Punjab-Haryana High Court
O.P. Mehra vs Raj Kumari Bhalla And Anr. on 9 August, 2006
Equivalent citations: II(2007)BC589
Author: Satish Kumar Mittal
Bench: Satish Kumar Mittal
JUDGMENT Satish Kumar Mittal, J.
1. Petitioner O.P. Mehra has filed this petition under Section 482 of the Code of Criminal Procedure for quashing of criminal complaint No. 115 of 1998 (Annexure P-1), filed by respondent No. 1 under Section 138 of the Negotiable Instruments Act (hereinafter referred to as 'the Act') as well as the summoning order and the other consequential proceedings.
2. The petitioner is 85 years old senior citizen, who has served the country for about 35 years in the Indian Air Force, from where he retired as Air Chief Marshal. He was awarded Padam Vibhushan in the year 1977. The grouse of the petitioner is that he has been unnecessarily impleaded as an accused in the aforesaid complaint filed by respondent No. 1 under Section 138 of the Act and the Judicial Magistrate 1st Class, Chandigarh, without applying his mind and without there being sufficient averment and evidence against the petitioner on the record, he has summoned the petitioner as accused along with 8 other persons. Thus, the process of law and Court has been misused by respondent No. 1 to unnecessarily harass the old senior citizen.
3. In this case, respondent No. 1 filed criminal complaint No. 115 of 1998 under Section 138 of the Act. In the said complaint, 9 persons have been arrayed as accused. The petitioner has been arrayed as accused No. 9. In the complaint, it has been averred that a Public Limited Company styled as Sagar Sun Estates and Finance Limited issued two post-dated cheques, one for Rs. 10,000/- (principal amount) and another for Rs. 1,608/- (interest) to the complainant in discharge of its liability. The amount of Rs. 10,000/- was deposited by the complainant with the said Company in Fixed Deposit. The said cheques were signed by accused No. 8, the authorised signatory of the said Company. When these cheques were dishonoured, the aforesaid complaint was filed by Smt. Raj Kumari Bhalla through her husband Shri V.M. Bhalla as her agent.
4. In the said complaint, after the preliminary evidence, all the nine accused were summoned by the Trial Court vide order dated 4.7.1998. After his service, the petitioner filed an application for re-calling the summoning order and for dismissal of the complaint qua him on the ground that the petitioner was only a part-time Director of the Company. He was never and at no point of time in charge of and responsible to the company for the conduct of its business within the meaning of Section 141 of the Act, therefore, he is not vicariously liable for the alleged offence being committed by the Company. The said application was dismissed by the Trial Court vide order dated 30.4.2003, while holding that the said application was not maintainable. Thereafter, the petitioner filed the instant petition for quashing of the complaint, the summoning order and the consequent proceedings.
5. I have heard the arguments of learned Counsel for the parties and gone through the contents of the complaint, the summoning order as well as other documents annexed with the petitioner,
6. Counsel for the petitioner has made two-fold submissions. Firstly, he submitted that there is no specific averment either in the complaint itself or In (he documents attached therewith that the petitioner was in charge of and responsible to the Company for the conduct of its business at the time of the commission of the alleged offence by the Company. In para 6 of the complaint, it has been alleged that accused No. 8 had issued the cheques on behalf of the company, accused No. 1 is a Chairman-cum-Managing Director of the Company and accused Nos. 2 to 9 are in charge of and responsible to the company for the conduct of its business. Counsel submitted that it has not been stated in the complaint or in the preliminary evidence by the complainant that the petitioner was in overall control of the day-to-day business of the Company, Counsel while relying upon decision of the Supreme Court in Katta Sujatha v. Fertilizers and Chemicals Travancore Limited and Anr. ; K.P.G. Nair v. Jindal Menthol India Ltd. I (2001) BC 243 (SC) : IV (2000) CCR 100 (SC) : 2002 SCC (Cri.) 1038 and S.M.S. Pharmaceuticals Ltd. v. Neeta Bhalla and Anr. , submitted that mere incorporating in the complaint the magic words of Section 141(1) of the Act is not sufficient for taking cognizance against a person on the principle of vicarious liability until and unless substance of allegations answer and fulfil the requirements of the ingredients of the said provision. The allegation that the person was in charge of and responsible to the Company for the conduct of its business must be clear and specifically disclose that the person was in overall control of the day-to-day business of the Company. Counsel for the petitioner contended that in the instant case, the petitioner was simply a part-time Director. He was not associated in day-to-day affairs of the business of the company. The complainant did not produce any evidence in her preliminary evidence showing that the petitioner was controlling the day-to-day affairs of the Company. In spite of there being no material and clear averment against the petitioner, he was summoned by the Trial Court without application of mind. Counsel for the petitioner also placed on record two affidavits, Annexures P-2 and P-3. one sworn by G. Sagar Suri. the Chairman-cum-Managing Director of the Company and the other sworn by G.S. Chhatwal, the Vice-President of the Company, in which it has been categorically stated that the petitioner has never been a whole-time Director of the Company and he never remained in charge of and responsible for the day-to-day affairs/functioning of the Company. Therefore, summoning of the petitioner in the aforesaid complaint was totally illegal and unjustified.
