National Small Industries Corp.Ltd. Vs State (nct of Delhi) & Ors.

17 November 2008
Supreme Court
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NATIONAL SMALL INDUSTRIES CORP.LTD. Vs STATE (NCT OF DELHI) & ORS.

Bench: R.V. RAVEENDRAN,DALVEER BHANDARI, , ,
Case number: Special Leave Petition (crl.) 2009 of 2007

Reportable IN THE SUPREME COURT OF INDIA

CRIMINAL APPELLATE JURISDICTION

CRIMINAL APPEAL NO. 1802 OF 2008 (Arising out of SLP(Crl.) No. 2009 of 2007)

National Small Industries Corporation Ltd. …...Appellant (s)

Vs. State (NCT of Delhi) & Ors. ... Respondent (s)

WITH

Crl. Appeal No.1803-1821/2008 (@ SLP(Crl.) Nos.7276-7294/2007)

J U D G M E N T

R. V. Raveendran J.

Leave granted. Heard the counsel for the parties. The following

question of law arises for consideration in these appeals : Where a

complaint in regard to dishonour of a cheque is made by a Government

company, represented by its officer who is a public servant, whether the

exemption made under clause (a) of the proviso to section 200 of Code of

Criminal Procedure, (‘Code’ for short) is available?

Crl. Appeal No…………./2008 (@ SLP(Crl.) No.2009/2007)

2. The National Small Industries Corporation Limited (‘NSIC’ for short)

– the appellant herein, is a ‘government company’ within the meaning of

that expression under section 617 of the Companies Act, 1956. Its object is

to extend financial and other assistance to small scale industries. The

appellant lodged a complaint in the Court of the Metropolitan Magistrate,

Delhi, alleging that the second respondent company had issued a cheque

drawn in favour of the appellant, towards discharge of its liability, and the

said cheque was dishonoured when presented for payment. The appellant

therefore prayed for summoning and punishing the second respondent and

its Directors (respondents 3 and 4).

3. On 4.2.2002, the learned Magistrate took cognizance and summoned

the accused. He did not examine the complainant and its witnesses, under

section 200 of the Code. He recorded the following reasons in that behalf :

“Complaint has been filed by a public servant in discharge of his public duties. Hence his examination is dispensed with. I have perused the record and considered the submission. I have also perused the original documents also. I consider that prima facie case under Sections 138/142 of Negotiable Instruments Act is made out.”

Respondents 2 to 4 filed a petition under section 482 of the Code

challenging the summoning order. They contended that as the complainant

was a government company and not a public servant, the exemption under

clause (a) of the proviso to section 200 of the Code was not available; and

that the learned Magistrate could not have dispensed with the mandatory

requirement of examining the complainant on oath, under section 200 of the

Code. The High Court accepted the said contention on the following

reasoning :

“Public servant is defined in section 21 of the IPC and a government company would not fall under any of the descriptions mentioned in the said section. Once it is held that NSIC is not a public servant, mandate of section 200 Cr.PC was to be followed by the learned MM, which provides compulsory examination of the complainant and the witnesses present, if any, on oath and on the basis of such pre-summoning evidence, the Magistrate is to decide as to whether cognizance of the offence is to be taken and summons are to be issued to the accused persons or not. This is the unambiguous mandatory procedure prescribed under section 200 Cr.P.C.”

Consequently, by order dated 12.1.2007, the High Court allowed the

petition and quashed the summoning order. It however made it clear that the

learned Magistrate would be at liberty to record the statement of the

complainant and the witnesses and thereafter take appropriate decision in

the matter in accordance with section 200 of the Code. The said order is

challenged in this appeal.

Contentions :

4. The appellant company submitted that being an incorporeal person, it

acts through its officers. In the complaint lodged against respondents 2 to 4,

it is represented by its Development Officer, who is a public servant, and he

has signed the complaint on its behalf. The appellant contended that though

the appellant was the de jure complainant, its Development Officer who

represents it in the complaint was the de facto complainant; and when the

complaint by a government company is signed and presented by its

employee who is a public servant, it should be deemed to be a complaint by

such public servant acting in the discharge of his official duties.

Consequently, clause (a) of the proviso to section 200 of the Code would be

attracted and the Magistrate was not required to examine the complainant

and the witnesses, on taking cognizance. It is therefore contended that a

complaint by a government company represented by its officer who is a

public servant, should be treated as complaint by a public servant.

5. On the other hand, the second respondent submitted that the wording

of clause (a) of the proviso to section 200 of the Code made it clear that the

Magistrate was not required to examine the complainant and the witnesses

only where the complaint was made in writing by : (a) a public servant

acting or purporting to act in discharge of his official duties; and (b) a court.

