Allahabad High Court
Smt. Vimla Devi & Another vs State Of U.P. & Another on 9 February, 2017
HIGH COURT OF JUDICATURE AT ALLAHABAD, LUCKNOW BENCH (Judgment reserved on 24.01.2017) (Judgment delivered on 9 .02.2017) AFR Case :- U/S 482/378/407 No. - 234 of 2008 1. Smt. Vimla Devi aged about 80 years w/o Harishchandra, Partner of regd. Firm M/s Vinod Kumar and co. having its registered office at Lohia Shopping Complex, near City Hospital Awas Vikas, district Farrukhabad. 2. Smt. Munni Devi aged about 52 years w/o Sri Vinod Kumar, Partner of regd. Firs M/s Vinod Kumar and co. having its registered office at Lohia Shopping Complex, near City Hospital Awas Vikas, district Farrukhabad. ...............Petitioners/ Applicants Versus 1. State of U.P. 2. Indo Gulf Fertilizers, a public limited co. having its regd. Office and factory at Jagdishpur Industrial area, district Sultanpur with marketing head office at 14-A/5, Park Road, Lucknow through its authorized representative Sri K.K. Jindal S/O G.P. Jindal R/O 2/344, Vishal Khand - 2, Gomti Nagar, Lucknow (Manager Marketing Account) .....................Opposite Parties Counsel for Applicant :- Anurag Shukla Counsel for Opposite Party :- Govt. Advocate,Sachin Garg Hon'ble Anil Kumar Srivastava-II,J.
1. Heard Shri Anurag Shukla learned counsel for the petitioner, Shri N.K. Seth, Senior Advocate assisted by Shri Sachin Garg.
2. Petitioners have filed this petition under Section 482 CrPC for quashing of the proceedings of the complaint case no.866/2005, Indo Gulf Fertilizers Limited vs. M/s Vinod Kumar and Company under Section 138 of Negotiable Instruments Act pending before court of Special Judicial Magistrate (Pollution) Lucknow and also the orders dated 23.11.2007 and 15.12.2005 as contained in Annexures 9 and 7 of the petition.
3. A complaint under Section 138 Negotiable Instruments Act was filed by the opposite party no.2 Indo Gulf Fertilizers Limited, a public limited company, through its authorized representative Shri K.K. Jindal, Manager (Marketing Accounts) of the company. It is alleged that the accused no.2 to 4, i.e., Vivek Kumar (non-petitioner), Vimla Devi (petitioner no.1), Munni Devi (petitioner no.2) are carrying on business in partnership under the firm name and style M/s. Vinod Kumar and Company (accused no.1) having its registered office at Farrukhabad. On the request of the accused persons opposite party no.2 appointed accused no.2 to 4 as wholesale dealer in their partnership firm M/s. Vinod Kumar and company for the sale of fertilizers under the brand name of SHAKTIMAN for the Tehsil Kannauj District Farrukhabad. Accused no.2 to 4 through their firm M/s Vinod Kumar and Company requested the opposite party no.2 to supply the stock of fertilizers measuring about 1819.450 metric tons amounting to Rs.90,10,374/- and after adjusting all the payments and other expenses an amount of Rs.5,35,621.67 became overdue upon the firm. Accused no.2 to 4 through their firm accused no.1 issued a cheque no.929974 from Account No.2009 in Bank of India, Farrukhabad Branch for an amount of Rs.535621.16. Cheque was duly presented by the complainant opposite party no.2 on 12.8.2005 with its banker State Bank of India, Jawahar Bhawan Branch, Lucknow which was dishonoured by the Bank vide memo dated 18.8.2005 on the ground ''exceed arrangement'. Cheque was returned with memo on 25.8.2005. A notice dated 8.9.2005 was sent to the accused which was duly served upon them on or about 20.9.2005 but they neither replied the notice nor complied the notice nor made any payment, rather sent a reply dated 22.9.2005 through counsel. Thereafter a complaint under Section 138 Negotiable Instrument Act was filed by the complainant.
4. In support of the complaint affidavit on behalf of the complainant Shri K.K. Jindal was filed under Section 200 Cr.P.C. After going through the record the learned Magistrate passed the impugned order dated 15.12.2005 summoning M/s Vinod Kumar and company, Vivek Kumar, Vimla Devi and Munni Devi under Section 138 Negotiable Instruments Act.
5. An application under Section 245(2) was moved by the petitioners which was rejected by the learned Magistrate on the ground that since they have not put in their appearance and are not granted bail, hence, application was rejected. Feeling aggrieved, petitioners Vimla Devi and Munni Devi have preferred the petition on 21.01.2008.
6. At the very outset it would be relevant to mention here that another petition no.1603/07 was filed by Vinod Kumar as a partner of M/s Vinod Kumar and Company, Vivek Kumar, Vimla Devi and Munni Devi wherein following prayer was made :-
"Wherefore, it is humbly prayed that this Hon'ble Court may graciously be pleased to quash the entire judicial proceedings in the nature of certiorari, under Section 138 of the Negotiable Instrument Act pending before the Sepcial Court Judicial Magistrate (Pollution) CBI, Lucknow Case No.866/05 wherein summoning the accused and also issuing the bailable warrant against the petitioners in the order dated 10.5.2007 an annexed herewith as Annexure no.1 to this petition.
It is further prayed that this Hon'ble Court may graciously be pleased to permit the petitioners to appear through counsel before the learned court below and also permitted the same to raise objections in the shape of written statement before the said court.
Such other order or direction which this Hon'ble Court may deem, just and proper in the nature and circumstances of the case, be also passed."
