Research › Search › Judgment

Calcutta High Court · body

2015 DIGILAW 568 (CAL)

Anup Lodha v. State of West Bengal

2015-07-14

SUDIP AHLUWALIA

body2015
JUDGMENT : Sudip Ahluwalia, J. The CRR No. 3210 of 2014 was filed earlier for quashing the proceedings started against the petitioners by way of an order for issuance of process passed on 17th January, 2013 by the Ld. Metropolitan Magistrate, 9th Court, Calcutta in Complaint Case No. 61/2013 of his Court. In the subsequent CRR No. 617 of 2015, the same petitioners have prayed for quashing a subsequent order passed by the Ld. Magistrate on 15th of December 2014. In the said order the Magistrate had rejected the petitioners' prayer to stay further proceedings against them till disposal of their earlier CRR No. 3210 of 2014. Both the Revisional applications have been heard together by this Court, and obviously the result in CRR 3210 of 2014 which is the parent proceeding, will govern the fate of the subsequent CRR 617 of 2015. 2. The petitioners are two of the four accused persons who were summoned in terms of the aforesaid Order. Initially another co-accused, namely, Madhav Kumar Lodha had also participated in the filing of the first application. But subsequently, his name was dropped as he chose not to press the same from his side. Consequently only the petitioners, Anup Lodha and Anant Kumar Lodha remained on record as such. They happen to be the accused numbers 3 & 4 in the original petition of complaint. 3. The complaint was filed against five accused persons the first of which happens to be a registered Company on the premise that the remaining four accused persons are its Directors. They were, therefore, claimed to be liable for the offence under Section 138 of the N.I. Act when certain cheques issued in favour of the Complainant Company were dishonoured. 4. The petitioners have challenged the proceedings against them on two counts. First of all, they contend they are residents of Midnapore, which is outside the jurisdiction of the Trial Court notwithstanding that the company with which they are associated and work for gain it itself located in Calcutta. As such according to them, the proceedings against them should not have commenced without compliance of the Mandatary Enquiry U/S. 202 of the Cr. P. Code. 5. As such according to them, the proceedings against them should not have commenced without compliance of the Mandatary Enquiry U/S. 202 of the Cr. P. Code. 5. The second contention is that that the complaint as filed does not fulfil the requirement indicating the nature of their responsibilities in terms of the law laid down in the case of "S.M.S. Pharmaceuticals Ltd. v. Neeta Bhalla & Anr." reported in (2005)8 SCC 89 which was subsequently enunciated further by the Apex Court in the case of "Gunmala Sales Private Limited v. Anu Mehta & Ors." reported in (2015) 1 SCC 103 . 6. In support of the contention that cognizance in the case is bad for non-compliance of the provisions under Section 202 of the Criminal Procedure Code inasmuch as the complaint as filed indicates the accused persons to be residents of Midnapore, Ld. Counsel for the petitioner has placed on record a number of Single Bench decisions passed earlier by this Court in which such cognizance was set aside and directions were passed on the concerned Magistrates to first have the enquiry under Section 202 conducted, and only thereafter to consider the issuance of process. 7. These decisions happen to be Orders dated 4.7.2014 in CRR 373 of 2014, and dated 15.3.2013 in CRR 3169 of 2012. The petitioners' side has thereafter, also drawn attention of this Court towards a subsequent decision of Hon'ble Justice Tarun Kumar Gupta (as His Lordship then was) in a Group of cases headed under the caption "S.S. Binu v. State & Anr.". In the relevant order passed on 11th June 2014, His Lordship had been pleased to refer the matter for consideration by a larger Bench for the purpose of a clear-cut determination as to whether or not the compliance of Section 202 of the Criminal Procedure Code is mandatory in complaint cases under the Negotiable Instruments Act 8. It may be mentioned that all the aforesaid decisions were passed in the light of the original decision of the Apex Court in "National Bank of Oman v. Barakara Abdul Aziz & Anr." reported in 2013(2) SCC 488 regarding the necessity of conducting an enquiry prior to issuance of process under Section 202 by a Magistrate when the accused persons are residing beyond his jurisdiction. Of course, that decision of the Apex Court in "National Bank of Oman" (supra) was in relation to offences committed under the I.P.C. and not under the N.I. Act. 9. However, learned Counsel for the complainant/Opposite Party has placed before this Court a subsequent decision passed by the Hon'ble Mr. Justice Joymalya Bagchi of this Court, in the case of "Nirmal Khandelwal v. M/s. Terai Dooars Tea Co. Pvt. Ltd. & Anr.", (2015 (1) JCC(NI) 101) in which the direction's passed by the Apex Court in "Indian Bank Association & Ors. v. Union of India & Ors." reported in (2014) 5 SCC 590 were relied upon. The relevant observations recorded by his Lordship in re "Nirmal Khandelwal" (supra) are as follows:- 6. I have considered the rival submissions of the parties as well as the materials on record. I find that from the averments made in the petitioner of complaint as well as the revision petition that the petitioner is carrying on business within the territorial jurisdiction of the learned Magistrate. 