Punjab-Haryana High Court
Satish Ahuja vs Raj Kamal Iron And Steel Co. And Ors on 22 March, 2024
Neutral Citation No:=2024:PHHC:043568
CRM M-19236 of 2014 (O&M) 2024:PHHC:043568 -1-
IN THE HIGH COURT OF PUNJAB AND HARYANA
AT CHANDIGARH
232+110 CRM M-19236 of 2014 (O&M)
Date of Decision: 22.03.2024
Satish Ahuja ...Petitioner
Versus
Raj Kamal Iron and Steel Co. and others ... Respondents
CORAM : HON'BLE MR. JUSTICE N.S.SHEKHAWAT
Present : Mr. Vikas Mohan Gupta, Advocate
for the petitioner.
Mr. Lovish Rattan, Advocate for
Mr. Surinder Sharma, Advocate, for respondent No. 1.
N.S.SHEKHAWAT, J. (Oral)
1. The petitioner has filed the present petition under Section
482 Cr.P.C. with a prayer to quash the complaint under Section 138 of
the Negotiable Instruments Act 1881 (hereinafter to be referred as 'the
Act'), bearing No. 28533 dated 05.12.2012 titled as "Raj Kamal
Iron & Steel Company Vs. M/s Krishna Engg. Works and others"
(Annexure P-1), summoning order dated 30.01.2013 (Annexure P-2)
and order dated 10.02.2014 (Annexure P-4) and all consequential
proceedings arising therefrom.
2. Learned counsel for the petitioner contended that the
petitioner had been wrongly arrayed as an accused in a complaint
filed under Section 138 of the Act (Annexure P-1) by respondent
No. 1 and vide order dated 30.01.2013 (Annexure P-2), the trial Court
wrongly summoned the petitioner to face a trial with the other
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accused under Section 138 of the Act, without appreciating the fact
that the petitioner had no concern with the allegations levelled by the
respondent No.1/complainant and was a total stranger to the
accused/company. Learned counsel further contended that respondent
No.1/complainant had filed a complaint (Annexure P-1) against the
petitioner and 04 more accused by alleging that Mukesh Juneja, who
has now expired, had issued a cheque of Rs. 34.50 lacs dated
30.10.2012 and when the said cheque was presented to the bank, it
was dishonoured on account of the reasons "payment stopped by the
drawer". It was mentioned in the complaint that the petitioner was
also incharge of day to day affairs of the accused/company and was
responsible for the conduct of the business of the complainant and
was wrongly projected as Finance Director. Learned counsel for the
petitioner further contended that the accused/company was
incorporated under the provisions of the Companies Act, 1956 and
was a separate legal entity. At no point of time, the petitioner was
even a shareholder, Director, Nominee Director or the Managing
Director of the accused/company. Further, the petitioner was never
employed as an ordinary employee also by the accused/company.
Learned counsel further contended that the petitioner was never
responsible for day to day affairs of the accused/company and was
wrongly mentioned as Director (Finance) of the accused/company.
Apart from that, from a perusal of the complaint (Annexure P-1), a
vague averment was made that the petitioner alongwith other accused
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was incharge of day to day affairs of the accused/company and was
responsible to the company for the conduct of business of the
company. It was nowhere mentioned in the complaint that as to and
what capacity and in what manner, he was working with the company
and without any evidence, the petitioner was wrongly ordered to be
summoned vide summoning order dated 30.01.2013 (Annexure P-2).
The petitioner appeared before the trial Court and moved an
application for recalling of the summoning order, which was declined
vide the impugned order dated 10.02.2014 (Annexure P-4). Learned
counsel for the petitioner contended that the petitioner cannot be
prosecuted and fastened with criminal liability for a company, with
which, the petitioner had no concern at all. Learned counsel also
placed reliance on the annual reports of the accused/company for the
last 05 years (Annexures P-6 to P-10) to contend that he was never on
the Board of Directors nor was employee of the said company. Even,
the petitioner also placed reliance on the annual return filed by the
accused/company with the Registrar of the Companies for the last 03
years (Annexure P-11) to submit that he was never the Director,
Nominee Director or the Managing Director of the accused/company
nor any role was played by him in the Board of Directors. He further
contended that in fact the petitioner was an employee of another
company known as M/s KEW Industrial Limited, a company under
the provisions of the Companies Act, 1956, which was having a
separate legal entity. Even, the company was not a sister concerned or
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associate company of the accused/company, even though, it was also
managed by accused No. 2 and 3. Thus, the petitioner had been
wrongly summoned in the present case.
