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Madhya Pradesh High Court · body

2017 DIGILAW 1172 (MP)

Archana Bagle v. Betul Oil Ltd.

2017-11-16

G.S.AHLUWALIA

body2017
JUDGMENT : G.S. Ahluwalia, J. Heard. This application under Section 482 of Cr.P.C. has been filed for quashing the order dated 23.9.2016 by which cognizance of offence under Section 138 of Negotiable Instruments Act was taken as well as further proceedings pending in the Court of C.J.M. Betul in Criminal Case No. SC NIA/2301039/2016. 2. The necessary facts for the disposal of the present case in short are that the respondent has filed a complaint under Section 138 of Negotiable Instruments Act read with Section 420 of the IPC against the applicant, M/s Amrit Feeds Limited and one Harish Bagla on the ground that the complainant is a registered Company and is dealing with Soyabean oil and its byproducts DOC. The accused no.1 M/s Amrit Feeds Limited is also a registered Company and the applicant and accused no.2 Harish are the Directors, the applicant and co-accused Harish Bagla are responsible and Incharge of day-to-day business of the Company and they are responsible for its act. The Company is carrying on its business at different places of the country. The complainant as well as accused no.1 M/s Amrit Feeds Limited had commercial relations for the last several years and the complainant was doing business with accused no.1 M/s Amrit Feeds Limited. Apart from accused no.1 M/s Amrit Feeds Limited., the applicant and accused no.2 Harish Bagla are managing as well as responsible and In-charge of other companies also. M/s Amrit Hatcheries Pvt. Limited and M/s Amricon Agrovet Private Limited are the sister concern of accused no. 1 M/s Amrit Feeds Limited. The applicant and the accused no.2 Harish Bagla, on behalf of the Company/accused no.1 M/s Amrit Feeds Limited., approached the complainant for purchase of DOC and as per orders placed by the applicant and accused no.2, the DOC was supplied to different places through Indian railways or by road, which was received by accused persons. The accused no.1 M/s Amrit Feeds Limited. issued cheques of Rs. 16,66,75,992/- under the signatures of accused no.2 Harish Bagla and the said cheques stood bounced and thereafter accused no.2 Harish Bagla tendered his apology and issued new cheques by taking the earlier cheques back. Accused No.2 Harish Bagla also sent a letter dated 13/2/2016 alongwith cheques and had explained the delay in payment and had also assured that the interest on the delayed payment shall also be paid. Accused No.2 Harish Bagla also sent a letter dated 13/2/2016 alongwith cheques and had explained the delay in payment and had also assured that the interest on the delayed payment shall also be paid. The earlier cheques, which were bounced, were returned by the complainant to accused no.2 Harish Bagla. In paragraph no.6 of the complaint, the details of the cheques, which were issued by accused no.1 M/s Amrit Feeds Limited., have been mentioned. The said cheques were presented before the bank, which were returned back by the bank on the ground of insufficiency of funds. A statutory notice under Section 138 of Negotiable Instruments Act was issued on 27/6/2016, which was received by the accused persons on 1/7/2016 and 4/7/2016, but inspite of that, neither the accused persons gave any reply nor they made the payment of the cheque amount. Accordingly, a complaint under Section 138 of Negotiable Instruments Act and Section 420 of IPC was filed. 3. By order dated 22/7/2016, the trial Court took cognizance of the offence under Section 138 of Negotiable Instruments Act and issued summons to the accused persons. 4. It is contended by the counsel for the applicant that in order to make the applicant vicariously liable there has to be a specific allegation to the effect that she is responsible and in-charge of day-to-day business of the Company. From the complaint itself, it is clear that the cheques issued by accused no.2 Harish on the earlier occasion were returned back by the bank as the same had stood bounced and thereafter accused no.2 Harish bagla had issued fresh cheques. Since the fresh cheques were issued, therefore, there should have been specific averment in the complaint to the effect that even on the date of issuance of fresh cheques by the accused no.2 Harish Bagla, the applicant was responsible and in-charge of day-to-day business of the Company. It is further submitted that there is no averment in the complaint that when the transactions took place and in absence of any specific averment, it cannot be said that the complaint filed under Section 138 of Negotiable Instruments