CASE ANALYSIS
PAWAN KUMAR GOEL VERSUS STATE OF U.P. & ANOTHER
SUPREME COURT OF INDIA
Citation: 2022 Scc Online Sc 1598
Bench: Hon’ble Mr. Justice Krishna Murari, Hon’ble Ms. Justice Bela M. Trivedi
Type of Jurisdiction: Criminal Appellate Jurisdiction
Advocates for Appellant: Manoj Swarup and Co.
Advocates for Respondent: Advs. Vishwa Pal Singh, Shantanu Krishna
CRIMINAL APPEAL NO. 1999 OF 2022 (Arising out of SLP (Crl.) No. 1697 of 2020) WITH
CRIMINAL APPEAL NO. 2000 OF 2022 (Arising out of SLP (Crl.) No. 3566 of 2020) WITH
CRIMINAL APPEAL NO. 2001 OF 2022 (Arising out of SLP (Crl.) No. 3563 of 2020) WITH
CRIMINAL APPEAL NO. 2002 OF 2022 (Arising out of SLP (Crl.) No. 3567 of 2020) WITH
CRIMINAL APPEAL NO. 2003 OF 2022 (Arising out of SLP (Crl.) No. 4471 of 2020)[1]
INTRODUCTION TO CASE
The High Court of Judicature at Allahabad passed a judgment on 19.11.2019 in response to four Criminal Miscellaneous Writ Petitions filed by the Respondents. These petitions sought the cancellation of the summoning order issued on 18.03.2013 by the Additional Chief Judicial Magistrate-II, Muzaffarnagar, as well as the order passed on 02.12.2013 by the Additional Sessions Judge, Muzaffarnagar. The High Court granted the Writ Petition, thereby invalidating the entire proceedings, including the summoning order of 18.03.2013 and the order of 02.12.2013.
Since the present appeals challenge the same judgment, they are being collectively addressed in this common Judgment. Criminal Appeal arising out of Special Leave Petition (Crl.) No. 1697 of 2020 is considered the lead case, and the parties involved in the other cases will be handled similarly.
FACTS OF THE CASE
The Appellant and Respondent No. 2 were engaged in regular business transactions, with Ravi Organics Limited being the company where Respondent No. 2 held the position of director. As part of their business relationship, an ongoing account was maintained between the Appellant and Ravi Organics Limited. However, a dispute arose when Respondent No. 2 allegedly issued a cheque to the Appellant as payment for supplied materials. Unfortunately, upon presenting the cheque for clearance, it was dishonored by the bank. Recognizing the seriousness of the situation, the Appellant sent a legal notice to Respondent No. 2 in an attempt to resolve the matter. Unfortunately, no response was received from Respondent No. 2, leading to further legal action.
In response to the dishonored cheque, the Appellant decided to pursue legal recourse by filing four criminal complaints under Section 138 of the Negotiable Instruments Act[2]. These complaints alleged that the dishonor of the cheque was due to the amount mentioned on it exceeding the previously agreed-upon arrangement between the Appellant and Respondent No. 2. The Appellant sought to hold Respondent No. 2 accountable for this violation of the law.
In an attempt to challenge the summoning order issued by the court, Respondent No. 2 filed a criminal revision before the Sessions Court. However, the Sessions Court dismissed the revision petition after careful consideration. The court determined that the dispute involving the dishonored cheque originated from the commercial transactions conducted between the Appellant and Respondent No. 2. By reaching this decision, the Sessions Court affirmed that the Appellant had valid grounds to proceed with the criminal complaints.
Subsequently, in response to the Sessions Court’s ruling, Respondent No. 2 decided to file a writ petition before the High Court of Allahabad. The purpose of the writ petition was to seek the High Court’s intervention and request the quashing of both the summoning orders issued by the Magistrate and the decision made by the Sessions Court. After evaluating the arguments presented by both parties, the High Court allowed the writ petition. As a result, the summoning orders issued by the Magistrate were nullified, and the Sessions Court’s decision was overturned. This meant that the entire legal proceedings initiated against Respondent No. 2, including the summoning orders and the criminal complaints, were dismissed.
ISSUES RAISED
Q. Can the director face prosecution under Section 138[3] if the company is not mentioned as an accused party?
Q. Will the complaint proceed against the director if the allegations in the complaint do not specifically attribute the accused’s responsibility to the company’s actions and operations?
CONTENTIONS OF PARTIES
CONTENTIONS BY APPELLANT
The Appellant presented an argument emphasizing that the name of Respondent No. 2 was mentioned as the Director of Ravi Organic Limited. According to the Appellant, the omission of listing the said company as Accused No. 2 in the complaint was a typographical error. The Appellant further contended that all the necessary information regarding the company had already been provided within the description of Accused No. 1.
Additionally, the Appellant asserted that neither the Negotiable Instruments Act[4] (NIA) nor the Criminal Procedure Code, 1973[5] imposed any restrictions on amending a complaint or adding additional accused parties. In other words, the Appellant argued that there were no legal barriers preventing the amendment of the complaint to rectify the omission or to include additional accused parties. The Appellant emphasized that it was within the court’s discretion and jurisdiction to allow such amendments to ensure the accuracy and completeness of the complaint.
