N.Gopalan v. K.Udhayakumar

IN THE HIGH COURT OF JUDICATURE AT MADRASDATED: 29.06.2009CORAMTHE HONOURABLE MR. JUSTICE P.R.SHIVAKUMARCrl.O.P.No.446 of 2009N.GopalanS/o.NatarajanAuthorised SignatoryDarshini Fabrics58, Ramasamy Gounder LaneErode-1, Erode District .. Petitioner-Vs-K.Udhayakumar .. RespondentPetition filed under section 482 Cr.P.C., to call for therecords in C.C.No.493/2008 on the file of the Judicial Magistrate-II, Erode and to quash the same. For Petitioner : Mr.N.ManokaranFor Respondent : Mr.C.S.SaravananO R D E RThe second accused in C.C.No.493/2008 on the file of thelearned Judicial Magistrate-II, Erode has come forward with thepresent petition under Section 482 Cr.P.C for quashing the saidcriminal proceedings so far as the petitioner is concerned.2. The above said case, namely C.C.No.493/2008 wasinstituted on the file of the Judicial Magistrate-II, Erode againstthe wife of the petitioner herein (A1) and the petitioner herein(A2) for an alleged offence punishable under Section 138 r/wSection 142 of the Negotiable Instruments Act, 1881. Therespondent herein preferred a private complaint on the file of thelearned Judicial Magistrate-II, Erode against the wife of thepetitioner herein and the petitioner herein arraying them as A1 andA2 respectively. It has been alleged in the complaint that thepetitioner herein, being the authorised signatory of his wife, whois running a proprietary concern in the name and style of'M/s.Darshini Fabrics', issued a cheque dated 21.06.2007 bearingNo.439765 drawn on the account of the above said proprietaryconcern maintained with ING VYSYA bank for a sum of Rs.25,000/- infavour of the respondent herein for the discharge of adebt/liability. The further averment made in the complaint is thatthe cheque, when presented for collection, was returned with a https://hcservices.ecourts.gov.in/hcservices/ dishonour note "funds insufficient"; that the petitioner and hiswife, even after receiving the statutory notice, failed to makepayment of the amount covered by the cheque as demanded in thenotice and thereby committed the offence punishable under Section138 of the Negotiable Instruments Act, 1881.3. The learned Judicial Magistrate-II, Erode took thecomplaint on file and registered it as C.C.No.493 of 2008 followingthe procedure prescribed for taking cognizance of the case onprivate complaint. The trial court has also issued process to thepetitioner herein and his wife. No defect has been pointed out bythe petitioner regarding the procedure adopted by the trial courtin taking cognizance of the case. On the other hand, the decisionmade by the trial court to issue process to the petitioner (A2) isattacked based on the contention that the learned JudicialMagistrate did not apply his mind to the facts of the case properlyand that no prosecution can be sustained against a person, whosimply signed and issued a cheque on behalf of another as a mandateholder/authorised signatory. It has also been contended in thepetition that the complaint was preferred after the statutoryperiod was over. Thus the criminal proceedings initiated againstthe petitioner herein is sought to be quashed on the following twogrounds:-a) The complaint was preferred after statutoryperiod prescribed in Section 138 of the NegotiableInstruments Act, 1881 was over.b) The mandate holder authorised to sign thecheque on behalf of another, cannot be prosecuted for thesimple reason that he signed the cheque on behalf ofother person.4. The arguments advanced by Mr.N.Manokaran, learnedcounsel for the petitioner and by Mr.C.S.Saravanan, learned counselfor the respondent were heard. The documents were also perused.5. Though the petitioner has taken a stand that thecomplaint has been lodged beyond the period of limitation as aground for quashing the complaint, the learned counsel for thepetitioner was fair enough to draw the attention of the court tothe proviso to Section 142(b) which enables the court to takecognizance of the complaint even after the prescribed period, ifthe complainant satisfies the court that he had sufficient causefor not making a complaint within the prescribed period andsubmitted that he would confine his arguments with regard to thesecond contention alone.6. Admittedly, the cheque in question was not drawn on anaccount maintained by the petitioner herein in a bank. On theother hand, the cheque in question was drawn on an accountmaintained by the wife of the petitioner, who is running a https://hcservices.ecourts.gov.in/hcservices/ proprietary concern in the name and style of 'M/s.DarshiniFabrics'. The wife of the petitioner has been arrayed as accusedNo.1 in the above said criminal case. There is no whisper on thepart of the petitioner to the effect that the launching ofprosecution against his wife is incompetent. On the other hand, thepetitioner has contended that he cannot be prosecuted for thedishonour of the cheque issued by him as an authorised signatory