Case: Aneeta Hada &amp; Another Vs. M/s Godfather Travels &amp; Tours Pvt.Ltd

responsible to, the company for the conduct of its business shall be proceeded against and punished for the said crime." 36. I may notice that in some of the decisions of this Court a liberal interpretation of notice had been advocated to suggest that a notice served upon a managing director of the company or a director of the company shall satisfy the requirements of law. [See Bilakchand Gyanchand Co. v. A. Chinnaswami JT 1999 (10) SC 236 and Rajneesh Aggarwal v. Amit J. Bhalla JT 2001 (1) SC 325 ]. 37. The said decisions proceeded on the premise that what is necessary is the knowledge of the accused that the cheque has been dishonoured so that the amount may be paid within a period of fifteen days from the date of such knowledge. 38. A learned Single Judge of the Kerala High Court in Pramod v. C.K. Velayudhan & Ors. [2006 (1) JCC (NI) 62] inter alia relying on a decision of this Court in Monaben Ketanbhai Shah v. State of Gujarat [(2004) 7 SCC 15 : 2004 Cri LJ 4249] opined: "...In other words, commission of offence under Section 138 of the Act by a juristic person is an inevitable legal pre-requisite or the condition precedent to proceed against a person referred to under Section 141 of the Act and to hold him guilty of the said offence." It was further opined: "19. Learned counsel for petitioner placed reliance upon the decision of the High Court of Andhra Pradesh in B.S.K. Prasad v. M/s. Laxmi Vessels, 2005 (1) LJ (NOC) 7 : (2004 Cri LJ 4079) (AP) in which it is held that "as per Section 138 of the Act the drawer of a dishonoured cheque only is liable for punishment". He also cited K. Seetharam Reddy v. K. Radhika Rani, (2002) 112 Comp Cas 204 (AP) in support of his arguments. It is held in the said decision that "Section 138 of the Negotiable Instruments Act, 1881, leaves no doubt that the person who has drawn the cheque on his account is alone liable in the event the cheque drawn by him is dishonoured". In the light of the above dictum also, I find that neither first accused- society nor petitioner, as secretary of the society can be proceeded against for offence under Section 138 of the Act. 20. But, despite all these, trial Court issued summons to petitioner. The mere description on the cause-title of the complaint appears to be the sole persuading factor which propelled learned Magistrate to summon petitioner. There was no other ground to proceed against the petitioner. Needless to say, a criminal Court will not get any jurisdiction to proceed against a person at the mere sight of the details on the docket-sheet or the cause title. No Court shall act upon the sole tag, label or the badge veiled on the cause-title. No Court shall be carried away by the prints and dots on the veil of cause-title. The Court is bound to unveil the complaint, feel the texure of its contents and test, the criminality. Criminality lies not on how a person is christened at the cause-title, but how he acts, as per the contents of the complaint." 39. In B.S.K. Prasad v. M/s. Laxmi Vessels & Anr. [2005 (1) JCC (NI) 86], a learned Single Judge of the Andhra Pradesh High Court has laid down the law in the following terms: "4. As per Section 138 of the Act the drawer of a dishonoured cheque only is liable for punishment. If the person that committed the offence under Section 138 of the Act is a company the Directors and the per-son-in-charge of the affairs of the company, who look after the day to day affairs of that company, apart from the company, would also be liable for the said offence, by virtue of Section 141 of the Act. As stated earlier there is no scope for invoking Section 141 of the Act because the dishonoured cheque was not issued for and on behalf of a company. Since petitioner, admittedly, did not draw the dishonoured cheque on an account maintained by him in a bank, and since there is no scope for invoking Section 141 of the Act to rope in the petitioner as Managing Director of a company of which A-1 is the Director, merely because A-1 is said to have given the dishonoured cheque in partial or full settlement of a debt due to 1st respondent from a company of which petitioner is the Managing Director, petitioner cannot be made liable for an offence under Section 138 of the Act. The fact that 1st respondent has a right to sue petitioner also for recovery of the debt due to him is not and cannot be a ground for making the petitioner liable for an offence under Section 138 of the Act, when the dishonoured cheque was not drawn for and on behalf of that company, on an account maintained by it in a bank. Therefore the fact that A1 who drew the dishonoured cheque happens to be a Director in the company of which petitioner is the Managing Director, for the debt allegedly due to 1st respondent from the said company, is of no consequence." 40. In Girish Saxena v. Praveen Kumar Jain & Ors. [2007 (2) JCC (NI) 220], a learned Single Judge of the Delhi High Court opined: "...It is settled law that only drawer of the cheque can be prosecuted under Section 138 of the Negotiable Instruments Act on the cheque getting dishonoured. Since the petitioner was neither the drawer of the cheque nor it is alleged that he was partner or proprietor of firm when cheque got dishonoured or he was the person responsible for non payment of cheque amount, no offence under Section 138 of Negotiable Instruments Act can be made out against the petitioner." 41. I agree with the aforementioned decisions of the High Courts as having laid down the correct law.

