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Anita v. Anil K. Mehara
Factual and Procedural Background
Three separate criminal complaints were filed against the same firm M/s Mehra Enterprises and its partners arising out of allegedly dishonoured cheques drawn on the Central Bank of India, Sector 22-C, Chandigarh.
- Petitioner Ms. Anita alleged that respondent Anil K. Mehra, as partner of the firm (of which respondents 2 and 3 were also partners), issued ten cheques for Rs. 2,066.66 each to discharge a loan of Rs. 2,066.60; the cheques were returned with the remark "exceeds arrangements". A notice was sent to the firm on 22.4.1989, payment was not made, a reply was sent, and the learned Judicial Magistrate summoned the respondents.
- Petitioner Santosh Kumari made a similar complaint alleging nine cheques of Rs. 2,066.66 issued by Anil K. Mehra were dishonoured in the same manner under Section 138 of the Negotiable Instruments Act.
- Petitioner Ms. Sangita alleged respondent Anil Kumar Mehra issued ten cheques for Rs. 1,550/- each that were dishonoured similarly; the Judicial Magistrate summoned the respondents.
The respondents preferred criminal revisions to the Court of Sessions. The learned Additional Sessions Judge, Chandigarh, by a judgment dated 15.7.1993, relied on this Court's decision in Gulshan Rai v. Anil Kumar Sawhney (1992 ISJ (Banking) 208), accepted the revisions and quashed the complaints, discharging the respondents. Aggrieved, the petitioners filed the present revision petitions to the High Court.
Legal Issues Presented
- Whether the learned Additional Sessions Judge's reliance on the decision in Gulshan Rai v. Anil Kumar Sawhney (1992 ISJ (Banking) 208) could be sustained after that decision was set aside by the Supreme Court in Anil Kumar Sawhney v. Gulshan Rai, 1994 (1) Recent Criminal Reports 150.
- Whether the limitation in Section 219 of the Code of Criminal Procedure (that a person accused of more than one offence of the same kind within 12 months can be charged with not more than three at one trial) prevents prosecution on more than three dishonoured cheques alleged in a single complaint.
- Whether service of the statutory notice required by Section 138 of the Negotiable Instruments Act upon the firm (as drawer) rather than upon each partner individually satisfies the requirements of law.
- Whether, under Section 141 of the Negotiable Instruments Act, partners (or persons associated with a firm) can be proceeded against where the complaint does not aver that they were "in charge of, and ... responsible" for the conduct of the firm's business or that the offence was committed with their consent, connivance or attributable to their neglect.
Arguments of the Parties
Respondents' Arguments
- The learned counsel for the respondents argued that each of the complaints alleged more than three cheques and therefore, by virtue of Section 219 CrPC, the accused could not be charged with more than three offences at one trial; the prosecution should be limited to three cheques or the proceedings quashed.
- It was contended that the statutory notice under Section 138 had been issued only to the firm (the drawer) and not served on the individual respondents; in the view of the respondents' counsel, such a notice was invalid and the complaint could not proceed.
- The respondents' counsel further argued there was no allegation in the complaint that respondents 2 and 3 were responsible for the conduct of the firm's business; consequently they could not be held liable under Section 141 of the Negotiable Instruments Act.
