This Criminal Original Petition has been filed by the petitioner seeking to quash the complaint filed by the respondent against him in C.C.No.341 of 2011 on the file of the Judicial Magistrate Court, Padmanabhapuram.
2.The case of the prosecution is that the petitioner borrowed a sum of Rs.1,19,500/- from the respondent. Accordingly, the petitioner issued the following 3 cheques drawn on ICICI Bank, Coimbatore Branch, to the respondent.
1.Cheque No.347018, dated 28.04.2011, for a sum of Rs.40,000/-
2.Cheque No.347017, dated 28.07.2011, for a sum of Rs.40,000/-
3.Cheque No.347016, dated 28.10.2011, for a sum of Rs.39,500/- When the respondent presented the cheque bearing No.347018, dated 28.04.2011, for a sum of Rs.40,000/-, with his Banker viz., M/s.Tamilnad Mercantile Bank, Thuckalay Branch, the said cheque was returned with an endorsement ''Funds Insufficient'', vide intimation dated 04.05.2011. Therefore, the respondent issued a notice to the petitioner on 01.06.2011 and the same was returned on 15.06.2011 as ''unclaimed''. Hence, the respondent had filed the present complaint against the petitioner herein.
3.The learned counsel for the petitioner submitted that the petitioner was one of the Directors of M/s.Hedtra Forex Solutions and the other Director, being one Mr.Desouza. The cheque was issued on behalf of the said company duly signed by the petitioner and the other Director Mr.Desouza. He further submitted that the respondent in the notice as well as in the complaint has stated that as if the petitioner had borrowed money in his personal capacity and had issued the cheques in his individual capacity. A mere perusal of the cheque would indicate that the cheque was issued on behalf of the company and the respondent had preferred the complaint only against the petitioner in his individual capacity. Aggrieved by the said complaint preferred by the respondent, the petitioner has filed the present Criminal Original Petition.
4.In support of his submissions, the learned counsel for the petitioner relied on the decision of the Hon'ble Apex Court in the case of Aneeta Hada v. M/s.Godfather Travels & Tours Pvt. Ltd., reported in AIR 2012 SCC 2795, wherein at paragraphs 39, 42 and 43, it has been held as follows:
''39.It is to be borne in mind that Section 141 of the Act is concerned with the offences by the company. It makes the other persons vicariously liable for commission of an offence on the part of the company. As has been stated by us earlier, the vicarious liability gets attracted when the condition precedent laid down in Section 141 of the Act stands satisfied. There can be no dispute that as the liability is penal in nature, a strict construction of the provision would be necessitous and, in a way, the warrant.
42. We have referred to the aforesaid passages only to highlight that there has to be strict observance of the provisions regard being had to the legislative intendment because it deals with penal provisions and a penalty is not to be imposed affecting the rights of persons whether juristic entities or individuals, unless they are arrayed as accused. It is to be kept in mind that the power of punishment is vested in the legislature and that is absolute in Section 141 of the Act which clearly speaks of commission of offence by the company. The learned counsel for the respondents have vehemently urged that the use of the term ?as well as? in the Section is of immense significance and, in its tentacle, it brings in the company as well as the director and/or other officers who are responsible for the acts of the company and, therefore, a prosecution against the directors or other officers is tenable even if the company is not arraigned as an accused. The words ?as well as? have to be understood in the context. In Reserve Bank of India v. Peerless General Finance and Investment Co. Ltd. and others [1987 (1) SCC 424] it has been laid down that the entire Statute must be first read as a whole, then section by section, clause by clause, phrase by phrase and word by word. The same principle has been reiterated in Deewan Singh and others v. Rajendra Prasad Ardevi and others [2007 (10) SCC 528] and Sarabjit Rick Singh v. Union of India [2008 (2) SCC 417]. Applying the doctrine of strict construction, we are of the considered opinion that commission of offence by the company is an express condition precedent to attract the vicarious liability of others. Thus, the words ?as well as the company? appearing in the Section make it absolutely unmistakably clear that when the company can be prosecuted, then only the persons mentioned in the other categories could be vicariously liable for the offence subject to the averments in the petition and proof thereof. One cannot be oblivious of the fact that the company is a juristic person and it has its own respectability. If a finding is recorded against it, it would create a concavity in its reputation. There can be situations when the corporate reputation is affected when a director is indicted.
43. In view of our aforesaid analysis, we arrive at the irresistible conclusion that for maintaining the prosecution under Section 141 of the Act, arraigning of a company as an accused is imperative. The other categories of offenders can only be brought in the dragnet on the touchstone of vicarious liability as the same has been stipulated in the provision itself. We say so on the basis of the ratio laid down in C.V. Parekh (AIR 1971 SC 447) (supra) which is a three-Judge Bench decision. Thus, the view expressed in Sheoratan Agarwal (AIR 1984 SC 1824) (supra) does not correctly lay down the law and, accordingly, is hereby overruled. The decision in Anil Hada (AIR 2000 SC 145 : 1999 AIR SCW 4228) (supra) is overruled with the qualifier as stated in paragraph 37. The decision in Modi Distilleries (AIR 1988 SC 1128) (supra) has to be treated to be restricted to its own facts as has been explained by us hereinabove.''
5.On a perusal of the abovesaid decision, it is seen that the Hon'ble Apex Court had categorically held that for maintaining the prosecution under Section 141 of the Negotiable Instruments Act, arraigning of a company as an accused is imperative and without arraigning the company as a party, the prosecution launched by the complainant, is bad in law.
6.Per contra, the learned counsel for the respondent submitted that the amount borrowed by the petitioner in his individual capacity. However, the cheque was issued by the petitioner on behalf of the company. Therefore, the action of the individual cannot be attributed against the company and hence, the complaint filed by the respondent is maintainable one.
7.Heard both sides.
8.A perusal of the cheques, makes it clear that the petitioner admittedly issued the same on behalf of the company. Hence, without impleading the said company as an accused, the complaint is not maintainable.
9.Further, a perusal of the abovesaid decision cited supra, the Hon'ble Apex Court has categorically held that for maintaining the prosecution under Section 141 of the Negotiable Instruments Act, arraigning of the company as an accused is imperative and without arraigning the company as an accused in the complaint is not maintainable in the eye of law. The said decision is squarely applicable to the facts of the present case on hand.
10.In view of the above discussions and the decision cited supra, I am inclined to quash the proceedings in C.C.No.341 of 2011 pending on the file of the Judicial Magistrate Court, Padmanabhapuram. Accordingly, this Criminal Original Petition is allowed and the proceedings in C.C.No.341 of 2011 pending against the petitioner before the Judicial Magistrate Court, Padmanabhapuram, is quashed. Consequently, connected miscellaneous petitions are closed.
To The Judicial Magistrate, Padmanabhapuram.
.