SUDHIR KUMAR BHALLA v. JAGDISH CHAND, ETC. ETC. [2008] INSC 781 (1 May 2008)

S. B. Sinha & Lokeshwar Singh Panta

O R D E R REPORTABLE CRIMINAL APPEAL No. 776 OF 2008 [Arising out of S.L.P. (Crl.) No.2541 of 2007] WITH

CRIMINAL APPEAL Nos. 780, 781, 779, 782, 777 & 778 OF 2008 [Arising out of S.L.P. (Crl.) No. 2545, 2546, 2548, 2550, 2988, 2990 of 2007] Leave granted in all the above-said Special Leave Petitions.

We have seven appeals before us in which the parties are similar. Since all these appeals arise out of common judgments and orders dated 25.01.2007 and 19.02.2007 passed by a learned Single Judge of the High Court of Punjab and Haryana in Criminal Appeal No. 1410-SBA of 2002, Criminal Appeal No. 1411-SBA of 2002, Criminal Appeal No.

1412-SBA of 2002, Criminal Appeal No. 1413-SBA of 2002, Criminal Appeal No. 1433-SBA of 2002, Criminal Misc.

Petition No.29090-M of 2001 and Criminal Misc. Petition No.36987-M of 2001. As similar questions of facts and law are involved, therefore, for the sake of convenience they are being heard together and disposed of by this common judgment.

Brief facts, which led to the trial of the appellant, are as follows:- Jagdish Chand - respondent herein and his wife Smt.

Ramesh Rani are the proprietors of M/s Mehra Export Corporation and M/s Mehra International, Katra Hari Singh, Amritsar. The firms deal in saffron, herbs and other like goods. M/s Sudhir Kumar Bhalla and Brothers, 25, Green Park, Ludhiana, of which Sudhir Kumar Bhalla - appellant herein is one of the partners, has been purchasing various goods from the firms of Jagdish Chand and Ramesh Rani. The sale price was being paid in cash and at times, through cheques.

In the month of May, 1997, the appellant on behalf of his firm issued six cheques Nos. 442344, 442345, 442346, 442347, 442348 and 442349 dated 01.05.1997, 03.05.1997 and 05.05.1997 in favour of M/s Mehra Export Corporation and M/s Mehra International. Out of those six cheques, two cheques were in the sums of Rs.30,000/- each and four cheques were in the sums of Rs.40,000/- each. All those cheques were drawn in favour of the Indian Overseas Bank, Ludhiana.

One of the cheques, in the sum of Rs.30,000/-, was stated to have been encashed, whereas the other five cheques have been dishonoured on the ground of 'Exceed Arrangement'. On 20.05.1997, the respondent sent statutory notices under Section 138 (5) of the Negotiable Instruments Act, 1881 [for short 'the Act '] to the appellant, which were despatched through registered post on 24.05.1997. However, the same were received back on 28/29.5.1997 with a report that the addressee was 'not met'. The respondent again sent another notice on 04.06.1997 through courier, which again was not accepted by the appellant and the same was received back on 05.06.1997 with the report of refusal.

It was on 13.06.1997 that the respondent, on his behalf and on behalf of his wife as her attorney, filed five criminal complaints under Section 138 of the Act read with Section 420 of the Indian Penal Code [for short 'the IPC'] in the Court of Chief Judicial Magistrate, Amritsar, against the appellant. On 09.07.1997, the respondent-complainant made a statement that he wanted to withdraw the said complaint with permission to file the fresh complaint. The learned Chief Judicial Magistrate vide his order dated 09.07.1997 passed the following order:- "In view of the statement given by the complainant, recorded separately, the present complaint is hereby dismissed as withdrawn."

On 12.07.1997, the respondent filed second complaint on similar and practically the same points purported to have accrued on identical causes of action. The second complaint was entrusted to the Court of Judicial Magistrate, 1st Class, Amritsar, who recorded the statement/evidence of the respondent on 12.07.1997. Thereafter, the Judicial Magistrate, 1st Class, vide order dated 23.08.1997 issued summon to the appellant. The appellant appeared on 06.04.1998 before the Judicial Magistrate and filed an application for discharging him in the case. However, on 01.06.1998 the Judicial Magistrate dismissed the said application. After following and adopting the due procedure as prescribed under the Code of Criminal Procedure, 1973 (for short 'Cr.P.C.'), the trial court dismissed the complaint on 06.02.2002 and acquitted the appellant.

Being aggrieved by the order of acquittal of the appellant by the trial court, the respondent filed five criminal appeals, two as an attorney of his wife and three on his behalf, in the High Court.

