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2002 DIGILAW 18 (CAL)

Karnataka Agro. Chemicals v. Sateyendra Nath Biswas

2002-01-17

Pradip Kumar Biswas

body2002
JUDGMENT Pradip Kumar Biswas, J.: Learned counsel for the petitioners is present. None appears, however, on behalf of the opposite party. However, the matter is taken up for consideration on its merit. Heard the learned counsel for the petitioners at length. 2. This is an application under section 401 read with section 482 of the Code of Criminal Procedure filed by Karnataka Agro Chemicals, a partnership firm along with five others against the opposite party seeking to quash the proceeding under section 138 of the Negotiable Instruments Act in Case No. C/137 of 1994 now pending before the Metropolitan Magistrate, 4th Court, Calcutta. The short facts leading to this revisional application may be summerised as follows:- 3. On April 8, 1994, the opposite party made a written complaint to the learned Chief Metropolitan Magistrate, Calcutta against the present petitioners alleging, inter alia, that the complainant is a Director of Paul Biswas & Company Private Limited and the accused No.6 Mr. K.V.S. Rao, i.e. the petitioner No.6 is the Chief Marketing Manager of Mis. Karnatak Agro Chemicals, i.e. the petitioner No.1 herein and he is the person in charge of the company and responsible officer in respect of Management, Administration of the company. It has also been alleged that accused Nos. 2 to 5, i.e. the petitioner Nos. 2 to 5 herein are the partners of the aforesaid company. Further it has been alleged that on August 3, 1993 the accused No.2, on behalf of the other accused persons settled the complaint's commission amounting to Rs. 2,46,043/- and arranged to make payment of Rs. 2,00,000/- keeping an outstanding balance of Rs. 46,043/-. The complainant, however, continued business with the aforesaid company but insisted upon for full payment of commission as agreed upon. Subsequently, by a letter No. KAC/PB/1036/93 dated 30.9.93/6.10.93 the accused terminated C & F agency of the complainant company. The complainant acknowledged the receipt of the said letter and repeatedly requested the accused persons to settle the accounts. When accused No.2 by his letter No. KAC/PB/1332/93 dated November 17, 1993 intimated the complainant that the accused No.6 has been duly authorised to settle the accounts and he would visit the complainant's office for the said purpose. The accused No.6 visited the complainant's office on 19.11.93 and 20.11.93 and after proper verification of the accounts by both the parties, the accounts were settled. The accused No.6 visited the complainant's office on 19.11.93 and 20.11.93 and after proper verification of the accounts by both the parties, the accounts were settled. The settlement was arrived at in the manner that the' complainant's company would get Rs.2,45,813/- and for paying the aforesaid amount, the aforesaid company would issue post dated 20.11.93 acknowledged and accepted the said settlement of accounts and issued 5 post dated cheques in payment thereof. Out of the 5 post dated cheques, the last cheque bearing No. 515574 dated 26.2.94 for Rs. 70,813/- drawn on Vijay Bank, Rabindra Sarani Branch, Calcutta was presented for encashment on due date but the said cheque was dishonoured by the accused's banker with a remarks "effect not cleared" vide the Bank's memo dated 28.2.94. Again the aforesaid cheque was presented for encashment but the cheque was again dishonoured by the accused's banker. The complainant thereafter issued demand notice through his learned Advocate dated 8.3.94 sent under Registered Post and the said letters were received by the accused on 11.3.94 and 13.3.94 and his Advocate received the acknowledgment card on 21.3.94. Inspite of demand notice, the accused failed and neglected to pay the said cheque amount. It has further been alleged that the accused Nos. 2 to 5 are all the partners of the aforesaid company and consequently, all of them are aware of the facts and circumstances of the Case and as such all of them are liable and responsible for the offence complained of and accused No.6 is the Chief Marketing Manager and he is a responsible officer and person-in-charge of the firm. With these allegations the complaint was filed. 4. On receipt of the aforesaid complaint, the learned Additional Chief Metropolitan Magistrate, Calcutta took cognizance and transferred the case to the learned Metropolitan Magistrate, 4th Court, Calcutta. The concerned court thereafter issued summons against the petitioners on 2nd May, 1994 directing them to appear before the court and face the trial for offence publishable under section 138 of the N.I. Act. 5. The concerned court thereafter issued summons against the petitioners on 2nd May, 1994 directing them to appear before the court and face the trial for offence publishable under section 138 of the N.I. Act. 5. Being aggrieved by and dissatisfied with the continuance of the prosecution against the petitioners under section 138 of the N.I. Act before the aforesaid court of the learned Metropolitan Magistrate, 4th Court, Calcutta, the petitioners have come up with this revisional application alleging therein that the allegations, as contained in the petition of complaint, even if, are taken at their face value and accepted in their entirety, no offence punishable under section 138 of the N.I. Act can be said to have been committed by the petitioners and as such, the impugned prosecution against the petitioners is liable to be quashed. The petitioners have precisely taken three grounds against the continuation of this proceeding, namely: (1) that in the instant case in discharge of an alleged liability total 5 post dated cheques were issued and after 4 cheques being duly encashed, on final settlement of accounts, as it was discharged, the drawer with a prior notice to the payee instructed its banker to stop payment against the last cheque and as such, no offence as alleged or at all can be said to have been committed; (2) that the person concerned who has filed the petition of complaint has not filed or showed any authority to institute the aforesaid legal proceeding and as such since the complainant could now show that he was in charge or was responsible for instituting such legal proceeding, no such case is maintainable against these present petitioners; and (3) that the petitioner Nos. 2 to 5 being partners are aware of the facts and circumstances of the case and excepting that there is no other allegations against them in the petition of complaint. 