Calcutta High Court (Appellete Side)
Sheetal Amit Patil & Anr vs The State Of West Bengal on 11 June, 2021
Author: Jay Sengupta
Bench: Jay Sengupta
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IN THE HIGH COURT AT CALCUTTA
CRIMINAL REVISIONAL JURISDICTION
Present:
THE HON'BLE JUSTICE JAY SENGUPTA
C.R.R. 2295 Of 2019
Sheetal Amit Patil & Anr.
Versus
The State of West Bengal
For the Petitioners : Mr. Ujjwal Gandhi
Mr. Rishi Bhuta
Mr. Gunjan Thakkar
For the Opposite Party No. 2 : Mr. Dipanjan Dutt
Ms. Trini Joarder
Lastly heard on : 17.03.2021
Judgment on : 11.06.2021
JAY SENGUPTA, J:
1. This is an application praying for quashing of a proceeding in a
complaint case being Case No. CC-3444 of 2016 under Section 138 read
with Section 141 of the Negotiable Instruments Act presently pending before
the learned Judicial Magistrate, 4th Court, Alipore, South 24 Parganas.
2. The petitioner nos. 1 and 2 are the accused nos. 8 and 9, respectively
before the learned Trial Court while the opposite party is the complainant in
this case. On 19.08.2016 the opposite party filed a petition of complaint
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against the petitioners and other co-accused including the partnership firm
in which the present petitioners were also partners. On 09.09.2016, process
was issued against the present petitioners and the other co-accused.
3. Learned counsel appearing on behalf of the petitioners submitted as
follows. First, the petitioners were neither signatories to the cheque nor
parties to the agreements in question. Secondly, there were incomplete
averments in the petition of complaint so far as the roles of the present
petitioners were concerned. In the petition of complaint it was merely
averred that all the accused were the partners at the accused partnership
firm looking after its day to day business affairs and responsible for each
and every business conduct at the relevant time when the offence was
committed. However, this fell sort of the specific averments about the role of
the accused that had to be made in a petition of complaint as per the ratio
of the Hon'ble Apex Court as laid down in S.M.S. Pharmaceuticals Limited
vs. Neeta Bhalla & Anr., (2005) 8 SCC 89. Merely being a partner in a firm
would not make the petitioners accused in this case. On this, reliance was
further placed on the decisions of the Hon'ble Apex Court in National Small
Industries Corporation Limited vs. Harmeet Singh Paintal & Anr., (2010) 3
SCC 330, Pooja Ravindra Devidasani vs. State of Maharashtra, (2014) 16
SCC 1 and Saroj Kumar Poddar vs. State (NCT of Delhi) & Anr., 2007 Cr.L.J.
1419. On this point, reliance was also placed on the decisions of the Hon'ble
Delhi High Court in Shivam Minerals Limited vs. State, AIR Online 2019
DEL 1257, Shyam Narayan Mishra & Ors. vs. State, 2014 (1) ADR 750, the
Hon'ble Calcutta High Court in Srabonti Ganguli vs. IDBI, 2014 ACD 629
(Cal), the Hon'ble Chhattisgarh High Court in Gita Singh & Ors. vs.