7. That apart, I am of the opinion that prosecution under Section 138 of the Negotiable Instruments Act, 1881, being a special law is governed by the provisions of the said Act, which naturally overrides the general provision under the Code of Criminal Procedure. 8. The provisions of the Sections 143 and 147 of the Negotiable Instruments Act, 1881 lays down a special procedure for conducting the trial of such cases so as to ensure its quick disposal. The complainant is entitled to file evidence by way of affidavit. It is settled law that the initial deposition of complainant may also be filed by way of affidavit. In Indian Bank Association & Ors. v. Union of India & Ors. reported in (2014) 5 SCC 590 the Apex Court, inter alia, held that affidavit evidence may be used both at the pre-summoning and post-summoning stage. The Court laid down the manner in which cognizance is to be taken and process be issued and trial conducted for speedy disposal of such cases. The Court held as follows: "18. reported in (2014) 5 SCC 590 the Apex Court, inter alia, held that affidavit evidence may be used both at the pre-summoning and post-summoning stage. The Court laid down the manner in which cognizance is to be taken and process be issued and trial conducted for speedy disposal of such cases. The Court held as follows: "18. We have indicated that under Section 145 of the Act, the complainant can give his evidence by way of an affidavit and such affidavit shall be read in evidence in any inquiry, trial or other proceedings in the court, which makes it clear that a complainant is not required to examine himself twice i.e. one after filing the complaint and one after summoning of the accused. The affidavit and the documents filed by the complainant along with complaint for taking cognizance of the offence are good enough to be read in evidence at both the stages i.e. pre-summoning stage and the post-summoning stage. In other words, there is no necessity to recall and re-examine the complainant after summoning of the accused, unless the Magistrate passes a specific order as to why the complainant is to be recalled. Such an order is to be passed on an application made by the accused or under Section 145(2) of the Act suo-motto by the court. In summary trial, after the accused is summoned, his plea is to be recorded under Section 263(g) CrPC and his examination, if any, can be done by Magistrate and a finding can be given by the court under Section 263(h) CrPC and the same procedure can be followed by a Magistrate for offence of dishonour of cheque since offence under Section 138 of the Act is a document based offence. We make it clear that if provisos (a), (b) and (c) to Section 138 of the Act are shown to have been complied with, technically the commission of the offence stands completed and it is for the accused to show that no offence could have been committed by him for specific reasons and defences." 9. Accordingly, the Court laid down the following guidelines:- "23.1. Accordingly, the Court laid down the following guidelines:- "23.1. The Metropolitan Magistrate/Judicial Magistrate (MM/JM), on the day when the complaint under Section 138 of the Act is presented, shall scrutinise the complaint and, if the complaint is accompanied by the affidavit, and the affidavit and the documents, if any, are found to be In order, take congnizance and direct issuance of summons......." 