Telangana High Court

Dr. Narendra Goud, vs The State Of Andhra Pradesh, on 1 December, 2021

Bench: G.Radha Rani

        THE HON'BLE Dr. JUSTICE G. RADHA RANI

            CRIMINAL PETITION No.11697 of 2013
ORDER:

This Criminal Petition is filed by the petitioners - A1 and A3

under Section 482 Cr.P.C. to quash the proceedings in CC No.646 of

2013 on the file of XI Additional Chief Metropolitan Magistrate,

Secunderabad, against the petitioners.

2. The 2nd respondent-complainant filed a private complaint

under Sections 138 and 142 of the Negotiable Instruments Act (for

short "NI Act') before the XI Additional Chief Metropolitan

Magistrate, Secunderabad, stating that he was in the business of

trading and supplying of medical equipments. A1 to A3, the

Management of the Indus Hospitals, ordered one Siemens G-50 Color

Doppler machine through one Mr. K. Chakravarthy, who was a

freelancer as well as an Executive. The cost of the machine was

Rs.4,00,000/-, with tax of 5%, totalling Rs.4,20,000/-. The said

machine was ordered by A1 to A3 on 15.04.2013 and it was delivered

and installed on 16.04.2013. A1 gave a cheque for Rs.3.00 lakhs

dated 01.05.2013 on 17.04.2013, stating that he was giving his

personal cheque, as the account was not yet opened in the name of

Indus Hospitals in Bank of India. On 01.05.2013, A1 to A3 asked the

complainant not to present the said cheque and gave two post-dated

cheques dated 04.05.2013 and 12.05.2013 for Rs.1,50,000/- each

drawn on Bank of India, Malakpet Branch. But, the first cheque was

dishonoured for the reason "Funds Insufficient" twice on 06.05.2013 Dr.GRR,J

and on 09.05.2013. The second cheque was dishonoured with the

reason "Payment stopped by Drawer". The complainant issued a legal

notice, but as the accused did not choose to make the payment and

inturn started threatening the complainant, hence, the complainant

filed the private complaint.

3. Heard the learned counsel for the petitioners. There is no

representation by the learned counsel for the 2nd respondent -

complainant.

4. Learned counsel for the petitioners submitted that the

complainant referred Section 142 of the NI Act in the complaint, but

nothing was mentioned as to how the provisions thereunder were

attracted. Admittedly, the order was placed through one

K.Chakravarthy, the broker, and the machine was delivered to the

hospital. The complainant through the said K.Chakravarthy had to

supply three probes but supplied two probes and also did not supply

the printer. The cost of the machinery was infact paid to

Charkavarthy and when said Chakravarthy was questioned about the

non-supply of the parts and printer, he said that he would arrange for

the same. When the legal notice was received from the complainant,

the hospital authorities questioned him, he stated that he would

discuss the matter with the supplier and would see that no action

would be taken. However, the complainant chose to take action

against the accused instead of Chakravarthy. The accused did not

know who was the complainant, and they neither contacted him nor

dealt with him at any point of time. The petitioners were not the Dr.GRR,J

drawers of the cheque and they never issued the same. As the

complaint did not disclose about the alleged vicarious liability of the

accused in the absence of details in the complaint that the accused was

a Company or Corporation or a Legal Entity and that the other

accused were accordingly concerned with the business of such Legal

Entity, the provisions under Section 141 and 142 of the NI Act could

not be invoked. A1 had absolutely no connection whatsoever in the

affairs of Indus Hospital. The name of A3 was different and such

person was not at all connected. Learned counsel relied upon the

judgment of the Hon'ble Apex Court in Aneeta Hada v. Godfather

Travels and Tours Private Limited1.

5. Perused the record. The complaint was filed under Sections

138 and 142 of NI Act. The complaint would not disclose as to what

is the status of the Indus Hospital, whether it is a Company or a

Corporation. The complaint also would not disclose as to how the

accused were connected with the said hospital, whether they were

Directors, Managing Directors etc. The Indus Hospital was not shown

as an accused. The complaint would not disclose how vicarious

liability could be fastened to the petitioners herein. The Three Judge

Bench of the Hon'ble Apex Court in Aneeta Hada case (supra), held

that:

"Section 141 uses the term "person" and refers it to a company. The company is a juristic person. The concept of corporate criminal liability is attracted to a corporation and company and it is so luminescent from the language employed under Section 141 of the Act. The present enactment is one

2012 (5) SCC 661 Dr.GRR,J

where the company itself and certain categories of officers in certain circumstances are deemed to be guilty of the offence.

The company can have criminal liability fastened on it, and if a group of persons that guide the business of the companies have the criminal intent, that would be imputed to the body corporate. Section 141 of the Act clearly stipulates that when a person which is a company commits an offence, then certain categories of persons in charge, as well as the company would be deemed to be liable for the offence under Section 138. Thus, the statutory intendment is absolutely plain. The provision makes the functionaries and the companies to be liable and that is by deeming fiction. A deeming fiction has its own signification.

53. It is to be borne in mind that Section 141 of the Act is concerned with the offences by the company. It makes the other persons vicariously liable for commission of an offence on the part of the company. As has been stated by us earlier, the vicarious liability gets attracted when the condition precedent laid down in Section 141 of the Act stands satisfied. There can be no dispute that as the liability is penal in nature, a strict construction of the provision would be necessitous and, in a way, the warrant.

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.

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.

6. Hence, considering the above judgment of the Hon'ble Apex

Court, if Indus Hospital is considered as a Company, it has to be

arrayed as an accused. Without arraying it as an accused, the persons

cited as A1 and A3 cannot be held liable without even stating as to

how they are connected to the hospital. A perusal of the cheque would

disclose that it was issued by Sri M. Madhusudhan Reddy, who was Dr.GRR,J

shown as A2, on behalf of Indus Hospitals. This petition is filed by

only Accused Nos.1 and 3, who are not signatories to the said cheques

which are returned / dishonoured. As per Section 138 of the NI Act,

the emphasis has been laid on the fact that the cheque has to be drawn

by a person on the account maintained by him. He must have issued

the cheque in discharge of any debt or other liability. As the