India Brewery and Distillery Pvt. Ltd. v. R. K. Distilleries Pvt. Ltd.
2014-03-14
C.PRAVEEN KUMAR
body2014
DigiLaw.ai
ORDER C. Praveen Kumar, J. 1. Rejection of an application filed under section 305 Cr.P.C., made the petitioner/accused to prefer this present petition under section 482 Cr.P.C. 2. The facts in issue are as under: The accused company, namely, M/s. India Brewery & Distillery Private Limited, represented by its Managing Director Mr. Balkrishan Mankani was involved in supply of raw material i.e., rectified spirit and neutral spirit, which was being used for manufacture of alcohol. The complainant, who is a manufacturer of alcohol is alleged to have approached the accused and placed an order for supply of 8 lakhs litres of extra neutral alcohol. Pursuant to an e-mail, the accused company issued a letter dt. 2-6-2011 expressing its acceptance and willingness to supply the said material and accepted an amount of Rs. 2 crores as advance towards supply of the said material. Later the accused expressed inability to fulfill its obligation but assured the complainant to return the advance amount. Left with but no other option the complainant accepted the offer. Consequent upon the failure of the accused to repay the amount agreed upon, the complainant presented the cheques bearing Nos. 635855 and 635856 dt. 29-10-2011 for Rs. 100 lakhs each. The said cheques when presented were returned with an endorsement "Payment Stopped by Drawer". After complying with the statutory requirements, a private complaint was filed against the accused being represented by its Managing Director Mr. Balkrishan Mankani for an offence punishable under section 138 of the Negotiable Instruments Act, 1881 (for short "the NI Act"). 3. Pending the said proceedings, the accused filed Crl. M.P. No. 3701/2012 under section 305 Cr.P.C., seeking permission of the court to permit one of its Directors by name Mr. Parasram N. Ramnani to represent the accused company in place of its Managing Director Mr. Balkrishan Mankani. By an order dt. 17-9-2012, the said application was rejected. Assailing the said order, the petitioner herein filed Crl. R.P. No. 326/2012, which was also rejected on 19-12-2012. Assailing the said order, the present criminal petition is filed. 4. The learned counsel for the petitioner mainly submits that since the private complaint was filed only against a company, represented by its Managing Director, it is always open to the accused company to substitute a person to represent the company in the case.
Assailing the said order, the present criminal petition is filed. 4. The learned counsel for the petitioner mainly submits that since the private complaint was filed only against a company, represented by its Managing Director, it is always open to the accused company to substitute a person to represent the company in the case. In view of section 305Cr.P.C., he submits that it is prerogative of the accused company to substitute any person of its choice to represent the company. 5. Relying upon the judgment of this Court in Mohd. Isaq Gulani V.J. Rajamouli 2001 (1) ALT (CRL) 80 (AP) and B. Manipal Reddy v. State of A.P. 2000 (1) ALT (CRL) 217(AP), the learned counsel for the first respondent submits that the person who signed the cheque in discharge of debt alone has to represent the company and that the provisions of Section 305 Cr.P.C., are not applicable to the case on hand. 6. Section 141 of the NI Act states that if a person committing an offence under section 138 of the NI Act is a company, the person who, at the time of commission of the offence was in charge of, and responsible to the company for the business of the company and also the company shall be deemed to be guilty. Section 141(2) of the NI Act reads that if the offence is committed by the company with the consent or connivance of or is attributable to any neglect on the part of Director, Manager, Secretary or other officers, all of them shall be deemed to be guilty of that offence. But neither section 138 of the NI Act nor Section 141 of the NI Act contemplate as to who should represent the company when it is prosecuted alone or along with its Directors. In the absence of any provision under the NI Act, one has to fall back on Section 305 Cr.P.C., which reads as under:- Procedure when corporation or registered society is an accused: (1) In this section, "corporation" means an incorporated company or other body corporate, and includes a society registered under the Societies Registration Act, 1860 (21 of 1860).
