1. The accused in c. C. 46/90 pending trial before the judicial magistrate, Sivakashi for an offence under s. 138 of the negotiable instruments act, 1881 as amended by act 66 of 1988, On a complaint given by the respondent herein, Invoices the inherent powers of this court under s. 482, Cr. P. C. To quash the above proceedings.
2. The allegation in the complaint is that, For liabilities arising out of supply of pictorial calendars by the respondent to m/s. Surya advertising private limited, Whose sistern concern is m/s. Mudra graphics private limited, The petitioner being the managing director of both the concerns, Representing that funds in m/s. Surya advertising private limited were not sufficient and that there was sufficient funds in m/s. Mudra graphics private limited, Issued a cheque for rs. 20,000/ - in m/s. Mudra graphics private limited account.
3. The cheque when presented by the respondent through the tamil nadu mercantile bank ltd. Sivakasi, Was returned unpaid for want of funds with an endorsement by the bank "refer to drawer". The statutory notice of demand was given to the petitioner requiring him to pay the amount within 15 days of the receipt of the notice and the petitioner not having paid the amount, The complaint was filed. On receipt of the summons from the trial court, The petitioner has filed the present application to quash the above complaint.
4. Thiru v. Sairam, Learned counsel for the petitioner urged two contentions in support of his prayer: (i) according to the complaint, The cheque was issued by m/s. Mudra graphics private lmited which owed no debt or was under no liability to the respondent, Whereas the liability for calendars supplied was that of m/s. Surya advertising private limited and as such, The petitioner who is shown as the managing director, M/s. Surya advertising private limited cannot be prosecuted.
(ii) the cheques had been issued by m/s. Mudra graphics private ltd. And when the cheque is dishonoured for want of funds, The offence, If any, Is committed only by m/s. Mudra graphics private limited, Which is not the accused in the case and hence the present petitioner cannot be prosecuted even though he had signed the cheque as managing director of m/s. Mudra graphics private limited.
5. Meeting the above contentions, Thiru k. S. Rajagopalan, Learned counsel for the respondent would contend that at this stage, This court has merely to accept the complaint as it is and find out whether an offence has been committed and in the present case, There is a specific averment in the complaint that m/s. Surya advertising private limited and m/s. Mudra graphics private limited aresisterconcer/isandthepetitioner is the managing director of both the concerns and the cheque has been issued by the petitioner from out of the account of m/s. Mudra graphics private limited on the specific representations that funds in m/s. Mudra graphics private limited were hot sufficient and that there was sufficient funds in m/s. Mudra graphics private limited. According to the learned counsel either way, The petitioner would be liable, Particularly when to the notice of demand sent after the dishonour of the cheque, The petitioner had not chosen to send even a reply or to pay the amount and as such, The complaint has to be sustained.
the question that arises for consideration is whether any one of the contentions put forward by the learned counsel for the petitioner can be accepted?
6. It is settled law that at this stage, This court while acting under s. 482, Criminal procedure code has to'accept the averments in the complaint as they are, Without adding anything thereto or subtracting anything there from and find out, If the offence is made out against the accused. If the complaint discloses the offence against the accused and there is no legal impediment to the continuance of the proceedings, This court cannot stifle the prosecution by quashing it at its very threshold. Every opportunity must be given to a complainant to prove his case during trial. It is in this background that the legal contentions have to be analysed.
7. For considering the first contention namely, That the respondents had supplied pictorial calendars only to m/s. Surya advertising private limited and that the cheque had been issued by m/s. Mudra graphics private limited which had no debt and was under no liability to the respondent, A reading of the relevant portion of s. 138 would be useful:
"138. Dishonour of cheque for insufficiency etc. Of funds in the accounts. Where any cheque drawn by a person 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 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 term which may extend to one year to or with fine which may extend to twice the amount of the cheque, Or with both.
explanations. For the purposes of this section "debt or other liability" means a legally enforceable debt or other liability. "
8. A reading of the above provision would indicate that the debt or liability towards which the cheque is issued, Should be a legally enforceable debt or liability. This would have reference to nature of the debt or liability and not to the person against whom the debt or liability could be enforced. This is clear by use of words "any debt or liability" which would include a cheque drawn by one person towards a legal enforceable debt or liability of another person. The significant omission of the words "debt or other liability of that person" (emphasis supplied) after the words "any debt or liability" would indicate the intention of the parliament. Hence in the instant case, The liability or debt was legally enforceable against m/s. Surya advertising private limited but the cheque had been issued by the m/s. Mudra graphics private limited towards the liability due by m/s. Surya advertising private limited to the respondent. The only requirement of the section on this aspect is that the debt or liability who owned the debt or is under liability but need not necessarily be a debt or liability of the person who actually draws the cheque. M/s. Surya advertising private limited and m/s. Mudra graphics private limited are sister concerns and for a liability due by m/s. Surya advertising private ltd., The sister concern m/s. Mudra graphics private limited has issued the cheque. There is nothing in the language of s. 138 or in any other provision of chap. 17, To exclude such a cheque out of the purview of the chapter. While so, The cheque issued by m/s. Mudra graphics private limited for a legally enforceable liability of m/s. Surya advertising private ltd. Liability would come within the purview of chap. 17 of the act. The contention of the learned counsel for the petitioner, Therefore cannot be accepted.
9. The next contention is that the offence has been committed by m/s. Mudra graphics private limited since the cheque is issued by it and when m/s. Mudra graphics private limited is not made an accused, The petitioner cannot be proceeded against, For an offence committed by the company. Here again, A reading of s. 138 would show that when a cheque is drawn by a person and is returned unpaid by the bank, For the reasons mentioned in the provision, Such person shall be deemed to have committed an offence.
the use of the words "such person" would clearly indicate, That the person who had drawn the cheque is the person who commits the offence. In the instant case, The cheque is drawn by m/s, Mudra graphics private limited, Signed by the petitioner herein as its managing director. The cheque however is drawn only by m/s. Mudra graphics private limited. Where the cheque is dishonoured for want of funds, The offence is committed only by the drawer, Namely m/s. Mudra graphics private limited. S. 141 of the act provides that when a person who has committed an offence under s. 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. The petitioner as managing director was in charge of and responsible to the company for the conduct of the business of the company. It is in such capacity he had signed the cheque also. The petitioner also would be liable since the offence has been committed by the company, Of which he is in charge. In the present complaint m/s. Mudra graphics private limited, Which has committed the offence is not an accused. 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 a settled position of law reiterated by the supreme court in u. P. Pollution control board v. M/s. Modi distillery, 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 formal amendment of the complaint to make the company also as an accused. In the instant case, The offence committed by m/s. Mudra graphics limited 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 result the petition is allowed and the proceedings in c. C. 46/90, Pending before the judicial magistrate, Sivakasi are quashed. Allowed.