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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 ..... of present applications, were numbered as CC No.502/SS/2002, CC No.503/SS/2002 and CC No.524/SS/2002. The facts in all the complaints are identical. 2. Brief facts, as alleged in one of the complaint, viz CC No.502/SS/2002, are as follows : (a) The accused is the Vice Chairman and Managing Director of the company known as M/s.Harvest Financials Limited registered under the Companies Act, 1956. The accused under the scheme of investments collected various amounts from various persons in the form of loans and in consideration of collecting such amounts, has given post dated cheques either in personal capacity or in the capacity as signatory of M/s.Harvest Financials Limited; (b) The complainant gave personal loan of Rs. 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 recei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... said applications were numbered as Criminal Application No.312 of 2015, Criminal Application No.313 of 2015 and Criminal Application No.314 of 2015. 6. Respondent no.2 preferred applications before the Trial Court under Section 319 of Cr.P.C to implead the company as an accused. The said applications were opposed by the applicant by filing reply. This Court had granted interim stay of the proceedings before the Trial Court vide order dated 20th April 2015 in Criminal Application Nos.312 of 2015, 313 of 2015 and 314 of 2015. In view of the applications preferred by Respondent no.2 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 th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Harvest Financials Limited being the drawer of the cheque as an accused in the complaint. Even demand notice was issued and served only in the name of applicant and it was never issued and served on the company. The applicant had ceased to be the director and managing director of the company with effect from 1st January 1997, since the company in the annual general meeting had not ratified the appointment made by the board earlier, since there was no annual general meeting called for within the stipulated period as per Companies Act, 1956. The application preferred by respondent 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 v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 009, decided on 20th July 2009; (iii) Aneeta Hada Vs. Godfather Travels & Tours Pvt. Ltd. (2012)5-SCC-661 (iv) A judgment of this Court in case of Bharat Mathur, ExVice President (Corp.) Services M/s.Data Access India Ltd. Vs Bharat Sanchar Nigam Limited and another. Criminal Writ Petition No.4419 of 2014, decided on 24th February 2015 10. The learned advocate for respondent no.2 submitted that trial had commenced and the application for quashing the proceedings preferred by the applicant, ought not to be entertained at this belated stage. The applicant 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 com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itted that the applicant is deliberately insisting on applicability of Aneeta Hada's case (supra) to avoid the Official Liquidator being impleaded in the complaint. The reason for not allowing the Official Liquidator to come on record is in defiance of order passed by this Court on 16th March 1999 in Company Petition No.183 of 1997 ordering winding up of the company. The applicant is being prosecuted in his capacity as officer incharge and responsible for the conduct of the business of the company being working Vice Chairman and Managing Director of the company and also being the signatory 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 14. The complainant realized that it would be imperative to add the company as an accused. The complainant had already tendered an affidavitinevidence. On the basis of the contents of the affidavitinevidence, it was pleaded that the company could be impleaded as accused no.1. The prayer to implead the company as an accused was sought by taking recourse to Section 319 of Cr.P.C. It is pertinent to note that at the time of filing of complaint, there was no impediment in impleading the company as an accused. In the application under Section 319, it is the case of the complainant that the company is the drawer of cheque and therefore, in view of the averments in the affidavitinevidence, 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 affidavitinevidence 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 exami ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ook cognizance only of the offence and not the offender. Thus, when once cognizance of an offence is taken, subsequent impleadment of any other person as accused, would not affect the judicial process adopted in taking cognizance of the offence. The Trial Court, however, overlooked the requirement of invoking Section 319 of Cr.P.C. The Court failed to appreciate that in the present cases, involvement of company was not disclosed for the first time during the course of trial and that the documents produced by the complainant which were in possession of the complainant, disclosed that the company was the 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 interpret ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for maintaining prosecution against a director under Section 141 of N.I.Act, arraigning the company as an accused, is imperative. In paragraphs 58 and 59 of the said decision, the Supreme Court has referred to the wording of Section 141 of N.I.Act and observed that commission of offence by company is an express condition precedent to attract vicarious liability of others. It was further observed that the words "as well as company" appearing in the section make it absolutely clear that when a company is prosecuted, then the persons mentioned in the other categories could be vicariously 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nables the Court to take cognizance of the offence even beyond the prescribed period of limitation, if the complainant satisfies the Court that he had sufficient cause for not making the complaint within the period of limitation. The Supreme Court, however, observed that the order of Trial Court was absolutely silent with regard to the contention of the delay. The offence under Section 138 of N.I.Act is capable of being committed by the drawer of the cheque. Section 141 stipulates liability for the offence punishable u/s 138 of N.I.Act when the person committing such an offence happens to be a company. 