Allowed

Devendra Kumar Garg v. State of U.P. and Anr.

Allahabad HC19 Nov 2019CRLP/24632/2013

Case brief

AI extract

What is this about?

This court allowed a criminal miscellaneous writ petition quashing summoning and revision orders in a cheque bounce case. The judgment held that since the company was not impleaded and the complaint lacked specific averments that the accused director was in charge of the business at the time of offence, the prosecution could not be maintained against him under Section 141 of the N.I. Act.

What did the court decide?

The summoning order dated 18.3.2013 and the revision order dated 2.12.2013 were quashed, and the entire proceedings were set aside.

Devendra Kumar Garg Vs State of U.P. and Anr. — Cheque Dishonour | Allahabad HC (2019)

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Court No. - 65

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Case :- CRIMINAL MISC. WRIT PETITION No. - 24632 of 2013

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Petitioner :- Devendra Kumar Garg Respondent :- State Of U.P. And Anr. Counsel for Petitioner :- Amit Daga Counsel for Respondent :- Govt. Advocate,Ashish Kaushik,Nazrul Islam Jafri

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Hon'ble Vivek Kumar Singh,J.

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Heard Sri Amit Daga,learned, learned counsel appearing for the petitioner,Sri N.I.Jafri, learned counsel for opposite party no.2 and Sri Sanjay Singh, learned AGA for the State and also perused the record brought on record.

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This writ petition has been filed with the prayer for quashing the order dated 2.12.2013 passed by Addl. Sessions Judge, Court No.7, Muzaffarnagar in Criminal Revision No.212 of 2013, Devendra Kumar Garg Vs. Pawan Kumar Goel and summoning order dated 18.3.2013 passed by Addl. Chief Judicial Magistrate, Court No.2, Muzaffarnagar in Criminal Case No.162 of 2013, Pawan Kumar Goel Vs. Devendra Kumar Garg.

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It has been contended by the learned counsel for the petitioner that four criminal complaints were filed by opposite party no.2 against the petitioner under Section 138 of Negotiable Instrument Act and one of the criminal case no.162 of 2013 Pawan Kumar Goel Vs. Devendra Kumar Garg was challenged by the petitioner in this Writ Petition in which interim order has been granted in his favour vide order dated 13.12.2013 by another Bench of this Court.

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In this writ petition the petitioner has challenged the another complaint filed by opposite party no.2 which is similar to that of first complaint filed by opposite party no.2.

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The fact of the case in brief are that the complainant-respondent no.2 filed criminal complaint against the petitioner for the offence punishable under section 138 N.I.Act before the court concerned alleging that the petitioner company has business terms for supply of machinery etc.with the complainant.It was further alleged that during the money transaction the Director of Company issued one cheque worth Rs.10.00 lacs which was deposited in the bank for encashment, but the same was dishonoured. Thereafter the complainant sent a legal notice to the petitioner which was duly served upon the petitioner for payment of due amount, but neither the petitioner replied to the said notice nor paid the the amount to him.

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On filing the complaint the learned Magistrate took the cognizance of the matter and called the complainant to get recorded his statement under section 200 Cr.P.C. who in turn filed an affidavit to this effect. treating it to be statement under section 200 Cr.P.C. Taking into account the affidavit filed by the complainant the learned Magistrate summoned the petitioner vide order dated 18.3.2013 in Criminal Case No.162 of 2013.

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Aggrieved by the summoning order the petitioner preferred criminal

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revision before the court below which was dismissed on 2.12.2013,hence the present petition.

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The counsel for the petitioner has submitted that the company has not been made the party as an accused in the case in question as held by the Hon'ble Supreme Court in the case of Aneeta Hada Vs. Godfathere Travels and Tours Private Limited, (2012) 5 SCC 661 , the impugned summoning order is erroneous.

