Madhya Pradesh High Court
Rai Infrastructure Pvt. Ltd. vs Sai Nath Roller And Floor Mills Pvt. Ltd. … on 4 April, 2025
Author: Sanjay Dwivedi
Bench: Sanjay Dwivedi
NEUTRAL CITATION NO. 2025:MPHC-JBP:17629
1 MCRC-12745-2022
IN THE HIGH COURT OF MADHYA PRADESH
AT JABALPUR
BEFORE
HON'BLE SHRI JUSTICE SANJAY DWIVEDI
ON THE 4 th OF APRIL, 2025
MISC. CRIMINAL CASE No. 12745 of 2022
RAI INFRASTRUCTURE PVT. LTD.
Versus
SAI NATH ROLLER AND FLOOR MILLS PVT. LTD. SOLAPUR
MAHARASHTRA
Appearance:
Shri Manoj Sharma - Senior Advocate with Shri Quazi Fakhruddin -
Advocate for the petitioner.
Shri Vijayendra Singh Choudhary - Advocate for the respondent.
ORDER
Looking to the issue involved in the case and nature of litigation, as
learned counsel for the parties agreed to argue it finally, therefore, it is
finally heard.
2 . This petition under Section 482 of the Code of Criminal Procedure,
1973, has been preferred challenging the order dated 26.11.2021 passed by
the Judicial Magistrate First Class, Narsinghpur, in un-registered Criminal
Complaint No.04/2017.
3 . As per the facts of the case, the petitioner is a food grain supplier
and the respondent is also engaged in the same kind of business. There used
to be commercial transactions between them.
(3.1) As mentioned in the petition, between the period from
10.09.2014 to 22.08.2015, the respondent had purchased 29,333.6 quintals of
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wheat worth Rs.1,71,37,360/- from the present petitioner. The respondent
through its Director, had issued eight cheques of Rs.1,50,000/- each, total
amounting to Rs.12,00,000/- drawn to his banker i.e. Janta Sahkari Bank
Ltd., Branch at Solapur, in Account No.000208. Those cheques were
presented for encashment by the petitioner to its banker i.e. Union Bank of
India, Branch at Kareli, on 29.06.2017, but the cheques were returned unpaid
with an endorsement of ‘stop payment’ by memo dated 11.07.2017.
(3.2) As per the petitioner, those cheques were furnished towards the
part payment of legally enforceable liability though instructions were given
by the respondent to its banker for not honoring the same, as such, offence
under Section 420 of Indian Penal Code was committed by the respondent.
Thereafter, the counsel for the petitioner had sent legal notice of demand to
the respondent-accused on 31.07.2017 and the same was served upon the
respondent-accused on 08.08.2017, even after receiving the legal demand
notice, the respondent failed to pay the said amount to make good its liability
so as to show his bona fide, therefore, the petitioner had no other option but
to file a complaint under Section 138 of the Negotiable Instruments Act,
1881 [for short ‘N.I. Act‘]. The complaint was made on 03.10.2017 before
the Judicial Magistrate First Class, Narsinghpur, along with relevant
documents. The copy of complaint is available on record as Annexure-A/4.
As per the averments made in the petition, the complaint was barred by eight
days but the reason for delay was assigned that the petitioner fell sick in the
interregnum period when the complaint ought to have been filed and as such,
an application under Section 5 of the Limitation Act, for condoning the delay
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of eight days, had also been moved. The case has remained pending from
03.10.2017 till 30.01.2020 for the appearance of the respondent. On
30.01.2020, the counsel for the respondents marked his appearance before
the Court and sought time to file reply to the application seeking
condonation of delay and thereafter, the reply was filed.
(3.3) The Court below, vide impugned order dated 26.11.2021, though
condoned the delay of eight days but rejected the complaint on the ground of
procedural defect that the petitioner has failed to mention the names of
Director/Manager/Partners of the company in the array of accused.
4 . Learned senior counsel for the petitioner submits that the order
impugned rejecting the complaint upon the reason assigned, was contrary to
law because as per the requirement of Section 141 of the N.I. Act, if a
company is not impleaded, the complaint could have been dismissed but if
company is impleaded and Directors were not impleaded, the complaint
could not have been dismissed on the ground of non-joinder of parties.
