1 2025:CGHC:19174 NAFR HIGH COURT OF CHHATTISGARH AT BILASPUR CrMP No.1028 of 2023 Order Reserved on 29.01.2025 Order Delivered on 28.04.2025 Dr. Manmohan Kumar Khanduja S/o Shri Dharampal Khanduja Aged About 67 Years R/o House No. 36/6, Nehru Nagar (East) Bhilai, Civil, Tehsil and District Durg Chhattisgarh. ... Petitioner versus Shankar Singh Kothari S/o Shri Kanhaiyalal Kothari Aged About 57 Years R/o Kamptee Line, Beside Bhilai Scan, Rajnandgaon, Civil, Tehsil And Revenue District Rajnandgaon Chhattisgarh. ... Respondent For Petitioner : Mr. Jaydeep Singh Yadav, Advocate For Respondent : Mr. Rishabh Gupta & Mr. Aniruddha Shrivastava, Advocates appear on behalf of Mr. Manoj Paranjpe, Advocate Hon’ble Shri Justice Arvind Kumar Verma CAV ORDER 1. The present writ petition has been filed by the petitioner on the following prayer : “(i). Quash the complaint filed by the respondent/complainant. 2 (ii). Set-aside the order dated 07/07/2018 passed by the learned Complaint JMFC, Rajnandgaon in Complaint Case no. 1677/2018 registering the complaint u/s 138 of N. 1. Act, 1881. (iii). Set-aside the order dated 03/01/2023 by which cognizance of the case has been taken by the learned JMFC, Rajnandgaon against the petitioner. (iv). And further quash the entire criminal proceedings arising out of e complaint the Complaint Case no. 1677/2018 against the petitioner, in the interest of justice.” 2. This petition has been preferred by the petitioner under Section 482 of the Code of Criminal Procedure, 1973 being aggrieved with the order dated 07.07.2018 in Complaint Case No.1677/2018, whereby the learned JMFC, Rajnandgaon has registered the complaint under Section 138 of the Negotiable Instruments Act, 1881 and the order dated 03.01.2023, wherein the learned JMFC, Rajnandgaon has taken cognizance of the offence and continuing with the criminal proceedings by taking evidence. 3. The brief factual background of the prosecution case is that the respondent/complainant filed a complaint u/s 138 of the Negotiable Instruments Act, 1881 alleging that in the year 2017, the petitioner/accused took a loan of Rs. 35,00,000/- from the respondent/complainant and to make repayment of the aforesaid loan amount, the petitioner’s company- BSR 3 SUPERSPECIALITY HOSPITAL LTD. issued a cheque in favour of the respondent bearing cheque no. 102283 for account no. 912030013576214 maintained at Axis Bank, Raipur dated 15/02/2018 for an amount of Rs. 35,00,000/- and when on 01/03/2023, the respondent/complainant presented the said cheque in his bank- Bank of Maharashtra, Branch- Rajnandgaon, the said cheque was dishonored on the ground that the account is closed. Subsequently, the respondent sent a registered demand notice to the petitioner only at his residence without arraying the company as a party and then presented a criminal complaint before the learned JMFC, Rajnandgaon on 14/05/2018 making the petitioner as a party & accused to the said complaint wherein the said cheque was issued by the company "BSR SUPERSPECIALITY HOSPITAL LIMITED" without making any averments about the wrong doing of the company or impleading the said company as an accused. The learned JMFC, Rajnandgaon then vide order dated 07/07/2018 registered the complaint case & summons were issued for the presence of the present petitioner and likewise on 03/01/2023, the learned JMFC, Rajnandgaon took cognizance of the case and ordered to proceed against the petitioner and continuing with the recording of the evidence. Hence, this petition. 4. Learned counsel for the petitioner contended that the learned Court below has mechanically registered the complaint against the petitioner without going through the averments made in the complaint to satisfy itself whether a case is made out against the petitioner or not. The learned Court below ought to have considered that, for maintaining prosecution under Section 141 of the 4 Negotiable Instruments Act, 1881 dealing with offences of dishonor by companies, the arraying of a company as an accused is imperative. He further contended that the learned Court below failed to appreciate that the Section 141 of the 1881 Act postulates that if the person committing an offence under Section 138 is a company, every person, who at the time when the offence was committed was in charge of or 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 but in the instant case the petitioner has been arrayed in his personal capacity wherein the registered address of the company is also not mentioned in the cause title nor a demand notice was ever made or sent to the company's address by the respondent. He further contended that even if the case of the respondent is accepted, the cheque was not issued by the signatory in his personal capacity. Hence, the complaint ought to have been instituted against the company and its directors and not against the petitioner. In catena of judgments it has been held that necessary averments ought to be contained in the complaint before a person can be subjected to criminal process. It is categorically submitted that, what is required is that the persons who are sought to be made criminally liable should be, at the time of the offence is committed, in charge of and responsible to the company for the conduct of the business of the company. Thus, it is mandatory that the complaint must disclose the necessary