Rajat Kumar Bhalotia vs Sai Tech Medicare Pvt Ltd. And Anr

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Cr. MMO No. 166 of 2018

Reserved on: 20.06.2024 Date of Decision: 11.07.2024

Rajat Kumar Bhalotia ....Petitioner Versus

Sai Tech Medicare Pvt Ltd. and anr. ....Respondent Coram

Hon'ble Mr Justice Rakesh Kainthla, Judge.

Whether approved for reporting? Yes

For the Petitioner : Ms. Shalini Thakur & Mr. Manoj Ahuja, Advocates.

For the Respondents : Mr. Rajiv Jiwan, Senior Advocate,

with Mr. Nitin, Advocate.

Rakesh Kainthla, Judge

The petitioner has filed the present petition for

quashing of complaint bearing registration No. 132/2015 dated

30.11.2015 for the commission of an offence punishable under

Section 138 of the Negotiable Instruments Act (in short 'NI Act').

2. Briefly stated, the facts giving rise to the present

petition are that the complainant filed a complaint under Section

138 of the NI Act against the accused. It was asserted that the

complainant manufactures medicines and other allied products.

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Accused Nos.1 and 2 were running their unit at 99B, Sai Puram,

New Delhi Road, Meerut, U.P. under the name and style of

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Symbiosis Life Sciences Limited. Rajat Kumar Bhalotia and Rajesh

Rastogi are the Directors and authorised signatories of Symbiosis

Life Sciences Limited. They were aware of the day-to-day function

and business affairs of the Company. The accused took a loan of

₹2,30,05,871/- from the complainant. They also purchased

medicines worth ₹2,24,26,078.76/-. Thus, they were liable to pay

₹4,54,31,949.76/-. The accused issued four cheques of different

amounts to discharge their legal liability. The complainant

presented the cheques for realisation in its account; however, the

cheques were dishonoured with the remarks 'funds insufficient'.

The complainant served a legal notice upon the accused on

17.09.2015 and asked them to make the payment but they failed to

do so; hence, the complaint was filed for taking action against the

accused as per the law.

3. The learned Trial Court found sufficient reasons to

summon the accused for the commission of an offence punishable

under Section 138 of the NI Act.

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4. The accused appeared and filed an application under

Section 243(2) of Cr.P.C. for sending the cheques for examination

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by the Central Forensic Science Laboratory. Learned Trial Court

held that Section 243 of Cr.P.C. deals with the defence evidence.

The notice of accusation was not put and the application was

premature. Hence, the application was dismissed.

5. The accused also filed an application under Section 319

of Cr.P.C. for impleading V.D. Gupta and Jagbir Singh, Managing

Director and Director of accused No.3 as accused. The learned Trial

Court dismissed the application after holding that the accused had

dealt with the complainant and Directors are not to be impleaded

at this stage. The accused was an authorized signatory and he is

liable by virtue of his position. The Director can be made liable if

he is In-charge and responsible to the Company for its affairs.

6. Being aggrieved from the orders of summoning the

accused and dismissing the applications, the petitioner/accused-

Rajat Kumar has filed the present petition asserting that

complainant Tech Medicare Private Limited is a Company. Mr. V.D.

Gupta is its Managing Director and Mr. Jagbir Singh is the other

Director. V.D. Gupta and Jagbir Singh are the first Directors,

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promoters and shareholders of the accused/Company. The

complaint is a gross misuse of the criminal process as the

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complaint is signed by Jagbir Singh without any authorization

from the complainant. He is also a Director in the

accused/Company. The complaint was filed to pressurise the

accused Rajat Kumar Bhalotia to settle the Company petition filed

before the Company Law Board, New Delhi on 29.06.2015 raising

the issues of oppression and mismanagement of the Company.

The cheques were misused by Symbiosis Life Sciences Limited. No

cheque signed by the petitioner/accused was presented to the

Bank for more than four years. It is beyond comprehension that

the petitioner would issue a set of cheques for an aggregate

amount of ₹4,54,31,949.76. The contents of the complaint are

false. The complainant had suppressed the material facts from the

Court. Mr. V.D. Gupta and Jagbir Singh were in-charge and

responsible to the accused Company for the conduct of its business

when the offence was committed. The complainant misstated the

fact that the medicines were purchased from the accused

company. Learned Magistrate erred in dismissing the applications

under Section 319 of Cr.P.C. and Section 243 of Cr.P.C. The

complaint was filed without any authority from the Board of

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Directors and no resolution of the Board of Directors was filed

with the complaint. The petitioner is a shareholder of the

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accused/Company having a 36.17% equity share with his father. He

is not the Director nor the officer of the Company. He cannot be

made liable for the commission of the offence. Mr. V.D. Gupta and

Mr. Jagbir Singh were managing both the Companies. Cheques

were misused by Jagbir Singh. The filing of a single complaint

regarding the dishonour of five cheques is barred under Section

219. It was not proved that the cheques were issued in the

discharge of the legal liability. The continuation of the

proceedings would amount to abuse of the process of the law.

There was no evidence to connect the petitioner with the

commission of crime. Learned Trial Court gravely erred in

summoning the petitioner and dismissing the applications; hence,

it was prayed that the present petition be allowed and the order

passed by learned Trial Court be set aside.

7. I have heard Ms. Shalini Thakur, learned counsel for

the petitioner/accused and Mr. Rajiv Jiwan, learned Senior Counsel

assisted by Mr. Nitin, learned counsel for the

respondent/complainant.

