Himachal Pradesh High Court
Reserved On: 16.10.2024 vs M/S Man Sarowar And Ors on 23 October, 2024
Author: Sandeep Sharma
Bench: Sandeep Sharma
2024:HHC:10242
IN THE HIGH COURT OF HIMACHAL PRADESH, SHIMLA
CrMMO No. 837 of 2022
Reserved on: 16.10.2024
Date of Decision: 23.10.2024
_____________________________________________________________________
Gurpreet Singh
.........Petitioner
Versus
M/s Man Sarowar and Ors.
.......Respondents
Coram
Hon'ble Mr. Justice Sandeep Sharma, Judge.
Whether approved for reporting? Yes.
For the Petitioner: Mr. Vinod Chauhan, Advocate.
For the Respondents: Mr. Karan Singh Kanwar, Advocate, for respondent
No.1.
Respondents No. 2 and 3 already ex-parte.
___________________________________________________________________________
Sandeep Sharma, J. (Oral)
By way of instant petition filed under Section 482 CrPC, petitioner herein, while praying to set-aside order dated 20.4.2024, passed by the learned Judicial Magistrate First Class, Nahan, District Shimla, Himachal Pradesh, thereby dismissing his application filed under Section 143 of the Negotiable Instruments Act read with Section 248 of the CrPC, praying therein to drop criminal proceedings against him on the ground that he had not signed the cheque in question, has also prayed for quashing of criminal case No. 284/3 of 2018, titled M/s Man Sarowar Minerals and Chemicals v. Punjab Industry and Ors., initiated against him 2 2024:HHC:10242 under Section 138 of the Act, pending adjudication in the Court as detailed herein above.
2. Precisely, the facts of the case as emerge from the record are that respondent-complainant No.1 through its partner Mr. Vijender Kumar Walia, instituted a complaint under Section 138 of the Act, in the Court of learned Chief Judicial Magistrate Nahan, District Sirmaur, Himachal Pradesh, alleging therein that partnership concerned namely M/s Man Sarowar Minerals and Chemicals (hereinafter referred to as 'complainant') manufactures poultry grit and coarse powder in its manufacturing unit situate at Village Khadkoli, Tehsil Sangrah and it on the request having been made by the partnership concern "M/s Punjab Industries" situate at Nabha, District Patiala, Punjab, supplied the poultry grit and coarse powder, through different bills w.e.f. 17.04.2018 to 17.09.2018, and afore partnership concern after having received material, issued a cheque No.525897 dated 26.09.2018 for a sum of Rs. 5.00 lakh from its account No. 32378013842, drawn at State Bank of India, Branch Nabha in favour of the complainant with a view to discharge its enforceable liability.
3. Complainant specifically pleaded in the complaint that accused-Mr. Amarjeet Singh, being one of the partner of the Punjab Industry issued cheque as detailed herein above, on behalf of "Punjab 3 2024:HHC:10242 Industry, Amarjeet Singh and Gurpreet Singh (petitioner herein), but aforesaid cheque on its presentation to the bank concern came to be dishonoured on account of insufficient funds in the bank account of the partnership concern i.e. respondent No.2. Since despite having received legal notice, accused named in the complaint failed to make the payment good within stipulated time, complainant had no option but to institute proceedings under Section 138 of the Act, in the competent court of law, which subsequently being prima-facie convinced that accused named in the complaint has committed offence under Section 138 of the Act, proceeded to issue process against both the accused named in the criminal complaint, including the present petitioner, being partner of the accused partnership concern-M/s Punjab Industries. Petitioner herein, after issuance of process filed an application under Section 143 of the NIA read with Section 258 CrPC, praying therein to drop criminal proceedings against him on the ground that he has not signed the cheque in question, however learned Court below vide impugned order dated 20.04.2022 dismissed the application on the ground that Section 258 of CrPC does not apply to the complainant's case, rather being aggrieved, if any, on account of summoning order, applicant i.e. petitioner herein is required to file revision petition in the competent Court of law. In the aforesaid 4 2024:HHC:10242 background, petitioner herein has approached this Court in the instant proceedings.
4. Vide order dated 09.09.2022, this Court taking note of the averments contained in the petition as well as documents annexed therewith, stayed further proceedings in the criminal complaint, pending adjudication before the competent Court of law, as detailed herein above. Besides above, through instant petition, petitioner has also sought quashment of the complaint on the ground that same is not maintainable qua him for the reason that he never signed and issued any cheque, thereby agreeing to discharge enforceable liability, if any, of the accused partnership concern.
5. Precisely, the grouse of the petitioner, as has been highlighted in the petition and further canvassed by Mr. Vinod Chauhan, learned counsel for the petitioner is that Court below while issuing process against the petitioner herein, failed to take note of the fact that cheque allegedly issued by respondent No.3- Amarjeet Singh in favour of the complainant- M/s Man Sarowar Minerals and Chemicals towards discharge of enforceable liability was never signed by the petitioner herein, being partner of the partnership concern. Mr. Chauhan, further submitted that though it is not in dispute that petitioner herein is/was partner of M/s Punjab 5 2024:HHC:10242 Industry, for which allegedly, one of the partner Mr. Amarjeet had issued cheque in favour of the M/s Man Sarowar Minerals and Chemicals, but once petitioner herein being partner of the aforesaid partnership concern had not signed the cheque and no specific averments ever came to be made in the complaint with regard to liability, if any, of the petitioner being partner of M/s Punjab Industry, there was no occasion, if any, for the Court below to issue process against him.
