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2023 DIGILAW 497 (HP)

A. K. Aggarwal v. Vijender Kumar Jain

2023-12-07

RAKESH KAINTHLA

body2023
JUDGMENT : (Rakesh Kainthla, J.) The petitioner has filed the present petition for seeking the quashing of Complaint No. 45/2020, pending in the Court of learned Additional CJM, Nadaun, District Hamirpur, H.P. for the commission of an offence punishable under Section 138 of the Negotiable Instruments Act (in short ‘the Act’). It has been asserted that respondent No. 1-complainant filed a complaint against the petitioner and proforma respondents asserting that they used to supply scrap, and other crushed iron steel waste material to proforma respondents and petitioner. A cheque of Rs.9,90,000/- was issued for discharging the legal liability, which was dishonoured due to insufficient funds. The company was closed. Notice was served upon proforma respondent no. 3 and 4; however, they did not respond to the notice. The petitioner replied to the notice claiming that he had left the job much earlier. Learned Trial Court took cognizance based on the complaint and summoned the petitioner and other persons. There is no material on record to summon the petitioner. The requirements of Section 141 of the NI Act were not satisfied. The complaint was filed against the company and the petitioner is the Executive Director of the Company. The cheque is signed by the petitioner and the date of issuance of the cheque is 10.12.2019. Only a person who is in charge and responsible for the affairs of the company can be held liable under Section 141 of the NI Act. The name of the petitioner was removed from the list of authorized signatories on 29.1.2018. The cheque was signed by the petitioner when he was the authorized signatory but it was presented when the petitioner had ceased to be the employee or the authorized signatory. If there was any liability before 29.1.2018, the cheque should have been issued before that date. The learned Trial Court could not have taken cognizance without the compliance of Section 141 of the NI Act. Therefore, the present petition seeking a quashing of the complaint. 2. I have heard Ms. Heena Chauhan, learned Counsel for the petitioner and Mr. Aman Sharma learned counsel for respondent no.1-complainant. 3. Ms Heena Chauhan, learned counsel for the petitioner submitted that as per the extract of Minutes of the Board meeting (Annexure P-5) and the letter written by the Bank (Annexure P-6), the petitioner had ceased to be an authorized signatory of the company on 29.1.2018. Aman Sharma learned counsel for respondent no.1-complainant. 3. Ms Heena Chauhan, learned counsel for the petitioner submitted that as per the extract of Minutes of the Board meeting (Annexure P-5) and the letter written by the Bank (Annexure P-6), the petitioner had ceased to be an authorized signatory of the company on 29.1.2018. The cheque (Annexure P-2) bears the date 10.1.2020 when the petitioner was not the authorized signatory. Hence, she prayed that the present petition be allowed and the complaint pending before the learned Trial Court be quashed. 4. Mr. Aman Sharma, learned counsel for respondent no.1 has submitted that it is undisputed that the petitioner has signed the cheque. Therefore, he is liable for its dishonour. The petitioner cannot produce any document before this Court in the proceedings under Section 482 of Cr.P.C. Therefore, he prayed that the present petition be dismissed. 5. I have given considerable thought to the submissions at the bar and have gone through the record carefully. 6. The principles of exercising the jurisdiction under Section 482 of Cr.P.C. were laid down by the Hon’ble Supreme Court in Supriya Jain v. State of Haryana, 2023 SCC OnLine SC 765 : (2023) 7 SCC 711 wherein it was observed at page 716:- 17. The principles to be borne in mind with regard to the quashing of a charge/proceedings either in the exercise of jurisdiction under Section 397CrPC or Section 482CrPC or together, as the case may be, has engaged the attention of this Court many a time. Reference to each and every precedent is unnecessary. However, we may profitably refer to only one decision of this Court where upon a survey of almost all the precedents on the point, the principles have been summarised by this Court succinctly. In Amit Kapoor v. Ramesh Chander [Amit Kapoor v. Ramesh Chander, (2012) 9 SCC 460 : (2012) 4 SCC (Civ) 687 : (2013) 1 SCC (Cri) 986], this Court laid down the following guiding principles : (SCC pp. 482-84, para 27) “27. …27.1. Though there are no limits to the powers of the Court under Section 482 of the Code but the more the power, the more due care and caution is to be exercised in invoking these powers. 482-84, para 27) “27. …27.1. Though there are no limits to the powers of the Court under Section 482 of the Code but the more the power, the more due care and caution is to be exercised in invoking these powers. The power of quashing criminal proceedings, particularly, the charge framed in terms of Section 228 of the Code should be exercised very sparingly and with circumspection and that too in the rarest of rare cases. 