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8. Ms Shalini Thakur, learned counsel for the

petitioner/accused submitted that the learned Trial Court erred in

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summoning the accused without any material. The complaint was

not filed by an authorised person, which is evident from the fact

that an application has been filed before this Court to prove the

resolution of the Board of Directors. Such a complaint is not

maintainable. She relied upon the judgments of A.C. Narayana

versus State of Maharashtra, 2015 (12) SCC 203, Valpoi Vally

Botanicals Pvt Ltd. vs. Anil Ashok Jaware, 2016 STPL 3027 Bombay,

Central Bureau of Investigation, Lucknow, U.P. versus Indra Bhushan

Singh and Ors., 2014 (6) Scale 58. M/s Balaji Agencies Private Limited

Goa versus M/s Samudra Ropes Private Limited, 2011 (4) Civil Court

Cases 515. George Joseph versus HMT (International) Limited,

Bangalore, 2015 ACD 83 (KAR). Karthick and Company versus Vadivel

Sizing and Weaving Mills Private Limited and anr, 2012 STPL 12337,

Amit Gupta versus State of West Bengal, 2020 STPL 5705 Calcutta,

and M/s Survika Distributors Pvt. Ltd. And anr. versus M/s S.R. Retain

Zone Pvt. Ltd., 2018 ACD 415 in support of her submission. In the

alternative, she submitted that the learned Trial Court erred in

dismissing the application under Section 319 of Cr.P.C. for

impleading V.D. Gupta and Jagbir Singh, as well as, the application

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under Section 243(2) of Cr. P.C for sending the cheques for

examination by Central Forensic Science Laboratory. Hence, she

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prayed that the complaint be quashed or in the alternative the

orders passed by the learned Trial Court dismissing the

applications be set aside.

9. Mr. Rajiv Jiwan, learned Senior Counsel, submitted that

the complaint was filed by a duly authorized person and an

application bearing No.Cr.M.P No. 937 of 2019 has been filed for

placing on record the resolution of the Board of Directors. It is

permissible to cure the defect in the authorization after the filing

of the complaint. He relied upon the judgments of the Hon'ble

Supreme Court in MMTC Limited versus M/s Medchl Chemicals and

Pharma Private Limited, 2002 (1) SCC 234 and judgment of this

Court in Uttam Traders Ranghri versus Tule Ram,

Menu/HP/1499/2018 in support of his submission. He further

submitted that the learned Trial Court had rightly dismissed the

applications because Section 243 of Cr.P.C. deals with the defence

evidence. The notice of accusation has not been put and it was not

permissible to file the application. Application under Section 319

of Cr.P.C. can be filed after some evidence has been led and since

no evidence has been led in the present case; hence, the

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application was rightly dismissed as not maintainable. The orders

were revisable and in the absence of any revision, the petitioner

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cannot take recourse to Section 482 of Cr.P.C. to set aside the

orders passed by the learned Trial Court. Hence, he prayed that the

present petition be dismissed.

10. I have given considerable thought to the submissions at

the bar and have gone through the records carefully.

11. This Court had framed the following points for

determination on 22.05.2024:-

(I) Whether the complaint initiated by respondent-

complainant in proceedings under Section 138 of the

Negotiable Instruments Act, without the authorization of a person by the Company-Board of Directors renders the initiation of proceedings a nullity?

(II) Whether the proceedings so initiated, could be rectified,

allowing the complainant-respondent to place on record the required authorization by the Company in favour of authorized signatory who had filed the complaint?

12. The record of the learned Trial Court has been

requisitioned and it does not show any authorization filed by the

complainant for filing the complaint. This defect was sought to be

rectified before this Court by filing an application for placing on

record the resolution of the Board of Directors. The present

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petition has been filed under Section 482 of Cr. P.C. and it is not

permissible for this Court to decide the petition by taking the fresh

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evidence. It was laid down by the Hon'ble Supreme Court in MCD v.

Ram Kishan Rohtagi, (1983) 1 SCC 1: 1983 SCC (Cri) 115, that the

proceedings can be quashed if on the face of the complaint and the

papers accompanying the same no offence is constituted. It is not

permissible to add or subtract anything. It was observed:

"10. It is, therefore, manifestly clear that proceedings against an accused in the initial stages can be quashed only

if on the face of the complaint or the papers accompanying

the same, no offence is constituted. In other words, the test is that taking the allegations and the complaint as they are, without adding or subtracting anything, if no offence is made out then the High Court will be justified in quashing

the proceedings in exercise of its powers under Section 482 of the present Code."

13. Madras High Court also held in Ganga Bai v. Shriram,

1990 SCC OnLine MP 213: ILR 1992 MP 964: 1991 Cri LJ 2018, that the

fresh evidence is not permissible or desirable in the proceedings

under Section 482 of Cr.P.C. It was observed:

"Proceedings under Section 482, Cr.P.C. cannot be allowed to be converted into a full-dressed trial. Shri Maheshwari filed a photostate copy of an order dated 28.7.1983, passed in Criminal Case No. 1005 of 1977, to which the present petitioner was not a party. Fresh evidence at this stage is neither permissible nor desirable. The respondent by filing this document is virtually introducing additional evidence, which is not the object of Section 482, Cr.P.C."

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14. Andhra Pradesh High Court also took a similar view in

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Bharat Metal Box Company Limited, Hyderabad and Others vs. G. K.

Strips Private Limited and another, 2004 STPL 43 AP, and held:

"9. This Court can only look into the complaint and the documents filed along with it and the sworn statements of the witnesses if any recorded. While judging the correctness

of the proceedings, it cannot look into the documents, which are not filed before the lower Court. Section 482 Cr.PC debars the Court to look into fresh documents, in view of the principles laid down by the Supreme Court in State of

Karnataka v. M. Devendrappa and another, 2002 (1) Supreme

192. The relevant portion of the said judgment reads as follows:

"The complaint has to be read as a whole. If it appears that on consideration of the allegations, in

the light of the statement made on oath of the complainant that the ingredients of the offence or offences are disclosed and there is no material to

show that the complaint is mala fide, frivolous or

vexatious, in that event there would be no justification for interference by the High Court. When information is lodged at the Police Station and

an offence is registered, then the mala fides of the informant would be of secondary importance. It is the material collected during the investigation and evidence led in Court, which decides the fate of the accused person. The allegations of mala fides against the informant are of no consequence and cannot by itself be the basis for quashing the proceedings".

