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Judgment
The petitioner is the complainant in C.C. No.3063 of 1997 on the file of the IX Metropolitan Magistrate, Saidapet, Madras. The respondent as
described before this Court is the accused in that case. That was a private complaint filed alleging an offence u/s 138 of the Negotiable Instruments
Act. In that Calendar Case, after the issue of process, the accused filed M.P. No.1444 of 1998 to discharge him from the offence. That petition
was opposed and yet the learned trial Magistrate allowed that petition by ordered dated 10.6.1998 resulting in the accused being discharged from
the offence in that Calendar Case. It is the correctness of that order that is being questioned in this revision before this Court.
In this order the parties to the revision would hereinafter to be referred to as the complainant and the accused for convenient sake.
Though more than One ground was raised before the Lower Court on behalf of the accused to discharge him from the offence, yet the request
for discharge was sustained only on the ground that since the company had not been impleaded as an accused, the prosecution against the present
accused alone is not maintainable.
I heard Mr. R. Krishnamoorthy, learned Senior Counsel appearing for the petitioner/complainant and Mr. M. Kalyanasundaram, learned Senior
Counsel appearing for the respondent/accused.
According to Mr. R. Krishnamoorthy, learned Senior Counsel appearing for the complainant, the order under challenge cannot be sustained in
the eye of law for more than one reason. The learned senior counsel submitted that though there are a number of judgments of this Court rendered
by various Judges that the prosecution, without the company itself being made an accused, is not maintainable, yet in view of the categorical
pronouncement of the Honourable Supreme Court of India in Sheoratan Agarwal and Another Vs. State of Madhya Pradesh, , it cannot be said
that the judgments of this Court referred to above have laid down the correct law. The learned Senior Counsel submitted that the later judgment of
the Honourable Supreme Court of India in U.P. Pollution Control Board v. M/s. Modi Distillery, does not run contra to the earlier referred to
judgment of the Honourable Supreme Court of India and therefore the judgments of this Court holding that the prosecution without impleading the
company as an accused, is not maintainable, run contra to the earlier judgment of the Honourable Supreme Court of India. In fact the learned
Senior Counsel contended that the Honourable Judges of the Supreme Court of India, who decided the case in U.P. Pollution Control Board v.
M/s. Modi Distrillery, , do not lay down any proposition of law as such stating that the prosecution, without the company being impleaded as an
accused, is not maintainable. Learned Senior Council brought to my notice a solitary judgment of this Court in N. Doraisamy and another etc. Vs.
M/s. Archana Enterprises and etc., holding, after taking into account the judgments of the Honourable Supreme Court of India in Sheoratan
Agarwal and Another Vs. State of Madhya Pradesh, and U.P. Pollution Control Board v. M/s. Modi Distrillery, , that the prosecution without
impleading the company as an accused is maintainable. The learned Senior Counsel also brought to my notice two judgments, one by the Kerala
High Court, holding a prosecution, without impleading the company as accused, is maintainable.
Mr. M. Kalyanasundaram, learned Senior Counsel appearing for the accused, contended that the judgment of the Honourable Supreme Court
reported in U.P. Pollution Control Board v. M/s. Modi Distrillery, had been properly under stood by this Court on various occasions and therefore
there would be no reason at all to take a different view. The learned Senior Counsel also contended that even assuming that the prosecution,
without impleading the company as an accused, is maintainable, yet there are no allegations in conformity with Section 141 of Negotiable
Instruments Act, which alone could have enabled the Court to proceed against the accused in this case. Therefore in the absence of such
allegations, the proceedings have to be quashed. The learned senior counsel contended that as mandated under Article 21 of the Constitution of
India, no person shall be deprived of his life or personal liberty except according to procedure established by law. In this case also, the single
accused cannot be allowed to be proceeded against on the basis of materials which do not satisfy the requirements of Section 141 of the
Negotiable Instruments Act. The learned senior counsel contended the procedure established by law, as far as the case on hand is concerned, is
available in Sections 138 and 141 of the Negotiable Instruments Act and therefore unless the requirements of those two Sections are strictly
satisfied, no prosecution can ever be launched. The learned senior counsel also contended that if at all anybody can be said to have committed the
offence, it is only the firm which had committed the offence and therefore to prosecute the persons other than the persons who committed the
offence, there should be allegations in the complaint, which are totally wanting in this case.
