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2002 DIGILAW 433 (CAL)

Arun Kumar Gupta v. S. N. Kar

2002-07-05

Joytosh Banerjee

body2002
JUDGMENT : - Joytosh Banerjee, J.: This is a proceeding in which the order and judgment dt. 20th July, 1999 passed in Criminal Appeal No. 18/95 by the learned Judge, 7th Bench, City Sessions Court, Calcutta confirming the order of conviction and sentence passed in case No. 2357/90 by the Chief Metropolitan Magistrate, Calcutta, on 4th of April, 1995 has been challenged. 2. Briefly stated the case of the petitioner is that O.P. No.1 moved a petition of complaint under section 138 of N.I. Act wherein the petitioner was treated and prosecuted as proprietor of M/s. Gupta Brothers (Sellac). The case was transferred to the Metropolitan Magistrate, 5th Court for disposal by the Chief Metropolitan Magistrate, Calcutta after he had taken cognizance. The learned Magistrate completed the trial and passed an order against the petitioner holding him guilty under the charge under section 138 of the N.I. Act. He referred the case to the learned Chief Metropolitan Magistrate, Calcutta for imposing adequate sentence. The learned C.M.M. after hearing the parties passed his order sentencing the petitioner to pay a fine of Rs. 5,51,294/- in default to suffer S.I. for 6 months by his order dt. 4.4.95. The petitioner being aggrieved by such judgment and order preferred an appeal being Criminal Appeal No. 18/ 95 in the City Sessions Court and such appeal was transferred to the court of learned Judge, 7th Bench, who by the order impugned confirmed the judgment and order passed by the court below and dismissed the appeal. Such order was passed ex parte in the absence of the appellant's advocate. Now in the present proceeding, it is alleged that the courts below failed to appreciate that the petitioner was wrongly and illegally treated and held liable for the alleged dishonoured cheques in his personal independent capacity as proprietor of M/s. Gupta Brothers (Sellac). Such order was passed ex parte in the absence of the appellant's advocate. Now in the present proceeding, it is alleged that the courts below failed to appreciate that the petitioner was wrongly and illegally treated and held liable for the alleged dishonoured cheques in his personal independent capacity as proprietor of M/s. Gupta Brothers (Sellac). It is further alleged that the courts below failed to consider that the relevant contract and/ or agreement between the parties was entered into by and between the complainant company and a partnership firm, M/s. Gupta Brothers (Sellac) and not with the petitioner and the entire money had been paid by the complainant company to the said partnership firm as per the allegation of the complainant and not to the petitioner at all and further more that the entire liability and debt towards the complainant company was absolutely of the said partnership firm and not of the petitioner. It is further alleged that the courts below failed to appreciate that in respect of the impugned dishonoured cheques, the petitioner could be prosecuted and/or held responsible only in his vicarious liability as partner of the said partnership firm if the requirement under section 141 of the said Act were adequately proved and not otherwise and in the instant case prosecution was launched under section 138 of the N.I. Act and section 141 of the said Act was not invoked to proceed against the petitioner. 3. I have heard the submissions advanced by the learned Counsels for the petitioner as well as O.P. No. 1. The learned Counsel for the petitioner has mainly contended that the contract was entered into by M/s. Gupta Brothers (Sellac) and Shaw Wallace & Co. Ltd. (complainant). The accused is simply a partner of M/s. Gupta Brothers (Sellac). He did not receive the advance by the Shaw Wallace & Co. Ltd. and the amount was received by M/s. Gupta Brothers. Secondly it was argued that the cheques in question were issued by the firm, namely, M/s. Gupta Brothers (Sellac) and not by the accused. Thirdly, it is also the contention that in the absence of the company, the accused cannot be prosecuted and convicted. Ltd. and the amount was received by M/s. Gupta Brothers. Secondly it was argued that the cheques in question were issued by the firm, namely, M/s. Gupta Brothers (Sellac) and not by the accused. Thirdly, it is also the contention that in the absence of the company, the accused cannot be prosecuted and convicted. In support of such contention, the learned Counsel has placed his reliance on reported decisions of the Apex Court, in the case of The State of Madras vs. C.V. Parekh & Anr., reported in AIR 1971 SC 447 , Sham Sundar & Ors. vs. State of Haryana , reported in AIR 1989 SC 1982 and also Sheoratan Agarwal & Anr. vs. State of Madhya Pradesh, reported in 1984 SCC (Cri) 620. The learned Counsel also referred the decision of the Apex Court in K.P.G. Nair vs. M/s. Jindal Menthol India Ltd., reported in J.T. 2000 (Suppl-1) 519 in support of his further argument that a person other than the company can be proceeded against under provisions of N.I. Act, only if that person was in charge of and was responsible to the Company for the conduct of its business. Learned Counsel for the O.P. on the other hand has contended that the persons responsible or officers of the Company, each of them, can be prosecuted separately under the provisions of N.I. Act by virtue of section 141 of the same Act, irrespective of whether the Company itself is prosecuted or not, if the offence punishable under section 138 by the Company is established. 