w w w . L a w y e r S e r v i c e s . i n

Rakesh Arora & Another v/s Hindustan Sales Haldwani

Company & Directors' Information:- SALES INDIA PRIVATE LIMITED [Active] CIN = U29191GJ1985PTC007880

Company & Directors' Information:- P K SALES COMPANY PRIVATE LIMITED [Active] CIN = U74140DL2011PTC219681

Company & Directors' Information:- J K SALES PRIVATE LIMITED [Active] CIN = U74899DL2001PTC109479

Company & Directors' Information:- D K Y SALES PRIVATE LIMITED [Active] CIN = U74899DL2002PTC117108

Company & Directors' Information:- M C SALES PRIVATE LIMITED [Active] CIN = U51909PB2007PTC031203

Company & Directors' Information:- P S SALES PRIVATE LIMITED [Active] CIN = U51432UP2002PTC026496

Company & Directors' Information:- S N SALES PRIVATE LIMITED [Converted to LLP] CIN = U74899DL1995PTC071621

Company & Directors' Information:- G C SALES PVT LTD [Active] CIN = U51109HR1989PTC030575

Company & Directors' Information:- G. L. SALES PRIVATE LIMITED [Active] CIN = U51909DL2010PTC205078

Company & Directors' Information:- J P M SALES PRIVATE LIMITED [Strike Off] CIN = U52100TG2012PTC080686

Company & Directors' Information:- S B SALES PRIVATE LIMITED [Active] CIN = U74899DL1984PTC019075

Company & Directors' Information:- V. R. A. SALES PRIVATE LIMITED [Active] CIN = U74900UP2010PTC039548

Company & Directors' Information:- K K SALES PRIVATE LIMITED [Active] CIN = U20299UP1987PTC009147

Company & Directors' Information:- P S I SALES PRIVATE LTD. [Active] CIN = U74899DL1986PTC022999

Company & Directors' Information:- H P SALES COMPANY PRIVATE LIMITED [Active] CIN = U51495DL2004PTC128566

Company & Directors' Information:- R. K. P. SALES PRIVATE LIMITED [Active] CIN = U52601UP2018PTC101743

Company & Directors' Information:- M A K SALES PRIVATE LIMITED [Amalgamated] CIN = U26106UP2003PTC027989

Company & Directors' Information:- D S SALES PVT LTD [Active] CIN = U74899DL1981PTC011644

Company & Directors' Information:- G S SALES PRIVATE LIMITED [Active] CIN = U74899DL1983PTC015481

Company & Directors' Information:- M L G SALES PRIVATE LIMITED [Strike Off] CIN = U51909DL1996PTC075048

Company & Directors' Information:- M V SALES (INDIA) PRIVATE LIMITED [Active] CIN = U51909DL2008PTC184122

Company & Directors' Information:- M J SALES PRIVATE LIMITED [Strike Off] CIN = U18101MH1988PTC049326

Company & Directors' Information:- G M SALES PRIVATE LIMITED [Strike Off] CIN = U99999MH1994PTC076494

Company & Directors' Information:- S G SALES PVT LTD [Active] CIN = U51909TG1989PTC010567

Company & Directors' Information:- ARORA SALES PRIVATE LIMITED [Strike Off] CIN = U31909RJ1997PTC013710

Company & Directors' Information:- R. P. SALES PRIVATE LIMITED [Active] CIN = U16004UP1995PTC017800

Company & Directors' Information:- P M C SALES PRIVATE LIMITED [Strike Off] CIN = U74899DL1986PTC024459

Company & Directors' Information:- M M SALES PRIVATE LIMITED [Strike Off] CIN = U52602OR1993PTC003255

Company & Directors' Information:- A P SALES PRIVATE LIMITED [Strike Off] CIN = U74899DL1977PTC008819

Company & Directors' Information:- B M SALES PRIVATE LIMITED [Strike Off] CIN = U51909DL2004PTC127901

Company & Directors' Information:- G V S SALES PRIVATE LIMITED [Active] CIN = U51900MH2004PTC149593

Company & Directors' Information:- S F SALES PRIVATE LIMITED [Strike Off] CIN = U51101UP2011PTC044031

Company & Directors' Information:- D B S SALES PRIVATE LIMITED [Under Process of Striking Off] CIN = U74999UP2004PTC028747

