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Judgment
S.C. Vyas, J.—In both these petitions filed u/s 482 of Cr.P.C. prosecution of the petitioners before Judicial Magistrate, First Class, Indore in private Complaint Case No. 12733/2006 is under challenge and a prayer has been made to quash the proceedings of the above stated criminal case, so far as it relates to present petitioners.
The short facts of the case are that respondent No. 1 in both these petitions namely Sajal Tiwari filed a complaint before Judicial Magistrate, First Class, Indore on 4.3.2006 for prosecution of petitioners as well as other accused persons arrayed therein u/s 138 of the Negotiable Instruments Act (hereinafter referred to as the N.I. Act for brevity). It has been stated in the complaint that one Gaurav Bandi (accused Nos. 3 and 8 of the complaint) is in business of shares and commodities with different companies and is having his office at Indore, from where he used to manage the affairs of companies namely Premium Global Commodities and Derivatives Pvt. Ltd. (accused No. 4), Premium Global Securities Pvt. Ltd. and Reffco Sify Securities India Pvt. Ltd., associate with Premium Capital & Investment Ltd. Business of all the three companies are being managed through different terminals and such terminals are being operated by some persons under the direction of accused Gaurav Bandi. Petitioner of M.Cr.C. No. 2794/2006 (Man Financial Sify Securities India Pvt. Ltd. (erstwhile known as Refco-Sify Securities India Pvt. Ltd.) a registered company has been arrayed as accused No. 2 through its Managing Director and petitioner of M.Cr.C. No. 2845/2006, Puranam Hayagreeva Ravikumar, Managing Director National Commodity & Derivatives Exchange Ltd. has been arrayed as accused No. 5 in the complaint. Regarding these two petitioners i.e. accused No, 2 and accused No. 5, it has been stated that some complaints were made by the complainant to them regarding business. It has also been averred that Rs. 2,00,000/- (Rs. two lacs) were paid by the complainant to accused Nos. 3,4, 6 and 8 by way of security for the purpose of commodity contracts in the centre of accused Nos. 2,4 and 5 and then by way of security, cheques of Rs. 2.00,000/- (Rs. two lacs) were given by accused Nos. 3, 4, 6, 7 and 8 to the complaint in two instalments, one cheque on 21.6.2005 of Rs. 1,00,000/- (Rs. one lac) and another cheque on 21.7.2005 of Rs. 1,00,000/- (Rs. one lac). When these two cheques were produced by the complainant in his Bank for payment, then they were returned to him with an endorsement for "insufficient funds". It has also been averred that petitioners i.e. accused Nos. 2 and 5 are also connected with other accused persons, directly or indirectly and it was their moral duty to cancel the agency of other accused persons and to repay the amount of Rs. 2,00,000/- (Rs. two lacs) to the complainant. But they had not done so, therefore, they have also been arrayed as accused persons in the complaint. Other facts, which are not relevant for the purpose of disposal of these petitions have also been averred in the complaint.
Learned Magistrate by order dated 12.4.2006, after considering the averments made in the complaint and the affidavit of the complainant registered a case u/s 138 of N.I. Act against all accused persons, including the present petitioners. So petitioners rushed to this Court for seeking quashment of the order of registration of criminal case against them.
Learned Counsel for the petitioner (M.Cr.C. No. 2845/2006). Mr. R.T. Thanewala, submitted that petitioner, National Commodities and Derivative Exchange Ltd. is a duly incorporated and registered company under the Companies Act having its registered office at Mumbai and is a professionally managed national level online multi commodity exchange, promoted by prominent national level institutions. It has been submitted that this company provides facilities/platform/ marketplace for trading in commodity and derivatives through its registered members in more than 550 centres throughout India by using very small Aperture Terminals (VSAT) and any individual. Companies, Partnership Firms or any other persons as specified can register as member of the petitioner as to trade on its platform on behalf of their constituents and/or on their own account and shall also be bound to clear and settle all such trades done by them. Petitioner company only acts the clearing and settlement house for the trades taken place by its trading members.
It has been submitted by learned Counsel for the petitioner that the petitioner had no direct dealing with the complainant/respondent No. 1 and has not received any sum of money or alleged sum of Rs. 2,00,000/- (Rs. two lacs) from the complainant. It has also been submitted that petitioner is neither the signatory of the cheque nor in any way connected with the transaction between complainant and respondent/accused Gaurav Bandi. He further submitted that in whole of the complaint it has nowhere been averred that the petitioner is the signatory of the cheque or is a director or secretary or is incharge or responsible; for acts of the persons who signed the cheques. It has been submitted that the dispute is only between the complainant and other accused persons to which the petitioner has no connection.
Similar arguments have been advanced by learned Counsel Mr. Vinay Saraf who appeared on behalf of petitioner of M.Cr.C. No. 2794/2006 i.e. Man Financial Sify Securities India Pvt. Ltd., previously known as Refco-Sify Securities India Pvt. Ltd. On his behalf also it has been argued that from the complaint and documents filed by the complainant along with the complaint and the statement given by him u/s 200 of Cr.P.C., it emerges that this petitioner has neither issued any cheque to the complainant nor the petitioner company is having any connection with the alleged offence and, therefore, the prosecution against him is abuse of process of law, as no prima facie case is made out against this petitioner also.
