2021 (6) TMI 438 - HC - Indian Laws

Dishonor of Cheque - petitioners were neither signatories to the cheque nor parties to the agreements - Partner of the partnership firm - territorial jurisdiction of the Learned Magistrate - Section 138 read with Section 141 of the Negotiable Instruments Act - Whether the averments made in the petition of complaint are sufficient to arraign the present petitioners as accused? - HELD THAT - In the present case, averments were made at paragraph 3 of the petition of complaint that all the accused including the present petitioners were partners of the said firm looking after its day to day business affairs and responsible for each and every business conducts at the relevant time when the offence was committed. Looking after its day to day business affairs as partners and responsible for each and every business conducts of the firm at the relevant time are clearly equivalent to being in charge of and responsible to the concern for the conduct of its business - after going through the petition of complaint and reading it as a whole, this Court is of the view that sufficient averments of facts were made in the instant petition of complaint so as to arraign the present petitioners as accused in this case. Compliance of Section 202 of the Code of Criminal Procedure - HELD THAT - It appears that no enquiry, in clear terms, was undertaken by the learned Trial Court as per the amended provision of Section 202 of the Code despite the fact that the accused petitioners were admittedly staying beyond the territorial jurisdiction of the learned Trial Court. As the law requires that an enquiry be held under Section 202 of the Code if the accused stayed outside the Court s jurisdiction, such enquiry has to be undertaken in clear terms and the Learned Trial Court, after making such enquiry whether by taking evidence on affidavit or by restricting the enquiry to examination of documents or not, is required to decide whether there are sufficient grounds to issue process against the accused - the order issuing process and the subsequent orders passed by the learned Trial Court in the present case ought to be set aside and the matter remanded back so that the learned Trial Court can proceed afresh from the stage of enquiry under Section 202 of the Code. Since no mandatory enquiry was undertaken in clear terms under Section 202 of the Code even through the accused resided beyond the territorial jurisdiction of the learned Trial Court, the order issuing process and the subsequent orders passed by the learned Trial Court are set aside and the matter is remanded back to the learned Trial Court for proceeding afresh from the stage of enquiry as contemplated under Section 202 of the Code - Appeal allowed by way of remand.

Summary

Issues Involved:
1. Sufficiency of averments in the petition of complaint to arraign the petitioners as accused.
2. Compliance with Section 202 of the Code of Criminal Procedure.

Detailed Analysis:

1. Sufficiency of Averments in the Petition of Complaint:

The petitioners argued that they were neither signatories to the cheque nor parties to the agreements in question. They contended that the complaint lacked specific averments regarding their roles, merely stating that all accused were partners responsible for the firm's business affairs. This, according to the petitioners, did not meet the requirements set by the Supreme Court in SMS Pharmaceuticals Limited vs. Neeta Bhalla & Anr., which mandates specific averments about the accused's role.

The complainant countered that sufficient averments were made in the complaint, stating the petitioners were partners looking after the firm's day-to-day business, which is equivalent to being "in charge of" and responsible for the firm's business. The complainant cited several Supreme Court decisions, including K.P.G. Nair vs. Jindal Menthol India Limited and Monaben Ketanbhai Shah vs. State of Gujarat, to support that no specific form of words is required to show involvement.

The court noted that merely being a partner does not make one liable under Section 138 of the Negotiable Instruments Act. However, it agreed with the complainant that the averments in the complaint were sufficient. The court referred to the Supreme Court's decision in A.K. Singhania vs. Gujarat State Fertilizer Company Limited, which emphasized that no specific form of averments is prescribed, and the substance of the accusation is sufficient if it shows the accused were in charge of and responsible for the firm's business.

2. Compliance with Section 202 of the Code of Criminal Procedure:

The petitioners argued that there was non-compliance with Section 202 of the Code, as no enquiry was conducted despite the accused residing outside the territorial jurisdiction of the trial court. They cited several Supreme Court decisions, including National Bank of Oman vs. Barakara Abdul Aziz & Anr., to support their contention that such an enquiry is mandatory.

The complainant, however, relied on the Division Bench decision in S.S. Binu vs. State of West Bengal, which held that compliance with Section 202 is not mandatory for offences under Section 138 read with Section 141 of the Negotiable Instruments Act.

The court observed that the trial court did not conduct an enquiry as required under Section 202, despite the accused residing outside its jurisdiction. It referred to the Supreme Court's Constitution Bench decision in Re: Expeditious trial of cases under Section 138 of N.I. Act, 1881, which mandates an enquiry under Section 202 when the accused resides beyond the court's jurisdiction.

Conclusion:

The court found the averments in the complaint sufficient to arraign the petitioners as accused. However, it noted the trial court's failure to conduct a mandatory enquiry under Section 202 of the Code. Consequently, the court set aside the order issuing process and subsequent orders, remanding the matter back to the trial court to proceed afresh from the stage of enquiry under Section 202. The court also requested the trial court to conclude the proceedings expeditiously. The prayer for quashing the proceeding was refused, and no order as to costs was made.