Allahabad High Court
M/S Narendra Kumar @ Brothers And 2 ... vs State Of U.P. And Another on 9 December, 2022
Author: Saurabh Shyam Shamshery
Bench: Saurabh Shyam Shamshery
HIGH COURT OF JUDICATURE AT ALLAHABAD Judgment Reserved on 31.10.2022 Delivered on 9.12.2022. Court No. - 84 Case :- MATTERS UNDER ARTICLE 227 No. - 7792 of 2022 Petitioner :- M/S Narendra Kumar @ Brothers And 2 Others Respondent :- State of U.P. and Another Counsel for Petitioner :- Akhilesh Chandra Shukla Counsel for Respondent :- G.A.,Sunil Vashisth Hon'ble Saurabh Shyam Shamshery,J.
1. Heard Shri. Akhilesh Chandra Shukla, learned counsel for petitioners, Shri. Munne Lal, learned A.G.A. for State and Shri.Sunil Vashisth, learned counsel for respondent no.2.
2. The petitioners herein are challenging the orders dated 7.9.2021 and 12.10.2021 passed by Special Chief Judicial Magistrate, Meerut in Complaint No.11580 of 2021 under Section 138 Negotiable Instruments Act, Police Station- Brahmpuri, District-Meerut, whereby respectively amendment in complaint was allowed and petitioners were summoned and the order dated 18.7.2022 passed by Additional Sessions Judge Court No.20 Meerut in Criminal Revision No.81 of 2022 by which criminal revision was dismissed.
3. Learned counsel for petitioners has vehemently argued that essential ingredient to file complaint under Section 138 of N.I. Act are absent in the present case. He submitted that the petitioner no.2 i.e. Saurabh Bansal, alleged to be a working partner of firm namely Narendra Kumar and Brothers was not supported by any document and whatever transactions were made between petitioner no.2 and complainant were in their personal capacity and the company as such was not involved and further petitioner no.3, Narendra Kumar was not even made a party in original complaint and was added by way of amendment which was not permissible.
4. Learned counsel for petitioners also submitted that no notice was issued to petitioner no.3 and no details about service of notice upon petitioners was mentioned in complaint and lastly he submitted that there was no specific allegations in regard to the company as well as petitioners.
5. In support of his submission he has placed reliance upon judgments of Supreme Court in DCM Financial Services Ltd. Vs. J.N. Sareen & Anr, AIR 2008 SC 2255: (2008) 8 SCC 1, Dilip Hariramani Vs. Bank of Baroda, AIRONLINE 2022 SC 668: 2022 SCC OnLine SC 579, Alka Khandu Avhad Vs. Amar Syamprasad Mishra, AIRONLINE 2021 SC 124, S.M.S. Pharmaceuticals Ltd. Vs. Neeta Bhalla and Anr, AIR 2005 SC 3512, S.R.Sukumar Vs. S.Sunaad Raghuram, (2015) 9 SCC 609, Mannalal Chamaria Vs.State of West Bengal, AIR 2014 SC 2240, Mrs. Aparna A.Shah Vs. M/s.Sheth Developers Pvt. Ltd. & Anr, AIR 2013 SC 3210 and the judgment of Allahabad High Court in application under Section 482 No.234 of 2008, Smt. Vimla Devi & Anr. Vs. State of U.P. & Anr, decided on 9.2.2017.
6. Per contra, learned counsel for responent no.2 has vehemently opposed above referred submissions that complainant issued a notice on 30.6.2021 addressed to M/s. Narendra Kumar and Brothers through its Proprietor Shri. Narendra Kumar and Saurabh Bansal (Active partner/authorised signatory) and that contention of learned counsel for applicants that no notice was issued to applicant nos. 2 and 3 are contrary to records and has placed reliance on a copy of demand notice annexed to this application as Annexure No.3.
7. Learned counsel further submitted that complainant has moved an application on 7.9.2021 to carry out an amendment in cause title which was allowed by learned trial court on same day and by way of amendment, cause title of complaint was amended and Narendra Kumar, son of Banwari Lal (Properietor) was arrayed as an accused no.2 and in this regard he has placed reliance upon the judgment of S.R.Sukumar (supra).
