Kerala High Court
Deleted vs State Of Kerala
Author: Alexander Thomas
Bench: Alexander Thomas
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT:
THE HONOURABLE MR. JUSTICE ALEXANDER THOMAS
TUESDAY, THE 29TH DAY OF AUGUST 2017/7TH BHADRA, 1939
Crl.MC.No. 4884 of 2017 ()
---------------------------
ST.811/2016 of JUDICIAL FIRST CLASS MAGISTRATE COURT-I,KANJIRAPPALLY
*PETITIONER/(1ST ACCUSED) :DELETED
-----------------------
P.M.MATHEW,
PARAPURATH PALUVELIL,
KADUTHURUTHY P.O., FORMER PRESIDENT,
KADUTHURUTHY CO-OPERATIVE RUBBER MARKETING
AND PROCESSING SOCIETY LTD NO.1397,
KADUTHURUTHY P.O., KOTTAYAM PIN-686604.
*THE DESCRIPTION OF THE PETITIONER IN THE CAUSE TITLE OF
THE CR.MC. AS FIRST ACCUSED STANDS DELETED AS PER THE
COMMON ORDER DATED 29.8.2017 IN CRMC.MC.4884/2017,
4888/2017 & 4893/2017.
BY ADV. SRI.JAMES MATHEW KADAVAN
RESPONDENT(S)/STATE, COMPLAINANT & ACCUSED 2 AND 3:
---------------------------------------------------
1. STATE OF KERALA,
REPRESENTED BY PUBLIC PROSECUTOR,
HIGH COURT OF KERALA,
ERNAKULAM-682031.
2. THOMSON RUBBERS (INDIA) PRIVATE LIMITED,
KARUVAMOOZHI, ERUMELY,
KOTTAYAM DISTRICT, PIN-676509 REPRESENTED BY ITS
ACCOUNTS MANAGER, SINOSH SEBASTIAN,
S/O SEBASTIAN, OOTTUKALATHIL HOUSE,
MUKKUTTUTHARA, KOLLAMULA KARA,
KOLLAMULA VILLAGE, PATHANAMTHITTA DISTRICT.
3. S.MURALEEDHARAN,
MANAGING DIRECTOR,
KADUTHURUTHY CO-OPERATIVE RUBBER MARKETING
AND PROCESSING SOCIETY LTD. NO.1397,
KADUTHURUTHY P.O., KOTTAYAM PIN-686604.
4. K.C.GEORGE,
MARKETING MANAGER,
KADUTHURUTHY CO-OPERATIVE RUBBER MARKETING
AND PROCESSING SOCIETY LTD. NO.1397,
KADUTHURUTHY P.O., KOTTAYAM PIN-686604.
R1 BY PUBLIC PROSECUTOR SRI.SAIGI JACOB PALATTY
R2 BY ADVS. SRI.HARISANKAR V. MENON
SRI.L.RAJESH NARAYAN
BY SRI.P.G. JAYASANKAR, AMICUS CURIAE
THIS CRIMINAL MISC.CASE HAVING BEEN FINALLY HEARD ON 21.8.2017
ALONG WITH CRL.MC.4888/2017 & CRL.MC.4893/2017, THE COURT ON
29.8.2017 PASSED THE FOLLOWING:
EL
Crl.MC.No. 4884 of 2017 ()
---------------------------
APPENDIX
PETITIONER(S)' ANNEXURES
------------------------
ANNEXURE-A1 TRUE PHOTOCOPY OF THE CHEQUE NO.607733 DATED
19/6/2014 ISSUED BY THE SOCIETY IN FAVOUR OF THE
COMPLAINANT/2ND RESPONDENT.
ANNEXURE-A2 CERTIFIED COPY OF THE COMPLAINT FILED BY THE 2ND
RESPONDENT BEFORE THE JUDICIAL FIRST CLASS
MAGISTRATE'S COURT, VAIKOM AND NOW TRANSFERRED TO
THE JUDICIAL 1ST CLASS MAGISTRATE COURT-1,
KANJIRAPPALLY.
ANNEXURE-A3 PHOTOCOPY OF THE RELEVANT PAGES OF THE BYE-LAWS
OF THE SOCIETY.
RESPONDENT(S)' ANNEXURE
-----------------------
NIL
TRUE COPY
P.S. TO JUDGE
EL
(C.R)
ALEXANDER THOMAS, J.
--------------------------
Crl.M.C. Nos. 4884, 4888, 4893 of 2017
-------------------------------
Dated this the 24th day of August, 2017
ORDER
The prayers in this Crl.M.Cs are for orders from this Court to quash the respective complaints impugned in this cases, to the extent it affects the petitioner herein. The complaints in Crl.M.C.Nos.4884, 4893 and 4888 are those in S.T.Nos.811, 815 and 816/2016 on the file of Judicial First Class Magistrate Court-I, Kanjirappally, which has been instituted by the 2nd respondent (company) herein.
