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Himachal Pradesh High Court · body

2025 DAILYLAW 3726 (HP)

Gursev Singh v. Gopal Krishan

2025-09-12

Virender Singh

body2025
JUDGMENT : Virender Singh, J. The petitioner has filed the present petition, under Section 528 of the Bharatiya Nagarik Suraksha Sanhita, 2023, (hereinafter referred to as ‘the B.N.S.S.) for quashing order dated 6.5.2023, (Annexure P-3), passed by the Court of learned Chief Judicial Magistrate, Mandi, H.P. (hereinafter referred to as ‘the trial Court’), in Complaint No. 15-III/2023, titled as, “Gopal Krishan versus Gursev Singh”. 2. Vide order dated 6.5.2023, the learned trial Court has taken the cognizance of the offence, punishable under Section 138 of the Negotiable Instrument Act, and notice of accusation was put to the petitioner, on 17.6.2024. 3. Parties to the present lis are referred to in the same manner, in which, they were referred to by the learned trial Court. 4. Brief facts leading to filing of the present petition, before this Court, as per the record, may be summed up as under: 4.1 Complainant Gopal Krishan has filed the complaint, under Section 138 of the Negotiable Instrument Act (hereinafter referred to as ‘the N.I. Act’), against accused Gursev Singh on the ground that complainant was the registered owner of vehicle (Tipper) bearing registration No. HP-65-4071. He had sold the same to accused, vide agreement, dated 28.10.2015 and the sale consideration was to be paid by the accused to the financing bank, as per the EMI fixed by the bank. The accused has not paid any EMI for a period of more than seven years. 4.2 It is further pleaded that as per the case of the complainant in complaint, when, he demanded the sale consideration amount and use and occupation charges of the above truck, accused issued a cheque No. 000606, dated 29.12.2022, amounting to Rs. 29,00,000/- to the complainant, issued out of his bank account, maintained with the Central Bank of India, Branch Office, Gutkar, Mandi, H.P. 4.3 As per the case of the petitioner-accused, the above said cheque was presented by the complainant on 2.3.2023, in his account No. 79470100003281 at Bank of Baroda, Branch Office Ner Chowk, District Mandi, H.P., however, the same was dishonoured and the same was returned back to the complainant, vide memo dated 27.3.2023 on the ground of “Account Closed”. 4.4 It has further been pleaded by the complainant that accused has intentionally and deliberately issued the bogus cheque, in favour of the complainant, in order to cheat him. 4.4 It has further been pleaded by the complainant that accused has intentionally and deliberately issued the bogus cheque, in favour of the complainant, in order to cheat him. After receiving the dishonoured memo, complainant issued requisite legal notice on 3.4.2023. Despite knowledge of the notice, payment of Rs. 29,00,000/- was not made. After waiting for the statutory period, the complainant has filed the complaint before the learned trial Court, in which, the learned trial Court has passed the summoning order, dated 6.5.2023. After securing his presence, notice of accusation was put to the accused, vide order dated 17.6.2024. The aforesaid order has been assailed, before this Court, by way of present petition, for the following substantive relief: “The present petition may kindly be allowed summoning order dated 6.5.2023 (Annexure P-3), whereby the learned Chief Judicial Magistrate, Mandi, H.P. had taken cognizance and notice of accusation dated 17.6.2024, (P-4) against the petitioner in complaint case No: NI Act 15-III/2023 titled as Gopal Krishan versus Gursev Singh may kindly be ordered to be quashed, in the interest of justice and fair play.” 5. Relief of quashing has mainly been sought on the ground that complainant had filed the complaint, arraying the accused as Managing Director of M/s Ram Hari Autos Pvt. Ltd, which is a business entity and is a private limited company, registered under the Companies Act. In this regard, Certificate of Incorporation has been annexed with the petition, as Annexure P-5. 6. Another ground, on which, the relief of quashing has been sought is that the complainant, without serving notice on the company and impleading the company as accused, cannot maintain the complaint. Necessary ingredients, as per Section 141 of the N.I. Act, are stated to be missing, in this case. 7. It is the further case of the accused that the learned trial Court has failed to take notice of the fact that cheque, involved in this case, was issued out of the account of the Company M/s Ram Hari Autos Pvt. Ltd., and agreement dated 28.10.2015 was also entered upon with M/s Ram Hari Infratech Pvt. Ltd., which according to the accused, is another company. 8. It is the further case of the accused that the learned trial Court has not taken into consideration the response of the legal notice, dated 3.4.2023 (Annexure P-7), sent by the complainant, before filing the complaint. 