3. Learned counsel for the petitioner further contended that
further proceedings qua the petitioner were stayed by this Court,
however, his co-accused were tried by the Court of Judicial
Magistrate 1st Class, Jalandhar and vide judgment and order dated
13.12.2018, the co-accused of the petitioner were convicted for an
offence under Section 138 of the Act and were sentenced. The
co-accused preferred an appeal before the Court of Sessions Judge,
Jalandhar and during the pendency of the said appeal, the entire
payment was made by the co-accused to the respondent
No.1/complainant and with the permission of the Court, the offence
was compounded on 09.09.2023 in the National Lok Adalat, held at
Jalandhar.
4. Even during the course of arguments, on 23.05.2017, the
complainant was granted an opportunity by this Court to place on
record the evidence against the petitioner, after noticing the
contentions raised on behalf of the petitioner. However, nothing was
placed on record before this Court by the respondent
No.1/complainant to indicate the official position of the petitioner in
the accused/company.
5. On the other hand, learned counsel appearing on behalf
of respondent No.1/complainant submitted that the petitioner had
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raised several disputed questions, which could be adjudicated only
during the course of trial. Even, fresh evidence was led by respondent
No.1/complainant to show that the criminal liability could be fastened
on the petitioner as well as his co-accused and after due appreciation
of the evidence, the co-accused of the petitioner were ordered to be
convicted by the trial Court. However, during the pendency of the
appeal, the co-accused of the petitioner had made the payment to
respondent No.1 and the offence was ordered to be compounded in
the National Lok Adalat, Jalandhar. However, the petitioner was not a
party in the said appeal and cannot take advantage of the said
judgment and the present petition deserves to be dismissed.
6. Having considered the rival submissions made by the
learned counsel for both the sides, this Court is of the considered
opinion that the submissions made by the learned counsel for the
petitioner are well founded and deserves to be accepted by this Court.
7. In various judgments passed by the Hon'ble Supreme
Court and this Court, it has been held repeatedly, while referring to
the provisions of Section 482 Cr.P.C. that nothing under the Code of
Criminal Procedure shall deem to limit or affect the inherent powers
of the High Court to make such orders as may be necessary to give
effect to any order under this Code or to prevent the abuse of the
process of any Court or otherwise to secure the ends of justice. The
Hon'ble Supreme Court in the matter of Ajay Mitra Vs. State of
M.P. & others, 2003(3) SCC 11, has held as follows:-
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"Leave granted.
These appeals by special leave are directed against the
judgment and order dated January 16, 2002 of High
Court of Madhya Pradesh, by which three Petitions filed
by the appellants under Section 482 Cr.P.C. were
dismissed.
xxx xxx xxx xxx xxx xxx
Thereafter, the appellants filed three Criminal
Miscellaneous Petitions under Section 482 Cr.P.C. before
the High Court for quashing of the FIR and the
proceedings of the case before the learned Magistrate.
After hearing the parties, the High Court held that the
investigation had not yet commenced in connection with
the FIRs which had been registered at the Police Station
and, therefore, the Petitions were pre-mature and
accordingly all the three Petitions were rejected.
xxx xxx xxx xxx xxx xxx
The High Court has held that the Petitions filed by the
appellants for quashing the complaint and the FIRs
registered against them are pre-mature. The question
which arises is that where the complaint or the FIR does
not disclose commission of a cognizable offence, whether
the same can be quashed at the initial stage? This
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question was examined by this Court in State of West
Bengal &Ors. V. Swapan Kumar Guha & Ors., AIR
1982 Supreme Court 949 and it was held that the First
Information Report which does not allege or disclose that
the essential requirements of the penal provision are
prima facie satisfied, cannot form the foundation or
constitute the starting point of a lawful investigation. It is
surely not within the province of the police to investigate
into a Report (FIR) which does not disclose the
commission of a cognizable offence and the code does
not impose upon them the duty of inquiry in such cases. It
was further held that an investigation can be quashed if
no cognizable offence is disclosed by the FIR. The same
question has been considered in State of Haryana &Ors.
V. Ch. Bhajan Lal &Ors. 1991(3) RCR (Criminal) 383
(SC) and after considering all the earlier decisions, the
category of cases, in which the Court can exercise its
extra-ordinary power under Article 226 of the
Constitution or the inherent power under Section 482
Cr.P.C. either to prevent abuse of the process of any
Court or to secure the ends of justice, were sumarised in
para 108 of the Report and sub- paras 1 to 3 thereof are
being reproduced hereinbelow :
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"1. Where the allegations made in the First Information
Report or the complaint, even if they are taken at their
face value and accepted in their entirety do not prima
facie constitute any offence or make out a case against
the accused.
