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2012 DIGILAW 521 (ORI)

Lalit Beriwala v. State of Orissa

2012-11-30

B.K.NAYAK

body2012
JUDGMENT B. K. NAYAK, J. The petitioner in this application under Section 482, Cr.P.C. prays for quashing the order of cognizance dated 25.10.2011 passed by the learned S.D.J.M., Bhubaneswar in I.C.C. Case No. 2730 of 2011 and also for quashing the proceeding in the said complaint case. 2. The petitioner is the sole accused in the complaint case bearing I.C.C. Case No. 2730 of 2011, for commission of offence under Section 138 of Negotiable Instruments Act filed by the present opposite party No.2. It is submitted by the learned counsel for the petitioner that the allegations in the complaint petition filed by opposite party No.2 clearly make out a case of commission of offence by the Company M/s. Beekay Steel and Power Ltd, and the present petitioner was the whole time Director of M/s. Shyam Steel Industries Ltd., and also the Authorized Signatory of M/s. Beekay Steel and Power Ltd., which is an associate company of M/s. Shyam Steel Industries Ltd., and that the petitioner asked the complainant to take up work of Public Consultation meeting (public hearing) of M/s. Beekay Steel and Power Ltd. at Barbil at village level, Panchayat level and District Level and to make the public hearing a success, and the petitioner allegedly promised to pay to the complainant incentive of Rs. 5,00,000/- for successful conduct of the public hearing and after completion of the work the petitioner issued a cheque of the company for Rs. 4,90,000/- to the complainant drawn on H.D.F.C. Bank but the cheque bounced, and that it being clear from the allegations that the company committed an offence, the petitioner who is the Authorized Signatory of the company cannot be prosecuted to the exclusion of the company i.e., the company having not been made an accused in the complaint case. 3. Learned counsel for the opposite party No.2-complainant on the other hand submits that the allegations made in the complaint petition do not disclose that the company has committed an offence but, on the other hand, allegations made against the petitioner relate to the act done by him in his individual capacity and therefore the complaint is maintainable against the petitioner in the absence of the company being made an accused. It is further his submission that only during the trial it can be ascertained whether company has committed an offence or not and not at the cognizance Stage. It is further his submission that only during the trial it can be ascertained whether company has committed an offence or not and not at the cognizance Stage. Section 141 of the Negotiable Instruments Act which is relevant for the purpose, is extracted hereunder: "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: Provided further that where a person is nominated as a Director of a company by virtue of his holding any office or employment in the Central Government or State Government or a financial corporation owned or controlled by the Central Government or the State Government, as the case may be, he shall not be liable for prosecution under this Chapter. (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." 4. Interpreting the provision of Section 141 of the Negotiable instruments Act, the apex Court in the case of Aneeta Hada v. M/s. Godfather Travels & Tours Pvt. Ltd., AIR 2012 SC 2795 held as follows: "43. In view of our aforesaid analysis, we arrive at the irresistible conclusion that for maintaining the prosecution under Section 141 of the Act, arraigning of a company as an accused is imperative. The other categories of offenders can only be brought in the dragnet on the touchstone of vicarious liability as the same has been stipulated in the provision itself. In view of our aforesaid analysis, we arrive at the irresistible conclusion that for maintaining the prosecution under Section 141 of the Act, arraigning of a company as an accused is imperative. The other categories of offenders can only be brought in the dragnet on the touchstone of vicarious liability as the same has been stipulated in the provision itself. We say so on the basis of the ratio laid down in C.V. Parkh, ( AIR 1971 SC 447 ) (supra) which is a three judges Bench decision. Thus, the view expressed in Sheoratan Agarwal, ( AIR 1984 SC 1824 ) (supra) does not correctly lay down the law and, accordingly is hereby overruled. The decision in Anil Hada, ( AIR 2000 SC 145 : 1999 AIR SCW 4228) (supra) is overruled with the qualifier as stated in paragraph-37., The decision in Modi Distilleries, ( AIR 1988 SC 1128 ) (supra) has to be treated to be restricted to its own facts as has been explained by us hereinabove." 