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Rajasthan High Court – Jaipur
Bharat Mittal Ex-Director vs State Of Rajasthan on 27 May, 2025
Author: Sameer Jain
Bench: Praveer Bhatnagar, Sameer Jain
[2025:RJ-JP:20828]
HIGH COURT OF JUDICATURE FOR RAJASTHAN
BENCH AT JAIPUR
S.B. Criminal Miscellaneous (Petition) No. 2912/2025
Bharat Mittal Ex-Director, Aged About 43 Years, Shiv Mahima
Ispat Private Limited, Having Its Registered Office At 6/403,
Chitrakoot, Vaishali Nagar, Jaipur, Rajasthan And Office At 1St
Floor, Rangroop Chamber 2, Dudu Baag. Loha Mandi, Sansar
Chandra Road, Jaipur, Rajasthan.
----Petitioner
Versus
1. State Of Rajasthan, Through Public Prosecutor
2. Steel Authority Of India Limited, Branch Office – Fourth
Floor, S-16-A, Mahaveer Marg, C -Scheme, Jaipur
Through Bank Manager And Authorized Representative-
Jacob Chako
3. Shiv Mahima Ispat Private Limited, Registered Office
6/403, Chitrakoot, Vaishali Nagar, Jaipur And Office
Address- Ist Floor, Rangroop Chamber 2 Dudu Baag, Loha
Mandi, Sansar Chandra Road, Jaipur, Rajasthan Through
Official Liquidator, Address- Corporate Bhawan, G-6-7,
Civil Lines, Jaipur.
—-Respondents
For Petitioner(s) : Dr.Sachin Kumar Sharma
For Respondent(s) : Mr.Rishi Raj Singh Rathore, PP
Mr.Manvendra Singh Shekhawat, PP
HON’BLE MR. JUSTICE PRAVEER BHATNAGAR
Judgment
Reserved on :: 16/05/2025
Pronounced on :: 27/05/2025
REPORTABLE:
1. The present petition is filed under Section 528 of
Bhartiya Nagarik Suraksha Sanhita, 2023 with a prayer seeking
quashing of the impugned order dated 27.11.2024 (to the extent
of deposition of 20% compensation award) and order dated
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[2025:RJ-JP:20828] (2 of 12) [CRLMP-2912/2025]02.05.2025 passed by Additional District and Sessions Court in
Criminal Appeal No. 83/2024, whereby, learned Appellant Court
has rejected the application of the petitioner for waiver of
condition of depositing 20% compensation amount.
FACTS OF THE CASE:
2. The petitioner in capacity of a director and as an
authorized signatory of respondent No.3/Company had issued a
cheque on behalf of the Company in favour of the respondent
No.2/complainant. Thereafter, for dishonor of the said cheque with
the remark “Exceeds arrangement” and non-payment of amount
even after service of legal notice, respondent No.3 filed a
complaint against the petitioner alleging offence under Section
138 of Negotiable Instruments Act, 1881 (for short ‘NI
Act‘).
3. Learned Trial Court vide judgment dated 28.10.2024,
convicted the petitioner under Section 138 of NI Act with two Year
simple imprisonment and ordered for the payment of Rs.
8,10,00,000/- as compensation under Section 357(3) of Criminal
Procedure Code, 1973 (for short ‘Cr.P.C‘) to the respondent
No.2 and in case of default, additional six months imprisonment
was imposed.
4. Subsequently, the petitioner filed an appeal against the
said judgment, whereby vide order dated 27.11.2024 learned
Appellant Court suspended the sentence as per the provision of
Section 141 of NI Act subject to condition that the petitioner
herein would pay 20 % of the compensation amount of Rs.
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8,10,00,000/- within 60 days to the complainant/respondent No.2
herein.
