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TMI Blog2022 (6) TMI 1172X X X X Extracts X X X X X X X X Extracts X X X X ..... bearing C.C.No.110/2016 and the order taking cognizance dated 05.12.2016 passed Judicial Magistrate, 1st Class, Rajmahal and pending in that learned court in Cr.M.P. No. 2183 of 2017; and for quashing of the entire criminal proceeding arising out of and in connection with complaint case being C.C.No.178 of 2016 presently pending in the court of learned Sub Divisional Judicial Magistrate, Sahibganj as also to quash the order dated 22.09.2016 passed by learned Sub Divisional Judicial Magistrate, Sahibganj in Complaint Case being C.C.No.178 of 2016 whereby under section 138 of N.I.Act, the concerned court directed to issue summons to the petitioner in Cr.M.P. No. 2190 of 2017. The facts of the case in Cr.M.P. No.2183 of 2017 are as follow: The O.P.No.2 has filed the instant complaint case alleging therein that the opposite party no.2 being the complainant filed the criminal complaint being Complaint Case No.110/2016 alleging therein that complainant is the owner of 'Vikash Vishal Urja Kendra' situated at Barhait and is dealing with stone chips and petrol pump at Barhait. It has been stated that the accused is a reputed construction company got the work of construction of road from D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 15 when the work was about to finish and the accused started getting money from the concerned department, the accused started demanding money from the accused. The accused person issued one cheque worth Rs.1 Lakh bearing no.128772 drawn on State Bank of India, Banka and cheque No.128767 for Rs.10 Lakhs. The cheques were deposited by the complainant in her account, however, both the cheques were returned by the Bank on 19.11.2015 on the ground of insufficient fund in the account of the accused. The complainant served a legal notice to the accused through her lawyer on 18.12.2015, and the accused assured through negotiation that he will pay the money but nothing has been paid. It is alleged that the accused knowing it well that there is no sufficient fund in the account still issued the cheques and made himself liable u/s 138 of N.I.Act. Mr. Umesh Prasad Singh, the learned Senior counsel appearing on behalf of the petitioners assailed the impugned order on the ground that the petitioners are not the drawer of the cheque in the both the cases and on that ground both the petitions are fit to be allowed in favour of the petitioners. He further elaborated his argument by way of inviting ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o laid down in C.V. Parekh. In the said case, a three-Judge Bench was interpreting Section 10 of the 1955 Act. The respondents in C.V. Parekh, were active participants in the management of the company. The trial court had convicted them on the ground that the goods were disposed of at a price higher than the control price by Vallabhadas Thacker with the aid of Kamdar and the same could not have taken place without the knowledge of the partners of the firm. The High Court set aside the order of conviction on the ground that there was no material on the basis of which a finding could be recorded that the respondents knew about the disposal by Kamdar and Vallabhadas Thacker. 52. At this juncture, we may usefully refer to the decision in U.P. Pollution Control Board v. Modi Distillery. In the said case, the company was not arraigned as an accused and, on that score, the High Court quashed the proceeding against the others. A two-Judge Bench of this Court observed as follows: (SCC p. 690, para 6) "6. ... Although as a pure proposition of law in the abstract the learned Single Judge's view that there can be no vicarious liability of the Chairman, Vice-Chairman, Managing Director an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... doctrine of strict construction, we are of the considered opinion that commission of offence by the company is an express condition precedent to attract the vicarious liability of others. Thus, the words "as well as the company" appearing in the section make it absolutely unmistakably clear that when the company can be prosecuted, then only the persons mentioned in the other categories could be vicariously liable for the offence subject to the averments in the petition and proof thereof. One cannot be oblivious of the fact that the company is a juristic person and it has its own respectability. If a finding is recorded against it, it would create a concavity in its reputation. There can be situations when the corporate reputation is affected when a Director is indicted. 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 as the same has been stipulated in the provision itself. We say so on the basis of the ratio laid down i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... w a cheque on an account maintained by him with the banker; (2) that such a cheque when presented to the bank is returned by the bank unpaid; (3) that such a cheque was presented to the bank within a period of six months from the date it was drawn or within the period of its validity whichever is earlier; (4) that the payee demanded in writing from the drawer of the cheque the payment of the amount of money due under the cheque to payee; and (5) such a notice of payment is made within a period of 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 in spite 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the cheques. He submits that the cheques have been brought on record by the petitioners in supplementary affidavit and draws the attention of the Court to the cheques and submits that the cheques brought on record by way of I.A. No.6162 of 2018, it has been issued by the firm namely Ganesh Ram Dokania by one of the employee of the said firm. By further advancing his argument, Mr. Singh, the learned senior counsel for the petitioners has relied on section 5 of the Transfer of Property Act, 1882 and submits that any person includes a company or association of body of individuals. Per contral, Mr. R.S. Mazumdar, the learned senior counsel appearing for the O.P.no.2 submits that there is no illegality in the cognizance order and the learned court has rightly taken cognizance as the cheques have been issued by the firm. He draws the attention of the Court to Clauses 6, 9 and 13 of the partnership deed, he submits that the petitioner is having major share in the firm and that is why the petitioner is liable to be prosecuted under section 138 of the Negotiable Instruments Act. He further submits that even if notice not issued in favour of the firm a petition is maintainable. He relied in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t on the record by way of I.A petition it transpires that the cheque in question was issued by the firm and the petitioner is not a drawer in both the cases. For correct appreciation of section 141 of the Negotiable Instruments Act, which is quoted hereinbelow: "141. Offences by companies.-(1) 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: Provided that nothing contained in this sub-section shall render any person liable to punishment if he proves that the offence was committed without his knowledge, or that he had exercised all due diligence to prevent the commission of such offence. [Provided further that where a person is nominated as a Director of a company by virtue of his holding any office or employment in the Central Government or State Government or a financial corporation owned or controlled by the Central Government or the State Government, as the case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y liable. Section 141 of the NI Act extends vicarious criminal liability to officers associated with the company or firm when one of the twin requirements of Section 141 has been satisfied, which person(s) then, by deeming fiction, is made vicariously liable and punished. However, such vicarious liability arises only when the company or firm commits the offence as the primary offender. This view has been subsequently followed in Sharad Kumar Sanghi v. Sangita Rane,17 Himanshu v. B. Shivamurthy and Another,18 and Hindustan Unilever Limited v. State of Madhya Pradesh.19 The exception carved out in Aneeta Hada (supra),20 which applies when there is a legal bar for prosecuting a company or a firm, is not felicitous for the present case. No such plea or assertion is made by the respondent. 15. Given the discussion above, we allow the present appeal and set aside the appellant's conviction under Section 138 read with 17 (2015) 12 SCC 781:11. In the case at hand as the complainant's initial statement would reflect, the allegations are against the Company, the Company has not been made a party and, therefore, the allegations are restricted to the Managing Director. As we have no ..... X X X X Extracts X X X X X X X X Extracts X X X X
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