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1999 DIGILAW 834 (MAD)

Karthick Fisheries through its Director, Mr. N. K. Kumar v. JosephaliasJoseph Raziz

1999-08-17

S.THANGARAJ

body1999
ORDER: The 3rd accused in C.C.No.413 of 1997 on the file of the Judicial Magistrate, Tuticorin, has filed this petition under Sec.482, Crl.P.C. to quash the said case. 2. The respondent has filed a complaint against five accused, alleging that the 1st accused is the Managing Director of 3rd accused, that the 2nd accused is the Director of the 3rd accused, that 5th accused is the company represented through its Managing Director A-1 and A-5, that A-1 and A-2 are actively engaged in running the affairs of the company A-3, and A.1, A-2 and A-4 are actively engaged in running of A-5. A.1 had purchased prawns on behalf of A-3 for a total sum of Rs.48,81,737,55 and Rs.6 lakhs was paid during January and February, 1995. As on April, 1996 the outstanding amount was Rs.22,12,000 and on 14.6.97 A.1 as Chairman-cum-Managing Director of A-5 issued a cheque for Rs.22,12,000 and it was presented for collection through their Bankers Indian Bank, Melur, Tuticorin and the same was returned with an endorsement “funds insufficient”. On 14.7.1997, the complainant issued a notice demanding the amount in the cheque. A.1, A-3 to A-5 received the notice on 19.7.1997 and A-2 wilfully evaded the receipt of notice. However, the accused did not pay any amount within the period. Hence, the complaint. 3. The present petition is filed by the 3rd accused’ company known as M/s.Karthick Fisheries through its Director N.K.Kumar who is the 1st accused. The main contention of the petitioner is that the cheque was issued by the 1st accused as Director of the 5th accused company and therefore the present petition, who is the 3rd accused, is not liable for an offence under Sec.138, Negotiable Instruments Act. To substantiate the said argument, the petitioner has relied on a decision in Sudesh Kumar Sharma v. Sevamani, (1994)1 L.W. (Crl.) 337. In the said case, the 2nd accused was the son of the 1st accused and they were running a business. The 1st accused was the proprietor and the 2nd accused was the authorised signatory of the firm M/s.‘Pushpanjali’ and the accused purchased fabrics on credit basis and apart from payment of the amount due to the complainant, he handed over tow cheques which were dishonoured. The 1st accused was the proprietor and the 2nd accused was the authorised signatory of the firm M/s.‘Pushpanjali’ and the accused purchased fabrics on credit basis and apart from payment of the amount due to the complainant, he handed over tow cheques which were dishonoured. This court held that the first accused was the proprietor of the concerns for whose liability his son, the second accused had issued the cheque and so criminal liability cannot be fastened on the first accused. In Krishna Bai v. M/s.Arti Press, Sivakasi, 1991 L.W. (Crl.) 513, wherein one person was Managing Director of two companies and that person in his capacity as Managing Director of S company had issued a cheque for meeting the liability of G Company Ltd. and the cheque was dishonoured. A complaint was filed against the said Managing Director without impleading G company and it was held that the said complaint was not maintainable because M/s.Mudra Graphics Pvt. Ltd. on whose behalf the cheque was issued by the Managing Director of the said company was not added as an accused and the learned Judge further stated that unless the company is made an accused, the person who is incharge of and responsible to the company for the conduct of the business of the company cannot be made an accused. In U.P.Pollution Control Board v. M.S.Modi Distillery, A.I.R. 1988 S.C. 1128, their Lordships while considering Sec.17 of the Prevention of Food Adulteration Act and Sec.47 of Water (Prevention and Control of Pollution) Act (6 of 1974), held: “On a plain reading of Sub-sec.(1) of Sec.47 of the Act, where an offence has been committed by a company, every person who at the time of the commission of the offence was ‘in charge of and responsible to’ the company for the conduct of the business of the company, shall be deemed to be guilty of the offence and shall be liable to be proceeded against and punished accordingly. Proviso to Sub-sec.(1) however engrafts an exception in the case of any such person if he were to prove that the offence was committed without his knowledge or that he exercised all due diligence to prevent the commission of such offence.” In Badhusha Bibi v. Anandkumar Trading Co., (1991)2 M.W.N. (Crl.) 237, it was held by this Court that the drawer of the cheque can alone be proceeded with for offence under Sec.138, Negotiable Instruments Act provided the other requirements are satisfied. The endorsor of the cheque issued by the 1st accused and had delivered it to the complainant cannot be proceeded with. 4. Before deciding the applicability of these decisions to the case on hand, it is better to state the facts of the present case once again. A-1 and A-2 are Directors of the third accused Company M/s.Karthick Fisheries/petitioner herein. A-1, A-2 and A-4 are the Directors of Karthick Multi-Packs Pvt. Ltd. A-5. Towards the discharge of the liability of the A-3, who is the petitioner herein, the first accused who is the Director of A-5/company has issued a cheque in favour of the complainant which was dishonoured later. Now, A-3 towards whose discharge of liability the cheque in question was issued, has filed this petition for discharge. The respondent/complainant in the counter has stated that the 1st accused has issued the cheque of the A-5 company to settle the liability of A-3, who is the petitioner herein and hence, A-3 is a necessary party to the complaint. 