The second respondent contended that if the intention was to exempt such

examination even where the complainant was a government company or

statutory corporation, clause (a) would have read : “if a public servant

acting or purporting to act in the discharge of his official duties, or a court,

statutory corporation or Government company, has made the complaint”

instead of “if a public servant acting or purporting to act in the discharge of

his official duties or a court has made the complaint”. It is argued that the

use of the words “public servant acting or purporting to act in the discharge

of his official duties”, would show that the exemption is intended to apply

only where government servants or employees of statutory bodies are

required to file complaints in the discharge of statutory duties. Reference

was made by way of illustration to section 11 of the Essential Commodities

Act, which provides that “No court shall take cognizance of any offence

punishable under the Act except on a report in writing of the facts

constituting such offence made by a person who is a public servant as

defined in section 21 of IPC…..”.

6. The second respondent next contended that if all the employees of a

government company are public servants, the government company does not

become a public servant, as it has an identity distinct from its employees. In

support of the said contention, the second respondent relied upon the

following observations in State Trading Corporation of India Ltd. v.

Assistant Superintendent of Commercial Taxes [AIR 1963 SC 1811] :

“We are dealing here with an incorporated company. The nature of the personality of an incorporated company which arises from a fiction of law, must be clearly understood ….. Unlike an unincorporated company, which has no separate existence and which the law does not distinguish from its members, an incorporated company has a separate existence and the law recognizes it as a legal person separate and distinct from its members. This new legal personality emerges from the moment of incorporation and from that date the person subscribing to the memorandum of association and other persons joining as members are regarded as a body corporate or a corporation aggregate and the new person begins to function as an entity. But the members who form the incorporated company do not pool their status or their personality. If all of them are citizens of India the company does not become a citizen of India any more than if all are married the company would be a married person. The personality of the members has little to do with the persona of the incorporated company. The persona that comes into being is not the aggregate of the personae either in law or in metaphor.”

(emphasis supplied)

In reply, the learned counsel for appellant clarified that the appellant had

never contended that it was a public servant. The contention always was that

the employee who represented the appellant in the complaint was the de

facto complainant and he being public servant, the exemption was available.

Legal provisions:

7. Section 138 of the Negotiable instruments Act (for short ‘NI Act’)

provides that dishonour of a cheque for insufficiency of funds in the bank

account etc., is an offence punishable with imprisonment for a term which

may be extended to two years or with fine which may extend to twice the

amount of the cheque or with both. Section 142 of the NI Act provides that

notwithstanding anything contained in the Code, no court shall take

cognizance of any offence punishable under section 138 except upon a

complaint in writing made by the Payee (or where it has been endorsed in

favour of another, the holder in due course) of the cheque.

8. Section 190 of the Code enumerates the various modes of taking

cognizance of offences by Magistrates. It provides for taking cognizance

upon receiving a complaint of facts which constitutes such offence. Section

200 of the Code relates to examination of complainant. Relevant portion of

which reads as under :

“200. Examination of complainant. – A Magistrate taking cognizance of an offence on complaint shall examine upon oath the complainant and the witnesses present, if any, and the substance of such examination shall be reduced to writing and shall be signed by the complainant and the witnesses, and also by the Magistrate :

Provided that, when the complaint is made in writing, the Magistrate need not examine the complainant and the witnesses –

(a) If a public servant acting or purporting to act in the discharge of his official duties or a court has made the complaint; or

(b) xxxxx”

The term ‘public servant’ is not defined in the Code. However, section 2(y)

of the Code provides that words and expressions used but not defined in the

Code will have the meaning assigned to them under the Indian Penal Code.

Section 21 IPC defines ‘public servant’, the relevant portion of which is

extracted below :

“21. ‘Public servant’.- The words “pubic servant” denote a person falling under any of the descriptions hereinafter following; namely –

Twelfth – Every person – xxxxx (b) in the service or pay of a local authority, a corporation established by or under a Central, Provincial or State Act or a Government company as defined in section 617 of the Companies Act, 1956.”

Having regard to the aforesaid definition, it is clear that the appellant which

is a government company is not a ‘public servant’, but every employee of

the appellant is a ‘public servant’.

The issue

9. The object of section 200 of the Code requiring the complainant and

witnesses to be examined, is to find out whether there are sufficient grounds

for proceeding against the accused and to prevent issue of process on

complaints which are false or vexatious or intended to harass the persons

arrayed as accused. (See: Nirmaljit Singh Hoon vs. The State of West

Bengal – 1973 (3) SCC 753). Where the complainant is a public servant or

court, clause (a) of proviso to section 200 of the Code raises an implied

statutory presumption that the complaint has been made responsibly and

bona fide and not falsely or vexatiously. On account of such implied

presumption, where the complainant is a public servant, the statute exempts

examination of the complainant and the witnesses, before issuing process.

