Andhra Pradesh High Court - Amravati
Amita Agarwal vs State Of Andhra Pradesh on 28 September, 2022
Author: K. Sreenivasa Reddy
Bench: K. Sreenivasa Reddy
THE HON'BLE SRI JUSTICE K. SREENIVASA REDDY
CRIMINAL PETITION NOs.5330 OF 2021 &
5332 OF 2021
COMMON ORDER :
Petitioner in Criminal Petition No. 5330 of 2021 is A.2, and petitioner in Criminal Petition No.5332 of 2021 is A.6, in C.C. No.321 of 2019 on the file of the III Additional Judicial Magistrate of First Class, Tirupati.
2. A private complaint was filed by 2nd respondent herein before the learned Magistrate against the petitioners and others and the same was taken cognizance by the learned Magistrate as C.C.No.321 of 2019 for the offence punishable under Section 138 of the Negotiable Instruments Act, 1881 (for short, 'the NI Act'). Brief facts of the case are as follows:
Complainant is a registered company under the provisions of the Companies Act, 1956 with its registered office at Renigunta-Kadapa Road, Karakambadi, Tirupati. It is in the business of manufacturing and sale 2 of Industrial and Automobile batteries both in India as well as various countries of India ocean Rim.
A.1 is a partnership and A.2 to A.7 are its Partners, involved in the business of recycling of used lead acid batteries. Complainant entered into an agreement on 15.03.2018 with accused permitting the accused to collect used batteries and to recycle used lead batteries from the company company and supply re-melted lead ingots at the ratio of 62% for Automotive used batteries collected from franchisees/customers and 60% for Industrial used batteries collected from telecom industrial customers, out of the total volume of used batteries collected on job work basis. As per the agreement, the complainant has to pay a sum of Rs.10,000/- per metric ton of re-melted lead for conversion of used lead batteries by the accused to supply re-melted lead ingots to the complainant company. After completion of contract documentation, accused started collecting the used lead acid batteries from the premises of franchisees/dealers of complainant 3 from 24.03.2018. The accused collected 2,999 MTs of used lead acid batteries and is supposed to supply 1,837.710 MTs of re-melted lead to complainant company. The accused supplied 1,144.325 MTs to the authorized smelter of complainant to manufacture pure lead and supply the same to the complainant company for manufacturing new batteries. The accused has not supplied the balance re-melted lead ingots of 693.385 MTs to the complainant company. The officials of complainant company were surprised to know that the accused have jointly and severally, criminally, dishonestly and fraudulently conspired and sold the remelted lead ingots belonging to the complainant company, which is supposed to be supplied to the complainant company, to third party buyers and amassed crores of money dishonestly and wrongfully and cheated the complainant company by breaching the contract.
The accused has to supply quantity of 730.640 MTs of Re-melted Lead ingots to complainant company, which 4 is sold illegally and unauthorizedly by the accused in open market. The accused promised to supply the said quantity after some days. A.5, who is authorized signatory of A.1, issued cheques bearing Nos.000194 to 000205 drawn on HDFC Bommasandra Industrial Area, Jigni, Bangalore for Rs.12.00 Crores in favour of the complainant company, being the value of re-melted ingots to be supplied to the complainant company, and A.2 to A.7 requested the complainant company to present the cheques after 05.12.2018 and all the accused assured their commitments for and on behalf of A.1 company to the complainant company.
On 17.09.2018, the accused gave post dated cheques bearing Nos. 000194 to 000205, dated 05.12.2018 to the complainant company with an understanding that they would supply re-melted lead ingots weekly once, the worth of re-melted lead to each cheque and would get back the cheques worth of re- melted lead supplied and will complete the supply of total balance of 730.640 MTs by 05.12.2018. From 5 17.09.2018, the accused supplied only 42 MTs of re- melted lead ingots to the complainant company and inspite of several reminders and requests, the accused haven ot supplied the balance ingots.