6. While making this Court peruse contents of the complaint having been filed by the respondent-complainant under Section 138 of the Act, Mr. Vinod, strenuously argued that there is no averment with regard to role, if any, played by the petitioner being partner of the company in day to day management of the company. He submitted that mere being partner of the company or partnership concern would not render partner or director of the company responsible/ liable for conduct, if any, of the partnership concern/company, rather to enforce liability on the partner/director of the company, complainant ought to have specifically pleaded in the complaint factum with regard to role, if any, played by the partner while placing order qua which subsequently cheque came to be issued by the one of the partner towards discharge of liability of partnership concern. He submitted that though cheque in question contains name of the petitioner, being 6 2024:HHC:10242 partner, but that is not sufficient to conclude liability, if any, of the partner, especially when he had not signed the cheque. He further submitted that there is no whisper in the complaint with regard to connivance, knowledge and intention of the petitioner to purchase or place order to the complainant company, for which subsequently one of the partner allegedly issued cheque on behalf of the company. He submitted that though no illegality can be said to have been committed by the Court below while recording finding that accused cannot be discharged of his liability under Section 138 exercising power under Section 258 CrPC, but since Section 143 of the Act, specifically empowers the Court to discharge the accused named in the complaint, Court below ought to have allowed the application filed by the petitioner under Section 143 read with Section 258 CrPC.
7. To substantiate his aforesaid submissions, he placed reliance upon following judgments: 1. Susela Padmavathy Amma v. M/ Bharti Airtel Limited, 2024 SCC OnLine SC 311, 2. Sunita Palita v. Panchami Stone Quarry, (2022) 10 SCC 152, 3. Alka Khandu Avhad v. Amar Syamprasad Mishra and Anr., (2021) 4 SCC 675.
8. To the contrary, Mr. Karan Singh Kanwar, learned counsel for the respondent no. 1, while supporting the impugned order, thereby rejecting the prayer of the petitioner to drop criminal proceedings 7 2024:HHC:10242 vehemently argued that in the case at hand, process was issued against the petitioner on 20.12.2018, and thereafter he despite his having received notice failed to put in appearance and as such, Court concerned was compelled to issue NBWs securing his presence. While referring to order dated 05.03.2020, passed by the Judicial Magistrate First Class, Mr. Kanwar, learned counsel for respondent no. 1, submitted that on 05.03.2020, though accused failed to put in appearance, but an application seeking therein exemption to put in appearance of Mr. Amarjeet Singh came to be filed but same was rejected. He submitted that factum with regard to issuance of process though had come in the knowledge of the petitioner much prior to passing of order dated 05.03.2020, but yet, he kept on lingering the matter by not putting in appearance and after considerable time of issuance of process, filed frivolous application under Section 143 of the Negotiable Instruments Act read with Section 258, seeking therein discharge on the ground that he had not signed the cheque in question. Mr. Kanwar submitted that since petitioner herein after issuance of process against him had virtually put in appearance on 05.03.2020, thereby filing an application for exemption, he is otherwise estopped from laying challenge to the summoning process on the ground that cheque was never issued by him, rather in such like situations, effect 8 2024:HHC:10242 of not signing of cheque, if any by the petitioner, can only be considered and decided by the learned trial Court after framing notice of accusation. He further submitted that once bare perusal of Section 258 itself suggests that accused cannot be discharged in the summary proceedings, no illegality can otherwise be said to have been committed by the Court below while passing order dated 20.4.2022.
9. While adverting to another prayer made by the petitioner for quashing of criminal complaint by the respondent, Mr. Kanwar argued that bare perusal of the complaint filed under Section 138 of the Act, clearly reveals that complainant specifically averred in the complaint that cheque in question, though not signed by the petitioner herein, was issued by the respondent No.3- Amarjeet Singh on behalf of the partnership concern M/s Punjab Industry and another partner Mr. Gurpreet Singh, petitioner herein, towards discharge of liability of company. Mr. Kanwar further submitted that there are specific averments with regard to liability and day to day role played by the petitioner herein being partner of the company in the management or partnership concern, but even if it is presumed that there are no sufficient pleadings, petitioner cannot dispute that respondent- complainant before initiating proceedings under Section 138 of the Act served him with legal notice, specifically stating therein his liability to pay 9 2024:HHC:10242 amount on account of supply of poultry grit and coarse powder. He submitted that since petitioner never replied to the notice nor made payment, averments contained in the notice are deemed to be admitted, if it is so, petitioner herein otherwise cannot be permitted to escape liability on the ground that there are no sufficient pleadings in the complaint with which petitioner has also placed on record copy of notice served upon the petitioner before initiation of proceedings under Section 138 of the Act. Mr. Kanwar further submitted that effect of non-signing of cheque by the petitioner qua liability of company to pay amount to respondent no. 1 can only be ascertained by the learned trial Court in totality of the pleadings as well as evidence adduced on record by the respective parties, in case full fledge trial is permitted to be conducted. Lastly, Mr. Kanwar submitted that even at this stage, no document has been adduced on record by the petitioner suggestive of the fact that he had no liability, if any, towards respondent-complainant for its having supplied poultry grit and course powder and as such, present petition deserves outright rejection. In support of his arguments, he placed reliance upon following judgments: 1. P. Rajarathinam vs. State of Maharastra and Ors., 2000 (10) SCC 529;
2. S.P. Mani and Mohan Dairy vs. Dr. Snehalatha Elangovan, 2022 SCC OnLine SC 1238.
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10. I have heard learned counsel for the parties and perused material available on record.
11. Before ascertaining the genuineness and correctness of the submissions and counter submissions having been made by the learned counsel for the parties vis-à-vis prayer made in the instant petition, this Court deems it necessary to discuss/elaborate the scope and competence of this Court to quash the criminal proceedings while exercising power under Section 482 of Cr.PC.