2. The gist of the allegations of those complaints are that in discharge of a total liability of Rs.12,39,384/- owed by the 1st accused/Co-operative society to the respondent complainant, cheques dated 18.06.2014 for Rs.5,00,000/-, Rs.5,00,000/- and Rs.2,39,384/- respectively were drawn from the account of the said Co-operative society (accused No.1) payable in favour of the complainant and that those cheques when presented were dishonoured on 30.09.2014, on the ground of insufficiency of funds. It is further averred in the complaints produced as Annexure-A2 in these three cases, that accused Nos.2 and 3 (respondents 3 and 4 herein), were the managing director and the marketing manager of the 1st accused/Co-operative society at the relevant time and that the cheques were drawn and executed in favour of the complainant as per the instructions of the petitioner, who was then the president of the 1st accused/Co-operative society and that the accused Nos.2 and 3 (respondents 3 and 4), were the signatories of the above said three dishonoured cheques. The three cheques in question have been Crl.M.C.4884/17, etc. - : 2 :-
produced as Annexure-A1 in these three petitions. It is further averred in these complaints that the day today affairs and the management of the business of the 1st accused/Co-operative society which was under the supervision and control of the petitioner, who was the then president of the Co-operative society, was being exercised by the petitioner for and on behalf of the executive committee of the said Society in his capacity as the president of the Co-operative society and further that the accused Nos.2 and 3, who are then the managing director and marketing manager of the society were also actively involved in the management of the Co-operative society etc. However, it is relevant to note that the petitioner in his individual capacity as the then president of the Co-operative society has not been arrayed separately as a co-accused in these three complaints. 1st accused is the Co-operative society concerned (Kaduthuruthy Co-operative Rubber Marketing and Processing Society Ltd. No.1397), represented by Sri.P.M.Mathew,Ex.M.L.A., aged about 60, President, Kaduthuruthy Co- operative Rubber Marketing and Processing Society Ltd. No.1397, Kaduthuruthy P.O., Kottayam-686 604. Accused Nos.2 and 3 are respondents 3 and 4, viz. Sri.S.Muraleedharan, the then managing director and Sri.K.C.George, the marketing manager of the above said Co-operative society. The cause title of all the three complaints are identically worded and for the sake of proper appreciation of the factual aspects in that regard, it will be appropriate to replicate the cause title of one such complaint, as given in Malayalam language in the said complaint, which reads as follows:- S/o U^F_.
gD^"XY ygLn]mXm ('XAc^) hdI. \_N_xAm, 5ayaU^Nb]__686 509, .xagN\_, g5^GO" <_\o, ?_OmAa gUI_ %AlImXm N^gH<V X_gH^Wm fXL^XmxcX, SS/o.fXL^XmxcX, Crl.M.C.4884/17, etc. - : 3 :-
*Ga5{J_W U`?m, NaAbGaDy, f5^\oNa{ 5x, f5^\oNa{ U_g\o<m, IJH"D_G <_\o.
dID_5Z.
1. 5?aJaxaJ_ g5^_3Mgyx`Um yLnV N^VAx_"7m &am gdI^XX_"7m fX^hXx_ \_N_xAm HOV 1397, ?_OmAa gUI_ I_..".N^Dca, Ex. MLA., aged about 60, dIX_Aam, 5?aJaxaJ_ g5^_3Mgyx`Um yLnV N^VAx_"7m &am gdI^XX_"7m fX^hXx_ \_N_xAm HOV 1397, 5?aJaxaJ_ I_.2., g5^GO" -686 604.
2. .Xm. Nax{`GxX, aged about 55, N^gH<_"7m AOy5m?V, 5?aJaxaJ_ g5^_3Mgyx`Um yLnV N^VAx_"7m &am gdI^XX_"7m fX^hXx_ \_N_xAm HOV 1397, 5?aJaxaJ_ I_.2., g5^GO" -686 604.
3. f5.X_. g<^V<m<m, aged about 50, N^VAx_"7m N^gH<V, 5?aJaxaJ_ g5^_3Mgyx`Um yLnV N^VAx_"7m &am gdI^XX_"7m fX^hXx_ \_N_xAm HOV 1397, 5?aJaxaJ_ I_.2., g5^GO" -686 604.
The English translation of the said cause title, reads as follows:-
Complainant:
THOMSON RUBBERS (INDIA) PRIVATE LIMITED, KARUVAMOOZHI, ERUMELY, KOTTAYAM DISTRICT, PIN - 686 509, REPRESENTED BY ITS ACCOUNTS MANAGER, SINOSH SEBASTIAN, S/O. SEBASTIAN, OOTTUKALATHIL HOUSE, MUKKUTTUTHARA, KOLLAMULA KARA, KOLLAMULA VILLAGE, PATHANAMTHITTA DISTRICT.
Accused;
1. KADUTHURUTHY CO-OPERATIVE RUBBER MARKETING AND PROCESSING SOCIETY LTD. NO.1397, REPRESENTED BY SRI.P.M.MATHEW, Ex.M.L.A., AGED ABOUT 60, PRESIDENT, KADUTHURUTHY CO-OPERATIVE RUBBER MARKETING AND PROCESSING SOCIETY LTD. NO.1397, KADUTHURUTHY P.O., KOTTAYAM-686 604.
2. S.MURALEEDHARAN, AGED ABOUT 55, MANAGING DIRECTOR, KADUTHURUTHY CO-OPERATIVE RUBBER MARKETING AND PROCESSING SOCIETY LTD. NO. 1397, KADUTHURUTHY P.O., KOTTAYAM - 686 604.