Company & Directors' Information:- S M SALES PRIVATE LIMITED [Active] CIN = U51900DL1993PTC053285

Company & Directors' Information:- A N SALES PRIVATE LIMITED [Strike Off] CIN = U51909DL1997PTC091432

Company & Directors' Information:- A J SALES PVT LTD [Strike Off] CIN = U51909CH1989PTC009863

Company & Directors' Information:- G M SALES PVT LTD [Strike Off] CIN = U51909CH1992PTC012260

Company & Directors' Information:- A TO Z SALES (P) LIMITED [Strike Off] CIN = U74900DL1996PTC082425

Company & Directors' Information:- B R SALES COMPANY PRIVATE LIMITED [Strike Off] CIN = U34300DL1983PTC016125

Company & Directors' Information:- HINDUSTAN LTD. [Active] CIN = U99999MH1917PTC000472

Company & Directors' Information:- SALES LIMITED [Dissolved] CIN = U99999MH1945PTC004578

    CRL. Misc. Application No. 492 of 2010

    Decided On, 27 September 2019

    At, High Court of Uttarakhand


    For the Petitioners: M.C. Kandpal, Sr. Advocate assisted by Chitrarth Kandpal, Advocate. For the Respondent: None.

Judgment Text

The instant petition under Section 482 of the Code of Criminal Procedure, 1973 (hereinafter referred to as ‘the Code’) has been filed against the order dated 6.5.2010, passed in Criminal Case No. 3378 of 2009, M/s Hindustan Sales Haldwani v. Rakesh Arora, proprietor/partner-Jitendra brothers by the Court of Additional Chief Judicial Magistrate, Haldwani, District –Nainital (this case shall hereinafter referred to as ‘the case’). By the impugned Order, an application filed under Section 319 of the Code, filed by the respondent has been allowed and the petitioner No. 2-Jitendra Arora has been summoned to face trial under Section 138 of the Negotiable Instruments Act, 1881 (for short, ‘The Act’).2. The facts necessary to resolve the controversy briefly stated are as hereunder:Respondent filed a complaint under Section 138 of the Act against petitioner No. 1 and proceedings of the case was instituted. After the inquiry under Section 200 of the Code, by an order dated 7.3.2003, petitioner No. 1 was summoned to face the trial under Section 138 of the Act. Proceedings of the case continued. After the evidence of the respondent was concluded, petitioner No. 1 examined himself as defence-witness No. 1. Thereafter, an application under Section 319 of the Code was moved by the respondent. Petitioner No. 1 filed objection against it. By the impugned order dated 6.5.2010, learned Court below allowed the application and summoned the petitioner No. 2 Jitendra Arora to answer the accusation under Section 138 of the Act. Aggrieved, the present petition.3. It may be noted here that initially the instant petition was filed against petitioner No. 1 only. Subsequently, petitioner No. 2-Jintendra Arora was impleaded as the co-petitioner on 7.6.2010.4. Heard learned Senior Counsel of the petitioners and perused the records.5. Learned Senior Counsel for the petitioners would argue that the provisions of the Act are self-contained. Before cognizance is taken under Section 138 of the Act, compliance of Section 142 of the Act is mandatory. But in the instant case notice, as required under Section 142(1)(b) of the Act has never been given to the petitioner No. 2, therefore, respondent No. 2 could not have had summoned under Section 319 of the Code. Accordingly, the impugned order is bad in the eye of law.6. This is a proceeding under Section 482 of the Code. In the case of R.P. Kapoor v. State of Punjab, 1960 (SLT SOFT) 279=AIR 1960 SC 866, Hon’ble Supreme Court cautioned that ordinarily the criminal proceedings initiated against an accused must be tried and the High Court should be reluctant to interfere with the said proceedings. The Court observed as under:“6. ………….It is well-established that the inherent jurisdiction of the High Court can be exercised to quash proceedings in a proper case either to prevent the abuse of the process of any Court or otherwise to secure the ends of justice. Ordinarily criminal proceedings instituted against an accused person must be tried under the provisions of the Code, and the High Court would be reluctant to interfere with the said proceedings at an interlocutory stage.”Guiding principles have been further laid down in the cases of State of Haryana and Others v. Bhajan Lal and Others, 1990 (SLT SOFT) 162=I (2006) CCR 209 (SC)=1992 Supp(1) SCC 335, Rajiv Thapar and Others v. Madan Lal Kapoor, I (2013) SLT 524=I (2013) CCR 433 (SC)=(2013) 3 SCC 330 and Amit Kapoor v. Ramesh Chander, VII (2012) SLT 154=IV (2012) DLT (CRL.) 78 (SC)=IV (2012) CCR 99 (SC)=(2012) 9 SCC 460.7. In the instant case, according to the complaint, respondent and the Firm of petitioner No. 1 had business transactions. In discharge of its liability on behalf of the Firm, petitioner No. 1 gave a cheque No. 286711 dated 18th October, 2002 of Almora Urban Cooperative Bank Ltd., Branch Nainital (Account No. 83) of Rs. 47,670/- (Forty-seven thousand six hundred seventy) to the respondent. When the cheque was presented in the Bank, it was dishonoured, with the remarks of ‘insufficient fund’. A notice was given to the Firm through petitioner No. 1, which he did not receive. Therefore, complaint was filed by the respondent against petitioner No. 1 as Proprietor/Partner of Jitendra Brothers.8. On behalf of the respondent, Jawahar Lal Aggarwal was examined in the case. Petitioner No. 1 was prosecuted as a representative of the Firm, which had obtained dealership of the respondent. Jawaharlal Aggarwal has stated about it and has further stated that the prescribed form of dealership was filled in by the Firm, in which, Proprietor/Partner’s name was mentioned as Rakesh Arora. According to him, he prosecuted the proprietor/partner of the Firm Jitendra Arora brothers.9. Petitioner No. 1 Rakesh Arora got himself examined as defence witness. He categorically stated that he had no