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2013 DIGILAW 470 (BOM)

M. M. Pangarkar v. Rajendra Modani

2013-02-27

S.P.DAVARE

body2013
JUDGMENT : S.P. DAVARE, J. 1. Heard Advocate Mr. A.R. Boruikar for the petitioner, and Advocate Mr. P.K. Lakhotiya for the respondent. Rule. Rule made returnable forthwith. With the consent of learned Counsel for the parties, taken up for final hearing. 2. At the request of learned Advocate for the petitioner, leave granted to correct the number of the proceedings in the trial Court, appearing in prayer clauses of the present petition. Amendment be carried out forthwith. 3. By the present petition filed under Articles 226 and 227 of the Constitution of India, the petitioner herein prays that the complaint in SCC No. 6238/2011, against the petitioner, pending [before learned Judicial Magistrate (FC), Aurangabad, be quashed and set aside. 4. It is the contention of the petitioner, that he was Technical Adviser of Asian Electronics Ltd. (hereinafter referred to as "said Company") till 1st February, 2009. The petitioner resigned from the services as Technical Advisor of the said Company by resignation letter dated 13th January, 2009 (Copy thereof is annexed here with at Exhibit "B"). Thereafter, the petitioner was appointed as a Consultant/Advisor of the said Company from 1st February, 2009 till 31st May, 2009 (Copy thereof is annexed herewith at Exhibit "C"). According to the petitioner, he was appointed as Consultant/Adviser for a particular project called 'GFSS Project'. He specifically stated that he was neither Director of the said Company nor v/as in-charge of day-to-day affairs of business of the said Company. 5. It is alleged that the said Company gave a work order (labour contract) of Erection, Testing and Commission of 11 K.V. Lines, 63 KVA DTC and LT Lines in Feeder, Gaothan Feeder Separation Scheme for five different Fidder/Places to Nath Electricals, a proprietory firm, represented through its proprietor, namely, Rajendraprasad S/o. Jagannath Madani i.e. the complainant in SCC No. 6238/2011 (Hereinafter referred to as "complainant"). It is also alleged that the complainant completed the entire work in given time schedule. Accordingly, the said complainant raised the bills towards each work done by it against the said Company as per the work order. The said Company also made part payments to the complainant towards the said work done. According to the complainant, the complainant has maintained the account of the said Company in the routine course of business and an amount of Rs. 13,93,401 was outstanding against the said Company towards the said work order. The said Company also made part payments to the complainant towards the said work done. According to the complainant, the complainant has maintained the account of the said Company in the routine course of business and an amount of Rs. 13,93,401 was outstanding against the said Company towards the said work order. It is alleged that the complainant made repeated efforts for recovery the said outstanding amount of the said Company. After repeated reminders, the said Company issued an account payee cheque No. 005280 dated 23rd September, 2011 for Rs. 2,00,000 drawn on Axis Bank, Fort Branch, Mumbai, in favour of the complainant towards part payment of the legal outstanding dues. It is further alleged that the said cheque bore signature of two signatories. The complainant deposited the said cheque with State Bank of India, Samarthnagar Branch, Aurangabad, for encashment purpose. However, the said cheque was dishonoured and returned unpaid with the endorsement 'Funds insufficient', alongwith Bank return memo dated 31.10.2011, which was received by the complainant from his Banker on 3.11.2011. Hence, the complainant issued legal notice dated 4.11.2011 through his Advocate by RPAD, calling upon the said Company to pay the complainant, the amount of the said dishonoured cheque i.e. Rs. 2,00,000 at Aurangabad, within 15 days from the receipt of the said notice. According to the complainant, the said legal notice was duly served upon the said Company on or about 9.11.2011. The said Company sent a reply which was received by the complainant on 23.11.2011, and the said Company admitted issuance of the cheque and amount due towards cheque, and promised to pay the amount by way of another cheque. However, it is the contention of the complainant that the complainant has not received any amount till the date of cause of action to file the complaint. Accordingly, it is further contention of the complainant that inspite of receipt of legal notice, the said Company has not paid cheque amount within the statutory stipulated period. Hence, the complainant filed the complaint against the said Company and Directors u/s 138 of the Negotiable Instruments Act, on 1.12.2011. Accordingly, process was issued against the accused persons in the said complaint and they appeared before the learned Judicial Magistrate (F.C.). It is reported that plea of the said accused also has been recorded. 6. Hence, the complainant filed the complaint against the said Company and Directors u/s 138 of the Negotiable Instruments Act, on 1.12.2011. Accordingly, process was issued against the accused persons in the said complaint and they appeared before the learned Judicial Magistrate (F.C.). It is reported that plea of the said accused also has been recorded. 