Delhi District Court
Sateesh Jain vs Uco Bank on 31 March, 2018
IN THE COURT OF SH. SIDHARTH SHARMA, ASJ-02/FTC
NEW DELHI DISTRICT, PATIALA HOUSE COURTS, NEW DELHI
Crl. Revision No. 14/2016
New Case No. 8596/2016
Sateesh Jain
The then Director of M/s. Surya Vinayak Industries Ltd.
R/o 1/7439, East Gorakh Park Shahdara,
Delhi - 110032. ...Petitioner
Versus
UCO Bank
Through its Manager / Attorney
Head Office at No. 10,
Biplabi Trailkya Maharaj Sarani,
Kolkata -700001
And
Flagship Corporate Centre,
5, Parliament Street,
New Delhi. ... Respondents
Date of institution of the case : 10.02.2016
Date of announcement of orders : 31.03.2018.
ORDER
1. By this order I shall dispose off the revision petition filed against the impugned order dated 28.01.2016 passed by Sh. Puneet Pahwa, Ld. MM, in CC No. 751/1 titled as UCO Bank vs. Suryavinayak Industries Ltd. & Ors., whereby he dropped the proceedings under section 138 read with section 141 N.I. Act against other accused persons, except the petitioner / revisionist, accused no. 1 and 11. Sateesh Jain vs. UCO Bank CR No.14/2016 1/7
2. The brief facts of the case are that the accused no. 1 (company) through its Director approached the complainant bank for availing loan. The complainant agreed to sanction a short term loan of Rs. 50 crores (rupees fifty crores). Certain agreements were signed. In the meantime the complainant deposited the cheques dated 12.05.2012 and 14.05.2012 which had been signed by the present petitioner as Director, but the said cheques were dishonoured for "Insufficient Funds". In the meanwhile the present petitioner is alleged to have resigned on 15.05.2012.
3. It is the case of the petitioner that he had resigned as a Director on the day when offence was committed and therefore he should not have been summoned. He has admitted that he was Director of the accused no. 1 company, but he had ceased to be the director at the time when the offence was committed and therefore no notice should be framed against him under section 138 N.I. Act. He has relied upon the following judgments:-
i) Kamal Goyal vs. M/s. United Phosphorus Ltd., Crl. M. C. 1761 / 2009 decided on 04.02.2010
ii) Sudeep Jain vs. M/s ECE Industries Ltd., Crl. M. C. No. 1821&22 /2013 decided on 06.05.2013.
4. On the other hand, ld. Counsel for the respondent UCO Bank has argued that the present petitioner is signatory to the cheqes in question. He has argued that the cheques were issued prior to the resignation and therefore this summoning order is valid and it is only during trial it could be established whether on the date when the offence Sateesh Jain vs. UCO Bank CR No.14/2016 2/7 was committed the present petitioner ceased to be the Director of the accused no. 1 Company. It is argued that it is from the date of issuance of cheque, the vicarious liability of the petitioner Director would be established. He has relied upon the following judgments:-
i) B.S. Sarao vs. Securities and Exchange Board of India, 2008 (3) AD (Delhi) 109.
ii) Rallis India Ltd. vs. Poduru Vidya Bhusan, 2011 (13) SCC 88.
iii) K. K. Ahuja vs. V.K. Vora, (2009) 10 SCC 48.
5. I have carefully gone through the judgments relied upon by the ld. Counsels for both the parties and have heard the Ld. Counsels for petitioner as well as respondent.
6. In the case of Kamal Goyal vs. M/s. United Phosphorus Ltd., Crl. M. C. 1761 / 2009 decided on 04.02.2010, it has been held as under: -
"13. It was also contended by the learned counsel for the complainant / respondent that the petitioner being the signatory of cheque in question, he was its drawer within the meaning of Section 138 of the Negotiable Instruments Act. In my view, the contention is totally misconceived. The cheque was issued by the Company and not by the petitioner. He only signed the cheque on behalf of the Company. He does not become a drawer of the cheque merely by signing it on behalf of the company when the cheque is issued by the company in discharge of its debt or liability and is not signed by him in his personal capacity. If the contention of the learned counsel for the complainant / respondent is accepted, even an employee of the Company, who on account of his being an authorized signatory signs a cheque issued by the Company towards discharge of the debt or other liability of the Comapny, would be liable to prosecution and conviction under Section 138 of the Negotiable Instruments Act even after he resigns from the company and is no more in its employment. This certainly Sateesh Jain vs. UCO Bank CR No.14/2016 3/7 could not have been the intention of the legislature. Even the vicarious liability created under Section 138 of the Negotiable Instruments Act would not be attracted in respect of a Director or an employee of the company who resigns and severs his connections with the company, unless the complainant is able to bring his case within the purview of sub-section 2 of Section 141 of the Negotiable Instruments Act, by proving that the offence had been committed with his consent or connivance or was otherwise attributable to any neglect on his part."
7. In the case of Sudeep Jain vs. M/s ECE Industries Ltd., Crl. M. C. No. 1821&22/2013 decided on 06.05.2013, it has been held as under:-
"10. With a view to ensure that the Metropolitan Magistrate dealing with the complainant cases filed under Section 138 r/w Section 141 of the Negotiable Instruments Act have a clear and complete picture of the persons arrayed by the complainant so as to hold them vicariously liable for the commission of the offence by the accused company, I am inclined to direct that the Magistrates must seek copies of Form-32 from the complainant to prima facie satisfy the Court as to who where the directors of the accused company at the time of commission of the alleged offence and on the date of filing of the complaint case. In addition to the above, the Magistrates must also seek information as given in the following table which is to be annexed by the Complainant on a separate sheet accompanying the complainant:-
a. Name of the accused company;
b. Particulars of the dishonoured cheque/ cheques;
- Person / Company in whose favour the cheque / cheques were issued
- Drawer of the cheque / cheques
- Date of issuance of cheque / cheques
- Name of the drawer bank, its location
- Name of the drawee bank, its location
- Cheque No. / Nos.