6. 2 to 5 being partners are aware of the facts and circumstances of the case and excepting that there is no other allegations against them in the petition of complaint. 6. Sri Ashim Roy, in course of his argument has argued first that in instituting a complaint case under section 138 of the N.I. Act a person other than the company can be proceeded with under those provisions only when it is proved or alleged that such person was in charge of and was responsible to the company for conducting its business but in the instant case that having not been alleged in the petition of complaint, the present petition of complaint can not at all be maintained against them and as such it cannot be proceeded with against these accused persons, at least against the accused petitioner Nos. 2 to 5 and hence, they pray for the aforesaid reliefs. 7. In this connection, Sri Roy drawing my attention to a decision reported in JT 2000 (Suppl.) SC 519, K. P. G. Nair vs. M/s. Jindal Menthol India Ltd., has submitted before me that in the petition of complaint excepting the fact that these petitioner Nos. 2 to 5 were partners of the aforesaid firm, nothing specific has been alleged against them so as to show that at the time when the offence was committed they were either in charge or were responsible to the firm for conduct of business and as such as per the dictum of the Supreme Court that a person other than the company can only be proceeded with under those provisions only when it is shown that if that person or persons was/were in charge and was responsible to the company for the conduct of its business but that having not been mentioned here in the petition of complaint, plainly reading the petition of complaint, it will be absolutely clear that no proceeding under section 138 of the N.I. Act can be maintained against these petitioners. 8. He has further submitted that although in the petition of complaint, especially in paragraph 2 there is mention of the fact that the accused petitioner No.6 Mr. 8. He has further submitted that although in the petition of complaint, especially in paragraph 2 there is mention of the fact that the accused petitioner No.6 Mr. K.V.S. Rao was the Chief Marketing Manager of the company and he was the person-in-charge of the company and responsible officer in respect of the management and administration of the company, yet, it has not been clearly spelt out that at the time when offence was committed he was the person-in-charge of the company and responsible officer in respect of management and administration of the company, no proceeding can also be continued to be allowed against him. 9. He has of course taken two other points that the person concerned who has filed this petition of complaint has not shown or produced any authority that he has the authority to institute legal proceeding and such authorisation must be on the date when the complaint is filed but in the instant case that having not been shown or produced before the concerned court, the present proceeding cannot be allowed to be continued on that score and moreover, there is no such averment in the four corners of the petition of complaint. 10. He has also taken another point that from the side of the drawer, instruction regarding stop-payment was given to the payee and in a situation like this, the provision of section 138 of the N.I. Act is not attracted at all. 11. Now, coming to the first contention with regard to the maintainability to this proceeding against the petitioners as a whole, I find that as per the decision reported in JT 2000 (Suppl.) SC 519 (supra) it has been clearly held: "A person other than the Company can be proceeded against under those provisions, only if that person was in charge of and was responsible to the company for the conduct of its business. It cannot also be disputed that substance of the allegations read as a whole, should answer and fulfill the requirements of the ingredients of the said provision (for being proceeded against for an offence which he is alleged to have committed). It cannot also be disputed that substance of the allegations read as a whole, should answer and fulfill the requirements of the ingredients of the said provision (for being proceeded against for an offence which he is alleged to have committed). Allegations made in the complaint do not, either in express words or with reference to the allegations contained therein, make out a case that at the time of commission of the offence, the appellant was in charge of and was responsible to the company for the conduct of its business." 