2023 (12) TMI 1202 - HC - Indian Laws

Society office bearer's prosecution quashed under Section 141 - company must be prosecuted first

The HC quashed criminal proceedings against a society's office bearer under Section 141 of the Negotiable Instruments Act. The court held that a society ... Dishonour of Cheque - discharge of legal liability or not - Society is not a body corporate - applicability of Section 141 of the Negotiable Instruments Act - HELD THAT:- Section 141 of the Negotiable Instruments Act deals with the liability of the Company and provides that where the offence is committed by 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 its business as well as the company, shall be deemed to be guilty of the commission of the offence. It is apparent from the bare perusal of the provisions that in the case of a Company, the Company as well as the office bearers are liable. Hence, the company is primarily liable and the office bearers are vicariously liable. It was laid down by the Hon'ble Supreme Court in ANEETA HADA VERSUS GODFATHER TRAVELS & TOURS (P.) LTD. [2012 (5) TMI 83 - SUPREME COURT] that it is not permissible to prosecute the Directors in the absence of the Company - in view of the binding precedents of the Hon'ble Supreme Court, the submission that the prosecution of the Company is necessary before prosecuting its office bearers has to be accepted as correct. It is an admitted position that the Himalayan Mahila Avam Jan Kalyan Sansthan is registered under the Societies Registration Act. Section 14 of the H.P. Societies Registration Act provides that every Society shall be a body corporate by the name under which it is registered having perpetual succession and a common seal - This Section specifically provides that the Society shall be a body; hence, the submission that the Society is not a body corporate is not acceptable. The complainant could not have filed a complaint against the petitioner and respondent no. 3 without impleading the Company to an accused. The prosecution of the petitioner in the absence of the Company is bad - the complaint titled Mukesh Kumar vs Anjana Kumari and another quashed qua the petitioner pending before the learned Additional Chief Judicial Magistrate, Sarkaghat against the petitioner and the consequent proceedings arising out of the same are ordered to be quashed qua the petitioner. Petition allowed. Issues Involved:1. Whether the complaint under Section 138 of the Negotiable Instruments Act is maintainable without arraigning the Society as an accused.2. Whether the Society qualifies as a 'body corporate' under Section 141 of the Negotiable Instruments Act.Summary:Issue 1: Maintainability of the Complaint Without Arraigning the SocietyThe complainant filed a complaint against the petitioner and respondent no. 3 for an offence under Section 138 read with Section 142 of the Negotiable Instruments Act, asserting that the Society issued a cheque which was dishonored. The Trial Court summoned the accused, but the petitioner sought quashing of the complaint and summoning order, arguing that the Society was not made an accused, rendering the complaint against the office bearers alone as not maintainable.The Court reviewed the submissions and relevant precedents, including the Supreme Court judgments in *Aneeta Hada v. Godfather Travels & Tours (P) Ltd.*, *Charanjit Pal Jindal v. L.N. Metalics*, *Himanshu v. B. Shivamurthy*, *Dilip Hariramani v. Bank of Baroda*, and *Pawan Kumar Goel v. State of U.P.*. These cases established that for maintaining prosecution under Section 141 of the Act, arraigning the company as an accused is imperative. The Court concluded that prosecuting the office bearers without the Society is not permissible, thus the complaint was not maintainable.Issue 2: Whether the Society is a 'Body Corporate'The petitioner argued that the Society is a body corporate with independent existence, and the complaint should include the Society as an accused. The complainant countered that the Society is not a body corporate and the provisions of Section 141 apply only to bodies corporate.The Court referred to Section 141 (2) of the Negotiable Instruments Act, which includes any body corporate, firm, or other association of individuals under the term 'Company'. The Court also noted that under Section 14 of the H.P. Societies Registration Act, the Society is considered a body corporate with perpetual succession and a common seal. Therefore, the Court held that the Society qualifies as a body corporate, and the complaint against the petitioner and respondent no. 3 without including the Society is not valid.Conclusion:The Court allowed the petition, quashed the complaint and the summoning order against the petitioner, and concluded that the prosecution of the petitioner in the absence of the Society is bad. The observations made are confined to the disposal of the petition and have no bearing on the merits of the case.