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2005 DIGILAW 218 (ORI)

Jagdish Prasad Lath v. UCO Bank

2005-03-29

A.K.PARICHHA

body2005
JUDGMENT A. K. PARICHHA, J. : Opposite party No.1 filed a complaint vide ICC No. 50 of 2003 in the Court of the learned S.D.J.M., Sambalpur alleging offences under Section 138 of the Negotiable Instruments Act, (hereinafter to be called as “the Act”, in short) against opposite party No.2 and the petitioner. The learned S.D.J.M. after perusing the statement of the complainant and the documents produced during inquiry under Section 202, Cr.P.C. took cognizance of the offence under Section 138 of the Act and directed issue of process only against the petitioner. Aggrieved, the petitioner has filed the present petitioner under Section 482, Cr.P.C. for quashing the order of cognizance dated 5.9.2003 passed by the learned S.D.J.M., Sambalpur. 2. Learned counsel for the petitioner submits that the order of cognizance against the petitioner is misconceived as there is no material to show that the petitioner was in-charge of conduct of business and the management of opposite party No.2. According to him, cognizance cannot be taken against a person unless there is specific pleading in the complaint petition that the said person was in-charge of conduct of business of the company and that he was responsible for bouncing of the cheque in question. In support of this contention, the decisions in the cases of S.N. Bangur and others v. M/s. Klen & Marshalls Mrfs. And Exporters Pvt.Ltd., Chennai (2002 CRI.L.J., 4155), Mrs. Sonia Bhalla and others v. Rajneesh Aggarwal and others (2002 Cri.L.J., 3053), Dr. O.P. Mehra v. M/s. Manasi Finance (Chennai) Ltd. (2002 Cri.L.J., 1310) and Monaben Ketanbhai Shah and another v. State of Gujarat and others (2004) 29 OCR (SC) 149) were cited. 3. Mr. M. Mishra, learned counsel for the opposite party No. 1, on the other hand, submits that there is clear averment in the complaint petition that the petitioner is the Managing Direc¬tor of opposite party No.2 and is in charge of conduct of busi¬ness of the company and the cheques which bounced were also signed and presented by the petitioner. He submits that these materials along with the documents and letter of the bank estab¬lish a clear prima facie case against the petitioner for the offence alleged. 4. Before examining the contentions of the parties, it will be beneficial to quote Section 141 of the Negotiable Instru¬ments Act, which deals with offences by companies. Section 141 of the said Act reads thus : “141. 4. Before examining the contentions of the parties, it will be beneficial to quote Section 141 of the Negotiable Instru¬ments Act, which deals with offences by companies. Section 141 of the said Act reads thus : “141. 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 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”. The Section therefore, contemplates that if the offence under Section 138 of the Act is alleged to have been committed by a company, then the person-in-charge and responsible for the conduct of the business of the Company shall be liable for prose¬cution on behalf of the Company. The Section also provides an exception which says that such person-in-charge of the company shall not be liable under Section 138 of the Act if he proves that offence was committed without his knowledge or that he has exercised all due diligence to prevail the commission of such offence. 5. Learned counsel for the petitioner submits that al¬though the petitioner was the Managing Director of opp.party No.2 and had also signed the cheque in question, he would not be liable for prosecution under Section 138 of the Act as because there was lack of pleading and evidence to show that he was in-charge of the conduct of the business of opp. party No. 2 Compa¬ny. party No. 2 Compa¬ny. He also submits that the ratio of the above noted reported cases comes to the rescue of the petitioner in this regard. 6. In S.N. Bangur’s case (supra) while analyzing the provisions of Section 141(1) and (2), the Madras High Court had the occasion to give the following observations : “The wordings contained in Section 141(1) of the Act are slightly different from the wordings contained in Section 141(2) of the Act with reference to the presumption. It is mentioned under Section 141(1) of the Act that when a company has committed the offence, every person, who has in charge and responsible to the company for the conduct of the business of the company as well as the company, shall be deemed to be guilty. But under Section 141(2) of the Act, the presumption would arise against the director,manager, etc., only when 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 those persons. Therefore, mere words that the petitioner-directors are responsi¬ble for the failure to make the payment of the cheque amounts without any further material would not be sufficient to conclude that it would cover Section 141(2) of the Act”. 7. In the case of Mrs. Sonia Bhalla (supra) the High Court of Himachal Pradesh ruled that unless the averments/allegations that the petitioners was in-charge of and responsible to the company for conduct of its business, cognizance under Section 138 of the Act cannot be take against that person. 8. In the case of Dr. O.P. Mehra (supra) the High Court of Madras also ruled that only bald and vague allegations made against the accused that they were managing the company and as such jointly and severally liable for the offence committed, would not satisfy the ingredients of Section 141 of the Act. 9. In the case of Monaben Ketanbhai Shah and another (supra), the complaint was against 5 accused under Section 138 of the Act. Out of the five, three accused were ladies and there was no averment against the appellants excepting stating in the cause title that they are partners of the firm. 9. In the case of Monaben Ketanbhai Shah and another (supra), the complaint was against 5 accused under Section 138 of the Act. Out of the five, three accused were ladies and there was no averment against the appellants excepting stating in the cause title that they are partners of the firm. The Division Bench of the Apex Court held that when no averment that the accused per¬sons were in-charge of the business of the partnership firm, was there, cognizance under Section 138 of the Act against the appel¬lant was untenable. 10. There is no quarrel about the proposition laid down by the respective High Courts and the Apex Court in the above noted cases. Law is settled that the management/business of the company can only be proceeded against under Section 138/141 of the Act and specific allegations/averments must be there in the complaint petition that the said persons was in-charge of the business of the company and was also responsible for dishonour of the cheques. But the facts and circumstances of the present case is totally different from the above-noted cases and so the ratio of Monaben Ketanbhai Shah and S.N. Bangur’s cases cannot be applied to this case. 11. In the complaint petition of ICC No.50 of 2003 of the Court of learned S.D.J.M., Sambalpur (C.T. No. 1679 of 2003) there was clear indication in para 9 that the petitioner is the Managing Director and Attorney of the company opposite party No.2 and that he manages all the affairs of the company. There is also clear averment that the petitioner gave post-dated cheques No.605199 dated 30.11.2002 for Rs. 20 lakhs towards payment of dues of opposite party No.1 as per the settlement made in the Lok Adalat. The above noted cheque carries the signature of the petitioner and there is no dispute that the said cheque was issued by the petitioner and the same bounced for insufficient funds. The initial statement of the complaint also discloses that the petitioner is the Managing Director of the company and man¬ages the affairs of the company and that he issued the cheque in question which bounced in the bank. The bank documents are also there. Thus, a clear prima facie case has been made out that the petitioner was managing the affairs of the opp. party No.2 - Company and he issued the cheque in question. The bank documents are also there. Thus, a clear prima facie case has been made out that the petitioner was managing the affairs of the opp. party No.2 - Company and he issued the cheque in question. So, the petitioner being the Managing Director in charge of the business of the company is liable for prosecution as per the provision of Section 138 of the Act. Learned S.D.J.M., Sambalpur, therefore, did not commit any legal error in taking cognizance under Section 138 of the Act against the petitioner. 12. The Criminal Misc. Case is thus found to be without any merit and is accordingly dismissed. Crl. Misc. case dismissed.