Shiv Om Sharma vs Atul Kumar Singh on 13 September, 2022

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Uttarakhand High Court

Shiv Om Sharma vs Atul Kumar Singh on 13 September, 2022

2. In C-482 Application No. 1624 of 2022, Shiv Om Sharma Vs. Atul Kumar Singh, the challenge as given is to the proceedings of the 2 Criminal Complaint Case No. 4444 of 2019, Vishwanath Paper and Board Limited Vs. Shiv Om Sharma, which were the proceedings drawn under Section 138 of the Negotiable Instruments Act, which was got registered at Police Station, Kashipur, District Udham Singh Nagar, which is presently pending consideration before the Court of Judicial Magistrate/ 2nd Additional Civil Judge, Kashipur, District Udham Singh Nagar.

3. In C-482 Application No. 1627 of 2022, Shiv Om Sharma Vs. Pankaj Gupta, the challenge as given by the applicants is to the proceedings of the Criminal Complaint Case No. 4405 of 2019 Pankaj Gupta Vs Shiv Om Sharma, which was yet again the proceedings drawn under Section 138 of the Negotiable Instruments Act, which was got registered at Police Station, Kashipur, District Udham Singh Nagar, which too is presently pending consideration before the Court of Judicial Magistrate/ 2nd Additional Civil Judge, Kashipur, District Udham Singh Nagar.

4. In C482 Application No. 1628 of 2022 Shiv Om Sharma Vs. Atul Kumar Singh, the challenge as given by the applicant, was to the proceedings of Criminal Complaint Case No. 4446 of 2019, Vishwanath Paper and Board Limited Vs. Shiv Om Sharma, which were yet again the proceedings under Section 138 of the Negotiable Instruments 3 Act, which was got registered at Police Station, Kashipur District Udham Singh Nagar, pending consideration before the Court of Judicial Magistrate /Additional Civil Judge, Kashipur, District Udham Singh Nagar.

5. Lastly, In C-482 Application No. 1633 of 2022, Shiv Om Sharma Vs. Atul Kumar Singh, the present applicant has given a challenge to the proceedings of Criminal Complaint Case No. 4445 of 2019, Vishwanath Paper and Board Limited Vs. Shiv Om Sharma, held under Section 138 of the Negotiable Instruments Act, registered at Police Station, Kashipur, District Udham Singh Nagar, which is presently pending consideration before the Court of Judicial Magistrate/ Additional Civil Judge Kashipur, district Udham Singh Nagar.

6. There are two fold arguments, which are being agitated by the learned counsel for the applicants, while challenging the proceedings of the respective 138 proceedings, ceased before the learned trial Court.

7. The first argument is, which has been even taken as a ground too in the C-482 Applications, is with regard to what bearing would Section 141 of Negotiable Instruments Act, would have to the proceedings which are held under Section 138 of the Negotiable Instruments Act, if the same has 4 been resorted to on a transaction for the offences, for which the company which has been referred to under Section 141, could be dealt with, as to whether at all the proceedings, in the absence of the company being made as a party to the proceedings under Section 138 of the Negotiable Instruments Act, whether the same would, still at all, be tenable or not?

8. The second argument, which has been extended by the learned counsel for the applicant, though without there being any specific ground pleaded in the present C-482 Applications is with regard to the compliance of the provisions contained under Section 202 of the Code of Criminal Procedure in a complaint case on which, the cognizance have been taken.

9. This Court feels it be apt to answer the first question, first. The exception, as carved out in relation to the offences pertaining to the companies, if that is taken into consideration which had necessitated that the person committing an offence under Section 138 of the Negotiable Instruments Act, if it is a company, all its agents of the company, who were involved or engaged at the time of commission of the offence and were responsible to the company for the conduct of business of the company, which has been complained of, shall be deemed to be guilty of 5 offence and shall be liable to be proceeded with under Section 138 of Negotiable Instruments Act.

10. In the explanation given to Section 141 of the Negotiable Instruments Act, the term 'company', which has been defined therein, as to be a Body corporate and includes a Firm or an Association of individuals. This case, in the present C-482 Applications, according to the applicant, as it has been argued would be falling under the explanation given to the word 'company', used under Section 141 of the Act, that it would be inclusive of the Association or a Firm of individuals.

