cheque was issued for VIP Financiers(regd.), Agarwal Market, Railway Road, Aligarh by its
partner Sri Yogendra Kumar Khullar @ Bitto ( applicant). It is not averred in the compliant that
Sri Yogendra Kumar Khullar @ Bittoo was in charge of and responsible for the conduct of the
business of the company at the time of commission of the offence and hence he will not be liable
for criminal action. It may be noted that the firm named as VIP Financiers (Regd.), Agarwal
Market, Railway Road, Aligarh, who was the principal accused, has not been made party in the
complaint as stated above and side by side the necessary averment required to be made in the
complaint satisfying the requirements of Section 141 of the Act are also lacking to maintain
prosecution as held in the decisions cited above. In this view of the matter, complaint itself is
bad in law and the entire proceedings in pursuance thereof, including the summoning order
dated 1.8.2007 passed by the Special Judicial Magistrate, Aligarh is nothing but an abuse of
process of the court and is liable to be quashed.
ALLAHABAD HIGH COURT
Vijay Prakash Pathak, J.
YOGENDRA KUMAR KHULLAR—Appellant
versus
STATE OF U.P. & ANR.—Respondents
Crl. Misc. Appln. No. 4452 of 2008—Decided on 28.9.20121
Citation; 2013 ALL M R (cri)JOURNAL 98
JUDGMENT
Vijay Prakash Pathak, J.—The present petition under Section 482 Cr.P.C. has been filed
with a prayer to quash the Criminal Complaint Case No.134 of 2007, Ram Singh Rathaur Vs.
Yogendra Kumar Khullar @ Bittoo, under Section 138 of the Negotiable Instrument Act
( hereinafter referred to as the Act), PS Banna Devi, District Aligarh.
2. The brief facts of the case are that opposite party no.2 Ram Singh Rathaur filed a
complaint against the applicant for the offence under Section 138 of the Act with the allegations
that the accused applicant was partner of V.I.P. Financiers Firm (Regd.) situated at Agarwal
Market, Railway Road, Thana Banna Devi, District Aligarh and a sum of Rs.50,000/- was given
as loan to the said firm on 4.1.2000 @ 2 per cent monthly interest by the opposite party no.2, for
which a receipt was also given on 4.1.2000 itself. It is alleged that for the last one year as the
accused did not pay any interest, the complainant demanded his money back towards which the
accused gave him a cheque dated 4.1.2007 of account no.3107, Canara Bank, Apsara Complex,
Main Branch Aligarh with the assurance that the said cheque shall never be bounced. Thereafter
the complainant deposited the said cheque on 24.2.2007 in his Savings Bank A/c in Canara
Bank, Main Branch, Aligarh but when he went to the Bank to enquire about the said cheque in
his account on 7.3.2007, it was found that the same was dishonoured. The complainant sent a
legal notice to the applicant on 13.3.2007 regarding the bouncing of the said cheque informing
him to return the money within 15 days from the receipt of the said notice but till date, he did
not return the same. Hence the complainant was filed on 4.4.2007.
3. On receiving the said complaint, the learned Magistrate recorded the statement of the
complainant under Section 200 Cr.P.C. and after considering the entire materials on record, the
learned Magistrate vide order dated 1.08.2007 summoned the applicant to face trial for the
offence under Section 138 of the Act finding a prima facie case against him.
4. Heard Sri Amit Daga, learned counsel for the applicant, Sri S.P.S. Chauhan learned
counsel for opposite party no.2 as well as learned AGA and perused the record.
5. Learned counsel for the applicant has mainly contended that admittedly the money
amounting to Rs.50,000/- was given to the applicant as loan on interest being partner of V.I.P.
