Sunday, December 16, 2018 | ePaper

Non-impleading of the Company as an accused is a mere irregularity

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High Court Division :
(Criminal Miscellaneous Jurisdiction)
M Moazzam Husain J
Md Badruzzaman J
Tipu Sultan ... Accused-Petitioner
(in all the cases)
vs
State and another ............Opposite Parties (in all the cases)
Judgment
December 2nd, 2015
Code of Criminal Procedure (V of 1898)
Section 561A
Negotiable Instruments Act (XXVI of 1881)
Section 138
Non-impleading of the Company as an accused is a mere irregularity not affacting the merit of the case the question of quashment of the proceedings for its non-impleadment as an accused in the proceeding does not arise . ...... (22)
Ferdous Khan, @ Alamgir vs Islami Bank Bangladesh Ltd., 63 DLR 540; Aneeta Hada vs Godfather Tralvels & Tours (P) Ltd., (2012) 5 SCC 661; Shahjahan Bhuiya vs State 11 BLC 625; Soumitra Sankar Das vs State, 33 BLD (2013) 91 = 17 BLC 292 and Ferdous Khan @ Alamgir vs Islami Bank Bangladesh Limited, 63 DLR 540 ref.
Sayed Misbahul Anwar, Advocate-For the Petitioner (in all the cases).
Khondaker Iqbal Ahmed, Advocate--For the Opposite Party No.2 (in all tire cases).
Judgment
MD BADRUZZAMAN J : Since similar facts and identical questions of law are involved in all the Rules, those are taken together and disposed of  by this single judgment.
2. All these Rules were issued upon an application under Section 561A of the Code of Criminal Procedure at the instance of the accused petitioner calling upon the opposite parties to show cause as to why the proceeding of Sessions Case No. 2996 of 2013, 2997 of 2013 and 2998 of 2013 under Section 138 of the Negotiable Instruments Act, 1881 now pending in the Additional Metropolitan Sessions Judge, 5th Court, Chittagong should not be quashed.
3. Facts, in brief, are that the opposite party No. 2 as complainant (herein after referred to as the Bank) filed three separate petition of complaints under Section 138 of Negotiable Instruments Act (herein after referred to as NI Act) in the Court of Chief Metropolitan Magistrate, Chittagong against the petitioner as accused alleging, inter alia, that the accused petitioner availed of a loan facility from the Bank and for repayment of the said loan the petitioner issued cheques in favour of the Bank on 28-6-2012 amounting to Taka 5,00,00,000 (Taka five crores) each drawn on Mercantile Bank Limited, Khatungonj Branch, Chittagong; that the said cheques were placed before the concerned Bank on 5-8-2012 for encashment but those were dishonored for insufficiency of fund, that the Bank on 14-8-2012 sent legal notice through registered post with A/D to the accused petitioner in his three separate addresses requesting him to pay the amount mentioned in the cheques within 30 (thirty) days which were received by him on 22-8-2012 and 26-8-2012 but he did not turn up to pay the said amount within the stipulated time and hence the cases.
4. Upon receipt of the petition of complaints the learned Magistrate, after examining the authorized officer of the Bank under Section 200 of the Code of Criminal Procedure, took cognizance of offence under Section 138 of the NI Act against the accused petitioner and issued summons against him. The petitioner surrendered before the learned Magistrate and obtained bail. Subsequently all those cases were transferred to the learned Metropolitan Sessions Judge, Chittagong for trial, who there after transferred the same to the learned Additional Metropolitan Sessions Judge, 5th Court, Chittagong for trial who fixed the cases for charge hearing.
5. The accused petitioner filed separate applications under Section 265C of the Code of Criminal Procedure praying for discharging him from the case stating, inter alia, that the accused petitioner is a bonafide businessman and for the purpose he enjoyed loan facility of Taka 80,00,00,000 (eighty crore) from the Bank out of Taka 100,00,00,000 (one hundred crore) credit limits and in the meantime he paid Taka 10,00,000 (ten lac) to the Bank but at the relevant time due to economic recession throughout the world the petitioner could not settle the liability with the Bank and was trying to get reschedulement of the loan liability and the Bank, in the meantime, took steps to sell out the mortgage property to make adjustment of the loan liability and that some cheques including the present one were issued in favour of the Bank as security for repayment of the loan and, as such, no offence has been committed by the petitioner under Section 138 of the NI Act and he should be discharged from the case.
