2020 (2) TMI 1244 - HC - Indian Laws

Court quashes orders in criminal case for failure to arraign company as accused under Section 141

Devendra Kumar Garg Versus State of U.P. and Another

The court allowed the application and quashed the orders in the criminal complaint case as the company was not arraigned as an accused, contrary to the ... Dishonor of Cheque - Section 138 of NI Act - Submission of the learned counsel for the applicant is that complaint has been filed without making party to the company though complainant case is that cheque in question had been issued by the applicant in capacity of the director of Ravi Organics Limited. - HELD THAT:- It is evident that the notice as well as the complaint was filed against the applicant in his individual capacity. Company was not arrayed as a party neither in the notice nor in the complaint - Hon'ble Apex Court in the case of ANEETA HADA VERSUS GODFATHER TRAVELS & TOURS (P.) LTD. [2012 (5) TMI 83 - SUPREME COURT] has held that for maintaining the prosecution under Section 141 of the Act, arraigning of a company as an accused is imperative. Application allowed. Issues:1. Quashing of orders in Criminal Complaint Case No.152/9 of 2013 under Section 138 of N.I. Act.2. Failure to arraign the company as an accused in the complaint.3. Legal position on maintaining prosecution under Section 141 of the N.I. Act.4. Applicability of judgments in Aneeta Hada and Himanshu cases.5. Dispute over legal position between applicant's counsel and State's counsel.Issue 1: Quashing of Orders in Criminal Complaint Case No.152/9 of 2013 under Section 138 of N.I. Act:The applicant sought relief to quash orders dated 17.7.2013 and 05.12.2015 in the mentioned criminal complaint case. The applicant argued that the complaint was filed without making the company a party, despite the cheque being issued by the applicant as a director of the company. The court considered the legal requirement for maintaining the prosecution under Section 141 of the N.I. Act, emphasizing the necessity of arraigning the company as an accused. Citing relevant case laws, the court analyzed the implications of not including the company as an accused in such cases. The court also noted the importance of strict construction in interpreting the law in this context.Issue 2: Failure to Arraign the Company as an Accused in the Complaint:The applicant contended that for a complaint under Section 138 of the N.I. Act related to a company's cheque, it is essential to include the company as an accused. The court referred to judgments in Aneeta Hada and Himanshu cases, which emphasized the need to arraign the company as an accused for maintaining the prosecution under Section 141 of the Act. The court highlighted that the complaint in question was against the applicant in his individual capacity, without involving the company, contrary to legal requirements.Issue 3: Legal Position on Maintaining Prosecution under Section 141 of the N.I. Act:The court discussed the legal position regarding the prosecution under Section 141 of the N.I. Act, emphasizing the mandatory requirement of arraigning the company as an accused for offenses related to dishonored cheques issued by the company. The court relied on precedents and case laws to support the argument that vicarious liability of individuals is contingent upon the company being prosecuted in such cases.Issue 4: Applicability of Judgments in Aneeta Hada and Himanshu Cases:The applicant's counsel referenced judgments in Aneeta Hada and Himanshu cases to support the argument that failure to arraign the company as an accused renders the complaint not maintainable. These judgments underscore the significance of including the company as an accused when prosecuting offenses under Section 138 of the N.I. Act involving dishonored cheques issued by the company. The court found the present case aligned with the principles established in these judgments.Issue 5: Dispute Over Legal Position Between Applicant's Counsel and State's Counsel:The State's counsel did not dispute the legal position presented by the applicant's counsel regarding the necessity of arraigning the company as an accused in cases involving dishonored cheques issued by companies. The court noted the absence of the company as a party in the complaint against the applicant, leading to the decision to allow the application and quash the orders related to the criminal complaint case, in line with the legal precedents discussed.This detailed analysis of the judgment highlights the key legal issues, arguments presented by the parties, relevant case laws, and the court's decision based on the legal principles discussed in the context of maintaining prosecution under the N.I. Act.