3. K.C.GEORGE, AGED ABOUT 50, MARKETING MANAGER, KADUTHURUTHY CO-OPERATIVE RUBBER MARKETING AND PROCESSING SOCIETY LTD.NO.1397, KADUTHURUTY P.O., KOTTAYAM - 686 604.
3. It is also relevant to note that accused Nos.2 and 3 have been arrayed as respondents 3 and 4 in these petitions. The petitioner, who is Crl.M.C.4884/17, etc. - : 4 :-
stated to be the then President of A1 Co-operative society has not been arrayed as a separate co-accused in these complaints. The petitioner in these three petitions is Sri.P.M.Mathew, the then President of the 1st accused/Co-operative society.
4. The main contention urged on behalf of the petitioner for quashment of the complaint to the extent it affects are as follows:-
(A).Firstly that there are no sufficient and proper averments in these three complaints that the petitioner was in charge and responsible for the affairs of the management of the 1st accused/Co-operative society at the time of the execution of the cheque and at the time of dishonour of the cheques. The Apex Court in the decisions Central Bank of India v. Asian Global Ltd. and others reported in AIR 2010 SC 2835 and N.K.Wahi v. Shekhar Singh and others (2007) 9 SCC 481 has clearly held that to maintain a prosecution in terms with the vicarious liability against the Directors and employees of a company under Section 141 of NI Act, necessarily there has to be specific allegations in the complaint with regard to the part played by each of such co-accused in the transactions which led to the liability in question. Accordingly it is contended that there are no specific and precise allegations in the complaint, with respect to any alleged role played by the petitioner in the Crl.M.C.4884/17, etc. - : 5 :-
transaction in question or in relation to the dishonour of the cheques in question.
(B).The 2nd contention urged by the petitioner is to the effect that the petitioner has not been separately arrayed as a co-accused in these complaints, and that only the Co-operative society, and the individual incumbents, who are holding the posts of managing director and marketing manager of the Co-operative society are alone arrayed as accused in the complaint as Accused Nos.1, 2 and 3 respectively. Summons issued to A1 has been served on the petitioner only because the complainant has sued as accused No.1/Co-operative society through the name of the petitioner in his alleged capacity as the president of the said Co-
operative society.
5. With respect to this crucial second contention, Sri.James Mathew Kadavan, learned counsel for the petitioner, would further contend that so long as the petitioner has not been separately arrayed as co-accused in the complaint, even if the 1st accused/Co-operative society is convicted, then the Criminal court can only at best to impose a fine on the 1st accused/Co-operative society, which is to be realised from the assets and properties of the said Co-operative society in terms of Section 421 of Cr.P.C. and that the petitioner, who has been involved in the complaint only to represent the 1st accused/Co-operative society cannot be made to personally Crl.M.C.4884/17, etc. - : 6 :-
suffer either any substantive sentence or fine or default sentence on account of nonpayment of fine by the 1st accused etc. Further it is pointed out that the complaint itself is not maintainable in as much as the 1st accused/Co-operative society is functioning within the purview of the Kerala Co-operative Societies Act, 1969 and Rules thereunder as well as in terms of the approved bylaws of the society registered in terms of the provisions of the Act and Rules, only the managing director can sued or be sued in the name of the Co-operative society concerned and that therefore arraying 1st accused/Co-operative society through the petitioner in his alleged capacity as the president of the Co-operative society, is vitiated by misjoinder of parties and that therefore the arraying of 1st accused/Co- operative society itself is not legally correct and proper. In this regard it is contended that it is now well established by decisions of the Apex Court in Aneeta Hada v. Godfather Travels and Tours Private Limited (2012) 5 SCC 661 that in case of dishonour of cheques drawn from the account of a body corporate like company/partnership firm etc., the complaint can be validly maintain only if the drawer company/partnership firm as the case may be is arrayed as an accused in such complaints, apart from arraying the directors/employees of the body corporate as co-accused etc., by imputing vicarious liability under Section 141 of NI Act.
6. These petitions were admitted by this Court on 18.07.2017 and notices were issued to the respondents concerned. Sri.L.Rajesh Narayana Crl.M.C.4884/17, etc. - : 7 :-
Iyer, has taken notice for R2/complainant company, Sri.Harish Sharma, learned counsel has taken notice for R3 and R4 (A2 and A3) and Sri.Saigi Jacob Palatty, learned Public Prosecutor takes notice for R1/State. Sri.P.G.Jayasankar, learned Advocate of this Court has been appointed as Amicus Curiae to assist this Court in the resolution of the issues in this case.
7. Heard Sri.James Mathew Kadavan, learned counsel for the petitioner, Sri.L.Rajesh Narayana Iyer, learned counsel for R2/complainant company, Sri.Harisharma, learned counsel for R3 and R4 (A2 and A3), Sri.P.G.Jayasankar, learned Amicus Curiae and Sri.Saigi Jacob Palatty, learned Public Prosecutor for R1/State.
