Orissa High Court
Case Details
Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 13-Mar-2025 17:54:08 IN THE HIGH COURT OF ORISSA AT CUTTACK CRLREV No.542 of 2014 (From the order dated 05.05.2014 passed by the learned J.M.F.C., Balasore in I.C.C. No.114 of 2011) Gourav Kumar Hota …. Petitioner(s) -versus- Ajay Kumar Barik …. Opposite Party (s) Advocates appeared in the case through Hybrid Mode: For Petitioner(s) : Mr. M. K. Mishra, Sr. Adv. Along with Mr. B. K. Mishra, Adv. For Opposite Party (s) : Mr. Debasish Samal, Adv. CORAM: DR. JUSTICE S.K. PANIGRAHI DATE OF HEARING:-24.02.2025 DATE OF JUDGMENT:-13.03.2025 Dr.S.K. Panigrahi, J. 1. The Petitioner has preferred the present revision petition assailing the order dated 05.05.2014 passed by the learned J.M.F.C., Balasore in I.C.C. No.114 of 2011, contending that the proceedings are vitiated in law for want of compliance with the mandatory requirements of Section 141 of the Negotiable Instruments Act. I. FACTS AS PRESENTED BY THE REVISIONIST: 2. The prosecution’s case can be summarized as follows: Page 1 of 11
Legal Reasoning
Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 13-Mar-2025 17:54:08 (i). Complainant/Opposite Party is the Sole proprietor of M/s. Maa Gayatri Transport & Supplier, a business engaged in supplying building materials such as chips, metal, boulders, sand, and stone products in Balasore, Odisha. (ii). Petitioner/Accused is the Executive Director of CCC Builders Merchant Pvt. Ltd., Gurgaon, Haryana, a company engaged in construction work. The dispute arises from a business transaction involving the supply of building materials for the construction of a concrete road for S.E. Railways at Balasore under the direct supervision of the petitioner. (iii). The complainant supplied metal and sand on credit to the petitioner’s company between October and November 2010. The total outstanding dues against the petitioner/company were as follows: a. Materials supplied between 11.10.2010 and 01.11.2010: ₹6,58,300/-. b. . Previous outstanding balance before October 2010: ₹6,34,045/-. c. Total outstanding amount: ₹12,92,345/-. (iv). A partial payment of ₹5,00,000/- was made through a bank transfer from the company’s account to the complainant’s account. The remaining balance of ₹7,92,345/- was due. (v). To settle part of the outstanding dues, the petitioner (accused) issued a cheque (No. 255951) dated 19.12.2010 for ₹4,00,000/- from Axis Bank Ltd. at Balasore. The complainant deposited the cheque Page 2 of 11 Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 13-Mar-2025 17:54:08 on 20.12.2010, but it was dishonored on 29.12.2010 due to “Payment Stopped by Drawer.” (vi). The complainant was formally notified of the dishonor on 01.01.2011 and received confirmation on 03.01.2011. Multiple attempts were made to contact the accused but they failed. (vii). A demand notice under Section 138 of the Negotiable Instruments Act (NI Act) was issued on 27.01.2011 through registered post with acknowledgment due (A.D.). The accused received the notice on 04.02.2011 but failed to respond or make payment within the statutory period. (viii). Consequently, the complainant filed ICC Case No. 114 of 2011 before the learned SDJM, Balasore, alleging an offense under Section 138 of the NI Act (dishonor of cheque). The complaint was supported by six exhibits, including the dishonored cheque (No. 255951), the deposit slip, the cheque return memo dated 15.11.2010, the statutory advocate notice dated 27.01.2011, the postal receipts, and the returned acknowledgment due (A.D.) slip. II. THE FINDINGS OF THE LOWER COURT: 3. 4. Cognizance was taken by the learned SDJM, Balasore, on 15.03.2011, and the case was later transferred to the learned JMFC, Balasore, for trial. On 23.09.2011, the substance of the accusation was explained to the accused, and the trial commenced. The complainant was examined as PW-1 and was cross-examined at length. At no point during the early stages of the trial did the petitioner Page 3 of 11 Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 13-Mar-2025 17:54:08 raise any objections about the non-inclusion of the company as an accused. 5. 