In April 1998, the appellant approached the Court of Judicial Magistrate, 1st Class, Ludhiana, under Section 156 of Cr.P.C. by way of two separate applications alleging fraud, cheating, tampering of the cheques by the respondent and his wife and prayed that the police be directed to register criminal cases against them. On the directions of the learned Magistrate, FIR No.93 of 1998 was registered against the respondent under Sections 420, 463, 465, 468 and 471 of the IPC, whereas second FIR No.94 of 1998 was lodged against Jagdish Chand and Smt. Ramesh Rani under Sections 420, 463, 465, 468, 471 and 120-B of the IPC at Police Station, Sarabha Nagar, Ludhiana. After investigation, the police filed challans in both the cases in the court. The trial court charge sheeted the respondent and his wife vide two separate orders dated 15.01.2000. They filed two revision petitions against the orders of framing charges against them, which were dismissed by the learned Sessions Judge, Ludhiana, vide separate orders dated 04.06.2001. The respondent and his wife filed two Criminal Miscellaneous Petitions Nos. 29090 and 36987-M of 2001 in the High Court challenging the validity and correctness of the orders of the learned Trial Magistrate as also of the learned Sessions Judge.

The High Court vide its judgment dated 25.01.2007 allowed the above-said five appeals and convicted the appellant under Section 138 of the Act . By the same order, Criminal Misc. Petitions Nos. 29090 and 36987-M of 2001 were allowed and FIR Nos. 93 and 94 of 1998 lodged by the respondent and his wife were quashed. By order dated 19.02.2007, the appellant was sentenced to undergo R.I. for one year and to pay a fine of Rs.8 lacs and in default thereof, the appellant shall undergo further R.I. of one year. Hence, the appellant has preferred these appeals.

We have heard the learned counsel for the parties and with their assistance, examined the entire material placed on record.

Mr. P.S. Patwalia, learned senior counsel appearing on behalf of the appellant, assailed the judgment of the High Court inter alia contending:- (i) that the learned Single Judge erred in not appreciating the statement of the respondent- complainant in which he admitted that all the cheques were filled by him, the date and figures of the amounts were also in his handwriting and the appellant simply had signed the cheques. According to the learned counsel, the cheques in question have been forged and fabricated by the respondent by making material alteration by changing figure in digit from Rs.30,000/- to Rs.3,00,000/- by adding 'zero' at the end of Rs.30,000/- and Rs.40,000/- to Rs.4,00,000/- by adding 'zero' at the end of Rs.40,000/-; and (ii) that the learned Single Judge erred in not addressing the legal arguments raised on behalf of the appellant that the provisions of Section 138 of the Act are only attracted if the cheques issued in discharge of liability or debt are dishonoured, but not on account of security cheques.

Mr. Ankit Singhal, learned counsel for the respondent, on the other hand, contended that the reasons given by the High Court recording the order of conviction of the appellant are based upon proper appreciation of evidence led by the respondent in the case. He submitted that this Court should be slow to interfere in the well-reasoned and well-merited judgment of the High Court.

We have given our anxious consideration to the rival contentions of the learned counsel for the parties. The arguments put forward by Mr. Patwalia deserve to be accepted.

We have gone through the record of the trial Magistrate placed before us. In support of the complaint filed under Section 138 of the Act , the trial Magistrate examined the respondent on 27.04.1999. On 05.05.2000, the respondent in his cross-examination admitted as under:- "I have brought the account books for the year 1995-96 and 1996-97. I have seen the ledger for the year 1995-96 where there is a payment of rupees one lac dated 26.10.1995 having been made by the accused to me but the remaining amounts are for an amount of Rs.35,000/- each and at one time it was for an amount of Rs.40,000/-. Once a payment of Rs.25,000/- was also made in the said year. This ledger relates to the firm M/s Mehra Exports. The payments of Rs.35,000/- each have been made either through cheques or through drafts.

I have also seen the ledger book of M/s Mehra International for the year 1995-96.

Except Rs.10,000/- all the payments made in this account are either through draft or through cheque. The lowest payment in this account in this year is Rs.10,000/- the maximum payment made by the accused to this firm in this account is Rs.50,000/-. The notices were sent only to the firm M/s Sudhir Kumar Bhalla and Brothers before filing the complaint and not to the partners individually. We did not receive any cheque from the accused bearing No.442344. We never received any advance payment from the accused. As per account books of firm M/s Mehra International for the year 1997-98 a sum of Rs.7,16,672.50 ps. On account of principal amount is due from the accused."

The respondent again stated as under:- "The cheque No.442347 is in my hands which is dated 5.5.1997 but the same is signed by accused Sudhir Kumar Bhalla.

All the cheques which are subject-matter of other complaints are filled in by me and are signed by Sudhir Kumar Bhalla accused. The dates on the cheques are also in my hands. The amount of the cheques in words and figures are also in my hands. I can read the contents of the cheques clearly."

On 05.05.2000, the trial court on the basis of the statement of the respondent-complainant in his cross- examination made the following observations:- "At this stage, counsel for accused had made a request for giving note regarding the demoneur of the witness as well as to give note on the aforesaid fact so that the document may not be tampered with subsequent. Heard, without commenting upon the demoneur of the witness at this stage. I have observed from cheque No.

442349 dated 3.5.1997 the last zero of the figure written in the column of rupees is separate from the remaining four zeros which are attached with each other in the same flow."

Thereafter, on 21.05.2001 the cheques were sent to Mr.