8. The learned counsel for R-3 and R-4 has urged that there are sufficient and necessary averments in the complaints to establish that the petitioner and respondents 3 & 4 were in charge of and responsible for the affairs of the Co-operative Society at the relevant time. The learned counsel for R-2 would has also taken the attention of this Court through the provisions of the approved bye-laws of the Co-operative Society registered under the provisions of the Kerala Co-operative Societies Act and the Rules framed thereunder and has raised his contention that the complaints cannot be quashed on the ground that there are no proper and sufficient averments in the complaints to establish that the petitioner and respondents 3 & 4 were in charge of and responsible for the affairs of the Crl.M.C.4884/17, etc. - : 8 :-
Co-operative Society at the relevant time, etc. Further he would also urge that the impugned criminal proceedings cannot be interdicted by this Court by invoking the extra ordinary powers conferred under Sec.482 of the Cr.P.C. merely on the ground that the petitioner has not been arrayed separately as a co-accused in those complaints and that the arraying of accused No.1 Co-operative Society cannot be said to be improper or legally wrong, in any manner. Whereas Sri.James Mathew Kadavan, learned counsel appearing for the petitioner, apart from urging his contentions as noted herein above, has also strongly argued on the basis of the provisions contained in the approved bye-laws that the petitioner cannot be said to have been in charge of and responsible for the affairs of the Co-operative Society in matters like execution and dishonour of the cheques, as those are all matters within the domain of Executive Officers concerned, etc.
9. The relevant pages of the approved bye-laws of the Society have been produced as Anx.A-3 and as per the directions of this Court the petitioner's counsel has made available the full text of the said bye-laws of accused No.1 Co-operative Society, which was made available to all the Advocates appearing for the respective parties concerned. The learned Prosecutor appearing in this case was specifically requested by this Court to ascertain through the liaison official of the Co-operative Department attached to the office of the Advocate General as to whether the copy of the said bye-laws made available for the perusal of this Court is in fact the Crl.M.C.4884/17, etc. - : 9 :-
registered and approved bye-laws of the Co-operative Society. Today the learned Prosecutor, on the basis of the instructions of the Co-operative Department of the State Government, has submitted that the copy of the bye-laws, as made available by the petitioner's counsel, is in fact the one registered in terms of the provisions contained in the Act and the Rules thereunder and that said bye-laws have secured the approval of the Registrar of Co-operative Society.
10. It is relevant to note that a 3-Judge Bench of the Apex Court in the case in Aneeta Hada v. Godfather Travels & Tours Pvt. Ltd. reported in (2012) 5 SCC 661, has held that where the dishonoured cheque in question has been issued from the account of a body corporate like company/partnership firm, etc. then the complaint alleging offence punishable under Sec.138 of the Negotiable Instruments Act can be maintained only if the drawer of the cheque, viz, company/partnership firm, as the case may be, is arrayed as an accused, inasmuch the principal offender in such a case is the drawer of the cheque and that apart from that, the directors and other persons concerned, who are in charge of and responsible for the affairs of the business of the company/partnership firm as the case may be, at the time of the commission of the offence could also be arrayed as co-accused due to vicarious liability. The Apex Court in another 3-Judge decision in the celebrated case S.M.S. Pharmaceuticals v. Neeta Bhalla & Anr. reported in (2005) 8 SCC Crl.M.C.4884/17, etc. - : 10 :-
89, has held that in order to make out a case of vicarious liability as contemplated under Sec.141 of the N.I. Act as against the co-accused persons, there should be specific averments in the complaint that the director/other persons concerned were in charge of and responsible for the affairs of the business of the company at the time of commission of the offence, etc. The matter in S.M.S. Pharmaceuticals' case supra, arose on a reference made to a larger 3-Judge Bench by a 2-judge Bench of the Apex Court and the questions that have been considered by the 3-judge Bench and answered thereto, have been dealt with in paragraphs 1 and 19 of the abovesaid S.M.S. Pharmaceuticals' case, which read as follows:
"This matter arises from a reference made by a two-Judge Bench of this Court for determination of the following questions by a larger Bench:
"(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 fulfil the requirements of the said section and it is not necessary to specifically state in the complaint that the person accused was in charge of, or responsible for, the conduct of the business of the company.
(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 or 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.
xxx xxx xxx "19. 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 Crl.M.C.4884/17, etc. - : 11 :-
requirements of Section 141 cannot be said to be satisfied.
(b) The answer to the question posed in sub-para (b) has to be in the 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 the 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 the 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 the 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 the signatory of a cheque which is dishonoured is concerned, he is clearly responsible for the incriminating act and will be covered under sub-section (2) of Section 141."
11. In yet another judgment in National Small Industries Corporation Ltd. v. Harmeet Singh Paintal and Anr. reported in (2010) 3 SCC 330, the Apex Court has held in para 39 thereof (pp.345-356 of SCC report) as follows:
"39. From the above discussion, the following principles emerge:
(i) The primary responsibility is on the complainant to make specific averments as are required under the law in the complaint so as to make the accused vicariously liable. For fastening the criminal liability, there is no presumption that every Director knows about the transaction.
(ii) Section 141 does not make all the Directors liable for the offence.
The criminal liability can be fastened only on those who, at the time of the commission of the offence, were in charge of and were responsible for the conduct of the business of the company.
