D.Mallika v. Panneer Selvam

IN THE HIGH COURT OF JUDICATURE AT MADRASDATED:20.03.2008C O R A MTHE HONOURABLE MR.JUSTICE P.R.SHIVAKUMAR Crl.O.P.No.27835 of 2006 and M.P.No.1 of 2006D.Mallika .. Petitioner/3rd Accused.Vs.Panneer Selvam .. Respondent/Complainant.This Criminal Original Petition is filed under Section 482 ofthe Ciminal Procedure Code to call for the records relating to thecomplaint made in STC.No.899 of 2006 on the file of the JudicialMagistrate Court No.1, Attur and quash the same.For Appellants : Mr.T.SivagnanamFor Respondents : Mr.T.MurugamanickamO R D E RThe 3rd accused in STC.No.899 of 2006 on the file of thelearned Judicial Magistrate No.1, Attur is the petitioner herein.This Criminal Original Petition has been filed for quashing thecriminal proceedings initiated against the petitioner herein andtwo other persons based on the private complaint of the respondentherein for alleged commission of an offence punishable underSection 138 read with Section 142 of the Negotiable InstrumentsAct. According to the complaint, M/s.Palanimurugan Sago Factory,arrayed as the first accused in the complaint is a partnership firmof which the second accused/Dhanasekaran and Mallika, the thirdaccused/petitioner herein are partners. Contending that the abovesaid firm, through its partners, borrowed a sum of Rs.7,50,000/-from the respondent/complainant on 15.01.2006 for its business andto discharge its pressing debts; that on the same day,Dhanasekaran/second accused, as a partner of the first accused firm,with the consent and knowledge of the third accused/petitionerherein issued three post-dated cheques, each for a sum ofRs.2,50,000/- drawn in favour of the respondent/complainant puttingthe date in all the three cheques as 25.05.2006; that the saidcheques drawn on the account of the first accused firm maintainedwith the Lakshmi Vilas Bank Limited, Attur bearing chequeNos.0081245, 0081246 and 0081247 when presented for collectionthrough ICICI Bank, Attur branch on 21.06.2006 were returned unpaidciting the reason "exceeds arrangement"; that on receipt of thebanker's memo dated 01.07.2006, a statutory notice was issued to https://hcservices.ecourts.gov.in/hcservices/ all the three accused demanding payment of the amount covered bythe returned cheques; that even after the receipt of the notice,the accused persons, including the petitioner herein, did not makepayment till the expiry of the date allowed by the Statute and thaton the other hand, the accused came up with a reply noticecontining false and untenable averments.2. The learned Judicial Magistrate No.1, Attur, afterfollowing necessary procedure and after recording the swornstatement of the respondent/complainant, took the complaint on fileas STC.No.899/2006. After service of process on the petitionerherein, she has approached this court by way of the presentpetition stating that in case of an offence of dishonour of cheque,punishable under Section 138 of the Negotiable Instruments Actcommitted by a company (partnership firm in this case), unlessnecessary averments to bring the case of a particular director orpartner as the case may be, within the ambit of Section 141(1) ofthe Negotiable Instruments Act, prosecution of such director orpartner cannot be sustained. 3. This court heard the submissions made on both sides andperused the materials available on record.4. The learned counsel for the petitioner in his arguments,reiterating the contentions made by the petitioner in the petitionhas submitted that the averments necessary for bringing the caseagainst the petitioner, a partner in the first respondent firm,within the ambit of Section 141(1) of the Negotiable InstrumentsAct, have not been made in the complaint and hence the complaintshould be quashed so far as the present petitioner is concerned. Insupport of his contention the learned counsel for the petitionerhas relied on the judgement of the Hon'ble Supreme Court inS.M.S.Pharmaceuticals Limited Vs.Neeta Bhalla reported in 2005(5)CTC 65. In the said case the Hon'ble Supreme Court held that forlaunching prosecution against the director of a company or partnerof a firm, necessary averments to the effect that such director orpartner was in charge of the affairs of the company/firm and wasresponsible for the business/day to day affairs of the company/firmas on the date on which the cause of action arose should have beenmade and that in the absence of such averments, the complaint couldbe quashed.5. Per contra, the learned