A.4 is also running lead recycling industry in the name of Chetan Industries. A.2 to A.7 colluded together and got supplied re-melted lead ingots through A.4's company and sold the same to third parties. Complainant company presented the above mentioned cheques in State Bank of India, SME branch, Tirupati on 06.12.2018, but the same were dishonoured with endorsement 'payment stopped by drawer' and the same was communicated vide Memos dated 07.12.2018. After issuing the statutory notice under Section 138 (b) of the Negotiable Instruments Act, 1881, as the accused did not pay the amount covered under the dishonoured cheques, the present complaint came to be lodged.
3. Learned Senior Counsel Sri Y.V.Ravi Prasad appearing for the petitioners contended that petitioners/A.2 and A.6 are neither managing the affairs 6 of A.1 firm nor signatory to the cheques which were issued in the name of the firm; that petitioner/A.6 had submitted her resignation on 30.03.2018 and the same was accepted by the existing partners vide their letter dated 31.03.2018; that the cheques in question were issued on 05.12.2018 and as on the date of issuance of the cheques, petitioner/A.6 was not at all partner of A.1 firm. He further contended that the cheques were issued as security. Apart from the said contention, the learned Senior Counsel relied on Section 141 of the NI Act and contended that a reading of the entire complaint goes to show that there is no compliance of Section 141 of the NI Act.
Learned Senior counsel also relied on Section 202 CrPC which mandates that the Magistrate shall, in a case where the accused are residents of a place beyond the area in which he exercises jurisdiction, postpone the issuance of process against the accused so as to enquire into the case himself or direct an investigation by a police officer. On the said grounds, the learned Senior 7 Counsel contended that the impugned proceedings are liable to be quashed.
4. Learned counsel for 2nd respondent contended that the complaint has to be read in holistic view; that merely because the complaint is not in compliance with Section 141 of the NI Act, it does not mean that the entire complaint has to be thrown out on the said ground. He further took this Court to the contents of the complaint and argued that a reading of the said complaint would go to show that all the accused were involved in day to day affairs of the company.
5. Perused the record.
6. In pursuance of filing of the private complaint under Section 138 of the NI Act, the Magistrate, on receipt of the complaint, had taken cognizance of the said offence. Sub-section (1) of Section 202 CrPC reads thus:
"(1) Any Magistrate, on receipt of a complaint of an offence of which he is authorized to take cognizance or which has been made over to him 8 under Section 192, may, if he thinks fit, and shall, in a case where the accused is residing at a place beyond the area in which he exercises his jurisdiction, postpone the issue of process against the accused, and either inquire into the case himself or direct an investigation to be made by a police officer or by such other person as he thinks fit, for the purpose of deciding whether or not there is sufficient ground for proceeding."
Under the aforesaid provision of law, it is clear that the Magistrate, on receipt of a complaint, either inquire into the case or direct investigation to be made by a police officer or by such other person as he thinks fit. The purpose of postponing issuance of process for the purpose of an inquiry or investigation is to determine whether or not there is sufficient ground for proceeding. It is held that the said procedure is mandatory for the Magistrate to do so in a case where the accused is resident of a place beyond the area in which he exercises his jurisdiction.
7. Under Sub-Section (1) of Section 202, a Magistrate upon the receipt of a complaint of an offence 9 of which he/she is authorized to take cognizance is empowered to postpone the issuance of process against the accused and either (i) inquire into the case; or (ii) direct an investigation to be made by a police officer or by such other person as he thinks fit. The purpose of postponing the issuance of process for the purposes of an enquiry or an investigation is to determine whether or not there is sufficient ground for proceeding. However, it is mandatory for the Magistrate to do so in a case where the accused is residing at a place beyond the area in which the Magistrate exercises jurisdiction. In the case on hand, admittedly, even according to the complaint, the petitioners are residents of Bengaluru and they would not come within the jurisdiction of Chittoor district.