6. On the aforesaid background, grievance of the petitioner is that he was never Director of the aforesaid Company i.e. Asian Electronics Ltd. and he was Technical Adviser to the said Company. According to the petitioner, he resigned from the said Technical Advisership of the said Company by letter of resignation dated 13th January, 2009 (Exhibit "B") with effect from 31st January 2009, Moreover, it is also contention of the petitioner that by letter dated 2nd February, 2009 (Exhibit "C"), the said Company appointed him as Consultant for a particular project for a specified period i.e. from 1st February, 2009 to 31st May, 2009, on the basis of payment of Retainership Fees. It is also grievance of the petitioner that he was never served with the legal notice dated 4.11.2011, and it is further canvassed that he was never party to the said legal notice dated 4.11.2011 (Exhibit "H", page 35). Accordingly, learned Counsel for the petitioner submitted that since the petitioner was never Director of the aforesaid Company, he was not in-charge and responsible of the day-to-day affairs of business of the said Company, and further he was not issued any legal notice before filing complaint against him, nor the petitioner has signed the disputed cheque in question, and therefore, he cannot be compelled to undergo ordeal effacing the trial before learned trial Court. To substantiate the said contention, learned Counsel for the petitioner has tendered photocopies of annual reports for the years 2008-09, 2009-10 and 2010-11, and submitted that the name of the petitioner has not been shown in the list of Board of Directors in the aforesaid reports which clarifies that the petitioner was never Director of the aforesaid Company, and therefore, he is not liable to face the trial in the complaint filed by the complainant. Accordingly, learned Counsel for the petitioner urged that the present petition be allowed and the complaint filed by the complainant, qua the petitioner, be quashed and set aside. 7. Mr. Accordingly, learned Counsel for the petitioner urged that the present petition be allowed and the complaint filed by the complainant, qua the petitioner, be quashed and set aside. 7. Mr. P.K. Lakhotiya, learned Counsel for the respondent, countered the said arguments and opposed the present petition vehemently, and submitted that since the petitioner is responsible and in-charge of day-to-day affairs of business of the Company, even though petitioner herein is not party to the legal notice dated 4.11.2011, complaint can be filed against the petitioner and the complaint filed by the respondent against the said Company and its Directors is maintainable, contending that Section 141 of Negotiable Instruments Act does not contemplate that the persons who faced indictment u/s 141 are entitled to notice under the proviso (b) to Section 138 of Negotiable Instruments Act, since they face the indictment because the Company has committed the offence u/s 138 of Negotiable Instruments Act and they happen to be persons in-charge and responsible to the Company for the conduct and its affairs. In the said context, he has relied upon judicial pronouncement of Kerala High Court, in the case of M/s. Target Overseas Exports Pvt. Ltd. and Others Vs. A.M. Iqbal and Others, (2005) CriLJ 1931 wherein the Court has observed thus: 17. Going by the language of proviso (b) to Section 138 of the N.I. Act, the person entitled to notice is the drawer and not the persons who have signed the cheque on behalf of the drawer. The purpose of notice must also be borne in mind. Notice is not an empty ritualistic formality. The drawer of the cheque must be given an opportunity to reverse the effect of dishonour within the specified period. Such notice by its very purpose need be given only to the drawer and not those who do acts on behalf of such drawer. In these circumstances, it appears to me to be evident that only the 1st accused/company and not accused 2 and 3, the signatories/Directors are entitled to notice under proviso (b) to Section 138 of the N.I. Act. 18. xxx xxx xxx 19. In these circumstances, it appears to me to be evident that only the 1st accused/company and not accused 2 and 3, the signatories/Directors are entitled to notice under proviso (b) to Section 138 of the N.I. Act. 18. xxx xxx xxx 19. Thus, going by the language of Sections 138 and 141 of the N.I. Act and considering the purpose of notice under proviso (b) to Section 138, it follows that accused 2 and 3 who face prosecution u/s 141 of the N.I. Act are not entitled to any notice under proviso (b) to Section 138 of the N.I. Act." 8. Learned Counsel for the respondent further submitted that the averments made in the complaint are self-explanatory wherein it is categorically stated by the complainant i.e. respondent herein, that the accused No. 4 i.e. petitioner herein is one of the Directors of accused No. 1 Company, and is also responsible for day-today affairs of the Company. Hence, in view of the said averments, learned Counsel for the respondent submitted that although the petitioner herein is not signatory to the disputed cheque in question, he is liable for the dues of the complainant. Moreover, it is further submitted that the averments made in the complaint are required to be seen and whether the petitioner herein is Director of the Company, or not, or whether he is merely a Technical Adviser of the said Company, is the matter of evidence and the said aspect can be ascertained during trial only, and hence, urged that the present petition deserves to be dismissed. To substantiate the said, contention, learned Counsel for the respondent has relied upon the judicial pronouncement of, Apex Court in the case of Rallis India Ltd. Vs. Poduru Vidya Bhusan and Others, (2011) 13 SCC 88 . 9. I have perused the present petition, its annexures, and heard rival submissions advanced by the learned Counsel for the parties anxiously, and also considered the judicial pronouncements cited by the learned Counsel for the parties carefully. 