5. Aggrieved of the same, the petitioner moved an
application for modification/amendment before the learned
Appellant Court, with a prayer seeking waiver of the said condition
qua deposition of 20 % compensation amount, which was
dismissed by the learned Appellant Court vide order dated
02.05.2025. Therefore, the present petition is filed.
6. In this background, learned counsel for the petitioner
had submitted that the petitioner was only acting in capacity of
the director and as an authorized signatory of the respondent
No.3/Company therefore, as per the dictum encapsulated by
Hon’ble Apex Court in Bijay Agarwal vs M/s Medilines: Special
Leave Petition (Crl.) No. 2696/2024, the petitioner as
authorized signatory of the cheque on behalf of the company is
not the drawer of the cheque and condition under Section 148 of
NI Act qua deposition of compensation is not applicable qua the
petitioner herein.
7. It was further submitted that the petitioner herein is
falsely implicated in the instant dispute for the reason that the
petitioner and the Company-respondent No.3 have separate
identity, therefore, as per the provisions of Companies Act, 2013
when the Company has a separate legal entity, the petitioner
cannot be made liable for the acts of the Company.
8. Further, it was submitted that the petitioner had
resigned from the Company on 10.02.2016, thereafter, the
respondent No.3/Company was wound up by the High Court vide
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order dated 01.12.2016, thus no case is made out against the
petitioner. Moreover, the Official Liquidator had admitted that the
claim of respondent No.2 will be paid as per the Rules.
9. Furthermore, it was submitted that denial of the
learned Appellant Court in waiving the condition of 20%
pre-deposit is contrary to the dictum encapsulated in the
judgment passed by Hon’ble Apex Court in Jamboo Bhandari Vs.
M.P. State Industrial Development Corporation Ltd. & Ors.:
(2023) 10 SCC 446, as in the said judgment it is opined that the
Court can interfere for dispensing with the requirements of
pre- deposit, if prima facie case is established.
10. Per contra, learned counsel for the respondent had
stoutly opposed the contentions of the learned counsel for the
petitioner and had submitted that neither before presenting the
disputed cheque in the bank, the petitioner had transferred any
amount to the respondent No.2 nor prior to serving legal notice,
no amount of any kind was paid by the accused-petitioner in
relation to the disputed cheque to the respondent No.2.
11. Lastly, it was submitted that when the cheque that is
endorsed is dishonored when it is sought to be endorsed upon
maturity, then the offence under Section 138 of NI Act will be
attracted. In support of the said contention reliance was placed
upon the judgment passed by Hon’ble Apex Court in
Dashrathbhai Trika Mbhai Patel Vs. Hitesh Mahendrabhai
Patel & Ors.: (2023) 1 SCC 578.
12. Heard and considered.
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13. Considering the arguments advanced by the learned
counsel for the parties and upon assiduously scanning the material
available on record, this Court has made the following
observations:-
13.1 That the petitioner was director and authorized
signatory of the Company- respondent No.3.
13.2 That Memorandum of Understanding dated 17.04.2012
was signed inter-se the complainant- respondent No.2 and the
respondent No.3 qua HR totaling 12001 metric tonnes coils.
Resultant to the same, the respondent No.2 Company dispatched
the said goods worth Rs. 4,82,72,269/- approximately under the
terms and conditions of Central Excise Invoice.
13.3 That qua the same respondent No.3- Company issued a
cheque dated 03.01.2013 signed by the petitioner in capacity of
authorized signatory/director to the respondent No.2-Company
and gave full assurance qua payment of the said amount.
However, upon depositing the said cheque in the Bank, the same
was dishonored and returned with a remark “Exceeds
arrangement”.
13.4 Immediately, the respondent No.2 served a notice for
demand upon the petitioner along-with interest and liability which
was accepted by the petitioner and the Company- respondent
No.3 vide letter dated 12.01.2013 with assurance to pay the due
amount by 20.01.2013, however, the same was flouted.
Subsequently, dispute arose with regard to the payment on the
plea that the goods were of inferior quality.
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14. Qua the said plea, this Court has noted that invoice(s)
sent by the respondent No.2 were supported by the certificate of
the material quality, which was duly admitted by the petitioner
upon receipt of the said goods, therefore, the plea that goods
were of inferior quality is an afterthought to avoid the payment
which is due.
15. In this background, a legal notice under Section 138 of
the NI Act was served upon the petitioner and the respondent
No.3 respectively, and learned Trial Court took cognizance of the
matter vide order dated 20.05.2013 and initiated proceedings
under the said Act.