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Jaiprakash, CDJ 2019 CH 8C100, the Hon'ble Jharkhand High Court in
Puranmal Agarwal & Ors. vs. State of Jharkhand & Anr. in CRMP No. 804 of
2012, the Hon'ble Gujarat High Court in Anil Kumar vs. Abhisekh
Enterprise & Anr., 2018 ACD 121 (Guj) and the Hon'ble Kerala High Court
in P. Rajagopalan vs. P.C. Jose & Anr., 2017 ACD 59 (KER). Lastly, it was
contended that there was complete non-compliance of Section 202 of the
Code inasmuch as no enquiry was undertaken despite the fact that the
accused petitioners were admittedly staying beyond the territorial
jurisdiction of the learned Trial Court. The learned Trial Court only
examined the complainant under Section 200 of the Code and did not direct
an enquiry as contemplated under the amended provision of Section 202 of
the Code. The enquiry as contemplated under Section 202 of the Code was
mandatory. On this, reliance was placed on the decisions of the Hon'ble
Apex Court in the cases of K.T. Joseph vs. State of Kerala & Anr, (2009) 15
SCC 199, National Bank of Oman vs. Barakara Abdul Aziz & Anr, (2013) 2
SCC 488, Abhijit Pawar vs. Hemant Madhukar Nimbalkar, AIR 2017 SC 267
and Birla Corporation Limited vs. Adventz Investments and Holdings
Limited, 2019 SCC On-Line SC 682. It was contended that Section 202 was
not only mandatory in respect of Penal Code offences, but also in respect of
offences under Section 138 of the Negotiable Instruments Act. Disputing the
ratio laid down by the Division Bench of the Hon'ble High Court at Calcutta
in S.S. Binu vs. State of West Bengal, 2018 SCC On-Line (Cal) 1741, it was
contended that the affidavit of evidence, as contemplated under Section 145
of the Negotiable Instruments Act could not be a surrogate for an enquiry
under Section 202 of the Code. Reliance was further placed on the decision
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of the Hon'ble Bombay High Court in Parth Bhadresh Mehta vs. State of
Maharashtra, 2019 SCC OnLine Bom 405, the Hon'ble Calcutta High Court
in Anu Mehta vs. Gunmala Sales Private Limited, 2013 ACD 1113 (Cal), the
Hon'ble Karnataka High Court in Babu Rao Chinchasur vs. Anjana
Shathaveer in Criminal Petition No. 7269 of 2015 and of the Hon'ble Gujarat
High Court in Vir Retail Pvt. Ltd. vs. State of Gujarat & Anr., 2014 ACD 537
(GUJ). In view of these, the impugned proceeding ought to be quashed so far
as the present petitioners were concerned.
4. Learned counsel appearing on behalf of the complainant/opposite
party no. 2 submitted as follows. The case arose out of the dishonour of a
cheque for a sum of Rs. 3 Crores issued by the accused towards part
discharge of their liability to the complainant company. There was a clear
averment made at paragraph 3 of the petition of complaint that all the
accused including the present petitioners were partners of the said firm and
were looking after its day-to-day business for each and every business
conduct at the relevant time when the offence was committed. As such, it
satisfied the requirement of the decisions of the Hon'ble Apex Court that in
order to arraign the directors of an accused company or the partners of an
accused firm as accused in a case for dishonour of a cheque, it had to be
averred that the said persons were in charge of and responsible for the
concerned for the day-to-day running of its business. There were no magic
words which were to be used in showing the involvement of the partners or
directors. In the facts of the present case, sufficient averments were made in
the petition of complaint to warrant the addition of the petitioners as
accused. Looking after its day-to-day business affairs was equivalent to the
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phrase "in charge of". On the point that no magic words were required for
satisfying the requirement, reliance was placed on the decisions of the
Hon'ble Apex Court in K.P.G. Nair vs. Jindal Menthol India Limited (2001)
10 SCC 218, Monaben Ketanbhai Shah vs. State of Gujarat (2004) 7 SCC
15. On the question that averments made in the petition of complaint in the
present case constituted requisite averments, reliance was placed on the
decisions of the Hon'ble Apex Court in Paresh P. Rajda vs. State of
Maharashtra, (2008) 7 SCC 442, Rallis India Limited vs. Poduru Vidya
Bhusan, (2011) 13 SCC 88, T.N. News Print and Papers Ltd. vs. D.
Karunakar, (2016) 6 SCC 78, A.R. Radha Krishna vs. Dasari Deepthi (2019)
15 SCC 550. On this, reliance was also placed on the decision of the Hon'ble
Calcutta High Court in Ashwini Kumar Singh vs. Panchami Stone Quarry,
(2019), SCC OnLine Cal 4491 and Sharad Madhav Kulkarni vs. Midaas
Construction Company Private Limited, 2019 SCC OnLine Cal 4492. On the
question that the decision in S.M.S. Pharmaceuticals Limited (supra) did not
prescribe any specific form of the basic averments, reliance was placed on
the decision of the Hon'ble Apex Court in the case of A.K. Singhania vs.
Gujarat State Fertilizer Company limited, (2013) 16 SCC 630. Now, on the
question of compliance of Section 202 of the Code, the authoritative
pronouncement by an Hon'ble Division Bench of this Court in S.S. Binu vs.