Petitioners' Arguments
The opinion does not contain a detailed account of the petitioners' legal arguments.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| Gulshan Rai v. Anil Kumar Sawhney, 1992 ISJ (Banking) 208 | Was relied upon by the learned Additional Sessions Judge to quash the complaints (specific rule as relied upon is not restated in the opinion). | The High Court held that the Sessions Judge's reliance on this decision could not be sustained because the decision had been set aside by the Supreme Court. |
| Anil Kumar Sawhney v. Gulshan Rai, 1994 (1) Recent Criminal Reports 150 (Supreme Court) | Held that a post-dated cheque is deemed to have been drawn on the date it bears and the six-month period in Section 138 must be reckoned from the date on the face of the cheque. | This Supreme Court ruling removed the basis of the Sessions Judge's reasoning; the High Court therefore rejected the Sessions Judge's reliance on the earlier contrary decision. |
| S. Kiran v. L.S. Corporation, 1994 ISJ (Banking) 556 (Madras High Court) | Held that when multiple cheques are issued and dishonoured, the complainant may choose which three cheques to prosecute; proceedings were not quashed in that case. | The High Court expressed difficulty in fully subscribing to that view and instead considered other authorities to decide whether Section 219 CrPC applied where the cheques arose from a single transaction. |
| State of Andhra Pradesh v. Kandimalla Subbaiah, AIR 1961 SC 1241 (Supreme Court) | Observed that where alleged offences had been committed in the course of the same transaction, the limitation under the provision akin to Section 219 need not apply. | The High Court relied on this observation to support the view that multiple dishonoured cheques forming part of one transaction need not be split into separate complaints limited by Section 219. |
| Station Shox Pvt. Ltd. Co. v. Auto Tensions (P) Ltd., 1994 (1) Recent CR 3 (Delhi High Court) | Held that filing one complaint for multiple dishonoured cheques did not cause prejudice; the accused could raise objections at trial. | The High Court cited this decision to support the proposition that a single complaint for several dishonoured cheques arising from the same transaction is permissible, subject to trial objections. |
| Manju Podar v. Ashwani Kumar, 1994 (1) Recent CR 639 | In that case there was a specific allegation that the accused were directors who were "in charge of and responsible" for the company's conduct; that fact made that decision distinguishable. | The High Court held that Manju Podar was of no avail to respondents because, unlike that case, the present complaints lacked specific averments that respondents 2 and 3 were in charge and responsible for the firm's conduct. |
| Sushil Singla v. Haripal Singh, 1994 (1) Recent CR 621 | Where complaints lacked averment that directors were in charge and responsible for company conduct, the complaints against those directors were quashed. | The High Court relied on this authority as demonstrating that where a complaint does not plead responsibility for conduct of business, accused persons in that position cannot be proceeded against under Section 141. |
| Anita Rani v. Malhotra Industrial Corporation, 1992 ISJ (Banking) 129 | Similar view to Sushil Singla: complaints lacking averment of responsibility for conduct of business resulted in quashing against certain persons. | The High Court cited this decision as supporting the proposition that lack of specific averments about responsibility can be a ground to quash proceedings against persons associated with a firm. |
Court's Reasoning and Analysis
The High Court proceeded through a sequence of analyses, applying statutory provisions and the cited authorities strictly as stated in the opinion:
- The Court first observed that the Sessions Judge had relied upon Gulshan Rai (1992 ISJ) but that decision had been set aside by the Supreme Court in Anil Kumar Sawhney v. Gulshan Rai, 1994 (1) RCR 150 which held that a post-dated cheque is deemed to be drawn on the date it bears and the six-month period of Section 138 must be reckoned from that date. Because of this authoritative ruling, the Sessions Judge's reasoning based on the earlier decision could not be sustained.
- The Court then addressed the respondents' Section 219 CrPC contention (that more than three offences of the same kind committed within 12 months cannot be tried together). The High Court examined the nature of the allegations: specific amount due and multiple post-dated cheques issued in respect of the same debt. Relying on the principle (as observed in State of Andhra Pradesh v. Kandimalla Subbaiah) that where alleged offences are committed in the course of the same transaction the limitation will not necessarily apply, and on the Delhi High Court's approach in Station Shox (that filing one complaint causes no prejudice), the High Court held that Section 219 would not operate as a bar in the peculiar facts where the cheques formed part of one transaction. The Court therefore repelled the Section 219 objection.
- On the question of notice under Section 138, the Court examined the statutory provision and concluded that it was sufficient for the notice to be issued to the drawer. Since the drawer was the firm, and a firm may act through one partner, issuing the notice to the firm satisfied the requirements of Section 138; it was not necessary to send the notice to each partner individually.
