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2021 DIGILAW 369 (JK)

Vishal Kanodia v. Surinder Pal Singh

2021-07-28

RAJNESH OSWAL

body2021
JUDGMENT : 1. The present petition has been filed by the petitioner under section 561-A Cr.P.C. (now 482 Cr.P.C.) for quashing the complaint filed against him under section 138 of the Negotiable Instruments Act, 1881 (for short the Act) as well as the order dated 31.03.2010 passed by the learned Sub Registrar, Jammu (hereinafter to be referred as the trial court) on the following grounds: (i) That the petitioner has not issued the cheque in question and any liability arising out of the same cannot be fastened upon the petitioner. (ii) That M/s Ultra Tuff Cement is a proprietorship concern of Mr. Deepak Savergi, that maintains the account with the Punjab National Bank, Durga Nagar, Jammu. (iii) That at the time of inception of the business, complainant/respondent executed a rent agreement with M/s Ultra Tuff Cement through its proprietor, Mr. Deepak Savergi, in which it is clearly mentioned that M/s Ultra Tuff Cement is proprietorship concern and the petitioner has no role in the same. (iv) That perusal of the complaint as well as the order dated 31.03.2010 reveals that nothing has been clearly established against the petitioner and the learned trial court too has not recorded any reason as to in what circumstances, the process has been issued against the petitioner. 2. Mr. Pranav Kohli, learned senior counsel representing the petitioner submitted that the petitioner has been unnecessarily arrayed as a party as the petitioner has not issued any cheque in favour of the complainant. In support of his submissions, Mr. Kohli has placed reliance on the judgments of the Supreme Court in S. M. S. Pharmaceuticals Ltd. v Neeta Bhalla, (2005) 8 SCC 89 and Raghu Lakshminarayan v Fine Tubes, (2007) AIR (SC) 1634 as also the judgment of this Court, titled, Neena Mahendru v/s M/s Pal Infrastructure Solutions, 2015(2) JKJ 51 (HC). 3. Mr. Sandeep Singh, learned counsel appearing for the respondent No. 1 submitted that the petitioner has committed an offence within the meaning of section 138 of the Act and the grounds raised in this petition are the disputed questions of facts, those cannot be looked into by this Court while exercising inherent power under section 561-A Cr.P.C (now 482). 4. Heard learned counsel for the parties and perused the record. 5. 4. Heard learned counsel for the parties and perused the record. 5. A perusal of the complaint reveals that in the complaint, ‘M/s Ultra Tuff Cement’ through its Managing Partner, Deepak Sawargi, has been arrayed as one of the accused and the petitioner and Goutam Kanodia have been shown as proprietors of M/s Ultra Tuff Cement. A perusal of the cheque also reveals that it bears stamp impression of “M/s Ultra Tuff Cement prop.” with signatures but not that of the petitioner. Further the petitioner has placed on record the certificate issued by the Bank concerned that the account on which the cheque was drawn is the proprietorship concern. The contesting respondent has not been able to dispute the said assertion and has not been able to demonstrate that the account in question belonged to partnership concern, with the petitioner as one of the partners. It is evident that the complainant himself is not sure as to whether M/s Ultra Tuff Cement is a proprietorship concern or the partnership concern. A business concern cannot be a proprietorship concern as well as partnership concern at the same time. 6. In order to fasten a liability under section 138 of the Act, the complaint can be filed against an individual or proprietorship concern only when the cheque has been issued by that individual/proprietor with regard to the account maintained by him, whereas in case of company, as per the mandate of section 141, every person, who at the time 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 company can be proceeded against for commission of above mentioned offence. The proprietorship concern does not fall within the definition of the company as per section 141 of the Act. 7. It is relevant to reproduce paragraph No. 8 of the Raghu Lakshminarayan’s case (supra): “The description of the accused in the complaint petition is absolutely vague. A juristic person can be a Company within the meaning of the provisions of the Companies Act, 1956 or a partnership within the meaning of the provisions of the Indian Partnership Act, 1932 or an association of persons which ordinarily would mean a body of persons which is not incorporated under any statute. A proprietary concern, however, stands absolutely on a different footing. A proprietary concern, however, stands absolutely on a different footing. A person may carry on business in the name of a business concern, but he being proprietor thereof, would be solely responsible for conduct of its affairs. A proprietary concern is not a Company. Company in terms of the explanation appended to Section 141 of the Negotiable Instruments Act, means anybody- corporate and includes a firm or other association of individuals. Director has been defined to mean in relation to a firm, a partner in the firm. Thus, whereas in relation to a Company, incorporated and registered under the Companies Act, 1956 or any other statute, a person as a Director must come within the purview of the said description, so far as a firm is concerned, the same would carry the same meaning as contained in the Indian Partnership Act.” 8. At the same time, it would also be appropriate to take note of the judgment of the Apex Court in Alka Khandu Avhad v Amar Syamprasad Mishra and another, reported in 2021 SCC Online SC 189 and the relevant paras are reproduced as under: 14. We have heard learned counsel appearing on behalf of the respective parties at length, considered material on record and also considered the averments and allegations in the complaint. It emerges from the record that the dishonoured cheque was issued by original accused No. 1 - husband of the appellant. It was drawn from the bank account of original accused No. 1. The dishonoured cheque was signed by original accused No. 1. Therefore, the dishonoured cheque was signed by original