facts to make a person liable. In absence of such an averment, the complaint of the respondent is not maintainable and is liable to be rejected. He further contended that it is the humble submission of the petitioner that the provisions of Section 141 of the N.I. Act, 1881 postulates 5 that the commission of the offences by the company is an express condition precedent to attract vicarious liability of the other. It is submitted that, once the company is prosecuted, then only the persons mentioned in the other categories could be vicariously liable for the offence subject to the averments in the petition and proof thereof. The prosecution of other persons under section 138 of the N I Act is permissible only when the company is named as an accused in the complaint. In the absence of the company being arraigned as an accused, a complaint against the petitioner is not maintainable. 5. Reliance has been placed by the counsel on several judgments as under : Himanshu Vs. B. Shivamurthy & Anr. reported in AIR 2019 Supreme Court 3052, N. Harihara Krishnan Vs. J. Thomas reported in AIR 2017 Supreme Court 4125, Manmohan Kumar Khanduja (Director, BSR Super Specialty Hospitals Ltd.) Vs. Amit Kumar reported in AIR Online 2023 CHH 220, M/s. Pepsi Foods Ltd. and another Vs. Special Judicial Magistrate and Others reported in 1998 Cri. L.J. 1 and S.M.S. Pharmaceuticals Ltd. Vs. Neeta Bhalla and Another reported in 2005 Cri. L.J. 4140. 6. The institution/continuance of the criminal proceedings against the petitioner amounts to abuse of process of Court and to secure the ends of justice, impugned proceedings need to be quashed. 7. On the other hand, learned counsel for the respondent/complainant contended that the cheque was not issued by the petitioner in the capacity of the Director 6 of the Company but in fact, the loan was taken by him in his personal capacity, therefore, no offence can be said to have been committed by the Company. therefore, the complainant has rightly impleaded the petitioner alone as a party in the complaint case. Learned counsel further submit that as the present petitioner is the Director of both the companies, therefore, he, in a deceitful manner, has issued the cheque in the name of the concerned Company. 8. I have heard learned counsel for the parties and perused the records with utmost circumspection. 9. Section 141 of the Negotiable Instruments Act, 1881 provides as 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 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: 7 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.” 8 10. In the matter of Himanshu Vs. B. Shivamurthy & Anr. reported in AIR 2019 Supreme Court 3052, the Hon’ble Supreme Court has held in para- 15 as under : “15. In the absence of the company being arraigned as an accused, a complaint against the appellant was therefore not maintainable, The appellant had signed the cheque as a Director of the company and Tor and on its behalf. Moreover, in the absence of a notice of demand being served on the company and without compliance with the proviso to Section 138, the High Court was in error in holding that the company could now be arraigned as an accused.” 11. In the matter of N. Harihara Krishnan Vs. J. Thomas reported in AIR 2017 Supreme Court 4125, the Hon’ble Supreme Court has held as under : “This Court in Aneeta Hada (AIR 2012 SC 2795, para 43), had an occasion to examine the question Whether an authorised signatory of a company would be liable for prosecution under Section 138 of the Negotiable Instruments Act, 1881 (for brevity "the Act") without the company being arraigned as an accused" and held as follows:- 9 "59. In view of our aforesaid analysis, we arrive at the irresistible conclusion that for maintaining the prosecution under Section 141 of the Act, arraigning of a company as an accused is imperative. The other categories of offenders can only be brought in the drag-net on the touchstone of vicarious liability as the same has been stipulated in the provision itself.…" Yet the High Court reached a conclusion that the revision filed by the petitioner is not maintainable because DAKSHIN did not choose to challenge the trial court's order. 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.” 12. In the matter of Manmohan Kumar Khanduja (Director, BSR Super Specialty Hospitals Ltd.) Vs. Amit Kumar reported in AIR Online 2023 CHH 220, the Hon’ble Supreme Court has held in para-8 & 9 as under : 10 “8.Reverting back to the facts of the present case, it is indisputable that the cheque was issued in the Capacity of an authorized signatory of BSR Health Ventures Private Limited and the said cheque was not issued from a personal account and also the name of the company has been wrongly mentioned since 'BSR Super Specialty Hospitals Ltd' and 'BSR Health Ventures Private Ltd' are two separate entities and the existence of both the companies are different and distinct. Further, the cheque was issued in the name of BSR Health Ventures Private Ltd., however, the notice was issued and the complaint was filed against the Director of BSR Super Specialty Hospitals Ltd. 9.In view of the aforesaid discussion, since a wrong notice has been served and a wrong party has been made and further, the Company has also not been arrayed as an accused, the continuation of the criminal proceeding against the petitioner