JUDGMENT R.L. Khurana, J.

1. The petitioner, Satinder Kumar, who is the managing director of Indian Magnetics Ltd., has approached this court under Section 482 of the Code of Criminal Procedure, 1973, for quashing the criminal proceeding pending against him before the learned Chief Judicial Magistrate, Shimla, for the offence under Section 138 of the Negotiable Instruments Act, 1881 (hereinafter referred to as "the Act"), being Criminal Case No, 51/3 of 1997.

2. Admittedly, the petitioner had issued a cheque dated March 31, 1997, in favour of the respondent for a sum of Rs. 68,000. This cheque on having been presented to the bank by the respondent for encashment was returned dishonoured with the endorsement "insufficient funds". The respondent thereafter launched prosecution against the petitioner by preferring a complaint before the learned Chief Judicial Magistrate, Shimla.

3. By virtue of the present petition, challenge has been laid to the continuation of the criminal proceedings, inter alia, on the following grounds :

(i) The offence, if any, was committed by the company, Indian Magnetics Ltd., and not by the petitioner ;

(ii) The prosecution of the petitioner without the company having been impleaded as an accused, is bad and not sustainable ;

(iii) even if it be assumed that prosecution could be launched against the petitioner, the complaint is devoid of necessary averments to constitute the offence under Section 138 of the Act.

I have heard learned counsel for the parties and have also gone through the record of the case, Ground No. (i) :

Section 141 of the Act which deals with "offences by companies" reads :

"141. Offences by companies.--(1) 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 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 (1), 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.

Explanation.--For the purposes of this section :

(a) 'company' means any body corporate and includes a firm or other association of individuals ; and

(b) 'director', in relation to a firm, means a partner in the firm."

4. A bare reading of the above provisions shows that if an offence under Section 138 of the Act is committed by the company, every person, who at the time of commission of the offence, was in charge of, and was responsible to the company for the conduct of the business of the company, is also liable along with the company by a legal fiction. Further, if the offence is shown to have 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 is also deemed to be guilty of the offence and he shall be liable to be proceeded against along with the company. Therefore, it cannot be contended that the company, which has committed the offence, alone is liable to be prosecuted and punished by leaving out the person(s) in charge of and responsible to the company for the conduct of its business, or the person(s) with whose consent or connivance or due to any neglect on his part, the offence has been committed.

5. Besides, in the present case, a bare perusal of the cheque in question shows that the same appears to have been issued by the petitioner in his personal capacity. There is nothing to indicate that the same was issued by the petitioner for and on behalf of the company, Indian Magnetics Ltd., in his capacity of being its managing director.

6. Even if it be taken that the cheque in question was issued by the petitioner in his capacity as managing director of the company, he is liable in view of the provisions contained in Section 141 of the Act being the person in charge of and responsible to the company for the conduct of its business.

Ground No. (ii)

7. It has been contended on behalf of the petitioner that the offence has been committed by the company, Indian Magnetics Ltd., since the cheque was issued by it and when the said company has not been impleaded as an accused, the petitioner cannot be proceeded against for the offence committed by the company. In support of his contention learned counsel for the petitioner placed reliance on the ratio laid down by the High Court of Madras in K. K Krishan Bai v. Arti Press [1992] 1 Banking Cases 361 ; [1994] 80 Comp Cas 750. In the said case the cheque issued by the company signed by its managing director was returned dishonoured for want of funds. A complaint was filed for the prosecution of the managing director of the company for the offence under Section 138 of the Act without impleading the company as an accused. It was held that unless the company is made an accused, the person who is in charge of and responsible to the company for the conduct of its business, cannot be made an accused.

8. The above ratio was followed by another single Bench of the High Court of Madras in S. Krishnamoorthy v. B. S. Kesavan [1994] 80 Comp Cas 755 ; [1995] II BC 265.

9. However, in a later case, N. Doraisamy v. Archana Enterprises [1995] Crl. LJ 2306 ; [1999] 97 Comp Cas 129 the ratio laid down in the abovenoted two cases was not followed by Janarthanam ] of the High Court of Madras in view of the ratio laid down by the Supreme Court in Sheoratan Agarwal v. State of Madhya Pradesh [1984] 4 SCC 352 ; AIR 1984 SC 1824.

10. In the case before the Supreme Court the point considered was whether the prosecution against the managing director and production manager of a company for an offence under the Essential Commodities Act was maintainable without making the company an accused.

