Gujarat High Court
Swarn Mukeshbhai Gupta vs Parth Mukeshbhai Patel & on 11 April, 2017
Author: J.B.Pardiwala
Bench: J.B.Pardiwala
R/CR.MA/29748/2016 JUDGMENT
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
CRIMINAL MISC.APPLICATION (FOR QUASHING & SET ASIDE
FIR/ORDER) NO. 29748 of 2016
With
CRIMINAL MISC.APPLICATION NO. 29751 of 2016
FOR APPROVAL AND SIGNATURE:
HONOURABLE MR.JUSTICE J.B.PARDIWALA
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1 Whether Reporters of Local Papers may be allowed
to see the judgment ?
2 To be referred to the Reporter or not ?
3 Whether their Lordships wish to see the fair copy of
the judgment ?
4 Whether this case involves a substantial question of
law as to the interpretation of the Constitution of
India or any order made thereunder ?
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SWARN MUKESHBHAI GUPTA....Applicant(s)
Versus
PARTH MUKESHBHAI PATEL & 1....Respondent(s)
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Appearance:
MR ASIFKHAN I PATHAN, ADVOCATE for the Applicant(s) No. 1
MR.HARDIK B SHAH, ADVOCATE for the Respondent(s) No. 1
MS. PATHAK, APP in CR.MA29748 OF 2016 & MS. THAKORE, APP in
CR.MA 29751 OF 2016 for the Respondent(s) No. 2
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CORAM: HONOURABLE MR.JUSTICE J.B.PARDIWALA
Date : 11/04/2017
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COMMON ORAL JUDGMENT
1. Since a common question of law has been raised in both the captioned applications and the parties are also the same, those were heard analogously and are being disposed of by this common judgment and order.
2. By these two applications under section 482 of the Code of Criminal Procedure, 1973, the applicant seeks to invoke the inherent powers of this Court praying for quashing of the proceedings to the two criminal cases being the Criminal Case No.7674 of 2015 and Criminal Case No.7675 of 2015 respectively pending in the court of the learned Chief Judicial Magistrate, Ahmedabad arising from the complaints filed under section 138 of the N.I. Act.
3. The applicant herein has been arraigned as an accused in her capacity as the authorized and responsible officer of a company by name B.M. Infrastructure Industries Pvt. Ltd.. The cheques in question were drawn by the husband of the applicant herein namely Mukeshbhai, original accused No.1 in the complaint. The applicant herein is sought to be fastened with the vicarious liability under section 141 of the N.I. Act. I am afraid both the complaints should fail in the absence of the company not being arraigned as an accused in the complaint. This issue is squarely covered by the decision of the Supreme Court in the case of Aneeta Hada vs. Godfather Travels & Tours Pvt. Ltd., (2012) 5 SCC
661.
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4. At this stage, Mr. Hardik Shah, the learned counsel appearing for the complainant submitted that it was just a typographical error on the part of the complainant in not arraigning the company as an accused. Mr. Shah submits that, his client has moved an application before the court concerned under section 319 of the Cr.P.C to implead the company as an accused in the complaint. I am afraid the application under section 319 of the Cr.P.C to implead the company as an accused at this stage is not maintainable in law. This issue is no longer res integra in view of the decision of this Court in the case of Oanali Ismailji Sadikot vs. State of Gujarat & Anr., 2016 (3) GLR 1991, wherein this Court held as under;
"37 Before I proceed to answer the third question, I deem fit to quote Sections 138 and 142 of the Act:
138. Dishonour of cheque for insufficiency, etc., of funds in the account Where any cheque drawn by a person on an account maintained by him with a banker for payment of any amount of money to another person from out of that account for the discharge, in whole or in part, of any debt or other liability, is returned by the bank unpaid, either because of the amount of money standing to the credit of that account is insufficient to honour the cheque or that it exceeds the amount arranged to be paid from that account by an agreement made with that bank, such person shall be deemed to have committed an offence and shall, without prejudice to any other provision of this Act, be punished with imprisonment for a [a term which may be extended to two years], or with fine which may extend to twice the amount of the cheque, or with both :Page 3 of 29
HC-NIC Page 3 of 29 Created On Tue Aug 15 20:59:12 IST 2017 R/CR.MA/29748/2016 JUDGMENT Provided that nothing contained in this section shall apply unless-
(a) the cheque has 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;
(b) the payee or the holder in due course of the cheque, as the case may be, makes a demand for the payment of the said amount of money by giving a notice in writing, to the drawer of the cheque, b [within thirty days] of the receipt of information by him from the bank regarding the return of the cheque as unpaid; and
(c) the drawer of such cheque fails to make the 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.
Explanation.-For the purposes of this section, "debt or other liability" means a legally enforceable debt or other liability.