8. It is the further case of the accused that the learned trial Court has not taken into consideration the response of the legal notice, dated 3.4.2023 (Annexure P-7), sent by the complainant, before filing the complaint. Copy of reply has been annexed with the petition, as Annexure P-8. 9. On the basis of above facts, Mr. Sumeet Raj Sharma, Advocate, has prayed that the present petition may kindly be allowed. 10. Per contra, Mr. H.S. Rangra, learned counsel for the respondent has argued that the learned trial Court has taken into consideration the documents, annexed with the petition and has rightly taken the cognizance and thereafter, notice of accusation has rightly been put to the accused. 11. On the basis of above facts, a prayer has been made to dismiss the present petition. 12. According to the documents, annexed with the petition, cheque in question was issued by the Director of M/s Ram Hari Autos Pvt. Ltd. As per Annexure P-2, which is copy of the complaint, M/s Ram Hari Autos Pvt. Ltd. has not been impleaded as accused, in this case. Legal notice was also issued to the petitioner. In such situation, material question, which arises for determination, before this Court, is whether non-impleadment of M/s Ram Hari Autos Pvt. Ltd., which, according to the certificate of incorporation, is a private limited company, is a defect, which is fatal for the case of the complainant? 13. Hon’ble Apex Court, in a case titled as, ‘Bijoy Kumar Moni versus Paresh Manna & Anr.’ 2024 INSC 1024 has elaborately discussed the point as to whether the authorized signatory of the company falls within the ambit of the expression “drawer”? After considering the legal position, Hon’ble, Supreme Court has answered in negative. Relevant paragraphs 43 to 46 of the judgment are reproduced as under: 43. This Court in one of its recent decisions in the case of Shri Gurudatta Sugars Marketing (P) Ltd. v. Prithviraj Sayajirao Deshmukh and Others reported in 2024 SCC OnLine SC 1800 had the occasion to consider the issue of whether the authorised signatory of a company who had signed a cheque drawn on the bank account of the company and which got dishonoured subsequently could be held to be liable for the payment of interim compensation under Section 143A of the NI Act. This Court while answering the issue in the negative, applied the doctrine of separate corporate personality and held that it is only the drawer of the cheque who could be held to be liable for the payment of interim compensation under Section 143A of the NI Act and the authorised signatory of a company cannot be said to be the drawer of the cheque. The relevant observations made by the Court are reproduced hereinbelow: “13. The appellant has challenged the judgment and order of the High Court dated March 29, 2023 as well as the relied upon judgment and order dated March 8, 2023. The present appeal is filed assailing the correctness of these orders vis-a-vis the larger question of law, as framed by the High Court: “Whether the signatory of the cheque, authorised by the ‘company’, is the ‘drawer’ and whether such signatory could be directed to pay interim compensation in terms of section 143A of the Negotiable Instruments Act, 1881 leaving aside the company?” xxx xxx xxx 28. The High Court's interpretation of section 7 of the Negotiable Instruments Act, 1881 accurately identified the “drawer” as the individual who issues the cheque. This interpretation is fundamental to understanding the obligations and liabilities under section 138 of the Negotiable Instruments Act, 1881, which makes it clear that the drawer must ensure sufficient funds in their account at the time the cheque is presented. The appellants’ argument that directors or other individuals should also be liable under section 143A misinterprets the statutory language and intent. The primary liability, as correctly observed by the High Court, rests on the drawer, emphasizing the drawer's responsibility for maintaining sufficient funds. 29. The general rule against vicarious liability in criminal law underscores that individuals are not typically held criminally liable for acts committed by others unless specific statutory provisions extend such liability. Section 141 of the Negotiable Instruments Act, 1881 is one such provision, extending liability to the company's officers for the dishonour of a cheque. The appellants’ attempt to extend this principle to section 143A, to hold directors or other individuals personally liable for interim compensation, is unfounded. The High Court rightly emphasised that liability under section 141 arises from the conduct or omission of the individual involved, not merely their position within the company.30. The distinction between legal entities and individuals acting as authorized signatories is crucial. The High Court rightly emphasised that liability under section 141 arises from the conduct or omission of the individual involved, not merely their position within the company.30. The distinction between legal entities and individuals acting as authorized signatories is crucial. Authorised signatories act on behalf of the company but do not assume the company's legal identity. This principle, fundamental to corporate law, ensures that while authorised signatories can bind the company through their actions, they do not merge their legal status with that of the company. This distinction supports the High Court's interpretation that the drawer under section 143A refers specifically to the issuer of the cheque, not the authorised signatories. 