12. Hon'ble Apex Court in judgment titled State of Haryana and others vs. Bhajan Lal and others, 1992 Supp (1) SCC 335 has laid down several principles, which govern the exercise of jurisdiction of High Court under Section 482 Cr.P.C. Before pronouncement of aforesaid judgment rendered by the Hon'ble Apex Court, a three-Judge Bench of Hon'ble Court in State of Karnataka vs. L. Muniswamy and others, 1977 (2) SCC 699, held that the High Court is entitled to quash a proceeding, if it comes to the conclusion that allowing the proceeding to continue would be an abuse of the process of the Court or that the ends of justice require that the proceeding ought to be quashed. Relevant para is being reproduced herein below:-
"7....In the exercise of this wholesome power, the High Court is entitled to quash a proceeding if it comes to the conclusion that 11 2024:HHC:10242 allowing the proceeding to continue would be an abuse of the process of the Court or that the ends of justice require that the proceeding ought to be quashed. The saving of the High Court's inherent powers, both in civil and criminal matters, is designed to achieve a salutary public purpose which is that a court proceeding ought not to be permitted to degenerate into a weapon of harassment or persecution. In a criminal case, the veiled object behind a lame prosecution, the very nature of the material on which the structure of the prosecution rests and the like would justify the High Court in quashing the proceeding in the interest of justice. The ends of justice are higher than the ends of mere law though justice has got to be administered according to laws made by the legislature. The compelling necessity for making these observations is that without a proper realisation of the object and purpose of the provision which seeks to save the 511 inherent powers of the High Court to do justice, between the State and its subjects, it would be impossible to appreciate the width and contours of that salient jurisdiction."
13. Subsequently, Hon'ble Apex Court in Bhajan Lal (supra), has elaborately considered the scope and ambit of Section 482 Cr.P.C. Subsequently, Hon'ble Apex Court in Vineet Kumar and Ors. v. State of U.P. and Anr., while considering the scope of interference under Sections 397 Cr.PC and 482 Cr.PC, by the High Courts, has held that High Court is entitled to quash a proceeding, if it comes to the conclusion that allowing the proceeding to continue would be an abuse of the process of the Court or that the ends of justice require that the proceedings ought to quashed. The 12 2024:HHC:10242 Hon'ble Apex Court has further held that the saving of the High Court's inherent powers, both in civil and criminal matters, is designed to achieve a salutary public purpose i.e. a court proceeding ought not to be permitted to degenerate into a weapon of harassment or persecution. In the aforesaid case, the Hon'ble Apex Court taking note of seven categories, where power can be exercised under Section 482 Cr.PC, as enumerated in Bhajan Lal (supra), i.e. where a criminal proceeding is manifestly attended with malafides and/or where the proceeding is maliciously instituted with an ulterior motive for wreaking vengeance on the accused and with a view to spite him due to private and personal grudge, quashed the proceedings.
14. Hon'ble Apex Court in Prashant Bharti v. State (NCT of Delhi), (2013) 9 SCC 293, while drawing strength from its earlier judgment titled as Rajiv Thapar and Ors v. Madan Lal Kapoor, (2013) 3 SCC 330, has reiterated that High Court has inherent power under Section 482 Cr.PC., to quash the initiation of the prosecution against an accused, at the stage of issuing process, or at the stage of committal, or even at the stage of framing of charge, but such power must always be used with caution, care and circumspection. While invoking its inherent jurisdiction under Section 482 of the Cr.P.C., the High Court has to be fully satisfied that the material produced by the accused is such, that would lead to the 13 2024:HHC:10242 conclusion, that his/their defence is based on sound, reasonable, and indubitable facts and the material adduced on record itself overrules the veracity of the allegations contained in the accusations levelled by the prosecution/complainant. The material relied upon by the accused should be such, as would persuade a reasonable person to dismiss and condemn the actual basis of the accusations as false. In such a situation, the judicial conscience of the High Court would persuade it to exercise its power under Section 482 Cr.P.C. to quash such criminal proceedings, for that would prevent abuse of process of the court, and secure the ends of justice. In the aforesaid judgment titled Prashant Bharti v. State (NCT of Delhi), (2013) 9 SCC 293, the Hon'ble Apex Court has held as under:-
"22. The proposition of law, pertaining to quashing of criminal proceedings, initiated against an accused by a High Court under Section 482 of the Code of Criminal Procedure (hereinafter referred to as "the Cr.P.C.") has been dealt with by this Court in Rajiv Thapar & Ors. vs. Madan Lal Kapoor wherein this Court inter alia held as under: (2013) 3 SCC 330, paras 29-30)
29. The issue being examined in the instant case is the jurisdiction of the High Court under Section 482 of the Cr.P.C., if it chooses to quash the initiation of the prosecution against an accused, at the stage of issuing process, or at the stage of committal, or even at the stage of framing of charges. These are all stages before the commencement of the actual trial. The same parameters would naturally be available for later stages as well. The power vested in the High Court under Section 482 of the Cr.P.C., at the stages referred to 14 2024:HHC:10242 hereinabove, would have far reaching consequences, inasmuch as, it would negate the prosecution's/complainant's case without allowing the prosecution/complainant to lead evidence. Such a determination must always be rendered with caution, care and circumspection. To invoke its inherent jurisdiction under Section 482 of the Cr.P.C. the High Court has to be fully satisfied, that the material produced by the accused is such, that would lead to the conclusion, that his/their defence is based on sound, reasonable, and indubitable facts; the material produced is such, as would rule out and displace the assertions contained in the charges levelled against the accused; and the material produced is such, as would clearly reject and overrule the veracity of the allegations contained in the accusations levelled by the prosecution/complainant. It should be sufficient to rule out, reject and discard the accusations levelled by the prosecution/complainant, without the necessity of recording any evidence. For this the material relied upon by the defence should not have been refuted, or alternatively, cannot be justifiably refuted, being material of sterling and impeccable quality. The material relied upon by the accused should be such, as would persuade a reasonable person to dismiss and condemn the actual basis of the accusations as false. In such a situation, the judicial conscience of the High Court would persuade it to exercise its power under Section 482 of the Cr.P.C. to quash such criminal proceedings, for that would prevent abuse of process of the court, and secure the ends of justice.
