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TMI Blog2017 (10) TMI 1234X X X X Extracts X X X X X X X X Extracts X X X X ..... 319 only when she knew that as per Aneeta Hada’s decision (2012 (5) TMI 83 - SUPREME COURT OF INDIA ), the complaint would become void and untenable in law. The Trial Court failed to appreciate that powers could have been exercised where it is difficult to ascertain as to who exactly committed the offence. In a technical offence like Section 138 of N.I.act, the offender is known to the complainant but is not arraigned as an accused, then in such eventuality, the company cannot be arraigned as an accused at a later stage to circumvent the decision of Supreme Court. It is pertinent to note that offence u/s 138 of N.I.Act is qua the drawer of the cheque. The cognizance can be taken within the time limit prescribed under the Act. The order passed by the Trial Court is against the settled principles of law. The cases relied upon by learned advocate for respondent no.2 were delivered in distinct facts and are not applicable in the present case, also contrary to the recent decision in case of N.Harihara Krishnan Vs. J.Thomas (2017 (9) TMI 1 - SUPREME COURT OF INDIA ). In the said decision it has been observed that failing to comply with the steps contemplated u/s 138 of N.I.Act, woul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nal capacity or in the capacity as signatory of M/s.Harvest Financials Limited; (b) The complainant gave personal loan of ₹ 1.80 lakh to the accused and in consideration, the accused gave post dated cheque dated 20th October 1997 drawn on Oman International Bank; (c) The said cheque was deposited by the complainant with his bank which was returned with remark account closed vide memo dated 28th October 1997. In spite of request and reminders, the accused failed to repay the money of the complainant. The complainant issued notice to the accused demanding the said amount which was received by the accused. The accused through his advocate replied the said notice and tried to disown the liability. The complainant, therefore, filed a complaint before the Court of Metropolitan Magistrate, at Bandra, Mumbai, on 18th December 1997. 3. Learned Magistrate recorded verification statement of the complainant. In the said statement, it was stated that the accused is the Vice Chairman and Managing Director of M/s.Harvest Financials Limited. He is responsible for conduct of the business of M/s.Harvest Financials Limited. In the ordinary course of the business, the accused issued c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in these applications under Section 319 of Cr.P.C; the respondent no.2 had submitted before this Court during the hearing of said applications, that the respondent no.2 had preferred an application under Section 319 of Cr.P.C which was pending before the Trial Court and the same cannot be decided in view of interim stay granted by this Court. This Court by order dated 8th June 2015 relaxed the order of stay to the extent that learned Magistrate was directed to decide the applications preferred by respondent no.2 under Section 319 of Cr.P.C. Learned Magistrate vide order dated 7th October 2015 allowed the applications under Section 319 of Cr.P.C and permitted the complainant to implead the company viz. M/s.Harvest Financials Limited as accused no.1 and to carry out necessary amendment in the complaint. In view of the aforesaid circumstances, the applications preferred by the applicant before this Court, were withdrawn with liberty to prefer fresh applications challenging the complaint as well as order dated 7th October 2015 passed by the Trial Court under Section 319 of Cr.P.C. By order dated 5th April 2016, the applications were disposed off as withdrawn with leave and liberty as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... no.2 is bad in law and the Trial Court has committed error in allowing the same. It is submitted that the issue which fall for determination before the Court was whether a company at such a belated stage can be impleaded as an accused without fulfilling relevant conditions of prosecution under Section 138 of N.I.Act by invoking Section 319 of Cr.P.C. Without fulfilling the mandatory requirements of law, to initiate prosecution under Section 138 of N.I.Act, the Trial Court ought not to have permitted the complainant to implead the company as an accused. It is submitted that the said application was made in view of the decision of Hon ble Supreme Court in case of Aneeta Hada (supra) at a belated stage, which ought not to have been entertained by the Trial Court. It is submitted that the Trial Court has misdirected itself in appreciating the scope of Section 319 of Cr.P.C; more particularly in the facts of the present case. It is submitted that to initiate prosecution under Section 138 of the N.I.Act, there are conditions precedent to be fulfilled viz a notice to be served on the drawer of the cheque and thereafter in the event the drawer fails to make payment as called upon vide the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pplicant has no locus to challenge the order dated 7th October 2015 passed by learned Magistrate under Section 319 of Cr.P.C. As per the said order, the company has been impleaded as accused no.1 and it is for the