Allowed

Sandeep Jaiswal and Anr. v. M/S. Perfect Paper Converter and Anr.

Gauhati HC16 Sept 2022Crl.Pet./25/2020

Case brief

AI extract

What is this about?

In a criminal petitions, the Gauhati High Court allowed the plea quashing Section 138 BCIs Act proceedings against individual proprietors of an unregistered agency. The court ruled that since the cheque was issued in the agency's name without invoking Section 141, prosecuting the individuals was illegal.

What did the court decide?

The impugned order dated 11.09.2019 under the Complaint Case No.3041C/2019 stands set aside and quashed; the stay previously granted stands vacated.

Sandeep Jaiswal and Anr. Vs M/S. Perfect Paper Converter… — Cheque Dishonour | Gauhati HC (2022)

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GAHC010005942020

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THE GAUHATI HIGH COURT (HIGH COURT OF ASSAM, NAGALAND, MIZORAM AND ARUNACHAL PRADESH)

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Case No. : Crl.Pet./25/2020

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SANDEEP JAISWAL AND ANR.

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PARTNER JAISWAL AGENCY, R/O H. NO. 271, 1ST FLOOR, ZOO NARENGI ROAD, GEETA NAGAR, GUWAHATI-781024, DIST-KAMRUP (M), ASSAM

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2: SMTI. MAUSUMI MISHRA PARTNER M/S JAISWAL AGENCY R/O H. NO. 271 1ST FLOOR ZOO NARENGI ROAD GEETA NAGAR GUWAHATI-781024 DIST-KAMRUP (M) ASSA

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VERSUS

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M/S. PERFECT PAPER CONVERTER AND ANR.

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R/O FATASHIL MAIN ROAD, OPPOSITE SBI ATM, GUWAHATI-781009, DISTKAMRUP(M), ASSAM, REPRESENTED BY SHRI AMIT KUMAR VYAS, AGED ABOUT 38 YEARS, S/O SHRI MANOHAR VYAS, R/O C/O BASANTA RAM KALITA, 2ND FLOOR, OPPOSITE ASHRAM ROAD GALI, SANTIPUR, GUWAHATI-781009, KAMRUP(M), ASSAM

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2:STATE OF ASSAM REPRESENTED BY THE PUBLIC PROSECUTOR ASSA

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Advocate for the Petitioner : MR. B DEKA

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Advocate for the Respondent : PP, ASSAM (R2)

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BEFORE

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HON’BLE MR. JUSTICE ROBIN PHUKAN

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Date of hearing : 30.08.2022. Date of judgment : 16.09.2022.

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JUDGEMENT AND ORDER

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Heard Mr. B. Deka, learned counsel appearing for the petitioners. Also heard Mr. H. Gupta, learned counsel appearing for the respondent No.1.

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In this petition under Section 482 of the CrPC, petitioner No.1 Sri Sandeep Jaiswal and petitioner No.2 Smti Mausumi Mishra have prayed for quashing of the order dated 11.09.2019, passed by the learned Judicial Magistrate, 1^st Class, Kamrup (M) at Guwahati in Complaint Case No.3041^C /2019. It is to be mentioned here that vide the impugned order, the learned Court below has taken cognizance upon the complaint lodged by the respondent M/s. Perfect Paper Converter, represented by its proprietor Shri Amit Kumar Vyas, under Section 138 of the N.I. Act and issued process against present petitioners.

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The factual background leading to filing of the present petition is briefly stated as under:

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“On 06.08.2019, M/s. Perfect Paper Converter, represented by its proprietor Amit Kumar Vyas, lodged a complaint under Section 138 of the N.I. Act before the learned CJM, Kamrup (M) at Guwahati to the effect that the accused is a firm/company in the name and style M/s. Jaiswal Agency, represented by its proprietors namely, Sri Sandeep Jaiswal and Smti Mausumi Mishra had purchased goods from the firm of the complainant on credit for a sum of Rs.61,356/-. In order to discharge the aforesaid liability, M/s. Jaiswal Agency issued a cheque

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bearing No.315235, dated 13.05.2019, for a sum of Rs.61,356/- drawn in the State Bank of India, situated at Zoo Road, Guwahati, against its account No.5020026622794. Thereafter, the complainant has deposited the cheque with his banker i.e. HDFC Bank for collecting the same. But, the said cheque returned unpaid by the Banker with an endorsement to the effect that “fund insufficient”, vide Bank memo dated 15.05.2019. Thereafter the respondent had issued notice demanding payment of the aforesaid amount, under Section 138 of the N.I. Act, by registered post through its Advocate, on 13.06.2019. But, the accused had failed to make payment of the aforesaid amount in spite of receipt of the legal notice. Thereafter the respondent approached the Court of learned CJM, Kamrup (M) at Guwahati, by filing the complaint under Section 138 of the N.I. Act. Upon the said complaint, the learned Court below has taken cognizance and issued process to the petitioners.

