IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED: 29.06.2009 CORAM THE HONOURABLE MR. JUSTICE P.R.SHIVAKUMAR Crl.O.P.No.446 of 2009 N.Gopalan S/o.Natarajan Authorised Signatory Darshini Fabrics 58, Ramasamy Gounder Lane Erode-1, Erode District .. Petitioner -Vs- K.Udhayakumar .. Respondent Petition filed under section 482 Cr.P.C., to call for the records in C.C.No.493/2008 on the file of the Judicial Magistrate- II, Erode and to quash the same. For Petitioner : Mr.N.Manokaran For Respondent : Mr.C.S.Saravanan O R D E R The second accused in C.C.No.493/2008 on the file of the learned Judicial Magistrate-II, Erode has come forward with the present petition under Section 482 Cr.P.C for quashing the said criminal proceedings so far as the petitioner is concerned. 2. The above said case, namely C.C.No.493/2008 was instituted on the file of the Judicial Magistrate-II, Erode against the wife of the petitioner herein (A1) and the petitioner herein (A2) for an alleged offence punishable under Section 138 r/w Section 142 of the Negotiable Instruments Act, 1881. The respondent herein preferred a private complaint on the file of the learned Judicial Magistrate-II, Erode against the wife of the petitioner herein and the petitioner herein arraying them as A1 and A2 respectively. It has been alleged in the complaint that the petitioner herein, being the authorised signatory of his wife, who is running a proprietary concern in the name and style of 'M/s.Darshini Fabrics', issued a cheque dated 21.06.2007 bearing No.439765 drawn on the account of the above said proprietary concern maintained with ING VYSYA bank for a sum of Rs.25,000/- in favour of the respondent herein for the discharge of a debt/liability. The further averment made in the complaint is that the cheque, when presented for collection, was returned with a https://hcservices.ecourts.gov.in/hcservices/ dishonour note "funds insufficient"; that the petitioner and his wife, even after receiving the statutory notice, failed to make payment of the amount covered by the cheque as demanded in the notice and thereby committed the offence punishable under Section 138 of the Negotiable Instruments Act, 1881. 3. The learned Judicial Magistrate-II, Erode took the complaint on file and registered it as C.C.No.493 of 2008 following the procedure prescribed for taking cognizance of the case on private complaint. The trial court has also issued process to the petitioner herein and his wife. No defect has been pointed out by the petitioner regarding the procedure adopted by the trial court in taking cognizance of the case. On the other hand, the decision made by the trial court to issue process to the petitioner (A2) is attacked based on the contention that the learned Judicial Magistrate did not apply his mind to the facts of the case properly and that no prosecution can be sustained against a person, who simply signed and issued a cheque on behalf of another as a mandate holder/authorised signatory. It has also been contended in the petition that the complaint was preferred after the statutory period was over. Thus the criminal proceedings initiated against the petitioner herein is sought to be quashed on the following two grounds:- a) The complaint was preferred after statutory period prescribed in Section 138 of the Negotiable Instruments Act, 1881 was over. b) The mandate holder authorised to sign the cheque on behalf of another, cannot be prosecuted for the simple reason that he signed the cheque on behalf of other person. 4. The arguments advanced by Mr.N.Manokaran, learned counsel for the petitioner and by Mr.C.S.Saravanan, learned counsel for the respondent were heard. The documents were also perused. 5. Though the petitioner has taken a stand that the complaint has been lodged beyond the period of limitation as a ground for quashing the complaint, the learned counsel for the petitioner was fair enough to draw the attention of the court to the proviso to Section 142(b) which enables the court to take cognizance of the complaint even after the prescribed period, if the complainant satisfies the court that he had sufficient cause for not making a complaint within the prescribed period and submitted that he would confine his arguments with regard to the second contention alone. 6. Admittedly, the cheque in question was not drawn on an account maintained by the petitioner herein in a bank. On the other hand, the cheque in question was drawn on an account maintained by the wife of the petitioner, who is running a https://hcservices.ecourts.gov.in/hcservices/ proprietary concern in the name and style of 'M/s.Darshini Fabrics'. The wife of the petitioner has been arrayed as accused No.1 in the above said criminal case. There is no whisper on the part of the petitioner to the effect that the launching of prosecution against his wife is incompetent. On the other hand, the petitioner has contended that he cannot be prosecuted for the dishonour of the cheque issued by him as an authorised signatory on behalf of his wife. On the other hand, an attempt was made to show that the petitioner having signed and issued the cheque on behalf of the proprietary concern of which his wife is the proprietrix can be prosecuted for an offence punishable under Section 138 of the Negotiable Instruments Act, 1881 r/w Section 142 of the said Act, as he can be construed to be a person responsible for the conduct of the business of the said proprietary concern. 