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2003 DIGILAW 1115 (PNJ)

Inder Sehgal v. Thakar Petro Chemical Ltd.

2003-08-13

S.S.SARON

body2003
JUDGMENT S.S. Saron, J. - This order will dispose of Criminal Misc. No. 20830-M of 2001 and Criminal Misc. No. 20872-M of 2001 as they are between the same parties and the facts are similar. Criminal Misc. 20830-M of 2001 2. In this Criminal petition, the petitioner has sought the quashing of the complaint dated 12.5.1998 (Annexure P-1), the summoning order dated 3.5.1999 (Annexure P-2) passed by the learned Chief Judicial Magistrate, Sirsa and all consequential proceedings in pursuance thereof. 3. The respondent M/s Thakar Petro Chemicals Ltd. filed a complaint dated 12.5.1998 (Annexure P-1) against five accused including the petitioner Inder Sehgal under Section 138 of the Negotiable Instruments Act (hereinafter referred to as "the Act"). It was alleged that the complainant entered into business with M/s Kay Ess Traders, which purchased goods worth more than Rs. 12.00 lacs from the complainant. A sum of more than Rs. 5.00 lacs was paid by M/s Kay Ess Traders through cheques and Bank Drafts on different dates. Surinder Katyal alias Raju Katyal issued a cheque baring No. 200164 for a sum of Rs. 4,65,174.37 in favour of the complainant drawn on Jammu Central Cooperative Bank Ltd. Jammu. The said cheque was not honoured by the said Bankers of M/s Kay Ess Traders for which the complaint was filed and the petitioner has been summoned. Criminal Misc. 20872-M of 2001 4. In this Criminal Misc. petition, the petitioner has sought the quashing of the complaint dated 25.4.1998/7.2.2000 (Annexure P-1), the summoning order dated 3.5.1999 (Annexure P-2) passed by the learned Chief Judicial Magistrate, Sirsa and all consequential proceedings in pursuance thereof. 5. It is stated that the complainant filed a complaint dated 25.4.1998/7.2.2000 (Annexure P-1) under Section 138 of the Act. The complainant-respondent alleged that it entered into business with M/s Kay Ess Traders and the said firm purchased goods worth more than Rs. 12.00 lacs from the complainant. Further a sum of more than Rs. 5.00 lacs was paid by M/s Kay Ess Traders through cheques and Bank Drafts on different dates. On 10.2.1998 Surinder Katyal alias Raju Katyal issued Cheque No. 200184 for Rs. 50,000/- in favour of complainant-respondent, which was drawn on Jammu Central Cooperative Bank Ltd. Jammu in their Account No. 238. The said cheque was not honoured for which the complainant filed the aforesaid complaint against the petitioner and four other accused. 6. On 10.2.1998 Surinder Katyal alias Raju Katyal issued Cheque No. 200184 for Rs. 50,000/- in favour of complainant-respondent, which was drawn on Jammu Central Cooperative Bank Ltd. Jammu in their Account No. 238. The said cheque was not honoured for which the complainant filed the aforesaid complaint against the petitioner and four other accused. 6. In both the cases, it is stated that the petitioner has been roped in merely by mentioning his name in the complaint alongwith others as a partner. It is stated that the cheque was issued by Surinder Katyal alias Raju Katyal, which is evident from a reading of the complaint. Besides, M/s Kay Ess Traders is a proprietorship firm which is owned by Surinder Katyal alias Raju Katyal from the very beginning and the petitioner was never a partner of this firm and even the complainant has not produced any partnership deed. 7. Notices in both the cases were issued to the complainant-respondent who has filed its reply. It is stated in the reply that the averments as made by the petitioner are incorrect. The complainant-respondent has placed on record Annexure R-1, which is an "Undertaking Against Bank Guarantee" given by M/s Kay Ess Traders which depicts the petitioner as a partner in the said firm. The copy of the said undertaking is exhibited on record in the proceedings before the Court of Chief Judicial Magistrate, Sirsa. Therefore, it is stated that the petitioner is equally liable for bouncing of the cheques in question. 8. I have heard Shri I.P.S. Doabia, learned counsel for the petitioner and Shri Sandeep Goel, learned counsel for the respondent and with their assistance gone through the records of the case. 9. It is contended by the learned counsel for the petitioner that the petitioner is in no way liable for the alleged offence under Section 138 of the Act as he has nothing to do with the firm M/s Kay Ess Traders. The learned counsel has also placed on record a copy of the cancellation of undertaking against the bank guarantee which was made on 2.8.1997. Therefore, it is contended that the petitioner is not in any way liable and the impugned complaint, the summoning order and the consequential proceeding are liable to be quashed. 