Calcutta High Court
Chhedi Lal Gupta vs Suresh Damani And Anr. on 15 February, 2007
Equivalent citations: 2007(2)CHN273
JUDGMENT P.N. Sinha, J.
1. These two revisional applications under Section 401 read with Section 482 of the Code of Criminal Procedure (in short the Code) are aimed at quashing the criminal proceedings being Complaint Case No. C-5488 of 2003 and Complaint Case No. C-5489 of 2003 under Section 138/141 of the Negotiable Instruments Act (hereinafter called the N.I. Act), 1881 now pending in the Court of the learned Metropolitan Magistrate, 12th Court, Calcutta. As the facts and legal principles of both the complaint cases and the present revisional applications are identical, I intend to dispose of both the revisional applications by this common judgment and order.
2. Before I proceed to enter into the merit of the revisional applications, I think it fruitful to mention the facts as disclosed in the complaints of the two cases. The revisional application bearing No. CRR No. 3890 of 2006 has been filed praying for quashing the case No. C-5488 of 2003 and the CRR No. 3891 of 2006 has been filed praying for quashing the case No. C-5489 of 2003. Both the complaints were filed by O.P. No. 1 against the petitioner and others. It was alleged in the complaint that, the complainant has been working for gain as the insurance agent of various reputed organisations. The accused No. 1 is the partnership firm and accused Nos. 2, 3 and 4 are the partners of the said firm. The accused Nos. 2, 3 and 4 being the partners of the firm were the persons in charge of, and responsible to, the conduct of the business of accused No. 1 firm and they were looking after the day-today affair of the said firm. The accused persons 2 to 4 obtained loan of Rs. 8,21,000/- (Rupees eight lakh twenty-one thousand) in the name and on behalf of the firm namely, M/s. Gaya Prasad Chhedilal up to 18th December, 2001 from the wife and minor son of the complainant on condition that the said loan would be repaid with interest by instalments to the complainant who was authorised by his wife and minor son to receive the said amount. The accused persons issued an account payee cheque bearing No. 293867 dated 30th July, 2003 for Rs. 1,00,000/- drawn on UCO Bank, Lower Circular Road Branch in favour of the complainant to meet the liabilities or part debt. The said cheque was presented within the validity period for encashment by the complainant on 4th August, 2003 with the United Bank of India, Shakespeare Sarani Branch, Kolkata. The said cheque was dishonoured and returned by the drawers banker namely, UCO Bank on the reason "payment stopped by the drawer" together with a memo dated 5th August, 2003. The petitioner, thereafter, sent demand notice through his Advocate on 10th August, 2003 and sent the same under speed post with A/D to the address of the accused persons and the accused persons duly received the notice on 14th August, 2003. The complainant received one letter on 18th August, 2003 sent by the Advocate on behalf of the accused persons mentioning therein that they received the demand notice, but the accused persons denied the allegations mentioned in the demand notice. The accused persons did not make payment of Rs. 1,00,000/- i.e. the amount of the dishonoured cheque within 15 days from the date of receipt of the demand notice. The complainant thereafter lodged the complaint against the accused persons including the present petitioner who was arrayed as accused No. 4.
3. The facts of the Complaint Case No. C-5489 of 2003 were identical except the difference in respect of cheque No. and its date, date of presentation of the cheque for encashment, date of intimation from bank concerning dishonour of the cheque and date of demand notice. In this complaint it was mentioned that the cheque No. was 293866 dated 30th June, 2003 and the complainant deposited the said cheque for encashment on 2nd August, 2003 and on 4th August, 2003 he received the intimation from bank regarding dishonour of the cheque due to "payment stopped by the drawer". The complainant sent the demand notice by speed post with A/D through his Advocate on 12th August, 2003 and the said notice was served upon the accused persons on 14th August, 2003. As the accused persons did not make payment of the amount of the dishonoured cheque within 15 days from the date of receipt of the notice, the complainant lodged the complaint and this petitioner was arrayed as accused No. 4.
4. Mr. Subrata Bose, the learned Advocate for the petitioner submitted that the petitioner is not at all a partner of the accused No. 1 firm namely, M/s. Gayaprasad Chhedilal. The petitioner never looked after the day-today affair of the said firm and the complainant did not produce any paper or document before the learned Magistrate to establish that the petitioner was or is a partner of the accused firm. The sons of the petitioner are the partners and the sons have mentioned clearly that their father i.e. the petitioner is or was never a partner of the said firm. The petitioner never took loan from the complainant O.P. No. 1 or from his wife and minor son. After receiving the demand notice by the accused No. 1 firm reply was sent through their Advocate and the petitioner in the said reply clearly mentioned that he was not a partner of the firm M/s. Gayaprasad Chhedilal and he was not a person in charge of the firm and was not looking after the day-to-day affairs of the business of the said firm.