said company to challenge the said order. It is submitted that no prejudice is caused to the applicant by order passed by the Trial Court under Section 319 of Cr.P.C. The Trial Court has assigned cogent reasons for invoking the powers under Section 319 of Cr.P.C and hence, the said order does not call for interference. It is submitted that the contention of the applicant that he is ceased to be the director of the company, cannot be accepted on a bald statement and it can be at the most agitated during trial. It is submitted that the complaint was filed against the applicant being the Vice Chairman and Managing Director of the company. In the affidavit in evidence filed by the complainant it is stated that towards discharge of the legal debt and liability, the accused on behalf of the company handed over an account payee post dated cheque. The cheque bears the stamp of Harvest Financials Limited. The statement made in the affidavit inevidence is that the drawer of the che ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ignatory of the cheque. It is submitted that the Trial Court has exercised the powers within the purview of Section 319 of Cr.P.C. The applicant cannot take contrary stand. When the company was not a party the grievance was that the matter could not be proceeded on that ground, and now when the company is a party, the contention of the applicant is that the company cannot now be made a party. The ratio in Aneeta Hada s case (supra) is that the company should be made a party. Even assuming that the said decision is applicable in this case, the same is complied with. The decision in Aneeta Hada s case (supra) in any case is not applicable in the present case. 11. Learned counsel for respondent no.2 has relied upon following decisions : (i) Hardeep Singh Vs. State of Punjab and others and group of matters (2014)3-SCC-92; (ii) Gyanendra Singh Vs. State of U.P. And others 2005-CRI.LJ.-2322; (iii) Satish Chand Singhal Vs. The State of Gujarat ors 2008(1)-DCR-440; (iv) Pankajbhai Nagjibhai Patel Vs. State of Gujarat and another. AIR-2001-SC-567 12. I have perused the documents on record. The complaint was filed by respondent no.2 alleging offence un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is the case of the complainant that the company is the drawer of cheque and therefore, in view of the averments in the affidavit in evidence, the Trial Court may exercise powers under Section 319 of Cr.P.C. It was contended by the complainant that the fact that the company is the drawer of the cheque and that the transaction was on behalf of company, is brought on record by affidavit in evidence and, therefore, the application under Section 319 of Cr.P.C is required tobe allowed. The Trial Court while allowing the application has observed that the complainant has examined and filed affidavit in lieu of examination in chief and that the record further discloses that the accused has examined himself who was duly cross examined. The cheque bears the rubber stamp of M/s.Harvest Financials Ltd. and receipt produced by the complainant shows that the same was issued for M/s.Harvest Financials Limited. Thus, prima facie, both the documents show that those are issued for M/s.Harvest Financials Ltd. It is pertinent to note that the cheque was in possession of the complainant, the receipt was also produced by the complainant and the complainant was very well aware that cheque was issued on be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... drawer of the cheque. 15. The Hon ble Supreme Court in the case of Aneeta Hada (supra) has considered the issue relating to maintainability of prosecution against the directors of the company without impleading the company, who is the drawer of the cheque, as an accused. In the said case, the question that arose for determination of the Supreme Court was that whether the authorized signatory of the company would be liable for prosecution under Section 138 of N.I.Act, when the company being arraigned as an accused. As initially there was difference of opinion with regard to interpretation of Section 138 of N.I.Act, a reference was made to a larger bench of three Judges. While deciding the said reference and interpreting Sections 138 and 141 of N.I.Act, the Supreme Court observed as under: 53. It is to be borne in mind that Section 141 of the Act is concerned with the offences by the company. It makes the other persons vicariously liable for commission of an offence on the part of the company. As has been stated by us earlier, the vicarious liability gets attracted when the condition precedent laid down in Section 141 of the Act stands satisfied. There can be no dispute t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... liable for the offence. Thus, the Supreme Court has arrived at a conclusion that for maintaining a prosecution under Section 141 of N.I.Act, arraigning of the company as an accused is imperative mostly on the basis of vicarious liability of the directors of the company and not necessarily because company is juristic person and it has its own respectability. 