10. At the outset, a bare perusal of the complaint under SCC No. 6238/2011 filed by the respondent against the petitioner herein and other co-accused reflects that Asian Electronics Ltd. is the accused No. 1 and Arun B. Shah, Executive Chairman & Managing Director of the said Company is accused No. 2, and Rasik D. Goradia, Sr. 10. At the outset, a bare perusal of the complaint under SCC No. 6238/2011 filed by the respondent against the petitioner herein and other co-accused reflects that Asian Electronics Ltd. is the accused No. 1 and Arun B. Shah, Executive Chairman & Managing Director of the said Company is accused No. 2, and Rasik D. Goradia, Sr. Vice President Finance & Company Secretary, is accused No. 3, whereas the petitioner herein is accused No. 4 in the cape city of Director of the said Company. The averments made in the said complaint disclose that the accused No. 4 is one of the Directors of the accused No. 1 Company, and is responsible for day-to-day affairs of the said Company. It is also averred in the said complaint, that the cheque is issued from the account of accused No. 1 Company and it was signed by accused Nos. 2 and 3, and other Directors are also responsible for the day-to-day affairs of business of the accused No. 1 Company, and all of them are responsible and vicariously liable for the action done by the others for the Company as they have actively participated in the day-to-day affairs of the Company. Hence, all of the mere equally responsible for the offence. Hence, apparently, the said very averments made in the complaint make the petitioner herein liable, at least, to face the trial. 11. Hence, all of the mere equally responsible for the offence. Hence, apparently, the said very averments made in the complaint make the petitioner herein liable, at least, to face the trial. 11. As regards the contention of the petitioner, that he was not made party to legal notice dated 4.11.2011, and without issuing any legal notice, he was made party/accused in the aforesaid complaint, considering the aforesaid averments made in the complaint, it is apparently clear that the petitioner herein is facing indictment because the Company has allegedly committed offence u/s 138 of Negotiable Instruments Act, and as per averments made in the complaint, the petitioner herein happens to be person in-charge and responsible to the Company for the conduct of its affairs, and therefore, he is facing the indictment only u/s 141 of Negotiable Instruments Act, and language of Section 141 of Negotiable Instruments Act does not indicate that the person who faces indictment u/s 141 of Negotiable Instruments Act would be entitled to notice under the proviso (b) to Section 138 of Negotiable Instruments Act, and such stipulation is not there at all u/s 141 of Negotiable Instruments Act, since the notice was issued to the Company, drawer, and therefore, the person facing indictment with the help of Section 141 is not entitled to insist on a separate notice, and hence, the submission made by the learned Counsel for the petitioner, apparently, bears no substance and he can very well be made accused in the complaint without issuance of notice to him considering the aforesaid averments and conjoint reading of Sections 138 and 141 of Negotiable Instruments Act. 12. Insofar as other contentions made by the learned Counsel for the petitioner, that the petitioner has already resigned from the aforesaid Company by resignation letter dated 13th January, 2009 with effect from 31st January, 2009, and he was appointed as a Consultant for a specified project on Retainership Fees basis by letter dated 2nd February, 2009 (Exhibit "C") for a specified period i.e. 1st February, 2009 to 31st May 2009, and he was merely Technical Adviser of the said Company, and not Director, of the said Company, apparently, letter dated 13th January, 2009 (Exhibit "B") does not bear acknowledgement of the said Company showing that the said letter was received by the said Company. Moreover, it is pertinent to note that the petitioner has not produced any authentic document issued by the Registrar of Companies showing that he was never Director of the aforesaid Company, nor he has produced any cogent evidence by Registrar of Companies to establish that he was merely a Technical Adviser of the aforesaid Company and resigned with effect from 31st January, 2009. Besides, the photocopies of Annual Reports for the years 2008-09, 2009-10 and 2010-11 produced by the petitioner do not bear any authenticity, and hence, same cannot be considered to decide whether he was Director of the said Company, or not, at the relevant time. Hence, on the face of aforesaid very averments made by the complainant in the complaint, that the petitioner herein is one of the Directors of accused No. 1 Company, and is also responsible for day-to-day affairs of business of the said Company, and in the absence of any authentic document produced by the petitioner showing that he was never Director of the said Company or he has resigned from Technical Advisership with effect from 31st January 2009, the submissions made by the learned Counsel for the petitioner cannot be accepted. 13. Apart from that, needless to state that this Court is not a fact finding Court and the very averments made by the complainant in the complaint are required to be considered, pertinently, in the absence of any authentic proof produced by the petitioner, as mentioned hereinabove, and whether the petitioner was Director of the aforesaid Company at the relevant time, or not, or whether he was merely Technical Advisor of the said Company, and whether he is a mere Consultant on Retainership Fees basis of the said Company, are the issues to be decided during the course of trial, after giving opportunities to the parties to adduce evidence in that respect, which can be tested on cross-examination, and therefore, today at this stage, in the present petition, one cannot jump to the conclusion that the petitioner is not responsible for the day-to-day affairs of business of the Company, Hence, present petition deserves to be rejected. In the result, present petition, which is sans merits, stands dismissed, and ad interim relief stands vacated. Rule is discharged accordingly.