8. The provisions of Section 202 which mandate the Magistrate, in a case where the accused is residing at a place beyond the area of its jurisdiction, to postpone the issuance of process so as to inquire into the case 10 himself or direct an investigation by police officer or by another person were introduced by Act 25 of 2005 with effect from 23 June 2006. The rationale for the amendment is based on the recognition by Parliament that false complaints are filed against persons residing at far off places as an instrument of harassment. In Vijay Dhanuka v. Najima Mamtaj { (2014) 14 SCC 638}, this Court dwelt on the purpose of the amendment to Section 202, observing:
"11. Section 202 of the Code, inter alia, contemplates postponement of the issue of the process 'in a case where the accused is residing at a place beyond the area in which he exercises his jurisdiction' and thereafter to either inquire into the case by himself or direct an investigation to be made by a police officer or by such other person as he thinks fit. In the face of it, what needs our determination is as to whether in a case where the accused is residing at a place beyond the area in which the Magistrate exercises his jurisdiction, inquiry is mandatory or not.
12. The words 'and shall, in a case where the accused is residing at a place beyond the area in 11 which he exercises his jurisdiction' were inserted by Section 19 of the Code of Criminal Procedure (Amendment) Act (Central Act 25 of 2005) w.e.f. 23-6-2006. The aforesaid amendment, in the opinion of the legislature, was essential as false complaints are filed against persons residing at far-off places in order to harass them. The note for the amendment reads as follows:
'False complaints are filed against persons residing at far-off places simply to harass them. In order to see that innocent persons are not harassed by unscrupulous persons, this clause seeks to amend sub-section (1) of Section 202 to make it obligatory upon the Magistrate that before summoning the accused residing beyond his jurisdiction he shall enquire into the case himself or direct investigation to be made by a police officer or by such other person as he thinks fit, for finding out whether or not there was sufficient ground for proceeding against the accused.' The use of the expression "shall" prima facie makes the inquiry or the investigation, as the case may be, by the Magistrate mandatory. The word "shall" is ordinarily mandatory but sometimes, taking into account the context or the intention, it can be held to be directory. The use of the word 12 "shall" in all circumstances is not decisive. Bearing in mind the aforesaid principle, when we look to the intention of the legislature, we find that it is aimed to prevent innocent persons from harassment by unscrupulous persons from false complaints. Hence, in our opinion, the use of the expression "shall" and the background and the purpose for which the amendment has been brought, we have no doubt in our mind that inquiry or the investigation, as the case may be, is mandatory before summons are issued against the accused living beyond the territorial jurisdiction of the Magistrate."
9. On this aspect, learned counsel for 2nd respondent relied on a decision in In Re: Expeditious Trial of Cases under Section 138 of N.I. Act, 1881,1 wherein a Constitution Bench of the Hon'ble Supreme Court of India held thus: (paragraph 10) "Section 202 of the Code confers jurisdiction on the Magistrate to conduct an inquiry for the purpose of deciding whether sufficient grounds justifying the issue of process are made out. The amendment to Section 202 of the Code with effect from 23.06.2006, vide Act 25 of 2005, made it 1 2021 SCC OnLine SC 325 13 mandatory for the Magistrate to conduct an inquiry before issue of process, in a case where the accused resides beyond the area of jurisdiction of the court. (See : Vijay Dhanuka v. Najima Mamtaj1, Abhijit Pawar v. Hemant Madhukar Nimbalkar2 and Birla Corporation Limited v. Adventz Investments and Holdings Limited3). There has been a divergence of opinion amongst the High Courts relating to the applicability of Section 202 in respect of complaints filed under Section 138 of the Act. Certain cases under Section 138 have been decided by the High Courts upholding the view that it is mandatory for the Magistrate to conduct an inquiry, as provided in Section 202 of the Code, before issuance of process in complaints filed under Section 138. Contrary views have been expressed in some other cases. It has been held that merely because the accused is residing outside the jurisdiction of the court, it is not necessary for the Magistrate to postpone the issuance of process in each and every case. Further, it has also been held that not conducting inquiry under Section 202 of the Code would not vitiate the issuance of process, if requisite satisfaction can be obtained from materials available on record."