When an employee of a Government company or statutory corporation, who

is a public servant, acts or purports to act in the discharge of his official

duties, it necessarily refers to doing acts done or duties discharged by such

public servant, for and on behalf of his employer, namely, the government

company/statutory corporation. Any complaint by a public servant (if he

happens to be an employee of a government company) acting or purporting

to act in the discharge of his official duties, can only be in regard to the

transactions or affairs of the employer company. When an offence is

committed in regard to a transaction of the Government company, it will be

illogical to say that a complaint regarding such offence, if made by an

employee acting for and on behalf of the company will have the benefit of

exemption under clause(a) of the proviso to section 200 of the Code, but a

complaint in regard to very same offence, if made in the name of the

company represented by the said employee, will not have the benefit of such

exemption. The contention of the second respondent, if accepted, would

mean that a complaint by ‘The Development Officer, NSIC’ as the

complainant can avail the benefit of exemption, the same complaint by

‘NSIC represented by its Development Officer’ as complainant will not

have the benefit of exemption. Such an absurd distinction is clearly to be

avoided.

10. The term ‘complainant’ is not defined under the Code. Section 142 NI

Act requires a complaint under section 138 of that Act, to be made by the

payee (or by the holder in due course). It is thus evident that in a complaint

relating to dishonour of a cheque (which has not been endorsed by the payee

in favour of anyone), it is the payee alone who can be the complainant. The

NI Act only provides that dishonour of a cheque would be an offence and

the manner of taking cognizance of offences punishable under section 138

of that Act. However, the procedure relating to initiation of proceedings,

trial and disposal of such complaints, is governed by the Code. Section 200

of the Code requires that the Magistrate, on taking cognizance of an offence

on complaint, shall examine upon oath the complainant and the witnesses

present and the substance of such examination shall be reduced to writing

and shall be signed by the complainant and the witnesses. The requirement

of section 142 of NI Act that payee should be the complainant, is met if

the

complaint is in the name of the payee. If the payee is a company, necessarily

the complaint should be filed in the name of the company. Section 142 of NI

Act does not specify who should represent the company, if a company is the

complainant. A company can be represented by an employee or even by a

non-employee authorized and empowered to represent the company either

by a resolution or by a power of attorney.

11. Section 138 NI Act mandates that payee alone, whether a corporeal

person or incorporeal person, shall be the complainant. Section 200 of the

Code contemplates only a corporeal person being a complainant. It

mandatorily requires the examination of the complainant and the sworn

statement being signed by the complainant. If section 142 of NI Act and

section 200 of the Code are read literally, the result will be : (a) the

complainant should be the payee of the cheque; and (b) the complainant

should be examined before issuing process and the complainant’s signature

should be obtained on the deposition. Therefore, if the payee is a company,

an incorporeal body, the said incorporeal body can alone be the

complainant. The mandatory requirement of section 200 of the Code is that

a Magistrate taking cognizance of an offence on complaint, shall examine

upon oath the complainant, and that the substance of such examination

reduced to writing shall be signed by the complainant. An incorporeal body

can obviously neither give evidence nor sign the deposition. If literal

interpretation is applied, it would lead to an impossibility as an incorporeal

body is incapable of being examined. In the circumstances, a harmonious

and purposive interpretation of section 142 of NI Act and section 200 of the

Code becomes necessary. Section 142 only requires that the complaint

should be in the name of the payee. Where the complainant is a company,

who will represent the company and how the company will be represented

in such proceedings, is not governed by the Code but by the relevant law

relating to companies. Section 200 of the Code mandatorily requires an

examination of the complainant; and where the complainant is an

incorporeal body, evidently only an employee or representative can be

examined on its behalf. As a result, the company becomes a de jure

complainant and its employee or other representative, representing it in the

criminal proceedings, becomes the de facto complainant. Thus in every

complaint, where the complainant is an incorporeal body, there is a

complainant -- de jure, and a complainant -- de facto. Clause (a) of the

proviso to section 200 provides that where the complainant is a public

servant, it will not be necessary to examine the complainant and his

witnesses. Where the complainant is an incorporeal body represented by one

of its employees, the employee who is a public servant is the de facto

complainant and in signing and presenting the complaint, he acts in the

discharge of his official duties. Therefore, it follows that in such cases, the

exemption under clause (a) of the first proviso to section 200 of the Code

will be available.

