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2007 DIGILAW 2771 (ALL)

SUNITA GARG v. STATE OF UTTAR PRADESH

2007-11-16

M.K.MITTAL

body2007
JUDGMENT Hon’ble M.K. Mittal, J.—This application has been filed by Smt. Sunita Garg wife of Rakesh Garg Frenco Formulation through proprietor Smt. Sunita Garg and Rakesh Garg for quashing the Complaint Case No. 1239/9 of 2003, New No. 5228/05, Balaji Pharmaceuticals v. Sunita Garg and others, under Section 138 Negotiable Instruments Act (hereinafter referred as Act) pending in the Court of Special Judicial Magistrate, Meerut. 2. Heard Sri Vijaya Prakash learned Counsel for the applicants, Sri Kuldeep Kumar Mishra learned Counsel for the opposite party and learned AGA and perused the material on record. The parties have exchanged counter and rejoinder-affidavits. 3. The brief facts of the case are that the opposite party No. 2 filed a complaint against the applicants in the Court of Special C.J.M. Meerut, alleging that the applicants represented themselves to be the manufacturers in medicine field and proposed to appoint the complainant as Super Stockist of their products for Meerut region. The complainant believing the accused advanced Rs. five lakhs on 10th December, 2001, one lakh on 28th December, 2001 and one lakh in September 2001 in cash and cheques. The accused had assured to give medicines at an early date but inspite of several demands, the medicines were not supplied to the complainant. However Smt. Sunita Garg the applicant No. 1 gave 3 cheques dated 30th April, 2003 for Rs. five lakhs, one lakh and one lakh payable at UCO Bank, Meerut. The cheques were post dated and were given with the assurance that when they would be presented at the bank, they would be cashed. The complainant presented the cheques in the bank but they were dishonoured with the endorsement dated 3.5.2003 that the account had been closed. Thus, they were received back by the complainant on 6th May, 2003. Thereafter, she made several demands but in vain. Finally registered notice dated 19.5.2003 was sent by the complainant through her Counsel which was served on accused on 21st May, 2003. In spite of that no payment was made although, the complainant met the accused twice or thrice and demanded her money. Ultimately the complainant presented this complaint on 30th June, 2003. 4. The learned Magistrate examined complainant and finding that a prima facie case was made out against the accused directed to summon them by order dated 20.11.2003. 5. In spite of that no payment was made although, the complainant met the accused twice or thrice and demanded her money. Ultimately the complainant presented this complaint on 30th June, 2003. 4. The learned Magistrate examined complainant and finding that a prima facie case was made out against the accused directed to summon them by order dated 20.11.2003. 5. The applicant No. 3 filed an application before the Court concerned alleging that no case was prima facie made out against him. The perusal of the cheques revealed that they were issued by M/s Frenco Formulation bearing the stamp of proprietor. It shows that the cheques were issued by proprietorship firm and Rakesh Garg the applicant had no concern with the firm. It was also alleged that no allegation was made in the complaint that Rakesh Kumar Garg had anything to do with the day to day business of the firm or that he was incharge for that firm. In the circumstances, it was alleged that he could not have been summoned under Section 138, N.I. Act. However, the learned Magistrate rejected that application. Feeling aggrieved, the present application has been filed. 6. The contention of the learned Counsel for the applicant is that the complainant has not made any averments in the complaint that the applicant was responsible for the discharge of the day-to-day work of the firm. According to him the applicant No. 3 had no concern with the firm. The learned Counsel for the applicant has further contended that it is mandatory and if such averments have not been made the accused cannot be prosecuted under Section 138 of the Act. 7. In support of his contention he has cited the case of S.M.S. Pharmaceuticals Ltd. v. Neeta Bhalla and another, 2005(53) ACC 503 (SC). In that matter the Full Bench of the Hon’ble Apex Court considered the reference as made by a two Judge Bench. In para 6 of the judgment it has been observed : “Section 203 of the Code empowers a Magistrate to dismiss a complaint without even issuing a process. In that matter the Full Bench of the Hon’ble Apex Court considered the reference as made by a two Judge Bench. In para 6 of the judgment it has been observed : “Section 203 of the Code empowers a Magistrate to dismiss a complaint without even issuing a process. It uses the words “after considering” and “the Magistrate is of