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The Constitution Bench of the Hon'ble Supreme Court held that merely because the accused were resident of outside the jurisdiction of the Court, on that ground, it is not necessary for the Magistrate to postpone the issuance of process in each and every case. The Constitution Bench categorically held that not conducting enquiry under Section 202 CrPC would not vitiate the issuance of process, if requisite satisfaction can be obtained from the material available on record. In respect of complaints under Section 138 of the NI Act, the Hon'ble Apex Court held that Section 202 (2) CrPC is inapplicable to the said complaints. In view of the said observation made by the Constitution Bench of the Hon'ble Apex Court, the argument of the learned Senior Counsel with regard to non-conducting of the enquiry by the learned Magistrate before issuance of process, does not hold good.
10. Learned Senior Counsel strenuously contended that essential averments to be made in the complaint filed is that it is necessary to aver that at the 15 time the offence was committed, the person accused was in-charge of and responsible to, conduct of business of the company, and in the absence of the said averment, Section 141 of the NI Act cannot be said to be satisfied. The learned Senior Counsel relied on the following decisions, in support of his contention.
(a) In S.M.S. Pharmaceuticals Limited v. Neeta Bhalla and another2, wherein it is held thus: (paragraphs 5, 18 and 19).
"5. Section 203 of the Code empowers a Magistrate to dismiss a complaint without even issuing a process. It uses the words "after considering" and "the Magistrate is of opinion that there is no sufficient ground for proceeding". These words suggest that the Magistrate has to apply his mind to a complaint at the initial stage itself and see whether a case is made out against the accused persons before issuing process to them on the basis of the complaint. For applying his mind and forming an opinion as to whether there is sufficient ground for proceeding, a complaint must make out a prima facie case to proceed. This, in other words, means that a complaint must contain material to enable the Magistrate to make up his mind for issuing process. If this were not the requirement, consequences could be far-reaching. If a Magistrate had to issue process in every case, the burden of work before the Magistrate as well as the harassment caused to the respondents to whom process is issued would be tremendous. Even 2 (2005) 8 SCC 89 16 Section 204 of the Code starts with the words "if in the opinion of the Magistrate taking cognizance of an offence there is sufficient ground for proceeding".
The words "sufficient ground for proceeding" again suggest that ground should be made out in the complaint for proceeding against the respondent. It is settled law that at the time of issuing of the process the Magistrate is required to see only the allegations in the complaint and where allegations in the complaint or the charge-sheet do not constitute an offence against a person, the complaint is liable to be dismissed.
18. To sum up, there is almost unanimous judicial opinion that necessary averments ought to be contained in a complaint before a person can be subjected to criminal process. A liability under Section 141 of the Act is sought to be fastened vicariously on a person connected with a company, the principal accused being the company itself. It is a departure from the rule in criminal law against vicarious liability. A clear case should be spelled out in the complaint against the person sought to be made liable. Section 141 of the Act contains the requirements for making a person liable under the said provision. That the respondent falls within the parameters of Section 141 has to be spelled out. A complaint has to be examined by the Magistrate in the first instance on the basis of averments contained therein. If the Magistrate is satisfied that there are averments which bring the case within Section 141, he would issue the process. We have seen that merely being described as a director in a company is not sufficient to satisfy the requirement of Section 141. Even a non-director can be liable under Section 141 of the Act. The averments in the complaint would also serve the purpose that the person sought to be made liable would know what is the case which is alleged against him. This will enable him to meet the case at the trial. 17
19. In view of the above discussion, our answers to the questions posed in the reference are as under:
(a) It is necessary to specifically aver in a complaint under Section 141 that at the time the offence was committed, the person accused was in charge of, and responsible for the conduct of business of the company. This averment is an essential requirement of Section 141 and has to be made in a complaint. Without this averment being made in a complaint, the requirements of Section 141 cannot be said to be satisfied.
(b) The answer to the question posed in sub- para (b) has to be in the negative. Merely being a director of a company is not sufficient to make the person liable under Section 141 of the Act. A director in a company cannot be deemed to be in charge of and responsible to the company for the conduct of its business. The requirement of Section 141 is that the person sought to be made liable should be in charge of and responsible for the conduct of the business of the company at the relevant time. This has to be averred as a fact as there is no deemed liability of a director in such cases.
