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2023 DIGILAW 265 (UTT)

Balraj Sarna v. State of Uttarakhand

2023-04-10

SHARAD KUMAR SHARMA

body2023
JUDGMENT : Sharad Kumar Sharma, J. These two C482 Applications arise out of the proceedings under Section 138 of the Negotiable Instruments Act. While granting the interim order, the coordinate Bench of this Court has issued notice to respondent No. 2, and there is an office report dated 10.05.2022 and 03.11.2022, that respondent No. 2 has been served with the notices. In that eventuality, respondent No. 2 would be deemed to have been served. Hence, the matter is being proceeded to be heard ex parte against respondent No. 2. 2. These two C482 Applications, which will be governed by the common question of law and facts as involved consideration, hence are being decided by this common judgment. 3. In C482 Application No. 1240 of 2018, the applicant has put a challenge to the summoning order dated 15.02.2015, which was passed by the Court of Special Judge/Magistrate, Kashipur, District Udham Singh Nagar in Criminal Complaint Case No. 2950 of 2013, M/s Prolific Papers Pvt. Ltd. Vs. Inderjeet Mehta and others. In the complaint proceeding, which was thus initiated under Section 138 of N.I. Act, by filing a complaint on 21.10.2013, in fact, it was the Directors who were impleaded as a party by name, but, however, the company itself i.e. M/s Crown Paper Distributors was not made as a party to the proceedings under Section 138 of N.I. Act. Hence, the learned counsel for the applicant submits that the summoning order, as issued on 15.02.2014 would be bad in the eyes of law, for the reason being, that the same would be in violation of the provisions contained under Section 141 of the N.I. Act. 4. In the connected C482 Application No. 1241 of 2018, it’s a complaint proceeding No. 2951 of 2013, M/s Prolific Papers Pvt. Ltd. Vs. Inderjeet Mehta and others, which was instituted by the complainant on 21.10.2013 being a complaint proceeding under Section 138 of N.I. Act, alleging thereof that the negotiable instrument, which has been issued by the company of which the present applicant was a Director, has been dishonored by the bank and hence 138 proceedings have been drawn, on which the summoning order has been issued on 15.12.2014. This order too has been contested by the learned counsel for the applicant on the ground that the same happens to be in violation of Section 141 of the N.I. Act. 5. This order too has been contested by the learned counsel for the applicant on the ground that the same happens to be in violation of Section 141 of the N.I. Act. 5. Factually, it is contended by the learned counsel for the applicant in the C482 Application, that the complainant company i.e. M/s Prolific Papers Pvt. Ltd. was in a business transaction with the company named as M/s Crown Paper Distributors of which the present applicant contends that he was the partner of the said firm. 6. The complainant has submitted that owing to certain business transactions pertaining to the sale of papers, made by the complaint’s company, certain cheques were issued by M/s Crown Paper Distributors, which were, on its submission of the same for being encashed, the same were dishonored and ultimately upon it’s dishonor, the notices were issued and when the same was not responded back, the complaint proceedings were drawn against the present applicant. 7. It is contended by the applicant that the cheques which have been referred to in para 6 of the C482 Application were the cheques, which were issued by the Director of M/s Crown Paper Distributors in the name of the complainant and the dishonor of the cheques, due to insufficient funds, if at all if the proceedings under Section 138 of N.I. Act was to be drawn, it could have been drawn only after compliance with the provisions contained under Section 141 of N.I. Act. 8. The provisions contained under Section 141 of the N.I. Act provides that the person committing an offence under Section 138 of N.I. Act, if it is a company, every person, who at the time when the offence was committed by the incharge of the affairs of the company for the conduct of business of the company has had to be held to be guilty for the offence and shall be liable to be proceeded against to it and punished accordingly. 9. 