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15. A similar view was taken in Mahendra K.C. v. State of

Karnataka, (2022) 2 SCC 129: (2022) 1 SCC (Cri) 401 wherein it was

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observed on page 142:

"16. ... the test to be applied is whether the allegations in the

complaint as they stand, without adding or detracting from the complaint, prima facie establish the ingredients of the offence alleged. At this stage, the High Court cannot test the veracity of the allegations nor for that matter can it proceed

in the manner that a judge conducting a trial would, on the basis of the evidence collected during the course of the trial."

16. This position was reiterated in Supriya Jain v. State of

Haryana, (2023) 7 SCC 711: 2023 SCC OnLine SC 765wherein it was

held:

13. All these documents which the petitioner seeks to rely on, if genuine, could be helpful for her defence at the trial but the same are not material at the stage of deciding

whether quashing as prayed for by her before the High Court was warranted or not. We, therefore, see no reason to

place any reliance on these three documents.

17. A similar view was taken in Iveco Magirus

Brandschutztechnik GMBH v. Nirmal Kishore Bhartiya, (2024) 2 SCC

86: 2023 SCC OnLine SC 1258 wherein it was observed:

"63. Adverting to the aspect of exercise of jurisdiction by the High Courts under Section 482CrPC, in a case where the offence of defamation is claimed by the accused to have not been committed based on any of the Exceptions and a prayer for quashing is made, law seems to be well settled that the High Courts can go no further and enlarge the scope of inquiry if the accused seeks to rely on materials which were not

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there before the Magistrate. This is based on the simple proposition that what the Magistrate could not do, the High Courts may not do. We may not be understood to undermine the High Courts' powers saved by Section 482CrPC; such

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powers are always available to be exercised ex debito

justitiae i.e. to do real and substantial justice for the administration of which alone the High Courts exist. However, the tests laid down for quashing an FIR or

criminal proceedings arising from a police report by the High Courts in the exercise of jurisdiction under Section 482CrPC not being substantially different from the tests laid down for quashing a process issued under Section 204 read with Section 200, the High Courts on recording due

satisfaction are empowered to interfere if on a reading of the complaint, the substance of statements on oath of the complainant and the witness, if any, and documentary evidence as produced, no offence is made out and that

proceedings, if allowed to continue, would amount to an abuse of the legal process. This too, would be impermissible

if the justice of a given case does not overwhelmingly so demand." (Emphasis supplied)

18. Therefore, it is not permissible to consider the

documents filed by any party which do not form the part of the

record of learned Trial Court; hence, the application is dismissed

as not maintainable.

19. Ms. Shalini Thakur, learned counsel for the petitioner

heavily relied upon the judgment of the Hon'ble Supreme Court in

AC Narayana (supra) to submit that the authorization cannot be

filed after the filing of the complaint. In AC Narayana (supra), the

Hon'ble Supreme Court was concerned with follwing five

questions:

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"21.1.(i) Whether a power-of-attorney holder can sign and file a complaint petition on behalf of the complainant?/Whether the eligibility criteria prescribed by Section 142(a) of the NI Act would stand satisfied if the

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complaint petition itself is filed in the name of the payee or

the holder in due course of the cheque?

21.2.(ii) Whether a power-of-attorney holder can be verified

on oath under Section 200 of the Code?

21.3.(iii) Whether specific averments as to the knowledge of the power-of-attorney holder in the impugned transaction must be explicitly asserted in the complaint.

21.4. (iv) If the power-of-attorney holder fails to assert explicitly his knowledge in the complaint then can the power-of-attorney holder verify the complaint on oath on

such presumption of knowledge?

21.5.(v) Whether the proceedings contemplated under Section 200 of the Code can be dispensed with in the light of Section 145 of the NI Act which was introduced by an amendment in the year 2002?"

20. It is apparent that the Hon'ble Supreme Court was not

concerned with the question whether the authorisation could have

been filed subsequently or not. Heavy reliance was placed upon

Para 16, wherein the Hon'ble Supreme Court held that the learned

Magistrate had taken cognizance of the complaint without prima

facie establishing whether Power of Attorney existed in the first

place and whether it was in the order. However, the Hon'ble

Supreme Court also noticed that the complaint was not preferred

by a payee or holder in due course and the complainant had not

stated that he was instructed by the payee or holder in the due

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course, therefore, the learned Magistrate erred in taking the

cognizance. In A.C. Narayana (supra), the complaint was filed by a

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private person through his Power of Attorney and once, it was held

that he had not deposed on oath about any authority from the

holder or payee in the due course, the natural corollary was the

dismissal of the complaint. Hence, this judgment does not apply to

the present case.

21. It was laid down by the Hon'ble Supreme Court in

Associated Company Limited versus Keshvanand, 1998 (1) SCC 687

that the Company is a juristic person and has to act through a

natural person for proceeding before the Court. It is permissible

for the Company to change the natural person with the permission

of the Court. It was observed:

"23. The above scheme of the new Code makes it clear that the complainant must be a corporeal person who is capable

of making a physical presence in the court. Its corollary is that even if a complaint is made in the name of an incorporeal person (like a company or corporation) it is necessary that a natural person represents such a juristic person in the court and it is that natural person who is looked upon, for all practical purposes, to be the complainant in the case. In other words, when the complainant is a body corporate it is the de jure complainant, and it must necessarily associate a human being as a de facto complainant to represent the former in court proceedings.

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xxxxxx

25. Be that so, we suggest as a pragmatic proposition that no magistrate shall insist that the particular person, whose

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statement was taken on oath at the first instance, alone can

continue to represent the company till the end of the proceedings. There may be occasions when a different person can represent the company e.g. the particular person

who represents the company at the first instance may either retire from the company's services or may otherwise cease to associate therewith or he would be transferred to a distant place. In such cases, it would be practically difficult

for the company to continue to make the same person represent the company in court. In any such eventuality, it is open to the de jure complainant company to seek

permission of the court for sending any other person to

represent the company in court. At any rate, the absence of the complainant envisaged in Section 249 or Section 256 of the new Code would include the absence of the corporeal person representing the incorporeal complainant."