10. Undisputedly some benches of this Court had earlier quashed the summoning orders, which were passed by the Magistrates in cases under the NI Act by directing that the requisite enquiry under Section 202 be conducted first. Thereafter Justice Tarun Kumar Gupta in the above mentioned Group of cases, by His Lordship's order of 11th of June 2014 referred the matter for determination by the larger bench. But it is clear that the decision of the Apex Court in "Indian Bank Association" (supra) was not considered at that time. The relevant citation has since been placed before this Court. It is seen that the Supreme Court's decision and directions contained therein were pronounced on the 21st of April, 2014, after which the same was published in (2014) 5 SCC (P 590). Since there is not even a passing reference to this decision in the order of Justice Tarun Kumar Gupta, there remains no doubt that the same was not within the notice of Lordship on the date of passing the relevant order i.e., 11th of June, 2014 as, in all probability, the publication in SCC would not have been circulated till that time. But now the directions contained in the aforesaid decision especially in Paragraph 23.1 of the same are to cover the cases on this particular point. The relevant direction is again set out below:- "23.1. The Metropolitan Magistrate/Judicial Magistrate (MM/JM), on the day when the complaint under Section 138 of the Act is presented, shall scrutinise the complaint and, if the complaint is accompanied by the affidavit, and the affidavit and the documents, if any, are found to be In order, take cognizance and direct issuance of summons......." 11. Perusal of the aforesaid direction clearly shows that in relation to complaint cases under the NI Act, the Apex Court has virtually done away with the requirement of an additional enquiry under Section 202 of the CrPC as a pre-requisite for issuance of summons, even if the accused person resides outside the territorial jurisdiction of the Magistrate. Perusal of the aforesaid direction clearly shows that in relation to complaint cases under the NI Act, the Apex Court has virtually done away with the requirement of an additional enquiry under Section 202 of the CrPC as a pre-requisite for issuance of summons, even if the accused person resides outside the territorial jurisdiction of the Magistrate. On this count therefore the contention raised on behalf of the petitioners is not found tenable. 12. Now the question regarding the alleged deficiency in the averments made in the original complaint in relation to the status and responsibility of the present petitioners for being liable under Section 138 of the NI Act is taken up for consideration. 13. While laying down the standards to determine the liability of the directors of any Company in a case under the NI Act, the Supreme Court in "S.M.S. Pharmaceuticals Ltd. v. Neeta Bhalla & Anr." (supra) had come to the following deductions:- 19. In view of the above discussion, our answers to the questions posed in the reference are 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. (b) The answer to the question posed in sub-para (b) has to be in the 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 the 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 - has to be in the affirmative. 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 - has to be in the 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 the conduct of its business. When that is so, holders of such positions 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 the 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. 14. In the subsequent decision in "Gunmala Sales Private Limited v. Anu Mehta and Ors." (supra), the essence of the previous determinations in "SMS Pharmaceutical Ltd." was retained, but the Apex Court qualified it a little by recording the following deductions:- 34. We may summarise our conclusions as follows:- 34.1. Once in a complaint filed under Section 138 read with Section 141 of the Ni Act the basic averment is made that the Director was in charge of and responsible for the conduct of the business of the company at the relevant time when the offence was committed, the Magistrate can issue process against such Director. 34.2. If a petition is filed under Section 482 of the Code for quashing of such a complaint by the Director, the High Court may, in the facts of a particular case, on an overall reading of the complaint, refuse to quash the complaint because the complaint contains the basic averment which is sufficient to make out a case against the Director. 34.3. In the facts of a given case, on an overall reading of the complaint, the High Court may, despite the presence of the basic averment, quash the complaint because of the absence of more particulars about the role of the Director in the complaint. 