T. Giri and Others vs Y.S. Mathivanan

B. Akbar Basha Khadiri, J.—The petitioner has come forward with the instant criminal original petition to call for the records in C. C. No.

287 of 2000, pending on the file of the Judicial Magistrate No. I, Erode, and quash the same.

This criminal original petition has arisen in this way :

The respondent, Y.S. Mathivanan, filed a private complaint u/s 200 of the Criminal Procedure Code, 1973, alleging that one Jayalakshmi was

the President of Sri Amman Trust, that the trust was running educational institutions like schools and colleges. For the purpose of running the

institutions, for and on behalf of Sri Amman Trust, Jayalakshmi borrowed Rs. 30,00,000 from the respondent, who is a financier, on April 6, 2000

and issued two post-dated cheques bearing Nos. 046133 for Rs. 20,00,000 and 046134 for Rs. 10,00,000. The cheques were dated April 12,

2000. The respondent/complainant sent the cheques for collection to the bank on April 12, 2000, but they were returned on the same date with an

endorsement ""funds insufficient"". The respondent/complainant issued statutory notice to the accused demanding payment on April 12, 2000. The

second accused Jayalakshmi received the notice on April 15, 2000 and sent a reply. The other accused, namely, the petitioners herein, have not

sent any reply at all. Since no amount was forthcoming after the expiry of the statutory period, the respondent Y.S. Mathivanan preferred the

private complaint, of which learned Judicial Magistrate took cognizance in C. C. No. 287 of 2000.

Now, the petitioners seek to quash the proceedings on the following grounds :

(i) There is no allegation against the petitioners that they were actually participating in the affairs of the society. Petitioners Nos. 1 and 2 were

studying in an engineering college at Chennai ;

(ii) The third petitioner is an aged lady. She is a permanent resident of Karur and she had no active role to play in the affairs of the society.

(iii) The respondent has wantonly given wrong address of the petitioners in the notice and the complaint only to avoid service of statutory notice.

(iv) As per the bye-laws of the society, the borrowing on behalf of the society can be done in the particular manner known under law and the

respondent cannot array the petitioners as accused.

Heard both the sides. Regarding the first contention of the petitioners, I have gone through the complaint. In State of Bihar v. K.J.D. Singh

[1994] SCC (Crl.) 63 the apex court has pointed out that the inherent power u/s 482 of the Criminal Procedure Code, has to be exercised for the

ends of justice and should not be arbitrarily exercised to cut short the normal process of a criminal trial. It has been pointed out that the exercise of

the powers by the High Court u/s 482 of the Criminal Procedure Code to quash the prosecution launched against the respondent at the stage when

the trial had not even commenced was not proper. Such course should be followed in rare cases where further continuance of proceedings would

amount to an abuse of the process of the law.

In Anil Hada Vs. Indian Acrylic Limited, , a question was posed by the apex court when a company, which committed an offence u/s 138 of the

Negotiable Instruments Act eludes from being prosecuted therefor, can the directors of that company be prosecuted for that offence ? The apex

court has pointed out that the offender u/s 138 of the Negotiable Instruments Act is the drawer of the cheque, but by virtue of the fiction envisaged

in Section 141 of the Negotiable Instruments Act three categories of persons can be discerned within the purview of penal liability. They are (1)

the company which committed the offence ; (2) everyone who was in charge of and responsible for the business of the company ; (3) any other

person who is a director or a manager or a secretary or officer of the company, with whose connivance or due to whose neglect the company has

committed the offence. Their Lordships of the apex court have stated as under in paragraph 12 (page 40)

Thus when the drawer of the cheque who falls within the ambit of Section 138 of the Act is a human being or a body corporate or even a firm,

prosecution proceedings can be initiated against such drawer. In this context the phrase ''as well as'' used in Sub-section (1) of Section 141 of the

Act has some importance. The said phrase would embroil the persons mentioned in the first category within the tentacles of the offence on a par

with the offending company. Similarly, the words ''shall also'' in Sub-section (2) are capable of bringing the third category of persons additionally

within the dragnet of the offence on an equal par. The effect of reading Section 141 is that when the company is the drawer of the cheque such

company is the principal offender u/s 138 of the Act and the remaining persons are made offenders by virtue of the legal fiction created by the

Legislature as per the section. Hence the actual offence should have been committed by the company, and then alone the other two categories of

persons can also become liable for the offence.

