Gujarat High Court
Jagdish Kumudchandra Vaidh vs M.S Satya Sai Enterprise on 8 February, 2024
NEUTRAL CITATION
R/CR.MA/1717/2014 ORDER DATED: 08/02/2024
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IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/CRIMINAL MISC.APPLICATION (FOR QUASHING & SET ASIDE
FIR/ORDER) NO. 1717 of 2014
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JAGDISH KUMUDCHANDRA VAIDH
Versus
M.S SATYA SAI ENTERPRISE & 3 other(s)
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Appearance:
MR NILESH A PANDYA(549) for the Applicant(s) No. 1
DELETED for the Respondent(s) No. 2,3
MR KAMLESH S KOTAI(6150) for the Respondent(s) No. 1
MR HK PATEL, PUBLIC PROSECUTOR for the Respondent(s) No. 4
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CORAM:HONOURABLE MR. JUSTICE J. C. DOSHI
Date : 08/02/2024
ORAL ORDER
1. By way of this petition, the petitioner has prayed for the following reliefs;
"11. ...
(A) This Hon'ble Court be pleased to call for R&P of Criminal Case No. 6267 of 2002, pending before the learned 5th Judicial Magistrate First Class, Mehsana, and after perusing the same, be pleased to quash and set aside the complaint qau the present petitioner and further be pleased to quash and set aside the process issued by the learned 5th Judicial Magistrate First Class, Mehsana, under Section 138 of the Negotiable Instruments Act qua the present petitioner.Page 1 of 11 Downloaded on : Fri Feb 09 21:26:43 IST 2024
NEUTRAL CITATION R/CR.MA/1717/2014 ORDER DATED: 08/02/2024 undefined (B) During the pendency hearing and final disposal of this petition, this Hon'ble Court be pleased to stay the further proceedings of Criminal Case No. 6267 of 2002, pending before the 5th Judicial Magistrate First Class, Mehsana.
(C) ... "
2. Brief facts of the case are that Respondent No.1-original complainant filed a complaint before the learned 5 th Judicial Magistrate First Class, Mehsana ('trial Court', in brief), under Section 138 of the NI Act, which came to be registered as Criminal Case No. 6267 of 2002, read with Sections 420 and 114 of the Indian Penal Code, against M/s. Sakha Organic Ltd. ('Company', hereinafter).
2.1 It is the case of Respondent No.1-complainant that as electrification work was to be done in the Company, the quotations were called from the petitioner by the Company. It appears that, thereafter, the price was fixed at Rs.5,10,000/- and the work order came to be issued in the year 1997-98.
2.2 It is, further, the case of Respondent No.1 that, as per the work order, he supplied the require items and raised a total bill of Rs.7,11,202/-. However, at the relevant point of time, the Company paid only Rs.1,00,000/- by way of cheque to the petitioner and issued another cheque for the remaining amount, i.e. for Rs.6,11,202/-, with an assurance that, if, the same is presented for payment after 12 months, the same Page 2 of 11 Downloaded on : Fri Feb 09 21:26:43 IST 2024 NEUTRAL CITATION R/CR.MA/1717/2014 ORDER DATED: 08/02/2024 undefined shall be honoured. As per the complaint, the cheque in question is signed by Respondent No. 2, whereas, the same was given to Respondent No.1-complainant in the presence of Respondent No.3.
2.2.1 According to Respondent No.1-complainant, when he presented the cheque on expiry of period of 12 months, i.e. on 24.10.2002, the same came to be dishonored with remarks, 'opening balance is insufficient'.
2.3 Therefore, Respondent No.1-complainant, after following the necessary legal procedure, filed the complaint before the concerned Court. Hence, the present petition.
3. Leaned Advocate, Mr. Pandya, appearing for the petitioner submitted that the petitioner was not a Managing Director of the Company and that he was just a technical director and was not involved in the day-to-day affairs of the company.
3.1 It was, further, submitted that the cheque in question is signed by one Mr. Kirit Shah and therefore, the petitioner cannot be arraigned as an accused in the proceedings under Section 138 of the NI Act.
3.2 In support of his submissions, learned Advocate, Mr. Pandya, placed reliance on the decision of the Coordinate Bench of this Court dated 06.03.2007, rendered in Criminal Misc. Application No. 1760 of 2006 and the allied matters, Page 3 of 11 Downloaded on : Fri Feb 09 21:26:43 IST 2024 NEUTRAL CITATION R/CR.MA/1717/2014 ORDER DATED: 08/02/2024 undefined whereby, in the identical situation, the Coordinate Bench has held that the petitioners, therein, were not in-charge of the day-to-day business of the company.
3.2.1 Learned Advocate, Mr. Pandya, also placed reliance on the decision of the Apex Court in the case of "S.M.S. Pharmaceuticals Ltd. Vs. Neeta Bhalla & Another", reported in (2005) 5 SCC 89, to buttress his submissions.