5. Mr. Bose contended that the petition of complaint including paragraph 4 of the same are merely bald statements and complaint did not reveal the parts played by this petitioner behind the incident of taking loan or issue of cheque etc. The complaint does not reveal any part played by this petitioner and accordingly on the basis of such vague and bald statements of complaint no criminal proceeding can be instituted against the petitioner. Mr. Bose also contended that the statement of complainant under Section 200 of the Code is as vague as possible and such statement did not reveal any role or taking part by the petitioner in the day-to-day affair or business of the partnership firm. The petitioner appeared before the learned Magistrate through lawyer and filed an application on 19.10.06 before the learned Magistrate praying for discharge but, the learned Magistrate by order dated 19.10.06 rejected his prayer without considering the contents of the petition and the principle of law. Before the learned Magistrate the decisions in Monaben Ketanbhai Shah v. State of Gujarat and Sabitha Ramamurthy v. R.B.S. Channabasavaradhya reported in 2006 AIR SCW 4582 were placed but, the learned Magistrate without considering those decisions placed reliance on the decision of Adalat Prasad and rejected the prayer for discharge.
6. Mr. Bose further submitted that the learned Magistrate failed to exercise the jurisdiction vested on him in law. The sons of the petitioner have categorically stated before the learned Magistrate that their father i.e. the present petitioner is not a partner of the accused firm but that was also not considered by the learned Magistrate. The petitioner has no connection with the accused firm and he is not involved with the partnership firm. The petitioner is a man of 78 years old and he has been unnecessarily implicated in this case. This Court under Section 482 of the Code is empowered to quash the criminal proceeding against the petitioner as there was no material at all against the petitioner. In support of his contention Mr. Bose relied upon the decisions mentioned above which were placed before the learned Magistrate, and besides those two decisions he also placed reliance on another decision in Subramanium Sethuraman v. State of Maharashtra reported in AIR 2004 SC 4711.
7. On the contrary, Mr. Amit Bhattacharjee, the learned Advocate for the complainant O.P. No. 1 submitted that the petition of complaint discloses sufficient averments of taking part in the day-to-day affair of the business by this petitioner and the same was averred in paragraphs 4 and 12 of the complaint. These two paragraphs and the paragraph 6 reveal the parts played by the accused persons including this petitioner in the alleged incident. In fact, this petitioner is the main person who was the leader of taking loan from the wife and minor son of O.P. No. 1 who authroised the O.P. No. 1 to receive the refund of loan. The other two accused persons namely, accused Nos. 2 and 3, who are the sons of this petitioner are now trying to save their father. The allegations made in the petition of complaint are matters of fact which can be decided only on the basis of evidence in the trial. The High Court in a revisional application cannot assess evidence like a Trial Court or Appellate Court. Moreover, the alleged statement of the son of petitioner cannot be acted upon as it stands in the shape of statement of co-accused persons and the High Court at this stage cannot consider statement of coaccused. If the languages of Section 141 of the N.I. Act are properly appreciated it would reveal that the complaint discloses essential requirements of the ingredients under Section 141 of the N.I. Act to file a complaint against a firm or company or the directors or partners of such company and firm.
8. Mr. Bhattacharjee next contended that the petitioner being a partner of the firm is vicariously liable in the incident for the firm and vicarious liability was sufficiently averred in the petition of complaint to show that this petitioner used to take part in the day-to-day affairs and business of the partnership firm. At this stage, the papers or documents of the accused persons cannot be considered and the onus is on the person who raises a particular fact or fact-in-issue to prove it in the trial. Here the petitioner has raised a plea that he was never a partner and is not a partner of the accused No. 1 firm and the onus lies upon the petitioner to prove it by producing sufficient evidence and this Court cannot assess evidence at this stage. In the trial the accused petitioner has to establish his case by producing sufficient evidence. This is not at all a fit case for quashing the criminal proceedings and the learned Magistrate very rightly rejected the prayer of the accused petitioner for discharge. There is no material in the revisional applications and the revisional applications should be dismissed. In support of his contention Mr. Bhattacharjee placed the decisions in M.M.T.C. Ltd. v. Medchl Chemicals & Pharma (P) Ltd. reported in 2002 Cr. LJ 266 : 2002(1) R.C.R. (Criminal) 318 Raj Lakshi Mills v. Shakti Bhankoo reported in 2003(1) DCR 453, S.V. Muzumdar v. Gujarat State Fertilizer Co. Ltd. SMS. Pharmaceuticals Ltd. v. Neeta Bhalla , P. Ramachandra Reddy v. Sanghi Enterprises, Hyderabad reported in 2004 Cr. LJ 2171 Monaben Ketanbhai Shah v. State of Gujarat (supra) A.S. Subramaniam v. Vasavi Cotton Traders Registered Firm reported in 2002 Cr. LJ 4226 : 2002(1) R.C.R. (Criminal) 732 Sreekant Bangur v. State of West Bengal reported in 2000 C Cr. LR (Cal) 363, T.P. Singh Kalra v. Star Wire India Ltd. reported in 1998(4) R.C.R. (Criminal) 179 and Samarendra Nath Das v. Supriyo Maitra reported in 2006(4) All India Criminal Law Reporter 337.