Act was within the period of limitation. It is further submitted that there is no averment in the complaint that when the transactions took place and in absence of any specific averment, it cannot be said that the complaint filed under Section 138 of Negotiable Instruments Act was within the period of limitation. It is further submitted that total eight complaint cases with similar allegations have been filed by the complainant against the accused persons and in one of the case this Court by order dated 9/3/2017 passed in M.Cr.C. No. 17940/2016, has quashed the proceedings on the ground that the complaint does not contain the basic averment with regard to the fact that whether the applicant is responsible and in-charge of the day-to-day business of the Company or not? It is further submitted that the order of this Court has already been affirmed by the Supreme Court vide order dated 4/5/2017 passed in SLP (Criminal) No.3325/2017. 5. Per contra, it is submitted by the counsel for the respondent that the order passed by this Court is distinguishable on facts. From para 12 of the order passed by this Court in M.Cr.C. No.17940/2016, it is clear that while deciding the said application under Section 482 of Cr.P.C., it was observed that nothing was averred against the applicant except mentioning that the accused no.2 is the wife of accused no.1 Harish Bagla and the Director of the Company. The Court was of the view that there was no allegation to the effect that the applicant is responsible and in-charge of day-to-day business of the Company and therefore, it was held that the complaint made by the complainant was short of basic requirements for vicariously holding a person responsible for offence under Section 138 of Negotiable Instruments Act. So far as the question of limitation is concerned, it is submitted that it is mixed question of facts and law, which cannot be decided without leading evidence. Once the cheque is issued, then in view of Section 139 of Negotiable Instruments Act, 1881, there is a presumption that the cheque was issued in discharge of legal liability and the burden shifts on the accused to dislodge the said presumption. Once the cheque is issued, then in view of Section 139 of Negotiable Instruments Act, 1881, there is a presumption that the cheque was issued in discharge of legal liability and the burden shifts on the accused to dislodge the said presumption. So far as the second set of cheques are concerned, those cheques were issued because the first set of cheques, which were issued under the signatures of accused no.2 Harish Bagla had stood bounced and therefore, the issuance of second set of cheques may also amount to acknowledgment in writing. It is further submitted that in para 2 of the complaint there is a specific averment to the effect that the applicant and accused no.2 are doing the day-to-day business of accused no.1 M/s Amrit Feeds Limited. and the applicant is responsible and in-charge of day to day business of the accused No. 1 M/s Amrit Feeds Limited. It is further submitted that the case has reached to an advanced stage and it is fixed for recording of accused statement under Section 313 of Criminal Procedure Code. 6. Heard the learned counsel for the parties. 7. Section 141 of Negotiable Instruments Act, 1881 reads as under : 141. It is further submitted that the case has reached to an advanced stage and it is fixed for recording of accused statement under Section 313 of Criminal Procedure Code. 6. Heard the learned counsel for the parties. 7. Section 141 of Negotiable Instruments Act, 1881 reads as under : 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 subsection 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. Explanation.-For the purposes of this section, - (a) “company” means any body corporate and includes a firm or other association of individuals; and (b) “director”, in relation to a firm, means a partner in the firm. 8. From the plain reading of the aforesaid provision, it is clear that where the offence has been committed by a Company, then not only the Company, but every person who is in charge of or responsible to the Company for the conduct of the business at the time of commission of offence shall be deemed to be guilty of the offence. Thus, Section 141 creates vicarious/constructive liability on the person responsible for the business of the Company. 