According to him, it was for the Court to provide time to the complainant to
implead Directors in the array of accused and could proceed further to decide
the matter even without the presence of Directors of the company, but in any
case, the complaint could not have been dismissed only on this count. He
further submits that it was only a procedural flaw and it could be cured by
giving an opportunity to the petitioner, therefore, this petition has been filed
challenging the order passed by the Court below asking that the same be set-
aside and directions be issued to the Court below to give an opportunity to
the complainant to implead the Directors of the company in the array of
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accused persons. In support of his contentions, learned senior counsel for the
petitioner places reliance upon the judgments reported in (2014) 4 SCC 704
parties being Haryana State Cooperative Supply & Marketing Federation
Limited Vs. Jayam Textiles & Another , I.L.R. [2016] MP 3154 parties being
Manav Sharma Vs. Umashankar Tiwari , (2015) 9 SCC 609 parties being
S.R. Sukumar Vs. S. Sunaad Raghuram , (2012) 5 SCC 661 parties being
Aneeta Hada Vs. Godfather Travels & Tours Private Limited .
5 . Learned counsel for the respondent opposes the submissions of
learned senior counsel for the petitioner and supports the order passed by the
Court below. He submits that once the accused have not been arrayed at the
time of filing the complaint, the said defect cannot be cured by giving an
opportunity to the complainant to implead them, but the only mode available
before the Court is to reject the complaint. He submits that the provisions of
Sections 138 and 141 of the N.I. Act, are very technical and scope of
rectifying the technical mistakes is very limited, therefore, the Court has
rightly dismissed the complaint. He relies upon the decision reported in
(2022) 11 SCC 705 parties being Gimpex private Limited Vs. Manoj Goel ,
the decision of Supreme Court passed in Criminal Appeal No.1424 of 2021
[arising out of SLP (Crl.) No.9077 of 2019] parties being M/s. Nag Leathers
Pvt. Ltd. Vs. M/s. Dynamic Marketing Partnership.
6 . I have heard the rival submissions of learned counsel for the parties
and perused the record.
7 . In order to answer the rival submissions of parties, it is apt to
reproduce the provisions of Section 141 of the N.I. Act, which reads as
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under:-
“141. Offences by companies.- (1) If the person committing an
offence under section 138 is a company, every person who, at the
time the offence as 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 offence 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.”
8 . As per the complaint which is available on record, it is clear that the
same has been filed under Section 138 of the N.I. Act, in which, only the
company i.e. Sai Nath Roller and floor Mills Pvt. Ltd. Solapur
(Maharashtra), has been made party and no natural person has been
impleaded as an accused. In the said complaint, nowhere it is mentioned as
to who has issued the cheques and who was the person liable to be convicted
for the offence committed under Sections 138 or 141 of the N.I. Act.
9 . So far as the judgment relied upon by learned senior counsel for the
petitioner i.e. in case of Haryana State Cooperative Supply & Marketing
Federation Limited (supra), is concerned, the said case does not help the
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petitioner for the reason that before the Supreme Court, in pursuance of an
authorization by Board of Directors of the Federation, a complaint had been
filed but that authorization was not filed along with the complaint and on
account of that reason, the complaint was dismissed. The Court, therefore,
has finally observed that merely because the said authorization letter was not
placed before the Court despite the fact that there was a specific averment
made in the complaint, the same could not have been dismissed but that
mistake could be cured directing the party to file the said document because
the Court has found that it was a procedural defect and such irregularity was
curable and could not be allowed to defeat the substantive right or cause
injustice. But here the situation is different as the complaint was filed under
Section 138 of the N.I. Act impleading only the company as a party and
there is no averment made in the complaint about any of the Directors or
Partners of the company held responsible for issuing cheques and in absence
of any natural person in the array of accused, the company cannot be
punished.
