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Judgment
These nine cases were listed on 05.11.2020 under different headings. Counsel for the parties agreed for final hearing of all these cases. Thus, all these
matters were heard on merits, irrespective of their defects, which are ignored. In all these cases, petitioners and the opposite parties are same.
Petitioner No.1 is the company, petitioners No.2 and 3 happens to be directors of the company. Petitioner No.3 is the wife of petitioner No.2.
Opposite party No.2 is the complainant, on whose instance, the complaint cases were instituted. All the cases arise out of proceeding under Section
138 of the Negotiable Instruments Act. Since several cheques were issued by the petitioner company to the opposite party No.2, and as those cheques
got dishonoured, several cases under Section 138 of the Negotiable Instruments Act were filed by the opposite party No.2 against the petitioners.
Dishonour of each cheque gave rise to a separate proceeding under Section 138 of the Negotiable Instruments Act. The petitioners herein have
challenged the order taking cognizance and issuing summons, passed in all those cases separately, which are before this Court. The details of orders
challenged in these criminal miscellaneous petitions are as under: -
Order Under challenge Cr. M.P. No. Date Complaint Case 2025 of 2020 16.08.2018 2276 of 2018 2026 of 2020 29.08.2018 2274 of 2018 2046 of
2020 13.09.2018 2272 of 2018 2047 of 2020 22.09.2018 2275 of 2018 2048 of 2020 07.09.2018 2270 of 2018 2058 of 2020 16.08.2018 2271 of 2018
2059 of 2020 16.08.2018 2279 of 2018 2029 of 2020 16.08.2018 2289 of 2018 2051 of 2020 06.09.2018 2277 of 2018
The grounds taken by the petitioners in all these cases are same. Thus, the decision arrived by this Court will be applicable to all the cases.
Mr. Anil Kumar Sinha, learned senior counsel for the petitioner challenges the composite order taking cognizance and issuing summons on the
grounds that there is no proof as to when the notice under Section 138 of the Negotiable Instruments Act read with Section 141 of the Negotiable
Instruments Act was served upon these petitioners. He submits that nowhere in the complaint petitions, the complainant has given the date as to when
the notice was served. He contended that the Court presumed that notices sent under Section 138 of the Negotiable Instruments Act were duly
served and thus, proceeded to take cognizance of the offence and thereafter issued summons. He submits that as per law, there cannot be any
presumption in respect of service of notice issued under Section 138 of the Negotiable Instruments Act. According to him, there has to be a specific
averment in the complaint, giving the date when the notice under Section 138 of the Negotiable Instruments Act is served, then only the case can
proceed under Section 138 of the Negotiable Instruments Act. Mr. Sinha, learned senior counsel further argued that there was no legal debt and since
there is no legal debt, the proceeding under Section 138 of the Negotiable Instruments Act is absolutely bad. He submits that in a demand-cum-show
cause issued by the Commissioner of GST and Central Excise, the petitioner company had to pay a huge penalty and that penalty was saddled upon
these petitioners because of the inaction of the opposite party No.2. As per the petitioners, the said amount is recoverable from the opposite party
No.2, so the payment was stopped. According to him, under the aforesaid condition when the petitioners have monetary claim over the opposite party
No.2, it cannot be said that the cheques were issued in relation to any legally enforceable dues. He refers to Annexure 2, which is a show cause-cum-
demand notice issued by the revenue authorities, saddling penalty upon the petitioner. He further submits that the Court below, while taking
cognizance, has not whispered as to what are the role played by these petitioners for summoning them. He submits that only mentioning that the
petitioners No.2 and 3 were ""responsible for and looking after day to day affairs and business of the Company"" is not sufficient. As per him, petitioner
No.3 is a sleeping partner, being the wife of petitioner No.2, and has got no role in the Company, whose affair is being looked after by the petitioner
No.2. In support of his submission, learned senior counsel for the petitioners relied upon the decision of the Hon'ble Supreme Court reported in the
case of Monaben Ketanbhai Shah & Another versus State of Gujarat & Others reported in (2004) 7 SCC 1.5 As per the petitioners, in view of the
aforesaid facts, cognizance could not have been taken and summons should not have been issued against the petitioners. In support of his contention,
he relies upon the decisions of the Hon'ble Supreme Court in the case of GHCL Employees Stock Option Trust versus India Infoline Limited reported
in (2013) 4 SCC 505. He further submits that there is no specific allegation against the petitioners No.2 and 3 to issue summons against them. He
submits that the ingredients of Section 190 and 204 of the Code of Criminal Procedure have not been followed in proper manner by the Court below
while taking cognizance and issuing summons. These are the only points raised during argument.
