Rajasthan High Court - Jaipur
Dharmendra Kumar, Son Of Harilal Yadav vs Sharvan Kumar Chopra on 10 May, 2023
Author: Birendra Kumar
Bench: Birendra Kumar
REPORTABLE
HIGH COURT OF JUDICATURE FOR RAJASTHAN
BENCH AT JAIPUR
S.B. Criminal Miscellaneous (Petition) No. 7565/2022
Dharmendra Kumar, Son Of Harilal Yadav, r/o Guest House, BTL
EPC Ltd., C/o. Sukhdev Guleriya, Village Laxmipur, Post
Prithvipur Khera, Tehsil Vikasnagar, District Dehradun,
Uttarkhand, working as Regional Commercial Manager at M/s.
BTL EPC Limited, formerly M/s. Bengal Tools Limited, a company
incorporated under the provisions of the Companies Act, 1956
and having its registered office at 2, Jessore Road, Dumdum,
Kolkata-700028, West Bengal, and office at Sharchi Tower, 686-
Anandpur, E M Bypass, R B Connector Junction, Kolkata-700
107, West Bengal.
(Non-Complainant No.4 In The Original Criminal Case No.
3793/2021 U/s 138 Of The Negotiable Instrument Act, 1881.)
----Petitioner
Versus
Sharvan Kumar Chopra, Director Of Amcur Power Tech Private
Limited, Having Its Registered Office At HE-236, Hanuman
Nagar, Vistar Khatipura Jaipur, Rajasthan, Within The Jurisdiction
As Aforesaid.
(Complainant In The Original Criminal Case No. 3793/2021 U/s
138 Of The Negotiable Instrument Act, 1881.)
----Respondent
Connected With
S.B. Criminal Miscellaneous (Petition) No. 7566/2022
M/s. BTL EPC Limited (formerly M/s. Bengal Tools Limited),
through its Assistant General Manager, Shri Sandip Mukherjee,
s/o late Paresh Nath Mukherjee, a company incorporated under
the provisions of the Companies Act, 1956 and having its
registered office at 2, Jessore Road, Dumdum, Kolkata-700028,
West Bengal, and office at Sharchi Tower, 686-Anandpur, E M
Bypass, R B Connector Junction, Kolkata-700 107, West Bengal.
(Non-Complainant No.1 In The Original Criminal Case No.
3793/2021 U/s 138 Of The Negotiable Instrument Act, 1881.)
----Petitioner
Versus
Sharvan Kumar Chopra, Director Of Amcur Power Tech Private
Limited, Having Its Registered Office At HE-236, Hanuman
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Nagar, Vistar Khatipura Jaipur, Rajasthan, Within The Jurisdiction
As Aforesaid.
(Complainant In The Original Criminal Case No. 3993/2021 U/s
138 Of The Negotiable Instrument Act, 1881.)
----Respondent
For Petitioner(s) : Mr. A.K. Gupta, Sr. Advocate assisted
by Ms. Savita Nathawat through V.C.
Mr. Rinesh Gupta
Mr. Pranjul Chopra, Mr. Aishwarya
Anand
Mr. Sameer Sharma
Mr. Saurabh Pratap Singh Chouhan,
Mr. Gaurav Sharma
For Respondent(s) : Mr. Sunil Kumar Sharma
HON'BLE MR. JUSTICE BIRENDRA KUMAR
Judgment reserved on : 04.05.2023
Judgment pronounced on : 10.05.2023
1. The petitioners are accused in Criminal Complaint No.
3793/2021 along with four others. The petitioners are aggrieved
by the order of cognizance and summoning the accused dated
11.11.2021 passed in the aforesaid complaint case by learned
Special Metropolitan Magistrate (N.I. Act Cases) No.12, Jaipur
Mahanagar-II. The complaint was filed for offences under Section
138 of the Negotiable Instruments Act (in short "N.I. Act) as well
as 420 of the IPC by respondent No.2, however cognizance has
been taken only for offence under Section 138 of the N.I. Act.
