Jammu & Kashmir High Court
Parveen Kumar Gupta And Ors. vs Saraf Raj on 1 February, 2019
Equivalent citations: AIRONLINE 2019 J AND K 30
Author: Sanjay Kumar Gupta
Bench: Sanjay Kumar Gupta
HIGH COURT OF JAMMU AND KASHMIR AT JAMMU
CRMC No.160/2017, IA No. 01/2017
Date of order:01.02.2019
Parveen Kumar Gupta and others Vs. Saraf Raj
Coram:
Hon'ble Mr. Justice Sanjay Kumar Gupta, Judge.
Appearing counsel:
For Petitioner (s) : Mr. Aseem Sawhney, Advocate
For Respondent (s) : None.
i) Whether to be reported in
Digest/Journal : Yes/No.
ii) Whether approved for reporting
in Press/Media : Yes/No.
1. Through the instant petition filed under Section 561-A Cr.P.C., the petitioners seek quashing of impugned order dated 23.09.2011 passed by the learned Munsiff JMIC, R. S. Pura in file No.145/Complaint, whereby the trial court took cognizance of the complaint under Section 138 Negotiable Instruments Act and 420 RPC, in case titled Saraf Raj vs. Shakti Kumar Gupta and others. The petitioners also seek quashing of subsequent proceedings in the said complaint.
2. The facts giving rise to the filing of this petition, briefly stated, are that a complaint under Sections 138 Negotiable Instruments Act and 420 RPC came to be filed by the respondent-Saraf Raj in the Court of Judicial Magistrate 1st Class, R. S. Pura on 23.09.2011. There are four accused in the complaint and the Court below has taken the cognizance on the basis of complaint of the respondent in both the offences, i.e. under Sections 138 of N.I. Act and 420 RPC against all the four accused in the complaint including the petitioners herein despite the fact that there is no proof of partnership in the form of any document as alleged in the CRMC No. 160/2017 Page 1 of 9 complaint and that the accused are partners of the firm M/s Kastrui Lal and Sons. Accused No.1 is the sole proprietor of the firm and he is the only signatory of the cheque. The petitioners feeling aggrieved of the order of taking cognizance and process issued by the Court below filed an application seeking dropping of the proceedings against them on the grounds:-
a) That in the complaint it has been alleged that petitioners/applicants are the partners in the firm, but the same is not true and the applicants have no concern with the firm and in no way are involved in the commission of the offence though all the accused are real brothers.
b) That petitioner No. 2, Ashok Kumar Gupta had been a Govt. Employee and other accused have their separate businesses and have no concern with the said firm of the accused No. 1, who is the sole proprietor of the firm.
c) That at the time of taking cognizance of the case under Section 138 N.I. Act, Section 420 RPC could not have been imposed and only Section 138 N.I. Act could be taken in cognizance.
3. During the proceedings in the case, accused No.1 expired and his death certificate is on the record of the file. The Court below after hearing both the parties, without commenting on the merits of the case, disposed of the application on 21.02.2017, holding that in the absence of the review powers, this Court cannot review its earlier order and the appropriate remedy lies with the applicants to invoke Section 561-A Cr.P.C. and not the instant application.
4. The petitioners are aggrieved of the impugned order dated 23.09.2011 and assailed the same on the following grounds:-
"a) That from the contents of the complaint and preliminary statement it is clear that amount received by accused No. 1 and cheque issued by accused No. 1 and the petitioners have no role at all. Hence they have no link with the commission of the offence.
Hence the complaint deserves outright dismissal against the petitioners.
CRMC No. 160/2017 Page 2 of 9b) That the order of the Court below taking cognizance of the offence under Sections 138 NIAct and 420 RPC is not well founded as nothing has come on record regarding the partnership in business or common intention of the petitioners in the commission of offence. Therefore, the process issued against them is legally not sustainable in the eyes of law thus deserves to be quashed.
c) That the record produced by the complainant has in no way proved the guilt of the petitioners, as such, the order under challenge requires to be set aside.
d) That as the cheque has been issued in discharge of debt as alleged in the complaint, its bouncing on presentation under no circumstances can be restored to any other provisions of law except under Section 138 NI Act. But the Court below by adding Section 420 RPC has committed an error. Which is a clear case of the abuse of process of Court of law and this Hon'ble Court has inherent powers to set aside the order dated 23.09.2011 taking cognizance of the case and issuing the process."
5. I have heard learned counsel for the petitioners and perused the file.
6. From the perusal of complaint, it is evident that respondent filed a complaint u/s 138 of N.I. Act against four accused including petitioners herein; the relevant paras of said complaint read as under:-
"1. That the accused persons are real brothers and are the partners of the firm namely Kasturi Lal & Sons.
