R. Nanjan vs Sri Krishna Electricals

A. Ramamurthi, J.—The petitioner/accused in C.C. No. 158 of) 998 on the file of the Judicial Magistrate, Palani, has preferred the revision

aggrieved against the orders passed in Crl.M.P. No. 3792 of 1998; dated February 24, 1999.

The case in brief is as follows :

The respondent filed a complaint against the petitioner u/s 158 of the Negotiable Instruments Act, 1881 (hereinafter referred to as ""NI Act""). The

petitioner/ accused filed a petition u/s 204 of the Criminal Procedure Code to drop the proceedings against him as there is no prima facie case

against him. The complainant has been examined and the evidence has not improved the case. Exhibit P-1, the cheque dated January 27, 1998,

was not issued by the accused. The said cheque was issued by Neelamalai Chits Private Limited, a company incorporated under the Companies

Act, in which the petitioner is a Director. According to the complaint and sworn statement as well as the evidence of PW-1, the company has no

liability to be paid to the complainant. There is absolutely no statutory notice as contemplated under the Negotiable Instruments Act to the

company, who is the drawer of the cheque. The cheque in question was also not issued by the accused in his individual capacity. The complainant

can claim only the cheque amount, whereas he has claimed more amount in the legal notice dated February 25, 1998. The respondent/

complainant opposed the application and the learned Magistrate dismissed the application and aggrieved against this, the present revision has been

filed.

Heard learned Counsels for both sides.

The point that arises for consideration is whether the order passed by the Court below is proper and correct?

Point : The respondent filed the complaint u/s 158 of the Negotiable Instruments Act against the petitioner, wherein it is stated that for urgent

expenses, a sum of Rs. 2,00,000 has been taken as loan on January 4,1998, and the cheque in question was also issued on the same day. When

the cheque was presented for encashment, it was returned on February 6,1998, on the ground of want of funds. The cheque in question was again

presented at the request of the accused on February 10, 1998, and even then on February 14, 1998, it was again returned on the ground ""exceeds

arrangement"". The statutory notice was sent on February 25, 1998, and a reply was received on March 14, 1998, denying the same. The

complaint further disclosed that although he was a subscriber in Neelamalai Chits Private Limited, the said cheque has nothing to do with the same.

It is seen from the notice that a sum of Rs. 2,00,000 was borrowed on January 4, 1998, from M/s. Krishna Electricals, Palani, as hand loan and

the petitioner issued the cheque dated January 27, 1998, for the said hand loan. There is a demand for return of the cheque amount together with

interest at the rate of 24 per cent per annum together with collection charges of Rs. 500 within two weeks. Simply because apart from the cheque

amount, some other amount was also claimed, is not a ground to drop further proceedings. Learned Counsel for the revision petitioner contended

that the Court below has not considered the averments in the complaint, the sworn statement and the returned cheque. The Court below failed to

see that the date of the cheque varies between the complaint and the statutory notice. There is no written demand on the drawer of the cheque

namely, Neelamalai Chits Private Limited in respect of the cheque dated January 4,1998, which is the subject-matter of the complaint. The

preliminary objection goes to the root of the matter and it can be raised by the accused at any stage of the proceedings. The drawer of the cheque

dated January 27. 1998, is Neelamalai Chits Private Limited, but the company has not been arrayed as accused. But the complaint has been filed

against the individual and not as a director of the company also. There is no averment in the complaint also that the petitioner is the director of the

company and he was in charge of and responsible to the company for the conduct of the business of the company.

It is seen from the typed set that the impugned cheque has been marked as Exhibit P-1, dated'' January 27,1998. for a sum of Rs. 2 lakhs and

the drawer is Neelamalai Chits Private Limited signed by the managing director. The statutory notice also refers to the cheque dated January 27,

1998, but in the complaint, the cheque date has been given as January 4, 1998. Similarly, in the sworn statement also, the cheque date was given

as January 4, 1998. It is, therefore, prima facie clear that the cheque date given in all these documents is completely a different one. Exhibit P-1

discloses that the drawer is a chit fund company. The complaint has been filed against the individual person and there is no reference as to whether

he is a director of the company. On the other hand, there is a specific averment in the complaint itself that the complaint was not filed against the

petitioner as a director of the company, but only in his individual capacity. When the cheque itself was issued by the drawer, a chit fund company

represented by the managing director, prima facie either the company should have been made a party or if the individual is made a party it should

be shown that he was the director of the company and he was in charge of the day-to-day affairs of the company. In the absence of any such

averment, the only conclusion that can be drawn is that the complaint is not maintainable.