22. It was held in MMTC (supra) that even if there was no

authority, such an authority could be filed subsequently. It was

observed:

"12. In the case of Associated Cement Co.

Ltd. v. Keshvanand [(1998) 1 SCC 687: 1998 SCC (Cri) 475] it has been held by this Court that the complainant has to be a corporeal person who is capable of making a physical appearance in the court. It has been held that if a complaint is made in the name of an incorporeal person (like a company or corporation) it is necessary that a natural person represents such juristic person in the court. It is held that the court looks upon the natural person to be the complainant for all practical purposes. It is held that when the complainant is a body corporate it is the de jure complainant, and it must necessarily associate a human being as a de facto complainant to represent the former in

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court proceedings. It has further been held that no Magistrate shall insist that the particular person, whose statement was taken on oath at the first instance, alone can continue to represent the company till the end of the

.

proceedings. It has been held that there may be occasions

when different persons can represent the company. It has been held that it is open to the de jure complainant

company to seek permission from the court for sending any other person to represent the company in court. Thus, even presuming, that initially there was no authority, still the company can, at any stage, rectify that defect. At a subsequent

stage, the company can send a person who is competent to represent the company. The complaints could thus not have been quashed on this ground." (Emphasis supplied)

23. This Court also considered this question in Uttam

Traders Ranghri (supra) and held that it is permissible for the

complainant Company to rectify the defect regarding lack of

authority at a subsequent stage. It was observed:

12. In M.M.T.C.Ltd. And another vs. Medchl Chemicals and

Pharma (P)Ltd. And another (2002) 1 SCC 234, the Hon'ble Supreme Court held that the only eligibility criteria

prescribed by Section 142 for maintaining a complaint under Section 138 are that the complaint must be by the payee or the holder in due course and once this criterion is

satisfied as the complaint is in the name and on behalf of the appellant Company. Therefore, even presuming that initially there was no authority, still, the company can, at any stage, rectify that defect at a subsequent stage, and the company can send a person who is competent to represent the Company. It is apt to reproduce the relevant observations as contained in paras 11 and 12 of the judgment, which reads thus:

"11. This Court has, as far back as, in the case of Vishwa Mitter v. O. P. Poddar reported in (1983) 4 SCC

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701, held that it is clear that anyone can set the criminal law in motion by filing a complaint of facts constituting an offence before a Magistrate entitled to take cognizance. It has been held that no court can

.

decline to take cognizance on the sole ground that the

complainant was not competent to file the complaint. It has been held that if any special statute prescribes

offences and makes any special provision for taking cognizance of such offences under the statute, then the complainant requesting the Magistrate to take cognizance of the offence must satisfy the eligibility

criterion prescribed by the statute. In the present case, the only eligibility criteria prescribed by Section 142 is that the complaint must be by the payee or the holder in due course. This criterion is satisfied as the

complaint is in the name and on behalf of the

appellant company.

12. In the case of Associated Cement Co. Ltd. v. Keshvanand (1998) 1 SCC 687, it has been held by this Court that the complainant has to be a corporeal

person who is capable of making a physical appearance in the court. It has been held that if a complaint is made in the name of an incorporeal

person (like a company or corporation) it is necessary that a natural person represents such juristic person

in the court. It is held that the court looks upon the natural person to be the complainant for all practical

purposes. It is held that when the complainant is a body corporate it is the de jure complainant, and it must necessarily associate a human being as a de facto complaint to represent the former in court proceedings. It has further been held that no Magistrate shall insist that the particular person, whose statement was taken on oath at the first instance, alone can continue to represent the company till the end of the proceedings. It has been held that there may be occasions when different persons can represent the company. It has been held that it is open to the de jure complainant company to

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seek permission from the court to send any other person to represent the company in court. Thus, even presuming, that initially there was no authority, still the Company can, at any stage, rectify that defect. At a

.

subsequent stage, the Company can send a person

who is competent to represent the company. The complaints could thus not have been quashed on this

ground."

13. Likewise in Samrat Shipping Co. Pvt. Ltd. vs. Dolly George (2002) 9 SCC 455, the Hon'ble Supreme Court termed the dismissal of the complaint at the threshold by the

Magistrate on the ground that the individual through whom the complaint was filed had not produced the certified copy of the resolution of the Board of Directors of the Company authorising him to represent the Company before the

Magistrate has also not justified and termed this exercise to

be "too hasty an action". It is apt to reproduce the observation as contained in para 3 of the judgment, which reads thus:

"3. Having heard both sides we find it difficult to support the orders challenged before us. A Company can file a complaint only through a human agency.

The person who presented the complaint on behalf of the Company claimed that he was the authorised

representative of the company. Prima facie, the trial court should have accepted it at the time when a complaint was presented. If it is a matter of evidence

when the accused disputed the authority of the said individual to present the complaint, the opportunity should have been given to the complainant to prove the same, but that opportunity needs to be given only when the trial commences. The dismissal of the complaint at the threshold on the premise that the individual has not produced a certified copy of the resolution appears to be too hasty an action. We, therefore, set aside the impugned orders and directed the trial court to proceed with the trial and dispose of

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it in accordance with the law. Parties are directed to appear before the trial court on 31.01.2000."

