A. Jafferullah vs T. Stanes and Co. Ltd.

Pratap Singh, J.—The accused in C.C. No. 356 of 1990, on the file of Judicial Magistrate No. III, Coimbatore, has filed this petition u/s

482 of the Criminal Procedure Code, praying to call for the record in the above case and quash the same.

The short facts are : The respondent has filed the private complaint against the petitioner for the offence u/s 138 of the Negotiable Instruments

Act (which I shall hereafter refer to as ""the Act""). The allegations in it are briefly as follows :

The complainant supplied goods to the accused on credit and as per the accounts maintained by the complainant, the accused owe to the

complainant a sum of Rs. 1,11,465.45 as on March 31, 1990. Towards a portion of the said liability, the accused issued a cheque dated March

31, 1990, for Rs. 48,000 in favour of the complainant. The complainant presented the cheque for collection through his bankers. The cheque was

dishonoured on the ground that it exceeds the arrangement. The above fact was intimated to the complainant by the bankers on June 20, 1990. By

notice dated June 27, 1990, the complainant called upon the accused to pay the cheque amount within 15 days of the receipt of notice. The

accused received the notice on July 3, 1990. He had not paid the amount. Hence the complaint.

Mr. C. S. Dhanasekaran, learned counsel appearing for the petitioner, would submit that the complaint is filed against A. Jafferullah, managing

partner, Gudalur Pest Control Agencies, Gudalur Bazaar, Gudalur, and that the firm of which the accused is the managing partner has not been

prosecuted and that it had not been arrayed as one of the accused and as such there is no proper compliance with section 141 of the Act and

hence the complaint is liable to be quashed. Per contra, Miss P. Srimathi, learned counsel appearing for the respondent, would submit that it is not

necessary that the firm also should be arrayed as one of the accused if the managing partner is to be prosecuted and that the managing partner by

himself can be prosecuted. Learned counsel would add that throughout the complaint it has been stated that only the accused had committed an

offence and while so there is no necessity for arraying the partnership firm as one of the accused to sustain a complaint as against this accused.

I have carefully considered the submissions made by learned counsel. In this case, the accused has been described as follows :

Mr. A. Jafferullah,

Managing Partner,

Gudalur Pest Control Agencies,

346/1, Calicut Road,

Gudalur Bazaar,

Gudalur-643 211.

The cheque dated March 31, 1990, for Rs. 48,000 has been issued by A. Jafferullah, in his capacity as managing partner. He has signed in the

cheque ""For Gudalur Pest Control Agencies"". So it is not as if the cheque was issued by Jafferullah in his personal capacity; but only a behalf of

Gudalur Pest Control Agencies, in his capacity as managing partner of the said firm. For the issuance of cheque, which was ultimately dishonoured

for exceeding the arrangement, this complaint is filed against him alone, without impleading the partnership firm as one of the accused.

Section 141 of the Act reads as follows :

Offences by companies. - (1) If the person committing an offence u/s 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.

(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.

In Sheoratan Agarwal v. State of M.P. [1984] SCC (Crl) 620, the apex court had occasion to consider section 10 of the Essential

Commodities Act, 1955, and as to whether the persons or officers of the company can each be separately prosecuted under sub-section (1) or (2)

of section 10 irrespective of whether the company itself is prosecuted or not Section 10 of the Essential Commodities Act, 1955, reads as follows :

(1) If the persons contravening an order made u/s 3 is a company, every person who, at the time the contravention 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 contravention and shall be liable to be proceeded against and punished accordingly :

Provided that nothing contained in this sub-section shall render any such person liable to any punishment if he proves that the contravention took

place without his knowledge or that he exercised all due diligence to prevent such contravention.

(2) Notwithstanding anything contained in sub-section (1), where an 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 attribute 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.