5. In the circumstances, of the case, the decision reported in Krishna Bai v. M/s.Arti Press, Sivakasi, (1991)1 L.W. (Crl) 513, is not applicable to the present facts of the case as the question decided therein was whether a Managing Director can be arrayed as a party without impleading the company on whose behalf the cheque was issued by the Managing Director. In that circumstance, it was held that the complaint against the Managing Director without impleading the company as a party is not maintainable. Here, the facts are different and the question to be decided is also different. 6. In Badhusha Bibi v. Anandkumar Trading Company, (1991)2 M.W.N. (Crl.) 237, it was held that the petitioner/2nd accused was not the drawer of the cheque but had only endorsed the cheque issued by the 1st accused and had delivered it to the complainant, hence she cannot be proceeded with. 6. In Badhusha Bibi v. Anandkumar Trading Company, (1991)2 M.W.N. (Crl.) 237, it was held that the petitioner/2nd accused was not the drawer of the cheque but had only endorsed the cheque issued by the 1st accused and had delivered it to the complainant, hence she cannot be proceeded with. In the instant case, the petitioner herein, who is the third accused in the complaint has not endorsed the cheque. However, whether the petitioner herein is liable for an offence under Sec.138, Negotiable Instruments Act has to be decided on the basis of many more factors as such the said decision cannot be applied directly to the facts in issue. 7. The facts of the decision in Sudesh Kumar Sharma v. Selvamani, (1994)1 L.W. (Crl.) 337, has already been stated above. Whether the ratio decidendi in the said decision is applicable to the instant case, is the question which arises for our consideration. In the said decision, it was held, the first accused was the proprietor of the concern for whose liability his son the 2nd accused has issued the cheque and so criminal liability cannot be fastened on the first accused. 8. Chapter XVII consisting of Secs.138 to 142. Secs.138 to 142, Negotiable Instruments Act was added to the said Act by way of an Amendment Act known as “Banking, Public Financial Institutions and Negotiable Instruments Laws (Amendment) Act, 1988 (66 of 1988) with effect from First April, 1989.” This chapter has been inserted with a view to make the drawer of the cheque liable for dishonour and to give adequate safeguards to the payee or the holder in due course as well as to prevent the harassment to honest drawers. To bring these offences to the jurisdiction of criminal court, Sec.142 was introduced for “cognizance of offences” wherein it was stated that the offences shall be triable by no court inferior to that of Metropolitan Magistrate or a Judicial Magistrate of the 1st Class. Sec.139 of Negotiable Instruments Act enjoins a presumption in favour of the holder and at the sametime against the drawer of the cheque. Sec.140 enjoins the defence which may be allowed in any prosecution under Sec.138, Negotiable Instruments Act and as stated under Sec.140, Negotiable Instruments Act “mens rea” is excluded. Sec.139 of Negotiable Instruments Act enjoins a presumption in favour of the holder and at the sametime against the drawer of the cheque. Sec.140 enjoins the defence which may be allowed in any prosecution under Sec.138, Negotiable Instruments Act and as stated under Sec.140, Negotiable Instruments Act “mens rea” is excluded. In Director of Enforcement v. M/s.M.C.T.M. Corporation Pvt. Ltd., A.I.R. 1996 S.C. 1100 at 1103, it was held that under Criminal Law “mens rea” is considered as the “guilty intention” and unless it is found that the accused had the guilty intention to committee “crime”, he cannot be guilty of committing the crime. Such mens rea is excluded to make an offence under Sec.138, Negotiable Instruments Act. Their Lordships of the Supreme Court in Nathu Lal v. State of Madhya Pradesh, A.I.R. 1966 S.C. 45 have held that mens rea is an essential ingredient of a criminal offence. A statute can, however, excluded mens rea. Even otherwise the nature of mens rea that would be employed in a statute creating an offence depends on the object of the Act and provisions thereof. Even if mens rea would be implied depending on the object of the Act and the provisions of the said Act, the drawer of the cheque is liable for the amount in case if the cheque is dishonoured. While considering the salient provisions of the Chapter XVII of the Negotiable Instruments Act and the object for which the said Chapter was introduced, it is clear that “criminal liability of an accused need not be looked into”. So that the legislature in its wisdom has not added any words like dishonestly or dishonest intention of the drawer of the cheque. In this view taken in Sudesh Kumar Sharma v. Selvamani, (1994)1 L.W. (Crl.) 337 cannot be accepted. Considering the facts of the case, the cheque was issued towards the liability of the petitioner herein and the 1st accused who has signed the cheque on behalf of A-5 is a Director in A-3 and A-5/firms. As the cheque was given by the fifth accused towards the discharge of the liability of the third accused, it cannot be absolved from the liability and therefore, the discharge petition field by A-3 will not stand the judicial scrutiny. As the cheque was given by the fifth accused towards the discharge of the liability of the third accused, it cannot be absolved from the liability and therefore, the discharge petition field by A-3 will not stand the judicial scrutiny. The said ground is not relevant to quash the case pending against the petitioner and on the contrary the petitioner can raise these points before the trial court and let in evidence, both oral and documentary, and thereafter the trial court will give a decision. As stated supra, mens rea is not an essential ingredient of the offence under Sec.138, Negotiable Instruments Act, the object of the Act and the provisions would be sufficient enough to decide the offence under Sec.138, Negotiable Instruments Act, the arguments advanced on the side of the petitioner cannot be accepted. Hence, the petition is liable to be dismissed. In the result, Crl.O.P.No.19632 of 1998 is dismissed. Consequently, Crl.M.P.No.9195 of 1998 is also dismissed.