Cri. O. P. NO. 9008 of 1997

8th April, 1999

Petitioner Counsel: Mr. A. R. L. SUNDERASAN
Respondent Counsel: Mrs. LATHA RAMAKRISHNAN

Cases Cited:
Suryanarayanan Vs. Anchor Marine Service, (1995) 1 L.W. (Cri.) 132 : (1998) 94 Comp. Cas. 874 (Mad.) [Para 7,9,10,14,17]
S. Krishnamoorthy Vs. B. S. Kesavan, (1994) 80 Comp. Cas. (Mad.) : (1994) 1 L.W. (Cri.) 135 [Para 9]
Krishan Bai Vs. Arti Press, (1991) L.W. (Cri.) 513 : (1994) 80 Comp. Cas. 750 (Mad.) [Para 9,10]
Sheoratan Agarwal Vs. State of Madhya Pradesh, AIR 1984 S.C. 1824 : (1984) 4 SCC 352 [Para 10,14]
U. P. Pollution Control Board Vs. Modi Distillery, (1988) 63 Comp. Cas. 77 : AIR 1988 S.C. 1123 [Para 10,12,14]
Anandan Vs. Arivazhagan, (1997) 2 C.T.C. 293 : (1999) 96 Comp. Cas. 503 (Mad.) [Para 10,14,15]
Chandrasekaran Vs. Dhanasekaran, Cri. R.C. No. 655 of 1996 [Para 11]
Delhi Municipality Vs. Ram Kishan Rohtagi, AIR 1983 SC 67 [Para 12]
Sharda Agarwal Vs. Additional Chief Metropolitan Magistrate, (1992) Suppl. M.W.N. (Cri.) All. 72 : (1993) 78 Comp. Cas. 123 [Para 13]

JUDGMENT

JUDGMENT :- This petition is filed by the accused in C.C. No. 133 of 1995 on the file of the Judicial Magistrate No. 1. Thiruchirapalli, to quash the above case.

2. The respondent/complainant filed a complaint under Sections 138 and 141 of the Negotiable Instruments Act, 1881, against the petitioners who are the Managing Director and Director of the Company called Sovisk Chamline (P.) Limited.

3. It is alleged in the complaint that the accused are carrying on business in selling of the complainant's products and that on behalf of the company one of the Directors issued cheque on December 31, 1994, in favour of the petitioner and that when the cheque was presented in the bank, it was returned with the endorsement "insufficiency of funds" and thereupon, the complainant issued notice to the accused and as the accused has not arranged for repayment of the loan, the complaint is filed.

4. It is seen that PW-1 who presented the complaint on behalf of the complainant-company was examined as PW-1 on August 9. 1995. After examination of PW-1 the case was posted for further hearing on several dates. Thereafter on July, 1997, the accused have filed petition to quash the proceedings.

It is contended by the petitioner/accused that the offence is said to have been committed by a private limited company and that the company has not been impleaded as accused and that therefore, the complaint is filed in contravention of Section 141 of the Act and that the entire proceedings have to be quashed. It is further, alleged that the complaint has been filed by Victor C. Manual claiming to be an agent and that authorisation letter dated August 15, 1993 has been given by one G. Radhakrishnan, marketing manager who himself is only a power of attorney and that a delegate cannot further delegate his powers and functions and that therefore the very laying of the complaint is bad and deserves to be quashed.

5. The respondent/complainant filed counter raising the following contentions:-

An application was filed to implead the company as an accused and that failure to implead the firm would only be an irregularity and that the same is rectified by filing the impleading application and that the petitioners have not stated in the petition that they were not Directors of the firm at the time of commission of the offence and that the petitioners were in charge of and responsible for the conduct of the business. Victor S Manual, was authorised to represent the proceedings and as he had resigned his job. The respondent has appointed one Gopal Krishnan, Accountant-cum-Manager as their power agent dated June 21, 1996.

6. Learned counsel for the revision petitioner accused contended that the presentation of the complaint by an agent is not maintainable and that as the cheque was issued on behalf of the company, the company should have been impleaded as accused and that therefore, the entire proceedings have to be quashed.

