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Sec.138 and sec.141 of N.I. Act – Whether the complaint against the accused alone maintainable leaving the company set free -NO – High court quashed the summons issued against the company by trial court and confirmed the summons issued against the appellant – Apex court held 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. We say so on the basis of the ratio laid down in C.V. Parekh17 which is a three-Judge Bench decision. Thus, the view expressed in Sheoratan Agarwal does not correctly lay down the law and, accordingly, is hereby overruled. The decision in Anil Hada is overruled with the qualifier as stated in para 51. The decision in Modi Distillery has to be treated to be restricted to its own facts as has been explained by us hereinabove.” In the present case, the High Court by impugned judgment dated 13th August, 2007 held that the complaint against respondent no.2-Company was not maintainable and quashed the summon issued by the Trial Court against respondent no.2-Company. Thereby, the Company being not a party to the proceedings under Section 138 read with Section 141 of the Act and in view of the fact that part of the judgment referred to by the High Court in Anil Hada (supra) has been overruled by three Judge Bench of this Court in Aneeta Hada (supra), we have no other option but to set aside the rest part of the impugned judgment whereby the High Court held that the proceedings against the appellant can be continued even in absence of the Company. We, accordingly, set aside that part of the impugned judgment dated 13th August, 2007 passed by the High Court so far it relates to appellant and quash the summon and proceeding pursuant to complaint case No.698 of 2001 qua the appellant.The appeal is allowed with aforesaid observation.=Anil Gupta … APPELLANT VERSUS Star India Pvt. Ltd. & Anr. … RESPONDENTS = 2014 – July. Part – http://judis.nic.in/supremecourt/filename=41752

Sec.138 and sec.141 of N.I. Act – Whether the complaint against the accused alone maintainable leaving the company set free  -NO – High court quashed the summons issued against the company by trial court and confirmed the summons issued against the appellant – Apex court held 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. We say so on the basis of the  ratio  laid  down  in  C.V. Parekh17 which is a three-Judge Bench decision. Thus, the view expressed  in Sheoratan Agarwal does not correctly lay down the law and,  accordingly,  is hereby overruled. The decision in Anil Hada is overruled with the  qualifier as stated in para 51. The decision in Modi Distillery has to be  treated  to be restricted to its own facts as has been explained by us hereinabove.” In the present case, the High Court by impugned  judgment  dated  13th August, 2007 held that the complaint  against  respondent  no.2-Company  was not maintainable and quashed the summon issued by the  Trial  Court  against respondent no.2-Company. Thereby, the Company  being  not  a  party  to  the proceedings under Section 138 read with Section 141 of the Act and  in  view of the fact that part of the judgment referred to by the High Court in  Anil Hada (supra) has been overruled by  three  Judge  Bench  of  this  Court  in Aneeta Hada (supra), we have no other option but to set aside the rest  part of the impugned judgment whereby the High Court held  that  the  proceedings against the appellant can be continued even in absence of the Company.   We, accordingly,  set aside that  part  of  the  impugned  judgment  dated  13th August, 2007 passed by the High Court so far it  relates  to  appellant  and quash the summon and proceeding pursuant to complaint case  No.698  of  2001 qua the appellant.The appeal is allowed with aforesaid observation.=

 

The aforesaid  three

cheques were presented before the Indian Overseas Bank, Gandhi Nagar,  Jammu

and  were  dishonoured  on  6.01.2004.  

Respondent  No.1  served  notice  on

respondent no.2-Company with a demand notice separately for  all  the  three

cheques.

Respondent no.2-Company replied to the said  notice  on  20.01.2004

informed respondent  no.1  that  payments  were  stopped  because  of  their

inability to stop the piracy due to which the cable operators did  not  make

payments.

Thereafter, respondent no.1 issued second notice dated  28.01.2004  on

the appellant based on the  same  facts  and  based  on  the  same  memo  of

dishonor in respect of the aforesaid three cheques.

Respondent  no.1  also

issued a corrigendum of the same date to  the  said  notice.

The  appellant

submitted reply to the said notice on 3.02.2004.

