Himachal Pradesh High Court
Vijay Kumar Dange vs Saroj Thakur And Another on 31 July, 2015
Author: Tarlok Singh Chauhan
Bench: Tarlok Singh Chauhan
HIGH COURT OF HIMACHAL PRADESH AT SHIMLA
Cr.MMO No. 171 of 2015
Date of decision: 31.7.2015
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Vijay Kumar Dange Petitioner
Versus
Saroj Thakur and another Respondents
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Coram :
The Hon'ble Mr. Justice Tarlok Singh Chauhan, J.
Whether approved for reporting ? Yes _______________________________________________ For the Petitioner : Mr. Vijay Chaudhary, Advocate For the Respondents: Mr. N.K. Thakur, Senior Advocate, with Mr. Rohit Bharoll, Advocate for respondent No. 1.
_______________________________________________ Tarlok Singh Chauhan, J. (Oral)1 This petition under Section 482 of the Code of Criminal Procedure read with Article 227 of the Constitution of India is directed against the summoning order, passed by the Judicial Magistrate Ist Class, Chamba, whereby the petitioner, who is the Director Marketing, Century Vision Organic Farm Private Limited, has been summoned without arraigning the company as party. Whether reporters of local newspaper are permitted to see the judgment Yes ::: Downloaded on - 15/04/2017 18:40:17 :::HCHP 2
2. It is not in dispute that before instituting the complaint under Section 138 of the Negotiable Instrument Act (for short 'the Act'), a legal notice to this effect was .
infact served upon the petitioner and one Madan Lal, not in their individual capacity, but because they were the employees of Century Vision (supra), and whereas, no notice, whatsoever, had been served upon this Company.
I have heard learned counsel for the parties and gone through the records.
3. The only question which arises for consideration is as to whether the employees, directors etc. of a company can be arraigned as accused without arraigning the company as an accused, particularly when no offence is alleged to have been committed by these accused in their individual capacity and offence is said to have been committed by the company.
4. The issue in the instant case is no longer res integra in view of the decision rendered by a larger Bench of Hon'ble Supreme Court in Aneeta Hada Vs. Godfather Travels and Tours Private Limited and batch matters, ::: Downloaded on - 15/04/2017 18:40:17 :::HCHP 3 (2012) 5 SCC 661, wherein the Hon'ble Supreme Court held as follows:-
"58. Applying the doctrine of strict construction, we .
are of the considered opinion that commission of offence by the company is an express condition precedent to attract the vicarious liability of others.
Thus, the words "as well as the company" appearing in the section make it absolutely unmistakable clear that when the company can be prosecuted, then only the persons mentioned in the other categories could be vicariously liable for the offence subject to the averments in the petition and proof thereof. One cannot be oblivious of the fact that the company is a juristic person and it has its own respectability. If a finding is recorded against it, it would create a concavity in its reputation. There can be situations when the corporate reputation is affected when a Director is indicated.
59. In view of our aforesaid analysis, we arrive at the irresistible conclusion that for maintaining the prosecution under Section 141 of the Act, arraigning of a company as an accused is imperative. The other categories of offenders can only be brought in the dragnet on the touchstone of vicarious liability as the same has been stipulated in the provision itself. We say so on the basis of the ratio laid down in C.V. Parekh which is a three-Judge Bench decision. Thus, ::: Downloaded on - 15/04/2017 18:40:17 :::HCHP 4 the view expressed in Sheorathan Agarwal does not correctly lay down the law and, accordingly, is herby overruled. The decision in Anil Hada is overruled with .
the qualifier as stated in para 51. The decision in Modi Distillery has to be treated to be restricted to its own facts as has been explained by us hereinabove."