12. We are fortified in our view by two decisions of this Court. In

Associated Cement Co. Ltd. vs. Keshvanand [1998 (1) SCC 687], this Court

held as follows :

“Chapter XV of the new Code contains provisions for lodging complaints with magistrates. Section 200 as the starting provision of that chapter enjoins on the Magistrate, who takes cognizance of an offence on a complaint, to examine the complainant on oath. Such examination is mandatory as can be discerned from the words "shall examine on oath the complainant...". The Magistrate is further required to reduce the substance of such examination to writing and it "shall be signed by the complainant". Under Section 203 the magistrate is to dismiss the complaint if he is of opinion that there is no sufficient ground for proceeding after considering the said statement on oath. Such examination of the complainant on oath can be dispensed with only under two situations, one if the complaint was filed by a public servant, acting or purporting to act in the discharge of his official duties and the other when a court has made the complaint. Except under the above understandable situations the complainant has to make his physical presence for being examined by the magistrate. Section 256 or Section 249 of the new Code clothes the Magistrate with jurisdiction to dismiss the complaint when the complainant is absent, which means his physical absence.

The above scheme of the new Code makes it clear that complainant must be a corporeal person who is capable of making 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 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 de facto complainant to represent the former in court proceedings.”

(emphasis supplied)

In Municipal Corporation of Delhi vs. Jagdish Lal [1969 (3) SCC 389], the

facts were that the Delhi Municipal Corporation had by a resolution

authorized the Municipal Prosecutor to launch a prosecution under section

20 of the Prevention of Food Adulteration Act. Accordingly, one S.S.

Mathur, the Municipal Prosecutor, filed a complaint against the respondent.

The learned Magistrate acquitted the respondent. Section 417 of the old

Code provided that where an order of acquittal was passed in any case

instituted upon complaint by the High Court granting special leave to appeal

from the order of acquittal on an application made to it by the complainant,

the complainant may present an appeal to the High Court. The Delhi

Municipal Corporation made an application to the High Court for special

leave under section 417 against the order of acquittal. The application was

granted. When the appeal came up for hearing, the respondent raised a

preliminary objection that as the complaint had been filed by S. S. Mathur,

the Municipal Prosecutor, he alone was competent to file the appeal and not

the Municipal Corporation. It was contended that as the application seeking

leave was not filed by the complainant but by the Municipal Corporation,

the appeal itself was not maintainable. The said contention was negatived

by this Court. This Court expressed its inability to accept the contention that

as S.S.Mathur, Municipal Prosecutor, was the complainant, the Delhi

Municipal Corporation was not competent to make an application for

special leave. This Court noted that S.S.Mathur, Municipal Prosecutor, filed

the complaint under the authority given to him under the resolution of the

Municipal Corporation. This Court held that in filing the complaint, S.S.

Mathur was not acting on his own personal behalf but was acting as an

agent of the Delhi Municipal Corporation and therefore, it must be deemed

that the Delhi Municipal Corporation was the complainant in the case; and

that as S.S. Mathur was only acting in a representative capacity and as the

Delhi Municipal Corporation was the complainant, the application for

special leave filed by the Municipal Corporation was properly instituted.

13. Resultantly, when in a complaint in regard to dishonour of a cheque

issued in favour of a company or corporation, for the purpose of section 142

NI Act, the company will be the complainant, and for purposes of

section 200 of the Code, its employee who represents the company or

corporation, will be the de facto complainant. In such a complaint, the de

jure complainant, namely, the company or corporation will remain the same

but the de facto complainant (employee) representing such de jure

complainant can change, from time to time. And if the de facto complainant

is a public servant, the benefit of exemption under clause (a) of proviso to

section 200 of the Code will be available, even though the complaint is

made in the name of a company or corporation.

14. Thus, the answer to the question raised is :

Where an incorporeal body is the payee and the employee who represents

such incorporeal body in the complaint is a public servant, he being the de

facto complainant, clause (a) of the proviso to section 200 of the Code will

be attracted and consequently, the Magistrate need not examine the

complainant and the witnesses.

The appeal is accordingly allowed, the order of the High Court is set aside

and summoning order of the Magistrate stands restored.

Crl. Appeal No…………./2008 (@ SLP(Crl.) Nos.7276-7294/2007)

Following the decision in the main matter, these appeals are allowed.

The impugned orders of the High Court are set aside. The summoning

orders are restored.

…………………………..J [R. V. Raveendran]

………………………….J [Dalveer Bhandari]

New Delhi; November 17, 2008.