2025 (6) TMI 836 - HC - Indian Laws

Gujarat HC rejects petition to add company and directors to Section 138 complaint after mandatory notice requirement not fulfilled

Gujarat HC dismissed petition seeking to amend complaint under Sections 138 and 141 of Negotiable Instruments Act to implead company and directors as ... Dishonour of Cheque - Seeking to invoke extraordinary and inherent jurisdiction of this Court under Articles 226 & 227 of the Constitution read with Section 528 of the Bharatiya Nagarik Suraksha Sanhita - seeking amendment of the complaint to implead the company and other directors as accused persons in the ongoing proceedings, after institution of a complaint under Sections 138 and 141 of the Negotiable Instruments Act against an individual director of a company - HELD THAT:- The Coordinate Bench in the case of M/S. Khizer Impex Pvt. Ltd. through Mohammed Hadi Karamhusian [2020 (9) TMI 106 - GUJARAT HIGH COURT] has, after considering various decisions of the Hon'ble Apex Court, held that the amendment of the nature sought for in the said petitions cannot be permitted and ultimately rejected both the petitions. It is also found out from the record that the procedure adopted by the present petitioner is, prima facie, found to be against the settled principle of law. It is well settled that before institution of the complaint under the provisions of N.I.Act, complainant has to fulfill certain requisite requirements mentioned in the statute. However, admittedly, in the instant case, the complainant - petitioner has not followed those requisite requirements. Before institution of the complaint a mandatory notice is required to be issued to the concerned accused persons. However, in the instant case, the petitioner has not issued said mandatory notice to the proposed persons, who were sought to be impleaded as accused persons in the ongoing proceedings. It is an admitted position of fact that after the institution of the complaint, petitioner realized that she has committed mistake by not joining certain persons, who were the Directors of the company and the company as accused and therefore an application is preferred for impleadment of those persons without making specific allegations that the said proposed accused persons were in charge of and responsible to the company for the conduct of the business at the time of offence. Conclusion - The orders passed by the learned Courts concerned are just, fair and reasonable based upon sound principle of law which are not required to be interfered by this Court. Petition dismissed. 1. ISSUES PRESENTED and CONSIDEREDThe core legal questions considered by the Court are:(a) Whether the petitioner, after institution of a complaint under Sections 138 and 141 of the Negotiable Instruments Act against an individual director of a company, can seek amendment of the complaint to implead the company and other directors as accused persons in the ongoing proceedings;(b) Whether such amendment or impleadment is permissible without issuing mandatory notices as required under Section 138(b) of the Negotiable Instruments Act to the proposed accused persons prior to institution of the complaint;(c) Whether the provisions of Section 319 of the Code of Criminal Procedure can be invoked at the stage of trial to implead additional accused persons not originally named in the complaint, especially when no incriminating evidence against them has been led;(d) The applicability and interpretation of judicial precedents, including the decision of the Delhi High Court in Sarabjit Singh and the coordinate bench decision in M/S. Khizer Impex Pvt. Ltd., regarding amendment of complaints and impleadment of companies and their directors in proceedings under the Negotiable Instruments Act;(e) Whether the orders passed by the Trial Court and Revisional Court rejecting the application for amendment and impleadment are legally sustainable.2. ISSUE-WISE DETAILED ANALYSISIssue (a): Permissibility of Amendment to Implead Company and Other Directors After Institution of ComplaintRelevant legal framework and precedents: The Negotiable Instruments Act, particularly Sections 138 and 141, governs offences related to dishonour of cheques. Section 138(b) mandates issuance of notice to the accused prior to complaint. Section 319 Cr.P.C. allows the Court to summon additional accused during trial if incriminating evidence emerges. The coordinate bench decision in M/S. Khizer Impex Pvt. Ltd. and several Supreme Court decisions (Arjundev Nagpal, S.R. Sukumar, Rajneesh Aggarwal, Bilakchand Ganchand Co., Gena Marketing Pvt. Ltd., Sarabjit Singh) have been considered.Court's interpretation and reasoning: The Court noted that the petitioner initially filed the complaint against one director only, without joining the company or other directors. The petitioner later sought to amend the complaint to implead the company and other directors, claiming inadvertent omission. The Trial Court rejected this application, and the Revisional Court upheld the rejection.The Court emphasized that amendment of the complaint to add new accused after institution of the complaint is not permissible unless supported by incriminating evidence discovered during trial, as per Section 319 Cr.P.C. The petitioner's application was premature and lacked specific allegations against the proposed accused persons.Key evidence and findings: The petitioner failed to join the company and other directors at the time of filing the complaint. No specific averments or incriminating facts were made against the proposed accused persons. The application was based on an alleged inadvertent mistake, not on new evidence.Application of law to facts: The Court applied the settled principle that amendment to add accused under Section 138 of the N.I. Act is not allowed post-institution of complaint unless new incriminating evidence emerges during trial. The petitioner's attempt to implead the company and other directors without fulfilling procedural requirements was rejected.Treatment of competing arguments: The petitioner relied on the Delhi High Court decision in Sarabjit Singh, where the company was already a co-accused but not summoned, and was later summoned under Section 319 Cr.P.C. The Court distinguished that case as factually different, since in the present matter the company was not originally a party. The State argued that the petitioner did not follow mandatory pre-complaint procedures and failed to make specific allegations against the proposed accused.Conclusion: Amendment to implead the company and other directors after complaint institution without new incriminating evidence is impermissible. The Trial and Revisional Courts rightly rejected the application.Issue (b): Requirement of Issuance