Andhra HC (Pre-Telangana)
R. Ramachandran vs Yerram Sesha Reddy And Ors. on 16 December, 1996
Equivalent citations: 1997(1)ALD(CRI)169, 1997(1)ALT(CRI)217, [1999]96COMPCAS830(AP), 1997CRILJ1595
Author: A.S. Bhate
Bench: A.S. Bhate
ORDER
1. These Criminal Petitions are being disposed of by a common order as they raise an identical point for decision.
2. For purposes of convenience the facts in Crl. P. No. 5145 of 1996 are only stated. It is alleged that first respondent was doing cotton business. He is the Managing Partner of the firm M/s. Yerram Sesha Reddy and Company. The petitioner is the Chairman of M/s. Ravindra Mills Limited, Coimbatore. The petitioner issued a cheque dated 23-9-1995 for a particular sum on Bank of Baroda of which the main branch is at Coimbatore. The cheque was in favour of the first respondent. The first respondent presented the cheque in his account with his banker. However, after due advice, the cheque was returned with endorsement that the drawer had stopped the payment. This was on 25-10-1995. Thereafter, the first respondent after following the procedure of issuing notice etc. as required by the provisions of the Negotiable Instruments Act (hereinafter referred to as 'the Act'), filed a complaint which was registered as Criminal Case on the file of the learned Additional Munsif Magistrate, Paruchur. It was for an offence under Section 138 of the Act. The petitioner appeared in pursuance of the summons and requested by appropriate petition that the proceedings be dropped against him. One of the grounds, alleged in the said petition to drop the proceedings was that the prosecution was initiated only against the petitioner without impleading the Company as accused. The prosecution was not maintainable as against the petitioner alone. Unless the Company is also named accused, the prosecution is not maintainable. The learned Magistrate dismissed the said petition by his order dated 3-9-1996.
3. The petitioner has now come here seeking quashing of the proceedings initiated against him on the ground that unless the Company is made co-accused, the prosecution is not maintainable. The proceedings, being not maintainable against him alone, should be quashed. As pointed out already the other two petitions raise identical point. The parties are same. Only the cheques are different and for different sum. However, the transactions are similar.
4. Sri J. Dasaradhi, the learned counsel for the petitioner has very strenuously argued and contended that the prosecution has been initiated only against the petitioner, who is the Chairman of the Company. Though petitioner had issued the cheque, the Company itself must also be made accused. Without the Company being made accused, the prosecution is not maintainable. He relies for this proposition one judgment of the Madras High Court in K. Krishna Bai, M.D., M/s. Surya Advertising Private Limited v. M/s. Arti Press, 1991 (2) MWN (Cri)/HC 110. However, in fairness Mr. Dasaradhi it must also be pointed out that he has brought to my notice the judgment of this Court delivered by Mr. Justice G. Radhakrishna Rao in M. Venkateswara Rao v. N. Venkateswarlu, . This judgment of this High Court does not approve the Madras High Court's view. What is argued by Sri Dasaradhi is that as there is difference of opinion in the Krishana Bai's case and the decision of this Court in M. Venkateswara Rao's case, I should refer the matter to a larger Bench for an authoritative exposition of law. If really I were myself satisfied with the view propounded by the Madras High Court as the correct one perhaps I would have directed this matter to be placed before the Hon'ble the Chief Justice for reference to a larger Bench. However, after giving my anxious thoughts and deep consideration, to the question involved, I am fully satisfied that the position enunciated in Venkateswara Rao's case (supra) is correct.
5. We must refer to S. 138 and S. 141 of the Act and they are as follows :-
"138. 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 extend to one year, 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 fifteen 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 purpose of this Section, "debt or other liability" means a legally enforceable debt or other liability.
Section 141.(1) If the person committing an offence under S. 138 is a company, every person 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 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.
(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 or 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."
From a reading of Section 141 of the Act it will be evident that if the person committing an offence under Section 138 is a Company, then every person, who at the time the offence was committed, was in-charge of, and was responsible to the Company for conducting its business, shall be deemed to be guilty as also the Company itself of the offence and both of them shall be liable to be proceeded against and punished accordingly. It is the proviso which really gives defence to a person, who is in-charge of and responsible to the Company for conduct of the business. The proviso says that any person, who proves that the offence was committed without his knowledge or if he proves that he exercised all due diligence to prevent commission of such offence would not be liable for punishment even if he is in-charge of and responsible to the Company for the conduct of the business. The Section nowhere says that the prosecution shall always be against the Company along with the person in-charge of and responsible to the conduct of the business of the Company. What the Section says is Company as well as such person are both liable for punishment. Therefore, their liability is independent. Each of them is independently liable for punishment. As this is the true purport of the Section, I fail to understand as to how it can be urged that the prosecution has to be against both to make it maintainable. When the liability is of each one them it is perfectly permissible that both can be prosecuted jointly or only one can be prosecuted or both can be prosecuted. This is of course subject to other conditions prescribed by the Act being fulfilled. Then again the matter can be looked at from a different angle. Section 223, Cr.P.C. states as to which persons can be charged jointly. It is in view of this enabling provision in Section 223, Cr.P.C. that more than one accused can be tried together. However, the normal rule is that all trials for separate offences or all trials against different persons are to be held separately. In other words, under the scheme of Criminal Procedure Code the general rule is that separate trials and joint trials are only permitted under certain circumstances. There is no material provision of law laying down that though separate trials can be held, the Court must hold a joint trial. In other words, S. 223, Cr.P.C. is only an enabling provision. Each individual member of the community, is in the absence of exceptional authority conferred by the law to the contrary, entitled to have a separate trial. That is the right vested in the individual. In the eye of law each individual is a separate unit and his rights of liberty cannot, without express authority in the law, be dealt with jointly with those of other persons with whom, far from having community of interest, he may have incompatibility of interest in matters of criminal nature. Therefore, on such general principle, in order to avoid any possibility of prejudice to the accused and for ensuring a fair trial which is always the paramount consideration, it is normally desirable that each accused be tried separately. There is no right vested in the accused to assert that a joint trial must be held along with his co-accused. If at all such a right or claim can be made it can be by the prosecution, it is permissible for the prosecution to decline to array a person as a co-accused in the case. Thus looked at it will be seen that section 223, Cr.P.C. is only a permissive Section and not mandatory one, it permits joint trial. It does not do away with the normal rule that trial of each accused should be separate. In fact it is open for a Judge i.e. the Court in a joint trial also, to split the cases and hold separate trials for separate offences or against separate persons.
