Judgment:
(Prayer: This Crl. R.P. is filed u/Section 397 r/w. 401 Cr. P.C. praying to set aside the Judgment/Order dt. 7.3.2008 passed by S.J., Udupi District, Udupi, in Crl. A. No. 52/07 and set aside the conviction Order dated 22.03.07 in C.C. No. 4700/07 passed by the I Addl, C.J. [Jr. Dn. ] and JMFC., Udupi District, Udupi and acquit the petitioner.)
1. The revisionist has challenged the concurrent findings of his conviction and sentence for the offence punishable under Section 138 of the Negotiable Instruments Act [hereinafter referred to as “the Act” for short].
2. The facts relevant for the purpose of this revision in brief are as under.
The petitioner herein is the accused, whereas the respondent is the complainant before the trial Court. The accused-Ajith Balse is said to be the Managing Director of Tim Tim Far East Export Trading Company Private Limited, Patalganga, Raigad District, Maharastra, whereas the complainant is the Managing Partner of a concern by name Yermal Fish Trading (YFT), carrying on the business of supplying fishes. There is an agreement dated 19.09.2001 between the parties, wherein the complainant has supplied beheaded and gutted “Rani fish” to the accused company. The accused was paying the amount through telegraphic transfer and under the terms of the agreement, the complainant was to send the statement of accounts by fax for every 15 days. At the end of fishing season i.e., on 04.06.2002, the complainant sent the final statement, under which the accused was liable to pay `73,24,710-00 to the complainant. The accused had called the complainant to his company on 02.08.2002 to settle the debt and at that time, the accused issued 3 cheques of the State Bank of India (1) bearing No. 511693 dated 14.08.2002 for `20 lakhs (2) bearing No. 511694 dated 05.09.2002 for `15 lakhs and (3) bearing No. 511695 dated 17.09.2002 for `20 lakhs. The accused had undertaken to settle the balance amount of `18,24,710 during the next fishing season. Later, the complainant received a notice dated 05.08.2002 from the accused castigating false aspersions on the complaint and in fact the accused had enquired about the said letter. The accused pacified the complainant and requested to present the cheques for encashment after a week from the date of the cheques. The complaint presented the cheque bearing No. 511693 dated 14.08.2002 for `20 lakhs to the Corporation bank and the said cheque was returned with endorsement “payment stopped” and “funds insufficient”. The complainant issued a legal notice dated 09.09.2002 by fax and also by registered post acknowledgement. There was no compliance of the demand made in the notice. Hence the complainant approached the trial Court and submitted the complaint on these facts and requesting to initiate action against the accused for the offence punishable under Section 138 of the Act.
During the trial, the complainant examined himself as P.W.1 and in his evidence documents Exs.P1 to 151 were marked. Statements of the accused were recorded under Section 313 Cr.P.C. He examined himself as D.W.2 and a witness D.W.1. In their evidence got marked the documents Exs.D1 to 7. The trial Court after hearing counsel for the parties and on appreciation of the material on record, convicted the accused and ordered him to pay a fine of `21,25,000-00, in default to undergo simple imprisonment for 6 months. An appeal against the order by the accused also came to be dismissed on merits. Aggrieved by the concurrent findings, the present revision petition has been filed.
3. I have heard the learned counsel for the parties.
4. The validity of the orders of the Courts below were challenged on three grounds firstly, that there is no debt or liability due to the complainant, secondly, that the cheques in question were obtained by giving threat and thirdly, that the complainant has not impleaded the company as a party to the proceedings and therefore, the complaint is not maintainable in law.
5. The learned counsel for the respondent has supported the orders passed by the Courts below.
6. So far as the agreement between the parties is concerned, the complainant has produced the copy of the agreement at Ex.P151. It contains the terms regarding the regular supply of beheaded and gutted “Rani fish” and it is signed by the accused. This fact is not disputed in the oral evidence of the parties. Ex.D5 is a letter dated 03.10.2002 produced by the accused, in which it is stated “Our clients have never denied that there was Agreement for supply of beheaded and gutted fish in fresh and unspoiled condition by your clients”. So, from Ex.P151 and demand made in Ex. D5 produced by the accused, safely it could be concluded that there exists an agreement between the parties for supply of the fish.
