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

2. Appellant is said to be an authorised signatory of M/s. Intel Travels Ltd (Company). The said Company as also the respondent company had business transactions. Appellant on behalf of the company issued a cheque dated 17.1.2001 for a sum of Rs.5,10,000/in favour of respondent which was dishonoured. Respondent filed a complaint petition against the appellant under Section 138 of the Negotiable Instruments Act, 1881 (the Act for short). The Company which is a juristic person was not arrayed as an accused.The learned Magistrate took cognizance of the offence against her. Respondent had not even served any notice upon the Company in terms of Section 138 of the Act. It served a notice only on the appellant presumably on the premise that she was in charge and responsible to the company for its day to day affairs.3. The High Court by reason of the impugned judgment refused to quash the proceedings, as prayed for by the appellant, holding:"This section does not say that the cheques should have been drawn for the discharge of any debt or other liability of the drawer towards the payee. Even the Section 139 of the Negotiable Instruments Act, by which a legal presumption is created, the Parliament has only fixed the presumption that the cheque was issued for the dishcarge, in whole or in part, or any debt or other liability. This would mean that the debt or other liability includes the due from any other person. It is not necessary that the debt or liability should be due from the drawer himself. It can be issued for the discharges of any other mans debt liability. Legally enforceable debt or liability would have a reference to the nature of the debt or liability and not the person against whom the debt or liability can be enforced. One has to go by the averments in the complaint. The complainant has averred that it is the petitioner who had purchased the tickets from the complainant and the cheque in question was given by them in discharge of their liability. The demand notice dated 8.5.2001 is also sent to the two petitioners and not to the company. What the petitioners state here may be their defence."4. A company being a body corporate is capable of suing and being sued in its own name. Section 7 of the Act defines "drawer" to mean the maker of a bill of exchange or a cheque. The authorised signatory of a company does not become the drawer of the cheque only because he has been authorised to do so for the purpose of banking operations. Admittedly, the bank account was also in the name of the company. The account was, therefore, maintained by the Company.

Reasoning:
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.