Rajat Kumar Bhalotia Vs Sai Tech Medicare Private Limited

Neutral Citation No. ( 2024:HHC:4940 )

IN THE HIGH COURT OF HIMACHAL PRADESH, SHIMLA

Cr. MMO No. 166 of 2018 Reserved on: 20.06.2024 Date of Decision: 11.07.2024

Rajat Kumar Bhalotia ....Petitioner Versus
Sai Tech Medicare Pvt Ltd. and anr. ....Respondent Coram Hon’ble Mr Justice Rakesh Kainthla, Judge. Whether approved for reporting? Yes
For the Petitioner : Ms. Shalini Thakur & Mr. Manoj Ahuja, Advocates.
For the Respondents : Mr. Rajiv Jiwan, Senior Advocate, with Mr. Nitin, Advocate.

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Rakesh Kainthla, Judge

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The petitioner has filed the present petition for quashing of complaint bearing registration No. 132/2015 dated 30.11.2015 for the commission of an offence punishable under Section 138 of the Negotiable Instruments Act (in short ‘NI Act’).

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Briefly stated, the facts giving rise to the present petition are that the complainant filed a complaint under Section 138 of the NI Act against the accused. It was asserted that the complainant manufactures medicines and other allied products.

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Accused Nos.1 and 2 were running their unit at 99B, Sai Puram, New Delhi Road, Meerut, U.P. under the name and style of Symbiosis Life Sciences Limited. Rajat Kumar Bhalotia and Rajesh Rastogi are the Directors and authorised signatories of Symbiosis Life Sciences Limited. They were aware of the day-to-day function and business affairs of the Company. The accused took a loan of ₹2,30,05,871/- from the complainant. They also purchased medicines worth ₹2,24,26,078.76/-. Thus, they were liable to pay ₹4,54,31,949.76/-. The accused issued four cheques of different amounts to discharge their legal liability. The complainant presented the cheques for realisation in its account; however, the cheques were dishonoured with the remarks ‘funds insufficient’. The complainant served a legal notice upon the accused on 17.09.2015 and asked them to make the payment but they failed to do so; hence, the complaint was filed for taking action against the accused as per the law.

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The learned Trial Court found sufficient reasons to summon the accused for the commission of an offence punishable under Section 138 of the NI Act.

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The accused appeared and filed an application under Section 243(2) of Cr.P.C. for sending the cheques for examination by the Central Forensic Science Laboratory. Learned Trial Court held that Section 243 of Cr.P.C. deals with the defence evidence. The notice of accusation was not put and the application was premature. Hence, the application was dismissed.

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The accused also filed an application under Section 319 of Cr.P.C. for impleading V.D. Gupta and Jagbir Singh, Managing Director and Director of accused No.3 as accused. The learned Trial Court dismissed the application after holding that the accused had dealt with the complainant and Directors are not to be impleaded at this stage. The accused was an authorized signatory and he is liable by virtue of his position. The Director can be made liable if he is In-charge and responsible to the Company for its affairs.

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Being aggrieved from the orders of summoning the accused and dismissing the applications, the petitioner/accusedRajat Kumar has filed the present petition asserting that complainant Tech Medicare Private Limited is a Company. Mr. V.D. Gupta is its Managing Director and Mr. Jagbir Singh is the other Director. V.D. Gupta and Jagbir Singh are the first Directors,

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promoters and shareholders of the accused/Company. The complaint is a gross misuse of the criminal process as the complaint is signed by Jagbir Singh without any authorization from the complainant. He is also a Director in the accused/Company. The complaint was filed to pressurise the accused Rajat Kumar Bhalotia to settle the Company petition filed before the Company Law Board, New Delhi on 29.06.2015 raising the issues of oppression and mismanagement of the Company. The cheques were misused by Symbiosis Life Sciences Limited. No cheque signed by the petitioner/accused was presented to the Bank for more than four years. It is beyond comprehension that the petitioner would issue a set of cheques for an aggregate amount of ₹4,54,31,949.76. The contents of the complaint are false. The complainant had suppressed the material facts from the Court. Mr. V.D. Gupta and Jagbir Singh were in-charge and responsible to the accused Company for the conduct of its business when the offence was committed. The complainant misstated the fact that the medicines were purchased from the accused company. Learned Magistrate erred in dismissing the applications under Section 319 of Cr.P.C. and Section 243 of Cr.P.C. The complaint was filed without any authority from the Board of

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Directors and no resolution of the Board of Directors was filed with the complaint. The petitioner is a shareholder of the accused/Company having a 36.17% equity share with his father. He is not the Director nor the officer of the Company. He cannot be made liable for the commission of the offence. Mr. V.D. Gupta and Mr. Jagbir Singh were managing both the Companies. Cheques were misused by Jagbir Singh. The filing of a single complaint regarding the dishonour of five cheques is barred under Section 219. It was not proved that the cheques were issued in the discharge of the legal liability. The continuation of the proceedings would amount to abuse of the process of the law. There was no evidence to connect the petitioner with the commission of crime. Learned Trial Court gravely erred in summoning the petitioner and dismissing the applications; hence, it was prayed that the present petition be allowed and the order passed by learned Trial Court be set aside.

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I have heard Ms. Shalini Thakur, learned counsel for the petitioner/accused and Mr. Rajiv Jiwan, learned Senior Counsel assisted by Mr. Nitin, learned counsel for the respondent/complainant.

