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MADHYA PRADESH HIGH COURT
R.C. Mishra, J.
Ramesh Babulal Baheti —Petitioner
versus
M.P. State Industrial Development Corporation Ltd. —Respondent
M Cr C No. 10703 of 2011 and M Cr C No. 10832 of 2011
Decided on 31.10.2012
For the Petitioner:Brian D’Silva and Ishan Soni, Advocates.
For the Respondent:Sanjay K. Agrawal and Piyush Bhatnagar, Advocates
IMPORTANT POINTS
(1) Every employee of Government Company is ‘Public Servant’ entitled to exemption under Clause (a) of the proviso to Section 200 of the Code with regard to a complaint relating to the offence under section 138 of the Act also.
(2) for launching a prosecution against the Directors of a Company under Section138 read with Section 141 of the Act, arraigning of the company as an accused is a condition precedent.
Headnote:(i) Negotiable Instruments Act, 1881—Section 138—Criminal Procedure Code, 1973—Section 200 Proviso (a) —Cheques drawn in favour of MPSIDC, a Government Company registered under Companies Act, dishonoured—Order taking cognizance of offence without examining officer authorized by complainant—Whether order suffered illegality? No.
Held: Every employee of Government Company is ‘Public Servant’ entitled to exemption under Clause (a) of the proviso to Section 200 of the Code with regard to a complaint relating to the offence under section 138 of the Act also. (Para 6)
(ii) Negotiable Instruments Act, 1881—Sections 138 and 141—Dishonour of cheque drawn by Company—Petitioner as Executive Chairman in Company was sought to be prosecuted in vicarious liability—Whether in absence of specific averments explaining as to how petitioner was in-charge of day to day affairs of Company and was responsible for conduct of its business prosecution of petitioner was bad and liable to be quashed? No.
Held: A bare perusal of the complaints would reveal that in paragraph (2) thereof. it was specifically pleaded that being the Chairman of the Company, the petitioner was aware of every act as well as of the transaction of the company. As pointed already. cheques for a total sum of Rs. 8 crores were issued in favour of the Government Company for and on behalf of S.T.I. Products India Limited, for repayment of the outstanding amounts against the Inter Company Loan termed as I.C.Ds. and therefore, the petitioner as the Executive Chairman could not plead ignorance of entire transaction (Everest Advertising (P) Ltd. v. State, Government of NCT of Delhi, referred to). Under these circumstances, as opined in Paresh P. Rajda v. State of Maharashtra, it would be inappropriate to quash proceedings against the petitioner. (Para 15)
(iii) Negotiable Instruments Act,1881—Sections 138 and 141—Cheque drawn by Company bounced—Vicarious liability of directors of Company—It is obligatory on part of complainant to comply statutory requirements of impleading Company as accused. (Para 21)
R.C. Mishra, J.—This common order shall govern disposal of both the petitions preferred, under Section 482 of the Code of Criminal Procedure (hereinafter referred to as the ‘Code’). for quashing of the proceedings pending before A.C.J.M.-cum-Special Magistrate (for M.P.S.I.D.C. cases). Bhopal, details of which may be summarized as under:
MCrC Complaint Case Complaint For an Demand no-
No. pertaining to amount tice issued
dishonour of of Rs. on
cheque dated
10703/11 983/05 9.5.2001 3523522 30.8.2001
9.5.2001 80000000
10832/11 2056/04 9.8.2000 3642293 20.12.2000
9.11.2000 3642293
2. In these cases, cognizance of the offence punishable under Section 138 of the Negotiable Instruments Act, 1881 (hereinafter referred to as “the Act”) was taken against the petitioner, the then Executive Chairman of S.T.I. Products India Limited, Bangalore, a company registered under the Companies Act, 1956 and its two Directors viz. Dr. P.N. Mehra and K.N. Garg, upon complaints made on behalf of the respondent viz., Madhya Pradesh State Industrial Development Corporation (for brevity “MMP. S.I.D.C.”), a Government Company registered under the Companies Act.
3. Common averments made in the complaints may be summarized as under:
The petitioner, being the Executive Chairman, was the in-charge of and responsible for the conduct of the business of the company that has taken financial assistance to the tune of Rs. 8 crores in the name of Inter-Corporate Deposits (I.C.Ds.). to be matured on 9.5.2011. As per the undertaking given for or on behalf of the borrower company, 12 post-dated cheques were issued for repayment of the loan together with interest as per terms of the agreement. However, the cheques were dishonoured by the Bank on the ground of ‘Exceed Arrangement’. Thereafter, despite service of respective demand notice, the amount covered by the corresponding cheques/cheque was not paid by the company.
4. Learned Senior Counsel appearing on behalf of the petitioner has strenuously contended that his prosecution is liable to be quashed as an abuse of the process of the Court on the following grounds:
(i) The order taking cognizance without examining the officer authorized by the complainant was bad in law as the exemption under Clause (a) of the proviso to Section 200 of the Code of Criminal Procedure was applicable to the complaint concerning any offence under the General Law and not an offence under a special statute like the N.I. Act.
(ii) In absence of specific averments explaining as to how the petitioner was in-charge of day-to-day business of the company and responsible for conduct of its business, the requirements of Section 141 of the Act were not satisfied.
(iii) No legally enforceable debt or liability was in existence as the cheques in question were issued against the I.C.Ds., which had already been repudiated in the year 1999.
(iv) The company was not arraigned as one of the accused in the complaint, bearing No. 2056/04 and called in question in MCrC No. 10832/11.
5. In response, learned Counsel for the complainant/respondent has submitted that being the Executive Chairman, the petitioner was prima facie in-charge of and responsible for the conduct of the business of the company. Inviting attention to the fact that in complaint case No.2056/04, an application to implead the Company as an additional accused has already been moved before the Trial Magistrate, he has further urged that no interference with a legitimate prosecution is called for under the inherent powers on any other grounds raised by the petitioner.
6. Ground No. (1) (supra) is apparently misconceived in view of the decision of the Apex Court in National Small Industries Corporation Ltd. v. State (N.C.T. of Delhi1, holding that every employee of Government Company is ‘Public Servant’ entitled to exemption under Clause (a) of the proviso to Section 200 of the Code with regard to a complaint relating to the offence under section 138 o