9. I have duly considered the submissions of the learned Advocates for the parties and perused the contents of the revisional applications, the annexures made thereto and the decisions cited by the learned Advocates for the parties. The paragraphs 4, 5, 6 and 12 of the petition of complaint in both the cases reveal the parts played by the accused persons constituting the alleged offence. In paragraph 4 of the petition of complaint it was specifically mentioned that, "the accused No. 1 is the partnership firm and the accused Nos. 2, 3 and 4 are the partners of the said firm and the persons in charge of, and responsible to, the conduct of the business of the accused No. 1 and looking after the day-to-day affairs of the said firm. In paragraph 5 it was stated that, "the accused persons 2, 3 and 4 have obtained loan of Rs. 8,21,000/- in the name and on behalf of their firm i.e. M/s. Gayaprasad Chhedilal from the wife and minor son of complainant and the complainant was authorised by his wife and son to receive back the amount of loan from accused Nos. 2, 3 and 4 who accepted the loan on behalf of accused No. 1." In paragraph 6 it was stated that, the accused persons issued the cheque and such averment was made in both the complaints. In paragraph 12 it was stated that, the learned Advocate of all the four accused persons sent a reply by letter dated 18th August, 2003 in response to the demand notice sent by complainant O.P. No. 1 and in that letter they denied everything. The averments made in the petition of complaint as disclosed above are sufficient compliance of the provisions of Section 141 of the N.I. Act.
10. I am unable to agree with the views of Mr. Bose, the learned Advocate for the petitioner that there was no material at all against the petitioner and the petition of complaint contains only vague and bald statements. The contents or averments of the complaint which I have just discussed or quoted reveal clearly that averments were sufficient to show the part played by this petitioner in the incident and complaint also reveals that the petitioner was also in charge of looking after day-to-day affair and business of the company. The statement of sons of petitioner, the other two accused persons of the case, cannot be relied upon as such statement is in effect a statement of co-accused over which a Magistrate cannot place any reliance. The plea raised by the petitioner that he was not a partner cannot be established in the criminal revision before this Court as the High Court cannot assess evidence like a Trial Court or Appellate Court. These are matters of fact which are to be established in the trial on the basis of evidence to be adduced by both the parties. Moreover, after such complaint and failure to make payment of the amount of the dishonoured cheque, the onus is on the accused petitioner to discharge by evidence before the learned Magistrate that he was not a partner and the accused petitioner has to prove it in the trial on the basis of oral and documentary evidence. At this stage or even at the stage of framing charge or at the stage of examination of the accused under Section 251 of the Code no paper or document on behalf of the accused can be relied upon by the learned Magistrate and in this connection I place reliance on the decisions of the Supreme Court in State of Orissa v. Debendra Nath Padhi . The name of the firm namely, Ms. Gayaprasad Chhedilal is very indicative. It appears from the materials on record that Gayaprasad was none but, the father of the present petitioner. It is also clear that Gayaprasad is now dead. Chhedilal is the present petitioner. Before the learned Magistrate during trial on the basis of evidence it would transpire how the partnership firm was originated and registered and who were the partners.