142. Cognizance of offences Notwithstanding anything contained in the Code of Criminal Procedure, 1973 (2 of 1974),-
(a) no Court shall take cognizance of any offence punishable under section 138 except upon a complaint, in writing, made by the payee or, as the case may be, the holder in due course of the cheque;
(b) such complaint is made within one month of the date on which the cause of action arises under clause (c) of the proviso to section 138 :
[Provided that the cognizance of a complaint may be taken by the Court after the prescribed period, if the complainant satisfies the Court that he had sufficient cause for not making a complaint within such period;] Page 4 of 29 HC-NIC Page 4 of 29 Created On Tue Aug 15 20:59:12 IST 2017 R/CR.MA/29748/2016 JUDGMENT
(c) no Court inferior to that of a Metropolitan Magistrate or a Judicial Magistrate of the first class shall try any offence punishable under section 138.] 38 The plain reading of the two sections referred to above would indicate that steps, for lodging of a complaint under Section 138 of the Act, are required to be taken within the time frame provided under Section 138 of the Act. As regards filing of a complaint for an offence under Section 138 of the Act, Section 142 of the Act, which deals with cognizance of offences punishable under Section 138, lays down a necessary precondition i.e. a written complaint by the payee or the holder of the cheque in due course and prescribes a special period of limitation within which the complaints must be filed (clause (b)). Clause (b) of Section 142 read with Clause (a) of the section suggests that a Court shall not take cognizance of an offence punishable under Section 138 of the Act unless the complaint in that behalf is made within one month of the date on which the cause of action arises under Clause (c) of the proviso to Section 138 i.e. on expiry of period of fifteen days from the date of receipt of notice of dishonour by the accused. However, by reason of addition of proviso to Sub-clause (b) of Section 142, the special period of limitation prescribed thereunder is no longer indefeasible. The proviso vests a discretionary jurisdiction in the criminal Court to waive the period of one month prescribed for taking cognizance of the case under the Act and to take cognizance of an offence punishable under Section 138 despite expiry of such period of limitation, if the complainant satisfies the Court that he had sufficient cause for not making a complaint within such period.Page 5 of 29
HC-NIC Page 5 of 29 Created On Tue Aug 15 20:59:12 IST 2017 R/CR.MA/29748/2016 JUDGMENT 39 Limitation under the Section is, however, provided only for filing the complaint and not for taking cognizance or even for issuing the process. The thrust is only on making the complaint meaning thereby presenting it to the Magistrate. The concept of its cognizance or the concept of issuance of process on the basis of such complaint is simply not to be found in the whole section. It is clear that once the complaint is filed within time contemplated under Section 142(b), the cognizance could be taken later.
40 In the case in hand, it is not in dispute that the complaint was filed without arraigning the partnership firm being a legal entity as an accused. It is not in dispute that the Magistrate took cognizance upon the complaint in the absence of the legal entity being the principal accused and thought fit to issue process against the Directors by virtue of their vicarious liabilities under Section 141 of the Act.
41 The following are the questions I need to look into:
(I) Whether the complaint under Section 138 of the Act the day it was filed was maintainable in law against the partners alone in the absence of the partnership firm being a legal entity not being impleaded as an accused?
(II) Whether the Magistrate could have taken cognizance upon the complaint and ordered issue of process against the partners of the firm in the absence of the partnership firm being an accused?
(III) Whether, after a period of almost twelve years, the complainant can file an application under Section 319 of the Cr.P.C. to implead the partnership firm as an accused to make the complaint maintainable and pray before the Page 6 of 29 HC-NIC Page 6 of 29 Created On Tue Aug 15 20:59:12 IST 2017 R/CR.MA/29748/2016 JUDGMENT Magistrate to issue process to the firm as a legal entity?
(IV) If the complainant is permitted to do so, could it not be said that indirectly he is substantially amending the complaint thereby changing the entire complexion of the same which is otherwise not permissible in law.
(V) Could it be said that although the cognizance was taken in the year 2004, yet the impleading of the partnership firm, after twelve years, would be in consonance with Section 142(b) of the Act read with Clause (a)? To put it in other words, could it be said that the complaint against the partnership firm is made within one month from the date on which the cause of action arises under Clause (c) of Proviso to Section 138 of the Act i.e. on expiry of period of fifteen days from the date of receipt of notice of dishonour by the accused?
(VI) Will the situation be saved by virtue of Section 319 of the Cr.P.C., which is sought to be invoked in the present case?
42 I am of the view that Section 319 of the Cr.P.C. has no application worth the name.
43 Section 319 of the Cr.P.C. reads as under:
319. Power to proceed against other persons appearing to be guilty of offence (1) Where, in the course of any inquiry into, or trial of, an offence, it appears from the evidence that any person not being the accused has committed any offence for which such person could be tried together with the accused, the Court may proceed against such person for the offence which he appears to have committed.
(2) Where such person is not attending the Court, he may be arrested or summoned, as the circumstances of the case may require, for Page 7 of 29 HC-NIC Page 7 of 29 Created On Tue Aug 15 20:59:12 IST 2017 R/CR.MA/29748/2016 JUDGMENT the purpose aforesaid.
(3) Any person attending the Court, although not under arrest or upon a summons, may be detained by such Court for the purpose of the enquiry into, or trial of, the offence which he appears to have committed.
(4) Where the Court proceeds against any person under sub-section (1), then-
(a) the proceedings in respect of such person shall be commenced afresh, and the witnesses re-heard;
(b) subject to the provisions of clause (a), the case may proceed as if such person had been an accused person when the Court took cognizance of the offence upon which the inquiry or trial was commenced.
44 The objects and reasons of Section 319 of the Cr.P.C. are as under:
The Law Commission in its 41st Report observed :-
"24.80. It happens sometimes, though not very often, that a Magistrate hearing a case against certain accused finds from the evidence that some person, other than the accused before him, is also concerned in that very offence or in a connected offence. It is only proper that a Magistrate should have the power to call and join him in the proceedings. Section 351 provides for such a situation, but only if that person happens to be attending the Court. He can then be detained and proceeded against. There is no express provision in S. 351 for summoning such a person if he is not present in Court. Such a provision would make S. 351 fairly comprehensive, and we think it proper to expressly provide for that situation.
24.81. Section 351 assumes that the
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Magistrate proceeding under it has the power of taking cognizance of the new case. It does not, however, say in what manner cognizance is taken by the Magistrate. The modes of taking cognizance are mentioned in section 190, and are apparently exhaustive. The question is, whether against the newly added accused, cognizance will be supposed to have been taken on the Magistrate's own information under S. 190(1)(c), or only in the manner in which cognizance was first taken of the offence against the accused..................The question is important, because the methods of inquiry and trial in the two cases differ. About the true position under the existing law, there has been difference of opinion, and we think it should be made clear. It seems to us that the main purpose of this particular provision is, that the whole case against all known suspects should be proceeded with expeditiously, and convenience requires, that cognizance against the newly added accused should be taken in the same manner as against the other accused. We, therefore, propose to re-cast S. 351 making it comprehensive and providing that there will be no difference in the mode of taking cognizance if a new person is added as an accused during the proceedings. It is, of course, necessary (as is already provided) that in such a situation the evidence must be reheard in the presence of the newly added accused."