6. On 2.07.2013, at an advanced stage of the trial, the petitioner filed a petition before the trial court arguing that the case was not maintainable because the company was not arraigned as an accused, as required under Section 141 of the NI Act. The JMFC Court rejected the petition on 05.05.2014, stating that the case had already substantially progressed, and raising such objections at this stage would amount to a delay tactic. III. SUBMISSIONS OF THE REVISIONIST: 7. The counsel for the revisionist urged the following submissions: (i). Section 141 of the NI Act mandates that when an offense is committed by a company, the company itself must be arraigned as an accused. The petitioner argues that since the cheque was issued on behalf of CCC Builders Merchant Pvt. Ltd., and the company was not made an accused, the complaint is not legally maintainable. The company was the actual debtor, and without its prosecution, vicarious liability cannot be imposed on its officers. (ii). Section 141(1) of the NI Act provides that if an offense under Section 138 is committed by a company, then both the company and its responsible officers must be prosecuted. The petitioner, as an Executive Director, merely signed the cheque in his official capacity and had no personal liability. Since the company is not an accused, the petitioner cannot be prosecuted independently. Page 4 of 11 Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 13-Mar-2025 17:54:08 (iii). The cheque was drawn on the company’s account and issued for payments related to the company’s transactions, not for any personal liability of the petitioner. As such, the prosecution of the petitioner without including the company is unsustainable. (iv). The trial court misconstrued the petitioner’s application as a motion to quash cognizance, rather than a plea of maintainability. The court lacked jurisdiction to reject the petition on the ground of lack of jurisdiction. The trial court’s reasoning was legally flawed and warrants interference by the revisional court. (v). The petitioner contends that the complaint and proceedings are legally defective, and allowing them to continue would constitute an abuse of process. The failure of the complainant to implead the company shows mala fide intent, rendering the proceedings unfair. IV. SUBMISSIONS OF THE OPPOSITE PARTY: 8. The counsel for the Opposite Party urged the following submissions: (i). The petitioner personally signed the cheque and was responsible for the company’s financial transactions. Since the petitioner single- handedly handled business dealings, including issuing cheques, he cannot now claim that he was not personally liable. (ii). The petitioner failed to raise the issue at the beginning of the trial and only did so after substantial progress had been made. Courts should not entertain objections that are clearly intended to delay proceedings. Page 5 of 11 Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 13-Mar-2025 17:54:08 (iii). The cheque issued by the accused was dishonored with the reason “Payment Stopped by Drawer”. The accused received the statutory notice but remained silent, which fulfils the legal requirements of Section 138 of the NI Act. (iv). Reliance is placed on S.P. Mani and Mohan Dairy v. Dr. Snehalatha Elangovan1, which held that failure to respond to a statutory notice makes the accused liable under Section 138 NI Act. Furthermore, the case of Siby Thomas v. Somany Ceramics Ltd.2 establishes that the liability under Section 141 of the NI Act extends to individuals in charge of company affairs, and raising factual disputes at a belated stage is impermissible. COURT’S ANALYSIS AND REASONS: I have given my anxious consideration to the submissions of the counsel V. 9. appearing for both the parties. 10. The central issue in this case is whether proceedings under Section 138 of the Negotiable Instruments Act, 1881 (NI Act) can be maintained against the petitioner, the Executive Director of the company, when the company itself has not been arraigned as an accused. The dishonored cheque in question was drawn on the company’s account, yet the prosecution has proceeded solely against the petitioner in his individual capacity. This raises a fundamental question of law whether, in the absence of the company, which is the principal drawer of the cheque, the petitioner can be held vicariously liable under Section 141 of the Act.