6. At the stage of charge hearing the accused petitioner has turned up with these applications seeking quashment of the proceedings and obtained the instant Rules.
7. Mr Sayed Misbahul Anwar learned Advocate appearing for the accused petitioner mainly submits that the cheques in question were issued by the petitioner for and on behalf of the borrower company (Messers Jasmir Vegetable Oil Limited) but the company has not been made party as an accused in this case as required under Section 140(1) of the NI Act 1881. The proceedings thereof are incompetent and continuation of the same are abuse of the process of the Court. In elaborating his submission Mr Anwar submits that according to Section 140 of the NI Act 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. He continues to argue that 'as well as the company, occurring in Section 140(1) of the NI Act shall have to be construed and interpreted regard being had to the scheme of the Act and in the facts and circumstances of the present case and from the language employed in sub-section (1) of Section 140 the company is the principal offender and in the absence of the company, the other alleged offenders, if any, cannot be fastened with the criminal liability under Section 138 of the Act. Against this backdrop, the proceedings of the cases should be quashed. In support of his submissions, Mr Anwar draws our attention to the decisions in the case of Ferdous Khan, @ Alamgir vs lslami Bank Bangladesh Ltd., 63 DLR 540 and Aneeta Hada vs Godfather Travels & Tours (P) Ltd.,
8. Per contra, Khondaker Iqbal Ahmed learned Advocate for the complainant opposite party No.2 Sonali Bank Ltd, submits that there is no materials on records suggesting that the so-called Company availed the loan facilities from the complainant Bank or that the cheque was issued by the Company and was signed by the accused petitioner representing the Company and, as such, question of implicating the Company as an accused in the proceedings does not arise in that even if it is presumed that the drawer of the cheques is Company and the petitioner is the authorized signatory and the Company (Messers Jasmir Vegetable Oil Limited) have not been made accused in the cases in accordance with Section 140 (1) of the NI Act but even then, the proceedings not being an abuse of the process of the court are maintainable. Learned Advocate further submits that non-impleading of the Company as an accused in the case, its proceeding cannot be quashed and the liability of the petitioner as the chairman of the Company under Section 138 of the Act cannot be eschewed in that he is admitted signatory to the bounced cheques. He further submits that non-impleading the Company as accused is a mere technical flaw and the case having been initiated by complying with all legal formalities as per law and a prima facie case having been disclosed against the accused petitioner in the petition of complaints, the proceedings cannot be quashed and the cause of substantial justice demands that the petitioner faces trial in the cases for his criminal liability as the Chairman-cum Director of the Company. In support of his contention learned Advocate relied on the case of Soumitra Sankar Das vs State reported in 33 BLD (2013) 91 = 17 BLC 292 and Joynul Karim vs State reported in 4 LNJ (2015) (AD) 153.
9. We have heard the learned Advocates and perused the records of the case.
10. On perusal of the petition of complaints itself it appears that there is no denial, as to the facts of issuance of the cheques by the accused petitioner, dishonouring of the same for insufficiency of fund, issuance of legal notices after dishonouring of the cheques by the Bank concern and failure to pay the cheque amount by the accused petitioner to the Bank and on the face of dishonor of the cheques and non-response to the demand for payment against dishonoured cheques we find criminality as alleged. Since the cases have been initiated by observing all legal formalities we find no illegality in continuation of the impugned proceedings against the petitioner under Section 138 of the NI Act.
11. Now question arises as to whether the proceedings can be continued against the accused petitioner without impleading the company namely 'Messers Jasmir Vegetable Oil Limited' as an accused in the proceedings.
