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TMI Blog2005 (3) TMI 809X X X X Extracts X X X X X X X X Extracts X X X X ..... three abovenamed accused persons as petitioners have preferred the present revisional applications bearing Nos. 10717 99, 1001/99 and 1103/99 respectively for quashing of the criminal proceeding against them. 3. The factual matrix as disclosed in the petition of complaint, in short, is that accused No. 1 is a limited company and Rajib Mankuria is the Manager -Accountant and Administration and constituted attorney of complainant company. Complainant company had given short term loan to accused No. 1 company for a total sum of ₹ 10.00 crores by way of demand draft of ₹ 5.00 crores on 14.7.95, further sum of ₹ 3.00 crores by way of demand draft on 25.7.95, further sum of ₹ 2.00 crores by demand draft on 2.8.95 on mutually agreed condition to repay ₹ 5.00 crores on 12.7.96 and balance sum of ₹ 5.00 crores on 18.7.96 and the said loan would carry interest @ 20% p.a. on quarterly rests. When the offence was committed the accused Nos. 2 and 3 were the Chairman and Vice-Chairman respectively of accused No. 1 and both were in charge of day-to-day conduct of business affairs, the administration and running of accused No. 1 company. Accused No. 4 is the fa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ₹ 37,28,690.00 respectively were towards balance payment of interest due on 31st March, 1997. Cheque of serial No. 3 bearing No. 984179 for ₹ 43,91,928.00 towards TDS on interest upto 31.3.97 and cheques of serial Nos. 4 and 5 bearing No. 984159 and 984160 for ₹ 5.00 crores each towards repayment of aggregate principal amount of ₹ 10.00 crores. All the cheques issued by accused No. 1 were handed over at the office of complainant at Calcutta in due discharge of liability. The above cheques were signed by accused No. 5 for and on behalf of accused No. 1 company. The complainant deposited the said cheque of serial No. 2 bearing No. 984178 for ₹ 37,28,690.00 with its banker Punjab National Bank, New Market Branch for collection of the proceeds. Complainant's bank send the cheque to the banker of accused at Canara Bank, Sarat Bose Road, Calcutta and the cheque was dishonoured and returned back with mark "fund insufficient" vide return memo dated 17.4.97. The complainant in due course through its Advocates and Solicitors M/s. Khaitan & Co. sent demand notice dated 25.4.97 to accused persons under registered post with A/D, by hand and by courie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itioners before the learned Trial Court with a prayer for dismissal of complaint under Section 203 of Cr. PC made it clear that they received the notice and that is why by filing an application before the learned Court they submitted prayer for dismissing the complaint. In that application they did not specifically deny receipt of the notice. Notice was sent by three modes namely, registered notice which was directed at office, notice by courier and notice by hand. Section 94 of the NI Act makes it clear that notice may be even oral. Section 138 of the NI Act does not prescribe that demand notice must be served by registered post and any other mode of service is invalid and illegal in the eye of law. Service of notice is a matter of fact which can be proved by adducing evidence only at the time of trial. The complaint cannot be dismissed at the early stage of the case on the ground of non-service of notice. In support of his contention Mr. Mitra cited the decision in V. Raja Kumari v. P. Subbarama Naidu and Anr., reported in 2004 C Cr. LR (SC) 1161. 7. I have duly considered the submissions made by the learned Advocates of the parties and perused the revisional applications and ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ully avoiding the notice." In the decision the Supreme Court also indicated that the object of notice is to give a chance to the drawer of the cheque to rectify his omission and also to protect an honest drawer. Service of notice of demand in clause (b) of proviso to Section 138 is a condition precedent for filing a complaint under Section 138 of the NI Act. Whether the notice was served or not and how it was served and which service was effected on the accused persons namely, whether by registered post, or by hand, or by courier, is a matter which can be considered during trial as the scheme of the Act unmistakably imposes burden on the complainant to show service of demand notice upon the accused persons. It is a matter which is to be considered at the time of trial on the basis of facts of each case. This cannot be a ground to reject the complaint at the very initial stage or at threshold. In the trial the burden would be on complainant to prove service of demand notice upon the accused persons and this cannot be a ground for quashing the complaint at the very early stage where appearance of all accused persons are not yet complete and question of recording evidence is far ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... epleting assets. The legal obligation, debt, salary of employees, payment of lawful consideration etc. were not restrained by the Reserve Bank of India nor those were stopped. Mr. Mitra further submitted that same prayers by the accused company and its Directors were discussed by this Court in another revisional application being CRR No. 1245/99. The same point relating to Reserve Bank of India's restraint Order was discussed by this Court and it has been decided against the petitioners. Law of estoppel arises in such a situation. In support of his contention Mr. Mitra cited the decisions in Prudential Capital Mkt. Ltd. and Anr. v. State of Bihar and Ors., reported in 2001 SCC (Cri) 644, Santosh Saha v. State, reported in 1973(2) ILR Cal 173, Manipur Administration, Manipur v. Bira Singh, , Pankaj Mehra and Anr. v. State of Maharashtra and Ors., reported in AIR 2000 SC 1953 : 2000 SCC(Cri) 556, Anil Hada v. Indian Acrylic Ltd., reported in 2000 Cr. LJ 373. 