SUPREME COURT OF INDIA CRIMINAL APPELLATE JURISDICTION CRIMINAL APPEAL NO. 838 OF 2008 [Arising out of SLP (Crl.) No. 2094 of 2007] Aneeta Hada ...Appellant Versus M/s. Godfather Travels and Tours Pvt. Ltd. ...Respondent WITH CRIMINAL APPEAL NO. 842 OF 2008 [Arising out of SLP (Crl.) No. 2117 of 2007] JUDGMENT S.B. SINHA, J :
Aneeta Hada vs M/S Godfather Travels & Tours ... on 8 May, 2008
2. Appellant is said to be an authorised signatory of M/s. Intel Travels Ltd (Company). The said Company as also the respondent company had business transactions. Appellant on behalf of the company issued a cheque dated 17.1.2001 for a sum of Rs.5,10,000/- in favour of respondent which was dishonoured. Respondent filed a complaint petition against the appellant under Section 138 of the Negotiable Instruments Act, 1881 ('the Act' for short).
The Company which is a juristic person was not arrayed as an accused.
The learned Magistrate took cognizance of the offence against her. Respondent had not even served any notice upon the Company in terms of Section 138 of the Act. It served a notice only on the appellant presumably on the premise that she was in charge and responsible to the company for its day to day affairs.
2. Appellant is said to be an authorised signatory of M/s. Intel Travels Ltd (Company). The said Company as also the respondent company had business transactions. Appellant on behalf of the company issued a cheque dated 17.1.2001 for a sum of Rs.5,10,000/- in favour of respondent which was dishonoured. Respondent filed a complaint petition against the appellant under Section 138 of the Negotiable Instruments Act, 1881 ('the Act' for short).
The Company which is a juristic person was not arrayed as an accused.
The learned Magistrate took cognizance of the offence against her. Respondent had not even served any notice upon the Company in terms of Section 138 of the Act. It served a notice only on the appellant presumably on the premise that she was in charge and responsible to the company for its day to day affairs.
4. A company being a body corporate is capable of suing and being sued in its own name.
Section 7 of the Act defines "drawer" to mean the maker of a bill of exchange or a cheque. The authorised signatory of a company does not become the drawer of the cheque only because he has been authorised to do so for the purpose of banking operations. Admittedly, the bank account was also in the name of the company. The account was, therefore, maintained by the Company.
6. A complaint petition may be maintainable at the instance of the person in whose favour the cheque was drawn only when:-
(i) the cheque was drawn by `a person'; and
(ii) the cheque was drawn on an account maintained by `him' with a banker for payment of any amount of money to `another person' from out of that account for the discharge, in whole or in part, of any debt or other liability, is returned by the bank unpaid, either because of the amount of money standing to the credit of the drawer is insufficient to honour the cheque or that it exceeds the amount to be paid from that account; and
(iii)in that event `such a person' shall be deemed to have committed an offence.
7. The person referred to in the said provisions, therefore, must not only be the drawer of the cheque but should have been maintaining an account with the banker.
8. Appellant does not answer either of the descriptions of such `the person' referred to in Section 138 of the Act. Admittedly, she was only an authorised signatory and the amount with the banker was to be maintained by the Company. Cheque was drawn by the Company and not by the appellant. She did not do so on her own behalf. She issued the cheque in course of ordinary business transaction.
9. The Parliament for meeting a contingency of this nature, namely, where a company is an offender, has raised a legal fiction in terms whereof any person who at the time the offence was committed, was incharge of and was responsible for the conduct of business of the company, shall be deemed to be guilty of the offence.
10. For the said purpose, the company itself must be made an accused. It has been so held by this Court in a number of decisions to which I would refer to a little later.
11. In this case, indisputably the company is the principal offender. A director of the company inter alia can be proceeded against if he is found to be responsible therefor as envisaged under Section 141 of the Act.
13. If a person, thus, has to be proceeded with as being vicariously liable for the acts of the company, the company must be made an accused. In any event, it would be a fair thing to do. Legal fiction is raised both against the Company as well as the person responsible for the acts of the Company. Unlike other statutes, this Act raises a presumption not only in tems of Section 139 of the Act but also under Section 118(a) thereof. Those presumptions in given cases may have to be rebutted. The accused must be given an opportunity to rebut the said presumption. An accused is entitled to be represented in a case so as to enable it to establish that allegations made against it are not correct.
14. Section 141 of the Act raises a legal fiction. Such a legal fiction can be raised only when the conditions therefor are fulfilled; one of it being that company is also prosecuted.
15. The Section uses the terms "as well as the company". The company which is, thus, the principal offender must be included in the category of the accused. Here, I am not dealing with a case where an individual act of a person is purporting to represent a company. In relation to business transactions, a company as a corporate entity may have created its own reputation. It must maintain it. If a complaint is filed, in a given case, only on the basis of the presumptions raised in the statute, it may be held to be guilty as a result whereof the reputation of the company shall suffer. It may, thus, suffer grave civil consequences.
16. It is no longer res integra that a company can be proceeded against in a criminal proceeding, even where imposition of substantive sentence is provided for.
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