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Learned counsel for the petitioner contended that in a catena of decisions the Apex Court has repeatedly held that if complaint under section 138 N.I.Act is filed in respect of dishonour of cheque issued from the account of company, it is incumbent on the part of complainant to make necessary averments in complaint at the time offence was committed. the person accused was In charge of and responsible for the conduct and business of the company. This averrment is an essential requirement of Section 141 of N.I.Act.

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In this context,learned counsel for the petitioner has placed reliance on the judgement of this Court in the case of Yogendra Kumar Khullar @ Bittoo Vs.State of U.P. & Another reported on2013 1ACR 277 (Criminal Mis.Application No.4452 of 2008) wherein the petition was allowed and entire proceeding was quashed.

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In support of his contentions, learned counsel for the petitioner has also cited two decisions of Hon'ble Apex Court reported in 2012 (77) ACC 924, Aneeta Hada Vs. M/s Godfather travels & Tours Pvt.Ltd. and (2005) 8 SCC 89, S.M.S.Pharmaceuticals Ltd. Vs. Neeta Bhalla & another.

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On the other hand, learned counsel appearing for opposite party no.2 has contended that the cheque issued by the applicant to opposite party no.2 was bounced and hence the liability is upon the petitioner for payment of the amount in question. It is also contended that the learned Magistrate has rightly summoned the petitioner to face trial after considering the entire materials on record and finding a prima facie offence against him. Hence no interference is called for in this petition.

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I have considered the aforesaid arguments advanced on behalf of the rival parties' counsel and perused the record.

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The Hon'ble Apex Court in Aneeta Hada Vs. M/s Godfather Travels & Tours Pvt. Ltd. (supra) has held that for the offence under Section 138 of the Act committed by a company, the company as well as every person in charge of and responsible to the company for conduct of the business of the company at the time of commission of the offence shall be deemed to be guilty of offence. The Hon'ble Apex Court has discussed the provisions of Section 138 along with Section 141 of the Act which deals with the offence committed by a company. Hon'ble Apex Court has held that for maintaining the prosecution under Section 141 of the Act, arraying of a company as an accused is imperative.

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The Hon'ble Apex Court in its verdict S.M.S.Pharmaceuticals Ltd. Vs. Neeta Bhalla & another (supra) has held that necessary averments ought to be contained in a complaint before a person is subjected to criminal process. A liability under Section 141 of the Act is sought to be fastened

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vicariously on a person connected with a company, the principal accused being the company itself. It is a departure from the rule in criminal law against vicarious liability. Under Section 141 what is required is that the persons who are sought to be made criminally liable, should be, at the time of offence was committed, in charge of and responsible to the company for the conduct of the business of the company. 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, will be liable for criminal action. The liability arises on account of conduct, act or omission on the part of a person and not merely on account of holding an office or position in a company.

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For an offence under Section 138 of the Act by the companies, the provisions are provided under Section 141 of the said Act. To decide the controversy at issue, both the provisions of Sections 138 and 141 of the Act are relevant, which are quoted below:-

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"138.Dishonour of cheque for insufficiency, etc., of funds in account.Where any cheque drawn by a person on an account maintained by him with a banker for payment of any amount of money to another person from out of that account for the discharge, in whole or in part, of any debt or other liability, is returned by the bank unpaid, either because of the amount of money standing to the credit of that account is insufficient to honour the cheque or that it exceeds the amount arranged to be paid from that account by an agreement made with that bank, such person shall be deemed to have committed an offence and shall, without prejudice to any other provision of this Act, be punished with imprisonment for [a term which may be extended to two years] or with fine which may extend to twice the amount of the cheque, or with both:

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Provided that nothing contained in this section shall apply unless-

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(a) the cheque has been presented to the bank within a period of six months from the date on which it is drawn or within the period of its validity, whichever is earlier;

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(b) the payee or the holder in due course of the cheque, as the case may be, makes a demand for the payment of the said amount of money by giving a notice in writing, to the drawer of the cheque, [within thirty days] of the receipt of information by him from the bank regarding the return of the cheque as unpaid; and

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(c) the drawer of such cheque fails to make the payment of the said amount of money to the payee or, as the case may be, to the holder in due course of the cheque, within fifteen days of the receipt of the said notice.

