Jammu & Kashmir High Court
Sunil Somnath Ghumare vs Fil Industries And Anr. on 12 July, 2006
Equivalent citations: 2007CRILJ2856, 2007(1)JKJ122
Author: Mansoor Ahmad Mir
Bench: Mansoor Ahmad Mir
JUDGMENT Mansoor Ahmad Mir, J.
1. Petitioner has invoked the jurisdiction of this Court in terms of Section 561-A of Criminal Procedure Code for quashing the, proceedings drawn in complaint titled FIL Industries Limited v. Vasundhra Seeds and Anr. under Section 138 of Negotiable Instrument Act, by Judicial Magistrate Ist Class (Sub-Registrar), Srinagar, and, orders dated 14th October, 2004 and 5th Feb., 2005, passed in the said complaint, on the grounds taken in the petition, which can be aptly and precisely summarized as under:
2. That the trial court i.e. Judicial Magistrate Ist Class (Sub-Registrar), Srinagar, is not having territorial jurisdiction to try the case.
The cause of action has not accrued in terms of Section 138 of the Negotiable Instrument Act, at Srinagar.
Petitioner (alleged accused No. 2) is neither proprietor of the firm nor responsible for conduct of the business of the firm in any way.
Heard.
3. It is alleged in the complaint that accused issued cheque for an amount of Rs. 3,45,772/- which was to be drawn at Devayana Sahakri Bank Limited, Kopergaon. Complainant presented it before UCO Bank, Budshah Chowk, Srinagar, on 9th April, 2002. The complainant was informed by the Bank authorities that cheque was received back due to "insufficient funds" and was returned to him which constrained him to serve a notice upon accused as per the mandate of law, and accordingly presented the complaint under Section 138 of Negotiable Instrument Act, hereinafter for short the Act, before the learned Chief Judicial Magistrate, Srinagar which came to be transferred to the Court of Judicial Magistrate Ist Class (Sub-Registrar), Srinagar. The trial court has drawn cognizance and issued process against the accused vide order dated 25th July, 2002.
4. I am of the considered view that the series of steps give cause of action to the complainant for presenting a complaint in terms of Section 138 of the Act. It is profitable to reproduce Section 138 of the Act, herein, which reads as under:
138. Dishonour of cheque for insufficiency, etc., of funds in the account. - Where any cheque drawn by a person on an account maintain 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.
5. While going through this provision of law, it is crystal clear that drawing of cheque, presentation of cheque, dishonour of cheque, issuance of demand notice and failure of the drawer to make payment within 15 days from the date of notice are the ingredients which constitute the commission of offence and give jurisdiction to the court. It is not necessary that all the five acts should be committed within one jurisdiction. The complaint under Section 138 of the Act can be presented before any court having jurisdiction where one of the aforesaid act(s) came to be committed.
Apex Court in case titled as K. Bhaskaran v. Sankaran Vaidyyan Balan and Anr. , has observed as under:
14. The offence under Section 138 of the Act can be completed only with the concatenation of a number of acts. The following are the acts which are components of the said offence: (1) drawing of the cheque, (2) presentation of the cheque to the bank, (3) returning the cheque unpaid by the drawee bank, (4) giving notice in writing to the drawer of the cheque demanding payment of the cheque amount, (5) failure of the drawer to make payment within 15 days of the receipt of the notice.
6. Applying the test to the case in hand, it is alleged, as discussed hereinabove, that cheque came to be presented before UCO Bank Branch Budshah Chowk, Srinagar, and the said bank after following codel formalities forwarded the cheque to Devayana Sahakri Bank Limited, Koper-gaon and received the cheque back as bounced due to insufficient funds and accordingly, UCO bank informed the complainant. In the given circumstances, cause of action has also arisen at Srinagar.
7. The question is whether the cognizance drawn and process issued against the accused No. 2, petitioner herein, is legally correct?
I am of the considered view that cognizance drawn and process issued against the petitioner, accused No. 2, is illegal and without any material and is virtually abuse of the process of law for the following reasons.
8. The complainant has nowhere pleaded that petitioner, accused No. 2, was responsible for the conduct of business of the firm at the relevant point of time. It is profitable to reproduce Section 141 of Negotiable Instrument Act, herein, which reads as under:
141. (1) If the person committing an offence under Section 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 the punished accordingly.