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Ms Shalini Thakur, learned counsel for the petitioner/accused submitted that the learned Trial Court erred in summoning the accused without any material. The complaint was not filed by an authorised person, which is evident from the fact that an application has been filed before this Court to prove the resolution of the Board of Directors. Such a complaint is not maintainable. She relied upon the judgments of A.C. Narayana versus State of Maharashtra, 2015 (12) SCC 203, Valpoi Vally Botanicals Pvt Ltd. vs. Anil Ashok Jaware, 2016 STPL 3027 Bombay, Central Bureau of Investigation, Lucknow, U.P. versus Indra Bhushan Singh and Ors., 2014 (6) Scale 58. M/s Balaji Agencies Private Limited Goa versus M/s Samudra Ropes Private Limited, 2011 (4) Civil Court Cases 515. George Joseph versus HMT (International) Limited, Bangalore, 2015 ACD 83 (KAR). Karthick and Company versus Vadivel Sizing and Weaving Mills Private Limited and anr, 2012 STPL 12337 , Amit Gupta versus State of West Bengal, 2020 STPL 5705 Calcutta , and M/s Survika Distributors Pvt. Ltd. And anr. versus M/s S.R. Retain Zone Pvt. Ltd., 2018 ACD 415 in support of her submission. In the alternative, she submitted that the learned Trial Court erred in dismissing the application under Section 319 of Cr.P.C. for impleading V.D. Gupta and Jagbir Singh, as well as, the application

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under Section 243(2) of Cr. P.C for sending the cheques for examination by Central Forensic Science Laboratory. Hence, she prayed that the complaint be quashed or in the alternative the orders passed by the learned Trial Court dismissing the applications be set aside.

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Mr. Rajiv Jiwan, learned Senior Counsel, submitted that the complaint was filed by a duly authorized person and an application bearing No.Cr.M.P No. 937 of 2019 has been filed for placing on record the resolution of the Board of Directors. It is permissible to cure the defect in the authorization after the filing of the complaint. He relied upon the judgments of the Hon’ble Supreme Court in MMTC Limited versus M/s Medchl Chemicals and Pharma Private Limited, 2002 (1) SCC 234 and judgment of this Court in Uttam Traders Ranghri versus Tule Ram, Menu/HP/1499/2018 in support of his submission. He further submitted that the learned Trial Court had rightly dismissed the applications because Section 243 of Cr.P.C. deals with the defence evidence. The notice of accusation has not been put and it was not permissible to file the application. Application under Section 319 of Cr.P.C. can be filed after some evidence has been led and since no evidence has been led in the present case; hence, the

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application was rightly dismissed as not maintainable. The orders were revisable and in the absence of any revision, the petitioner cannot take recourse to Section 482 of Cr.P.C. to set aside the orders passed by the learned Trial Court. Hence, he prayed that the present petition be dismissed.

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I have given considerable thought to the submissions at the bar and have gone through the records carefully.

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This Court had framed the following points for determination on 22.05.2024:-

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(I) Whether the complaint initiated by respondentcomplainant in proceedings under Section 138 of the Negotiable Instruments Act, without the authorization of a person by the Company-Board of Directors renders the initiation of proceedings a nullity?

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(II) Whether the proceedings so initiated, could be rectified, allowing the complainant-respondent to place on record the required authorization by the Company in favour of authorized signatory who had filed the complaint?

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The record of the learned Trial Court has been requisitioned and it does not show any authorization filed by the complainant for filing the complaint. This defect was sought to be rectified before this Court by filing an application for placing on record the resolution of the Board of Directors. The present

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petition has been filed under Section 482 of Cr. P.C. and it is not permissible for this Court to decide the petition by taking the fresh evidence. It was laid down by the Hon’ble Supreme Court in MCD v. Ram Kishan Rohtagi, (1983) 1 SCC 1: 1983 SCC (Cri) 115 , that the proceedings can be quashed if on the face of the complaint and the papers accompanying the same no offence is constituted. It is not permissible to add or subtract anything. It was observed:

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“10. It is, therefore, manifestly clear that proceedings against an accused in the initial stages can be quashed only if on the face of the complaint or the papers accompanying the same, no offence is constituted. In other words, the test is that taking the allegations and the complaint as they are, without adding or subtracting anything, if no offence is made out then the High Court will be justified in quashing the proceedings in exercise of its powers under Section 482 of the present Code.”

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Madras High Court also held in Ganga Bai v. Shriram,

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1990 SCC OnLine MP 213: ILR 1992 MP 964: 1991 Cri LJ 2018 , that the fresh evidence is not permissible or desirable in the proceedings under Section 482 of Cr.P.C. It was observed:

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“Proceedings under Section 482, Cr.P.C. cannot be allowed to be converted into a full-dressed trial. Shri Maheshwari filed a photostate copy of an order dated 28.7.1983, passed in Criminal Case No. 1005 of 1977, to which the present petitioner was not a party. Fresh evidence at this stage is neither permissible nor desirable. The respondent by filing this document is virtually introducing additional evidence, which is not the object of Section 482, Cr.P.C .”

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Andhra Pradesh High Court also took a similar view in Bharat Metal Box Company Limited, Hyderabad and Others vs. G. K. Strips Private Limited and another, 2004 STPL 43 AP , and held:

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“9. This Court can only look into the complaint and the documents filed along with it and the sworn statements of the witnesses if any recorded. While judging the correctness of the proceedings, it cannot look into the documents, which are not filed before the lower Court. Section 482 Cr.PC debars the Court to look into fresh documents, in view of the principles laid down by the Supreme Court in State of Karnataka v. M. Devendrappa and another, 2002 (1) Supreme 192 . The relevant portion of the said judgment reads as follows:

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"The complaint has to be read as a whole. If it appears that on consideration of the allegations, in the light of the statement made on oath of the complainant that the ingredients of the offence or offences are disclosed and there is no material to show that the complaint is mala fide, frivolous or vexatious, in that event there would be no justification for interference by the High Court. When information is lodged at the Police Station and an offence is registered, then the mala fides of the informant would be of secondary importance. It is the material collected during the investigation and evidence led in Court, which decides the fate of the accused person. The allegations of mala fides against the informant are of no consequence and cannot by itself be the basis for quashing the proceedings".

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A similar view was taken in Mahendra K.C. v. State of Karnataka, (2022) 2 SCC 129: (2022) 1 SCC (Cri) 401 wherein it was observed on page 142:

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“ 16 . … the test to be applied is whether the allegations in the complaint as they stand, without adding or detracting from the complaint, prima facie establish the ingredients of the offence alleged. At this stage, the High Court cannot test the veracity of the allegations nor for that matter can it proceed in the manner that a judge conducting a trial would, on the basis of the evidence collected during the course of the trial.”

