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TMI Blog2023 (9) TMI 704X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of the court of the learned Magistrate and passed an order under Section 204 of the Cr.P.C, it is obvious that the learned Magistrate also took into account the provision under Section 202 of the Cr.P.C. In SMS PHARMACEUTICALS LTD. VERSUS NEETA BHALLA [ 2005 (9) TMI 304 - SUPREME COURT] , the Hon ble Supreme Court while construing the provision of Section 141 of the N.I Act, 1881, has noted that the position of a Managing Director or a Joint Managing Director of the company is distinct since persons occupying that position are in charge of and responsible for the conduct of the day to day business of the company. It was observed that though there is a general presumption that the Managing Director and Joint Managing Director are responsible for the act of the company, the director will not be held liable if he was not responsible for the criminal conduct of the company at the time of the commission of offence. Now to conclude, it is found from the record that the petitioner was arraigned as an accused in the aforementioned cases under Section 138 read with Section 141 of the N.I Act on the ground that he at the relevant point of time was the Managing Director of the compa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... od on 21st June, 2011. However, the said cheques were dishonoured on the ground that payments were stopped by the drawer. Dishonour of cheque was followed by a demand notice issued by the complainant/company requiring the petitioner and others to repay the cheque amount within statutory period of time. As the accused persons failed to make payment of the said sum, the petitioner/company lodged the aforesaid complaint before the learned Chief Metropolitan Magistrate, Kolkata. The Chief Metropolitan Magistrate transferred the case to the Metropolitan Magistrate, 16th Court, Kolkata who issued process against the accused persons under Section 200 of the Cr.P.C without making any inquiry under Section 202 of the Cr.P.C though the petitioner is a permanent resident of Ahmedabad in the State of Gujarat. C/35317/2010 4. The opposite party No. 2 as complainant filed a complaint under Section 138/141 of the Negotiable Instruments Act alleging, inter alia, that in discharge of existing date and liability the accused No. 2 to 4 issued two account payee cheque being No. 045720 dated 22nd September, 2010 for Rs. 65 lakhs drawn on Punjab and Sind Bank, 8 Old Court House Street, Kol-700 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... accused No. 2 to 4 issued five account payee cheques being No. 760913 dated 30.04.2010 for Rs. 50 lakhs; No. 760914 dated 30.04.2010 for Rs. 50 lakhs; No. 760915 dated 30.04.2010 for Rs. 60 lakhs; No. 760916 dated 05.05.2010 for Rs. 50 lakhs and No. 760917 dated 07.05.2010 for Rs. 50 lakhs, total being Rs. 2,60,00,000/- drawn on Punjab and Sind Bank, 8 Old Court House Street, Kol-700001. The complainant/company deposited the said cheques to its banker within its validity period on 31.07.2016. However, the said cheques were dishonoured on the ground that payments were stopped by the drawer. Dishonour of cheque was followed by a demand notice issued by the complainant/company requiring the petitioner and others to repay the cheque amount within statutory period of time. As the accused persons failed to make payment of the said sum, the petitioner/company lodged the aforesaid complaint before the learned Chief Metropolitan Magistrate, Kolkata. The Chief Metropolitan Magistrate transferred the case to the Metropolitan Magistrate, 16th Court, Kolkata who issued process against the accused persons under Section 200 of the Cr.P.C without making any inquiry under Section 202 of the Cr.P.C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6th Court, Kolkata who issued process against the accused persons under Section 200 of the Cr.P.C without making any inquiry under Section 202 of the Cr.P.C though the petitioner is a permanent resident of Ahmedabad in the State of Gujarat. C/23841/2011 9. The opposite party No. 2 as complainant filed a complaint under Section 138/141 of the Negotiable Instruments Act alleging, inter alia, that in discharge of existing date and liability the accused No. 2 to 4 issued two account payee cheque being No.045719 dated 07.09.2010 for Rs. 65 lakhs drawn on Punjab and Sind Bank, 8 Old Court House Street, Kol-700001. The complainant/company deposited the said cheques to its banker within its validity period on 07.09.2010. However, the said cheques were dishonoured on the ground that payments were stopped by the drawer. Dishonour of cheque was followed by a demand notice issued by the complainant/company requiring the petitioner and others to repay the cheque amount within statutory period of time. As the accused persons failed to make payment of the said sum, the petitioner/company lodged the aforesaid complaint before the learned