(iii) Vicarious liability can be inferred against a company registered or incorporated under the Companies Act, 1956 only if the requisite statements, which are required to be averred in the complaint/petition, are made so as to make the accused therein vicariously liable for offence committed by the company along with averments in the petition containing that the accused were in charge of and responsible for the business of the company and by virtue of their position they are liable to be proceeded with.
(iv) Vicarious liability on the part of a person must be pleaded and proved and not inferred.
Crl.M.C.4884/17, etc. - : 12 :-
(v) If the accused is a Managing Director or a Joint Managing Director then it is not necessary to make specific averment in the complaint and by virtue of their position they are liable to be proceeded with.
(vi) If the accused is a Director or an officer of a company who signed the cheques on behalf of the company then also it is not necessary to make specific averment in the complaint.
(vii) 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."
12. In a landmark judgment in the case in Gunmala Sales Pvt. Ltd. v. Anu Mehta & Ors. reported in (2015) 1 SCC 103, the Apex Court has delineated various guidelines that may be borne in mind while considering the plea of quashment of a complaint on the ground that there are no sufficient averments regarding the role played by the co-accused directors, etc. in para 34 thereof, which read as follows:
"34. We may summarise our conclusions as follows:
34.1. Once in a complaint filed under Section 138 read with Section 141 of the NI Act the basic averment is made that the Director was in charge of and responsible for the conduct of the business of the company at the relevant time when the offence was committed, the Magistrate can issue process against such Director.
34.2. If a petition is filed under Section 482 of the Code for quashing of such a complaint by the Director, the High Court may, in the facts of a particular case, on an overall reading of the complaint, refuse to quash the complaint because the complaint contains the basic averment which is sufficient to make out a case against the Director.
34.3. In the facts of a given case, on an overall reading of the complaint, the High Court may, despite the presence of the basic averment, quash the complaint because of the absence of more particulars about the role of the Director in the complaint. It may do so having come across some unimpeachable, incontrovertible evidence which is beyond suspicion or doubt or totally acceptable circumstances which may clearly indicate that the Director could not have been concerned with the issuance of cheques and asking him to stand the trial would be abuse of process of court. Despite the presence of basic averment, it may come to a conclusion that no case is made out against the Director. Take for instance a case of a Director suffering from a terminal illness Crl.M.C.4884/17, etc. - : 13 :-
who was bedridden at the relevant time or a Director who had resigned long before issuance of cheques. In such cases, if the High Court is convinced that prosecuting such a Director is merely an arm-twisting tactics, the High Court may quash the proceedings. It bears repetition to state that to establish such case unimpeachable, incontrovertible evidence which is beyond suspicion or doubt or some totally acceptable circumstances will have to be brought to the notice of the High Court. Such cases may be few and far between but the possibility of such a case being there cannot be ruled out. In the absence of such evidence or circumstances, complaint cannot be quashed. 34.4. No restriction can be placed on the High Court's powers under Section 482 of the Code. The High Court always uses and must use this power sparingly and with great circumspection to prevent inter alia the abuse of the process of the court. There are no fixed formulae to be followed by the High Court in this regard and the exercise of this power depends upon the facts and circumstances of each case. The High Court at that stage does not conduct a mini trial or roving inquiry, but nothing prevents it from taking unimpeachable evidence or totally acceptable circumstances into account which may lead it to conclude that no trial is necessary qua a particular Director."
13. Though both sides have urged their respective contentions as to the issue whether there are proper and sufficient averments on the issue and as to whether the petitioner was in charge of and responsible for the affairs of the business of the society concerned at the relevant time, this Court is of the view that it is not necessary for this Court to render any verdict on that specific issue, in view of peculiar facts and circumstances of this case. Resolution of such an issue would have been imperative and necessary if, as a matter of fact, the petitioner had been separately arrayed as a co-accused in the complaint. Therefore, this Court need to consider only the other contentions raised by the petitioner for adjudication of the issues raised in these petitions.
14. It is common ground that the petitioner in his capacity as the President of accused No.1 Co-operative Society has not been separately arrayed as an accused in the complaint as stated herein above. Accused Crl.M.C.4884/17, etc. - : 14 :-
Nos.2 and 3 are individuals, concerned who are holding the post of Managing Director and Marketing Manager of the Co-operative Society concerned. Accused No.1 is the Co-operative Society. The summons has been issued against the petitioner only because accused No.1 Co-operative Society has been sued through the petitioner in his alleged capacity as the President of the Co-operative Society. The description of accused No.1 in the complaints as follows:
"Kaduthuruthi Co-operative Rubber Marketing & Processing Society Ltd. No.1397, represented by P.M.Mathew, Ex.MLA, aged about 60, President, Kaduthuruthi Co-operative Rubber Marketing & Processing Society Ltd., No.1397, Kaduthuruthi P.O., Kottayam -686 604."
15. The learned author, Kenny in his treatise titled "The Outlines of Criminal Law" (15th Edition pp.73 to 75), has held as follows:
"Moreover a corporation is devoid not only of mind, but also of body; and therefore incapable of the usual criminal punishments. `Can you hang its common seal ?' asked an advocate in James, K.K.'s days (8 St Tr 1138).