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This position was reiterated in Supriya Jain v. State of Haryana, (2023) 7 SCC 711: 2023 SCC OnLine SC 765 wherein it was held:

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13. All these documents which the petitioner seeks to rely on, if genuine, could be helpful for her defence at the trial but the same are not material at the stage of deciding whether quashing as prayed for by her before the High Court was warranted or not. We, therefore, see no reason to place any reliance on these three documents.

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A similar view was taken in Iveco Magirus

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Brandschutztechnik GMBH v. Nirmal Kishore Bhartiya, (2024) 2 SCC

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86: 2023 SCC OnLine SC 1258 wherein it was observed:

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“63. Adverting to the aspect of exercise of jurisdiction by the High Courts under Section 482CrPC, in a case where the offence of defamation is claimed by the accused to have not been committed based on any of the Exceptions and a prayer for quashing is made, law seems to be well settled that the High Courts can go no further and enlarge the scope of inquiry if the accused seeks to rely on materials which were not

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there before the Magistrate. This is based on the simple proposition that what the Magistrate could not do, the High Courts may not do. We may not be understood to undermine the High Courts' powers saved by Section 482CrPC; such powers are always available to be exercised ex debito justitiae i.e. to do real and substantial justice for the administration of which alone the High Courts exist. However, the tests laid down for quashing an FIR or criminal proceedings arising from a police report by the High Courts in the exercise of jurisdiction under Section 482CrPC not being substantially different from the tests laid down for quashing a process issued under Section 204 read with Section 200, the High Courts on recording due satisfaction are empowered to interfere if on a reading of the complaint, the substance of statements on oath of the complainant and the witness, if any, and documentary evidence as produced, no offence is made out and that proceedings, if allowed to continue, would amount to an abuse of the legal process. This too, would be impermissible if the justice of a given case does not overwhelmingly so demand.” (Emphasis supplied)

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Therefore, it is not permissible to consider the

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documents filed by any party which do not form the part of the record of learned Trial Court; hence, the application is dismissed as not maintainable.

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Ms. Shalini Thakur, learned counsel for the petitioner heavily relied upon the judgment of the Hon’ble Supreme Court in AC Narayana (supra) to submit that the authorization cannot be filed after the filing of the complaint. In AC Narayana (supra), the Hon’ble Supreme Court was concerned with follwing five questions:

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“ 21.1 .( i ) Whether a power-of-attorney holder can sign and file a complaint petition on behalf of the complainant?/Whether the eligibility criteria prescribed by Section 142( a ) of the NI Act would stand satisfied if the complaint petition itself is filed in the name of the payee or the holder in due course of the cheque?

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21.2 .( ii ) Whether a power-of-attorney holder can be verified on oath under Section 200 of the Code?

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21.3 .( iii ) Whether specific averments as to the knowledge of the power-of-attorney holder in the impugned transaction must be explicitly asserted in the complaint.

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21.4 . ( iv ) If the power-of-attorney holder fails to assert explicitly his knowledge in the complaint then can the power-of-attorney holder verify the complaint on oath on such presumption of knowledge?

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21.5 .( v ) Whether the proceedings contemplated under Section 200 of the Code can be dispensed with in the light of Section 145 of the NI Act which was introduced by an amendment in the year 2002?”

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It is apparent that the Hon’ble Supreme Court was not

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concerned with the question whether the authorisation could have been filed subsequently or not. Heavy reliance was placed upon Para 16, wherein the Hon’ble Supreme Court held that the learned Magistrate had taken cognizance of the complaint without prima facie establishing whether Power of Attorney existed in the first place and whether it was in the order. However, the Hon’ble Supreme Court also noticed that the complaint was not preferred by a payee or holder in due course and the complainant had not stated that he was instructed by the payee or holder in the due

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course, therefore, the learned Magistrate erred in taking the cognizance. In A.C. Narayana (supra), the complaint was filed by a private person through his Power of Attorney and once, it was held that he had not deposed on oath about any authority from the holder or payee in the due course, the natural corollary was the dismissal of the complaint. Hence, this judgment does not apply to the present case.

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It was laid down by the Hon’ble Supreme Court in Associated Company Limited versus Keshvanand, 1998 (1) SCC 687 that the Company is a juristic person and has to act through a natural person for proceeding before the Court. It is permissible for the Company to change the natural person with the permission of the Court. It was observed:

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“23. The above scheme of the new Code makes it clear that the complainant must be a corporeal person who is capable of making a physical presence in the court. Its corollary is that even if a complaint is made in the name of an incorporeal person (like a company or corporation) it is necessary that a natural person represents such a juristic person in the court and it is that natural person who is looked upon, for all practical purposes, to be the complainant in the case. In other words, when the complainant is a body corporate it is the de jure complainant, and it must necessarily associate a human being as a de facto complainant to represent the former in court proceedings.

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xxxxxx

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25. Be that so, we suggest as a pragmatic proposition that no magistrate shall insist that the particular person, whose statement was taken on oath at the first instance, alone can continue to represent the company till the end of the proceedings. There may be occasions when a different person can represent the company e.g. the particular person who represents the company at the first instance may either retire from the company's services or may otherwise cease to associate therewith or he would be transferred to a distant place. In such cases, it would be practically difficult for the company to continue to make the same person represent the company in court. In any such eventuality, it is open to the de jure complainant company to seek permission of the court for sending any other person to represent the company in court. At any rate, the absence of the complainant envisaged in Section 249 or Section 256 of the new Code would include the absence of the corporeal person representing the incorporeal complainant.”

