itself. The materials on record indicate that the cheques were issued and signed by the Petitioner in his capacity as Director, and the transaction itself was initiated by him on behalf of the company. In such circumstances, the omission to mention the

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company's name in the initial cause title, when steps have already been taken to correct it, cannot be a ground to hold the prosecution itself as not maintainable.

m Accordingly, the contention of the Petitioner that the prosecution is vitiated for non-impleadment non impleadment of the company does not merit acceptance.

12. For Issue (ii), it is argued by the Petitioner that no statutory notice, as required under Section 138(b) of the N.I. Act, was served either upon the company or upon the Petitioner personally, personally and that the complaint does not contain specific averments as to how he was in charge of andd responsible for the conduct of the business of the company at the relevant time.

These submissions, however, do not hold good on the facts of the present case. The complaint attributes to the Petitioner the initiation of the agreement with the complainant complainant and issuance of cheques in his capacity as Director. The record reveals that on 19.04.2016, the Petitioner, in his capacity as Director, initiated the business arrangement with the complainant for the purpose of media advertisements and issued cheques towards towards discharge of the agreed liability, including cheque no. 874240 dated 15.06.2016. These cheques were dishonoured on 13.07.2016 for insufficiency of funds. Though the Petitioner has placed reliance on his resignation from the Directorship of Docoss Multimedia Multimedia Pvt. Ltd. on 06.07.2016, such resignation came after he had already executed the agreement and issued the cheques on behalf of the company. The cause of action, therefore, flows from acts undertaken by him while holding office as Director, and he cannot cannot be absolved of liability merely by subsequently resigning.

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13. More importantly, in the transfer petition filed before the Hon'ble Supreme Court seeking transfer of the present complaint from Cuttack to Bikaner, the Petitioner himself admitted his status as Director and acknowledged receipt of statutory notices. In paragraph (v) of the said petition, the Petitioner categorically stated as follows:

"The Respondent after return of the cheques, through his advocate, issued two legal notices by registered postt to one M/s Docoss Multimedia Pvt. Ltd. at Jaipur, Rajasthan and another to M/s Right Step Media Services Pvt. Ltd. office situated at Bikaner, Rajasthan, in accordance with the provision under Section 138(b) of Negotiable Instruments Act, 1881 with regard regar to the above mentioned dishonour of the cheques. The legal notices issued by the Respondent were received by the Petitioner herein. True copy of legal notices dated

14.07.2016, which was filed is annexed herewith and marked as Annexure - P5 (pages 18 to 19)." Thus, the plea that no statutory notice under Section 138(b) of the N.I. Act was served upon either the company or the Petitioner personally stands answered by the Petitioner's own admission on oath before the Hon'ble Supreme Court.

14. Under Section 58 of the Indian Evidence Act, 1872, facts admitted need not be proved.

proved The admissions made by the Petitioner in the transfer petition were voluntary, supported by affidavit, and made on oath before a competent court of law. Such admissions dispense with the need for further proof and can legitimately be relied upon by this Court while considering the legality of the order of cognizance. An accused who, in proceedings before a competent court, acknowledges his status in relation to a

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company and his knowledge of a complaint filed against him, cannot subsequently plead ignorance of notice or deny such status in a proceeding arising out of the same transaction. These admissions, having been made consciously and on oath, carry significant evidentiary value and must must be accepted as binding against the maker unless shown to be erroneous or withdrawn, which is not the case here.

Accordingly, these undisputed admissions, when read with the complaint's specific reference to the Petitioner's role in initiating the agreement and issuing the cheques, prima facie satisfy the statutory requirement under Section 141 of the N.I. Act that he was a person in charge of and responsible for the conduct of the business of the company in relation to the transaction in question.

15. For Issue (iii), the Petitioner contends that there was no legally enforceable debt or liability and that the cheques were issued merely as security, without any authority from the Board of Directors to bind the company. It is further urged that a civil dispute di between the parties is already pending, which, according to the Petitioner, renders the criminal prosecution unsustainable.

These arguments are primarily matters of defence which raise disputed questions of fact, requiring appreciation of evidence. The he complaint specifically alleges that the cheques were issued in discharge of liability arising from the business transaction initiated by the Petitioner himself on behalf of the company. The allegation that the cheques were issued only as security is not borne out from the complaint or the admitted documents but is a defence that can only be adjudicated at trial. Similarly, whether the Board of

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Directors authorised the Petitioner or whether the cheques were issued beyond his authority are also issues of evidence, evidence, which cannot be conclusively determined at this stage.

Even assuming that a civil dispute is pending between the parties, it is well settled that the existence of a civil remedy does not bar prosecution under Section 138 of the N.I. Act, which creates cre a distinct statutory offence for dishonour of cheques. The criminal liability under Section 138 is independent of civil proceedings and is intended to enhance the credibility of commercial transactions.

Therefore, these contentions cannot be grounds for f quashing the order of cognizance in exercise of jurisdiction under Section 482 Cr.P.C. and must be left to be determined in the course of trial on the basis of evidence adduced by the parties.

16. The Petitioner also seeks to question the validity of cognizance ance on the ground that no statutory notice under Section 138(b) of the N.I. Act was served upon either the company or the Petitioner personally. This plea also stands answered by the Petitioner's own conduct in approaching the Hon'ble Supreme Court seekingg transfer of the complaint from Cuttack to Bikaner, which unequivocally demonstrates his knowledge of the complaint and the transaction giving rise to it. Once actual knowledge is established, the technical objection regarding notice loses its force, particularly icularly when the Petitioner, instead of disputing receipt of intimation, actively sought transfer of the case itself.

17. To summarise, the t plea of non-impleadment impleadment of the company is not tenable in view of the steps already taken by the complainant and the curable able nature of such omission. The contentions regarding

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absence of averments and want of statutory notice stand answered by the Petitioner's own admissions made on oath before the Hon'ble Supreme Court, which, under Section 58 of the Indian Evidence Act, dispense ispense with the need for further proof. The plea of absence of legally enforceable liability or of issuance of cheques as security, as well as the pendency of civil proceedings, are all matters of defence raising disputed questions of fact which cannot be gone into at this stage and must be left to be determined at trial.

18. In view of the foregoing discussion on all three issues, this Court finds no illegality, impropriety or perversity in the order dated 03.09.2016 taking cognizance of the offence under Section 138 of the Negotiable Instruments Act against the Petitioner.

19. For the reasons as above, this Court is not convinced to interfere with the order of cognizance in exercise of jurisdiction under Section 482 Cr.P.C.

20. Accordingly, the t CRLMC stands dismissed.

sed. Pending applications, if any, are also disposed of.

(Chittaranjan Dash) Judge

Bijay

Location: HIGH COURT OF ORISSA

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