High Court Division :
(Criminal Miscellaneous Jurisdiction)
Md Rezaul Hasan J
Kashefa Hussain J
February 1st, 2016
Harun-or-Rashid (Md) and others …………Petitioner
State and another …………….
Code of Criminal Procedure (V of 1898)
A lot of petitions under Section 561A CrPC are moved without impleading the beneficiary of the cheque/the complaint as party to the proceeding. Appropriate provisions may be made to secure justice to the aggrieved and to stop indiscriminate granting of bail without at all considering the chance of absconsion of tampering with the evidence. . ..... (19)
Negotiable Instruments Act (XXVI of 1881)
The offence is not deemed to have been committed against the State. The proceeding is initiated by the 'payee', of a 'holder in due course', who has proprietary right and interest in the property of the dishonoured cheque. The State is not a necessary party, though it may be a proper party in such a case. NI Act case is unlike a case filed under Penal Code etc. In a case under NI Act, cost may be awarded to the aggrieved party for causing financial hardship. Leading a person or a family to the verge of ruination, for harassment and inflicting mental agony on frivolous grounds or by resorting to dilatory tactics or on issues of law already settled by the Appellate Division, i.e. when the accused-petitioner does not come in clean purpose.
In a case under NI Act, where the amount due under the cheque is not secured by any mortgage of pledge then the· drawer's moveable and immovable properties should be liable to attachment and the bank accounts to be freezed. Provisions may be made to that effect. Otherwise, the intent of the legislatures to secure beneficial interest of the payee or a 'holder in due course' as well as the entire proceeding is bound to become, in maximum case, a mere futile exercise. . ..... (19)
Aneeta Hada vs Godfather Travels & Tours (Pvt.)
Ltd. (2012) 5 SCC 661; Anil Gupta YS Star India (Pvt.) Ltd, (2014) 10 SCC 373; Moh. A Nairn vs Chairman, Sonali Bank Limited, 1 MLR (AD) 106 = 1 BLC (AD) 80; Ferdous Khan vs Islami Bank Bangladesh Ltd, 63 DLR 540; Islami Bank Bangladesh Ltd. vs Ferdous Khan @ Alamgir, Criminal Petition for Leave to Appeal No. 485 of 2010; Joynul Karim vs State, 4 NLJ (AD) 153 and Delhi Development Authority vs Shipper Construction Co. (Pvt) Ltd, LJ 233 (SC) = 89 ref.
Mizan Sayeed with Furzana Rashid, Advocates-For the Petitioner.
AKM Badrudduza with Md Zakir Hossain, with Baki with Md Murtoza, Advocates-For the Opposite Party No. 2.
Md Rezaul Hasan J : In the instant petition, filed by the accused-petitioners under Section 561A of the Code of Criminal Procedure, a Rule has been issued calling upon the opposite parties to show cause as to why the proceedings of Sessions Case No. 3035 of 2014 arising out of CR Case. No. 1678 of 2013 (Double Mooring Zone) under Section 138 read with Section 140 of the Negotiable Instruments Act, 1881, now pending in the Court of Metropolitan Sessions Judge, Chittagong shall not be quashed and/or such other or further order or orders passed as to this court may seem fit and proper.
2. The facts relevant for disposal of the Rule, in brief, are that the Opposite Party No.2. IOP No.2), namely Mr Mohammad Humayun Kabir Patwari has filed a complaint petition under Section 138 read with Section 140 of the Negotiable Instruments Act, 1881 (NI Act) against Alhaj Md Harun-or-Rashid, Anjuman Ara Begum and Hasnain Harun, before the Metropolitan Magistrate, Cognizance Court No. 3, Chittagong, alleging, amongst other, that the aforesaid 3 (three) accuseds are respectively Managing Director (MD), Chairman and Director of Rubya Vegetable Oil Limited (the company), that the accused No. 1 Alhaj Md. Harun-or-Rashid, the MD of the said company has purchased iron rods worth Taka 9,43,00,000 (Nine crore forty three lac) only, on credit, and they have also executed an undertaking in favour of the complainant to repay the said amount of money to the petitioner as price of the goods sold. Besides the above, the accused No. 1 has also signed a cheque No.7233140, dated 31-4-2013, for taka 5 (five) crore, drawn on the company's account No. 2592-90102-2000 maintained with the Pubali Bank Limited, Dewanhat Branch, Chittagong. The said cheque was deposited, on 282013 in the account of the complainant maintained with IBBL, for clearance (for collection) through clearing house, but it was dishonoured and returned with the remark "insufficient fund" in the account of the said company, that the accuseds being the Managing Director (MD), the Chairman and Director, respectively, they are personally responsible to pay the amount of the cheque.