34.3. In the facts of a given case, on an overall reading of the complaint, the High Court may, despite the presence of the basic averment, quash the complaint because of the absence of more particulars about the role of the Director in the complaint. It may do so having come across some unimpeachable, incontrovertible evidence which is beyond suspicion or doubt or totally acceptable circumstances, which may clearly indicate that the Director could not have been concerned with the issuance of cheques and asking him to stand the trial would be abuse of process of court. Despite the presence of basic averment, it may come to a conclusion that no case is made out against the Director. Take for instance a case of a Director suffering from a terminal illness who was bedridden at the relevant time or a Director who had resigned long before issuance of cheques. In such cases, if the High Court is convinced that prosecuting such a Director is merely an arm-twisting tactics, the High Court may quash the proceedings. It bears repetition to state that to establish such case unimpeachable, incontrovertible evidence which is beyond suspicion or doubt or some totally acceptable circumstances will have to be brought to the notice of the High Court. Such cases may be few and far between but the possibility of such a case being there cannot be ruled out. In the absence of such evidence or circumstances, complaint cannot be quashed. 34.4. No restriction can be placed on the High Court's powers under Section 482 of the Code. The High Court always uses and must use this power sparingly and with great circumspection to prevent inter alia the abuse of the process of the court. There are no fixed formulae to be followed by the High Court in this regard and the exercise of this power depends upon the facts and circumstances of each case. The High Court at that stage does not conduct a mini trial or roving inquiry, but nothing prevents it from taking unimpeachable evidence or totally acceptable circumstances into account which may lead it to conclude that no trial is necessary qua a particular Director." 15. The High Court at that stage does not conduct a mini trial or roving inquiry, but nothing prevents it from taking unimpeachable evidence or totally acceptable circumstances into account which may lead it to conclude that no trial is necessary qua a particular Director." 15. It follows therefore that the requirements of a clear averment indicating the status and responsibilities of an accused person to render him liable within the meaning of section 141 of the NI Act, which had been laid down in "SMS Pharmaceuticals" (supra) have by no means been diluted by the subsequent pronouncement in "Gunmala Sales" (supra). Rather, another safeguard has been added by way of entitling the accused to show some unimpeachable/incontrovertible evidence that he is not responsible for the day to day Management of the company, in which case the proceedings against him can also be quashed, even if there is a sufficient and proper averment in the petition of complaint. 16. It would now be pertinent to refer to the text of the concerned averments contained in the relevant Paras No. 3, 4 & 10 of the petition of complaint which are set out as under - ".......3. That the Accused No. 1 is a Limited Company. The Accused No. 2 and 5 are the directors of the Accused No. 1. The accused No. 2 and 5 are incharge and solely responsible for the day to day affairs of the Accused No. 1. The accused No. 2 is signatory of the cheque also 4. That the complainant states that sometime in the month of August, 2012 the Accused Person No. 2 and 5 visited the office of the complainant company and represented themselves as the Directors of the Accused No. 1 The Accused No. 2 and 5 further induced the complainant that due to sudden financial loss in their business then are in dire need of loan of Rs. 20 Lacs. (Emphasis added). 10. That the complainant states that Accused No. 1 & 2 received the said demand notice on 27.12.2012. Accused No. 3 received the said notice on 27.12.2012 and 28.12.2012. The Accused No. 4 received the notice on 28.12.2012 and 29.12.2012 and Accused No. 5 received the said notice on 27.12.2012 and 29.12.2012....." 17. It is thus noticeable that virtually everywhere the substantive allegations have been made only in relation to the original accused persons Nos. 2 and 5. Accused No. 3 received the said notice on 27.12.2012 and 28.12.2012. The Accused No. 4 received the notice on 28.12.2012 and 29.12.2012 and Accused No. 5 received the said notice on 27.12.2012 and 29.12.2012....." 17. It is thus noticeable that virtually everywhere the substantive allegations have been made only in relation to the original accused persons Nos. 2 and 5. The only allegation of any nature against the present petitioners who are the accused Nos. 3 and 4 is that they had received the demand notice sent on behalf of the complaint between 27.12.2012 to 29.12.2012. It has also not been stated anywhere in the petition of complaint that the dishonoured cheques in question were issued or signed by either of the present two petitioners. 