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 Ane ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te, he takes cognizance of an offence and not the offenders; once he takes cognizance of an offence 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. ..." Such a statement of law was made by this Court in the background of the scheme of the CrPC. 22. The CrPC is an enactment which is designed to regulate the procedures governing the investigation of crimes in order to get the perpetrators of the crime punished. 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 satisfie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f 30 days from the date of the receipt of the information by the payee from the bank regarding the return of the cheque as unpaid. It is obvious from the scheme of Section 138 that each one of the ingredients flows from a document which evidences the existence of such an ingredient. The only other ingredient which is required to be proved to establish the commission of an offence under Section 138 is that inspite of the demand notice referred to above, the drawer of the cheque failed to make the payment within a period of 15 days from the date of the receipt 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 pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alse statement. On the face of the cheque it is clear that it was drawn on account of Dakshin Granites. It was also observed that the impugned judgment was contrary to the language of the Act as expounded by Supreme Court Aneeta Hada (supra) and, therefore, cannot be sustained. Applying the ratio laid down in the aforesaid decision which is categorically applicable in the present cases, it is clear that it was imperative upon the complainant to implead the company as an accused and exercise of the powers under Section 319 of Cr.P.C to implead the company 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d in the FIR but not charged or who have been discharged. The Supreme Court held that the constitutional mandate under Articles 20 and 21 of the Constitution of India provides a protective umbrella for the smooth administration of justice making adequate provisions to ensure a fair and efficacious trial so that the accused does not get prejudiced after the law has been put into motion to try him for the offence. But the same also gave equal protection to victims and society at large to ensure that the guilty does not get away from the clutches of law. 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 pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng complaint, he was incharge and responsible for conduct of the business of the said company. Therefore, the complainant ought to have impleaded the company as an accused. Therefore, the present case cannot be equated with the case where during trial it is disclosed that some other accused is required to be impleaded as an accused, or that the evidence on record which may be in the form of examinationinchief disclosed the involvement of the accused, who is not arraigned as accused in the complaint. Apart from that, as laid down by the Supreme Court in the case of N.Harihara 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 examinationinchief, 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 prosecu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ned that the said transaction and that the cheque was not signed by him as a director of company. The Court has observed that the Trial Court has not committed an error while passing the impugned order. It was observed that there was sufficient material to implead him as an accused in exercise of powers u/s 319 of Cr.P.C. It was not necessary that evidence must have been adduced in the case and documents produced with the application constitute evidence within the meaning of the said section. The Court, however, did not consider the issue about limitation in impleading the accused in the complaint 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 nonobstante expression embodied u/s 142 of N.I.Act is intended to operate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .Act. 27. To initiate proceedings u/s 138 of N.I.Act, there are conditions precedent to be fulfilled viz, notice be served on the drawer of the cheque and thereafter in the event the drawer of the cheque fails to make payment as called upon vide the notice, a complaint against the drawer can thereafter be instituted within the stipulated time. In the present case, prior to preferring application u/s 319 of Cr.P.C; the complainant in his affidavitinchief has stated that the drawer of the cheque is the company. Thus, it is no where in dispute as to who is the drawer of cheque and thus it is an admitted position that the drawer 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, suc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l aspects involved in the present case and the circumstances referred to hereinabove and in the light of the decisions of Hon'ble Supreme Court discussed hereinabove, I find that there is no substance in the contentions of respondent no.2 respectively in these applications and the same are devoid of merit. The prosecution in all these applications which are subject matter of challenge under these applications as well as the orders passed by the learned Magistrate u/s 319 of Cr.P.C deserves to be quashed and set aside. 29. Hence, I pass following order : ORDER (i) Criminal Application No.464/2016, Criminal Application No.465/2016 and Criminal Application No.466/2016 are allowed in terms of prayer clause (a) respectively, thereby the impugned criminal proceedings pending before the Metropolitan Magistrate, 58th Court, at Bandra, Mumbai being CC No.502/SS/2002, CC No.503/SS/2002 and CC No.524/SS/2002 and the impugned order dated 7th October 2015 passed by learned Metropolitan Magistrate, 58th Court, at Bandra, Mumbai in CC No.502/SS/2002, CC No.503/SS/2002 and CC No.524/SS/2002 are quashed and set aside; (ii) Criminal Application No.1071/2016, Criminal Application No.1072/2016 and ..... X X X X Extracts X X X X X X X X Extracts X X X X
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