11. The law relating to vicarious liability and the elements constituting offence punishable under Sections 138 and 141 of the N.I. Act are almost settled. The decisions cited by Mr. Bose for the petitioner also reveal the settled principle of law and so also the decisions cited by Mr. Bhattacharjee, the learned Advocate for O.P. No. 1. The decision in Sabitha Ramamurthy v. R.B.S. Channabasavaradhya (supra) are not properly applicable in this case ****************** materials disclosed in the complaint showing the involvement of this petitioner and specific averment of taking day-to-day part in the affair and business of the accused firm by this petitioner. Absence of some averment in the statement on oath when the complainant was examined under Section 200 of the Code is not a ground to quash the criminal proceeding against the petitioner, and here, I place reliance on the decision of larger Bench of the Supreme Court in Raj Lakshi Mills v. Shakti Bhankoo (supra) and S.M.S. Pharmaceuticals Ltd. v. Neeta Bhalla (supra). The decision in Subramanium Sethuraman v. State of Maharashtra (supra) cited by Mr. Bose for the petitioner lays down settled principle as the said decision reveals that after issue of process only the remedy is available under Section 482 of the Code and Magistrate cannot review or reconsider his decision relating to issue of process.
12. I now intend to discuss the principle of law and the decisions placed by Mr. Bhattacharjee, the learned Advocate for O.P. No. 1 which are apposite. In M.M.T.C. Ltd. v. Medchl Chemicals & Pharma (P) Ltd. (supra) the Supreme Court was considering an appeal against order of quashing the complaint in a proceeding under Sections 138 and 142 of the N.I. Act. The Supreme Court held that at the stage after issue of process the Court is not justified in embarking upon an enquiry as to the reliability or genuineness or otherwise of the allegations made in the complaint. A large Bench of the Supreme Court in Raj Lakshi Mills v. Shakti Bhankoo (supra) at the stage of issuing summons in the proceeding under Section 138 of the N.I. Act held that, at the stage of summoning when evidence was yet to be led by the parties, the High Court could not on an assumption of facts come to a finding that the respondent was not responsible for the conduct of the business.
13. In Supreme Court in S.V. Muzumdar v. Gujarat State Fertilizer Co. Ltd. (supra) in a proceeding under Sections 138 and 141 of the N.I. Act held that, 'Whether a person is in charge of or is responsible to the company for conduct of business is to be adjudicated on the basis of the materials to be placed by the parties. Sub-section (2) of Section 141 is a deeming provision which as noted supra operates in certain specified circumstances. Whether the requirements for the application of the deeming provision exist or not is again a matter for adjudication during trial. Similarly, whether the allegations contained are sufficient to attract culpability is a matter for adjudication at the trial."
14. The larger Bench of the Supreme Court settled the law in the matters of company in a proceeding under Sections 138 and 141 of the N.I. Act in S.M.S. Pharmaceuticals Ltd. v. Neeta Bhalla (supra). While considering the reference made by two Hon'ble Judge Bench of the Supreme Court, the larger Bench in this decision laid down the law in respect of the directors' involvement in a proceeding under Sections 138 and 141 of the N.I. Act. In connection with that decision the Supreme Court considered several decisions and laid down the law and I am quoting below the observations of the Supreme Court.
15. The Supreme Court observed that, "As to what should be the averments in a complaint, assumes importance in view of the fact that, at the stage of issuance of process, the Magistrate will have before him only the complaint and the accompanying documents. A person who is sought to be made accused has no right to produce any document or evidence in defence at that stage. Even at the stage of framing of charge the accused has no such right and a Magistrate cannot be asked to look into the documents produced by an accused at that stage, State of Orissa v. Debendra Nath Padhi, ."
16. In the said decision the Supreme Court considered several provisions of the Companies Act and observed that, "What emerges from this is that the role of a director in a company is a question of fact depending on the peculiar facts in each case. There is no universal rule that a director of a company is in charge of its everyday affairs....It all depends upon respective roles assigned to the officer in a company. A company may have Managers or Secretaries for different departments, which means, it may have more than one Manager or Secretary. These officers may also be authorised to issue cheques under their signatures with respect to affairs of their respective departments....Therefore, mere use of a particular designation of an officer without more, may not be enough by way of an averment in a complaint. When the requirement in Section 141, which extends the liability to officers of a company, is that such a person should be in charge of, and responsible to, the company for conduct of business of the company, how can a person be subjected to liability of criminal prosecution without it being averred in the complaint that he satisfies those requirements? Not every person connected with a company is made liable under Section 141. Liability is cast on persons who may have something to do with the transaction complained of. A person who is in charge of, and responsible for, conduct of business of a company would naturally know why the cheque in question was issued and why it got dishonoured. The position of a Managing Director or a Joint Managing Director in a company may be different. These persons, as the designation of their office suggests, are in charge of a company and are responsible for the conduct of the business of the company....What is required is that the persons who are sought to be made criminally liable under Section 141 should be at the time the offence was committed, in charge of, and responsible to, the company for the conduct of the business of the company. Every person connected with the company shall not fall within the ambit of the provision. It is only those persons who were in charge of, and responsible for, conduct of business of the company at the time of commission of an offence, who will be liable for criminal action....The conclusion is inevitable that the liability arises on account of conduct, act or omission on the part of a person and not merely on account of holding an office or a position in a company. Therefore, in order to bring a case within Section 141 of the Act, the complaint must disclose the necessary fact which make a person liable."
