Uttarakhand High Court
Ms Arvinder Kaur vs Ms Kashmiri Lal Construction Pvt Ltd on 10 October, 2017
Author: U.C. Dhyani
Bench: U.C. Dhyani
IN THE HIGH COURT OF UTTARAKHAND AT NAINITAL
Criminal Misc. Application (C-482) No. 997 of 2014
Ms. Arvinder Kaur .... Applicant
versus
M/s Kashmiri Lal Construction Pvt. Ltd. .... Respondent
Mr. L.K. Tiwari, Advocate for the applicant.
U.C. Dhyani, J.(Oral)
By means of present application under Section 482 Cr.P.C., the applicant seeks to quash the summoning order dated 09.04.2013, as also the entire proceedings of criminal complaint case no. 84 of 2012, M/s Kashmiri Lal Construction Pvt. Ltd. vs M/s Rishi Ganga Power Corporation Ltd. and others, under Section 138 of the Negotiable Instruments Act, pending in the court of Judicial Magistrate, Ranikhet, District Almora.
2) When the application under Section 482 Cr.P.C. was taken up on 28.08.2014, the following order was passed by this Court. The relevant portion of the order is reproduced here-in-below for convenience:
" The applicant is facing trial for the offence punishable under Section 138 of the Negotiable Instruments Act, 1881.
It is the submission of learned counsel for the applicant that the applicant was not responsible for the conduct of the business of the company, namely, Rishi Ganga Power Corporation Ltd."2
3) Notice was issued to the respondent, but none has turned up on behalf of said respondent, despite service of notice.
4) Vide order dated 09.04.2013, the applicant was summoned to face the trial for the offence punishable under Section 138 of the Negotiable Instruments Act.
5) It is settled law that factual controversy need not to be gone into by this Court in petition under Section 482 Cr.P.C. in exercise of its inherent jurisdiction. Had the petition involved factual controversy, the Court would not have interfered in the summoning order, but the petition under Section 482 Cr.P.C. involves legal grounds in support of the same, which may briefly be stated as under:
"i) The complainant and respondent entered into an agreement to carry out the work of construction of 33 K.V. line on SP-56 pole with wolf conductor, project work site at Village Raini, Near Joshimath, Chamoli Garhwal. Complainant performed his part. Accused persons issued a cheque in favour of the complainant.
Said cheque was presented in the bank, but was dishonoured for stop payment. Applicant was appointed as independent Director on 06.11.2006 in the company. She was non-executive Director having no shareholding in the company.
ii) Applicant never remained Director in-charge. She was also responsible for the company for the conduct of its business. She was neither a whole time Director, nor had any signing authority throughout the period of her directorship in the company.
iii) Applicant resigned from directorship of company on 22.11.2012, which was properly accepted by the 3 Board of Directors and communicated to the Registrar of Companies. To substantiate the factum of date of appointment and cessation of her directorship in the company, the petitioner filed true copies of Form DIN-2, letter of resignation, part of information given to ROC and annual return-2013, submitted in prescribed format to the ROC of the company (copy Annexure 3 to the petition).
iv) One Rajit Mehra was the Managing Director of the company in-charge and responsible to conduct business and to sign on behalf of company. He was in over all control of the day-to-day business of the company. It was Rajit Mehra, who signed the cheque in question in the capacity of the Managing Director. In other words, Rajit Mehra, Managing Director is the drawer of the cheque. The applicant is not a signatory to the cheque, which was dishonoured.
v) When the offence was committed the accused was not in-charge of the company and as such was not responsible for the conduct of business of company. It is alleged in the complaint that the applicant was having control over the affairs but the same has not been substantiated either through oral evidence or through documents. There is no clear averment in the complaint, as required under law, to this effect and, therefore, no offence punishable under Section 138 of the Negotiable Instruments Act is made out against the applicant.
vi) Section 141 of the Negotiable instruments Act does not make all the Directors liable for the offence. The criminal liability can be fastened only on those, who at the time of commission of the offence, were in-charge of and were responsible for the work and conduct of the company.