Financiers Firm ( Regd.), situated at Agarwal Market, PS Banna Devi, District Aligarh for his
firm, hence the principal accused shall be the firm itself and the firm not being impleaded as an
accused by the complainant, the prosecution cannot be maintained as against the applicant. It has
also been argued that the applicant was only partner of the said firm and it is not averred in the
complaint that at the time the offence was committed, he was in charge of and was responsible
for conduct of business of the firm. Hence the requirement of Section 141 of the Act is not
satisfied for the purposes of lodging a complaint against the applicant for an offence under
Section 138 of the Act. It is also contended that the alleged notice was not served upon the
applicant but according to the complaint itself, the information of notice was given at the house
of the applicant but not at the office of the firm
6. In support of his contentions, learned counsel for the applicant has cited two decisions of
Hon'ble Apex Court reported in 2012 (77) ACC 924, Aneeta Hada Vs. M/s Godfather travels &
Tours Pvt. Ltd. and (2005) 8 SCC 89, S.M.S. Pharmaceuticals Ltd. Vs. Neeta Bhalla & another.
7. On the other hand, learned counsel for opposite party no.2 has contended that the cheque
issued by the applicant to opposite party no.2 was bounced and hence the liability is upon the
applicant for payment of the amount in question. It is also contended that the learned Magistrate
has rightly summoned the applicant to face trial after considering the entire materials on record
and finding a prima face offence against him. Hence no interference is called for in this petition
under Section 482 Cr.P.C.
8. I have considered the aforesaid arguments advanced on behalf of the rival parties'
counsel and perused the record.
9. The Hon'ble Apex Court in Aneeta Hada Vs. M/s Godfather Travels & Tours Pvt. Ltd.
(supra) has been pleased to hold that for the offence under Section 138 of the Act committed by
a company, the company as well as every person in charge of and responsible to the company
for conduct of the business of the company at the time of commission of the offence shall be
deemed to be guilty of offence. The Hon'ble Apex Court has discussed the provisions of Section
138 along with Section 141 of the Act which deals with the offence committed by a company.
Hon'ble Apex Court has held that for maintaining the prosecution under Section 141 of the Act,
arraying of a company as an accused is imperative.
10. The Hon'ble Apex Court in its verdict S.M.S. Pharmaceuticals Ltd. Vs. Neeta Bhalla &
another (supra) has held that necessary averments ought to be contained in a complaint before a
person is subjected to criminal process. A liability under Section 141 of the Act is sought to be
fastened vicariously on a person connected with a company, the principal accused being the
company itself. It is a departure from the rule in criminal law against vicarious liability. Under
Section 141 what is required is that the persons who are sought to be made criminally liable,
should be, at the time of offence was committed, in charge of and responsible to the company
for the conduct of the business of the company. Every person connected with the company shall
not fall within the ambit of the provision. It is only those persons who were in charge of and
responsible for the conduct of business of the company at the time of commission of an offence,
will be liable for criminal action. The liability arises on account of conduct, act or omission on
the part of a person and not merely on account of holding an office or position in a company.
11. Admittedly, according to the complaint itself, the money amounting to Rs.50,000/- was
given by the complainant as loan to the firm V.I.P. Financiers (regd.), of which the applicant
was a partner and a receipt in respect thereof was issued. The said money was advanced @
Rs.2/- per cent monthly interest and when interest was not paid, the company was asked by the
complainant for payment of the same and then the applicant issued a cheque drawn on Canara
Bank, Apsara Complex, Main Branch, Aligarh. A perusal of the receipt shows that the same was
issued by Mg Partner for V.I.P. Financiers (Regd.). The alleged cheque was also given by the
partner for V.I.P. Financiers (Regd.) on 4.1.2007. Hence it is clear that the money was advanced
to the firm on the asking of the applicant, being partner of the said firm and the receipt and also
the said cheque were issued by the partner for V.I.P. Financiers ( Regd.).
12. For an offence under Section 138 of the Act by the companies, the provisions are
provided under Section 141 of the said Act. To decide the controversy at issue, both the
provisions of Sections 138 and 141 of the Act are relevant, which are quoted below:—
“138.Dishonour of cheque for insufficiency, etc., of funds in account.— Where any
cheque drawn by a person on an account maintained by him with a banker for 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, 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
by an agreement made with that bank, such person shall be deemed to have committed
an offence and shall, without prejudice to any other provision of this Act, be punished
with imprisonment for 2[a term which may be extended to two years] or with fine
which may extend to twice the amount of the cheque, or with both:
Provided that nothing contained in this section shall apply unless—
(a)
the cheque has been presented to the bank within a period of six months from the
date on which it is drawn or within the period of its validity, whichever is earlier;
(b)
the payee or the holder in due course of the cheque, as the case may be, makes a
demand for the payment of the said amount of money by giving a notice in
writing, to the drawer of the cheque, [within thirty days] of the receipt of
information by him from the bank regarding the return of the cheque as unpaid;
and
(c)
the drawer of such cheque fails to make the payment of the said amount of
money to the payee or, as the case may be, to the holder in due course of the
cheque, within fifteen days of the receipt of the said notice.