Section 138 of N.I. Act contends penal provision and, therefore, requires to be construed very strictly. It creates an offence when the cheque was returned by the Bank unpaid, either because of the amount of money standing to the credit of the account of drawer is insufficient to honour the cheque or that it exceeds the amount arranged to be paid from the account of drawer. In such a situation the person who draws the cheque on an account maintained by him with a Banker for payment of any amount of money to another person from out of that account for the discharging, in whole or in part, of any debt or other liability is deemed to have committed an offence and shall be punished for imprisonment for a term which may extend to one year, or with line which may extend to twice the amount of the cheque, or with both. Therefore, the ingredients of the offence punishable u/s 138 of N.I. Act are:
(a) the cheque must have been issued in favour of the payee;
(b) the cheque so issued must have been issued in discharge either in whole or in part for legally recoverable debt or liability;
(c) the cheque should be presented to the Bank within a period of six months from the date on which it is drawn or within the period of its validity, whichever is earlier;
(d) the cheque should have been returned by the Bank unpaid, either because of the amount of money standing to the credit of that account is insufficient to honour the cheque or that it exceeds the amount arranged to be paid from the account of drawer;
(e) that the payee should have given a notice of discharge to the drawer within 15 days from the receipt of the information given by him regarding payment of the cheque;
(f) that the drawer should have failed to make payment within 15 days from the date of receipt of notice.
The whole scheme of Chapter XVII of the N.I. Act which starts from Section 138 and ends at Section 142 of the N.I. Act clearly shows that under the provisions of Section 138 the person who draws the cheque for payment of any amount, is basically liable for the prosecution. Section 141 of the N.I. Act, enlarges the scope of Section 138 of N.I. Act by providing that when the offence u/s 138 of N.I. Act is committed by 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 be liable to be proceeded against and punished accordingly.
Joint reading of both these sections clearly shows that basically the drawer of the cheque is responsible and if the offence is committed by a company then the company as well as every other person who, is incharge and is responsible to the company for the conduct of the business of the company are all liable to be proceeded against and punished for the offence u/s 138 of N.I. Act.
In the case of Monaben Ketanbhai Shah and Another Vs. State of Gujarat and Others, , Hon''ble Supreme Court in Paragraph Nos. 3 and 4 held as under:
Para 3--Section 138 of the Act makes dishonour of the cheque an offence punishable with imprisonment or fine or both. Section 141 relates to offences by the company. It provides that if the person committing an offence u/s 138 is a company, every person who, at the time the offence was committed, was incharge 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 be liable to be proceeded against and punished accordingly. Thus, vicarious liability has been fastened on those, who are incharge of and responsible to the company for the conduct of its business. For the purpose of Section 141, a firm comes within the ambit of a company.
Para 4--It is not necessary to reproduce the language of Section 141 verbatim in the complaint since the complaint is required to be read as a whole. If the substance of the allegations made in the complaint fulfil the requirements of Section 141 the complaint has to proceed and is required to be tried with. It is also true that in construing a complaint a hyper-technical approach should not be adopted so as to quash the same. The laudable object of preventing bouncing of cheques and sustaining the credibility of commercial transactions resulting in enactment of Sections 138 and 141 has to be born in mind. These provisions create a statutory presumption of dishonesty, exposing a person to criminal liability if payment is not made within the statutory period even after issue of notice. It is also true that the power of quashing is required to be exercised very sparingly and where, read as a whole, factual foundation for the offence has been laid in the complaint, it should not be quashed. All the same, it is also to be remembered that it is the duty of the Court to discharge the accused if taking everything stated in the complaint as correct and construing the allegations made therein liberally in favour of the complainant, the ingredients of the offence are altogether lacking. The present case falls in this category as would be evident from the facts noticed hereinafter.
When we consider the facts of the present case in the light of the observations made by Supreme Court in the above stated case, then it can very well be seen that in the complaint as well as in the statement of the complainant given in form of an affidavit nowhere it has been stated that petitioners of both these petitions are either drawer of the cheques or they are the persons who are incharge or responsible for the conduct of the business of the company, which has drawn the cheques in favour of the complainant and, therefore, vicarious liability cannot be fastened on these two petitioners. In the above stated case of Monaben Ketanbhai Shah (supra), Supreme Court has also held that, "it is the duty of the Court to discharge an accused after taking everything stated in the complaint as correct and construing the allegations made therein liberally in favour of the complainant, the ingredients of the offence are altogether lacking".
In the opinion of this Court the averments made in the complaint against both these petitioners brings them in the category of such persons who are to be discharged, as the ingredients of the offence are altogether lacking, so far as they are concerned.
Learned Counsel for the respondent placed reliance of reported judgment of Delhi High Court passed in the matter of Daljeet Singh Chandok v. State and Anr. 2006 (1) DCR 635. But in the facts of that case the cheque was issued by a company and in the complaint it has been averred that all the accused persons are directors of that company and one of the accused was Manager/Principal Officer of that company, managing day-to-day conduct and business and affairs of that company and, therefore, the company as well as Directors were made accused persons in the complaint. The petition was also filed after 8� years from the date of taking cognizance of the offence against those petitioners and taking into consideration these circumstances Delhi High Court did not find that case as fit case for interference u/s 482 of Code of Criminal Procedure.
Therefore, the facts of that case are clearly distinguishable and this judgment of Delhi High Court does not help the respondent so far as present petitioners arc concerned. Particularly in view of the mandate issued by Supreme Court in the case of Monaben Ketanbhai Shah (supra), wherein the duty has been imposed on this Court to discharge an accused after taking every thing stated in the complaint as correct and construing the allegations made therein liberally in favour of the complainant the ingredients of the offence are altogether lacking.
In view of the foregoing discussion both these petitions succeed and are hereby allowed. The order of taking cognizance against both these petitioners and their prosecution is hereby quashed.
Original judgment be retained in M.Cr.C. No. 2845/06 and a copy of the same be placed in the record of M.Cr.C. No. 2794/06.
With these directions both these M.Cr.Cs. are disposed of.