Research › Search › Judgment

Bombay High Court · body

2012 DIGILAW 1164 (BOM)

Banwarilal L. Saini v. State of Maharashtra

2012-07-02

ABHAY M.THIPSAY

body2012
Judgment : Heard. 2. Rule. By consent, Rule made returnable forthwith. By consent, heard forthwith. 3. The petitioners are the accused nos.1 and 3 in Criminal Case No.11/SS/2012 pending before the Metropolitan Magistrate, 71st Court, Mazgaon, Mumbai. The case is in respect of an offence punishable under section 138 of the Negotiable Instrument Act and arises on the basis of a complaint filed by the respondent no.2 herein. One Amit Saini is the accused no.2 in the said case. He is the son of the first petitioner (accused no.1) and the husband of the second petitioner (accused no.3). After examining the respondent no.2 on oath in accordance with the provisions of section 200 of the Code of Criminal Procedure, the Magistrate issued process against all the three accused mentioned as such, in the complaint. The petitioners challenged the issue of process against them, on the ground that the cheques in question had been issued only by the accused no.2 and not by the petitioners or any of them, by filing a revision in the Court of Sessions but the revision application came to be dismissed. The petitioners have now approached this court by filing the present writ petition. 4. The contention of the petitioners is that the cheques in question had not been issued by them or by any of them. It is also contended that the account on which the cheques had been drawn is not maintained by any of the petitioners. 5. That this is so, is not a dispute. The contention of the respondent no.2 is, however, that the cheques had been issued by the accused no.2 – Amit Saini – in discharge of the liability which was of all the accused. 6. Mr.Arote, learned counsel for the respondent no.2 submitted that the facts of the case are rather peculiar. He pointed out that previously the respondent no.2 had filed cases against all the accused i.e. the present petitioners and the said accused no.2 – Amit Saini – in respect of the offence punishable under section 138 of the Negotiable Instruments Act. He submitted that as the parties were having good relations between them, it was decided to settle the matters and a Memorandum of Understanding was arrived at between the parties on the basis of which the previous complaints filed by respondent no.2 against the petitioners and the said Amit Saini were withdrawn. He submitted that as the parties were having good relations between them, it was decided to settle the matters and a Memorandum of Understanding was arrived at between the parties on the basis of which the previous complaints filed by respondent no.2 against the petitioners and the said Amit Saini were withdrawn. Under the said Agreement, or Memorandum of Understanding, it was decided that the petitioners and the said Amit Saini would admit their liability to pay the amounts in question and that 60 post dated cheques, (details of which were mentioned in the schedule annexed to the Memorandum of Understanding), would be given to the respondent no.2. As aforesaid, on the basis of this understanding, the previous case filed by the respondent no.2 against the petitioners and Amit Saini were withdrawn. Some of the cheques which were given pursuant to the settlement and the Memorandum of Understanding were honored, but subsequently, the remaining cheques were dishonored. Interestingly, it is an admitted position that the 60 post dated cheques which were given to the respondent no.2 on the basis of the Memorandum of Understanding, had been signed by the said Amit Saini the accused no.2 and the account on which they were drawn was maintained by him in his individual capacity and in his own name. As a matter of fact, this has been stated in the complaint itself (para 10). 7. Indeed, it appears that the cheques which are the subject matter of the said complaint had been issued by the accused no.2 in discharge of the liability of himself and also of the petitioners. It is on this ground that the learned counsel for the respondent no.2 contends that the petitioners also should be liable to be prosecuted with respect to the said offence. According to him, the facts of the present case are rather peculiar and that it cannot be overlooked that the petitioners and the said accused no.2 had somehow made the respondent no.2 to believe that the matters would indeed be settled and the respondent no.2 on being convinced was made to accept the cheques issued by the accused no.2 drawn on account maintained by him in his own name and in his personal capacity. According to him, these facts indicate that the petitioners and the said accused no.2 were acting together with a common object and that therefore, the petitioners should also be held vicariously liable for the offence in view of the provisions of section 141 of the said Act. He submitted that this Court ought to give a broad and wider meaning to the term “Association of Individuals” as has been used in section 141 of the said Act. 8. I have carefully considered the matter. 