4. When the matter was taken-up for hearing, learned Advocate, Mr. Kotai, appearing for Respondent No.2 was not present.
5. Learned APP appearing for the Respondent-State submitted that this, essentially, appears to be a private dispute, under Section 138 of the NI Act, between the two parties and therefore, this Court may pass the appropriate orders.
6. Having heard the learned Advocates for the parties and having perused the material on record, especially, the report forwarded by the concerned trial Court, indicating that as and when the parties shall appear, the matter shall be proceeded with, it would be relevant to refer to the order passed by this Court on 22.09.2023, which reads thus;
"Pursuant to order dated 08/08/2023 passed by this Court, the learned 3rd Additional Chief Judicial Magistrate, Mehsana has forwarded the progress report Page 4 of 11 Downloaded on : Fri Feb 09 21:26:43 IST 2024 NEUTRAL CITATION R/CR.MA/1717/2014 ORDER DATED: 08/02/2024 undefined of the criminal case no.6267 of 2002; perusal of which indicates that the learned Magistrate has forwarded the report; without application of mind to the order passed by this Court. In the order passed by this Court, it is made clear that no IR is operating in favour of Mr.Kirit R Shah and Dilipbhai C Patel and therefore the Court is required to proceed further against them; but the learned Court below in some casual manner has reported that whenever the party will appear, the Court will proceed further with the matter on merits of the case qua them. It is to be noted that the Court is not subservient of the parties. The Code of Criminal Procedure is taking care for proceeding to be carried further in the matte in absence of the party or when party is not comingforth to conduct the matter.
Thus, learned Principal District and Sessions Judge, Mehsana is directed that considering such report as afore-stated to transfer criminal case no.6267 of 2002 to some other Court for further hearing of the matter in accordance with the law.
Today, when matter is called out, none remains present. As a last chance, adjourned to 13/10/2023.
Registry to communicate this order to learned 3rd Additional Chief Judicial Magistrate, Mehsana."
6.1 Here, it is also pertinent to know that, though, it is the Page 5 of 11 Downloaded on : Fri Feb 09 21:26:43 IST 2024 NEUTRAL CITATION R/CR.MA/1717/2014 ORDER DATED: 08/02/2024 undefined specific case of the petitioner that he is merely a technical director and that he is not engaged in the day-to-day management of the Company, he has not produced any evidence to substantiate his say. The petitioner could have produced the extract received from the Office of the Registrar to substantiate his say. Prima facie, there appears to be sufficient material against the present petitioner in the complaint and therefore, merely because the cheque in question is signed by original accused No.1 does not mean that the provisions of Section 141 of the NI Act are not attracted, which reads thus;
"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: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 Page 6 of 11 Downloaded on : Fri Feb 09 21:26:43 IST 2024 NEUTRAL CITATION R/CR.MA/1717/2014 ORDER DATED: 08/02/2024 undefined 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."
6.1.1 Thus, from a plain reading of Section 141 of the NI Act, it becomes clear that not only the person, who has signed the cheque in question, but also the persons, who are involved in the day-to-day business of the companies are liable for the offence under Section 138 of the NI Act. So far as the present petitioner is concerned, as to whether, he was just a technical director of the company or whether, he was involved in the day-to-day business of the company or not, are the questions that can be answered at the end of the trial.
6.2 At this stage, it would be relevant to refer to the observations made by the Apex Court in the case of 'M/s Neeharika Infrastructure Pvt. Ltd. Vs. State of Maharashtra and others', AIR 2021 SC 1918, wherein, it is observed as under at Paragraph-23 thereof;
"Conclusions:
23. In view of the above and for the reasons stated above, our final conclusions on the principal/core issue, whether the High Court would be justified in passing an interim order of stay of investigation and/or "no coercive steps to be adopted", during the pendency of the quashing petition under Section 482 Cr.P.C and/or under Article 226 of the Constitution of India and in what circumstances and whether the High Court would be justified in passing the order of not to arrest the accused or "no coercive steps to be adopted" during the Page 7 of 11 Downloaded on : Fri Feb 09 21:26:43 IST 2024 NEUTRAL CITATION R/CR.MA/1717/2014 ORDER DATED: 08/02/2024 undefined investigation or till the final report/chargesheet is filed under Section 173 Cr.P.C., while dismissing/disposing of/not entertaining/not quashing the criminal proceedings/complaint/FIR in exercise of powers under Section 482 Cr.P.C. and/or under Article 226 of the Constitution of India, our final conclusions are as under:
i) Police has the statutory right and duty under the relevant provisions of the Code of Criminal Procedure contained in Chapter XIV of the Code to investigate into a cognizable offence;
ii) Courts would not thwart any investigation into the cognizable offences;
iii) It is only in cases where no cognizable offence or offence of any kind is disclosed in the first information report that the Court will not permit an investigation to go on;
iv) The power of quashing should be exercised sparingly with circumspection, as it has been observed, in the 'rarest of rare cases (not to be confused with the formation in the context of death penalty).