8. Accused No.1 M/s. Narendra Kumar and Brothers was arrayed through its working partners through Saurabh Bansal and its properietor Narendra Kumar. Counsel placed reliance upon S.P.Mani and Mohan Dairy Vs. Dr.Snehlatha Elangovan, 2022 SCC OnLine SC 1238, that there was no legal requirement for the complainant to show that accused partner of firm was aware about each and every transaction.
9. The first issue before this Court is whether amendment in a complaint was legally permissible?
10. In this regard rival parties have placed reliance on S.R.Sukumar (Supra).
11. Learned counsel for the applicants has submitted that amendment which could cause prejudice to accused, such cannot be allowed. Contrary, according to counsel for complainant no prejudice was caused.
12. Before considering rival submissions, relevant paragraphs no.18 and 19 of S.R.Sukumar (supra) would be relevant to mention hereinafter:
"18. Insofar as merits of the contention regarding allowing of amendment application, it is true that there is no specific provision in the Code to amend either a complaint or a petition filed under the provisions of the Code, but the Courts have held that the petitions seeking such amendment to correct curable infirmities can be allowed even in respect of complaints. In U.P. Pollution Control Board vs. Modi Distillery And Ors., (1987) 3 SCC 684, wherein the name of the company was wrongly mentioned in the complaint that is, instead of Modi Industries Ltd. the name of the company was mentioned as Modi Distillery and the name was sought to be amended. In such factual background, this Court has held as follows:-
"...The learned Single Judge has focussed his attention only on the [pic]technical flaw in the complaint and has failed to comprehend that the flaw had occurred due to the recalcitrant attitude of Modi Distillery and furthermore the infirmity is one which could be easily removed by having the matter remitted to the Chief Judicial Magistrate with a direction to call upon the appellant to make the formal amendments to the averments contained in para 2 of the complaint so as to make the controlling company of the industrial unit figure as the concerned accused in the complaint. All that has to be done is the making of a formal application for amendment by the appellant for leave to amend by substituting the name of Modi Industries Limited, the company owning the industrial unit, in place of Modi Distillery.... Furthermore, the legal infirmity is of such a nature which could be easily cured..."
19. What is discernible from the U.P. Pollution Control Board's case is that easily curable legal infirmity could be cured by means of a formal application for amendment. If the amendment sought to be made relates to a simple infirmity which is curable by means of a formal amendment and by allowing such amendment, no prejudice could be caused to the other side, notwithstanding the fact that there is no enabling provision in the Code for entertaining such amendment, the Court may permit such an amendment to be made. On the contrary, if the amendment sought to be made in the complaint does not relate either to a curable infirmity or the same cannot be corrected by a formal amendment or if there is likelihood of prejudice to the other side, then the Court shall not allow such amendment in the complaint."
13. In order to consider rival submission, I have carefully perused the contents of notice dated 30.6.2021 issued by complainant (Annexure No.3 to application). It was addressed to "M/s. Narendra Kumar and Brothers 18 Dal Mandi Meerut City, through its proprietor Shri. Narendra Kumar Saurabh Bansal (Active partner/authorised signatory) with specific contention that:
"3. That you also deal in the trading of Dal, rice etc. in the name of above said proprietorship firm M/s Narendra Kumar & Brothers, 18 Dal Mandi Meerut City. My client came to know after a long period of business with your firm whereas Narendra Kumar's son Saurabh Bansal and Gaurav Bansal are the active partner as well as authorize signatory of the above said firm M/s. Narendra Kumar and Brothers 18 Dal Mandi Meerut City.
