(Criminal Miscellaneous Jurisdiction)
Farah Mahbub J
Mahmudul Hoque J
Shahidul Islam (Md)…..Accused-Petitioner in all the cases
vs
State and another………Opposite-Parties in all the cases
Judgment
February 5th, 2018
Code of Criminal Procedure (V of 1893)
Section 561A
In an appropriate case, if on the face of the document which are beyond suspicion of doubt, placed by accused and not disputed by the prosecution the accusation against him cannot stand, for, it would be travesty of justice, if the accused is relegated to trial and he is asked to prove his defence before the trial court.
For the ends of justice or to prevent injustice or abuse of process of the court, this Court may look into the materials submitted by the parties, which have significant bearing on the matter at prima facie stage. . ….. (35)
Code of Criminal Procedure (V of 1898)
Section 561A
A director whose share transfer has been approved and accepted by the company and that has been duly notified to the Registrar of Joint Stock Companies cannot be made accountable and fastened with liability for anything done by the company after the transfer of his entire shares and cessation of his position as Managing Director. . ….. (31)
Code of Criminal Procedure (V of 1898)
Section 561A
Instead of quashing the proceedings in the two cases the trial court shall dispose of the same keeping in mind the observations and findings by this Court in order to avoid conflicting decisions and multiplicity of judicial proceedings. ……(39)
Negotiable Instruments Act (XXVI of 1881)
Section 138
Since the transfer of share has been approved by the company and duly notified to the Registrar of Joint Stock Companies before the date of issuance of the cheques in question, the accused had no authority to sign any cheque on behalf of the Company at the relevant time as he was nobody to the company. These facts leave no manner of doubt to find that on the date the offence was committed by the company and since at that relevant time the petitioner was not the Managing Director, he had nothing to do with the affairs of the company. No ingredients of section 138 of the Act attracts the accused to be tried in a criminal prosecution. ……..(36)
Mohammad Eusof Babu vs State, 4 CLR (AD) 70 = 68 DLR (AD) 298 and Majed Hossain vs State, 17 BLC (AD) 177 ref.
Tanvir Ahmed AI-Amin, Advocate-For the Accused-Petitioner in all the cases.
AM Mahbubuddin with Saqeb Mahbub, Advocates-For the Opposite Party No.2 in all the cases.
AKM Zahirul Huq DAG with M Masud Alam Chowdhury, Sathi Shahjahan and Md Hatem Ali, AAGs-For the State.
Judgment
Mahmudul Hoque J : These five Rules are taken up for joint consideration and for disposal given that this pertain to the same petitioner and involved common issues of law as shall need be addressed for the disposal of the Rules.
2. In Criminal Miscellaneous Case No. 13689 of 2012 Rule was issued under section -561 A 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 proceedings in Metro Sessions Case No. 6387 of 2011 arising out of CR Case No. 16 of 2011 (North) now pending in the 6th Court of Joint Metropolitan Sessions Judge, Dhaka under section 138 of the Negotiable Instruments Act 1881, should not be quashed.
3. Facts, in short, are that the complainant and the accused petitioner were known to each other. In consideration of relationship, the complainant paid Taka 50,00,000 (Taka fifty lac) to the accused petitioner for purchase of shares in Seus Fabrics Limited. The accused petitioner failed to transfer any share to the complainant. Resultantly, the accused petitioner issued a cheque dated 20-10-2010 for the payment of aforesaid amount in favour of the complainant. The complainant presented the said cheque to the bank on 20-12-2010 for encashment but the same was dishonoured for insufficient fund. Thereafter, the complainant served a legal notice upon the accused petitioner on 30-12-2010 demanding payment of the money, but he failed to comply with the demand so made in the legal notice. Consequently, the complainant filed the complaint under section 138 of the Negotiable Instruments Act, before the Metropolitan Magistrate, Dhaka which was registered as CR Case No. 16 of 2011. The said CR case was transferred to the Metro Sessions Judge, Dhaka, wherein it was registered as Metro Session Case No. 6387 of 2011. Thereafter, the case was transferred to the Joint Metropolitan Sessions Judge, 6th Court, Dhaka for trial and disposal.