7. Secondly, Counsel for the petitioner submitted that the aforesaid complaint was not signed, made and filed by the payee or holder in due course of the cheques, which are alleged to have been bounced. Thus, in view of Section 142(1) of the Act, no Court can take cognizance on such complaint filed by a person other than the payee or the holder in due course of the bounced cheque. Counsel submitted that as per the decision of the Supreme Court in Janki Vasudeo Bhojwani and Anr. v. Indusind Bank Ltd. and Ors. 1 (2005) BC 399 (SC) : 2004 AIR SCW 7064, a general or special power of attorney holder can appear, plead and act on behalf of the party and he can also file a complaint under Section 138 of the Act, but he cannot become a witness. But in the instant case, Shri V.M. Bhalla, who has filed the instant complaint on behalf of his wife Smt. Raj Kumari Bhalla is not the general or special power of attorney holder of his wife. The instant complaint has been filed only on the basis of an authority letter given by Smt. Raj Kumari Bhalla to her husband which has been marked as Mark C-1 in the Trial Court and which reads as under:
Authority Letter I, hereby authorise Mr. V.M. Bhalla S/o Shri Devi Dayal Bhalla. resident of H. No. 3367. Sector 27-D, Chandigarh to file complaint under Section 138 of Negotiable Instruments Act, against M/s. Sagar Suri Estate and Finance Ltd. CMDIG, Sagar Suri, Sagar Apartment-6, Tilak Marg, New Delhi and others in the competent Court, to appear on every date on my behalf to give statement, to compromise, to receive payment, to issue receipt or to withdraw the complaint, to engage Counsel and to do all things which he may deem fit for prosecution of the above said complaint.
Counsel for the petitioner submitted that merely on the basis of such an authority letter, neither a complaint under Section 138 of the Act can be filed nor such person can appear as a witness on behalf of the complainant. Such an authority letter cannot be treated as general power of attorney of the executant, because in this authority letter, it is nowhere undertaken that the executant would be bound by the acts done and conducted on her behalf in respect of the cheques, which are subject-matter of the authority letter. In support of his contention, Counsel for the petitioner relied upon a judgment of this Court in Meeta Rai v. Gulshan Mahajan 1999(2) RCR (Criminal) 383, in which in similar circumstances, it was held that on the basis of such an authority letter, no cognizance can be taken for the offence under Section 138 of the Act.
8. On the other hand, Counsel for respondent No. 1 submitted that the averments made in the complaint to the effect that accused Nos. 2 to 9 are in charge of and responsible to the company for the conduct of its business are sufficient to proceed against all the accused under Section 141 of the Act and at this stage, complaint as well as the summoning order cannot be quashed on the ground that the averments made in the complaint arc vague and the petitioner was not in charge of and person responsible to the Company for the conduct of its business at the time of commission of the alleged offence by the Company. This question will be determined by the Trial Court after recording of evidence of the parties. Counsel further submitted that in pursuance of the summoning order, petitioner did not appear before the Trial Court and now, he has been declared proclaimed offender, therefore, keeping in view the conduct of the petitioner, the Court should not interfere in the petition filed under Section 482 of the Code of Criminal Procedure. Regarding the second submission made by Counsel for the petitioner, Counsel for respondent No. 1 does not dispute the factual position and the contents of the authority letter on the basis of which the instant complaint was filed by husband of the complainant on her behalf, He has also not controverted the affidavits, Annexures P-2 and P-3. However, he submitted that power of attorney holder is competent to file the complaint under Section 138 of the Act and even on the basis of such authority letter, such complaint can be filed. Thus, Judicial Magistrate, 1st Class, Chandigarh has not committed any illegality in this case, while taking cognizance of the matter and summoning the petitioner.