In the light of the submissions made by the learned senior counsel on either side, I perused the records relating to this case. It is no doubt true
that the person who drew the cheque, which forms the subject matter of the present complaint, is described as follows:
For Ram and Company sd\- Partner
To show that the firm exists in the name of Ram and Company, the learned senior counsel appearing for the accused produced before this Court
the registration certificate for the said firm issued by the Registrar of Firms and the Partnership Deed. The learned senior counsel also produced the
documents entered into between the complainant and the said firm to establish that the transaction was between the firm and the complainant.
In the light of the above facts, I applied my mind to the materials placed before me. The statutory notice of demand sent on behalf of the
complainant is before the Court and the addressee is described as ""Balasikhamani, Proprietor, Ram and Company...."". This notice of demand met
with a reply notice sent on behalf of the accused by his counsel. There is no denial in this reply notice that the addressee in the notice of demand is
not a Proprietor and there is no proprietary concern but it is only partnership concern. The complaint that followed the notice and the reply notice
referred to proceeded to show the accused as ""Balasikhamani, Proprietor, Ram and Company,...."". For the first time in the discharge petition filed
on 14.10.1997, the accused came out with a stand as follows:
3....The accused submits that Ram and Company is a partnership and the prosecution is bad since the firm has not been impleaded. The secured
liability was inclined only by the firm
The question that falls for consideration therefore are as follows:
(a) Assuming the liability is that of the firm and the offence is committed by the firm, yet whether the prosecution of the present accused without
impleading the firm, is maintainable or not?
(b) Assuming the complaint is maintainable without impleading the company\firm as an accused, yet whether the continuation of the proceedings
anymore describing the accused as the proprietor of a proprietary concern, would be in order?
To answer the first point in favour of the complaint without impleading the company as an accused is maintainable, the learned senior counsel for
the petitioner\complaint relied on the following judgments:
(i) Sheoratan Agarwal and Another Vs. State of Madhya Pradesh, ; (ii) U.P.Pol-lution Control Board v. Modi Distillery, ; (iii) N. Doraisamy and
another etc. Vs. M/s. Archana Enterprises and etc., . (iv) Alex v. Vijayan 1994 (81) C.C. 910; (v) V. N. Samant Vs. K.G.N. Traders and
another,
Learned senior counsel for the petitioner \ complainant also brought to my notice the various judgments rendered by the learned Judges of this
Court laying down that a prosecution without impleading the company as an accused is not maintainable and they are as follows:
(i) K. Krishna Bai v. M\s. Arti Press, 1991 L.W. 513 (Padmini Jesudurai,J);(ii)S.Krishnamoorthy v. B.S.Kesavan, 1994 (80) C.C 755; (iii)
Balakumaran Textiles v. Chenammal, 1994 (81) CC 905; (iv) Jeferullah A. v. M/s. S.t. Stanes and Company Ltd., 1994 (1) L.W. 262); (v)
Suryanarayanan v. M/s. Anchor Marine Service, 1995 (I) L.W. 132 (Rengasamy, J); (vi) Anandan and Another Vs. Arivazhagan, (Rengasamy,
J).
I very carefully perused the judgments referred to above and brought to my notice by the learned senior counsel for the petitioner. It is no
doubt true that in all the judgments starting from K. Krishna Bai v. M\s. Arti Press, 1991 L.W. 513 and ending with Anandan and Another Vs.
