Andhra HC (Pre-Telangana)
Bharat Kumar Modi And Ors. vs Pennar Paterson Securities Ltd. And ... on 12 April, 1999
Equivalent citations: 1999(1)ALD(CRI)749, 1999(3)ALT595, [1999]97COMPCAS406(AP), 1999CRILJ3803
Author: K.B. Siddappa
Bench: K.B. Siddappa
JUDGMENT K.B. siddappa, J.
1. These revision cases are connected. Hence, they are disposed of by a common order.
2. Criminal Revision Case No. 267 of 1999 is filed against the order passed in Crl. M. P. No. 3567 of 1998 in C. C. No. 506 of 1997 on the file of XVth Metropolitan Magistrate, Hyderabad.
3. Criminal Revision Case No. 268 of 1999 is filed against the order passed in Criminal M. P. No. 3829 of 1998 in C. C. No. 18 of 1998 on the file of the same Magistrate.
4. Criminal Revision Case No. 269 of 1999 is filed against the order passed in Criminal M. P. No. 383 of 1998 in C. C. No. 19 of 1998 on the file of the same Magistrate.
5. Criminal Revision Case No. 270 of 1999 is filed against the order passed in Criminal M. P. No. 3563 of 1998 in C. C. No. 189 of 1998 on the file of the same Magistrate.
6. Criminal Revision Case No. 271 of 1999 is filed against the order passed in Criminal M. P. No. 3566 of 1998 in C. C. No. 491 of 1998 on the file of the same Magistrate.
7. In all these revision cases the petitioners are A-2 to A-6.
8. The complaint is filed under Section 138 of the Negotiable Instruments Act when the cheques issued by the director of the company were dishonoured.
9. In Criminal R. C. No. 267 of 1999 two cheques were issued by A1-com-pany and they are dated April 1, 1997, and May 1, 1997, and when they were presented to the bank, the bank made an endorsement on May 20, 1997, "payment stopped by drawer". The complainant issued notice as required under Section 138 of the Negotiable Instruments Act on June 20, 1997.
10. In Criminal Revision Case No. 268 of 1999 two cheques were issued by A1-company dated September 1, 1997, and October 1, 1997. The bank made an endorsement on October 13, 1997, "payment stopped by drawer" and this was communicated to the complainant on October 20, 1997. Thereupon the complainant issued notice as required under Section 138 of the Act on October 24, 1997.
11. In Criminal Revision Case No. 269 of 1999 three cheques were issued by A-1-company and they are dated June 1, 1997, July 1, 1997, and August 1, 1997. The bank made an endorsement saying that "payment stopped by drawer" on October 8, 1997. The cheques were returned by the banker to the complainant on October 20, 1997, Notice under Section 138 of the Act was given on October 24, 1997.
12. In Criminal Revision Case No. 270 of 1999 two cheques were issued by A1-company and they are dated November 1, 1997, and December 1, 1997. The bankers endorsement dated December 8, 1997, was "suit filed account" and the bankers memo is dated December 15, 1997. The complainant issued notice under Section 138 of the Act on December 23, 1997.
13. In Criminal Revision Case No. 271 of 1999 three cheques were issued by A1-company and they are dated January 1, 1998, February 1, 1998, and March 1, 1998. The bank made an endorsement "payment stopped by the drawer" dated March 14, 1998. The cheques were returned with a bankers memo to the complainant on March 21, 1998. Notice under Section 138 of the Act was given on April 2, 1998.
14. The main contention of the petitioners is that by the time the offence was alleged to have been committed the petitioners who are accused Nos. 2 to 6 were no longer the directors of the A-1-company. A-2 ceased to be the managing director by resignation with effect from March 3, 1997, A-3 ceased to be director by resignation with effect from May 20, 1996, A-4 ceased to be director by resignation with effect from March 31, 1997, A-5 ceased to be director by resignation with effect from April 20, 1995, and A-6 ceased to be director by resignation with effect from October 1, 1996. Therefore, they filed a petition to discharge.
15. The lower court, after considering the provisions of Chapter 20, held that there is no provision under which the petition could be filed and after discussing the case on the merits dismissed the petitions. Hence, the present revisions are filed.