4vii) To make a Director vicariously liable for an offence by a company, complainant should specifically spell out in what manner the Director was in-charge of or was responsible for conduct and its business. Merely being a Director of the company is not sufficient to make a person liable under Section 141 of the Negotiable Instruments Act.
viii) Reliance has been placed upon the decision rendered by Hon'ble Apex Court in Ashoke Mal Bafna vs M/s Upper India Steel Mfg. & Engg. Co. Ltd., AIR 2017 SC 2854, to argue that courts must ensure strict compliance of statutory requirement as well as settled principles of law before holding any person vicariously liable for offence committed by the company. The cheques were neither issued by the accused, nor was she involved in day-to-day affairs of the company. She had already resigned from the company prior to presentation of cheques. The Hon'ble Apex Court in these circumstances quashed the criminal proceedings against such Director in the aforesaid decision of Ashoke Mal Bafna (supra).
6) It is, therefore, the contention of learned counsel for the applicant that no prima facie case is made out against the applicant even on a bare reading of the entire criminal complaint.
7) The relevant portion of the complaint for the purposes of adjudication of this C-482 petition can be reproduced here-in-below for convenience:
"That the accused persons no. 2 to 7 are the directors of M/s Rishi Ganga Power Corporation Ltd. having its Regd. Office at Rajit House, B-23, Phase-II, Ludhiana, Punjab, company corporated & registered under the 5 provisions of Companies Act, 1956. Since, the accused persons are having control over the affairs as well as consent or connivance of or are attributable to the neglect conduct on their part with respect to the business transactions arising out of agreement dated 21.10.2008, as such they are being impleaded as accused jointly and separately for the purpose of prosecution under the aforesaid sections.
That the accused persons are responsible and bound to pay the charges and amount under the aforesaid job work, issued a cheque no. 796071 dated 13.06.2012, amounting to Rs.5,00,000/- of Punjab National Bank, payable at par in all branches of P.N.B. to complainant towards the part payment of the outstanding amount."
8) The contents of these paragraphs have been negotiated by the applicant in the aforesaid description.
9) Even on a bare reading of the complaint, the attributes of Section 138 Negotiable Instruments Act do not appear to be made out, at least against the present applicant.
10) Although jurisdiction under Section 482 Cr.P.C. has to be exercised sparingly, carefully and with caution, but this is one such case, in which inherent power under Section 482 Cr.P.C. should be exercised. The power is to be exercised ex debito justitiae, i.e., to do real and substantial justice for administration of which alone, the courts exists.
11) The Court can intervene in exercise of jurisdiction under Section 482 Cr.P.C. to prevent the abuse of process of law, as has been held by Hon'ble Apex Court 6 in Rajiv Thapar and others vs Madan Lal Kapoor (2013) 3 SCC 330; Amit Kapoor vs Ramesh Chander and another 2013 (1) SCC (Crl) 986 and Inder Mohan Goswami and another vs State of Uttarakhand and others (2008) 1 SCC (Crl) 259.
12) Application under Section 482 Cr.P.C. is, therefore, allowed. The entire proceedings of criminal complaint case no. 84 of 2012, M/s Kashmiri Lal Construction Pvt. Ltd. vs M/s Rishi Ganga Power Corporation Ltd. and others, under Section 138 of the Negotiable Instruments Act, pending in the court of Judicial Magistrate, Ranikhet, District Almora are hereby set aside, qua applicant only.
13) Since present application under Section 482 Cr.P.C. is being decided in the absence of the respondent, although with due notice, therefore, opportunity of hearing should be afforded to him if he approaches the Court on his own, either in person or through counsel, and if he feels aggrieved with this order, which is purely based upon statutory foundation. [Vishnu Agarwal vs State of U.P. and another, (2011) 14 SCC 813; Asit Kumar Kar vs State of West Bengal, (2009) 2 SCC 703.] (U.C. Dhyani, J.) Dt. October 10, 2017.
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