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2002 DIGILAW 1314 (AP)

RBF NIDHI LIMITED v. State Of A. P.

2002-11-11

S.R.K.PRASAD

body2002
S. R. K. PRASAD, J. ( 1 ) THE petitioners who are accused 1 and 2 in CC. No. 1012 of 2000 on the file of the X Metropolitan Magistrate, criminal Courts, Secunderabad, seek quashing of the proceedings by invoking inherent powers. ( 2 ) THE brief facts of the case are as follows: on 8-7-1999 the respondents 2, 3 and 4 who are de facto complainants deposited rs. 31,000/-, Rs. 7,500/- and Rs. 41,400/- with the first petitioner company as a short term deposit for a period of 90 days. After maturity, on 7-2-2000 a cheque bearing no. 010696 was issued in favour of second respondent for Rs. 82,961/- drawn on ICICI banking Corporation Limited, S. D. Road branch, Secunderabad signed by two whole time directors. The said cheque was deposited into the bank and the same was dishonoured. Thereafter, a legal notice is stated to have been issued on 31-7-2000. ( 3 ) WHILE so, the first petitioner herein sent a demand draft bearing No. 26137 dated 8-8-2000 for an amount of Rs. 4,150/ -. In response to legal notice dated 31-7-2000, a reply notice dated 21-8-2000 was issued by first and second petitioners. In the complaint it is specifically stated in the reply notice dated 21-8-2000 that due to mismanagement in the first petitioner company by the erstwhile Board of Directors, the company remained closed throughout january, 2000 and an application was made to the Company Law Board in C. P. No. 2 of 2000 on 18-1-2000, thereby, the erstwhile board was superseded and new Board was reconstituted. The second petitioner was appointed as Chairman and the new board assumed charge on 21-9-2000. In the reply notice 21-8-2000, there was a specific reference of interim orders of Company Law board, which form part of the complaint. ( 4 ) LEARNED Counsel appearing for the accused assails the orders on the ground that the second petitioner was not responsible for issuance of the cheques and their dishonour since he was appointed subsequently and assumed charge only on 21-9-2000. It is also contended that the g. P. A. holder, has no right to present a complaint on behalf of de facto complainant and the present petition is bad. It is also contended that the g. P. A. holder, has no right to present a complaint on behalf of de facto complainant and the present petition is bad. ( 5 ) LEARNED Counsel appearing for respondents 2, 3 and 4 contends that the supreme Court has granted stay in respect of the principle laid by the Division Bench in S. P. Sampathy v. Manju Gupta, 2002 (1) ald (Crl.) 619 (A. P.)In that view of the matter, it is submitted that the complaint is maintainable and it is contended that the notice was also issued to the company to furnish the information regarding the directors of the Company. The company has failed to furnish the same, and hence the first respondent who is in-charge of the affairs of the company is also responsible for the offences alleged. ( 6 ) LEARNED Public Prosecutor contends that it is not a fit case where inherent powers can be exercised to quash the proceedings and contends that the matter has to be relegated to trial. ( 7 ) ADVERTING to the said contentions, it is clearly stated in S. P. Sampathy s case (supra) that if the complaint is not signed by the payee, the complaint is not maintainable by the G. P. A. Holder or his Agent. It appears that in the said decision, the decision in Payyati Savitri Devi v. Mali Reddy damayanthamma, 1997 (4) ALD 815 , was overruled. However, it is already urged that the operation of the S. P. Sampathy s case was stayed by the Apex Court. It is necessary to have a look at Section 142 of the negotiable Instruments Act. ( 8 ) SECTION 142 of the Negotiable Instruments Act reads as under. cognizance of Offences :notwithstanding anything contained in the Code of Criminal procedure, 1973, (A) no Court shall take cognizance of any offence punishable under Section 138 except upon a complaint, in writing, made by the payee or, as the case may be, the holder in due course of the cheque, (b) Such complaint is made within one month of the date on which the cause of action arises under clause (c) of the proviso to section 138, (c) no Court inferior to that of a Metropolitan magistrate or a Judicial Magistrate of the First Class shall try any offence punishable under Section 138. " ( 9 ) IT is clearly stated in Y. Venkateshwara Rao v. Mahee Handlooms (P) Limited, 1992 (3) ALT 73 , that a magistrate has to proceed with the case in accordance with the provisions of the chapter XV of the Code of Criminal Procedure. That means the procedure contemplated under Section 200 to Section 203 of Cr. P. C. has to be followed by the Magistrate, whenever a complaint is presented. Section 200 of Cr. P. C. reads as under. "examination of complainant:a Magistrate taking cognizance of an offence on complaint shall examine upon oath the complainant and the witnesses present, if any, and the substance of such examination shall be reduced to writing and shall be signed by the complainant and the witnesses, and also by the Magistrate: provided that, when the complaint is made in writing, the Magistrate need not examine the complainant and the witnesses (A) if a publi servant acting or purporting to act in the discharge of his official duties or a court has made the complaint; or (b) if the Magistrate makes over the case for inquiry or trial to another Magistrate under section 192:provided further that if the Magistrate makes over the case to another Magistrate under section 192 after examining the complainant and the witnesses, the latter Magistrate need not re-examine them. " ( 10 ) IT is clear from Section 200 of Cr. P. C. that whenever a complaint is presented, the Magistrate shall examine the complainant and witnesses present. It is a case, where the G. P. A. holder has presented a complaint on behalf of 3 people. The g. P. A. holder has been examined on oath. The other complainants are not present, and they are not examined. It is now represented that one of the de facto complainant i. e. , second respondent died and that 4th respondent is an aged person. As per the complaint, 3 persons are said to have deposited amounts belonging and the said amounts are deposited separately, knowledge can be attributable to other complainants who have made deposits. They have to speak personally about the same. As per the provisions of the General Clauses Act, a singular includes plural, while interpreting the provisions of the statute. If that is imported into Section 142 of the N. I. Act, a payee in writing includes payees in writing. They have to speak personally about the same. As per