2005 (1) TMI 727 - HC - Indian Laws

Summary

Issues Involved:
1. Maintainability of the petition under Section 482, Cr.P.C.
2. Liability of accused 11 and 12 under Section 138 of the Negotiable Instruments Act.
3. The propriety of splitting the case against accused 1 to 9.
4. The requirement of prosecuting the company along with its officers.
5. The application of legal precedents and statutory provisions.

Issue-Wise Detailed Analysis:

1. Maintainability of the petition under Section 482, Cr.P.C.:
The petitioners sought relief under Section 482, Cr.P.C. to call for records and set aside the orders of the lower courts. The High Court examined whether the application filed by the petitioners under Section 255, Cr.P.C. seeking acquittal was maintainable. It was argued that the Magistrate can only acquit the accused after evaluating the evidence, not through an application under Section 255, Cr.P.C. The court held that the application under Section 255, Cr.P.C. seeking discharge was not maintainable.

2. Liability of accused 11 and 12 under Section 138 of the Negotiable Instruments Act:
The petitioners, accused 11 and 12, argued that they were merely signatories and employees of the company and should not be held liable. They contended that without a finding of guilt against the company and other directors (accused 1 to 9), they could not be held responsible. The court referred to Section 141 of the Negotiable Instruments Act, which deems every person in charge of and responsible for the conduct of the business of the company guilty of the offence. The court emphasized that it is for the accused to prove that the offence was committed without their knowledge or that they exercised due diligence to prevent it.

3. The propriety of splitting the case against accused 1 to 9:
The trial court had split the case against accused 1 to 9 due to the non-execution of non-bailable warrants. The High Court criticized this approach, stating that the trial court should have directed the complainant to pursue substituted service methods like paper publication to ensure the presence of all accused. The court held that the order of splitting the case was improper and needed to be quashed.

4. The requirement of prosecuting the company along with its officers:
The petitioners argued that the guilt of the company is a condition precedent for holding them liable. The court referred to the ruling in Anil Hada v. Indian Acrylic Ltd., which established that even if the company is not prosecuted due to legal constraints, proceedings against the responsible officers can continue. The court clarified that while the prosecution of the company is not a sine qua non, a finding that the company committed the offence is essential for convicting the officers.

5. The application of legal precedents and statutory provisions:
The court referred to several precedents, including STATE OF KARNATAKA v. NARASA REDDY and SHEORATON AGARWAL AND ANR. v. STATE OF MADHYA PRADESH, to reinforce the principles regarding the prosecution of company officers. The court reiterated that the burden lies on the accused to prove their non-involvement in the offence under the proviso to Section 141 of the Negotiable Instruments Act.

Conclusion:
The High Court set aside the order of splitting the case against accused 1 to 9 and directed the complainant to take steps to proceed against all accused, including accused 11 and 12. The court emphasized that the trial should be conducted against all responsible parties to determine their liability comprehensively. The petitioners were granted the liberty to present their defense to establish their innocence in the conduct of the company's business.