((-1-)) mst IN THE HIGH COURT OF JUDICATURE AT BOMBAY CRIMINAL APPELLATE JURISDICTION CRIMINAL WRIT PETITION NO.1444 OF 2008 WITH CRIMINAL WRIT PETITION NO.1445 OF 2008 1. Amarnath Baijnath Gupta, 2. Dr.N.V.Srinivasa Rao, having their office at 204, 2nd Floor, Ninerva Complex, S.D.Road, Secunderabad 500 003 Petitioners (In both the Petitions) versus 1. M/s.Mohini Organics Pvt.Ltd. 210, Mahavir Industrial Estate, Kachpada, Ramchandra Lane Extension, Malad (W), Mumbai. 2. State of Maharashtra Respondents (In both the Petitions) Mr.S.R.Chitnis, Senior Advocate with Sameer M. Mangaonkar for the petitioners in both the petitions. Mr.Anil Agarwal for respondent no.1 in both the petitions. CORAM : A.S.OKA, J. DATE OF RESERVING THE JUDGEMENT : 21st November 2008 DATE OF PRONOUNCING THE JUDGEMENT : 11th December 2008 JUDGEMENT :- ((-2-)) 1. On 17th July 2008, in these two petitions, this Court issued notice for final disposal at the admission stage. Further submissions were heard by this Court on 21st August 2008 and 8th September 2008. 2. When the petitions were placed before this Court (Coram : V.K.Tahilramani, J.) on 8th October 2008, the registry was directed to place these petitions before the Hon’ble the Chief Justice for appropriate orders as a contention was raised that the petitions have been substantially argued before this Court. Accordingly, by an administrative order dated 20th October 2008 passed by the Hon’ble the Chief Justice, these petitions have been assigned to this Court. Accordingly, the petitions were taken up for final hearing on 21st November 2008. 3. It is not in dispute that the facts leading to filing of these two petitions are more or less identical. Therefore, a reference is made to the facts of the case in Criminal Writ Petition No.1444 of 2008. The first respondent filed a private complaint against the petitioners and four others alleging commission ((-3-)) of an offence under section 138 read with section 141 of the Negotiable Instruments Act, 1881 (hereinafter referred to as "the said Act"). The complaint is based on eight cheques issued by M/s.Premier Explochem Limited (the first accused) in favour of the first respondent in discharge of the alleged liability of the said M/s.Premier Explochem Limited (hereinafter referred to as "the said Company"). The petitioners have been arrainged as fifth and sixth accused in the said complaint. As stated earlier, the first accused is the said company. The case of the first respondent made out in the complaint is that the petitioners along with second to fourth accused are the Directors of the said company. The fifth accused (the first petitioner) is alleged to be the Chairman of the said company. It is stated that second and third accused are the Directors of the said company and also signatories to the cheques subject matter of the complaint. It is alleged that the petitioners and second to fourth accused have from time to time negotiated with the first respondent and placed orders for supply of goods. It is alleged that the petitioners and second to fourth accused from ((-4-)) time to time promised that the dues of the first respondent will be paid. It is alleged that the petitioners and second to fourth respondents are in-charge and in control of the day to day affairs and management of the said company and they have issued the concerned cheques in consultation with each other. It is alleged that the petitioners and the second to fourth accused take decisions of day to day working of the said company and they are responsible for the conduct of the business of the said company. Further allegation made in the complaint is that the dishonoured cheques were not deposited for some time by the first respondent on instructions of the first petitioner. The first respondent alleged that subsequently on instructions being received from the first petitioner and the second and third accused, the first respondent deposited the cheques and the same were dishonoured. 4. Verification Statement of one Mr.Shyam Manglunia was recorded by the learned Metropolitan Magistrate, 43rd Court, at Boriwali, Mumbai and process was issued against all the accused including the petitioners on 2nd September 2007 for an offence punishable ((-5-)) under section 138 of the said Act. 5. The petitioners filed a Revision Application under section 397 of the Code of Criminal Procedure, 1973 (hereinafter referred to as "the said Code") before the Court of Sessions for Greater Mumbai, at Dindoshi (Borivali Division) for challenging the order passed by the Magistrate of issuing the process on the private complaint of the first respondent. The learned Additional Sessions Judge dismissed the said revision application by judgement and order dated 17th June 2008. 6. By these petitions under Article 227 of the Constitution of India, the petitioners have challenged the order passed by the learned magistrate of issuing process as well as the order passed by the Additional Sessions Judge by which the revision application was rejected. 7. The learned Senior Counsel appearing for the petitioners invited my attention to the averments made in the complaint as well as to the verification statement of the authorised representative of the first respondent recorded by the learned Magistrate. He submitted that ((-6-)) on plain reading of the averments made in the complaint the process could not have been issued against the petitioners as material averments in terms of Section 141 of the said Act have not been made in the complaint. Reliance was placed on a decision of the Apex Court in the case of S.M.S.Pharmaceuticals Ltd. Vs. Neeta Bhalla and another ({2005}8-SCC-89). The learned Senior Counsel appearing for the petitioners also relied upon the decision of the Apex Court in the case of Sabitha Ramamurthy and another Vs. R.B.S. Channabasavaradhya ({2006}10-SCC-581). He submitted that in view of the mandate of Section 200 of the said Code, the first respondent- complainant was bound to make statements on oath as to how the offence has been committed and how the petitioners and other accused are responsible therefor. He also relied upon a decision of this Court in the case of Kapal Mehra Vs. Indusind Enterprises and Finance Ltd. (2007{6}-Mh.L.J.