16. Learned Trial Court vide impugned order dated
28.10.2024 convicted the petitioner and imposed a sum of Rs.
8,10,00,000/- on the petitioner as compensation under Section
357(3) of Cr.P.C. Thereafter, the petitioner challenged the said
order and prayed for suspension of sentence before the learned
Appellant Court, whereby Court vide order dated 27.11.2024
imposed a condition of furnishing bond and depositing 20% of the
compensation amount to the respondent No.2, within a period of
60 days for hearing the appeal and for keeping the order of
conviction in abeyance, as per the provisions of Section 148 of NI
Act. However, the petitioner, being a compulsive litigant, filed a
modification application qua the said order on 20.04.2025 (after
the expiry of 60 days), which was dismissed by the learned
Appellant Court vide order dated 02.05.2025 stating that as per
the provisions of Section 362 Cr.P.C no change or modification can
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be made in the order except for correction of clerical or arithmetic
error.
17. It is pertinent to mention here that initially learned Trial
Court took cognizance against the other directors of the Company
namely Mr.Sunil Mittal and Ms.Mukta Mittal and others, however,
they filed a revision qua the same which was allowed by the Court
vide order dated 12.05.2014, and petitioner herein never assailed
the said order, thereby making it absolute.
18. Further, learned Trial Court has held the petitioner
vicariously liable. Before commenting upon the same, this Court
intends to examine the underlying principle of vicarious liability.
Hon’ble Apex Court in Ravindranatha Bajpe vs Mangalore
Special Economic Zone Ltd. and Others reported in (2022) 15
SCC 430, has laid down two possibilities of attributing liability to
individuals on behalf of the company, firstly, an individual who
commits an offense on behalf of the company can be held liable
alongside the company, secondly, an individual can be held
vicariously liable if a statute specifically provides for it. Therefore,
this Court has noted that a company, being an artificial entity
operates through individuals, and crime committed by a company
often involves mens rea, that is actions and decisions of the said
individuals. However, criminal law generally doesn’t recognize
vicarious liability unless specifically provided by the statute. Thus,
the directors can be prosecuted alongside the company if evidence
reflects that they have played an active role with mens rea. Taking
note of the case in hand wherein as per the provisions Section 141
of NI Act, which expressly extends liability on company officials for
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dishonor of cheque, the petitioner can be held liable for the acts of
the Company. Therefore, the learned Trial Court has rightly held
the petitioner vicariously liable. The same is reiterated herein
below :-
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 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.
Explanation.–For the purposes of this section,–
(a) “company” means any body corporate and includes
a firm or other association of individuals; and
(b) “director”, in relation to a firm, means a partner in
the firm.
19. Further, learned Appellant Court upon application
filed by the petitioner praying suspension of sentence
directed the petitioner, as per the provisions of Section 148
of NI Act, to deposit 20 % of the compensation amount
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within 60 days, despite the same, the petitioner has flouted
the said condition imposed by the concerned Court and
instead filed a modification/amendment application, after the
expiry of the 60 days as directed and with a significant delay,
which reflects petitioners’ vindictive attitude and intent to
frustrate the proceedings under NI Act before the concerned
Court. The relevant Section is reiterated below :-
Section 148. Power of Appellate Court to order
payment pending appeal against conviction.-(1)
Notwithstanding anything contained in the Code of
Criminal Procedure, 1973 (2 of 1974), in an appeal by
the drawer against conviction under section 138, the
Appellate Court may order the appellant to deposit1
such sum which shall be a minimum of twenty percent
of the fine or compensation awarded by the trial Court:
Provided that the amount payable under this sub-
section shall be in addition to
any interim compensation paid by the appellant under
section 143A.
(2) The amount referred to in sub-section (1) shall be
deposited within sixty days from the date of the order,
or within such further period not exceeding thirty days
as may be directed by the Court on sufficient cause
being shown by the appellant.
