Draft amendment allowed. [1.0] RULE in each of the Revision Applications. Shri K.A. Champaneri, learned advocate waives service of notice of Rule on behalf of respondent No.2 – original complainant and Ms. C.M.
Shah, learned Additional Public Prosecutor waives service of notice of Rule on behalf of respondent No.1 – State of Gujarat in each of the Revision Applications. In the facts and circumstances of the case and with the consent of learned advocates appearing on behalf of respective parties and as the facts are undisputed, all the three present Criminal Revision Applications are taken up for final hearing today.
[1.1] As common question of law and facts arise in this group of Revision Applications, all these Revision Applications are heard, decided and disposed of by this common judgment and order.
[2.0] Criminal Revision Application No.527 of 2012 has been preferred by the applicant herein – original accused No.2 challenging the impugned judgment and order of conviction and sentence dated 23.09.2011 passed by the learned Additional Chief Judicial Magistrate, Bhavnagar in Criminal Case No.9814 of 2005 convicting the applicant herein – original accused No.2 for the offence under Section 138 of the Negotiable Instruments Act, 1881 (hereinafter referred to as “NI Act”) for dishonor of the cheque of Rs.10,425/ which was allegedly issued by the original accused No.1 – wife of the applicant herein – original accused No.2 – proprietor of one Vijay Marketing and issued and signed by the original accused No.1 drawn from the bank account maintained by her as well as the impugned judgment and order dated 10.10.2012 passed by the learned Appellate Court – learned Additional Sessions Judge, Bhavnagar in Criminal Appeal No.72 of 2011 by which the learned Appellate Court has dismissed the said Appeal so far as the applicant herein – original accused No.2 is concerned.
[2.1] Criminal Revision Application No.528 of 2012 has been preferred by the applicant herein – original accused No.2 challenging the impugned judgment and order of conviction and sentence dated 06.08.2011 passed by the learned Additional Chief Judicial Magistrate, Bhavnagar in Criminal Case No.3399 of 2007 convicting the applicant herein – original accused No.2 for the offence under Section 138 of the NI Act for dishonor of the cheque of Rs.14,500/ which was allegedly issued by the original accused No.1 – wife of the applicant herein – original accused No.2 – proprietor of one Vijay Marketing and issued and signed by the original accused No.1 drawn from the bank account maintained by her as well as the impugned judgment and order dated 10.10.2012 passed by the learned Appellate Court – learned Additional Sessions Judge, Bhavnagar in Criminal Appeal No.75 of 2011 by which the learned Appellate Court has dismissed the said Appeal so far as the applicant herein – original accused No.2 is concerned.
[2.2] Criminal Revision Application No.529 of 2012 has been preferred by the applicant herein – original accused No.2 challenging the impugned judgment and order of conviction and sentence dated 31.12.2011 passed by the learned Additional Chief Judicial Magistrate, Bhavnagar in Criminal Case No.9815 of 2005 convicting the applicant herein – original accused No.2 for the offence under Section 138 of the NI Act for dishonor of the cheque of Rs.20,460/ which was allegedly issued by the original accused No.1 – wife of the applicant herein – original accused No.2 – proprietor of one Vijay Marketing and issued and signed by the original accused No.1 drawn from the bank account maintained by her as well as the impugned judgment and order dated 10.10.2012 passed by the learned Appellate Court – learned Additional Sessions Judge, Bhavnagar in Criminal Appeal No.4 of 2012 by which the learned Appellate Court has dismissed the said Appeal so far as the applicant herein – original accused No.2 is concerned.
[3.0] That the original complainant initiated the proceedings against the applicant herein – original accused No.2 and one another – original accused No.1 in the Court of learned Judicial Magistrate, First Class, Bhavnagar for the offence under Section 138 of the NI Act for dishonor of respective cheques issued by the original accused No.1 – Smt. Minaben Vijabhai Tulsanai as proprietor of Vijay Marketing, signed by her and from the bank account maintained by her and the applicant herein – original accused No.2 was arraigned as accused No.2 as Manager of the aforesaid Vijay Marketing. That the learned trial Court convicted both the accused for the offence under Section 138 of the NI Act and imposed the sentence upon both the accused. That the learned trial Court also imposed a fine upon original accused No.1.