7. As regards the first contention that the presentation of the complaint by PW-1 is not maintainable, the same has got to be rejected. It is seen from the records that one G. Radhakrishnan, was authorised by the Director of the company to appear and represent the company in all the Courts on August 16, 1993. On August. 15, 1993. the said Radhakrishnan has authorised PW-1, Victor Manual, to represent the company in the civil and criminal court with effect from August 15, 1993. It is seen that only on August 16, 1993, Radhakrishnan was authorised by the company. But on August 15, 1993, i.e., one day earlier to the authorisation given to Radhakrishnan, the said Radhakrishnan has authorised Victor Manual to represent in the court on behalf of the company. But, it is seen from the power of attorney given by the company, which is marked as exhibit P-1, that Radhakrishnan was conferred under the above deed of power of attorney to act and represent the company in all the courts whether civil or criminal. The above power of attorney was given on August 2, 1993. Subsequently, the company has given the power of attorney to one N. Gopalkrishnan on June 21, 1996 to represent the company since Victor-Manual has resigned. But, before the said resignation, the said Victor Manual was examined as PW-1, and he was also cross-examined by the accused. The question whether or not the complaint was presented by a person competent to represent the affairs of the company cannot be decided in these proceedings. In a decision cited by learned counsel for the respondent reported in Suryanarayanan v. Anchor Marine Service, (1995) 1 L.W. (Cri.) 132 : (1998) 94 Comp. Cas. 874 (Mad.) it is clearly held that whether the complaint is maintainable or not is a matter to be considered at the time of evidence and that the above question cannot be gone into at this stage to quash the proceedings. The validity of the complaint presented by PW-1 and his subsequent resignation and the validity of the authorisation given to another person under a document by the company cannot be decided at this stage. The above questions have to be decided only in the main case and as such the contention of the accused that the presentation of the complaint by agent PW-1 is not maintainable cannot be decided at this stage. Hence I hold that the proceedings cannot be quashed on that ground.

8. The second contention raised by the accused is that the cheque was issued for the company by one of the partners and that, therefore, the company should have been impleaded as accused in the case. To appreciate the contention of the petitioner-accused it becomes necessary to extract the relevant provision contained in the Negotiable Instruments Act.

Section 141 of the Act reads thus:

"141. Offences by companies - (1) if the person committing an offence under Section 138 is a company every person who, at the time the offence was committed, was in-charge of. and was 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 he liable to be proceeded against and punished accordingly:

Provided that nothing contained in 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.

(2) Notwithstanding anything contained in sub-section (1) 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."

Relying upon the above provision, it is contended by learned counsel for the petitioner that the proceedings have to be quashed solely on the ground that the company is not impleaded as a party. In support of the same, learned counsel for the petitioner also relies upon the following decisions.

9. In Suryanarayanan v. Anchor Marine Service, (supra) this court has held that the respondent deliberately omitted to implead the company in the complaint, though Section 141 of the Act emphasises that the company shall be an accused. The court has further held that the wording in the section "as well as the company shall be deemed to be guilty of the offence and shall be liable to be proceeded against", makes it clear that the company also shall be prosecuted along with others, who were in charge of the company and that if the company has not been impleaded as an accused in the proceedings. It will not be in compliance with Section 141 of the Act. The learned Judge for coming to such a conclusion also relied upon earlier decisions of this court reported in S. Krishnamoorthy v. B.S. Kesavan, (1994) 80 Comp. Cas. (Mad.) : (1994) 1 L.W. (Cri.) 135 and Krishan Bai v. Arti Press, (1991) L.W. (Cri.) 513 : (1994) 80 Comp. Cas. 750 (Mad.).

10. It is seen that in Sheoratan Agarwal v. State of Madhya Pradesh reported in AIR 1984 S.C. 1824 : (1984) 4 SCC 352, The Apex Court in a case arising under the Essential Commodities Act has held that persons or officers of the company can be separately prosecuted irrespective of whether the company itself is prosecuted or not, the learned Judge of this court in the decision in Krishan Bai v. Arti Press (supra) cited above has also observed that in another decision reported in U.P. Pollution Control Board v. Modi Distillery, (1988) 63 Comp. Cas. 77 : AIR 1988 S.C. 1123 the apex Court has held that unless there was prosecution of the company, there can be no prosecution of the Managing Director. The same view was affirmed by the learned Judge who gave the ruling in Suryanarayanan v. Anchor Marine Service (supra) and Anandan v. Arivazhagan, (1997) 2 C.T.C. 293 : (1999) 96 Comp. Cas. 503 (Mad.). It has been held in the above decisions that proceedings under Section 138 of the Act are defective for the non-prosecution of the company and that the directors alone cannot be prosecuted for the alleged offence and that for this non-compliance with this provision, the petitioners are entitled to discharge.

11. In another unreported decision in Chandrasekaran v. Dhanasekaran, Cri. R.C. No. 655 of 1996 and connected petitions, the learned Judge of this court has also taken the same view as reiterated in the earlier decision, which have been referred to above.