Section 10 of the Essential Commodities Act which is identical to the provisions contained in Section 141 of the Act, reads :

"(1) If the person contravening an order made under Section 3 is a company, every person who, at the time the contravention 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 deemed to be guilty of the contravention and shall be liable to be proceeded against and punished accordingly :

Provided that nothing contained in this sub-section shall render any such person liable to any punishment if he proves that the contravention took place without his knowledge or that he exercised all due diligence to prevent such contravention.

(2) Notwithstanding anything contained in Sub-section (1), where an 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.

Explanation.--For the purposes of this section :

(a) 'company' means any body corporate, and includes a firm or other association of individuals ; and

(b) 'director' in relation to a firm means a partner in the firm."

Interpreting the above provisions, the Supreme Court observed (page 1825 of AIR 1984 SC) :

"The section appears to our mind to be plain enough. If the contravention of the order made under Section 3 is by a company, the persons who may be held guilty and punished are (1) the company itself, (2) every person who at the time the contravention was committed, was in charge of, and was responsible to, the company for the conduct of the business of the company whom for short we shall describe as the person-in-charge of the company, and (3) any director, manager, secretary or other officer of the company with whose consent or connivance or because of neglect attributable to whom the offence has been committed, whom for short we shall describe as an officer of the company. Any one or more or all of them may be prosecuted and punished. The company alone may be prosecuted. The person-in-charge only may be prosecuted. The conniving officer may individually be prosecuted. One, some or all may be prosecuted. There is no statutory compulsion that the person-in-charge or an officer of the company may not be prosecuted unless he be ranged along-side the company itself. Section 10 indicates the persons who may be prosecuted where the contravention is made by the company. It does not lay down any condition that the person-in-charge or an officer of the company may not be separately prosecuted if the company itself is not prosecuted. Each or any of them may be separately prosecuted or along with the company. Section 10 lists the person who may be held guilty and punished when it is a company that contravenes an order made under Section 3 of the Essential Commodities Act . . ."

11. Relying on the said ratio, Janarthanam J. In N. Doraisamy v. Archana Enterprises [1995] Crl. LJ 2306 ; [1999] 97 Comp Cas 129, 137, while dealing with a case, the facts of which are somewhat similar to the facts of the case, held :

"In view of the clear exposition of law, the law stands settled that the prosecution proceedings against the persons-in-charge of and responsible to the company for the conduct of its business, or, the persons, with whose consent or connivance of, or an act attributable to, or due to any neglect on their part, the offence had been committed, are maintainable irrespective of whether the company is prosecuted or not. Thus, the decisions of the two learned judges of this court in K. K. Krishan Bai v. Arti Press [1991] Mad LW (Crl) 513 ; [1994] 80 Comp Cas 75.0 and S. Krishnamoorthy v. B. S. Kesavan [1994] 80 Comp Cas 755 ; [1994] Mad LJ (Crl) 147, in my opinion, cannot be regarded as laying down the correct proposition of law, in the light of the Supreme Court's decision in Sheoratan Agarwaal v. State of Madhya Pradesh [1984] 4 SCC 352 ; AIR 1984 SC 1824. Both the points, are thus answered."

12. Be it stated that the earlier view taken by two learned single judges of the Madras High Court in K. K. Krishan Bai v. Arti Press [1994] 80 Comp Cas 750 which was followed in S. Krishnamoorthy v. B, S. Kesavan [1994] 80 Comp Cas 755 was based on the reasoning that the legal position stood settled by the Hon'ble Supreme Court in U. P. Pollution Control Board v. Modi Distillery [1988] 63 Comp Cas 77 ; AIR 1988 SC 1128.

13. In the latter case, prosecution was launched against the chairman, vice-chairman, managing director and members of the board of directors of the company Modi Industries Ltd., for the offence under the Water (Prevention and Control of Pollution) Act, 1974. Section 47 of the said Act is worded similar to Section 141 of the Act. A learned single judge of the Allahabad High Court quashed the proceedings pending before the learned magistrate. It was held that there was no sufficient ground to proceed against the accused inasmuch as the allegations in the complaint did not constitute an offence under Section 44 of the Water (Prevention and Control of Pollution) Act, 1974. In coming to such conclusion, the learned single judge relied upon the ratio laid down by the Supreme Court in State (Delhi Admn.) v. I. K. Nangia, AIR 1979 SC 1977, interpreting a similar provision contained in Section 17(4) of the Prevention of Food Adulteration Act, 1954. The decision of the learned single judge of the Allahabad High Court was assailed before the Supreme Court. The decision of the Allahabad High Court was set aside and the prosecution of the accused was restored.