45 The crucial words in the section are, any person not being the accused.' This section empowers the Court to proceed against persons not being the accused appearing to be guilty of offence. Sub- sections (1) and (2) of this section provide for a situation when a Court hearing a case against certain accused person finds from the evidence that some person or persons, other than the accused before it is or are also connected in this very offence or any connected offence; and it empowers the Court to proceed against such person or persons for the offence which he or they appears or appear to have committed and issue process for the purpose. It Page 9 of 29 HC-NIC Page 9 of 29 Created On Tue Aug 15 20:59:12 IST 2017 R/CR.MA/29748/2016 JUDGMENT provides that the cognizance against newly added accused is deemed to have been taken in the same manner in which cognizance was first taken of the offence against the earlier accused.It naturally deals with a matter arising from the course of the proceeding already initiated. The scope of the section is wide enough to include cases instituted on private complaint.
46 It is therefore abundantly clear that the object of the makers of the statute in enacting Section 319 of the Code was to provide for a more comprehensive provision, with considerable improvement in the old Section 351, for proceeding against other persons appearing to be guilty, although he is not an accused. Section 319 of the Code provides that where in the course of an enquiry or trial of an offence, if it appears from the evidence that any person not being accused has committed any offence, Court may proceed against such person for the offence which he appears to have committed. The intention of the Legislature in enacting Section 319 appears to be that if somebody other than the person who is party and facing trial or enquiry is also an accused, he may be summoned on the basis of some evidence available on the record.
47 Thus, having regard to the substantive provision of Section 319 of the Cr.P.C. read in conjunction with the objectives and reasons, Section 319 of the Cr.P.C. authorizes the Court concerned to take cognizance against any person who has not been tried with the accused, but, who appears to be a person not being accused has committed any offence along with the accused persons and in such circumstances that person can also be tried together with the original accused subject to the conditions precedent that under the provisions of Section 319 of the Cr.P.C. which must appear from the evidence during the course of inquiry or trial that any other person than the original accused have also committed the alleged offence along with the original accused, then only, cognizance can be taken under the provisions of Section 319.
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48 Let me give a simple illustration. Take a case where the partnership firm being a legal entity is an accused. The trial Court has taken cognizance and issued process against the partnership firm as a legal entity. In the course of the trial, it comes to the notice of the Court that one of the partners not being accused has committed an offence for which he could be tried together with other partners (co- accused), the Court would be justified in invoking Section 319 of the Cr.P.C.
[See: Division Bench judgment in Satish Chand Singhal v. State of Gujarat, 2006 Cri. Law Journal 3854] 49 However, when the complaint itself is not maintainable in the absence of the partnership firm being a legal entity before the Court and the cognizance and issue of process against the partners alone is illegal, then there is no question of invoking Section 319 of the Cr.P.C. in such a situation. Section 319 of the Cr.P.C. would not save the situation and is actually not meant to take care of such a serious infirmity in the complaint.
50 The best test in the construction of statutes is to see the subject-matter of the purpose for which a provision of law is enacted. One should always get at its real object and purpose; the importance of the provision of law enacted and its relation to or effect on the general object intended to be secured by its enactment. The surroundings, the purpose of enactment, the end to be accomplished and the consequences that may result by adopting one meaning rather than the other are important factors which must be taken into account while interpreting law.
51 The complaint in question was in fact liable to be dismissed under Section 203 of the Code of Criminal Procedure on the very first day of its prosecution before the learned Magistrate. The maintainability of the complaint is sought to be saved by virtue of Section 319 of the Cr.P.C.
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52 It is a settled legal proposition that if initial action is not in consonance with law, all subsequent and consequential proceedings would fall through for the reason that illegality strikes at the root of the order. In such a fact-situation, the legal maxim "sublato fundamento cadit opus" meaning thereby that foundation being removed, structure/work falls, comes into play and applies on all scores in the present case.
53 In Badrinath v. State of Tamil Nadu and Ors. [AIR 2000 SC 3243]; and State of Kerala v. Puthenkavu N.S.S. Karayogam and Anr., [(2001) 10 SCC 191], the Supreme Court observed that once the basis of a proceeding is gone, all consequential acts, actions, orders would fall to the ground automatically and this principle is applicable to judicial, quasi-judicial and administrative proceedings equally.
54 Similarly in Mangal Prasad Tamoli (dead) by L.Rs. v. Narvadeshwar Mishra (dead) by L.Rs. and Ors., [(2005) 3 SCC 422 : (AIR 2005 SC 1964)], the Supreme Court held that if an order at the initial stage is bad in law, then all further proceedings, consequent thereto, will be non est and have to be necessarily set aside.
55 In C. Albert Morris v. K. Chandrasekaran and Ors., [(2006) 1 SCC 228], the Supreme Court held that a right in law exists only and only when it has a lawful origin.
56 I am of the view that the application under Section 319 of the Cr.P.C. seeking impleadment of the partnership firm as an accused is more in the nature of a substantive amendment. There is no provision in the Code of Criminal Procedure giving right to the parties to file an application for amendment in the pleadings and give power to the lower Courts to allow the same. Had it been an application for substitution of the complainant on death or a technical flaw, the position would be different. What cannot be done directly by the Court, should not be done indirectly.
