Mushtaq Ahmad Khuroo vs Sterlite Technologies Ltd

The petitioner by the medium of this petition filed under Section 561-A Cr.P.C. (now repealed and replaced by Section 482 Cr. P.C.), seeks

quashment of the Order dated 3rd November, 2018 passed by the court of 4th Additional Sessions Judge, Srinagar, (Revisional Court), in a revision

petition titled Sterlite Technologies Ltd. Vs. Mushtaq Ahmad Khuroo and Anr.

With a view to appreciate the grounds of challenge urged by the petitioner in support of his petition, it is necessary to notice material facts briefly. It

is claimed by the petitioner that he was engaged as Project Coordinator by the respondent no. 2 for the execution of NFS Project allotted to

respondent no. 1 for a monthly salary of Rs. 42,000/-The petitioner was also entitled to 2% commission of the project cost for rendering consultancy

services as well. During the course of his employment, the petitioner was issued a cheque by the respondent no. 2 amounting to Rs. 15.00 lacs drawn

at Jammu and Kashmir Bank in lieu of the services rendered by the petitioner. The petitioner presented the said cheque before the concerned Branch,

but the same was dishonoured by the Bank with the memo ‘insufficient funds.’ The petitioner issued a legal notice to the respondents bringing it

to their notice that the cheque issued by the respondent no. 2 had been dishonored by the Bank and, therefore, they should make the payment else

face action under law. However, despite the service of notice, the respondents did not make the payment to the petitioner which made the petitioner to

file a complaint under Section 138 of the Negotiable Instruments Act, 1881, (for short “N.I.Actâ€), before the court of Special Mobile Magistrate,

Passenger Tax, Srinagar, (“the trial courtâ€). The trial court took cognizance of the commission of offence under Section 138 of the N.I.Act and

issued process against the respondents.

Feeling aggrieved by the order of the trial court dated 20th February, 2017, the respondent no. 1 herein filed a revision petition before the Revisional

Court. The revision petition was accepted by the Revisional Court vide its Order dated 03.11.2018 and the impugned order qua the respondent no. 1

was set aside vide Order dated 3rd November, 2018 impugned in this petition.

Order impugned has been assailed by the petitioner, inter alia, on the ground that the Revisional Court has not appreciated, that by virtue of Section

141 of the N.I.Act, both the companies, which were jointly executing the project, were liable to be proceeded against and punished for commission of

offence under Section 138 of the N.I.Act and that the Revisional Court did not appreciate that the business, in which, the petitioner had been engaged,

was being run by the respondents 1 and 2 jointly and, therefore, both the respondents were under a legal obligation to compensate the petitioner for the

services he had rendered to them. The cheque issued by the respondent no. 2 was only towards discharge of joint liability of the respondents 1 and 2.

Per contra, Mr. Dheeraj Nanda, learned counsel, appearing for the respondent no. 1 submits that there was no privity of contract between the

petitioner and respondent no. 1. He further submits that cheque in the instant case has been issued by respondent no. 2 and the liability, if any, to pay

the amount of cheque to the petitioner, is of the respondent no. 2. The petitioner has unnecessarily and for oblique reasons arrayed the respondent no.

1 as party-respondent in the complaint. Inviting the attention of this Court to the order of engagement of the petitioner as Project Coordinator, learned

counsel for respondent no. 1 submits that the appointment of the petitioner as a Project Coordinator was made by the respondent no. 2 and not by

respondent no. 1. He, therefore, argues that neither there was any legally payable debt towards the petitioner nor any cheque was ever issued by the

respondent no. 1. He urges that the Revisional Court has thoroughly gone into all the pleas of the petitioner and rejected the same by a speaking order.

Continuation of proceedings against the respondent no. 1 was sheer abuse of process of law and, therefore, the Revisional Court has rightly allowed

the revision petition of respondent no. 1 and set aside the order of cognizance qua the respondent no. 1.

Having heard learned counsel for the parties and perused the record, I do not find it a fit case for indulgence in the exercise of inherent jurisdiction

vested in this Court by Section 561 A Cr. P.C. (now Section 482 Cr. P.C.). Admittedly, the petitioner is an employee of respondent no. 2, this is

evident from the certificate placed on record by the petitioner as Annexure-2 with the petition, which is also reproduced by the Revisional Court in the

judgement impugned. Simply because the employer of the petitioner i.e., Welcome World Electrical Pvt. Ltd. is executing NFS Project in coordination

with respondent no. 1 does not make the petitioner an employee of the later. That apart, cheque for the discharge of liability towards the petitioner has

been issued by the respondent no. 2 as is evident from the copy of the cheque placed on record by the petitioner as Annexure-4 and the cheque has

been returned with the memo ‘insufficient funds’ in the account of respondent no. 2. In that view of the matter, it is difficult to comprehend the

submission of learned counsel for the petitioner that respondent no. 2 being a partner in business with respondent no. 1 too is guilty of commission of

offence under Section 138 of the N.I.Act.

In order to maintain a complaint under Section 138 of the N.I.Act, it must contain following ingredients:-

I. That there is a legally enforceable debt;

II. That the cheque was drawn from the account of Bank for discharge in whole or in part of any debt or other liability, which presupposes

a legally enforceable debt;

III. That the cheque so issued has been returned due to insufficiency of funds.

Viewed thus, it is axiomatic that it is only the person who has issued the cheque for discharge of legally enforceable debt, which is bounced or

returned by the Bank due to insufficiency of funds in the account of such person, alone can be arraigned as accused in the complaint under Section

138 of the N.I.Act. It is only where the person committing an offence under Section 138 of the N.I.Act is a company, every person, who, at the time

of commission of offence was incharge of, and was responsible to the company for conduct of business of the company, as well as the company, shall

be deemed to be guilty of offence and liable to be proceeded against and punished accordingly. This is evident from the provisions of Section 141 of

the N.I.Act.

The petitioner has also placed strong reliance upon Section 141 of the N.I.Act to contend that it is not only the respondent no. 2, who has issued

the cheque, but also the respondent no. 1, who is partner with respondent no. 2 in the business is liable to be proceeded against and punished,

accordingly, by the aid of Section 141 of the N.I.Act. The submission of learned counsel for the petitioner is totally meritless and misconceived. In the

instant case, going by the allegations contained in the complaint and the supporting evidence placed on record, it is respondent no. 2, a company, which

is accused of committing an offence under Section 138 of the N.I.Act. By operation of Section 141 of the N.I.Act, it is not only the company i.e.,

respondent no. 2, but every person, who, at the time of commission of offence was incharge of, and responsible to the company for conduct of

business, shall be deemed to have committed offence and, therefore, liable to be proceeded against and punished accordingly. Section 141 of the N.I.

Act cannot be stretched so as to fasten the liability on the other company, who may be executing works in partnership with the accused company.

The revisional Court has very elaborately considered all the aspects of the case and concluded that the respondent no. 1 was unnecessarily

arrayed as accused in the complaint and that the trial court has committed glaring mistake in issuing process against it. The order impugned is well

reasoned and, therefore, deserves to be upheld.

For the forgoing reasons, this petition is found to be without merit and, accordingly, dismissed along with connected CM(s).