9. Section 141 of the Act is an exception for the general rule in criminal law against vicarious liability under this section, a liability is sought to be fastened vicariously on a person connected with a company, the principal accused being the company itself. In order to bring the case within Section 141 of the Act, the persons who are sought to be made criminally liable should be in charge of and responsible to the company for the conduct of its business at the time of the commission of the alleged offence. In S.M.S. Pharmaceuticals Ltd. v. Neeta Bhalla and Anr. (supra), the Supreme Court observed that every person connected with the company shall not fall within the ambit of this provision. It is only those persons who were in charge of and responsible for the conduct of business of the company at the time of commission of the offence will be liable for criminal action. It was further held that merely being a director of a company, a person cannot be made liable under Section 141 of the Act. A director of a company cannot be deemed to be in charge of and responsible to the company for the conduct of its business. Such liability depends upon the respective roles assigned to the officers in a company. Therefore, in order to bring a case within Section 141 of the Act, the complaint must disclose the necessary facts which make a person liable. It is necessary to specifically aver in a complaint 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. In K.P.G. Nair v. Jindal Menthol India Ltd. (supra), it was held by the Supreme Court that though words of Section 142(1) of the Act need not be incorporated in a complaint as magic words but substance of the allegations read as a whole should answer and fulfil the requirements of the ingredients of the said provision. In Katta Sujatha v. Fertilisers & Chemicals Travancore Limited and Anr. (supra), the Supreme Court explained the meaning of "person in charge" by observing that the term "person in charge" must mean that the person should be in overall control of the day-to-day business of the company or firm. The person may be a party to the policy being followed by a company and yet not be in charge of the business of the company or may be in charge of but not in overall charge or may be in charge of only some part of the business. Thus, in my opinion, in order to fasten vicarious liability against a director of the company, there must be clear, specific and unambiguous allegations made in the complaint. It is not as if every direction of the accused company can be roped in automatically and be proceeded with for the offence committed by the company under Section 138 of the Act. The complainant can proceed only against such persons who at the time of the offence committed by the company were in charge of and responsible to the company for the conduct of its business. 'Such persons' means that they were in overall control of the day-to-day business of the company. The averments in this regard in the complaint must be clear. The role played by each of the accused must be clearly stated in the complaint. A bald allegation by merely repeating the magic words mentioned in Section 141 of the Act would not be enough to rope any and every director or other officer, manager, secretary of the company as the case may be.
10. It is well settled that at the time of taking cognizance and issuing the process, the Magistrate is required to apply his mind and to sec whether a case is made out against the accused persons before issuing summons to them, As held in Pepsi Food Ltd. and Anr. v. Special Judicial Magistrate and Ors. , the summoning of an accused in a criminal case is a serious matter. Criminal law cannot be set into motion as a matter of course. It is not that the complainant has to bring only two witnesses to support his allegations in the complaint to have the criminal law set into motion. The order of the Magistrate summoning the accused must reflect that he has applied his mind to the facts of the case and the law applicable thereto. It should be taken care that judicial process should not be an instrument of oppression or needless harassment, If a Magistrate issues process in every case without application of mind, it will not only burden the work of Magistrate but it will also cause severe harassment to the persons who have been summoned. It is also well settled that this Court has ample inherent power under Section 482, Cr.P.C. to prevent the abuse of the process of law by the inferior Courts and to see that the stream of administration of justice remains clean and pure. No doubt the Magistrate can discharge the accused at any stage of the trial, if he considers the charge to be groundless, but that does not mean that the accused cannot approach the High Court under Section 482, Cr.P.C. for quashing the proceedings against him, when the complaint does not make out any case against him and still he must undergo the agony of a criminal trial. In view of the decision in Adalat Prasad v. Rooplal Jindal and Ors. , now the Magistrate cannot review his order on an application filed by the summoned accused. If the summoned accused wants to show that he has been unnecessarily summoned without there being any sufficient ground for proceeding against him, he has remedy to approach this Court under Section 482, Cr.P.C. and this Court has ample power to quash the proceedings, in case it comes to the conclusion that continuation of the proceedings in the Trial Court is an abuse of the process of the Court and the petitioner is being summoned unnecessarily without there being any cogent material against him.
