Andhra HC (Pre-Telangana)
Om Prakash Agarwal vs State Of Andhra Pradesh And Anr. on 26 September, 2000
Equivalent citations: 2000(2)ALD(CRI)607, [2003]115COMPCAS190(AP), 2001CRILJ253
Author: Vaman Rao
Bench: Vaman Rao
JUDGMENT Vaman Rao, J.
1. Notice before admission has been ordered and respondent No. 2 made their appearance through their counsel. The public prosecutor takes notice for respondent No. 1. /
2. Heard learned counsel for the petitioner Sri C. Kodandaram and learned senior counsel Sri E. Manohar for respondent No. 2. /
3. This petition under Section 482 of the Criminal Procedure Code, 1973, seeks quashing of the proceedings in C.C. No. 236 of 2000 on the file of the III Metropolitan Magistrate, Visakhapatnam in so far as the petitioner is concerned, who appears as accused No. 5 facing a charge for an offence under Section 138 of the Negotiable Instruments Act, 1881. /
4. Learned counsel for the petitioner Sri Kodandaram contends that there are no specific allegations against the petitioner-accused No. 5 to implicate him in the alleged offence under Section 138 of the Negotiable Instruments Act. It is stated that accused No. 5 has nothing to do with the affairs of the company. /
5. On the other hand, learned senior counsel for respondent No. 2 Sri E. Manohar contends that according to the complainant there is a specific allegation that the cheque issued on behalf of accused No. 1 company had been dishonoured and accused No. 5 is the director of the company and accused Nos. 2 to 5 were in charge of and responsible to for the conduct of affairs of accused No. 1 company. A reference is made in this regard to para. L in the complaint. There is a specific allegation that accused No. 5 is not only a director of the company who is alleged to have been in charge of and responsible to the company for the conduct of the business of accused No. 1 company. The contention is that the requirements contemplated in Section 147 of the Negotiable Instruments Act for fastening criminal liability on the petitioner for the offence committed by accused No. 1 company have been satisfied. /
6. Learned counsel for the petitioner contends that such an allegation is not sufficient unless there is a material to show that the petitioner-accused No. 5 was really in charge of and responsible to the company for its business affairs. Learned counsel relies on the judgment of the Supreme Court in the case of Pepsi Foods Ltd. v. Special Judicial Magistrate, in support of his contention. /
7. In that case, the accused-appellant, namely, Pepsi Foods Ltd. had merely lent their brand name to "Residency Foods and Beverages, Sataria, Jaunpur" for bottling the beverage "Lehar Pepsi". The complaint did not show as to what is the role of the appellant-company "Pepsi Foods" in the manufacture of the beverage which was said to be adulterated nor was there any averment in the complaint that the appellant held a licence for manufacturing the alleged bottle and its contents. Thus, there was no allegation or material that the appellant had anything to do with the manufacture of the bottle or beverage or that the appellant held the licence for manufacture of such beverage. It is in the background of these facts that the court held that in respect of adulteration of a drink detected in a remote corner, 100 kilometres away from the office of the appellant, it cannot be fastened with criminal liability and the cognizance taken by the learned magistrate against the said accused company was quashed. /
8. In that case, the Supreme Court as stated in para. 28 of the judgment observed that the order of the magistrate summoning the accused must reflect that he has applied his mind to the facts of the case and the law applicable thereto. /
9. The contention of learned senior counsel for respondent No. 2 is that the judgment of the Supreme Court has to be appreciated in the background of the specific facts in that case. It is pointed out by learned senior counsel that the facts of the case before the Supreme Court as gleaned from the reported judgment show that the accused company seeking quashing of the proceedings was not shown to have any connection whatsoever with the alleged offence. /
10. It is true that the above-cited judgment of the Supreme Court has to be appreciated in the background of the specific facts in the case. As pointed out by learned counsel for respondent No. 2 in that case there was no allegation in the complaint connecting the accused with the alleged offence in any manner. The only ground the accused was sought to be proceeded against was that they had lent their brand's name to a drink manufactured by somebody else and they themselves apparently had no role in the manufacture of the drink in respect of which an offence under Food Adulteration Act was alleged to have been committed. It is in the background of these facts that the Supreme Court directed quashing of the proceedings against the said accused. /
11. But in this case, the petitioner accused No. 5 is said to be a director of accused No. 1 company, which is said to have committed the offence. There is a specific allegation that along with other directors, accused No. 5 is in charge of and responsible to the affairs of the company. Thus, in this case, it cannot be said that the petitioner accused had absolutely no connection with the company that is said to have committed the offence. /
12. In the case of Secunderabad Health Care Ltd. v. Secunderabad Hospitals P. Ltd. [1999] 96 Comp Cas 106 (AP); [1998] (2) ALD (CrI.) 206 (AP), his Lordship Sri Justice B. Sudershan Reddy of this court had occasion to consider this question. The following observations, in para. No. 9, appearing in the said judgment are relevant (page 112) : / "There must be specific accusation against each of the persons impleaded that such person was in charge of and responsible for the conduct of the business of the company at the relevant time when the offence was committed by the company. True, it is not necessary to disclose the evidence as to on what basis such an assertion is made by the complainant. It may be a matter of evidence and proof."
