APPLN.1436,1437-10 - 1 - VPH IN THE HIGH COURT OF JUDICATURE AT BOMBAY CRIMINAL APPELLATE JURISDICTION CRIMINAL APPLICATION No. 1436 OF 2010 AND CRIMINAL APPLICATION No. 1437 OF 2010 Jiten Mugatlal Shah ...Applicant Vs. State of Maharashtra & Anr. ...Respondents *** Mr. Pravin Kanani & Mrs. Vidya Dongare, for the Applicant. Mr. P. S. Hingorani, APP for the Respondent No.1. Mr. Madhav Jamdar, for Respondent No.2. *** CORAM: V. M. KANADE J. DATE : OCTOBER 6, 2010 P.C. 1. Heard the learned counsel appearing for the applicant and respondent No.2. By these applications, the applicant is seeking the quashing of the order of issuance of process, passed by the learned J.M.F.C. Pune on the complaints filed under S. 138 of the Negotiable Instruments Act. 2. It is submitted that the applicant/accused No.2 is residing at APPLN.1436,1437-10 - 2 - Mumbai. It is further submitted that cases were filed before the J.M.F.C. Cantonment Court, Pune and as such the applicant is residing outside the jurisdiction of the Court and in view of the mandatory provisions of S. 202 Cr.P.C., an inquiry should have been held, after postponing the issuance of process. Secondly, it was submitted that notice was not separately served on the applicant and therefore, there was non compliance of service of notice, particularly since the applicant is a Director of the Company/respondent No.2 and is made vicariously liable for the dishonour of the cheque under S. 141 of the Negotiable Instruments Act. 3. It is submitted that necessary averments giving the role of the applicant, are not made in the complaints and therefore, in view of the judgment of the Apex Court in the case of - National Small Industries Corporation Limited v. Harmeet Singh Paintal and another [1(2010) SLT 593] = (2010) 3 SCC 330 , the process is liable to be quashed qua the applicant in both the applications. 4. Thirdly, it is submitted that verification is not recorded in appropriate form and in accordance with the guidelines laid down in the case of - Amarnath Baijnath Gupta & Anr. v. Mohini Organics Pvt. Ltd. & Anr. 2009[ ALL MR (Cri) 184] . In support of the submission that a APPLN.1436,1437-10 - 3 - separate notice has not been given, the learned counsel relied on a judgment of the learned Single Bench of this Court in the case of – Chaitan M. Manir v. State of Maharashtra [2004(2) Mh.L.J.1035] AND another judgment of the learned Single Judge of this Court dated 6th May, 2008 in the case of Krishna Texport & Capital Markets Ltd. vs. Mrs. Ila A. Agrawal & 2 Ors. in Criminal Application No. 2174 of 2007. He also invited my attention to an order dated 18th November, 2009 passed by another learned Single Judge of this Court in Criminal Writ Petition No. 2843 of 2009 in which on this point rule was issued and an interim relief was granted. 5. On the other hand, the learned counsel appearing for respondent No.2 submitted that so far as inquiry under S. 202 Cr.P.C. is concerned, this Court has in the case of Bansilal Kabra Vs. Global Trade Finance Ltd. & Anr., dated 9th July, 2010 in Criminal Application No. 1344 of 2010, held that said provision is not mandatory but is directory. 6. As regards service of notice, it is then submitted that the applicant was in fact served separately. She invited my attention to the notice and also the acknowledgment which was received by the complainant. 7. After having heard both the counsel at length, in my view, APPLN.1436,1437-10 - 4 - the submissions made by the learned counsel for the applicant cannot be accepted, so far as issue of holding inquiry under S. 202 Cr. P. C. is concerned, in a complaint which is filed under S. 138 of the Negotiable Instruments Act, the presumption under S. 139 of the Act about the existence of debt or liability, and also the presumptions which are raised under S. 118 of the said Act, set out special rules of evidence relating to negotiable instruments. The Magistrate has therefore to consider on the basis of the averments in the complaints and the documents which are annexed, whether prima-facie case is made out and therefore an elaborate inquiry in such cases is not always necessary. This Court has already held in the case of Bansilal Kabra (supra) that the provision is not mandatory but directory. In any case, no material is produced before this Court to show that prejudice would be caused to the applicant on account of not holding the inquiry. So far as submission in regard to notice is concerned, the same has not been served. This fact has been disputed by the complainant and the acknowledgement due receipt has been annexed to the affidavit-in-reply, filed by respondent No.2. It does indicate that separate notice was served on the applicant also. This being the disputed question of fact, therefore, at this stage, it will not be possible to decide this aspect. The ratio of the judgments relied by the APPLN.1436,1437-10 - 5 - learned counsel for the applicant do not apply to the facts of the present case. 8. So far as submission regarding averments is concerned, perusal of the complaint indicates that necessary averments have been made in paragraph 3. Following averments are made in paragraph 3, 5,10 and 11 of the complaint- “3. That the Accused No.1 is a Company incorporated under Companies Act, 1956 with its office at 106, Fort Foundation, (Bake House Lane), 26/30, Maharashtra Chamber of Commerce Lane, Mumbai 400 001 engaged in the business of Manufacturing and sale of various pharmaceutical products and Accused No.2 is the Director of the said Company and is incharge of and responsible for the conduct of the business of the Accused No.1 Company. The Accused No.2 takes an active part in running the business of the Accused No.1 Company.” “5. That considering the good business relations with the Accused No.1 and relying on the representation made by Accused No.1 and 2, the Complainant opened INLC in favour of Anil Overseas Pvt. Ltd., and purchased the said pharmaceutical products for Accused No.1.” “10. The aforesaid cheques were issued by the Accused No.1 through Accused No.2 under the legal liability to pay the Complainant the value of the transaction between Accused and APPLN.1436,1437-10 - 6 - the Complainant the value of the transaction between Accused and the Complainant based on the said letters and Purchase Orders issued by the Accused No.1 upon the Complainant dated 11.06.2008 and 31.07.2008 and invoices raised by the Complainant on the Accused No.1. The Accused promised the Complainant that the said cheques will be encashed under any circumstances whenever presented for encashment.” “11. That only as per the instructions of the Accused No. 1 and 2, the Complainant deposited the said cheques with its bank i.e. Axis Bank Ltd. Sterling Plaza, 1262/B, J.M. Road, Deccan Gymkhana, Pune 400 004 branch for encashment. However to the astonishment of the Complainant the said cheques were dishonoured and returned unpaid with remark Funds Insufficient”. That the said fact of dishoour of cheques has been informed by the bank of the Complainant to the Complainant vide its Cheque Returning Memo dated 16/06/2009.” 9. Therefore, from the aforesaid averments, it is clear that the complainant has not only stated that he is in charge and is responsible for the conduct of the business of accused No.1 Company, but has also stated that he takes active part in running business of accused No.1 Company. The role of the applicant has also been set out in paragraph 5, 10 and 11 of the complaint. Under these circumstances, therefore, APPLN.1436,1437-10 - 7 - submission made by the learned counsel for the applicant cannot be accepted. Both the criminal applications are therefore, dismissed. However, hearing of the criminal complaints is expedited. Interim order is vacated. [ V. M. KANADE J.]