4. That all the business/order of the Dal and rice time to time has been ordered by Saurabh Bansal, Narendra Kumar and Gaurav Bansal and and the payment of the received goods has also been done by the Saurabh Bansal by way of cheque duly signed by him on behalf of the firm M/s. Narendra Kumar and Brothers 18 Dal Mandi Meerut City the act of the Shaurabh Bansal shows that Shaurabh is the main active partner of the firm M/s. Narendra Kumar and Brothers 18 Dal Mandi Meerut City. As per the order placed and payment done on behalf of the firm M/s. Narendra Kumar and Brothers 18 Dal Mandi Meerut City, Narendra Kumar and Shaurabh Bansal are jointly responsible of total legal liability of the firm M/s. Narendra Kumar and Brothers 18 Dal Mandi Meerut City.
15. That it shows that you (Shaurabh Bansal) intentionally and deliberately issued the above said cheques to my client with the different signatures with the intention of cheating and not making the outstanding payments of unpaid price of goods supplied by my clients firm as per your request and the complete goods have been duly received by you within time making the legal liability against your firm for making the payment.
16. That you (Shaurabh Bansal & Narendra Kumar) on behalf of the above said firm that due some an information of dishonour of the above said cheque (cheque No.-63374 dated 29-01-2021 of the Federal Bank Ltd. 17 Chiipi Tank Begum Bridge Road Meerut) was received by my client on 07-02-2021."
14. In the complaint, above referred averments are reiterated in paragraphs nos.2,3,6,8,10 and 11 (Annexure No.1 to this application) however, initially in cause title, name of applicant no.3, Narendra Kumar was not mentioned though, there were specific averments against him also.
15. In these circumstances, application moved by the complainant for amendment in cause title was submitted and it was allowed, therefore, the amendment could not be considered to be a substantial one as it was only to add applicant no.3 as one of the parties to complaint and no amendment was proposed in contents of the application.
16. In S.R.Sukumar (supra), Supreme Court has reproduced part of U.P. Pollution Control, Board (supra) wherein amendment of details of the company was allowed and it was held that Court may permit an amendment which are formal in nature though a caveat was put that in event of likelihood of prejudice to the other side, such amendment may not be allowed.
17. As discussed above, amendment was only in the cause title without any amendment in body of complaint wherein there were specific allegations against the applicant no.3 also, therefore, in the light of judgment of S.R. Sukumar (supra), since no prejudice was caused, therefore, there was no illegality in amendment of the cause title, as such submission of learned counsel for the applicants is rejected.
18. The second argument of learned counsel for the applicants that there was no averment in complaint that applicants were incharge of conducting business at relevant time and since no notice was issued to applicants in capacity of their alleged responsibility, complaint was not maintainable.
19. Above arguments were vehemently opposed by learned counsel for the opposite party no.2.
20. Before considering rival submissions, few paragraphs of judgments relied upon by the applicants in, Dilip Hariramani (supra) and S.M.S. Pharmaceuticals Ltd. (supra) are mentioned mentioned hereinafter:
Dilip Hariramani (supra) "14. The provisions of Section 141 impose vicarious liability by deeming fiction which presupposes and requires the commission of the offence by the company or firm. Therefore, unless the company or firm has committed the offence as a principal accused, the persons mentioned in sub-section (1) or (2) would not be liable and convicted as vicariously liable. Section 141 of the NI Act extends vicarious criminal liability to officers associated with the company or firm when one of the twin requirements of Section 141 has been satisfied, which person(s) then, by deeming fiction, is made vicariously liable and punished. However, such vicarious liability arises only when the company or firm commits the offence as the primary offender. This view has been subsequently followed in Sharad Kumar Sanghi v. Sangita Rane,17 Himanshu v. B. Shivamurthy and Another,18 and Hindustan Unilever Limited v. State of Madhya Pradesh.19 The exception carved out in Aneeta Hada (supra),20 which applies when there is a legal bar for prosecuting a company or a firm, is not felicitous for the present case. No such plea or assertion is made by the respondent."
S.M.S. Pharmaceuticals Ltd. (supra) "20. In view of the above discussion, our answers to the questions posed in the Reference are as under:
(a) It is necessary to specifically aver in a complaint under Section 141 that at the time the offence was committed, the person accused was in charge of, and responsible for the conduct of business of the company. This averment is an essential requirement of Section 141 and has to be made in a complaint. Without this averment being made in a complaint, the requirements of Section 141 cannot be said to be satisfied.