11. In the light of the aforesaid principles, the facts of the present case clearly show that in this case, the Judicial Magistrate has summoned the petitioner on the principle of vicarious liability for the offence committed by the company without there being any clear allegation and sufficient material against him that he was the person in charge of and responsible for the conduct of business of the company at the time of commission of the alleged offence. In the complaint, only it has been averred that accused Nos. 2 to 9 were in charge of and responsible to the company for the conduct of its business. It has not been stated either in the complaint or in the preliminary evidence that the petitioner was in overall control of the day-to-day business of the company. The complaint only contains the magic words of Section 141 of the Act without there being any averment as to how petitioner was in control of the day-to-day business of the company or was in charge of and responsible to the company for the conduct of its business at the time of commission of alleged offence. It is not disputed that the petitioner was only a part-time director of the company and as per the affidavits, Annexures P-2 and P-3, which have not been controverted by Counsel for respondent No. 1, the petitioner has never been a whole time director of the company and he never remained in charge of and responsible for the day-to-day affairs/functioning of the company, Undisputedly, the petitioner is not the signatory of the impugned cheque, Thus, in my opinion, the Judicial Magistrate has committed a grave illegality while issuing to the petitioner for committing the offence under Section 138 of the Act by the company, on the principle of vicarious liability. Hence, the complaint as well as the summoning order and all the subsequent proceedings qua the petitioner are liable to be quashed on this ground.
12. I also find force in the second contention raised by Counsel for the petitioner. Section 142(1) of the Act provides that no Court shall take cognizance of any offence punishable under Section 138 except upon a complaint in writing made by the payee or, as the case may be the holder in due course of the cheque. Undisputedly, in the instant case, the complaint has been filed by Shri V.M. Bhalla, the husband of Smt. Raj Kumar Bhalla. He was neither the payee nor the holder in due course of the cheque. He is also not a general or special power of attorney holder of his wife. He had filed the instant complaint only on the basis of the authority letter, which has been reproduced in paragraph 7 of this order. In the said authority letter, it was no where undertaken that the executant would be bound by the acts done and conducted on her behalf in respect of the cheques, which are subject matter of the authority letter. It is well settled, as has been held by the Supreme Court in Janki Vashdeo Bhojwani and Anr. v. Indusind Bank Ltd. and Ors. (supra) that a general or special power of attorney holder can appear plead and act on behalf of the party and he can also file a complaint under Section 138 of the Act, but he cannot become a witness on behalf of the party. However, the instant complaint has not been filed by Shri V.M. Bhalla being the general or special power of attorney holder. Exactly the similar controversy was dealt with by this Court in Meeta Rai v. Gulshan Mahajan (supra) where also a complaint under Section 138 of the Act was filed on similar authority letter and this Court observed as under:
4. The facts in the instant case are entirely different and distinct from the case of Surinder Singh (supra) inasmuch as in the instant case, there is no document of General Power of Attorney executed by Smt. Sucheta Mahajan in favour of her husband Shri Gulshan Mahajan and for that matter nor even his document of Special Power of Attorney authorising her husband to do certain acts for and on her behalf. Apart from it, it is relevant to note that the authority letter in nowhere undertakes that the executant, namely, Smt. Sucheta Mahajan would be bound by the acts done and conducted on behalf of her husband in respect of the matter which is the subject matter of authority letter. Learned Counsel for the petitioner cited the judgment reported as U. C. Saxena, Managing Director, Meltra Machines & Equipments Pvt. Ltd., Noida v. Shri Madan Mohan 1995(1) RCR (Crl.) 394 : 1993(3) RCR (Crl.) 391 : 1993(2) PLR 161, when the learned Single Judge of this Court held in para 7 as under-
As mentioned hereinbefore, Madan Mohan complainant was neither the payee nor the holder in due course of the cheque and, therefore, he was not competent to institute the complaint. The learned trial Magistrate has gravely erred in having failed to consider the above aspect of the case. Therefore, I have no hesitation to hold that the Court below could not have taken cognizance of the complainant (complaint?) as far as the offence under Section 138 of the Negotiable Instruments Act is concerned.
5. By applying the ratio of the decision in the case of U.C. Saxena (supra), in the instant case, the complaint filed by Shri Gulshan Mahajan, a person who has not been legally and validly authorised by means of a general power of attorney or a special power of attorney cannot be held to be a properly instituted complaint in law and the same is liable to be quashed on that score alone....
13. In view of the above discussion, this petition is allowed and the criminal complaint No. 115 of 1998 (Annexure P-1) filed by the respondent No. 1 as well as the summoning order and the other consequential proceedings, only qua the petitioner, arc hereby quashed.