BALAJI TRADING CO Vs. KEJRIWAL PAPER LTD

JUDGEMENT

(1.) This revision case is filed by the complainant in C.C.No.904 of 2001 on the file of the VI Metropolitan Magistrate, Hyderabad filed under Section 138 of the Negotiable Instruments Act.

(2.) The respondent-accused is a company represented by its Director Sri Rahul Kejriwal. The revision petitioner-complainant is the proprietary concern and is a dealer in all kinds of paper products. In the year 2000 the respondent approached the revision petitioner for supply of waste paper. The complainant supplied waste paper on different dates under different invoices. The accused company issued cheques for Rs 20,00,000/- in September 2000 towards consideration for the material supplied by the petitioner. The complainant deposited all the cheques with South Indian Bank Limited, Hyderabad and later he received an intimation from the bank that all the cheques issued by the accused company in favour of the complainant were returned as dishonoured for insufficient funds. After receipt of the intimation, the complainant requested the company to pay the amounts covered by the cheques, but the company failed to pay the said amount. On 27-2-2001 the petitioner issued a legal notice under Section 138 of the Negotiable Instruments Act (for short 'the Act') calling for the accused company to pay the amounts covered by the cheques within 15 days from the date of receipt of the legal notice. The company instead of arranging payment issued a reply notice raising some contentions. Since the accused company failed to make payment of the amount covered by the cheques, the complainant prosecuted the company by contending that the accused company deliberately failed to pay the amounts. The learned Magistrate took cognizance of the offence and issued summons to the company. During the pendency of the said case, the accused company filed Criminal Misc. Petition No.3598 of 2003 under Sections 239 and 245 Cr.P.C. for discharge and acquittal for the offence under Section 138 read with Section 141 of the Act. In the said application Sri Rahul Kejriwal, Director of the company pleaded that as the complainant did not mention anywhere in the complaint that Sri Rahul Kejriwal was personally responsible for the day-to-day business of the accused firm, he is not liable to be prosecuted. The learned Magistrate after hearing both parties dismissed the application on 8-9-2003 observing as follows: With regard to the personal liability of the petitioner, Sri Rahul Kejriwal is not made an accused independently, but he is shown as Director representing the accused company. ... The petition is devoid of merits. In the result, the petition is dismissed.

(3.) The accused company being aggrieved by the order of the learned Magistrate preferred Criminal Revision Petition No.222 of 2003 on the file of the VI Additional Metropolitan Sessions Judge, Hyderabad. The respondent company contended before the Sessions Court that the learned Magistrate erred in holding that a complaint can be lodged against the company through its Director without there being any specific allegation that the said Director was in-charge of and was responsible to the company in the conduct of the business at the relevant point of time and that the offence was committed with his consent or connivance and the non-impleading of the Directors in their personal capacity is contrary to Section 141 of the Act, as such, the Director cannot be made to undergo the trial in the absence of any allegation or averment in the complaint that he was incharge of the affairs of the company. Therefore, the complaint has to be dismissed by setting aside the order of the learned Magistrate dated 8-9-2003. The learned Sessions Judge after hearing both parties and after referring to certain case law held as follows: In the light of the clear legal position, the finding of the Magistrate that a company alone can be prosecuted under Section 138 of the Act is illegal and is liable to be set aside.