30. Based on the factors canvassed in the foregoing paragraphs, we would delineate the following steps to determine the veracity of a prayer for quashing, raised by an accused by invoking the power vested in the High Court under Section 482 of the Cr.P.C.:-
15 2024:HHC:10242 30.1 Step one, whether the material relied upon by the accused is sound, reasonable, and indubitable, i.e., the material is of sterling and impeccable quality?
30.2 Step two, whether the material relied upon by the accused, would rule out the assertions contained in the charges levelled against the accused, i.e., the material is sufficient to reject and overrule the factual assertions contained in the complaint, i.e., the material is such, as would persuade a reasonable person to dismiss and condemn the factual basis of the accusations as false. 30.3 Step three, whether the material relied upon by the accused, has not been refuted by the prosecution/complainant; and/or the material is such, that it cannot be justifiably refuted by the prosecution/complainant?
30.4 Step four, whether proceeding with the trial would result in an abuse of process of the court, and would not serve the ends of justice?
30.5 If the answer to all the steps is in the affirmative, judicial conscience of the High Court should persuade it to quash such criminal - proceedings, in exercise of power vested in it under Section 482 of the Cr.P.C. Such exercise of power, besides doing justice to the accused, would save precious court time, which would otherwise be wasted in holding such a trial (as well as, proceedings arising therefrom) specially when, it is clear that the same would not conclude in the conviction of the accused."
15. Hon'ble Apex Court in Asmathunnisa v. State of A.P. (2011) 11 SCC 259, has held as under:
"12. This Court, in a number of cases, has laid down the scope and ambit of the High Court's power under section 482 of the Code of 16 2024:HHC:10242 Criminal Procedure. Inherent power under section 482 Cr.P.C. though wide have to be exercised sparingly, carefully and with great caution and only when such exercise is justified 9 by the tests specifically laid down in this section itself. Authority of the court exists for the advancement of justice. If any abuse of the process leading to injustice is brought to the notice of the court, then the Court would be justified in preventing injustice by invoking inherent powers in absence of specific provisions in the Statute.
13. The law has been crystallized more than half a century ago in the case of R.P. Kapur v. State of Punjab AIR 1960 SC 866 wherein this Court has summarized some categories of cases where inherent power can and should be exercised to quash the proceedings. This Court summarized the following three broad categories where the High Court would be justified in exercise of its powers under section 482:
(i) where it manifestly appears that there is a legal bar against the institution or continuance of the proceedings;
(ii) where the allegations in the first information report or complaint taken at their face value and accepted in their entirety do not constitute the offence alleged;
(iii) where the allegations constitute an offence but there is no legal evidence adduced or the evidence adduced clearly or manifestly fails to prove the charge."
14.In Smt. Nagawwa v. Veeranna Shivalingappa Konjalgi and Others (1976) 3 SCC 736, according to the court, the process against the accused can be quashed or set aside :
"(1) where the allegations made in the complaint or the statements of the witnesses recorded in support of the same taken at their face value make out absolutely no case against 17 2024:HHC:10242 the accused or the complaint does not disclose the essential ingredients of an offence which is alleged against the accused; (2) where the allegations made in the complaint are patently absurd and inherently improbable so that no 10 prudent person can ever reach a conclusion that there is sufficient ground for proceeding against the accused;
(3) where the d iscretion exercised by the Magistrate in issuing process is capricious and arbitrary having been based either on no evidence or on materials which are wholly irrelevant or inadmissible; and (4) where the complaint suffers from fundamental legal defects, such as, want of sanction, or absence of a complaint by legally competent authority and the like".
15. This court in State of Karnataka v. L. Muniswamy & Others (1977) 2 SCC 699, observed that the wholesome power under section 482 Cr.P.C. entitles the High Court to quash a proceeding when it comes to the conclusion that allowing the proceedings to continue would be an abuse of the process of the court or that the ends of justice requires that the proceedings ought to be quashed. The High Courts have been invested with inherent powers, both in civil and criminal matters, to achieve a salutary public purpose. A Court proceeding ought not to be permitted to degenerate into a weapon of harassment or persecution. In this case, the court observed that ends of justice are higher than the ends of mere law though justice must be administered according to laws made by the Legislature. This case has been followed in a large number of subsequent cases of this court and other courts."
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16. Hon'ble Apex Court in Asmathunnisa (supra) has categorically held that where discretion exercised by the Magistrate in issuing process is capricious and arbitrary having been based either on no evidence or on materials which are wholly irrelevant or inadmissible; and where the complaint suffers from fundamental legal defects, such as, want of sanction, or absence of a complaint by legally competent authority and the like, High Court would be justified in exercise of its powers under S. 482 CrPC.
17. From the bare perusal of aforesaid exposition of law, it is quite apparent that while exercising its inherent power under Section 482 Cr.PC., High Court can proceed to quash the proceedings, if it comes to the conclusion that allowing the proceedings to continue would be an abuse of process of the law.
18. Now being guided by the aforesaid law laid down by the Hon'ble Apex Court from time to time, this court would make an endeavour to find out "whether the case at hand is a fit case to exericise power under SEction 482 CrPC, to quash the summoning order dated 20.12.2018 passed by the learned Judicial Magistrate First Class Nahan, District Sirmaur Himachal Pradesh in Criminal Case No. 284/3 of 2018, titled M/s Man Sarowar Minerals and Chemicals v. Punjab Industry and Ors.?"
