HIGH COURT OF CHHATTISGARH, BILASPUR
Goutam Bhaduri, J.
Charanjeet Singh Saini & Ors. – Appellants
Versus
Ispat India & Ors. – Respondents
CRMP No. 1645, 1643, 1644 of 2019, 118, 120 of 2021, 605, 625, 640 of 2020
Decided On : 21-03-2022
Section 138 of Negotiable Instrument Act - Complaint without arraigning the company as an accused - (2012) 5 SCC 661, (2020) 10 SCC 751, (2019) 3 SCC 797, (2018) (13) SCC 663, (2009) 6 SCC 729 - The court discussed the maintainability of a complaint under Section 138 of the Negotiable Instruments Act without arraigning the company as an accused. It referenced several cases to establish that for maintaining the prosecution under Section 138, arraigning of a company as an accused is imperative. The court highlighted the legal principle that commission of offence by the company is an express condition precedent to attract the vicarious liability of others. It emphasized the importance of specific allegations and clear averments about the role played by the directors in the transaction, and the need for the company to be made a necessary party in order to maintain a prosecution against the director.
Fact of the Case:
Different complaints were filed under Section 138 of Negotiable Instrument Act as the cheques issued by the petitioners on behalf of M/s. Saini Industries Limited were dishonoured. The petitioners objected to the maintainability of the complaint, arguing that it would not lie without arraigning the company as an accused. The court considered the description of the parties in the complaint and the role of the petitioners as directors of the company.
Finding of the Court:
The court found that the complaint under Section 138 of Negotiable Instruments Act would not lie without arraigning the company as an accused. It held that specific allegations and clear averments about the role played by the directors in the transaction are imperative for maintaining a prosecution against the director.
Issues: The main issue was whether a complaint under Section 138 of Negotiable Instruments Act without arraigning the company as an accused would be maintainable.
Ratio Decidendi: The court established that for maintaining the prosecution under Section 138, arraigning of a company as an accused is imperative. It emphasized the importance of specific allegations and clear averments about the role played by the directors in the transaction, and the need for the company to be made a necessary party in order to maintain a prosecution against the director.
Final Decision: The court allowed the petitions and quashed the impugned orders and criminal proceedings initiated against the respective petitioners, holding that the complaint under Section 138 of Negotiable Instruments Act without arraigning the company as an accused would not be maintainable.
The final conclusion is that a complaint under Section 138 of the Negotiable Instruments Act is not maintainable if the company involved in the transaction has not been arraigned as an accused. The legal requirement is that the company must be made a necessary party to establish the offence and to hold the directors vicariously liable. Without the company being properly arrayed as an accused, the prosecution against the directors alone is not sustainable, as the commission of the offence by the company is an essential condition for proceeding against its responsible persons (!) (!) .
JUDGMENT :
1. All these petitions are being heard and decided together, as the common questions of law is raised.
2. Different complaints were filed by the respondents under Section 138 of Negotiable Instrument Act as the cheques issued by the petitioners on behalf of M/s. Saini Industries Limited were dishonoured for want of fund in the account. Thereafter, the statutory notice having been served, the repayment of the amount was not made, consequently different complaints under Section 138 of Negotiable Instruments Act were filed.
3. The facts show that initially after filing of the complaint, objections were raised by the petitioners by filing interlocutory applications about maintainability of the petition. The same having been dismissed, revision was preferred and the Sessions Judge dismissed the revision by holding that the Directors cannot be absolved of their criminal liability, despite the fact the company has not been arrayed as an accused. Having aggrieved by the said order, the present petitions.
4. The legal question which arises for consideration that whether the complaint under Section 138 of Negotiable Instruments Act without arraigning the company as an accused would be maintainable ?
5. Mr. K. Rohan, learned counsel for the petitioners contended in the memo of complaint the petitioners were described as either Directors of Saini Industries Limited or on behalf of the Saini Industries. Therefore, the company having not been made an accused, the complaint only against the Director would not lie. Learned counsel for the petitioners would submit that the respondents herein are very well in know of the fact that the cheques were issued by petitioners as directors of company, which is evident from copy of the cheques itself. He would submit that the cheques were issued by the petitioners in the capacity of the Director of the Company M/s. Saini Industries. Admittedly, Saini Industries being not arrayed as a party before the Trial Court, in a result, in view of the law laid down in case of Aneeta Hada v. Godfather Travels & Tours (P) Ltd. (2012) 5 SCC 661, the prosecution of the like nature would not lie. He placed his reliance in (2020) 10 SCC 751, (2019) 3 SCC 797, (2018) (13) SCC 663, (2012) 5 SCC 661 and lastly (2009) 6 SCC 729 and would submit that no specific averments have been made that what role the petitioners have played on behalf of the company as an authorised signatory. Therefore, if the company is not made a party as accused, the prosecution itself would not be maintainable.
6. Per contra, learned counsel for the respondents would submit that there is no dispute about the legal proposition, however, the petitioners were the Directors of the company or not, it is a matter of evidence and no inference can be drawn on this date. The reference was made to the Criminal Appeal Nos.403-405 of 2019 and (2020) 3 SCC 794 and would submit that when there is a disputed question arises for adjudication, the petition under Section 482 would not be maintainable.
7. Heard learned counsel appearing for the parties and perused the documents filed alongwith the petitions.
8. The copy of the complaint filed by the respondents shows the description of the parties in CRMP Nos.1643/2019, 625/2020, 1644/2019 & 1645/2019, they have been shown on behalf of Saini Industries. In CRMP No.625/2020 the certified copy of the cheque bears Saini Industries Limited and signed by the Director. So the copy of the complaint would clearly demonstrate the fact that different cheques were issued on behalf of Saini Industries Limited. Admittedly, the company has not been arrayed as an accused.
9. Dealing with similar issue wherein only directors of company is made the accused, leaving the company, the complaint under Section 138 of Negotiable Instruments Act would not lie. In recent judgment in case of Hindustan Unilever Ltd. v. State of Madhya Pra
Aneeta Hada v. Godfather Travels and Tours Private Limited (2012) 5 SCC 661
Anil Hada v. Indian Acrylic Ltd.
Charanjit Pal Jindal v. L.N. Metalics (2015) 15 SCC 768
Himanshu v. B.Shivamurthy & Another (2019) 3 SCC 797
Hindustan Unilever Ltd. v. State of Madhya Pradesh (2020) 10 SCC 751
MSR Leathers v. S. Palaniappan (2013) 1 SCC 177
N. Harihara Krishnan v. J. Thomas (2018) 13 SCC 663
Pepsi Foods Limited & Anr. v. Special Judicial Magistrate (1998) 5 SCC 749
Ramraj Singh v. State of M.P. (2009) 6 SCC 729
Sheoratan Agarwal v. State of M.P.
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