11. The learned counsel for the applicant submits, that if the complaint herein itself is taken into consideration, it was a complaint, which was submitted by M/s Vishwanath Paper and Board Limited, as against the present applicant, who has alleged that the money transaction, which has been referred to in para 2 of the said application, will fall to be within an ambit of Section 138 of the Negotiable Instruments Act as against the applicants only.

12. The C-482 Application No. 1624 of 2022, which relates to the transaction for the period commencing from 1st April 2018 to 2nd September 2019, for a total amount of transaction amounting to Rs. 99,62,207/- for its payment three cheques;

bearing (i) cheque Number 000172 amounting to Rs. 9,40,000/- dated 19th August 2019; (ii) cheque number 000173 amounting to Rs. 11,00,000/- dated 21st August 2019 and (iii) cheque bearing number 000159 amounting to Rs. 79,22,207 dated 3rd September 2019, which were drawn at Katghar Branch, Bank of Baroda, district Moradabad, are said to have been dishonored by the Bank on 4th September 2019. On its dishonor, admittedly a registered Notice dated 11th September 2019, was issued under sub Clause (b) to proviso of Section 138 of the Act, prior to institution of the proceedings under Section 138 of Negotiable Instruments Act on 15th October 2019.

13. In C482 Application No. 1627 of 2022, it would be related to a complaint proceedings which were drawn on 15th October 2019, in relation to the money transactions, which have been referred to in para 2 of the complaint, which related to cheque number 000160 dated 3rd September 2019 for an amount of Rs. 15,00,000/-, which too was issued from the accounts standing at the branch of Bank of Baroda, Katghar Branch, district Moradabad, which on its presentation before the bank, was informed to be dishonored by the order dated 16th September 2019. Consequently, a Notice was issued under sub Clause (b) to the proviso, prior to institution of the proceedings under Section 138 of 7 the Negotiable Instruments Act on 15th October 2019.

14. In C-482 Application No. 1628 of 2022, the genesis of the complaint, which was submitted on 16th September 2019, by the complainant Vishwanath Paper and Board Limited, it was in relation to the money transactions, which have been referred to in para 2 of the said complaint, for the period of transactions between 1st April 2018 to 2nd September 2019; which was in relation to (i) cheque number 000172 for an amount of Rs. 9,40,000/- dated 19th August 2019; (ii) cheque number 000173 for an amount of Rs. 11,00,000/- dated 21st August, 2019 and (iii) cheque number 000159 for an amount of Rs. 79,22,207/- issued on 3rd September 2019 for which prior notices too were issued.

15. In the two proceedings i.e. C-482 Application No. 1624 of 2022 and C-482 Application No. 1628 of 2022, the money transactions, which have been complained of, in relation to the respective cheques are identical and the institution of the complaint too happens to be by M/s Vishwanath Paper and Board Limited.

16. In the complaint, which was instituted and is now a subject matter of consideration in the present C482 Application, it was a dishonored cheque, made 8 by the bank on 4th September 2019, for which the notices were issued on 19th September 2019, which yet again happens to be akin to the respective dates as referred to in C482 Application No. 1624 of 2022. This Court doesn't visualizes any justification or a rationale logic, that when the two C-482 Application No. 1624 of 2022 and C-482 Application No. 1628 of 2022, the complainant was common and when it was particularly in relation to a common banking transactions, for a common amount of money involved in exchanging hands; it was a common notice issued by the complainant; it was a common notice which was issued by the bank informing about the dishonored of the cheques, this Court doesn't see any reason as to why the 2nd C482 Application No. 1628 of 2022 has been preferred on 9th September, 2022, when both of them were filed on same day.

17. Lastly, the applicant has preferred C482 Application No. 1633 of 2022, in relation to the Criminal Complaint Case No. 4445 of 2019, which yet again in para 2, has almost given the details of the same money transaction, which was the subject matter of the other complaints, as referred to in C482 Application Nos. 1624 of 2022 and 1628 of 2022, and in all probability, this Court is of a tentative view, that the different complaint cases must have been filed in relation to the three respective cheques transactions, which were 9 involved and detailed in para 2, necessitating the issuance of three notices under clause (b) to proviso to Section 138 of the Negotiable Instruments Act, prior to Institution of the proceedings under Section 138 of the Negotiable Instruments Act, and that justification stands fortified from the contents of complaint para 3, which finds reference to the different respective cheques, as it has been compositively referred to in each of the C482 Applications in para 2, hence for all practical purposes, these three C482 Application Nos. 1624 of 2022, 1628 of 2022 and 1633 of 2022, engage a common factual consideration, except for C-482 Application No. 1627 of 2022, which relates to a different set of transactions, as already referred to above by this Court.