4. The language of section 138 of the N.I. Act, clearly indicates that when any cheque drawn by a person on an account maintained by him with a banker for payment of any amount of money to another person from out of that account and when such cheque is drawn for the discharge, in whole or in part, of any debt or other liability, is returned by the bank unpaid, either because of the amount of money standing to the credit of that account is insufficient to honour the cheque or that it exceeds the amount arranged to be paid from that account by an agreement made. with that bank, in that event that person is liable to be punished under that provision and proviso a.b.c. of that section further lays down that the cheques thus issued, to make the section applicable must be presented to the bank within a period of six months from the date on which it is drawn or within the period of its validity, whichever is earlier. The payee or the holder in due course of the cheque, as the case may be, makes a demand for the payment of the said amount of money by giving a notice, in writing, to the drawer of the cheque, within fifteen days of the receipt of information by him from the bank regarding the return of the cheque as unpaid; and the drawer of such cheque fails to make the payment of the said amount of money to the payee or as the case may be to the holder in due course of the cheque, within fifteen days of the receipt of the said notice. The use of the words "such person" would clearly indicate that the person who had drawn the cheque is the person who commits the offence under the provisions of that section, the drawer of the cheque alone and no other person except in contingencies mentioned under section 141, would be liable for prosecution. Now in the instant case, the undisputed position is that P.W.1 who filed the complaint on behalf of the Shaw Wallace Co. Ltd. as its authorised agent deposed that the petitioner Arun Gupta received Rs. 3,00,000/- in advance for the M/s. Gupta Brothers (Sellac) from the complainant company for supply of materials. When the petitioner failed to supply the materials, he issued four cheques which have been marked Exts. 3 to 3c of the amount of Rs. 71,000/-, Rs. 70,000/-, Rs. 68,300/- and Rs. 66,347/but those cheques were dishonoured and complainant's banker Standard Chartered Bank informed the complainant about the fact of dishonour for insufficient fund. Thereafter the complainant issue notice by a letter dated 5.11.90. Such letter was sent by Registered Post with A.D. and also through an employee of the complainant's company. The notice which was issued by hand through the employee was tendered to the accused on three consecutive dates from 6.11.90 to 8.11.90 but the accused refused to receive. Thereafter the complainant issue notice by a letter dated 5.11.90. Such letter was sent by Registered Post with A.D. and also through an employee of the complainant's company. The notice which was issued by hand through the employee was tendered to the accused on three consecutive dates from 6.11.90 to 8.11.90 but the accused refused to receive. Such letter was also sent by registered post with A.D. and it was returned with the postal endorsement 'left' in its cover. The prosecution was launched when the accused/petitioner inspite of such notice did not make any payment. 5. It appears from the petition of complaint that it was filed against petitioner/accused Arun Gupta describing him as an accused and giving the relevant particulars in the following manner. " Arun Gupta of Gupta Brothers (Sellac), 5 Mango Lane, Calcutta-700001.... accused". The question is whether for this reason, the prosecution launched against the petitioner and the conviction and the sentence awarded to him would be had in law? In the case of Seoratan Agarwal vs. State of Madhya Pradesh (supra) where the Hon'ble Apex Court had the occasion to consider the effect of section 10 of Essential Commodities Act, 1955, which is similar to the provisions contained in section 141 of the N.I. Act and in doing so, the Hon'ble Court made the following observation at Paragraph 5 of the Judgment:- "The section appears to our mind to be plain enough. If the contravention of the order made under section 3 is by a company, the persons who' may be held guilty and punished are(1) the company itself, (2) every person who, at the time the contravention was committed, was in-charge of, and was responsible to, the company for the conduct of the business of the company whom for short we. shall describe as the person-in-charge of the company, and (3) any director, manager, secretary or other officer of the company with whose consent or connivance or because of neglect attributable to whom the offence has been committed, whom for short we shall describe as an officer of the company. Anyone or more or all of them may be prosecuted and punished. The company alone may be prosecuted. The person-in-charge only may be prosecuted. The conniving officer may individually be prosecuted. One, some or all may be prosecuted. Anyone or more or all of them may be prosecuted and punished. The company alone may be prosecuted. The person-in-charge only may be prosecuted. The conniving officer may individually