9. In the present case, paragraph 2 of the complaint reads as under:- ^^2 & ;g fd vfHk;qDr dzekad 1 eSllZ ve`r QhMl fyfeVsM Hkh ,d iathd`r daiuh gS ftldk lapkyu vfHk;qDr dzekad 2 gjh'k ckxyk ,oa vfHk;qDr dzeakd 3 vpZuk ckxyk }kjk crkSj lapkyd fd;k tkrk gSA vfHk;qDr gjh'k ,oa vpZuk] eSllZ ve`r QhMl fyfeVsM ds lapkyu ls lacaf/kr lHkh fnu izfr fnu ds dk;Z djrs gS ,oa mDr daiuh ls lacaf/kr lHkh ysu nsu dk dk;Z Hkh djrs gSA mDr daiuh ds dk;kZy; dydRrk] iVuk] flfyxqM+h] gkthiqj] iVuk o vUu txg fLFkr gSA mDr daiuh iksYV~h QhM~l ,oa QkElZ dk O;olk; djrh gSA^^ 10. Thus, it is clear from para 2 of the complaint, that there is a specific basic averment in the complaint to the effect that the applicant alongwith accused no.2 Harish Bagla was responsible and in-charge of the day-to-day business of the Company and they were doing all the transactions. 11. So far as the order dated 9/3/2017 passed by this Court in M.Cr.C. No. 17940/2016 is concerned, paragraph 12 of the said order reads as under:- “In the present case nothing has been averred against the petitioner, except that she is the wife of the accused Harish Bagla and a Director of the company. But all transactions were made by Harish Bagla with the respondent company.” 12. The Supreme Court in the case of Standard Chartered Bank v. State of Maharashtra and others reported in (2016) 6 SCC 62 , after considering various judgments on Section 138 and Section 141 of Negotiable Instrument Act, has held that there has to be a specific averment in the complaint to the effect that the Director was responsible and in-charge of the day-to-day business of the Company and in absence of that averment, the said person cannot be vicariously held liable for offence under Section 138 of Negotiable Instruments Act. 13. The Supreme Court in the case of Standard Chartered Bank (Supra) has held as under : 31. Now, is the time to scan the complaint. Mr Divan, learned Senior Counsel appearing for the appellant Bank, has drawn our attention to Paras 2, 4 and 10 of the complaint petition. They read as follows: “2. I further say that I know the accused abovenamed. Now, is the time to scan the complaint. Mr Divan, learned Senior Counsel appearing for the appellant Bank, has drawn our attention to Paras 2, 4 and 10 of the complaint petition. They read as follows: “2. I further say that I know the accused abovenamed. Accused 1 is a company incorporated under the Companies Act, 1956 having its registered address as mentioned in the cause-title. Accused 2 to 7 are the Chairman, Managing Director, Executive Director and whole-time Director and authorised signatories of Accused 1, respectively. As such being the Chairman, Managing Director, Executive Director and whole-time Director were and are the persons responsible and in charge of day-to-day business of Accused 1 viz. when the offence was committed. Accused 6 and 7 being signatories of the cheque are aware of the transaction and therefore Accused 2 to 7 are liable to be prosecuted jointly or severally for having consented and/or connived in the commission of present offence in their capacity as the Chairman, Managing Director, Executive Director, whole-time Director and authorised signatories of Accused 1, further the offence is attributable to Accused 2 to 7 on account of their neglect to ensure and make adequate arrangements to honour the cheque issued by Accused 1 and further on account of the neglect of Accused 1 to 7 to comply with the requisition made in the demand notice issued under the provisions of Section 138(c) of the Negotiable Instruments Act within the stipulated period. The accused are therefore liable to be proceeded. * * * 4. I say that Accused 1 through Accused 2 and 3 approached the complainant Bank at its branch situated at Mumbai for a short-term loan facility for a sum of Rs 200 crores to meet the expenditure of four ORV vessels being built at ABG Shipyard. After verifying the documents submitted the complainant Bank vide its sanction letter dated 28.4.2012 sanctioned the said facility for the purpose mentioned therein. The said terms and conditions mentioned in the sanction letter dated 28.4.2012 were duly accepted by Accused 1 by signing the same. Accused 1 also agreed to pay interest at the negotiated rate by the complainant Bank. Hereto annexed the marked as Ext. 'B' is a copy of the said sanction letter dated 28-4-2012. * * * 10. The said terms and conditions mentioned in the sanction letter dated 28.4.2012 were duly accepted by Accused 1 by signing the same. Accused 1 also agreed to pay interest at the negotiated rate by the complainant Bank. Hereto annexed the marked as Ext. 