Delhi District Court
M/S. Trunks & Roots vs Raj Profin Pvt. Ltd on 25 July, 2022
IN THE COURT OF SH. SANJAY SHARMA-II : ADDL. SESSIONS JUDGE-03,
(CENTRAL): TIS HAZARI COURTS, DELHI
Criminal Revision No. 297/2022
CNR No.: DLCT01-008495-2022
1. M/s. Trunks & Roots
Through its: Partners
2. Anil Aggarwal, Partner
3. Aalekh Aggarwal, Partner
4. Sheershak Agarwal
All Residents of: S-206
Panchsheel Park, New Delhi-110017
..... Petitioners
VERSUS
Raj Profin Pvt. Ltd.
Through its Managing Director: Surender Lal Jain
Office: 125, Veer Nagar, Jain Colony
Delhi-110007
..... Respondent
Date of Institution : 30.05.2022
Date of Arguments : 23.07.2022
Date of Judgment : 25.07.2022
JUDGMENT
1. The criminal revision petition under Section 397 of 'The Code of Criminal Procedure, 1973' (In short 'Cr.P.C.') is directed against order dated 13.11.2018 (In short 'the impugned order') arising from complaint case under Section 138 of 'The Negotiable Instruments Act, 1881' (In short 'NI Act') vide CC No. 18163/2018 titled as 'Raj Profin Pvt. Ltd. vs. Trunks & Roots & Ors.' whereby Ld. MM-01 (N.I. Act), Central, Tis Hazari Courts, Delhi (In short 'the trial Court') summoned the petitioners.
Crl. Rev. No. 297/2022 M/s. Trunks & Roots & Ors. vs. Raj Profin Pvt. Ltd. Page No. 1 of 11 BRIEF FACTS:
2. The respondent (Hereinafter referred to as 'the complainant') instituted a complaint case, through its managing director, namely, Surender Lal Jain, under Section 138 NI Act on averments that M/s. Trunks & Roots is a partnership firm. The petitioner No. 2 to 4 are partners of the said firm. On being approached, the complainant advanced a friendly loan of Rs.
25,00,000/- to the petitioners, vide cheque, on interest @ 12% per annum, on 22.04.2014. The petitioners paid interest on the loan amount till 30.07.2017. Thereafter, the petitioners neither paid principal amount nor interest thereon. In discharge of their liability, the petitioner No. 2 issued Cheque No. 197266 dated 13.06.2018 in the sum of Rs. 25,00,000/- drawn on 'J & K Bank, A-6, 7, Shopping Mall, Arjun Marg, DLF, Phase-I, Gurgaon-122 002' (In short 'the said cheque') in favour of the complainant. On presentation, the said cheque was returned unpaid for the reason 'Refer to drawer' vide memo dated 02.08.2018. The complainant sent demand notice dated 24.08.2018 to the petitioners through speed post. The petitioners were served with the demand notice on 29.08.2018, as per tracking report. The petitioners failed to make payment of cheque amount within statutory period despite receipt of demand notice. Thereafter, the complainant filed the complaint case under Section 138 NI Act.
Crl. Rev. No. 297/2022 M/s. Trunks & Roots & Ors. vs. Raj Profin Pvt. Ltd. Page No. 2 of 11 THE IMPUGNED ORDER :
3. The trial Court, vide impugned order, summoned the petitioners, as under:
"Complaint, affidavit of evidence and documents considered in light of above cited judgment, in opinion of this Court, there is no need to examine the complainant's evidence for purpose of issuance of process. In view of complaint, documents produced and verification in the form of affidavit of evidence, there are sufficient grounds for proceeding further against accused No. 01 (partnership firm) and accused No. 02 to 04 (partners) also as per judgments of Hon'ble Supreme Court of India cited as (2015) 1 Supreme Court Cases 103 and (2016) SCC Online SC 304 as conditions for same are fulfilled.
Hence, issue summons against the accused persons on P.F./R.C./Approved Courier for 12.08.2019. The complainant can provide email address of accused person(s), if any for service. The service of summons through whatsapp message(s) and text message(s) is also permitted provided the complainant files an affidavit to the effect that number on which the said message(s) are sent is/are of the accused person(s) and further subject to filing of report of service. The process server is directed to serve the summons by way of affixation, if premises found closed or same could not be served personally or on any adult male member. An endorsement be also made that if application for compounding at first or second hearing is made the court may pass appropriate orders at the earlier as per judgment of Damodar S. Prabhu cited as (2010) 5 SCC 663. Complainant is directed to file PF and take steps within 30 days including providing copy(ies) of complaint otherwise the complaint may be dismissed U/s. 204(4) Cr.P.C. Dasti summons also permitted for service."
Crl. Rev. No. 297/2022 M/s. Trunks & Roots & Ors. vs. Raj Profin Pvt. Ltd. Page No. 3 of 11
4. Feeling aggrieved and dissatisfied with the impugned order, the petitioners preferred the criminal revision petition.
5. As regards contention that there was no legally enforceable debt against the petitioners on the date of filing of the complaint, it can be stated that there is presumption under Section 118 and 139 NI Act regarding existence of a legally enforceable debt.
