TaxTMI 
TaxTMI 
2005 (3) TMI 809
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....ayed as accused No. 5 and the last three abovenamed accused persons as petitioners have preferred the present revisional applications bearing Nos. 10717 99, 1001/99 and 1103/99 respectively for quashing of the criminal proceeding against them. 3. The factual matrix as disclosed in the petition of complaint, in short, is that accused No. 1 is a limited company and Rajib Mankuria is the Manager -Accountant and Administration and constituted attorney of complainant company. Complainant company had given short term loan to accused No. 1 company for a total sum of Rs. 10.00 crores by way of demand draft of Rs. 5.00 crores on 14.7.95, further sum of Rs. 3.00 crores by way of demand draft on 25.7.95, further sum of Rs. 2.00 crores by demand draft on 2.8.95 on mutually agreed condition to repay Rs. 5.00 crores on 12.7.96 and balance sum of Rs. 5.00 crores on 18.7.96 and the said loan would carry interest @ 20% p.a. on quarterly rests. When the offence was committed the accused Nos. 2 and 3 were the Chairman and Vice-Chairman respectively of accused No. 1 and both were in charge of day-to-day conduct of business affairs, the administration and running of accused No. 1 company. Accused No....
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....p; 37,28,690.00 3. 31.03.97 984179 43,91,928.00 4. 31.03.97 984159 5,00,00,000.00 5. 31.03.97 984160 5,00,00,000.00 4. The cheques as per serial Nos. 1 and 2 bearing No. 984168 and 984178 for Rs. 9,37,625.00 and Rs. 37,28,690.00 respectively were towards balance payment of interest due on 31st March, 1997. Cheque of serial No. 3 bearing No. 984179 for Rs. 43,91,928.00 towards TDS on interest upto 31.3.97 and cheques of serial Nos. 4 and 5 bearing No. 984159 and 984160 for Rs. 5.00 crores each towards repayment of aggregate principal amount of Rs. 10.00 crores. All the cheques issued by accused No. 1 were handed over at the office of complainant at Calcutta in due discharge of liability. The above cheques were signed by accused No. 5 for and on behalf of accused No. 1 company. The complainant deposited the said cheque of serial No. 2 bearing No. 984178 for Rs. 37,28,690.00 with its ba....
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....a proceeding under Section 138 of the NI Act notice must be served upon the accused by registered post. Service of notice by hand is illegal and not permissible in law. The petition of complaint is liable to be quashed on this score only. 6. Mr. Biplab Mitra, learned Senior Advocate appearing for the complainant opposite party along with Mr. Debabrata Acharyya and Mr. S.B. Sinha Roy submitted that Annexure B of the revisional application which is an application filed by the petitioners before the learned Trial Court with a prayer for dismissal of complaint under Section 203 of Cr. PC made it clear that they received the notice and that is why by filing an application before the learned Court they submitted prayer for dismissing the complaint. In that application they did not specifically deny receipt of the notice. Notice was sent by three modes namely, registered notice which was directed at office, notice by courier and notice by hand. Section 94 of the NI Act makes it clear that notice may be even oral. Section 138 of the NI Act does not prescribe that demand notice must be served by registered post and any other mode of service is invalid and illegal in the eye of law. Servi....
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....d above) can profitably be imported in a case where the sender has despatched the notice by post with the correct address written on it. Then it can be deemed to have been served on the sendee unless he proves that it was not really served and that he was not responsible for such non-service. Any other interpretation can lead to a very tenous position as the drawer of the cheque who is liable to pay the amount would resort to the strategy of subterfuge by successfully avoiding the notice." In the decision the Supreme Court also indicated that the object of notice is to give a chance to the drawer of the cheque to rectify his omission and also to protect an honest drawer. Service of notice of demand in clause (b) of proviso to Section 138 is a condition precedent for filing a complaint under Section 138 of the NI Act. Whether the notice was served or not and how it was served and which service was effected on the accused persons namely, whether by registered post, or by hand, or by courier, is a matter which can be considered during trial as the scheme of the Act unmistakably imposes burden on the complainant to show service of demand notice upon the accused persons. It is a matter ....
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....plab Mitra for the opposite party submitted that the Delhi High Court granted stay of proceeding against the company only, but not against others. Continuation of proceeding against the Directors of the company is maintainable and pendency of proceeding of winding up of company cannot be a bar to lodge criminal case against the Directors for dishonour of the cheque. The Reserve Bank of India restrained the accused company only relating to disposal of assets and depleting assets. The legal obligation, debt, salary of employees, payment of lawful consideration etc. were not restrained by the Reserve Bank of India nor those were stopped. Mr. Mitra further submitted that same prayers by the accused company and its Directors were discussed by this Court in another revisional application being CRR No. 1245/99. The same point relating to Reserve Bank of India's restraint Order was discussed by this Court and it has been decided against the petitioners. Law of estoppel arises in such a situation. In support of his contention Mr. Mitra cited the decisions in Prudential Capital Mkt. Ltd. and Anr. v. State of Bihar and Ors., reported in 2001 SCC (Cri) 644, Santosh Saha v. State, reported ....