5. Since the Director or any other person in charge of the Management of the Company can also be prosecuted as being vicariously liable for the offence committed by the Company, it is necessary that there must be clear averments and proof that the Company committed the offence; otherwise the individuals issuing the cheque can be personally held liable under Section 138 of Negotiable Instruments Act. In this context, the apex Court in the aforesaid decision also observed as follows : "42. .......... Applying the doctrine of strict construction, we are of the considered opinion that commission of offence by the company is an express condition precedent to attract the vicarious liability of others. Thus, the words as well as the company appearing in the section make it absolutely unmistakably clear that when the company can be prosecuted, then only the persons mentioned in the other categories could be vicariously liable for the offence subject to the averments in the petition and proof thereof" 6. in the light of the principles lay down by the Supreme Court it is to be seen whether the relevant averments in the complaint petition and the other circumstances described therein make out a case about commission of offence by the company. The relevant averments made in the complaint filed by opposite party no. in the light of the principles lay down by the Supreme Court it is to be seen whether the relevant averments in the complaint petition and the other circumstances described therein make out a case about commission of offence by the company. The relevant averments made in the complaint filed by opposite party no. 2 as described in paragraph (B) of the complaint petition are quoted hereunder: "(B) That M/s. Shyam Steel Industries Limited having its head office at EN-32 Sector-V, Salt Lake Kolkata and its Branch office at N/4-18, IRC village, Nayapalli, Bhubaneswar. The accused Mr. Lalit Beriwal is the whole time Director of M/s. Shyam Steel Industries Limited and Authorized Signatory of M/s. Beekay Steels and Power Ltd. M/s. Beekay Steels and Power Ltd. is the associate company of M/s. Shyam Steel Industries Limited. The complainant was asked by the accused Mr. Lalit Beriwal to take over the entire responsibility from starting to completion of entire formalities of Public Consultation meeting (public hearing) of M/s. Beekay Steels and Power Ltd. based at Ulibur, Barbil in related to Government offices, at village level, Panchayat level and District Level by interacting with local villagers, key persons, NGO's, SHG's etc. to make the hearing success one. At that time the accused Mr. Lalit Bariwal gave the assurance/commitment to the complainant to give incentive of Rs. 5 lakhs if the public hearing gets success." The aforesaid averments make it clear that the petitioner was an Authorized Signatory of the Company, M/s. Beekay Steel and Power Ltd., which was an associate company of M/s. Shyam Steel Industries Ltd., of which he was also a whole time Director. The work which was entrusted to the complainant related to the company M/s. Beekay Steel of which the petitioner was the Authorized Signatory and it was not the personal work of the petitioner. The petitioner did not enter into the transaction and entrusted the work to complainant in his individual capacity but as the Authorised agent of the company. The cheque, copy whereof has been produced at the time of hearing, belongs to the company. The petitioner did not enter into the transaction and entrusted the work to complainant in his individual capacity but as the Authorised agent of the company. The cheque, copy whereof has been produced at the time of hearing, belongs to the company. The petitioner has only signed the cheque as the Authorised Signatory of the company, M/s. Beekay Steel and Power Ltd. Although there is no specific allegation in the complaint petition that the petitioner entered into the transaction with the company, the combined effect of all the averments make it clear that he transacted with the company through its authorised agent (petitioner) for company's work and received the company cheque which bounced and as such the offence must be said to have been committed by the company. 7. Admittedly, the company, M/s. Beekay Steel and Power Ltd., has not been made an accused in the complaint case which is filed only against the petitioner describing him in his official capacity. Applying the principle laid down by the Apex Court in the case of Aneeta Hada (supra) it must be held that the cognizance taken against the petitioner for the offence under 138 of Negotiable Instruments Act is bad and the complaint against him alone cannot be maintained, in the absence of the company. 8. Accordingly, the order of taking cognizance as well as I.C.C. Case No. 2730 of 2011 pending in the Court of learned S.D.J.M., Bhubaneswar is hereby quashed. The CRLMC is accordingly disposed of. CRLMC disposed of.