(c) The answer to Question (c) has to be in the affirmative. The question notes that the managing director or joint managing director would be admittedly in charge of the company and responsible to the company for the conduct of its business. When that is so, holders of such positions in a company become liable under Section 141 of the Act. By virtue of the office they hold as managing director or joint managing director, these persons are in charge of and responsible for the conduct of business of the company. Therefore, they get covered under Section 141. So far as the signatory of a cheque which is dishonoured is concerned, he is clearly responsible for the incriminating act and will be covered under sub- section (2) of Section 141."
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(b) In Ashutosh Ashok Parasrampuriya and another v. Gharrkul Industries Private Limited and another3, wherein it is held thus: (paragraphs 20 and 25) "20. In this regard, taking note of the three-Judge Bench decision of this Court in S.M.S. Pharmaceuticals Ltd. (supra) would be apposite. While dealing with an offence under Section 138 of the NI Act, the Court explaining the duty of a Magistrate while issuing process and his power to dismiss a complaint under Section 203 without even issuing process observed thus:--
"5. ... a complaint must contain material to enable the Magistrate to make up his mind for issuing process. If this were not the requirement, consequences could be far-reaching. If a Magistrate had to issue process in every case, the burden of work before the Magistrate as well as the harassment caused to the respondents to whom process is issued would be tremendous. Even Section 204 of the Code starts with the words 'if in the opinion of the Magistrate taking cognizance of an offence there is sufficient ground for proceeding'. The words 'sufficient ground for proceeding' again suggest that ground should be made out in the complaint for proceeding against the respondent. It is settled law that at the time of issuing of the process the Magistrate is required to see only the allegations in the complaint and where allegations in the complaint or the charge- sheet do not constitute an offence against a person, the complaint is liable to be dismissed."
25. We are concerned in this case with Directors who are not signatories to the cheques. So far as Directors who are not the signatories to the cheques or who are not Managing Directors or Joint Managing Directors are concerned, it is clear from the conclusions drawn in the afore-stated judgment 3 2021 SCC OnLine SC 915 19 that it is necessary to aver in the complaint filed under Section 138 read with Section 141 of the NI Act that at the relevant time when the offence was committed, the Directors were in charge of and were responsible for the conduct of the business of the company."
(c) In Dilip Hariramani v. Bank of Baroda4, wherein it is held thus: (paragraph 11) "In the present case, we have reproduced the contents of the complaint and the deposition of PW-
1. It is an admitted case of the respondent Bank that the appellant had not issued any of the three cheques, which had been dishonoured, in his personal capacity or otherwise as a partner. In the absence of any evidence led by the prosecution to show and establish that the appellant was in charge of and responsible for the conduct of the affairs of the firm, an expression interpreted by this Court in Girdhari Lal Gupta v. D.H. Mehta11 to mean 'a person in overall control of the day-to-day business of the company or the firm', the conviction of the appellant has to be set aside.12 The appellant cannot be convicted merely because he was a partner of the firm which had taken the loan or that he stood as a guarantor for such a loan. The Partnership Act, 1932 creates civil liability. Further, the guarantor's liability under the Indian Contract Act, 1872 is a civil liability. The appellant may have civil liability and may also be liable under the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 and the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002. However, vicarious liability in the criminal law in terms of Section 141 of the NI Act cannot be fastened because of the civil liability. Vicarious liability under sub-section (1) to Section 4 2022 LiveLaw (SC) 457 20 141 of the NI Act can be pinned when the person is in overall control of the dayto-day business of the company or firm. Vicarious liability under sub- section (2) to Section 141 of the NI Act can arise because of the director, manager, secretary, or other officer's personal conduct, functional or transactional role, notwithstanding that the person was not in overall control of the day-to-day business of the company when the offence was committed. Vicarious liability under sub-section (2) is attracted when the offence is committed with the consent, connivance, or is attributable to the neglect on the part of a director, manager, secretary, or other officer of the company."