2. As per complaint petition, the complainant Amcur Power Tech
Private Ltd. and petitioner M/s Bengal Tools Limited entered into
an agreement on 30.5.2015 wherein the complainant company
agreed to construct transmission line of electricity as per the
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requirement of the petitioner company. Out of total Rs. sixteen
crore seven lacs seventy two thousand seven hundred sixty eight,
the petitioner company paid Rs. thirteen crorer seventy eight lacs
thirty one thousand three hundred and seventy two to the
complainant for work done. In respect of the remaining amount,
after due deliberations between the parties, it was decided that
only one crore forty five lacs is payable. The decision took place
on 26.8.2020. Thereafter the petitioner company made payment
of Rs. forty five lacs through RTGS and for payment of remaining
one crore, ten cheques of ten lacs each were issued. Five were
honoured and remaining five detailed in the complaint petition got
dishonoured as payment was stopped by the petitioner company.
Out of five dishonoured cheques two were reported dishonoured
on 9.4.2021 and three were reported dishonoured on 2.7.2021.
On 21.8.2021, the complainant company sent legal notice as
required under Section 138 proviso (b) of the N.I. Act to co-
accused Amitawa Guin (Accused No.3), the Executive Director of
the company. The dishonoured cheques were issued under joint
signatures of accused No.3 and accused No.5, the General
Manager (Accounts). In the notice, it is specifically stated that
accused No.3 had issued cheques which got dishonoured on
presentation to the Bank on the instructions of accused No.3. To
the aforesaid legal notice, the petitioner company submitted reply
dated 7.9.2021 stating therein some different dispute of
accounting had led to stoppage of payment of the cheques.
3. Some common questions have been raised in both the
petitions aforesaid and one individual issue has also been raised
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separately to support that prayer of petitioners in both the
petitions deserves to be allowed.
4. Mr. A.K. Gupta, learned Senior Advocate for the petitioners
contends that the impugned order suffers from non application of judicial mind. The law is well settled that the exercise of cognizance and issuance of process by the court is not a mere formality rather the order must disclose application of mind based on material on record. Learned Senior Advocate contends that the information of dishonour of cheque was received by the complainant on 9.4.2021 and 2.7.2021 respectively, therefore, notice of information of dishonour of cheque and request for payment of the cheque amount within 15 days should have been made within 30 days as required by the proviso (b) to Section 138 of the N.I. Act. Since the notice was sent admittedly much beyond 30 days, there is non compliance of mandate of law, therefore, the cognizance order stands vitiated on this ground.
5. Mr. Sunil Kumar Sharma, learned counsel for the complainant-respondent contends that there is no dispute regarding legal requirement of noticiting the petitioner within 30 days but in the peculiar facts and circumstances of this case when the whole country was under the grip of Corona virus, the Hon'ble Supreme Court Suo Motu In Re: Cognizance for Extension of Limitation reported in [2021]7SCR1099 by order dated 23.9.2021 excluded the period between 15.3.2020 to 2.10.2021, the relevant portion is as follows:
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"8. ... ... ...
III. 'The period from 15.03.2020 till 02.10.2021 shall also stand excluded in computing the periods prescribed Under Sections 23(4) and 29A of the Arbitration and Conciliation Act, 1996, Section 12A of the Commercial Courts Act, 2015 and provisos (b) and
(c) of Section 138 of the Negotiable Instruments Act, 1881 and any other laws, which prescribe period(s) of limitation for instituting proceedings, outer limits (within which the court or tribunal can condone delay) and termination of proceedings."
6. Evidently, the limitation of 30 days started on 2.7.2021 for two cheques and 21.8.2021 for the remaining three cheques which was period covered under the aforesaid exclusion order, therefore, notice under Section 138 proviso (b) of the N.I. Act dated 21.8.2021 was well within time and the impugned order cannot be faulted on this ground.
