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  • SECTION 141 NEGOTIABLE INSTRUMENTS ACT 1881
  • sections 138 and 142 of the Negotiable Instruments Act.2.
  • sections 138 and 142 of the Negotiable Instruments Act
  • sections 138 and 141 of the Negotiable Instruments Act,
  • section 1 or 2 of the Essential Commodities Act
  • section 319 of the Code of Criminal Procedure,
  • section 482 of the Code of Criminal Procedure
  • ESSENTIAL COMMODITIES ACT 1955
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citation codes
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  • SECTION 141 NEGOTIABLE INSTRUMENTS ACT 1881
  • sections 138 and 142 of the Negotiable Instruments Act.2.
  • sections 138 and 142 of the Negotiable Instruments Act
  • sections 138 and 141 of the Negotiable Instruments Act,
  • section 1 or 2 of the Essential Commodities Act
  • section 319 of the Code of Criminal Procedure,
  • section 482 of the Code of Criminal Procedure
  • ESSENTIAL COMMODITIES ACT 1955
Smart Summary

Structured Summary of the Opinion (Rengasamy, J.)

Factual and Procedural Background

This petition was filed under section 482 of the Code of Criminal Procedure seeking quashing of criminal proceedings (C.C. No. 2974 of 1994) pending before the VIIth Metropolitan Magistrate, Madras. The respondent lodged a complaint alleging that a cheque issued by the petitioner, who signed as authorised signatory of Tajoomals Industries, was dishonoured for insufficiency of funds, and that the petitioner and another committed offences under sections 138 and 142 of the Negotiable Instruments Act. The petitioner raised two grounds in support of quashing: (1) the complaint was filed against him in his individual capacity without impleading the company, contrary to section 141 of the Negotiable Instruments Act; and (2) the complainant claimed to act as power of attorney for a partner but did not produce the power of attorney.

Legal Issues Presented

  1. Whether a complaint under sections 138 and 142 of the Negotiable Instruments Act is maintainable against an individual director/authorised signatory without impleading the company, in light of section 141 of the Negotiable Instruments Act.
  2. Whether the absence of production of the power of attorney at the stage of the complaint is a ground for quashing the proceedings, when the complainant alleges he acted as power of attorney for a partner.

Arguments of the Parties

Petitioner's Arguments (as represented by learned senior counsel Mr. N.T. Vanamamalai)

  • The complaint is legally defective because it prosecutes the petitioner in his individual capacity without impleading the company, which is contrary to section 141 of the Negotiable Instruments Act and therefore not maintainable.
  • The defect is a serious legal infirmity in the complaint's initiation and cannot be cured subsequently by impleading under section 319 of the Code of Criminal Procedure.
  • Relied upon the principle in Delhi Municipality v. Ram Kishan that a proceeding can be quashed at the initial stage if, taking the allegations in the complaint as they are, no offence is constituted.

Respondent's Arguments

  • The complainant should be permitted to implead the company during the proceedings under section 319 of the Code of Criminal Procedure; the defect can be cured by such impleading or amendment.
  • Relied upon the decision in U.P. Pollution Control Board v. Modi Distillery and other authorities to support the proposition that technical or curable defects may be rectified in the course of proceedings.
  • Referenced a decision (Alex v. Vijayan) of the Kerala High Court holding that proceedings under sections 138 and 141 can be initiated against a person in charge independently of the company.