Learned Counsel for the respondent contended that the evidence of PW-1 is already over and, as such, whatever objections are available can

be raised in the course of trial and, as such, it is not necessary to drop the proceedings. The points referred to above will clearly indicate that the

proper person has not been made an accused in this case. Apart from this, there is variation between the date of the cheque in the complaint as

well as in the statutory notice. Learned Counsel for the petitioner/accused relied on the decision reported in Satish Mehra v. Delhi Administration,

IV (1996) CCR4 (SC)= ( 1996) SCC Cri. 1104. wherein it was observed that ""(he Court is not debarred from looking into any material

produced by the accused at that stage. Hearing of accused not confined to oral arguments... But when the Judge is fairly certain that there is no

prospect of the case ending in conviction the valuable time of the Court should not be wasted in holding a trial only for the purpose of formally

completing the procedure to pronounce the conclusion on a future date"". The analogy in the decision can be made applicable to the case on hand.

Learned Counsel for the respondent relied on the decision in K. Krishan Bai v. Anti Press, I (1992) CCR 361 = ( 1991) LW Crl. 513, for the

proposition that a complaint against the managing director without impleading the company is not maintainable and the proceedings can be

quashed.

Reliance is also placed on the decision in Balakchand Gyanchand Co. v. A. Chinnaswami, IV (1999) CCR 270 (SC)=IX (1999) SLT437= (

1999) SCC Cri 1034, that the High Court was not justified in quashing the complaint on the ground that notice was sent to the managing director

at his office address since that could not mean that the notice was sent to the company itself. He also relied on M/s. Egmore Benefit Society Ltd.

Vs. K. Balasigamani, Proprietor Ramu and Company Chennai-18, : wherein the High Court set aside the order of discharge holding that the

prosecution against the partner atone without impleading the firm is valid. They also relied on Anil Hada Vs. Indian Acrylic Limited, : that ""under

Sections 138 and 141 complaint--effect of company not being an accused in company not being an accused in complaint--for prosecution against

directors be sustained when company has been ordered to be wound up--complaint can be proceeded with as against other persons even if

prosecution proceedings against company were not taken or could not be continued"".

Learned Counsel for the respondent also relied on Triveni Alloys Ltd. v. Cholamandalam Investments and Financial Co. Ltd. (2000) 2 LW

Cri. 563, that the plea of the accused in a petition for discharge and revision therefrom that the complaint is not maintainable without impleading the

principal debtor, was rejected and the complaint is held maintainable. Lastly, he also relied on Suman Sethi v. Ajay K. Churiwal, I (2001) BC 144

(SC)=I (2000) CCR 163 (SC)=I (2000) SLT 605= (2000) SCC Cri. 414, that if in a notice while giving the break-up of the claim the cheque

amount, interest, damages, etc., are separately specified, other such claims for interest, cost, etc., would be superfluous and these additional claims

would be sever able and will not invalidate the notice. If, however, in the notice an omnibus demand is made without specifying what was due

under the dishonoured cheque, the notice might well fail to meet the legal requirement and may be regarded as bad.

It is, therefore, clear from the aforesaid discussion and decisions that either the company should be made a party or in the absence of the same,

at least there should be proper averment in the complaint relating to the impleaded accused as to whether he was in charge of the day-to-day

administration of the company in his capacity as a director. Now, in the present case, neither the company nor the director had been made an

accused, but the complaint was filed against the individual. On the other hand, there is a specific averment in the complaint itself that the accused

had been proceeded with only in his individual capacity whereas the cheque under Exhibit P-1 disclosed that the drawer of the cheque is

Neelamalai Chits Private Limited by the managing director. Then this being the position, unfortunately the Court below without considering the

valid objections raised by the petitioner, had simply dismissed the application on the ground that the trial is going on. When prima facie material has

been produced by the petitioner and they clinchingly established, I am of the view that further proceedings have to be necessarily stopped and the

point is answered accordingly.

For the reasons stated above, the revision petition is allowed and the order passed by the Court below dated February 24, 1999, is set aside

and Crl. M.P. No. 3792 of 1998 is allowed and the petitioner is discharged. Consequently, Crl. M.P. No. 3548 of 1999 is closed.