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It was held in MMTC (supra) that even if there was no

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authority, such an authority could be filed subsequently. It was observed:

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“12. In the case of Associated Cement Co. Ltd. v. Keshvanand [(1998) 1 SCC 687: 1998 SCC (Cri) 475] it has been held by this Court that the complainant has to be a corporeal person who is capable of making a physical appearance in the court. It has been held that if a complaint is made in the name of an incorporeal person (like a company or corporation) it is necessary that a natural person represents such juristic person in the court. It is held that the court looks upon the natural person to be the complainant for all practical purposes. It is held that when the complainant is a body corporate it is the de jure complainant, and it must necessarily associate a human being as a de facto complainant to represent the former in

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court proceedings. It has further been held that no Magistrate shall insist that the particular person, whose statement was taken on oath at the first instance, alone can continue to represent the company till the end of the proceedings. It has been held that there may be occasions when different persons can represent the company. It has been held that it is open to the de jure complainant company to seek permission from the court for sending any other person to represent the company in court. Thus, even presuming, that initially there was no authority, still the company can, at any stage, rectify that defect. At a subsequent stage, the company can send a person who is competent to represent the company. The complaints could thus not have been quashed on this ground .” (Emphasis supplied)

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This Court also considered this question in Uttam

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Traders Ranghri (supra) and held that it is permissible for the complainant Company to rectify the defect regarding lack of authority at a subsequent stage. It was observed:

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In M.M.T.C.Ltd. And another vs. Medchl Chemicals and Pharma (P)Ltd. And another (2002) 1 SCC 234 , the Hon’ble Supreme Court held that the only eligibility criteria prescribed by Section 142 for maintaining a complaint under Section 138 are that the complaint must be by the payee or the holder in due course and once this criterion is satisfied as the complaint is in the name and on behalf of the appellant Company. Therefore, even presuming that initially there was no authority, still, the company can, at any stage, rectify that defect at a subsequent stage, and the company can send a person who is competent to represent the Company. It is apt to reproduce the relevant observations as contained in paras 11 and 12 of the judgment, which reads thus:

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“11. This Court has, as far back as, in the case of Vishwa Mitter v. O. P. Poddar reported in (1983) 4 SCC

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701 , held that it is clear that anyone can set the criminal law in motion by filing a complaint of facts constituting an offence before a Magistrate entitled to take cognizance. It has been held that no court can decline to take cognizance on the sole ground that the complainant was not competent to file the complaint. It has been held that if any special statute prescribes offences and makes any special provision for taking cognizance of such offences under the statute, then the complainant requesting the Magistrate to take cognizance of the offence must satisfy the eligibility criterion prescribed by the statute. In the present case, the only eligibility criteria prescribed by Section 142 is that the complaint must be by the payee or the holder in due course. This criterion is satisfied as the complaint is in the name and on behalf of the appellant company.

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In the case of Associated Cement Co. Ltd. v. Keshvanand (1998) 1 SCC 687 , it has been held by this Court that the complainant has to be a corporeal person who is capable of making a physical appearance in the court. It has been held that if a complaint is made in the name of an incorporeal person (like a company or corporation) it is necessary that a natural person represents such juristic person in the court. It is held that the court looks upon the natural person to be the complainant for all practical purposes. It is held that when the complainant is a body corporate it is the de jure complainant, and it must necessarily associate a human being as a de facto complaint to represent the former in court proceedings. It has further been held that no Magistrate shall insist that the particular person, whose statement was taken on oath at the first instance, alone can continue to represent the company till the end of the proceedings. It has been held that there may be occasions when different persons can represent the company. It has been held that it is open to the de jure complainant company to

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seek permission from the court to send any other person to represent the company in court. Thus, even presuming, that initially there was no authority, still the Company can, at any stage, rectify that defect. At a subsequent stage, the Company can send a person who is competent to represent the company. The complaints could thus not have been quashed on this ground.”

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Likewise in Samrat Shipping Co. Pvt. Ltd. vs. Dolly George (2002) 9 SCC 455 , the Hon’ble Supreme Court termed the dismissal of the complaint at the threshold by the Magistrate on the ground that the individual through whom the complaint was filed had not produced the certified copy of the resolution of the Board of Directors of the Company authorising him to represent the Company before the Magistrate has also not justified and termed this exercise to be “too hasty an action”. It is apt to reproduce the observation as contained in para 3 of the judgment, which reads thus:

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“3. Having heard both sides we find it difficult to support the orders challenged before us. A Company can file a complaint only through a human agency. The person who presented the complaint on behalf of the Company claimed that he was the authorised representative of the company. Prima facie, the trial court should have accepted it at the time when a complaint was presented. If it is a matter of evidence when the accused disputed the authority of the said individual to present the complaint, the opportunity should have been given to the complainant to prove the same, but that opportunity needs to be given only when the trial commences. The dismissal of the complaint at the threshold on the premise that the individual has not produced a certified copy of the resolution appears to be too hasty an action. We, therefore, set aside the impugned orders and directed the trial court to proceed with the trial and dispose of

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it in accordance with the law. Parties are directed to appear before the trial court on 31.01.2000.”

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A similar matter of dishonour of cheque came before a three-judge Bench of the Hon’ble Supreme Court in M/s Haryana State Co.Op., Supply and Marketing Federation Ltd. vs. M/s Jayam Textiles and another AIR 2014 SC 1926 wherein it was held that the dismissal of the complaint for mere failure to produce authorisation would not be proper and an opportunity ought to be granted to produce and prove the authorisation. It is apt to reproduce the apposite observations as contained in paras 6 and 7 of the judgment, which read thus:

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“6. Having heard learned counsel for the parties and after perusing the material on record, we find that admittedly authorisation by the Board of Directors of the appellant-ederation was not placed before the Courts below. But, we may notice that a specific averment was made by the appellant- Federation before the learned Judicial Magistrate that the said General Power of Attorney has been filed in a connected case being CC No. 1409/1995, which has neither been denied nor disputed by the respondents. In any case, in our opinion, if the Courts below were not satisfied, an opportunity ought to have been granted to the appellant Federation to place the document containing authorisation on record and prove the same in accordance with the law. This is so because procedural defects and irregularities, which are curable, should not be allowed to defeat substantive rights or to cause injustice. The procedure, a handmaiden to justice, should never be made a tool to deny justice or perpetuate injustice, by any oppressive or punitive use. {See Uday Shankar Triyar Vs. Ram Kalewar Prasad Singh, (2006) 1 SCC 75}. : (AIR 2006 SC 269: 2005 AIR SCW 5851 ).