Which was withdrawn by the learned counsel for the petitioner and the petition was dismissed as withdrawn vide order of this Court dated 04.01.2017.
7. Learned counsel for the petitioners submits that the petition is filed only on behalf of Vimla Devi and Munni Devi. Learned counsel has mainly pressed his arguments on Section 141 of Negotiable Instruments Act. It is submitted that so far as petitioners are concerned there is an assertion in para 2 of the complaint only which reads as under.
"(2) That the accused nos.2 to 4 are carrying on business in partnership under the firm name and style of M/s.Vinod Kumar and Company (accused no.1), which is having its registered Officer at Lohia Shopping Complex, near City Hospital, Awas Vikas, District Farrukhabad."
8. It is further submitted that the petitioners are the sleeping partners, they have not signed the cheque. It is further submitted that even in the para no.4 of the complaint no assertion has been made regarding petitioners that they are the active partners of the firm. It is submitted that the cheque in question was signed by Vivek Kumar in the capacity of the partner for Vinod Kumar and company. It is further submitted that even C/C Account No.2009 was in the name of M/s. Vinod Kumar and company. Smt. Vimla Devi and Smt. Munni Devi were not authorized by the bank to operate the C/C Account no. 2009 of M/s Vinod Kumar and company. It is further submitted that even in Annexure CA-6, which was notice dated 8.9.2015, given by Shri N.K. Seth, Advocate on behalf of M/s Indo Gulf Fertilizers Limited i.e., complainant, there was no statement about active role of the petitioners which is required under Section 141 of Negotiable Instruments Act.
9. Learned counsel has placed reliance upon SMS Pharmaceuticals Limited vs. Neeta Bhalla and others, (2005) 8 SCC 89, a three Judges judgment of the Hon'ble Apex Court. Learned counsel has further placed reliance upon para 7 and 11 of Sabitha Ramamurthy and Another vs. R.B.S. Channabasavaradhya, (2007) 1 SCC (Cri)621. Learned counsel has further submitted that in view of non- compliance of the provisions of Section 141 Negotiable Instruments Act, the impugned order of the learned Magistrate, so far as it relates to the petitioners, is bad in law.
10. Per contra, learned counsel for the opposite party no.2 submits that an earlier petition no.1603/2007 was filed by the petitioners including Vinod Kumar and Vivek Kumar for quashing the proceedings of case no.866/2005 along with the order dated 10.5.2007. Since that petition has been withdrawn by the learned counsel for the petitioner, hence, this petition itself now is not maintainable. It is further submitted that provisions of Section 245(2) CrPC would not be applicable in this case as the proceedings under Section 138 Negotiable Instruments Act are summary in nature which is covered under Chapter XXI, Section 260 to 265 of CrPC. Section 245 CrPC relates to the trial of warrant cases by the Magistrate. According to Section 143 of Negotiable Instruments Act the trial of the cases under Section 138 Negotiable Instruments Act shall be of summary nature. Learned Magistrate has rightly rejected the application moved by the petitioners under Section 245(2) CrPC.
11. It is further submitted that in reply of the notice, given by the complainant opposite party no.2 to the petitioners, no assertion has been made that the petitioners are not active partners, rather they are sleeping partners. It is submitted that factual reply was given wherein it is stated that the blank cheque was obtained by the opposite party no.2 which is misused. It is further submitted that the petitioners are partners of a partnership firm wherein all the partners have joint liability. It is a question of fact as to whether who is a partner or not ? Who is a sleeping partner ? These all are question of fact which could not be looked into in a petition under Section 482 CrPC. Learned counsel has placed reliance upon Rallis India Limited vs. Poduru Vidya Bhushan and Others, (2011) 13 SCC 88.
12. It is further submitted that the case law of SMS Pharma (supra) has no bearing upon the petitioner's case.
13. Learned counsel has placed reliance upon Bacha F. Guzdar, Bombay vs. Commissioner of Income Tax, Bombay, (1995) 1 SCR 876. Learned counsel relied upon para 9 and submits that there is distinction between the company and partnership firm. Reliance has also been placed upon HMT Watches Limited vs. M.A. Abida and Another, Criminal Appeal No.471 of 2015 (Arising out of SLP (Crl) No.5295 of 2014) wherein it was held that factual intricacies could not be seen in a petition under Section 482 CrPC. Learned counsel has further placed reliance upon Sarguja Transport Service vs. State Transport Appellate Tribunal M.P. Gwalior and Others (1987) 1 SCC 5 wherein placing reliance upon para 9 of the report it is submitted that this petition is not maintainable in view of withdrawal of earlier petition by the learned counsel for the petitioner.
14. Learned counsel has further placed reliance upon Kishore Samrite vs. State of Uttar Pradesh and Others (2013) 2 SCC 398. Reliance is also placed upon A.K. Singhania vs. Gujarat State Fertilizer Co. Ltd and Another, AIR 2014 SC 71.