31. The principle of statutory interpretation, particularly in relation to sections 143A and 148, was also correctly applied by the High Court. The court emphasised that when statutory language is clear and unambiguous, it should be given its natural and ordinary meaning. The legislative intent, as discerned from the plain language of the statute, aims to hold the drawer accountable. The appellants’ argument for a broader interpretation to include authorised signatories under section 143A contradicts this principle and would lead to an unjust extension of liability not supported by the statutory text.” (Emphasis supplied) 44. In yet one another decision of this Court in the case of N. Harihara Krishnan v. J. Thomas reported in (2018) 13 SCC 663 , while dealing with the issue of commission of an offence under Section 138 of the NI Act by a company, the Court observed that Section 138 only contemplates the drawer of the cheque to be responsible for the commission of the offence. It is only by virtue of Section 141 that certain persons other than the drawer of the cheque can be made liable for the offence in cases where the offence under Section 138 is committed by a company and not an individual person. The Court, in the facts of the case before it, further held that the identity of the drawer of the cheque was apparent from the cheque itself and thus it was not open to the payee/complainant to seek impleadment of the company, that is, the drawer of the cheque, at a belated stage by filing an impleadment application when it had instituted the complaint only against the authorised signatory who had signed the cheque on behalf of the company. The Court also held that the offence under Section 138 is person specific and in the absence of applicability of the principles of the Code of Criminal Procedure, 1973, the magistrate cannot take cognizance of the complaint unless it is made against the drawer of the cheque, as it is only the drawer who can be an accused under Section 138. The relevant observations are reproduced hereinbelow: “20. The offence under Section 138 of the Act is capable of being committed only by the drawer of the cheque. The logic of the High Court that since the offence is already taken cognizance of, there is no need to take cognizance of the offence against Dakshin is flawed. Section 141 stipulates the liability for the offence punishable under Section 138 of the Act when the person committing such an offence happens to be a company—in other words when the drawer of the cheque happens to be a company. [...] xxx xxx xxx 22. The High Court failed to appreciate that the liability of the appellant (if any in the context of the facts of the present case) is only statutory because of his legal status as the Director of Dakshin. Every person signing a cheque on behalf of a company on whose account a cheque is drawn does not become the drawer of the cheque. Such a signatory is only a person duly authorised to sign the cheque on behalf of the company/drawer of the cheque. If Dakshin/drawer of the cheque is sought to be summoned for being tried for an offence under Section 138 of the Act beyond the period of limitation prescribed under the Act, the appellant cannot be told in view of the law declared by this Court in Aneeta Hada [Aneeta Hada v. Godfather Travels & Tours (P) Ltd., (2012) 5 SCC 661 : (2012) 3 SCC (Civ) 350 : (2012) 3 SCC (Cri) 241] that he can make no grievance of that fact on the ground that Dakshin did not make any grievance of such summoning. It is always open to Dakshin to raise the defence that the initiation of prosecution against it is barred by limitation. Dakshin need not necessarily challenge the summoning order. It can raise such a defence in the course of trial. xxx xxx xxx 27. It is always open to Dakshin to raise the defence that the initiation of prosecution against it is barred by limitation. Dakshin need not necessarily challenge the summoning order. It can raise such a defence in the course of trial. xxx xxx xxx 27. By the nature of the offence under Section 138 of the Act, the first ingredient constituting the offence is the fact that a person drew a cheque. The identity of the drawer of the cheque is necessarily required to be known to the complainant (payee) and needs investigation and would not normally be in dispute unless the person who is alleged to have drawn a cheque disputes that very fact. The other facts required to be proved for securing the punishment of the person who drew a cheque that eventually got dishonoured is that the payee