- Turning to Section 141 (which treats "company" to include a firm for the purposes of that section), the Court observed the distinction in prior decisions where complaints that specifically averred that certain persons were "in charge of, and responsible" for the conduct of business were treated differently from complaints that lacked such averments. The present complaints did not aver that respondents 2 and 3 were in charge of or responsible for conduct of the firm's business, nor did they allege that the offences were committed with their consent, connivance or attributable to their neglect.
- Consequently, the Court concluded that the complaints could not proceed against respondents 2 and 3 for want of necessary particulars required under Section 141, and the revisions as to them had to succeed. The position as against Anil K. Mehra was different because he had specifically issued the cheques in favour of the petitioners; that fact sufficed at the initial stage to permit the complaint to proceed against him. The Court noted that Anil K. Mehra could attempt to bring his case within known exceptions later, but at the initial stage the complaint as against him could proceed.
Holding and Implications
Holding:
The High Court dismissed the revision petitions insofar as they were directed against respondents 2 and 3, and set aside the judgment of the learned Additional Sessions Judge insofar as it had discharged respondent No. 1 (Anil K. Mehra). As against Anil K. Mehra, the complaints were directed to proceed in the court of the learned Judicial Magistrate.
The operative outcome as recorded in the opinion: "For these reasons given above, the revision petitions as against respondents 2 and 3 fails and are dismissed. However, as against respondent No. 1, the judgment of the learned Additional Sessions Judge is set aside. As against him, the complaint will proceed in the court of learned Judicial Magistrate." The opinion concludes with "Petition dismissed."
Implications
Direct consequences for the parties:
- The complaints cannot proceed against respondents 2 and 3 because the complaint did not aver that they were in charge of or responsible for the conduct of the firm's business nor that the offences were with their consent, connivance or attributable to their neglect.
- The complaint can proceed against respondent No. 1 (Anil K. Mehra) because he is specifically alleged to have issued the cheques; he may raise defenses or try to bring his case within exceptions at trial.
The opinion does not state that it establishes any broader or novel precedent; it applies existing authorities and statutory provisions to the facts and resolves the parties' rights accordingly. No new legal principle beyond the application of the cited authorities and statutory text is proclaimed in this opinion.
V.S Aggarwal, J.:— Since common questions are involved, therefore, all the all three criminal revisions can be disposed of together.
2. The relevant facts are that petitioner Ms. Anita filed a complaint against the respondents asserting that respondent Anil K. Mehra as partner of the firm M/s Mehra Enterprises, of which respondents 2 and 3 are also partners, issued ten cheques for Rs. 2066.66 each in her favour. They had been drawn on the Central Bank of India. Sector 22-C, Chandigarh to discharge the debt of Rs. 2066.60 on account of the loan advanced. The details of the cheques and their numbers had been given in the complainant. The cheques had been presented for encashment and were received back with the remarks “exceeds arrangements”. A notice was issued to the firm calling upon it to pay the amount of cheques within 15 days. It was received 22.4.1989 but the payment was not made. Instead a reply was sent. The learned Judicial Magistrate summoned the respondents as accused persons.
3. On identical facts petitioner Santosh Kumari preferred another criminal complaint with respect t6 the offence under section 138 of the Negotiable Instruments Act. Herein nine cheques of Rs. 2066.66 had been issued by respondent Anil K. Mehra of the same concern which have been dishonoured in a similar manner.
4. The third complaint was filed by Ms. Sangita against the respondents asserting that respondent Anil Kumar Mehra partner of the same firm issued ten cheques for Rs. 1550/- each and in similar manner the same were dishonoured with the regards “exceeds arrangement”. The learned Judicial Magistrate had summoned the respondents as the assumed.