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Being highly aggrieved, the petitioners approached this Court for quashing and setting aside the complaint and the order of taking cognizance on the ground that the cheque was issued in the name of M/s. Jaiswal Agency, but said Agency has not been made and accused and no notice was issued to it and having not invoked the provision of Section 141 of the N.I. Act, the petitioners cannot be made as accused.

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Mr. B. Deka, learned counsel for the petitioner submits that as per averment made in the para 2 of the complaint, accused M/s. Jaiswal Agency is a firm/company, represented by its proprietor namely, Sri Sandeep Jaiswal and Smti Mausumi Mishra, but said firm/ company has not been arrayed in the complaint as an accused and no statutory notice was also issued to the firm/company M/s. Jaiswal Agency. Mr. Deka further submits that having not invoked Section 141 of the N.I. Act, the respondent cannot array the petitioners as accused here in this case and that in view of Section 141 of the N.I. Act, deeming fiction is created and the

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functionaries and the companions are made liable. Mr. Deka also submits that in view of the proviso to Section 138 of the N.I. Act and as per Clause ‘B’, the drawer of the cheque is M/s. Jaiswal Agency and the petitioners are only the representatives.

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Mr. Deka further submits that no offence under Section 138 of the N.I. Act is made out against the petitioners and as such the complaint lodged before the learned CJM, Kamrup (M) at Guwahati is an abuse of the process of the Court and that the legal notice, issued to the petitioners, is contrary to the complaint and therefore, it is contended to allow this petition by setting aside and quashing the complaint. Mr. Deka also referred a decision of the Hon’ble Supreme Court in the case of Aneeta Hada vs. Godfather Travel and Tours Pvt. Ltd. , reported in 2012 5 SCJ 661 , in support of his submission.

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On the other hand, Mr. H. Gupta, learned counsel for the respondent No.1 submits that M/s. Jaiswal Agency is an agency of two individuals, who are husband and wife and the said agency is not a registered firm or company and as such not a juristic person and therefore, it was not arrayed as a party in the proceeding and also no notice was issued to it and it will not come under the purview of Section 141 of the N.I. Act in view of explanation “a” and “b” to the said Section. Mr. Gupta also referred two case laws: (1) M/s. Bedi Sons Steels and Wires vs. M/s. B.G. Brothers , in Crl. M. No.50086/M of 2001 and (2) Dilip Hariramani vs, Bank of Boroda, reported in 2022 SCC OnLine SC 579 in support of his submission. Mr. Gupta therefore, contended to dismiss the petition. In reply to the above submission, Mr. Deka, learned counsel for the petitioners submits that “association of individual” also a firm or company in view of Explanation (a) to Section 141(2) of the N.I. Act.

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Having heard the submission learned Advocates of both sides, I have carefully gone

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through the petition and the documents placed on record and also perused the case laws referred by the learned Advocates of both sides.

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It appears that there was a business transaction between the petitioners and the respondent No.1 and the petitioners have used to do the business in the name and style of M/s. Jaiswal Agency and in order to discharge a debt of Rs.61,356/-, M/s. Jaiswal Agency issued one cheque which is enclosed with the petition as Annexure-1 and the said cheque was signed by both the petitioner No.1 Sri Sandeep Jaiswal and petitioner No.2 Smti Mausumi Mishra. The said cheque was deposited with the Banker of the respondent No.1, but, the same was returned unpaid with the endorsement “fund insufficient”. Further, it appears that thereafter, the respondent No.1 issued legal notice to the petitioners, which is enclosed with the petition as Annexure-2. But, despite receipt of notice, M/s. Jaiswal Agency represented by the petitioners, failed to make the payment of the amount so demanded within the stipulated time for which the respondent No.1 has approached the Court of learned CJM, Kamrup (M) at Guwahati by filing a complaint under Section 138 of the N.I. Act, read with Section 142 and 142(b) of the N.I. Act. The said complaint is annexed with the petition as Annexure-3.

