2015 (2) TMI 1254 - HC - Indian Laws

Director or Employee Prosecution Without Company Involvement: High Court Decision

Bharat Mathur, Ex-Vice President (Corp.) Services M/s. Data Access India Ltd. Versus Bharat Sanchar Nigam Ltd., & Anr.

The High Court of Bombay addressed the issue of prosecuting a director or employee of a company for an offense under section 138 of the Negotiable ... Director or an employee of the company prosecution for the offence punishable under section 138 of the Negotiable Instruments Act - offence is allegedly committed by the company - Held that:- The present petition is maintainable and the petitioner is entitled for the relief sought by him in the present petition. Writ petition is allowed.The proceedings pending against the Petitioner i.e. C.C.No. 2411/SS/2007 before the Metropolitan Magistrate, Court, Ballard Pier, Mumbai, shall stand quashed.Bail bond, if any, of the Petitioner shall also stand cancelled. Issues:Whether a director or an employee of a company can be prosecuted for an offense under section 138 of the Negotiable Instruments Act without impleading the company as an accused.Analysis:The High Court of Bombay addressed the issue of prosecuting a director or employee of a company for an offense under section 138 of the Negotiable Instruments Act without involving the company as an accused. The court noted that a previous application on the same issue had been dismissed, stating that the company was not a necessary party as an accused. However, the petitioner relied on a judgment of the Supreme Court in the case of Aneeta Hada vs. Godfather Travels & Tours Pvt. Ltd., which emphasized the necessity of arraigning a company as an accused to maintain a prosecution under section 141 of the Act. The court highlighted the importance of vicarious liability for other categories of offenders. The judgment in the case of Aneeta Hada vs. M/s. Godfather Travels was considered pivotal in changing the legal landscape regarding this issue.The respondent argued that the cited judgment had prospective application and should not affect cases filed before its issuance. Referring to the judgment in the case of Anil Hada vs. Indian Acrylic Ltd., the respondent contended that the complaint filed in 2004 should be decided based on the law prevailing at that time. Additionally, reliance was placed on the judgment in the case of Ramesh Kumar Soni vs. State of Madhya Pradesh, emphasizing the concept of prospective declaration of law to prevent reopening of settled issues and avoid uncertainty in legal matters.After considering the arguments and judgments presented, the court concluded that the case against the petitioner had not reached finality, making the cited judgment applicable. The court highlighted that the pending case would be governed by the principles laid down by the Supreme Court in the Aneeta Hada case. Consequently, the court allowed the writ petition, quashed the proceedings against the petitioner before the Metropolitan Magistrate, and canceled any existing bail bond. The court's decision was based on the applicability of the Supreme Court judgment to the ongoing case, ensuring justice and adherence to legal principles.In conclusion, the High Court of Bombay's judgment in this case clarified the necessity of involving a company as an accused for prosecuting offenses under the Negotiable Instruments Act. The court's decision emphasized the importance of legal precedents and the application of law to ongoing cases, ensuring fairness and adherence to established legal principles.