16. E. Manohar, learned senior counsel appearing for the petitioners, submitted that the Magistrate was wrong in dismissing the petitions on the ground that there is no specific provision under summons proceedings to order discharge. In support of his contentions a strong reliance was placed on the judgment of the Supreme Court in K.M. Mathew v. State of Kerala, . In this case a private complaint was filed under Section 504, read with Section 34 of the Indian Penal Code. The entire complaint does not disclose any prima facie case against the chief editor. In those circumstances, the Supreme Court held that there is need to try the accused when there is no allegation that the accused has committed the crime. The Supreme Court further held :
"7. The High Court seems to be too technical in this regard. If one reads carefully the provisions relating to trial of summons cases the power to drop proceedings against the accused cannot be denied to the Magistrate. Section 204 of the Code indicates that the proceedings before the Magistrate commences upon taking cognizance of the offence and the issue of summons to the accused. When the accused enters appearance in response to the summons, the Magistrate has to take proceedings under Chapter XX of the Code. But the need to try the accused arises when there is allegation in the complaint that the accused has committed the crime. If there is no allegation in the complaint involving the accused in the commission of the crime, it is implied that the Magistrate has no jurisdiction to proceed against the accused.
8. It is open to the accused to plead before the Magistrate that the process against him ought not to have been issued. The Magistrate may drop the proceedings if he is satisfied on reconsideration of the complaint that there is no offence for which the accused could be tried. It is his judicial discretion. No specific provision is required for the Magistrate to drop the proceedings or rescind the process. The order issuing the process is an interim order and not a judgment. It can be varied or recalled. The fact that the process has already been issued is no bar to drop the proceedings if the complaint on the very face of it does not disclose any offence against the accused."
17. Therefore, in his submission the absence of specific provision is not a bar for the Magistrate to discharge if no case is made out against the accused.
18. Learned counsel appearing for the respondents complainants submitted that the Supreme Court case is distinguishable on facts. In that case the complaint itself shows that there was no allegation against the chief editor. In those circumstances, the Supreme Court was pleased to hold as stated above, But in the present case there is a specific allegation against each of the accused Nos. 2 to 6 and they were directors at the time of issuing cheques. The fact that they ceased to be directors subsequently is a matter to be decided during trial. Form No. 32 and the other documents can be established during trial. There are specific allegations in the complaint and prima facie, a case is made out against accused Nos. 2 to 6. If they prove that they were not the directors when the offence was committed they can as well be acquitted but this is not the case for discharge at this stage. In support of his contention, while distinguishing the facts of the Supreme Court judgment referred to supra, he strongly relied upon the judgment of the Bombay High Court rendered in Rajan Kinnerkar v. Eric Cordeiro [1994] 80 Comp Cas 487. In this case it was held while dismissing the petition, that although the petitioner might have to face unnecessary inconvenience by appearing before the criminal court in order to answer a charge in respect of which in all probability he could not be held guilty, the fact that he was no longer an employee or director of the company had to be substantiated on record and this could be done only at the stage of the trial, The petition was, therefore, premature.
19. I am inclined to accept the contention of learned counsel appearing for the respondents-complainants. In the judgment of the Supreme Court there was no allegation at all against the chief editor. In those circumstances, the Supreme Court held that even though there was no specific provision in summons proceedings the magistrate is not divested of the power from discharging. In the present case there are specific allegations in the complaint against A-2 to A-6 that they were directors at the time of issuing cheques. The fact that they ceased to be directors with effect from the dates mentioned above is a matter to be decided during trial.
20. E. Manohar, learned senior counsel submitted that by virtue of Section 610(3) of the Companies Act and the facts mentioned in Form No. 32, a copy of, or extract from, any document kept and registered at any of the offices for the registration of companies under this Act, certified to be a true copy under the hand of the Registrar (whose official position it shall not be necessary to prove), shall, in all legal proceedings, be admissible in evidence as of equal validity with the original document. Therefore, on seeing the document the magistrate can satisfy himself that the accused ceased to be the directors with effect from the respective dates.
21. It is true that Form No. 32 and other documents kept and registered at any of the offices for the registration of companies under the Act shall be admissible in evidence as of equal validity with the original documents but they are to be proved according to law. The proof of such document is not dispensed with, particularly when the resignation and the proceedings issued are from Madhya Pradesh. The fact that accused Nos. 2 to 6 have resigned from the respective dates is not known to the complainant. Therefore, he should be given an opportunity to verify the fact and cross-examine the witnessess when these documents were produced. This exercise cannot be done at this stage. This fullfledged enquiry can be taken up during trial. It is another point that the accused in all probability could not be held guilty after the full trial but they have to undergo this trial and prove the documents on which they relied upon. Therefore, they are not entitled for discharge at this stage. Hence, these revision cases have to be dismissed.
22. Accordingly, the revision cases are dismissed and the magistrate is directed to expedite hearing of these C. Cs. according to law.