12. The question has consistently arisen in many cases in our jurisdiction as well as Indian jurisdiction. Indian Supreme Court could not come to a consistent view in respect of impleadment of the Company in that some decisions came to the effect that a proceeding under Section 138 against a drawer of the cheque, who is authorized signatory of the Company, is competent without impleading the Company as an accused as per Section 141 of Indian Negotiable Instruments Act' (same as Section 140 our Negotiable Instruments Act) and some decisions came to the effect that 'for maintaining the prosecution under Section 141 (Section 140 in our jurisdiction) of the Act, arraigning of a Company as an accused is imperative. This controversy has been solved by the Supreme Court of India in the case of Aneeta Hada vs Godfather Travels and tours (P) Ltd. In that case Aneeta Hada, the accused of that case and an authorized signatory of International Travels  Ltd., a company registered under the Companies Act,' 1956, issued a cheque for a sum of Rs. 5,10,000 in favour of the complainant, namely M/s Godfather Travels and Tours (P) Ltd, which was dishonoured as a consequence of which the complainant initiated a complaint case before the judicial Magistrate concerned under Section 138 of the Act. In the complaint petition, the Company was not impleaded as an accused. The proceeding was challenged by the accused petitioner under Section 482 of Indian CrPC (same as 561 A of our CrPC) before the Delhi High Court and the High Court opined (Aneeta Hada vs Godfather Travels and Tours, Crl. Misc. 928 of 2006) that the ground urged would be in the sphere of defence of the accused and would not strengthen the edifice for quashing the proceeding'. The judgment was challenged before the Supreme Court of India and a two Judge Bench of the Supreme Court heard the matter and there was difference of opinion [Ref: 13 SCC 703 = (2009 3 SCC (crl) 845] between the two learned Judges in the interpretation of Sections 138 and 141 of the Act and, therefore, the matter has been placed before three-Judge Bench of the Indian Supreme Court which delivered its judgment on 27-4-2012 [Ref: (2012) 5 SCC661] and unanimously upheld the ratio laid down in CV Parekh, (1970) 3 see 491 and overruled the ratio laid down in Sheoratan Agarwal, (1984) 4 SCC 352 and Anil Hada, (2000) 1 SCC 1 holding as follows:
"58. Applying the doctrine of strict con-struction, 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 obliviolls 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 affected when 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 stipulaled in the provision itself. We say so on the basis of the ratio laid down in CV Parekh 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.
60. We will be failing in our duty if we do not state that all the decisions cited by the learned counsel for the respondents relate to service of notice, instructions for stopping of payment and certain other areas covered under Section 138 of the Act. The same really do not render any aid or assistance to the case of the respondents and, therefore, we refrain ourselves from dealing with the said authorities. Resultantly, Criminal Appeals Nos. 838 and 842 of 2008 are allowed and the proceedings initiated under Section 138 of the Act arc quashed."
13. From the ratio as quoted above it appears that in Indian jurisdiction it is now settled that for maintaining the prosecution under Section 141 of Indian Negotiable Instruments Act (Section 140 of our Negotiable Instruments Act), impleadment of a company as an accused is imperative and 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.
14. In our jurisdiction a different view has been developed in case to case basis.
15. In the case of Shahjahan Bhuiya vs State reported in 11 BLC 625 (judgment delivered on 15-6-2006) a question was raised that the cheque in question having been issued by the Managing Director and Directors of a private company and the alleged offence having been committed by the company, without impleading the company as an accused, the proceeding was barred under Section 140 of NI Act and a Division Bench of this Division answered the question holding that:
"From the plain reading of the aforesaid provisions of Section 140 of the Negotiable Instruments Act, it appears that when 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 any director, manager, secretary or other officer of the company, such director, manager, secretary or other officer shall be deemed to be guilty of that offence. Therefore, the section itself negates the argument advanced by Mr A Baset Majumder, inasmuch as admittedly the accused petitioners being Managing Director and Directors of a private company named Salex Apparel Limited' issued two cheques of total Taka 6,50,000 in favour of the complainant opposite party No.2 and, on presentation those cheques in the bank for encashment, were bounced for insufficient fund"
16. In the case of Md Farook Hossain vs The State (unreported, judgment delivered on 10-72008 in Criminal Miscellaneous Case No. 9760 of 2007) a Division Bench of this Division held as follows:
"So, it is ex-facie clear that under Section 140(1) of the Act, the company being an offender is to be made an accused along with the persons who were in charge of, and responsible to, the company for the conduct of its business at the time of commission of the offence. The record shows that the cheque was issued by the petitioner and the co-accused on behalf of the company. Be that as it may, it appears that at his own peril, the complainant opposite party No.2 has not made the company, that is to say, Design Smith Limited an accused in the case, the question of suffering any prejudice by the accused petitioner does not arise at all. Rather it is the complainant-opposite party No.2 who may be prejudiced by his own action. Against this backdrop, the proceedings of the case cannot be quashed."