7. Learned Senior Advocate next contends that since the accused persons were residents of territorial jurisdiction beyond the limits of the court below, inquiry, before cognizance and summoning the accused persons, was a must as required under Section 202 Cr.P.C. In the case on hand, no inquiry has been done by the Magistrate hence the impugned order is vitiated in law.
8. Learned counsel for the complainant-respondent contends that the learned Magistrate has fulfilled the requirement of the inquiry which would be evident from the impugned order itself and is wholly covered by judgment of the Hon'ble Supreme Court suo motu In Re: Expeditious Trial of Cases Under Section 138 OF N.I. ACT 1881 reported in 2021 SCC OnLine SC 325 by a Bench of five judges.
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9. The impugned order reveals that the learned court below has considered the affidavit filed by the complainant, the details of the cheques which were dishonoured, the legal notice sent to the accused persons and non payment of the cheque amount within the statutory period, therefore, oral and documentary evidences were already there before the learned Magistrate which is referred in the impugned order. The relevant paragraphs of judgment of the Hon'ble Supreme Court in Expeditious Trial of Cases Under Section 138 OF N.I. ACT 1881 (supra) are reproduced below:
"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 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 & Ors. v. Najima Mamtaj & Ors., Abhijit Pawar v. Hemant Madhukar Nimbalkar and Anr. and Birla Corporation Limited v. Adventz Investments and Holdings Limited & Ors.). 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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11. The learned Amici Curiae referred to a judgment of this Court in K.S. Joseph v. Philips Carbon Black Ltd & Anr. where there was a discussion about the requirement of inquiry under Section 202 of the Code in relation to complaints filed under Section 138 but the question of law was left open. In view of the judgments of this Court in Vijay Dhanuka (supra), Abhijit Pawar (supra) and Birla Corporation (supra), the inquiry to be held by the Magistrate before issuance of summons to the accused residing outside the jurisdiction of the court cannot be dispensed with. The learned Amici Curiae recommended that the Magistrate should come to a conclusion after holding an inquiry that there are sufficient grounds to proceed against the accused. We are in agreement with the learned Amici.
12. Another point that has been brought to our notice relates to the interpretation of Section 202 (2) which stipulates that the Magistrate shall take evidence of the witness on oath in an inquiry conducted under Section 202 (1) for the purpose of issuance of process. Section 145 of the Act provides that the evidence of the complainant may be given by him on affidavit, which shall be read in evidence in any inquiry, trial or other proceeding, notwithstanding anything contained in the Code. Section 145 (2) of the Act enables the court to summon and examine any person giving evidence on affidavit as to the facts contained therein, on an application of the prosecution or the accused. It is contended by the learned Amici Curiae that though there is no specific provision permitting the examination of witnesses on affidavit, Section 145 permits the complainant to be examined by way of an affidavit for the purpose of inquiry under Section
202. He suggested that Section 202 (2) should be read along with Section 145 and in respect of complaints under Section 138, the examination of witnesses also should be permitted on affidavit. Only in exceptional cases, the Magistrate may examine the witnesses personally. Section 145 of the Act is an exception to Section 202 in respect of examination of the complainant by way of an affidavit. There is no specific provision in relation to examination of the witnesses also on affidavit in Section 145. It becomes clear that Section 145 had been inserted in the Act, with effect from the year 2003, with the laudable object of speeding up trials in complaints filed under Section 138. If the evidence of the complainant may be given by him on affidavit, there is no reason for insisting on the evidence of the witnesses to be taken on oath. On a (Downloaded on 11/11/2023 at 05:20:10 PM) (8 of 13) [CRLMP-7565/2022] holistic reading of Section 145 along with Section 202, we hold that Section 202 (2) of the Code is inapplicable to complaints under Section 138 in respect of examination of witnesses on oath. The evidence of witnesses on behalf of the complainant shall be permitted on affidavit. If the Magistrate holds an inquiry himself, it is not compulsory that he should examine witnesses. In suitable cases, the Magistrate can examine documents for satisfaction as to the sufficiency of grounds for proceeding under Section 202."