(3) The Appellate Court may direct the release of the
amount deposited by the appellant to the complainant
at any time during the pendency of the appeal:
Provided that if the appellant is acquitted, the Court
shall direct the complainant to repay to the appellant
the amount so released, with interest at the bank rate
as published by the Reserve Bank of India, prevalent at
the beginning of the relevant financial year, within sixty
days from the date of the order, or within such further
period not exceeding thirty days as may be directed by
the Court on sufficient cause being shown by the
complainant.”
20. This Court has noted that learned Trial Court has
adjudicated the matter without adhering to the provision of
Section 143 of NI Act, which mandates expeditious disposal of
cases, preferably within a period of six months. Notably,
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cognizance was taken in the Year 2014, and the decision was
rendered in 2024, reflecting significant delay. The relevant Section
is reiterated below :-
143.Power of Court to try cases summarily.-(1)
Notwithstanding anything contained in the Code of
Criminal Procedure, 1973 (2 of 1974), all offences
under this Chapter shall be tried by a Judicial
Magistrate of the first class or by a Metropolitan
Magistrate and the provisions of sections 262 to 265
(both inclusive) of the said Code shall, as far as may
be, apply to such trials:
Provided that in the case of any conviction in a
summary trial under this section, it shall be lawful for
the Magistrate to pass a sentence of imprisonment for
a term not exceeding one year and an amount of fine
exceeding five thousand rupees:
Provided further that when at the commencement of,
or in the course of, a summary trial under this section,
it appears to the Magistrate that the nature of the case
is such that a sentence of imprisonment for a term
exceeding one year may have to be passed or that it is,
for any other reason, undesirable to try the case
summarily, the Magistrate shall after hearing the
parties, record an order to that effect and thereafter
recall any witness who may have been examined and
proceed to hear or rehear the case in the manner
provided by the said Code.
(2) The trial of a case under this section shall, so far as
practicable, consistently with the interests of justice, be
continued from day to day until its conclusion, unless
the Court finds the adjournment of the trial beyond the
following day to be necessary for reasons to be
recorded in writing.
(3) Every trial under this section shall be conducted as
expeditiously as possible and an endeavour shall be
made to conclude the trial within six months from the
date of filing of the complaint.
21. That relying upon dictum encapsulated in Harshendra
Kumar D. Vs Rebatilata Koley and others reported in (2011)
3 SCC 351, this Court has opined that the petitioner has resigned
from the Company after issuance of the cheque and subsequent
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dishonor of cheque, thence it can be deduced that the petitioner
was involved in the affairs of the company, thereby making him
liable for the acts of the Company. That before and after issuance
of the cheque, it was the responsibility of the petitioner to ensure
its compliance.
Conclusion:-
22. Taking note of the aforementioned observations, this
Court has concluded that the dispute in the instant matter
pertains to the year 2012-13 for default in making payment qua
the amount of Rs. 5 crore approximately; that the petitioner has
admitted the obligation/liability due towards respondent No.2;
that the petitioner has never assailed the order dated 12.05.2014,
whereby, learned Trial Court took cognizance against the
petitioner and exonerated other directors; that direction passed
by the learned Appellant Court qua deposition of 20 % of the
compensation amount within a period of 60 days for keeping the
suspension order in abeyance, as per the provision of Section 148
of NI Act, was flouted by the petitioner; that the said order was
not immediately assailed by the petitioner and modification
application qua the same was filed with a significant delay,
reflecting malice intent on the part of petitioner; that the
petitioner till date has not paid any amount to the respondent
No.2; that the petitioner has acted as a compulsive litigant and
has attempted to frustrate the provisions of the NI Act, therefore,
this Court deems it apposite to dismiss the present petition with a
cost of Rs.5,00,000/- (Rupees Five Lakhs only), which is to be
recovered from the petitioner only. Further, the petitioner is
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hereby restrained from alienating any of his personal assets,
whether movable or immovable, until such time as petitioner
satisfy the Official Liquidator that these assets were acquired
through legitimate means unrelated to the company’s funds.
23. In view of the observations and directions given above,
the present criminal miscellaneous petition is dismissed with
aforementioned cost. Stay application and/or pending
application(s), if any, also stand disposed of.
(SAMEER JAIN),J
Preeti Asopa
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