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A careful perusal of the said complaint reveals that M/s. Jaiswal Agency is not made a party in the said complaint, rather the proprietors i.e. petitioner No.1 Sri Sandeep Jaiswal and petitioner No.2 Smti Mausumi Mishra have been made as accused No.1 and accused No.2 respectively.

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It also appears from the complaint, specially para 2, where in it is avered that “the accused M/s. Jaiswal Agency is a firm/company having its office at H. No.271, 1^st Floor, Zoo Narengi Road, Geeta Nagar, Guwahati-24 and represented by its proprietors i.e. Sri Sandeep

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Jaiswal and Smti Mausumi Mishra”. This being the factual position, the submission of Mr. Gupta, learned counsel for the respondent appears to be contradictory with the averments made in the complaint.

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It is to be noted here that Mr. Gupta has argued that M/s. Jaiswal Agency is an agency of two individuals i.e. husband and wife and not a registered firm/company and this submission of Mr. Gupta is controverted by Mr. B. Deka, learned counsel for the petitioners that M/s. Jaiswal Agency though not a registered firm/company, yet it is an association of two individuals and as per Explanation “a” of Section 141 of the N.I. Act, it deems to be a company.

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Having analyzed the submission of learned Advocates of both sides, I find force in the submission of Mr. Deka, learned counsel for the petitioners. As per the averments made in the complaint, M/s. Jaiswal Agency is a firm/company and it has not been made as an accused in the complaint i.e. Annexure-3 and admittedly no notice was issued to it and as such there is substance in the submission of Mr. Deka, learned counsel for the petitioners as because the cheque was issued in the name of M/s. Jaiswal Agency, though it was signed by both the petitioners and since M/s. Jaiswal Agency was not made a party, the petitioner No.1 and petitioner No.2 cannot be prosecuted without invoking Section 141 of the N.I. Act and the case law, Aneeta Hada (Supra) referred by Mr. Deka also to lend support to his version.

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It is to be noted here that in the said case, Hon’ble Supreme Court has held 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 dragnet

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on the touchstone of vicarious liability as the same has been stipulated in the provision itself.

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The said decision has also been followed consistently in the case of Himanshu vs. B. Shivamurthy & another in Criminal Appeal No.1465/2009 and also in the case of Hindustan Unilever Ltd. vs. State of Madhya Pradesh , in Criminal Appeal No.715/2020 (arising out of SLP Criminal No.578/2020), which is quoted here-in-below for ready reference:

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“58. Applying the 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.” In similar terms, the Court further held:

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“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…. “ The judgment of the three Judge Bench has since been followed by a two Judge Bench of this Court in Charanjit Pal Jindal vs. L.N. Metalics2. There is merit in the second submission which has been urged on behalf of the appellant as well. The proviso to Section 138 contains the pre-conditions which must be fulfilled before an offence under the provision is made out. These conditions are; (i) presentation of the cheque to the bank within six months from the date on which it is drawn or within the period of its validity, whichever is earlier; (ii) a demand being made in writing by the payee or holder in due course by the issuance of a notice in writing to the drawer of the cheque within thirty days of the receipt of

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information from the bank of the return of the cheques; and”

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I have also carefully gone through the decision referred by Mr. Gupta, learned counsel for the respondent and I find that the ratio laid down in the aforesaid cases has to be treated

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to be restricted to its own facts and therefore, it would not come into the aid of the respondent No.1.

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Since M/s. Jaiswal Agency has not been made an accused here in this case and since no legal notice has been issued to it, the complaint under Section 138 of the N.I. Act cannot be maintained against the present petitioners, without invoking the provision of Section 141 of the N.I. Act and as such the complaint lodged before the Court of learned CJM, Kamrup (M) at Guwahati is nothing but an abuse of the process of Court and taking cognizance vide impugned order dated 11.09.2019 suffers from manifest illegality and thus, failed to withstand the test of legality and propriety.

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In the result, I find sufficient merit in this petition and accordingly the stands allowed. The impugned order dated 11.09.2019, passed by the learned Judicial Magistrate, 1^st Class, Kamrup (M) at Guwahati in Complaint Case No.3041^C /2019 stands set aside and quashed. Stay, if any, granted earlier stands vacated. The parties have to bear their own cost.

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JUDGE

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Comparing Assistant

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Barman

Sandeep Jaiswal and Anr. v. M/S. Perfect Paper Converter and Anr.

Case brief

What is this about?

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Sandeep Jaiswal and Anr. v. M/S. Perfect Paper Converter and Anr.

Case brief

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