9. Undoubtedly, section 141 of the said Act provides for vicarious liability of certain persons when the offences under section 138 of the said Act are committed by a Company. The explanation to section 141 makes it clear that for the purposes of the said section “Company” means any Body corporate and includes a firm or other “Association of Individuals”. It is on this explanation that much emphasis is placed by Mr.Arote saying that in the instant case, `the petitioners and accused no.2 should be held to have formed an “association of individuals”.' He brought to my notice, a decision of this Court in the case of Dadasaheb Rawal Co-op Bank of DondaichaLtd. Dist.Dhule V/s.Ramesh S/o Jawrilal Jain & ors , reported in 2008 ALL MR (Cri) 2528, wherein a Hindu Undivided Family was held to be an “association of individuals” as contemplated under section 141 of the said Act and it was held that all the members of the Hindu Undivided Family would be liable to be prosecuted with respect to the offence punishable under section 138 of the said Act, in case of a cheque issued in respect of the liability of the Hindu Undivided Family incurred in the course of joint family business. 10. In my opinion, the phrase “Association of Individuals” appearing in clause (a) of the explanation to section 141 of the said Act cannot be stretched to include all the persons in discharge of whose liability the cheques in a given case, might have been issued. In my opinion, the phrase “Association of Individuals” has to be read along with the words “Company” and “Firm” occurring in the said explanation. It is clear that the “Association of Individuals” as contemplated therein, must have a legal existence. Such an association must have an identity in the eyes of law. In my opinion, the phrase “Association of Individuals” has to be read along with the words “Company” and “Firm” occurring in the said explanation. It is clear that the “Association of Individuals” as contemplated therein, must have a legal existence. Such an association must have an identity in the eyes of law. Undoubtedly, the concept of Hindu Undivided Family is a legal concept and therefore, the cheques issue in discharge of the liability of an Hindu Undivided Family is concerned, may have to be looked at from a different angle depending on the facts of each case. In the instant case, there are no averments so as to indicate that the petitioners and the accused no.2 was an “Association of Individuals” which could be recognised as such, in law. 11. It is clear from order passed by the Magistrate while issuing process, that he had noticed the fact that the cheque had been drawn by the accused no.2 alone, on an account maintained by him. However, in view of the Memorandum of Understanding and the fact that all the accused had collectively admitted and agreed to pay the amount, the Magistrate observed as under: “Thus, prima facie it can be seen and understood that the accused have associated to pay the liability amount.” Thus, the Magistrate, in order to overcome the difficulty in prosecuting the petitioners resorted to a reasoning that the petitioners and the accused no.2 had formed an “Association of Individuals”. 12. In the revision that was preferred by the petitioners, the Sessions Court also emphasized on the liability to pay the amount to the respondent no.2 being joint. In paragraph no.9 of his order, the learned Addl. Sessions Judge observed as follows:- “Apart from this, when having accepted collective liability for all liable persons, one has issued cheque pursuant to Memorandum and Understanding, it goes without saying that others have authorised him to issue cheques. By such authorisation, others have also accepted the liability. Therefore, merely because one person has issued the cheques, he alone cannot be called as drawer as tried to be distinguished by ld. Advocate.” 13. It is not possible to agree with the learned Magistrate or with the learned Addl. Sessions Judge. 14. By such authorisation, others have also accepted the liability. Therefore, merely because one person has issued the cheques, he alone cannot be called as drawer as tried to be distinguished by ld. Advocate.” 13. It is not possible to agree with the learned Magistrate or with the learned Addl. Sessions Judge. 