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Explanation- For the purpose of this section "debt or other liability" means a legally enforceable debt or other liability."

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"141. Offences by companies-- (1) If the person committing an offence under Sec. 138 is a company, every person who, at the time the offence was committed, was in charge of, and 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:

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Provided that nothing contained 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.

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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 may be, he shall not be liable tor prosecution under this Chapter.

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(2) Notwithstanding anything contained in sub-section, where any offence under this Act has been committed by a company and it is proved that the offence has been committed with the consent or connivance of, or is attributable to, any neglect on the part of, any Director, Manager, Secretary or other officer of the company, such Director, Manager, 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.

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Explanation-- For the purposes of this section--

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(a) "Company" means any body corporate and includes a firm or the association of individuals; and

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(b)"director", in relation to a firm, means a partner in the firm."

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It will be seen from the above provisions that Section 138 of the Act casts criminal liability punishable with imprisonment for a term which may be extended to two years or with fine which may extend to twice the amount of the cheque, or with both on a person who issues a cheque towards discharge of a debt or liability in whole or in part and the cheque is dishonoured by the bank on presentation.

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Section 141 extends such criminal liability in case of a company to 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. By a deeming provision contained in Section 141 of the Act, such a person is vicariously liable to be held guilty for the offence under Section 138 of the Act and punished accordingly.

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Considering the facts and circumstance of the present case, according to the complaint itself, the cheque was issued for Pawan Hardware Store, Sandeep talkies,near Court Road, Civil Lines, Muzaffar Nagar by the Director, Devendra Kumar Garg- petitioner. It is not averred in the compliant that Devendra Kumar Garg was in charge of and responsible for the conduct of the business of the company at the time of commission of the offence and hence he will not be liable for criminal action. It may be noted that the firm named as Ravi Organics Ltd., Nai Mandi,Muzaffar Nagar,, who was the principal accused, has not been made party in the complaint as stated above and side by side the necessary averment required to be made in the complaint satisfying the requirements of Section 141 of the Act are also lacking to maintain prosecution as held in the decisions cited above. In this view of the matter, complaint itself is bad in law and the entire proceedings in pursuance thereof, including the summoning order dated 18.3.2013 passed by Addl. Chief Judicial Magistrate, Court No.2, Muzaffar Nagar in Criminal Case No.162 of 2013,

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Pawan Kumar Goel Vs. Devendra Kumar Garg, under Section 138 N.I. Act, P.S. Civil Lines, District Muzaffar Nagar as well as order dated 2.12.2013 passed by Addl. Sessions Judge, Court No.7, Muzaffarnagar in Criminal Revision No.212 of 2013, Devendra Kumar Garg Vs. Pawan Kumar Goel, is nothing but an abuse of process of the court and is liable to be quashed.

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Accordingly, this petition is allowed and the entire proceedings in pursuance thereof, including the summoning order dated 18.3.2013 passed by Addl. Chief Judicial Magistrate, Court No.2, Muzaffar Nagar in Criminal Case No.162 of 2013, Pawan Kumar Goel Vs. Devendra Kumar Garg, under Section 138 N.I. Act, P.S. Civil Lines, District Muzaffar Nagar as well as order dated 2.12.2013 passed by Addl. Sessions Judge, Court No.7, Muzaffar Nagar in Criminal Revision No.212 of 2013, Devendra Kumar Garg Vs. Pawan Kumar Goel, are hereby quashed.

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There is no order as to costs

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Order Date :19.11.219

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Devendra Kumar Garg v. State of U.P. and Anr.

Case brief

What is this about?

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Devendra Kumar Garg v. State of U.P. and Anr.

Case brief

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