counsel for the Respondentcontended that even applying the said view expressed by the ApexCourt in S.M.S.Pharmaceuticals Limited Vs.Neeta Bhalla reported in2005(5) CTC 65, the case against the petitioner herein/third accusedcould not be quashed, as more than sufficient averments had beenmade in the complaint. In order to show the nature of averment tobe held sufficient to bring the case of a director or partnerwithin the ambit of Section 141(1) of the Negotiable InstrumentsAct, the learned counsel for the Respondent has relied on thejudgment of the Hon'ble Supreme Court in N.Rangachari Vs. BharatSanchar Nigam Limited reported in 2007(3) CTC 495. The followingare the observations made therin: https://hcservices.ecourts.gov.in/hcservices/ "In the case on hand, reading the complaint as awhole, it is clear that the allegations in thecomplaint are that at the time at which the twodishonoured cheques were issued by the company, theappellant and another were the Directors of thecompany and were in-charge of the affairs of thecompany. It is not proper to split hairs in readingthe complaint so as to come to a conclusion that theallegations as a whole are not sufficient to showthat at the relevant point of time the appellant andthe other are not alleged to be persons in-charge ofthe affairs of the company. Obviously, the complaintrefers to the point of time when the two cheques wereissued, their presentment, dishonour and failure topay in spite of notice of dishonour. We have nohesitation in overruling the argument in that behalfby the learned Senior counsel for the appellant.We think that, in the circumstances, the HighCourt has rightly come tot he conclusion that it isnot a fit case for exercise of jurisdiction underSection 482 of the Code of Criminal Procedure forquashing the complaint. In fact, an advertence toSections 138 and 141 of the Negotiable InstrumentsAct shows that on the other elements of an offenceunder Section 138 being satisfied, the burden is onthe Board of Directors or the Officers in-charge ofthe affairs of the company to show that they are notliable to be convicted. Any restriction on theirpower or existence of any special circumstance thatmakes them not liable is something that is peculiarlywithin their knowledge and it is for them toestablish at the trial such a restriction or to showthat at the relevant time they were not incharge ofthe affairs of the company. Reading the complaint asa whole, we are satisfied that it is a case where thecontentions sought to be raised by the appellant canonly be dealt with after the conclusion of the trial.6. In Rangachari's case relied on by the learned counsel forthe Respondent, the allegations found in the complaint which wereheld sufficient for launching the prosecution are reproduced hereunder:"accused no.1 is a company incorporated under thecompanies act. Accused no.2 and 3 are its directors.They are in charge and responsible to accused no.1 forconduct of business of accused no.1 company. They arejointly and severally liable for the acts of theaccused no.1. https://hcservices.ecourts.gov.in/hcservices/ The said allegation itself was held to be enough formaintaining a prosecution for an offence punishableunder Section 138 read with Section 141(1) of theNegotiable Instruments Act. 7. In the case on hand the relevant portion of the complaintcontaining necessary allegations is extracted here under:-"The accused numbers 2 and 3 are the partners of thefirst accused. The accused 2 and 3 are theresponsible and in charge of the business and day-today affairs of the first accused. The firstaccused through its partners viz. Accused 2 and 3 ofyou have borrowed 7,50,000/- from the complainant on15.01.2006 for sago business and to discharge theirpressing debts. On the same day towards thedischarge of the amount due to the complainant fromthe first accused as said supra, the second accusedas partner of first accused with the knowledge andconsent of the third accused being the partners ofthe first accused, have issued three post datedcheques drawn in favour of the complainant, each fora sum of Rs.2,50,000/- for a total sum ofRs.7,50,000/- (seven lakhs and fifty thousand only)dating all the cheques to 25.05.2006."8. A comparison of the allegations made in the complaint inRangachari's case and the allegations made in the complaint in thecase on hand will make it abundantly clear that the averments madein the present complaint are more than the averments made in thecase before the Apex