of the cheque did in fact comply with each one of the steps contemplated under Section 138 of the Act before initiating prosecution. Because it is already held by this Court that failure to comply with any one of the steps contemplated under Section 138 would not provide “cause of action for prosecution”. Therefore, in the context of a prosecution under Section 138, the concept of taking cognizance of the offence but not the offender is not appropriate. Unless the complaint contains all the necessary factual allegations constituting each of the ingredients of the offence under Section 138, the Court cannot take cognizance of the offence. Disclosure of the name of the person drawing the cheque is one of the factual allegations which a complaint is required to contain. Otherwise in the absence of any authority of law to investigate the offence under Section 138, there would be no person against whom a court can proceed. There cannot be a prosecution without an accused. The offence under Section 138 is person specific. Therefore, Parliament declared under Section 142 that the provisions dealing with taking cognizance contained in the CrPC should give way to the procedure prescribed under Section 142. Hence the opening of non obstante clause under Section 142. It must also be remembered that Section 142 does not either contemplate a report to the police or authorise the Court taking cognizance to direct the police to investigate into the complaint. (Emphasis supplied) iii. Hence the opening of non obstante clause under Section 142. It must also be remembered that Section 142 does not either contemplate a report to the police or authorise the Court taking cognizance to direct the police to investigate into the complaint. (Emphasis supplied) iii. Meaning of the expression “on an account maintained by him” used in Section 138 of the NI Act 45. It is of vital importance to understand the import of the expression “on an account maintained by him with a banker” used in Section 138 of the NI Act. The expression, in our considered opinion, describes the relationship between the account holder and the banker. This relationship is fundamental to the application of Section 138. The act of maintaining an account is exclusively tied to the account holder and does not extend to any third party whom the account holder may authorize to manage the account on its behalf. Therefore, any delegation of authority to manage the account does not alter the intrinsic relationship existing between the account holder and the banker as envisaged under the NI Act. Corporate persons like companies, which are mere legal entities and have no soul, mind or limb to work physically, discharge their functions through some human agency recognised under the law to work. Therefore, if some function is discharged by such human agency for and on behalf of the company it would be an act of the company and not attributable to such human agent. One such instance of discharge of functions could be the authority to manage the bank accounts of the company, issue and sign cheques on its behalf, etc. which may be delegated to an authorised signatory. However, such authorisation would not render the authorised signatory as the maker of those cheques. It is the company alone which would continue to be the maker of these cheques, and thus also the drawer within the meaning of Section 7 of the NI Act. 46. The authorised signatory is merely the physical limb that signs and makes the cheque on behalf of the company’s incorporeal personality. The company, for all purposes, continues to remain the drawer of the cheques. 46. The authorised signatory is merely the physical limb that signs and makes the cheque on behalf of the company’s incorporeal personality. The company, for all purposes, continues to remain the drawer of the cheques. If the interpretation as being canvassed by the complainant is accepted then even an employee of the Company, who on account of his being an authorized signatory signs a cheque issued by the Company towards discharge of the debt or other liability of the Company, would be liable to prosecution and conviction under Section 138 of NI Act even after he resigns from the company and is no more in its employment. This certainly could not have been the intention of the legislature. Even the vicarious liability created under Section 138 of NI Act would not be attracted in respect of a Director or an employee of the Company who resigns and severs his connections with the company, unless the complainant is able to bring his case within the purview of sub-Section 2 of Section 141, by proving that the offence had been committed with his consent or connivance or was otherwise attributable to any neglect on his part.” (Self-emphasis supplied) 14. In this case, Mr. H.S. Rangra, Advocate, appearing for the complainant has made a feeble attempt by arguing that company can be impleaded by moving an application under Section 319 Cr. P.C. (358 of BNSS). Such argument is liable to be ignored, in view