Thus the fact that a corporation cannot be hanged or imprisoned sets a limit to the range of its criminal liability. A corporation can only be prosecuted, as such, for offences which can be punished by a fine."
16. The Apex Court has held in various decision as in the Constitution Bench judgment in Standard Chartered Bank & ors. v. Directorate of Enforcement & Ors. reported in (2005) 4 SCC 530 = 2005 (2) KLT 876 (SC) that though a company cannot be sentenced to imprisonment, it can nevertheless be prosecuted and the court can impose punishment of fine. It has also been held that if custodial prison Crl.M.C.4884/17, etc. - : 15 :-
sentence is the only punishment prescribed for the offence, then the company being a juristic person cannot be prosecuted for the offence for which custodial sentence is the only mandatory punishment. But that when custodial sentence and fine are the prescribed mode of punishment, then the court can impose the sentence of fine on the company which is found guilty as the sentence of imprisonment is impossible to be carried out. So also it has also been held that as the company cannot be sentenced to imprisonment, the court cannot impose that punishment, but when imprisonment and fine is the prescribed punishment, the court could impose the punishment of fine, which could be enforced against the company, etc. and that such a discretion is to be read into the provision as far as the juristic person is concerned.
17. This Court in the decision in Moonukandathil Modern Mills v. Abraham Thomas & Anr. reported in 2012 (4) ILR Ker. 745 = 2012 (4) KLT SN 119 = 2012 (4) KHC 564, dealt with a case where the partnership firm alone was arrayed as an accused in the complaint alleging offence punishable under Sec.138 of the N.I. Act. While arraying the partnership firm as the sole accused, the individual who was the managing partner of the firm was described in the cause-title as representing the sole accused partnership firm. The question arose was that when the firm alone is made an accused, whether the individual, who is the managing partner of that firm, who is only representing that partnership firm, could be Crl.M.C.4884/17, etc. - : 16 :-
sentenced to imprisonment till rising of the court and also to undergo imprisonment in the default of payment of fine or compensation, etc. This Court held that since partnership is a body corporate as envisaged in Sec.141 of the N.I. Act, and so partnership firm could be prosecuted and convicted. But that a body corporate like partnership firm or company could be sentenced only to pay fine which could be realised in terms of the provisions contained in Sec. 421 of the Cr.P.C. But that the individual Managing Partner, who is representing the accused partnership firm, cannot be made to suffer the prison sentence or fine in respect of the conviction that is incurred by the accused partnership firm/company. This Court has also relied on the decision of the Apex Court in ANZ Grindlays Bank Ltd. v. Directorate of Enforcement reported in 2005 (2) KLT 876 (SC) and held that though the firm/company could be convicted and sentenced, the Managing Director/ Managing Partner who represents the company/firm cannot be sentenced to undergo imprisonment nor can he be sentenced to undergo jail sentence for default of payment of fine amount, etc. and that the fine alone could be imposed on the accused partnership firm/company. The judgment of this Court in Moonukandathil Modern Mills v. Abraham Thomas & Anr.
reported in 2012 (4) ILR Ker. 745 reads as follows:
Partner'When undergoofimprisonment till the rising of the court and also to undergo thatthe firm alone is made an accused can the Managing firm, who is only representing the firm be sentenced to imprisonment in default of payment of fine/compensation is the crucial Crl.M.C.4884/17, etc. - : 17 :-
question raised by the learned counsel for the petitioner. According to the learned counsel, the petitioner who only represents the firm cannot be sentenced to undergo imprisonment, for the fine/compensation amount which the firm is liable to pay can only be realised by resorting to Sec.421 Cr.P.C.
can be2.prosecuted and convicted. But the learned counsel for the There can be no doubt that a firm being a separate legal entity petitioner submits that Mr. M.J. Jacob has not been independently arrayed as accused but he is only representing the firm-Moonnukandathil Modern Mills. Though Mr. M.J.Jacob represented the firm and even if he is the Managing Partner or a partner who was in charge of and responsible to the conduct of the business of the company, he cannot be directed to undergo imprisonment in default of payment of fine/compensation, for, his liability is only vicarious in nature. Mr.M.J.Jacob is not prosecuted for his individual act and he was not arrayed as an accused in his individual capacity. Had it been a case where he was impleaded as an accused as the Managing Partner or Partner of that firm or a person in charge of the business of the Firm then the position would have been different. But here the firm alone is the accused, though, it is represented by Mr.M.J.Jacob, the Managing Partner. He represents the firm only for the conduct of the case before court, the learned counsel submits.
3. It was held by the Honourable Supreme Court in ANZ Grindlays Bank Ltd. v. Directorate of Enforcement [2005 (2) KLT 876 (SC)] :
"As the company cannot be sentenced to imprisonment, the Court cannot impose that punishment, but when imprisonment and fine is the prescribed punishment the Court can impose the punishment of fine which could be enforced against the company. Such a discretion is to be read into the Section so far as the juristic person is concerned. Of course, the Court cannot exercise the same discretion as regards a natural person. Then the Court would not be passing the sentence in accordance with law. As regards company, the Court can always impose a sentence of fine and the sentence of imprisonment can be ignored as it is impossible to be carried out in respect of a company."