14. To make it clear that the term “Association of Individuals” occurring in clause (a) of the explanation to section 141 of the said Act must be taken as referring to an association which has a recognition in law as such, the term “Association of Individuals” may be replaced by the term “Company” wherever it is appearing in section 141 of the said Act. If that is done, the relevant part of subsection (1) thereof shall read as under: "141. Offences by companies – (1) If the person committing an offence under section 138 is a association of individuals, every person who, at the time the offence was committed, was in charge of, and was responsible to the association of individuals for the conduct of the business of the association of individuals, as well as the association of individuals, shall be deemed to be guilty of the offence and shall be liable to be proceeded against and punished accordingly” (Emphasis supplied) 15. The phrase as well as the “association of individuals” emphasized above is significant. It means that the “association of individuals” could be prosecuted along with the other persons who would be liable to be prosecuted by virtue of the said section. If the view that the petitioners and the accused no.2 had formed an “association of individuals” is accepted, it would mean that the petitioners as well as the accused no.2 should be prosecuted as being responsible for the “association of individuals” and the “association of individuals” also should be prosecuted along with them. They would lead to absurd results as the “association of individuals” which is supposed to have been formed by the petitioners and accused no.2, has no legal existence so as to be capable of being separately prosecuted. This makes the legislative intent clear viz. 'that the “association of individuals” must be taken as an association which is a legal entity and has existence as such, in law'. Apparently, the expression is intended to cover the cases of societies, trusts etc who have a legal and juristic personality. 16. This makes the legislative intent clear viz. 'that the “association of individuals” must be taken as an association which is a legal entity and has existence as such, in law'. Apparently, the expression is intended to cover the cases of societies, trusts etc who have a legal and juristic personality. 16. The offence punishable under section 138 of the Negotiable Instruments Act is a statutory offence. The drawer of a cheque in certain circumstances, is “deemed” to have committed an offence. The offence is of strict liability and does not require any mensrea. The penal provisions contained in section 138 of the Negotiable Instruments Act are therefore, required to be construed strictly. No person who does not fall within the terms of section 138 and/or the terms of section 141 of the said Act can be prosecuted with respect to the offence in question. The emphasis of the Addl. Sessions Judge on the existence of liability on the part of the petitioner would be irrelevant in the context of prosecution of the petitioners, as that would be the civil liability of the petitioners. The body of the offence punishable under section 138 requires drawing of a cheque by a person on an account maintained by him; and as the petitioners have not drawn any cheque or any account maintained by them or any of them, there would be no question of prosecuting them with respect to an offence punishable under section 138 of the said Act. On a reading of the relevant provisions, there can be no doubt that merely because a cheque has been drawn and issued by a person towards the discharge of the liability of another, that another cannot be prosecuted for an offence punishable under section 138 of the said Act on the ground that 'the liability to pay was his.' 17. Indeed, the facts of this case are rather peculiar. Apparently, the petitioners who were being prosecuted escaped from the previous prosecution by purporting to settle the matters by getting issued cheques drawn by the accused no.2 to the respondent no.2. In effect, for the same liability for which Respondent No.2 could earlier prosecute three persons the applicants as well as accused No.2 he can now prosecute only the accused No.2. One therefore does feel same sympathy for the respondent No.2. In effect, for the same liability for which Respondent No.2 could earlier prosecute three persons the applicants as well as accused No.2 he can now prosecute only the accused No.2. One therefore does feel same sympathy for the respondent No.2. However, in this regard, what needs to be observed is that if the respondent no.2 is able to make out a case of deception and cheating, it would be open for him to proceed against the petitioners on that basis, but merely because of that, the petitioners cannot be prosecuted with respect to the offence punishable under section 138 of the Act. 18. The Petition therefore succeeds. 19. The proceedings of C.C. No.11/SS/2012 pending before the Metropolitan Magistrate, 71st Court, so far as they relate to the petitioners, are quashed. 20. The learned Magistrate shall proceed further with the case against the accused no.2 in accordance with law. 21. The learned Magistrate shall expedite the trial and endeavour to complete it as early as possible. 22. Rule is made absolute in the aforesaid terms.