17. In the case of Joynul Karim reported in 4 LN] (AD) 153 (judgment delivered on 22-3-2009) the High Court Division refused to quash the proceeding for non-impleading the company and our Apex Court approved the view of the High Court Division saying:
"In discharging the Rule. their Lordships in the High Court Division also observed that the grounds taken for quashment under Section 561A of the Code of Criminal Procedure and that the alleged omission of impleading' the Company in the proceeding, is an irregularity and the same is not fatal and that though the company is not made a party in the proceeding but the persons concerned representing the company, who are party in the issuance of the dishonored cheque in reference, having been made party in the proceeding, the proceeding cannot be said to be bad for defect of party inasmuch as the punishment, if any on proof, is to be inflicted upon the natural persons involved in the offence
18. The same view has been expressed in the case of Soumitra Sankar Das vs State reported in 33 BLD (2013) 91 = 17 BLC 292 (Judgment delivered on 1-2-2012) by another Division Bench of this Division holding that 'the petitioners being admitted signatories to the bounced cheque may be proceeded against under Section 138 evan in the absence of the company (actual drawer) and their liability is covered by the provisions of sub-section (2) of Section 140 of the Act, 1881'.
19. But in the case of Ferdous Khan @ Alamgir vs lslami Bank Bangladesh Limited, 63 DLR 540 (Judgment delivered on 1-8-2010) a Division Bench of this Division took different view and quashed the proceeding against the signatory of the Company holding that 'for not making any allegation in the complaint petition for committing any offence under Section 138 by the drawer company, provisions of Section 140 of the Act would not be applicable in this case and there is no scope in law to hold the accused guilty in this case or to continue the proceeding against him'.
20. The Indian Supreme Court Decisions and that of our High Court Division are not binding upon 45 and have only persuasive value but we are bound by the judgment of our apex Court delivered in Joynul Karim (Supra) wherein it is held that 'omission of impleading the Company in the proceeding is an irregularity and the same is not fatal'.
21. In these cases it has been asserted in the applications for discharge filed under Section 265C of CrPC by the accused petitioner before the trial Court that for business purpose he availed a loan facility from the Bank who disbursed TOTAL total Taka 80,00,00,000 (eighty crare) in favour of the accused petitioner out of Taka 100,00,00,000 (one hundred crore) credit limits and in the meantime, he repaid Taka 10,00,000 (ten lac) to the Bank. But at the relevant time due to economic recession throughout the world the petitioner could not settle the liability with the Bank and was trying to get reschedulement of the loan liabilities and some cheques including the present one were issued by the petitioner in favour of the Bank as security against loan.
22. It appears that the accused petitioner neither claimed that the so-called company availed loan facilities from the complainant Bank nor the accused petitioner issued the cheque in question on behalf of the Company. On the other hand, it is not the case of the complainant bank that the cheques in question were issued by the Company rather, the positive case of the complainant is that the petitioner availed loan facility from the Bank and he issued the cheques in favour of the Bank which were bounced for insufficiency of fund. It is for the first time the accused petitioner took a different plea before us since the Company availed the loan facility and the petitioner issued the cheques in question representing the Company, the proceedings are incompetent without making the Company as an accused in the proceedings. This plea of the petitioner is totally beyond the defence case and a question of fact. Moreso, as we have earlier said, non-impleading of the company as an accused is a mere irregularity not affecting the merit of the case the question of quashment of the impugned proceedings for its non-impleadment as an accused in the proceeding does not arise.
23. From the forgoing discussion and in the facts and circumstances of the case, we find no merit in these Rules.
24.  Accordingly, the Rules are discharged.
25. The orders of stay granted earlier are vacaled.
The court below is directed to proceed with the cases in accordance with law.

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