10. The learned counsel has also placed on record a copy of the cancellation of undertaking against the bank guarantee which was made on 2.8.1997. Therefore, it is contended that the petitioner is not in any way liable and the impugned complaint, the summoning order and the consequential proceeding are liable to be quashed. 10. The learned counsel for the respondent, however, contends that the proceedings are not liable to be quashed as the petitioner is a partner in the firm M/s Kay Ess Traders and is, therefore, equally liable for the cheque not being honoured. Besides, in view of the undertaking Annexure R-1, the petitioner has also undertaken the responsibility of supplies made from M/s Thakar Petro Chemicals Ltd. to M/s Sehgal Motors Engineers and M/s Kay Ess Traders. It has been undertaking that all the dues would be cleared to the above firms. Therefore, it is contended that the petition is liable to be dismissed. 11. In order to appreciate the respective contentions of the parties the provisions of Sections 138 and 141 of the Act may be noticed which read as under :- "138 : Dishonour of cheque for insufficiency etc. of funds in the account. Therefore, it is contended that the petition is liable to be dismissed. 11. In order to appreciate the respective contentions of the parties the provisions of Sections 138 and 141 of the Act may be noticed which read as under :- "138 : Dishonour of cheque for insufficiency etc. of funds in the account. - Where 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 the account for the discharge, in whole or in part, of any debt or other liability, is returned by the bank unpaid, either of 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, such person shall be deemed to have committed an offence and shall, without prejudice to any other provisions of this Act, be punished with imprisonment for a term which may extend to one year, or with fine which may extend to twice theater of the cheque or with both; Provided that nothing contained in this section shall apply unless : a) the cheque has been 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; b) 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 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 c) the drawer of such cheque fails to make the payment of the said amount to the payee or, as the case may be, to holder in due course of the cheque within fifteen days of the receipt of the said notice." Explanation - For the purposes of this section, "debt or other liability" means "a legally enforceable debt or other liability." "141. Offences by companies. 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 proceed 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 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." 12. The perusal of Section 138 of Act shows that dishonour of the cheque of insufficiency of funds in the account etc. amounts to an offence and is punishable. Section 141 of the Act deals with offences by companies in terms sub-section (1) thereof 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. The explanation (a) to Section 141 envisages that for the purpose of the said section "company" means any body corporate and includes a firm or other association of individuals. In view of Section 141 of the Act a person other than the "company" can even be proceeded against. The explanation (a) to Section 141 envisages that for the purpose of the said section "company" means any body corporate and includes a firm or other association of individuals. In view of Section 141 of the Act a person other than the "company" can even be proceeded against. However, under the said provisions the person can be proceeded against if it is shown, that he was in charge of, and was responsible to the company or the firm, as the case may be, for the conduct of its business. 