7. In the oral evidence, P.W.1 has stated having supplied fish as per the terms of the agreement and to substantiate this contention, he has produced Exs.P11 to 139, the receipts regarding the freight charges, advance paid and the balance due as per the supply of “Rani fish” to the Tim Tim Far East Sea Food, Patalanga, which the accused is the Managing Director and the statement of account maintained by the complainant has been produced as per Exs.P142 to 148 and it reveals that an amount of `73,24,710-00 was due by the accused. The complaint also produce Exs.P152, letter issued on behalf of the accused company to the learned counsel for the complainant, wherein it is stated “Our clients have even in our letter dated October 3, 2002 admitted that there is a sum of `23,79,428-00 due as on 30.06.2002 to your clients for the fish supplied. So, clearly under this letter, the accused admitted the liability atleast to an extent of `23,79,428-00, though the complainant claims that an amount of `73,24,710-00 was due, the cheque Ex.P1 in dispute is for `20 lakhs. So, there is no necessity for this Court to find out as to whether the accused is due for more than `73,24,710-00 lakhs when to an extent of `23,79,428-00 the liability is admitted by the accused.
8. So far as the second contention is concerned, it is relevant to note that D.W.2-accused has admitted in para 9 of his cross-examination that there are as many as 150 workers in the company apart from the security personnel provided and that without the permission of the security personnel no one would enter the premises of the company of the accused. Though it is contended that the complainant was accompanied by as many 8 persons, the evidence of D.W.1 discloses that one Razak was the person who accompanied the complainant and on that day i.e., on 02.08.2008 it was Friday. D.W.2 admits in the cross-examination that the company made arrangement of a car to Razak to go to Mosque for the purpose of offering prayer. Furthermore, the accused admits in the cross-examination that the cheque-Ex.P1 was given to the complainant by one Sushanth Welkar, who is also a director of the company. If there was a threat for issuance of the cheque, the accused could have examined Sushanth Welkar, who gave cheque Ex.P1 to the complainant. That apart, the evidence of D.W.2 also reveals that there were as many as 5 telephones in the office of the company and if there was really a threat by the complainant and his associates, the fact could have been informed to the Police over phone. Ex.D6 is the copy of the complaint and it discloses that even residence of Sushanth Welkar and threatened the members of the family. But, despite the said threat, immediately and considering the circumstances stated above, the evidence of D.Ws.1 and 2 is insufficient to hold that there was either a threat or duress by the complainant in obtaining the 3 post dated cheques.
9. Thirdly, the learned counsel for the revisionist has placed reliance on the decision of this Court reported in ILR 2010 Kar. 3287 [Sri Rajesh Adani and another Vs. Assistant Labour Commissioner and Another], wherein it has been held:
“Company is a necessary party in a complaint filed against the Directors. The complaint cannot be entertained when the Company is not made as a party.”
He also relied upon 2008 AIR SCW 3608 (Aneeta Hada Vs. M/s. Godfather Travels and Tours Pvt. Ltd.], wherein the learned Judge of the Division Bench held:
“The Company is necessary party, whereas the other opinion was that the Company is not a necessary party and in the circumstances, the matter was referred to a larger bench.”
In part I (2010) BC 674 (SC) [National Small Industries Corporation Ltd. Vs. Harmeet Singh Paintal and anr.J, it has been held:
“The penal provision creating vicarious liability e.g., Section 141 of the Negotiable Instruments Act, must be strictly construed.”
So also reliance is placed on the decision of this Court reported in ILR 2011 Kar. 2475 [Smt. Rasheeda Mehaboob Vs. Replicon Software (India) Private Limited Representated by its Manager], wherein it is held:
“It is clear from the provisions of Section 138 of Negotiable Instruments Act that it is only a person who has drawn the cheques, who is deemed to have committed an offence under Section 138 of N.I. Act, if the cheque drawn by the said person is returned from the bank with an endorsement ‘insufficient funds’. It is not possible to read from the contents of the Section 138 of the N.I. Act that even a person who is not the drawer of the cheque also can be made liable in respect of an offence under Section 138 of N.I. Act The Trial Court in the instant summons to the petitioner in respect of an offence under Section 138 of N.I. Act when the petitioner was not the drawer of the cheques in question.”