be prosecuted. One, some or all may be prosecuted. There is no statutory compulsion that the person-in-charge or an officer of the company may not be prosecuted unless he be arranged alone side the company itself. Section 10 indicates the persons who may be prosecuted where the contravention is made by the company. It does not lay down any condition that the person-in-charge or an officer of the company may not be separately prosecuted when the company itself is not prosecuted." In the case of Sham Sundar & Ors. vs. State of Haryana (supra), the Apex Court while examining the provision contained in section 10 of the Essential Commodities Act took similar view by the following observation made in paragraph 6 of the reported judgment. "From explanation to section 10 it will be seen that the company includes a firm and other association of persons. Section 10 provides that the person shall be deemed to be guilty of contravention of an order made under section 3 if he was incharge of and was responsible to the firm for the conduct of the business of the firm. What is of importance to note is, that the person who was entrusted with the business of the firm and was responsible to the firm for the conduct of the business could alone be prosecuted for the offence complained of." Of course a contrary view was taken by the Apex Court in the earlier decision in the case of State of Madras vs. C.V. Parekh & Anr. (supra), wherein the Hon'ble court held that the conviction on manager and director of a company could not be fastened on them by applying section 10 as liability of person incharge could arise under that section only when contravention was by company itself. But that reported decision is distinguishable from the present case in view of the simple fact that in that case there was no evidence on record, from which it could be inferred that the two respondents took any active part in the matter of sale or they had any knowledge of the sale. But that reported decision is distinguishable from the present case in view of the simple fact that in that case there was no evidence on record, from which it could be inferred that the two respondents took any active part in the matter of sale or they had any knowledge of the sale. In the recent decision of the Apex Court in the case of K.P.G. Nair vs. M/s. Jindal Menthol India Ltd. (supra), the Hon'ble Court examined the provisions of section 141 of the N.I. Act in order to see the effect of a company committing an offence punishable under section 138 of N.I. Act by observing as follows in Para-8 of the judgment: "From a perusal of section 141, it is evident that in a case where a Company committed offence under section 138, then not only the Company but also every person who at the time when the offence was committed, was in-charge of and was responsible to the Company for the conduct of the business of the Company shall be deemed to be guilty of the offence and liable to be proceeded against and punished accordingly. It follows that 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." The Hon'ble Court further observed in Paragraph 9 what the petition of complaint should contain in an offence punishable under section 138 of the N.I. Act by making the following observation:- "It is true, as submitted by Mr. Arora that the words of section 141(1) need not be incorporated in a complaint as magic words but it cannot also be disputed that the substance of the allegations read as a whole should answer and fulfil the requirements of the ingredients of the said provisions (for being proceeded against for an offence which he is alleged to have committed). On the above premises, it is clear that the allegations made in the complaint do not, either in express words or with reference to the allegations contained therein, made 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." 6. On the above premises, it is clear that the allegations made in the complaint do not, either in express words or with reference to the allegations contained therein, made 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." 6. In the instant case, the petition of complaint clearly indicated that the accused was the proprietor of the firm, namely, M/s. Gupta Brothers (Sellac) and the accused in part discharge of existing liability issued the cheques in question. Therefore, unlike the aforesaid reported case, the petition of complaint in the instant case has given sufficient indication how the accused was responsible for the commission of the offence. According to the allegation, the accused/petitioner was the proprietor of the firm and he issued the cheques in question which were dishonoured. 7. From the discussion above, it is clear that the argument advanced by the learned Counsel for the petitioner that the prosecution launched against the petitioner in the absence of the company is incompetent, cannot stand scrutiny and the decisions of the Apex Court cited in this connection also are not helpful to the petitioner for advancing such argument. 8. From the discussion above it is clear that the judgment impugned is not tainted with any illegality or impropriety or incorrect finding. The proceeding therefore must fail. Accordingly, the revisional application stands dismissed. Let the L.C.R., if any, be returned along with a copy of this order to the trial court for information and necessary action. Revisional application dismissed.