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57 With regard to the aforesaid, I may quote a recent pronouncement of the Supreme Court in the case of S.R. Sukumar v. S. Sunaad Raghuram [(2015) 9 SCC 609]. The observation in paras 17 and 18 is the answer to the question whether it is permissible for the Court to allow any amendment in the complaint:
17. Insofar as merits of the contention regarding allowing of amendment application, it is true that there is no specific provision in the Code to amend either a complaint or a petition filed under the provisions of the Code, but the Courts have held that the petitions seeking such amendment to correct curable infirmities can be allowed even in respect of complaints. In U.P. Pollution Control Board vs. Modi Distillery and ors., (1987) 3 SCC 684, wherein the name of the company was wrongly mentioned in the complaint that is, instead of Modi Industries Ltd. the name of the company was mentioned as Modi Distillery and the name was sought to be amended. In such factual background, this Court has held as follows:-
&The learned Single Judge has focussed his attention only on the [pic]technical flaw in the complaint and has failed to comprehend that the flaw had occurred due to the recalcitrant attitude of Modi Distillery and furthermore the infirmity is one which could be easily removed by having the matter remitted to the Chief Judicial Magistrate with a direction to call upon the appellant to make the formal amendments to the averments contained in para 2 of the complaint so as to make the controlling company of the industrial unit figure as the concerned accused in the complaint. All that has to be done is the making of a formal application for amendment by the appellant for leave to amend by substituting the name of Modi Industries Limited, the company owning the industrial unit, in place of Modi Distillery&. Furthermore, the legal infirmity is of such a nature which could be easily cured...
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18. What is discernible from the U.P. Pollution Control Boards case is that easily curable legal infirmity could be cured by means of a formal application for amendment. If the amendment sought to be made relates to a simple infirmity which is curable by means of a formal amendment and by allowing such amendment, no prejudice could be caused to the other side, notwithstanding the fact that there is no enabling provision in the Code for entertaining such amendment, the Court may permit such an amendment to be made. On the contrary, if the amendment sought to be made in the complaint does not relate either to a curable infirmity or the same cannot be corrected by a formal amendment or if there is likelihood of prejudice to the other side, then the Court shall not allow such amendment in the complaint.
58 The Supreme Court in Delhi Administration vs. Gurdip Uban and others [(2007) 7 SCC 296] has explained the principle of doing something indirectly which is otherwise not permitted. The said principle has been explained in para 17 observing thus:
"17. . . . .This procedure is meant to save the time of Court and to preclude frivolous review petitions being filed and heard in open Court. However, with a view to avoid this procedure of 'no hearing,' we find that sometimes applications are filed for 'clarification,' 'modification' or 'recall' etc. not because any such clarification, modification is indeed necessary but because the applicant in reality wants a review and also wants a hearing, thus avoiding listing of the same in chambers by way of circulation. Such applications, if they are in substance review applications deserve to be rejected straightway inasmuch as the attempt is obviously to by-pass O. XL, Rule 3 relating to circulation of the application in Chambers for consideration without oral hearing. By describing an application as one for 'clarification' or 'modification,' - though it is Page 14 of 29 HC-NIC Page 14 of 29 Created On Tue Aug 15 20:59:12 IST 2017 R/CR.MA/29748/2016 JUDGMENT really one of review - a party cannot be permitted to circumvent or by-pass the circulation procedure and indirectly obtain a hearing in the open Court. What cannot be done directly cannot be permitted to be done indirectly."
59 The learned counsel appearing for the petitioner placed strong reliance on one decision of the Kerala High Court delivered by Justice K.T. Thomas (as His Lordship then was), in which, His Lordship took the view that by virtue of Section 319 of the Cr.P.C., the partnership firm can be subsequently impleaded in the complaint. Let me look into the judgment closely. It is a short judgment of eight paras. I deem fit to quote the entire judgment:
1. The petitioner is a firm. On the strength of some cheques said to" have been issued by the petitioner-firm, two complaints have been filed against the managing partner of the firm for the offence under Section 138 of the Negotiable Instruments Act, 1881 (for short "the Act"). The first complaint was filed on November 23, 1991, and the other was filed on June 28, 1991. The managing partner of the firm, after entering appearance, raised a contention in the lower court that prosecution against him is not maintainable as the firm which drew the cheques was not made an accused in the complaints. On November 6, 1992, the complainant filed a petition in each case praying for impleading the firm as additional accused. Though the petitions were stoutly resisted, the Chief Judicial Magistrate before whom the complaints were filed, allowed the petitions by the impugned order.
2. Two main contentions have been advanced by learned counsel for quashing the order. The first is that since there is no provision in the Act for impleading a new accused in the case, the court cannot have recourse to the general provisions contained in the Code of Criminal Procedure, 1973 Page 15 of 29 HC-NIC Page 15 of 29 Created On Tue Aug 15 20:59:12 IST 2017 R/CR.MA/29748/2016 JUDGMENT (for short "the Code"). Even otherwise Section 142 of the Act makes it clear that the prosecution proceedings contemplated therein are either untrammelled or unaided by anything contained in the Code, contended counsel. The second contention is that the court is debarred from taking cognizance of the offence against the firm after the expiry of the period of one month from the date of cause of action envisaged in Clause (c) of Section 138 of the Act, and hence the firm cannot be impleaded after the said period.
3. Section 142 of the Act reads as follows :
"Cognizance of offences.--Notwithstanding anything contained in the Code of Criminal Procedure, 1973 (2 of 1974),--
(a) no court shall take cognizance of any offence punishable under Section 138 except upon a complaint, in writing, made by the payee or, as the case may be, the holder in due course of the cheque ;
(b) such complaint is made within one month of the date on which the cause of action arises under Clause (c) of the proviso to Section 138 ;.