19 2024:HHC:10242
19. Admittedly, in the case at hand, though petitioner herein admits himself to be partner of the partnership concern namely M/s Punjab Industry, but bare perusal of cheque in question, which came to be made available to this Court during proceedings of the case by the learned counsel appearing for the complainant, clearly substantiates the plea set up by the learned counsel for the petitioner that petitioner herein had not signed the cheque in question. Though cheque leaf, which is subject matter of the dispute contains name of the petitioner alongwith other partner Mr. Amarjeet Singh and it also suggests that account of M/s Punjab Industry is operated by the aforesaid partners namely Gurpreet and Amarjeet Singh, but the question which needs to be determined in the case at hand is "whether issuance of cheque on behalf of the partnership concern signed by one of the partner, can render other partner liable to be prosecuted under Section 138 of the Act for his/her having failed to discharge liability for which company/partnership concern had issued cheque?"
20. There cannot be any denial of the fact, rather stands admitted, that petitioner herein is/was partner of the M/s Punjab Industry, for which another partner namely Mr. Amarjeet Singh allegedly issued cheque of Rs. 5.00 lakh in favour of the respondent-complainant towards discharge of enforceable liability, but bare perusal of complaint if read in entirety, 20 2024:HHC:10242 nowhere suggests that petitioner herein being partner of aforesaid partnership concern had any knowledge with regard to order, if any, placed by M/s Punjab Industry for supply of poultry grit and coarse powder from the complainant and thereafter, issuance of cheque by one of the partner on behalf of the company towards discharge of its enforceable liability. Respondent-complainant in complaint has simply stated that respondent No.3- Amarjeet Singh, one of the partner of the M/s Punjab Industry, issued cheque in question in favour of the respondent-complainant for sum of Rs. 5.00 lakh on behalf of the partnership concern i.e. M/s Punjab Industry and petitioner Gurpreet Singh. Interestingly, there are no specific pleadings, if any, with regard to liability of the partner namely Gurpreet Singh, who admittedly had not issued cheque. Complaint speaks about issuance of cheque by respondent no. 3 Amarjeet Singh on behalf of M/s Punjab Industry and its other partner- Mr. Gurpreet, whereas cheque in question, admittedly, came to be signed and issued only by respondent No.3- Amarjeet Singh. There are no pleadings that petitioner herein, being partner of partnership concern, had any knowledge or connivance, if any, with that of another partner namely Amarjeet Singh. No doubt, bank account, for which cheque in question came to be issued, is/was jointly operated by the petitioner and person namely Amarjeet Singh, but once 21 2024:HHC:10242 cheque in question came to be signed by only one of the partner namely Amarjeet Singh, coupled with the fact that no specific pleadings with regard to liability, if any, of the another partner i.e petitioner herein and his having knowledge with regard to cheque issued by another partner towards discharge of liability of partnership concern ever came to be made, there appears to be merit in the contention of learned counsel for the petitioner that Court below ought not have issued process against the petitioner that too after having noticed factum of non-signing of cheque by the petitioner.
21. At this stage, it would be apt to take note of judgment passed by Hon'ble Apex Court in case titled Susela Padmavathy Amma v. M/ Bharti Airtel Limited, 2024 SCC OnLine SC 311, relevant paras whereof read as under:
"21. It was held that merely because a person is a director of a company, it is not necessary that he is aware about the day-today functioning of the company. This Court held that there is no universal rule that a director of a company is in charge of its everyday affairs. It was, therefore, necessary, to aver as to how the director of the company was in charge of day-to-day affairs of the company or responsible to the affairs of the company. This Court, however, clarified that the position of a managing director or a joint managing director in a company may be different. This Court further held that these persons, as the designation of their office suggests, are in charge of a company and are responsible for the conduct of the business of the company. To escape liability, they will have to prove that when the offence was committed, they had no knowledge of the offence or that they exercised all due diligence to prevent the commission of the offence.
22. In the case of Pooja Ravinder Devidasani v. State of Maharashtra this Court observed thus:
22 2024:HHC:10242 "17. ...... Every person connected with the Company will not fall into the ambit of the provision. Time and again, it has been asserted by this Court that only those persons who were in charge of and responsible for the conduct of the business of the Company at the time of commission of an offence will be liable for criminal action. A Director, who was not in charge of and was not responsible for the conduct of the business of the Company at the relevant time, will not be liable for an offence under Section 141 of the NI Act. In National Small Industries Corpn. [National Small Industries Corpn. Ltd. v. Harmeet Singh Paintal, (2010) 3 SCC 330 : (2010) 1 SCC (Civ) 677 : (2010) 2 SCC (Cri) 1113] this Court observed : (SCC p. 336, paras 13-14) "13. Section 141 is a penal provision creating vicarious liability, and which, as per settled law, must be strictly construed. It is therefore, not sufficient to make a bald cursory statement in a complaint that the Director (arrayed as an accused) is in charge of and responsible to the company for the conduct of the business of the company without anything more as to the role of the Director. But the complaint should spell out as to how and in what manner Respondent 1 was in charge of or was responsible to the accused Company for the conduct of its business. This is in consonance with strict interpretation of penal statutes, especially, where such statutes create vicarious liability.
14. A company may have a number of Directors and to make any or all the Directors as accused in a complaint merely on the basis of a statement that they are in charge of and responsible for the conduct of the business of the company without anything more is not a sufficient or adequate fulfilment of the requirements under Section 141."
(emphasis in original)
18. In Girdhari Lal Gupta v. D.H. Mehta [Girdhari Lal Gupta v. D.H. Mehta, (1971) 3 SCC 189 : 1971 SCC (Cri) 279 : AIR 1971 SC 2162], this Court observed that a person "in charge of a business" means that the person should be in overall control of the day-to-day business of the Company.