accused No. 1 and it was drawn on the bank account of original accused No. 1. The appellant herein-original accused No. 2 is neither the signatory to the cheque nor the dishonoured cheque was drawn from her bank account. That the account in question was not a joint account. In the light of the aforesaid facts, it is required to be considered whether the appellant herein - original accused No. 2 can be prosecuted for the offence punishable under Section 138 r/w Section 141 of the NI Act? 15. That the account in question was not a joint account. In the light of the aforesaid facts, it is required to be considered whether the appellant herein - original accused No. 2 can be prosecuted for the offence punishable under Section 138 r/w Section 141 of the NI Act? 15. On a fair reading of Section 138 of the NI Act, before a person can be prosecuted, the following conditions are required to be satisfied: (i) that the cheque is drawn by a person and on an account maintained by him with a banker; (ii) for the payment of any amount of money to another person from out of that account for the discharge, in whole or in part, of any debt or other liability; and (iii) the said cheque is returned by the bank unpaid, either because of the amount of money standing to the credit of that account is insufficient to honour the cheque or that it exceeds the amount arranged to be paid from that account. 16. Therefore, a person who is the signatory to the cheque and the cheque is drawn by that person on an account maintained by him and the cheque has been issued for the discharge, in whole or in part, of any debt or other liability and the said cheque has been returned by the bank unpaid, such person can be said to have committed an offence. Section 138 of the NI Act does not speak about the joint liability. Even in case of a joint liability, in case of individual persons, a person other than a person who has drawn the cheque on an account maintained by him, cannot be prosecuted for the offence under Section 138 of the NI Act. A person might have been jointly liable to pay the debt, but if such a person who might have been liable to pay the debt jointly, cannot be prosecuted unless the bank account is jointly maintained and that he was a signatory to the cheque. 17. Now, so far as the case on behalf of the original complainant that the appellant herein - original accused No. 2 can be convicted with the aid of Section 141 of the NI Act is concerned, the aforesaid has no substance. 18. Section 141 of the NI Act is relating to the offence by companies and it cannot be made applicable to the individuals. 18. Section 141 of the NI Act is relating to the offence by companies and it cannot be made applicable to the individuals. Learned counsel appearing on behalf of the original complainant has submitted that “Company” means any body corporate and includes, a firm or other association of individuals and therefore in case of a joint liability of two or more persons it will fall within “other association of individuals” and therefore with the aid of Section 141 of the NI Act, the appellant who is jointly liable to pay the debt, can be prosecuted. The aforesaid cannot be accepted. Two private individuals cannot be said to be “other association of individuals”. Therefore, there is no question of invoking Section 141 of the NI Act against the appellant, as the liability is the individual liability (may be a joint liabilities), but cannot be said to be the offence committed by a company or by it corporate or firm or other associations of individuals. The appellant herein is neither a Director nor a partner in any firm who has issued the cheque. Therefore, even the appellant cannot be convicted with the aid of Section 141 of the NI Act. Therefore, the High Court has committed a grave error in not quashing the complaint against the appellant for the offence punishable under Section 138 r/w Section 141 of the NI Act. The criminal complaint filed against the appellant for the offence punishable under Section 138 r/w Section 141 of the NI Act, therefore, can be said to be abuse of process of law and therefore the same is required to be quashed and set aside. 9. Thus, once the cheque has been issued by one individual with regard to the bank account maintained by him, the other individual cannot be fastened with liability under section 138 of the Act. In the instant case, it is evident that the cheque has not been signed by the petitioner and the cheque has been issued with regard to the business concern that is the proprietorship concern of the other accused, so the petitioner cannot be made liable for the commission of offence under section 138 of the Act. In the instant case, it is evident that the cheque has not been signed by the petitioner and the cheque has been issued with regard to the business concern that is the proprietorship concern of the other accused, so the petitioner cannot be made liable for the commission of offence under section 138 of the Act. Even in the case of a partnership firm or company as defined under section 141 of the Act, it has to be specifically mentioned in the complaint that at the time when the offence was committed, the person/accused was incharge of and responsible for the conduct of the business of the company. (See also S. M. S. Pharmaceuticals Ltd. v Neeta Bhalla, (2005) 8 SCC 89 Neena Mahendru v/s M/s Pal Infrastructure Solutions, 2015(2) JKJ (HC) 51.) 10. The learned trial court too in a mechanical manner has issued the process against the petitioner without adverting to the facts as to whether the petitioner signed the cheque or not and further as to whether M/S Ultra Tuff cements is partnership concern or not. So, the continuance of the proceedings against the petitioner shall be abuse of process of law as the petitioner cannot be made vicariously liable for the commission of an offence committed by other accused. 11. For all what has been said and discussed above, this petition has merit and is allowed. The proceedings arising out of the complaint, titled, “Surinder Pal Singh vs M/S Ultra Tuff and others” as well as the order dated 31.03.2010 passed by the Sub Registrar, Jammu, qua the petitioner, are quashed. 12. Disposed of.