(2024) ibclaw.in 296 HC
IN THE HIGH COURT OF GUJARAT
Bhoraniya Damjibhai Tapubhai
v.
Sumeru Tradelink Pvt. Ltd. and Anr.
R/Criminal Misc. Application (For Quashing & Set Aside Fir/Order) No. 20188 of 2022
Decided on 08-Apr-24
Coram: Mr. Justice Ilesh J. Vora
Add. Info:
For Appellant(s): Mr. PT Jasani
For Respondent(s): Chetankumar V Darji, Mr. Jay Mehta, App
Order:
ORAL ORDER
1. By invoking inherent powers of this Court, the applicant-original accused no.4 who has been subsequently impleaded during the course of enquiry by the trial court, has preferred this application against the order dated 05.03.2022 passed below Ex.13 by which the Additional Judicial Magistrate Court, Ahmedabad (Rural) by exercising his judicial discretion under Section 319 of Cr.P.C., impleaded the applicant herein as accused no.4 in the said Enquiry No.132 of 2017.
2. This Court has heard Mr. P.T. Jasani, learned counsel for the applicant, Mr. C.V Darji, learned counsel for respondent no.1 and Mr. Jay Mehta, learned Additional Public Prosecutor for the respondent-State.
3. Brief facts giving rise to file present application are that, the second respondent/complainant – Sumeru Tradelink Private Limited filed a private complaint under the provisions of Section 138 of Negotiable Instruments Act, 1881, impleading therein the company Umiya Ceramics as accused no.3 and its two directors namely Odhavji Talshibhai Bhoraniya and Ramesh Tapubhai Bhoraniya as accused no.1 and 2. The complaint for return of two cheques, issued by the company accused no.3 filed on 02.08.2014 on the file of Additional Judicial Magistrate Court at Ahmedabad (Rural). The complaint was registered as Criminal Enquiry No.132 of 2017. During the pendency of said enquiry, the second respondent-complainant moved an application Ex.10 to issue summon on the officer of State Bank of India, for production of documents of signature etc. in relation to the company Umiya Ceramics – accused no.3. On 22.12.2021, before the trial court, the authorized person of the bank namely Mr. P.D. Parth, was examined and he had produced the particulars of the accounts of Umiya Ceramics including the particulars of the authorized signatory of the accounts. It has come on record of the trial court that, the cheques were issued by Umiya Ceramics and one Bhoraniya Damjibhai Tapubhai i.e. applicant herein is the authorized signatory of the cheques. Based on this evidence, the complainant vide Ex.13, prayed before the trial court that, the applicant Bhoraniya Damjibhai Tapubhai being a signatory of the cheques, has committed offence and therefore, he may be impleaded as accused in the said enquiry. The learned trial court vide its order dated 21.05.2022, allowed the said application and joined the applicant herein as accused no.4.
4. Being aggrieved with the said order, the applicant has preferred this application, inter alia, stating that the impugned order has been passed by ignoring the mandatory provision of N.I. Act as no notice as contemplated under Section 138(b) of N.I. Act was served upon the applicant and therefore, impleadment of applicant as accused, without serving statutory notice itself is bad in law and there is a delay in filing a petition under Section 319 of Cr.P.C. for impleading the applicant as an accused.
5. Mr. P.T. Jasani, learned counsel appearing for the applicant has submitted that, the complaint for alleged dishonour of cheques filed on 02.08.2014 and criminal enquiry being registered in the year of 2017 and the application Ex.13 impleading the applicant-accused was filed on 05.03.2022. Thus, there is a delay in filing the application and on this count, the application Ex.13 is not sustainable. The second contention raised by learned counsel Mr. Jasani questioning the legality of the orders is that, no demand notice under Section 138(d) was served upon the applicant herein and notice to the company would not suffice for compliance of the mandatory provisions. It is in this context, Mr. Jasani, learned counsel would urge that, the three Judge Bench decision of the Apex Court in the case of Aneeta Hada & Ors. vs. Godfather Travels and Tours Pvt. Limited (2012) 5 SCC 661) has laid down the law that, notice to each director sought to be impleaded is mandatory and pre-condition for the prosecution and therefore, the judgment relied (Satish Chand Singhal vs. The State of Gujarat & Ors.) has no application in the facts of present case.
6. In view of the aforesaid contention and relying on the ratio laid down by the Apex Court in the case of N. Harihara Krishnan vs. J. Thomas (2017 ACD 1002 (SC)), learned counsel Mr. Jasani, contended that, the application under Section 319 of Cr.P.C. by which the applicant sought to be impleaded, is filed after expiry of statutory period as provided under the Act and that too, without serving a statutory notice as contemplated under Section 138(b) of the Act and same has not been properly considered by the court while allowing the application filed under Section 319 of Cr.P.C. by which court has committed an error of law which has resulted into miscarriage of justice as prosecution without serving notice is bad in law. Thus, he would urge that, the order impugned is not sustainable in law and same deserves to be quashed by exercising inherent powers of this Court.