9. But, however, the two provisos contained to Section 141 held that in those eventualities where the directors or the persons who were in helm of affairs of the defaulted company, they too, if at all they are found to have been involved in the commission of offence under Section 138 of N.I. Act, then in view of the explanation given under Section 141, the company is required to be made as a party to the proceedings under Section 138 of N.I. Act. In fact, if the provisions contained under Section 141 is taken into consideration, it clearly stipulates that when a person against whom, the proceedings under Section 138 is drawn is a representative of the committee which has committed a breach and a default in remittance of the amount payable under a cheque and the same has been defaulted due to insufficiency of fund in the company’s account, the individual directors in personnel capacity cannot be held to be liable but inthose proceedings under Section 138, the company would be deemed to be liable for the offence under Section 138 and hence, on a simpliciter reading of the provisions under Section 141 of N.I. Act, since the perceptible provisions under Section 141 provides that the functionaries and the company would be liable to pay, in that eventuality, because of the deeming fiction the company itself, is required to be made as party to the complaint proceedings. 10. The aforesaid principle has been laid down by the Hon’ble Apex Court in a judgment reported in 2012 (5) SCC 661 , Aneeta Hada vs M/S Godfather Travels & Tours. In the said judgment, it has been observed that when the company is the principal offender under Section 138 of N.I. Act, the remaining persons who were made as an offender by virtue of a legal fiction created by the legislature, will not suffice the purpose to draw the proceedings under Section 138 of the Act, and hence the actual offender i.e. the company has had to be made as a party to the proceedings under Section 138 of N.I. Act. 11. The aforesaid principle about the necessity of company being made as a party has been interpreted, as to what would the term “ever person”, referred to under Section 141 would mean, in the light of the explanation given to sub Section (2) of Section 141. 11. The aforesaid principle about the necessity of company being made as a party has been interpreted, as to what would the term “ever person”, referred to under Section 141 would mean, in the light of the explanation given to sub Section (2) of Section 141. In fact, here the “every person” under Section 141 would denote the company who is the principal offender and was liable to pay amount on whom the criminal liability was to be fastened. The director in the individual capacity will not be exclusively responsible to meet the liability for an offence under Section 138 of the N.I. Act. 12. When the notices are issued by the complainant on account of the dishonor of cheque, which has been issued by the Director of the company, the same would be in the capacity of the office which was held by the person and not by an individual personnel capacity. In that eventuality, in the judgment of 2000 (99) CompCas 130 HP 2000 Amit J Bhalla Vs. Rajneesh Aggarwal, the Hon’ble High Court of Himachal Pradesh has held that even if the Director of the company has issued a cheque in his individual capacity, he may not be held to be a person individually responsible for any offence under Section 138 of N.I. Act, if ultimately it is found that the account of the company was not having sufficient fund and in that eventuality, the company who had actually committed the offence is to be proceeded with and not the individual director, who has represented the cause of the company. 13. In view of the aforesaid principles that since in the present C482 Application, the complaint itself which has been instituted by M/s Prolific Papers Pvt. Ltd. has named three accused persons as to be the directors of M/s Crown Paper Distributors, but the company itself since was not made as a party to the proceedings under Section 138, the entire proceedings would be vitiated in the light of the ratio laid down by theHon’ble Apex Court in the matters of Aneeta Hada (supra) and on the basis of the said anomaly, the proceedings under Section 138 of the N.I. Act, would be bad. 14. Owing to the aforesaid reasons, the C482 Application is allowed. As a result thereto, the Criminal Complaint Case No. 2950 of 2013, M/s Prolific Papers Pvt. Ltd. Vs. 14. Owing to the aforesaid reasons, the C482 Application is allowed. As a result thereto, the Criminal Complaint Case No. 2950 of 2013, M/s Prolific Papers Pvt. Ltd. Vs. Inderjeet Mehta and others and Criminal Complaint Case No. 2951 of 2013, M/s Prolific Papers Pvt. Ltd. Vs. Inderjeet Mehta and others, would hereby stand quashed.