12. From the perusal of the petition of complaint, I find in paragraph 2 that although there is sufficient allegation against the petitioner No.6 Mr. K.V.S. Rao alleging that he was the person-in-charge of the company and responsible officer in respect of management and administration of the company, yet there is no specific allegation against the other petitioners, namely, the petitioner Nos. 2 to 5 who are accused persons being Nos. 2 to 5 herein excepting the fact that they were the partners of the aforesaid company and only in paragraph 5 there is some reference with regard to the accused-petitioner Nos. 2 who is accused No.2 herein that he had some lands as on 3.8.93 for settlement of the accounts between the parties. But nothing has been stated specifically against him that at the time when the present offence was committed, he was also responsible in respect of the management, administration of the company and was involved with regard to the present matter directly. That being the position, applying the ratio of the aforesaid decision, I hold that plainly on the allegation, as it stands in the petition of complaint, the present case under section 138(1) of the N.I. Act against the petitioner Nos. 2 to 5 who were accused person Nos. 2 to 5 of this case cannot at all be proceeded against. But applying the ratio of the aforesaid decision, I hold that there are sufficient materials, as it appears, against the accused petitioner No.6 for proceeding against him in connection with this case. 13. Now, turning to the 2nd objection that although the petition of complaint was filed by one Satyendra Nath Biswas on behalf of the M/s. Paul Biswas & Co. (Pvt.) Ltd., yet in the complaint petition there is neither any averment nor any document has been produced that Mr. 13. Now, turning to the 2nd objection that although the petition of complaint was filed by one Satyendra Nath Biswas on behalf of the M/s. Paul Biswas & Co. (Pvt.) Ltd., yet in the complaint petition there is neither any averment nor any document has been produced that Mr. Biswas had appropriate authority to institute such legal proceeding. 14. True it is that there is no such averment in the petition of complaint, yet, I find that Mr. Biswas filed this petition of complaint on behalf of M/s. Paul Biswas & Co.(Pvt.) Ltd. and he has figured as the Director of the company. But here, at this stage before this court, there is no proper materials to connect whether Shri Biswas was duly authorised or not by the company to institute this legal proceeding and this may be decided as a mixed question of law and facts at the time of trial upon evidence being adduced by the parties. So, for the present, on the available materials, I am not inclined to quash the present proceeding on the ground that Sri Satyendra Nath Biswas had no legal authority to represent the company or to institute the legal proceeding on behalf of the company and that being the position, this question is left open to be decided during trial. 15. Now, turning to the other objection as raised, I find that the claim has been made from the side of the petitioners that since the stop payment instruction was issued to the payee, it cannot be said that offence under section 138 of the N.I. Act has been committed. But, as per pronouncement of the Apex Court in the case of Modi Cements Ltd. vs. Kuchil Kumar Nandi, reported in JT 1998(2) SC 198, wherein it has been held that even though the cheques were dishonoured by reason of stop-payment instruction, an offence under section 138 could still be made out and it was also held in that case that the presumption under section 139 is attracted in such a case also. In a case even when the cheque is dishounoured by reason of stop payment instructions by virtue of section 139, the court has to presume that the cheque was received by the holder for the discharge, in whole or in part, of any debt or liability and such presumption is of course rebuttable and as such accused person can thus show that the 'stop-payment' instructions were not issued because of insufficiency or paucity of funds. 16. If the accused shows that in his account there was sufficient fund to clear the amount of the cheque at the time of presentation of the cheque for encashment at the drawer bank and that the stop payment notice had been issued because of other valid causes including that there was no existing debt or liability, as has been stated in this case, at the time of presentation of cheque for encashment then offence would not be made out. 17. So, plainly on such allegation, there cannot be any quashing of the complaint as finality in relation to such matter can only be reached at the time of trial after adducing evidence by the concerned parties. So, on this count, no quashing is possible and the liberty is given to the concerned parties to agitate those points before the appropriate court in its appropriate time. 18. Now, in view of what I have stated above, I hold that the present proceeding against the petitioner Nos. 2 to 5 cannot be maintained on the allegations as made out in the petition of complaint and so far as these accused petitioner are concerned, the present proceeding is being quashed against them but the proceeding against the accused petitioner Nos. 1 and 6 shall continue as usual. 19. In view of the above findings, the present proceeding in Case No. C/137 of 1994 pending before the court of learned Metropolitan Magistrate, 4th Court, so far as it relates to the petitioner No.2 i.e. Dr. G. P. Shetty, petitioner No.3, i.e. Mr. Mahesh Shetty, petitioner No.4, i.e., Mrs. Nahalakshmi G. Shetty and petitioner No.5, i.e. Mr. Dinesh Shetty, shall stand quashed and the proceeding against those, namely, Karnataka Agro Chemicals and Mr. K.V.S. Rao shall continue as usual. 20. In view of the above observations, this revisional application stands disposed of. 21. G. P. Shetty, petitioner No.3, i.e. Mr. Mahesh Shetty, petitioner No.4, i.e., Mrs. Nahalakshmi G. Shetty and petitioner No.5, i.e. Mr. Dinesh Shetty, shall stand quashed and the proceeding against those, namely, Karnataka Agro Chemicals and Mr. K.V.S. Rao shall continue as usual. 20. In view of the above observations, this revisional application stands disposed of. 21. Let a copy of this order be sent down to the court below for information and necessary compliance with a direction to proceed in this case against the accused petitioner Nos. 1 and 6 named above as expeditiously as possible. Revisional application disposed of.