10. Likewise, in the case relied upon by learned senior counsel for the
petitioner in the case of S.R. Sukumar (supra) , the Supreme Court has
considered that even though there is no specific provision of amendment but
if any curable infirmity can be corrected by moving an application for
amendment, the same can be allowed. In the said case, the name of company
was wrongly mentioned; instead of Modi Industries Ltd., it was mentioned
as Modi Distillery and the Court, therefore, has observed that the said
mistake was easily curable and that could have been done, but in the same
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case, the Court has also observed that if the amendment sought to be made in
the complaint, does not relate either to a curable infirmity or the same cannot
be corrected by a formal amendment or if there is any likelihood of causing
prejudice to the other side, then the Court shall not allow the amendment in
the complaint. The respective paragraphs of the said judgment, are as under:-
“18. Insofar as merits of the contention regarding allowing of
amendment application, it is true that there is no specific provision
in the Code to amend either a complaint or a petition filed under
the provisions of the Code, but the Courts have held that the
petitions seeking such amendment to correct curable infirmities
can be allowed even in respect of complaints. In U.P. Pollution
Control Board vs. Modi Distillery And Ors., (1987) 3 SCC 684,
wherein the name of the company was wrongly mentioned in the
complaint that is, instead of Modi Industries Ltd. the name of the
company was mentioned as Modi Distillery and the name was
sought to be amended. In such factual background, this Court has
held as follows:-
“…The learned Single Judge has focussed his attention only
on the [pic]technical flaw in the complaint and has failed to
comprehend that the flaw had occurred due to the recalcitrant
attitude of Modi Distillery and furthermore the infirmity is
one which could be easily removed by having the matter
remitted to the Chief Judicial Magistrate with a direction to
call upon the appellant to make the formal amendments to
the averments contained in para 2 of the complaint so as to
make the controlling company of the industrial unit figure as
the concerned accused in the complaint. All that has to be
done is the making of a formal application for amendment by
the appellant for leave to amend by substituting the name of
Modi Industries Limited, the company owning the industrial
unit, in place of Modi Distillery…. Furthermore, the legal
infirmity is of such a nature which could be easily cured…”
19. What is discernible from the U.P. Pollution Control Board’s
case is that easily curable legal infirmity could be cured by means
of a formal application for amendment. If the amendment sought
to be made relates to a simple infirmity which is curable by means
of a formal amendment and by allowing such amendment, no
prejudice could be caused to the other side, notwithstanding the
fact that there is no enabling provision in the Code for entertaining
such amendment, the Court may permit such an amendment to be
made. On the contrary, if the amendment sought to be made in the
complaint does not relate either to a curable infirmity or the same
cannot be corrected by a formal amendment or if there is
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likelihood of prejudice to the other side, then the Court shall not
allow such amendment in the complaint.”
11. Further, the case relied upon by learned senior counsel for the
petitioner in the case of Aneeta Hada (supra) , also is not applicable to the
instant case for the reason that in the said case, Supreme Court has observed
that in a complaint under Section 141 of the N.I. Act, the company is
required to be impleaded and if it is not done, the complaint is found not
maintainable. But, here in the case at hand, the situation is altogether
different.
12. In the case relied upon by learned senior counsel for the petitioner
i.e. Manav Sharma (supra) , when the complaint was filed, no application for
condoning the delay under Section 142 of the N.I. Act, had been filed and
the complaint was dismissed by the Court saying that the complaint is barred
by time, although cognizance had already been taken by the Court. The
application had been filed at the final stage for condoning the delay and the
High Court has observed that as per the provisions of Section 142 of the N.I.
Act, once cognizance had been taken, then at a later point of time, if party
tries to satisfy the Court that there was a sufficient case for not making the
complaint within the prescribed period, then the complaint should not have
been dismissed only on that ground and the complainant can be given an
opportunity to file an application for condoning the delay. Here in the
present case, that is not the factual position and it is a case in which neither
any Director was made accused nor any averment was made and even the
complaint was made under Section 138 and not Section 141 and even not
Section 141 r/w 138 of the N.I. Act. As such, the decision passed in the case
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of Manav Sharma (supra) also does not help the present petitioner.