[3.1] That being aggrieved and dissatisfied with the judgment and order of conviction and sentence passed by the learned trial Court in respective Criminal Case Nos.9814 of 2005, 3399 of 2007 and 9815 of 2005 convicting the original accused for the offence under Section 138 of the NI Act, both the accused preferred Criminal Appeal Nos.72 of 2011, 75 of 2011 and 4 of 2012 before the learned Sessions Court, Bhavnagar and by impugned judgment and orders the learned Appellate Court has partly allowed the said Criminal Appeals modifying the respective judgment and orders passed by the learned trial Court in Criminal Case Nos.9814 of 2005, 3399 of 2007 and 9815 of 2005 to the extent reducing the sentence to the rising of the Court so far as original accused No.1 is concerned. However, confirmed the judgment and orders of conviction and sentence passed by the learned trial Court in respective Criminal Case Nos.9814 of 2005, 3399 of 2007 and 9815 of 2005.
[3.2] Feeling aggrieved and dissatisfied with the impugned judgment and orders passed by both the Courts below convicting the respective applicant herein – original accused for the offence under Section 138 read with Section 141 of the NI Act, the applicant herein – original accused No.2 has preferred the present Criminal Revision Applications.
[4.0] Shri Vishwas Dave, learned advocate appearing on behalf of the applicant herein – original accused No.2 has vehemently submitted that both the Courts below have materially erred in convicting the applicant herein – original accused No.2 for the offence under Section 138 read with Section 141 of the NI Act for dishonor of cheques which were admittedly issued and signed by the original accused No.1 as proprietor of Vijay Marketing and from the bank account maintained by her. It is submitted that as admittedly the cheques in question were neither signed by the applicant herein – original accused No.2 nor they were issued from the bank account maintained by him, both the Courts below have materially erred in convicting the applicant herein – original accused No.2 for the offence under Section 138 of the NI Act.
[4.1] In support of his above submission, Shri Dave, learned advocate appearing on behalf of the applicant herein – original accused No.2 has heavily relied upon the decision of the Hon’ble Supreme Court in the case of P.J. Agro Tech Limited and Ors. vs. Water Base Limited reported in (2010)12 SCC 146 as well as decision of this Court in the case of Mahendrakumar Tulsibhai Patel vs. (The) State of Gujarat and Anr. reported in 2008(1) GLH 196 as well as unreported decision of this Court in Criminal Miscellaneous Application No.7949 of 2011. It is submitted that as held by the Hon’ble Supreme Court as well as by this Court in aforesaid decisions, before convicting a person for the offence under Section 138 of the NI Act, it must be proved that the concerned person has issued the cheque drawn in favour of the complainant from the bank account maintained by him. It is submitted that unless and until all the three ingredients of Section 138 of NI Act are not satisfied, it cannot be said that he has committed offence under Section 138 of the NI Act.
[4.2] It is further submitted that even considering the fact that the cheques were issued by original accused No.1, signed by her as a proprietor of Vijay Marketing, which was a proprietary firm, the applicant herein – original accused No.2 cannot be held vicariously liable under Section 141 of the NI Act as Section 141 would not be applicable with respect to the proprietary firm and would be applicable only in a case where the offence is alleged to have been committed by the Company or the partnership firm and in that case only, the Directors/Partners of the Company and/or partnership firm or the person incharge of and in day to day affairs of the Company and/or partnership firm can be held vicariously liable. Relying upon the decisions of the Hon’ble Supreme Court in the case of National Small Industries Corporation Ltd. v. Harmeet Singh Paintal & Anr. reported in (2010) 3 SCC 330 as well as the recent decision of the Hon'ble Supreme Court in the case of Central Bank of India v. M/s. Asian Global Ltd. & Ors. reported in (2010)11 SCC 203, it is submitted that Section 141 of the NI Act would not be applicable in case of proprietary firm. It is submitted that even otherwise it was not proved by the original complainant that the applicant herein – original accused No.2 was the Manager of the original accused No.1.
