Chattisgarh High Court
Mahesh Vidhani vs M/S Sun Diesels /C P. Associate on 10 May, 2024
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NAFR
HIGH COURT OF CHHATTISGARH, BILASPUR
CRMP No. 1385 of 2023
1. Mahesh Vidhani S/o. Shri Sheetal Das Vidhani, Aged About 50
Years, R/o. Hotel Ananda, Vyapar Vihar Road, Police Station
Tarbahar, Bilaspur, Tahsil and District Bilaspur Chhattisgarh.
Correct Address - Guruanak Chowk, Torwa, Bilaspur, Tehsil and
District Bilaspur Chhattisgarh.
2. Rahul Vidhani, S/o. Shri Mahesh Vidhani, Aged About 24 Years,
R/o. Hotel Ananda, Vyapar Vihar Road, Police Station Tarbahar,
Bilaspur, Tahsil and District Bilaspur Chhattisgarh. Correct
Address - Guruanak Chowk, Torwa, Bilaspur, Tehsil and District
Bilaspur Chhattisgarh.
---- Petitioners
Versus
C. P. Associate Tatibandh, Raipur, Chhattisgarh, Through
Partner Vishal Chouhan, S/o. Late Devendra Bahadur, R/o.
Near Vikrant Battery, Ring Road No.2, Tatibandh, Police Station
Amanaka, Raipur, District Raipur Chhattisgarh.
---- Respondent
(Cause-title taken from Case Information System) For Petitioners - Mr. Vivek Chopda,Advocate. For Respondent - Mr. Praveen Das, Advocate.
Hon'ble Shri Justice Ravindra Kumar Agrawal Order on Board 10-05-2024
1. Heard Mr. Vivek Chopda, learned counsel for the petitioners as well as Mr. Praveen Das, learned counsel for the respondent and perused the materials available on record.
2. By way of present petition under Section 482 Cr.P.C. the petitioners seek to impugn and challenge the initiation and continuance of the criminal proceedings registered as Complaint Case No. 5367/2018 (M/s C. P. Associates Vs. C.P. Inn and Others) under Section 138 of the Negotiable -2- Instruments Act, 1881 (for short, 'the NI Act') in the Court of learned Judicial Magistrate First Class, Raipur.
3. The brief facts of the case are that the respondent/complainant has filed a complaint case under Section 138 of the Negotiable Instruments Act, 1881 before the Court of learned Judicial Magistrate First Class, Raipur, vide Complaint Case No. 5367/2018. In the compliant case, it has averred that the parties have engaged in a same business and therefore they are having business relation with each other. The another firm of the complainant "C.G. Inn" which is authorized workshop of Bosch company at Bilaspur, which was purchased by the accused persons for the total consideration of Rs. 1 Crore 50 Lakhs. In lieu of the said transaction, the firm V.N. Inn/accused persons have issued a cheque of Punjab National Bank, Sadar Bazar, Bilaspur branch, for Rs. 1 Crore 50 Lakhs, in the name of the complainant C.P. Associates. When the said cheque was deposited in the bank account of the complainant at Indian Overseas Bank, Tatiband, Raipur branch, on 06-08-2018, it was dishonoured by the payee bank for want of sufficient amount in the bank account of accused persons. After service of legal demand notice, the complaint case under Section 138 of NI Act has been filed on 11-10-2018 before the learned trial court. The complaint case was registered on 11-10-2018 itself and notices were issued to the accused persons/petitioners.