6. In Rangappa vs. Sri Mohan, (2010) 11 SCC 441, Hon'ble Supreme Court of India held, as under::
"26. In light of these extracts, we are in agreement with the respondent claimant that the presumption mandated by Section 139 of the Act does indeed include the existence of a legally enforceable debt or liability. To that extent, the impugned observations in Krishna Janardhan Bhat may not be correct....."
7. As regards contention that the said cheque, which was issued for payment of a time barred debt, cannot be a subject matter of a complaint under Section 138 NI Act, it can be stated that maintainability of the complaint is inferred from averments made in the complaint. It is the case of the complainant that the petitioners paid interest till 30.07.2017 and therefore, it cannot be said that right of the complainant for recovery of debt was barred by time. Moreover, it is a question of fact which can only be decided at the time of trial. In Smt. Tarun Samdarshi vs. State (NCT of Delhi) & Anr., Crl. M.C. 4123/2016 decided on 16.01.2019, Hon'ble High Court of Delhi held that it is for the drawer to show at the trial that the amount was not due.
Crl. Rev. No. 297/2022 M/s. Trunks & Roots & Ors. vs. Raj Profin Pvt. Ltd. Page No. 4 of 11
8. As regards contention that the said cheque bears signature of Rajender Aggarwal who expired on 02.09.2016 and as such, the complainant misrepresented that the said cheque was signed by the petitioner No. 2 in June, 2018, it can be stated that this is also a question of fact. The said cheque was not returned unpaid for the reason that the said cheque did not bear signature of an authorized signatory of the petitioner No. 1.
9. As regards contention that the petitioner No. 3 and 4 were admitted as partners in 2016 and the transaction in question pertains to April, 2014 and therefore, they could not be impleaded, it can be stated that determinative factor is not the date of transaction but the date of issuance of the said cheque. Admittedly, the petitioner No. 3 and 4 were partners on the date of issuance of the said cheque and they cannot contend that the complaint should be quashed against them on this ground.
10. This Court find force in contention of Ld. Counsel for the petitioners that there is no averment in the complaint that the petitioner No. 3 and 4 were in charge of, and were responsible to the petitioner No. 1 for the conduct of the business of the firm, as well as the firm.
11. Ld. Counsel for the complainant relied on judgment in Sunil Todi & Ors. vs. State of Gujarat & Anr., Criminal Appeal No. 1446/2021 decided on 03.12.2021 to contend that determination of whether a partner was in charge of and responsible for the affairs of the firm is a matter of trial.
Crl. Rev. No. 297/2022 M/s. Trunks & Roots & Ors. vs. Raj Profin Pvt. Ltd. Page No. 5 of 11
12. In SMS Pharmaceuticals Ltd. vs. Neeta Bhalla & Anr., (2005) 8 SCC 89, Hon'ble Supreme Court of India held 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 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."
Crl. Rev. No. 297/2022 M/s. Trunks & Roots & Ors. vs. Raj Profin Pvt. Ltd. Page No. 6 of 11
13. Therefore, the complaint must contain basic averment that the petitioner No. 3 and 4 were in charge of and responsible to the firm for the conduct of its business at the time of issuance of the said cheque. However, this averment is not present in the present complaint. Relevant para of the complaint is as under:
"13. That the aforesaid cheque of Rs. 25 lacs dated 13.06.2018 bearing No. 197266 was issued by accused / respondent No. 2 towards the discharge of part legal debt liability which accused / respondents owe to the complainant company as the complainant company has to also receive pending interest on the loan amount from the accused / respondent. The accused / respondents No. 3 and 4 being Partners of accused / respondent No. 1 are incharge and responsible for day to day affairs of the firm and it was abundant and foremost duty of the accused / respondent No. 3 and 4 to ensure that aforesaid cheque on presentation is honoured by the bankers of accused / respondent No. 1. The above mentioned cheque has been dishonoured due to the neglect, omission and wilful intentions of all the accused / respondents. All the accused / respondents are jointly and severally liable for the commission of the offence Under Section 138 of Negotiable Instruments Act."
14. Every person connected with a partnership firm cannot be liable for infraction of cheque and for a criminal action under Section 138 NI Act. It is only those persons who were in charge of and responsible for the conduct of business of the company at the time of commission of an offence, who will be liable for criminal act. If a partner of a firm was not in charge of and not responsible for the conduct of the business of the firm at the relevant time, he will not be liable under Section 138 NI Act.
Crl. Rev. No. 297/2022 M/s. Trunks & Roots & Ors. vs. Raj Profin Pvt. Ltd. Page No. 7 of 11
15. The liability arises from being in charge of and responsible for the conduct of business of the company at the relevant time when the offence was committed and not on the basis of holding a status of partner in a firm.
