[-1-] IN THE HIGH COURT OF JUDICATURE AT BOMBAY CRIMINAL APPELLATE JURISDICTION CRIMINAL APPLN.NO.3679 OF 2008 TO CRIMINAL APPLN.NO.3682 OF 2008 Mr.Prabhat Kumar Gupta ..Applicant Vs. State of Maharashtra & Anr. ..Respondents ... Mr.Manmohan H.Ramsinghani advocate for Applicant Mr.Ashish Chavan Adv. for Respondent no.1 Ms.A.A.Mane A.P.P. for the State ... CORAM: SMT.V.K.TAHILRAMANI,J. CORAM: SMT.V.K.TAHILRAMANI,J. CORAM: SMT.V.K.TAHILRAMANI,J. DATE : NOVEMBER 20, 2008 DATE : NOVEMBER 20, 2008 DATE : NOVEMBER 20, 2008 P.C. P.C. P.C. 1. Heard the learned advocate for the applicant-original accused no.3, the learned advocate for the respondent no.1-original complainant and the learned A.P.P. for the State. 2. Respondent no.1 filed complaints against the applicant and others under Section 138 of the Negotiable Instruments Act. The said cases are numbered as CC Nos. CC No.1719/SS/2005, 1718/SS/2005,3796/SS/2005 and 2948/SS/2005. These cases are pending before the learned Special Metropolitan Magistrate and Judge of Small Causes Court at Mumbai. The complaints came to be filed against the applicant as at the relevant time, the [-2-] applicant was Director of the Company i.e. original accused no.1. There is one other accused in the said case. However, in the present matter, we are not concerned with said accused. In all these cases, process came to be issued by the learned Magistrate under Section 138 r.w. 141 of Negotiable Instruments Act against the applicant. Being aggrieved thereby, revisions came to be preferred before the Sessions Court. The said revision came to be dismissed, hence, these applications have been preferred. 3. The learned advocate for the applicant submitted that main ground is that no legal notice was given to the applicant by the complainant as required under the Negotiable Instruments Act and therefore, no cause of action has arisen against the applicant, hence, process issued against the applicant, is liable to be quashed. 4. In support of his contention that if notice is not sent to the accused, the accused cannot be made liable and the order of process deserves to be quashed, the learned advocate for the applicant has placed reliance on the decisions in Bipin Bipin Bipin [-3-] J.Shah Vs. Smt.Niru B.Mehta J.Shah Vs. Smt.Niru B.Mehta J.Shah Vs. Smt.Niru B.Mehta reported in 2001(2) 2001(2) 2001(2) Mh.L.J.632 Mh.L.J.632 Mh.L.J.632 and Chaitan M.Maniar Vs. State of Chaitan M.Maniar Vs. State of Chaitan M.Maniar Vs. State of Maharashtra and another Maharashtra and another Maharashtra and another reported in 2004(2) Mh.L.J. 2004(2) Mh.L.J. 2004(2) Mh.L.J. 1035. 1035. 1035. 5. The learned advocate for the Respondent no.1 submitted that decision in the case of Bipin J.Shah Bipin J.Shah Bipin J.Shah (supra) does not consider a case wherein the case is filed against the Company and its Director and the said case only deals with individuals who have been arraigned as accused and the said decision would not be applicable to the facts of the present case. In the present case, complaint has been filed against the Company and the applicant who was Director of the Company at the relevant time. No doubt, the case relating to Bipin Shah (supra) deals with a complaint which has been filed against private individuals, however, the decision in the case of Chaitan Maniar (supra) Chaitan Maniar (supra) Chaitan Maniar (supra) deals with a case wherein the accused were the Directors of the Company and no notice was given to the accused who were Directors of the Company. The facts in the case of Chaitan Maniar (supra) and the facts in the present case are almost identical. [-4-] 6. The learned advocate for the respondent no.1 submitted that when notice was given to one accused i.e. company, there was sufficient cause of action to proceed against the other accused. In support of his contention, he has placed reliance on three decisions i.e. (1) Dilip Kumar Jaiswal Vs. (1) Dilip Kumar Jaiswal Vs. (1) Dilip Kumar Jaiswal Vs. Debapriya Banerjee, Debapriya Banerjee, Debapriya Banerjee, reported in 1992(1) Calcutta 1992(1) Calcutta 1992(1) Calcutta High Court 1233, (2) M/s.Target Overseas Exports High Court 1233, (2) M/s.Target Overseas Exports High Court 1233, (2) M/s.Target Overseas Exports Pvt.Ltd. and others Vs. A.M.Iqbal and another, Pvt.Ltd. and others Vs. A.M.Iqbal and another, Pvt.Ltd. and others Vs. A.M.Iqbal and another, reported in 2005 Cri.L.J.1931, 2005 Cri.L.J.1931, 2005 Cri.L.J.1931, and (3) K.Pannir K.Pannir K.Pannir Selvam Vs. M.M.T.C. Ltd. New Delhi and another, Selvam Vs. M.M.T.C. Ltd. New Delhi and another, Selvam Vs. M.M.T.C. Ltd. New Delhi and another, reported in 2000 Cri.L.J. 1002. 2000 Cri.L.J. 1002. 2000 Cri.L.J. 1002. The said decisions are by Calcutta High Court, Kerala High Court and Andhra Pradesh High Court. In the said decisions, it has been held that it is not necessary to give a separate notice to the Directors as notice was given to the Company. The notice to the company was held to be sufficient. It is seen that decisions relied upon by the learned advocate for the Respondent do not pertain to this High Court, whereas there are direct decisions of this Court on the point involved in the present matter. The said decisions are in the case of Chaitan Maniar Vs. State of Maharashtra Chaitan Maniar Vs. State of Maharashtra Chaitan Maniar Vs. State of Maharashtra and another, and another, and another, reported in 2004(2) Mh.L.J. 1035 2004(2) Mh.L.J. 1035 2004(2) Mh.L.J. 1035 [-5-] (supra), (supra), (supra), unreported judgment in Cri.Application Cri.Application Cri.Application No.2174 of 2007 No.2174 of 2007 No.2174 of 2007 in the matter of Krishna Texport Krishna Texport Krishna Texport and Capital Markets Ltd. Vs. Mrs.Ila A.Agrawal and Capital Markets Ltd. Vs. Mrs.Ila A.Agrawal and Capital Markets