2. Where the allegations in the First Information Report
and other materials, if any, accompanying the F.I.R. do
not disclose a cognizable offence, justifying an
investigation by police officers under Section 156(1) of
the Code except under an order of a Magistrate within
the purview of Section 155(2) of the Code.
3. Where the uncontroverted allegations made in the FIR
or complaint and the evidence collected in support of the
same do not disclose the commission of any offence and
make out a case against the accused."
8. The said judgment by the Three Judges Bench of the
Hon'ble Supreme Court had affirmatively held that where an FIR
does not disclose the essential requirements of the penal provision or
does not disclose the commission of a cognizable offence, the same
can be quashed at the initial stage. Reference has also been made to
the judgment of Hon'ble Supreme Court in case "State of Haryana
and others Vs. Ch. Bhajan Lal & Ors., 1991(3) RCR (Criminal)
383), in which, it was observed that the High Court can exercise its
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extraordinary power under Article 226 of the Constitution or the
inherent power under Section 482 Cr.P.C. 1973 either to prevent
abuse of the process of any Court or to secure the ends of justice.
9. Section 141 of the Act provides for "Offences by the
companies", which has been reproduced below:-
"141. Offences by companies. --
(1) 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:
Provided that nothing contained in this sub-section shall
render any person liable to punishment if he proves that
the offence was committed without his knowledge, or that
he had exercised all due diligence to prevent the
commission of such offence:
Provided further that where a person is nominated as a
Director of a company by virtue of his holding any office
or employment in the Central Government or State
Government or a financial corporation owned or
controlled by the Central Government or the State
Government, as the case may be, he shall not be liable
for prosecution under this Chapter.
(2)Notwithstanding anything contained in sub-section
(1), where any offence under this Act has been committed
by a company and it is proved that the offence has been
committed with the consent or connivance of, or is
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attributable to, any neglect on the part of, any director,
manager, secretary or other officer of the company, such
director, manager, secretary or other officer shall also be
deemed to be guilty of that offence and shall be liable to
be proceeded against and punished accordingly.
Explanation.--
For the purposes of this section,--
(a)"company" means any body corporate and includes a
firm or other association of individuals; and
(b)"director", in relation to a firm, means a partner in
the firm".
10. In fact, Section 141 of the Act is a penal provision
creating vicarious liability, and which, as per the settled law must be
strictly construed. It is, therefore, not sufficient to make a bald
cursory statement in the complaint that the accused was incharge and
responsible to the company for the conduct of business of the
company, without knowing more as to the role of the accused. The
complainant is under a legal obligation to spell out as to how and in
what manner the accused was incharge or was responsible to the
accused/company for the conduct of its business. This is in
consonance with the strict interpretation of penal statutes, especially,
where the said statues create vicarious liability in person, who was not
a Director, Nominee Director, Managing Director, Additional
Director, Non-Executive Director, shareholder and employee of the
accused/company and cannot be fastened with a criminal liability.
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11. In the present case, the petitioner has placed on record
the annual reports of the accused/company for the last 05 years
(Annexures P-6 to P-10) to show that the petitioner was never on the
Board of Directors nor the employee of the company. Still further, the
petitioner also placed on record the annual return filed by the
accused/company with the Registrar of the Companies for the last 03
years (Annexure P-11), which established that the petitioner was
never associated with the accused/company nor was the Director,
Nominee Director or the Managing Director of the accused/company.
Even, the petitioner had specifically pleaded that the petitioner had
never been associated with the accused/company and was not
responsible for day to day affairs of the company nor had any role to
play in the affairs of the accused/company. Thus, the ingredients,
which were required under Section 141 of the Act were completely
missing in the present case. Still further, even the complainant was
afforded an opportunity of hearing by this Court and was granted time
to place on record any evidence to show that the petitioner had any
concern with the affairs of the accused/complainant, but the
complainant utterly failed in bringing on record any evidence to that
effect. Thus, it would be the travesty of justice, if such a person, who
had no concern with the accused/company is dragged in the criminal
prosecution and is fastened with any kind of criminal liability.
12. In view of the above discussion, the present petition
succeeds and the impugned complaint bearing No. 28533 dated
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05.12.2012 titled as "Raj Kamal Iron & Steel Company Vs. M/s
Krishna Engg. Works and others" (Annexure P-1), summoning
order dated 30.01.2013 (Annexure P-2) and order dated 10.02.2014
(Annexure P-4) alongwith all consequential proceedings arising
therefrom are ordered to be quashed qua the present petitioner.
22.03.2024 (N.S.SHEKHAWAT)
amit rana JUDGE
Whether reasoned/speaking : Yes/No
Whether reportable : Yes/No
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