-58) and submitted that the persons sought to be made criminally liable under section 141 must be in-charge of and responsible for the conduct of the business of the accused company. Inviting my attention to ((-7-)) paragraphs 25 and 26 of the said decision of this Court, he submitted that the learned Magistrate while issuing the process cannot act casually. He submitted that before issuing the process the learned Magistrate is under an obligation to scrutinise the averments made in the complaint as well as in verification statement. He submitted that the verification statement is totally silent about the existance of ingredients of the section 141 of the said Act. 8. He submitted that the petitioners in their alleged capacity as Directors could have been prosecuted only by invoking Section 141 of the said Act. He pointed out that the process has been issued only under section 138 of the said Act and in the order issuing the process there is no reference to Section 141 of the said Act. He submitted that the order of the learned Magistrate shows that the learned magistrate was not satisfied that a case under section 141 of the said Act was made out. He submitted that the process under section 138 could have been issued only against the company and not against its Directors especially when Section 141 of the said Act is not invoked. ((-8-)) 9. The learned Senior Counsel further submitted that in paragraph 6 of the verification statement the authorised signatory of the first respondent-complainant has made a false statement that there was no reply issued by the accused to the statutory notice sent by the first respondent. He submitted that on 16th August 2007, a separate reply was sent by the advocate for the petitioners on behalf of the petitioners. He pointed out that copies thereof have been annexed to the petitions. He pointed out that the first petitioner has stated in the reply that till 29th June 2007 he was never in-charge of and in the control of the day to day affairs of the company and in fact he was not involved in the decisions of the day to day working of the company and especially the financial matters. He pointed out that similar contention has been raised in the reply of the second petitioner. 10. The submission made by the learned Senior Counsel for the petitioners is that the order passed by the learned Magistrate of issuing the process against the petitioners is patently illegal and the same deserves to be quashed. ((-9-)) 11. The learned counsel appearing for the first respondent submitted that there is no suppression of the facts in the verification statement as the reply forwarded by the petitioners on 16th August 2007 was not received before the complaint was filed and, therefore, there was no reference to the said reply of both the petitioners in the complaint as well as in the verification statement. He submitted that the material averments in terms of section 141 of the said Act have been made in the complaint. He submitted that the Income Tax Returns of the said company of the relevant years have been signed by the first petitioner in his capacity as the Chairman of the said company. 12. He submitted that the learned Magistrates in the city of Mumbai who are dealing with the complaints under section 138 of the said Act have been following a practice of recording the verification statement of the complainants in complaints under section 138 of the said Act in a particular format. In fact, he has placed on record verification statements recorded by different Magistrates in the City in particular ((-10-)) formats. His submission is that if the learned Magistrate has not recorded a detailed verification statement of the authorised representative of the first respondent though the said representative was willing to make a detailed statement, the first respondent-complainant cannot be allowed to suffer. He submitted that at the highest this Court may send back the matter to the learned Magistrate for recording the verification statement afresh. He pointed out that the material averments as required by the decision of the Apex Court have been incorporated in the complaint. He submitted that the issues raised in these petitions by the petitioners are purely matters of trial and the same can be gone into only after evidence is adduced. 13. The learned Senior Counsel appearing for the petitioners submitted that as the process could not have been issued on the basis of such cryptic verification statement, the complaint deserves to be dismissed and there is no question of sending back the complaint for recording a fresh verification statement. 14. I have carefully considered the ((-11-)) submissions. I have perused the complaint and other annexures to the petitions. At this stage the question which will have to be considered is whether a case is made out for issuing process as against the petitioners on the private complaint filed by the first respondent. In paragraph 4 of the complaint there is a specific averment made that the second to sixth accused are all in-charge of and control of the day to day affairs and management of the accused no.1 company. It is stated in paragraph 2 of the complaint that the accused no.5 (the first petitioner) is the Chairman of the said company. In paragraph 4 of the complaint there is a further averment that the second to sixth accused are responsible for the conduct of the business of the accused no.1 company. Thus insofar as the complaint is concerned, there are sufficient averments made in compliance with Section 141 of the said Act. There is a substantial compliance with the requirements laid down by the Apex Court in the case of S.M.S.Pharmaceuticals (supra). 