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2018 DIGILAW 94 (ORI)

Ajaya Kumar Choudhury v. Sarada Nanda

2018-01-17

D.P.CHOUDHURY

body2018
ORDER CRLMC NO.512, 513, 514 and 515 OF 2007. 17.01.2018. Heard Mr. B. Baug, learned Counsel for the petitioner in all these cases. None appears on behalf of the opposite party. Since similar question of law are involved in all these matters, the same are being disposed of by this common order. 2. CRLMC Nos. 512, 513 and 514 of 2007 have been filed under Section 482 Cr.P.C. to quash the order of taking cognizance for the offence under Section 138 of the N.I. Act dated 26.8.2006 passed by the learned S.D.J.M., Bhubaneswar in I.C.C. Case Nos.1904, 1905 and 1906 of 2006 respectively against the petitioner. 3. CRLMC No.515 of 2007 has been filed under Section 482 Cr.P.C. to quash the order of taking cognizance for the offence under Section 138 of the N.I. Act dated 5.8.2006 passed by the learned S.D.J.M., Bhubaneswar in I.C.C. Case No.1694 of 2006 against the petitioner. 4. Mr. Baug, learned Counsel for the petitioner submits that the petitioner being the Managing Director of M/s. Keshari Estates Private Limited had made agreement on behalf of the company with the opposite party to purchase her property at Bhubaneswar. Accordingly, the petitioner on behalf of the company had issued four post-dated cheques of dated 30.5.2006, 30.6.2006, 28.6.2006 and 29.6.2006 each amounting to Rs.2,50,000/- in total Rs.10,00,000/-. 5. Mr. Baug, learned Counsel for the petitioner further submits that cheques were issued as advance for purchase of the land in addition to the payment of advance already made amounting to Rs.14,50,000/- but there was some inter-se dispute between the L.Rs. of opposite party after receiving a letter from the daughter of the opposite party asking the bank of the company to stop payment in respect of the cheques even if deposited. In the meantime, the said agreement was cancelled but after the cheques were returned to the opposite party, the petitioner falsely filed the complaint under Section 138 of the N.I. Ac. 6. Learned Counsel for the petitioner further submits that the order of taking cognizance for the offence passed by the learned Magistrate against the petitioner is illegal and improper because the company has not been made as co-accused along with the petitioner. He further submits that since payment has been made for advance, the provisions of Section 138 of the N.I. Act will not be made applicable. He further submits that since payment has been made for advance, the provisions of Section 138 of the N.I. Act will not be made applicable. In support of his submissions, he cited the decisions reported in AIR 2012 SC 2795 ; Aneeta Hada v. M/s. Godfather Travels and Tours Pvt. Ltd., and (2014) 12 SCC 539 ’ Indus Airways Private Limited and others- vrs. Magnum, Aviation Private Limited and another. 7. Although the opposite party is absent but had filed the counter affidavit which is available on record. From the counter affidavit, it appears that there was an agreement and cheques were issued but due to non-payment of the money, the agreement has been cancelled. 8. Considered the submissions of the learned Counsel for the petitioner and counter. It is admitted fact that the petitioner being the Managing Director of M/s. Keshari Estates Private Limited had made agreement with the opposite party for purchasing the property from the opposite party. It is also admitted fact that the cheques were issued by the petitioner representing the company and the same was dishonoured. It is also averred in the complaint that the petitioner alone was made as an accused but not the company. 9. It is reported in Aneeta Hada (supra) where Their Lordships observed at paragraphs-42, 43 and 45. “42. We have referred to the aforesaid passages only to highlight that there has to be strict observance of the provisions regard being had to the legislative intendment because it deals with penal provisions and a penalty is not to be imposed affecting the rights of persons whether juristic entities or individuals, unless they are arrayed as accused. It is to be kept in mind that the power of punishment is vested in the legislature and that is absolute in Section 141 of the Act which clearly speaks of commission of offence by the company. The learned Counsel for the respondents have vehemently urged that the use of the term aswellas in the Section is of immense significance and, in its tentacle, it brings in the company as well as the Director and/or other officers who are responsible for the facts of the company and, therefore, a prosecution against the directors or other officers is tenable even if the company is not arraigned as an accused. The words aswellas have to be understood in the context. The words aswellas have to be understood in the context. In Reserve Bank of India v. Peerless General Finance and Investment Co. Ltd. and others, it has been laid down that the entire statute must be first read as a whole, then section by section, clause by clause, phrase by phrase and word by word. The same principle has been reiterated in Dewan Singh and others v. Rajendra Prasad Ardevi and others and Sarabjit Rick Singh v. Union of India. 