It was observed by the Supreme Court in para. 6 of the report at page 1132 in the following terms :

"Although as a pure proposition of law in the abstract the learned single judge's view that there can be no vicarious liability of the chairman, vice-chairman, managing director and members of the board of directors under Sub-section (l) or (2) of Section 47 of the Act unless there was a prosecution against Modi Industries Limited, the company owning the industrial unit, can be termed as correct, the objection raised by the petitioners before the High Court ought to have been viewed not in isolation but in the conspectus of facts and events and not in vacuum . . ."

14. I am in full agreement with the view taken by Janarthanam J. In N. Doraisamy v. Archana Enterprises [1995] Crl. LJ 2306 ; [1999] 97 Comp Cas 129 (Mad) and hold that the purport of the decision of the Supreme Court in U. P. Pollution Control Board v. Modi Distillery [1988] 63 Comp Cas 77 is not what has been stated in K. K, Krishan Bai v. Arti Press [1994] 80 Comp Cas 750 (Mad) which was followed in S. Krishnamoorthy v. B. S.

Kesavan [1994] 80 Gomp Cas 755 (Mad). The settled legal proposition is the one laid down by the Supreme Court in Sheoratan Agarwal v. State of Madhya Pradesh [1984] 4 SCC 352.

15. Assuming that the Supreme Court in U. P. Pollution Control Board v. Modi Distillery [1988] 63 Comp Cas 77 has laid down the proposition that no managing director, director or other officer of the company can be proceeded against for an offence committed by the company without the company being impleaded as an accused, the questions which arise for consideration are, when there are two conflicting judgments of the Hon'ble Supreme Court of equal Benches, which one is to be followed and whether the later decision of the Supreme Court has the effect of overruling its earlier decision.

A similar situation arose before a Full Bench of the High Court of Punjab and Haryana in Indo-Swiss Time Ltd. v. Umrao, AIR 1981 P & H 213. It was held (page 219) :

"Now the contention that the latest judgment of a co-ordinate Bench is to be mechanically followed and must have pre-eminence irrespective of any other consideration does not commend itself to me. When judgments of the superior court are of co-equal Benches and, therefore, of matching authority then their weight inevitably must be considered by the rationale and the logic thereof and not by the mere fortuitous circumstances of the time and date on which they were rendered. It is manifest that when two directly conflicting judgments of the superior court and of equal authority are extant then both of them cannot be binding on the courts below. Inevitably a choice, though a difficult one, has to be made in such a situation. On principle it appears to me that the High Court must follow the judgment which appears to it to lay down the law more elaborately and accurately. The mere incidence of time whether the judgments of co-equal Benches of the superior court are earlier or later is a consideration which appears to me as hardly relevant."

16. The above decision was followed by the Bombay High Court in Special Land Acquisition Officer v. Municipal Corporation of Greater Bombay, AIR 1988 Bom 9, the Full Bench of the Allahabad High Court in Ganga Saran v. Civil Judge, Hapur, AIR 1991 All 114, the Special Bench of the Calcutta High Court in Bholanath Karmakar v. Madanmohan Karmakar, AIR 1988 Cal 1, and the single Bench of the Sikkim High Court in Union of India v, Ashok Tshering Lama, AIR 1983 Sikkim 19.

17. It is significant to note that in U. P. Pollution Control Board v. Modi Distillery [1988] 63 Comp Cas 77 (SC), the ratio laid down by the Supreme Court in Sheoratan Agarwal v. State of Madhya Pradesh [1984] 4 SCC 352 was never noticed. Besides, the question involved has been elaborately discussed by the Supreme Court in its earlier decision in Sheoratan Agarwal v. State of Madhya Pradesh [1984] 4 SCC 352. In the later case of U. P. Pol-lution Control Board v. Modi Distillery [1988] 63 Comp Cas 77 (SC), the Supreme Court had proceeded on the assumption "as a pure proposition of law in the abstract" that there can be no vicarious liability of the chairman, vice-chairman, managing director and members of the board of directors unless the company had been impleaded as an accused.