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In view of the fact that in spite of the arbitration award against the respondents, there was nonpayment of amount by the respondents to the

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appellant-Federation, and also in the light of authorisation contained in Annexure–P/7, we are of the opinion that, in the facts and circumstances of the case, an opportunity should be given to the appellantFederation to produce and prove the authorisation before the Trial Court, more so, when money involved is public money. We, therefore, set aside the judgments of the Courts below and remit the matters back to the Trial Court with a direction to conduct the trial afresh taking into consideration the authorisation placed before us and dispose of the matter as expeditiously as possible in accordance with the law.”

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Bearing in mind the aforesaid exposition of the law, I am of the considered view that the appellant-applicant ought to be granted one chance to place and prove on record the partnership deed. Accordingly, Cr.M.P. No. 464 of 2018 is allowed.”

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Hence, even if the Company had failed to place the authorization on record, it is permissible for it to file the same before the Court at a subsequent stage.

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In view of the judgments of the Hon’ble Supreme Court and this Court, which is binding upon this Court, the judgment of Bombay High Court in Valpoi (supra), M/s Balaji Agencies (supra), George Joseph (supra), Karthick (supra) cannot be followed. Hence, none of these judgments cited by learned counsel for the petitioner will assist her.

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Thus, it is held that the complaint filed by the complainant/Company without authorization can be rectified by

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filing such authorization subsequently and it does not render the initiation of the proceedings a nullity.

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It was submitted that a joint complaint was filed regarding five cheques, which is impermissible because of Section 219 of Cr.P.C. This submission is not acceptable. A single notice was issued in respect of five cheques. The cause of action for filing the complaint regarding the dishonour of the cheques is not the dishonour but the failure to pay the amount of the cheques despite the receipt of the notice. It was laid down by the Karnataka High Court in Tiruchandoor Muruhan Spinning Mills (P) Ltd. v. Madanlal Ramkumar Cotton and General Merchants, 2000 SCC OnLine Kar 699: ILR 2000 Kar 5000 that where a single notice is issued for the dishonour of more than one cheque, a single complaint is maintainable. It was observed:

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“6. In so far as the important question raised for consideration in this petition that the provisions of Section 219 Cr. P.C. are attracted to the facts of the case is concerned, it is contended that cause of action for the complainant arose only after service of notice to the accused. It is pointed out that the complainant has issued a single notice calling upon the accused by way of demand to pay the cheque amount within 15 plays from the date of service of notice and the accused failed to pay the cheque amount within the time stipulated under Section 138(b) of the Act and therefore the complainant filed a complaint within one month from the date of service of notice which is

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well within time. There is no bar for lodging a complaint for initiation of action under Section 138 of the Negotiable Instruments Act as the accused committed the offence punishable under Section 138 of the Negotiable Instruments Act. In fact, it is not to his disadvantage but it is an advantage that a single complaint is lodged against the accused by the complainant. The cause of action giving raise to a complaint is upon the service of the notice contemplated under Section 138(b) of the Negotiable Instruments Act and not upon the dishonour of the cheques and therefore the contention canvassed by the learned Counsel for the respondent that the provisions of Section 219 Cr. P.C. are not applicable to the proceeding under Section 138 of the Negotiable Instruments Act has to be accepted.”

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A similar view was taken in Manjula v. Colgate Palmolive

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(India) Ltd., 2006 SCC OnLine Mad 912 wherein it was observed:

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“16. In the case on hand, though the act of issuance of 16 cheques was on different dates, in view of the fact that a demand was made by issuing a common notice, the complaint cannot be said to be vitiated. To put it clear, though the giving of cheques by the accused to the complainant may be on different dates, all those acts of giving those cheques were merged together to form the same transaction viz., the presentation of the cheques together was on one particular date. In view of the fact that demand was also made by the complainant on the dishonouring of the cheques by giving one lawyer's notice and not several demands, we are of the view that the accused may be charged and tried at one trial for several such offences because the series of acts are so inter-linked or inter-connected together so as to form the same transaction of dishonouring the cheques, therefore, it cannot be said that the complaint is vitiated.”

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29. Allahabad High Court also took a similar view in Vinay

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Patni v. State of U.P., 2012 SCC OnLine All 3681 and observed:

¶110

“The third contention of the learned Counsel for the revisionist that the demand notice, as well as the complaint, was illegal for combining three separate causes of actions cannot be accepted for the reason that though the three cheques might have been given separately to the complainant but all these cheques were drawn on the same account and, as per the complaint allegations, were in lieu of payment of a common loan amount. Further, they were presented for collection on the same date through a single account, in the manner desired by the accused, and that the information of the cheques returning unpaid was also received on the same date, and a common notice of demand was also made. It was, therefore, one transaction and to state that there has to be a separate complaint with respect to each cheque that was dishonoured, will not be correct in view of subsection (1) of section 220, Cr. P.C.”

¶111

Hence, the complaint cannot be said to be bad because

¶112

it was filed regarding five cheques.

¶113

It was submitted that the learned Trial Court erred in dismissing the applications for impleadment filed under Section 319 of Cr.P.C. There is a force in the submission of Mr. Rajiv Jiwan, learned Senior Counsel for the complainant/respondent that power under Section 319 of Cr.P.C. can be exercised if there is some evidence against the person sought to be impleaded. It was held in Nisar v. State of U.P., (1995) 2 SCC 23 that power under Section 319

¶114

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¶115

of CrPC can only be exercised after leading the evidence. It was observed:

¶116

“8. As regards the second contention of the appellants it must be said that in view of the plain and unambiguous language of Section 319 of the Code, the earlier quoted reason which weighed with the High Court in sustaining the order of the learned Judge is patently incorrect. The power under Section 319(1) can be exercised only in those cases where the involvement of persons other than those arraigned in the charge sheet comes to light in the course of evidence recorded during the enquiry or trial. As that stage has not yet reached the appellants could not have been summoned invoking Section 319 of the Code.”