5. This Court in Kuldeep Thakur Vs. M/s Mohar Mahesh Construction Pvt. Ltd., Kullu through its Managing Director 2012 (2) S.L.C. 854, held as follows:-
"10. The complaint filed is only against the company through its Managing Director. Shri Mohan Singh Thakur clearly stated before the Court that he was only Director not the Managing Director of the company. Although in his statement under Section 313 of the Code of Criminal Procedure he admitted having signed the cheque but neither he has been impleaded as an accused nor statutory notice of demand was sent to him. The notice is only addressed in the name of the proprietor not even in the name of the Managing Director. Without making any allegation against any of the Directors or so to say there is even no mention in the complaint as to who had issued and signed the cheque. The proceedings against Mohar Singh were not maintainable and there is no allegation that he was in charge of and responsible to the company for the conduct of its business.::: Downloaded on - 15/04/2017 18:40:17 :::HCHP 5
11. Section 141 of the Act deals with the offences by the Company which reads as under:
"Offences by companies.
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(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 and 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["Provided further that where a person is nominated as a Director of a company by virtue of his holding any office or employment in the Central Government or State Government or a financial corporation owned or controlled by the Central Government or the State Government, as the case may be, he shall not be liable for prosecution under this Chapter.] (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 attribute to, any neglect on the ::: Downloaded on - 15/04/2017 18:40:17 :::HCHP 6 part of, any director, Manager, secretary, or other office 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 purpose of this section. -
(a) "Company" means any body corporate and includes a firm or other association of individuals; and
(b) "Director", in relating to a firm, means a partner in the firm."
12. The perusal of the aforesaid Section reveals that when the company is the principle offender under Section 138 of the Act remaining persons are made offender by virtue of legal fiction created by the legislature as per its indictments hence the actual offence should have been committed by the Company, and then alone, the other two categories of persons can also become liable for the offence. The statutory notice, in the instant case has been issued to the proprietor of the respondent; whereas the company has the Managing Director and it was not even issued to the signatory of the cheque thereof, as noted above. The provision of Section 138 of the Act casts criminal liability punishable with imprisonment or fine or with both on a person who issues a cheque towards discharge of a debt or liability as a whole or in part and the cheque is dishonoured by the Bank on ::: Downloaded on - 15/04/2017 18:40:17 :::HCHP 7 presentation. But the complaint lacks such averments. Further, Section 141 extends such criminal liability in case of a Company to every person who at the time of .
the offence, was incharge of, and was responsible for the conduct of the business of the Company. By a deeming provision contained in Section 141 of the Act, such a person is vicariously liable to be held guilty for the offence under Section 138 and punished accordingly. Section 138 is the charging section creating criminal liability in case of dishonour of a cheque and its main ingredients are:
(i) Issuance of a cheque.
(ii) Presentation of the cheque
(iii) Dishonour of the cheque
(iv) Service of statutory notice on the person sought to be made liable, and
(v) Non-compliance or non-payment in pursuance of the notice within 15 days of the receipt of the notice.
14. As already stated above, the statutory demand notice was not addressed/ sent to Mohar Singh. There is also no averment against him in the complaint nor he is impleaded as an accused. Further he is also not the Managing Director of the respondent company. Even the statutory notice has not been sent to the company through Managing Director. Therefore, the basis of the complaint itself is wrong and not in conformity with law. Thus, the complaint also suffers from mandatory requirements, and in these ::: Downloaded on - 15/04/2017 18:40:17 :::HCHP 8 circumstances, against Mohar Singh, no presumption can be raised as is sought by the learned counsel for the appellant, in any capacity. Hence the complaint .
was rightly dismissed."
6. In Raj Pal Kapil Vs. State of Himachal Pradesh and another 2013 (3) S.L.C. 1248, reliance was placed on the judgment rendered in Aneeta Hada's case supra and it was held as follows:-
"6. Precisely the question is whether in the absence of the Company, the petitioner can be prosecuted as a signatory of the cheque, the answer is "NO". In absence of the Company, the complaint is not maintainable.
7. Section 141 of the Act reads as under:
"Offence by companies-(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 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 ::: Downloaded on - 15/04/2017 18:40:17 :::HCHP 9 knowledge, or that he had exercised all due diligence to prevent the commission of such offence: Provided further that where a person is nominated as a .