v) While examining an FIR/complaint, quashing of which is sought, the court cannot embark upon an enquiry as to the reliability or genuineness or otherwise of the allegations made in the FIR/complaint;
vi) Criminal proceedings ought not to be scuttled at the initial stage;
vii) Quashing of a complaint/FIR should be an exception rather than an ordinary rule;
viii) Ordinarily, the courts are barred from usurping the jurisdiction of the police, since the two organs of the State operate in two specific spheres of activities and Page 8 of 11 Downloaded on : Fri Feb 09 21:26:43 IST 2024 NEUTRAL CITATION R/CR.MA/1717/2014 ORDER DATED: 08/02/2024 undefined one ought not to tread over the other sphere;
ix) The functions of the judiciary and the police are complementary, not overlapping;
x) Save in exceptional cases where non-interference would result in miscarriage of justice, the Court and the judicial process should not interfere at the stage of investigation of offences;
xi) Extraordinary and inherent powers of the Court do not confer an arbitrary jurisdiction on the Court to act according to its whims or caprice;
xii) The first information report is not an encyclopaedia which must disclose all facts and details relating to the offence reported. Therefore, when the investigation by the police is in progress, the court should not go into the merits of the allegations in the FIR. Police must be permitted to complete the investigation. It would be premature to pronounce the conclusion based on hazy facts that the complaint/FIR does not deserve to be investigated or that it amounts to abuse of process of law. After investigation, if the investigating officer finds that there is no substance in the application made by the complainant, the investigating officer may file an appropriate report/summary before the learned Magistrate which may be considered by the learned Magistrate in accordance with the known procedure;
xiii) The power under Section 482 Cr.P.C. is very wide, but conferment of wide power requires the court to be more cautious. It casts an onerous and more diligent duty on the court;
xiv) However, at the same time, the court, if it thinks fit, regard being had to the parameters of quashing and the self-restraint imposed by law, more particularly the Page 9 of 11 Downloaded on : Fri Feb 09 21:26:43 IST 2024 NEUTRAL CITATION R/CR.MA/1717/2014 ORDER DATED: 08/02/2024 undefined parameters laid down by this Court in the cases of R.P. Kapur (supra) and Bhajan Lal (supra), has the jurisdiction to quash the FIR/complaint;
xv) When a prayer for quashing the FIR is made by the alleged accused and the court when it exercises the power under Section 482 Cr.P.C., only has to consider whether the allegations in the FIR disclose commission of a cognizable offence or not. The court is not required to consider on merits whether or not the merits of the allegations make out a cognizable offence and the court has to permit the investigating agency/police to investigate the allegations in the FIR;
xvi) The aforesaid parameters would be applicable and/or the aforesaid aspects are required to be considered by the High Court while passing an interim order in a quashing petition in exercise of powers under Section 482 Cr.P.C. and/or under Article 226 of the Constitution of India. However, an interim order of stay of investigation during the pendency of the quashing petition can be passed with circumspection. Such an interim order should not require to be passed routinely, casually and/or mechanically. Normally, when the investigation is in progress and the facts are hazy and the entire evidence/material is not before the High Court, the High Court should restrain itself from passing the interim order of not to arrest or "no coercive steps to be adopted" and the accused should be relegated to apply for anticipatory bail under Section 438 Cr.P.C. before the competent court. The High Court shall not and as such is not justified in passing the order of not to arrest and/or "no coercive steps" either during the investigation or till the investigation is completed and/or till the final report/chargesheet is filed under Section 173 Cr.P.C., while dismissing/disposing of the quashing petition under Section 482 Cr.P.C. and/or under Article 226 of the Constitution of India.Page 10 of 11 Downloaded on : Fri Feb 09 21:26:43 IST 2024
NEUTRAL CITATION R/CR.MA/1717/2014 ORDER DATED: 08/02/2024 undefined xvii) Even in a case where the High Court is prima facie of the opinion that an exceptional case is made out for grant of interim stay of further investigation, after considering the broad parameters while exercising the powers under Section 482 Cr.P.C. and/or under Article 226 of the Constitution of India referred to hereinabove, the High Court has to give brief reasons why such an interim order is warranted and/or is required to be passed so that it can demonstrate the application of mind by the Court and the higher forum can consider what was weighed with the High Court while passing such an interim order.
xviii) Whenever an interim order is passed by the High Court of "no coercive steps to be adopted" within the aforesaid parameters, the High Court must clarify what does it mean by "no coercive steps to be adopted" as the term "no coercive steps to be adopted" can be said to be too vague and/or broad which can be misunderstood and/or misapplied."
6.2.1 In view of above, the decisions relied on by the learned Advocate, Mr. Pandya, shall not apply in the facts and circumstances of this case and this petition deserves to be dismissed.
7. Resultantly, this petition fails and is DISMISSED, accordingly. Rule is discharged.
(J. C. DOSHI,J) UMESH/-
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