opinion that there is no sufficient ground for proceeding.” These words suggest that the Magistrate has to apply his mind to a complaint at the initial stage itself and see whether a case is made out against the accused persons before issuing process to them on the basis of the complaint. For applying his mind and forming an opinion as to whether there is sufficient ground for proceeding, a complaint must make a prima facie case to proceed. This, in other words, means that a complaint must contain material to enable the Magistrate to make up his mind for issuing process. If this were not the requirement, consequences could be far reaching. If a Magistrate had to issue process in every case, the burden of work before Magistrates as well as harassment caused to the respondents to whom process is issued would be tremendous. Even Section 204 of the Code starts with the words “if in the opinion of the Magistrate taking cognizance of an offence there is sufficient ground for proceeding..........” The words “sufficient ground for proceeding” again suggest that ground should be made out in the complaint for proceeding against the respondent. It is settled law that at the time of issuing of the process the Magistrate is required to see only the allegations in the complaint and where allegations in the complaint or the charge-sheet do not constitute an offence against a person, the complaint is liable to be dismissed. While answering the reference, the Hon’ble Apex Court observed in para 19 as under : (a) It is necessary to specifically aver in a complaint under Section 141 that at the time the offence was committed, the person accused was in charge of, and responsible for the conduct of business of the company. This averment is an essential requirement of Section 141 and has to be made in a complaint. Without this averment being made in a complaint, the requirements of Section 141 cannot be said to be satisfied. This averment is an essential requirement of Section 141 and has to be made in a complaint. Without this averment being made in a complaint, the requirements of Section 141 cannot be said to be satisfied. (b) The answer to question posed in sub-para (b) has to be in negative. Merely being a Director of a company is not sufficient to make the person liable under Section 141 of the Act. A Director in a company cannot be deemed to be in charge of and responsible to the company for conduct of its business. The requirement of Section 141 is that the person sought to be made liable should be in charge of and responsible for the conduct of the business of the company at the relevant time. This has to be averred as a fact as there is no deemed liability of a Director in such cases. (c) The answer to question (c) has to be in affirmative. The question notes that the Managing Director or Joint Managing Director would be admittedly in charge of the company and responsible to the company for conduct of its business. When that is so, holders of such position in a company become liable under Section 141 of the Act. By virtue of the office they hold as Managing Director or Joint Managing Director, these persons are in charge of and responsible for the conduct of business of the company. Therefore, they get covered under Section 141. So far as signatory of a cheque which is dishonoured is concerned, he is clearly responsible for the incriminating act and will be covered under sub-section (2) of Section 141. 8. A perusal of the complaint shows that the complainant did not specifically aver in the complaint that the applicant No. 3 was responsible for the day-to-day works of the firm. In view of above legal position, I am of the opinion that the case under Section 138, N.I. Act cannot be proceeded against the applicant No. 3. However the applicant No. 1 being the signatory of the cheque she is liable to be prosecuted under Section 138 of the Act as held in the case of S.M.S. Pharmaceuticals Ltd. (supra). Thus the application under Section 482, Cr.P.C. is to be partly allowed. 9. However the applicant No. 1 being the signatory of the cheque she is liable to be prosecuted under Section 138 of the Act as held in the case of S.M.S. Pharmaceuticals Ltd. (supra). Thus the application under Section 482, Cr.P.C. is to be partly allowed. 9. The application is allowed partly and the proceedings in Criminal Case No. 1239/03 new 5228/05 under Section 138 of the Act as against applicant No. 3 Rakesh Kumar Garg are hereby quashed. However, it is made clear that proceeding shall continue against the other two applicants namely Smt. Sunita Garg and Frenco Formulation through proprietor Smt. Sunita Garg. The Trial Court is directed to expedite the hearing of the case and to conclude the same expeditiously and preferably within 3 months from the date the copy of order is filed before him. ————