2. That the accused persons had good relations with the complainant and approached the complainant and made him to believe that they are running the firm and requires money for their firm and requested him to lend money amounting to Rs.5,00,000/- (Rupees five lac only) for running the smooth business of the firm to which the complainant conceded.
3. That the accused persons succeeded in borrowing Rs.five lacs from complainant which was paid to the accused No.1 Shakti Kumar Gupta at R. S. Pura repayable on demand.
4. That the complainant approached the accused persons and demanded the repayment of the loan amount.
5. That upon the said demand accused No.1 Shakti Kumar Gupta issued cheque No.449767 dated 18.07.2011 of Rs.1,00,000/- drawn on the Citizens Cooperative Bank Ltd. Jammu R. S. Pura in favour of the complainant. All the accused were party to the decision to issue cheques which when presented to bank was dishonored."CRMC No. 160/2017 Page 3 of 9
7. On this complaint, court JMIC R.S. Pura after recording statements of complainant and witness took cognizance and issued process on 23.9.2011 under 138 of N.I. Act and 420RPC. The order of cognizance reads as under:-
"Complainant present this complaint for above said offence before me today 23.09.2011. Office to diarize the same. Statement of complainant on oath recorded which made part of this complaint. It is stated in the complaint that the accused persons are real brothers and are partners of the Firm namely Kasturi Lal & sons.
Accused persons had good relations with the complainant and approached the complainant and made to believe that they are running the firm and require money for their firm and requested him to lend money amounting to Rs.5,00,000/- (Rs.Five lac only) for running smooth business of the Firm. The accused persons succeeded in borrowing Rs. Five lac from complainant which was paid to accused No.1 Shakti Kumar Gupta at R. S. Pura repayable on demand. The complainant approached the accused persons and demanded the repayment of the loan amount. Upon the said demand accused No.1 Shakti Kumar Gupta issued cheque No.449767 dated 18/7/2011 of Rs.1,00,000/- drawn on the Citizens Cooperative Bank Ltd. Jammu R. S. Pura in favour of the complainant. The said cheque was presented for payment in the bank of the accused on 20/07/2011 by the complainant. But the said cheque was returned unpaid to the complainant with the remarks "account closed" alongwith memo dated 20/07/2011. The accused persons were served by legal notices on 11/8/2011 and also through registered posts. But liabilities of the accused still subsists and issuance of cheque by the accused to the complainant were with mala fide and to cheat the complainant. Statement of the complainant has supported the contents of the complaint. As such this material is on record to proceed further against the accused persons for the offence u/s 138/N.I. Act & 420/RPC. Office is directed to issue notice to accused persons for their appearance and put up on 28/11/2011."
8. Accused/petitioners herein filed an application before Court below for dropping the proceeding on the same grounds, which have been taken in this petition; the court below rejected the said application on the ground CRMC No. 160/2017 Page 4 of 9 that defense taken by petitioners can be proved during trial and not at initial stage; and criminal court cannot review the order.
9. I have given my thoughtful consideration to whole aspects of the matter.
10. The offence under section 138 of N.I. Act is punitive as well as compensatory; the court while convicting has also power to compensate the complainant of cheque amount; procedure is summary in nature. At the time of taking cognizance, court has only to see from the contents of complaint as well documents annexed therein, whether all the essential elements of section 138 of N.I. Act are made out or not. Section 138 reads as under:-
" 138 Dishonour of cheque for insufficiency, etc., of funds in the account.
--Where any cheque drawn by a person on an account maintained by him with a banker for payment of any amount of money to another person from out of that account for the discharge, in whole or in part, of any debt or other liability, is returned by the bank unpaid, either because of the amount of money standing to the credit of that account is insufficient to honour the cheque or that it exceeds the amount arranged to be paid from that account by an agreement made with that bank, such person shall be deemed to have committed an offence and shall, without prejudice to any other provisions of this Act, be punished with imprisonment for [a term which may be extended to two years], or with fine which may extend to twice the amount of the cheque, or with both:
Provided that nothing contained in this section shall apply unless--
(a) the cheque has been presented to the bank within a period of six months from the date on which it is drawn or within the period of its validity, whichever is earlier;
(b) the payee or the holder in due course of the cheque, as the case may be, makes a demand for the payment of the said amount of money by giving a notice in writing, to the drawer of the cheque, 20[within thirty days] of the receipt of information by him from the bank regarding the return of the cheque as unpaid; and
(c) the drawer of such cheque fails to make the payment of the said amount of money to the payee or, as the case may be, to the holder in due course of the cheque, within fifteen days of the receipt of the said notice.