15. Admittedly, a complaint under Section 138 Negotiable Instruments Act was filed by the opposite party no.2 wherein the learned Magistrate has taken cognizance and summoned the petitioners along with other co-accused. An application was moved by the petitioners under Section 245 (2) CrPC which was rejected by the learned Magistrate. This order of rejection is also under challenge. At the very outset the order of rejection of application under Section 245(2) CrPC is in accordance with law. Under Section 143 of Negotiable Instruments Act it is provided that :-
"143. Power of Court to try cases summarily.- (1) Notwithstanding anything contained in the Code of Criminal Procedure, 1973 (2 of 1974), all offences under this Chapter shall be tried by a Judicial Magistrate of the first class or by a Metropolitan Magistrate and the provisions of sections 262 to 265 (both inclusive) of the said Code shall, as far as may be, apply to such trials:
Provided that in the case of any conviction in a summary trial under this section, it shall be lawful for the Magistrate to pass a sentence of imprisonment for a term not exceeding one year and an amount of fine exceeding five thousand rupees:
Provided further that when at the commencement of, or in the course of, a summary trial under this section, it appears to the Magistrate that the nature of the case is such that a sentence of imprisonment for a term exceeding one year may have to be passed or that it is, for any other reason, undesirable to try the case summarily, the Magistrate shall after hearing the parties, record an order to that effect and thereafter recall any witness who may have been examined and proceed to hear or rehear the case in the manner provided by the said Code."
16. Procedure for summary trial is prescribed in Chapter XXI containing Section 260 to 265 of the CrPC. Section 245 relates to the cases instituted otherwise on police report in warrant cases. Complaint under Section 138 Negotiable Instruments Act is not to be tried as case as a trial of the warrant cases instituted otherwise than on a police report, hence, the trial is to proceed as per procedure prescribed by law for summary cases. Accordingly Section 245 CrPC will not be attracted and the learned Magistrate has rightly dismissed the application under Section 245 CrPC.
17. Admittedly, a petition no.1603/07 was filed by Vinod Kumar, Vivek Kumar, Smt. Vimla Devi and Smt. Munni Devi for a prayer of quashing the enitre proceedings of case no. 866/05 under Section 138 Negotiable Instruments Act, pending before Special Judicial Magistrate (Pollution) Lucknow along with a prayer to quash the order dated 10.5.2007 wherein it was ordered that the accused is not present, hence, process be issued for attendance. When both the petitions came up for hearing on 04.01.2017, the learned counsel for the petitioner withdrew the petition no.1603/07 wherein the learned counsel for the opposite party did not raise any objection. It is noteworthy that the petition no. 234/08 was pending at that time. Learned counsel for the opposite party no.2 has placed reliance upon Sarguja Transport Service vs. State Transport Appellate Tribunal, M.P., Gwalior and Others (supra) wherein in para 9 it was held that : -
"The point of consideration is whether a petitioner after withdrawing a writ petition filed by him in the High Court under Article 226 of the Constitution of India without the permission to institute a fresh petition can file a fresh writ petition in the High Court under that Article. On this point the decision in Daryao case is of no assistance. But we are of the view that the principle underlying Rule 1 of Order XXIII of the Code should be extended in the interests of administration of justice to cases of withdrawal of writ petition also, not on the ground of res judicata but on the ground of public policy as explained above. It would also discourage the litigant from indulging in bench-hunting tactics. In any event there is no justifiable reason in such a case to permit a petitioner to invoke the extraordinary jurisdiction of the High Court under Article 226 of the Constitution once again. While the withdrawal of a writ peittion filed in a High Court without permission to file a fresh writ petition may not bar other remedies like a suit or a petition under Article 32 of the Constitution of India since such withdrawal does not amount to res judicata, the remedy under Article 226 of the Constitution of India should be deemed to have been abandoned by the petitioner in respect of the cause of action relied on in the writ petition when he withdraws it without such permission. In the instant case the High Court was right in holding that a fresh writ petition was not maintainable before it in respect of the same subject- matter since the earlier writ petition had been withdrawn without permission to file a fresh petition.
18. Facts of the present case are different. Present petition was already pending when the petition no.1603/07 was withdrawn. Further relief in both the petitions is also different. In the present petition petitioners have also prayed for quashing the order dated 23.11.2007 and 15.12.2005 which are the summoning order as well as order of rejection of application under Section 245(2) CrPC. Since the petitioners have not filed a fresh petition after withdrawal of the first petition, rather the present petition was already pending at the time of withdrawal with a different relief, hence, case law of Sarguja Transport Service (supra) could not help the opposite party no.2 to hold that present petition is not maintainable. Present petition is maintainable.
19. Learned counsel for the petitioner has mainly challenged the impugned order of summoning of the petitioners on the basis of Section 141 Negotiable Instruments Act. Section 141 Negotiable Instruments Act reads 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 of 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 of State Government of 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 of 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.
20. The prosecution launched against the petitioner was under Section 138 Negotiable Instruments act, 1881. Section 138 Negotiable Instrument Act reads under :-
"138. Dishonour of cheque for insufficiency, etc, of funds in the account.- Where any cheque drawn by a person on an account maintained by him with a banker for payment of any amount of money to another person from out of that account for the discharge, in whole or in part, of any debt or other liability, is returned by the bank unpaid, either because of the amount of money standing to the credit of that account is insufficient to honour the cheque or that it exceeds the amount arranged to be paid from that account by an agreement made with that bank, such person shall be deemed to have committed an offence and shall, without prejudice to any other provision of this Act, be punished with imprisonment for a term which may be extended to two years, or with fine which may extend to twice the amount of the cheque, or with both :
Provided that nothing contained in this section shall apply unless -
(a) the cheque has been presented to the bank within a period of six months from the date on which it is drawn or within the period of its validity, whichever is earlier;
(b) the payee or the holder in due course of the cheque, as the case may be, makes a demand for the payment of the said amount of money by giving a notice in writing, to the drawer of the cheque, within thirty days of the receipt of information by him from the bank regarding the return of the cheque as unpaid; and
(c) the drawer of such cheque fails to make the payment of the said amount of money to the payee or, as the case may be, to the holder in due course of the cheque within fifteen days of the receipt of the said notice.