Therefore, the complaint opposite party has issued a demand notice dated 29-10-2013, upon the accused-petitioners, under registered post with acknowledgment due, giving them 30 (thirty) days time to make payment of the amount due under the said cheque, that the said notice was received by the accused persons on 30-10-2013 and since then 30 (thirty) days time to repay the amount of the cheque has expired on 28-11-2013, that therefore the petitioner has filed this petition under Section 138/140 of the NI Act, on 11-12-2013, under Section 141 of the NI Act, that the accused-petitioner took bail from the Magistrate Court and the case being ready for hearing, the record of the said case was transmitted to the court of Metropolitan Session Judge, Chittagong, wherein it has been register as Session Case No. 3035 of 2014. The Metropolitan Session Judge, Chittagong, has taken up the matter on 09-11-2014 for framing charge hearing, but the accused petitioner has prayed for time which was allowed. Thereafter, 13-1-2015 was fixed for hearing on charge framing. The accused-petitioner again prayed for time which was allowed. In the meantime the accused-petitioner has filed and moved this petition under Section 561A of CrPC, 11-2-2015 and obtained the instant Rule.
3. The opposite party No. 2 has filed a counter-affidavit, denying all material allegations made in the petition and further submitting that the instant Rule has no merit and the same is liable to he discharged and the stay granted is liable to be vacated.
4. Learned Advocate Mr. Mizan Sayeed, appearing along with Ms Furzana Rashid, having placed the petition and drawing our attention to the materials on record, mainly submits that admittedly the accused-petitioners are the Managing Director, the Chairman and the Director of the Rubya Vegetable Oil Industries Limited. Hence the impugned proceedings against these accuseds is not maintainable. He continues, referring to the provisions of Section 140 of the NI Act, 1881, that the offence has been committed by the company and the liability of the accused petitioners are vicarious liability. The cheque was drawn on the account of the company maintained with Pubali Bank Ltd. Therefore, for not impleading the company as the principal accused, this proceeding is not maintainable against the Managing Director, the Chairman and Director of the Company. In support, of his contention, the learned advocate has cited certain decisions. He has mainly relied upon the case reported in (2012) 5 SCC 661: Aneeta Hada vs Godfather Travels & Tou (Pvt) Ltd. and submits that, in this case the Supreme Court of India has held that the criminal liability on a account of dishonour of a cheque primarily falls on drawer company and extends to its officers only when conditions incorporated in Section 141 stand satisfied. The Supreme Court of India in that case, whiled explaining import of the words "as well as the company" occurring in Section 141, has further held that, for maintaining prosecution under Section 141, arraigning of company as accused is imperative. The learned Advocate next submits that, similar view was adopted in a subsequent case reported in (2014) 10 SCC 373: Anil Gupta vs. Star India (P) Ltd. He has also referred to 1 MLR (AD) 106 = 1 BLC (AD) 80: Moh. A Naim vs Chairman, Sonali Bank Limited, another case of our jurisdiction, reported 63 DLR 540: Ferdous Khan vs Islami Bank Bangladesh Ltd. He also submits that no particular averment has been made in the complainant petition as to who of the accuseds was running and managing the affairs of the company. Hence, the complain petition itself is vague and is not maintainable on this ground alone. As such, the company is admittedly the drawer of the cheque, but the company has not been implead as accused in this case. Thereafter, he has prayed for making the rule absolute asserting that the continuation of the impugned proceeding in the court below is a clear abuse of the process of that court.