4. In Criminal Miscellaneous Case No. 13690 of 2012 Rule was issued 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 proceedings in Special Session Case No. 11 of 2011 arising out of CR Case No. 821 of 2010 (North) now pending in the court of Special Sessions Judge, Court No.5, Dhaka under section 138 of the Negotiable Instruments Act 1881, should not be quashed.
5. Short facts, of the case are that the complainant supplied huge amount of machinery and spare parts to the accused petitioner on credit. The accused petitioner issued a cheque dated 10-11-2009 for Taka 28,00,600 (Taka twenty eight lac and six hundred) to the complainant in the name of his proprietorship firm “NEW BOILER PARTS” for payment of the said dues. The complainant presented the said cheque for encashment to the bank but it was dishonoured for insufficient fund. Thereafter, the complainant served a legal notice dated 26-1-2010 upon the accused petitioner under section 138 of the Negotiable Instruments Act, demanding payment of the money mentioned in the said cheque but the petitioner failed to comply with the demand. Consequently, the complainant filed CR Case No. 821 of 2010 before the learned Chief Metropolitan Magistrate, Dhaka. The said CR case was transferred to the Metro Sessions Judge, Dhaka who again transferred the case to the Special Sessions Judge, 5th Court, Dhaka for trial wherein it was registered as Special Session Case No. 11 of 2011.
6. In Criminal Miscellaneous Case No. 21685 of 2012 Rule was issued 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 proceedings in Metro Session Case No. 3862 of 2011 arising out of CR Case No. 3624 of 2010, now pending in the court of Joint Metropolitan Sessions Judge, 5th Court, Dhaka under section 138 of the Negotiable Instruments Act 1881 should not be quashed.
7. Short facts, for disposal, of the case are that the complainant for the purpose of purchasing shares in Seus Fabrics Limited paid an amount of Taka 35,00,000 (Taka thirty-five lac) to the accused petitioner, but he failed to provide any share to the complainant for which he issued a cheque dated 3-9-2010 for Taka 35,00,000 (Taka thirty five lac) to the complainant for payment of the said amount. The complainant presented the said cheque for encashment to the concern bank, but it was dishonoured for the reason of insufficient fund. Thereafter, the complainant served a legal notice dated 28-10-2010 upon the accused petitioner stating the facts of dishonor of the cheque and demanding payment of the said amount, but the accused petitioner failed to pay the money demanded by the complainant. Consequently, the complainant filed CR Case No. 3624 of 2010 before the learned Metropolitan Magistrate Dhaka against the accused petitioner under section 138 of the Negotiable Instruments Act 1881. The said case was transferred to the Metropolitan Sessions Judge, 5th Court, Dhaka wherein it was registered as Metro Sessions Case No. 3862 of 2011. Thereafter, it was again transferred to the 5th Court of Joint Metropolitan Sessions Judge, Dhaka for trial.
8. In Criminal Miscellaneous Case No. 21686 of 2012 Rule was issued 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 proceedings in Metro Session Case No. 3493 of 2011 arising out of CR Case No. 21 of 2011 (North), now pending in the court of Joint Metropolitan Sessions Judge, 5th Court, Dhaka under section 138 of the Negotiable ‘Instruments Act 1881, should not be quashed.
9. Short facts, of the case are that the complainant supplied salt and soda to the accused petitioner on credit. For payment of the amount against salt and soda the accused petitioner issued a cheque dated 20-8-2010 for Taka 15,00,000 (Taka fifteen lac) to the complainant in the name of his proprietorship firm “M/s Rassel Enterprise”. The complainant presented the said cheque for encashment, but it was dishonoured by the bank for insufficient fund Thereafter, on 22-11-2010 the complainant served a legal notice upon the accused petitioner informing the fact of dishonour , the cheque and demanding; payment of money mentioned in the chequc in question but the petitioner failed to make payment of the amount. Consequently, the complainant filed CR Case No. 21 of 2011 before the learned Chief Metropolitan Magistrate, Dhaka under section 138 of the Negotiable Instruments Act, against the accused petitioner which was transferred to the Metropolitan Sessions Judge, Dhaka wherein it was registered as Metro Session No. 3493 of 2011. The case was again transferred to the 5th Court of Joint Metropolitan Session Judge, Dhaka for trial.