'B' is a copy of the said sanction letter dated 28-4-2012. * * * 10. I say that Accused 1 to 7 were aware that the aforesaid cheque would be dishonoured for being “account blocked” and all the accused, in active connivance mischievously and intentionally issued the aforesaid cheques in favour of the complainant Bank.” 32. The aforesaid averments, as we find, clearly meet the requisite test. It is apt to mention here that there are seven accused persons. Accused 1 is the Company, Accused 2 and 3 are the Chairman and Managing Director respectively and Accused 6 and 7 were signatory to the cheques. As far as Accused 4 and 5 were concerned, they were whole-time Directors and the assertion is that they were in charge of day-to-day business of the Company and all of them had with active connivance, mischievously and intentionally issued the cheques in question. 14. In view of the judgment passed by the Supreme Court in the case of Standard Chartered Bank (supra), this Court is of the view that the complaint contains the basic averment to make the applicant vicariously liable under Section 141 of the Negotiable Instruments Act. 15. It is next contended by the counsel for the applicant that this Court while passing the order dated 9/3/2017 in M.Cr.C. No.17940/2016 has observed as under :- “13. In the case of National Small Industries Corporation Ltd. v. Harmeet Singh Paintal and Another, (2010) 3 SCC 330 the Hon'ble Apex Court while dealing with such a situation like the present one has held as follows: “Negotiable Instruments Act, 1881- Sections 141, 138 and 142 - Dishonour of cheque-Offence by company - provision of vicarious liability in Section 141 - Scope - Not every person connected with the company but only those in charge of and responsible for conduct of business of the company at the time of commission of offence, held, vicariously liable-Hence, Director of accused company who was not in charge of or responsible for the conduct of its business at the time of commission of offence, held, not so liable. Vicarious liability of Director/Managing Director/Joint Director-Averments required to be made in the complaint - In case if a Director, held, complaint should specifically spell out how and in what manner the Director was in charge of or was responsible to the accused company for conduct of its business-Mere bald statement that he was in charge of and was responsible to the company for conduct of its business nor\sufficient-There is no presumption that every Director knows about the transaction-In the absence of specific averment as to the role of co-accused Director, trial Court's order summoning him, rightly quashed by High Court. (quoted from the placitum)” 14. In view of the above factual matrix and legal analysis and on a combined reading of Sections 138 and 141 of the Negotiable Instruments Act, this Court is of the opinion that, absence of a specific averment as regards the role of the petitioner and particularly in view of the allegations levelled in the complaint that Harish Bagla, Director of the Company-Amrit Feeds Ltd. was responsible for transactions who issued the apology letter and eight cheques in question, the petitioner who is the wife of Harish Bagla and is a dormant partner/Director of the Company and there was no active role of the petitioner in transactions of the company, summoning her by the trial Court as accused seems to be not justified.” 16. Any observation made in a judgment has to be considered in the light of the facts of the said case. When the facts of the case are distinguishable then an observation depending on peculiar facts of the said case cannot be made applicable to all the cases. The Supreme Court in the case of Standard Chartered Bank (supra) has already observed that the averments “as such being Chairman, Managing Director, Executive Director, and whole time Director are the persons responsible and Incharge of day-to-day business of the Company accused no. 1” are sufficient to proceed against such persons. 17. It is further submitted by the counsel for the applicant that as there is nothing on record that the applicant had played any effective role in the entire transactions, therefore, she cannot be held responsible vicariously. The submissions made by the counsel for the applicant is misconceived and it is hereby rejected. 