13. Thus, in this case there is a specific allegation that accused No. 5 is not only a director of the company but was, along with other directors, in charge of and responsible to the conduct of the business of the company. Under these circumstances, the requirements enjoined in Section 141 of Negotiable Instruments Act for fastening liability on any person for the offences committed by the company must be deemed to have been satisfied. /
14. Under these circumstances, there are no grounds for quashing the proceedings. /
15. However, before parting with the case, with great respect, I find it necessary to emphasise the cautions sounded by the Supreme Court in the Pepsi Food Ltd. v. Special Judicial Magistrate, . The following observations in para. 28 must be kept in mind and treated as guiding principles for all magistrates taking cognizance of criminal offences (page 135) : / "Summoning of an accused in a criminal case is a serious matter. Criminal law cannot be set into motion as a matter of course. It is not that the complainant has to bring only two witnesses to support his allegations in the complaint to have the criminal law set into motion. The order of the magistrate summoning the accused must reflect that he has applied his mind to the facts of the case and the law applicable thereto. He has to examine the nature of allegations made in the complaint and the evidence both oral and documentary in support thereof and would that be sufficient for the complainant to succeed in bringing charge home to the accused. It is not that the magistrate is a silent spectator at the time of recording of preliminary evidence before summoning of the accused. Magistrate has to carefully scrutinise the evidence brought on record and may even himself put questions to the complainant and his witnesses to elicit answers to find out the truthfulness of the allegations or otherwise and then examine if any offence is prima facie committed by all or any of the accused."
16. This has assumed all the more significance in view of the recent trend found that in respect of offences under Section 138 of the Negotiable Instruments Act alleged against a company, all the directors of the company are being routinely roped in as accused with a statement that they, are in charge of and responsible to the business of the company as required under Section 141 of the Negotiable Instruments Act. In fact, it has been seen that some times, even the nominee directors nominated by the financial agencies like the IDBI have also been arrayed as accused for the offence committed by the company on the board of which they have been nominated. The need to carefully scrutinise the material and if necessary to question the complaint as to the basis for implicating an accused as observed by the Supreme Court in the above cited judgment cannot be ignored. /
17. Considering this, it appears necessary that at any rate even if on the basis of formal allegations in the complaint such directors have been summoned to face the trial, they must be afforded an opportunity at least at the earliest stage to show with reference to the material which may be placed before the court that they are not in charge of and are not responsible to the business of the company and on that basis seek their discharge from the array of the accused. In such cases, I think it will be a great injustice if they are asked to go through the ordeal of the trial and plead their defence only during the trial. In this case, considering the circumstance that the petitioner is said to be a resident of Calcutta, his personal attendance shall be dispensed with and he shall be permitted to be represented by his advocate during the trial subject to any directions that may be given by the trial court for his personal attendance for any specific purpose at a particular stage of the trial. With the above directions, the criminal petition is dismissed. /