27.2. The Court should apply the test as to whether the uncontroverted allegations as made from the record of the case and the documents submitted therewith prima facie establish the offence or not. If the allegations are so patently absurd and inherently improbable that no prudent person can ever reach such a conclusion and where the basic ingredients of a criminal offence are not satisfied then the Court may interfere. 27.3. The High Court should not unduly interfere. No meticulous examination of the evidence is needed for considering whether the case would end in conviction or not at the stage of framing of charge or quashing of charge. 27.4. Where the exercise of such power is absolutely essential to prevent patent miscarriage of justice and for correcting some grave error that might be committed by the subordinate courts even in such cases, the High Court should be loath to interfere, at the threshold, to throttle the prosecution in the exercise of its inherent powers. 27.5. Where there is an express legal bar enacted in any of the provisions of the Code or any specific law in force to the very initiation or institution and continuance of such criminal proceedings, such a bar is intended to provide specific protection to an accused. 27.6. The Court has a duty to balance the freedom of a person and the right of the complainant or prosecution to investigate and prosecute the offender. 27.7. The process of the court cannot be permitted to be used for an oblique or ultimate/ulterior purpose. 27.8. Where the allegations made and as they appeared from the record and documents annexed therewith to predominantly give rise to and constitute a “civil wrong” with no “element of criminality” and does not satisfy the basic ingredients of a criminal offence, the court may be justified in quashing the charge. Even in such cases, the court would not embark upon the critical analysis of the evidence. 27.9. Even in such cases, the court would not embark upon the critical analysis of the evidence. 27.9. Another very significant caution that the courts have to observe is that it cannot examine the facts, evidence and materials on record to determine whether there is sufficient material on the basis of which the case would end in a conviction; the court is concerned primarily with the allegations taken as a whole whether they will constitute an offence and, if so, is it an abuse of the process of court leading to injustice. 27.10. It is neither necessary nor is the court called upon to hold a full-fledged enquiry or to appreciate evidence collected by the investigating agencies to find out whether it is a case of acquittal or conviction. 27.11. Where allegations give rise to a civil claim and also amount to an offence, merely because a civil claim is maintainable, does not mean that a criminal complaint cannot be maintained. 27.12. In the exercise of its jurisdiction under Section 228 and/or under Section 482, the Court cannot take into consideration external materials given by an accused for reaching the conclusion that no offence was disclosed or that there was the possibility of his acquittal. The Court has to consider the record and documents annexed therewith by the prosecution. 27.13. Quashing of a charge is an exception to the rule of continuous prosecution. Where the offence is even broadly satisfied, the Court should be more inclined to permit a continuation of prosecution rather than its quashing at that initial stage. The Court is not expected to marshal the records with a view to deciding the admissibility and reliability of the documents or records but is an opinion formed prima facie. 27.14. Where the charge sheet, reported under Section 173(2) of the Code, suffers from fundamental legal defects, the Court may be well within its jurisdiction to frame a charge. 27.15. Coupled with any or all of the above, where the Court finds that it would amount to abuse of process of the Code or that the interest of justice favours, otherwise it may quash the charge. The power is to be exercised ex debito justitiae i.e. to do real and substantial justice for administration of which alone, the courts exist. 27.16. The power is to be exercised ex debito justitiae i.e. to do real and substantial justice for administration of which alone, the courts exist. 27.16. These are the principles which individually and preferably cumulatively (one or more) be taken into consideration as precepts to exercise extraordinary and wide plenitude and jurisdiction under Section 482 of the Code by the High Court. Where the factual foundation for an offence has been laid down, the courts should be reluctant and should not hasten to quash the proceedings even on the premise that one or two ingredients have not been stated or do not appear to be satisfied if there is substantial compliance with the requirements of the offence.” 