(c) no court inferior to that of a Metropolitan Magistrate or a Judicial Magistrate of the first class shall try any offence punishable under Section 138,"
4. Section 4(2) of the Code requires that all offences under any law, other than the Indian Penal Code, 1860, shall also be enquired into or tried and otherwise dealt with according to the provisions of the Code, subject to any other enactment which requires a different mode of trial for such offence. The non-obstante clause in Section 142 of the Act is intended to make it clear that the three matters specified in the section have overriding effect on the provisions of the Code. The clause does not keep the provisions of the Code away from trial or inquiry into the offence under Section 138 of the Act as for all other purposes. All that Section 142 restricts is that for taking cognizance of the offence under Section 138 a written complaint (made by Page 16 of 29 HC-NIC Page 16 of 29 Created On Tue Aug 15 20:59:12 IST 2017 R/CR.MA/29748/2016 JUDGMENT either the payee or the holder in due course) within one month of the cause of action envisaged in Clause (c) of the section is the sine qua non, whatever be the provisions in the Code. The contention that the non-obstante clause in Section 142 is intended to sweep out all the provisions of the Code bell, book and candle is, therefore, unsound and unsustainable.
5. The second contention seems to be based on the erroneous premise that cognizance taken is against the offender and not of the offence. The prohibition in Section 142 stretches only to the taking of cognizance of any offence. It is now well-settled that a court takes cognizance only of the offence and not of any offender; It was pointed out by the Supreme Court in Raghubans Dubey v. State of Bihar, AIR 1967 SC 1167, 1169, that "once cognizance has been taken by the Magistrate. ... it is his duty to find out who the offenders really are and once he comes to the conclusion that apart from the persons sent up by the police some other persons are involved, it is his duty to proceed against those persons." A Division Bench of this court has followed the said legal position in Asokan v. Narayonan [1972] KLT 728. Subsequently, the Supreme Court reiterated it in Hareram v. Tikaram, AIR 1978 SC 1568.
6. Thus, the legal position is, when once cognizance of the offence was taken, subsequent impleadment of any other person as accused would not affect the judicial process already adopted in taking cognizance of the offence.
7. In the aforesaid context, a reference to Section 319 of the Code, is necessary. Under Sub-section (1), the court is given power to proceed against any other person who appears to have committed any offence for which such person could be tried together with the accused already arraigned in the case. Once the court decides to proceed against such other person then Sub-section (4) will save the earlier act of taking cognizance of the offence. Sub- section (4) says that "the case may proceed as if such person had een an accused person when the court took cognizance of the offence upon which Page 17 of 29 HC-NIC Page 17 of 29 Created On Tue Aug 15 20:59:12 IST 2017 R/CR.MA/29748/2016 JUDGMENT the inquiry or trial was commenced". Hence the stage at which the new accused was brought in the array of the accused has no legal impact on the proceedings.
8. In the result, I dismiss both criminal miscellaneous cases in limine.
60 In M/s. Plywood House (supra), one of the submissions before the learned Single Judge of the Kerala High Court on behalf of the petitioner was that since there was no provision in the Negotiable Instruments Act for impleading a new accused in the case, the Court could not have recourse to the general provisions contained in the Cr.P.C. Such submission was canvassed by the accused to oppose an application filed by the complainant for impleading the firm as an additional accused. The submission was rejected on the ground that Section 142 of the Negotiable Instruments Act itself makes it clear that the prosecution proceedings contemplated therein are either untrammelled or unaided by anything contained in the Code. The learned Judge took the view that the non-obstante clause in Section 142 of the Act is intended to make it clear that the three matters specified in the section have an overriding effect on the provisions of the Code. There cannot be any debate on the proposition of law explained in the decision. The second contention, which was raised, was as regards the prohibition in Section 142 to taking of cognizance of any offence. The submission canvassed was that the Court was debarred from taking cognizance of the offence against the partnership firm after the expiry of the period of one month from the date of cause of action envisaged in clause (c) of Section 138 of the Act, and therefore, the firm could not be impleaded after the said period. Such submission was negatived on the reasoning that the Court takes cognizance only of the offence and not of any offender. The learned Judge observed that when once cognizance of the offence was taken, subsequently impleadment of any other person as accused, would not affect the judicial process already adopted in taking cognizance of the offence. At this stage, I would like to say that the learned Single Judge of the Kerala Page 18 of 29 HC-NIC Page 18 of 29 Created On Tue Aug 15 20:59:12 IST 2017 R/CR.MA/29748/2016 JUDGMENT High Court had no occasion to consider the matter from the angle I am looking at i.e. the legality and validity of the cognizance itself. Let me take note of the fact that when the judgment in the case of M/s. Plywood House (supra) was pronounced, the law was altogether different. The law was that even in the absence of a firm, the partner of the firm could be prosecuted. This proposition of law is no longer good after the pronouncement of the Supreme Court in the case of Aneeta Hada (supra), which I have discussed at length while answering the second question. When the cognizance itself is bad, would the position be saved by virtue of Section 319 (4)(b) of the Code.
61 As observed by the Supreme Court in State of Orissa vs. Sudhansu Sekhar Misra (AIR 1968 SC 647 vide para 13):
A decision is only an authority for what it actually decides. What is of the essence in a decision is its ratio and not every observation found therein nor what logically follows from the various observations made in it. On this topic this is what Earl of Halsbury, LC said in Quinn v. Leathem, 1901 AC 495:
Now before discussing the case of allen v. Floo (1989) A 1 and what was decided therein, there are two observations of a general character which I wish to make, and one is to repeat what I have very often said before, that every judgment must be read as applicable to the particular facts proved, or assumed to be proved, since the generality of the expressions which may be found there are not intended to be expositions of the whole law, but governed and qualified by the particular facts of the case in which such expressions are to be found. The other is that a case is only an authority for what it actually decides. I entirely deny that it can be quoted for a proposition that may seem to follow logically from it. Such a mode of reasoning assumes that the law is necessarily a logical Code, whereas every lawyer must acknowledge that the law is not always logical at all.Page 19 of 29
HC-NIC Page 19 of 29 Created On Tue Aug 15 20:59:12 IST 2017 R/CR.MA/29748/2016 JUDGMENT 62 In Ambica Quarry Works vs. State of Gujarat & Others (1987) 1 SCC 213 (vide para 18), the Supreme Court observed:
The ratio of any decision must be understood in the background of the facts of that case. It has been said long time ago that a case is only an authority for what it actually decides, and not what logically follows from it.