It is in pari materia with section 141 of the Negotiable Instruments Act. After considering section 10, the Supreme Court had held that if the

contravention of the order made u/s 3 is by a company, the persons who may be held guilty and punished are (1) the company itself, (2) every

person who, at the time the contravention was committed, was in charge of, and was responsible to, the company for the conduct of the business

of the company, whom, for short, we shall describe as the person in charge of the company, and (3) any director, manager, secretary or other

officer of the company with those consent the offence has been committed. Any one or more or all of them may be prosecuted. The conniving

officer may individually be prosecuted. One, some or all may be prosecuted. There is no statutory compulsion that the person-in-charge or an

officer of the company may not be prosecuted unless he be ranged alongside the company itself. Section 10 does not lay down any condition that

the person-in-charge or an officer of the company may not be separately prosecuted if the company itself is not prosecuted. Each or any of them

may be separately prosecuted or along with the company.

In U.P. Pollution Control Board v. Modi Distillery [1987] SCC (Crl) 632 ; [1988] 63 Comp Cas 77, the apex court had occasion to consider

section 47 of the Water (Prevention and Control of Pollution) Act, 1974, for an offence u/s 44 of the said Act. The language of the said section 47

is the same as section 141 of the Negotiable Instruments Act and section 10 of the Essential Commodities Act. In that case, the prosecution was

launched against the chairman, vice-chairman, managing director and other members of the board of directors of the company u/s 47 of the Act,

without the company being prosecuted. A single judge of the Allahabad High Court quashed the proceedings on the ground that there can be no

vicarious liability of the chairman, vice-chairman, managing director and other members of the board of directors of the company u/s 47 of the Act

unless there was a prosecution of the company. The learned judge had held that the complaint suffered from serious legal infirmities and quashed

the proceedings. Aggrieved by that order, the U.P. Pollution Control Board took up the matter to the apex court. In para 6 of the judgment, the

apex court had held as follows (at page 82 of 63 Comp Cas) :

Although as a pure proposition of law in the abstract the learned single judge''s view that there can be no vicarious liability of the chairman, vice-

chairman, managing director and members of the board of directors under sub-section (1) or (2) of section 47 of the Act unless there was a

prosecution against Modi Industries Limited, the company owing the industrial unit, can be termed as correct, the objection raised by the

petitioners before the High Court ought to have been viewed not in isolation or vacuum but in the conspectus of facts and events.

Thus, on the question as to whether there can be any prosecution of the managing director and others, without the company being arrayed as

an accused, the High Court''s view was upheld by the Supreme Court.

Mr. C. S. Dhanasekaran would submit that both the rulings of the apex court were by two judges and in such a situation, the later judgment

will prevail. In this regard, the relied upon Govindanaik G. Kalaghatigi Vs. West Patent Press Co. Ltd. and Another, . In it, it was held that if two

decisions of the Supreme Court on a question of law cannot be reconciled and if both the Benches of the Supreme Court consist of an equal

number of judges, the later of the two decisions should be followed by High Courts and other courts. In Gujarat Housing Board v. Nagajibhai,

AIR 1980 Guj 81 , it was held that when there are two conflicting decisions of the Supreme Court consisting of an equal number of judges, the

later of the two decisions should be followed by the High Courts and other courts. In view of the above, the ruling in U.P. Pollution Control Board

v. Modi Distillery [1987] SCC (Crl) 632; [1988] 63 Comp Cas 77 is to be followed. When that be so, this complaint against the managing

partner alone, without impleading the partnership firm as one of the accused cannot be sustained. In Krishnamoorthy v. Kesavan [1994] 80 Comp

Cas 755 ; [1994] MLJ (Crl) 147, I have followed U. P. Pollution Control Board v. Modi Distillery [1987] SCC (Crl) 632; [1988] 63 Comp Cas

77 and have held that a prosecution against the managing partner alone cannot be sustained. Hence, I accept the submission made by Mr. C. S.

Dhanasekaran.

In the result, the petition is allowed and all the further proceedings in C.C. No. 356 of 1990, on the file of the judicial Magistrate No. III,

Coimbatore, shall stand quashed.