In 2007 AIR SCW 6482 [M/s. Sarav Investment and Financial Consultants Pvt. Ltd. and Anr. Vs. Llyods Register of Shipping Indian Office Staff Provident Fund and Anr.], wherein it has been held:
“(D) Negotiable Instruments Act (26 of 1881), S. 141-Dishonour of cheque – Offence by Company – Accused, a Director of Company – He is merely vicariously liable for acts of Company – He could be prosecuted only if ingredients laid down in Section 141 are satisfied.
That when the offence is by the Company and the accused is a director of the said Company, he is merely said to be vicariously liable for the acts of the Company and he could be prosecuted only if the ingredients laid down in Section 141 are satisfied. Placing reliance on this decision, it is the contention of the learned counsel that when the Company is not a party to the proceedings, the complaint against the accused is not maintainable in law.
10. Now as could be seen from the provisions of Section 141 of the N.I. Act, it reads thus:
“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:
(2) Notwithstanding anything contained in sub-section (1), 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.”
11. A similar provision as above is also provided under the provisions of Section 10 of the Essential Commodities Act, 1955. The said provision is extracted herein for the purpose of convenience:
“(1) If the person contravening an order made under Sec. 3 is a company, every person who, at the time the contravention was committed, was in charge of, and was responsible to, the company, shall be deemed to be guilty of the contravention and shall be liable to be proceeded against and punished accordingly:
Provided that nothing contained in this sub-section shall render any such person liable to any punishment I he proves that the contravention took place without his knowledge or that he exercised all due diligence to prevent such contravention.
(2) Notwithstanding anything contained in sub-section (1), where an 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.”
The Apex Court while considering the provisions of Section 10 of the Essential Commodities Act, in a decision reported in AIR 1984 SC 1824 [sheoratan Agarwal and another Vs. State of Madhya Pradesh] held as under:
“In respect of the offences by Companies, separate prosecution of person-in-charge or an officer of the company without prosecuting the conviction is permissible”.
Even as could be seen from the provisions of Section 10 of the above said Act, it does not state that if the person contravening an order made under Section 3 is a company, the prosecution of the director, the officers and servants of the Company or other persons is precluded unless the company itself is prosecuted. So, there is no statutory compulsion that the person-in-charge or any officer of the Company may not be prosecuted unless he be ranged alongside the Company itself. So also, in AIR 2009 SC 1891 [State Government of NCT of Delhi Vs. DAM Prabhu and another, where there was contravention by a Company and a person in charge of the offences and the company, it was held that he could be prosecuted separately or along with the Company, no statutory compulsion, he may not be prosecuted unless he is ranged along with the Company itself.
12. In 2000(1) Crimes 26 (SC) [Anil Hada Vs. Indian Acrylic Ltd.], the Apex Court took into consideration the directions of Section 141 of the Act and in the said case a contention was raised by the directors to drop the complaint against them on the plea that without prosecuting the Company, they could not be prosecuted. The Apex Court held that the contention is not tenable and the prosecution of the Company is not sine qua non for prosecuting its directors, even if the prosecution proceedings against the company are not taken or could not be continued, it is no bar for proceeding against other persons falling within the purview of sub-Sections (1) and (2) of Section 141.
13. In 2001 Crl.L.J. 4936 [R. Rajgopal Vs. S.S. Venkat], the Apex Court in a case where there was a complaint under Section 138 of the Act and the Company/Partnership firm on whose behalf the cheque was dishonoured, was not made an accused and only partner made an accused, it was held that quashing of the complaint on that ground was improper.
14. In 1994 Crl. L.J. 3115 [V.N. Samant Vs. M/s. K.G.N. Traders an another] this Court held:
“Section 141 of the Act provides that if the persons committing an offence under Section 138 is a Company, every persons 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. The explanation to that section provides that the Company means and includes a firm also. However it cannot be contended that the persons who were incharge of and were responsible to the company for the conduct of the business cannot be prosecuted for the offence committed by the company without the company itself being prosecuted. Therefore when the offence under Section 138 of the Act was committed by a partnership firm it cannot be said that as the offence is committed by the firm, the partners cannot be prosecuted without the firm being arraigned as an accused.”