Decision (1 = appeal accepted, 0 = rejected): 1

Explanation:
1[ds]10. In the present case it is yet to be decided as to whether the liability was that of the company or the appellant herself. It could be personal liability of the appellant herself for discharging her debt for which she might have misused theof the company. Even under such circumstances the offence against her could be complete is not known at this stage since no evidence has been led in this regard. Therefore, the inference that the liability was that of the company and she was merely vicariously liable would, therefore, be a premature finding. On the other hand even if she has misused theto discharge her own liability, taking advantage of her authorization to put the signatures on theof M/s.Intel Travels, she still would be liable to be proceeded against and it would be a question between herself and the company whether she has committed any offencethe company also. At this stage, however, it is not possible to say anything without any evidence having been led.No comment is required on the reported decision in B.S.K. Prasads case (cited supra) since the decision in that case turns on the evidence led in that case. That opportunity has still not been given to the prosecution in this case and it is not known uptil now as to whether the cheque issued by the accused was issued on behalf of the company or to pay off her own debts. Again the judgment does not say anywhere that the signatory to the cheque cannot alone be prosecuted.22. Appellants reliance on the last case in Girish Saxena v. Praveen Kumar JainOrs. [(2007) 2 JCC (NI) 220] is also unnecessary since in that case the accused was not a signatory to the cheque. The decision in that case would not be applicable to the present case.With the greatest of respect to the learned judges, it is difficult to agree therewith. The findings, if taken to its logical corollary lead us to an anomalous position. The trial court, in a given case although the company is not an accused, would have to arrive at a finding that it is guilty. Company, although a juristic person, is a separate entity. Directors may come and go. The company remains. It has its own reputation and standing in the market which is required to be maintained. Nobody, without any authority of law, can sentence it or find it guilty of commission of offence. Before recording a finding that it is guilty of commission of a serious offence, it may be heard. The Director who was in charge of the company at one point of time may have no interest in the company. He may not even defend the company. He need not even continue to be its Director. He may have his own score to settle in view of change in management of the company. In a situation of that nature, the company would for all intent and purport would stand convicted, although, it was not an accused and, thus, had no opportunity to defend itself.29. Any person accused of commission of an offence, whether natural or juristic, has some rights. If it is to be found guilty of commission of an offence on the basis whereof its Directors are held liable, the procedures laid down in the Code of Criminal Procedure must be followed. In determining such an issue all relevant aspects of the matter must be kept in mind. The ground realities cannot be lost sight of. Accused persons are being convicted for commission of an offence under Section 138 of the Act inter alia on drawing statutory presumptions. Various provisions contained therein lean in favour of a drawer of the cheque or the holder thereof and against the accused. Sections 20, 118(c), 139 and 140 of the Act are some such provisions. The Act is a penal statute. Unlike offences under the general law it provides for reverse burden. The onus of proof shifts to the accused if some foundational facts are established.It is, therefore, in interpreting a statute of this nature difficult to conceive that it would be legally permissible to hold a company, the prime offender, liable for commission of an offence although it does not get an opportunity to defend itself. It is against all principles of fairness and justice. It is opposed to the Rule of Law. No statute in view of our Constitutional Scheme can be construed in such a manner so as to refuse an opportunity of being heard to a person. It would not only offend a commonsense, it may be held to be unconstitutional. Such a construction, therefore, in my opinion should be avoided. In any event in a case of this nature, the construction which may be available in invoking Essential Commodities Act, Prevention of Food Adulteration Act, which affects the Society at large may not have any application when only a private individual is involved.It is one thing to say that the complaint petition proceeded against the accused persons on the premise that the company had not committed the offence but the accused did, but it is another thing to say that although the company was the principal offender, it need not be made an accused at all. I have no doubt whatsoever in our mind that prosecution of the company is a sine qua non for prosecution of the other persons who fall within the second and third categories of the candidates, viz., everyone who wasincharge and was responsible for thebusiness of the company and any other person who was a director or managing director or secretary or officer of the company with whose connivance or due to whose neglect the company had committed theall the decisions of this Court in no uncertain terms sayscompany at the first instance should be proved to be offender and, thus, only question of proof that the Director is also liable being in charge of its affairs.34. True interpretation, in my opinion, of the said provision would be that a company has to be made an accused but applying the principle "lex non cogit ad impossibilia", i.e., if for some legal snag, the company cannot be proceeded against without obtaining sanction of a court of law or other authority, the trial as against the other accused may be proceeded against if the ingredients of Sections 138 as also 141 are otherwise fulfilled. In such an event, it would not be a case where the company had not been made an accused but would be one where the company cannot be proceeded against due to existence of a legal bar. A distinction must be borne in mind between cases where a company had not been made an accused and the one where despite making it an accused, it cannot be proceeded against because of a legal bar.I agree with the aforementioned decisions of the High Courts as having laid down the correct law.