In the absence of any provision under the NI Act, one has to fall back on Section 305 Cr.P.C., which reads as under:- Procedure when corporation or registered society is an accused: (1) In this section, "corporation" means an incorporated company or other body corporate, and includes a society registered under the Societies Registration Act, 1860 (21 of 1860). (2) Where a corporation is the accused person or one of the accused persons in an inquiry or trial, it may appoint a representative for the purpose of the inquiry or trial and such appointment need not be under the seal of the corporation. (3) Where a representative of a corporation appears, any requirement of this Code that anything shall be done in the presence of the accused or shall be read or stated or explained to the accused, shall be construed as a requirement that thing shall be done in the presence of the representative or read or stated or explained to the representative, and any requirement that the accused shall be examined shall be construed as a requirement that the representative shall be examined. (4) Where a representative of a corporation does not appear, any such requirement as is referred to in sub-section (3) shall not apply. (5) Where a statement in writing purporting to be signed by the managing director of the corporation or by any person (by whatever name called) having, or being one of the persons having the management of the affairs of the corporation to the effect that the person named in the statement has been appointed as the representative of the corporation for the purposes of this section, is filed, the Court shall, unless the contrary is proved, presume that such person has been so appointed. (6) If a question arises as to whether any person, appearing as the representative of a corporation in an inquiry or trial before a Court is or is not such representative, the question shall be determined by the Court. 7. A reading of the above section makes it clear that as the Corporation which includes a company or registered society cannot be physically present in the court to face a prosecution, sub-section 2 of section 305 Cr.P.C., authorizes a company to appoint their representative for the purpose of enquiry or trial and such appointment need not be under the seal of the Corporation. 8. In Mohd.
8. In Mohd. Isaq Gulani 2001 (1) ALT (CRL) 80 (AP) this court was dealing with a situation where an individual approached the complainant and borrowed an amount of Rs. 13,000/- as hand loan promising to repay the same as and when demanded. Pursuant to the representation made, the accused gave a cheque for the said amount which when presented through the Banker was dishonoured. One of the grounds raised in the petition seeking to quash the proceedings was that the cheque was issued by the person in the capacity of a President of A.P. Habitat Society, Hyderabad, and neither the Society nor the President in that capacity representing the Society has been impleaded as an accused and inasmuch as the petitioner has been impleaded in his individual capacity, the complaint is not sustainable and is liable to be quashed. The question before the court was whether a complaint filed under section 138 of the Act is maintainable without making its President as a party to the proceedings. Under those circumstances, the learned single Judge held that although the Society has not been arrayed as accused, since the liability of the President of the Society is independent, both the Company as well as the Managing Director are liable under Section 141 of the Act. The Court held that mere omission to array the Society as accused, the President who is independently liable cannot escape the liability. 9. B. Manipal Reddy's case relied upon by the second respondent was dealing with prosecution of a person who was shown as MD of the Company. Since the complaint describes the accused as Managing Director of the Company and the agreement which is the basis for payment of money describes him as Managing Director, the Court held that mere absence of an averment in the complaint does not absolve the accused from culpability and accordingly rejected the said application. Both the judgments relied upon by the learned counsel for the second respondent do not apply to the case on hand. 10. In the instant case, the first respondent company filed a private complaint against the accused company showing its Managing Director as the person representing the said company. He was not made an accused in his individual capacity though he was a signatory to the cheque. Pursuant to an authorization dt. 13-8-2012 given by the accused company one Mr.
10. In the instant case, the first respondent company filed a private complaint against the accused company showing its Managing Director as the person representing the said company. He was not made an accused in his individual capacity though he was a signatory to the cheque. Pursuant to an authorization dt. 13-8-2012 given by the accused company one Mr. Parasram N. Ramnani styling himself as a person representing the company filed an application to substitute his name as the person representing the accused company instead of its Managing Director Balkrishan Mankani. The said application was opposed by the first respondent herein stating that the Managing Director who is responsible for day to day affairs of the company alone has to represent the company. Under section 305 Cr.P.C., it is the privilege of the accused company to authorise any person of its choice to represent the accused company. Since the Managing Director of the accused was not individually prosecuted and as the company cannot be sent to jail, no prejudice would be caused to either of the parties if the accused is represented by a person authorised by the accused company. The argument of the counsel that the person who signed the cheque alone has to represent the company and not by a stranger who has nothing to do with the issuance of a cheque cannot be accepted. In a given situation, if the person who signs the cheque and shown as a person representing the company dies, the prosecution against the company will not get abated. Steps have to be taken to substitute a person to represent the company. Therefore, the accused company has every authority to substitute a person of its choice to represent the company under section 305 Cr.P.C. Even if the person who signed the cheque is made individually liable, still the accused company can be represented by a person of its choice. Both the courts have erred in holding that the Managing Director who singed and issued the cheque alone has to represent the company and that the company cannot be permitted to substitute a person of its choice. 11. For the foregoing reasons, the impugned order of the revisional court confirming the orders passed by the trial court cannot be sustained and the same are liable to be set-aside. 12. The Criminal Petition is accordingly allowed and the impugned order dt.
11. For the foregoing reasons, the impugned order of the revisional court confirming the orders passed by the trial court cannot be sustained and the same are liable to be set-aside. 12. The Criminal Petition is accordingly allowed and the impugned order dt. 19-12-2013 passed in Crl.R.P. No. 326/2012 on the file of Metropolitan Sessions Judge, Hyderabad, confirming the order passed in Crl.M.P. No. 3701/2012, is set aside. Miscellaneous petitions, if any, shall stand closed. Petition allowed