13. Therefore, it is to be seen from the substance in the complaint as to whether the petitioner has been a person in charge of the firm M/s Kay Ess Traders and was responsible to it for the conduct of its business. A reading of the complaint shows that the primary allegations contained therein have been attributed to Surinder Katyal alias Raju Katyal. In the complaint Annexure P-1 in both the cases (i.e. Crim. Misc. No. 20830-M of 2001 and Crim. Misc. No. 20872-M of 2001) it has been stated that Rajinder Singh Mann and Surinder Katyal alias Raju Katyal approached the complainant company at its Sirsa office and wanted to act as its stockiest at Jammu for the complainant company for its products. It is further stated that : "these accused had further represented that Satya Pal Suri and Inder Sehgal (petitioner) were the other partners of their firm. They further disclosed that they were carrying on their business in the name of M/s Key Ess Motors." However, there is no substance of allegation that the petitioner was in charge of, and was responsible to, the firm for the conduct of its business so as to be proceeded against for the offence under Section 138 of the Act. This aspect is not to be specifically pleaded but the substance of the complaint must show so as held by the Supreme Court in the case of K.P.G. Nair v. Jindal Menthol India, 2000(4) RCR (Criminal) 298 (Citation not correct-Ed.) It was held that though the words of section 141 (1) of the Act need not be incorporated in a complaint as magic words but 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 is alleged to have been committed.) 14. What is required to be seen, thus, is as to whether the substance of the allegations read as a whole answers and fulfills the requirements of the ingredients of the Section 141 of the Act. The complaint when read as a whole does not show as to whether the petitioner was in any manner in charge of, or responsible for the conduct of the business. It is only a representation by the other accused that the petitioner was also stated to be one of the partners of the firm M/s Kay Ess Traders. In fact, no partnership deed has been produced to show that the petitioner is a partner in the firm M/s Kay Ess Traders. 15. The learned counsel for the respondent, however, lays strong emphasis on the documents Annexure R-1 which is an "Undertaking Against Bank Guarantee" given by the petitioner and three others. The said document, it is stated, has been exhibited in the trial Court. A reading of the said document, however, shows that it only enjoins an undertaking given by the petitioner and three others for clearing all the outstanding dues to firm M/s Kay Ess Traders. Although it records that the partners of M/s Kay Ess Traders, which includes the petitioner, undertake the responsibility of supplies made from the respondent to M/s Sehgal Motors Engineers and M/s Kay Ess Traders that all dues would be cleared, however, the same does not show, even if it is to be assumed that the petitioner is a partner of the said firm, that he was, in fact at the time the offence was committed, was in charge of, and as responsible to, the firm for the conduct of its business so as to come within then ambit of Section 141(1) of the Act. The offence in terms of the Act would be deemed to have been committed when the drawer of the cheque failed to make the payment of the amount of money to the complainant within 15 days of the receipt of notice sent by the complainant to the drawer. In the complaint Annexure P-1 in Criminal Misc. No. 20830-M of 2001 the notices were sent on 7.4.1998 and in the other case i.e. Criminal Misc. No. 20872-M of 2001, the notice was sent on 9.3.1998. In the complaint Annexure P-1 in Criminal Misc. No. 20830-M of 2001 the notices were sent on 7.4.1998 and in the other case i.e. Criminal Misc. No. 20872-M of 2001, the notice was sent on 9.3.1998. Therefore, it is at this point of time that it is to be shown by the complainant that the petitioner was in charge of and responsible to the firm for the conduct of its business. The undertaking Annexure R-1, which is stated to be exhibited is to be examined by the trial Court during the trial. This Court in exercise of its inherent powers under Section 482 Criminal Procedure Code is not to embark upon any inquiry with regard to the case and go into the veracity of facts on the basis of which the complaint is to be established or not. 16. The question which is for consideration is whether the petitioner is liable to be proceeded against on the basis of the material and evidence on record. This Court in Raj Kumar Mangla v. M/s. Indo Lowenbrau Breweries Ltd., 1997(3) RCR(Criminal) 494 held that each and every partner is not guilty of offence under Section 138 and only those partners who were in charge and responsible for conduct of business shall be guilty. The petitioner in the said case was summoned as an accused being a partner of the firm. This