R.P. Balakrishna Vs. Muthoot Leasing and Finance Ltd. and anr. - Court Judgment

Excerpt:
- section 100: [a.n. venugopala gowda, j] substantial question of law - challenge to the decree of the trial court in the second appeal without questioning the same either under order 41 rule 1 or order 41 rule 22 - permissibility under law - held, section 96 of the code of civil procedure makes provision for appeal being preferred from every original decree. the appeal can be filed by an aggrieved person, prejudicially or adversely affected by the decree. the respondent in the appeal, though he may not have filed an appeal from any part of the decree impugned, may still support the decree to the extent to which it is already in his favour by laying a challenge to a finding recorded in the impugned judgment against him, though he has neither preferred an appeal of his own nor taken any cross objection. the right to file cross objection under rule 22 of order 41 is the exercise of right to appeal, though in a different form. second appeal under section 100 cpc shall lie to the high court from every decree passed in appeal by any court subordinate to the high court, if the case involves a substantial question of law. thus, what can be appealed under section 100 cpc is the decree passed in appeal. therefore, a party who has not challenged the decree of the trial court by preferring an appeal or cross objections before first appellate court, cannot challenge the same in the regular second appeal under section 100 of the code of civil procedure. on facts held, admittedly, the defendants were aggrieved even with the granting of decree of even 1/15th share, which ought to have been appealed against or objected to by them, but they permitted the decree granting of 1/15th share to achieve finality. even if the decree passed by the first appellate court is set aside, still the decree passed by the trial court which was not challenged by the defendants in the first appellate court, shall remain undisturbed and is separable from the decree passed by the first appellate court. - --(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 :provided that nothing contained in this sub-section shall render any person liable to punishment if he proves that the offence was committed without his knowledge, or that he had exercised all due diligence to prevent the commission of such offence. 3 of the complaint contended that there is sufficient averment made out in the complaint to show that the accused including the petitioner were aware of the transaction relating to the dishonour of the cheque and they were effectively dealing on behalf of the company. it is interesting to mention here that the said order is signed only by the managing director. ' 7. the material produced by the petitioner by way of annexures a and d clearly suggest that the petitioner was also in charge of and responsible to the company for the conduct of the business of the company.k. sreedhar rao, j.1. petition filed under section 482 of the criminal procedure code, 1973, for the quashing of the proceedings against the petitioners in c. c. no. 27224 of 1999. the first respondent filed a private complaint against the petitioner and others for committing an offence punishable under sections 138 and 142 of the negotiable instruments act, 1881 (hereinafter referred to as 'the act'). it is alleged that the impugned dishonoured cheques are issued by the petitioner on behalf of the company. in the cause title of the complaint, the petitioner has been described as the director of the second respondent-company. the trial court took cognizance and issued process. being aggrieved by the said order, the present petition is filed.2. the issuance of the dishonoured of cheques is not in dispute in this proceedings. however it is contended by the petitioner that he is not the director of the second respondent-company and he was only an employee of the company. further it is contended that the complaint does not contain necessary averments to show that the petitioner was responsible for the conduct of the business of the company. in the absence of such averments, it was strenuously contended by counsel for the petitioner that the proceedings against the petitioner has to be quashed.3. it is relevant to advert to the provisions of section 141 of the act which read as follows :'141. offences by companies.--(1) if the person committing an offence under section 138 is a company, every person who, at the time the offence was committed, was in charge of, and was responsible to, the company for the conduct of the business of the company, as well as the company, shall be deemed to be guilty of the offence and shall be liable to be proceeded against and punished accordingly : provided that nothing contained in this sub-section shall render any person liable to punishment if he proves that the offence was committed without his knowledge, or that he had exercised all due diligence to prevent the commission of such offence. (2) notwithstanding anything contained in sub-section (1), where any offence under this act has been committed by the 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.'4. counsel for the first respondent with reference to the averments in para. 3 of the complaint contended that there is sufficient averment made out in the complaint to show that the accused including the petitioner were aware of the