16. In Pooja Ravinder Devidasani vs. State of Maharashtra and Another, (2014) 16 SCC 1, Hon'ble Supreme Court of India held, as under:
"17.....To fasten vicarious liability under Section 141 of the Act on a person, at the material time that person shall have been at the helm of affairs of the company, one who actively looks after the day-to-day activities of the company and is particularly responsible for the conduct of its business. Simply because a person is a Director of a company, does not make him liable under the NI Act. Every person connected with the Company will not fall into the ambit of the provision. Time and again, it has been asserted by this Court that only those persons who were in charge of and responsible for the conduct of the business of the Company at the time of commission of an offence will be liable for criminal action. A Director, who was not in charge of and was not responsible for the conduct of the business of the Company at the relevant time, will not be liable for an offence under Section 141 of the NI Act....."
17. In Dilip Hariramani vs. Bank of Baroda, 2022 SCC OnLine SC 579, Hon'ble Supreme Court of India held, as under:
"9.....The expression 'every person' is wide and comprehensive enough to include a director, partner or other officers or persons. At the same time, it follows that a person who does not bear out the requirements of 'in charge of and responsible to the company for the conduct of its business' is not vicariously liable under Section 141 of the NI Act. The burden is on the prosecution to show that the person prosecuted was in charge of and responsible to the company for conduct of its business....."
Crl. Rev. No. 297/2022 M/s. Trunks & Roots & Ors. vs. Raj Profin Pvt. Ltd. Page No. 8 of 11
18. It is admitted case of the complainant that the said cheque was issued by the petitioner No. 2. The petitioner No. 3 and 4 are not signatories of the said cheque. They are impleaded in the complaint only for the reason that they are partners of the petitioner No. 1. There is no averment that the petitioner No. 3 and 4 were in charge of and responsible to the conduct of the business of the petitioner No. 1.
19. The trial Court mechanically issued the process and summoned the petitioner No. 3 and 4 without considering averments made in the complaint. The trial Court did not exercise its jurisdiction, as directed by Hon'ble Supreme Court of India in Pooja Ravinder Devidasani (supra), as under:
"30. Putting the criminal law into motion is not a matter of course. To settle the scores between the parties which are more in the nature of a civil dispute, the parties cannot be permitted to put the criminal law into motion and courts cannot be a mere spectator to it. Before a Magistrate taking cognizance of an offence under Sections 138/141 of the NI Act, making a person vicariously liable has to ensure strict compliance with the statutory requirements. The superior courts should maintain purity in the administration of justice and should not allow abuse of the process of the court. The High Court ought to have quashed the complaint against the appellant which is nothing but a pure abuse of process of law."
20. The impugned order qua summoning of the petitioner No. 1 and 2 does not suffer from any manifest legal error or material irregularity or illegality.
21. There is no sufficient ground for proceeding against the petitioner No. 3 and 4 for dishonour of the said cheque issued by the petitioner No. 2.
Crl. Rev. No. 297/2022 M/s. Trunks & Roots & Ors. vs. Raj Profin Pvt. Ltd. Page No. 9 of 11 CONCLUSION:
22. Accordingly, the criminal revision petition filed by the petitioners is partly allowed.
23. The criminal revision petition challenging summoning of the petitioner No. 1 and 2 is dismissed.
24. The criminal revision petition pertaining to summoning of the petitioner No. 3 and 4 is allowed.
25. The complaint under Section 138 NI Act instituted by the complainant against the petitioner No. 3 and 4 is dismissed.
26. A copy of judgment alongwith trial Court record be sent back.
27. The criminal revision file be consigned to record room. Digitally signed by SANJAY SANJAY SHARMA SHARMA Date:
2022.07.25 17:33:32 +0530 Announced in the open Court SANJAY SHARMA-II on this 25th July, 2022 Addl. Sessions Judge-03 (Central) Tis Hazari Courts, Delhi Crl. Rev. No. 297/2022 M/s. Trunks & Roots & Ors. vs. Raj Profin Pvt. Ltd. Page No. 10 of 11 M/s. Trunks & Roots & Ors. vs. Raj Profin Pvt. Ltd. CNR No.: DLCT010084952022 Crl. Revision No. 297/2022 25.07.2022 Proceedings convened through Video Conferencing.
Present : Mr. Tarun Kumar Bedi, Advocate with Ms. Priyadarshini Upadhyay, Advocate for the petitioners. Mr. Gaurav Jain, Advocate for the respondent.
Vide separate judgment, the criminal revision petition filed by the petitioners is partly allowed. The criminal revision petition challenging summoning of the petitioner No. 1 and 2 is dismissed. The criminal revision petition pertaining to summoning of the petitioner No. 3 and 4 is allowed. The complaint under Section 138 NI Act instituted by the complainant against the petitioner No. 3 and 4 is dismissed. The criminal revision file be consigned to record room. Digitally signed SANJAY by SANJAY SHARMA SHARMA Date: 2022.07.25 17:33:45 +0530 Sanjay SharmaII ASJ03, Central District, Tis Hazari Courts, Delhi 25.07.2022 Crl. Rev. No. 297/2022 M/s. Trunks & Roots & Ors. vs. Raj Profin Pvt. Ltd. Page No. 11 of 11