4. Learned counsel for the petitioners submits that without arraying -3- the Company as the party / non-applicant, the complaint is not maintainable. The cheque has been issued by the V.N. Inn Private Limited whereas Company has not been arrayed as a party / non-applicant. He placed reliance on the judgment passed by the Hon'ble Supreme Court in the matter of Himanshu Vs. B. Shivamurthy and Another, reported in (2019) 3 SCC 797, wherein the Hon'ble Supreme Court has held that in absence of Company being arrayed as accused, prosecution of appellant-accused not maintainable. The Hon'ble Supreme Court held that commission of offence by the company is an express condition precedent to attract the vicarious liability of others and the word "as well as the company" makes it clear when the company can be prosecuted, then only the persons mentioned in the other categories could be vicariously liable for the offence subject to the averments in the petition and proof thereof that the company is a juristic person. At para 7, 8, 9,10, 12 & 13 held as under :
"7. The first submission on behalf of the appellant is no longer res integra. A decision of a three-Judge Bench of this Court in Aneeta Hada v. Godfather Travels and Tours Private Limited (2012) 5 SCC 661 governs the area of dispute. The issue which fell for consideration was whether an authorized signatory of a company would be liable for prosecution under Section 138 of the Negotiable Instruments Act, 1881 without the company being arraigned as an accused. The three Judge Bench held thus: (SCC p.688 para 58)-
"58. Applying the doctrine of strict construction, we are of the considered opinion that commission of offence by the company is an express condition precedent to attract the vicarious liability of others. Thus, the words "as well as the company" appearing in the section make it absolutely unmistakably clear that when the company can be prosecuted, then only the persons mentioned in the other categories could be vicariously liable for the offence subject to the averments in the petition and proof thereof. One -4- cannot be oblivious of the fact that the company is a juristic person and it has its own respectability. If a finding is recorded against it, it would create a concavity in its reputation. There can be situations when the corporate reputation is affected when a director is indicted." In similar terms, the Court further held: (SCC p.688, para
59) "59. In view of our aforesaid analysis, we arrive at the irresistible conclusion that for maintaining the prosecution under Section 141 of the Act, arraigning of a company as an accused is imperative. The other categories of offenders can only be brought in the drag- net on the touchstone of vicarious liability as the same has been stipulated in the provision itself.
8. The judgment of the three-Judge Bench has since been followed by a two-Judge Bench of this Court in Charanjit Pal Jindal vs. L.N. Metalics (2015) 15 SCC 768. There is merit in the second submission which has been urged on behalf of the appellant as well. The proviso to Section 138 contains the pre-conditions which must be fulfilled before an offence under the provision is made out. These conditions are: (i) presentation of the cheque to the bank within six months from the date on which it is drawn or within the period of its validity, whichever is earlier; (ii) a demand being made in writing by the payee or holder in due course by the issuance of a notice in writing to the drawer of the cheque within thirty days of the receipt of information from the bank of the return of the cheques; and (iii) the failure of the drawer to make payment of the amount of money to the payee or the holder in due course within fifteen days of the receipt of the notice.
9. In MSR Leathers vs. S. Palaniappan (2013) 1 SCC 177, this Court held thus : (SCC p.188 para 12)-
"12. The proviso to Section 138, however, is all important and stipulates three distinct conditions precedent, which must be satisfied before the dishonour of a cheque can constitute an offence and become punishable. The first condition is that the cheque ought to have been presented to the bank within a period of six months from the date on which it is drawn or within the period of its validity, whichever is earlier. The second condition is that the payee or the holder in due course of the cheque, as the case may be, ought to make a demand for the payment of the said amount of money by giving a notice in writing, to the drawer of the cheque, within thirty days of the receipt of information by him from the bank regarding the return of the cheque as unpaid. The third condition is that the drawer of such a cheque should have failed to make payment of the said amount of money to the payee or as the case may be, to the holder in due course of the cheque within fifteen days of the receipt of the said notice. It is only upon the satisfaction of all the three conditions mentioned above and enumerated under the proviso to Section 138 as clauses (a), (b) and (c) thereof that an offence under Section 138 can be said to have been committed by the person issuing the cheque."-5-
10. The importance of fulfilling these conditions has been adverted to in a recent judgment of a two-Judge Bench of this Court in N. Harihara Krishnan vs. J. Thomas (2018) 13 SCC 663. Adverting to the ingredients of Section 138, the Court observed as follows:
"26. ....Obviously such complaints must contain the factual allegations constituting each of the ingredients of the offence under Section 138. Those ingredients are: (1) that a person drew a cheque on an account maintained by him with the banker; (2) that such a cheque when presented to the bank is returned by the bank unpaid; (3) that such a cheque was presented to the bank within a period of six months from the date it was drawn or within the period of its validity whichever is earlier; (4) that the payee demanded in writing from the drawer of the cheque the payment of the amount of money due under the cheque to payee; and (5) such a notice of payment is made within a period of 30 days from the date of the receipt of the information by the payee from the bank regarding the return of the cheque as unpaid."