Arivazhagan, , learned Judges of this Court had laid down that without impleading the company\firm as an accused, the prosecution against the
other persons is not maintainable when the offence has been committed by the company. All the learned Judges who had delivered those
judgments had derived support for their conclusion from the judgment of the Honourable Supreme Court of India reported in U.P. Pollution
Control Board v. M/s. Modi Distrillery, . While doing so, the learned Judges held that the judgment of the Honourable Supreme Court of India in
U.P. Pollution Control Board v. M/s. Modi Distrillery, strikes a different note than the one decided by the Honourable Judges of the Supreme
Court of India in the case reported in Sheoratan Agarwal and Another Vs. State of Madhya Pradesh, . Therefore since the source of all the
judgments of this court referred to above holding that the prosecution without impleading the company as an accused is not maintainable, is the
judgment of the Honourable Supreme Court of India reported in U.P. Pollution Control Board v. M/s. Modi Distrillery, the learned senior counsel
appearing for the complainant took me through the judgment line by line and submitted that nowhere the Honourable Judges of the Supreme Court
of India in that case had said anything which would run contra to the law laid down by the Honourable Judges of the Supreme Court of India in the
judgment reported in Sheoratan Agarwal and Another Vs. State of Madhya Pradesh, . I also perused both the judgments of the Honourable
Supreme Court of India with respect, came and caution.
In Sheoratan Agarwal and Another Vs. State of Madhya Pradesh, , the Honourable Judges have categorically laid down that where the
offence is committed by a company, the company or the persons incharge or responsible or both can be prosecuted. In other words the dictum in
that case is that anyone of the persons mentioned in section 10 of the Essential Commodities Act viz. the company or the Directors can be
prosecuted and there is no compelling necessity that in a prosecution all of them should be joined as accused. When this is the clear
pronouncement of law, laid down by the Honourable Supreme Court of India, it is needless to state that unless there is any other clear
pronouncement of law on the very same issue running contra, it must be held that the judgment which lays down the law in a clear and unequivocal
manner should have to be necessarily followed.
In the later judgment of the Honourable Supreme Court of India, the facts are as follows:
A distillery called Modi Distillery was found to be discharging trade effluents into the river and therefore they are guilty of violating the provisions of
water (Prevention and Control of Pollution) Act 6 of 1994. On this basis, the complaint was lodged against Modi Distillery as the first accused and
ten other accused. Among the other accused were the Chairman, Vice Chairman, Managing Director and Members of the Board of Directors of
M\S. Modi Industries Limited, which is the company owning the industrial unit viz. Modi Distillery, on process being issued, the officials of the
company viz, Modi Industries Ltd., moved the High Court for quashing the proceedings and the High Court agreed with them and quashed the
proceedings holding that there could no vicarious liability saddled on the Chairman, Vice Chairman, Managing Director and the other Members of
the Board of Directors of the company u/s 47 of the Act unless there was a prosecution of the company viz. M\s. Modi Industries Limited. The
U.P. Pollution Control Board took up the matter in appeal before the Honourable Supreme Court of India. It was found therein that notices were
issued prior to the filing of the complaint to the company asking for details about the, persons responsible for the conduct of the company and
those letters were not responded. In that context, the complaint came to be filed describing Modi Distillery as the company within the meaning of
Section 47 of that Act.
On the above facts, the question that was posed by the Court itself is as follows:
The question arising in the Appeal is whether the Chairman, Vice Chairman, Managing Director and Members of the Board of Directors are liable
to be proceeded against u/s 47 of the Act in the absence of the prosecution of the company owing the said industrial unit. The company is Modi
Industries Limited and the industrial unit is Modi Distillery. In answering this question, the Honourable Judges found fault with the company for not
responding to the notices issued by the Pollution Control Board and found the situation before the Criminal Court was the own making of the
company. In paragraph 6, the learned Honourable Judges have held:
On a combined reading of the provisions contained in sub-Sections (1) and (2). We have no doubt, whatever that the Chairman, Vice Chairman,
Managing Director and the Members of the Board of Directors of M\s. Modi Industries Ltd., the company owing the industrial unit M\s. Modi
Distillery could be prosecuted as having been in charge of and responsible to the company, for the business of the industrial unit M\s. Modi
Distillery owned by it and could deemed to be guilty of the offence with which they are charged....