(d) In Alka Khandu Avhad v. Amar Syamprasad Mishra & another5, wherein it is held thus: (paragraphs 6 and 7)
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 5 (2021) 4 SCC 675 21 offence punishable under Section 138 read with Section 141 of the NI Act?
9. On a fair reading of Section 138 of the NI Act, before a person can be prosecuted, the following conditions are required to be satisfied:
9.1. That the cheque is drawn by a person and on an account maintained by him with a banker.
9.2. For the 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.
9.3. The said cheque 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.
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."
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(e) In Kodam Danalakshmi v. State of Telangana6, wherein it is held thus: (paragraphs 11 and 12) "11. In Mrs. Aparna A. Shah's case (2 supra), cited by the learned counsel for petitioner/A.2, the Hon'ble Apex Court took the view that under Section 138 of the N.I. Act, it is only the drawer of the cheque who can be proceeded. In the said case, the husband had drawn the cheque on the account, which was being jointly maintained by him and his wife. The Hon'ble Supreme Court held that in case of issuance of a cheque from joint account, a joint account holder cannot be prosecuted unless the cheque has been signed by each and every person who has a joint account holder. The Hon'ble Supreme Court observed as follows:
"Para 23 : We also hold that under Section 138 of the N.I. Act, in case of issuance of cheque from joint accounts, a joint account holder cannot be prosecuted unless the cheque has been signed by each and every person who is a joint account holder. The said principle is an exception to Section 141 of the N.I. Act which would have no application in the case on hand. The proceedings filed under Section 138 cannot be used as an arm twisting tactics to recover the amount allegedly due from the appellant. It cannot be said that the complainant has no remedy against the appellant but certainly not under Section
138. The culpability attached to dishonour of a cheque can, in no case "except in case of Section 141 of the N.I. Act" be extended to those on whose behalf the cheque is issued. This Court reiterates that it is only the drawer of the cheque who can be made an accused in any proceeding under Section 138 of the Act. Even the High Court has specifically recorded the stand of the appellant that she was not the signatory of the cheque but rejected the contention that the amount was not due and payable by her solely on 6 (2021) 2 ALD (Cri) 1000 23 the ground that the trial is in progress. It is to be noted that only after issuance of process, a person can approach the High Court seeking quashing of the same on various grounds available to him. Accordingly, the High Court was clearly wrong in holding that the prayer of the appellant cannot even be considered. Further, the High Court itself has directed the Magistrate to carry out the process of admission/denial of documents. In such circumstances, it cannot be concluded that the trial is in advanced stage."
12. In the instant case, it is evident from the entire material placed on record, particularly, the complaints filed by the respondent No. 2/complainant under Section 138 of N.I. Act r/w Sec.200 Cr.P.C, the petitioner/A.2 is merely a joint account holder and she is not the signatory to the subject cheques. On the other hand, it is culled out from the record that though the account relating to the disputed cheques is a joint account, only one signature, which appears to be of A.1, are seen on those disputed cheques. Penal provisions should be construed strictly, but not in a routine/casual manner. The words used in Section 138 of N.I. Act that "such person shall be deemed to have committed an offence" refers to a person who has drawn the cheque, but not any other person, except the contingencies mentioned under Section 141 of the N.I. Act. In view of the same, the submission made by the learned counsel for the petitioner/A.2 that the petitioner/A.2, who is a mere joint account holder but not a signatory to the subject cheque, cannot be proceeded under Section 138 of N.I. Act, merits consideration, inasmuch as a joint account holder cannot be prosecuted, unless and until he/she is a signatory to the subject cheque. Further, the commencement of the trial in the subject C.Cs cannot be a ground to continue the proceedings against the petitioner/A.2. The Courts below erred in taking cognizance against the petitioner/A.2, particularly, when she is not a signatory to the disputed cheques. So the 24 contentions raised on behalf of the respondents do not merit consideration. In view of these circumstances, when no ingredients under Section 138 of N.I. Act are made out against the petitioner/A.2, continuation of the subject proceedings against the petitioner/A.2 is abuse of process of law. Therefore, the proceedings in the subject C.Cs against the petitioner/A.2, are liable to be quashed."