Chief Metropolitan Magistrate, Kolkata. The Chief ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cheques were dishonoured on the ground payments were stopped by the drawer. Dishonour of cheque was followed by a demand notice issued by the complainant/company requiring the petitioner and others to repay the cheque amount within statutory period of time. As the accused persons failed to make payment of the said sum, the petitioner/company lodged the aforesaid complaint before the learned Chief Metropolitan Magistrate, Kolkata. The Chief Metropolitan Magistrate transferred the case to the Metropolitan Magistrate, 16th Court, Kolkata who issued process against the accused persons under Section 200 of the Cr.P.C without making any inquiry under Section 202 of the Cr.P.C though the petitioner is a permanent resident of Ahmedabad in the State of Gujarat. 12. Thus, in all the above mentioned cases the common question is as to whether process under Section 138 of the Negotiable Instruments Act can be issued without making any inquiry under Section 202 of the Code of Criminal Procedure or not. 13. Section 202 of the Cr.P.C states as follows: Postponement of issue of process - (1) Any Magistrate, on receipt of a complaint of an offence which he is authorised to take cogni ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate is of the opinion on considering the statement on oath, if any, of the complainant and all the witnesses and the result of the enquiry or investigation, if, any under Section 202 that there is no sufficient ground for proceeding, he shall dismiss the complaint recording briefly his reasons for doing so. The requirement of recording reasons which is specifically incorporated in Section 203 does not find place in Section 202. Section 204 which deals with the issuance of process stipulates that if in the opinion of the Magistrate taking cognizance of an offence, there is sufficient ground for proceeding, he may issue (a) in a summons case, a summons for attendance of the accused; (b) in a warrant case, a warrant or if he thinks fit a summons for the appearance of the accused. 15. On the requirement of inquiry under Section 202 of the Cr.P.C in relation to an application under Section 138/141 of the N.I Act the Constitution Bench of the Hon ble Supreme Court in Re: Expeditious trial under Section 138 of the N.I Act, 1881, Suo Motu Writ Petition (Crl No. 2 of 2020) reported in 2021 SCC Online SC 325 has been pleased to hold that in a case where the accused resides beyond ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ognition by parliament that false complaints are filed against the persons residing at far off places as an instrument of harassment. In Birla Corporation Limited vs. Advent Investments and Holdings reported in (2019) 16 SCC 610, the scope of inquiry under Section 202 of the Cr.P.C is held to be extremely restricted onto finding out the truth or otherwise of the allegations made in the complaint in order to determine whether process should be issued or not under Section 204 Cr.P.C or whether the complaint should be dismissed by resorting to Section 203 Cr.P.C on the footing that there is no sufficient ground for proceeding on the basis of the statement of the complainant and of his witnesses, if any. At the stage of inquiry under Section 202 Cr.P.C the Magistrate is only concerned with the allegations made in the complaint or the evidence in support of the averments in complaint to satisfy himself that there is sufficient ground for proceeding against the accused. 17. Interlink between Section 145 of the N.I Act and Section 202 Cr.P.C is discussed in Sunil Todi in the following words:- Consequently it was held that Section 202(2) Cr.P.C is inapplicable to complaints und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate failed to conduct inquiry under Section 202 of the Cr.P.C. Such an inquiry is mandatory in connection with the said complaint case as the petitioner resides outside the territorial jurisdiction of the learned Magistrate. 20. Mr. Phiroze Edulji, learned Advocate on behalf of the opposite party, on the other hand submits that for the conduct of inquiry under Section 202 of the Cr.P.C, evidence of witnesses on behalf of the complainant is permitted to be taken on affidavit. In suitable cases, the Magistrate can restrict the inquiry to examination of documents without insisting for examination of witnesses. The above observation was made by the Hon ble Supreme Court in Suo Motu Writ Petition (Crl. 2 of 2020) reported in 2021 SCC OnLine SC 325 . 