transaction with the respondent. He neither purchased any goods nor gave any cheque. According to him, the cheque is not signed by him. He is not the partner of the Firm. In his cross-examination, he admits that Jintendra Arora is his son, though according to him he resides separately.10. In the impugned order, the learned Court below took into consideration the details of the Bank account, on which the cheque was drawn as well as the dealership form. In the impugned order, learned Court below observed that the cheque, prima facie, appears to have been drawn by Jitendra Arora, therefore, he was summoned. The Court below also observed that it is a question of fact as to whether Rakesh Arora is partner of the Firm or not?11. The complaint is filed against petitioner No. 1 in the following format:“Rakesh Arora Malik/Partner Jitendra Brothers Rajwar Bhawan, 19 Bhawali Road Cant., Nainital Post Office Tallital, District Nainital.”12. And, it may also be noted that the Notice under Section 142 of the Act was given to the Firm Jitendra Brothers through Sri Rakesh Arora in the following address:“Jitendra Brothers, Rajwar Bhawan, 19 Cant Bhawali Road, Tallital Post Office Tallital, District–Nainital Through Sri Rakesh Arora”13. It abundantly makes clear that the respondent prosecuted the Firm Jitendra Brothers through petitioner No. 1-Rakesh Arora. Petitioner No. 1-Rakesh Arora was not prosecuted in his individual capacity. While summoning the petitioner No. 2-Jitendra Arora, the learned Court below also observed that cognizance is taken of an offence and not against the offender. Learned Court below also observed that when the cognizance is taken under Section 142 of the Act, it is deemed that the person summoned was an accused when the trial began.14. It is true that no notice was given to petitioner No. 2-Jitendra Arora. What would be its effect? In this petition, Annexure-5 has been filed by the petitioners to show that petitioner No. 2 is the owner of M/s Jitendra Brothers Firm. This document can neither be believed nor be looked into in this proceedings under Section 482 of the Code for two reasons:(i) A Firm is an association of more than two persons who have agreed to share the profit of the business carried on by all or any of them acting for all. Persons who have entered into the partnership with another are called individually ‘partners’ and collectively ‘a firm’. Now, if M/s Jitendra Brothers is a Firm there would be more than two persons and only Jitendra Arora cannot be the owner.In fact, there is no owner in the Firm. They may be individual partners.(ii) Secondly, additional material cannot be considered in the proceedings under Section 482 of the Code.15. Since in the impugned order reference was made to dealership form, original record has been requisitioned. The dealership form is 10A/5 in the record. According to which, name of proprietor/partnership is Rakesh Arora and the address is the same, which is mentioned in the complaint and in the notice given to the Firm through petitioner No. 1. The signatures on this dealership form and the signature on the cheque looks alike.16. Learned Court below also summoned the record of the account, on which the cheque was drawn and according to the report of the Bank, which is paper No. 29-A on the original record, the account was in the name of M/s Jitendra Brothers, Tallital, Nainital, which was being operated by Jitendra Arora S/o Rakesh Arora but the account was closed on 6.11.2003. In his cross-examination, petitioner No. 1, admits that when he received summon, at the address given in the complaint, he came to know about the complaint. Petitioner No. 1 is resident of the address which was shown in the notice. In the case of offence by a Firm like the instant one, the concept of vicarious liability is introduced by virtue of Section 141 of the Act, which reads as under:141 Offences by companies.“(1) 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, and was responsible to the company for the conduct of the business of the company, as well as the company, shall be deemed to be guilty of the offence and shall be liable to be proceeded against and punished accordingly:Provided that nothing contained in this sub-section shall render any person liable to punishment if he proves that the offence was committed without his knowledge, or that he had exercised all due diligence to prevent the commission of such offence:Provided further that where a person is nominated as a Director of a company by virtue of his holding any office or employment in the Central Government or State Government or a financial corporation owned or controlled by the Central Government or the State Government, as the case may be, he shall not be liable for prosecution under this Chapter.(2) Notwithstanding anything contained in Sub-section (1), where any offence under this Act has been committed by a company and it is proved that the offence has been committed with the consent or connivance of, or is attributable to, any neglect on the part of, any Director, Manager, Secretary or other officer of the company, such Director, Manager, Secretary or other officer shall also be deemed to be guilty of that offence and shall be liable to be proceeded against and punished accordingly.Explanation—For the purposes of this section,—(a) “Company” means any body corporate and includes a firm or other association of individuals; and(b) “Director”, in relation to a firm, means a partner in the firm.”17. In the case of N. Harihara Krishnan v. J. Thomas, IV (2017) BC 215 (SC)=VII (2017) SLT 71=III (2017) DLT (CRL.) 960 (SC)=(2018) 13 SCC 663, the Hon’ble Supreme Court interpreted Section 142 of the Act and made reference to the observation of the Hon’ble Supreme Court in the case of Raghubans Dubey v. State of Bihar, 1967 (SLT SOFT) 22=AIR 1967 SC 1167. Para 9 of the Raghubans Dubey’s (supra) case is reproduced, as hereunder:“9. …… In our opinion, once cognizance has been taken by the Magistrate, he takes cognizance of an offence and not the offenders; once he takes cognizance of an offence it is his duty to find out who the offenders really are and once he comes to the conclusion that apart from the persons sent up by the police some other persons are involved, it is his duty to proceed against the person…..”