5. Learned advocate Mr. AKM Badrudduza, appearing along with Mr. Md. Zakir Hossain and Mr. Baki Md. Murtoza, for opposite party No.2, on the other hand, having drawn our attention to the materials on record, as well as to the provisions of Section 140 of the NI Act, first of all submits that, in Criminal Petition for Leave to Appeal No. 485 of 2010; Islami Bank Bangladesh Ltd. vs Ferdous Khan @ Alamgir, the Appellate Division has set aside the judgment passed by the High Court Division reported in 63 DLR 540. Besides, in the judgment passed in Criminal Appeal No. 07-22 of 2011, it has been held by the Appellate Division that, if for any reason the company is not prosecuted, the other persons who are in charge of the affairs of the company or have knowledge about the affairs of the company cannot escape from criminal liability if they are served with the notice under Clause (b) [of Section 138 (1) of the NI Act]. As such, the law in this respect has been set at rest by the Appellate Division and it is now settled law that a case 138(1) is maintainable against the directors and other officials of the company, even if the company is not made a party to the complain petition as an accused. He has next referred to sub-section (2) of Section 140 of the NI Act and submits that, sub-section (2) of section 140 of the NI Act starts with a non-obstante clause and it clearly makes provisions to file a petition under Section 138(1) against the directors and officials of a company, though the company is the drawer of the dishonoured cheque. The complainant petitioner apprehends, he adds, that meantime the accused-petitioner might have removed the goods purchased on credit or its sale proceeds, as the case may be, leaving complainant opposite party to financial hardship, unspeakable suffering and in situation of uncertainty as to whether the amount due under the cheque can at all be recovered. He therefore prayed for discharging the Rule with exemplary cost. The learned advocate has also produced before us an unreported judgment delivered in Criminal Appeals No. 7-22 of 2011 of the Appellate Division and submits that similar view was taken by the Appellate Division in Criminal Petition for Leave to Appeal No. 485 of 2010.
6. We have heard the learned advocates and perused the petition filed under Section 561A, the counter-affidavit, the law and the decision cited by the both sides.
7. The facts leading to issuance of the Rule has been briefly narrated herein before.
8. To examine the contention of the learned advocate of the accused-petitioner that the company is primarily responsible for bouncing of the cheque drawn on it's account and that, without impleading the company the directors cannot be impleaded in the complaint petition filed under Clause (b) of Section 141 of the NI Act, we consider it pertinent to quote sub-section (I) and (2) of section 140 of the NI Act, that read as follows:
"140. Offences of companies-(I) If the person committing an offence under Section 138 is a company, every person who, at the time the offence was committed, as in charge of, and was responsible to, the company for the conduct of the business of the company, as well as the company, shall be deemed to be guilty of the offence and shall be liable to be proceeded against and punished accordingly:
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 (I), 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 officer of the company, such director, manager, secretary or other officer shall also be deemed to be guilty of that offence and shall be liable to be proceeded against and punished accordingly."
9. A mere perusal, of the provision of sub-section (1) of Section 140, as quoted above, clearly shows that the intention of the legislature is to make those persons primarily responsible who are in charge of the company and are managing the affairs of the company. The words/expression 'as well as' simply denotes that the company may also be impleaded as co-accused. Nothing more. If sub-section (1) is read with sub-section (2) of Section 140 of the NI Act, then the intention of legislature becomes more vivid.
10. Sub-section (2) of Section 140, commencing with a non-obstante clause, abundantly makes it clear that the Chairman, Directors, Managers and other officers of the company can be prosecuted even by dropping the company, though the dishonoured cheque was drawn on an account of the company maintained with its banker. The legislature did not intend to let any of them go escort free simply for the reason that the company was not impleaded as a co-accused.