Explanation.- For the purposes of this section, "debt or other liability" means a legally enforceable debt or other liability.
21. Learned counsel for the petitioners has placed reliance upon a Three Judges' Bench judgment of the Hon'ble Apex Court in SMS Pharmaceuticals Limited Vs. Neeta Bhalla, (2005) 8 SCC 89 which was referred by the Hon'ble Apex Court in Darga Ram vs. State of Rajasthan, (2015) 2 SCC 775. It was held in SMS Pharmaceuticals in para 5 that :-
"5. Section 203 of the Code empowers a Magistrate to dismiss a complaint without even issuing a process. It uses the words "after considering" and "the Magistrate is of opinion that there is no sufficient ground for proceeding". These words suggest that the Magistrate has to apply his mind to a complaint at the initial stage itself and see whether a case is made out against the accused persons before issuing process to them on the basis of the complaint. For applying his mind and forming an opinion as to whether there is sufficient ground for proceeding, a complaint must make out a prima facie case to proceed. This, in other words, means that a complaint must contain material to enable the Magistrate to make up his mind for issuing process. If this were not the requirement, consequences could be far-reaching. If a Magistrate had to issue process in every case, the burden of work before the Magistrate as well as the harassment caused to the respondents to whom process is issued would be tremendous. Even Section 204 of the Code starts with the words "if in the opinion of the Magistrate taking cognizance of an offence there is sufficient ground for proceeding." The words "sufficient ground for proceeding" again suggest that ground should be made out in the complaint for proceeding against the respondent. It is settled law that at the time of issuing of the process the Magistrate is required to see only the allegations in the complaint and where allegations in the complaint or the charge sheet do not constitute an offence against a person, the complaint is liable to be dismissed."
22. In a recent judgment delivered by Hon'ble the Apex Court on 14.12.2016 in Criminal Appeal No.1225 of 2016 (arising out of SLP(Crl.) No.9318 of 2012) Abhijit Pawar vs. Hemant Madhukar Nimbalakar & Anr. It was held that the admitted position in law is that in those cases where the accused is residing at a place beyond the area in which the Magistrate exercises his jurisdiction, it is mandatory on the part of the Magistrate to conduct an inquiry or investigation before issuing the process. Section 202 of the Cr.P.C. was amended in the year by the Code of Criminal Procedure(Amendment) Act, 2005, with effect from 22nd June, 2006 by adding the words that ''and shall, in a case where the accused is residing at a place beyond the area in which he exercises his jurisdiction'. There is a vital purpose or objective behind this amendment, namely, to ward off false complaints against such persons residing at a far off places in order to save them from unnecessary harassment. Thus, the amended provisions casts an obligation on the Magistrate to conduct inquiry or direct investigation before issuing the process, so that false complaints are filtered and rejected.
23. Referring the case law in Vijay Dhanuka vs. Najima Mamtaj (2014) 14 SCC 638; it was held :-
"11. Section 202 of the Code, inter alia, contemplates postponement of the issue of the process "in a case where the accused is residing at a place beyond the area in which he exercises his jurisdiction" and thereafter to either inquire into the case by himself or direct an investigation to be made by a police officer or by such other person as he thinks fit. In the face of it, what needs our determination is as to whether in a case where the accused is residing at a place beyond the area in which the Magistrate exercises his jurisdiction, inquiry is mandatory or not.
12. The words "and shall, in a case where the accused is residing at a place beyond the area in which he exercises his jurisdiction" were inserted by Section 19 of the Code of Criminal Procedure (Amendment) Act (Central Act 25 of 2005) w.e.f. 23.6.2006. The aforesaid amendment, in the opinion of the legislature, was essential as false complaints are filed against persons residing at far off places in order to harass them. The note for the amendment reads as follows:
"False complaints are filed against persons residing at far off places simply to harass them. In order to see that innocent persons are not harassed by unscrupulous persons, this clause seeks to amend sub-section (1) of Section 202 to make it obligatory upon the Magistrate that before summoning the accused residing beyond his jurisdiction he shall enquire into the case himself or direct investigation to be made by a police officer or by such other person as he thinks fit, for finding out whether or not there was sufficient ground for proceeding against the accused."
The use of the expression "shall" prima facie makes the inquiry or the investigation, as the case may be , by the Magistrate mandatory. The word "shall" is ordinarily mandatory but sometimes, taking into account the context or the intention, it can be held to be directory. The use of the word "shall" in all circumstances is not decisive. Bearing in mind the aforesaid principle, when we look to the intention of the legislature, we find that it is aimed to prevent innocent persons from harassment by unscrupulous persons from false complaints. Hence, in our opinion, the use of the expression"shall" and the background and the purpose for which the amendment has been brought, we have no doubt in our mind that inquiry or the investigation, as the case may be, is mandatory before summons are issued against the accused living beyond the territorial jurisdiction of the Magistrate."
24. In Mehmood UI Rehmand vs. Khazir Mohammad Tunda (2016) 1 SCC (Cri) 124; it was held as under :
"20. The extensive reference to the case law would clearly show that cognizance of an offence on complaint is taken for the purpose of issuing process to the accused. Since it is a process of taking judicial notice of certain facts which constitute an offence, there has to be application of mind as to whether the allegations in the complaint, when considered along with the statements recorded or the inquiry conducted thereon, would constitute violation of law so as to call a person to appear before the criminal court. It is not a mechanical process or matter of course. As held by this Court in Pepsi Foods Ltd [Pepsi Foods Ltd. v. Judicial Magistrate, (1998) 5 SCC 749 : 1998 SCC (Cri) 1400] to set in motion the process of criminal law against a person is a serious matter.