¶117

This position was reiterated in Hardeep Singh v. State of

¶118

Punjab, (2014) 3 SCC 92: 2014 SCC OnLine SC 26 and it was held:

¶119

78. It is, therefore, clear that the word “evidence” in Section 319 CrPC means only such evidence as is made before the court, in relation to statements, and as produced before the court, in relation to documents. It is only such evidence that can be taken into account by the Magistrate or the court to decide whether the power under Section 319 CrPC is to be exercised and not on the basis of material collected during the investigation.

¶120

79. The inquiry by the court is neither attributable to the investigation nor the prosecution, but by the court itself for collecting information to draw back a curtain that hides something material. It is the duty of the court to do so and therefore the power to perform this duty is provided under CrPC.

¶121

xxxx

¶122

81. An inquiry can be conducted by the Magistrate or court at any stage during the proceedings before the court. This power is preserved with the court and has to be read and

¶123

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¶124

understood accordingly. The outcome of any such exercise should not be an impediment in the speedy trial of the case. Though the facts so received by the Magistrate or the court may not be evidence, yet it is some material that makes things clear and unfolds concealed or deliberately suppressed material that may facilitate the trial. In the context of Section 319 CrPC, it is an information of complicity. Such material, therefore, can be used even though not evidence in stricto sensu, but an information on record collected by the court during inquiry itself, as a prima facie satisfaction for exercising the powers as presently involved.

¶125

82. This pre-trial stage is a stage where no adjudication on the evidence of the offences involved takes place and therefore, after the material along with the charge sheet has been brought before the court, the same can be inquired into in order to effectively proceed with framing of charges. After the charges are framed, the prosecution is asked to lead evidence and till that is done, there is no evidence available in the strict legal sense of Section 3 of the Evidence Act. The actual trial of the offence by bringing the accused before the court has still not begun. What is available is the material that has been submitted before the court along with the charge sheet. In such a situation, the court only has the preparatory material that has been placed before the court for its consideration in order to proceed with the trial by framing of charges.

¶126

83. It is, therefore, not any material that can be utilised, rather it is that material after cognizance is taken by a court, that is available to it while making an inquiry into or trying an offence, that the court can utilise or take into consideration for supporting reasons to summon any person on the basis of evidence adduced before the court, who may be on the basis of such material, treated to be an accomplice in the commission of the offence. The inference that can be drawn is that material which is not exactly evidence recorded before the court, but is a material collected by the court, can be utilised to corroborate

¶127

P a g e | 26

¶128

evidence already recorded for the purpose of summoning any other person, other than the accused. This would harmonise such material with the word “evidence” as material that would be supportive in nature to facilitate the exposition of any other accomplice whose complicity in the offence may have either been suppressed or escaped the notice of the court.

¶129

84. The word “evidence” therefore has to be understood in its wider sense both at the stage of trial and, as discussed earlier, even at the stage of inquiry, as used under Section 319 CrPC. The court, therefore, should be understood to have the power to proceed against any person after summoning him on the basis of any such material as brought forth before it. The duty and obligation of the court becomes more onerous to invoke such powers cautiously on such material after evidence has been led during trial.

¶130

85. In view of the discussion made and the conclusion drawn hereinabove, the answer to the aforesaid question posed is that apart from evidence recorded during trial, any material that has been received by the court after cognizance is taken and before the trial commences, can be utilised only for corroboration and to support the evidence recorded by the court to invoke the power under Section 319 CrPC. The “evidence” is thus, limited to the evidence recorded during trial.”

¶131

In the present case, the notice of accusation was not

¶132

put to the accused and no evidence was led. Therefore, the application was premature and was rightly dismissed by the learned Trial Court.

¶133

The accused had also filed an application under Section 243 of Cr.P.C. for sending the documents for comparison. Learned Trial Court had rightly pointed out that the provisions of Section

¶134

P a g e | 27

¶135

243 of Cr.P.C. will come into operation only at the stage of the defence evidence and the application was premature.

¶136

It was submitted that the application could have been entertained under Section 73 of the Indian Evidence Act, however, in the absence of any evidence, it was premature to determine whether the cheque required the comparison by the expert or not. Therefore, no fault can be found with the orders passed by the learned Trial Court.

¶137

It was submitted that the contents of the complaint are false and they do not disclose the commission of any offence. The present petition has been filed under Section 482 of Cr.P.C. and the Court has to see the allegations in the complaint to determine whether an offence is disclosed or not. It is not permissible for the Court to conduct a fact-finding inquiry to determine the innocence or otherwise of the contents of the complaint at this stage. It was laid down by the Hon’ble Supreme Court in Priyanka Jaiswal vs. State of Jharkhand, 2024 SCC OnLine SC 685 that the Court exercises extra-ordinary jurisdiction under Section 482 of Cr.P.C. and cannot conduct a mini-trial or enter into an appreciation of an evidence of a particular case. It was observed:-

¶138

P a g e | 28

¶139

“13. We say so for reasons more than one. This Court in catena of Judgments has consistently held that at the time of examining the prayer for quashing of the criminal proceedings, the court exercising extra-ordinary jurisdiction can neither undertake to conduct a mini-trial nor enter into appreciation of evidence of a particular case. The correctness or otherwise of the allegations made in the complaint cannot be examined on the touchstone of the probable defence that the accused may raise to stave off the prosecution and any such misadventure by the Courts resulting in proceedings being quashed would be set aside. This Court in the case of Akhil Sharda 2022 SCC OnLine SC 820 held to the following effect:

¶140

“28. Having gone through the impugned judgment and order passed by the High Court by which the High Court has set aside the criminal proceedings in the exercise of powers under Section 482 Cr. P.C., it appears that the High Court has virtually conducted a mini-trial, which as such is not permissible at this stage and while deciding the application under Section 482 Cr. P.C. As observed and held by this Court in a catena of decisions no mini-trial can be conducted by the High Court in the exercise of powers under Section 482 Cr. P.C. jurisdiction and at the stage of deciding the application under Section 482 Cr. P.C., the High Court cannot get into appreciation of evidence of the particular case being considered.”

