Sandeep Kumar vs Rajiv Kumar and Others

K.C. Gupta, J.—This is a petition u/s 482 of the Code of Criminal Procedure, 1973, inter alia, seeking quashing of the complaint dated August 17, 1998 (annexure P1) u/s 138 of the Negotiable Instruments Act, 1881 (hereinafter referred to as the Act) and the summoning order dated November 6, 1998 (annexure P2).

The brief facts of the case are that respondent No. 1 (complainant) filed a complaint u/s 138 of the Act against respondents Nos. 2 and 3 and the petitioner on the allegations that respondent No. 1 had supplied iron material to respondent No. 2 vide Bill No. 166/167 dated October 8, 1995, for Rs. 4,81.032 and respondent No. 2 with a view to discharge the said financial liability through its director, respondent No. 3 Tarsem Kansal, under his signature had issued cheque No. 729707 dated July 1, 1998, of Rs. 2,21,126 equal to the amount of Bill No. 166 dated October 8, 1995, in favour of the complainant drawn on Oriental Bank of Commerce, Mandi Gobindgarh, assuring that the same would be honoured when it would be presented for encashment to the concerned bank.

Respondent No. 1 sent the said cheque for collection through his banker Bank of India, Mandi Gobindgarh to the concerned bank but it was dishonoured on July 9, 1998, with the remarks "insufficient funds". After receipt of the dishonoured cheque, respondent No. 1 issued legal notice dated July 14, 1998, through his authorised signatory by registered post to respondents Nos. 2 and 3 calling upon them to make the payment of the aforesaid cheque to the complainant within 15 days of the receipt of the notice but the same was not paid.

It was next averred that respondent No. 3 Tarsem Kansal being the director of respondent No. 2, Classic Ispat Pvt. Ltd., was controlling and managing the business and affairs of the company and the petitioner was also taking active part in the affairs of the company and thus all of them were liable u/s 138 of the Act for all the acts committed on behalf of the company.

After recording the preliminary evidence, respondents Nos. 2, 3 and the petitioner were summoned vide order dated November 6, 1998, by the Sub Divisional Judicial Magistrate, Amloh. The said complaint was filed through Vishal Kumar Goel, special power of attorney of Rajiv Gupta, proprietor of Rohin Steel Industries.

Thus Sandeep Kumar filed petition u/s 482 of the Criminal Procedure Code seeking quashing of the complaint dated August 17, 1998 (annexure P1) u/s 138 of the Act and the summoning order dated November 6, 1998 (annexure P2) on the allegations, that no notice was given to him as required u/s 138, proviso (b) after dishonouring of the cheque requiring payment of the money within 15 days from the receipt of the notice by registered post. He also stated that the petitioner was a sleeping director and was not connected with the day to day affairs of the company and as such, was not liable u/s 138 of the Act. It is further alleged that Vishal Kumar Goel special power of attorney was not authorised by the proprietor of the firm to institute the complaint against him and as such, the complaint against him was not maintainable ; so it was liable to be quashed. Respondent No. 1 filed reply opposing the request of the petitioner for quashing the complaint as well as the summoning order.

I have heard counsel for the petitioner, Shri Anand Chhibbar, counsel for respondent No. 1 (complainant) Shri R.K. Battas and have gone through the file.

A perusal of the complaint (annexure P1) shows that it has been filed through Vishal Kumar Goel, special power of attorney, against Classic Ispat Pvt. Ltd., Tarsem Kansal, director and Sandeep Kumar, Annexure P4 is the special power of attorney which has been given by Rajiv Gupta, proprietor of Rohin Steel Industries in favour of Vishal Kumar Goel to file the complaint u/s 138 of the Act against Tarsem Kansal, director, Classic Ispat Pvt. Ltd. regarding dishonour of cheque and prosecute the same and take all proceedings therein. Subsequently, on November 2, 2000, Rajiv Gupta had executed ratification deed and stated therein that the complaint against the company covers all its directors and the special power of attorney has been authorised to file complaint against the company as well as its directors participating in the business of the company one way or the other. He further ratified all actions taken by Vishal Goyal in filing the complaint against the directors while pursuing the complaint in all possible ways.

It has been observed by the Privy Council in AIR 1943 66 (Privy Council) , that ratification u/s 196 of the Contract Act could be express or implied from conduct. According to this authority, it is not necessary that the ratification should be in writing. It can also be inferred from the conduct.

Counsel for the petitioner contended that since there was no authorisation to file the complaint against the petitioner through the special power of attorney holder, so the complaint against him was not liable and was liable to be quashed. In support of this submission, reliance was sought to be placed on a decision in M. Lakshmi Vs. M/s. Shanmuga Priya Textiles (P) Ltd., Thungavi, Udumalpet, in which it was observed that the power of attorney should be authorised by way of company resolution to file the complaint and in the absence of authorisation by means of company resolution, the complaint is liable to be quashed. The said authority is not applicable to the facts of the present case because Rajiv Gupta is the proprietor of Rohin Steel Industries, New Delhi, having branch at Mandi Gobindgarh and being the sole proprietor, he could authorise anyone to institute the complaint. It is further held in Pandalal v. Jacob C. Alexander [2000] 2 RCR Crimes 480 that where a complaint is filed by advocate on instructions given by power of attorney holder of payee and not by payee himself, then it is not illegal because u/s 27, the power of attorney is entitled to act on behalf of the payee. It has been also held that the provisions of Section 27 are applicable to civil as well as criminal proceedings. It has further been observed that a power of attorney of payee can file complaint u/s 142 of the Act notwithstanding anything contained in the Criminal Procedure Code. It has been held by the Supreme Court in United Bank of India Vs. Naresh Kumar and others, that where suits are instituted or defended on behalf of a public corporation, public interest should not be permitted to be defeated on a mere technicality. There is sufficient power in the courts under the CPC to ensure that injustice is not done to any party who has a just case. It has also been held by the Supreme Court in the case of BSI Ltd. v. Gift Holdings Pvt. Ltd. [2000] 100 CompCas 436 ; [2000] 1 RCR 660 that where a cheque is issued by a company and is dishonoured, then the following three categories of persons can be brought within purview of penal liability through legal fiction u/s 141 of the Act:

(i) The company which committed the offence.

(ii) Every person who was in charge of and responsible to the company for conduct of the business.

(iii) Any other person who is director or a manager or secretary or officer of the company with whose connivance or with whose neglect the company committed the offence.

In the present case, it is specifically alleged in the complaint that Tarsem Kansal being the director the Classic Ispat Pvt. Ltd. is controlling and managing the business and affairs of the company and Sandeep Kumar is also taking active part in the affairs of the company and as such, all of them are liable for all the acts committed by Classic Ispat Pvt. Ltd.

So, respondents Nos. 2 and 3 and the petitioner are liable u/s 138 of the Act and the complaint is not liable to be quashed because Rajiv Gupta of Rohin Steel Industries had ratified the act of special power of attorney Vishal Kumar Goel to file the complaint against the petitioner also. It is not necessary to issue notice as required u/s 138 proviso (b) because notice to the company, i.e., Classic Ispat Pvt. Ltd. is also notice to its directors, i.e., respondent No. 3 and the petitioner. Hence, no ground is made out to exercise discretion u/s 482 of the Criminal Procedure Code for quashing the complaint of the complainant (annexure P1) and the summoning order dated November 6, 1998 (annexure P2). Hence the petition is dismissed.