Madras High Court
N.R.Mahesh vs N.Ashok on 13 April, 2007
Equivalent citations: AIR 2007 (NOC) 2630 (MAD.)
Author: R.Regupathi
Bench: R.Regupathi
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED: 13/04/2007
CORAM
THE HONOURABLE MR.JUSTICE R.REGUPATHI
Crl. O.P. No.5969 of 2005
and
Crl. M.P. No.2210 of 2005
N.R.Mahesh .. Petitioner.
Versus
N.Ashok .. Respondent.
Prayer: Petition filed under Section 482 Cr.P.C seeking to call
for the records in C.C.No.6977 of 2003 on the file of the XXIII
Metropolitan Magistrate at Madras and quash the same.
For Petitioner : Mr.G.M.Ramasubramaniam for M/s.Ram and Ram
For Respondent : Mr.K.Murugan
O R D E R
The petitioner is the sole accused for an offence punishable under Section 138 of the Negotiable Instruments Act. After taking sworn statement of the complainant, process has been issued to the accused and questioning the proceedings, pending against the petitioner, the present petition to quash the proceedings has been filed before this Hon'ble court.
2. It is the alleged that the petitioner borrowed a sum of Rs.9,00,000/- on 20.02.2002 by executing a promissory note. To discharge the liability, the petitioner issued a cheque dated 30.06.2003 and on presentation of the same, it was dishonoured for the reason "insufficient funds". The respondent/complainant issued legal notice dated 04.07.2003 to the petitioner/accused which was received on 11.07.2003. Neither a reply was sent, nor the money was paid, resulting in the filing of the complaint before the learned Magistrate.
3. Learned counsel appearing for the petitioner submits that the proceedings has been initiated against the petitioner in his individual capacity. On a perusal of the cheque in question, it has been signed by the petitioner in his capacity, as a partner for the firm by name N.S.Rama Rao Body works". Therefore, the drawer is the firm and the petitioner in his individual capacity cannot be demanded payment.
4. A notice has not been sent to the firm and it has been sent only to the petitioner. The account from which the said cheque was drawn is maintained only by the firm. Therefore, the offence has been committed only by the partnership firm and not by an individual. Further, there are no specific allegations and averments in the complaint that the petitioner in his capacity as a partner of the firm was in charge and responsible for the conduct of the day to day affairs of the firm. In such circumstances, the complaint against the petitioner, in his personal capacity, is not maintainable and sought to quash the proceedings.
5. Learned counsel appearing for the petitioner relied on a case reported in 2000 Crl.L.J.2526 (D.Chadra Reddy Vs. Gowrisetti Prabhakar and others), wherein it has been held as follows:
"In the instant case the petitioner accused is sought to be prosecuted for the offence under Section 138 in his personal capacity as shown in the complaints whereas the cheque in question which has been returned for insufficiency of funds was issued not by the petitioner herein but by the company through its Managing Director. Even assuming that the petitioner is the Managing Director of the Company and he signs the cheque in his capacity as such on behalf of the company, the petitioner cannot be mulcted with criminal liability on the basis of a cheque which has been drawn on an account of the company and not on the account of the accused. These are not the cases where the complaints disclose that the company is stated to have issued the cheques as a proprietary firm of the accused and that in fact the cheques were drawn on an account which is maintained by the accused himself as a proprietor and gave them in the name of the said company. Therefore, the complaint against the accused under Section 138 would be liable to be quashed."
6. By relying on the judgment reported in 2006 (1) MLJ Crl. 68 (R.Ravi Chandran Vs. C.Subramanian) the learned counsel contended that the petitioner is not an account holder and only the firm is the account holder. A mandate holder cannot be held responsible for non payment of the amount by the account holder. In the decision cited, it has been held as follows.
"The person liable to be dealt with under Section 138 of the Negotiable Instruments Act or the person answerable under Section 138 of the Act must be the person, who had drawn the cheque and who is having the account, in which account the cheque was drawn, and not others. Therefore, the mandate holder certainly will not come within that meaning. The complaint ought to have been filed against the owner or proprietor, who was maintaining the account, who had drawn the cheque, though the mandate holder signed it."
7. Per contra the learned counsel for respondent/complainant submits that it is true that the petitioner has signed the cheque in his capacity as a partner of a firm. It is also true that the firm has been omitted in the complaint and the name of the petitioner alone has been mentioned as sole accused in the case.
8. In the notice issued to the petitioner, it has been specifically alleged that the petitioner borrowed the said sum for business purpose. In the complaint it is alleged that the complainant is a partner in N.S.Rama Rao Body Works, No.41, T.T.K.Road, Alwarpet, Chennai-600 018. It is further alleged that the accused had borrowed the sum of Rs.9,00,000/- on 20.02.2002 from the complainant by executing a pronote and that the accused after receiving the notice, failed and neglected to pay the above said cheque amount within the stipulated period and till date did not send any reply notice.
9. Learned counsel appearing for the respondent/complainant submits that a notice has been issued to the petitioner and there is no dispute that he is the partner of the firm. The petitioner is the person who has signed the cheque. It is incumbent upon him to see that the payments are made, or if there is any dispute regarding the payment of the money in his personal capacity, or in his capacity as a partner would have replied and clarified the same within the stipulated period.