14. A similar matter of dishonour of cheque came before a

.

three-judge Bench of the Hon'ble Supreme Court in M/s

Haryana State Co.Op., Supply and Marketing Federation Ltd. vs. M/s Jayam Textiles and another AIR 2014 SC 1926 wherein it was held that the dismissal of the complaint for mere

failure to produce authorisation would not be proper and an opportunity ought to be granted to produce and prove the authorisation. It is apt to reproduce the apposite observations as contained in paras 6 and 7 of the judgment,

which read thus:

"6. Having heard learned counsel for the parties and after perusing the material on record, we find that admittedly authorisation by the Board of Directors of

the appellant-ederation was not placed before the

Courts below. But, we may notice that a specific averment was made by the appellant- Federation before the learned Judicial Magistrate that the said

General Power of Attorney has been filed in a connected case being CC No. 1409/1995, which has neither been denied nor disputed by the respondents.

In any case, in our opinion, if the Courts below were not satisfied, an opportunity ought to have been

granted to the appellant Federation to place the document containing authorisation on record and prove the same in accordance with the law. This is so

because procedural defects and irregularities, which are curable, should not be allowed to defeat substantive rights or to cause injustice. The procedure, a handmaiden to justice, should never be made a tool to deny justice or perpetuate injustice, by any oppressive or punitive use. {See Uday Shankar Triyar Vs. Ram Kalewar Prasad Singh, (2006) 1 SCC 75}. :

(AIR 2006 SC 269: 2005 AIR SCW 5851).

7. In view of the fact that in spite of the arbitration award against the respondents, there was non-

payment of amount by the respondents to the

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appellant-Federation, and also in the light of authorisation contained in Annexure-P/7, we are of the opinion that, in the facts and circumstances of the case, an opportunity should be given to the appellant-

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Federation to produce and prove the authorisation

before the Trial Court, more so, when money involved is public money. We, therefore, set aside the

judgments of the Courts below and remit the matters back to the Trial Court with a direction to conduct the trial afresh taking into consideration the authorisation placed before us and dispose of the

matter as expeditiously as possible in accordance with the law."

15. Bearing in mind the aforesaid exposition of the law, I am of the considered view that the appellant-applicant ought to

be granted one chance to place and prove on record the

partnership deed. Accordingly, Cr.M.P. No. 464 of 2018 is allowed."

24. Hence, even if the Company had failed to place the

authorization on record, it is permissible for it to file the same

before the Court at a subsequent stage.

25. In view of the judgments of the Hon'ble Supreme Court

and this Court, which is binding upon this Court, the judgment of

Bombay High Court in Valpoi (supra), M/s Balaji Agencies (supra),

George Joseph (supra), Karthick (supra) cannot be followed. Hence,

none of these judgments cited by learned counsel for the

petitioner will assist her.

26. Thus, it is held that the complaint filed by the

complainant/Company without authorization can be rectified by

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filing such authorization subsequently and it does not render the

initiation of the proceedings a nullity.

.

27. It was submitted that a joint complaint was filed

regarding five cheques, which is impermissible because of Section

219 of Cr.P.C. This submission is not acceptable. A single notice

was issued in respect of five cheques. The cause of action for filing

the complaint regarding the dishonour of the cheques is not the

dishonour but the failure to pay the amount of the cheques despite

the receipt of the notice. It was laid down by the Karnataka High

Court in Tiruchandoor Muruhan Spinning Mills (P) Ltd. v. Madanlal

Ramkumar Cotton and General Merchants, 2000 SCC OnLine Kar 699:

ILR 2000 Kar 5000 that where a single notice is issued for the

dishonour of more than one cheque, a single complaint is

maintainable. It was observed:

"6. In so far as the important question raised for

consideration in this petition that the provisions of Section 219 Cr. P.C. are attracted to the facts of the case is concerned, it is contended that cause of action for the complainant arose only after service of notice to the accused. It is pointed out that the complainant has issued a single notice calling upon the accused by way of demand to pay the cheque amount within 15 plays from the date of service of notice and the accused failed to pay the cheque amount within the time stipulated under Section 138(b) of the Act and therefore the complainant filed a complaint within one month from the date of service of notice which is

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well within time. There is no bar for lodging a complaint for initiation of action under Section 138 of the Negotiable Instruments Act as the accused committed the offence punishable under Section 138 of the Negotiable Instruments

.

Act. In fact, it is not to his disadvantage but it is an

advantage that a single complaint is lodged against the accused by the complainant. The cause of action giving raise

to a complaint is upon the service of the notice contemplated under Section 138(b) of the Negotiable Instruments Act and not upon the dishonour of the cheques and therefore the contention canvassed by the learned

Counsel for the respondent that the provisions of Section 219 Cr. P.C. are not applicable to the proceeding under Section 138 of the Negotiable Instruments Act has to be accepted."

28. A similar view was taken in Manjula v. Colgate Palmolive

(India) Ltd., 2006 SCC OnLine Mad 912 wherein it was observed:

"16. In the case on hand, though the act of issuance of 16

cheques was on different dates, in view of the fact that a demand was made by issuing a common notice, the complaint cannot be said to be vitiated. To put it clear,

though the giving of cheques by the accused to the complainant may be on different dates, all those acts of

giving those cheques were merged together to form the same transaction viz., the presentation of the cheques

together was on one particular date. In view of the fact that demand was also made by the complainant on the dishonouring of the cheques by giving one lawyer's notice and not several demands, we are of the view that the accused may be charged and tried at one trial for several such offences because the series of acts are so inter-linked or inter-connected together so as to form the same transaction of dishonouring the cheques, therefore, it cannot be said that the complaint is vitiated."

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29. Allahabad High Court also took a similar view in Vinay

Patni v. State of U.P., 2012 SCC OnLine All 3681 and observed:

.

"The third contention of the learned Counsel for the revisionist that the demand notice, as well as the complaint, was illegal for combining three separate causes of actions

cannot be accepted for the reason that though the three cheques might have been given separately to the complainant but all these cheques were drawn on the same account and, as per the complaint allegations, were in lieu

of payment of a common loan amount. Further, they were presented for collection on the same date through a single account, in the manner desired by the accused, and that the information of the cheques returning unpaid was also

received on the same date, and a common notice of demand

was also made. It was, therefore, one transaction and to state that there has to be a separate complaint with respect to each cheque that was dishonoured, will not be correct in view of subsection (1) of section 220, Cr. P.C."

