TMI Blog2023 (6) TMI 894X X X X Extracts X X X X X X X X Extracts X X X X ..... tice that the word drawer has been defined under Section 7 of the Act which mean maker of a bill of exchange or a cheque. Thus, the Court held that even an authorized signatory in company becomes a drawer as he has been authorized to do so in respect of account maintained by the company - The Hon ble Supreme Court upon analysis of the deeming fiction created in the proviso to Section 141 held that it crystallizes the corporate criminal liability and vicarious liability of a person who is in charge of the company. Thus from the aforesaid legal position, there cannot be any iota of doubt for maintaining prosecution under Section 141 of the Act, the company must be joined as an accused. The other categories of offenders can only be brought in the dragnet on the touchstone of vicarious liability as the same has been stipulated in the provision itself. The Court notice that in absence of specific averment as to the role of the respondent and particularly in view of the material at the relevant time, which in no manner connected with the affairs of the company, rejected the appeal of the complainant. In the instant case, the contents of the complaint as reproduced in the impugned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... quested to complainant to deliver goods and against the outstanding amount of purchase of goods, the accused had issued cheque bearing no.925949 of ICICI Bank, Suraj Plaza, Vadodara Branch dated 29.12.2015 for an amount of Rs.1,50,000/-. 3.2. It is further alleged that as instructed by the accused, the complainant had presented the aforementioned cheque on 16.1.2016 with the Bank viz. State Bank of India, Akshar Chawk Branch, Vadodara. However, the said cheque had been dishonored on 19.1.2016 with an endorsement of account closed. 3.3. In such circumstances, the complainant was constrained to raise demand notice dated 29.1.2016 which was sent on the known address of the accused. It is further contended that inspite of the aforesaid notice being duly served upon the accused, the accused had choose not to reply to such notice. Even the amount outstanding was not repaid. 3.4. The complainant was, therefore, constrained to initiate proceedings under Section 138 of the Negotiable Instruments Act by lodging complaint against the accused. The said complaint was presented before the Court of 10th Additional Judicial Magistrate, First Class, Vadodara on 09.06.2016 which was registe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was reflected as proprietor of M/s. Vadiyawala Logistic Pvt. Ltd. He further submitted that joining of the company as a party respondent may not be necessary as it is the person in charge of and responsible for the affairs of the company who is made accused. He has further submitted that Mr. Hemant Shah is the authorized signatory to the disputed cheque. He further submitted that similar issue arose for consideration before the Hon ble Supreme Court, wherein it has been held that there was no necessity for the complainant to prove that the respondent- accused was in charge of the affairs of the company as it can be always be derived by virtue of his position which he was holding in the company and thereafter the respondent accused was held liable for the offence under Section 138 of the Negotiable Instruments Act. Mr. Soni, learned advocate has relied upon the following decisions in support of his case: 6.1. Relying upon the decision in the the case of Jitendra Vora vs. Bhavana Y Shah reported in (2015) 16 SCC 744, Mr. Soni has submitted that the effect of the reading of Section 141 is that when the company is drawer of the cheque, such company is the principal offender under S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tention of this Court to the contents of the complaint as reproduced in the impugned order and submitted that no averments have been made by the complainant as to in what capacity the respondent accused was associated with the public limited company. He further submitted that the name of the company does not appear in the cause title as being joined as accused. At this stage, he referred to and relied upon Section 141 of the Negotiable Instruments Act which deals with the offence by company. He submitted that on reading of the said provisions and Section 138 of the Negotiable Instruments Act, it clearly provides that if a person who commits the offence is a company, the company as well as every person in charge of and responsible to the company for the conduct of the business of the company at the time of commission of offence is deemed to be guilty of the offence. He submitted that the term person appearing in Section 141 of the Act reference to the term company appears. It is a settled legal position that company is a juristic person and to impose criminal liability the category of officers as appearing in the said provisions are deemed to be guilty of the offence on behalf of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng at a finding that the application was not maintainable in absence of company being joined as party respondent accused. 