12. The provisions of Section 141postulate that if the person committing an offence under Section 138 is a company, every person, who at the time when the offence was committed was in charge of or 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.
13. In the absence of the company being arraigned as an accused, a complaint against the appellant was therefore not maintainable. The appellant had signed the cheque as a Director of the company and for and on its behalf. Moreover, in the absence of a notice of demand being served on the company and without compliance with the proviso to Section 138, the High Court was in error in holding that the company could now be arraigned as an accused."
5. In case of Aneeta Hada v. Godfather Travels & Tours Private Limited (2012) 5 SCC 661, the Hon'ble Supreme Court held that in order to maintain a prosecution against the Director, the company would be a necessary party. At para 3, 7, 58 & 59, the Court held as under :
"3. The core issue that has emerged in these two appeals is whether the company could have been made liable for prosecution without being impleaded as an accused and whether the directors could have been prosecuted for offences punishable under the aforesaid provisions without the company being arrayed as an accused.
7. While assailing the said order before the two-Judge Bench, the -6- substratum of argument was that as the Company was not arrayed as an accused, the legal fiction created by the legislature in Section 141 of the Act would not get attracted. It was canvassed that once a legal fiction is created by the statutory provision against the Company as well as the person responsible for the acts of the Company, the conditions precedent engrafted under such deeming provisions are to be totally satisfied and one such condition is impleadment of the principal offender.
58. Applying the doctrine of strict construction, we are of the considered opinion that commission of offence by the company is an express condition precedent to attract the vicarious liability of others. Thus, the words "as well as the company" appearing in the Section make it absolutely unmistakably clear that when the company can be prosecuted, then only the persons mentioned in the other categories could be vicariously liable for the offence subject to the averments in the petition and proof thereof. One cannot be oblivious of the fact that the company is a juristic person and it has its own respectability. If a finding is recorded against it, it would create a concavity in its reputation. There can be situations when the corporate reputation is affected when a director is indicted.
59. In view of our aforesaid analysis, we arrive at the irresistible conclusion that for maintaining the prosecution under Section 141 of the Act, arraigning of a company as an accused is imperative. The other categories of offenders can only be brought in the drag-net on the touchstone of vicarious liability as the same has been stipulated in the provision itself. We say so on the basis of the ratio laid down in State of Madras v. C.V. Parekh [(1970) 3 SCC 491 : 1971 SCC (Cri) 97] which is a three-Judge Bench decision. Thus, the view expressed in Sheoratan Agarwal v. State of M.P. [(1984) 4 SCC 352 : 1984 SCC (Cri) 620] does not correctly lay down the law and, accordingly, is hereby overruled. The decision in Anil Hada v. Indian Acrylic Ltd. [(2000) 1 SCC 1 : 2001 SCC (Cri) 174] is overruled with the qualifier as stated in paragraph 51. The decision in U.P. Pollution Control Board v. Modi Distillery [(1987) 3 SCC 684 : 1987 SCC (Cri) 632] has to be treated to be restricted to its own facts as has been explained by us hereinabove."
6. Considering the facts and circumstances of the case and in the light of judgment passed by the Hon'ble Supreme Court in Himanshu (supra) and Aneeta Hada (supra), since in the instant case the Cheque was issued by the V. N. Inn Pvt. Ltd. And the Company has not been arrayed as a party / non- applicant, it appears that while summoning the accused, the learned trial Court has committed grave illegality as such, I am -7- of the considered opinion that the petitioners have made out prima facie a good case in their favour.
7. Accordingly, the instant petition is allowed. The criminal proceedings of the Complaint Case No. 5367/2018 (M/s C. P. Associates Vs. C.P. Inn and Others) pending in the Court of learned Judicial Magistrate First Class, Raipur (C.G.) is quashed. However, the respondent is at liberty to avail appropriate remedy in accordance with law, if so advised.
Sd/-
(Ravindra Kumar Agrawal) Judge Aadil