30. Hence, the complaint cannot be said to be bad because

it was filed regarding five cheques.

31. It was submitted that the learned Trial Court erred in

dismissing the applications for impleadment filed under Section

319 of Cr.P.C. There is a force in the submission of Mr. Rajiv Jiwan,

learned Senior Counsel for the complainant/respondent that

power under Section 319 of Cr.P.C. can be exercised if there is some

evidence against the person sought to be impleaded. It was held in

Nisar v. State of U.P., (1995) 2 SCC 23 that power under Section 319

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of CrPC can only be exercised after leading the evidence. It was

observed:

.

"8. As regards the second contention of the appellants it must be said that in view of the plain and unambiguous language of Section 319 of the Code, the earlier quoted

reason which weighed with the High Court in sustaining the order of the learned Judge is patently incorrect. The power under Section 319(1) can be exercised only in those cases where the involvement of persons other than those

arraigned in the charge sheet comes to light in the course of evidence recorded during the enquiry or trial. As that stage has not yet reached the appellants could not have been summoned invoking Section 319 of the Code."

32. This position was reiterated in Hardeep Singh v. State of

Punjab, (2014) 3 SCC 92: 2014 SCC OnLine SC 26 and it was held:

78. It is, therefore, clear that the word "evidence" in Section

319 CrPC means only such evidence as is made before the court, in relation to statements, and as produced before the court, in relation to documents. It is only such evidence that

can be taken into account by the Magistrate or the court to

decide whether the power under Section 319 CrPC is to be exercised and not on the basis of material collected during the investigation.

79. The inquiry by the court is neither attributable to the investigation nor the prosecution, but by the court itself for collecting information to draw back a curtain that hides something material. It is the duty of the court to do so and therefore the power to perform this duty is provided under CrPC.

xxxx

81. An inquiry can be conducted by the Magistrate or court at any stage during the proceedings before the court. This power is preserved with the court and has to be read and

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understood accordingly. The outcome of any such exercise should not be an impediment in the speedy trial of the case.

Though the facts so received by the Magistrate or the court may not be evidence, yet it is some material that makes

.

things clear and unfolds concealed or deliberately

suppressed material that may facilitate the trial. In the context of Section 319 CrPC, it is an information of

complicity. Such material, therefore, can be used even though not evidence in stricto sensu, but an information on record collected by the court during inquiry itself, as a prima facie satisfaction for exercising the powers as

presently involved.

82. This pre-trial stage is a stage where no adjudication on the evidence of the offences involved takes place and therefore, after the material along with the charge sheet has

been brought before the court, the same can be inquired

into in order to effectively proceed with framing of charges. After the charges are framed, the prosecution is asked to lead evidence and till that is done, there is no evidence available in the strict legal sense of Section 3 of the Evidence

Act. The actual trial of the offence by bringing the accused before the court has still not begun. What is available is the material that has been submitted before the court along

with the charge sheet. In such a situation, the court only has the preparatory material that has been placed before the

court for its consideration in order to proceed with the trial by framing of charges.

83. It is, therefore, not any material that can be utilised, rather it is that material after cognizance is taken by a court, that is available to it while making an inquiry into or trying an offence, that the court can utilise or take into consideration for supporting reasons to summon any person on the basis of evidence adduced before the court, who may be on the basis of such material, treated to be an accomplice in the commission of the offence. The inference that can be drawn is that material which is not exactly evidence recorded before the court, but is a material collected by the court, can be utilised to corroborate

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evidence already recorded for the purpose of summoning any other person, other than the accused. This would harmonise such material with the word "evidence" as material that would be supportive in nature to facilitate the

.

exposition of any other accomplice whose complicity in the

offence may have either been suppressed or escaped the notice of the court.

84. The word "evidence" therefore has to be understood in its wider sense both at the stage of trial and, as discussed earlier, even at the stage of inquiry, as used under Section 319 CrPC. The court, therefore, should be understood to

have the power to proceed against any person after summoning him on the basis of any such material as brought forth before it. The duty and obligation of the court becomes more onerous to invoke such powers cautiously on

such material after evidence has been led during trial.

85. In view of the discussion made and the conclusion drawn hereinabove, the answer to the aforesaid question posed is that apart from evidence recorded during trial, any

material that has been received by the court after cognizance is taken and before the trial commences, can be utilised only for corroboration and to support the evidence

recorded by the court to invoke the power under Section 319 CrPC. The "evidence" is thus, limited to the evidence

recorded during trial."

33. In the present case, the notice of accusation was not

put to the accused and no evidence was led. Therefore, the

application was premature and was rightly dismissed by the

learned Trial Court.

34. The accused had also filed an application under Section

243 of Cr.P.C. for sending the documents for comparison. Learned

Trial Court had rightly pointed out that the provisions of Section

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243 of Cr.P.C. will come into operation only at the stage of the

defence evidence and the application was premature.

.

35. It was submitted that the application could have been

entertained under Section 73 of the Indian Evidence Act, however,

in the absence of any evidence, it was premature to determine

whether the cheque required the comparison by the expert or not.

Therefore, no fault can be found with the orders passed by the

learned Trial Court.