10. The money has been borrowed by the petitioner for his business purpose and in the complaint it has been specifically stated that the petitioner is the partner of the firm. Therefore, in such circumstances, the respondent/complainant has complied with all the formalities to prosecute the petitioner herein and relied on a case reported in AIR 2001 SC 518 (Rajeneesh Agarwal Vs. Amit J, Bhalla), wherein it has been held as follows:
"In the instant case the cheques had been issued by a company through its Director. The appellant payee had issued notice to the said Director. Notwithstanding the service of the notice, the amount in question was not paid. The object of issuing notice indicating the factum of dishonour of the cheques is to give an opportunity to the drawer to make payment within 15 days, so that it will not be necessary for the payee to proceed against in any criminal action, even though the bank dishonoured the cheques. The Director who had signed the cheque it was incumbent upon him to see that the payments are made within the stipulated period of 15 days. It was not disputed that the Director has not signed the cheques, nor was it disputed that he was not the Director of the Company. Having regard to the objet of issuance of such notice, the notices cannot be construed in a narrow technical way without examining the substance of the matter. In the circumstances of the case, it cannot be said that there was no notice to the drawer of the cheque, as required under Section 138 of the Negotiable Instruments Act."
11. I have perused the materials available on record and heard the submissions made by either counsel.
12. Though in the cause title it appears that the petitioner/accused has been prosecuted as if in his personal capacity, while elaborating the details of the petitioner, it has been stated that the petitioner is a partner of the firm. The name of the firm has been omitted in the cause title. The cheque in question has been issued only by the petitioner in the name of the partnership firm, mentioned in the complaint. Issuance of notice by the respondent/complainant to the petitioner is not in dispute. For the notice issued, no reply has been sent by the petitioner.
13. To consider the argument of the petitioner, a reply and an explanation would have been given on receipt of such notice. The present plea without any substance has been taken only to get rid of the liability for which there is no dispute. Such hypertechnical interpretation may not be available to the petitioner in the instant case. The Supreme Court in a case reported in 2000 (1) SCC Crl 1 (Anil Hada Vs. Indian Acrylic Ltd.,) wherein it has been held as follows:
"10.Three categories of persons can be discerned from the said provision who are brought within the purview of the penal liability through the legal fiction envisaged in the Section. They are:(1) the Company which committed the offence, (2) everyone who was in charge of and was responsible for the business of the company, and (3) any other person who is a director or a manager or a secretary or officer of the company, with whose connivance or due to whose neglect the company has committed the offence.
11. Normally an offence can be committed by human beings who are natural persons. Such offence can be tried according to the procedure established by law. By there are offences which could be attributed to juristic persons also. If the drawer of a cheque happens to be a juristic person like a body corporate it can be prosecuted for the offence under Section 138 of the Act. Now there is no scope for doubt regarding that aspect in view of the clear language employed in Section 141 of the Act. In the expanded ambit of the word "company" even firms or any other associations of persons are included and as a necessary adjunct thereof a partner of the firm is treated as director of that company.
12. Thus when the drawer of the cheque who falls within the ambit of Section 138 of the Act is a human being or a body corporate or even firm, prosecution proceedings can be initiated against such drawer. In this context the phrase" as well as" used in sub- section(1) of Section 141 of the Act has some importance. The said phrase would embroil the persons mentioned in the first category within the tentacles of the offence on a par with the offending company. Similarly the words "shall also" in sub-section (2) are capable of bringing the third category persons additionally within the dragnet of the offence on an equal part. The effect of reading Section 141 is that when the company is the drawer of the cheque such company is the principal offender under Section 138 of the Act and the remaining persons are offenders by virtue of the legal fiction created by the legislature as per the section. Hence, the actual offence should have been committed by the company, and then alone the other two categories of persons can also become liable for the offence.
13. If the offence was committed by a company it can be punished only if the company is prosecuted. But instead of prosecuting the company if a payee opts to prosecute only the persons falling within the second or third category the payee can succeed in the case only if he succeeds in showing that the offence was actually committed by the company. In such a prosecution the accused can show that the company has not committed the offence, though such company is not made an accused, and hence the prosecuted accused is not liable to be punished. The provisions do not contain a condition that prosecution of the company is sine qua non for prosecution of the other persons who fall within the second and the third categories mentioned above. No doubt a finding that the offence was committed by the company is sine qua non for convicting those other persons. But if a company is not prosecuted due to any legal snag or otherwise, the other prosecuted persons cannot, on that score alone, escape from the penal liability created through the legal fiction envisaged in Section 141 of the Act."
This judgment has been followed in the judgment reported in 2003 SCC (Cri) 1007 (T.Stanes and Co. Ltd Vs. A.Jaffarullah).
14. Therefore, in the instant case, though the firm has been omitted to be listed as an accused in the case, the partner of the firm is arrayed as an accused and there are specific allegations and averments against him. Accordingly, I find that there are prima facie materials to proceed against the petitioner in accordance with law. Hence, I do not find any merit in the petition to quash the proceedings. The petition is dismissed. Consequently, connected Crl.M.P is closed.
csh To The XXIII Metropolitan Magistrate, Saidapet, Chennai.
[PRV/10289]