11. On the contrary, learned counsel for 2nd respondent relied on a decision in G.Ramesh v. Kanike Harish Kumar Ujwal and another7, wherein it is held thus: (paragraphs16 and 18).
"16. In the present case, it is evident from the relevant paragraphs of the complaint which have been extracted above that the complaint contains a sufficient description of: (i) the nature of the partnership; (ii) the business which was being carried on; (iii) the role of each of the accused in the conduct of the business and, specifically, in relation to the transactions which took place with the complainant. At every place in the averments, the accused have been referred to in the plural sense. Besides this, the specific role of each of them in relation to the transactions arising out of the contract in question, which ultimately led to the dishonour of the cheques, has been elucidated.
18. The High Court proceeded on the basis that the first accused was a company in which the other two accused were Directors. Section 141 undoubtedly uses the expression "company" so as to include a firm or association of persons. The fact that the first accused, in the present case, is a partnership firm 7 (2010) 17 SCC 239 25 of which the remaining two accused are partners has been missed by the High Court."
12. In the case on hand, it is an admitted fact that A.5, who is authorized signatory of A.1 firm, issued cheques bearing Nos.000194 to 000205 drawn on HDFC Bommasandra Industrial Area, Jigni, Bangalore for Rs.12.00 Crores in favour of the complainant company. Admittedly, petitioners herein are not signatories to the subject cheques. A reading of the entire complaint would go to show that there is no any averment in the complaint in compliance of Section 141 of the NI Act that every person, who at the time the offence was committed, was in-charge of, and responsible to, the company for conduct of business of the company as well as the company. Time and again, this Court and the Hon'ble Supreme Court categorically held that specific averments are necessary. Section 203 CrPC empowers a Magistrate to dismiss a complaint without even issuing the process. At that stage, it is essential for the Magistrate in forming an opinion whether there is sufficient ground to proceed 26 against the accused or there is no sufficient ground for proceeding against him. At that juncture, it is foremost for the Magistrate to apply his mind and see whether the case is made out as against the accused persons for issuance of process. A reading of the entire complaint, no where it is stated that the petitioners are Directors and they were in-charge of, and responsible to, the day to day affairs of the company. A person might be a Director of the said company, but he would be residing at a far away place. Whether the said Director of the company is aware of the transaction that is complained of, is to be taken note of, by the Magistrate at an earlier stage. A reading of the statute under Section 141 of the NI Act, it is clear that the complaint to contain the said averment, and in the absence of such an averment, it has to be deemed that Section 141 of the NI Act has not been satisfied. Merely stating here and there that all the accused were involved in the transaction would not suffice, more so, when the statute categorically stipulates that an averment has to be mentioned in the complaint. 27
13. To sum up, a clear case should be spelled in the complaint against all the persons sought to be made liable. Section 141 of the NI Act contains requirements for a person making a person liable under the said provision. The complainant has to be examined by the Magistrate in the first instance on the basis of the averments contained therein. If he satisfies that there is material which brings the case within the purview of Section 141 of the NI Act, the learned Magistrate would issue process. Merely stating that the petitioners are Directors would not in any way suffice to satisfy the requirements of Section 141 of the NI Act. In view of the facts and circumstances of the case, this Court has no impediment to come to the conclusion that in the absence of any averment contained in the complaint, continuation of the impugned proceedings agaisnt the petitioenrs, who are residing at far away places, would be opporesive and abuse of process of Court. 28
14. In the result, the Criminal Petitions are allowed. The proceedings in C.C. No.321 of 2019 on the file of the III Additional Judicial Magistrate of First Class, Tirupati are quashed in sofar as petitioners/A.2 and A.6 are concerned.
Miscellaneous petitions pending, if any, in the Criminal Petitions shall stand closed.
___________________________________ JUSTICE K. SREENIVASA REDDY .09.2022.
DRK 29 THE HON'BLE SRI JUSTICE K. SREENIVASA REDDY COMMON ORDER IN CRIMINAL PETITION NOs.5330 OF 2021 & 5332 OF 2021 .9.2022 DRK