21. The decision of the Constitution Bench was further elaborated in Sunil Todi (supra) where the Hon ble Supreme Court in Sunil Todi after making elaborate discussion on the scope of Section 202 the mandatory requirement of the Magistrate to either inquire or cause investigation by police regarding the veracity of the complaint where the accused resides outside the jurisdiction of the learned Magistrate, applicability of Section 14 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r, secretary or other officer shall also be deemed to be guilty of that offence and shall be liable to be proceeded against and punished accordingly. Explanation . For the purposes of this section, (a) company means anybody corporate and includes a firm or other association of individuals; and (b) director , in relation to a firm, means a partner in the firm. 50. Section 141 of the NI Act stipulates that if a company is alleged to have committed an offence under Section 138, then every person who was in charge of, and responsible to, the company for the conduct of the business of the company shall also be deemed guilty of the offence. The proviso provides an exception if she proves that the offence was committed without her knowledge or that she had exercised due diligence. In Sunil Bharati Mittal v. CBI29 , a three judge Bench of this Court observed that the general rule is that criminal intent of a group of people who undertake business can be imputed to the Company but not the other way around. Only two exceptions were provided to this general rule: (i) when the individual has perpetuated the commission of offence and there is sufficient e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ible for the conduct of the company at the time of the commission of the offence. The Court observed: 9. The position of a managing director or a joint managing director in a company may be different. These persons, as the designation of their office suggests, are in charge of a company and are responsible for the conduct of the business of the company. In order to escape liability such persons may have to bring their case within the proviso to Section 141(1), that is, they will have to prove that when the offence was committed they had no knowledge of the offence or that they exercised all due diligence to prevent the commission of the offence. [...] Every person connected with the company shall not fall within the ambit of the provision. It is only those persons who were in charge of and responsible for the conduct of business of the company at the time of commission of an offence, who will be liable for criminal action. It follows from this that if a director of a company who was not in charge of and was not responsible for the conduct of the business of the company at the relevant time, will not be liable under the provision. The liability arises from being i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has in a carefully considered judgment, analysed the submissions of the appellants and for justifiable reasons has come to the conclusion that they are lacking in substance. 22. Mr. Edulji also refers to an unreported decision of the Hon ble Supreme Court in Vishwakalyan Multistate Credit Co. Op. Society Ltd. vs. Oneup Entertainment Pvt. Ltd. (Criminal Appeal No. 2484 of 2023 ) wherein the Hon ble Supreme Court was pleased to modify the judgment passed by the High Court and directed the trial court to proceed from the stage of Section 202 of the Cr.P.C. While doing so, the learned Magistrate is directed to be guided by the direction issued by the Constitution Bench in Suo Motu Writ Petition (Crl.) 2 of 2020 23. Mr. Edulji further submits that the complaints were lodged in the year 2011. The learned Magistrate passed the impugned order on 29th October, 2011. While passing the order the learned Magistrate examined the complaint under Section 138/141 of the N.I Act. The evidence of the complainant was affirmed on affidavit in terms of Section 145(1) of the said Act and also the documents filed by the complainant. Thus, it is contended by Mr. Edulji that the learned M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... complaint only to cause harassment of innocent persons who reside outside the jurisdiction of the court of the learned Magistrate. When the learned Magistrate on scrutiny of record prima facie came to a decision that process ought to have been issued even against a person who resides outside the jurisdiction of the court of the learned Magistrate and passed an order under Section 204 of the Cr.P.C, it is obvious that the learned Magistrate also took into account the provision under Section 202 of the Cr.P.C. 27. There is another aspect of the matter which this Court is inclined to record. In the petition of complaint the address of the petitioner was stated as Pawan Kumar Agarwal, Managing Director of Fair Deal Supplies Ltd. 4, B.B.D Bag (East), Room No. 5, 1st Floor, Stephen House, Kolkata-700001. The address of the accused No.4/petitioner recorded in the complaint is within the jurisdiction of learned Metropolitan Magistrate, Kolkata. Therefore, when the case was initially taken up for examination of the complainant and issuance of process the learned Magistrate had no scope to known that the petitioner resides outside the jurisdiction of the learned Magistrate. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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