22. The steps taken by the Magistrate under Section 190(1)(a) CrPC followed by Section 204 CrPC should reflect that the Magistrate has applied his mind to the facts and the statements and he is satisfied that there is ground for proceeding further in the matter by asking the person against whom the violation of law is alleged, to appear before the court. The satisfaction on the ground for proceeding would mean that the facts alleged in the complaint would constitute an offence, and when considered along with the statements recorded, would prima facie, make the accused answerable before the court. No doubt, no formal order or a speaking order is required to be passed at that stage. The Code of Criminal Procedure requires speaking order to be passed under Section 203 CrPC when the complaint is dismissed and that too the reasons need to be stated only briefly. In other words, the Magistrate is not to act as a post office in taking cognizance of each and every complaint filed before him and issue process as a matter of course. There must be sufficient indication in the order passed by the Magistrate that he is satisfied that the allegations in the complaint constitute an offence and when considered along with the statements recorded and the result of inquiry or report of investigation under Section 202 CrPC, if any, the accused is answerable before the criminal court, there is ground for proceeding against the accused under Section 204 CrPC, by issuing process for appearance. The application of mind is best demonstrated by disclosure or mind on the satisfaction. If there is no such indication in a case where the Magistrate proceeds under Sections 190/204 CrPC, the High Court under Section 482 CrPC is bound to invoke its inherent power in order to prevent abuse of the power of the criminal court. To be called to appear before the criminal court as an accused is serious matter affecting one's dignity, self-respect and image in society. Hence, the process of criminal court shall not be made a weapon of harassment." Emphasis added. "
25. Hon'ble Apex Court has further dealt with the nature of inquiry which is required to be conducted by the Magistrate and referring the case of Vijay Dhanuka (supra) it was held as under:
"14. In view of our answer to the aforesaid question, the next question which falls for our determination is whether the learned Magistrate before issuing summons has held the inquiry as mandated under Section 202 of the Code. The word "inquiry " has been defined under Section 2(g) of the Code, the same reads as follows:
"2. (g) ''inquiry' means every inquiry, other than a trial, conducted under this Code by a Magistrate or court,"
It is evident from the aforesaid provision, every inquiry other than a trial conducted by the Magistrate or the court is an inquiry. No specific mode or manner of inquiry is provided under Section 202 of the Code. In the inquiry envisaged under Section 202 of the Code, the witnesses are examined whereas under Section 200 of the Code, examination of the complainant only is necessary with the option of examining the witnesses present, if any. This exercise by the Magistrate, for purpose of deciding whether or not there is sufficient ground for proceeding against the accused, is nothing but an inquiry envisaged under Section 202 of the Code."
26. In Sonu Gupta versus Deepak Gupta (2015) 3 SCC 424, it was held by the Hon'ble Apex Court that :-
"At the stage of cognizance and summoning the Magistrate is required to apply his judicial mind only with a view to take cognizance of the offence, or in other words, to find out whether prima facie case has been made out for summoning the accused persons. At this stage, the Magistrate is not required to consider the defence version or materials or arguments nor is he required to evaluate the merits of the materials or evidence of the complainant, because the Magistrate must not undertake the exercise to find out at this stage whether the materials will lead to conviction or not. (Para 8) At the stage of framing of charge an individual accused may seek discharge if he or she can show that the materials are absolutely insufficient for framing of the charge against that particular accused. But such exercise is required only at a later stage and not at the stage of taking cognizance and summoning the accused on the basis of prima facie case. Even at the stage of framing of charge, the sufficiency of materials for the purpose of conviction is not the requirement and a prayer for discharge can be allowed only if the court finds that the materials are wholly insufficient for the purpose of trial. Even when there are materials raising strong suspicion against an accused, the court will be justified in rejecting a prayer for discharge and in granting an opportunity to the prosecution to bring on record the entire evidence in accordance with law so that case of both the sides may be considered appropriately on conclusion of trial. (Para 9)
27. In the background of these legal propositions now it is to be seen as to whether learned Magistrate has applied his judicial mind at the time of taking cognizance?
28. It is to be seen as to what should be the averments in a complaint under Section 138 and 141 of Negotiable Instrument Act? It assumes importance in view of the fact that at the stage of issuance of process the Magistrate will have before him only the complaint and accompanying documents. A person who has sought to be made the accused, has no right to produce any documents or evidence in defence at that stage. If we stretch this position further even at the stage of framing of charge the accused has no such right and the Magistrate cannot be asked to look into the documents produced by the accused at that stage. It was held by the Hon'ble Apex Court in the case of SMS Pharmaceuticals Limited (supra) in para 10 that :-
"10. While analysing Section 141 of the Act, it will be seen that it operates in cases where an offence under Section 138 is committed by a company. The key words which occur in the section are "every person". These are general words and take every person connected with a company within their sweep. Therefore, these words have been rightly qualified by use of the words :
"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, etc."
What is required is that the persons who are sought to be made criminally liable under Section 141 should be, at the time the offence was committed, in charge of and responsible to the company for the conduct of the business of the company. Every person connected with the company shall not fall within the ambit of the provision. 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 beliable for criminal action. It follows from this that if a director of a company 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 under the provision. 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 merely holding a designation or office in a company. Conversely a person not holding any office or designation in a company may be liable if he satisfies the main requirement of being in charge of and responsible for the conduct of business of a company at the relevant time. Liability depends on the role one plays in the affairs of a company and not on designation or status. If being a director or manager or secretary was enough to cast criminal liability, the section would have said so. Instead of "every person" the section would have said "every director, manager or secretary in a company is liable"...., etc, The legislature is aware that it is a case of criminal liability which means serious consequences so far as the person sought to be made liable is concerned. Therefore, only persons who can be said to be connected with the commission of a crime at the relevant time have been subjected to action.