6. It is true that S. 223, Cr.P.C. refers to joinder of charges as such and framing of charges is done only in respect of warrant cases. In a summons case there is no charge as such. The offence under the Act is triable as a summons case. Even if it be true that in a summons case there is no formal charge, the accusation made against the accused have to be intimated to him during his examination under S. 251, Cr.P.C. Such examination takes place of formal charge and it is well settled that the principles of Ss. 218 and 223, Cr.P.C. apply not only to warrant cases but also to the summons cases. Therefore, even if the offence under S. 138 of the Act is triable as summons case the principle remains the same. The net result is that it is futile to argue that there must be a joint trial of the petitioner, who is independently liable for punishment, along with the Company which is also liable for punishment for the same offence. The prosecution is quite in order even if it is initiated only against one of those entities.
7. The provisions of S. 141 of the Act are very similar to that of Prevention of Food Adulteration Act and the Essential Commodities Act. Under those Acts also the firm as well as the person, who is in-charge of day-to-day business of the firm, are both liable if the offence is committed under provisions of those Act. In Sheoratan Agarwal v. State of M.P., , the Supreme Court pointed out that S. 20 of the Essential Commodities Act does not lay down any condition that the person-in-charge or, the Officer of the Company may not be separately prosecuted if the Company itself is not prosecuted. The Court observed that each or any one of the persons mentioned in S. 10 of the Essential Commodities Act may be separately prosecuted or prosecuted along with the Company. Section 10 of the Essential Commodities Act is very similar to S. 141 of the Act. This being the law propounded by the Supreme Court I do not think that there is any ambiguity left in holding that the prosecution against petitioner alone in the instant case is valid and legal.
8. I must now refer to the K. Krishna Bai's case relied upon by the learned counsel for the petitioner. In that case in para 8 the learned Judge observed :
"Here again, a reading of S. 138 would show that when a cheque is drawn by a person and is returned unpaid by the bank, for the reasons mentioned in the provision, such person shall be deemed to have committed an offence."
The learned Judge further went to observe that the petitioner in that case was in-charge of and responsible to the Company for the conduct of the business of the said Company and therefore was also liable for the offence committed by the Company. The learned Judge then said that unless the Company was made an accused, the person, who is in-charge and is responsible to the Company for the conduct of the business of the Company, cannot be made an accused. There is not much reasoning given for such conclusion by the learned Judge. The learned Judge has simply referred to the decision of the Supreme Court in U.P. Pollution Control Board v. M/s. Modi Distillery, AIR 1988 SC 1128. It appears that in the said case the complaint was against the Chairman, Vice-Chairman, Managing Director and Members of the Board of Directors of the Company. However, the Company itself was not made accused. The proceedings were quashed by the High Court on the ground that there was no vicarious liability on the Chairman or others and unless there was prosecution of the Company, the prosecution cannot stand. This finding was upheld by the Supreme Court and the Supreme Court directed that the matter may be remitted back for making a formal amendment to make the Company as a party-accused in the case. It appears that the provisions of Anti-Pollution Laws require that the prosecution has to be against the Company. In the instant case the provisions of the Act nowhere specifies that the prosecution must be initiated against the Company or the firm. As pointed out already, the prosecution can be initiated against the person in-charge, as well as against the Company. It would be introducing something in body of S. 141 of the Act to say that prosecution against the person-in-charge of the Company alone is not maintainable.
9. On the other hand, the judgment of this Court in M. Venkateswara Rao's case has clearly dealt with the point with abundant discussion. The learned Judge bas referred to the Supreme Court's decision in Sheoratan Agarwal's case and has also referred to the decision of the Calcutta High Court in Satish Kr. Jhunjunwalla v. Registrar of Companies, 1986 (2) Crimes 586. In the said case it was laid down by the Calcutta High Court that on authority of the Supreme Court decision, the proceedings cannot be quashed merely because the Company has not been joined as the accused in the case. The learned Judge then very rightly points out in para 19 of the judgment that there is no provision in the Negotiable Instruments Act which says that the Company also has to be prosecuted along with the person, who has issued the cheque for and on behalf of the Company. With due respect, I fully agree with the judgment of this Court in M. Venkateswara Rao's case. In fact I have already given my reasons for reaching the same conclusions. The Madras High Court's judgment in K. Krisha Bai's case does not appear to have laid down the correct law and I would prefer to dissent from it.
10. In view of the correct legal position discussed above, it is clear that the objection raised in the present petitions for seeking the direction to quash the prosecutions against the petitioner, are totally meritless. The petitions being devoid of substance are dismissed at the stage of the admission.
11. Petition dismissed.