¶141

A similar view was taken in Maneesha Yadav v. State of

¶142

U.P., 2024 SCC OnLine SC 643 wherein it was held that: -

¶143

“13. As has already been observed hereinabove, the Court would not be justified in embarking upon an enquiry as to the reliability or genuineness or otherwise of the allegations made in the FIR or the complaint at the stage of quashing of the proceedings under Section 482 Cr. P.C. However, the allegations made in the FIR/complaint, if taken at its face

¶144

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¶145

value, must disclose the commission of an offence and make out a case against the accused. At the cost of repetition, in the present case, the allegations made in the FIR/complaint even if taken at its face value, do not disclose the commission of an offence or make out a case against the accused. We are of the considered view that the present case would fall under Category-3 of the categories enumerated by this Court in the case of Bhajan Lal (supra) .

¶146

14. We may gainfully refer to the observations of this Court in the case of Anand Kumar Mohatta v. State (NCT of Delhi), Department of Home(2019) 11 SCC 706: 2018 INSC 1060 :

¶147

“ 14. First, we would like to deal with the submission of the learned Senior Counsel for Respondent 2 that once the charge sheet is filed, the petition for quashing of FIR is untenable. We do not see any merit in this submission, keeping in mind the position of this Court in Joseph Salvaraj A. v. State of Gujarat [Joseph Salvaraj A. v. State of Gujarat, (2011) 7 SCC 59 : (2011) 3 SCC (Cri) 23] . In Joseph Salvaraj A. [Joseph Salvaraj A. v. State of Gujarat, (2011) 7 SCC 59 : (2011) 3 SCC (Cri) 23], this Court while deciding the question of whether the High Court could entertain the Section 482 petition for quashing of FIR when the charge-sheet was filed by the police during the pendency of the Section 482 petition, observed : (SCC p. 63, para 16)

¶148

“ 16. Thus, the general conspectus of the various sections under which the appellant is being charged and is to be prosecuted would show that the same are not made out even prima facie from the complainant's FIR. Even if the charge sheet had been filed, the learned Single Judge [ Joesph Saivaraj A. v. State of Gujarat, 2007 SCC OnLine Guj 365 ] could have still examined whether the offences alleged to have been committed by the appellant were prima facie made out from the complainant's FIR, charge-sheet, documents, etc. or not.”

¶149

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¶150

Hence, it is not permissible for the Court to go into the truthfulness or otherwise of the allegations made in the complaint.

¶151

It was submitted that the cheques were misused by the complainant and they were not issued in discharge of legal liability. This submission is not acceptable at this stage. It was laid down by the Hon’ble Supreme Court in Rathish Babu Unnikrishnan v. State (NCT of Delhi), 2022 SCC OnLine SC 513 , that the burden of proving that there is no existing debt of liability is to be discharged in the trial and the Court has to consider the presumption under Section 139 of NI Act in favour of the holder while deciding the petition under Section 482 of Cr.P.C. It was observed:

¶152

“10. It is also relevant to bear in mind that the burden of proving that there is no existing debt or liability, is to be discharged in the trial. For a two judges Bench in M.M.T.C. Ltd. v. Medchl Chemicals and Pharma (P) Ltd. (2002) 1 SCC 234 , Justice S.N. Variava made the following pertinent observation on this aspect: —

¶153

“17. There is therefore no requirement that the complainant must specifically allege in the complaint that there was a subsisting liability. The burden of proving that there was no existing debt or liability was on the respondents. This they have to discharge in the trial. At this stage, merely on the basis of averments in the petitions filed by them the High

¶154

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¶155

Court could not have concluded that there was no existing debt or liability.”

¶156

11. The legal presumption of the cheque having been issued in the discharge of liability must also receive due weightage. In a situation where the accused moves the Court for quashing even before the trial has commenced, the Court's approach should be careful enough not to prematurely extinguish the case by disregarding the legal presumption which supports the complaint. The opinion of Justice K.G. Balakrishnan for a three-judge Bench in Rangappa v. Sri Mohan (2010) 11 SCC 441 would at this stage, deserve our attention:—

¶157

“ 26. … we are in agreement with the respondent claimant that the presumption mandated by Section 139 of the Act does indeed include the existence of a legally enforceable debt or liability. As noted in the citations, this is of course in the nature of a rebuttable presumption and it is open to the accused to raise a defence wherein the existence of a legally enforceable debt or liability can be contested. However, there can be no doubt that there is an initial presumption which favours the complainant.”

¶158

12. At any rate, whenever facts are disputed the truth should be allowed to emerge by weighing the evidence. On this aspect, we may benefit by referring to the ratio in Rajeshbhai Muljibhai Patel v. State of Gujarat(2020) 3 SCC 794 where the following pertinent opinion was given by Justice R. Banumathi:—

¶159

“ 22. ………….. When disputed questions of facts are involved which need to be adjudicated after the parties adduce evidence, the complaint under Section 138 of the NI Act ought not to have been quashed by the High Court by taking recourse to Section 482 CrPC. Though, the Court has the power to quash the criminal complaint filed under Section 138 of the NI Act on legal issues like limitation, etc. criminal complaint filed under Section 138 of the NI Act against

¶160

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¶161

Yogeshbhai ought not to have been quashed merely on the ground that there are inter se disputes between Appellant 3 and Respondent 2. Without keeping in view the statutory presumption raised under Section 139 of the NI Act, the High Court, in our view, committed a serious error in quashing the criminal complaint in CC No. 367 of 2016 filed under Section 138 of the NI Act.”