12. Learned counsel for the respondent contended that the petition to implead the company is pending in the trial court and as such, the initial defect that appeared on the date of the presentation of the complaint is to be rectified and that, therefore, the proceedings cannot be quashed at this stage. Learned counsel for the petitioner contended that filing a petition under Section 319 of the Criminal Procedure Code will not cure the initial defect relating to non-compliance with Section 141 of the Act. It is no doubt true that Section 319 of the Criminal Procedure Code permits impleading another accused in the course of enquiry or trial when it appears from the evidence that another person also has committed the offence. The court has held in Anandan v. Arivazhagan (supra) that without impleading the company the complaint against the petitioner is not sustainable and that when the complaint has the initial defect, the defect cannot be cured by amending the proceedings under Section 319 of the Criminal procedure Code. The court has also held relying upon a decision of the Supreme Court in Delhi Municipality v. Ram Kishan Rohtagi, AIR 1983 SC 67. that when the complaint has the initial defect in its sustainability, the defect cannot be cured by amending the proceedings and that Section 319 of the Criminal Procedure Code will not come to the rescue for such defect. It was contended before the learned Judge in Anandan v. Arivazhagan. (supra) that the apex Court has allowed amendment of the complaint to implead the company and that the above case is reported in U. P. Pollution Control Board v. Modi Distillery (supra). The above decision of the apex Court will not apply to the present case. The above decision will not strengthen the contention of the respondent/complainant. In the above case, it is seen that the company was impleaded as a party, but the company is wrongly described as an industrial unit and that the authority failed to furnish the requisite information to the complainant and that the amendment was permitted. In the above circumstances, the apex Court has held that the industrial trial unit having failed to furnish the correct description of the company, it was not open to them to take advantage of their own lapses to quash the proceedings alleging that the company was not properly described. But in this case, the company was not at all impleaded as a party. It cannot be disputed that the cheque was issued by the Managing Director for and on behalf of the company. In the complaint, the accused, apart from the person who issued the cheque were impleaded. Apart from the Managing Director, three other Directors were impleaded as respondents No. 2 to 4. It is, thus, clear that the complainant deliberately omitted to implead the company as an accused. In view of the decisions referred to above, the contention of the respondent/complainant that the company can be impleaded as a party under Section 319 of the Criminal Procedure Code and as such, the complaint does not suffer from any infirmity has got to be rejected.

13. The complaint filed under Section 138 of the Act has to be quashed on another ground also. The plain meaning of Section 141 of the Act will clearly show that every person who at the time of the offence was in charge of and was 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. There is no averment in the complaint that the accused were in-charge of and responsible to the company for the conduct of the business of the company. In paragraph 3 of the complaint, it is alleged that the accused being a private limited company and on behalf of the company one among the Directors have issued the cheque. It is not specifically alleged that the Director who issued the cheque or accused Nos. 2 to 4 were in-charge of and responsible to the company for the conduct of the business. It is not even alleged that as to how accused Nos. 2 to 4 are responsible for the issue of cheque by one of the Directors. It is not alleged that the Director who issued the cheque was solely responsible and was in-charge of the affairs of the company. It is no doubt true that if evidence is led during the trial about the accused or any of the accused, the court would be at liberty to proceed against them or him, Learned counsel for the petitioner also relies upon a decision reported in Sharda Agarwal v. Additional. Chief Metropolitan Magistrate, (1992) Suppl. M.W.N. (Cri.) All. 72 : (1993) 78 Comp. Cas. 123 wherein it is held thus:

"There is no allegation in the complaint that the directors, i.e.. the applicants, were in-charge of and responsible to, the company for the conduct of the business of the company. Therefore, as it is, the complaint cannot proceed against the Directors only."

14. Learned counsel for the respondent contended that the complaint under Section 138 of the Act can be filed against the company ,or partners and Directors of the company or both and that therefore, it is not incumbent on the complainant to implead the company as an accused. To substantiate the above contention, learned Counsel for the respondent relies upon a decision of this court reported in Doraisamy v. Archana Enterprises (supra). As already observed the learned Judge who delivered the Judgment in Anandan v. Arivazhagan (supra) and Suryanarayana v. Anchor Marine Service (supra) which is referred to above, relied upon the judgment of the apex Court reported in U.P. Pollution Control Board v. Modi Distillery, (supra) The learned single Judge in the above decision also referred to the decisions reported in Krishan Bai v. Arti Press, (supra) and S. Krishnamoorthy v. B.S. Kesarvan (supra) But the learned Judge in Doraisamy v. Archana Enterprises (supra) has held that the above two decisions cannot be recorded as laying down the correct proposition of law in the light of the apex Court decision reported in Sheoratan Agarwal v. State of Madhya Pradesh (supra). The above decision was rendered in a case arising under the Water (Prevention and Control of Pollution) Act. 1974 (6 of 1974). But in U.P. Pollution Control Board v. Modi Distillery (supra) the apex Court has held thus (headnote of AIR) :