4.    Respondent no.1 filed a Criminal Complaint under Sections 138 and  141

of the Act on 17.03.2004 =

By the impugned judgment, the  High  Court  held  that

the complaint under Section 138 read with  Section  141  of  the  Negotiable

Instruments Act, 1881 (hereinafter referred to as the, ‘Act’) was barred  by

limitation and quashed the summon order against respondent  no.2-Visionaries

Media Network (hereinafter referred to as the, ‘Company’). 

It  further  held

that the dispute qua the appellant (petitioner no.2 before  High  Court)  is

within limitation and affirmed the summon order against the appellant.=

 

Whether the complaint against the accused alone maintainable leaving the company set free 

Again the same question was considered by three Judge  Bench  of  this

Court in Aneeta Hada v.  Godfather Travels and Tours Pvt. Ltd. (2012) 5  SCC

661. The Court noticed the decisions in Anil Hada (supra)  case  and  Aneeta

Hada (supra) case.   The  three  Judge  Bench  while  partly  overruled  the

finding of Anil Hada (supra) affirmed the decision of Aneeta  Hada  (supra).

This Court held

“51. We have already opined that the  decision  in  Sheoratan  Agarwal  runs

counter to the ratio laid down in C.V. Parekh which is  by  a  larger  Bench

and hence, is a binding  precedent.  On  the  aforesaid  ratiocination,  the

decision in Anil Hada has to be treated as not laying down the  correct  law

as far as  it  states  that  the  Director  or  any  other  officer  can  be

prosecuted without impleadment of the company. Needless  to  emphasise,  the

matter would stand  on  a  different  footing  where  there  is  some  legal

impediment  and  the  doctrine  of  lex  non  cogit  ad  impossibilia   gets

attracted.”

“53. It is to be borne in mind that Section 141  of  the  Act  is  concerned

with the offences by the company. It makes  the  other  persons  vicariously

liable for commission of an offence on the part of the company. As has  been

stated by us earlier,  the  vicarious  liability  gets  attracted  when  the

condition precedent laid down in Section 141 of the  Act  stands  satisfied.

There can be no dispute that as the liability is penal in nature,  a  strict

construction of the provision would  be  necessitous  and,  in  a  way,  the

warrant.”

“58. Applying the doctrine of strict construction, we are of the  considered

opinion that commission of offence by the company is  an  express  condition

precedent to attract the vicarious liability of others. Thus, the words  “as

well  as  the  company”  appearing  in  the  section  make   it   absolutely

unmistakably clear that when the company can be 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.  One

cannot be oblivious of the fact that the company is a  juristic  person  and

it has its own respectability. If a  finding  is  recorded  against  it,  it

would create a concavity in its reputation. There  can  be  situations  when

the corporate reputation is affected when a Director is indicted.

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. We say so on the basis of the  ratio  laid  down  in  C.V.

Parekh17 which is a three-Judge Bench decision. Thus, the view expressed  in

Sheoratan Agarwal does not correctly lay down the law and,  accordingly,  is

hereby overruled. The decision in Anil Hada is overruled with the  qualifier

as stated in para 51. The decision in Modi Distillery has to be  treated  to

be restricted to its own facts as has been explained by us hereinabove.”

15.   In the present case, the High Court by impugned  judgment  dated  13th

August, 2007 held that the complaint  against  respondent  no.2-Company  was

not maintainable and quashed the summon issued by the  Trial  Court  against

respondent no.2-Company. Thereby, the Company  being  not  a  party  to  the

proceedings under Section 138 read with Section 141 of the Act and  in  view

of the fact that part of the judgment referred to by the High Court in  Anil

Hada (supra) has been overruled by  three  Judge  Bench  of  this  Court  in

Aneeta Hada (supra), we have no other option but to set aside the rest  part

of the impugned judgment whereby the High Court held  that  the  proceedings

against the appellant can be continued even in absence of the Company.   We,

accordingly,  set aside that  part  of  the  impugned  judgment  dated  13th

August, 2007 passed by the High Court so far it  relates  to  appellant  and

quash the summon and proceeding pursuant to complaint case  No.698  of  2001

qua the appellant.

16.   The appeal is allowed with aforesaid observation.

 

2014 – July. Part – http://judis.nic.in/supremecourt/filename=41752

SUDHANSU JYOTI MUKHOPADHAYA, V. GOPALA GOWDA

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