36. It was submitted that the contents of the complaint are

false and they do not disclose the commission of any offence. The

present petition has been filed under Section 482 of Cr.P.C. and the

Court has to see the allegations in the complaint to determine

whether an offence is disclosed or not. It is not permissible for the

Court to conduct a fact-finding inquiry to determine the

innocence or otherwise of the contents of the complaint at this

stage. It was laid down by the Hon'ble Supreme Court in Priyanka

Jaiswal vs. State of Jharkhand, 2024 SCC OnLine SC 685 that the

Court exercises extra-ordinary jurisdiction under Section 482 of

Cr.P.C. and cannot conduct a mini-trial or enter into an

appreciation of an evidence of a particular case. It was observed:-

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"13. We say so for reasons more than one. This Court in catena of Judgments has consistently held that at the time of examining the prayer for quashing of the criminal proceedings, the court exercising extra-ordinary

.

jurisdiction can neither undertake to conduct a mini-trial

nor enter into appreciation of evidence of a particular case. The correctness or otherwise of the allegations made in the

complaint cannot be examined on the touchstone of the probable defence that the accused may raise to stave off the prosecution and any such misadventure by the Courts resulting in proceedings being quashed would be set aside.

This Court in the case of Akhil Sharda 2022 SCC OnLine SC 820 held to the following effect:

"28. Having gone through the impugned judgment and order passed by the High Court by

which the High Court has set aside the criminal

proceedings in the exercise of powers under Section 482 Cr. P.C., it appears that the High Court has virtually conducted a mini-trial, which as such is not permissible at this stage and while deciding

the application under Section 482 Cr. P.C. As observed and held by this Court in a catena of decisions no mini-trial can be conducted by the

High Court in the exercise of powers under Section 482 Cr. P.C. jurisdiction and at the stage of

deciding the application under Section 482 Cr. P.C., the High Court cannot get into appreciation of

evidence of the particular case being considered."

37. A similar view was taken in Maneesha Yadav v. State of

U.P., 2024 SCC OnLine SC 643 wherein it was held that: -

"13. As has already been observed hereinabove, the Court would not be justified in embarking upon an enquiry as to the reliability or genuineness or otherwise of the allegations made in the FIR or the complaint at the stage of quashing of the proceedings under Section 482 Cr. P.C. However, the allegations made in the FIR/complaint, if taken at its face

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value, must disclose the commission of an offence and make out a case against the accused. At the cost of repetition, in the present case, the allegations made in the FIR/complaint

.

even if taken at its face value, do not disclose the

commission of an offence or make out a case against the accused. We are of the considered view that the present case would fall under Category-3 of the categories enumerated by

this Court in the case of Bhajan Lal (supra).

14. We may gainfully refer to the observations of this Court in the case of Anand Kumar Mohatta v. State (NCT of Delhi), Department of Home(2019) 11 SCC 706: 2018 INSC 1060:

"14. First, we would like to deal with the submission of the learned Senior Counsel for Respondent 2 that once the charge sheet is filed, the petition for

quashing of FIR is untenable. We do not see any merit

in this submission, keeping in mind the position of this Court in Joseph Salvaraj A. v. State of Gujarat [Joseph Salvaraj A. v. State of Gujarat, (2011) 7 SCC 59 : (2011) 3 SCC (Cri) 23]. In Joseph Salvaraj

A. [Joseph Salvaraj A. v. State of Gujarat, (2011) 7 SCC 59 : (2011) 3 SCC (Cri) 23], this Court while deciding the question of whether the High Court could entertain

the Section 482 petition for quashing of FIR when the charge-sheet was filed by the police during the

pendency of the Section 482 petition, observed : (SCC p. 63, para 16) "16. Thus, the general conspectus of the

various sections under which the appellant is being charged and is to be prosecuted would show that the same are not made out even prima facie from the complainant's FIR. Even if the charge sheet had been filed, the learned Single Judge [Joesph Saivaraj A. v. State of Gujarat, 2007 SCC OnLine Guj 365] could have still examined whether the offences alleged to have been committed by the appellant were prima facie made out from the complainant's FIR, charge-sheet, documents, etc. or not."

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38. Hence, it is not permissible for the Court to go into the

truthfulness or otherwise of the allegations made in the

.

complaint.

39. It was submitted that the cheques were misused by the

complainant and they were not issued in discharge of legal

liability. This submission is not acceptable at this stage. It was laid

down by the Hon'ble Supreme Court in Rathish Babu Unnikrishnan

v. State (NCT of Delhi), 2022 SCC OnLine SC 513, that the burden of

proving that there is no existing debt of liability is to be

discharged in the trial and the Court has to consider the

presumption under Section 139 of NI Act in favour of the holder

while deciding the petition under Section 482 of Cr.P.C. It was

observed:

"10. It is also relevant to bear in mind that the burden of proving that there is no existing debt or liability, is to be

discharged in the trial. For a two judges Bench in M.M.T.C. Ltd. v. Medchl Chemicals and Pharma (P) Ltd. (2002) 1 SCC 234, Justice S.N. Variava made the following pertinent observation on this aspect: --

"17. There is therefore no requirement that the complainant must specifically allege in the complaint that there was a subsisting liability. The burden of proving that there was no existing debt or liability was on the respondents. This they have to discharge in the trial. At this stage, merely on the basis of averments in the petitions filed by them the High

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Court could not have concluded that there was no existing debt or liability."

11. The legal presumption of the cheque having been issued

.

in the discharge of liability must also receive due weightage.

In a situation where the accused moves the Court for quashing even before the trial has commenced, the Court's approach should be careful enough not to prematurely

extinguish the case by disregarding the legal presumption which supports the complaint. The opinion of Justice K.G. Balakrishnan for a three-judge Bench in Rangappa v. Sri Mohan (2010) 11 SCC 441 would at this stage, deserve our

attention:--

"26. ... we are in agreement with the respondent claimant that the presumption mandated by Section

139 of the Act does indeed include the existence of a

legally enforceable debt or liability. As noted in the citations, this is of course in the nature of a rebuttable presumption and it is open to the accused to raise a defence wherein the existence of a legally enforceable

debt or liability can be contested. However, there can be no doubt that there is an initial presumption which favours the complainant."