63 In Bhavnagar University vs. Palitana Sugar Mills Pvt. Ltd (2003) 2 SCC 111 (vide para 59), the Supreme Court observed:-
It is well settled that a little difference in facts or additional facts may make a lot of difference in the precedential value of a decision.
64 The endeavour on the part of the learned counsel appearing for the petitioner in the present case all through out the course of his submissions was that when a person is impleaded or added as an accused by virtue of Section 319 of the Code, then by a deeming fiction, he is deemed to be an accused from the day one i.e. from the time when the cognizance was taken by the Court of the offence, and therefore, the partnership firm should be deemed to be an accused. The argument before me is that if the partnership firm is deemed to be an accused, then the Court need not go into the question of the legality and validity of the cognizance.
65 The argument at the first blush appears to be quite attractive, but if considered closely, the same deserves to be rejected.
66 A deeming fiction is a supposition of law that the thing is true without inquiring whether it be so or not, that it may have the effect of truth so far as it is consistent with justice. A deeming provision is made Page 20 of 29 HC-NIC Page 20 of 29 Created On Tue Aug 15 20:59:12 IST 2017 R/CR.MA/29748/2016 JUDGMENT to include what is obvious or what is uncertain or to impose, for the purpose of statute, an ordinary construction of a word or phrase that would not otherwise prevail but, in each case, it would be a separate question as to that what object the Legislature has made on such a deeming fiction.
67 The word deemed is used in various senses. Sometimes, it means generally regarded. At other time, it signifies 'taken prima facie to be', while in other case, it means, 'taken conclusively'. Its various meanings are, - 'to deem' is 'to hold in belief, estimation or opinion'; to judge; adjudge; decide; considered to be; to have or to be of an opinion; to esteem; to suppose, to think, decide or believe on considerations; to account, to regard; to adjudge or decide; to conclude upon consideration. (see Major Law Lexicon by P.Ramanatha Aiyar, 4th Edition 2010 Vol.2) 68 In this connection, I deem it necessary to consider few precedents on the true meaning of the word 'deemed' and 'deeming fiction'.
69 In Consolidated Coffee Ltd. v/s. Coffee Board, Bangalore, reported in AIR 1980 SC 1468, the purpose of the word 'deemed' occurring in Section 5(3) of the Central Sales Tax Act, 1956 came for consideration. The issue that emanated was whether a legal fiction had been created by use of the word 'deemed'. It is fruitful to reproduce what has been exposited by Their Lordships:
"A deeming provision might be made to include what is obvious or what is uncertain or to impose for the purpose of a statute an artificial construction of a word or phrase that would not otherwise prevail, but in each case it would be a question as to with what object the legislature has made such a deeming provision. In St. Aubyn and Ors. v/s. Attorney General, 1952 A.C. 15 at p.53 Lord Radcliffe observed thus:
"The word 'deemed' is used a great deal in Page 21 of 29 HC-NIC Page 21 of 29 Created On Tue Aug 15 20:59:12 IST 2017 R/CR.MA/29748/2016 JUDGMENT modern legislation. Sometimes it is used to impose for the purposes of a statute an artificial construction of a word or phrase that would not otherwise prevail. Sometimes it is used to put beyond doubt a particular construction that might otherwise be uncertain. Sometimes it is used to give a comprehensive description that includes what is obvious, what is uncertain and what is, in the ordinary sense, impossible."
70 In State of Tamil Nadu v. M/s. Arooran Sugars Ltd., reported in AIR 1997 SC 1815, a Constitution Bench, while dealing with the deeming provision in a statute, opined that the role of a provision in a statute creating legal fiction is well settled. Their Lordships referred to the decisions in East End Dwellings Co. Ltd. v/s. Finsbury Borough Council, 1952 AC 109, Chief Inspector of Mines v/s. Karam Chand Thapar, AIR 1961 SC 838, J.K. Cotton Spinning and Weaving Mills Ltd. v/s. Union of India, AIR 1988 SC 191, M. Venugopal v/s. Divisional Manager, Life Insurance Corporation of India, AIR 1994 SC 1343 and Harish Tandon v/s. Addl. District Magistrate, Allahabad, AIR 1995 SC 676, and came to hold that when a statute creates a legal fiction saying that something shall be deemed to have been done which in fact and truth has not been done, the Court has to examine and ascertain as to for what purpose and between which persons such a statutory fiction is to be resorted to and thereafter the courts have to give full effect "6. ... It is a well known principle of construction that in interpreting a provision creating a legal fiction, the Court is to ascertain for what purpose the fiction is created, and after ascertaining this, the Court is to assume all those facts and consequences which are incidental or inevitable corollaries to giving effect to the fiction. But in so construing the fiction it is not to be extended beyond the purpose for which it is created, or beyond the language of the Section by which it is Page 22 of 29 HC-NIC Page 22 of 29 Created On Tue Aug 15 20:59:12 IST 2017 R/CR.MA/29748/2016 JUDGMENT created..."