transaction relating to the dishonour of the cheque and they were effectively dealing on behalf of the company. therefore, he submitted that the requirements of section 141 of the act are fulfilled and as such the petitioner also became accountable under section 141 of the act. counsel for the petitioner on the other hand, strenuously contended that the petitioner being only an employee and not being the director is not involved in the decision-making process of the company ; therefore not liable for prosecution. the petitioner has produced along with the petition annexures a to d, the minutes of the company. in the annexure a, the directors of the company have resolved and authorised the petitioner who was the manager of finance to sign the agreements on behalf of the company and to do all necessary acts for availing of the loan facility from the first respondent. under annexure b, the directors of the company have resolved to indemnify the petitioner and other officers against civil and criminal prosecutions in respect of actions initiated by any of the creditors. under annexure c, the company had resolved to approach the bifr as it was a sick company. under annexure d, in the minutes of the company, the proceedings brought against the company under section 138 of the act have been noticed and mentioned.5. counsel for the petitioner relied on the ruling of the allahabad high court reported in smt. sharda agarwal v. additional chief metropolitan magistrate ii, kanpur [1993] 78 comp cas 123. in the said case, reference is made to the provisions of section 141 of the act. it was found that there was no allegation in the complaint that the petitioner/director was in charge of and responsible to the company for the conduct of the business and made the following observations in paras. 7 and 8 as follows (page 126) :'there is no allegation in the complaint that the directors, i.e., the applicants were in charge of and responsible to the company for the conduct of the business of the company. therefore, as it is, the complaint cannot proceed against the directors only.in this connection the appointment letter creating the relationship between the complainant and accused-company was referred to by learned counsel. it is interesting to mention here that the said order is signed only by the managing director. the other facts to be noted are that the cheques were issued by the managing director and even the bank draft appears to have been prepared in the name of the accused-company. thus, from the facts emerging out of the complaint, it cannot be said that the applicants have got anything to do with the bouncing of the cheque. however, if evidence is led during trial about the applicants or any one of them being in charge of and responsible to the company for the conduct of the business of the company the court below would be at liberty to proceed against them or him also in accordance with law. as it is, the complaint does not make out an offence in so far as the applicants smt. sharda, smt. kiran and sri m. p. agarwal are concerned.'6. the decision relied upon by counsel for the petitioner has no application to the facts on hand. in the instant case, the prima facie material indicates that the dishonoured cheques are issued by the petitioner on behalf of the company. there are also necessary averments in para. 3 of the complaint which reads as follows :'that accused nos. 1 to 4 are aware of the above facts, and the strategy for the loan and the repayment of the same is discussed in between them during their day-to-day business transactions of factory affairs. the complainants after inspecting the factory and meeting the accused agreed to release the loan for the installation of computers, for the sake of buying air-conditioners, epabx psx 130 tel. exchange, for the fluid drier etc. the accused issued cheques in the name of the complainant after due discussions and consultations which is the normal procedure of the course of the business transactions.'7. the material produced by the petitioner by way of annexures a and d clearly suggest that the petitioner was also in charge of and responsible to the company for the conduct of the business of the company. he was duly authorised by the board of directors to negotiate in the transaction in question and was authorised to sign the agreements between the company and the first respondent.8. the contention that the petitioner had no role in the decision making process of the company affairs is not a tenable argument. the requirement of section 141 of the act only suggests that a person whether he is an employee or a director if he is in charge of the business and responsible for the conduct of the business of the company, he becomes accountable for an action. in the present case, the necessary requisites of section 141 are fulfilled although the averments in the complaint may not set out in detail the material basis on which the petitioner incurs liability. the concept of the strict rules of pleadings in a civil law cannot be important in criminal proceedings. the complaint has to contain basic necessary material ingredients of the offence and its commission by the accused. the mention of the other details of the evidentiary material is not necessary, nor such absence is fatal for maintainability of the complaint.9. in that view of the matter i do not find any merit in the petition. accordingly dismissed.