7. Similar is the judgment in Gulam Mustafa v. State of Karnataka, 2023 SCC OnLine SC 603 wherein it was observed:- 26. Although we are not for verbosity in our judgments, a slightly detailed survey of the judicial precedents is in order. In State of Haryana v. Bhajan Lal, 1992 Supp (1) SCC 335, this Court held: “102. In the backdrop of the interpretation of the various relevant provisions of the Code under Chapter XIV and of the principles of law enunciated by this Court in a series of decisions relating to the exercise of the extraordinary power under Article 226 or the inherent powers under Section 482 of the Code which we have extracted and reproduced above, we give the following categories of cases by way of illustration wherein such power could be exercised either to prevent abuse of the process of any court or otherwise to secure the ends of justice, though it may not be possible to lay down any precise, clearly defined and sufficiently channelised and inflexible guidelines or rigid formulae and to give an exhaustive list of myriad kinds of cases wherein such power should be exercised. (1) Where the allegations made in the first information report or the complaint, even if they are taken at their face value and accepted in their entirety do not prima facie constitute any offence or make out a case against the accused. (1) Where the allegations made in the first information report or the complaint, even if they are taken at their face value and accepted in their entirety do not prima facie constitute any offence or make out a case against the accused. (2) Where the allegations in the first information report and other materials, if any, accompanying the FIR do not disclose a cognizable offence, justifying an investigation by police officers under Section 156(1) of the Code except under an order of a Magistrate within the purview of Section 155(2) of the Code. (3) Where the uncontroverted allegations made in the FIR or complaint and the evidence collected in support of the same do not disclose the commission of any offence and make out a case against the accused. (4) Where the allegations in the FIR do not constitute a cognizable offence but constitute only a non-cognizable offence, no investigation is permitted by a police officer without an order of a Magistrate as contemplated under Section 155(2) of the Code. (5) Where the allegations made in the FIR or complaint are so absurd and inherently improbable on the basis of which no prudent person can ever reach a just conclusion that there is sufficient ground for proceeding against the accused. (6) Where there is an express legal bar engrafted in any of the provisions of the Code or the concerned Act (under which a criminal proceeding is instituted) to the institution and continuance of the proceedings and/or where there is a specific provision in the Code or the concerned Act, providing efficacious redress for the grievance of the aggrieved party. (7) Where a criminal proceeding is manifestly attended with mala fide and/or where the proceeding is maliciously instituted with an ulterior motive for wreaking vengeance on the accused and with a view to spite him due to private and personal grudge. 103. (7) Where a criminal proceeding is manifestly attended with mala fide and/or where the proceeding is maliciously instituted with an ulterior motive for wreaking vengeance on the accused and with a view to spite him due to private and personal grudge. 103. We also give a note of caution to the effect that the power of quashing a criminal proceeding should be exercised very sparingly and with circumspection and that too in the rarest of rare cases; that the court will not be justified in embarking upon an enquiry as to the reliability or genuineness or otherwise of the allegations made in the FIR or the complaint and that the extraordinary or inherent powers do not confer an arbitrary jurisdiction on the court to act according to its whim or caprice.” (emphasis supplied) 8. It was laid down in CBI v. Aryan Singh, 2023 SCC OnLine SC 379, that the High Court cannot conduct a mini-trial while exercising jurisdiction under Section 482 of Cr.P.C. The allegations are required to be proved during the trial by leading evidence. It was observed: “10. From the impugned common judgment and order passed by the High Court, it appears that the High Court has dealt with the proceedings before it, as if, the High Court was conducting a mini-trial and/or the High Court was considering the applications against the judgment and order passed by the learned Trial Court on conclusion of the trial. As per the cardinal principle of law, at the stage of discharge and/or quashing of the criminal proceedings, while exercising the powers under Section 482 Cr. P.C., the Court is not required to conduct the mini-trial. The High Court in the common impugned judgment and order has observed that the charges against the accused are not proved. This is not the stage where the prosecution/investigating agency is/are required to prove