- Signatory of the cheque / cheques c. Reasons due to which the cheque / cheques were Sateesh Jain vs. UCO Bank CR No.14/2016 4/7 dishonoured;
d. Name and Designation of the persons sought to be vicariously liable for the commission of the offence by the accused Company and their exact role as to how and in what manner they were responsible for the commission of the alleged offence;
e. Particulars of the legal notice and status of its service; f. Particulars of reply to the legal notice, if any."
8. Further in the case of B.S. Sarao vs. Securities and Exchange Board of India, 2008 (3) AD (Delhi) 109 it has been observed as under:-
"This again would depend on the facts and circumstances of every case. As pointed out by this Court in J.N. Bhatia vs. State 139 (2007) DLT 361 where a Form 32 is filed after the date of the issuance of the cheque that still would be a matter of leading evidence at the trial. If however, the Form 32 was filed before the issuance of the dishonoured cheque then such Form 32 can safely be acted upon to quash the complaint. A reference may also be made in this regard to the decision in Sarla Kumar v. Srei International Finance Ltd., 132 (2006) DLT 363.
17. It may be noticed at this stage that there have been instances where petitioners have, along with their petitions under Section 482 Cr.P.C., filed in this Court certified copies of the Form 32 filed by them in terms of the Companies Act, 1956 to show that they have ceased to be the Directors of the company at the time of commission of the offence. The document being a public document which can be easily verified even on an inspection of the records of the company with the Registrar of Companies does not require elaborate evidence at the trial. One such instance was a complaint filed by SEBI which was quashed by this Court by an order dated 30th January, 2008 in Crl. MC No. 2145/2006 Virender Kumar Singh v. Securities and Exchange Board of India. This Court held that where a certified copy of a Form 32 is placed on record and despite sufficient opportunities SEBI has not been able to rebut it, then the said certificate ought to be Sateesh Jain vs. UCO Bank CR No.14/2016 5/7 accepted as constituting sufficient proof of the fact that the person ceased to be a person in charge of the affairs of the company at the time of the commission of the offence. This again would depend on the facts and circumstances of every case. As pointed out by this Court in J.N. Bhatia v. State 139 (2007) DLT 361 where a Form 32 is filed after the date of the issuance of the cheque that still would be a matter of leading evidence at the trial. If however, the Form 32 was filed before the issuance of the dishonoured cheque then such Form 32 can safely be acted upon to quash the complaint. A reference may also be made in this regard to the decision in Sarla Kumar v. Srei International Finance Ltd. 132 (2006) DLT
363."
9. In the case of Rallis India Ltd. vs. Poduru Vidya Bhusan, 2011 (13) SCC 88 is has been observed as under:-
"Sections 138 & 141 - Dishonour of cheque - Offence by partnership firm - Discharge by High Court - Justification - Specific averment of vicarious criminal liability found to be contained in the complaint - Same revealed that the respondents - accused were the partners of the firm, at the relevant point of time and were looking after day to day affairs of the partnership firm - Held, burden of proof that at the relevant point of time they were not the partners is required to be discharged by them by leading evidence and unless it is so proved, in accordance with law, they cannot be discharged of their liability - Resultantly, impugned order discharging them set aside - Criminal Procedure Code, 1973 - Section 227 & 482."
10. In the case of K. K. Ahuja vs. V.K. Vora, (2009) 10 SCC 48 it has been held as under:-
" 27 (ii) In the case of a Director or an officer of the company who signed the cheque on behalf of the company, there is no need to make a specific averment that he was in charge of and was responsible to the company, for the conduct of the business of the company or make any specific allegation about consent, connivance or negligence. The Sateesh Jain vs. UCO Bank CR No.14/2016 6/7 very fact that the dishonoured cheque was signed by him on behalf of the company, would give rise to responsibility under sub-section (2) of Section 141."
11. It is not disputed that petitioner is one of the signatory to the cheque in question which was dishonoured. It is not disputed that the cheques in question and Form No. 32 were prior to the date of resignation as per the admitted position of the petitioner. It has been categorically held in the judgments relied upon by the Ld. Counsel for the respondent that it shall be matter of trial in case that the cheques have been issued after the resignation as per shown in Form No. 32. In the present case the petitioners are signatory of the dishonoured cheque and the Form No. 32 showing the resignation of the petitioner is after the date of the cheque and in my opinion therefore it shall be the matter of trial to prove if there is any vicarious liability against the petitioner for the offence under section 138 N.I. Act. The judgments relied upon are different on the facts and circumstances of the present case.
12. In these circumstances, I do not find any infirmity or illegality in the order passed by the Ld. MM while summoning the petitioner and framing notice against him. The revision petition is accordingly dismissed.
13. Trial Court record be sent back along with copy of this order. Revision file be consigned to record room.
Announced in the open Court (SIDHARTH SHARMA)
on 31st March 2018 ASJ-02/FTC, PHC/NDD
31.03.2018
Sateesh Jain vs. UCO Bank
CR No.14/2016 7/7