18. The learned counsel for the applicant has submitted that the respective cognizance orders, which are impugned in the present the C482 Applications would be bad in view of the spirit and purpose of Section 141 of the Negotiable Instruments Act. Section 141 of the Negotiable Instruments Act read as under:-

"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 10 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: 22 [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 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.]"

19. In fact, if the provisions contained under Section 141 of the Negotiable Instruments Act, is taken into consideration in its totality, and with its legal imperative implication, in fact, it creates a constructive composite liability on the person responsible for the conduct of business of the company, which is inclusive of the representative referred to therein who would be responsible for an act or the affairs of the company, which has been explained in Explanation-(a).

20. Learned counsel for the applicant submits that, in that eventuality, where an offence relates to an 11 act of a company, the compliance of Section 141 of the N.I. Act, becomes mandatory in the light of the judgement of the Hon'ble Apex Court, as reported in 2012 (3) Supreme 416, Aneeta Hada Vs. M/s Godfather Travels & Tours Pvt. Ltd., and particularly, the learned counsel for the applicant has particularly referred to para 42 of the said judgment, which is extracted hereunder:-

"42. We have referred to the aforesaid passages only to highlight that there has to be strict observance of the provisions regard being had to the legislative intendment because it deals with penal provisions and a penalty is not to be imposed affecting the rights of persons whether juristic entities or individuals, unless they are arrayed as accused. It is to be kept in mind that the power of punishment is vested in the legislature and that is absolute in Section 141 of the Act which clearly speaks of commission of offence by the company. The learned counsel for the respondents have vehemently urged that the use of the term "as well as" in the Section is of immense significance and, in its tentacle, it brings in the company as well as the director and/or other officers who are responsible for the acts of the company and, therefore, a prosecution against the directors or other officers is tenable even if the company is not arraigned as an accused. The words "as well as" have to be understood in the context. In Reserve Bank of India v. Peerless General Finance and Investment Co. Ltd. and others[44] it has been laid down that the entire statute must be first read as a whole, then section by section, clause by clause, phrase by phrase and word by word. The same principle has been reiterated in Deewan Singh and others v. Rajendra Prasad Ardevi and others[45] and Sarabjit Rick Singh v. Union of India[46]. 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 12 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."

21. The said para has to be read in the context that the legislative purpose of Section 141 of the N.I. Act, which intends to be attracted for the purposes of taking cognizance to offence under Section 138 of the N.I. Act, which is a penal provision it rather provides that all instrumentalities of the company are required to be impleaded as a party to the proceedings under Section 138 of the Negotiable Instruments Act.

22. There cannot be any doubt with regard to the principles vivid laid down by the Hon'ble Apex Court in para 42 of the aforesaid judgment, which has been subsequently even followed by the co-ordinate Bench of the Punjab and Haryana High Court, in Sardar Bhupender Singh Vs. M/s Green Feeds through its partner Vipin Kumar, and particularly the reference of which has been made by the learned counsel for the applicant is, that the observations which have been made in para 16 of the said judgement would be read in the context of the ratios of the Hon'ble Apex Court. The relevant para 16 is extracted hereunder:-

"16. In coming to the above view, reliance is made upon para nos. 42 and 43, of the verdict rendered by Hon'ble Apex Court in case titled as Aneeta Hada Vs. M/s Godfather Travels and Tours Pvt. Ltd., to which Criminal Appeal No. 838 of 2008 is assigned, paras whereof are extracted hereinafter.

42. We have referred to the aforesaid passages only to highlight that there has to be strict observance of the provisions regard being had to the legislative intendment because it deals with penal provisions and a penalty is not to be imposed affecting the rights of persons whether juristic entities or individuals, unless they are arrayed as accused. It is to be kept in mind that the power of punishment is vested in the legislature and that is absolute in Section 141 of the Act which clearly speaks of commission of offence by the company. The learned counsel for the respondents have vehemently urged that the use of the term "as well as" in the Section is of immense significance and, in its tentacle, it brings in the company as well as the director and/or other officers who are responsible for the acts of the company and, therefore, a prosecution against the directors or other officers is tenable even if the company is not arraigned as an accused. The words "as well as" have to be understood in the context. In Reserve Bank of India v. Peerless General Finance and Investment Co. Ltd. and others, (1987) 1 SCC 424 it has been laid down that the entire statute must be first read as a whole, then section by section, clause by clause, phrase by phrase and word by word. The same principle has been reiterated in Deewan Singh and others v. Rajendra Prasad Ardevi and others, (2007) 10 SCC 528 and Sarabjit Rick Singh v. Union of India, (2008) 2 SCC 417. 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 6 of 7 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.