Court held that there was no averment or allegation that he was responsible to the partnership for the conduct of the business. The ratio of the said judgment was reiterated by this Court in Smt. Shakti Bhakoo v. M/s Raj Lakshmi Mills (Regd.), 2001(4) RCR(Criminal) 279 and quashed the proceedings under Section 138 of the Act against the petitioner of the said case on the ground that she being a house wife was a sleeping partner. This Court in Punjab State Cooperative Supply & Marketing Federation v. M/s. Malerkotla Rice Mills, 2002(1) RCR (Criminal) 359 upheld the order of the Magistrate discharging two of the partners of the firm who were discharged for the offence under Section 138 of the Act. It was observed that the cheque in the said case was issued by respondent No. 2 and, therefore, the respondents No. 3 and 4 therein could not be held liable. 17. It was observed that the cheque in the said case was issued by respondent No. 2 and, therefore, the respondents No. 3 and 4 therein could not be held liable. 17. In the present case it may be noticed that the trial Magistrate has not adverted to any role that may have been attributed to the petitioner so as to proceed against him under the criminal law by summoning him. In case of M/s Pepsi Foods Ltd. v. Special Judicial Magistrate, AIR 1998 Supreme Court 128 the Supreme Court held as follows :- "Summoning of an accused in a criminal case is a serious matter. Criminal Law cannot be set into motion as a matter of course. It is not that the complainant has to bring only two witnesses to support his allegations in the complaint to have the criminal law set into motion. The order of the Magistrate summoning the accused must reflect that he has applied his mind to the facts of the case and the law applicable thereto. He has to examine the nature of allegations made in the complaint and the evidence both oral and documentary in support thereof and would that be sufficient for the complainant to succeed in bringing charge home to the accused. No doubt the Magistrate can discharge the accused at any stage of the trial if he considers the charge to be groundless, but that does not mean that the accused cannot approach the High Court under Section 482 of the Code or Article 227 of the Constitution to have the proceedings quashed against him when the complaint does not make out any case against him and still he must undergo the agony of a criminal trial." 18. Reverting to the case in hand it may be noticed that there is no allegation against the petitioner nor the substance of the allegations read as a whole answers or fulfills the requirements of the ingredients of the provision of Section 141(1) of the Act so as to proceed against him. The allegation that has been made by the complainant is to the effect that Rajinder Singh Mann and Surinder Katyal alias Raju Katyal approached the complainant company at its Sirsa office and wanted to do business and represented that Satya Pal Suri and Inder Sehgal (petitioner) were the other partners of their firm. The allegation that has been made by the complainant is to the effect that Rajinder Singh Mann and Surinder Katyal alias Raju Katyal approached the complainant company at its Sirsa office and wanted to do business and represented that Satya Pal Suri and Inder Sehgal (petitioner) were the other partners of their firm. This by itself is not sufficient to proceed against the petitioner. Even in the summoning orders in the two cases no specific role has been adverted to in respect of the petitioner by the trial Court. In my view, the initiation of criminal proceeding against the petitioner is wholly unwarranted. 19. For the foregoing reasons, both the petitions are allowed. The complaint date 12.5.1998 (Annexure P-1), the summoning order dated 3.5.1999 (Annexure P-2) passed by the learned Chief Judicial Magistrate, Sirsa and all consequential proceedings in pursuance thereof in Criminal Misc. 20830-M of 2001 and the complaint dated 25.4.1998/7.2.2000 (Annexure P-1), the summoning order dated 3.5.1999 (Annexure P-2) passed by the learned Chief Judicial Magistrate, Sirsa and all consequential proceedings in pursuance thereof in Criminal Misc. 20872-M of 2001 shall stand quashed qua the petitioner only. It is made clear that any observations made herein shall not be taken as an expression of merit against the other accused and the trial Court shall consider the case on the basis of evidence and material as produced before it uninfluenced by any observations made herein. Petitions allowed.