In the light of the law adumbrated by the Apex Court in ANZ Grindlays Bank Ltd.'s case cited supra,andhassentenced, that though the it to be held company/firm Director/Managing Partnerconvicted can be the Managing who represents the company cannot be sentenced to undergo imprisonment nor can he be sentenced to undergo jail sentence for default of payment of the fine amount. Therefore, the conviction is to be confirmed and the sentence is to be modified. It is submitted by the learned counsel that a total amount of Rs.75,000/- (Rs.37,500/- each) was deposited by the petitioner. If so, the petitioner will pay only the balance amount. The petitioner firm is given one month time to pay the balance amount.
In the result, both revision petitions are disposed of as stated below :-
The conviction is confirmed.
In supersession of the sentence awarded by the courts below, the Crl.M.C.4884/17, etc. - : 18 :-
petitioner firm is sentenced to pay a fine of Rs.75,000/- each. The amount already deposited shall be given deduction to and the balance fine amount shall be paid by the firm. If the balance amount is not paid, it shall be realised by resorting to Sec.421 Cr.P.C. The amount already deposited shall be released to the complainant.'
18. In the complaint in respect of the abovesaid reported judgment, the sole accused was a partnership firm, which was represented through the individual, who was the Managing Partner of the firm. The individual Managing Partner or other partners of the firm were not separately arrayed as co-accused in that complaint. It is in the light of these factual aspects, that this Court had held that the individual Managing Partner, who is made to represent the partnership firm, cannot be made to suffer the sentence, which is imposed on the accused partnership firm, etc. The legal principles laid down by this Court in the abovesaid decision would aptly apply to the facts of this case. The only difference in the facts in this case is that, apart from accused No.1 Co-operative Society, the individual Managing Director and Marketing Manager have also been arrayed as accused Nos.2 and 3. But the petitioner, who is stated to be the President of the Co-operative Society, has not been separately arrayed as an accused in the instant case. Therefore, going by the elementary principles of criminal law, as referred to herein above, even if Accused No.1 Co- operative Society is convicted in this case, only a sentence of fine could at best be imposed as against accused No.1 Co-operative Society, which could be realised from the assets of that co-operative society, in terms of the Crl.M.C.4884/17, etc. - : 19 :-
provisions contained in the Code of Criminal Procedure. The petitioner, who is only made to represent accused No.1 Co-operative Society, cannot be made to suffer substantive sentence or default sentence nor can he be made to personally suffer any fine that may be imposed on accused No.1 co- operative society even if accused No.1 is convicted by the criminal court concerned.
19. The other aspect of the matter is as to whether the arraying of accused No.1 is vitiated by misjoinder of parties. It is common ground that accused No.1 Co-operative Society is registered in terms of the provisions contained in the Co-operative Societies Act, 1969 and the Rules framed thereunder and that the functioning of the said Co-operative Society is regulated by the provisions of the said Act and Rules framed thereunder. Section 9 of the Kerala Co-operative Societies Act, reads as follows :
"Section 9: Co-operative Societies to be bodies corporate. The registration of a society shall render it a body corporate by the name under which it is registered, having perpetual succession and a common seal and with power to hold property, enter into contracts, institute and defend suits and other legal proceedings and to do all things necessary for the purposes for which it was constituted.
Provided that the Government and the Registrar shall have power to regulate the working of a society for the economic and social betterment of its members and the general public."
Section 7 deals with the provisions relating to registration of Co- operative Societies. Rule 5(1) of the Kerala Co-operative Societies Rules, 1969 framed under the provisions of the abovesaid Act, provides that the bye-laws of a Society shall not be contrary to the provisions of the Act and Rules and further Clause (x) of Rule 5(1) provides that the bye-laws may Crl.M.C.4884/17, etc. - : 20 :-
provide for the authorization of an officer/officers to sign documents and defend suits and other legal proceedings on behalf of the Co-operative Society. In accordance with the provisions of the Act and the Rules framed thereunder that the byelaws of accused No.1, Kaduthuruthy Co-operative Rubber Marketing and Processing Society Ltd.No.1397, Kaduthuruthy, has been registered and approved by the Registrar of Co-operative Societies. Rule 8(1) of the registered byelaws of the Society provides that subject to resolutions as the Board of Directors may from time to time, pass several officers of the Society shall have powers mentioned thereunder and clause
(c) of Rule 8(1) provides that the Managing Director shall be the officer to sue or to be sued on behalf of the Society, etc. Therefore, going by the provisions in the Act, Rules as well as the registered byelaws, Managing Director is the designated officer to sue or to be sued on behalf of accused No.1 Co-operative Society. Therefore, prima facie, arraying of accused No.1 Co-operative Society to be represented through the petitioner as the President of the Co-operative Society does not appear to be in consonance with the provisions of the Kerala Co-operative Societies Act, the Rules framed thereunder as well as the registered byelaws of the Society. However, in the facts of this case, this Court is of the considered view that it is not necessary to render any final opinion on that issue, in the nature of the order that is proposed to be rendered in this case. However, as noted herein above, going by the elementary principles of criminal Crl.M.C.4884/17, etc. - : 21 :-
jurisprudence in the matter of arraying Companies and Body Corporates as accused, it is only to be held that even if accused No.1 Company is convicted, only a sentence of fine could be imposed as against A1 and in such eventuality, the individual has been made to represent only accused No.1 Society, cannot be made to personally suffer any substantive prison sentence or fine or default sentence, etc. and even if the case ultimately ends up in conviction the fine amount that may be imposed on accused No.1 Co-operative Society is to be realized in accordance with the provisions contained in the Code of Criminal Procedure, 1973. Since accused Nos.2 and 3 (respondents 3 and 4 herein) have not sought for quashment of the complaint, this Court need not examine any issues as to whether there are sufficient and necessary averments in the complaint so as to implicate the said accused persons.