11. After duly considering the submissions of the learned Advocates of the parties I am of opinion that the submissions made by the learned Advocates for the petitioners are not acceptable. It is evident that the prohibition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the company proceedings it would be but fair if the criminal proceedings initiated under Section 138 of the Negotiable Instruments Act against the company only are stayed. It is made clear that stay pertains to prosecution against company only. It establishes that Delhi High Court stayed the proceeding against the company only, but not against the officers who are respnsible for the day to day affair of the company or against the Directors of the company. In Anil Hada(supra) the Supreme Court pronounced that when a company, which committed the offence under Section 138 eludes from being prosecuted thereof, on account of complaint against it being dropped because of winding up proceeding Ordered by Court, the Directors of that company can be prosecuted for that offence. The same view was reiterated by the Supreme Court in Pankaj Mehra(supra) where it went further and observed that merely because petition for winding up of the company has been presented prior to the company being called upon by a notice to pay the amount of the cheque, the company cannot escape from penal liability under Section 138 of the Negotiable Instruments Act. Therefore, application filed for winding up of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The complaint is totally silent regarding factual aspects against the petitioners. The magic words used in Sections 138 and 141 of the N.I. Act would not automatically make the petitioners liable for the offence. Criminal liability is not attracted by signing cheque. There cannot be any complaint against sleeping partners of a company. The learned Magistrate without applying judicial mind issued process which was illegal. In support of his contention he cited the decisions in Veteran Company Pvt. Ltd. and Anr. v. State and Ors., reported in 2003(4) CHN 525, Goa Plast (P) Ltd. v. Chico Ursula D'Souza, reported in 2004 C Cr. LR (SO 113, Monaben Ketanbhai Shah and Anr. v. State of Gujarat and Ors., reported in 2004 SCC (Cri) 1857 : 2004(2) CLJ (SC) 215, Modern Denim Limited and Ors. v. Lucas TVS Limited, reported in 2001 Company Cases (Volume 105) 194, KGP Nair v. Jindal Menthol India Ltd. reported in JT 2000 (Suppl.) SC 519, J. Th. Zwart and Ors. v. Indrani Mukherjee, reported in 1990(1) CHN 62 and Shanku Concretes Pvt. Ltd. and Ors. v. State of Gujarat and Anr., reported in 2000 Cr. L.J. 1988. 15. Mr. Biplab Mitra for the complainant-opposite party submitted that there was suf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in charge of the company and responsible to the firm can be fastened with criminal liability. It is also well-settled that the sleeping partners particularly, the lady accused persons, who do not take any part in the day-today account or discharge of business of the firm or company cannot be prosecuted. There is no need of detailed discussion of the decisions cited by the learned Advocate for the petitioners as well as by the learned Advocate for the opposite party. At the same time it is also now settled that when a company which committed the offence under Section 138 eludes from being prosecuted thereof, on account of complaint against it being dropped because of winding up proceeding Ordered by the Court, the Directors of that company can be prosecuted for that offence. In Anil Hada(supra) the Supreme Court observed that, "The effect of reading Section 141 is that when the company is the drawer of the cheque such company is the principal offender under Section 138 of the Act and the remaining persons are made offenders by virtue of the legal fiction created by the legislature as per the Section. Hence the actual offence should have been committed by the company, and then a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... accepted that the complaint was vague and did not contain any averment against the petitioners or that there was only bald statement against the petitioners. In the trial only it can be determined on appreciation of evidence what was the nature of work, responsibility and duty of these three petitioners in the day-today affairs of the company. 18. The Supreme Court in Monaben Ketanbhai Shah(supra) observed that, Section 138 of the Act makes dishonour of the cheque an offence punishable with imprisonment or fine or both. Section 141 relates to offences by the company. It provides that if the person committing an offence under Section 138 is a company, every person who, at the time the offence was committed, was in charge of, and was responsible to, the company for the conduct of the business of the company, as well as the company, shall be deemed to be guilty of the offence and shall be liable to be proceeded against and punished accordingly. Thus, vicarious liability has been fastened on those who are in charge of, and responsible to, the company for the conduct of its business. For the purpose of Section 141, a firm comes within the ambit of a company. 19. It is not necessary to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... P. v. Awadh Kishore Gupta(supra) is an authority regarding permissibility of this Court to look into the papers and documents annexed with the revisional application. The story of petitioners that they resigned from the company by submitting Form 32 and are in no way responsible for the alleged offence is a defence of accused petitioners. The defence or alibi of accused is a matter for consideration in the trial on the basis of evidence which cannot be decided by this Court. 22. In a proceeding under Section 482 of the Cr. PC this Court would interfere only in rarest of rare cases. It is well-settled that power of quashing a criminal proceeding should be exercised very sparingly and with circumspection and that too in the rarest of rare cases. Considering the entire facts and circumstances as it transpired before this Court in these revisional applications, there is no ground sufficient enough to invoke inherent power or jurisdiction of this Court under Section 482 of Cr. PC to quash the criminal proceeding against the petitioners. It is equally settled that this Court at this stage cannot assess evidence like a Trial Court or Appellate Court. 23. In view of the discussions made ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d petitioners in accordance with law. 25. As it is a case of 1999 and several years have lapsed in the meantime, learned Metropolitan Magistrate is directed to proceed with the trial as expeditiously as possible and to conclude the same at the earliest without granting any undue adjournment to either of the parties. 26. I make it clear that I have not entered into the merits of the main case and the observations made by this Court in this matter are observations only for the purpose of the revisional applications and the learned Magistrate will be at liberty to act in accordance with law on the basis of evidence and materials on record without being influenced in any way by the observations of this Court. 27. This Order will govern all the three revisional applications bearing Nos. CRR 1001/99, CRR 1071/99 and CRR 1103/99. 28. All the Rules issued in connection with these revisional applications are hereby discharged. 29. Interim Order of stay passed earlier in all the three revisional applications stand vacated. 30. Criminal Section is directed to send the Lower Court Record along with a copy of this Order to the learned Metropolitan Magistrate, 17th Court, Calcutta for info ..... X X X X Extracts X X X X X X X X Extracts X X X X
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