7. Section 141 of the Negotiable Instruments Act, 1881 deals with offences committed by the companies. It also says that when an offence under Section 138 of the Negotiable Instruments Act, 1881 is committed by a company, every person in charge of and was responsible to the company for the conduct of the business at the time of commission of the said offence as well as the company shall be deemed to be guilty of the offence. However, in the explanation, the term "company" is defined to be any body corporate including a firm or other association of individuals. Explanation (b) says a "director", in relation to a firm, means a partner of the firm. 8. A careful reading of Section 141 and the explanations will show that a proprietary concern shall not be covered by the definition of company. This aspect was dealt with by the Hon'ble Supreme Court in Raghu Lakshminarayanan vs. Fine Tubes reported in (2007)5 Supreme Court Cases 103 and the Hon'ble Supreme Court has chosen to express the very same view. Therefore, it is quite clear that the petitioner cannot be prosecuted as a person responsible for the conduct of the business of the proprietary concern run by his wife. 9. However, an attempt was made on the part of the respondent to show that the petitioner himself had borrowed the amount and issued the cheque and hence he shall be liable for prosecution and punishment for the offence under Section 138 of the Negotiable Instruments Act. If at all the petitioner herein is sought to be prosecuted as the prime offender having issued the cheque for the amount borrowed by him, this court does not understand the rational in prosecuting his wife (A1) along with the petitioner herein for the very same act. Even assuming that the petitioner owed some amount or liability towards the respondent and in discharge of the debt/liability he issued the cheque, the same will not be enough to sustain a prosecution against the petitioner as the drawer alone can be prosecuted for an offence under Section 138 of the Negotiable Instruments Act. This has been held so in two previous cases by this court in R.Ravi Chadran v. C.Subramanian https://hcservices.ecourts.gov.in/hcservices/ alias C.S.Maniam Mandate Holder of M/s.Southern Biologicals, Coimbatore reported in (2006)1 M.L.J.(Crl.) 68 and in Surendra Mal Mehta and Another vs. M/s.Gillette India Limited, represented by its Power of Attorney Agent, Vijay Malhotra reported in 2006 (2) TLT 178. Almost in similar circumstances, the authorised signatory/mandate holder, who issued the cheques were sought to be prosecuted in those cases and this court held that such prosecution could not be maintained and quashed the proceedings against such mandate holders/authorised signatories. 10. To prosecute a person for an offence under Section 138 of the Negotiable Instruments Act, the cheque should have been issued by him on an account maintained by him with a banker. The opening words of Section 138 of the Negotiable Instruments Act reads as follows:- "Where any cheque drawn by a person on an account maintained by him with a banker......." Only he who issued the cheque drawn on an account maintained by them can be prosecuted for an offence under Section 138 of the Negotiable Instruments Act. In this case, admittedly the cheque was not drawn on an account maintained by the petitioner herein and the same was drawn on an account maintained by the wife of the petitioner in the name of the proprietary concern run by her. The judgments of the Apex court and this court cited above squarely apply to the facts of the case on hand. 11. For all the reasons stated above, this court comes to the conclusion that the prosecution of the petitioner for an offence under Section 138 of the Negotiable Instruments Act, 1881 cannot be maintained and the criminal proceedings initiated in C.C.No.493/2008 on the file of the learned Judicial Magistrate-II, Erode against him has got to be quashed. It is made clear that the said criminal proceedings shall be quashed only so far as the petitioner is concerned. 12. In the result, this petition is allowed and the criminal proceedings initiated in C.C.No.493/2008 on the file of the learned Judicial Magistrate-II, Erode is quashed as far as the petitioner is concerned. Sd/ Asst.Registrar /true copy/ Sub Asst.Registrar asr https://hcservices.ecourts.gov.in/hcservices/ To 1.Judicial Magistrate-II, Erode. 2.-DO- Through, The Chief Judicial Magistrate, Erode. 1 cc To Mr.C.S.Saravanan, Advocate, SR.27002 1 cc To Mr.N.Manokaran, Advocate, SR.27057 Crl.OP.No.446 of 2009 ts(co) pmk.20.7.2009. https://hcservices.ecourts.gov.in/hcservices/