10. It is evident that the Magistrate has held inquiry himself, as such it was not necessary to examine the witnesses when the Magistrate had considered the documentary evidences brought on the record for his satisfaction as to the sufficiency of the grounds for proceeding against the accused persons, therefore, the impugned order cannot get vitiated for this reason as well.
11. Learned Senior Advocate for the petitioner next contends that in the case on hand, five cheques got dishnoured. All the cheques were admittedly of different dates and were dishonoured on different dates, therefore, the cause of action arose for each individual cheque separately and a common trial is not permissible for all the five cheques as the accused persons can be tried in one trial only for three such offences in view of mandate of Section 219 and 220 Cr.P.C. This question was also considered in Expeditious Trial of Cases Under Section 138 OF N.I. ACT 1881 case (supra) and conclusion is as follows:
"24... ... ... ...
(4) We recommend that suitable amendments be made to the Act for provision of one trial against a person for multiple offences under Section 138 of the Act committed within a period of 12 months, notwithstanding the restriction in Section 219 of the Code."
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12. Since the cause of action for all the cheques arose under proviso (c) of Section 138 of the Negotiable Instruments Act only, on non payment of the cheque amount within 15 days of notice dated 21.8.2021, the impugned order of summoning cannot be faulted on this ground especially when no prejudice has been caused to the accused petitioner rather it was beneficial for the accused to face one trial instead of five. It would be within the domain of the trial court to decide at the stage of framing of charges as to which of the three offences should be tried together and the trial judge would consider the feasibility of separation of trial for two other cheques, if permissible under the law. The provisions contained in Section 464 Cr.P.C shall be take care of. It is left open to the trial judge to decide joinder of charges at the appropriate stage.
13. In Criminal Misc. Petition No. 7566/2022, learned Senior counsel for the petitioner M/s BTL EPC Ltd. contends that the company has vicarious liability for the act of its office-bearers, therefore, mandatory notice under proviso (b) to Section 138 of NI Act should have been addressed to the company and in the absence of mandatory notice, the whole complaint is incompetent and the impugned order stands vitiated.
14. Learned counsel for the complainant asserts that in the legal notice, the complainant had specifically stated that for the work done for the company, co-accused Mr. Guin (accused No.3) had issued cheque which got dishonoured. To that notice, the company has replied and the company has not stated that accused No.3 has not acted for the company or acted against the interests of the (Downloaded on 11/11/2023 at 05:20:10 PM) (10 of 13) [CRLMP-7565/2022] company or acted without knowledge to the company, therefore, the company cannot be absolved of its vicarious liability.
15. In Criminal Misc. Petition No. 7565/2022, Mr. A.K. Gupta, Senior Advocate for the petitioner contends that petitioner Dharmendra Kumar was Commercial Manager of the company, arrayed as accused No.6. The petitioner had no role either in the agreement between the two companies or execution of the work as well as issuance of cheque. The petitioner is not involved in day to day affairs of the company. In the circumstance, prosecution of the petitioner would amount to abuse of the process of law and the court below has not specifically noticed absence of any material against the petitioner. Statement of the petitioner in para 12 of the petition denying his individual role has not been controverted in the reply of the respondent.
16. Learned counsel for the complainant respondent contends that in the complaint petition, it is specifically stated in para 2 that accused No. 2 to 4 are Directors and accused No.5, General Manager (Accounts) and accused No.6, Commercial Manager who are engaged in the day to day affairs of the company, as such are jointly and severally responsible.