12. At any rate, whenever facts are disputed the truth should

be allowed to emerge by weighing the evidence. On this aspect, we may benefit by referring to the ratio in Rajeshbhai Muljibhai Patel v. State of Gujarat(2020) 3 SCC

794 where the following pertinent opinion was given by Justice R. Banumathi:--

"22. .............. When disputed questions of facts are involved which need to be adjudicated after the parties adduce evidence, the complaint under Section 138 of the NI Act ought not to have been quashed by the High Court by taking recourse to Section 482 CrPC. Though, the Court has the power to quash the criminal complaint filed under Section 138 of the NI Act on legal issues like limitation, etc. criminal complaint filed under Section 138 of the NI Act against

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Yogeshbhai ought not to have been quashed merely on the ground that there are inter se disputes between Appellant 3 and Respondent 2. Without keeping in

.

view the statutory presumption raised under Section

139 of the NI Act, the High Court, in our view, committed a serious error in quashing the criminal complaint in CC No. 367 of 2016 filed under Section

138 of the NI Act."

13. Bearing in mind the principles for the exercise of jurisdiction in a proceeding for quashing, let us now turn to the materials in this case. On careful reading of the

complaint and the order passed by the Magistrate, what is discernible is that a possible view is taken that the cheques drawn were, in the discharge of a debt for the purchase of

shares. In any case, when there is a legal presumption, it would not be judicious for the quashing Court to carry out a

detailed enquiry on the facts alleged, without first permitting the trial Court to evaluate the evidence of the parties. The quashing Court should not take upon itself, the

burden of separating the wheat from the chaff where facts are contested. To say it differently, the quashing proceedings must not become an expedition into the merits

of factual dispute, so as to conclusively vindicate either the complainant or the defence.

14. The parameters for invoking the inherent jurisdiction of the Court to quash the criminal proceedings under S.482

CrPC, have been spelt out by Justice S. Ratnavel Pandian for the two judges' bench in State of Haryana v. Bhajan Lal 1992 Supp (1) SCC 335: AIR 1992 SC 604, and the suggested precautionary principles serve as good law even today, for invocation of power under Section 482 of the Cr.P.C.

"103. We also give a note of caution to the effect that the power of quashing a criminal proceeding should be exercised very sparingly and with circumspection and that too in the rarest of rare cases; that the court will not be justified in embarking upon an enquiry as to the reliability or genuineness or otherwise of the

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allegations made in the FIR or the complaint and that the extraordinary or inherent powers do not confer an arbitrary jurisdiction on the court to act according to

.

its whim or caprice."

15. In the impugned judgment, the learned Judge had rightly relied upon the opinion of Justice J.S. Khehar for a Division Bench in Rajiv Thapar (supra), which succinctly expresses

the following relevant parameters to be considered by the quashing Court, at the stage of issuing process, committal, or framing of charges,

"28. The High Court, in the exercise of its jurisdiction under Section 482 CrPC, must make a just and rightful choice. This is not a stage of evaluating the truthfulness or otherwise of the allegations levelled

by the prosecution/complainant against the accused.

Likewise, it is not a stage for determining how weighty the defences raised on behalf of the accused are. Even if the accused is successful in showing some suspicion or doubt, in the allegations levelled by the

prosecution/complainant, it would be impermissible to discharge the accused before trial. This is so because it would result in giving finality to the

accusations levelled by the prosecution/complainant, without allowing the prosecution or the complainant

to adduce evidence to substantiate the same."

16. The proposition of law as set out above makes it

abundantly clear that the Court should be slow to grant the relief of quashing a complaint at a pre-trial stage, when the factual controversy is in the realm of possibility particularly because of the legal presumption, as in this matter. What is also of note is that the factual defence without having to adduce any evidence needs to be of an unimpeachable quality, so as to altogether disprove the allegations made in the complaint.

17. The consequences of scuttling the criminal process at a pre-trial stage can be grave and irreparable. Quashing proceedings at preliminary stages will result in finality

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without the parties having had an opportunity to adduce evidence and the consequence then is that the proper forum i.e., the trial Court is ousted from weighing the material

.

evidence. If this is allowed, the accused may be given an un-

merited advantage in the criminal process. Also because of the legal presumption, when the cheque and the signature are not disputed by the appellant, the balance of

convenience at this stage is in favour of the complainant/prosecution, as the accused will have due opportunity to adduce defence evidence during the trial, to rebut the presumption.

18. Situated thus, to non-suit the complainant, at the stage of the summoning order, when the factual controversy is yet to be canvassed and considered by the trial court will not

in our opinion be judicious. Based upon a prima facie impression, an element of criminality cannot entirely be

ruled out here subject to the determination by the trial Court. Therefore, when the proceedings are at a nascent stage, the scuttling of the criminal process is not merited."

40. Therefore, it is not permissible to adjudicate the plea

that the cheque was not issued in the discharge of the legal

liability of the petitioner in these proceedings.

41. The complainant had specifically stated that the

accused is the Director and the authorized signatory. The liability

of the signatory was decided by the Hon'ble Supreme Court in

S.M.S. Pharmaceuticals Ltd. v. Neeta Bhalla, (2005) 8 SCC 89. The

following question, inter alia, was referred for consideration by the

larger Bench: -

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"(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 the conduct of its

business could be proceeded against."

42. The Hon'ble Supreme Court after discussing the entire

case law on the subject, answered the reference as under: -

(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 the 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.

43. It is apparent from the judgment of the Hon'ble

Supreme Court that a signatory is liable by virtue of the fact that

he had signed the cheque under Section 141(2) of the Act and

nothing more is required to be established in his case.

44. Thus, it cannot be said that the learned Trial Court had

no material to summon the accused for the commission of an

offence punishable under Section 138 of the NI Act.

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45. Consequently, the present petition fails and the same is

dismissed.

.

46. The observation made hereinabove shall remain

confined to the disposal of the petition and will have no bearing,

whatsoever, on the merits of the case.

47. Parties through their respective counsel are directed to

appear before the learned Trial Court on 30.07.2024.

(Rakesh Kainthla) Judge 11th July, 2024

(Saurav pathania)

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