State of West Bengal, (2018) SCC OnLine Cal 1741, inter alia, laid down that
in cases falling under Section 138 read with Section 141 of the Negotiable
Instruments Act, the learned Magistrate was not mandatorily required to
comply with provisions of Section 202(1) before issuing summons to an
accused residing outside the territorial jurisdiction of the Learned
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Magistrate concerned. This decision of a Division Bench being binding on
this Court, the revisional application of the petitioner was sure to fail. On
the question of binding nature of precedents, reliance was placed on
Tribhuvandas Purshottamdas Thakur vs. Ratilal Motilal Patel, (1968) 1 SCC
455 and Commissioner of Income Tax vs. Thana Electricity Supply Limited,
(1993) SCC OnLine Bom 591. The decisions relied upon by the petitioner in
Udai Shankar Awasthi (supra), Abhijit Pawar (supra), National Bank of
Oman (supra) had all been considered in S.S. Binu (supra). So far as the
ratio laid down in the case of K.T. Joseph was concerned, there was nothing
to indicate its applicability to a proceeding under the Negotiable Instruments
Act. Similarly, the decision in Birla Corporation Ltd. (supra) was also
distinguishable on facts as the same concerned Penal Code offences. The
decision in K.S. Joseph (supra) too did not pronounce as to whether Section
202 of the Code was mandatory or not. Being partners of the accused firm,
in charge of and responsible its business at the material point, the
petitioners would have to face the impugned proceeding under Section 138
read with Section 141 of the Negotiable Instruments Act.
5. I heard the submissions of the learned counsels appearing on behalf
of the accused petitioners and the complainant/opposite party no.2 and
perused the revision petition, the affidavits and the written notes filed.
6. First, it is an admitted position that the petitioners were not the
signatories to the cheque in question. However, they were the partners in
the co-accused partnership firm.
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Whether the averments made in the petition of complaint are sufficient
to arraign the present petitioners as accused:
7. It is trite law that merely being a partner in a firm would not make the
petitioners accused in a case for dishonour of cheque issued by the said
firm. In view of the decision of the Hon'ble Apex Court in SMS
Pharmaceuticals Limited (supra) and the subsequent decisions pronounced
in this regard, necessary averments are to be made in the petition of
complaint that the petitioners were in charge of and responsible to the
concerned artificial entity for the daily running of its business.
8. In SMS Pharmaceuticals Case (supra), a Three Judges' Bench of the
Hon'ble Apex Court laid down as under-
"19. In view of the above discussion, our answers to the questions
posed in the reference are as under:
(a) It is necessary to specifically aver in a complaint under Section
141 that at the time the offence was committed, the person accused
was in charge of, and responsible for the conduct of business of the
company. This averment is an essential requirement of Section 141
and has to be made in a complaint. Without this averment being
made in a complaint, the requirements of Section 141 cannot be said
to be satisfied.
(b) The answer to the question posed in sub-para (b) has to be in the
negative. Merely being a director of a company is not sufficient to
make the person liable under Section 141 of the Act. A director in a
company cannot be deemed to be in charge of and responsible to the
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company for the conduct of its business. The requirement of Section
141 is that the person sought to be made liable should be in charge
of and responsible for the conduct of the business of the company at
the relevant time. This has to be averred as a fact as there is no
deemed liability of a director in such cases.
(c) The answer to Question (c) has to be in the affirmative. The
question notes that the managing director or joint managing director
would be admittedly in charge of the company and responsible to the
company for the conduct of its business. When that is so, holders of
such positions in a company become liable under Section 141 of the
Act. By virtue of the office they hold as managing director or joint
managing director, these persons are in charge of and responsible for
the conduct of business of the company. Therefore, they get covered
under Section 141. So far as the signatory of a cheque which is
dishonoured is concerned, he is clearly responsible for the
incriminating act and will be covered under sub-section (2) of Section
141."
9. However, it has also been made sufficiently clear by the Hon'ble
Supreme Court in A.K. Singhania (supra) that no specific form of the
required averments is prescribed. There is no necessity to reproduce the
exact words 'in charge of' and 'responsible to'. Actually, it has to be seen
whether in the facts of a particular case, sufficient averments of facts were
made in the petition of complaint so as to warrant arraignment of the
partners, being in charge of or responsible to the firm, as accused in a
proceeding against a partnership firm.
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10. In this regard, the expression used in SMS Pharmaceuticals Ltd. Case
(supra) at para 19(b) that "This has to be averred as a fact.........." assumes
immense significance.