To counter the submissions made from the side of the petitioner, Mr. Pandey Neeraj Rai, learned counsel appearing on behalf of opposite party
No.2, submits that as per Section 27 of the General Clauses Act, there is a deeming provision in respect of service of notice and the same was applied
by the Court below. He submits that it is not the case of the petitioners that they have not received the notice. It is his contention that when the receipt
of notice is not specifically denied, it will be presumed that they have received the notice. He submits that the petitioners No.2 and 3 are the directors
of petitioner No.1 and in the capacity of Director, they are responsible for looking after day to day affairs and business of the company, so they are
liable to be prosecuted and proceeded against under Section 138 of the Negotiable Instruments Act, since the cheque, which they had issued got
dishonoured. He further submits that when the revenue authorities have penalized the petitioners and there is no order to the effect that the opposite
party No.2, i.e., the complainant is to indemnify the petitioners/accused, the amount of penalty so imposed is payable by the petitioners. He submits
that if the petitioners had got any claim against the complainant, the same is a different issue and has got no relation with the dishonoured cheques in
question and both these issues cannot be merged. He submits that the cheques were issued in discharge of their liability towards legal dues and as the
cheques got dishonoured, the complainant cases were filed under Section 138 of the Negotiable Instruments Act and the Court, after applying its mind,
passed a speaking order taking cognizance of the offence under Section 138 of the Negotiable Instruments and thereafter issued summons to the
petitioners. He submits that no fault can be found in the impugned order and these petitions are liable to be dismissed.
I have heard learned counsel for both the sides and have gone through the records.
A specific question was put by this Court to the counsel for both the sides, as to who are / is the signatory to the dishonoured cheques. Both the
parties, after taking instruction from their client and after going through the records, which they had with them, stated that cheques in question were
signed by the petitioner No.2 and not by the petitioner No.3. This question was put to the parties as the dishonourned cheques are not on record.
The main contention raised by the petitioner is that the complainant in his complaint petition, has not stated as to when notices under Section 138 of
the Negotiable Instruments Act was served upon the petitioners. As per him, since the date of receipt of notice has not been mentioned the Court
could not have presumed that the notices have been served, thus, rendering the order taking cognizance as bad. When I go through the entire
pleadings of these cases, I find that there is no pleading to the effect that the petitioners have not received the notices. In absence of such pleadings, it
has to be seen as to whether notice can be deemed to have been served or not and whether the deeming provision can be applied in this case.
In this connection, Section 27 of the General Clauses Act is of great relevance. Section 27 of the General Clauses Act reads as follows: -
Meaning of service by post - Where any Central Act or Regulation made after the commencement of this Act authorizes or requires any
document to be served by post, whether the expression ""serve"" or either of the expressions ""give"" or ""send"" or any other expression is used, then,
unless a different intention appears, the service shall be deemed to be effected by properly addressing, pre-paying and posting by registered post, a
letter containing the document, and, unless the contrary is proved, to have been effected at the time at which the letter would be delivered in the
ordinary course of post.
The Hon'ble Supreme Court in the case of K. Bhaskaran versus Shankaran Vaidhyan Balan & Another reported in (1999) 7 SCC 510 (at para 24)
has held that the principles incorporated under Section 27 of the General Clauses Act can preferably be imported in a case where a signatory has
dispatched the notice by post with the correct address written on it. The Hon'ble Supreme Court, further held that if the address is correctly written,
then the notice can be deemed to have been served on the sendee, unless he proves that the same was not served upon him for which he was not
responsible. The Hon'ble Supreme Court further observed that any other interpretation can lead to a very tenuous position as the drawer of the cheque
would resort to the strategy of subterfuge by successfully avoiding notice. It is necessary to quote paragraph 24 of the said judgment, which reads as
under:-
No doubt Section 138 of the Act does not require that the notice should be given only by ""post"". Nonetheless the principle incorporated in Section
27 (quoted above) can profitably be imported in a case were the sender has dispatched the notice by post with the correct address written on it. Then
it can be deemed to have been served on the sendee unless he proves that it was not really served and that he was not responsible for such non-
service. Any other interpretation can lead to a very tenuous position as the drawer of the cheque who is liable to pay the amount would resort to the
strategy of subterfuge by successfully avoiding the notice.
From the aforesaid judgment, it is quite clear that the deeming fiction in respect of service of notice is applicable in respect of notice under Section
138 of the Negotiable Instruments Act also if the notice is properly and correctly addressed. In this context, it is to be noted that it is not the case of
the petitioners that the notice so issued is not properly or correctly addressed. Considering the judgment of the Hon'ble Supreme Court, I find that the
grounds taken by the petitioner has got no legs to stand. The notice is deemed to have been served upon the petitioner.