17. It is further submitted by the counsel for the applicant that as there is nothing on record that the applicant had played any effective role in the entire transactions, therefore, she cannot be held responsible vicariously. The submissions made by the counsel for the applicant is misconceived and it is hereby rejected. For making a person vicariously liable under Section 141 of Negotiable Instruments Act active role is not required to be played by each Director or Partner of a Company/firm. If a person is responsible and in-charge of day-to-day transactions/business of the Company, then he can be vicariously held liable under Section 141 of the Negotiable Instruments Act. So far as the observations in para 14 made by the co-ordinate bench of this Court in order dated 9-3-2017 passed in M.Cr.C. No. 17940/2016 is concerned, this Court cannot loose sight of the fact, that the only allegation in the said case was that the applicant is the wife of the accused no. 2 Harish Bagla and She is a Director. In view of this averment, it was held by the coordinate bench of this Court that there has to be some active role of the applicant in the transaction. If a person is responsible and in-charge of business of the Company, then the active role of the said person for each and every transaction is not the requirement of law. The main accused is the Company and not the individual. The individuals are made vicariously liable by virtue of Section 141 of Negotiable Instruments Act. They are responsible/liable for the acts of the Company. 18. So far as the order dated 9/3/2017 passed by this Court in M.Cr.C. No. 17940/2016 is concerned, it is distinguishable on facts. In the said case, the only allegation made in the complaint was that the applicant is the wife of accused no.2 Harish Bagla and a Director of the Company. Merely a person is a Director of a Company, would not ipso facto makes him/her vicariously liable in absence of basic averment that the said person is responsible and in-charge of day-to-day business of the Company. Since in the said case, the basic averments were missing, therefore, this Court had quashed the proceedings. Merely a person is a Director of a Company, would not ipso facto makes him/her vicariously liable in absence of basic averment that the said person is responsible and in-charge of day-to-day business of the Company. Since in the said case, the basic averments were missing, therefore, this Court had quashed the proceedings. However, paragraph 2 of the complaint contains the basic averments with regard to the fact that the applicant is not only a Director of the Company but She is responsible and in-charge of day-today business of the Company and is also doing all the transactions on behalf of the Company. Thus, in the light of the judgment passed by the Supreme Court in the case of Standard Chartered Bank (supra) as well as considering the provision of Section 141 of Negotiable Instruments Act, this Court is of the considered opinion that the complaint contains the basic averments so as to prima facie make the applicant vicariously liable for the acts of accused no.1 M/s Amrit Feeds Limited. and accused no. 2 Harish Bagla. 19. It is next contended by the counsel for the applicant that in the complaint out of which M.Cr.C No.17940/2016 had arisen, was also containing similar allegations as contained in the complaint of the present case, and since this Court has quashed the proceedings qua the applicant, therefore, this case is also liable to be quashed in the light of the observations made by this Court in order dated 9/3/2017 passed in M.Cr.C. 17940/2016. 20. The submissions made by counsel for the applicant cannot be considered for the simple reason that his contention is that although there were allegations in the complaint that the applicant was also responsible for day-to-day business of the Company, but still this Court while deciding the petition under Section 482 of Cr.P.C. has merely stated that the only allegation is that the applicant is the wife of accused no.2 Harish Bagla and a Director of the Company. If the submissions made by the counsel for the applicant is considered then in nutshell the submission is that the allegations made by the complainant in the said complaint were not taken note of by this Court in proper perspective. This Court cannot look into the submissions made by the counsel for the applicant. If the submissions made by the counsel for the applicant is considered then in nutshell the submission is that the allegations made by the complainant in the said complaint were not taken note of by this Court in proper perspective. This Court cannot look into the submissions made by the counsel for the applicant. This Court has to consider the order dated 9/3/2017 passed by this Court M.Cr.C. No.17940/2016 in the light of the observations and facts mentioned in the said order. The facts which are mentioned in the said order are clearly distinguishable from the facts of the present case, therefore, this Court is of the considered opinion that the order dated 9/3/2017 passed in M.Cr.C. No.17940/2016 is clearly distinguishable and the applicant does not get any assistance from the said order. 