20. Therefore, in the light of these aspects, this Court is not inclined to grant the prayer for quashment of the complaint inasmuch as the petitioner has not been separately arrayed as a co-accused in the complaint.
21. Faced with the situation, Sri.L.Rajesh Narayanan, learned counsel appearing for R2/complainant, would submit on the basis of instructions from his party that the complainant will forthwith take steps to file an application for correction of the cause title to the extent it arrays as accused No.1 by deleting the representation through the petitioner's name Crl.M.C.4884/17, etc. - : 22 :-
and to ensure that A1 is represented through the Managing Director of accused No.1 Co-operative Society, so as to be in consonance with the provisions of the abovesaid Act, Rules and the Registered bye-laws Society. It is further pointed out by Sri.L.Rajesh Narayanan, learned counsel for the second respondent/complainant that respondent No.3 (accused No.2) is the individual who is the Managing Director of the Co-operative Society and that there are necessary averments in the complaints about the role of accused No.2 and about the involvement of accused No.1 Society and that accused No.2 has already been separately arrayed as co-accused in the present complaint and that therefore, by the said correction sought to be made by the complainant, no further prejudice is caused to the said Managing Director inasmuch as he has already been arrayed as accused No.2 in the above complaint. Further it is also pointed out by learned counsel for the respondent/complainant that solely due to such correction in the description of accused No.1, the Managing Director cannot be made to suffer any substantive prison sentence, default sentence or even fine even if A1 is convicted and that at best the fine imposed on A1 Society, if not paid, can only be recovered from the assets of that Society and so the Managing Director cannot be said to be in any manner more prejudiced by such correction and that this is without prejudice to the right of the complainant to also seek the conviction of accused numbers 2 and 3, who are already arrayed as co-accused, on the basis of vicarious liability. It is for Crl.M.C.4884/17, etc. - : 23 :-
the second respondent/complainant to proceed on that aspect in accordance with law. In the light of the abovesaid aspects, it is ordered that the name of the petitioner as described in arraying of accused No.1 in the cause title of the complaint will stand struck out and accused No.1 will remain in the accused array and it is for the second respondent/complainant to proceed further with the matter in the manner known to law.
22. The following directions and orders are passed:
(i) Even if accused No.1 (Co-operative Society) is convicted, still the individual/official who is made to represent A-1 as per the description in the cause-title, cannot be individually made to suffer any substantive sentence, fine/compensation, default sentence, etc. and in the eventuality of such conviction, only fine (which may be disbursed as compensation) can be imposed on A-1 and any such unpaid fine could be realised only from the assets of that body corporate. Of course, pursuant to such conviction of A-1 (Society), the co-accused individuals who come within the sweep of vicarious liability, could be separately and personally made to suffer conviction and sentence, inclusive of fine/compensation, etc.
(ii) Since the dishonoured cheque is alleged to have been drawn from the account of A-1 (Co-operative Society), the complaint is maintainable as against that body corporate as it is the alleged drawer of the dishonoured cheque. As the petitioner has not been separately arrayed as a co-accused, there is no necessity to consider the plea of quashment of the impugned complaint, at the instance of the petitioner herein.
(iii) The submissions made on behalf of the 2nd respondent (complainant) that the complainant will forthwith take steps to file application for correction of the cause-
title to the extent it arrays accused No.1 by deleting the representation through the petitioner's name and to ensure that A-1 is represented through the Managing Director of A-1 Co-operative Society, etc. are recorded and it is ordered that it is for the 2nd respondent (complainant) to proceed on that aspect in accordance with law.
(iv) Resultantly, it is ordered that the name of the petitioner as described in arraying of accused No.1 in the cause-title of the complaint will stand struck out. But it is also ordered that accused No.1 (Co-operative Society) will remain in the accused array and it is for the 2nd respondent (complainant) to proceed further with the matter, in the manner known to law.
23. Before parting with this case, this Court would place on record its appreciation for the able assistance rendered by all the Advocates concerned especially Sri.P.G.Jayasankar, learned Amicus Curiae appointed Crl.M.C.4884/17, etc. - : 24 :-
by this Court, and Sri.Saigi Jacob Palatty, learned prosecutor appearing for the respondent/State. The Registry will forward copies of this order to the trial court and the Amicus Curiae.
With these observations and directions, the aforecaptioned Criminal Miscellaneous Cases stand finally disposed of.
Sd/-
sdk+ ALEXANDER THOMAS, JUDGE
///True Copy///
P.S. to Judge