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TMI Blog2018 (3) TMI 1993X X X X Extracts X X X X X X X X Extracts X X X X ..... n by a two Judge Bench in Anil Hada's case [[ 1999 (11) TMI 808 - SUPREME COURT] ] stood overruled. The Apex Court in Kirshna Texport Capital Markets Ltd.'s case [[ 2015 (6) TMI 344 - SUPREME COURT] ] has held that statutory demand notice on the drawer Company is mandatory where the drawer of the dishonoured cheque is a Company and that in such cases, it is not necessary to additionally issue notices to the directors/officers of the Company so long as the statutory demand notice is served on the drawer Company, etc. The revisional interdiction of this Court is imperative as the impugned judgments of the Courts below are illegal and ultra vires - the impugned judgments of both the Courts below will stand set aside and the conviction and sentence imposed on the petitioners will also stand set aside - the revision petitioners/accused No. 1 and accused No. 2 will stand acquitted for the offence punishable under Section 138 of the Negotiable Instruments Act. Criminal Revision Petition disposed off. - Crl. R.P. No. 877 of 2015 - - - Dated:- 16-3-2018 - Alexander Thomas, J. For the Appellant : T.N. Hareendran. For the Respondents : Saigi Jacob Palatty, C.A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce, the Trial Court has found that the offence under Section 138 of the Negotiable Instruments Act has been committed by additional accused No. 2 Company and that the original accused, who was the Managing Director of the Company at the relevant time, is vicariously liable. In that view of the matter, the Trial Court has convicted both the accused for the abovesaid offence and were sentenced to pay a fine of Rs. 1,00,000/- and in default of payment of fine, the accused were sentenced to undergo simple imprisonment for a period of six months and that the fine amount realised was directed to be paid as compensation to the complainant under Section 357(1)(b) of the Cr.P.C. Thereupon the accused persons had filed Criminal Appeal No. 456 of 2014 before the Appellate Sessions Judge, Ernakulam, to impugn the abovesaid Trial Court judgment of conviction and sentence dated 24/09/2014 in C.C. No. 4509 of 2010. The appellate Sessions Court, as per the impugned judgment dated 03/06/2015, has dismissed Criminal Appeal No. 456 of 2014 and has held that the complaint is maintainable and further that both the accused are liable to be convicted and have also confirmed the sentence of fine and defa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed without their knowledge or that they had exercised due diligence to prevent such commission, it would be a matter of defence to be considered at the appropriate stage. This legal position was so held on the basis of the judgment of the Apex Court in the case in Kirshna Texport Capital Markets Ltd. v. Ila A. Agrawal, reported in (2015) 8 SCC 28 : 2015 (2) KHC 793 : 2015 (2) KLT 543 : 2015 (2) KLJ 534 : AIR 2015 SC 2091 : 2015 Cri LJ 2847 and thus it was so held that fulfillment of the requirements of serving statutory demand notice to the Company prior to the institution of the complaint under Section 138 proviso (b) would be mandatory and without such notice, there is no question of maintaining any complaint irrespective as to whether the drawer of the cheque is a Company or individual and that where the dishonoured cheque is drawn from the account of a Company/partnership firm/corporate body, then the drawer of the cheque is such Company/partnership firm, etc. and the offence is committed by the drawer of the cheque/principal offender and that Section 138 proviso (b) notice should be mandatorily to be served to the drawer Company and that there is no necessity to serve notice ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... who are in charge of the affairs of such company, etc., and if it is their case that the offence was committed without their knowledge or that they had exercised due diligence to prevent such commission, it would be a matter of defence to be considered at the appropriate stage, etc. Therefore, it is crystal clear that in a case, where the drawer of the dishonoured cheque is a company, then statutory demand notice should mandatorily be served on the drawer company but that separate individual notices to the individual directors and officials of the company is not mandatory. Therefore, going by the legal principles laid down by the Apex Court in Aneeta Hada v. Godfather Travels Tours Pvt. Ltd. reported in 2012 (2) KLT 736 (SC): (2012) 5 SCC 661, and in Kirshna Texport Capital Markets Ltd.'s case supra, it is crystal clear that where the drawer of the dishonoured cheque in a case being a company, then the prosecution for offence under Section 138 of the Nl Act is not maintainable without arraying the principal offender (drawer of the cheque) as an accused in such complaint. Further that even if the principal offender company is arrayed as a accused in such complaint, the same ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as to whether such prosecution could be lawfully maintained even in the absence of the prior statutory demand notice, was never raised or decided by this Court in those revision petitions. If the accused company could successfully point out that the statutory demand notice was never served on the drawer of the dishonoured cheque, then certainly the Trial Court, Appellate Court and revisional Court, etc., are bound to apply their judicial mind and decide that issue. For deciding that issue, it