Full Judgment Text
Reportable
IN THE SUPREME COURT OF INDIA
CRIMINAL APPELLATE JURISDICTION
CRIMINAL APPEAL NO.603 OF 2019
(Arising out of SLP(CRL.) No.655 OF 2019)
G RAMESH APPELLANT
VERSUS
KANIKE HARISH KUMAR UJWAL & Anr. RESPONDENTS
J U D G M E N T
DR DHANANJAYA Y CHANDRACHUD, J
1. Leave granted.
2. This appeal arises from a judgment dated 13 June 2018
of a learned Single Judge of the High Court of Judicature
1
at Hyderabad. While allowing a petition under Section
2
482 of the Code of Criminal Procedure, 1973 instituted by
the first respondent, the High Court quashed the
3
proceedings on the file of the Special Judicial
Magistrate of First Class arising out of a complaint
under Section 138 of the Negotiable Instruments Act,
4
1881.
3. The appellant is the complainant. The first accused
is a partnership firm by the name of Vainqueur Corporate
Services.
4. The third accused is the managing partner. The first
Signature Not Verified
1 “ Criminal Petition No. 5301 Of 2014”
2 “CrPC”
3 “ Criminal M.P. No. 295 of 2014 in C.C. No. 751 of 2012”
4 “The Act”
Digitally signed by
RACHNA
Date: 2019.04.09
17:53:57 IST
Reason:
1
respondent, who is arrayed as the second accused, is a
partner of the firm. The complaint alleges that the
partnership firm was dealing in data entry work. After
obtaining contracts for data entry, sub-contracts were
entered into by the firm for the completion of the
assignments. Paragraphs 1 to 7 of the complaint are
material to the controversy in the present case and are
extracted below:
“1. That the accused No. 3 is the Managing Director and
Accused No. 2 is one of the partners of M/s.
Vainqueur Corporate Services situated at Hyderabad
and dealing in data entry work. They used to take
contracts of data entry and give sub contracts to
others to complete said assignment.
2. The accused persons have given sub contract of data
entry to the complainant in the month of August 2010
by taking a caution deposit of Rs 1,00,000 which has
paid through two cheques which were credited into
their account No. 304011014832 at ING Vysya Bank on
30.08.2010. Thereafter, they have assigned the job
of data entry to the complainant from the month of
September 2010 to December 2010.
3. The complainant did the data entry work for said
four months worth of Rs 8,50,000 as per rates of
understanding. They have issued cheque bearing No.
929605 dated 01.11.2010 drawn on Axis Bank, Hyderabad
for Rs 2,00,000 towards work of September 2010 and
cheque bearing No. 929620 dated 18.12.2010 drawn on
Axis Bank, Hyderabad for Rs 2,50,000 towards work of
October 2010.
4. The complainant presented said two cheques for
collection through his bank i.e., HDFC, Mahabubnagar
but said cheques were returned unpaid due to
insufficient balance in their bank account. The said
fact of return of cheques was informed to the accused
with a request to pay the dishonoured cheque amount
along with subsequent months i.e., for the month of
November and December 2010 amounts.
5. On that accused No. 2 transferred Rs. 1,00,000 from
his account No. 10141560000576 to the account No.
10141070007111 of complainant at HDFC Bank,
Mahabubnagar on 08.02.2011 and 10.02.2011. They
also assured the complainant to pay the balance
amount within short time. As the accused no. 2 is
2
son of brother in law of complainant, he believed
them and kept quite for some time. As they have
committed default in payment of amounts, the
complainant could not continue said work from the
month of January 2011, as he had no money to pay the
salaries of his employees.
6. After repeated demands for the payment of balance
amount of Rs. 7,50,000 towards completed work and
Rs.1,00,000 given towards caution deposit, the
accused No. 3 issued two more cheques bearing No.
929675 and 929676 dated 30.05.2011 and 19.07.2011
respectively each for Rs. 2,00,000 drawn on Axis Bank
Ltd., Hyderabad towards part payment of due amount
and assured to pay the balance amount within short
time.
7. The complainant presented said cheque bearing
No. 929675 but the same was returned unpaid due to
insufficient funds in their bank account on
30.05.2011. The complainant informed the accused
about the return of cheque and they assured to honour
both cheques on re-presentation in the month of July
2011. As per their request, the complainant
presented cheques bearing No. 929675 and 929676 in
the month of July 2011 but both cheques again
returned unpaid on 14.07.2011 and 20.07.2011
respectively for insufficient funds in their bank
account. Since then the complainant is tried to
contact the accused to inform and for the payment
of cheques amount along with entire due amount but
they have avoided the complainant.”
In paragraph 8 of the complaint, there is an averment
that a notice of demand was issued within 30 days of the
dishonour of the cheque on 1 August 2011 in spite of
which payment was not made.
5. The complaint was instituted on 19 September 2011
before the Special Judicial Magistrate First Class,
Mahabubnagar. Non-bailable warrants were issued against
the first respondent as he failed to appear in the
proceedings. The warrants were recalled. The first
respondent instituted proceedings under Section 482 of
the CrPC. The High Court quashed the proceedings by its
3
impugned judgment and order.