19. A Director of a company is liable to be convicted for an offence committed by the company if he/she was in charge of and was responsible to the company for the conduct of its business or if it is proved that the offence was committed with the consent or connivance of, or was attributable to any negligence on the part of the Director concerned (see State of 23 2024:HHC:10242 Karnataka v. Pratap Chand [State of Karnataka v. Pratap Chand, (1981) 2 SCC 335 : 1981 SCC (Cri) 453] ).
20. In other words, the law laid down by this Court is that for making a Director of a company liable for the offences committed by the company under Section 141 of the NI Act, there must be specific averments against the Director showing as to how and in what manner the Director was responsible for the conduct of the business of the company.
21.In Sabitha Ramamurthy v. R.B.S. Channabasavaradhya [Sabitha Ramamurthy v. R.B.S. Channabasavaradhya, (2006) 10 SCC 581 : (2007) 1 SCC (Cri) 621], it was held by this Court that : (SCC pp. 584-85, para 7) "7. ... it is not necessary for the complainant to specifically reproduce the wordings of the section but what is required is a clear statement of fact so as to enable the court to arrive at a prima facie opinion that the accused is vicariously liable. Section 141 raises a legal fiction. By reason of the said provision, a person although is not personally liable for commission of such an offence would be vicariously liable therefor. Such vicarious liability can be inferred so far as a company registered or incorporated under the Companies Act, 1956 is concerned only if the requisite statements, which are required to be averred in the complaint petition, are made so as to make the accused therein vicariously liable for the offence committed by the company."
(emphasis supplied) By verbatim reproducing the words of the section without a clear statement of fact supported by proper evidence, so as to make the accused vicariously liable, is a ground for quashing proceedings initiated against such person under Section 141 of the NI Act."
23. It could thus clearly be seen that this Court has held that merely reproducing the words of the section without a clear statement of fact as to how and in what manner a director of the company was responsible for the conduct of the business of the company, would not ipso facto make the director vicariously liable.
24. A similar view has previously been taken by this Court in the case of K.K. Ahuja v. V.K. Vora.
25. In the case of State of NCT of Delhi through Prosecuting Officer, Insecticides, Government of NCT, Delhi v. Rajiv Khurana, this Court reiterated the position thus:
24 2024:HHC:10242 "17. The ratio of all these cases is that the complainant is required to state in the complaint how a Director who is sought to be made an accused, was in charge of the business of the company or responsible for the conduct of the company's business. Every Director need not be and is not in charge of the business of the company. If that is the position with regard to a Director, it is needless to emphasise that in the case of non-
Director officers, it is all the more necessary to state what were his duties and responsibilities in the conduct of business of the company and how and in what manner he is responsible or liable."
26. In the case of Ashoke Mal Bafna (supra), this Court observed thus:
"9. To fasten vicarious liability under Section 141 of the Act on a person, the law is well settled by this Court in a catena of cases that the complainant should specifically show as to how and in what manner the accused was responsible. Simply because a person is a Director of a defaulter Company, does not make him liable under the Act. Time and again, it has been asserted by this Court that only the person who was at the helm of affairs of the Company and in charge of and responsible for the conduct of the business at the time of commission of an offence will be liable for criminal action. (See Pooja Ravinder Devidasani v. State of Maharashtra [Pooja Ravinder Devidasani v. State of Maharashtra, (2014) 16 SCC 1 : (2015) 3 SCC (Civ) 384 : (2015) 3 SCC (Cri) 378 : AIR 2015 SC 675].)
10. In other words, the law laid down by this Court is that for making a Director of a Company liable for the offences committed by the Company under Section 141 of the Act, there must be specific averments against the Director showing as to how and in what manner the Director was responsible for the conduct of the business of the Company."
27. A similar view has been taken by this Court in the case of Lalankumar Singh v. State of Maharashtra to which one of us (B.R. Gavai, J.) was a party."
22. Reliance is also placed upon judgment rendered by the Hon'ble Apex Court in Sunita Palita v. Panchami Stone Quarry, (2022) 10 SCC 152, relevant paras whereof read as under:
25 2024:HHC:10242 "28. In Pooja Ravinder Devidasani v. State of Maharashtra [Pooja Ravinder Devidasani v. State of Maharashtra, (2014) 16 SCC 1 :
(2015) 3 SCC (Civ) 384 : (2015) 3 SCC (Cri) 378] this Court held as under : (SCC pp. 9-10, paras 17-20) "17. ... Non-executive Director is no doubt a custodian of the governance of the company but is not involved in the day-to-day affairs of the running of its business and only monitors the executive activity. To fasten vicarious liability under Section 141 of the Act on a person, at the material time that person shall have been at the helm of affairs of the company, one who actively looks after the day-to-day activities of the company and is particularly responsible for the conduct of its business.
Simply because a person is a Director of a company, does not make him liable under the NI Act. Every person connected with the Company will not fall into the ambit of the provision. Time and again, it has been asserted by this Court that only those persons who were in charge of and responsible for the conduct of the business of the Company at the time of commission of an offence will be liable for criminal action. A Director, who was not in charge of and was not responsible for the conduct of the business of the Company at the relevant time, will not be liable for an offence under Section 141 of the NI Act. InNational Small Industries Corpn. [National Small Industries Corpn. Ltd. v. Harmeet Singh Paintal, (2010) 3 SCC 330 : (2010) 1 SCC (Civ) 677 : (2010) 2 SCC (Cri) 1113] this Court observed : (SCC p. 336, paras 13-14) '13. Section 141 is a penal provision creating vicarious liability, and which, as per settled law, must be strictly construed. It is therefore, not sufficient to make a bald cursory statement in a 26 2024:HHC:10242 complaint that the Director (arrayed as an accused) is in charge of and responsible to the company for the conduct of the business of the company without anything more as to the role of the Director. But the complaint should spell out as to how and in what manner Respondent 1 was in charge of or was responsible to the accused Company for the conduct of its business. This is in consonance with strict interpretation of penal statutes, especially, where such statutes create vicarious liability.