is common ground that P.W-1 has clearly admitted in his evidence that prior statutory demand notice has never been served on the drawer company. Therefore, the Appellate Court cannot be found fault with in any manner in rendering the impugned view. Since the prosecution is not maintainable as against the drawer company in view of this ground, then the prosecution against the individual director would also crumble to the ground as the offence under Section 138 of the Nl Act is essentially and primarily attracted as against the drawer of the cheque. If no offence is made out against the accused drawer company, then the question of convicting the individual Directors and officials of that company ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is case, any plea for such amendment was not brought forth before the issuance of summons to the accused company. For all these reasons, this Court is constrained to uphold the view taken by the Appellate Sessions Court that the accused persons are entitled for acquittal. In view of these aspects, the afore captioned Criminal Appeals will stand dismissed. 5. Further the Apex Court in the decision in Harihara Krishnan N. v. J. Thomas reported in 2017(4) KHC 699 (SC) 2017 (2) KLD 577 : 2017 (10) SCALE 417 : 2017 (4) KLJ NOC 3 : 2017 (4) KLT SN 41 : AIR 2017 SC 4125 : 2018 Cri LJ 72 dealt with a similar case where the drawer of the dishonoured cheque was a Company M/s. Dakshin Granites Pvt. Ltd. and the signatory of the dishonoured cheque was one of the directors, Sri. Harihara Krishnan. The judgment of the Trial Court ended in conviction. The complainant had initially arrayed only the individual director Sri. Harihara Krishnan as the sole accused in the complaint. After three long years, the complainant had filed an application purportedly invoking the provisions contained in Section 319 of Cr.P.C., so as to array the drawer Company as additional accused No. 2 and the learned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 him and punished accordingly. The Apex Court held in paragraph 21 of the said decision that the impugned judgment of the High Court therein has erred in holding that the revision filed by the individual director is not maintainable because the drawer Company had not chosen to challenge the order of the Trial Court. It was further held that the High Court had failed to appreciate that the liability of the individual director is only statutory because of his legal status as the director of the drawer Company and that if the drawer Company is sought to be summoned for being tried for an offence under Section 138 of the N.I. Act beyond the period of limitation prescribed under the Act, the individual director cannot be told in view of the law declared by this Court in Aneeta Hada v. Godfather Travels Tours Pvt. Ltd. reported in (2012) 5 SCC 661 : 2012 KHC 4244 : 2012 (2) KLD 16 : 2012 (2) KHC SN 36 : 2012 (4) SCALE 644 : 2012 (2) KLJ 456 : 2012 (2) KLT 736 : AIR 2012 SC 2795 : 2012 Cri LJ 2525, that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not the offender is not appropriate. That the complainant should contain all necessary and factual allegations constituting each of the ingredients of the offence under Section 138 and without that the Court cannot take cognizance of the offence. Disclosure of the name of the person drawing the cheque is one of the factual allegations which a complaint is required to contain. Otherwise in the absence of any authority of law to investigate the offence under Section 138, there would be no person against whom a Court can proceed. There cannot be a prosecution without an accused and that the offence under Section 138 of the Negotiable Instruments Act is person specific. Therefore, it was held that the Parliament has declared an unequivocal terms under Section 142 of the N.I. Act that the provisions dealing taking cognizance as contained in Cr.P.C. should give way to the special procedure prescribed under Section 142 of the N.I. Act. That the opening of the non obstante clause under Section 142 would make it clear that Section 142 does not either contemplate a report to the police or authorise a Court taking cognizance to direct the police to investigate the complaint. Accordingly, it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ught 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 occurrence of a non-cognizable offence and submit a report under Section 173. Section 173(2)(i)(d) inter alia stipulates that the report should contain a statement: Whether any offence appears to have been committed and if so by whom? The conclusions reached by the police after investigation into the above two questions are required to be scrutinized by a competent Court. It is only after the Court is satisfied that the evidence collected by the investigating agency is sufficient in law to punish the accused, such accused can be punished. Taking cognizance of an offence by the Court is one of the initial steps in the process. Thereafter, the investigating agency is required to collect evidence (investigate) and place the same before the Court under Section 173 CrPC. 23. The sc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 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 not appropriate. Unless the complaint contains all the necessary factual allegations constituting each of the ingredients of the offence under Section 138, the Court cannot take cognizance of the offence. Disclosure of the name of the person drawing the cheque is one of the factual allegations which a complaint is required to contain. Otherwise in the absence of any authority of law to investigate the offence under Section 138, there would be no person against whom a Court can proceed. There cannot be a prosecution without an accused. The offence under Section 138 is person specific. Therefore, the Parliament declared under Section 142 that the provisions dealing with taking cognizance contained in the CrPC should give way to the procedure prescribed under Section 142. Hence the opening of non obstante clause under Section 142. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at stage. To this extent the facts in this case are quite similar to the one in Harihara Krishnan's case (supra) considered by the Apex Court. The only relevant difference in this case is that neither the first revision petitioner (original accused No. 1) nor the revision petitioner No. 2 (additional accused No. 2 drawer Company) have sought to challenge the said interlocutory order of the Trial Court rendered on 08/04/2014 allowing the application dated 26/02/2014 filed under Section 319 of the Cr.P.C. to array the drawer Company as additional accused. The revision petitioners had undergone the trial which invited the conviction and sentence and thereafter, they have filed appeal to challenge the Trial Court judgment of conviction and sentence which has also been dismissed. The Apex Court has clearly held in paragraph 21 of Harihara Krishnan's case (supra) that there is no necessity to the drawer Company to challenge the order of the Trial Court in allowing the plea of the complainant filed under Section 319 of the Cr.P.C., so as to subsequently array the drawer Company as an additional accused. The legal basis for this is that it has been categorically held by the Apex Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) would apply on all force in the facts of this case. On that limited ground alone, the accused are entitled to succeed and the prosecution is only to be held as ultra vires and illegal. This crucial aspect of the matter has been completely overlooked by both the Courts below and therefore, the impugned judgments of the Trial Court and the Appellate Court are illegal, ultra vires and perverse. In the light of these aspects, it is not necessary to examine whether the findings of fact made by the Trial Court on the merits of the matter is correct or not. 7. It is also to be noted that the specific averments in the complaint filed in this case is that the drawer of the cheque is the sole original accused therein (first revision petitioner). No averments have been made in the complaint that the drawer of the cheque in the instant case is the Company concerned (which was later subsequently arrayed as additional accused No. 2). Therefore, in the lack of specific averments in the complaint that the drawer of the cheque is accused No. 2, would give rise to the situation that it was legally impermissible for the Trial Court to have taken cognizance as against additional accused No. 2 in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) 5 SCC 693 : AIR 1999 SC 2182 : 1999 KHC 1676 : 1999 SCC (Cri) 1034 : 1999 Cri LJ 3498 : 1999 (98) Comp Cas 573 and Rajneesh Aggarwal v. Amit J. Bhalla reported in (2001) 1 SCC 631 : AIR 2001 SC 518 : 2001 KHC 130 : 2001 (1) KLT 484 : 2001 (1)KLJ NOC 49 : 2001 SCC (Cri) 229 : 2001 Cri LJ 708: 2001 (104) Comp Cas 332 that failure to issue statutory demand notice under Section 138 proviso (b) to the drawer Company is not fatal, so long as such notice is issued to the director of the Company who is the signatory to the cheque drawn by the Company. In this regard it is relevant to note that by a two Judge Bench judgment dated 26/11/1999, the Apex Court had earlier held in Anil Hada v. Indian Acrylic Ltd. reported in (2000) 1 SCC 1 : 2000 KHC 30 : 2000 (1) KLT 141 : 2000 (1) KLJ NOC 18 : 2001 SCC (Cri) 174 : AIR 2000 SC 145 : 2000 Cri LJ 373 : 1999 AIR SCW 4228 : 2000 (1) Crimes 26 : JT 1999 (9) SC 223 : 1999 (9) Supreme 484 that even in a case where the drawer of the dishonoured cheque is a Company, the complaint could be maintainable even as against the individual director/directors of the Company who were in charge of and responsible for the affairs of the Company even if the drawer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in (2012) 5 SCC 661 : 2012 KHC 4244 : 2012 (2) KLD 16 : 2012 (2) KHC SN 36 : 2012 (4) SCALE 644 : 2012 (2) KLJ 456 : 2012 (2) KLT 736 : AIR 2012 SC 2795 : 2012 Cri LJ 2525 and that position is reflected in the legal position conclusively settled by the Apex Court in Kirshna Texport Capital Markets Ltd.'s case (supra) about which reference has been made herein above as well as in the judgment of this Court in Balanchandran's case (supra). Therefore, the contention made by the complainant in that regard does not appear to be tenable. However, there is no necessity to pronounce any final opinion in this case based on that specific contention urged by the complainant in this case based on Bilakchand Gyanchand Company's case (supra) and Rajneesh Aggarwal's case (supra) in view of the findings made by this Court already herein above on the other rival contentions of the parties. Accordingly, it is only to be held that the revisional interdiction of this Court is imperative as the impugned judgments of the Courts below are illegal and ultra vires for the reasons stated herein above. In this view of the matter, the impugned judgments of both the Courts below will stand se ..... X X X X Extracts X X X X X X X X Extracts X X X X
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