Sardara Singh Parmar, Document Expert, for examination, who in his report dated 21.05.2001 submitted to the Court, opined as under:- "In view of the reasons stated above, I am of the opinion that the last figure (0) in above mentioned cheque has not been written in the continuous process by the same person with the same pen and ink, but it has been subsequently changed into by adding figure (0) in the original amount Rs. 40,000/- and it is free hand forgery."

Mr. Sardara Singh Parmar was examined as DW-3 before the trial court on 13.08.2001 and deposed as under:- "I am of the opinion that the last figure zero in above mentioned cheque has not been written in the continuous process by the same person with the same pen and ink, but it has been subsequently changed into by adding figure zero in the original amount Rs. 30,000/- and it is free hand forgery. The reasons have already been given in my report dated 21.5.2001. It consists of 6 pages and it is Ex.DW3/1. It has been prepared by me signed by me and is correct. One photograph chart bearing the photograph cheque No. 442345 dt. 5.5.97 is Ex.DW3/2, one negative is Ex.DW/3."

As noticed above, the Judicial Magistrate vide his judgment dated 06.02.2002 acquitted the appellant of the charge under Section 138 of the Act and consequently dismissed the complaint of the respondent.

The learned Single Judge of the High Court, after hearing the learned counsel for the parties, recorded the conviction of the appellant vide order dated 25.01.2007 for an offence under Section 138 of the Act , which reads as under:- "Lastly, it was contended by the learned counsel for Sudhir Kumar Bhalla that the figures of Rs.30,000/- and Rs.40,000/- mentioned in the cheques were interpolated by adding 'zero' to make the same Rs.3,00,000/- and Rs.4,00,000/-.

He contended that there is evidence of the handwriting expert to establish the afore-stated fact and the trial court had rightly dis-believed the claim of Jagdish Chand on this court.

The contention of the learned counsel for Sudhir Kumar Bhalla is misplaced. The trial court had clearly fallen in error by ignoring the fact that the cheques were not only filled in figures, but in words as well, according to which Rs.3 lacs and Rs.4 lacs were written thereon. Even though, the handwriting expert opined that the zero has been added in the cheques subsequently, but it was clearly in consonance with the wishes of Sudhir Kumar Bhalla, who had issued the cheques by depicting the amounts in words also.

That apart, there is cogent evidence on record in the shape of original bills and the complete details of the prices of the goods supplied and the registers of account, which could not be countered by Sudhir Kumar Bhalla during the course of evidence. In view of the overwhelming evidence in favour of Jagdish Chand, the findings of the trial court awarding an acquittal to Sudhir Kumar Bhalla are unsustainable.

On the basis of the above discussion, it is held that Sudhir Kumar Bhalla, who was one of the partners of M/s Sudhir Kumar Bhalla & Brothers, Ludhiana, issued the cheques in question to discharge the liability of his firm and on presentation thereof by Jagdish Chand and Ramesh Rani, the same were dishonoured. Thus, he had committed an offence punishable under Section 138 of the Act . This court holds him accordingly guilty for the same in each of the appeals.

For the reason that the findings qua interpolation in the cheques in question have been categorically set aside, the proceedings against Jagdish Chand and Ramesh Rani initiated in the court of Judicial Magistrate, 1st Class, Ludhiana, pursuant to FIR Nos. 93 and 94 of 1998 registered at Police Station Sarabha Nagar, Ludhiana, which have been assailed in Criminal Miscellaneous Petitions Nos. 29090-M and 36987-M of 2001, must, as a logical consequence, fail.

In view of the above, the criminal appeals and the criminal miscellaneous petitions filed by Jagdish Chand and Ramesh Rani are accepted. The proceedings taken against Jagdish Chand and Ramesh Rani in pursuance to FIR Nos. 93 and 94 of 1998 registered at Police Station Sarabha Nagar, Ludhiana, are also quashed."

On examination of the above-stated findings of the learned Single Judge in the judgment impugned before us, we find that the learned Single Judge has not addressed himself on the legal question raised before him by the appellant that the criminal liability of the appellant under the provisions of Section 138 of the Act are attracted only on account of the dishonour of the cheques issued in discharge of liability or debt, but not on account of issuance of security cheques. The learned Single Judge has also not given cogent, satisfactory and convincing reasons for disbelieving and discarding the pre-charge evidence of the appellant corroborated by the evidence of the expert opinion in regard to the interpolation in and fabrication of the cheques by adding one more figure '0' to make Rs.30,000/- to Rs.3,00,000/- and similarly adding one more figure '0' to make Rs.40,000/- to Rs.4,00,000/-.

In the backdrop of the facts of these cases, we are of the opinion that the judgments and orders of the High Court cannot be sustained on the premise that the High Court has not addressed itself on the above-said two legal questions raised by the appellant and, therefore, the impugned judgments and orders dated 25.01.2007 and 19.02.2007 are set aside. The interest of justice should be sub-served if the matters are remitted to the High Court to decide the appeals filed by the respondent against the appellant and criminal miscellaneous petitions seeking for quashing the first information reports registered against the respondent and his wife by the police for commission of the offences stated in FIR Nos.93 and 94 of 1998. Needless to say that any observation made by us in this judgment shall not be construed as an expression of opinion on the merits of the cases, which shall be decided by the High Court on their own merits in accordance with law.