14. A company may have a number of Directors and to make any or all the Directors as accused in a complaint merely on the basis of a statement that they are in charge of and responsible for the conduct of the business of the company without anything more is not a sufficient or adequate fulfilment of the requirements under Section 141.'
18. In Girdhari Lal Gupta v. D.H. Mehta [Girdhari Lal Gupta v. D.H. Mehta, (1971) 3 SCC 189 : 1971 SCC (Cri) 279] , this Court observed that a person "in charge of a business"
means that the person should be in overall control of the day- to-day business of the Company.
19. A Director of a company is liable to be convicted for an offence committed by the company if he/she was in charge of and was responsible to the company for the conduct of its business or if it is proved that the offence was committed with the consent or connivance of, or was attributable to any negligence on the part of the Director concerned (see State of Karnataka v. Pratap Chand [State of Karnataka v. Pratap Chand, (1981) 2 SCC 335 : 1981 SCC (Cri) 453] ).
20. In other words, the law laid down by this Court is that for making a Director of a company liable for the offences 27 2024:HHC:10242 committed by the company under Section 141 of the NI Act, there must be specific averments against the Director showing as to how and in what manner the Director was responsible for the conduct of the business of the company."
(emphasis in original and supplied)
29. As held in K.K. Ahuja v. V.K. Vora [K.K. Ahuja v. V.K. Vora, (2009) 10 SCC 48 : (2009) 4 SCC (Civ) 1 : (2010) 2 SCC (Cri) 1181] when the accused is the Managing Director or a Joint Managing Director of a company, it is not necessary to make an averment in the complaint that he is in charge of, and is responsible to the company for the conduct of the business of the company. This is because the prefix "Managing" to the word "Director" makes it clear that the Director was in charge of and responsible to the company, for the conduct of the business of the company. A Director or an officer of the company who signed the cheque renders himself liable in case of dishonour. Other officers of a company can be made liable only under sub- section (2) of Section 141 of the NI Act by averring in the complaint, their position and duties in the company, and their role in regard to the issue and dishonour of the cheque, disclosing consent, connivance or negligence.
36. The High Court also rightly held that the Managing Director or Joint Managing Director would admittedly be in charge of the company and responsible to the company for the conduct of its business by virtue of the office they hold as Managing Director or Joint Manging Director. These persons are in charge of and responsible for the conduct of the business of the company and they get covered under Section 141 of the NI Act. A signatory of a cheque is clearly liable under Sections 138/141 of the NI Act.
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37. The High Court, however, failed to appreciate that none of these appellants were Managing Director or Joint Managing Director of the accused Company. Nor were they signatories of the cheque which was dishonoured.
41. A Director of a company who was not in charge or responsible for the conduct of the business of the company at the relevant time, will not be liable under those provisions. As held by this Court in, inter alia, S.M.S. Pharmaceuticals [S.M.S. Pharmaceuticals Ltd. v. Neeta Bhalla, (2005) 8 SCC 89 : 2005 SCC (Cri) 1975] , the liability under Sections 138/141 of the NI Act arises from being in charge of and responsible for the conduct of the business of the company at the relevant time when the offence was committed, and not on the basis of merely holding a designation or office in a company. It would be a travesty of justice to drag Directors, who may not even be connected with the issuance of a cheque or dishonour thereof, such as Director (Personnel), Director (Human Resources Development), etc. into criminal proceedings under the NI Act, only because of their designation.
42. Liability depends on the role one plays in the affairs of a company and not on designation or status alone as held by this Court in S.M.S. Pharmaceuticals [S.M.S. Pharmaceuticals Ltd. v. Neeta Bhalla, (2005) 8 SCC 89 : 2005 SCC (Cri) 1975] . The materials on record clearly show that these appellants were independent, non- executive Directors of the company. As held by this Court in Pooja Ravinder Devidasani v. State of Maharashtra [Pooja Ravinder Devidasani v. State of Maharashtra, (2014) 16 SCC 1 : (2015) 3 SCC (Civ) 384 : (2015) 3 SCC (Cri) 378] a non-executive Director is not involved in the day-to-day affairs of the company or in the running of its business. Such Director is in no way responsible for the day-to- day running of the accused Company. Moreover, when a complaint is 29 2024:HHC:10242 filed against a Director of the company, who is not the signatory of the dishonoured cheque, specific averments have to be made in the pleadings to substantiate the contention in the complaint, that such Director was in charge of and responsible for conduct of the business of the Company or the Company, unless such Director is the designated Managing Director or Joint Managing Director who would obviously be responsible for the company and/or its business and affairs."
23. Hon'ble Apex Court in Alka Khandu Avhad v. Amar Syamprasad Mishra and Anr., (2021) 4 SCC 675, has held as under:
"8. We have heard the learned counsel appearing on behalf of the respective parties at length, considered material on record and also considered the averments and allegations in the complaint. It emerges from the record that the dishonoured cheque was issued by original Accused 1 husband of the appellant. It was drawn from the bank account of original Accused 1. The dishonoured cheque was signed by original Accused 1. Therefore, the dishonoured cheque was signed by original Accused 1 and it was drawn on the bank account of original Accused 1. The appellant herein-original Accused 2 is neither the signatory to the cheque nor the dishonoured cheque was drawn from her bank account. That the account in question was not a joint account. In the light of the aforesaid facts, it is required to be considered whether the appellant herein-original Accused 2 can be prosecuted for the offence punishable under Section 138 read with Section 141 of the NI Act?