Making above submissions and relying upon above decisions, it is requested to allow present Criminal Revision Applications and to quash and set aside the impugned judgment and orders passed by both the Courts below.
[5.0] Shri Champaneri, learned advocate has appeared on behalf of the respondent No.2 – original complainant. He is not in a position and as such not disputing the factual aspects of the case that admittedly the cheques in question, which were dishonored, were signed by original accused No.1 as proprietor of Vijay Marketing and issued from the bank account maintained by her. However, has submitted that as the applicant herein – original accused No.2 was infact doing the business on behalf of original accused No.1 and infact he has done the business with the complainant in the name of Vijay Marketing and he was managing the affairs of the firm, it cannot be said that both the Courts below have committed any error and/or illegality in convicting the applicant herein – original accused No.2 for the offence under Section 138 read with Section 141 of the NI Act. It is submitted that there are concurrent finding of facts given by both the Courts below holding the applicant herein – original accused No.2 guilty for the offence under Section 138 read with Section 141 of the NI Act which are not required to be interfered by this Court in exercise of revisional jurisdiction.
[5.1] Shri Champaneri, learned advocate has submitted that if this Court is inclined to allow the present Revision Applications in favour of the applicant herein – original accused No.2, in that case, it may be observed that the same shall be without prejudice to the rights and contentions of the original complainant against the original accused No.1 and to challenge the impugned judgment and order passed by the learned Appellate Court so far as reducing the sentence till the rising of the Court so far as original accused No.1 is concerned and it is requested to observe that as and when such proceedings are initiated against original accused No.1, same be considered in accordance with law and on merits.
[6.0] Heard learned advocates appearing on behalf of respective parties at length and perused the impugned judgment and order passed by both the Courts below. At the outset it is required to be noted and it is an admitted position that the cheques in question, which are dishonored for which the criminal proceedings are initiated for the offence under Section 138 of the NI Act, are admittedly issued and signed by the original accused No.1 as proprietor of Vijay Marketing (may be wife of original accused No.2) and from the bank account maintained by her. Thus, the applicant herein – original accused No.2 is neither the signatory to the cheques nor the cheques are drawn from the bank account maintained by him. Under the circumstances, it is not appreciable how the applicant herein – original accused No.2 who is neither the signatory to the cheques nor the cheques are drawn from the bank account maintained by him can be convicted for the offence under Section 138 of the NI Act.
[6.1] Identical question came to be considered by the Hon’ble Supreme Court in the case of P.J. Agro Tech Limited and others (Supra). In the said decision, the Hon’ble Supreme Court has held that from reading of Section 138, it is very clear that in order to attract the provisions thereof a cheque which is dishonored will have to be drawn by a person on an account maintained by him for payment of any amount of money to another person from out of that account for discharge, in whole or in part of any debt in between or other liability. It is held that it is only such a cheque which is dishonored it would attract the provision of Section 138 of the NI Act against the drawer of the cheque. Even this Court in the case of Mahendrakumar Tulsibhai Patel (Supra) has held that to make a person liable for the offence under Section 138 of the NI Act, it must be proved and established that such person is a signatory to the cheque and the cheque has been drawn by him from the bank account maintained by him.
[6.2] In the case of Jugesh Sehgal vs. Shamsher Singh Gogi reported in (2009)14 SCC 683, the Hon’ble Supreme Court has held that to constitute an offence under Section 138 of the NI Act, following ingredients are required to be fulfilled.