¶162

13. Bearing in mind the principles for the exercise of jurisdiction in a proceeding for quashing, let us now turn to the materials in this case. On careful reading of the complaint and the order passed by the Magistrate, what is discernible is that a possible view is taken that the cheques drawn were, in the discharge of a debt for the purchase of shares. In any case, when there is a legal presumption, it would not be judicious for the quashing Court to carry out a detailed enquiry on the facts alleged, without first permitting the trial Court to evaluate the evidence of the parties. The quashing Court should not take upon itself, the burden of separating the wheat from the chaff where facts are contested. To say it differently, the quashing proceedings must not become an expedition into the merits of factual dispute, so as to conclusively vindicate either the complainant or the defence.

¶163

14. The parameters for invoking the inherent jurisdiction of the Court to quash the criminal proceedings under S.482 CrPC, have been spelt out by Justice S. Ratnavel Pandian for the two judges' bench in State of Haryana v. Bhajan Lal 1992 Supp (1) SCC 335: AIR 1992 SC 604 , and the suggested precautionary principles serve as good law even today, for invocation of power under Section 482 of the Cr.P.C.

¶164

“ 103. We also give a note of caution to the effect that the power of quashing a criminal proceeding should be exercised very sparingly and with circumspection and that too in the rarest of rare cases; that the court will not be justified in embarking upon an enquiry as to the reliability or genuineness or otherwise of the

¶165

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¶166

allegations made in the FIR or the complaint and that the extraordinary or inherent powers do not confer an arbitrary jurisdiction on the court to act according to its whim or caprice.”

¶167

15. In the impugned judgment, the learned Judge had rightly relied upon the opinion of Justice J.S. Khehar for a Division Bench in Rajiv Thapar (supra), which succinctly expresses the following relevant parameters to be considered by the quashing Court, at the stage of issuing process, committal, or framing of charges,

¶168

“ 28. The High Court, in the exercise of its jurisdiction under Section 482 CrPC, must make a just and rightful choice. This is not a stage of evaluating the truthfulness or otherwise of the allegations levelled by the prosecution/complainant against the accused. Likewise, it is not a stage for determining how weighty the defences raised on behalf of the accused are. Even if the accused is successful in showing some suspicion or doubt, in the allegations levelled by the prosecution/complainant, it would be impermissible to discharge the accused before trial. This is so because it would result in giving finality to the accusations levelled by the prosecution/complainant, without allowing the prosecution or the complainant to adduce evidence to substantiate the same.”

¶169

16. The proposition of law as set out above makes it abundantly clear that the Court should be slow to grant the relief of quashing a complaint at a pre-trial stage, when the factual controversy is in the realm of possibility particularly because of the legal presumption, as in this matter. What is also of note is that the factual defence without having to adduce any evidence needs to be of an unimpeachable quality, so as to altogether disprove the allegations made in the complaint.

¶170

17. The consequences of scuttling the criminal process at a pre-trial stage can be grave and irreparable. Quashing proceedings at preliminary stages will result in finality

¶171

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¶172

without the parties having had an opportunity to adduce evidence and the consequence then is that the proper forum i.e., the trial Court is ousted from weighing the material evidence. If this is allowed, the accused may be given an unmerited advantage in the criminal process. Also because of the legal presumption, when the cheque and the signature are not disputed by the appellant, the balance of convenience at this stage is in favour of the complainant/prosecution, as the accused will have due opportunity to adduce defence evidence during the trial, to rebut the presumption.

¶173

18. Situated thus, to non-suit the complainant, at the stage of the summoning order, when the factual controversy is yet to be canvassed and considered by the trial court will not in our opinion be judicious. Based upon a prima facie impression, an element of criminality cannot entirely be ruled out here subject to the determination by the trial Court. Therefore, when the proceedings are at a nascent stage, the scuttling of the criminal process is not merited.”

¶174

Therefore, it is not permissible to adjudicate the plea

¶175

that the cheque was not issued in the discharge of the legal liability of the petitioner in these proceedings.

¶176

The complainant had specifically stated that the accused is the Director and the authorized signatory. The liability of the signatory was decided by the Hon’ble Supreme Court in S.M.S. Pharmaceuticals Ltd. v. Neeta Bhalla, (2005) 8 SCC 89. The following question, inter alia, was referred for consideration by the larger Bench : -

¶177

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¶178

“( c ) Even if it is held that specific averments are necessary, whether, in the absence of such averments, the signatory of the cheque and or the managing directors or joint managing director who admittedly would be in charge of the company and responsible to the company for the conduct of its business could be proceeded against.”

¶179

The Hon’ble Supreme Court after discussing the entire

¶180

case law on the subject, answered the reference as under: -

¶181

( c ) The answer to Question ( c ) has to be in the affirmative. The question notes that the managing director or joint managing director would be admittedly in charge of the company and responsible to the company for the conduct of its business. When that is so, holders of such positions in a company become liable under Section 141 of the Act. By virtue of the office they hold as managing director or joint managing director, these persons are in charge of and responsible for the conduct of the business of the company. Therefore, they get covered under Section 141. So far as the signatory of a cheque which is dishonoured is concerned, he is clearly responsible for the incriminating act and will be covered under sub-section (2) of Section 141.

¶182

It is apparent from the judgment of the Hon’ble Supreme Court that a signatory is liable by virtue of the fact that he had signed the cheque under Section 141(2) of the Act and nothing more is required to be established in his case.

¶183

Thus, it cannot be said that the learned Trial Court had no material to summon the accused for the commission of an offence punishable under Section 138 of the NI Act.

¶184

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¶185

Consequently, the present petition fails and the same is

¶186

dismissed.

¶187

The observation made hereinabove shall remain confined to the disposal of the petition and will have no bearing, whatsoever, on the merits of the case.

¶188

Parties through their respective counsel are directed to appear before the learned Trial Court on 30.07.2024.

¶189

(Rakesh Kainthla)

¶190

Judge

¶191

11th July, 2024

¶192

(Saurav pathania)

Rajat Kumar Bhalotia v. Sai Tech Medicare Private Limited

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