Another ground taken by the petitioners is that the petitioner No.3 is a sleeping partner and has got nothing to do with the day to day affairs of the
business and merely putting the words in the complaint that she was incharge of the day to day activity is not sufficient to take cognizance. Section
141 of the Negotiable Instruments Act does not make all the persons and directors liable for the offence. Criminal liability has been fastened on those,
who at the time of commission of offence, were in charge of, and were responsible to the firm for the conduct of the business of the firm. There may
be cases where the partners are sleeping partners or directors, who are not required to take part in the business, they may be ladies and those, who
know nothing about the business. In these circumstances, the Hon'ble Supreme Court in the case of Monaben Ketanbhai Shah & Another versus
State of Gujarat & Others reported in (2004) 7 SCC 15 (at para 6) has held that primary responsibility is on the complainant to make necessary
averment in the complaint so as to make the accused vicariously liable. For fastening the criminal liability, there is no presumption that every partner
knows about the transaction. The obligation of the accused to prove that they were not incharge of the conduct of the business would arise only when
first the complainant makes necessary averment in the complaint and establishes that fact. In the aforesaid judgment, Hon'ble Supreme Court relied
upon a decision reported in (2001) 10 SCC 218 [K.P.G. Nair versus Jindal Menthol India Ltd. ]where the Hon'ble Supreme Court has held that
substance of allegation, read as a whole should answer and fulfill the requirement of ingredients of Section 141 of the Negotiable Instructions Act.
Similarly, in the case of A.R. Radha Krishna versus Dasari Deepthi & Others reported in (2019) 15 SCC 55 0(at para 7) the Hon'ble Supreme Court
has held that in a case pertaining to an offence under Section 138 and Section 141 of the Act (herein the Negotiable Instruments Act), the law
requires that complaint must contain a specific averment that the Director was in charge of, and responsible for, conduct of company's business at the
time when the offence was committed. The Hon'ble Supreme Court further held that the High Court, in deciding the quashing petition under Section
482 CrPC must consider whether the averment made in the complaint is sufficient or if some unimpeachable evidence has been brought on record
which leads to conclusion that the Director could never have been in charge of and responsible for the conduct of the business of the company at the
relevant time. It has been further held that while the role of a Director in a company is ultimately a question of fact, and no fixed formula can be fixed
for the same, and the High Court must exercise its power under Section 482 CrPC, when it is convinced, from the material on record, that allowing the
proceedings to continue would be an abuse of the process of the Court.
Further, the Hon'ble Supreme Court in the case of Standard Chartered Bank versus State of Maharashtra & Others reported in (2016) 6 SCC 62
has reiterated that it is necessary to specifically aver in the complaint that at the time of offence, accused was in charge of, and responsible for the
conduct of the business of the company.
Considering the aforesaid judgments, when I go through the complaint petitions, I find that in paragraph 3, it has been stated that the accused No.2
and 3 are directors of the company, who are responsible for and looking after day to day affairs of the business. By asserting the aforesaid fact, I am
of the opinion that the complainant has discharged their onus in terms of Section 141 of the Negotiable Instruments Act. Now it is the accused, who
have to rebut the same by cogent evidence. Before this Court, at this stage, save and except only the oral submission, no impeachable material has
been brought on record by the petitioners to suggest that the petitioner No.3 is not responsible and also is not looking after the day to day affairs of the
company. In absence of any materials, at this stage, to give a finding in favour of the accused is not proper. The accused needs to prove her
contention by cogent evidence before the Court below. Thus, at the stage of cognizance, this fact cannot be looked into. The accused can rebut the
same at an appropriate stage. Thus, prima facie, the accused No.3, in view of the statement made in paragraph 3 of the complaint petition, is
responsible for and can be said to be looking after day to day affairs of the business of the company. This is a prima facie finding given by this Court
only for the purpose of cognizance and issuing summons.
So far as accused No.2 is concerned, admittedly, he is the signatory to the cheque and has issued the cheques, thus, there is no illegality in issuing
summons to him.
So far as the contention of the petitioner that the dues are not legally payable dues is concerned, the same cannot be adjudicated at this stage.
Admittedly, the cheques were issued by the accused company, whose payment was stopped. This, definitely, attracts the provisions of Section 138 of
the Negotiable Instruments Act.
It is well settled principle that when prima facie an offence is made out, a criminal proceeding cannot be quashed at the very threshold. In these
cases, I find that the cheques were issued in favour of the complainant, whose payments were stopped. Admittedly, notices were sent, which were
deemed to have been served. Admittedly, the amount involved in each cheque was not paid. This prima facie makes out an offence for taking
cognizance. Since the cheques were issued by accused No.2, he has been summoned/noticed. Since accused No.3 is a director and it has been
mentioned in the complaint petitions that she is also looking after the day to day affairs of the company, by application of Section 141 of the Negotiable
Instruments Act notice has also been issued to her. Thus, I find no illegality in the impugned orders in all these cases, by which cognizance has been
taken and the petitioners have been summoned in all these cases.
All these criminal miscellaneous petitions, accordingly, stand dismissed.