15. The learned Senior Counsel appearing for the petitioners submitted that the learned ((-12-)) Magistrate has not issued process under section 141 of the said Act and, therefore, the complaint cannot proceed against the second to sixth accused and in particular against the petitioners. He pointed out that the process has been issued only under section 138 of the said Act. The submission is that if the learned Magistrate was satisfied that a case to proceed against the petitioners was made out, the process ought to have been issued under section 138 read with section 141 of the said Act. For dealing with this submission, a reference will have to be made to sections 138 and 141 of the said Act. The Section 138 introduces a legal fiction which provides that in case of dishonour of a cheque in the situations provided for in the section, the drawer of the cheque shall be deemed to have committed an offence. The said section provides for a punishment for the said offence. Section 141 of the said Act reads thus :- "141. Offences by companies.- (1) If the person committing an offence under section 138 is a company, every person who, at the time the offence was committed, was in charge of, and was responsible to the company for the conduct of the business of the company, as well as the company, shall be deemed to be guilty of the offence and shall be ((-13-)) liable to be proceeded against and punished accordingly : Provided that nothing contained in this sub-section shall render any person liable to punishment if he proves that the offence was committed without his knowledge, or that he had exercised all due digilence to prevent the commission of such offence : (Provided further that where a person is nominated as a Director of a company by virtue of his holding any office or employment in the Central Government or State Government or a financial corporation owned or controlled by the Central Government or the State Government, as the case may be, he shall not be liable for prosecution under this Chapter.) (2) Notwithstanding anything contained in sub section (1), where any offence under this Act has been committed by a company and it is proved that the offence has been committed with the consent or connivance of, or is attributable to, any neglect on the part of, any director, manager, secretary or other officer of the company, such director, manager, secretary or other officer shall also be deemed to be guilty of that offence and shall be liable to be proceeded against and punished accordingly." 16. Section 141 does not create or define an offence. It only provides that if the person committing an offence under section 138 is a company, every person who at the time the offence was committed was in-charge of, and was responsible to the company for the conduct of the business of the company as well as company, shall be deemed to be guilty of the offence ((-14-)) under section 138 and shall be liable to be proceeded against and punished accordingly. The legal effect of Section 141 is that the persons referred to in sub section 1 thereof shall be deemed to be guilty of the offence under section 138 of the said Act which is committed by a company. Thus, if a case is established under section 141, the persons referred to in sub section 1 thereof will be punished under section 138 of the said Act. Thus, if section 141 is applicable, the person concerned can be punished under section 138 of the said Act. While issuing the process, the Court is required to mention the section under which the accused can be punished and/or the section which defines the offence. If the learned Magistrate on the basis of the averments made in the complaint as well as the verification of the complainant is satisfied that the complainant has made out a case under section 141, he can issue process for the offence punishable under section 138 of the said Act against the company as well as the Directors or the persons referred to in sub section 1 of section 141. In the circumstances, there is no merit in the said grievance made by the petitioners. ((-15-)) 17. The main submissions have been made on the verification statement of one Shyam Manglunia which is annexed at page 32 of the petition. The said statement contains numbered paragraphs having titles such as the cheque number, the cheque date, the cheque amount, the name of the drawer’s bank, the name of the drawee’s bank, the date of presentation of the cheque, the date of receiving the intimation from the bank of dishonour of the cheque, the date of notice of demand, the date of service of notice to the drawer, the date of receipt of reply-if any of the drawer and the date of filing the complaint. In the verification statement necessary particulars have been filled in against the item numbers referred to above. Thus, the verification statement recorded in these two cases is in a pre-conceived format in which necessary particulars referred to above are filled in. 18. Before dealing with the effect of such a verification statement, it will be necessary to consider the object of the statement under section 200. Section 200 of the said Code reads thus:- ((-16-)) "S.200. Examination of complainant.