71 From the aforesaid pronouncements, the principle discernible is that, it is the bounden duty of the court to ascertain for what purpose the legal fiction has been created. It is also the duty of the Court to imagine the fiction with all real consequences and instances unless prohibited from doing so. That apart, the use of the term deemed has to be read in its context and further the fullest logical purpose and import are to be understood. It is because in modern legislation, the term deemed has been used for manifold purposes. The object of the Legislature has to be kept in mind. (See Andaleeb Sehgal v/s. Union of India and another, AIR 2011 Delhi 29(FB)).
72 I am of the view that by virtue of a legal fiction, it cannot be said that on the date of filing of the complaint, the Court was justified in taking cognizance and issue process against the partners in the absence of the legal entity and no fault could be found so far as the legality and validity of the cognizance is concerned. The legal fiction is altogether for a different purpose and it should not be brought in aid of curing a serious defect or infirmity in the complaint or the order taking cognizance. When Sub-section (4)(b) of Section 319 of the Code says that it will be presumed that the newly added person had been an accused person when the Court took cognizance of the complaint upon which the inquiry or trial was commenced, the same indicates that the Court is not empowered to take cognizance of any fresh offence if any accused is impleaded by invoking Section 319 and the newly added accused could be tried only for the offence already taken cognizance against the other accused.
73 The policy of the Code is that the offence can be taken cognizance of once only and not repeatedly upon discovery of further particulars. In a given case, the complainant may not even know the names and other particulars of the offenders, and it would, Page 23 of 29 HC-NIC Page 23 of 29 Created On Tue Aug 15 20:59:12 IST 2017 R/CR.MA/29748/2016 JUDGMENT therefore, be sufficient for him to lodge a complaint making the persons who are known as the accused. When such a trial proceeds against the known accused, if the evidence led in trial discloses offences committed by other persons who could be tried along with the accused, then there need not be a fresh complaint and fresh order of cognizance against those persons. I reiterate that the complaint was liable to be dismissed on the very first day of its presentation and no process could have been issued against the partners in the absence of the partnership firm.
74 My view is fortified by a decision of the Madras High Court in the case of Suryanarayan v. Anchor Marine Service [1995 (1) Bank Case 466]. A learned Single Judge of the High Court observed in paras 6, 7 and 8 as under:
6. The wording in the section "as well as the company shall be deemed to be guilty of the offence and shall be liable to be proceeded against makes it clear that the company also shall be prosecuted along with the others, who were in charge of the company. Therefore, if the company has not been impleaded as an accused in the proceedings, it will not be in compliance with Section 141 of the Negotiable Instruments Act, 1881, and, therefore, the prosecution is not sustainable against the directors or persons in the administration of the company as held in the decisions cited above.
7. Learned counsel for the respondents placed another submission that the complainant is always entitled to implead the other accused in the course of the proceedings under Section 319 of the Code of Criminal Procedure, and, therefore, now he may be permitted to implead the company also as one of the accused and if the company is brought on record, the present infirmity gets cured, and, therefore, the prosecution cannot be quashed.
Section 319 of the Code of Criminal Procedure, no doubt permits for impleading another accused in the course of the enquiry or trial when it appeared Page 24 of 29 HC-NIC Page 24 of 29 Created On Tue Aug 15 20:59:12 IST 2017 R/CR.MA/29748/2016 JUDGMENT from the evidence that another person also has committed offence and he also should be tried together with the other accused. Learned counsel for the respondent relies upon the decision in U.P. Pollution Control Board v. Modi Distillery [1988] 63 Comp Cas 77; AIR 1988 SC 1123, in support of his argument. The decision cited above is about the right of the complainant to set right the technical flaw by amending the complaint. But learned senior counsel for the petitioner, Mr. N. T. Vanamamalai, would contend that that was a case in which the company also was impleaded as a party, but the company was wrongly described as the industrial unit, wilfully failed to furnish the requisite information to the complainant therein, and, therefore, the amendment was permitted. The apex court observes that the industrial unit having failed to furnish the correct description of the company, it was not open to them to take advantage of their own lapses to quash the proceedings alleging that the company was not properly described. So, in that case, the company was impleaded as a party but the description of the company was found to be a mistake, and, therefore, the apex court observed that this technical flaw of describing the name of the company can be rectified by amending the complaint. Therefore, that decision will not come in support of the respondent's contention because in this case, the respondent has deliberately omitted to implead the company. According to the learned senior counsel, Mr. Vanamamalai, the defect in this case, is a serious legal infirmity in the complaint itself, and, therefore, when the complaint itself has the initial defect, the proceedings cannot be allowed to continue against the petitioner. He also draws support from the decision in Delhi Municipality v. Ram Kishan, , wherein the Supreme Court observes that it is manifestly clear that proceedings against an accused in the initial stage can be quashed only if on the basis of the complaint or the papers accompanying the same, no offence is constituted. In other words, the test is that taking the allegations in the complaint, as they are, without adding or subtracting anything, if no offence is made out, then the High Court will be justified in quashing the proceedings in exercise of Page 25 of 29 HC-NIC Page 25 of 29 Created On Tue Aug 15 20:59:12 IST 2017 R/CR.MA/29748/2016 JUDGMENT its powers under Section 482 of the present Code. In the above view of the Supreme Court, the maintainability of the proceedings against a particular accused has to be considered without adding or subtracting anything in the complaint.
8. Now it is found that without impleading the company, the present complaint against the petitioner is not sustainable. Therefore, when the complaint has the initial defect in its sustainability, the defect cannot be cured by amending the proceedings. Section 319 of the Code of Criminal Procedure, no doubt permits for impleading any other accused, who was party to the commission of the offence. But impleading such co-accused under Section 319 of the Code of Criminal Procedure will not have any bearing as to the maintainability of the proceedings against other accused. Section 319 of the Code of Criminal Procedure is not intended for curing the infirmity in the proceedings but only to bring all the culprits before the court when their role in the commission of the offence was brought to light only after the evidence before court. Such is not the position in this case. The respondent had deliberately omitted to implead the company in the complaint though Section 141 of the Negotiable Instruments Act, 1881, emphasizes that the company also shall be an accused. When the proceedings has legal infirmity in its initiation itself, the respondent is not entitled to invoke Section 319 of the Code of Criminal Procedure because on the date of the complaint, it was not maintainable against the petitioner. Therefore, accepting the contention of the learned senior counsel, Mr. N. T. Vanamamalai, the proceedings against the petitioner have to be quashed.