Table of Precedents Cited

Precedent Rule or Principle Cited For Application by the Court
S. Krishnamoorthy v. B.S. Kesavan ([1994] 80 Comp Cas 755; 1994 1 LW (Crl.) 135 (Mad)) Held that without adding (impleading) the company, the prosecution against directors/partners cannot be maintained under the Negotiable Instruments Act. The court treated this decision as part of a consistent view of the Madras courts supporting quashing where the company was not impleaded; it was cited in support of quashing the proceedings against the petitioner.
Krishan Bai v. Arti Press ([1994] 80 Comp Cas 750; 1991 1 LW (Crl.) 513 (Mad)) Held that where the firm drew the cheque, the firm must be impleaded; complaint against partners without impleading firm is not in compliance with section 141 and liable to be quashed. Relied upon as a Madras precedent holding that the complaint must include the firm; used to support the court's conclusion that the present complaint was not sustainable without impleading the company.
U.P. Pollution Control Board v. Modi Distillery (1987) 3 SCC 684 : AIR 1988 SC 1123 Held that unless the company was prosecuted, there can be no prosecution of the managing director (later Supreme Court view on prosecution of officers where the company is concerned). The court accepted the later view of the Supreme Court reflected in this decision, indicating that the later decision should be followed; it supported the proposition that the company must be impleaded for prosecution of persons in charge.
Sheoratan Agarwal v. State of M.P. (1984) 4 SCC 352 : AIR 1984 SC 1824 In the context of the Essential Commodities Act, held that persons/officers of a company can be separately prosecuted irrespective of whether the company itself is prosecuted. The court noted this earlier apex court view but contrasted it with the later decision in Modi Distillery; the Sheoratan Agarwal view was not treated as controlling for the issue before the court.
A. Jafferullah v. T. Stanes and Co. Ltd. ([1991] 1 LW (Crl.) 262; [1994] 80 Comp Cas 759 (Mad)) Confirmed the view that without impleading the partnership firm as an accused, a complaint against its partners cannot be sustained. The decision was cited as reinforcing the Madras line of authority that complaints must implead the firm/company; it supported quashing the present proceedings.
Alex v. Vijayan ([1994] 81 Comp Cas 910; 1994 1 Crimes 505 (Kerala HC)) Kerala High Court held that where offences under sections 138 and 141 are concerned, proceedings can be initiated against either or both the company and the person in charge; the person in charge may be prosecuted independently without impleading the company. The opinion records this as a dissenting view from the Madras line of cases and treats it as not aligning with the conclusions reached by the court in this matter; the court did not accept this approach for the present facts.
Delhi Municipality v. Ram Kishan (1983) 1 SCC 1 : AIR 1983 SC 67 Established that a High Court may quash proceedings at the initial stage only if, taking the allegations in the complaint as they are, no offence is constituted. The court applied this test to determine that on the face of the complaint (without adding or subtracting), the proceedings against the petitioner were not maintainable because the company was not impleaded; this justified quashing under section 482 Cr.P.C.

Court's Reasoning and Analysis

The court addressed the petition in two parts corresponding to the petitioner's contentions.

First, on the second contention (absence of the power of attorney on record), the court held that where the complainant states he is acting as power of attorney for a partner, the question of the genuineness and validity of the power of attorney is a matter for the trial and evidence. Therefore, that contention could not be examined at the quashing stage and did not warrant dismissal of proceedings at that stage.

Second, on the principal contention regarding non-impleading of the company under section 141 of the Negotiable Instruments Act, the court examined the wording of section 141 which states that where the person committing an offence under section 138 is a 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." The court read this language to mean that the company must also be prosecuted along with the persons in charge.

The court reviewed a consistent line of Madras decisions (Krishan Bai, S. Krishnamoorthy, A. Jafferullah) holding that a complaint against partners/directors is not compliant with section 141 if the firm/company is not impleaded, and would therefore be liable to be quashed. The court contrasted those decisions with the Kerala High Court decision in Alex v. Vijayan and noted an earlier Supreme Court decision (Sheoratan Agarwal) which had adopted a different approach in another statutory context, but emphasized that a later Supreme Court decision in U.P. Pollution Control Board v. Modi Distillery held that unless the company was prosecuted there could be no prosecution of the managing director, and that the later Supreme Court view must be followed.

The respondent's reliance on section 319 Cr.P.C. (to implead another accused during trial) and the U.P. Pollution Control Board decision to cure the defect was considered. The court accepted that section 319 allows impleading of persons disclosed by evidence, and that in some cases technical defects in description may be cured by amendment. However, the court distinguished those situations from the present case: here the company was deliberately omitted from the outset despite section 141 emphasising the company should be an accused. The court concluded that section 319 is intended to bring additional culprits to trial when revealed by evidence and is not designed to cure an initial legal infirmity that renders the complaint not maintainable against a particular accused on the date of filing.

Applying the Delhi Municipality v. Ram Kishan test (i.e., taking allegations in the complaint as they stand), the court found that the complaint, without impleading the company, was not maintainable against the petitioner. Therefore, the proceedings were legally infirm at inception and could not be permitted to continue; the appropriate remedy was to quash the proceedings.

Holding and Implications

Holding: The court's final decision was to quash the proceedings. The opinion concludes:

Proceedings in C.C. No. 2974 of 1994 on the file of the VIIth Metropolitan Magistrate, Madras, are quashed; the petition is allowed.

Implications: The direct effect is that the prosecution against the petitioner in the specified criminal complaint is terminated by quashing of the proceedings. The court based its decision on statutory construction of section 141 of the Negotiable Instruments Act and on existing case law; the opinion does not purport to announce a new legal principle beyond applying earlier authorities and the cited Supreme Court decision (Modi Distillery) to the facts. In other words, the decision resolves the maintainability of the present proceedings but does not state that it creates a novel precedent beyond following and applying existing jurisprudence.

Note: All content above is a concise synthesis strictly confined to matters appearing in the provided opinion. No facts or authorities beyond those expressly referenced in the opinion have been added.

