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2014 Supreme(UK) 372

High Court of Uttarakhand
U.C. Dhyani, J.
Surinder Singh - Applicant
Vs.
Atik Ahmad - Respondent
Criminal Misc. Application (C-482) No. 1271 of 2013
Decided On : 27-11-2014

Advocates:
Advocate Appeared:
Shri Rajat Mittal, Advocate for the appellant.
Shri Neeraj Garg, Advocate for the respondent.

The imperative requirement of arraigning the company as an accused for maintaining a prosecution under Section 141 of the Negotiable Instruments Act, 1881.

Headnote:

Section 138 of the Negotiable Instruments Act, 1881 - Non-joinder of necessary party - Quashing of criminal complaint case

Fact of the Case:

The applicant sought to quash the summoning order and entire proceedings of a criminal complaint case filed against him under Section 138 of the Negotiable Instruments Act. The complaint failed to include the applicant's company as an accused, despite the cheque being issued by the applicant in his capacity as the Managing Director of the company.

Finding of the Court:

The court, relying on the judgment of the Hon'ble Apex Court, held that the non-joinder of the company as an accused rendered the complaint bad. Consequently, the court allowed the application under Section 482 of Cr.P.C. and set aside the summoning order and the entire proceedings of the criminal complaint case.

Issues: Non-joinder of necessary party, Quashing of summoning order and proceedings

Ratio Decidendi: The court's decision was influenced by the interpretation of Section 141 of the Negotiable Instruments Act, which imposes vicarious liability on others for the company's offences. The court emphasized the imperative requirement of arraigning the company as an accused for maintaining a prosecution under Section 141 of the Act.

Final Decision: The court set aside the summoning order and the entire proceedings of the criminal complaint case, allowing the applicant's application under Section 482 of Cr.P.C.

Judgment

By means of present application under Section 482 of Cr.P.C., the applicant seeks to quash the summoning order dated 11.09.2013, as also entire proceedings of criminal complaint case no. 2030 of 2013, Atik Ahmad vs Surinder Singh, pending in the court of Judicial Magistrate I, Vikasnagar, Dehradun.

2. A perusal of the complaint filed by Atik Ahmed (respondent herein) against Surinder Singh (applicant herein) under Section 138 of the Negotiable Instruments Act, 1881, reveals that Surinder Singh alone was made party in the criminal complaint case, and not his company, whereas the fact of the matter is that the cheque was issued by Surender Singh in the capacity of Managing Director of MAPEX India (P) Ltd.. In such a situation, MAPEX India (P) Ltd. also ought to have been arrayed as accused alongwith Surinder Singh. In a way, the complaint is bad for non-joinder of necessary party.

3. Learned counsel for the applicant relied upon the judgment of Hon'ble Apex Court rendered in the case of Anil Gupta vs Star India Pvt. Ltd. and another, decided on 07.07.2014 in support of his contention. Paragraph no. 14 of said judgment is being reproduced hereunder for ready reference:

"14. Again the same question was considered by three Judge Bench of this Court in Aneeta Hada v Godfather Travels and Tours Pvt. Ltd. (2012) 5 SCC 661. The Court noticed the decisions in Anil Hada (supra) case and Aneeta Hada (supra) case. The three Judge Bench while partly overruled the finding of Anil Hada (supra) affirmed the decision of Aneeta Hada (supra). This Court held:

"51. We have already opined that the decision in Sheoratan Agarwal runs counter to the ratio laid down in C.V. Parekh which is by a larger Bench and hence, is a binding precedent. On the aforesaid ratio, the decision in Anil Hada has to be treated as not laying down the correct law as far as it states that the Director or any other officer can be prosecuted without impleadment of the company. Needless to emphasise, the matter would stand on a different footing where there is some legal impediment and the doctrine of lex non cogit ad impossibilia gets attracted."

"53. It is to be borne in mind that Section 141 of the Act is concerned with the offences by the company. It makes the other persons vicariously liable for commission of an offence on the part of the company. As has been stated by us earlier, the vicarious liability gets attracted when the condition precedent laid down in Section 141 of the Act stands satisfied. There can be no dispute that as the liability is penal in nature, a strict construction of the provision would be necessitous and in a way, the warrant."

"58. Applying the doctrine of strict construction, we are of the considered opinion that commission of offence by the company is an express condition precedent to attract the vicarious liability of others. Thus the words "as well as the company" appearing in the section make it absolutely unmistakably clear that when the company can be prosecuted, then only the persons mentioned in the other categories could be vicariously liable for the offence subject to the averments in the petition and proof thereof. One cannot be oblivious of the fact that the company is a juristic person and it has its own respectability. If a finding is recorded against it, it would create a concavity in its reputation. There can be situations when the corporate reputation is affected when a Director is indicated.

"59. In view of our aforesaid analysis we arrive at the irresistible conclusion that for maintaining the prosecution under Section 141 of the Act. arraigning of a company as an accused is imperative. The other categories of offenders can only be brought in the dragnet on the touchstone of vicarious liability as the same has been stipulated in the provision itself. We say so on the basis of the ratio laid down in C.V. Parekh which is a three Judge Bench decision. Thus, the view expressed in Sheoratan Agarwal does not correctly lay down the




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