7. Mr. C.V. Darji, learned counsel for the complainant has submitted that, after filing the complaint, instead of issuing summons to the accused, the trial court registered the case as Criminal Enquiry No.132 of 2017 and therefore, before taking cognizance for the offence under Section 138 of the N.I. Act, the court having all the powers to join the accused who has committed the offence and in the facts of present case, the applicant is the authorized signatory of the cheques and at relevant time, the complainant was not certain about who is the authorized signatory and during the criminal enquiry, the bank officer was examined for production of particulars of the bank account and on production of evidence in relation to the signatory authority, the application Ex.13 under Section 319 of Cr.P.C. was submitted to the court. Thus, undisputedly the cheques in question were signed by the present applicant and trial court was prima-facie satisfied that, the company and the present applicant has committed an offence for which he could be tried together with the co-accused. In such circumstances, Mr. Darji, learned counsel has submitted that, the trial court has rightly relied on the ratio laid down by the Apex Court in the case of Satish Chand Singhal (supra) that notice to the company amounts to notice to the signatory of the cheque and no separate notice is require to be served on the signatory of the cheque and therefore, there is no mandatory violation of Section 138(b) of the N.I. Act.
8. Having considered the submissions made by learned counsel for respective parties and on perusal of the findings recorded by the trial court, the issue falls for my consideration as to whether case is made out to interfere with the findings recorded by the trial court below Ex.13 by which the applicant impleaded as accused no.4 in the criminal enquiry.
9. Having regard to the facts and circumstances of present case, initially second respondent-complainant filed a complaint against Umiya Ceramics, a company incorporated under the provisions of Companies Act, 1956 and its two directors for the alleged dishonour of cheques. The court, instead of taking cognizance of the offence, thought it fit to make enquiry into the case and as a result, the complaint was registered as Criminal Enquiry No.132 of 2017. In such circumstances, pending the enquiry, the application under Section 319 was submitted to implead the applicant herein as accused no.4. The statutory notices were being served upon the company as well as its two directors who are already joined as accused. However, no notice is served upon the applicant herein. Before the court and during the enquiry proceedings, the bank personnel with whom the company’s bank account maintained, had been called to furnish the bank details and it has come on record that the applicant is the signatory of two cheques for which the complaint is filed. In this undisputed background of facts, the contention as raised required to be examined. The first contention is that, notice to the applicant is mandatory and same has been held by three Judge Bench of Supreme Court in case of Aneeta Hada (supra). In the case of Aneeta Hada, the issue before the Supreme Court was that whether an authorized signatory of a company would be liable for prosecution under Section 138 without the company being arraigned as accused. The Supreme Court after examining the statutory provisions and various ruling on these aspects, held that, if a person who commits offence under Section 138 is a company, the company as well as every person in charge of and responsible for the company at the time of commission of the offence, is deemed to be guilty of the offence and applying the doctrine of strict condition, it was held that, for maintaining the prosecution under Section 141 of the Act, arraigning of a company as an accused is imperative. In the said judgment, it has nowhere observed and held that, in order to maintain the prosecution against the directors, the individual notices under Section 138 would be mandatory and necessary. Thus, the contention as raised that, without serving notice upon the director, the prosecution is bad in law, has not been dealt by the three Judge Bench of the Apex Court (Aneeta Hada). On the contrary, the Apex Court in Krishna Texport & Capital Markets Limited vs. Ila A. Agrawal & Ors. (2015 (8) SCC 28), has observed and held that, when the offence is committed by the company and to fastening the liability on the directors with vicarious liability, the issuance of individual notice under Section 138 to the directors not required as the summary remedy created for benefit of drawee of dishonour of cheque will thus be rendered completely cumbersome and capable of getting frustrated. The extract of para-15 and 16 are reproduced as under:
“15. If the requirement that such individual notices to the directors must additionally be given is read into the concerned provisions, it will not only be against the plain meaning and construction of the provision but will make the remedy under Section 138 wholly cumbersome. In a given case the ordinary lapse or negligence on part of the Company could easily be rectified and amends could be made upon receipt of a notice under Section 138 by the Company. It would be unnecessary at that point to issue notices to all the directors, whose names the payee may not even be aware of at that stage. Under Second proviso to Section 138, the notice of demand has to be made within 30 days of the dishonour of cheque and the third proviso gives 15 days time to the drawer to make the payment of the amount and escape the penal consequences. Under clause (a) of Section 142, the complaint must be filed within one month of the date on which the cause of action arises under the third proviso to Section 138. Thus a complaint can be filed within the aggregate period of seventy five days from the dishonour, by which time a complainant can gather requisite information as regards names and other details as to who were in charge of and how they were responsible for the affairs of the Company. But if we accept the logic that has weighed with the High Court in the present case, such period gets reduced to 30 days only. Furthermore, unlike proviso to clause (b) of Section 142 of the Act, such period is non-extendable. The summary remedy created for the benefit of a drawee of a dishonoured cheque will thus be rendered completely cumbersome and capable of getting frustrated.