5. The respondents had preferred criminal revisions in the Court of Sessions. The learned Additional Sessions Judge, Chandigarh vide the impugned judgment dated 15.7.1993 relying on the decision of this Court in the case of Gulshan Rai v. Anil Kumar Sawhney, 1992 ISJ (Banking) 208 accepted the revisions and quashed the impugned complaints. The respondents were discharged.
6. Aggrieved by the said judgments of the learned Additional Sessions Judge, Chandigarh, the present revision petitions have been filed.
7. It is not subject matter of any controversy that decision of this Court referred to above in the case of Gulshan Rai (supra) which was relied by the learned Additional Sessions Judge has since been set aside by the Supreme Court of India in the case titled Anil Kumar Sawhney v. Gulshan Rai, 1994 (1) Recent Criminal Reports 150. The Supreme Court settled the controversy by holding that a post-dated cheque shall be deemed to have been drawn on the date it bears and the period of six months has to be reckoned from the date mentioned on the face of the cheque.
8. That being the position, the reasoning of the learned Additional Sessions Judge in this regard cannot be sustained. However, the respondents' learned counsel took up certain other contentions so as to support the fact that the proceedings had to be quashed and the revision petitions must fail.
9. It was urged vehemently that in each of the complaints more than three cheques are alleged to have been issued while under Section 219 of the Code of Criminal Procedure when a person is accused of more offences than one of the same kind committed within the space of 12 months, he can be charged, and tried at one trial for, any number of them not exceeding three. To buttress this argument, the learned counsel relied on the judgment of Madras High Court in the case of 5. Kiran v. L.S Corporation, 1994 ISJ (Banking) 556.
10. In the case of S. Kiran (supra) certain goods had been sold by the complainant to the accused. After giving credit to various part payments made by the accused, certain sum was found due. Accused issued five cheques. When the said cheques were presented, they were returned dis-honoured. After giving the notice a complaint was filed. It was held that the complainant will have to choose as to which of these five cheques, he will pick up the three regarding which prosecution would be maintainable but proceedings were not quashed. With deep respect it is difficult to subscribe this view point. Some help can be taken in this regard from the decision of the Supreme Court in the case of State of Andhra Pradesh v. Kandimalla Subbaiah, AIR 1961 SC 1241. The facts were different but it was observed that where alleged offences had been committed in course of the same transaction, the abovesaid limitation will not apply. A similar argument had taken advanced before Delhi High Court in the case of Station Shox Pvt. Ltd. Co. v. Auto Tensions (P) Ltd., 1994 (1) Recent CR 3. Therein too it was argued that separate complaint should have been filed with respect to each cheque that was dis-honoured. The learned Single Judge of that Court negatived the plea by holding that no prejudice is caused to the petitioner by filing of one complaint. However, the accused were permitted to raise these points before the trial court. In fact for purposes of the present order, one is constrained to observe that as per the allegations a specific amount was due. Certain post-dated cheques were issued. They were numbering 9/10 (already mentioned above in individual complaint). It was, therefore, one transaction and to state that there has to be a separate complaint with respect to each cheque that was dis-honoured, will not be correct. Section 219 of the Code of Criminal Procedure, therefore, will not be bar in the peculiar facts of the case. Therefore, this court has no hesitation in repelling the said arguments.
11. In that event respondents' learned counsel urged that no notice had been served on the respondents. The said notice had simply been issued to the firm of which the respondents are alleged to be the partners. In his view, therefore, the notice was invalid and the complaint cannot proceed. Section 138 of the Negotiable Instruments Act, 1881 (As Amended) reads:—
“138. Dishonour of cheque for insufficiency, etc., of funds in the account. - Where any cheque drawn by a person on an account maintained by him with banker for payment of any amount of money to another person from out of that account for the discharge, in whole or in part, of any debt or other liability, is 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 that account by an agreement made with that bank, such person shall be deemed to have committed an offence and shall, without prejudice to any other provision of this Act, be punished with imprisonment for a term which may extend to one year, or with fine which may extend to twice the amount of the cheque, or with both:
Provided that nothing contained in this section shall apply unless —
(a) the cheque has been 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;
(b) the payee or the holder in due course of the cheque, as the case may by, makes a demand for the payment of the said amount of money by giving a notice in writing, to the drawer of the cheque, within fifteen days of the receipt of information by him from the bank regarding the return of the cheque as unpaid; and
(c) the drawer of such cheque fails to make the payment of the said amount of money to the payee or as the case may be, to the holder in due course of the cheque within fifteen days of the receipt of the said notice.