17. The Supreme Court thereafter discussed several decisions of different High Courts as to what should be the averments in a criminal complaint in respect of alleged offence under Sections 138 and 141 of the N.I. Act against a company and its directors. The Supreme Court considered the decision in State of Haryana v. Brij Lal Mittal where it was held that vicarious liability of a person for being prosecuted for an offence committed under the Act by a company arises if at the material time he was in charge of, and was also responsible to, the company for the conduct of its business. Simply because a person is a director of a company, it does not necessarily mean that he fulfils both the above requirements so as to make him liable. Conversely, without being a director a person can be in charge of, and responsible to, the company for the conduct of its business.
18. The Supreme Court also considered the earlier decision of the said Court in Monaben Ketanbhai v. State of Gujarat (supra) where it was laid down that, "It is not necessary to reproduce the language of Section 141 verbatim in the complaint since the complaint is required to be read as a whole. If the substance of the allegations made in the complaint fulfil the requirements of Section 141, the complaint has to proceed and is required to be tried with. It is also true that in construing a complaint a hypertechnical approach should not be adopted so as to quash the same. The laudable object of preventing bouncing of cheques and sustaining the credibility of commercial transactions resulting in enactment of Sections 138 and 141 has to be borne in mind." The Supreme Court in Monaben Ketanbhai v. State of Gujarat (supra) also held that, "The primary responsibility is on the complainant to make necessary averments in the complaint so as to make the accused vicariously liable. For fastening the criminal liability, there is no presumption that every partner knows about the transaction. The obligation of the appellants to prove that at the time the offence was committed they were not in charge of, and were not responsible to, the firm for the conduct of the business of the firm, would arise only when first the complainant makes necessary averments in the complaint and establishes that fact."
19. The Supreme Court in S.M.S. Pharmaceuticals Ltd. v. Neeta Bhalla (supra) towards end held that, "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 respondent falls within 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 and the trial." Finally the larger Bench of the Hon'ble Supreme Court answered the reference observing that, "(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 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."
20. The other decisions cited by Mr. Bhattacharjee do not require consideration after the aforesaid decision of the larger Bench of the Hon'ble Supreme Court. In the present matter, I find that in the petition of complaint there were specific averments that the accused Nos. 2, 3 and 4 were the partners of the accused No. 1 firm and the persons in charge and responsible to the conduct of the business of the accused No. 1 and looking after day-today affairs of the said firm. Paragraphs 5, 6 and 12 also reveal the parts played by the partners including this petitioner which are sufficient to constitute prima facie materials of offence under Sections 138 and 141 of the N.I. Act. It has already been discussed that the documents of the accused petitioner cannot be considered at this stage and after such averment the onus is on the accused petitioner to establish in the trial that he was not a partner of the accused firm at the time of commission of the alleged offence. The learned Magistrate made no mistake by dismissing the prayer of the accused for discharge from the complaint cases.
21. The aforesaid discussion makes it clear that there is no ground for quashing the complaint cases against the petitioner. The revisional applications accordingly having no merit fails and are dismissed. This judgment and order would govern both the revisional applications bearing No. 3890 of 2006 and CRR No. 3891 of 2006.
22. I make it clear that I have not entered into merit of the main complaint cases and the observations made herein are the observations only for the purpose of these revisional applications and the learned Magistrate would arrive at his own decision on the basis of evidence and materials on record before him without being influenced in any way by the observations of this Court.
23. The learned Metropolitan Magistrate, 12th Court, Calcutta is directed to proceed with the complaint cases bearing No. C-5488 of 2003 and C-5489 of 2003 now pending in his Court and to take steps for disposal of the said cases as expeditiously as possible without granting undue adjournment to either of the parties.
24. All interim orders passed earlier stand vacated.
25. Criminal Section is directed to forward a copy of this order to the learned Metropolitan Magistrate, 12th Court, Calcutta for information and necessary action.
Later:
26. Let xerox certified copy of this order be given to the parties within two weeks from the date of making of such application on payment of proper fees and charges.