.18. The Hon’ble Court held in the case of N. Harihara Krishnan (supra) that only the offence is taken cognizance of and there is no need to take cognizance of an offence accused-wise is an erroneous view in the context of a prosecution under the Act. It was also held in the case of N. Harihara Krishnan (supra) that by the nature of the offence under Section 138 of the Act, the first ingredient constituting the offence is the fact that a person drew a cheque.19. In the case of Aneeta Hada v. Godfather Travels and Tours Private Limited, II (2012) BC 638 (SC)= III (2012) SLT 417=II (2012) DLT (CRL.) 315 (SC)=II (2012) CCR 195 (SC)=(2012) 5 SCC 661, the Hon’ble Supreme Court interpreted the various provisions of the Act and held that commission of an offence by the Company is the express condition precedent to attract the vicarious liability of others. Referring to the phraseology “as well as the company” appearing in Section 141 of the Act, Hon’ble Supreme Court further observed that 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. The Hon’ble Supreme Court in the case of Aneeta Hada (supra) observed as under:“32. We have referred to the aforesaid authorities to highlight that the company can have criminal liability and further, if a group of persons that guide the business of the companies have the criminal intent, that would be imputed to the body corporate. In this backdrop, Section 141 of the Act has to be understood. The said provision clearly stipulates that when a person which is a company commits an offence, then certain categories of persons in charge as well as the company would be deemed to be liable for the offences under Section 138. Thus, the statutory intendment is absolutely plain. As is perceptible, the provision makes the functionaries and the companies to be liable and that is by deeming fiction. A deeming fiction has its own signification.38. From the aforesaid pronouncements, the principle that can be culled out is that it is the bounden duty of the Court to ascertain for what purpose the legal fiction has been created. It is also the duty of the Court to imagine the fiction with all real consequences and instances unless prohibited from doing so. That apart, the use of the term ‘deemed’ has to be read in its context and further the fullest logical purpose and import are to be understood. It is because in modern legislation, the term ‘deemed’ has been used for manifold purposes. The object of the Legislature has to be kept in mind.39. The word ‘deemed’ used in Section 141 of the Act applies to the company and the persons responsible for the acts of the company. It crystallizes the corporate criminal liability and vicarious liability of a person who is in charge of the company. What averments should be required to make a person vicariously liable has been dealt with in S.M.S. Pharmaceuticals Ltd. v. Neeta Bhalla, VII (2005) SLT 113=IV (2005) BC 425 (SC)=IV (2005) CCR 12 (SC)=123 (2005) DLT 275 (SC)=(2005) 8 SCC 89=2005 SCC (Cri) 1975. In the said case, it has been opined that the criminal liability on account of dishonour of cheque primarily falls on the drawee (sic drawer) company and is extended to the officers of the company and as there is a specific provision extending the liability to the officers, the conditions incorporated in Section 141 are to be satisfied.”20. The factual matrix in the instant case is not much in dispute. According to the respondent, the petitioner No. 1 was transacting with it, as proprietor/partner of the Firm Jitendra Brothers. In the dealership form name of petitioner No. 1 as such is referred to, and it was petitioner No. 1 who gave the cheque. The cheque was drawn on an account of the Firm, which was being operated by petitioner No. 2- Jitendra Arora. The fact has been narrated in the impugned order. The question is whether the petitioner No. 1 is a partner of the Firm Jitendra Brothers? The complaint has not been filed against an individual. It has been filed against a Firm through one of its partner. Notice has also been given to the Firm.21. In the case of Rallis India Limited v. Poduru Vidya Bhushan and Others, III (2011) SLT 387=II (2011) DLT (CRL.) 247 (SC)=II (2011) CCR 197 (SC)=(2011) 13 SCC 88, the Hon’ble Supreme Court observed as hereunder:“14. In the present case, there are several disputed facts involved—for instance, the date when the partnership came into being, who were the initial partners, if and when the respondents had actually retired from the partnership firm etc. Strictly speaking, the ratio of the SMS Pharmaceuticals (supra) can be followed only, after the factum that accused were the Directors or Partners of a Company or Firm respectively at the relevant point of time, stands fully established. However, in cases like the present, where there are allegations and counter-allegations between the parties regarding the very composition of the firm, the above rule of ‘specific averment’ must be broadly construed.15. Indeed, it would be nothing short of a travesty of justice if the Directors of a Company of Partners of a Firm, who, having duped a third-party by producing false documents (like a fake partnership deed) or making false statements (that some others were in charge of the Company/Firm), at a subsequent stage, seek protection from prosecution on the ground that they were not directly indicted in the complaint—such