9. While going through this provision of law, it mandates that the liability can be fastened on those partners, managers/directors who at the time of commission of offence were in charge of and responsible to firm for the conduct of its business. The complaint must contain specific averment that the accused was at the relevant point of time in charge of and responsible to the firm for the conduct of its business. If such an averment is lacking in the complaint, the complaint is not maintainable and is to be dismissed.
10. Apex Court in case titled Monaben v. State of Gujarat , has observed that vicarious liability has to be fastened on those who are in charge of and responsible to the Company for the conduct of business. It is profitable to reproduce paras 3 and 6 of the said judgment herein, which reads as under:
3. Section 138 of the Act makes dishonour of the cheque an offence punishable with imprisonment or fine or both. Section 141 relates to offences by the company. It provides that if the person committing an offence under Section 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. Thus, vicarious liability has been fastened on those who are in-charge of and responsible to the company for the conduct of its business. For the purpose of Section 141, a firm comes within the ambit of a company.
6. From the above, it is evident that in the complaint there are no averments against the appellants except stating in the title that they are partners of the firm. Learned Counsel for the respondents/complainant contended that a copy of the partnership deed was also filed which would show that the appellants were active in the business. No such document was filed with the complaint or made part thereof. The filing of the partnership deed later is of no consequence for determining the point in issue. Section 141 does not make all partners liable for the offence. The Criminal liability has been fastened on those who, at the time of the commission of the offence, was in-charge of and was responsible to the firm for the conduct of the business of the firm. These may be sleeping partners who are not required to take any part in the business of the firm; they may be ladies and others who may not know anything about the business of the firm. The primary responsibility is on the complainant to make necessary averments in the complaint so as to make the accused vicariously liable. For fastening the criminal liability, there is no presumption that every partner knows about the transaction. The obligation of the appellants to prove that at the time the offence was committed they were not in-charge of and were not responsible to the firm for the conduct of the business of the firm, would arise only when first the complainant makes necessary averments in the complaint and establishes that fact. The present case is of total absence of requisite averments in the complaint.
The same view is taken by the Apex Court in case titled Katta Sujatha v. Fertilizers & Chemicals Travancore Ltd. . It is profitable to reproduce para-5 of the said judgment herein:
5. In short the partner of a firm is liable to be convicted for an offence committed by the firm if he was in charge of and was responsible to the firm for the conduct of the business of the firm or if it is proved that the offence was committed with the consent or connivance of, or was attributable to any neglect on the part of the partner concerned.
The Apex Court also held in a case titled K. P. G. Nair v. Jindal Menthol India Ltd. , that if it is not alleged in the complaint that accused was at the time of commission of the offence in-charge of and responsible to the company for the conduct of business, the proceedings are liable to be quashed. It is profitable to reproduce paras 7 and 8 of the said judgment herein, which reads as under:
7. From a perusal of the excerpts of the complaint it is seen that nowhere is it stated that on the date when the offence is alleged to have been committed, the appellant was in charge of or was responsible to the accused Company for the conduct of its business. Here it will be appropriate to note Sub-section (1) of Section 141 which is in the following terms:
8. From a perusal of Section 141, it is evident that in a case where a company committed offence under Section 138 then not only the company but also every person who at the time when the offence was committed, was in charge of and was responsible to the company for the conduct of the business of the company shall be deemed to be guilty of the offence and liable to be proceeded against and punished accordingly. It follows that a person other than the company can be proceeded against under those provisions only if that person was in charge of and was responsible to the company for the conduct of its business.
11. It is not alleged in the complaint that accused No. 2, petitioner herein, was in-charge of and responsible for the conduct of business at the relevant point of time.
Petitioner has also filed a certificate which appears to have been issued by concerned bank which discloses that accused No. 2, petitioner herein, is neither proprietor nor signatory of the cheque.
12. Keeping in view the above discussion, I am of the considered view that cognizance drawn and process issued against accused No. 2 is liable to be quashed.
13. Accordingly, this petition is allowed and cognizance drawn and process issued against accused No. 2 is hereby quashed.
14. Petition is accordingly allowed.