"Where an offence has been committed by a company, every person who at the time of the commission of the offence 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. Proviso to sub-section (1) of Section 47 however engrafts an exception in the case of any such person if he were to prove that the offence was committed without his knowledge or that he exercised all due diligence to prevent the commission of such offence. Sub-section (1) of Section 47 is much wider than sub-section (4) of Section 17 of the Prevention of Food Adulteration Act, 1954. Furthermore, proviso to sub-section (1) shifts the burden on the delinquent officer or servant of the company responsible for the commission of the offence. Its burden is on him to prove that he did not know of the offence or connived in it or that he had exercised all due diligence to prevent the commission of such offence. The non obstante clause in sub-section (2) expressly provides that notwithstanding anything contained in sub-section (1) where an offence under the 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."

Section 47 of the above Act is similar to Section 141 of the Negotiable Instruments Act which relates to offences by companies. But the learned Judge in Doraisamy v. Archana Enterprises. (supra) has held that the Supreme Court made the above observations on the facts of the said case and they cannot be regarded as setting a point of law. I am unable to agree with the above finding of the learned Single Judge. The apex court has relied upon Section 47 of the Water Pollution Act which is similar to Section 141 of the Negotiable Instruments Act and has held that where the offence is committed by the company every person who at the time of commission of the offence was in-charge of the company as well as the company shall be deemed to be guilty of the offence. Of course, there are certain exceptions to above Section 141 of the Act. The proviso to Section 141 states that nothing contained in Section 141 sub-clause (1) shall render any person liable to punishment, if he proves that the offence was committed without his knowledge. Sub-clause (2) of Section 141 which is already extracted above also contains another exception. But the above provisions will not help the case of the respondent, since there is no adequate and sufficient averment in the complaint in the above aspect. It has to be stressed at this stage that only if the company is impleaded as a party, then the accused would be in a position to set up defence under the proviso and sub-clause (2) to Section 141.

15. The learned single Judge has held in Doraisamy v. Archana Enterprises (supra) that either the company can be prosecuted or the person mentioned in sub-section (1) or sub-section (2) can be prosecuted or both can be prosecuted together in the same proceedings. I am unable to accept the above view taken by the learned single Judge, as it is clearly mentioned in Section 141 sub-clause (1) that the person as well as the company shall be deemed to be guilty of the offence. Learned counsel for the respondent contended that there is no word "and" that only the words "as well as" is mentioned in the above section and as such, there is no need to implead the company. The above contention of the respondent has got to be rejected, in view of the decision referred to earlier. The words "as well as" clearly indicate that both the company and the person who is responsible for the affairs of the company shall be deemed to be guilty of the offence. It is well settled that in interpreting the rules and section of a particular enactment much importance has to be attached only to the plain meaning employed in a particular rule. Further, in view of the latest decision of this court in Anandan v. Arivazhagan (supra) the Judgment reported in Doraisamy v. Archana Enterprises, (supra) will not assist the case of the respondent. Therefore, I hold that non-impleading of the company as accused vitiates the proceedings. I hold that the complaints filed are in contravention of Section 141 of the Act.

16. It is contended by the respondent that the accused did not file any application for discharge from the case and as such, this original petition is not maintainable. The above contention of learned Counsel for the respondent is bereft of any substance. There is no need for the accused to file an application for discharge of the accused. Under Section 482 of the Criminal Procedure Code the court is entitled to quash the proceedings, if there is inherent defect in the complaint and that defect cannot he cured in subsequent stage of the proceedings. As the complaint itself was filed in contravention of Section 141 of the Act, the contention of the respondent that failure on the part of the accused to file an application for discharge from the case will disentitle them to file this petition is not sustainable and has got to be rejected.

17. For the above reasons, I am inclined to follow the decisions reported in Suryanarayanan v. Anchor Marine Service (supra) and Anandan v. Arivazhagan (supra) in preference to the decision reported in Doraisamy v. Archana Enterprise (supra).

18. As the complaint was filed in contravention of Section 141 of the Negotiable Instruments Act, the calender case pending on the file of the trial court has to be quashed, and the accused have to be discharged from the case.

19. In the result, the criminal original petition is allowed. The proceedings in C.C. No. 133 of 1995 on the file of the Judicial Magistrate No. 1, Tiruchirapalli, are quashed and the petitioners/accused are discharged from the case.

Petition allowed.