CONTENTIONS BY RESPONDENTS
The argument presented during the legal proceedings centered around the sustainability of the ongoing case. The primary claim put forth was that the proceedings lacked a solid foundation because the company itself had not been named as an accused party in the complaint. According to the contention raised, when a cheque is issued from a company’s account, it is necessary for the complainant to explicitly mention in the complaint that the accused individual held a position of responsibility within the company at the time the offense occurred. This argument emphasized the importance of clearly establishing the connection between the accused individual and their role within the company.
Furthermore, it was asserted that the defect in the complaint, which failed to include the company as an accused party, could not be rectified or cured in any manner. This position highlighted the belief that the omission of the company as an accused party was a fundamental flaw that undermined the validity of the legal proceedings. As a result, the argument contended that without the inclusion of the company in the complaint, the case could not proceed and any attempts to amend the complaint would be futile in remedying this particular defect.
JUDGEMENT BY THE HONOURABLE SUPREME COURT OF INDIA
After careful deliberation, the Hon’ble Supreme Court rendered a decision to dismiss the appeal and uphold the validity of the High Court’s ruling in granting the Writ Petition. In arriving at this determination, the Supreme Court conducted a thorough examination of the arguments and evidence put forth during the proceedings. Its comprehensive analysis led to the finding that the High Court had made a correct and error-free judgment.
The Supreme Court’s dismissal of the appeal serves as an affirmation of its agreement with the reasoning and legal interpretation employed by the High Court. By endorsing the High Court’s decision, the Supreme Court essentially acknowledges that the High Court had appropriately exercised its judicial authority and discretion in granting the Writ Petition. This affirmation further solidifies the legitimacy and accuracy of the High Court’s ruling in the specific case under consideration.
RATIONALES AND REASONS FOR THE JUDGEMENTS
The Court conducted a thorough examination of two significant matters. Firstly, it evaluated whether a director could be prosecuted under Section 138 of the Negotiable Instruments Act [6](NIA) when the company itself was not explicitly named as an accused party. Secondly, it assessed whether the complaint could proceed against the director if the allegations in the complaint did not specifically attribute responsibility to the accused for the company’s actions and business.
The Bench acknowledged that while the details of the accused mentioned in the complaint did refer to the company, the complaint itself did not explicitly identify the company as a party. Furthermore, the complaint did not make any claims about the accused’s involvement in managing the company’s affairs.
The Supreme Court expressed the view that general principles of criminal law cannot be applied if the complainant fails to mention the company in the complaint filed under Section 138 of the NIA. It was clarified that Section 141 of the NIA [7]imposes vicarious liability through a legal fiction.
Regarding the possibility of amending the complaint and adding additional accused parties, the Apex Court observed that once the limitation period for taking cognizance has expired under Section 142 of the NIA[8], no amendments or additions can be allowed. In the present case, the petitioner did not provide any evidence of effort or present circumstances that could justify the court in condoning the delay.
INFERENCE FROM THE CASE
The case provides valuable insights regarding several aspects of complaints filed under Section 138 of the Negotiable Instruments Act [9](NIA):
The first inference drawn from the case is the importance of explicitly mentioning the company as a party in the complaint. Merely including the details of the accused without specifically identifying the company may not be considered sufficient. To ensure clarity and avoid ambiguity, it is crucial to explicitly state the involvement of the company in such cases.
The case also highlights that in situations where the complaint fails to mention the company, general principles of criminal law cannot be applied. According to Section 141 of the NIA[10], a legal fiction is established, establishing vicarious liability and holding the company responsible for the actions of its directors. This means that for effective prosecution, it is essential to establish the direct involvement of the company as a party in the complaint.
The case further emphasizes the significance of adhering to the limitation period specified in Section 142 of the NIA[11]. Once the prescribed period for taking cognizance has expired, any amendments or additions to the complaint, such as adding additional accused parties, are not permitted. It is essential to demonstrate valid reasons or present circumstances that can justify the court in condoning any delays. Failing to do so may result in the court rejecting the addition of new accused parties after the limitation period has expired.
These inferences from the case shed light on the procedural and legal requirements when filing complaints under Section 138 of the Negotiable Instruments Act, emphasizing the need for clarity in identifying the involved parties and adhering to the prescribed limitation periods. By understanding and following these principles, litigants can enhance the effectiveness and validity of their complaints in such cases.
Details of Author
Name: Aakansh Prakash
College: Amity Law School, Noida
[1] Pawan Kumar Goel versus State of U.P. & Another, (2022) Scc Online Sc 1598.
[2] Negotiable Instruments Act, 1881, § 138, No. 26, Acts of Parliament, 1881 (India)
[3] Id.
[4] Negotiable Instruments Act, 1881, No. 26, Acts of Parliament, 1881 (India)
[5] Criminal Procedure Code, 1973, No. 2, Acts of Parliament, 1973 (India)
[6] Negotiable Instruments Act, 1881, § 138, No. 26, Acts of Parliament, 1881 (India)
[7] Negotiable Instruments Act, 1881, § 141, No. 26, Acts of Parliament, 1881 (India)
[8] Negotiable Instruments Act, 1881, § 142, No. 26, Acts of Parliament, 1881 (India)
[9] See supra note 6
[10] See supra note 7
[11] See supra note 8