15. In 2004 Crl. L.J. 3170 [B.V. Rangam Vs. B. Govinda Reddy and another], the High Court of Andhra Pradesh had an occasion to consider the provisions of Section 141 of the Act and in a complaint for dishonour of cheque, a contention was raised for non-joinder of necessary parties, the accused was impleaded in his personal capacity as the Managing Director of the Company and it was held that merely because that the Company is not made a party to the complaint, it cannot be said that the complaint is not maintainable against the accused.
16. The High Court of Himachal Pradesh in the decision reported in 2003 Crl. L.J. 2611 [B.N. Mehta Vs. M/s. Kapoor Agencies and another] wherein the accused was General Manager of Super Bazar and was in-charge/officer of the super Bazar, cheque was drawn by him in his capacity as a General Manager of the Super Bazar, failure to implead Super Bazar/Co-operative Society as co-accused was said to be not fatal and it was held that the proceedings against the accused alone are maintainable.
17. The High Court of Allhabad in a decision reported in 2006 Cri. L.J. 2611 [Bimal Kumar Nopani Vs. State of Utter Pradesh and Anr.] held that the person responsible for conduct and in-charge of the business of the Company can be prosecuted without prosecuting the Company itself.
18. In 2005 Cri.L.J. 4140 [S.M.S. Pharmaceuticals Ltd. Vs. Neeta Bhalla and another], the Apex Court considering the dishonour of a cheque in the offence by the Company held that the Managing Director, Joint Managing Director are in-charge of and responsible for conduct of business of the Company by virtue of office they hold and that they get covered under Section 141 of the Act. It further held that the signatory on the cheque which is dishonoured is clearly responsible for incriminating act as he is covered under sub-Section (2) of Section 141 of the Act.
19. In the decision reported in 1999 Cri. L.J. 3498 [M/s. Bilakchand Gyanchand Co. Vs. A. Chinnaswamy], the Apex Court in a petition under Section 482 Cr. P.C., wherein the cheque signed by the M.D. of the Company-notice under Section 138 were sent to the M.D., who is the signatory of the cheque, it held as there is no infirmity and the complaint is not liable to be quashed on the ground that the notice was not sent to the Company itself.
20. Now, as could be seen from catena of decisions referred to supra of different High Courts and also the Apex Court, it is well established principle of law that a complaint against any of the Director or person/s in-charge of the Company is very much maintainable despite the fact that the Company is not arrayed as an accused.
21. In 2008 AIR SCW 3608 [Aneeta Hada Vs. M/s. Godfather Travels and Tours Pvt. Ltd.], while the same principle was being considered by the Division Bench of the Apex Court, there was difference of opinion and the matter now stands transferred to a larger bench for disposal. So, the larger bench has not yet, taken any decision on the question as to whether a Director cannot be prosecuted in the absence of the Company as an accused. But, anyhow, till the reference of the matter to the larger bench, the Apex Court in many cases has taken a decision that the Company is not a necessary party and there is no necessity to array it as an accused. So, as the law now stands, it has to be held that a presumption under Section 138 of the Act can be maintained even in the absence of the Company as an accused. It is not in dispute that the accused is the signatory of cheque-Ex.P1 and therefore, the prosecution of the accused in the absence of the Company as a party, there is no impediment to prosecute the accused in the absence of the Company.
22. The cheque-Ex.P1 has been issued in favour of the complainant by name Ranga Karkera. It is not in the name of either the proprietorship concern or a firm. The evidence reveals that the complainant is doing the business in his own capacity and though the records disclose that YFT is either a partnership firm or a proprietorship concern, as the cheque has been issued in the name of the complainant and it is admitted by the accused that the complainant is doing business in his personal capacity. Hence, I do not find any impediment to hold the complaint is maintainable. So, in view of the material facts and the law laid down, this Court is of the view that the conviction ordered by the Courts below and the sentence has to be upheld. In that view of the matter, I proceed to pass the following:
ORDER
The revision petition is dismissed. No costs.