Ltd. Vs. Mrs.Ila A.Agrawal and others. and others. and others. In the case of Krishna Texport (supra), in paragraph 12, it is observed that the object of notice is to give a chance to the drawer of the cheque to rectify his omission and also to protect an honest drawer. As such, service of notice of demand in Clause (b) of the proviso to Section 138 is a condition precedent for filing a complaint. In this case, the service of notice to accused no.1 is proved by the complainant, but no any individual notice is served to accused nos.6 and 8 and as such, said accused have not got any opportunity to explain their situation and position in the company or to rectify the mistake by making the payment of cheque in question. If the legal fiction created by Section 141 to make directors who are responsible for day to day affairs of the company, punishable under Section 138, then it is necessary that they get an opportunity to rectify the mistake or clarify matters after service of notice. So before making the complaint against the directors, notice necessarily must be served on them. In my opinion without service of notice to [-6-] accused nos.6 and 8, vicarious liability of the offence under Section 138 cannot be fixed upon them. In this regard, useful reference may be made to the case of B.Raman and Ors. Vs. M/s.Shasun B.Raman and Ors. Vs. M/s.Shasun B.Raman and Ors. Vs. M/s.Shasun Chemicals and Drugs Ltd., Chemicals and Drugs Ltd., Chemicals and Drugs Ltd., reported in 2006 Cri.L.J. 2006 Cri.L.J. 2006 Cri.L.J. page 4552 page 4552 page 4552 wherein it is held in para 32 of the judgment that the meaning of the word "drawer" as contemplated under Section 138, has to be interpreted in the case of company as the company as well as the persons, who are responsible for the commission of offence. If such is the interpretation, then, the complainant has to send notice to the drawer, which means, the company and its directors and officers, responsible for the business of the company and for the commission of the offence. 7. It is further reflected in the above decision that Section 138(b) refers to issuance of notice to the drawer. Of course, while interpreting the said Section, a notice to the drawer shall mean notice to the drawer, who has drawn the cheque in individual cases. But, when the offence is committed by the company, by virtue of Section 141, every person, who, at the time the offence was [-7-] committed, was in charge of and responsible for the conduct of the business of the company, is presumed to be guilty of the offence. The word "drawer" as contained in Section 138(b), cannot be restricted in the sense to the drawer of the cheque alone, but to those, who are presumed to be guilty of the offence, by virtue of Section 141, more particularly when such individuals are liable to be imprisoned for such an offence and their personal liberty is infringed thereon. As such, it is a violation of Article 21 of the Constitution of India. Lastly, it is stated that statutory notice to every person, including the director, who is sought to be prosecuted, is mandatory. 8. Looking to the provisions of the Act and the object of the Act, it is seen that the object of giving notice is to give a chance to a drawer of cheque to rectify his omission and also to protect an honest drawer. In the present case, admittedly, no notice has been served upon the applicant. 9. Sub-clause (b) of the proviso to Section 138 of the Negotiable Instruments Act, requires that the payee or the holder in due course of the cheque, as [-8-] the case may be, must make a demand for the amount due by giving a notice in writing, to the drawer of the cheque, within 30 days of the receipt of information by him from the bank regarding the return of the cheque as unpaid. This notice is an essential prerequisite of action under Section 138 of Negotiable Instruments Act. It is an essential prerequisite because sub-section (c) of Section 138 of the N.I.Act makes it clear that if the drawer of such cheque fails to make the payment of the said amount of money to the payee or, as the case may be, to the holder in due course of the cheque, within 15 days of the receipt of the said notice, the liability under section 138 will be attracted. It is clear from the complaint itself that no notice is given to the applicant. Besides the applicant has not drawn the said cheque. It is not signed by him. This case, therefore, would be covered by the judgment of this Court in Bipin Shah’s case (supra). 10. Section 138 of Negotiable Instruments Act envisages that if a cheque is drawn by a person which is subsequently dishonoured, legal notice has to be addressed to that person to make him [-9-] accountable and bring him within the sweep of Section 138 of Negotiable Instruments Act. In the case at hand, admittedly, the drawer of the cheque is not the present applicant and admittedly legal notice was addressed by the complainant to accused no.1 only. In view of this admitted position and the settled legal position, in fact process should not have been issued against the applicant and it was erroneous on the part of the learned Sessions Judge to reject the application for quashing process made by accused no.3 to whom the legal notice was not addressed by the complainant. Therefore, in my opinion, on this ground alone that notice was not issued to the applicant, process issued against the applicant deserves to be quashed. 11. In view of the above, the common order dated 9.7.2008 passed by the learned Sessions Judge, Gr.Bombay at Mumbai in Revision Application nos.426 to 429 of 2007 is set aside. So also the order issuing process against the applicant is set aside. 12. Applications are disposed of accordingly. [-10-] [SMT.V.K.TAHILRAMANI, J.] [SMT.V.K.TAHILRAMANI, J.] [SMT.V.K.TAHILRAMANI, J.]