Director of a company by virtue of his holding any offence or employment in the Central Government or State Government or a financial corporation owned or controlled by the Central Government or the State Government, as the case may be, he shall not be liable for prosecution under this Chapter.
(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.]"
8. Section aforesaid uses the term "person" and refers it to a company. The company is a juristic person. The concept of corporate criminal liability is attracted to a corporation and company and it is so luminescent ::: Downloaded on - 15/04/2017 18:40:17 :::HCHP 10 from the language employed under this Section. This enactment is one where the company itself and certain categories of officers in certain circumstances are .
deemed to be guilty of the offence.
9. The company can have criminal liability fastened on it, and if a group of persons that guide the business of the companies have the criminal intent, that would be imputed to the body corporate. On a reference to the larger Bench in Aneeta Hada versus Godfather Travels and Tours, (P) Ltd., (2012) 5 SCC 661, three judges of the Supreme Court examined this preposition and observed that Section 141 of the Act clearly stipulates that when a person which is a company commits an offence, then certain categories of persons in charge as well as the company would be deemed to be liable for the offences under Section
138. Thus, the statutory intendment is absolutely plain. The provision makes the functionaries and the companies to be liable and that is by deeming fiction. A deeming fiction has its own signification.
10. It was further observed that it is the bounden duty of the court to ascertain for what purpose the legal fiction has been created. It is also the duty of the court to imagine the fiction with all real consequences and instances unless prohibited from doing so. That apart, the use of the term "deemed" (used in the present case in Section 141) has to be read in its context and further, the fullest logical purpose and import are to be ::: Downloaded on - 15/04/2017 18:40:17 :::HCHP 11 understood. It is because in modern legislation, the term "deemed" has been used for manifold purposes. The object of the legislature has to be kept in mind.
.
11. The apex Court examined the provisions of Section 141 of the Act above vis-à-vis Section 85 of the Information Technology Act, 2000 and relevant provisions of the Essential Commodities Act as a logical sequitur, precisely holding that the prosecution of the Director or the authorized signatory of the cheque without arraigning of the company is not maintainable, in the absence of any legal bar.
12. Now, in the present case, no legal bar has been impleaded to array the company as an accused.
Admittedly, the company i.e. M/s Swiftron Courier and Cargo Ltd. has not been made an accused. As such, the complaint is not maintainable against the petitioner without its impleadment. Hence, the impugned order of summoning the petitioner being signatory of the cheque is quashed and set aside. Consequently, the complaint stands dismissed so also the pending applications, if any."
7. Similar issue came up before the Hon'ble Supreme Court in Anil Gupta Vs. Star India Private Limited and another (2014) 10 SCC 373, wherein the ratio laid down by the Hon'ble Supreme Court in Aneeta Hada's case supra was reiterated.
::: Downloaded on - 15/04/2017 18:40:17 :::HCHP 128. Yet again a similar issue came up before the Hon'ble Supreme Court recently in Gunmala Sales Private Limited Vs. Anu Mehta and others (2015) 1 .
SCC 103, wherein again the ratio, as laid down in Aneeta Hada's case supra was followed.
9. Taking into consideration the exposition of law, as laid down by the Hon'ble Supreme Court in Aneeta Hada's case and thereafter subsequently by this Court and reiterated by the Hon'ble Supreme Court to the effect that no complaint under Section 138 of the Act against the employees or Directors of the Company would be maintainable without arraigning the Company itself.
10. Having said so, I find merit in this petition.
Consequently, the same is allowed and proceedings pending before the Judicial Magistrate Ist Class, Chamba in Complaint Case N.I.Act No. 786 of 2013, titled as Saroj Thakur and another Vs. Vijay Kumar are quashed and set aside.
31st July, 2015(K) ( Tarlok Singh Chauhan ), Judge ::: Downloaded on - 15/04/2017 18:40:17 :::HCHP