6. The High Court held that the averments contained in
paragraph 5 of the complaint were not sufficient to
implicate criminal liability upon the first respondent
for an offence punishable under Section 138. It is this
view of the High Court which falls for consideration in
the present appeal.
7. Ms. Bhabhna Das, learned counsel appearing on behalf
of the appellant submits that the High Court was
manifestly in error in quashing the complaint. Besides
relying on the decision of this Court in Gunmala Sales
5
Private Limited v. Anu Mehta and Others , learned counsel
submitted that the averments contained in the complaint
are sufficient to meet the requirement of Section 141.
8. On the other hand, Mr. Abhimanyu Bhandari learned
counsel appearing on behalf of the first respondent
submits that under Section 141(1), where the person
committing an offence is a company, every person who, at
the time the offence was committed was in charge of and
was responsible to the company for the conduct of the
business of the company as well as the company shall be
deemed to be guilty of the offence. The submission is
that there was no averment in the complaint that the
first respondent was incharge of and was responsible to
the “company” for the conduct of the business. The
defence of the first respondent is that, he resides in
5 (2015) 1 SCC 103 (at paragraph 30 and 31)
4
Kuwait where he is employed with the National Bank of
Kuwait. Hence, he has no day to day connection with the
affairs of the partnership firm. In these circumstances,
learned counsel submitted that the High Court having
quashed the complaint, this Court ought not to exercise
its jurisdiction under Article 136 to interfere with the
judgment and order of the High Court.
9. Section 141(1) provides as follows:-
“1.If the person committing an offence under section 138 is
a company, every person who, at the time the offence was
committed, was in charge of, and was responsible to the
company for the conduct of the business of the company, as
well as the company, shall be deemed to be guilty of the
offence and shall be liable to be proceeded against and
punished accordingly:
Provided that nothing contained in this sub-section shall
render any person liable to punishment if he proves that
the offence was committed without his knowledge, or that he
had exercised all due diligence to prevent the commission
of such offence:
[Provided further that where a person is nominated as a
Director of a company by virtue of his holding any office
or employment in the Central Government or State Government
or a financial corporation owned or controlled by the
Central Government or the State Government, as the case may
be, he shall not be liable for prosecution under this
Chapter.]
2. Notwithstanding anything contained in sub-section (1),
where any offence under this Act has been committed by a
company and it is proved that the offence has been
committed with the consent or connivance of, or is
attributable to, any neglect on the part of, any director,
manager, secretary or other officer of the company, such
director, manager, secretary or other officer shall also be
deemed to be guilty of that offence and shall be liable to
be proceeded against and punished accordingly.”
The explanation to the Section is in the following
terms:-
“ Explanation – For the purposes of this section -
(a) “company” means any body corporate and includes a
firm or other association of individuals; and
5
(b) “director”, in relation to a firm, means a
partner in the firm.”
10. In terms of the explanation to Section 141, the
expression “company” has been defined to mean any body
corporate and to include a firm or other association of
individuals. Sub-section (1) of Section 141 postulates
that where an offence is committed under Section 138 by a
company, the company as well as every person who, at the
time when the offence was committed, was in charge of and
was responsible to the company for the conduct of the
business shall be deemed to be guilty of the offence.
11. In determining as to whether the requirements of the
above provision have been fulfilled, it is necessary to
bear in mind the principle of law that a partnership is
a compendious expression to denote the partners who
comprise of the firm. By the deeming fiction in
Explanation (a) the expression company is defined to
include a firm.
12. The issue is whether there are sufficient averments
in the complaint to meet the requirement of Section
141(1). This is a matter which has to be determined on a
holistic reading of the complaint. From the averments in
the complaint, the case of the complainant is that the
partnership firm of which the first respondent is a
partner had obtained contracts for data entry, which were
being sub-contracted to the complainant. The accused are
6
alleged to have obtained a caution deposit of Rs 1,00,000
and to have assigned the job of data entry to the
complainant. After completing the job of data entry, the
accused issued two cheques dated 1 November 2010 and 18
December 2010 for the amount of Rs 2,00,000 and Rs
2,50,000 respectively. On presentation, the cheques were
returned due to insufficiency of funds. It was
thereafter that the first respondent is alleged to have
transferred an amount of Rs 1,00,000 from his account on
8 February 2011 and 10 February 2011. The complaint
contains the statement that the parties are related.
Thereafter, two further cheques were issued by the
managing partner on 30 May 2011 and 19 July 2011 each in
the amount of Rs 2,00,000. After the cheques were
returned unpaid due to insufficiency of funds, the
complainant is alleged to have informed the accused who
are stated to have assured him that both the cheques
would be honoured on re-presentation in the month of July
2011.
13. The submission is that the above averments are
adequate to meet the requirements of Section 141 having
regard to the fact that the first accused is a
partnership firm.