(b) The answer to question posed in sub-para (b) has to be in negative. Merely being a director of a company is not sufficient to make the person liable under Section 141 of the Act. A director in a company cannot be deemed to be in charge of and responsible to the company for conduct of its business. The requirement of Section 141 is that the person sought to be made liable should be in charge of and responsible for the conduct of the business of the company at the relevant time. This has to be averred as a fact as there is no deemed liability of a director in such cases.
(c) The answer to question (c) has to be in affirmative. The question notes that the Managing Director or Joint Managing Director would be admittedly in charge of the company and responsible to the company for conduct of its business. When that is so, holders of such positions in a company become liable under Section 141 of the Act. By virtue of the office they hold as Managing Director or Joint Managing Director, these persons are in charge of and responsible for the conduct of business of the company. Therefore, they get covered under Section 141. So far as signatory of a cheque which is dishonoured is concerned, he is clearly responsible for the incriminating act and will be covered under sub-section (2) of Section 141."
21. It will also be relevant to refer to para 47 of a recent judgment of Supreme Court in S.P.Mani and Mohan Dairy Vs. Dr.Snehlatha Elangovan, 2022 SCC OnLine SC 1238, that:
"47.Our final conclusions may be summarised as under: a.) The primary responsibility of the complainant is to make specific averments in the complaint so as to make the accused vicariously liable. For fastening the criminal liability, there is no legal requirement for the complainant to show that the accused partner of the firm was aware about each and every transaction. On the other hand, the first proviso to subsection (1) of Section 141 of the Act clearly lays down that if the accused is able to prove to the satisfaction of the Court that the offence was committed without his/her knowledge or he/she had exercised due diligence to prevent the commission of such offence, he/she will not be liable of punishment.
b.) The complainant is supposed to know only generally as to who were in charge of the affairs of the company or firm, as the case may be. The other administrative matters would be within the special knowledge of the company or the firm and those who are in charge of it. In such circumstances, the complainant is expected to allege that the persons named in the complaint are in charge of the affairs of the company/firm. It is only the Directors of the company or the partners of the firm, as the case may be, who have the special knowledge about the role they had played in the company or the partners in a firm to show before the court that at the relevant point of time they were not in charge of the affairs of the company. Advertence to Sections 138 and Section 141 respectively of the NI Act shows that on the other elements of an offence under Section 138 being satisfied, the burden is on the Board of Directors or the officers in charge of the affairs of the company/partners of a firm to show that they were not liable to be convicted. The existence of any special circumstance that makes them not liable is something that is peculiarly within their knowledge and it is for them to establish at the trial to show that at the relevant time they were not in charge of the affairs of the company or the firm.
c.) Needless to say, the final judgement and order would depend on the evidence adduced. Criminal liability is attracted only on those, who at the time of commission of the offence, were in charge of and were responsible for the conduct of the business of the firm. But vicarious criminal liability can be inferred against the partners of a firm when it is specifically averred in the complaint about the status of the partners 'qua' the firm. This would make them liable to face the prosecution but it does not lead to automatic conviction. Hence, they are not adversely prejudiced if they are eventually found to be not guilty, as a necessary consequence thereof would be acquittal.
d.) If any Director wants the process to be quashed by filing a petition under Section 482 of the Code on the ground that only a bald averment is made in the complaint and that he/she is really not concerned with the issuance of the cheque, he/she must in order to persuade the High Court to quash the process either furnish some sterling incontrovertible material or acceptable circumstances to substantiate his/her contention. He/she must make out a case that making him/her stand the trial would be an abuse of process of Court."
22. In order to consider the above referred legal issue, I have carefully perused the complaint wherein there are specific averments in paragraph 2 that there was a transaction between the applicant and a company through Saurabh Bansal, Gaurav Bansal and Narendra Kumar and Saurabh Bansal (applicant no.2) being authorised signatory have paid amount to the complainant during their business transaction which was honoured, however, later on when dispute arose, when payment was demanded, accused Saurabh Bansal on a cheque book of Narendra Kumar and Brothers issued three cheques which were dishonoured due to mismatch of signatures.