“(i) a person must have drawn a cheque on an account maintained by him in a bank for payment of a certain amount of money to another person from out of that account;
(ii) the cheque should have been issued for the discharge, in whole or in part, of any debt or other liability;
(iii) that cheque has been presented to the bank within a period of six months from the date on which it is drawn or within the period of its validity whichever is earlier;
(iv) that cheque is returned by the bank unpaid, either because of the amount of money standing to the credit of the account is insufficient to honour the cheque or that it exceeds the amount arranged to be paid from that account by an agreement made with the bank;
(v) the payee or the holder in due course of the cheque makes a demand for the payment of the said amount of money by giving a notice in writing, to the drawer of the cheque, within 15 days of the receipt of information by him from the bank regarding the return of the cheque as unpaid;
(vi) the drawer of such cheque fails to make payment of the said amount of money to the payee or the holder in due course of the cheque within 15 days of the receipt of the said notice.”
[6.3] Under the circumstances, as the applicant herein – original accused No.2 is neither the signatory to the cheques in question which are dishonored nor the same are drawn from the bank account maintained by him, applicant cannot be held guilty for the offence under Section 138 of the NI Act for dishonor the cheques which are neither issued by him nor signed by him nor drawn from the bank account maintained by him.
[6.4] Now, so far as convicting the applicant herein – original accused No.2 for the offence under Section 141 of the NI Act is concerned, it is required to be noted that admittedly the cheques are issued by the original accused No.1 as proprietor of Vijay Marketing. Therefore, the cheques were issued by the proprietary firm and for the dues and/or debt of the proprietary firm. The concept of daytoday business and management would be applicable with respect to the offence alleged to have been committed by the Company and/or Proprietorship Firm and the question with respect to vicarious liability as provided under section 141 of the Negotiable Instruments Act would not be applicable with respect to a Proprietorship Firm.
[6.5] In the case of Raghu Lakshminarayan Versus Fine Tubes, reported in (2007) 5 SCC 103, the Hon'ble Supreme Court has specifically held that if cheque is issued by proprietorship Firm, it cannot be a Company under explanation to section 141 of the Negotiable Instruments Act and section 34 of the Companies Act and or a Partnership Firm under section 4 of the Partnership Act. It is specifically observed by the Hon'ble Supreme Court in the said decision that if the offence had not been committed by a Company, the question of appellant (in that case) being a Director or is being vicariously liable and proceeded against would not arise.
Considering the above, even the applicant herein – original accused No.2 cannot be convicted for the offence under Section 138 read with Section 141 of the NI Act.
[7.0] In view of the above and for the reasons stated above, both the Courts below have committed an error and/or illegality in convicting the applicant herein – original accused No.2 for the offence under Section 138 read with Section 141 of the NI Act and the same deserves to be quashed and set aside.
[7.1] Consequently, the impugned judgment and orders dated 23.09.2011, 06.08.2011 and 31.12.2011 passed by the learned Additional Chief Judicial Magistrate, Bhavnagar respectively in Criminal Case Nos.9814 of 2005, 3399 of 2007 and 9815 of 2005 as well as the impugned judgment and orders passed by the learned Additional Sessions Judge, Bhavnagar in Criminal Appeal Nos.72 of 2011, 75 of 2011 and 4 of 2012 are hereby quashed and set aside.
[7.2] It appears that by impugned judgment and order the learned Appellate Court has partly allowed the Appeal preferred by original accused No.1 and reducing the sentence till rising of the Court which might be challenged by the original complainant (as stated). Therefore, it is observed that the present judgment and order shall be without prejudice to the rights of the original complainant to challenge the impugned judgment and order so far as original accused No.1 is concerned and as and when such proceedings are initiated the same can be considered in accordance with law and on merits and without being in anyway influenced by any of the observations made in the present order and/or the present order and the present judgment and order will be confined to original accused No.2 only. Rule is made absolute to the aforesaid extent in each of the Revision Applications. Direct service is permitted.
(M.R. Shah, J.) Menon