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a proposition strikes against one of the very basic tenets of the law of natural justice, which is, that none shall be allowed to take advantage of his own default. Of course, the above observation is of a general nature, and has no bearing on the present case, but nonetheless, the power to quash a criminal proceeding with respect to an offence under Section 141 of the Act, must be exercised keeping this advisory note and caveat in mind.”22. It is true that for taking the cognizance under the Act, the mandatory requirement under Section 142 of the Act are to be followed. In case where offence is committed by a Firm, it is not only drawer of the cheque but the person responsible in the Firm may also be held responsible. In the instant case, notice has been served upon the Firm. The Firm as well as the person incharge of the Firm, at the relevant time, are definitely responsible and notice to Firm covers notice to all.23. The accused in the case is a Firm, namely, Jintendra Brothers. Cheque has been given on an account of the Firm. The signature on the dealership form, which is filled in by M/s Jitendra Brothers and on the cheque looks alike; the account of the firm was operated by petitioner No. 2; in the dealership firm petitioner No. 1 is recorded as proprietor/partner of the firm. Who is responsible for a cheque drawn on the account of firm? Who signed dealership form? And, who signed the cheque? What is the role of petitioner No. 2 in the firm? These factual aspects cannot be looked into in this petition under Section 482 of the Code. These questions will be decided during trial in the case.24. In view of the forgoing discussion, this Court is of the view that no interference is warranted in this proceeding under Section 482 of the Code and the instant petition deserves to be dismissed.25. The petition is dismissed.Petition dismissed.