The appeals shall stand disposed of in the aforesaid terms.

SHAMSHAD BEGUM v. B.MOHAMMED [2008] INSC 1852 (3 November 2008)

Judgement
IN THE SUPREME COURT OF INDIA CRIMINAL APPELLATE JURISDICTION CRIMINAL APPEAL NO. 1715 OF 2008 (Arising out of SLP (Crl.) NO.73 of 2006)

Smt. Shamshad Begum ....Appellant
Versus
B. Mohammed ....Respondent

Dr. ARIJIT PASAYAT, J.

1. Leave granted.

2. Challenge in this appeal is to the judgment of a learned Single Judge of the Karnataka High Court dismissing the petition filed under Section 482 of the Code of Criminal Procedure, 1973 (in short the `Code'). Prayer in the petition was to quash all proceedings in CC No. 1042 of 2004 on the file of learned Vth JMF Court Mangalore. Appellant is the accused in the aforesaid case in relation to an offence punishable under Section 138 of the Negotiable Instruments Act, 1881(in short the `Act '). The petition was filed before the High Court on the ground that the Mangalore Court has no jurisdiction to try the case. It was stated that the agreement between the parties was entered into Bangalore and the parties live in Mangalore and the cheque were returned from the banks at Bangalore and therefore the Bangalore Court has jurisdiction to try the case.

3. In response, the respondent had submitted that before issuing notice to the appellant he had shifted his residence to Mangalore and therefore he had issued the notice from Mangalore which was received by the appellant and the reply was sent by her to the complainant to the Mangalore address.

Therefore, as one of the components of the said offence i.e. notice in writing to the drawer of the cheque demanding payment of cheque amount was sent from Mangalore, Court at Mangalore had jurisdiction to try the case. The High Court noted that one of the components of the offence was giving notice in writing to the drawer of the cheque demanding payment of the 2 cheque amount. The said action took place within Mangalore jurisdiction and, therefore, the petition was without merit. It was however stated that if the presence of the appellant was not very necessary for continuation of the proceeding, on appropriate application being filed, the court can grant exemption from appearance.

4. In support of the appeal learned counsel for the appellant submitted that the Court at Mangalore had no jurisdiction.

5. Learned counsel for the respondent on the other hand supported the judgment of the High Court.

6. In K. Bhaskaran v. Sankaran Vaidhyan Balan & Anr. [1999(7) SCC 510], it was inter alia observed as follows:

"15. It is not necessary that all the above five acts should have been perpetrated at the same locality. It is possible that each of those five acts could be done at five different localities. But a concatenation of all the above five is a sine qua non for the completion of the offence under Section 138 of the Code. In this context a reference to Section 178(d) of the Code is useful. It is extracted below:

"178. (a)-(c) * * * (d) where the offence consists of several acts done in different local areas, it may be enquired into or tried by a court having jurisdiction over any of such local areas."

3

16. Thus it is clear, if the five different acts were done in five different localities any one of the courts exercising jurisdiction in one of the five local areas can become the place of trial for the offence under Section 138 of the Act . In other words, the complainant can choose any one of those courts having jurisdiction over any one of the local areas within the territorial limits of which any one of those five acts was done. As the amplitude stands so widened and so expansive it is an idle exercise to raise jurisdictional question regarding the offence under Section 138 of the Act .

17. The more important point to be decided in this case is whether the cause of action has arisen at all as the notice sent by the complainant to the accused was returned as "unclaimed". The conditions pertaining to the notice to be given to the drawer, have been formulated and incorporated in clauses (b) to (c) of the proviso to Section 138 of the Act . The said clauses are extracted below:

"(b) the payee or the holder in due course of the cheque, as the case may be, makes a demand for the payment of the said amount of money by giving a notice in writing, to the drawer of the cheque, within fifteen days of the receipt of information by him from the bank regarding the return of the cheque as unpaid; and (c) the drawer of such cheque fails to make the payment of the said amount of money to the payee or as the case may be, to the holder in due course of the cheque within fifteen days of the receipt of the said notice."

7. As was noted in K. Bhaskar's case (supra) the offence under Section 138 of the Act can be completed only with the concatenation of a number of acts. The acts which are components are as follows:

(1) Drawing of the cheque;

(2) Presentation of the cheque to the bank;

(3) Returning the cheque unpaid by the drawee bank;

4 (4) Giving notice in writing to the drawer of the cheque demanding payment of the cheque amount;

(5) failure of the drawer to make payment within 15 days of the receipt of the notice.

8. It is not necessary that the above five acts should have been perpetrated at the same locality. It is possible that each of those five acts could be done at five different localities. But concatenation of all the above five is sine qua non for the completion of the offence under Section 138 of the Act .

9. In view of the aforesaid, the judgment of the High Court does not suffer from any infirmity to warrant interference.

10. The appeal is dismissed.

..........................................J.