Therefore to my mind it appears on facts, the Honourable Judges have stated that even though Modi Industries Ltd., is not before the Court. Yet
the above referred to office bearers of Modi Industries Ltd., could be prosecuted. The Honourable Judges in that case had also said as follows:
6.....Although as a pure proposition of law in the abstract the learned single judges 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) and (2) of section 47 of the Act unless there
was a prosecution against M/s. Modi Industries Limited, the company owning 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 but in the conspectus of facts and events and not in vacuum. We
have already pointed out that the technical flaw in the complaint is attributable to the failure of the industrial unit to furnish the requisite information
called for by the Board. Furthermore, the legal infirmity is of such a nature which could be easily cured.....
This judgment of the Honourable Supreme Court of India as well as the earlier judgment of the very same court had been adverted to by his
Lordship M.S. Janarthanam, J. as His Lordship then was, in the decided cased in Doraisamy v. M\s. Archana Enterprises, 1955 Cri. L.J. 2306.
The learned Judge that the law has been clearly laid down by the Honourable Supreme Court of India in the decision reported in Sheoratan
Agarwal and Another Vs. State of Madhya Pradesh, and in view of that, the learned Judge was not inclined to follow the Judgments of this court in
K. Krishna Bai v. M\s. Arti Press, 1991 L.W. 513 and (Padmini Jesudurai, J). The learned Judge in pronouncing the Judgment above referred to
had held, after referring to the judgment of the Supreme Court of India reported in U.P. Pollution Control Board v. M/s. Modi Distrillery, , as
follows:
7 (b) It was the said observation, which Padmini Jesudurai, J. in Krishnan Pai''s case, 1991 Mad. L.W. Crl. 513 regarded as setting the law on the
point. With great respect, I may point out that the Supreme Court made the said observation, on the facts of the said case and it cannot be
regarded as one setting a point of law
Honourable Mr. Justice K.T. Thomas, as His Lordship then was in the Kerala High Court, in the decided case in Alex v. Vijayan, 1994 (81) C.C
910 while adverting to the judgment of the Honourable Supreme Court of India in U.P. Pollution Control Board v. M/s. Modi Distrillery, , held as
follows:
It was the said observations which Padmini Jesudurai J. in Krishan Bai''s case, 1994 (80) CC 750 regarding as setting the law on the point. With
great respect, I may point out that the Supreme Court made the said observation on the facts of the said case and it cannot be regarded as one of
settling .a point of law.
A learned single Judge of the Karnataka High Court in the Judgment in V.N. Samant v. M\s. K.G.N. Traders, 1994 Crl. L.J. 3115 had also said
on the impact of the judgment of the Honourable Supreme Court of India in the judgment reported in U.P. Pollution Control Board v. M/s. Modi
Distrillery, , as follows:
13.... In the above case, the Supreme Court has only observed that the proposition may be correct in the abstract, but it has not laid down
specifically that no prosecution against the persons in charge of and responsible to the company for the conduct of the business can be prosecuted
without the company itself being prosecuted....
In the light of the judgments of the Honourable Supreme Court of India reported in Sheoratan Agarwal and Another Vs. State of Madhya
Pradesh, and U.P. Pollution Control Board v. M/s. Modi Distrillery, the view taken by his Lordship M.S. Janarthanam, J, as His Lordship then
was; the view of Honourable Mr. Justice K.T. Thomas, as His Lordship then was in the Kerala High Court, and the view of the Honourable Mr.