21. It is next contended by the counsel for the applicant that since it is the case of the complainant himself that the cheques which were issued by the accused no.1 M/s Amrit Feeds Limited. under the signatures of accused no.2 Harish Bagla had stood bounced and thereafter another set of cheques were issued by accused no.2 Harish Bagla thus, there should have been specific averment in the complaint to the effect that even on the date of issuance of the second set of cheques the applicant was still responsible and in-charge of day-today business of the Company. The submissions made by the counsel for the applicant cannot be accepted for the simple reason that it is not the case of the complainant that either the accused no.1 M/s Amrit Feeds Limited. was reconstituted or some more persons were also appointed as Director. The basic allegations are that after the initial set of cheques had stood bounced, the accused no.2 on behalf of the Company tendered his apology and issued new set of cheques. This cannot be said that the subsequent cheques were issued for certain liabilities which had accrued after the issuance of first cheques. The subsequent cheques were also issued of the consideration amount of DOC, which was initially supplied by the complainant. Under these circumstances, this Court is of the considered opinion that it was not necessary for the complainant to allege that even on the date of the issuance of the subsequent cheques the applicant was responsible and in-charge of day-to-day business of the Company. Under these circumstances, this Court is of the considered opinion that it was not necessary for the complainant to allege that even on the date of the issuance of the subsequent cheques the applicant was responsible and in-charge of day-to-day business of the Company. The averments made in paragraph 2 of the complaint are sufficient to proceed against the applicant for an offence under Section 138 of the Negotiable Instruments Act. 22. It is next contended by the counsel for the applicant that there is no specific averments in the complaint to the effect that when the transactions took place and whether the legal liability is within limitation or not because it is well established principle of law that the cheques issued for repayment of an amount which has already become time barred cannot be a subject matter of proceeding under Section 138 of Negotiable Instruments Act. 23. The submissions made by the counsel for the applicant cannot be considered at this stage, while exercising the powers under Section 482 of Cr.P.C. undisputedly the question of limitation is a mixed question of fact and law. The basic averments are that the accused no.1 M/s Amrit Feeds Limited. had purchased DOC and for payment of the said purchased material cheques of Rs. 16,66,75,992/- were issued and when they stood bounced, another set of cheques were issued by the accused no.2 Harish on 13/2/2016. Whether the second set of cheques issued on 13-2-2016 would also amount to acknowledgment in writing or not is also a question, which is to be decided he Trial Court. This Court is of the considered opinion that since the question of limitation is a mixed question of fact and law, which can be decided by the trial Court only after considering the evidence which would ultimately come on record, therefore, at this stage it is held that there is sufficient allegation in the complaint to proceed against the applicant under Section 138 of Negotiable Instruments Act. 24. It is an undisputed fact that the Trial has reached to an advanced stage and the case is fixed for recording of accused statement. Even otherwise, on that ground also, the application under Section 482 of Cr.P.C. is liable to be dismissed. 25. 24. It is an undisputed fact that the Trial has reached to an advanced stage and the case is fixed for recording of accused statement. Even otherwise, on that ground also, the application under Section 482 of Cr.P.C. is liable to be dismissed. 25. Thus, this Court is of the considered opinion that the Trial Court did not commit any mistake in taking cognizance of the offence under Section 138 of Negotiable Instruments Act, and hence, the order dated 23-9-2016 passed by the C.J.M., Betul in SC NIA/2301039/2016 is hereby affirmed. 26. Before parting with this order, this Court feels it appropriate to mention that the submissions made by the Counsel for the parties, have been considered in the light of the limited scope of interference while exercising power under Section 482 of Cr.P.C. The Trial Court is directed to decide the Trial strictly in accordance with the evidence which would come on record, without getting prejudiced by any of the observation made by this Court in this order. 27. Accordingly, the application fails and is hereby Dismissed.