(Dr. ARIJIT PASAYAT) ...........................................J.

(Dr. MUKUNDAKAM SHARMA) New Delhi:

S.M.S. PHARMACEUTICALS LTD V. NEETA BHALLA & ANR [2007] INSC 174 (20 February 2007)

S.M.S. PHARMACEUTICALS LTD V. NEETA BHALLA & ANR [2007] INSC 174 (20 February 2007)

S.B. Sinha & Markandey Katju

S.B. Sinha, J.

Appellant herein is a company registered and incorporated under the Companies Act. Respondent No. 1 was a Director of a company known as M/s. Direct Finance and Investment Ltd., New Delhi. She allegedly submitted her resignation on 15.04.1994.

Against the said company, the Managing Director thereof, Respondent No. 1 herein as also another director, a complaint petition was filed by the appellant alleging that the Company represented by its Managing Director had called for inter-corporate deposit for a short period of 15 days to the extent of rupees two crores and to such a proposal it agreed. The rate of interest for such deposit was stipulated at 25% per annum therefor payable within 15 days. A promissory note was executed by the accused No. 2 on behalf of the Company. The date of maturity of the said deposit was fixed on 15.03.1995. Upon expiry of the period of deposit, the accused  Company represented by its Managing Director allegedly issued a cheque for a sum of rupees two crores as also a cheque for a sum of Rs. 1,58,219.00 and another cheque for a sum of Rs. 8,33,334.00 drawn on Canara Bank, Janpath, New Delhi. All the cheques were dated 15.08.1996. The cheques for Rs. 8,33,334.00 and Rs. 1,58,219.00 represented the interest part on the deposit of rupees two crores for 15 days. The said cheques upon presentation were dishonoured on the ground of insufficient funds. It stands accepted that a notice dated 21.09.1996 was issued by the appellant asking the accused No. 1  Company to pay the said sum. The said notice was served upon the accused Nos. 2 and 3, viz., the Managing Director and another Director of the Company. Respondent No. 1 who was arrayed as the accused No. 4 in the complaint petition was however not served with any notice. The address of Respondent No. 1 herein  accused No. 4 was shown as the Director of the Company being resident of 353, Bhera Enclave, Outer Ring Road, Delhi  110 041. We may, however, notice that in the complaint petition her address had been shown to be Outer Ring Road, Paschin Vihar, Delhi  110 041.

In the complaint petition the allegations made inter alia are as under:

"The Accused No. 1 is a duly incorporated Company, having its registered office at the address mentioned above, represented by the Director, Accused no. 2. The accused No. 3 and 4 are also the Directors of the Accused No. 1 company and the accused 2 to 4 are actively involved in the management of the affairs of the Accused No. 1 Company."

Appellant along with the said complaint petition annexed a purported resolution dated 15.02.1995 authorizing the Managing Director of the Company to execute the promissory note which reads as under:

"RESOVED THAT the Company to avail an Inter Corporate Deposit of Rs. 2 Crores (Rupees Two Crores Only) for 15 days @ 25% p.a. from Reddy Nagar, Hyderabad and that Mr. Rajiv Anand, Director be and is hereby authorized to sign and execute Demand Promissory Note, Post Dated Cheques and other documents as may be required by M/s. SMS Pharmaceuticals Ltd. on behalf of the Company and deliver the same to M/s. SMS Pharmaceuticals Ltd.

RESOVED FURTHER THAT Mr. Rajiv Anand, Director of the Company be and is hereby authorized to affix common seal of the Company on such documents and papers as may be required in this connection pursuant to the Articles of Association of the Company."

In the said proceedings, a petition for discharge was filed by Respondent No. 1 which was rejected by the learned Trial Judge. A revision petition filed thereagainst was also dismissed by the learned Sessions Judge.

An application under Section 482 of the Code of Criminal Procedure was filed questioning the said orders which, however, was permitted to be withdrawn by the High Court stating:

"The learned counsel for the petitioner seeks leave of the Court to withdraw this application. The same shall accordingly stand dismissed as withdrawn.

Leave granted to the petitioner to avail the remedies if any available to him in law.

The trial Court shall expeditiously dispose of the matter in accordance with law. The Trial Court is directed not to grant any unreasonable adjournments to any of the parties to the proceedings."

Another discharge application was filed which was dismissed on 03.08.2000. The application for quashing of the proceeding was filed thereafter.

The High Court by reason of the impugned judgment opining that the allegations contained in the complaint petition as against Respondent No. 1 are vague and indefinite and do not satisfy the requirements of law as contained in Section 141 of the Negotiable Instruments Act (for short "the Act"), held that no case had been made out for issuance of any summons against her. As regards the contention raised by the appellant herein that the involvement of Respondent No. 1 in the affairs of the Company is evident from the resolution dated 15.02.1995, the High Court opined that the same by itself did not disclose commission of any offence on the day of commission of the offence.

Appellant has filed the appeal aggrieved by the said judgment.

