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JAMMU AND KASHMIR HIGH COURT
Bansi Lal Bhat, J.
Sanjeev Khajuria —Petitioner
versus
Ravinder Singh Pathania —Respondent
561-A No.320 of 2013 and Cr.MA No.386 of 2013
Decided on 28.7.2015
For the Petitioner:Mr. Gaurav Jamwal and Mr. Anil Khajuria, Advocates
For the Respondent:Mr. H. C. Jalmeria, Advocate with Mr. Arvind Singh Jalmeria, Advocate
IMPORTANT POINT
Where a person is sought to be prosecuted under Section 138 of NI Act in his individual capacity though cheque was drawn by him as Managing Director of a Company on account of accounts maintained by the Company, prosecution was liable to be quashed.
Headnote:Negotiable Instruments Act, 1881—Section 138—Cheque drawn by petitioner as chairman of a Trust on an account maintained by trust—Cheque was dishonour—Prosecution of petitioner as an individual—Maintainability of prosecution—Trust, either private/charitable or otherwise is a Juristic person—No allegations in complaint that cheque was issued by trust in discharge of its liability and that petitioner was in-charge of and responsible for conduct of business of trust—Complaint could not be maintained against petitioner in his individual capacity and was liable to be quashed.
Held: It is indisputable that in the instant case the Cheque was issued by Chairman of MLK Educational and Welfare Trust, Kathua. The Cheque bears the seal of the Chairman of the Trust which in itself is sufficient to demonstrate that the drawer of the Cheque signed and issued the same in his capacity as Chairman of the afore-said Trust. In view of this position, it was obligatory upon the respondent to allege in the complaint that at the time of commission of offence, petitioner, in his capacity as Chairman, was in-charge of and responsible for the conduct of the business of the Trust. Admittedly, there is no allegation in the complaint that the Cheque was issued by the Trust in discharge of its past liability and the petitioner was, at the time of commission of offence in charge of and responsible for the conduct of business of the Trust. There is not even a whisper in the complaint that the petitioner had issued the bounced Cheque in his capacity as Chairman of the Trust and the cheque had been issued to discharge legally enforceable liability of the Trust. Admittedly, the Trust has not been arrayed as accused in the complaint and petitioner has not been arraigned as accused in his capacity as Chairman of the Trust. There is also no allegation in the complaint that the petitioner was in charge of and responsible to the Trust for the conduct of its business when the alleged offence was committed. In absence of necessary allegations in respect of the petitioner being incharge of and responsible for the conduct of the business of the Trust at the relevant time, petitioner could not be deemed to be liable.
The import of these judgments is that the respondent was required to allege in the complaint that the Cheque was issued by the petitioner in his capacity as Chairman of the Trust and the same had been issued by the petitioner, being incharge of the affairs and responsible for the conduct of business of the Trust, in discharge of legally enforceable liability of the Trust. He was also required to allege dishonour of cheque against the Trust. Unfortunately that has not been done. In absence of proceedings being initiated against the Trust and the cheque in question having been issued by the Chairman of the Trust, the complaint could not be maintained against the petitioner in his individual capacity. (Paras 6 and 8)
Result: Petition allowed.
Bansi Lal Bhat, J.—The petitioner seeks quashing of order dated 03.11.2007 passed by learned CJM Kathua on the complaint filed by respondent against petitioner herein by virtue whereof the trial Court issued process against the petitioner for offence under Section 138 of Negotiable Instruments Act. Invoking jurisdiction of this Court under Section 561-A CrPC, the petitioner prays for quashing of complaint as well as the proceedings before the trial Court.
2. Allegedly petitioner, in discharge of past liabilities, issued check No.11631010 dated 03.09.2007 for sum of Rs.1,00,000/- drawn at J&K Bank Kathua in favour of respondent herein which on being presented in the Bank was dishonoured and returned on 15.09.2007 with endorsement of insufficiency of funds in the account of petitioner. Respondent issued statutory notice of demand to petitioner on 07.10.2007 which was claimed to have been served upon petitioner on 21.09.2007 (date as reflected in the complaint, otherwise it should have been 21-10-2007). Respondent filed the complaint under Section 138 of NI Act on 03.11.2007 and on the same date, learned CJM Kathua, after examining the respondent under Section 200 CrPC, took cognizance of offence under Section 138 of NI Act against petitioner herein and issued process against him which has been assailed in the present proceedings.
3. The impugned order dated 03.11.2007 directing issue of process against petitioner herein under Section 138 of NI Act has been assailed on the ground that the trial Court has overlooked the fact that the cheque in question has not been issued by the petitioner in his personal capacity. It is contended that the cheque in dispute was drawn by MLK Education and Welfare Trust and signed on behalf of the Trust by the Chairman. Thus, it is contended, the cheque so drawn was of account maintained by the MLK Educational and Welfare Trust and not of the account maintained by the petitioner. It is further contended that the ld. Trial Court has construed the liability of the Trust as that of the petitioner least realizing that liability under the said cheque was that of the Trust and not personal liability of the petitioner.
4. Heard learned counsel for the parties. Learned counsel for the petitioner submits that the impugned order is not sustainable as criminal liability of a Trust could not be fastened against the individual even if that individual was managing the affairs of the Trust unless the Trust was arrayed as accused in the complaint. He further submits that the petitioner is being prosecuted without there being any legally enforceable debt against the petitioner. It is submitted that in absence of any allegation in the complaint that it was the liability of the Trust which was sought to be discharged by way of the cheque in question, complaint against the petitioner in his individual capacity was nothing but the abuse of the process of law. Per contra, learned counsel for respondent submits that the petitioner having issued the cheque in his capacity as Chairman of MLK Educational and Welfare Trust, Kathua was liable for penal action and the factum of petitioner being Chairman of the aforesaid Trust has been specified in the notice of demand dated 25.09.2007 though the aforesaid Trust has not been arrayed as accused in the complaint.
5. Learned counsel for the parties have referred to a host of judgments which deal with the import of Section 141 of NI Act. Since in the instant case, the issue does not relate to commission of offence by a Company, the authorities cited are not relevant and need not be referred to.
6. Offence under Section 138 of Negotiable Instruments Act is committed when the Cheque issued in discharge of legally enforceable liability is dishonoured. It is indisputable that in the instant case the Cheque was issued by Chairman of MLK Educational and Welfare Trust, Kathua. The Cheque bears the seal of the Chairman of the Trust which in itself is sufficient to demonstrate that