13. I have also gone through the decision of Supreme Court passed in
the case of M/s. Nag Leathers Pvt. Ltd. (supra) , which has been relied upon
by learned counsel for the respondent, wherein the Court has observed as
under:-
“In that case, apart from the corporate debtor, certain natural
persons who were stated to be in-charge of and responsible for the
affairs of the corporate debtor were also arrayed as accused and,
as such, the proceedings under Section 138/141 of the Act were
allowed to be continued as against such natural persons.
However, in the instant case, the complaint was filed only against
the corporate entity and none of the natural persons who were
stated to be the in-charge of and responsible for the affairs of the
corporate entity were arrayed as accused.
The decision rendered by this court in P. Mohanraj (supra) has
since then been followed by another three-Judge Bench of this
court in Gimpex Private Ltd. Vs. Manoj Goel , 2021 SCC OnLine
SC 925 : 2021 (12) SCALE 269.
It must therefore be held that the corporate debtor, namely, the
appellant herein cannot now be proceeded against under Section
138 of the Act. Consequently, the proceedings initiated against the
appellant deserve to be quashed.
Since no natural person was arrayed as accused, the exception
carved out in the decision of this Court in P. Mohanraj (supra)
does not arise in the instant case.”
14. The Supreme Court recently in a case reported in 2023 (2) MPLJ
19 parties being Pawan Kumar Goel Vs. State of U.P. & Another , has very
elaborately considered the requirement of pleading in a complaint of
Sections 138 and 141 of the N.I. Act. The Supreme Court has observed that if
a person is made accused being a Director of the company alleging that he
has committed an offence under Section 141 of the N.I. Act, it is required to
make specific averments in the complaint as to how he is responsible for
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commission of offence and can be convicted. The Supreme Court in the said
case has also observed that if in a complaint, there is no specific averment
against the company for commission of offence under Section 138 of the
N.I. act, the same cannot be rectified by taking recourse to general principal
of criminal jurisprudence and Section 141 of the N.I. Act imposes vicarious
liability by deeming fiction which presupposes or requires the commission
of offence by the company or firm unless it is proved that the company has
committed an offence, principal of vicarious liability does not fulfill. In the
said case, finally the Supreme Court has observed that if there is no specific
averment against the company for commission of offence and also no
allegation against the person made an accused who is one of the Directors in
the company to show as to how he is responsible for an offence committed,
the amendment cannot be made and that complaint deserves to be dismissed.
The relevant consideration of the Supreme Court is as under:-
“28. The three-Judge Bench also took note of the earlier
pronouncements of this Court in the case of State of Haryana Vs.
Brij Lal Mittal & Ors. [(1998)5 SCC 343], wherein it was held
that vicarious liability of a person for being prosecuted for an
offence committed under the Act by a company arises if at the
material time he was in charge of and was also responsible to the
company for the conduct of its business. Simply because a person
is a director of a company, it does not necessarily mean that he
fulfils both the above requirements so as to make him liable.
Conversely, without being a director a person can be in charge of
and responsible to the company for the conduct of its business.
29. The Bench also considered the dictum of this Court in the case
o f K.P.G. Nair Vs. Jindal Menthol India Ltd. [(2001)10 SCC
218], which was also a case under the Negotiable Instruments Act.
In the said case, it was found that the allegations in the complaint
did not in express words or with reference to the allegations
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to the company for the conduct of its business. It was held that
requirement of Section 141 was not met and the complaint against
the accused was quashed.
30. After analyzing the aforesaid and various other
pronouncements, the three-Judge Bench in paragraph 18 of the
reports, observed as under :-
“18. To sum up, there is almost unanimous judicial opinion
that necessary averments ought to be contained in a
complaint before a persons can be subjected to criminal
process. A liability under Section 141 of the Act is sought to
be fastened vicariously on a person connected with a
Company, the principal accused being the company itself. It
is a departure from the rule in criminal law against vicarious
liability. A clear case should be spelled out in the complaint
against the person sought to be made liable. Section 141 of
the Act contains the requirements for making a person liable
under the said provision. That respondent falls within
parameters of Section 141 has to be spelled out. A complaint
has to be examined by the Magistrate in the first instance on
the basis of averments contained therein. If the Magistrate is
satisfied that there are averments which bring the case within
Section 141 he would issue the process. We have seen that
merely being described as a director in a company is not
sufficient to satisfy the requirement of Section 141. Even a
non director can be liable under Section 141 of the Act. The
averments in the complaint would also serve the purpose that
the person sought to be made liable would know what is the
case which is alleged against him. This will enable him to
meet the case at the trial.”
