Allowed

Hardev Singh v. State of U.P and Another

Allahabad HC6 Jun 2023A482/43317/2022

Case brief

AI extract

What is this about?

This application challenged the dismissal of a request to array an issuing company as a party in a cheque bounce case. The court held that non-impleadment of the company is a curable irregularity and allowed the application to array the company despite prior cognizance.

What did the court decide?

Impugned order setting aside application u/s 482 dismissed; order dated 20.08.2022 set aside and court directed to proceed with complaint arraying the company.

Hardev Singh Vs State of U.P and Another — Cheque Dishonour | Allahabad HC (2023)

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Neutral Citation No. - 2023:AHC:124834

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Court No. - 84

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Case :- APPLICATION U/S 482 No. - 43317 of 2022

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Applicant :- Hardev Singh Opposite Party :- State Of U.P And Another Counsel for Applicant :- Brijesh Kumar Pandey Counsel for Opposite Party :- G.A.

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Hon'ble Prashant Kumar,J.

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1. The instant application has been filed against challenging the order 20.08.2022 passed by Chief Judicial Magistrate, Rampur in Complaint Case No.1543 of 2019 (Hardev Singh Vs. Akhilesh Mani).

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2. Counsel for the applicant submits that the complainant had some business transaction with opposite party no.2. During course of business the opposite party had given three cheques of Rs.80 lacs, Rs.65 crores and Rs.25 crores. The first cheque was encashed and remaining two cheques of Rs.65 crores and Rs.25 crores were bounced because of insufficiency of fund.

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On the request of opposite party the cheques were again presented and the same were returned on 04.03.2019 with the note that "Account Blocked". Thereafter, the complainant issued a legal notice to opposite party.

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When the amount was not paid, the applicant filed complaint under Section 138 of Negotiable Instruments Act in the Court of Chief Judicial Magistrate, Rampur and while filing the complaint the Company, who had issued the cheques was not arrayed as party. Thereafter, the applicant had filed an application on 25.07.2022 seeking permission of the Chief Judicial Magistrate concerned to array the Company (M/s Gadiwal Load Service Private Limited) as party. This application of the applicant to array the Company as party was rejected vide order dated 20.08.2022.

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Learned Counsel for the applicant submits that as per Section 141 of the

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Negotiable Instruments Act, Company has to be impleaded as a party and the order rejecting the impleadment application is incorrect and is liable to be set aside.

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On this point learned counsel for the respondent submitted that the impugned order dated 20.08.2022 passed by the Chief Judicial Magistrate, Rampur is correct as it is not open for the complainant to add Company as a party at the stage when the cognizance had already been taken against the other accused.

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Heard Sri Brijesh Kumar Pandey, learned Counsel for the applicant and learned A.G.A. for the State.

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The impugned order has been passed on the ground that since cognizance has already been taken under Section 142 Cr.P.C. hence, at this stage, no fresh party can be added and accordingly, the application for arraying the party was dismissed by the court below.

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At this juncture, this court refers to Section 141 which deals with offences by companies. As the spine of the controversy rests on the said provision, it is reproduced below: -

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“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;

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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:

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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 for prosecution under this Chapter.

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(2) Notwithstanding anything contained in sub-section (1), where any

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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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10. On a reading of the said provision, it is plain as day that if a person who commits offence under Section 138 of the Act is a company, the company as well as every person in charge of and responsible to the company for the conduct of business of the company at the time of commission of offence is deemed to be guilty of the offence.

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Section 141 uses the term ‘person’ and refers it to a company. There is no trace of doubt that the company is a juristic person. The concept of corporate criminal liability is attracted to a corporation and company and it is so luminescent from the language employed under Section 141 of the Act.

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The Hon'ble Supreme Court in the case of Anita Hada Vs. Godfather Travels and Tours Private Limited reported in (2012) 5 SCC 661 has held that for maintaining the prosecution under Section 141 of the Act arraigning of a company as an accused is imperative.