8.0. I have extensively heard the learned advocates for the respective parties and have perused the record. The Court is conscious of the fact that the learned Magistrate has proceeded to record the order of acquittal on two grounds firstly where the learned Magistrate has formed an opinion that the complaint itself is not maintainable in absence of company being joined as party accused nor being served with the legal notice. Secondly, the Court has appreciated the material which has come on record in the form of evidence and has concluded that the accused has been able to successfully rebut the presumption and complainant has failed to prove his case beyond the reasonable doubt. This Court considering the nature of dispute involved has taken up this application seeking leave to appeal along with appeal for final adjudication. In the opinion of the Court, the question which falls for consideration to be decided at the threshold is the maintainability of the complaint itself rather than going into the merits of the case. The neat question of law which falls fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the Larger Bench proceeded to held as under: 53. It is to be borne in mind that Section 141 of the Act is concerned with the offences by the company. It makes the other persons vicariously liable for commission of an offence on the part of the company. As has been stated by us earlier, the vicarious liability gets attracted when the condition precedent laid down in Section 141of the Act stands satisfied. There can be no dispute that as the liability is penal in nature, a strict construction of the provision would be necessitous and, in a way, the warrant. 54. In this context, we may usefully refer to Section 263 of Francis Bennion s Statutory Interpretation where it is stated as follows: - A principle of statutory interpretation embodies the policy of the law, which is in turn based on public policy. The court presumes, unless the contrary intention appears, that the legislator intended to conform to this legal policy. A principle of statutory interpretation can therefore be described as a principle of legal policy formulated as a guide to legislative intention. 55. It will be seemly to quote a passage from Maxwell s The Interpretation of Statutes (12th Ed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thereof. One cannot be oblivious of the fact that the company is a juristic person and it has its own respectability. If a finding is recorded against it, it would create a concavity in its reputation. There can be situations when the corporate reputation is affected when a director is indicted. 59. In view of our aforesaid analysis, we arrive at the irresistible conclusion that for maintaining the prosecution under Section 141 of the Act, arraigning of a company as an accused is imperative. The other categories of offenders can only be brought in the dragnet on the touchstone of vicarious liability as the same has been stipulated in the provision itself. We say so on the basis of the ratio laid down in C.V. Parekh (supra) which is a three-Judge Bench decision. Thus, the view expressed in Sheoratan Agarwal (supra) does not correctly lay down the law and, accordingly, is hereby overruled. The decision in Anil Hada (supra) is overruled with the qualifier as stated in paragraph 51. The decision in Modi Distilleries (supra) has to be treated to be restricted to its own facts as has been explained by us hereinabove. Thus from the aforesaid legal position, there cannot be an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ently by the Hon ble Supreme Court in the case of Aneeta Handa (supra). In my opinion, the aforesaid view is not goodf law after the Larger Bench decision in the case of Aneeta Handa (supra). 12. So far as reliance placed by learned advocate Mr.Soni in the case of National Small Industries Corporation Limited (supra), the same is applicable in the facts of the present case. It was a case where the SLP was filed at the instance of the original complainant challenging the common judgment and order, High Court in batch of cases whereby the High Court had quashed the summoning orders passed by the trial Court against the respondent -accused under Section 138 r/w Section 141 of the Act. It was contended in the said appeal before the Hon ble Supreme Court that the respondent accused was holding charge as Director of the company and was liable to be prosecuted under the provisions. It was contended that the accused person had issued cheques which were dishonored, the Hon ble Supreme Court proceeded to decide the issue as to whether the order of High Court quashing summoning order insofar as respondents are concerned, is sustainable and what should be the averments in the complaint unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... able should be incharge of and responsible for the conduct of the business of the company at the relevant time. This has to be averred as a fact as there is no deemed liability of a Director in such cases. 13. Thus, the Court notice that in absence of specific averment as to the role of the respondent and particularly in view of the material at the relevant time, which in no manner connected with the affairs of the company, rejected the appeal of the complainant. In the instant case, the contents of the complaint as reproduced in the impugned order goes to suggest that the complainant has even failed to make necessary averments with regard to the role of the accused by virtue of his position to make him liable or to be proceeded with the prosecution under Section 138 of the Negotiable Instruments Act. As held by the Hon ble Supreme Court in the case of Aneeta Handa (supra) criminal liability can be only imposed if the principal offenders viz. concerned company being joined as party accused. In my opinion, no error is committed by the learned Magistrate in not entertaining the complaint having noticed the lacuna of not joining the company as party respondent. 14. In view of ..... 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