onbehalf of his wife. On the other hand, an attempt was made to showthat the petitioner having signed and issued the cheque on behalfof the proprietary concern of which his wife is the proprietrix canbe prosecuted for an offence punishable under Section 138 of theNegotiable Instruments Act, 1881 r/w Section 142 of the said Act,as he can be construed to be a person responsible for the conductof the business of the said proprietary concern.7. Section 141 of the Negotiable Instruments Act, 1881deals with offences committed by the companies. It also says thatwhen an offence under Section 138 of the Negotiable InstrumentsAct, 1881 is committed by a company, every person in charge of andwas responsible to the company for the conduct of the business atthe time of commission of the said offence as well as the companyshall be deemed to be guilty of the offence. However, in theexplanation, the term "company" is defined to be any body corporateincluding a firm or other association of individuals. Explanation(b) says a "director", in relation to a firm, means a partner ofthe firm.8. A careful reading of Section 141 and the explanationswill show that a proprietary concern shall not be covered by thedefinition of company. This aspect was dealt with by the Hon'bleSupreme Court in Raghu Lakshminarayanan vs. Fine Tubes reported in(2007)5 Supreme Court Cases 103 and the Hon'ble Supreme Court haschosen to express the very same view. Therefore, it is quite clearthat the petitioner cannot be prosecuted as a person responsiblefor the conduct of the business of the proprietary concern run byhis wife. 9. However, an attempt was made on the part of therespondent to show that the petitioner himself had borrowed theamount and issued the cheque and hence he shall be liable forprosecution and punishment for the offence under Section 138 of theNegotiable Instruments Act. If at all the petitioner herein issought to be prosecuted as the prime offender having issued thecheque for the amount borrowed by him, this court does notunderstand the rational in prosecuting his wife (A1) along with thepetitioner herein for the very same act. Even assuming that thepetitioner owed some amount or liability towards the respondent andin discharge of the debt/liability he issued the cheque, the samewill not be enough to sustain a prosecution against the petitioneras the drawer alone can be prosecuted for an offence under Section138 of the Negotiable Instruments Act. This has been held so intwo previous cases by this court in R.Ravi Chadran v. C.Subramanian https://hcservices.ecourts.gov.in/hcservices/ alias C.S.Maniam Mandate Holder of M/s.Southern Biologicals,Coimbatore reported in (2006)1 M.L.J.(Crl.) 68 and in Surendra MalMehta and Another vs. M/s.Gillette India Limited, represented byits Power of Attorney Agent, Vijay Malhotra reported in 2006 (2)TLT 178. Almost in similar circumstances, the authorisedsignatory/mandate holder, who issued the cheques were sought to beprosecuted in those cases and this court held that such prosecutioncould not be maintained and quashed the proceedings against suchmandate holders/authorised signatories. 10. To prosecute a person for an offence under Section 138of the Negotiable Instruments Act, the cheque should have beenissued by him on an account maintained by him with a banker. Theopening words of Section 138 of the Negotiable Instruments Actreads as follows:-"Where any cheque drawn by a person on an accountmaintained by him with a banker......."Only he who issued the cheque drawn on an account maintained bythem can be prosecuted for an offence under Section 138 of theNegotiable Instruments Act. In this case, admittedly the chequewas not drawn on an account maintained by the petitioner herein andthe same was drawn on an account maintained by the wife of thepetitioner in the name of the proprietary concern run by her. Thejudgments of the Apex court and this court cited above squarelyapply to the facts of the case on hand.11. For all the reasons stated above, this court comes tothe conclusion that the prosecution of the petitioner for anoffence under Section 138 of the Negotiable Instruments Act, 1881cannot be maintained and the criminal proceedings initiated inC.C.No.493/2008 on the file of the learned Judicial Magistrate-II,Erode against him has got to be quashed. It is made clear that thesaid criminal proceedings shall be quashed only so far as thepetitioner is concerned.12. In the result, this petition is allowed and thecriminal proceedings initiated in C.C.No.493/2008 on the file ofthe learned Judicial Magistrate-II, Erode is quashed as far as thepetitioner is concerned.Sd/Asst.Registrar/true copy/Sub Asst.Registrarasr https://hcservices.ecourts.gov.in/hcservices/ To1.Judicial Magistrate-II, Erode.2.-DO- Through, The Chief Judicial Magistrate, Erode.1 cc To Mr.C.S.Saravanan, Advocate, SR.270021 cc To Mr.N.Manokaran, Advocate, SR.27057 Crl.OP.No.446 of 2009ts(co)pmk.20.7.2009.