17. In S.M.S. Pharmaceuticals Ltd. vs. Neeta Bhalla and Anr. ,MANU/SC/0622/2005 following questions were referred before a Bench of Three Judges of the Hon'ble Supreme Court:-
"(a) whether for purposes of Section 141 of the Negotiable Instruments Act, 1881, it is sufficient if the substance of the allegation read as a whole fulfill the requirements of the said section and it is not necessary to specifically state in the complaint that the persons accused was in charge of, or responsible for, the conduct of the business of the company.(Downloaded on 11/11/2023 at 05:20:10 PM)
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(b) whether a director of a company would be deemed to be in charge of, and responsible to, the company for conduct of the business of the company and, therefore, deemed to be guilty of the offence unless he proves to the contrary.
(c) even if it is held that specific averments are necessary, whether in the absence of such averments the signatory of the cheque and or the Managing Directors of Joint Managing Director who admittedly would be in charge of the company and responsible to the company for conduct of its business could be proceeded against."
18. The aforesaid questions were answered in para 16 as follows:
"16. 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 question posed in sub-para (b) has to be in 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 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 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 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 signatory of a cheque which is (Downloaded on 11/11/2023 at 05:20:10 PM) (12 of 13) [CRLMP-7565/2022] dishonoured is concerned, he is clearly responsible for the incriminating act and will be covered under sub- section (2) of Section 141."
Para 5 of the aforesaid judgment is being reproduced below which is relevant for our purpose:
"5. In the present case, we are concerned with criminal liability on account of dishonour of cheque. It primarily falls on the drawer company and is extended to officers of the Company. The normal rule in the cases involving criminal liability is against vicarious liability, that is, no one is to be held criminally liable for an act of another. This normal rule is, however, subject to exception on account of specific provision being made in statutes extending liability to others. Section 141 of the Act is an instance of specific provision which in case an offence under Section 138 is committed by a Company, extends criminal liability for dishonour of cheque to officers of the Company. Section 141 contains conditions which have to be satisfied before the liability can be extended to officers of a company. Since the provision creates criminal liability, the conditions have to be strictly complied with. The conditions are intended to ensure that a person who is sought to be made vicariously liable for an offence of which the principal accused is the Company, had a role to play in relation to the incriminating act and further that such a person should know what is attributed to him to make him liable. In other words, persons who had nothing to do with the matter need not be roped in. A company being a juristic person, all its deeds and functions are result of acts of others. Therefore, officers of a Company who are responsible for acts done in the name of the Company are sought to be made personally liable for acts which result in criminal action being taken against the Company. It makes every person who, at the time the offence was committed, was incharge of, and was responsible to the Company for the conduct of business of the Company, as well as the Company, liable for the offence. The proviso to the sub-section contains an escape route for persons who are able to prove that the offence was committed without their knowledge or that they had exercised all due diligence to prevent commission of the offence. (emphasis mine)"
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19. Considering the settled proposition aforesaid and the factual scenario appearing on the record, it is held that since the co-
accused persons had issued cheques on behalf of the company and the company has not denied this fact, the company- petitioner cannot be absolved of its liability and should be prosecuted in the criminal case along with his responsible office bearers. Moreover, the company was duly noticed which would be evident from the reply of the company. Hence, prayer of the company is liable to be dismissed.
20. Since no specific role has been assigned to petitioner Dharmendra Kumar, the Commercial Manager, rather some other co-accused were holding the post of Managing Director, Executive Director etc., the criminal prosecution of the petitioner would be an abuse of the process of law, hence his prayer deserves to be allowed and impugned order qua him stands quashed.
21. In the result, Criminal Misc. Petition No. 7566/2022 filed by the Company is dismissed and Criminal Misc. Petition No. 7565/2022 filed by Dharmendra Kumar is allowed.
(BIRENDRA KUMAR),J BRIJ MOHAN GANDHI /77/165-166 (Downloaded on 11/11/2023 at 05:20:10 PM) Powered by TCPDF (www.tcpdf.org)