Explanation— For the purpose of this section “debt or other liability” means a legally
enforceable debt or other liability.”
“141. Offences by companies— (1) If the person committing an offence under
13. Sec. 138 is a company, every person who, at the time the offence was committed, was
in charge of, and 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:
14. Provided that nothing contained this sub-section 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.
15. 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 tor prosecution under this Chapter.
(2) Notwithstanding anything contained in sub-section, 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 the association
of individuals; and
(b)
“director”, in relation to a firm, means a partner in the firm.”
16. It will be seen from the above provisions that Section 138 of the Act casts criminal
liability punishable with imprisonment for a term which may be extended to two years or with
fine which may extend to twice the amount of the cheque, or with both on a person who issues a
cheque towards discharge of a debt or liability in whole or in part and the cheque is dishonoured
by the bank on presentation.
17. Section 141 extends such criminal liability in case of a company to every person who at
the time the offence was committed, was in charge of, and was responsible to, the company for
the conduct of of the business of the company. By a deeming provision contained in Section 141
of the Act, such a person is vicariously liable to be held guilty for the offence under Section 138
of the Act and punished accordingly.
18. The Hon'ble Apex Court in the aforesaid verdict of Aneeta Hada Vs. God Father
Travels and Tours Pvt. Ltd. (supra) has held that for maintaining prosecution under Section 141
of the Act, arraying of a company as an accused is imperative. Hon'ble Apex Court in the
aforesaid verdict S.M.S. Pharmaceuticals Ltd. Vs. Neeta Bhalla & another (supra) has been
pleased to hold that the necessary averment in the complaint is to be made that at the time the
offence was committed, a person accused was in charge of, and responsible for the conduct of
the business of the company. It is further observed that liability under Section 141 of the Act is
sought to be fastened vicariously on a person connected with a company, the principal accused
being the company itself. Under Section 141 of the Act what is required is that the persons who
are sought to be made criminally liable should be, at the time of the offence was committed,
incharge of and responsible to the company for the conduct of the business of the company.
Every person connected with the company shall not fall within the ambit of the provision. It is
only those persons who were in charge of and responsible for the conduct of business of the
company at the time of commission of an offence will be liable for criminal action.
19. Now adverting to the facts of the present case, according to the complaint itself, the
cheque was issued for VIP Financiers(regd.), Agarwal Market, Railway Road, Aligarh by its
partner Sri Yogendra Kumar Khullar @ Bitto ( applicant). It is not averred in the compliant that
Sri Yogendra Kumar Khullar @ Bittoo was in charge of and responsible for the conduct of the
business of the company at the time of commission of the offence and hence he will not be liable
for criminal action. It may be noted that the firm named as VIP Financiers (Regd.), Agarwal
Market, Railway Road, Aligarh, who was the principal accused, has not been made party in the
complaint as stated above and side by side the necessary averment required to be made in the
complaint satisfying the requirements of Section 141 of the Act are also lacking to maintain
prosecution as held in the decisions cited above. In this view of the matter, complaint itself is
bad in law and the entire proceedings in pursuance thereof, including the summoning order
dated 1.8.2007 passed by the Special Judicial Magistrate, Aligarh is nothing but an abuse of
process of the court and is liable to be quashed.
20. Accordingly this petition is allowed. Entire proceedings of Criminal Case No.134 of
2007, Ram Singh Rathaur Vs. Yogend Kumar Khullar @ Bittoo under Section 138 of the Act,
PS Banna Devi, District Aligarh, including the summoning order dated 1.8.2007 are hereby
quashed.
Petition allowed.
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