Explanation. - For the purpose of this section, “debt or other libility” means a legally enforceable debt or other liability.”
12. Perusal of the aforesaid leaves no doubt that the required notice had been issued to the drawer of the said cheque. It is not the requirement of law that the said notice must be sent to each of the partner. The drawer was the firm and only one of the partners may act on behalf of it. Once the notice was issued to the drawer, it would be compliance of Section 138 of the Negotiable Instruments Act, 1881.
13. The last submission in this regard was that there was no allegation made in the complaint that the respondents were responsible for the conduct of the business of the firm and consequently they cannot be held liable. Section 141 of the Negotiable Instruments Act, 1881 holds the key of this controversy. It is being reproduced below for the sake of facility:—
“141. Offences by companies. - (1) If the person commiting 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.
(2) Notwithstanding anything contained in sub-section (1), where any offence under this Act has been committed by a company and it is proved that the offence has been committed with the consent or connivance of, or is attributable to, any neglect on the part of, any director, manager, secretary or other officer of the comapany, such director, manager, secretary or other officer shall also be deemed to be guilty of that offence and shall be liable to be proceeded against the punished accordingly.
Explanation. - For the purpose of this section.
(a) “company” means any body corporate and includes a firm or other association of individuals; and
(b) “director”, in relation in a firm, means a partner in the firm.”
14. The relevant provisions reveal that for purposes of Section 141 of the Negotiable Instruments Act, 1881, the expression ‘company’ also includes a firm or other association of individuals. Therefore, the partnership firm would be included therein. The decision of this Court in the case of Manju Podar… v. Ashwani Kumar…, reported as 1994 (1) Recent CR 639 is of no avail because in the cited case, there was a specific allegation in the complaint that the alleged accused were directors of the company. They were incharge and responsible to the company for conduct of business.
15. Attention was drawn towards the decision of this Court in the case of Sushil Singla… v. Haripal Singh…., 1994 (1) Recent CR 621. A complaint in the cited case was filed under the Negotiable Instruments Act, 1881. There was no averment that the directors were incharge and responsible to the company for conduct of business. The complaint qua those directors was quashed. The same view prevailed in the case of Anita Rani v. Malhotra Industrial Corporation, 1992 ISJ (Banking) 129.
16. What is the position in the present cause? The complaint does not make any assertion so far as respondents 2 and 3 are concerned that at the time when the offence was committed, they were incharge and responsible to the company for the conduct of business of the said firm. There is no averment that the offence had been committed with the consent or connivance or is attributable to any neglect on the part of these two partners. Consequently, as against these two respondents the revisions must fail because complaint could not proceed for lack of necessary particulars. The position as against Anil K. Mehra is different. The answer against him in obvious. He is not alleged to be the person responsible for conduct of the business of the firm. But the gap is filled up from the fact that it is he who had issued the cheques in favour of each of the petitioners separately. He may show and try to bring his case within the known exceptions of law but as far present he can be stated to be incharge and responsible to the firm for conduct of business. At this initial stage, therefore, complaint as against him can certainly proceed.
17. For these reasons given above, the revision petitions as against respondents 2 and 3 fails and are dismissed. However, as against respondent No. 1, the judgment of the learned Additional Sessions Judge is set aside. As against him, the complaint will proceed in the court of learned Judicial Magistrate.
Petition dismissed.
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