TMI Blog1999 (11) TMI 808X X X X Extracts X X X X X X X X Extracts X X X X ..... ommitted the offence under section 138 of the Negotiable Instruments Act, 1881 ( the Act ) eludes from being prose-cuted thereof, can the Directors of that company be prosecuted for that offence? This is the nub of the issue mooted before us by one of the Directors of the company. He approached the High Court of Punjab and Haryana with the contention that prosecution in such a situation is not maintainable as against the directors. But a single judge of the High Court spurned down the contention by the judgment which is now being challenged in this appeal. 3. Rama Fibres Ltd. is a public limited company of which the present appellant is one of the directors. Five complaints were filed by another company ( the complainant ) before a Judicial Magistrate of First Class Chandigarh against Rama Fibres Ltd. ( the accused company ) and 11 other persons who are shown as directors of the accused company. The complaints contained the allegations that cheques were issued on behalf of the accused company for the debts due to the complainant and such cheques were dishonoured by the drawee bank on the ground of insufficiency of funds in the account; and notices were issued to the accused com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this Court in State of Madras v. C.V. Parekh 1970 (3) SCC 491. A brief written submission prepared by the counsel has been presented to us. 7. Shri Nidesh Gupta, the learned counsel for the complainant company referred us to certain provisions of the Companies Act, 1956 and contended that a company would not cease to exist merely because an order of winding up has been passed and the company would still continue to function until it reaches final dissolution. He canvassed for the position that learned magistrate had gone wrong in holding that leave of the liquidation Court is necessary to continue prosecution against the prosecuting company. However, we do not consider it necessary to go into that question as it is not open to the complainant to canvass before us since it has not challenged the said order of the magistrate. Shri Nidesh Gupta further contended that there is no legal requirement that the company should necessarily have been made an accused in the prosecution case in order to sustain a conviction of the offending directors. According to the learned counsel where an offence is committed by a company, either the company alone or the person in charge of the bus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... edure established by law. But there are offences which could be attributed to juristic persons also. If the drawer of a cheque happens to be a juristic person like a body corporate it can be prosecuted for the offence under section 138. Now there is no scope for doubt regarding that aspect in view of the clear language employed in section 141. In the expanded ambit of the word company even firms or any other AOP are included and as a necessary adjunct thereof a partner of the firm is treated as director of that company. 10. Thus when the drawer of the cheque who falls within the ambit of section 138 is a human being or a body corporate or even firm, prosecution proceedings can be initiated against such drawer. In this context the phrase as well as used in sub-section (1) of section 141 has some importance. The said phrase would embroil the persons mentioned in the first category within the tentacles of the offence on a par with the offending company. Similarly the words shall also in sub-section (2) are capable of bringing the third category persons additionally within the dragnet of the offence on an equal par. The effect of reading section 141 is that when the company i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ence in a case. It is open to any one of the accused to adduce evidence to rebut the said presumption. In a prosecution where both the drawer company and its office bearers are arrayed as accused, and if the drawer company does not choose to adduce any rebuttal evidence it is open to the other office bearers-accused to adduce such rebuttal evidence. If that be so, even in a case where the drawer company is not made an accused but the office bearers of the company alone are made the accused such office bearers-accused are well within their rights to adduce rebuttal evidence to establish that the company did not issue the cheque towards any antecedent liability. 13. Hence we are not impressed by the contention that section 139 would afford support to the plea that prosecution of the company is sine qua non for persecuting its directors under section 141. 14. In C.V. Parekh s case ( supra ) a prosecution was launched against the Managing Director of a private limited company for the offence under section 7 of the Essential Commodities Act, 1955 with the aid of section 10 of that Act. (That provision is very much analogous to section 141 of the Negotiable Instruments Act. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rosecuted. One, some or all may be prosecuted. There is no statutory compulsion that the person-in-charge or an officer of the company may not be prosecuted unless he be ranged alongside the company itself. Section 10 indicates the persons who may be prosecuted where the contravention is made by the company. It does not lay down any condition that the person-in-charge or an officer of the company may not be separately prosecuted if the company itself is not prosecuted. Each or any of them may be separately prosecuted or along with the company." [p. 1825] 16. Smt. Indira Jaising, the learned senior counsel submitted that the observations in the aforesaid two decisions are not exactly to the point involved in this case and on the contrary the decision in U.P. Pollution Control Board v. Modi Distillery AIR 1988 SC 1128 was endeavoured to be shown as covering the issue involved now. In the said case a prosecution was moved against members of the Board of Directors of Modi Distillery under section 44 of the Water (Prevention and Control of Pollution) Act, 1974. Section 47 of that act is identical to section 141 of the Negotiable Instruments Act. Modi Distillery was not arraigned ..... X X X X Extracts X X X X X X X X Extracts X X X X
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