18. Learned Counsel for the Complainant/Opposite Party in this regard submitted before this Court that in the Cause Title of the complaint, the present petitioners (accused Nos. 3 and 4) had also been described as Directors of the company (accused No. 1). Learned Counsel further submitted that usage of the words "Accused No. 2 and 5"appearing at the various places in the body of the complaint petition is a pure typing mistake and the same were actually meant to be "Accused No. 2 to 5". Be that as it may, the Court is to take into account what is actually mentioned in the petition of complaint, and not what ought to have been there. Even otherwise this submission is hardly credible in view of the fact that even in the subsequent Affidavit-in-Chief tendered in the Ld. Court below by way of the evidence U/S 145(1) of the NI Act by PW1 Shri Bhaskar Gupta on the 25th of March 2014, again the words "Accused No. 2 and 5" have been used in all the statements instead of "Accused No. 2 to 5". Since these statements have been given by the deponent on oath, there can be no doubt that the averments in the body of the original complaint were also correctly typed as what they were actually meant to be. To sum up therefore, this Court has no hesitation in coming to the conclusion that the averments in the original petition of complaint do not meet up to the standards laid down by the Apex Court in "SMS Pharmaceuticals" (supra). Consequently the order for issuance of Summons against the present petitioners (the original accused Nos. To sum up therefore, this Court has no hesitation in coming to the conclusion that the averments in the original petition of complaint do not meet up to the standards laid down by the Apex Court in "SMS Pharmaceuticals" (supra). Consequently the order for issuance of Summons against the present petitioners (the original accused Nos. 3 and 4) would not appear to be tenable. 19. Ld. Counsel for the Complainant/OP has also contended that this revisional application is actually a motivated device to stall and delay the proceedings in the original complaint case, and, therefore, the same deserves to be dismissed. To support this contention a decision of the of the Delhi High Court in "Krishna Dwivedi v. Surender Kumar" reported in 2007(4) JCC 3083 : 2007(10) AD(Delhi) 595," and another of the Apex Court "Amar Chand Agarwalla v. Shanti Bose & Anr., ETC" reported in (1973) 4 SCC 10 , were cited. 20. In "Krishna Dwivedi v. Surender Kumar" (supra) the Delhi High Court had dismissed the Revisional application filed belatedly by an accused person with the following observations:- 5. Section 482 Criminal Procedure Code reads as under:- "482. Saving of inherent power of High Court, Nothing in this Code shall be deemed to limit or affect the inherent powers of the High Court to make such orders as may be necessary to give effect to any order under this Code, or to prevent abuse of the process of any Court or otherwise to secure the ends of justice." 6. This Section envisages three circumstances under which the inherent jurisdiction may be exercised, namely:- (i) to give effect to any order under the Code, (ii) to prevent abuse of the process of Court, and (iii) to otherwise secure the ends of justice, 7. Further to seek interference under this Section, three conditions are to be fulfilled, namely:- (i) the injustice which comes to light should be of a grave and not of a trivial character; (ii) it should be palpable and clear and not doubtful; and (iii) there exists no other provision of law by which the party aggrieved could have sought relief. 8. Keeping in view these circumstances, it has to be seen as to whether present petition is at all maintainable or not. 9. 8. Keeping in view these circumstances, it has to be seen as to whether present petition is at all maintainable or not. 9. All the pleas taken in the present petition are the defence of the petitioner, which he can take during the course of trial and this Court is not the forum to conduct trial between the parties. 10. Moreover, the summoning order was passed on 5th March, 2005, however nothing has been mentioned as to why the petitioner waited for more than two years to challenge the summoning order and there is no explanation for this delay. It is well settled that the benefit of this Section should not be extended to those persons who do not approach the Court at the earliest opportunity. 11. The present petition under these circumstances is nothing but an abuse of process of law and has been filed to waste the time of this Court and the same is liable to be dismissed with heavy costs. Accordingly the present petition is hereby dismissed with costs of Rs. 5,000/-." 