Requirements of law for proceeding against the Directors of the Company for their purported constructive liability came up for consideration in this case before a Division Bench of this Court, wherein the following questions were posed:

"(a) Whether for purposes of Section 141 of the Negotiable Instruments Act, 1881, it is sufficient if the substance of the allegation read as a whole fulfil the requirements of the said section and it is not necessary to specifically state in the complaint that the person accused was in charge of, or responsible for, the conduct of the business of the company.

(b) Whether a director of a company would be deemed to be in charge of, and responsible to, the company for conduct of the business of the company and, therefore, deemed to be guilty of the offence unless he proves to the contrary.

(c) Even if it is held that specific averments are necessary, whether in the absence of such averments the signatory of the cheque and or the managing directors or joint managing director who admittedly would be in charge of the company and responsible to the company for conduct of its business could be proceeded against."

Having regard to the importance of the questions, the matter was referred to a 3-Judge Bench of this Court. Upon noticing the rival contentions of the parties as also the precedents operating in the field, the questions were answered by the larger bench in the following terms:

"19. In view of the above discussion, our answers to the questions posed in the reference are as under:

(a) It is necessary to specifically aver in a complaint under Section 141 that at the time the offence was committed, the person accused was in charge of, and responsible for the conduct of business of the company. This averment is an essential requirement of Section 141 and has to be made in a complaint. Without this averment being made in a complaint, the requirements of Section 141 cannot be said to be satisfied.

(b) The answer to the question posed in sub-para (b) has to be in the negative. Merely being a director of a company is not sufficient to make the person liable under Section 141 of the Act. A director in a company cannot be deemed to be in charge of and responsible to the company for the conduct of its business. The requirement of Section 141 is that the person sought to be made liable should be in charge of and responsible for the conduct of the business of the company at the relevant time. This has to be averred as a fact as there is no deemed liability of a director in such cases.

(c) The answer to Question (c) has to be in the affirmative. The question notes that the managing director or joint managing director would be admittedly in charge of the company and responsible to the company for the conduct of its business. When that is so, holders of such positions in a company become liable under Section 141 of the Act. By virtue of the office they hold as managing director or joint managing director, these persons are in charge of and responsible for the conduct of business of the company. Therefore, they get covered under Section 141. So far as the signatory of a cheque which is dishonoured is concerned, he is clearly responsible for the incriminating act and will be covered under sub- section (2) of Section 141."

The Bench, however, referred the matter back to the Division Bench for determination on merit. The matter is, thus, before us.

Mr. P.S. Mishra, learned senior counsel appearing on behalf of the appellant, would submit that the averments made in paragraph 2 of the complaint petition are sufficient to attract the provisions of Section 141 of the Act inasmuch as the involvement of Respondent No. 1 insofar as the management of the affairs of the Company is concerned is evident from the documents appended to the complaint petition.

The learned counsel brought to our notice that the well-settled principle of law that for the purpose of attracting the provisions of Section 141 of the Act, it is not necessary to reproduce the exact wordings of the statute and submitted that the involvement of an accused as a Director of a Company being incharge of or responsible to the conduct of the Company must be gathered from the other averments made in the complaint petition as also the documents appended thereto.

It was submitted that for the said purpose, the term "management"

should be given its ordinary or dictionary meaning which would include the act or manner of managing, controlling or conducting.

Mr. Ranjit Kumar, learned senior counsel appearing on behalf of Respondent No. 1, on the other hand submitted that no allegation has been made as against Respondent No. 1 herein in the complaint petition which satisfies the requirements of Section 141 of the Act but as would appear from the facts of the case that she had no role to play in commission of the offence at all.

Section 141 of the Act does not say that a Director of a Company shall automatically be vicariously liable for commission of an offence on behalf of the Company. What is necessary is that sufficient averments should be made to show that the person who is sought to be proceeded against on the premise of his being vicariously liable for commission of an offence by the Company must be incharge and shall also be responsible to the Company for the conduct of its business.

By reason of the said provision, a legal fiction has been created. The larger Bench in this case [since reported in (2005) 8 SCC 89] categorically held:

"11. A reference to sub-section (2) of Section 141 fortifies the above reasoning because sub-section (2) envisages direct involvement of any director, manager, secretary or other officer of a company in the commission of an offence. This section operates when in a trial it is proved that the offence has been committed with the consent or connivance or is attributable to neglect on the part of any of the holders of these offices in a company.

In such a case, such persons are to be held liable.

Provision has been made for directors, managers, secretaries and other officers of a company to cover them in cases of their proved involvement.

12. 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."