would amount to abuse of the process of law.” 13. In the matter of M/s. Pepsi Foods Ltd. and another Vs. Special Judicial Magistrate and Others reported in 1998 Cri. L.J. 1, the Hon’ble Supreme Court has held in para-28 as under : “28.Summoning of an accused in a criminal case is a serious matter. Criminal law cannot be set into motion as a matter of course. It is not that the complainant has to bring 11 only two witnesses to support his allegations in the complaint to have the criminal law set into motion. The order of the Magistrate summoning the accused must reflect that he has applied his mind to the facts of the case and the law applicable thereto. He has to examine the nature of allegations made in the complaint and the evidence both oral and documentary in support thereof and would that be sufficient for the complainant to succeed in bringing charge home to the accused. It is not that the Magistrate is a silent spectator at the time of recording of preliminary evidence before summoning of the accused. Magistrate has to carefully scrutinies the evidence brought on record and may even himself put questions to the complainant and his witnesses to elicit answers to find out the truthfulness of the allegations or otherwise and then examine if any offence is prima facie committed by all or any of the accused.” 14. In the matter of S.M.S. Pharmaceuticals Ltd. Vs. Neeta Bhalla and Another reported in 2005 Cri. L.J. 4140, the Hon’ble Supreme Court has held in para- 6, 12 & 14 as under : “6. Section 203 of the Code empowers a Magistrate to dismiss a complaint without even issuing process. It uses the words "after considering" and "the Magistrate is of opinion that there is no sufficient ground for proceeding". These words suggest that the Magistrate has to apply his 12 mind to a complaint at the initial stage itself and see whether a case is made out against the accused persons before issuing process to them on the basis of the complaint. For applying his mind and forming an opinion as to whether there is sufficient ground for proceeding, a complaint must make out a prima facie case to proceed. This, in other words, means that a complaint must contain material to enable the Magistrate to make up his mind for issuing process. If this were not the requirement, consequences could be far reaching. If a Magistrate had to issue process in every case, the burden of work before Magistrates as well as harassment caused to the respondents to whom process is issued would be tremendous. Even Section 204 of the Code starts with the words "if in the opinion of the Magistrate taking cognizance of an offence there is sufficient ground for proceeding......" The words "sufficient ground for proceeding" again suggest that ground should be made out in the complaint for proceeding against the respondent. It is settled law that at the time of issuing of the process the Magistrate is required to see only the allegations in the complaint and where allegations in the complaint or the charged-sheet do no constitute an offence against a person, the complaint is liable to be dismissed. 13 12. While analysing Section 141 of the Act, it will be seen that it operates in cases where an offence Cunder Section 138 is committed by a company. The key words which occur in the Section are "every person". These are general words and take every person connected with a company within their sweep. Therefore, these words have been rightly qualified by use of the words "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 etc." What is required is that the persons who are sought to be made criminally liable under Section 141 should be at the time the offence was committed, in charge of and responsible to the company for the conduct of the business of the company. Every person connected with the company shall not fall within the ambit of the provision. It is only those persons who were in charge of and responsible for conduct of business of the company at the time of commission of an offence, who will be liable for criminal action. It follows from this that if a director of a Company who was not in charge of and was not responsible for the conduct of the business of the company at the relevant time, will not be liable under the provision. 14 14. The conclusion is inevitable that the liability arises on account of conduct, act or omission on the part of a person and not merely on account of holding an office or a position in a company. Therefore, in order to bring a case within Section 141 of the Act the complaint must disclose the necessary facts which make a person liable.” 15. In view of the provisions of Section 141 of N.I. Act and the well settled principles of law, it is apparent that the complainant should have impleaded the Company- BSR SUPERSPECIALITY HOSPITAL LTD as a party respondent in the complaint case before the JMFC. 16. In such eventuality, the orders dated 07.07.2018 and 03.01.2023 are set aside and the case is remanded back to the trial Court for fresh adjudication and the petitioner shall file appropriate application before the trial Court and the learned trial Court after taking into consideration the objection raised by the petitioner, the same shall decide on its own merits without prejudice to the order of this Court. 17.Accordingly, the instant CrMP stands disposed of. Sd/- (Arvind Kumar Verma) Judge Vasant