Justice S. Venkatraman, in the Karnataka High Court, I am also of the respectful opinion that the judgment of the Honourable Supreme Court of
India reported in Sheoratan Agarwal and Another Vs. State of Madhya Pradesh, holds the field in clear and unequivocal terms to the effect that
the prosecution, without impleading the company or the firm as an accused, is still maintainable. In view of what I have stated above, with respect,
I am not inclined to follow the judgments of this Court starting from K. Krishna Bai v. M\s. Arti Press, 1991 L.W. 513 and ending with Anandan
and Another Vs. Arivazhagan, and I am inclined to follow the judgment of this Court reported in N. Doraisamy and another etc. Vs. M/s. Archana
Enterprises and etc., (Janarthanam, J). In this case also on facts, I find that the statutory notice of demand was addressed to the accused as
Proprietor of a proprietary concern and he also replied through a lawyer without raising any objections. Under these circumstances for the reasons
stated, I am of the opinion that the complaint in this case against the accused alone is maintainable without impleading the firm as an accused.
The second point urged by the learned senior counsel for the accused, does not appeal to me at all. The apparent tenor of the cheque forming
the subject matter of the complainant indicates that it has been issued for and on behalf of the firm Ramu and Company signed by the partner. The
name of the firm is only a compendious name enabling its Partners to carry on their business in that name. The partnership firm acts only through its
partners. I have already held in this case that the prosecution of the firm is not a mandatory requirement of law. The statutory notice issued by the
complaint describes the addressee as ""Balasikhamani, Proprietor, Ramu and Company"". This notice was replied to by the accused and he had not
taken any objection to that description. The accused is described in the complaint as Balasikhamani, Proprietor, Ramu and Company. Therefore at
best the description of the accused as a proprietor of Ramu and Company could be only an error which could be rectified. The partner who signed
the cheque viz., Balasikhamani is before Court. In the judgment reported in U.P. Pollution Control Board v. M/s. Modi Distrillery, , the first
accused was Modi Distillery while in fact it should be Modi Industries Limited. In that judgment, the Honourable Judges of the Supreme Court
were of the opinion that the High Court should have remitted the case back to the Chief Judicial Magistrate with a direction to see that the
complainant takes steps for appropriate amendment. That judgment indicates that it was a curable order. On facts available in this case, I am of the
opinion that the judgment of the Supreme Court may come in handy in this case also to correct the error in the description of the accused. The
learned senior counsel''s arguments that when the offence is committed by the firm, and when others are sought to be proceeded against in the
criminal complaint, then the necessary allegations against them as contemplated in Section 141 of the Negotiable Instruments Act should be made
and in the absence of the said allegations, the complaint is liable to be quashed, is again not appealing to me. This submission can be well merited if
the person who is sought to be prosecuted is neither the firm nor the person who signed the cheque. But that is not the situation here and the
person who is shown as an accused in this case is the person who had signed the cheque. The necessity to comply with the requirements of
Section 141 of the Negotiable Instruments Act would arise only when either the company or the person who had signed the cheque is not before
the Court. In other words, when the company or the person who signed the cheque is before the court as an accused, there need not be any
further allegation at all as contemplated u/s 141 of the ""Negotiable Instruments Act. The learned senior counsel''s arguments that Article 21 of the
constitution of India is violated in this case since the present accused is sought to be tried except in accordance with the procedure established by
law viz., Sections 138 and 141 of the Code of Criminal Procedure, are not well founded for the reasons stated above by me. In accordance with
the judgment of the Honourable Supreme Court in U.P. Pollution Control Board v. M/s. Modi Distrillery, , the learned trial Magistrate is directed
to call upon the complainant to take appropriate steps to correctly describe the accused before that Court.
For the reasons stated above by me in this order, I am of the opinion that the order under challenge discharging the accused from C.C.
No.3063 of 1997 on the file of the IX Metropolitan Magistrate, Saidapet, Madras, cannot be sustained and if is accordingly set aside. The learned
trial Magistrate is directed to take the case on file and dispose of it in accordance with law. The Revision is allowed.