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TMI Blog1998 (4) TMI 429X X X X Extracts X X X X X X X X Extracts X X X X ..... is a company engaged in the manufacture and export of certain drugs. For importing the raw materials, MCPL entered into an agreement with the MMTC and a memorandum of understanding was drawn up between them on June 1, 1994, which was later on altered to some extent by addendum to the memorandum of understanding on September 17, 1994. The important conditions under the memorandum of understanding are that the MCPL should export the required raw materials through MMTC and after the manufacture of the drugs, the export orders should be made in the name of MMTC or MCPL, that the respondent-MCPL should open the letters of credit in the name of MMTC and also execute the pronote to the value of the materials towards the security at the value of the raw materials imported by the MMTC and that the letters of credit and the promissory notes will get discharged automatically if MCPL exports the manufactured drugs within the prescribed time, otherwise the MMTC will be entitled to encash the cheques. With this understanding, MCPL issued two cheques, one dated October 31, 1994, to the value of Rs. 20,26,975 and another dated November 10, 1994, to the value of Rs. 22,17,156. Subsequently also, du ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed Crl. M.P. No. 1770 of 1996 contending that they are public servants as defined under the Indian Penal Code and without the sanction of the Government, they cannot be prosecuted and they should be discharged. A similar petition was filed by the other accused in C.C. No. 5232 of 1995, in Crl. M.P. No. 1056 of 1996, contending that as the MMTC is owned by the Union of India, in view of their employment in the MMTC, they are also public servants, that without the sanction of the Government, the complaint against them is not maintainable and they should be discharged. The learned VIIth Metropolitan Magistrate, who heard both the petitions filed by the employees of the MMTC has found that the director, who is arrayed as the eleventh accused in C.C. No. 5232 of 1995, was appointed by the President of India, whereas all others including the fifth accused were appointed by the office bearers of the MMTC who can be removed by them and section 197 of the Criminal Procedure Code, 1973, is not attracted for sanction, and, therefore, he dismissed M.P. No. 1056 of 1996, totally and partly M. P. No. 1770 of 1996, relating to the prayer of the fifth accused. As the petitions of the employees of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 652 of 1996. It is thus, these revisions have come before this court. I feel that the revision relating to the sanction to prosecute under section 197 of the Criminal Procedure Code, 1973, Crl. R.C. Nos. 450, 578 and 579 of 1996, can be first taken up for consideration. As mentioned above, Crl. R.C. No. 450 of 1996 is against the order of discharge of the eleventh accused whereas Crl. R.C. Nos. 578 to 579 of 1996 are against the dismissal of the petitions to discharge the other employees of the MMTC, the revision petitioner. It is not in dispute that the revision petitioner, MMTC, is a company owned by the Government of India. The employees of the company, relying upon the definition of "public servant" in clause ( b ) of the twelfth category to section 21 of the Indian Penal Code, 1860, which reads, "Every person ... ( b ) in the service or pay of a local authority, a corporation, established by or under a Central, provincial or State Act or a Government company as defined in section 617 of the Companies Act, 1956," is a public servant, filed the petitions before the learned magistrate that they cannot be prosecuted unless the sanction was obtained from the Government of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he board of directors or from all meetings of the board for a continuous period of three months, whichever is longer, without obtaining leave of absence from the board; ( f )he fails to disclose the nature of his concern or interest in any contract or arrangement, or proposed contract or arrangement, entered into or to be entered into by or on behalf of the company as required under section 299 of the Act; ( g )he becomes disqualified by an order of court under section 203 of the Act ; ( h )he is removed in pursuance of section 284 of the Act..." Section 284 of the Companies Act is relating to the removal of the directors and it reads: "284. Removal of directors ( 1 ) A company may by ordinary resolution, remove a director (not being a director appointed by the Central Government in pursuance of section 408) before the expiry of his period of office:" So, the director of the company can be removed by ordinary resolution. It is these powers that are referred to in article 87(6)( b ) of the articles of association of the revision petitioner. No doubt, there is an exception in section 284 of the Companies Act itself that the director appointed by the Central Governmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and the employees of such a company or corporation are not Government servants. Even though as per the definition under section 21 of the Indian Penal Code, such persons can be public servants, they cannot be Government servants for the purpose of obtaining sanction under section 197 of the Criminal Procedure Code. Learned senior counsel, Mr. Natarajan, citing two decisions, viz., Dr. A.S. Rao, Managing Director, E.C.I.L. v. C.N.N. Kutty [1977] 2 APLJ 219 and N.N. Pillai v. P.V.R. Kutty Menon [1979] APLJ 269, contended that accused No. 11 having been appointed as director by the President of India, sanction under section 197 of the Criminal Procedure Code, is required. In the first case, the managing director of Electronics Corporation of India, which is a Central Government owned company, was found to be a public servant and sanction was required to prosecute him. No doubt, the managing director of the company was also appointed by the President of India. The judgment reads that the President appoints the chairman, managing director and the other directors of the corporation and he alone removes them. So the appointment and removal were in the hands of the President of I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . N. Natarajan, learned senior counsel, would contend that section 258 of the Criminal Procedure Code is attracted only to the summons case instituted otherwise than upon a complaint, that is cases filed by the police, but in this case though the offence under section 138 of the Negotiable Instruments Act will be tried as a summons case, as it is a private complaint, section 258 of the Criminal Procedure Code is not attracted and, therefore, the learned magistrate stopping the proceedings and discharging the accused under section 258 of the Criminal Procedure Code is a manifest illegality. It is not as if the learned magistrate was not aware that section 258 of the Criminal Procedure Code cannot be invoked in the private complaint. Being fully conscious of this position, the learned magistrate has taken support from the decision of this court in Jameel Khan, Proprietor, Oriental Leather Export v. Thomas Cook India Ltd. [1995] 1 LW (Crl.) 277 , wherein this court has expressed the view that the accused is entitled to plead for discharge, even of the complaints filed under section 138 of the Negotiable Instruments Act. But, unfortunately, the learned magistrate has not understood ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... applicable as the materials in the four complaints of the revision petitioner definitely make out the offence. But Mr. K.V. Sridharan, learned counsel, would submit that in this case, three witnesses on the side of the prosecution have been examined, that though the learned magistrate has used the word "discharge", it has to be treated as acquittal after full trial of the case and, therefore, the order of acquittal by the learned magistrate is perfectly valid. Learned counsel has cited a series of decisions in support of his argument that the order of discharge can be treated as an order of acquittal. He relied upon the decision in Palchami v. Paramasiva Gounder, AIR 1958 Mad 197, wherein this court has held that when the trial court cannot pass an order of discharge in a summons case, but it has discharged the accused, it is an acquittal. In Public Prosecutor v. Hindustan Motors, AIR 1970 AP 176, also, the Andhra Pradesh High Court has held that when the trial magistrate had wrongly followed the summons procedure, though there cannot be any discharge in this case, the order of discharge is actually an acquittal of the case. In Amritsar Municipality v. Labbu Ram [197 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... magistrate was justified in passing this order of acquittal. It is to kept in mind that the prosecution has examined three witnesses and marked fourteen exhibits to substantiate the offence under section 138 of the Negotiable Instruments Act. No cross-examination of the witnesses was made to discredit the testimony of these witnesses or the documents placed before the court. The learned magistrate also has not observed in his order that the witnesses are not reliable or the documents are fabricated and the offences against the respondent/accused are not proved. On the other hand, he has gone into the question of maintainability of the complaints from the allegations made in Crl. M.Ps. Nos. 2377 to 2380 of 1996. He has found that a single complaint has been filed in each of the cases by two complainants and such complaints are not contemplated under the Code of Criminal Procedure, and, therefore, the accused party cannot be prosecuted. He has given another reason that the senior manager, Mr. Lakshman Goyal, has filed the complaints as though he was authorised to file the complaints but in Crl. M.P. Nos. 1058 to 1062, 1057 and 1059 of 1996, one Sampath Kumar had filed the complaints ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d., represented