    Suryanarayanan v. Anchor Marine Service

    Rengasamy, J.:— This petition is filed under section 482 of the Code of Criminal Procedure to quash the proceedings against the petitioner. The respondent has filed a complaint against him and another for the offences under sections 138 and 142 of the Negotiable Instruments Act on the file of the VIIth Metropolitan Magistrate, G.T, Madras, in C.C No. 2974 of 1994, alleging that the cheque issued by this petitioner, who signed as authorised signatory of Tajoomals Industries, was dishonoured for insufficiency of funds, and, therefore, they have committed the offences under sections 138 and 142 of the Negotiable Instruments Act.

    2. The petitioner has raised two contentions in this petition for quashing the proceedings against him.

    3. The first contention is that the cheque was drawn by him as authorised signatory of Tajoomals Industries but the complaint has been filed against him in his individual capacity without impleading the company and this is not in compliance with section 141 of the Negotiable Instruments Act, 1881, and, therefore, the complaint is not maintainable. The next contention is that even though the complainant, T.N Srinivasan, has stated that he is the power of attorney of Mrs. Omana Manavalan, one of the partners of Anchor Marine Service, the power of attorney is not produced before the court, and, therefore, the complaint is not maintainable.

    4. So far as the second point is concerned, when the petitioner-complainant has stated that he is the power of attorney of Anchor Marine Service and he filed a complaint on the instruction of the partner, it is a matter to be considered at the time of the evidence whether the power of attorney referred to in his affidavit is valid and true. Therefore, that cannot be gone into at this stage to quash the proceedings.

    5. So far as the first point is concerned, this court has taken a consistent view that without adding the company, the prosecution against the directors cannot be maintained. In S. Krishnamoorthy v. B.S Kesavan, [1994] 80 Comp Cas 755; [1994] 1 LW (Crl.) 135 (Mad), Pratap Singh J. relying upon the decision in Krishan Bai v. Arti Press, [1994] 80 Comp Cas 750; [1991] 1 LW (Crl.) 513 (Mad), has held that without impleading the firm, who had drawn the cheque which was dishonoured, the complaint against the partners of the firm will not be in compliance with section 141 of the Negotiable Instruments Act, and, therefore, the complaint is liable to be quashed. In the decision in Krishan Bai v. Arti Press, [1994] 80 Comp Cas 750; [1991] 1 LW (Crl.) 513 (Mad), Padmini Jesudurai J. has relied upon the decision of the apex court in U.P Pollution Control Board v. Modi Distillery, [1988] 63 Comp Cas 77; (1987) 3 SCC 684 : AIR 1988 SC 1123. Therefore, the view of the Supreme Court has been followed by Padmini Jesudurai J. in Krishan Bai v. Arti Press, [1994] 80 Comp Cas 750; [1991] 1 LW (Crl.) 513 (Mad), which was later on followed by Pratap Singh J. in S. Krishnamoorthy v. B.S Kesavan, [1994] 80 Comp Cas 755; [1994] 1 LW (Crl.) 135 (Mad). Subsequently, Pratap Singh J. in another decision in A. Jafferullah v. T. Stanes and Co. Ltd., [1991] 1 LW (Crl.) 262; [1994] 80 Comp Cas 759 (Mad), has confirmed his earlier view holding that without impleading the partnership firm as one of the accused, the complaint cannot be sustained against its partners. But learned counsel appearing for the respondent refers to the view of the Kerala High Court in Alex v. Vijayan, [1994] 81 Comp Cas 910; [1994] 1 Crimes 505, wherein the Kerala High Court has held that when the offence is committed under sections 138 and 141 of the Negotiable Instruments Act, proceedings can be initiated against either or both the company and the person in charge of the business of the company can be independently prosecuted without impleading the company. But the Kerala High Court has dissented from the view of this court taken in Krishan Bai v. Arti Press, [1994] 80 Comp Cas 750; [1991] 1 LW (Crl.) 513 (Mad), in which the decision of the Supreme Court in Sheoratan Agarwal v. State of M.P, (1984) 4 SCC 352 : AIR 1984 SC. 1824, was followed. It is true that the apex court in Sheoratan Agarwal v. State of M.P, (1984) 4 SCC 352 : AIR 1984 SC 1824, has held that under the Essential Commodities Act, 1955, persons or officers of the company can be separately prosecuted under section 1 or 2 of the Essential Commodities Act irrespective of whether the company itself is prosecuted or not, for the contravention of the order by the company. But, in the later decision of the apex court in U.P Pollution Control Board v. Modi Distillery, [1988] 63 Comp Cas 77; (1987) 3 SCC 684 : AIR 1988 SC 1123, the apex court has held that unless there was prosecution of the company, there can be no prosecution of the managing director. As the apex court has taken two different views in different times in A Jafferullah v. T. Stanes and Co. Ltd., [1991] 1 LW (Crl.) 262; [1994] 80 Comp Cas 759 (Mad), Pratap Singh J. has observed that the later decision of the Supreme Court has to be followed. I respectfully agree with this view of the learned judge.