Court in Rangachari's case. Hence the samecannot be held insufficient to maintain the prosecution of thepetitioner herein for the offence committed by the partnership firmof which she is a partner.9. However, the learned counsel for the petitioner relying onthe judgment of a learned single judge (Justice K.B.Basha) inCapt.D.Karunakar, Director, Manito Electronics Pvt. Ltd.,Anchorage, East Hill, Calicut- 673 005 and others Vs. Tamil NaduNews Print & Papers Ltd. Rep. By Sr.Officer (Marketing) S.Anbusamyhaving its office at Mount Road, Guindy, Chennai -32 reported in(2008) 1 MLJ (Crl) 391, argued that the mere statement that accusedas a director/partner was taking part in the management, businessand day-to-day affairs of the company/firm would not be enough tobring the case against him within Section 141 of the NegotiableInstruments Act. Of course, the learned single Judge of this Courtquashed the prosecution launched against the directors of thecompany in the said case with the following observation:-"14. In the instant case also, as already pointed out,there is absolutely no specific, clear and unambiguousallegations as to how and in what manner thepetitioners were responsible for the conduct of thebusiness and there is absolutely no specific role https://hcservices.ecourts.gov.in/hcservices/ assigned to the petitioners in respect of the conductof the business of the first accused company."The above said judgment of this Court was pronounced on12.04.2007. Naturally the judgment of the Hon'ble Supreme Court inRangachari's case could not have been brought to the notice of thiscourt, as the said judgment in Rangachari's case was pronouncedsubsequently, namely on 19.04.2007. Hence it goes without sayingthat the judgment of the Hon'ble Supreme Court pronounced inRangachari's case shall have the effect of overruling the viewexpressed by this Court in (2008) 1 MLJ (Crl) 391. Therefore wehave to apply the view expressed by the Hon'ble Supreme Court inRangachari's case.10. A reading of the said complaint will show that necessaryaverments to the effect that the petitioner herein/third accusedwas not only a partner of the firm but also was responsible and in-charge of the business and day-to-day affairs of the first accusedfirm have been made. It has also been clearly averred that thepetitiner, along with the second accused, as partner of the firstaccused firm borrowed the amount. The further averment in thecomplaint is to the effect that the cheques were issued by thesecond accused as a partner of the first accused firm to theknowledge and with the consent of the petitioner herein/thirdaccused. Such averments in the opinion of this court aresufficient to sustain a prosecution of the petitioner herein/thirdaccused for the offence of dishonour of cheque committed by thefirst accused partnership firm as its partner. It is for thepetitioner/third accused to establish in the trial that she was noway connected with the day-to-day affairs of the partnership firmas on the date on which the cause of action arose. 11. All the grounds raised in the present petition are validgrounds to be raised and proved in the trial of the case. They arenot sufficient to foreclose the complaint at the inception itself.Hence this court comes to the conclusion that the petitioner hasnot made out a case for quashing of the complaint against her andthat there is no merit in the petition and the same deserves to bedismissed. However, this court makes it clear that the dismissalof the present petition will not be construed as an expression ofany opinion regarding the correctness of the allegations made inthe petition. The consideration of this court is confined to thesufficiency of the averments made in the petition for quashing thecomplaint. Therefore, there shall not be any bar for raising allthese grounds before the Trial Court and in the case such groundsof defence are raised, the Trial Court shall consider them on theirown merit without being influenced by the dismissal of the presentCriminal Original Petition. https://hcservices.ecourts.gov.in/hcservices/

12. In the result, subject to the above said observation, theCriminal Original Petition is dismissed. There shall be no order asto costs. Consequently the connected miscellaneous petition isclosed.Sd/-Asst. Registrar./true copy/Sub Asst. Registrar.asrTo1. The Judicial Magistrate Court No.1, Attur2. -do- through the Chief Judicial Magistrate, Salem.Crl.O.P.No.27835 of 2006andM.P.No.1 of 2006vsv[co]gp/4.4.