10. In Criminal Miscellaneous Case No.
21687 of 2012, Rule was issued 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 proceedings in Metro Session Case No. 2449 of 2011 arising out of CR Case No. 3516 of 2010 (North), now pending in the court of Joint Metropolitan Sessions Judge, 2nd Court, Dhaka under Section 138 of the Negotiable Instruments Act 1881, should not be quashed.
11. Short facts, of the case, are that the complainant paid Taka 30,00,000 (Taka thirty lac) to the accused petitioner for purchasing shares in Seus Fabrics Limited, but the accused petitioner failed to provide any share in the company for which the accused petitioner issued a cheque dated 25-8-2010 for Taka 30,00,000 (Taka thirty lac) in favour of the complainant for payment of the said amount received by the accused petitioner. The complainant presented the said cheque for encashment to the concern bank but it was dishonoured for insufficient fund. Thereafter, on 20-10-2010 the complainant served a legal notice under section 138 of the Negotiable Instruments Act, upon the accused petitioner demanding payment of the money mentioned in the cheque in question. But he failed to comply with the demand of the complainant. Resultantly, the complainant filed CR Case No. 3516 of 2010 (North) before the learned Chief Metropolitan Magistrate, Dhaka under Section 138 of the Negotiable Instruments Act, which was transferred to the Metropolitan Sessions Judge, Dhaka, wherein it was registered as Metro Session Case No. 2449 of 2011. The case was again transferred to the 2nd Court of Joint ) Metropolitan Sessions Judge, Dhaka for trial.
12. In all the cases the accused petitioner surrendered and obtained bail from the concerned court below. In usual course, all the cases were fixed for framing charge ; however, the accused petitioner filed applications under Section 265C of the Code of Criminal Procedure (“Code”) praying his discharge. The trial court heard the applications filed by the accused petitioner for discharging him and upon contested hearing rejected the same under Section 265C of the Code and framed charge against him in all the five cases. Among the aforesaid 5 (five) cases in Sessions Case No. 6387 of 2011 and Sessions Case No. 11 of 2011 PW 1 has been examined and both the cases fixed for examining the accused petitioner under Section 342 of the Code and for further cross examination of the PW 1. The remaining 3 (three) Sessions cases have been fixed for witness.
13. At this juncture, the accused petitioner moved this court by filing these applications under Section 561A of the Code of Criminal Procedure seeking quashment of the proceedings in all the cases and obtained the present Rules and respective orders of stay.
14. Mr Tanvir Ahmed AI-Amin, the learned Advocate appearing for the accused petitioner in all the Rules at the very outset submits that the accused petitioner once was a Managing Director of Seus Fabrics Limited, but he transferred all of his shares in the company on 23-8-2009 which was duly approved by the company in its Board meeting and recorded in the shares register of the company as well as duly notified to the Registrar of Joint Stock Companies as evident by Annexure-/G’ to the application. But the chequcs in question are alleged to have been issued on 10-11-2009,2 0-8-2010, 25-8-2010, 3-9-2010 and 20-10-2010 respectively, by Seus Fabrics Limited to the complainant and those cheques were placed for encashment thereafter, i,e, after transfer of his entire shares in the company. In other words, it is submitted by the counsel for the petitioner that at the time when the cheques were issued and when the cheques were dishonoured the petitioner had no concerned or the connection with the company. Moreover, the accused petitioner had no authority to sign the cheques on behalf of the company as Managing Director and, as such, he cannot be held liable for the offence where the accused petitioner had transferred his shares and ceased to be the Managing Director of the company before issuance of the cheques in question.