The view taken by the learned Single Judge of the Madras High Court is quite commendable, and I propose to adopt the same line of reasoning.
75 Suryanarayan (supra) later came to be followed by the Madras High Court in the case of Anandan v. Arivazhagan [1999 (96) Company case 503]. A learned Single Judge observed in paras 7, 8 and 9 as Page 26 of 29 HC-NIC Page 26 of 29 Created On Tue Aug 15 20:59:12 IST 2017 R/CR.MA/29748/2016 JUDGMENT under:
7. It is not in dispute that the cheque was issued by the first petitioner as managing partner of K. S. Muthu Constructions for the liability to the complainant. Learned counsel, Mr. Dhanyakumar, relying upon certain decisions of the Kerala High Court, would contend that when the court has taken cognizance of the offence against a partner, it will not affect the proceedings for the failure to implied the other accused including the company. In Alex v. Vijayan [1994] 81 Comp Cas 910 (Ker); [1993] MWN 192, the Kerala High Court has held that when the managing partner of a firm was prosecuted under Section 138 of the Negotiable Instruments Act for the dishonour of the cheque issued by the managing partner and without impleading the partnership, the partners alone were prosecuted, the complaint is maintainable against the partners alone. Following this decision, the same court in M.O.H. Iqbal v.
Uthaman (M) [1995] 82 Comp Cas 726; [1993] MWN 146, also repeated the same view that the complaint against the partners is maintainable without impleading the company under Section 138 of the Negotiable Instruments Act. In Plywood House v.
Woodcraft Products Ltd. [1993] MWN 140; [1997] 88 Comp Cas 565 the Kerala High Court has again held that when the managing partner was prosecuted for the offence under Section 138 of the Negotiable Instruments Act without impleading the partnership, the partnership can be impleaded subsequently also as when once the cognizance of the offence was taken by the court, the subsequent impleadment of another person as accused, would not affect the judicial process as it has already commenced by taking cognizance. But these views of the Kerala High Court have not been accepted by this court in a series of decisions and this court has taken a consistent view that a complaint under Section 138 of the Negotiable Instruments Act is not sustainable Page 27 of 29 HC-NIC Page 27 of 29 Created On Tue Aug 15 20:59:12 IST 2017 R/CR.MA/29748/2016 JUDGMENT without complying with the mandatory provision, viz., Section 141 of the Negotiable Instruments Act, without impleading the company or the partnership and when there was defect even in the initial stage in the initiation of the proceedings itself, that cannot be cured by impleading the company or partnership subsequently.
8. This court in Suryanarayan v. Anchor Marine Service [1998] 94 Comp Cas 874 (Mad); [1995] 1 LW (Crl.) 132, following the previous decisions of this court, has held that the prosecution is not sustainable against the directors of a company without impleading the company itself. As a matter of fact, this court has considered the views taken by the Kerala High Court in Alex v. Vijayan [1994] 81 Comp Cas 910; [1993] MWN 192, which were followed in the later decision in M.O.H. Iqbal v. Utharnan (M) [1995] 82 Comp Cas 726 and this court has not followed the view of the Kerala High Court. Therefore, the respondent is not entitled to contend that the complaint is maintainable even without the partnership K. S. Muthu Constructions.
9. Then coming to the next point with regard to the curable aspect of the defect in the complaint, by invoking Section 319 of the Code of Criminal Procedure, this court, in the above decision, following the view taken by the apex court in Delhi Municipality v. Ramkishan, , has held that when the complaint has the initial defect in its sustainability, the defect cannot be cured by amending the proceedings under Section 319 of the Code of Criminal. Procedure will not come to the rescue for such defects. Learned counsel for the respondent cited the decision of the apex court in U.P. Pollution Control Board v. Modi Distillery, to support his argument for the right to amend the complaint. This decision also has been distinguished in the above decision of this court and this court has held that the amendment to implied the company cannot be ordered. Therefore, as the view of this court is that the company or partnership cannot be subsequently Page 28 of 29 HC-NIC Page 28 of 29 Created On Tue Aug 15 20:59:12 IST 2017 R/CR.MA/29748/2016 JUDGMENT impleaded to set right the defect in the proceedings, the respondent/complainant is not entitled to seek for amendment of the complaint. So, as on today, the proceedings under Section 138 of the Negotiable Instruments Act against the petitioners is defective for the non-prosecution of K. S. Muthu Constructions. Hence, the petitioners alone cannot be prosecuted for the alleged offence and for this non-compliance with the provision, the petitioners are certainly entitled to be discharged. Though the grounds raised before the lower court do not confer a right for discharge of the petitioners, the point raised in this court by the revision petitioners certainly enables them to be discharged from the proceedings. "
5. The Trial Judge shall dispose of the application filed by the applicant under section 319 of the Cr.P.C. keeping in mind the decision of this Court referred to above.
6. In the result, both the applications succeed and are hereby allowed. The proceedings of the Criminal Case No.7674 of 2015 and Criminal Case No.7675 of 2015 pending in the court of the learned Chief Judicial Magistrate, Ahmedabad are quashed so far as the applicant herein is concerned. Rule is made absolute to the aforesaid extent.
Direct service is permitted.
(J.B.PARDIWALA, J.) Vahid Page 29 of 29 HC-NIC Page 29 of 29 Created On Tue Aug 15 20:59:12 IST 2017