Referring to this Court's earlier decisions in K.P.G. Nair v. Jindal Menthol India Ltd. [(2001) 10 SCC 218] and Monaben Ketanbhai Shah and Another v. State of Gujarat and Others [(2004) 7 SCC 15], it was stated:

"18. To sum up, there is almost unanimous judicial opinion that necessary averments ought to be contained in a complaint before a person can be subjected to criminal process. A liability under Section 141 of the Act is sought to be fastened vicariously on a person connected with a company, the principal accused being the company itself. It is a departure from the rule in criminal law against vicarious liability. A clear case should be spelled out in the complaint against the person sought to be made liable. Section 141 of the Act contains the requirements for making a person liable under the said provision. That the respondent falls within the parameters of Section 141 has to be spelled out. A complaint has to be examined by the Magistrate in the first instance on the basis of averments contained therein. If the Magistrate is satisfied that there are averments which bring the case within Section 141, he would issue the process. We have seen that merely being described as a director in a company is not sufficient to satisfy the requirement of Section 141. Even a non-director can be liable under Section 141 of the Act. The averments in the complaint would also serve the purpose that the person sought to be made liable would know what is the case which is alleged against him. This will enable him to meet the case at the trial."

In terms of Section 138 of the Act, a complaint petition alleging an offence thereto must demonstrate that the following ingredients exist that:

(i) a cheque was issued;

(ii) the same was presented;

(iii) but, it was dishonoured;

(iv) a notice in terms of the said provision was served on the person sought to be made liable; and (v) despite service of notice, neither any payment was made nor other obligations, if any, were complied with within fifteen days from the date of receipt of the notice.

The liability of a Director must be determined on the date on which the offence is committed. Only because Respondent No. 1 herein was a party to a purported resolution dated 15.02.1995 by itself does not lead to an inference that she was actively associated with the management of the affairs of the Company. This Court in this case has categorically held that there may be a large number of Directors but some of them may not associate themselves in the management of the day to day affairs of the Company and, thus, are not responsible for conduct of the business of the Company. The averments must state that the person who is vicariously liable for commission of the offence of the Company both was incharge of and was responsible for the conduct of the business of the Company. Requirements laid down therein must be read conjointly and not disjunctively. When a legal fiction is raised, the ingredients therefor must be satisfied.

If the complaint petition is read in its entirety, the same would show that the only person who was actively associated in the matter of obtaining loan, signing cheques and other affairs of the company which would lead to commission of the alleged offence was the accused No. 2. By reason of the purported resolution dated 15.02.1995, whereupon strong reliance has been placed by Mr. Mishra, only the accused No. 2 was authorized to do certain acts on behalf of the Company. The cheques were issued on 15.08.1996, i.e., after a period of 17 months from the date of the said resolution. As is evident from the averments made in the complaint petition, the cheques represented the amount of interest payable for a total period of 15 days only calculated at the rate of 25% per annum on the amount of deposit, viz., rupees two crores.

The High Court has gone into the matter at some length. The High Court found that the resolution by itself did not constitute an offence even assuming that the same bore the signature of Respondent No. 1 (although the genuineness thereof was disputed).

On a plain reading of the averments made in the complaint petition, we are satisfied that the statutory requirements as contemplated under Section 141 of the Act were not satisfied.

This aspect of the matter has recently been considered by this Court in Sabitha Ramamurthy & Anr. v. R.B.S. Channabasavaradhya [2006 (9) SCALE 212], wherein it was held:

"A bare perusal of the complaint petitions demonstrates that the statutory requirements contained in Section 141 of the Negotiable Instruments Act had not been complied with. It may be true that it is not necessary for the complainant to specifically reproduce the wordings of the section but what is required is a clear statement of fact so as to enable the court to arrive at a prima facie opinion that the accused are vicariously liable. Section 141 raises a legal fiction. By reason of the said provision, a person although is not personally liable for commission of such an offence would be vicariously liable therefor. Such vicarious liability can be inferred so far as a company registered or incorporated under the Companies Act, 1956 is concerned only if the requisite statements, which are required to be averred in the complaint petition, are made so as to make the accused therein vicariously liable for the offence committed by the company. Before a person can be made vicariously liable, strict compliance of the statutory requirements would be insisted..."

Yet again in Saroj Kumar Poddar v. State (NCT of Delhi) and Anr.

[2007 (2) SCALE 36], the said legal principle was reiterated stating:

"Apart from the Company and the appellant, as noticed hereinbefore, the Managing Director and all other Directors were also made accused.

The appellant did not issue any cheque. He, as noticed hereinbefore, had resigned from the Directorship of the Company. It may be true that as to exactly on what date the said resignation was accepted by the Company is not known, but, even otherwise, there is no averment in the complaint petitions as to how and in what manner the appellant was responsible for the conduct of the business of the Company or otherwise responsible to it in regard to its functioning. He had not issued any cheque. How he is responsible for dishonour of the cheque has not been stated. The allegations made in paragraph 3, thus, in our opinion do not satisfy the requirements of Section 141 of the Act."

A faint suggestion was made that this Court in Saroj Kumar Poddar (supra) has laid down the law that the complaint petition not only must contain averments satisfying the requirements of Section 141 of the Act but must also show as to how and in what manner the appellant was responsible for the conduct of the business of the company or otherwise responsible to it in regard to its functioning. A plain reading of the said judgment would show that no such general law was laid down therein. The observations were made in the context of the said case as it was dealing with a contention that although no direct averment was made as against the appellant of the said case fulfilling the requirements of Section 141 of the Act but there were other averments which would show that the appellant therein was liable therefor.