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....alleged offence under Sections 420, 120B of IPC as well as Section 138 of the NI Act. Similarly, in the present case the restriction of the Reserve Bank of India under Sections 45K(4) and 45MB(2) cannot be a bar to a criminal proceeding under Section 138 of the NI Act against accused company and its Directors. 12. The Order of the Delhi High Court clearly reveals that the Delhi High Court in a proceeding for winding up of the company directed that during pendency of the company proceedings it would be but fair if the criminal proceedings initiated under Section 138 of the Negotiable Instruments Act against the company only are stayed. It is made clear that stay pertains to prosecution against company only. It establishes that Delhi High Court stayed the proceeding against the company only, but not against the officers who are respnsible for the day to day affair of the company or against the Directors of the company. In Anil Hada(supra) the Supreme Court pronounced that when a company, which committed the offence under Section 138 eludes from being prosecuted thereof, on account of complaint against it being dropped because of winding up proceeding Ordered by Court, the Director....
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.... of the company. They resigned from the company and form 32 of the Companies Act, 1956 were submitted before the Registrar of Companies. The fact of their resignation were also published in the leading daily newspapers. The petitioners had no vicarious liability in this matter. There was no averment against the petitioners relating to the alleged commission of offence nor, the complaint shows any specific part played by them relating to day-to-day account of the company. The complaint is totally silent regarding factual aspects against the petitioners. The magic words used in Sections 138 and 141 of the N.I. Act would not automatically make the petitioners liable for the offence. Criminal liability is not attracted by signing cheque. There cannot be any complaint against sleeping partners of a company. The learned Magistrate without applying judicial mind issued process which was illegal. In support of his contention he cited the decisions in Veteran Company Pvt. Ltd. and Anr. v. State and Ors., reported in 2003(4) CHN 525, Goa Plast (P) Ltd. v. Chico Ursula D'Souza, reported in 2004 C Cr. LR (SO 113, Monaben Ketanbhai Shah and Anr. v. State of Gujarat and Ors., reported in 200....
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....vision. Penal provision under Section 138 of the NI Act would arise only when after demand made by the complainant or holder of the cheque for payment of the dishonoured cheque, the accused or drawer of the cheque fails to make payment within the time of fifteen days, It is also equally well-established that all partners of a company are not responsible for the alleged offence under Sections 138 and 141 of the NI Act. Only the persons or the officers of the company who were in charge of the company and responsible to the firm can be fastened with criminal liability. It is also well-settled that the sleeping partners particularly, the lady accused persons, who do not take any part in the day-today account or discharge of business of the firm or company cannot be prosecuted. There is no need of detailed discussion of the decisions cited by the learned Advocate for the petitioners as well as by the learned Advocate for the opposite party. At the same time it is also now settled that when a company which committed the offence under Section 138 eludes from being prosecuted thereof, on account of complaint against it being dropped because of winding up proceeding Ordered by the Court, th....
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....ay affairs of the company, and not only that, accused No. 5 Mrs. Manju Bhansali signed the cheque in question. The complaint is not totally silent regarding the parts played by these petitioners. On the other hand, complaint discloses that the petitioners were Vice-Chairman and Directors respectively of the accused No. 1 company and were responsible to the accused No. 1 company for the day-today conduct of business of the company. Accordingly, it cannot be accepted that the complaint was vague and did not contain any averment against the petitioners or that there was only bald statement against the petitioners. In the trial only it can be determined on appreciation of evidence what was the nature of work, responsibility and duty of these three petitioners in the day-today affairs of the company. 18. The Supreme Court in Monaben Ketanbhai Shah(supra) observed that, Section 138 of the Act makes dishonour of the cheque an offence punishable with imprisonment or fine or both. Section 141 relates to offences by the company. It provides that if the person committing an offence under Section 138 is a company, every person who, at the time the offence was committed, was in charge of, an....
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....stage cannot look into the papers and documents annexed with the revisional application as those were neither verified nor tested. Therefore, the question whether the petitioners resigned from the company and submitted Form 32 under the Companies Act, and thereby in no way responsible in this matter are all questions which can be decided in the trial. There is no need of discussion of any decision or authority of law in this respect but, the decision of State of M.P. v. Awadh Kishore Gupta(supra) is an authority regarding permissibility of this Court to look into the papers and documents annexed with the revisional application. The story of petitioners that they resigned from the company by submitting Form 32 and are in no way responsible for the alleged offence is a defence of accused petitioners. The defence or alibi of accused is a matter for consideration in the trial on the basis of evidence which cannot be decided by this Court. 22. In a proceeding under Section 482 of the Cr. PC this Court would interfere only in rarest of rare cases. It is well-settled that power of quashing a criminal proceeding should be exercised very sparingly and with circumspection and that too in ....