23. In the complaint, it was also specifically averred that Narendra Kumar accused no.2 being proprietor of M/s Narendra Kumar and Brothers was also actively involved in negotiations during time when there was no dispute in business as well as both the accused persons were acting through their firm and were negotiating with the complainant and assured that cheques would be honoured, but they were dishonoured.
24. In light of above factual aspect that there were specific averments in regard to responsibility of both accused in the firm, therefore there were sufficient material for purpose of making out an opinion that there were sufficient grounds to proceed against applicants at the stage and order was passed under Section 204 Cr.P.C.
25. The requirement as mentioned in S.M.S. Pharmaceuticals (supra) are prima-facie satisfied that since cheque was issued by the company, through its authorized signatory, therefore, prima-facie, firm has committed an offence as a primary accused and both applicant nos.2 and 3 became vicarious liable, therefore, as held in Dilip Hariramani (supra) prima-facie case is made out against both applicants.
26. S.P. Mani (supra) would also be relevant to mention at this stage that there is no legal acquirement to show that the accused partner was aware about each and every transaction as well as in order to quash the proceedings, the accused has to pursue the High Court by furnishing some sterling and uncontroverted material however, there was no such material before this Court to accept defence version of applicants during challenge to the summoning order.
27. At this stage, it would be also apposite to mention paragraph nos. 16 to 19 of Rathish Babu Unnikrishnan Vs. State (Govt. of NCT of Delhi) and Another, 2022 SCC OnLine SC 513, that :
"16. The proposition of law as set out above makes it abundantly clear that the Court should be slow to grant the relief of quashing a complaint at a pre-trial stage, when the factual controversy is in the realm of possibility particularly because of the legal presumption, as in this matter. What is also of note is that the factual defence without having to adduce any evidence need to be of an unimpeachable quality, so as to altogether disprove the allegations made in the complaint.
17. The consequences of scuttling the criminal process at a pre-trial stage can be grave and irreparable. Quashing proceedings at preliminary stages will result in finality without the parties having had an opportunity to adduce evidence and the consequence then is that the proper forum i.e., the trial Court is ousted from weighing the material evidence. If this is allowed, the accused may be given an un-merited advantage in the criminal process. Also because of the legal presumption, when the cheque and the signature are not disputed by the appellant, the balance of convenience at this stage is in favour of the complainant/prosecution, as the accused will have due opportunity to adduce defence evidence during the trial, to rebut the presumption.
18. Situated thus, to non-suit the complainant, at the stage of the summoning order, when the factual controversy is yet to be canvassed and considered by the trial court will not in our opinion be judicious. Based upon a prima facie impression, an element of criminality cannot entirely be ruled out here subject to the determination by the trial Court. Therefore, when the proceedings are at a nascent stage, scuttling of the criminal process is not merited.
19. In our assessment, the impugned judgment is rendered by applying the correct legal principles and the High Court rightly declined relief to the accused, in the quashing proceeding. Having said this, to rebut the legal presumption against him, the appellant must also get a fair opportunity to adduce his evidence in an open trial by an impartial judge who can dispassionately weigh the material to reach the truth of the matter. At this point, one might benefit by recalling the words of Harry Brown, the American author and investment advisor who so aptly said - "A fair trial is one in which the rules of evidence are honored, the accused has competent counsel, and the judge enforce the proper court room procedure - a trial in which every assumption can be challenged." We expect no less and no more for the appellant."
28. In view of the above discussion, no circumstances exist which warrants interference by exercising inherent jurisdiction to quash proceedings at the stage of summoning initiated against the accused persons as well as to interfere with impugned order passed in the revision petition.
29. In view of the above, the petition is dismissed and the trial court is directed to conclude the trial expeditiously considering directions passed by Supreme Court in Re-:Expeditious trial of cases under Section 138 N.I. Act, 1881, reported in 2021 SCC Online SC 325.
Order Date :-9.12.2022 SB/AK