In the instant case, in page No. 3 of the typed set the respondent/complainant had clearly stated as under :

Besides accused No. 2, accused Nos. 3 to 5 are actively participating in all the affairs of the trust and they are fully aware of the borrowings made

by the second accused from the complainant.

In the complaint, the respondent/complainant had described the first petitioner herein as the secretary, the second petitioner as treasurer and the

third petitioner as executive committee member. The very averments in the complaint that they are at the helm of the affairs of the trust, would bring

them under Clause (2) pointed out in the decision reported in Anil Hada Vs. Indian Acrylic Limited,

In Girish K. Bhandari v. Lakshmi Finance and Industrial Corporation Ltd. [1999] 97 Comp Cas 92 ; [2000] 2 CCR 161 a single judge of the

Andhra Pradesh High Court has pointed out that in terms of Section 141 of the Negotiable Instruments Act if an offence is committed by a

company u/s 138 of the Negotiable Instruments Act every person who at the time of offence was responsible to the company for the conduct of

the business of the company, shall be vicariously liable for the offence. The single judge has also pointed out that it is sufficient to make an

allegation in the complaint with regard to the liability of the accused and whether they are actually liable or not will have to be considered through

evidence.

In the instant case, the respondent/complainant had expressly stated in the complaint that the petitioners are in charge of the day-to-day affairs

of the company. Further, by virtue of being the secretary, treasurer and executive member, there is an implication that they are at the helm of the

affairs of the company as stated in Rajesh Bajaj Vs. State NCT of Delhi and Others, : wherein the apex court has held that in a petition u/s 482 of

the Criminal Procedure Code, it is not permissible to adopt a strictly hyper-technical approach and ""sieve the complaint through a coalander of

finest gauzes for testing the ingredients"" of the offence alleged against the accused and that as to whether the person in question was really in charge

of the affairs of the company and was responsible to the affairs of the company or not, and as to what functions, he was assigned in the affairs of

the company and whether those functions could be considered sufficient to hold that he was in charge of the affairs of the company are matters

which have to be gone into during the trial.

If the first and second petitioners are to contend that they are studying in an engineering college at Chennai and the third petitioner is a

permanent resident of Karur and there is no occasion for them to take part in the day-to-day affairs of the company, it is for them to prove that

fact by letting in evidence before the trial court. The averment in the complaint would prima facie indicate that they are at the helm of the affairs of

the company and it is for them to negative the same by letting in evidence.

The next contention is that the addresses of the petitioners mentioned in the notice and the complaint are different, in that they are residents of

Erode, but petitioners Nos. 1 and 2 are residing at Chennai and the third petitioner is residing at Karur. The question whether or not the proper

address is given and the exact location of the petitioners are all matters which have to be decided by the trial court. Prima facie, this court cannot

make a probe into this aspect and decide the criminal proceedings in part.

It is next contended that as per the bye-laws, the borrowing can be done only in the particular manner laid down under the same and the

respondent cannot array the petitioners as accused. It is worth mentioning that the cause of action for offence u/s 138 of the Negotiable

Instruments Act arises not on the borrowing, not even on the issuance of the cheque or bouncing of the cheque, but only on failure to make

payment within fifteen days from the date of receipt of the statutory notice. Therefore, the question whether or not the borrowing was proper is a

question for consideration by the trial court. It is not the case of the petitioner that they have not received the notice at all. Nowhere have they

stated so. Their case is that the respondent/complainant has wantonly given the wrong address. I have already indicated that if there is any legal

defect in the notice, this court can go into the aspect to find out whether such defect vitiates the proceedings u/s 138 of the Negotiable Instruments

Act. When the petitioners plead a factual defect that the respondent had wantonly sent the notice to a wrong address, it is for them to prove so

before the trial court. I do not find any merit in the criminal original'' petition and accordingly the same is dismissed. Consequently, Crl. M. P. Nos.

3811 and 3812 of 2000 are also dismissed.