11. A reference to sub-section (2) of Section 141 fortifies the above reasoning because sub-section (2) envisages direct involvement of any director, manager, secretary or other officer of a company in the commission of an offence. This section operates when in a trial it is proved that the offence has been committed with the consent or connivance or is attributable to neglect on the part of any of the holders of these offieces in a company. In such a case, such persons are to be held liable. Provision has been made for directors, managers, secretaries and other officers of a company to cover them in cases of their proved involvement.
12. The conclusion is inevitable that the liability arises on account of conduct, act or omission on the part of a person and not merely on account of holding an office or a position in a company. Therefore, in order to bring a case within Section 141 of the Act the complaint must disclose the necessary facts which make a person liable.
13. The question of what should be the averments in a criminal complaint has come up for consideration before various High Courts in the country as also before this Court. Secunderabad Health Care Ltd v. Secunderabad Hospitals (P) Ltd. Was a case under the Negotiable Instruments Act specifically dealing with Sections 138 and 141 thereof. The Andhra Pradesh High Court held that every director of a company is not automatically vicariously liable for the offence committed by the company. Only such director or directors who were in charge of or responsible to the company for the conduct of business of the company at the material time when the offence was committed alone shall be deemed to be guilty of the offence. Further, it was observed that the requirement of law is that : (comp. Cas p.112) "There must be clear, unambiguous and specific allegations against the persons who are impleaded as accused that they were in charge of and responsible to the company in the conduct of its business at the material time when the offence was committed."
14. The same High Court in V. Sudheer Reddy v. State of A.P., (2000) 107 Comp Cas 107 (AP) held that : (Comp cas p.110) "The purpose of Section 141 of the Negotiable Instruments Act would appear to be that a person [who appears to be] merely a director of the company cannot be fastened with criminal liability for an offence under Section 138 of the Negotiable Instruments Act unless it is shown that he was involved in the day-to-day affairs of the company and was responsible to the company."
Further, it was held that allegations in this behalf have to be made in a complaint before process can be issued against a person in a complaint. To the same effect is the judgment of the Madras High Court in R. Kannan v. Kotak Mahindra Finance Ltd. (2003) 115 Comp Cas 321 (Mad). In Lok Housing and Constructions Ltd. v. Raghupati Leasing and Finance Ltd., (2003) 115 Comp Cas 957 (Del) the Delhi High Court noticed that there were clear averments about the fact that accused 2 to 12 were officers incharge of and responsible to the company in the conduct of the day to day business at the time of commission of the offence. Therefore, the Court refused to quash the complaint. In Sunil Kumar Chhaparia vs. Dakka Eshwaraiah (2002) 108 Comp Cas 687 (AP) the Andhra Pradesh High Court noted that there was a consensus of judicial opinion that : (Comp Cas p. 691) "[A] director of a company cannot be prosecuted for an offence under Section 138 of the Act in the absence of a specific allegation in the complaint that he was incharge of and responsible to the company in the conduct of its business at the relevant time or that the offence was committed with his consent or connivance."
29. It was held by the Hon'ble Apex Court in SMS Pharmaceuticals Limited (supra) in para 18 and 19 that :-
"18. To sum up, there is almost unanimous judicial opinion that necessary averments ought to be contained in a complaint before a person can be subjected to criminal process. A liability under Section 141 of the Act is sought to be fastened vicariously on a person connected with a company, the principal accused being the company itself. It is a departure from the rule in criminal law against vicarious liability. A clear case should be spelled out in the complaint against the person sought to be made liable. Section 141 of the Act contains the requirements for making a person liable under the said provision. That the respondent falls within the parameters of Section 141 has to be spelled out. A complaint has to be examined by the Magistrate in the first instance on the basis of averments contained therein. If the Magistrate is satisfied that there are averments which bring the case whithin Section 141, he would issue the process. We have seen that merely being described as a director in a company is not sufficient to satisfy the requirement of Section 141. Even a non-director can be liable under Section 141 of the Act. The averments in the complaint would also serve the purpose that the person sought to be made liable would know what is the case which is alleged against him. This will enable him to meet the case at the trial.
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.
30. Explanation attached to Section 141 (2) includes a firm or other association of individuals within the meaning of "company". It is further provided that "Director" in relation to a firm means a partner in the firm.
31. In para 7 of Sabitha Ramamurthy v. R.B.S. Channabasavaradhya (supra) it was held that :-
"7. A bare perusal of the complaint petitions demonstrates that the statutory requirements contained in Section 141 of the Negotiable Instruments Act had not been complied with. It may be true that it is not necessary for the complainant to specifically reproduce the wordings of the section but what is required is a clear statement of fact so as to enable the court to arrive at a prima facie opinion that the accused are vicariously liable. Section 141 raises a legal fiction. By reason of the said provision, a person although is not personally liable for commission of such an offence would be vicariously liable therefor. Such vicarious liability can be inferred so far as a company registered or incorporated under the companies Act, 1956 is concerned only if the requisite statements, which are required to be averred in the complaint petition, are made so as to make the accused therein vicariously liable for the offence committed by the company. Before a person can be made vicariously liable, strict compliance with the statutory requirements would be insisted. Not only the averments made in para 7 of the complaint petitions do not meet the said statutory requirements, the sworn statement of the witness made by the son of the respondent herein, does not contain any statement that the appellants were incharge of the business of the company. In a case where the court is required to issue summons which would put the accused to some sort of harassment, the court should insist strict compliance with the statutory requirements."