15. Mr Tanvir further argued that apparently, on the face of record it seems that the cheques in question were issued by the company when the petitioner ceased to be the shareholder as well as the Managing Director. In the absence of any averments being made in the complaint about the signatory of the cheque connecting him with the business of the company the requirements of Section 140 of the Negotiable Instruments Act, cannot be said to be satisfied. To bring the case under Section 140(1) of the Act an averment in the complaint to the effect that the petitioner was in charge of and was responsible to the company, for the conduct of the business of the company is necessary. But in the present case from plain reading of the complaint itself nowhere it would be found that the accused petitioner has been described as Managing Director of the company and he is liable for the business of the company or he was in charge of the day to day affairs of the company at the relevant time when the cheques were issued. As such, the petitioner cannot be held liable for the offence under Section 138 of the Negotiable Instruments Act.
(To be continued)
Fact should not be disputed by the opposite party
16. He further argued that Section 138 of the Negotiable Instruments Act, shall attract where any cheque drawn by a person on an account “maintained by him” with a banker for payment of any amount of money to another person from out of that account is returned by the bank unpaid. But in the present case the account from which the cheques were issued is maintained by Seus Fabrics Limited, not by the accused petitioner; the accused petitioner alleged to have signed the cheques on behalf of the company as Managing Director on whose account a cheque is drawn does not become the drawer of the cheque. Since the accused petitioner is not the account holder or the drawer of the cheque the case under Section 138 of the Negotiable Instruments Act is not maintainable in view of the provision of Section 138.
17. Mr AM Mahbubuddin with Mr Saqeb Mahbub, learned Advocates appearing for the opposite party No.2 in all the Rules submit that it is not denied that the cheques in question were signed and issued by the accused petitioner. It is also admitted that the cheques in question were dishonoured by the concern bank when presented for encashment. It is also admitted that notice under Section 138 of the Negotiable Instruments Act, after dishonour of the cheques were duly served upon the accused petitioner informing the fact of dishonour and demanded payment of the amount mentioned in the cheques from the accused petitioner. Therefore, to attract offence under Wection 138 of the Negotiable Instruments Act, the requirements of law as stated in Section 138 have been fulfilled. Mr Mahbubuddin further argued that whether the accused petitioner transferred his shares in the company or ceased to be the Managing Director of the company or the cheques in question were issue after or before his cessation of directorship in the company are matters of evidence to be considered at the time of trial.
18. It is also argued that it is well settled that when dealing with a quashing petition the Court is ordinarily to proceed on the basis of averments made in the complaint; the defence of the accused cannot be considered. As such, applications seeking quashment of the proceedings in all the cases are not maintainable at this stage because of the fact that in two cases PW 1 has already been examined and other three cases, the argument advanced on behalf of the petitioner are all matters of evidence and the documents referred by the petitioner are defence materials.
19. Learned Advocate for the opposite party No.2 further goes to submit that since the learned magistrate has already taken cognizance of the offence the complainant should be given an opportunity to adduce evidence in support of his complaint against the accused petitioner and, as such, at this stage the proceedings are not liable to be quashed to the detriment of the complainant.
20. Lastly, he submits that for initiating a case under Section 138 of the Negotiable Instruments Act, against the person who is responsible for the affairs of the company, averments connecting him to that effect are not required to be stated in the complaint as held by the Apex Court in the case of Mohammad Eusof Babu vs State reported in 4 CLR (AD) 70 = 68 DLR (AD) 298 and, as such, all the proceedings in the present cases are maintainable and not liable to be quashed.
21. Heard the learned Advocates for the parties, have gone through the application, complaint petitions in all the cases, order framing charge against the accused petitioner and the annxures annexed thereto.
22. In the present case first question has come for our consideration as to whether the accused petitioner is a drawer of the cheques and the account in question is “maintained by him”.
23. Secondly, whether the accused petitioner can be held liable for dishonour of the cheques issued from the account maintained by Seus Fabrics Limited, a registered company, limited by shares without describing him as in charge of, and liable for the affairs of the said company.
24. Thirdly, whether the accused petitioner has had any authority to sign the cheque on behalf of the company at the relevant time.