of the decision of Hon’ble Supreme Court in a case titled as, ‘N. Harihara Krishnan versus J.Thomas’, reported in 2018 (13) SCC 663 . Relevant paragraph-26 of the judgment is reproduced as under: “26. The scheme of the prosecution in punishing under Section 138 of THE ACT is different from the scheme of the CrPC. Section 138 creates an offence and prescribes punishment. No procedure for the investigation of the offence is contemplated. The prosecution is initiated on the basis of a written complaint made by the payee of a cheque. Obviously such complaints must contain the factual allegations constituting each of the ingredients of the offence under Section 138. Section 138 creates an offence and prescribes punishment. No procedure for the investigation of the offence is contemplated. The prosecution is initiated on the basis of a written complaint made by the payee of a cheque. Obviously such complaints must contain the factual allegations constituting each of the ingredients of the offence under Section 138. Those ingredients are: (1) that a person drew a cheque on an account maintained by him with the banker; (2) that such a cheque when presented to the bank is returned by the bank unpaid; (3) that such a cheque was presented to the bank within a period of six months from the date it was drawn or within the period of its validity whichever is earlier; (4) that the payee demanded in writing from the drawer of the cheque the payment of the amount of money due under the cheque to payee; and (5) such a notice of payment is made within a period of 30 days from the date of the receipt of the information by the payee from the bank regarding the return of the cheque as unpaid. It is obvious from the scheme of Section 138 that each one of the ingredients flows from a document which evidences the existence of such an ingredient. The only other ingredient which is required to be proved to establish the commission of an offence under Section 138 is that inspite of the demand notice referred to above, the drawer of the cheque failed to make the payment within a period of 15 days from the date of the receipt of the demand. A fact which the complainant can only assert but not prove, the burden would essentially be on the drawer of the cheque to prove that he had in fact made the payment pursuant to the demand.” 15. Admittedly, provisions of Section 319 Cr. P.C. are applicable, where, from the evidence on record, it is proved that any person, other than the accused, before the Court, has committed the offence. In that eventuality, by exercising the powers under Section 319 Cr. Admittedly, provisions of Section 319 Cr. P.C. are applicable, where, from the evidence on record, it is proved that any person, other than the accused, before the Court, has committed the offence. In that eventuality, by exercising the powers under Section 319 Cr. P.C., the person, who appears to have committed the offence, other than the accused, can be summoned, before the Court, whereas, in the case, under Section 138 of the N.I. Act, the issuance of notice to the person, against whom the complaint under Section 138 of N.I. Act is to be filed, is sine-qua non. 16. In this case, as stated above, the complainant has not issued notice to M/s Ram Hari Autos Pvt. Ltd., and the same was issued only to the petitioner. Meaning thereby, initial action of the complainant is not in consonance with the provisions of Section 138 of the N.I. Act. As such, all the subsequent and consequential acts would fail, as the said failure to serve notice, goes to the root of the case. 17. Moreover, the defect, as highlighted by this Court, in the above discussion, does not fall within the explanation, as carved out by Hon’ble Supreme Court in a case titled as, “S.R. Sukumar versus S. Sunaad Raghuram”, reported in 2015 (9) SCC 609 . Relevant paragraphs 18 and 19 of the judgment are reproduced, as under: “19. 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 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 likelihood of prejudice to the other side, then the Court shall not allow such amendment in the complaint.” 18. 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 likelihood of prejudice to the other side, then the Court shall not allow such amendment in the complaint.” 18. In view of the discussions made above, when the proceedings under Section 138 of the N.I. Act were initiated on bouncing of the cheque, which was admittedly issued, on behalf of the company, non- impleadment of the company as accused, is a defect, which goes to the very root of the case. 19. Consequently, the proceedings, initiated under Section 138 of the N.I. Act, against the petitioner, are nothing, but abuse of the process of law. As such, the complaint, as well as, the order of cognizance, taken by the learned trial Court, vide order dated 6.5.2023, as well as, the subsequent proceedings, are ordered to be quashed. 20. In view of above, the present petition is allowed. The pending application(s), if any, are also disposed of.