11. In this connection, we have also consulted the judgment passed by the Apex Court in Criminal Petition/or Leave to Appeal No. 485 of 2010: Islami Bank Bangladesh Ltd. vs Ferdous Khan @ Alamgir. By this unreported judgment dated 09-2-2014, the Appellate Division has set-aside the judgment passed by the High Court Division reported in 63 DLR 540. Ferdous Khan vs Islami Bank Bangladesh Ltd. In their judgment passed in the CrPLA No. 485 of 2010, the Appellate Division has referred to the judgment passed them in Criminal Appeal Nos. 7-22 of 2011, wherein it has been held that, if for any reason the company is not prosecuted, the other persons who are in charge of the affairs of the company or have knowledge about the affairs of the company cannot escape from criminal liability, if they are served with the notice. As such, the law on this point has been set at rest by the Appellate Division holding that a case under Section 138(1) can be filed and is maintainable for dishonour of a cheque, drawn on the account company, even if that company is not prosecuted, i.e. not impleaded as an accused. Besides, in 4 NLJ (AD) 153, Joynul Karim vs State, the apex court has held that, "Omission of impleading the company in the proceeding is an irregularity and same is not fatal".
(To be continued)
12. We also find that, the Appellate Division in Criminal Appeal Nos. 07-22 of 2011 as well as the provisions of law, viz sub-section (2) of Section 140 of the Negotiable Instrument Act, 1881, clearly make a proceeding maintainable even if the company, on whose account the dishonoured cheque was drawn, has not been impleaded as one of the co-accused in a case filed under Section 138(1) of the Act.
13. We have gone though the judgments reported in (2012) 5 SCC 661 and (2014) 10 SCC 373. Sub-section (2) of Section 140 has not at all been discussed in the aforesaid two judgments by the Supreme Court of India (SCI). We are unable to regard these two judgments having no persuasive value at all, while, as per provision of Article 111 of the Constitution of the People's Republic of Bangladesh, the judgment passed by the Appellate Division is binding on us.
14. Besides, in a case under SCI jurisdiction, reported in  by Comp LJ 233 (SC) =  89 Camp Case 262 (SC),. Delhi Development Authority vs Shipper Construction Co. (P) Ltd, it has been held by the Supreme Court of India that, where it is found that a corporate character has been used for committing illegalities and for defrauding people, corporate veil can be lifted with a view to rendering full justice to affected parties (emphasis added)
15. As regards the decision reported 1 MLR (AD) 106 we find that this is a case' regarding Administrative Tribunal and has no manner of relevance to the instant case.
16. We have also taken into consideration the submission of the learned Advocate appearing for the accused-petitioners that, no specific averment has been made as to who of the accuseds was in charge of running or managing the affairs of the company. On this ground, our considered view is that, it need not be emphasized that a company cannot work without the board of directors. The accused-petitioners are, respectively,' the Managing Director, Chairman, and the Director. Their presence is necessary to form the quorum of the meetings of the board of directors as well as for adopting any resolution by the board of directors, for operating the accounts of the company, for entering into any deal with any other party as well as for running day to day business of the company, subject to their supervision. As such, apparently they are active party in managing the affairs of and operation the business of the company. Companies Act, Section 95, requires that the Board must sit at least 4(four) times in each year. This also proves the active participation of accuseds, as required by law, in running the affairs of the company. The board decides the date of and holds the AGM and EGM etc too. The accused persons being the MD, Chairman and Director their participation in running and managing the affairs of the company hardly needs any further proof, although the accused petitioners one entitled to adduce evidence at the time of hearing of the case, before the trial Court, on this issues.
17. As regards another submission of the petitioner, we should make it clear that, neither the NT Act, 1881 nor the CrPC. 1898. provides any particulars to be stated in a complaint petition or in an FIR (pleadings), as provided in Order 7 and 8 of the Code of Civil Procedure, 1908, as to what particulars a plaint or a written statement shall contain. Hence, we find the submission of the learned advocate for the accused-petitioner is devoid of any substance and suffer from serious misconception about the pleadings in criminal cases.