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. One cannot be oblivious of the fact that the company is a juristic person and it has its own respectability. If a finding is recorded against it, it would create a concavity in its reputation. There can be situations when the corporate reputation is affected when a director is indicted. 43. In view of our aforesaid analysis, we arrive at the irresistible conclusion that for maintaining the prosecution under Section 141 of the Act, arraingning 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. Parekh (supra) which is a three-Judge Bench decision. This the viewexpressed in Sheiratan Agarwal (AIR) 1994 SC 1824 (Supra) does not correctly lay down the law and accordingly, is hereby overruled. The decision in Anil Hada (supra) is overruled with the qualifier as stated in paragraph 37. The decision in Modi Distilleries (supra) has to be treated to be restricted to its own facts as has been explained by us hereinabove. 45. Resultantly, the Criminal Appeal Nos.838 of 2008 and 842 of 2008 are allowed and the proceedings initiated under Section 138 of the Act are quashed.” 10. The decision in Modi Distilleries (supra) has to be treated to be restricted to its own facts as has been explained by us hereinabove. 45. Resultantly, the Criminal Appeal Nos.838 of 2008 and 842 of 2008 are allowed and the proceedings initiated under Section 138 of the Act are quashed.” 10. When due regard to the aforesaid decision, it appears that the larger Bench of the Hon’ble Supreme Court have categorically held that the complaint against the persons responsible for the company cannot be made as an accused in absence of company because of the doctrine of the vicarious liability. In the said case many decisions have been discussed and also overruled. Finally, the criminal appeals were allowed and the proceeding under Section 138 of the N.I. Act was quashed. 11. Now adverting to this case, since the petitioner has been arrayed as a party without the company being made a party, the aforesaid decisions are applied to these cases and as such the proceeding under Section 138 of N.I. Act cannot run against the petitioner. 12. It is also reported in Indus Airways Private Limited and others (supra) where Their Lordships observed at paragraph – 9 in the following manner : “9. The explanation appended to Section 138 explains the meaning of the expression ‘debt or other liability’ for the purpose of Section 138. This expression means a legally enforceable debt or other liability. Section 138 treats dishonoured cheque as an offence, if the cheque has been issued in discharge of any debt or other liability. The explanation leaves no manner of doubt that to attract an offence under Section 138, there should be legally enforceable debt or other liability subsisting on the date of drawal of the cheque. In other words, drawal of the cheque in discharge of existing or past adjudicated liability is sine qua non for bringing an offence under Section 138. If a cheque is issued as an advance payment for purchase of the goods and for any reason purchase order is not carried to its logical conclusion either because of its cancellation or otherwise, and material or goods for which purchase order was placed is not supplied, in our considered view, the cheque cannot be held to have been drawn for an existing debt or liability. The payment by cheque in the nature of advance payment indicates that at the time of drawal of cheque, there was no existing liability. 13. With due regard to the aforesaid decision, it is made clear that the payment of cheque in the nature of advance cannot be said to be an existing liability, which is one of the ingredient for setting the prosecution under Section 138 into motion. Therefore, in the instant case, admittedly the advance was made for acquiring the land is not in nature of the liability for which the said decision also applies to this present case. 14. In terms of the above discussion, the order of taking cognizance for the offence under Section 138 of the N.I. Act against the petitioner in all four cases stands quashed. The CRLMC are disposed of accordingly. The interim order, in the Criminal Misc. Case stands vacated. Registry is directed to communicate this order to the Court below forthwith. CRLMC disposed of.