17. The most apt decision which is applicable in the present case is decided by the Apex Court recently in the case of N.Harihara Krishnan (supra). The facts in the said case were that the appellant was a director of a company known as M/s.Dakshin Granites Pvt.Ltd. A complaint was filed for an offence under Section 138 of N.I.Act. The appellant drew the subject cheque towards discharge of liability which was dishonourd. A notice was issued to the said appellantaccused and thereafter complaint was filed. Subsequently an application was filed under Section 319 of Cr.P.C and it was prayed that the company Dakshin Granites Pvt.Ltd. be impleaded as accused in the said complaint. It was the case of the complainant that during the course of examination of the appellant in the said trial, it came to the notice of the complainant tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any. In other words, the drawer of the cheque happens to be a company, it would be necessary to advert to Section 141 of N.I.Act. The Supreme Court then referred to the decision in Aneeta Hada (supra) and observed that the High Court failed to appreciate that the liability of the appellant is only statutory because of his legal status as a director of Dakshin Granites. 18. It wold be pertinent to quote paragraphs 21 to 25 of the said decision, which are vital and important to determine the issues involved in the present case. Paragraphs 21 to 25 reads as follows : 21. This Court in Aneeta Hada, had an occasion to examine the question whether an authorised signatory of a company would be liable for prosecution under Section 138 of the Negotiable Instruments Act, 1881 (for brevity the Act ) without the company being arraigned as an accused and held as follows: 59. In view of our aforesaid analysis, we arrive at the irresistible conclusion that for maintaining the prosecution under Section 141 of the Act, arraigning of a company as an accused is imperative. The other categories of offenders can only be brought in the drag net on the touchstone of vicarious liability ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d. A crime is an act or omission prohibited by law attracting certain legal consequences like imprisonment, fine etc. Obviously, acts or omissions constituting offences/crimes are capable of being committed only by persons either natural or juridical. The CrPC imposes a duty on the investigating agencies to gather evidence necessary to establish the occurrence of a crime and to trace out the perpetrators of the crime in order to get them punished. Punishment can be inflicted only by a competent Court but not by the investigating agency. Courts are authorised to inflict punishment if only they are satisfied that the evidence gathered by the investigating agency is sufficient to establish that (1) a crime had been committed; and (2) the persons charged with the offence (accused) and brought before the Court by the investigating agency for trial are the perpetrators of the crime. Under the Scheme of the CrPC, any investigating agency (normally the police) is bound to investigate by following the procedure prescribed therein once it receives either information regarding the commission of a cognizable offence or an order from a Magistrate to investigate into the allegation of the o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ipt of the demand. A fact which the complainant can only assert but not prove, the burden would essentially be on the drawer of the cheque to prove that he had in fact made the payment pursuant to the demand. 24. By the nature of the offence under Section 138 of THE ACT, the first ingredient constituting the offence is the fact that a person drew a cheque. The identity of the drawer of the cheque is necessarily required to be known to the complainant (payee) and needs investigation and would not normally be in dispute unless the person who is alleged to have drawn a cheque disputes that very fact. The other facts required to be proved for securing the punishment of the person who drew a cheque that eventually got dishonoured is that the payee of the cheque did in fact comply with each one of the steps contemplated under Section 138 of THE ACT before initiating prosecution. Because it is already held by this Court that failure to comply with any one of the steps contemplated under Section 138 would not provide cause of action for prosecution . Therefore, in the context of a prosecution under Section 138, the concept of taking cognizance of the offence but not the offender is n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ompany at the belated stage, was erroneous. 20. In the case of K.Satyanarayan Vs. Madhur and another (supra), relied upon by learned counsel for applicant, it was observed that Courts in the ordinary circumstances may exercise their jurisdiction in terms of Section 319 of Cr.P.C to summon any person as an additional accused. However, the proviso appended to Section 138 of N.I.Act mandates that before a complaint petition thereunder becomes mandatory, the conditions precedent specified therein must be satisfied. No notice was served on the appellant by the complainant in terms of proviso (b) appended to Section 138 of N.I.Act and in that view of the matter, the complaint petition being not maintainable against him. 21. In the decision of this Court in Bharat Mathur, Ex Vice President (Corp.) Sevices M/s.Data Access India Ltd. (Criminal Writ Petition No.4419 of 2014) (supra), this Court had considered whether a director or an employee