18. In view of the deliberation recorded above, we do not find any merit in this Rule. We find substance in the submission of the learned advocate of the complainant OP No: 2, that the petitioner has put the complainant OP No.2 to serious financial hardship, put their business to the verge of ruination and caused severe mental agony due to uncertainty about getting speedy trial and relief in the NI Act case, for which, he submits, exemplary cost should be imposed upon the petitioners, upon considering the face value of this dishonoured cheque as well as the delay and suffering caused by resorting to dilatory tactics by the accused-petitioners.
19. Before parting of, we should bring to the notice of Bangladesh Law Commission and or the Law Ministry that this type of cases are being filed in bunches on frivolous grounds' mainly because, so far we understand, that the term of imprisonment has been kept maximum I (one) year, whether the cheque is for Taka 5(five) lac or for Taka 5 (five) crore. Therefore the term of imprisonment is required to be reconsidered according to the amount of the cheque. On the other hand, the cheque involves money to be paid to the payee or beneficiary of the cheque. Therefore provision may be made, by inserting a new Section 138B, for substitution of parties, so that a case filed under Section 138 of the Negotiable Instrument Act, 1881, shall not abate even if either the complainant or the accused dies, though the heirs of a deceased accused shall not be subjected to corporal punishment to realize the fine that may be imposed, as we find in Section 34(2) of Artha Rin Adalat Ain, 2003, in respect of substituted heirs. In a case under N1 Act, 1881, where the amount due under the cheque is not secured by any mortgage or pledge then the drawer's moveable and immovable properties should be liable to attachment and the bank accounts to be freezed. Provisions may be made to that effect. Otherwise, the intent of the legislatures to secure beneficial interest of the payee or a 'holder in due course' as well as the entire proceeding is bound to become, in maximum cases, a mere futile exercise. Besides, as a Bench hearing criminal matters, we find that the trial Courts, almost in 100% cases, are granting bail mechanically, as if a routine, without considering the amount due under the cheque and the chance of jumping the bail. Besides, a lot of petitions under Section 561 A CrPC are moved without impleading the beneficiary of the cheque/the complaint as party to the proceeding. Appropriate provisions may be made to secure justice to the aggrieved and to stop indiscriminate granting of bail without it all considering the chance of absconsion, or tampering with the evidence.
20. In view of the deliberation recorded above, we do not find any merit in this Rule and the Rule is liable to be discharged with cost.
21. In a case under Section 138(1) of the Negotiable Instruments Act, 1881, the offence is not deemed to have been committed against the state. The proceeding is initiated by the 'payee', or a 'holder in due course', who has proprietary right and interest in the property of the dishonoured cheque. The state is not a necessary party, though it may be a property party in such a case. NI Act case is unlike a case filed under Penal Code etc. This distinction will be more clear from the fact that, for preferring appeal against the judgment and order of sentence passed under NI Act, not less than 50% of the amount due under dishonoured the cheque has to be deposited in the trial court, unlike in the case of preferring another appeal against conviction. In a case under NI Act, cost may be awarded to the aggrieved party for causing financial hardship, leading a person or a family to the verge of ruination, for harassment and inflicting mental agony on frivolous grounds or by resorting to dilatory tactics or on issues of law already settled by the Appellate Division, i.e. when the accused- petitioner does not come in clean hands for seeking justice, but with collateral purpose.
In the result the Rule is discharged. The petitioner is directed to pay as cost Taka 2,50,000 to the complainant, within 30(thirty) days of drawing up of this judgment and order.
Let a copy of this judgment be sent to the trial Court and the trial Court is directed to proceed expeditiously for disposal of the case pending before it.
Let another copy of this judgment be sent to the Hon'ble Chairman, Bangladesh Law Commission, so that the Commission may take into notice the observation made in paragraph 18, herein above and may do the needful out of their wisdom.