    6. section 141 of the Negotiable Instruments Act, 1881, 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.”

    7. The wording in the section “as well as the company shall be deemed to be guilty of the offence and shall be liable to be proceeded against…”, makes it clear that the company also shall be prosecuted along with the others, who were in charge of the company. Therefore, if the company has not been impleaded as an accused in the proceedings, it will not be in compliance with section 141 of the Negotiable Instruments Act, 1881, and, therefore, the prosecution is not sustainable against the directors or persons in the administration of the company as held in the decisions cited above.

    8. Learned counsel for the respondents placed another submission that the complainant is always entitled to implead the other accused in the course of the proceeding's under section 319 of the Code of Criminal Procedure, and, therefore, now he may be permitted to implead the company also as one of the accused and if the company is brought on record, the present infirmity gets cured, and, therefore, the prosecution cannot be quashed. section 319 of the Code of Criminal Procedure, no doubt, permits for impleading another accused in the course of the enquiry or trial when it appeared from the evidence that another person also has committed offence and he also should be tried together with the other accused. Learned counsel for the respondent relies upon the decision in U.P Pollution Control Board v. Modi Distillery, [1988] 63 Comp Cas 77; (1987) 3 SCC 684 : AIR 1988 SC 1123, in support of his argument. The decision cited above is about the right of the complainant to set right the technical flaw by amending the complaint. But learned senior counsel for the petitioner, Mr. N.T Vanamamalai, would contend that that was a case in which the company also was impleaded as a party, but the company was wrongly described as the industrial unit, wilfully failed to furnish the requisite information to the complainant therein, and, therefore, the amendment was permitted. The apex court observes that the industrial unit having failed to furnish the correct description of the company, it was not open to them to take advantage of their own lapses to quash the proceedings alleging that the company was not properly described. So, in that case, the company was impleaded as a party but the description of the company was found to be a mistake, and, therefore, the apex court observed that this technical flaw of describing the name of the company can be rectified by amending the complaint. Therefore, that decision will not come in support of the respondent's contention because in this case, the respondent has deliberately omitted to implead the company. According to the learned senior counsel, Mr. Vanamamalai, the defect in this case, is a serious legal infirmity in the complaint itself, and, therefore, when the complaint itself has the initial defect, the proceedings cannot be allowed to continue against the petitioner. He also draws support from the decision in Delhi Municipality v. Ram Kishan, (1983) 1 SCC 1 : AIR 1983 SC 67, wherein the Supreme Court observes that it is manifestly clear that proceeding's against an accused in the initial stage can be quashed only if on the basis of the complaint or the papers accompanying the same, no offence is constituted. In other words, the test is that taking the allegations in the complaint, as they are, without adding or subtracting anything, if no offence is made out, then the High Court will be justified in quashing the proceedings in exercise of its powers under section 482 of the present Code. In the above view of the Supreme Court, the maintainability of the proceeding's against a particular accused has to be considered without adding or subtracting anything in the complaint. Now it is found that without impleading’ the company, the present complaint against the petitioner is not sustainable. Therefore, when the complaint has the initial defect in its sustainability, the defect cannot be cured by amending the proceeding's. section 319 of the Code of Criminal Procedure, no doubt permits for impleading’ any other accused, who was party to the commission of the offence. But impleading such co-accused under section 319 of the Code of Criminal Procedure will not have any bearing as to the maintainability of the proceeding's against other accused. section 319 of the Code of Criminal Procedure is not intended for curing the infirmity in the proceeding's but only to bring all the culprits before the court when their role in the commission of the offence was brought to light only after the evidence before court. Such is not the position in this case. The respondent had deliberately omitted to implead the company in the complaint though section 141 of the Negotiable Instruments Act, 1881, emphasizes that the company also shall be an accused. When the proceedings has legal infirmity in its initiation itself, the respondent is not entitled to invoke section 319 of the Code of Criminal Procedure because on the date of the complaint, it was not maintainable against the petitioner. Therefore, accepting the contention of the learned senior counsel, Mr. N.T Vanamamalai, the proceedings against the petitioner have to be quashed.

    9. In the result, the proceeding's in C.C No. 2974 of 1994, on the file of the VIIth Metropolitan Magistrate, Madras, are quashed. The petition is allowed.

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    Suryanarayanan v. Anchor Marine Service
    (Nov 15, 1994)