21. Again in "Amar Chand Agarwalla v. Shanti Bose and Another" (supra) the Apex Court set aside an order of the High Court by virtue of which proceedings against one particular accused had been quashed at a stage when the Trial was virtually nearing its completion. The relevant observations of the Supreme Court are set out as under:- 17. In our opinion, the High Court was not justified, in the particular circumstances of this case, in quashing the charge as well as the entire proceedings that had taken place before the Magistrate. It is not as if the accused had moved the High Court at the earliest stage when the Presidency Magistrate issued summons to them. Nor had they approached the High Court when charges were framed against them. The accused had been summoned, after a judicial enquiry by the Chief Presidency Magistrate on December 26, 1967, under Sections 120-B/409 and 409, I.P.C. Before the Magistrate, the evidence, oral and documentary, was adduced by the complainant in the presence of the accused. On a consideration of such materials, the Presidency Magistrate framed charges against all the four accused as early as September 7, 1968. On a consideration of such materials, the Presidency Magistrate framed charges against all the four accused as early as September 7, 1968. If the case of the accused was that the allegations in the complaint do not constitute the offence complained of or that the complaint has to be quashed for any ground available in law, they should have approached the High Court, at any rate, immediately after the charges were framed. The records disclose that it was the fourth accused, who moved the High Court to quash the proceeding on March 17, 1969, earlier than the other accused. Even by that date, several prosecution witnesses had been examined and they had also been cross-examined by the accused. Several items of documentary evidence had already been let in during the trial. Only two prosecution witnesses and a court witness remained to be examined. The proper course at that stage to be adopted by the High Court was to allow the proceedings to go on and to come to its logical conclusion, one way or the other, and decline to interfere with those proceedings. The fourth contention related to the suppression of certain materials in the complaint. We do not propose to express any opinion on that aspect because, even assuming that there has been suppression, that is a matter to be considered by the Trial Magistrate. Similarly, as to whether the evidence on record establishes that an offence of breach of trust has been committed, or not, is again a matter for the trial court to come to a conclusion, one way or the other, after on appraisal of the entire evidence that is let in by the prosecution and by the defence, if any. The High Court was not justified at that stage to have embarked upon an appreciation of the evidence. Here again, we do not express any opinion on merits, as the matter is to be considered by the Trial Magistrate." 22. It is seen from the material available in the case record that earlier the had been a Revisional application being CRR No. 1247 of 2013 in which a direction had been passed upon the Ld. Court below to dispose of the complaint case preferably within six months. The same has been noted in the order passed by the Ld. Magistrate on the 7th of May 2013. Court below to dispose of the complaint case preferably within six months. The same has been noted in the order passed by the Ld. Magistrate on the 7th of May 2013. It is further seen from the record that the present petitioners had entered appearance and obtained bail in the Ld. Court below as far back as on 10th of June 2013. Subsequently there was substantial delay in the proceedings mainly attributable to the accused persons themselves and ultimately their Plea U/S. 251 of the Cr. P. Code could be taken only on the 21st February 2014. Evidence from the complainant's side was thereafter commenced, but the petitioners chose to file this Revisional application a good 7 months later on 26th of September 2014, which actually was more than one year and three months after they had appeared before the Ld. Court below. Considering that they would naturally have been aware of the earlier direction of this Court in CRR No. 1247 of 2013, their conduct in approaching this Court at such a belated stage certainly does not help their case. In the given circumstances therefore, the ratio of the aforesaid two decisions of the Apex Court, and of the Delhi High Court appears to be even more applicable in the present case in which there is an inordinate delay in spite of the earlier direction of this Court. 23. For the aforesaid reasons and considering that the Trial in the present case is also virtually nearing its completion, this Court finds no reason to quash the proceedings against the petitioners at this belated stage. It is always open to the petitioners to urge any point including maintainability of the proceedings against them before the Ld. Court below, in the arguments to follow after completion of the defence evidence. 24. With the above observations both the Revisional applications are dismissed without costs.