the charges. The charges are required to be proved during the trial based on the evidence led by the prosecution/investigating agency. Therefore, the High Court has materially erred in going into detail in the allegations and the material collected during the course of the investigation against the accused, at this stage. At the stage of discharge and/or while exercising the powers under Section 482 Cr. Therefore, the High Court has materially erred in going into detail in the allegations and the material collected during the course of the investigation against the accused, at this stage. At the stage of discharge and/or while exercising the powers under Section 482 Cr. P.C., the Court has very limited jurisdiction and is required to consider “whether any sufficient material is available to proceed further against the accused for which the accused is required to be tried or not”. 11. One other reason pointed out by the High Court is that the initiation of the criminal proceedings/proceedings is malicious. At this stage, it is required to be noted that the investigation was handed over to the CBI pursuant to the directions issued by the High Court. That thereafter, on conclusion of the investigation, the accused persons have been charge-sheeted. Therefore, the High Court has erred in observing at this stage that the initiation of the criminal proceedings/proceedings is malicious. Whether the criminal proceedings was/were malicious or not, is not required to be considered at this stage. The same is required to be considered at the conclusion of the trial. In any case, at this stage, what is required to be considered is a prima facie case and the material collected during the course of the investigation, which warranted the accused to be tried.” 9. The petitioner is relying upon the photocopies of the extract of the Minutes of the Board meeting (Annexure P-5) and the letter written by the bank (Annexure P-6) to submit that he was not authorized signatory on the date of the issuance of the cheque. The question whether the Court can consider new material or not while considering a petition under Section 482 of Cr.P.C. has been considered by the Hon’ble Supreme Court and various High Courts. It was laid down by Hon’ble Supreme Court in MCD v. Ram Kishan Rohtagi, (1983) 1 SCC 1 : 1983 SCC (Cri) 115, that the proceedings can be quashed if on the face of the complaint and the papers accompanying the same no offence is constituted. It is not permissible to add or subtract anything. It was observed: “10. It is, therefore, manifestly clear that proceedings against an accused in the initial stages can be quashed only if on the face of the complaint or the papers accompanying the same, no offence is constituted. It is not permissible to add or subtract anything. It was observed: “10. It is, therefore, manifestly clear that proceedings against an accused in the initial stages can be quashed only if on the face of the complaint or the papers accompanying the same, no offence is constituted. In other words, the test is that taking the allegations and the complaint as they are, without adding or subtracting anything, if no offence is made out then the High Court will be justified in quashing the proceedings in exercise of its powers under Section 482 of the present Code.” 10. Madras High Court also held in Ganga Bai v. Shriram, 1990 SCC OnLine MP 213: ILR 1992 MP 964: 1991 Cri LJ 2018, that the fresh evidence is not permissible or desirable in the proceeding under Section 482 of Cr.P.C. It was observed: “Proceedings under Section 482, Cr.P.C. cannot be allowed to be converted into a full-dressed trial. Shri Maheshwari filed a photostate copy of an order dated 28.7.1983, passed in Criminal Case No. 1005 of 1977, to which the present petitioner was not a party. Fresh evidence at this stage is neither permissible nor desirable. The respondent by filing this document is virtually introducing additional evidence, which is not the object of Section 482, Cr.P.C.” 11. Andhra Pradesh High Court also took a similar view in Bharat Metal Box Company Limited, Hyderabad and Others vs. G. K. Strips Private Limited and another, 2004 STPL 43 AP, and held: “9. This Court can only look into the complaint and the documents filed along with it and the sworn statements of the witnesses if any recorded. While judging the correctness of the proceedings, it cannot look into the documents, which are not filed before the lower Court. Section 482 Cr.PC debars the Court to look into fresh documents, in view of the principles laid down by the Supreme Court in State of Karnataka v. M. Devendrappa and another, 2002 (1) Supreme 192 . The relevant portion of the said judgment reads as follows: "The complaint has to be read as a whole. Section 482 Cr.PC debars the Court to look into fresh documents, in view of the principles laid down by the Supreme Court in State of Karnataka v. M. Devendrappa and another, 2002 (1) Supreme 192 . The relevant portion of the said judgment reads as follows: "The complaint has to be read as a whole. If it appears that on consideration of the allegations, in the light of the statement made on oath of the complainant that the ingredients of the offence or offences are disclosed and there is no material to show that the complaint is mala fide, frivolous or vexatious, in that event there would be no justification for interference by the High Court. When information is lodged at the Police Station and an offence is registered, then the mala fides of the informant would be of secondary importance. It is the material collected during the investigation and evidence led in Court, which decides the fate of the accused person. The allegations of mala fides against the informant are of no consequence and cannot by itself be the basis for quashing the proceedings". 12. A similar view was taken in Mahendra K.C. v. State of Karnataka, (2022) 2 SCC 129 : (2022) 1 SCC (Cri) 401 wherein it was observed at page 142: “16. … the test to be applied is whether the allegations in the complaint as they stand, without adding or detracting from the complaint, prima facie establish the ingredients of the offence alleged. At this stage, the High Court cannot test the veracity of the allegations nor for that matter can it proceed in the manner that a judge conducting a trial would, on the basis of the evidence collected during the course of the trial.” 13. This position was reiterated in Supriya Jain v. State of Haryana, (2023) 7 SCC 711 : 2023 SCC OnLine SC 765 wherein it was held: 13. All these documents which the petitioner seeks to rely on, if genuine, could be helpful for her defence at the trial but the same are not material at the stage of deciding whether quashing as prayed for by her before the High Court was warranted or not. We, therefore, see no reason to place any reliance on these three documents. 14. We, therefore, see no reason to place any reliance on these three documents. 14. Therefore, it is not permissible to look into the material filed by the petitioner with the petition and the Court has to rely upon the complaint filed before the learned Magistrate. 15. It was submitted that the complainant did not mention that the petitioner was in charge and responsible for the company for its day-to-day affairs, which is a necessary requirement in the absence of which the learned Trial Court erred in summoning the petitioner. This submission is not acceptable. In S.M.S. Pharmaceuticals Ltd. v. Neeta Bhalla, (2005) 8 SCC 89 , the following reference was made to the Larger Bench. This matter arises from a reference made by a two-judge Bench of this Court for the determination of the following questions by a larger Bench: “(a) Whether for purposes of Section 141 of the Negotiable Instruments Act, 1881, it is sufficient if the substance of the allegation read as a whole fulfil the requirements of the said section and it is not necessary to specifically state in the complaint that the person accused was in charge of, or responsible for, the conduct of the business of the company. (b) Whether a director of a company would be deemed to be in charge of, and responsible to, the company for the conduct of the business of the company and, therefore, deemed to be guilty of the offence unless he proves to the contrary. (c) Even if it is held that specific averments are necessary, whether, in the absence of such averments, the signatory of the cheque and or the managing directors or joint managing director who admittedly would be in charge of the company and responsible to the company for the conduct of its business could be proceeded against.” 16. The relevant question in the present case is question (c) as it deals with the liability of the signatory in the absence of an averment that he is in charge and responsible to the company for the conduct of its business. The Court held that the Managing Director, Joint Managing Director and Signatory will be responsible for the incriminating act and will be covered under Section 141(2) of the NI Act. It was observed: (c) The answer to Question (c) has to be in the affirmative. The Court held that the Managing Director, Joint Managing Director and Signatory will be responsible for the incriminating act and will be covered under Section 141(2) of the NI Act. It was observed: (c) The answer to Question (c) 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 the 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. 17. Therefore, in the case of the signatory, it is not necessary to aver that he was Incharge and responsible to the company for the conduct of its business and the submission that the complaint was bad in the absence of the averment that the petitioner was in charge and responsible for its affairs, cannot be accepted. 18. No other point was urged. 19. Consequently, the present petition fails and the same is dismissed. 20. The observation made hereinabove shall remain confined to the disposal of the petition and will have no bearing, whatsoever, on the merits of the case.