of Mandatory Notice under Section 138(b) of the Negotiable Instruments ActRelevant legal framework and precedents: Section 138(b) mandates that a notice in writing must be issued to the drawer of the cheque within 30 days of receiving information of dishonour. This is a pre-condition to filing a complaint.Court's interpretation and reasoning: The Court found that the petitioner did not issue the mandatory notice to the proposed accused persons (company and other directors) prior to seeking their impleadment. The notice was issued only to the company before institution of the complaint against the individual director.Key evidence and findings: The petitioner admitted that the proposed accused persons were not signatories to the cheque and no specific demand or notice was issued to them before complaint.Application of law to facts: The Court held that the failure to issue mandatory notice to each proposed accused person is fatal and bars their impleadment in the complaint under Section 138 of the N.I. Act.Treatment of competing arguments: The petitioner argued that since notice was issued to the company, it sufficed for the directors as well. The Court rejected this, emphasizing the statutory requirement for notice to each accused.Conclusion: The petitioner's failure to issue mandatory notice to the proposed accused persons before complaint institution invalidated the application for their impleadment.Issue (c): Application of Section 319 Cr.P.C. for Impleadment of Additional Accused During TrialRelevant legal framework and precedents: Section 319 Cr.P.C. permits the Court to summon additional accused during trial if evidence implicates them. The Delhi High Court and Supreme Court decisions were examined.Court's interpretation and reasoning: The Court held that Section 319 cannot be invoked prematurely by the complainant to amend the complaint and add accused without leading incriminating evidence during trial. The petitioner's application was based on an inadvertent omission, not on new evidence.Key evidence and findings: No evidence was led or discovered during trial implicating the proposed accused persons. The petitioner sought impleadment solely on the basis of their directorship and alleged connection to the company.Application of law to facts: The Court concluded that Section 319 requires incriminating evidence to be placed on record during trial before additional accused can be summoned. The petitioner's application did not satisfy this requirement.Treatment of competing arguments: The petitioner contended that the directors were responsible for the company's conduct and should be joined. The Court found this argument insufficient without specific allegations or evidence.Conclusion: Section 319 Cr.P.C. cannot be used to implead accused persons without new incriminating evidence during trial. The petitioner's application was rightly rejected.Issue (d): Applicability of Judicial Precedents, Particularly Sarabjit Singh and M/S. Khizer Impex Pvt. Ltd.Relevant legal framework and precedents: The Delhi High Court decision in Sarabjit Singh allowed summoning of a company as accused under Section 319 Cr.P.C. where the company was already a co-accused but not summoned. The coordinate bench decision in M/S. Khizer Impex Pvt. Ltd. rejected amendment applications to implead companies as accused after complaint institution under Section 138 N.I. Act.Court's interpretation and reasoning: The Court distinguished Sarabjit Singh on factual grounds, noting that the company was already a co-accused in that case, whereas here the company and other directors were never parties to the original complaint. The coordinate bench decision in M/S. Khizer Impex Pvt. Ltd. was found directly applicable and authoritative, holding that amendment to add company as accused post-complaint is impermissible.Key evidence and findings: The Court reviewed the precedents and found that the petitioner's reliance on Sarabjit Singh was misplaced. The M/S. Khizer Impex Pvt. Ltd. decision comprehensively dealt with similar facts and rejected such amendment.Application of law to facts: The Court applied the legal principles and precedents to uphold the rejection of the petitioner's application.Treatment of competing arguments: The petitioner's reliance on Sarabjit Singh was countered by the State and the Court's analysis of the coordinate bench decision.Conclusion: The precedents support the rejection of the petitioner's application for amendment and impleadment.Issue (e): Legality and Reasonableness of the Orders Passed by Trial and Revisional CourtsCourt's interpretation and reasoning: The Court found that both the Trial Court and Revisional Court passed detailed, reasoned orders considering all aspects of law and facts. The orders were based on sound principles and consistent with settled law.Key evidence and findings: The Courts considered the procedural lapses, absence of specific allegations, and lack of notice to proposed accused persons.Application of law to facts: The Court found no infirmity or illegality in the impugned orders warranting interference.Conclusion: The orders passed by the Trial and Revisional Courts are just, fair, reasonable, and sustainable in law.3. SIGNIFICANT HOLDINGS'The amendment of the nature sought for in present petitions, cannot be permitted and therefore this Court is not inclined to entertain present petitions, as no infirmity or illegality is noticed in the impugned orders.''Before institution of the complaint under the provisions of N.I.Act, complainant has to fulfill certain requisite requirements mentioned in the statute. However, admittedly, in the instant case, the complainant - petitioner has not followed those requisite requirements.''Section 319 Cr.P.C. requires incriminating evidence to be led during the course of trial before additional accused can be summoned. Mere inadvertent omission or realization post complaint institution is not sufficient.''The procedure adopted by the present petitioner is, prima facie, found to be against the settled principle of law.''The orders passed by the learned Courts concerned are just, fair and reasonable based upon sound principle of law which are not required to be interfered by this Court.'Core principles established include the strict adherence to procedural requirements under the Negotiable Instruments Act before instituting complaint, the limitation on amendment of complaints to add accused post-institution without new evidence, and the non-applicability of Section 319 Cr.P.C. for premature impleadment.Final determinations: The petition challenging the rejection of amendment application to implead company and other directors is dismissed. The impugned orders of the Trial and Revisional Courts are upheld.