25. To answer the first question raised, provisions in section 138 may be looked into, which runs thus:
138. Dishonour of cheque for insufficiency, etc. of funds in the account[1]. Where any cheque drawn by a person on an account maintained by him with a banker for payment of any amount of money to another person from out of that account[* * * * *] is returned by the bank unpaid, either because of the amount of money standing to the credit of that account is insufficient to honour the cheque or that it exceeds the amount arranged to be paid from that account by an agreement made with that bank, such person shall be deemed to have committed an offence and shall, without prejudice to any other provisions of this Act, be punished with imprisonment for a term which may extend to one year, or with fine which may extend to [thrice] the amount of the cheque, or with both” (underlines are ours)
26. The objective of the Act is to prescribe the liability in case of a failure of the instrument to fulfill its debt due to the default on the part of the payer or to curb scrupulous practices adopted to escape liability in respect of Negotiable Instruments. From a plain reading of Section 138(1) of the Act, it is manifestly clear that the cheque drawn by a person on any account must be maintained by him. In other words, for the purpose of Section 138(1) of the Act the account has to be maintained by the drawer of the cheque. The expression “drawer” is defined in Section 7 of the Act. As per that secti0n, the maker of a bill of exchange or cheque is called the drawer.
27. From a plain reading of the complaint it appears that the petitioner has been made accused as an individual alleging his independent and personal liability not as Managing Director of the company. The liability of the petitioner if any is only statutory because of his legal status as Managing Director of Seus Fabrics Limited. Every person signing a cheque on behalf of a company on whose account a cheque is drawn does not become the drawer of the cheque. Such a signatory is only a person duly authorized to sign the cheque on behalf of the company/drawer of the cheque. It is clear that the offence is committed by the drawer of the cheque which in this case happens to be the Seus Fabrics Limited which was represented by the accused petitioner.
28. The account from which the cheques in question were issued is admittedly not maintained in the name of the accused petitioner; rather it is maintained in the name of a limited company named Seus Fabrics Limited. Further more, the cheques were not bounced because of insufficiency of funds only but also for the reason that signature of the drawer defers. In such a posture of thing Section 138(1) cannot be applied against the accused petitioner.
29. To answer the second question raised, provisions in Section 140(1) of the Act may be looked into which runs thus;
“140. Offences of companies-(l) 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 liable to be proceeded against and punished accordingly:
Provided that nothing contained in this sub-section shall render any person liable to punishment if he proves that the offence was committed without his knowledge, or that he had exercised all due diligence to prevent the commission of such offence.
(2) Notwithstanding anything contained in sub-section (l), where 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, or is attributable to, any neglect on the part of any director, manager, secretary or other office of the company, such director, manager, secretary or other officer shall also be deemed guilty of that offence and shall be liable to be proceeded against and punished accordingly.
Explanation-For the purposes of this section-
(a) “company” means anybody corporate and includes firm or other association of individuals ; and
(b) “director” in relation to a firm, means a partner in the firm …..
30. Apparently on the face of record it appears that the cheques were issued by the company as drawer. The accused petitioner was an authorized Signatory of the cheques. From plain reading of the complaint itself this Court, finds that no averments regarding status of the accused petitioner has been made in that complaint connecting him with the business the company. In the absence of any averment being made about the signatory of the cheques connecting him with the business of the company the requirement of Section 140(1) a the Act cannot be said to be satisfied and, a such, the Court cannot take cognizance of the offence under Section 138 of the Act.
31. The person sought to be made liable should be in charge of and responsible for the conduct of the business of the company at the relevant time. This has to be averred at least connecting with the liability of the company as Managing Director in such case. A director, whose share transfer has been approved and accepted by the company and that has been duly notified to the Registrar of Joint Joint Stork Companies cannot be made accountable and fastened with liability for anything done by the company after the transfer of his entire shares and cessation of his position as Managing Director.
32. The words “every person who, at the time the offence committed” occurring in Section 140(1) of the Act, are not without significance and this words indicate that criminal liability of a Managing Director must be deter-mined on the date of offence alleged to have been committed.