- A Magistrate taking cognizance of an offence on complaint shall examine upon oath the complainant and the witnesses present, if any, and the substance of such examination shall be reduced to writing and shall be signed by the complainant and the witnesses, and also by the Magistrate; Provided that, when the complaint is made in writing, the Magistrate need not examine the complainant and the witnesses- (a) if a public servant acting or purporting to act in the discharge of his official duties or a Court has made the complaint; or (b) if the Magistrate makes over the case for inquiry or trial to another Magistrate under section 192; Provided further that if the Magistrate makes over the case to another Magistrate under section 192 after examining the complainant and the witnesses, the latter Magistrate need not re-examine them." 19. The Apex Court in the case of Nirmaljit Singh Hoon Vs. The State of West Bengal and another ({1973}3-SCC-753) had an occasion to consider the provisions of Section 200 of the said Code. It will be necessary to refer to what is held by the Apex Court in paragraph no.22 :- "22. ... ... ... Where a complaint is ((-17-)) presented before him, he can under Section 200 take cognizance of the offence made out therein and has then to examine the complaint and his witnesses. The The The object of such examination is to object of such examination is to object of such examination is to ascertain ascertain ascertain whether there is a prima facie whether there is a prima facie whether there is a prima facie case case case against the person accused of the against the person accused of the against the person accused of the offence offence offence in the complaint, and to prevent in the complaint, and to prevent in the complaint, and to prevent the the the issue of process on a complaint which issue of process on a complaint which issue of process on a complaint which is is is either false or vexatious or intended either false or vexatious or intended either false or vexatious or intended only only only to harass such a person. Such to harass such a person. Such to harass such a person. Such examination examination examination is provided therefore to find is provided therefore to find is provided therefore to find out out out whether there is or not sufficient whether there is or not sufficient whether there is or not sufficient ground ground ground for proceeding for proceeding for proceeding." (emphasis supplied) This Court had an occasion to consider Section 200 of the said Code in the Case of Captain Lance Irwin Lobo Vs. Ismail D’Souza @ Angelo Ismail de Souzla and another (2007-ALL MR {Cri}-623). It will be necessary to refer paragraph 16 of the said judgement in which this Court has held thus :- "16. ... ... ... The recording of the statement on oath of the complainant under Section 200 Cr.P.C. is not an empty formality. Commonly it is nicknamed as verification. To verify To verify To verify means means means to establish the truth. In other to establish the truth. In other to establish the truth. In other words, words, words, verification is done in order to verification is done in order to verification is done in order to ascertain ascertain ascertain as to what is pleaded by the as to what is pleaded by the as to what is pleaded by the complainant complainant complainant is true or not. It is with a is true or not. It is with a is true or not. It is with a view view view to separate chaff from the grain as to separate chaff from the grain as to separate chaff from the grain as many many many a times complaints do contain a times complaints do contain a times complaints do contain unfounded unfounded unfounded allegations and it is the duty allegations and it is the duty allegations and it is the duty of of of the Court to ensure that what is the Court to ensure that what is the Court to ensure that what is stated stated stated in the complaint is also stated by in the complaint is also stated by in the complaint is also stated by the the the complainant on oath complainant on oath complainant on oath and it is only then that based on such statement that process can be issued. The corollary of The corollary of The corollary of this this this would be that unless offences are would be that unless offences are would be that unless offences are disclosed disclosed disclosed from the statement on oath, no from the statement on oath, no from the statement on oath, no process process process can be issued only based on can be issued only based on can be issued only based on ((-18-)) averments averments averments in the complaint. The in the complaint. The in the complaint. The complainant complainant complainant is bound to make a statement is bound to make a statement is bound to make a statement on on on oath as to how the offence was oath as to how the offence was oath as to how the offence was committed committed committed and how the accused persons are and how the accused persons are and how the accused persons are responsible responsible responsible therefore. therefore. therefore. After the statement on oath is recorded, a Magistrate is required to apply his judicial mind to the facts of the case and the law applicable thereto and find out what offence/s is made out, notwithstanding that the other party at that stage is unrepresented. As observed As observed As observed by by by the Apex Court time and again, the Apex Court time and again, the Apex Court time and again, summoning summoning summoning of an accused in a criminal of an accused in a criminal of an accused in a criminal case case case is a serious matter and criminal law is a serious matter and criminal law is a serious matter and criminal law cannot cannot cannot be set into motion as a matter of be set into motion as a matter of be set into motion as a matter of course. course. course. A Magistrate is required to examine the nature of the allegations made in the complaint and the evidence both oral and documentary to see if it is sufficient for the complainant to succeed in bringing charge home to the accused. In In In other words, the examination of the other words, the examination of the other words, the examination of the complainant complainant complainant on oath is for the