of the company can be prosecuted for the offence punishable under Section 138 of N.I.Act with the help of Section 141 of the Act, when the offence is allegedly committed by the company, without impleading the company as an accused. Relia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Where the investigation agency does not arraign a real culprit as an accused, the Court is not powerless in calling the accused to face trial. The word inquiry in Section 319 is not inquiry in relation to investigation of the case by the investigating agency, but is an inquiry after the case is brought to the notice of the Court on filing of the charge sheet. The stage of inquiry by the Court does not contemplate any evidence in the strict legal sense, nor the legislature have contemplated this inasmuch as stage for evidence has not yet arrived. The circumstances that lead to the inference being drawn by the Court for summoning a person under Section 319 arise out of the availability of the facts and material that come up before the Court. The material should disclose the complicity of the person in the commission of offence which has to be the material that appears from the evidence during course of any inquiry into or trial of offence. The word evidence therefore, needs to be understood in its wider sense, both at the stage of trial and even at the stage of inquiry as used in Section 319 of Cr.P.C. The Court need not wait till the evidence is tested upon cross examination f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rihara Krishnan, the drawer cannot be impleaded as an accused without satisfying the requirements of Section 142 of N.I.Act. It is apparent that the complainant resorted to Section 319 only on account of the decision in Aneeta Hada (supra). The complainant had tried to contend that in the examination in chief, the involvement of accused no.1 company has been disclosed. However, as stated hereinabove, it was clear that the company was the drawer of cheque which was to the knowledge of complainant. In N.Harihara Krishnan s case (supra), the Supreme Court has observed that the scheme of the prosecution for punishment under Section 138 of N.I.Act is different from the scheme of Cr.P.C. Section 138 creates an offence and prescribes punishment. No procedure for investigation of the offence is contemplated. The prosecution is initiated on the basis of written complaint made by the payee of a cheque. It is obvious that from the scheme of Section 138 that each of the ingredients flows from the document which evidences the existence of such an ingredient. The failure to comply the steps under Section 138 would not provide cause of action for prosecution. Hence, the concept of taking cognizan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and about the compliance of the safeguards enshrined u/s 142 of N.I.Act. Apart from that, in view of the decision of Hon ble Supreme Court in the case of N.Harihara Krishnan Vs. J.Thomas (supra), no reliance can be placed on the said decision to deal with the issue in the present case which is also distinct in nature than that was considered by Gujarat High Court. 25. In the case of Pankajbhai Nagjibhai Patel (supra) relied upon by learned counsel for respondent no.2, the Hon ble Supreme Court has observed tat non obstante expression embodied u/s 142 of N.I.Act is intended to operate only in respect of three aspects and nothing more. The first is, under the Code of Criminal Procedure, a Magistrate can take cognizance of an offence either upon receiving a complaint or upon police report or upon receiving information from any person or upon his own knowledge, except in the cases differently indicated in Chapter XIV of the Code. Section 142 of the N.I.Act states that insofar as offence u/s 138 of N.I.Act is concerned, no Court shall take cognizance except upon a complaint made by the payee or the holder in due course of cheque. The said decision does not pertain to the issues ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rawer of the cheque was company. The complainant despite being conscious of the fact had chosen to arraign the applicant only as an accused and not the company. The purpose of Section 319 of Cr.P.C is to arraign other person as an accused, when in the course of inquiry or trial the fact surfaces that other person has committed the offence. Section 319 could be invoked when in the course of inquiry or trial, the evidence or material suggest that person over and above the said accused who are impleaded in the proceedings, has committed the offence, then, such person could be arraigned as an accused. The complainant was aware as to who was the drawer of the cheque and despite chose not to file a complaint impleading the company. In criminal proceedings, many a times, the prosecution agency files a challan/charge sheet against one or more accused and it is only when evidence is led, that the Court realizes the culpability of an individual other than the one arraigned as an accused. It will in these circumstances and based on the evidence, that has come on record, that the Trial Court can invoke this remedy u/s 319 of Cr.P.C. The circumstances in the present case are distinct. From the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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