32. It was held in Green Earth Asphalt and power private limited vs. State of Maharashtra, (2008) 8 SCC 278 that Section 141 of the Negotiable Instruments Act raises a legal fiction in terms whereof the Directors of a company which would include the partners of a firm would be deemed to have committed an offence along with the company if they are incharge of the affairs of the company and responsible to it.
33. In A.K. Singhania vs. Gujarat State Fertilizer Co. Ltd. And Another, AIR 2014 SC 71 SMS Pharmaceutical Company was followed.
34. In the Rallis India Limited vs. Poduru Vidya Bhushan and Others , (2011) 13 SCC 88, assertions in the complaint itself were that "accused no.1 a partnership firm and accused no.2 to 7 are partners thereof and accused no.3 is signatory of impugned cheques and all partners are looking after day to day affairs of the accused firm and thus the liability as raised by them is joint and several. In view of the fact the Hon'ble Supreme Court held that the specific averments of vicarious criminal liability as mandated by the three judgdes bench of this Court in SMS Pharmaceuticals Limited is contained in them in the form mentioned in para 2 hereinabove. Hon'ble Apex Court further held that sufficient averments have been made against the respondents that they were the partners of the firm at the relevant time and were looking after day to day affairs of the partnership firm.
35. In this case also the Hon'ble Apex Court has dealt with the day to day affairs of the partnership firm theory. Further in Pooja Ravinder Devidasani vs. State of Maharashtra and Another, AIR 2015 SC 675, it was held in para 17 that :-
"There is no dispute that the appellant, who was wife of the Managing Director, was appointed as a Director of the Company - M/S Elite International Pvt. Ltd. On Ist July, 2004 and had also executed a Letter of Guarantee on 19the January, 2005. The cheques in question were issued during April, 2008 to September, 2008. So far as the dishonor of Cheques is concerned, admittedly the cheques were not signed by the appellant. There is also no dispute that the appellant was not the Managing Director but only a non-executive Director of the Company. Non-executive Director is no doubt a custodian of the governance of the Company but does not involve in the day to day affairs of the running of its business and only monitors the executive activity. 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 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 N.I. 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 incharge 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 incharge 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 N.I. Act. In National Small Industries Corporation (supra) this Court observed:
"Section 141 is a penal provision creating vicarious liability, and which, as per settled law, must be strictly construed. It is therefore, not sufficient to make a bald cursory statement in a complaint that the Director (arrayed as an accused) is incharge of and responsible to the company for the conduct of the business of the company without anything more as to the role of the Director. But the complaint should spell out as to how and in what manner Respondent 1 was incharge of or was responsible to the a accused Company for the conduct of its business. This is in consonance with strict interpretation of penal statutes, especially, where such statutes create vicarious liability.
A company may have a number of Directors and to make any or all the Directors as accused in a complaint merely on the basis of a statement that they are incharge of and responsible for the conduct of the business of the company without anything more is not a sufficient or adequate fulfilment of the requirements under Section 141."
36. Law as laid down by the Hon'ble Apex Court in Bacha F. Guzdar, Bombay vs. Commissioner of Income Tax, Bombay, AIR 55 (SC) 74 is not applicable to the facts of the present case. Explanation attached to Section 141(2) shows the legislative intent to include the partnership firm within the meaning of company so far as the proceeding of the Negotiable Instrument Act are concerned.
37. In the present case the opposite party no.2 has not complied the provisions of Section 141 of Negotiable Instruments Act. An essential requirement of Section 141 of the Negotiable Instruments Act has not been made wherein it was necessary to specifically aver in the complaint that at the time the offence was committed the present accused was incharge of, and responsible for the conduct of business of the company. The requirement of Section 141 is that the person sought to be made liable should be incharge of and responsible for the conduct of the business of the company at the relevant time. Necessary averments ought to be contained in a complaint before a person can be subjected to criminal process. A clear case should be spelled out in the complaint against the person sought to be made liable. A complaint has to be examined by the Magistrate in the first instance on the basis of averments contained therein. Merely being described as a Director in a company is not to satisfy the requirement of Section 141 of Negotiable Instruments Act. Since no compliance of Section 141 of Negotiable Instruments Act has been made by the opposite party no.2, hence, the complaint itself is not maintainable under the law.
38. Learned counsel for the opposite party has placed reliance upon HMT Watches Ltd. vs. M.A. Abida and Another, Criminal Appeal No. 472/2015, decided on 19.3.2015 and submit that the factual intricacies could not be seen in a petition under Section 482 CrPC. It is true that factual intricacies cannot be seen in a petition under Section 482 CrPC but if the complaint itself is not maintainable for want of a mandatory provision that can very well be seen under Section 482 CrPC.