14. While laying down the general principles which must
apply to this body of law, a two-Judge Bench of this
Court in Gunmala Sales Private Limited ( supra ) held:
“30. When a petition is filed for quashing the process, in a
7
given case, on an overall reading of the complaint, the
High Court may find that the basic averment is sufficient,
that it makes out a case against the Director; that there is
nothing to suggest that the substratum of the allegation
against the Director is destroyed rendering the basic
averment insufficient and that since offence is made out
against him, his further role can be brought out in the
trial. In another case, the High Court may quash the
complaint despite the basic averment. It may come across
some unimpeachable evidence or acceptable circumstances
which may in its opinion lead to a conclusion that the
Director could never have been in charge of and responsible
for the conduct of the business of the company at the
relevant time and therefore making him stand the trial would
be an abuse of process of court as no offence is made out
against him.”
31. When in view of the basic averment process is issued
the complaint must proceed against the Directors. But, if
any Director wants the process to be quashed by filing a
petition under Section 482 of the Code on the ground that
only a bald averment is made in the complaint and that he is
really not concerned with the issuance of the cheque, he
must in order to persuade the High Court to quash the
process either furnish some sterling incontrovertible
material or acceptable circumstances to substantiate his
contention. He must make out a case that making him stand
the trial would be an abuse of process of court. He cannot
get the complaint quashed merely on the ground that apart
from the basic averment no particulars are given in the
complaint about his role, because ordinarily the basic
averment would be sufficient to send him to trial and it
could be argued that his further role could be brought out
in the trial. Quashing of a complaint is a serious matter.
Complaint cannot be quashed for the asking. For quashing of
a complaint it must be shown that no offence is made out
at all against the Director.”
15. In the present case, it is evident from the relevant
paragraphs of the complaint which have been extracted
above that the complaint contains a sufficient
description of (i) the nature of the partnership; (ii)
the business which was being carried on; (iii) the role
of each of the accused in the conduct of the business
and, specifically, in relation to the transactions which
took place with the complainant. At every place in the
averments, the accused have been referred to in the
8
plural sense. Besides this, the specific role of each of
them in relation to the transactions arising out of the
contract in question, which ultimately led to the
dishonour of the cheques, has been elucidated.
16. The complaint contains a recital of the fact that the
first set of cheques were returned for insufficiency of
funds. It is alleged that the first respondent
transferred an amount of Rs 1,00,000 on 8 February 2011
and 10 February 2011. The complaint also contains an
averment that after the second set of cheques were
dishonoured, the accused assured the complainant that
they will be honoured on re-presentation in the month of
July 2011. The averments are sufficient to meet the
requirement of Section 141(1).
17. The High Court proceeded on the basis that the first
accused was a company in which the other two accused were
directors. Section 141 undoubtedly uses the expression
“company” so as to include a firm or association of
persons. The fact that the first accused, in the present
case, is a partnership firm of which the remaining two
accused are partners has been missed by the High Court.
18. Be that as it may, for the reasons adduced above, we
have come to the conclusion that the High Court was in
error in quashing the criminal case against the first
respondent.
19. We accordingly allow the appeal and set aside the
impugned judgment and order of the High Court dated 13
9
June 2018.
20. At this stage, Mr. Abhimanyu Bhandari, learned
counsel has submitted that the first respondent may be
granted an exemption from appearing before the Trial
Court. We leave it open to the first respondent to move
an application in that regard before the learned Trial
Judge which would be considered in accordance with law.
.............................J.
(DR. DHANANJAYA Y. CHANDRACHUD)
.............................J.
(HEMANT GUPTA)
NEW DELHI
APRIL 5, 2019
10
ITEM NO.34 COURT NO.11 SECTION II
S U P R E M E C O U R T O F I N D I A
RECORD OF PROCEEDINGS
Petition(s) for Special Leave to Appeal (Crl.) No(s). 655/2019
(Arising out of impugned final judgment and order dated 13-06-2018
in CRRP No. 5301/2014 passed by the High Court Of Judicature At
Hyderabad For The State Of Telangana And The State Of Andhra
Pradesh)
G RAMESH Appellant
VERSUS
KANIKE HARISH KUMAR UJWAL & ANR. Respondents
Date : 05-04-2019 This petition was called on for hearing today.
CORAM : HON'BLE DR. JUSTICE D.Y. CHANDRACHUD
HON'BLE MR. JUSTICE HEMANT GUPTA
For Petitioner(s) Ms. Bhabhna Das, Adv.
Mr. Krishna Dev Jagarlamudi, AOR
For Respondent(s) Mr. Abhimanyu Bhandari, Adv.
Ms. Akriti Chaubey, Adv.
Ms. Roohina Dua, Adv.
Mr. Kunwar Aditya Singh, Adv.
Mr. Ejaz Maqbool, AOR,
Mr. S. Udaya Kumar Sagar, AOR
Mr. Mrityunjai Singh, Adv.
UPON hearing the counsel the Court made the following
O R D E R
Leave granted.
The appeal is allowed in terms of the signed
Reportable Judgment.
(POOJA CHOPRA) (SUNIL KUMAR RAJVANSHI)
COURT MASTER COURT MASTER
(Signed Reportable Judgment is placed on the file)
11