16. In our view, Section 138 of the Act does not admit of any necessity or scope for reading into it the requirement that the directors of the Company in question must also be issued individual notices under Section 138 of the Act. Such directors who are in charge of affairs of the Company and responsible for the affairs of the Company would be aware of the receipt of notice by the Company under Section 138. Therefore neither on literal construction nor on the touch stone of purposive construction such requirement could or ought to be read into Section 138 of the Act. Consequently this appeal must succeed. The order passed by the High Court is set aside. Since the matter was at the stage of considering application for leave to appeal and the merits of the matter were not considered by the High Court, we remit the matter to the High Court for fresh consideration which may be decided as early as possible. Concluding so, we must record that the decision of the Division Bench of the Madras High Court in B. Raman & Ors. Vs. M/s. Shasun Chemicals and Drugs Ltd. (supra) was incorrect and it stands overruled. The appeal is allowed in these terms.”
10. It is not in dispute that the applicant was in charge of and responsible to the conduct of business and the cheques were issued by the company allegedly signed by the applicant herein. Therefore, mere non mentioning of the name of the applicant in the complaint cannot be absolved him of the responsibility of the company as he has issued the cheques in question. Thus, therefore, the technical issue of non-serving of notice as contemplated under Section 138 (b) has no any merits as the principal accused-company and other two directors were served with statutory notice and in view of the status of the applicant in the company and being a signatory of the cheques was deemed to be aware of the receipt of the notice by the company. Thus, the ratio of the Apex Court laid down in Krisha Texport and Capital Markets (supra) and considering the peculiar facts and circumstances of present case, the prosecution against the applicant without serving the statutory notice is maintainable and trial court has rightly recorded the findings that, the notice to the applicant is not necessary and prosecution can be proceeded without it.
11. The second contention raised is that, the impleadment of the accused under Section 319 of the Cr.P.C. for the offence punishable under Section 138 could not have entertained after the expiry of statutory period.
12. In the facts of present case, when the application under Section 319 of Cr.P.C. was allowed, the trial court has not taken a cognizance of the offence. The contention with regard to limitation would be applicable only in case the court has taken cognizance of the offence. If the application of impleadment of the applicant would have filed after taking cognizance of the offence, then, the issue of limitation would come into picture. Heavy reliance has been placed on the case of N. Harihara Krishnan (supra), by the applicant to contend that, the order is passed contrary to the provisions of Section 142(1)(b) of the N.I. Act. On examination of factual aspects of the cited case, this Court finds that, in the cited case, the company M/s. DAKSHIN GRANITES PRIVATE LIMITED was not impleaded as accused when complaint for the return of cheque filed before the trial court. The trial court took cognizance and issued summons to individual persons and after three years, the application under Section 319 of Cr.P.C. was being filed to implead M/s DAKSHIN. There was no any reasonable explanation for seeking impleadment of the company as an accused after expiry of statutory period as contemplated under Section 142(1)(b) of N.I. Act and therefore, the Apex Court on factual aspects, held that, the application invoking section 319 of Cr.P.C. is only device by which the respondent-complaint seeks to initiate prosecution against the DAKSHIN beyond the period of limitation stipulated under the Act. In the facts of present case, at the time of passing the order under Section 319, the trial court has not taken cognizance of the offence and at the enquiry stage, the application was entertained. Thus, before taking cognizance in terms of Section 142 of the N.I. Act, the trial court could implead the accused under Section 319 of Cr.P.C. and plea of limitation at that stage was not require to be considered nor it is applicable. In such circumstances, the cited case on the factual aspects as well as on law would not be much helpful to the applicant.
13. For the foregoing reasons, this Court is of considered opinion that, the order passed by the trial court cannot be termed as unsustainable or abuse to the process of law which do not warrant any interference as no ground is made out to quash the same.
14. Resultantly, the application stands dismissed. Rule is discharged.
(ILESH J. VORA,J)
Original judgment copy is available here.
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