S. Krishnamoorthy v. B.S Kesavan

Pratap Singh, J.:— The accused in C.C Nos. 6856, 6857, 6858, 6932 and 6933 of 1991 on the file of the VIIIth Metropolitan Magistrate, George Town, Madras, has filed these petitions under section 482 of the Criminal Procedure Code, praying to call for the records in the above cases and quash the same.

2. Criminal Original Petition No. 2515 of 1992 is concerned with C.C No. 6856 of 1991. In it, the respondent herein had filed the complaint against the petitioner for an offence under section 138 of the Negotiable Instru-ments Act (which I shall hereafter refer to as “the Act”). The allegations in it are briefly as follows:

In respect of the loan borrowed under an agreement dated December 28, 1990, for the value of Rs. 25,000 to pay in five equal monthly instalments for the payment of dues, the accused issued the cheques on Central Bank of India, Sowcarpet, dated April 28, 1991, and May 28, 1991, each of the value of Rs. 5,000. When the cheques were presented for payment on September 16, 1991, they were dishonoured with an endorsement “refer to drawer”. The complainant issued notice dated September 16, 1991, to the accused, calling upon him to pay the amount within 15 days. In spite of the notice, the accused has failed to pay the amount. Hence the complaint.

3. Criminal Original Petitions Nos. 2516 to 2519 of 1992 are concerned with C.C Nos. 6857, 6858, 6932 and 6933 of 1991. In those complaints, the very same respondent has filed private complaints against the very same petitioner for offences under section 138 of the Act on similar allegations, with regard to different cheques, which were in respect of the loans borrowed under the agreements dated February 22, 1991, April 4, 1991, November 29, 1990, and April 4, 1991, respectively.

4. Mr. T.K Sampath, learned counsel appearing for the petitioner, would submit that the agreements referred to in the complaints were between the complainant's firm, Hema Finance Corporation and Sreenivasa Goods Transports, of which the accused/petitioner is only a partner and that the cheques referred to in the complaints were issued only by Sreenivasa Goods Transports, the firm of which the accused/petitioner is only a partner and while so when the partnership firm was not arrayed as an accused, these complaints, arraying the partner alone as an accused are not maintainable and hence are liable to be quashed.

5. He would submit that the drawer of the cheque is the firm and the accused is only a partner of the firm and the filing of the complaint against him alone is not maintainable and the firm ought to have been made as an accused in these cases to sustain the maintainability of the complaint.

6. From the original records, I find that the cheques were issued by the Sreenivasa Goods Transports and the petitioner/accused has signed as partner for Sreenivasa Goods Transports. That would substantiate the submission made by Mr. T.K Sampath that the drawer of the cheque was only the firm, viz., Sreenivasa Goods Transports, and the petitioner/accused had signed it as a partner thereof. The xerox copies of the agreements referred to in the complaints are found in the original records. Those agreements are between Sreenivasa Goods Transports and Hema Finance Corporation. From the above, it would be apparent that for the amount due under the agreements entered into by the firm, the cheques were issued by the firm. On these facts, the submission made by Mr. T.K Sampath is to be considered.

7. Section 141(1) of the Act, which is relevant for our purposes, reads as follows:

“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 be 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.”

8. On a plain reading of section 141(1), it would be clear that when the offence was committed by the company, the person responsible alone cannot be prosecuted, leaving out the company. When the offence is committed by a firm, the partner of the firm cannot be prosecuted, leaving out the firm.

9. In Dilip Kumar Jaiswal v. Debapriya Banerjee, [1992] 73 Comp Cas 434; [1992] (Cr.) (Suppl) MWN 143, a cheque signed by the managing director of the company, which was the subject-matter of an offence under section 138 of the Act, came up for consideration. It was held that the cheque signed by the managing director was issued by him for the company, as director and, therefore, the liability to make the payment being that of the company, the company was the drawer of the cheque. In Krishna Bai v. Arti Press, [1991] 2 MWN (Cr.) 110; [1994] 80 Comp Cas 750. the impugned cheque was issued by Mudra Graphics P. Ltd., of which the accused in that case was the managing director. The complaint was laid against the managing director, Krishna Bai, alone. Mudra Graphics P. Ltd. was not arrayed as an accused. On that ground, the complaint was challenged. Justice Padmini Jesudurai had held as follows (at page 754):

“Unless the company is made an accused, the person who is in charge of and responsible to the company for the conduct of the business of the company, cannot be made an accused. This is the settled position of law reiterated by the Supreme Court in U.P Pollution Control Board v. Modi Distillery, [1988] 63 Comp Cas 77; (1987) 3 SCC 684 : AIR 1988 SC 1128, where a complaint against the chairman, vice-chairman, managing director and members of the board of directors of the company and the unit of the company but without the company was quashed by the High Court on the ground that there could be no vicarious liability on the chairman and others, unless there was a prosecution of the company and the Supreme Court upheld that part of the legal finding but on the facts of that case, remitted the matter to the trial court to give a direction to the complainant to make a formal amendment of the complaint to make the company also as an accused. In the instant case, the offence is committed by Mudra Graphics P. Ltd. which is not an accused in this case. In such circumstances, there can be no prosecution of the managing director, when the company is not prosecuted.”

10. In the instant case before me, the debt due was by the firm. The cheque was issued by the firm. No doubt the petitioner, as partner, had signed the agreement as well as the cheque. Inasmuch as the offence was committed by the firm, without the firm being arrayed as an accused, the petitioner alone cannot be arrayed as an accused and be proceeded against. In view of non-compliance with section 141 of the Act, all these complaints are liable to be quashed. Though Mr. T.K Sampath had put forth other submissions also, since I feel that it is unnecessary to consider the other submissions, I am not considering the same.

11. In view of the above, these petitions are allowed and all further proceedings in C.C Nos. 6856, 6857, 6858, 6932 and 6933 of 1991, on the file of the VIIIth Metropolitan Magistrate, George Town, Madras, shall stand quashed.