31. The Bench answered the questions posed in the reference as
under :-
“19. (a) It is necessary to specifically aver in a complaint
under Section 141 that at the time the offence was
committed, the person accused was in charge of, and
responsible for the conduct of business of the company. This
averment is an essential requirement of Section 141 and has
to be made in a complaint. Without this averment being
made in a complaint, the requirements of Section 141 cannot
be said to be satisfied.
(b) The answer to question posed in sub-para (b) has to be in
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sufficient to make the person liable under Section 141 of the
Act. A director in a company cannot be deemed to be in
charge of and responsible to the company for conduct of its
business. The requirement of Section 141 is that the person
sought to be made liable should be in charge 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.
(c) The answer to question (c ) has to be in affirmative. The
question notes that the Managing Director or Joint Managing
Director would be admittedly in charge of the company and
responsible to the company for conduct of its business.
When that is so, holders of such positions in a company
become liable under Section 141 of the Act. By virtue of the
office they hold as Managing Director or Joint Managing
Director, these persons are in charge of and responsible for
the conduct of business of the company. Therefore, they get
covered under Section 141. So far as signatory of a cheque
which is dishonoured is concerned, he is clearly responsible
for the incriminating act and will be covered under sub-
section (2) of Section 141.”
32. In view of the undisputed facts of the present case in
juxtaposition to the judicial pronouncements of this Court referred
to above, we have no hesitation in holding that no error has been
committed by the High Court in allowing the Writ Petition filed
by the respondent no. 2 and quashing the impugned order and the
proceedings.”
15. However, in the present case, the company only has been made
accused but nothing has been specified as to who is the other persons held
responsible and issued the cheques and committed offence under Sections
138 and 141 of the N.I. Act. A person can be prosecuted under Section 141
of the N.I. Act in pursuance of vicarious liability as an offence committed by
the company, but it must be pleaded that at the relevant time, he was in
charge and was also responsible to the company for the conduct of its
business. Simply because a person is a Director of a company, it does not
necessarily mean that he fulfills both the requirements and can be made
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liable. Even without being a Director, a person can be in charge and
responsible to the company for the conduct of its business. In absence of any
specific averment against the person issuing the cheques and also held
responsible for the commission of offence for the conduct of business of the
company, it is not proper for the Court to allow the complainant to make
such an amendment and implead the accused. In the case at hand, neither any
such averment is available in the complaint nor any natural person has been
made an accused. If the argument submitted by learned senior counsel for
the petitioner that the defect is curable, it can be cured by making an
application for amendment and the Court should have granted an opportunity
instead of dismissing the complaint, is taken into account, then this
amendment, in my opinion, is contrary to law as has been laid-down by the
Supreme Court in the case of S.R. Sukumar (supra) saying that any
amendment which is likely to cause prejudice to the other side, then the
Court should not allow the said amendment. In the present case, if any
amendment is allowed and any natural person is impleaded as an accused,
then the averments with regard to his responsibility and involvement in the
conduct of business of the company would be required and notice within the
period of limitation, would also be required to be given to him, but that is not
done in this case, ergo it would cause prejudice to the natural person who, in
case, is impleaded as an accused, if opportunity would have been granted.
16. Thus, in view of the aforesaid enunciation of law and considering
the facts of present case and also the averments made in the complaint filed
under Section 138 of the N.I. Act, I am of the opinion that the amendment is
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not permissible. In the opinion of this Court, the Court below has rightly
rejected the complaint because from perusal of the complaint, it can be easily
seen that the required pleadings are completely missing in the same so as to
hold any of the Directors of the company responsible and explaining his role
at the relevant point of time when the transaction took place, therefore, the
order passed by the Court below, in my opinion, does not call for any
interference.
17. Accordingly, the petition stands dismissed.
(SANJAY DWIVEDI)
JUDGE
Prachi
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