by its senior manager, Mr. Lakshman Goyal. The company is the complainant and the human agency, viz ., its senior manager, has represented this company. Even though different addresses are given, one a Bombay address and the other a Madras address, the complainant, viz ., the company, and the person who represents the company, are repeated twice in the complaint. Therefore, it cannot be treated that it is a joint complaint by two persons. In view of the fact that the company presented the cheques for encashment at Madras, the complainant's name is repeated twice in the complaints. There is no dispute with regard to the identity of the two names given in the complaint describing them as complainants. The learned magistrate has not found that those two names, refer to two different companies or different legal entities unconnected with each other. As mentioned above, the name of the company as well as the person representing the company is the same though repeated twice for the reason that the cheques were presented by the Madras office. Suppose a complainant's name is repeated twice in the complaint, when admittedly it refers to the same person, can that be said th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and these complaints were filed by Lakshman Goyal detrimentally to the interest of the company. In Ruby Leather Exports v. K. Venn [1994] I LW (Crl.) 34; [1995] 82 Comp Cas 776 (Mad) also this court has held that the power of attorney of a company or as the case may be, the holder in due course of the cheque, can file the complaint unless any statutory provision prescribes any special qualification or eligibility criteria for setting the criminal law in motion. It is also the view of this court in that decision that no court can decline to take cognizance of a complaint on the sole ground that the complainant was not competent to file the complaint. In the complaints itself, it is mentioned that Lakshman Goyal was the senior manager authorised to give the complaints and it cannot be disputed that he is one connected with the affairs of the company. Under those circumstances, the learned magistrate was not right in holding that the complaints by Mr. Lakshman Goyal were not maintainable. The other ground considered by the learned magistrate is that all the four cheques mentioned in the four complaints were issued as security along with indemnity bonds and only in the event of c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rsement. No doubt, PW-1 in his evidence has stated that they intimated to the accused about their intention to present the cheques for encashment and the accused party over the phone requested some time for payment of the amount. Mr. K. V. Srid-haran, learned counsel, contended that the Supreme Court in Electronics Trade and Technology Development Corporation Ltd. v. Indian Technologists and Engineers (Electronics) Pvt. Ltd. [1996] 86 Comp Cas 30; [1996] 1 LW (Crl.) 325, has observed that after the cheque is issued to the payee, or to the holder in due course and before it is presented for encashment, if notice is issued to him not to present the same for encashment and yet the payee or holder in due course presented the cheque to the bank for payment and when it is returned on instructions, section 138 of the Negotiable Instruments Act does not get attracted. But this view of the two honourable judge-Bench has been differed by a larger Bench of the apex court in Modi Cements Ltd. v. Kuchil Kumar Nandi [1998] 92 Comp Cas 88 (SC). In this decision, the larger Bench has observed as follows (page 93): " once the cheque is issued by the drawer, a presumption under section 139 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mplied with, they had the right to present the cheques. It is not as if the memorandum of understanding is exclusively in the custody of the complainant. On the other hand, both parties are having copies of memorandum of understanding and if the evidence of PW-1 is not correct, the accused, who are having copies of the memorandum of understanding were entitled to bring it to the notice of PW-1 as to how he did not give the correct particulars of the transaction. Therefore, the criticism levelled against the complainant for not producing the memorandum of understanding is quite uncharitable. So, the reasons given by the learned metropolitan magistrate, though for discharge of the accused, even if treated as reasons for acquittal, there are no materials sufficient to hold that the complaints made by the revision petitioner are not maintainable, so as to acquit the accused party, even without giving an opportunity to the accused to cross-examine the witnesses. Having examined the three witnesses, the learned magistrate could have completed the trial by allowing the accused to cross examine the witnesses. But with undue haste, giving importance to the criminal miscellaneous petitions ..... X X X X Extracts X X X X X X X X Extracts X X X X
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