The Supreme Court has opined that if the Complainant fails to mention the name of the Company as Accused and that the Accused Person was handling the affairs of the Company at the time of the alleged offence under Section 138, Negotiable Instruments Act, 1881 (hereinafter referred to as “NIA”), then the Complainant cannot apply general rules of criminal jurisprudence to make the Accused Person vicariously liable under Section 141 NIA.
Brief Facts:
The Appellant and Respondent No. 2 were engaged in regular business dealings and Ravi Organics Limited, where the Respondent No. 2 is the director had a running account with the Appellant.
It was alleged that Respondent No. 2 issued a cheque for the supply of materials by the Appellant and on presentation, the cheque got dishonoured. A legal notice was sent to Respondent No.2 but there was no reply received.
Thereafter, 4 criminal complaints under Section 138 of the NIA were filed by the Appellant alleging that the cheque got dishonoured because the amount stated on the cheque exceeds the arrangement.
The Magistrate took cognizance of the said complaint and called the Appellant to get his statements recorded. However, the Appellant filed an affidavit seeking that the affidavit can be read as a statement of the Appellant. Thereafter, summon order was issued for Respondent No. 2.
Against the summoning order, Respondent No. 2 filed a criminal revision before the Sessions Court, and vide an order, the Sessions Court dismissed the revision petition and held the cheque to be arising out of commercial transactions between the parties.
Against the said order of the Session Court, Respondent No. 2 filed a writ before the High Court of Allahabad seeking the quashing of the summon orders passed by the Magistrate and the order of the Session Court. The writ petition was allowed by the High Court.
Hence, the present appeals are filed by the Appellant challenging the judgment of the High Court.
Contentions of the Appellant:
It was contended by the Appellant that the name of the Respondent No. 2 was arrayed as the Director in Ravi Organic Limited and it was due to a typographical error that the said company could not be named as Accused No. 2 in the complaint. It was further argued that all the details of the company were mentioned in the description of Accused No. 1. The Appellant further contended that there is nothing in NIA or Criminal Procedure Code, 1973 that prohibits amendment of complaint or impleadment of additional accused.
Contentions of the Respondent No. 2:
It was argued that the proceedings will not be maintainable because the company has not been arrayed as an Accused in the complaint. It was contended that when the cheque is issued from the company’s account, the complainant must avert in the complaint that the Accused was in charge of the company at the time of the commission of the offence. It was argued that such a defect in the complaint is not a curable defect.
Observations of the Court:
The Court looked at two broad issues. One was whether the director can be prosecuted under Section 138 if the company is not named as an accused and the second was whether the complaint can proceed against the director if there are no averments in the complaint regarding the Accused being responsible for the conduct and business of the company.
The Bench noted that in the present complaint, the details of the Accused did talk about the company, however, the company itself was not mentioned as a party in the Complaint. It was also noted that the complaint nowhere talked about the Accused being responsible for handling the affairs of the company.
The Supreme Court opined that general principles of criminal jurisprudence cannot be applied if the Complainant fails to mention the company in the complaint under Section 138 NIA. It was expounded that Section 141 of NIA imposes vicarious liability by deeming fiction which pre-supposes and requires the commission of the offence by the company and therefore unless the offence is committed by the company as the principal accused, the Accused Person would not be liable to be convicted on basis of vicarious liability.
Concerning the amendment of complaint and impleadment of additional Accused, the Apex Court observed that once the limitation period for taking cognizance is expired under Section 142 NIA, then no such amendment/impleadment can be allowed. Also, in the present case, the Petitioner failed to make any effort or refer to any circumstance vide which the Court condones the delay.
The decision of the Court:
Based on the reasons above, the Hon’ble Supreme Court dismissed the appeal and held that High Court has not committed any error in allowing the Writ Petition.
Case Title: Pawan Kumar Goel v. State of U.P. & Another
Citation: 2022 Latest CaseLaw 909 SC
Coram: Hon’ble Mr. Justice Krishna Murari, Hon’ble Ms. Justice Bela M. Trivedi
Case No.: Criminal Appeal No. 1999 of 2022
Advocates for Appellant: Manoj Swarup and Co.
Advocates for Respondent: Advs. Vishwa Pal Singh, Shantanu Krishna
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