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13. In Hon'ble M.P. High Court in Manish Kalani and Anr. Vs. Housing and Development Corporation Ltd. (HUDCO) Misc. Crl. No. 16285 of 2016" , decided on 30.01.2018 formulated following 4 questions for adjudications:

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"(i) Whether in a complaint filed under Section 138 N.I. Act in respect of an offence committed by a company the company is a necessary and proper party, in view of Section 141 of the N.I. Act or not.

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(ii) Whether the failure on the part of the complainant to implead the company as an accused/opposite party in the complaint is fatal and incurable.

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(iii) Whether in the absence of any specific provision in the N.I. Act or in the Code of Criminal Procedure regarding impleadment, the Court can summon the additional accused or not.

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(iv) Whether the summoning of a non applicant as an accused can be done only after the Court passing the summoning order, has itself recorded the evidence in the case. "

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14. On the first issue the Hon'ble M.P. High Court gave a finding that the complaint filed under Section 138 N.I. Act in respect of an offence committed by a company i.e. where the cheque is issued on behalf of the company would not be maintainable if the company on whose behalf of the cheque has been issued is not impleaded as an accused/opposite party in the complaint..

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As far as the second question is concerned, a complete answer to this question has been given in the case of " Manish Kalani and Anr. Vs. Housing and Development Corporation Ltd. (HUDCO) Misc. Crl. No. 16285 of 2016 , decided by Hon'ble M.P. High Court on 30.01.2018, and answered this question as under:-

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"Thus, upon perusal of the aforesaid paragraphs, there is no iota of doubt that in a case under Section 138 of the N.I. Act, if the company on whose behalf of the disputed cheque was issued was not impleaded, can be subsequently impleaded. However, the only rider to the aforesaid proposition is that the material particulars in respect of the same should be present in the complaint filed under Section 138 of the N.I. Act or else the same being barred by limitation cannot be permitted at a belated stage."

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16. With regard to issue no.4 the Madhya Pradesh High Court has further held that non-arraying the company as an accused in the complaint would not itself render the complaint illegal and it is simply an irregularity and the complaint can be regularized by impleading the company as the party in the complaint.

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That an identical issue came up before Lucknow Bench of this Court in Misc. Single No.10686 of 2019 (Nitin Bhatia Vs. State of U.P. & Others) decided on 16.04.2019 in which this Hon'ble Court has held that when specific allegations have been made against the company, in view of the above mentioned decision of Ushar Agro Ltd . (supra), it is merely an irregularity which can be corrected subsequently, as there are specific allegations against the company in the complaint. The omission to implead the company as an accused is not such an

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infirmity or illegality in the considered opinion of this Court, which could not be allowed to be cured, as all material particulars for implicating the company as an accused are available in the complaint .

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18. As per the ratio laid down by Hon'ble Supreme Court in the matter of Anita Hada (supra), Hon'ble Madhya Pradesh High Court in the matter of Manish Kalani (supra) and this Hon'ble Court in the matter of Nitin Bhatia (supra), it is clear that a company has to be impleaded as accused in the complaint filed under Section 138 of N.I. Act. It has been further held that non arraying of company as an accused in the complaint would not itself render the complaint illegal and it is simply an irregularity and the complaint can be regularized by impleading the company as party in the complaint.

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19. Accordingly, the instant application under Section 482 Cr.P.C. is allowed. The impugned order dated 20.08.2022 passed by C.J. M., Rampur is hereby set aside and the Court below is directed to proceed with the complaint filed under Section 138 of N.I.Act arraying the company M/s Gadiwal Load Service Private Limited as a party.

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(Prashant Kumar, J.)

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Order Date :- 6.6.2023 S.P.

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Digitally signed by :- RAMAKANT High Court of Judicature at Allahabad

Hardev Singh v. State of U.P and Another

Case brief

What is this about?

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Hardev Singh v. State of U.P and Another

Case brief

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