the provisions of the General Clauses Act, a singular includes plural, while interpreting the provisions of the statute. If that is imported into Section 142 of the N. I. Act, a payee in writing includes payees in writing. In fact the complaint has been presented on behalf of 3 persons by G. P. A. holder. A lacuna in statute cannot be filled up when it does not contemplate presentation of the complaint by G. P. A. holder. The accused is always entitled to take advantage of the lacunas in statute and seek for quashing of the proceedings. On examination of the language of Section 142 of N. I. Act, I am of considered view that the G. P. A. holder cannot invoke Section 142 of N. I. Act and only payee has to invoke Section 142 of N. I. Act by presenting a complaint in writing. ( 11 ) ASSUMING for argument sake that G. P. A. holder is entitled to present the complaint, the examination of complainant under Section 200 Cr. P. C. by the Magistrate is mandatory. It does not contemplate examining G. P. A. holders, only. The original complainant have to be examined at the time of presentation of the complaint. As the payees are not present at the time of filing of the complaint and have not filed the written complaint into Court and as their sworn statements are not recorded, I am of the considered view that procedure contemplated under Section 200 of Cr. P. C. has not been followed or adhered to by the learned Magistrate and the proceedings are liable to be quashed on that ground also. ( 12 ) COMING to the aspect of petitioners contention that second respondent was not responsible for issuance of the cheques, it cannot be said that the said argument is without any force. In order to make the director or a Managing Director who succeed the company, after issuance of the cheque, it is to be seen whether he can be prosecuted individually as a Director under section 141 of N. I. Act. In order to make the director or a Managing Director who succeed the company, after issuance of the cheque, it is to be seen whether he can be prosecuted individually as a Director under section 141 of N. I. Act. Section 141 of N. I. Act read as follows:"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 subsection 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 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. Explanation :for the purpose of this section (a) "company" means any body corporate and includes a firm or other association of individuals; and (b) "director" in relation to a firm, means a partner in the firm. ( 13 ) BY the date of dishonour of the cheques, he was not a Director. It is only after issuance of the notice, he was appointed by the Company Law Board. In that view of the matter, he cannot be held responsible vicariously under Section 141of N. I. Act, as it cannot be said that he has given consent and connivance as he is not a Director at the time of issuance of the cheque. Coming to non-furnishing of the information of the prior Directors, it cannot lead to prosecute the present Directors. Coming to non-furnishing of the information of the prior Directors, it cannot lead to prosecute the present Directors. This Court is unable to understand how the de facto complainant can demand as of right to furnish the information of the company regarding the past Directors, that too, when they want to prosecute them. It is a common knowledge that no person will furnish the information to facilitate for prosecution before the Court. In any view of the matter, the demand made by the de facto complainant to disclose about the information of the prior Directors appears to be an odd desire and it is not shown having legal basis. ( 14 ) UNDER Section 138 of the N. I. Act, the drawer of the cheque is always liable and he cannot escape the responsibility, except in cases where the complaint is not properly presented or barred by limitation. This is one such case, where the complaint has not been presented properly and the sworn statements are not recorded. The contention of the learned Counsel for respondent that the matter may be sent back for recording sworn statements after setting aside the cognizance of the order, cannot be complied with for the fact that the irregularity cannot be cured, since one of the complainant had already died and another one is stated to be aged person and bed ridden, and thus, it will only lead to postponing the trial. In any view of the matter, prejudice will be caused to the petitioner, if such a course is adopted. ( 15 ) UNDER the above circumstances, I am of the considered view that certain guidelines have to be given to the Lower courts in cases where complaint has been presented by G. P. A. holders to avoid injustice being caused to the parties under N. I. Act, till rules are framed either under Negotiable instruments Act or under Criminal Procedure code. The guidelines are as follows: (A) Whenever G. P. A. holder presents a complaint before the Court, the magistrate shall insist upon the signature of the payee on the complaint, and he shall record sworn statement of not only the payee, g. P. A. holder and endeavour shall also be made to record the sworn statement of de facto complainant, at whose instance provisions of section 142 of N. I. Act are invoked. (B) If more than one complaint is presented, the complainant and the persons who have got the knowledge of the offence shall be examined before the Court. (C) If cause of action differs for each of the complainant, the Magistrate shall examine all complainants separately, though cognizance might be taken on a common complaint under Section 142 of N. I. Act. (D) The Magistrate shall insist on filing of G. P. A. into Court and also insist on filing an affidavit to be presented in lieu of proof of execution of the said G. P. A. (E) The Magistrate shall thoroughly examine the statement of G. P. A. holder as well as the Original Complainant and documents produced before him and exercise his discretion vested under Sections 200 to 203 of Cr. P. C. (F) The above guidelines are not exhaustive. There may be some cases which are not covered by the above guidelines. In such cases, the Magistrate shall exercise his judicial discretion and proceed to deal with the cases arising under Section 200 Cr. P. C. ( 16 ) COMING to the facts of the present case, the second petitioner was not responsible for issuance of the cheques and was not Director of the Company at the time of dishonour of the cheques in question. Apart from this, sworn statements were not recorded as per Section 200 of cr. P. C. ( 17 ) IN view of my above discussion, the proceedings in C. C. 1012 of 2000 are liable to be quashed and accordingly the same are quashed. ( 18 ) THE petition is ordered accordingly.