43. In view of our aforesaid analysis, we arrive at the irresistible conclusion that for maintaining the prosecution under Section 141 of the Act, arraigning 14 of a company as an accused is imperative. The other categories of offenders can only be brought in the dragnet 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 (supra) which is a three-Judge Bench decision. Thus, the view expressed in Sheoratan Agarwal (supra) does not correctly lay down the law and, accordingly, is hereby overruled. The decision in Anil Hada (supra) is overruled with the qualifier as stated in paragraph."

23. The issue would be, that as per the opinion of this Court, as to whether, on the face of it, if at all Section 141 would have any bearing on the sustainability of the proceedings under Section 138 of the Negotiable Instruments Act, whether that aspect would call for consideration of its impact, after determination of respective factual backdrops of the each of the cases or not which could or rather should be left open to be scrutinized in the exercise of inherent jurisdiction under Section 482 of the Code of Criminal Procedure by the High Courts?

24. There are two reasons; to answer the aforesaid view of this Court. One, that each set of transaction which is the subject matter of C482 Application, its veracity! its implication! the fixation of its liability, whether it relates to an individual agent of the company, or, the company itself, and whether all the parties who were instrumental in the process of issuance of cheques, which has been later on dishonored by the banking company, would be a subject matter which calls for a factual appreciation, before deriving a conclusion as to whether at all 15 Section 141 has been complied with or not and its scope of applicability in respect to each of the transactions.

25. Secondly, the proceedings under Section 138 of the Negotiable Instruments Act, itself if at all it is to be vitiated due to non compliance of Section 141 as per opinion of this Court, would always be, dependent upon establishment of fact before the Court, who is ceased with the trial and not merely on the pretext of plea of non-compliance of the provisions contained under Section 141 of the Negotiable Instruments Act, which requires factual appreciation, on consideration of evidence, hence, according to the opinion of this Court, is only a procedural provision not a substantive provision and the conclusion in relation to it could only be derived after factually dealing with each of the cases, and its circumstances.

26. The determination altogether to a procedural provision, which had substantively effects a party to the proceedings against whom the proceedings under Section 138 has been drawn, would still be a subject matter to be left open to be decided under Section 482 of the Code of Criminal Procedure, by the Courts after appreciation of evidence and its effect and bearing on each of the transactions in relation to which the cheques have been dishonored.

27. The ratio of the Hon'ble Apex Court doesn't deals with that situation as to whether, if there at all happens to be any anomaly of bearing of Section 141, it could at all be made as a subject matter of scrutiny under Section 482 of the Code of Criminal Procedure in the absence of the competence being vested, with the Court under Section 482 to scrutinize the evidence and the set of circumstances, under which the transaction has chanced ultimately resulting to dishonor of cheques.

28. In that eventuality, this Court is of the view, that the effect of interplay of Section 138 or Section 141 of the N.I. Act, cannot be independent in its interpretation and applicability by the Courts, without factually going into the impact, which each transaction would have had carried in relation to the complaints under Section 138 of the Negotiable Instruments Act. All these issues as to what bearing, in relation to the respective proceedings of a complaint would have whether at all the parties as it has been contemplated under Section 141, is required to be made at all as a party or not, could only be possible by the trial Court, and that too only after giving an opportunity to the complainant to substantiate his stand taken in the complaint, as to whether it was an exclusive transaction or a transaction on behalf of the company, who was necessitated to be required to be impleaded.

29. In that eventuality, this Court is of the view, that the scope and its applicability of the aforesaid two ratios of the Hon'ble Apex Court; as well as that of the Punjab and Haryana High Court, cannot be isolatedely be applied to be decided in C-482 proceedings, without enabling the complainant to substantiate his stand by establishing, a fact about the allegations or the transactions referred to in each of the complaints and circumstances under which it has been ventured. In that eventuality, the subject as to whether at all the provisions contained under Section 141 of the Negotiable Instruments Act, will at all have a bearing over the principal proceedings, it cannot be permitted to be camouflaged by interference to be made under C482 Application, particularly, as per the opinion of this Court, when Section 141 uses the word "was responsible to the company". When the legislature has used the word "was responsible to the company", for a transaction under Section 141 of the N.I. Act, the aspect of fixation of responsibility will always be a factor, which is to be determined only based on appreciation of evidence and not by the proceedings held under inherent exercise of powers under C482 Application, which doesn't have the scope of exercise of powers of appreciating the evidence by this Court to come to a conclusion over the controversy raised.