11. From bare perusal of this section, it is evident that a person (will be drawer of the cheque) should have a legally enforceable debt or other liability towards another person (will be payee or holder of the cheque, as the case may be) and a cheque is drawn to discharge the debt or liability;
CRMC No. 160/2017 Page 5 of 9Cheque is returned due to insufficient funds or exceeds the amount agreed upon to be paid by the bank; Cheque is to be presented within six months from date of its drawn or till its validity, whichever being earlier; A written notice within 30 days is sent to the drawer along with the receipt of information from bank about failure of payment of cheque; The payee or holder doesn't receive the payment within 15 days of the receipt of sent written notice to the drawer.The Section 138 was inserted with the objective to discourage the dishonest activity of issuing cheques which were later dishonored for insufficient funds.
12. Section 141 of Act deals with vicarious liability, it reads as under:-
"141 Offences 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 knowledge, or that he had exercised all due diligence to prevent the commission of such offence: 22 [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 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.]"
13. Sub-section (1) of Section 141 of the Act provides that if a person committing an offence under the section is a company, every person who, at the time offence was committed, was in charge of, and was CRMC No. 160/2017 Page 6 of 9 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. The offender in section 138 of the Act is the drawer of the cheque. He alone would have been the offender there under if the Act did not contain other provisions. It is because of section 141 of the Act that penal liability under section 138 is cast on other persons connected with the company. Three categories of persons can be discerned from the said provision who are brought within the purview of the penal liability through the legal fiction envisaged in the section. They are: (1) The company the principal offender which committed the offence, (2) Everyone who was in charge of and was responsible for the business of the company, (3) Any other person who is a director or a manager or a secretary or officer of the company, with whose connivance or due to whose neglect the company has committed the offence. However, if a person proves that the offence was committed without his knowledge, or that he had exercised all due diligence to prevent the commission of such offence, he shall not be liable to punishment under this section. Sub- section (2) further provides that where any offence under this Act has been committed by a company and it is provided 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. The Explanation to the section defines company as anybody corporate and includes a firm or other association of individuals; and director, in relation to a firm, means a partner in the firm.
CRMC No. 160/2017 Page 7 of 9Sub-clause (a) of the explanation appended to Section 141 of the Act shows that it is an inclusive of anybody corporate or other association of individuals. Though the heading of Section 141 of the Act reads offences by companies; according to the explanation to that Section, company means anybody corporate and includes a firm or other association of individuals and director, in relation to a firm means a partner in the firm. The term other association of individuals should not be understood to refer even to informal understanding between the individuals. It has to be understood in the context of body corporate and partnership firms..
The Explanation to Section 141 makes it clear that wherever there is a reference under Section 141 to a company it has to be substituted by the word firm where the accused is a partnership firm and the provision has to be read as if it refers to the firm. What this means is that a complaint can be filed for the offence under Section 138 Negotiable Instruments Act not only against the partnership firm on whose behalf the cheque was issued but also against an individual partner or person who, at the time of the commission of the offence, was in charge of the affairs of the firm or responsible to it for the conduct of its business. A partnership firm is a separate legal entity and it is answerable in law in that capacity. It is perfectly possible for a complainant, aggrieved by the dishonour of a cheque issued by or on behalf of a firm, to file a complaint for the offence under Section 138 Negotiable Instruments Act only against the firm.
14. But for prosecuting the partners, there should be substantial evidence and proofs that accused were partners at that relevant time. In present case, complainant has only mentioned in para no.1 and 2 that all accused are brothers and are partners of firm KASTURI LAL & SONS and they approached him and took five lakh for their firms for smooth functioning of firm. This is bald assertion without any substantial supporting CRMC No. 160/2017 Page 8 of 9 evidence. Cheque in question has been signed by deceased person namely Shakti Gupta; there is also certificate of registration of firm with Jammu and Kashmir House and Shop Establishment in question issued by Labour Officer dated 15.3.2014, which clearly suggests that Shakti Gupta was sole proprietor; income return certificate for assessment year 2009-2010 also clearly reveals that Shakti Gupta was sole proprietor of firms. Even reply sent with regard to demand of money, it was categorically written that petitioners have nothing to do with firm in question as they are not partners of firm. Registration Certificate and Income Return are public documents, which cannot be disputed and are prior to issuance of cheque. Mere fact that petitioners are brothers of Shakti Gupta, who issued cheque, it cannot be presumed that they are partners of Firm and liable to be prosecuted.
15. In view of above this petition is allowed, order of taking cognizance against present petitioners is quashed; consequently complaint so far as pertaining to petitioners, is also quashed. Respondent /complainant may proceed in complaint against legal heirs of deceased Shakti Gupta under law. This petition is disposed off accordingly.
(Sanjay Kumar Gupta) Judge Jammu 01.02.2019 Meenakshi CRMC No. 160/2017 Page 9 of 9