11. It is evidently pertinent to refer to the relevant portions of the decision
in A.K. Singhania's Case (supra), as quoted below-
"14. From a plain reading of the aforesaid provision it is evident that
every person who at the time the offence was committed was in
charge of and responsible to the company shall be deemed to be
guilty of the offence under Section 138 of the Act. In the face of it,
will it be necessary to specifically state in the complaint that the
person accused was in charge of and responsible for the conduct of
the business of the company? In our opinion, in the case of offence
by the company, to bring its Directors within the mischief of Section
138 of the Act, it shall be necessary to allege that they were in charge
of and responsible to the conduct of the business of the company. It
is a necessary ingredient which would be sufficient to proceed
against such Directors. However, we may add that as no particular
form is prescribed, it may not be necessary to reproduce the words of
the section. If reading of the complaint shows and the substance of
accusation discloses necessary averments, that would be sufficient to
proceed against such of the Directors and no particular form is
necessary. However, it may not be necessary to allege and prove that,
in fact, such of the Directors have any specific role in respect of the
transaction leading to issuance of cheque. Section 141 of the Act
makes the Directors in charge of and responsible to the company "for
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the conduct of the business of the company" within the mischief of
Section 138 of the Act and not particular business for which the
cheque was issued. We cannot read more than what has been
mandated in Section 141 of the Act."
12. In the present case, averments were made at paragraph 3 of the
petition of complaint that all the accused including the present petitioners
were partners of the said firm looking after its day to day business affairs
and responsible for each and every business conducts at the relevant time
when the offence was committed. Looking after its day to day business
affairs as partners and responsible for each and every business conducts of
the firm at the relevant time are clearly equivalent to being in charge of and
responsible to the concern for the conduct of its business.
13. Therefore, after going through the petition of complaint and reading it
as a whole, this Court is of the view that sufficient averments of facts were
made in the instant petition of complaint so as to arraign the present
petitioners as accused in this case.
Compliance of Section 202 of the Code of Criminal Procedure:
14. It appears that no enquiry, in clear terms, was undertaken by the
learned Trial Court as per the amended provision of Section 202 of the Code
despite the fact that the accused petitioners were admittedly staying beyond
the territorial jurisdiction of the learned Trial Court.
15. The question whether Section 202 of the Code is mandatory in respect
of a proceeding under Section 138 of the Negotiable Instruments Act or not
is now well settled. In Re: Expeditious trial of cases under Section 138 of
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N.I. Act, 1881, reported in 2021 SCC Online SC 325, a Constitution Bench
of the Hon'ble Apex Court, inter alia, held as follows:
"24. The upshot of the above discussion leads us to the following
conclusions:
................
2) Inquiry shall be conducted on receipt of complaints under Section 138 of the Act to arrive at sufficient grounds to proceed against the accused, when such accused resides beyond the territorial jurisdiction of the Court.
3) For the conduct of inquiry under Section 202 of the Code, evidence of witnesses on behalf of the complainant shall be permitted to be taken on affidavit. In suitable cases, the Magistrate can restrict the inquiry to examination of documents without insisting for examination of witnesses.
..................."
16. Therefore, as the law requires that an enquiry be held under Section 202 of the Code if the accused stayed outside the Court's jurisdiction, such enquiry has to be undertaken in clear terms and the Learned Trial Court, after making such enquiry whether by taking evidence on affidavit or by restricting the enquiry to examination of documents or not, is required to decide whether there are sufficient grounds to issue process against the accused. In the present case, the learned Trial Court did not do so. In view of the same, the order issuing process and the subsequent orders passed by 12 the learned Trial Court in the present case ought to be set aside and the matter remanded back so that the learned Trial Court can proceed afresh from the stage of enquiry under Section 202 of the Code.
17. For the reasons recorded earlier regarding the averments made in the petition of complaint for arraigning the present petitioners as accused, this Court is satisfied with the said averments. Therefore, the prayer of the petitioners for quashing of the proceeding is refused.
18. However, since no mandatory enquiry was undertaken in clear terms under Section 202 of the Code even through the accused resided beyond the territorial jurisdiction of the learned Trial Court, the order issuing process and the subsequent orders passed by the learned Trial Court are set aside and the matter is remanded back to the learned Trial Court for proceeding afresh from the stage of enquiry as contemplated under Section 202 of the Code.
19. As the proceeding has remained pending for quite long, the learned Trial Court is requested to conclude the proceeding as expeditiously as possible without granting any unnecessary adjournment to any of the parties.
20. With these observations, the revisional application is disposed of.
21. However, there shall be no order as to costs.
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22. Urgent Photostat certified copies of this judgment may be delivered to the learned Advocates for the parties, if applied for, upon compliance of all formalities.
(Jay Sengupta, J) P. Adak