We, therefore, are of the opinion that the judgment of the High Court cannot be faulted.

Another submission of Mr. Mishra was that the second application was not maintainable. Such a question had not been raised before the High Court. Even otherwise, the High Court was not denuded from exercising its inherent jurisdiction in a matter of this nature. The principles of res judicata are not attracted. Reliance placed by Mr. Mishra on Simrikhia v. Dolley Mukherjee and Chhabi Mukherjee and Another [(1990) 2 SCC 437] is misplaced. The question which arose for consideration therein was as to whether despite dismissal of an earlier application a second application would be maintainable which would virtually amount to review of the earlier order which would be contrary to the spirit of Section 362 of the Code of Criminal Procedure. It was held:

"7. The inherent jurisdiction of the High Court cannot be invoked to override bar of review under Section 362. It is clearly stated in Sooraj Devi v. Pyare Lal, that the inherent power of the court cannot be exercised for doing that which is specifically prohibited by the Code. The law is therefore clear that the inherent power cannot be exercised for doing that which cannot be done on account of the bar under other provisions of the Code. The court is not empowered to review its own decision under the purported exercise of inherent power. We find that the impugned order in this case is in effect one reviewing the earlier order on a reconsideration of the same materials.

The High Court has grievously erred in doing so.

Even on merits, we do not find any compelling reasons to quash the proceedings at that stage."

We have noticed the previous order passed by the High Court. The High Court gave liberty to Respondent No. 1 to agitate the matter once again. Respondent No. 1 merely took recourse thereto. Equally misplaced is the judgment of this Court in Rajinder Prasad v. Bashir and Others [(2001) 8 SCC 522]. Although therein it was held that when an earlier revision application under Section 397 of the Code of Criminal Procedure has been dismissed, as not pressed, a second application under Section 482 thereof for grant of same relief should not have been entertained, this Court opined:

"8. We are of the opinion that no special circumstances were spelt out in the subsequent application for invoking the jurisdiction of the High Court under Section 482 of the Code and the impugned order is liable to be set aside on this ground alone."

It is, therefore, an authority for the proposition that the High Court is not completely denuded of its power to exercise inherent jurisdiction for the second time.

Furthermore, this court therein also went into the merit of the matter.

In this case, not only the merit of the matter had been gone into by the High Court as also by this Court, the questions raised in the petition had been referred to a larger Bench for obtaining an authoritative pronouncement. It is, therefore, too late in the day for the appellant to contend that the application under Section 482 of the Code of Criminal Procedure was not maintainable.

We may, however, notice that this Court in Superintendent and Remembrancer of Legal Affairs, West Bengal v. Mohan Singh and Others [(1975) 3 SCC 706] held that when there is a changed set of circumstances, a second application under Section 561A of the Code of Criminal Procedure would be maintainable stating:

"2. The main question debated before us was whether the High Court had jurisdiction to make the order dated April 7, 1970 quashing the proceeding against Respondents 1, 2 and 3 when on an earlier application made by the first respondent, the High Court had by its order dated December 12, 1968 refused to quash the proceeding. Mr Chatterjee on behalf of the State strenuously contended that the High Court was not competent to entertain the subsequent application of Respondents 1 and 2 and make the order dated April 7, 1970 quashing the proceeding, because that was tantamount to a review of its earlier order by the High Court, which was outside the jurisdiction of the High Court to do. He relied on two decisions of the Punjab and Orissa High Courts in support of his contention, namely, Hoshiar Singh v. State and Namdeo Sindhi v.

State. But we fail to see how these decisions can be of any help to him in his contention. They deal with a situation where an attempt was made to persuade the High Court in exercise of its revisional jurisdiction to reopen an earlier order passed by it in appeal or in revision finally disposing of a criminal proceeding and it was held that the High Court had no jurisdiction to revise its earlier order, because the power of revision could be exercised only against an order of a subordinate court. Mr Chatterjee also relied on a decision of this Court in U.J.S. Chopra v. State of Bombay where N.H. Bhagwati, J., speaking on behalf of himself and Imam, J., observed that once a judgment has been pronounced by the High Court either in exercise of its appellate or its revisional jurisdiction, no review or revision can be entertained against that judgment and there is no provision in the Criminal Procedure Code which would enable the High Court to review the same or to exercise revisional jurisdiction over the same.

These observations were sought to be explained by Mr Mukherjee on behalf of the first respondent by saying that they should not be read as laying down any general proposition excluding the applicability of Section 561-A in respect of an order made by the High Court in exercise of its appellate or revisional jurisdiction even if the conditions attracting the applicability of that section were satisfied in respect of such order, because that was not the question before the Court in that case and the Court was not concerned to inquire whether the High Court can in exercise of its inherent power under Section 5 61 A review an earlier order made by it in exercise of its appellate or revisional jurisdiction..."

For the reasons aforementioned, we do not find any error whatsoever in the impugned judgment. The appeal is dismissed with costs. Counsel's fee assessed at Rs. 10,000/-.