30. In that eventuality, since it is still a subject matter which has yet to be gone into by the Court, which is ceased with the proceedings under Section 138, and particularly in the context of the principles which had been relied by the learned counsel for the applicant in the light of the Supreme Court's judgment, has not yet been permitted to be embarked upon the implications of Section 141 and it's correlated applicability in a proceedings under Section 482 of the Code of Criminal Procedure, leaving all the issues left open to be decided, when the applicant response to the summon issued, in the proceedings under Section 138 of the Negotiable Instruments Act, I am not inclined to venture into as to whether at all the complaints satisfied the conditions of Section 141 or not which in fact has to be decided by the trial Court itself, after formulation of point of determination on the aspect, and effect of Section 141 of the Negotiable Instruments Act.

31. Further, to meet up the argument, though in the absence of there being any pleading, which has orally been argued by the learned counsel for the applicant, about the implications of Section 202 of the Code of Criminal Procedure, owing to the place of residence as given in their respective complaints, which was instituted before the Court of Judicial Magistrate. If the very finding which has been recorded in the cognizance order is taken into consideration, this Court is of the view, that the 19 counsel for the applicant has rightly not impleaded about the effect of Section 202 of the Code of Criminal Procedure, for the reason being, that the impugned summoning order itself specifically observes, which deciphers that for satisfying the conditions of Section 202 of the CrPC, which provides for postponement of an issuance of process, on the receipt of the compliant prior to taking its cognizance. The language used under Section 202 of the CrPC, is still wide enough to exercise the discretion by the Court issuing the cognizance order, to assign reasons to satisfy the conditions of Section 202 of the Code of Criminal Procedure.

32. In the instant case, the observations, which has been made in each of the respective notices, it refers to that rather Section 202 Cr.PC, stood complied with owing to the appreciation of evidence pertaining to the original cheque, returning memo, the notice, the copy of the receipt which was placed on record, and other material referred to therein, which were taken into consideration by the Court as to be the basis for taking cognizance of the offence, because the scope of postponement of issuance of process to a person, who is a resident of outside the territorial jurisdiction of the Court ceased with the proceedings, is preceded by a word 'if he thinks fit'.

33. The language of Section 202 of the CrPC, where it has left open with the Court with the prerogative to exercise its wisdom depending upon the circumstances of each of the case, this Court is of the view, that the impugned summoning order, since the Court has not isolatedely issued the summoning order without referring to the application of its mind in the context of the provisions contained under Section 202 of the Code of Criminal Procedure, prior to issuance of the processes to the residents of the outside territorial jurisdiction of the Court, even though without pleading or any ground having being taken, this Court is of the tentative view, that Section 202 of the Code of Criminal Procedure, stood complied with, owing to the material which was considered by the Court, because the consideration of the material itself would engage the Court's wisdom and its analysis, for the purpose for which Section 202 of the Code of Criminal Procedure has been procedurally prescribed under the CrPC, because the purpose of Section 202 is only to enquire an aspect, which is wide enough, that the enquiry could be conducted by the Court itself or through an investigation to be made by any officer or by any such person to whom the Court think necessary to decide.

34. Meaning thereby, Section 202 of the CrPC does not create any absolute impediment, as such for the 21 Court to apply its mind itself, prior to taking of the cognizance in relation to the offences which relates to the accused person, who is a residence of the outside territorial jurisdiction of the Court.

35. In view of the aforesaid distinction, and with all due reverence in my command, I think since the aspect of the implications of Section 141 of the N.I. Act, qua the proceedings under Section 482 of CrPC, has not yet been dealt with in either of the Authorities to bring a case within the framework of Section 482 of the Code of Criminal Procedure, and since as it has already been observed, it will be a subject matter which is required to be determined on appreciation of evidence, this Court is not inclined to interfere in the C-482 Applications, and the same are, accordingly, dismissed.

36. Let a copy of this judgment be placed in the order sheet of the connected C-482 Applications.

(Sharad Kumar Sharma, J.) 13.09.2022 Mahinder/

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Uttarakhand High Court