39. The power under Section 482 Cr.P.C. is not to be exercised in a routine manner, but it is for limited purposes, namely, to give effect to any order under the Code, or to prevent abuse of process of any Court or otherwise to secure ends of justice. Time and again, Apex Court and various High Courts, including ours one, have reminded when exercise of power under Section 482 Cr.P.C. would be justified, which cannot be placed in straight jacket formula, but one thing is very clear that it should not preampt a trial and cannot be used in a routine manner so as to cut short the entire process of trial before the Courts below. If from a bare perusal of first information report or complaint, it is evident that it does not disclose any offence at all or it is frivolous, collusive or oppressive from the face of it, the Court may exercise its inherent power under Section 482 Cr.P.C. but it should be exercised sparingly. This will not include as to whether prosecution is likely to establish its case or not, whether the evidence in question is reliable or not or whether on a reasonable appreciation of it, accusation would not be sustained, or the other circumstances, which would not justify exercise of jurisdiction under Section 482 Cr.P.C. I need not go into various aspects in detail but it would be suffice to refer a few recent authorities dealing all these matters in detail, namely, State of Haryana and others Vs. Ch. Bhajan Lal and others 1992 Supp (1) SCC 335, Popular Muthiah Vs. State represented by Inspector of Police (2006) 7 SCC 296, Hamida vs. Rashid @ Rasheed and Ors. (2008) 1 SCC 474, Dr. Monica Kumar and Anr. vs. State of U.P. and Ors. (2008) 8 SCC 781, M.N. Ojha and Ors. Vs. Alok Kumar Srivastav and Anr. (2009) 9 SCC 682, State of A.P. vs. Gourishetty Mahesh and Ors. JT 2010 (6) SC 588, Iridium India Telecom Ltd. Vs. Motorola Incorporated and Ors. 2011 (1) SCC 74 and Manoj Kumar Sharma and Ors. vs. State of Chhattisgarh and Another (2016) 9 SCC 1.
40. "In Manoj Kumar Sharma and Others (Supra) Hon'ble the Apex Court has relied upon the law laid down in State of Haryana v. Bhajan Lal (Supra) wherein it was held that though it may not be possible to lay down any precise, clearly defined, sufficiently channelised and inflexible guidelines or rigid formulae or to give an exhaustive list of myriad kinds of cases wherein power under Section 482 of the Code for quashing of the FIR should be exercised, there are circumstances where the court may be justified in exercising such jurisdiction. These are, where the FIR does not prima facie constitute any offence, does not disclose a cognizable offence justifying investigation by the police; where the allegations are so absurd and inherently improbable on the basis of which no prudent person can ever reach a just conclusion that there is sufficient ground for proceeding against the accused; where there is an expressed legal bar engrafted in any of the provisions of the Code; and where a criminal proceeding is manifestly attended with mala fide and/or where the proceeding is maliciously instituted with an ulterior motive for wreaking vengeance on the accused and with a view to spite him due to private and personal grudge. Despite stating these grounds, the Court unambiguously uttered a note of caution to the effect that the power of quashing a criminal proceeding should be exercised very sparingly and with circumspection and that too, in the rarest of rare cases; the Court also warned that the court would not be justified in embarking upon an enquiry as to the reliability or genuineness or otherwise of the allegations made in the FIR or the complaint and that the extraordinary or inherent powers do not confer an arbitrary jurisdiction on the court to act according to its whims or caprice."
41. In Lee Kun Hee and others Vs. State of U.P. and others JT 2012 (2) SC 237, Hon'ble the Apex Court has further laid down, the guidelines for exercise of the power by the High Court under Section 482 Cr.P.C. It has been held that Court in exercise of its jurisdiction under Section 482 Cr.P.C. cannot go into the truth or otherwise of the allegations and appreciate evidence, if any, available on record. Interference would be justified only when a clear case of such interference is made out. Frequent and uncalled interference even at the preliminary stage by High Court may result in causing obstruction in the progress of inquiry in a criminal case which may not be in public interest. It, however, may not be doubted, if on the face of it, either from the first information report or complaint, it is evident that allegation are so absurd and inherently improbable on the basis of which no fair-minded and informed observer can ever reach a just and proper conclusion as to the existence of sufficient grounds for proceeding, in such cases refusal to exercise jurisdiction may equally result in injustice, more particularly, in cases, where the complainant sets the criminal law in motion with a view to exert pressure and harass the persons arrayed as accused in the complaint.
42. Compliance of the provisions of Section 141 Negotiable Instruments Act has not been made by the opposite party no.2 which can and should be seen by this Court in a petition under Section 482 CrPC, hence, I do not find any force in the argument of the learned counsel for the opposite party.
43. Reliance has also been placed on Kishore Samrite case (supra) which is also not applicable to the facts of the present case. It is not that the petitioners have not come before the Court with clean hands. It is mentioned in paragraph 14 of the petition that petition no.1603 of 2007 is pending before this Court, hence, it cannot be said that the petitioner have not filed the petition with clean hands. It is submitted that in that petition Vinod Kumar has arrayed as a petitioner showing himself to be a partner of the firm while Vinod Kumar is not a partner. In this regard it is noteworthy that petition no.1603/2007 has been dismissed as withdrawn, hence, this ambiguity could not help the opposite parties. What have been stated earlier it is clear that the opposite party no.2 has not complied the provisions of Section 141 Negotiable Instruments Act, so far as petitioner no.1 and 2 are concerned. In the absence of such assertions in view of the law laid down by the Hon'ble Apex Court in the case of SMS Pharmaceuticals Limited (supra) this Court is of the view that the complaint, so far as it relates to the petitioners, as well as the cognizance order is bad in law and is liable to be quashed.
44. Accordingly petition is allowed. Complaint case no.866 of 2005 pending before Special Judicial Magistrate (Pollution) CBI, Lucknow Indo Gulf Fertilizers Limited vs. M/s Vinod Kumar and Company under Section 138 Negotiable Instruments Act, Police Station Hazratganj is quashed to the extent it relates to the petitioners Smt. Vimla Devi and Smt. Munni Devi. Summoning order dated 15.12.2005, so far as it relates to the petitioner Vimla Devi, Munni Devi is also quashed. Complaint shall proceed for rest of the accused in accordance with law.
Date :- 09.02.2017 mks (Anil Kumar Srivastava- II, J.)