33. Documents available in the record
show that on 23-8-2009 the petitioner transferred his entire shares and ceased to be the Managing Director of the company due to transfer of his share. The cheques in question were issued on several dates starting from the month of November, 2009 to October, 2010. The above documents placed on record by the petitioner have not been disputed and or controverted by the complainant. As a matter of fact, it was not even the case of the complainant that the change among directors of the company on transfer of shares of the petitioner with effect from 23-8-2009 has not been taken place or the petitioner as Managing Director of the company signed the cheques in question have been averred in the complaint.
34. The argument of the complainant before this Court that it was not permissible for this Court to look into the papers and documents relating to the petitioner’s transfer of shares since these are the matters of defence is a matter for the consideration at the trial on the basis of evidence which cannot be decided by this Court. In this respect it is our considered view that if before the issuance of cheques the accused had transferred his entire shares and ceased to be the Managing Director of the company then he cannot be held liable for the offence of Section 138, where cognizance taken, the trial is yet to take place and the materials relied upon by the accused and the complainant which are in the nature of public document are beyond suspicion or doubt and not disputed by the opposite party. In the circumstances, this can be looked into by this Court in exercise of its jurisdiction under Section 561A of the Code. Moreover, in an appropriate case, if on the face of the document which are beyond suspicion or doubt, placed by accused and not disputed by the prosecution the accusation against him cannot stand, for, it would be travesty of justice, if the accused is relegated to trial and he is asked to prove his defence before the trial court.
35. In such a situation, for the ends of justice or to prevent injustice or abuse of process of the court, this Court may look into the materials submitted by the parties, which have significant bearing on the matter at prima facie stage.
36. To answer the third question so raised, we may have a look at Annexure-‘G’. Annexure-‘G’ to the application shows that the accused petitioner transferred his share in the company on 23-8-2009, said fact is not disputed by the opposite party. In the given context, it is apparent that the petitioner has transferred his share in the company much before the cheques were issued and dishonoured. With the transfer of the share of the accused petitioner the relationship between the accused petitioner and the company ceased to exist on and from 23-8-2009. Since the said transfer of share has been approved by the company and duly notified to the Registrar of Joint Stock Companies before the date of issuance of the cheques in question, the accused petitioner had no authority to sign any cheque on behalf of the company at the relevant time as he was nobody to the company. These facts leave no manner of doubt to find that on the date the offence was committed by the company and since at that relevant time the petitioner was not the Managing Director, he had nothing to do with the affairs of the company. Consequently, no ingredients of Section 138 of the Act attracts the accused petitioner to be tried in a criminal prosecution.
37. Criminal prosecution is a serious matters, it affects the liberty of a person. No greater damage can be done to the reputation of a person than dragging him in a criminal case.
38. However, so far Criminal Miscellaneous Case Nos. 13689 and 13690 both of 2012 are concerned it appears from record that in Metro Sessions Case Nos. 6387 and 11 both of 2011 prior to issuance of the Rules PW 1 has already been examined. In this regard our Apex Court in the case of Majed Hossain vs State reported in 17 BLC (AD) 177 has held that when the trial is commenced and witness examined quashing of the proceedings under Section 5blA is not proper.
39. In view of the said decision, this Court is of the opinion that instead of quashing the proceedings in the aforesaid two cases the trial court shall dispose of the same keeping in mind the observations and findings made hereinabove by this Court in order to avoid conflicting decisions and multiplicity of judicial proceedings.
40. Taking into consideration the above, Rules in Criminal Miscellaneous Case Nos. 13689 and 13690 both of 2012 are disposed of with the above observations.
41. We find merit in other three Rules issued in Criminal Miscellaneous Case Nos. 21685, 21686 and 21687 all of 2012.
42. In the result, the Rules in the above 3 (three) Miscellaneous Cases are made absolute.
43. The proceedings in Sessions Case Nos. 3862 of 2011, 3493 of 2011 and 2449 of 2011 arising out of CR Case Nos. 3624 of 2010, 21 of 2011 and 3516 of 2010, now pending in the 5th and 2nd Court of Joint Metropolitan Sessions Judge, Dhaka, respectively are hereby quashed.
44. The orders of stay granted earlier by this Court are hereby vacated.
Communicate a copy of the judgment and order to the court concerned..