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10. Therefore, a person who is the signatory to the cheque and the cheque is drawn by that person on an account maintained by him and the cheque has been issued for the discharge, in whole or in part, of any debt or other liability and the said cheque has been returned by the bank unpaid, such person can be said to have committed an offence. Section 138 of the NI Act does not speak about the joint liability. Even in case of a joint liability, in case of individual persons, a person other than a person who has drawn the cheque on an account maintained by him, cannot be prosecuted for the offence under Section 138 of the NI Act. A person might have been jointly liable to pay the debt, but if such a person who might have been liable to pay the debt jointly, cannot be prosecuted unless the bank account is jointly maintained and that he was a signatory to the cheque."
24. Reliance is also placed upon judgment passed by the High Court of Judicature at Bombay titled Aarti Shailesh Shah v. Satish Vasant Dharukkar and Anr. in Criminal Application No. 747 of 2023.
25. Careful perusal of aforesaid judgments if read in its entirety clearly suggests that joint account holder cannot be prosecuted unless cheque has been signed by each person, who is joint account holder. It is only the drawer of the cheque who can be made as an accused in any proceedings under Section 138 of the Act. The words 'such person' employed in Section 138 of the Act depict the legislative intent to restrict the liability upon the person who has issued the cheque.
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26. Similarly, this Court finds no force in the submission of learned counsel for the respondent that statutory notice was served upon the petitioner regarding dishonour of cheque in question, who in turn, was under obligation to give an appropriate reply clearing his stance that he has no role to play in the affairs of the company or partnership concern for the reason that aforesaid aspects of the matter can only be dealt with by the learned trial court in the totality of evidence adduced on record by the respective parties. Learned counsel for the respondent further submitted that if the partner, on whom the said notice is alleged to have been served, keeps quiet and does not say anything in the reply, then complainant has all the reason to believe that what he stated in the notice has been accepted by the notice, but this court is not impressed with the aforesaid submission of learned counsel for the respondent because it is nowhere stated in the pleadings that the petitioner was incharge of the day-to-day activities of the company and said offence was committed with the consent, connivance or knowledge of the petitioner, rather such fact is required to be established on record by the complainant in the totality of evidence adduced on record. Moreover, when petitioner has not signed and issued the cheque, it is not understood that how he can be prosecuted under the aforesaid provisions of law.
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27. Judgments passed by the Hon'ble Apex Court in P. Rajarathinam and S.P. Mani and Mohan Dairy cases supra, which have been relied upon by the learned counsel for the respondent, may not be of much help as far as case of the respondent is concerned. Findings and observations given in the aforesaid judgments are in context of appreciation of pleadings as well as evidence adduced on record by the complainant, in afore cases for holding accused guilty of his having committed offence punishable under Section 138 of the Act. Observation made by the Hon'ble Apex Court, that averments contained in the notice issued prior to initiation of proceedings under Section 138 of the Act are also relevant to ascertain liability, if any, of the accused pursuant to his having issued cheque towards discharge of lawful liability, cannot be made applicable in the instant case to conclude that there are sufficient pleadings in the complaint on behalf of the respondent-complainant that petitioner herein is/was liable to discharge his liability for his having purchased poultry grit and coarse powder for one of the accused i.e. partnership concern. Since it is not in dispute that cheque in question was issued by one of the partner i.e. Amarjeet Singh and there are no pleadings with regard to knowledge and connivance, if any, of the petitioner as well as issuance of cheque, if any, of one of the partner towards discharge of lawful liability of the 33 2024:HHC:10242 partnership concerned, averments made in this regard in notice may not be sufficient at this stage to dissuade this court from accepting prayer made by the petitioner that no case is made out against him under Section 138 of the Act from the bare perusal of the complaint. Moreover, if afore judgments are read in their entirety, it support the case of the petitioner in as much as findings returned by the Hon'ble Apex Court that till the time specific pleadings are not made in the complaint with regard to role, if any, played by the partner or director of the company in the day to day affairs of the company with his knowledge or connivance, he cannot be prosecuted under Section 138 of the Act. In view of the aforesaid view taken by this Court, there appears to be no justification for this Court to take note of afore judgment pressed into service by the petitioner.
28. Having scanned the entire evidence, this Court has no hesitation to conclude that since petitioner, being co-account holder of the joint account of the partnership concern had not signed and issued the cheque in question, no case much less under the aforesaid provisions of law can be said to have been made against the petitioner.
29. Since for the discussion made herein above, case of the prosecution is likely to fail in any eventuality, this Court finds the case at hand to be fit for exercising power under Section 482 CrPC to quash the 34 2024:HHC:10242 summoning order as well as consequent proceedings. Trial, if any, pursuant to aforesaid summoning order, if permitted to continue, would unnecessarily subject the petitioner to ordeal of the protracted trial, which is bound to culminate in acquittal of the accused.
30. Consequently, in view of the aforesaid discussion as well as law laid down by the Hon'ble Apex Court (supra), present petition is allowed and summoning order dated 20.12.2018 as well as consequent proceedings i.e. criminal complaint No. 284/3 of 2018, titled M/s Man Sarovar Minerals and Chemicals v. Punjab Industry and Ors, initiated against the petitioner under Section 138 NIA pending adjudication before the ld. Judicial Magistrate First Class Nahan, District Sirmaur, Himachal Pradesh, are quashed and set-aside. The petition stands disposed of in the aforesaid terms, alongwith all pending applications.
October 23, 2024 (Sandeep Sharma),
(manjit) Judge