Under the circumstances, it cannot be said that the case of U. P. Pollution Control Board v. Modi Distillery [1988] 63 Comp Cas 77 (SC) lays down the proposition that the chairman, vice-chairman, managing director or any other officer of the company cannot be prosecuted without the company having been impleaded as an accused. Nor can it be said that the decision rendered in this case had overruled the ratio laid down in the earlier case of Sheoratan Agarwal v. State of Madhya Pradesh [1984] 4 SCC 352. It would not be reasonable to say that the Supreme Court would depart or dissent from its earlier decision without even referring to it.

18. For the foregoing reasons, it must be held that the ratio laid down by the Supreme Court in Sheoratan Agarwal v. State of Madhya Pradesh [1984] 4 SCC 352 holds good and has to be followed.

19. Relying upon the said ratio, I hold that the petitioner can be prosecuted for the offence under Section 138 of the Act without the company Indian Magnetics Ltd., having been impleaded as a party. A similar view has been taken by a learned single judge of the High Court of Punjab and Haryana in T. P. Singh Kalra v. Star Wire India Ltd. [1998] 93 Comp Cas 186 ; [1998] 1 CLR 390.

Ground No. (iii) :

The last contention raised on behalf of the petitioner is that the complaint preferred by the respondent for the prosecution of the petitioner is devoid of necessary averments to constitute the offence under Section 138 of the Act and as such the same is liable to be quashed.

Section 138 of the Act provides :

"138. Dishonour of cheque for insufficiency, etc., of funds in the account--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 for the discharge, in whole or in part, of any debt or other liability, 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 provision of this Act, be punished with imprisonment for a term which may extend to one year, or with fine which may extend to twice the amount of the cheque, or with both :

Provided that nothing contained in this section shall apply unless :

(a) the cheque has been presented to the bank within a period of six months from the date on which it is drawn or within the period of its validity, whichever is earlier ;

(b) the payee or the holder in due course of the cheque, as the case may be, makes a demand for the payment of the said amount of money by giving a notice, in writing, to the drawer of the cheque, within fifteen days of the receipt of information by him from the bank regarding the return of the cheque as unpaid ; and

(c) the drawer of such cheque fails to make the payment of the said amount of money to the payee or as the case may be, to the holder in due course of the cheque within fifteen days of the receipt of the said notice.

Explanation.--For the purposes of this section, 'debt or other liability' means a legally enforceable debt or other liability."

20. A bare perusal of the complaint dated July 14, 1997, shows that all the necessary averments required to constitute the offence under Section 138 of the Act, find mention therein.

21. The Supreme Court in Modi Cements Ltd. v. Kuchil Kumar Nandi [1998] 92 Comp Cas 88 ; [1998] 3 SCC 249 has held that the court taking cognizance of the complaint under Section 138 of the Act is required to be satisfied as to whether a prima facie case is made out under the said provision. The drawer of the cheque undoubtedly gets an opportunity under Section 139 of the Act to rebut the presumption at the trial. A petition under Section 482 of the Criminal Procedure Code is tenable only when no offence prima facie is made out in the complaint.

The necessary ingredient required to be pleaded for the purpose of an offence under Section 138 of the Act are :

(a) a cheque has been drawn by the accused for payment of a sum of money to the complainant ;

(b) the cheque was issued for the discharge, either in whole or in part of any debt or other liability though in the absence of proof to the contrary, it is presumed that it was issued for a consideration ;

(c) the cheque stands returned by the bank as dishonoured on having been presented within six months from the date on which it is drawn or within the period of its validity, whichever is earlier ;

(d) the payee or the holder in due course, as the case may be, has made a demand for payment of the said amount by giving a notice in writing to the drawer of the cheque within fifteen days of the receipt of information by him from the bank regarding the return of the cheque as unpaid ; and

(e) the drawer of the cheque has failed to make the payment of the said amount to the payee or to the holder in due course, as the case may be, within fifteen days of the receipt of such notice ;

22. Apart from the above, under Section 142 of the Act, the requirement is that the complaint in writing must be made within one month of the date on which the cause of action arises under Clause (c) of the proviso to section 138 of the Act by the payee or, as the case may be, the holder in due course of the cheque.

23. The complaint filed by the respondent, who is the payee of the cheque in question, contains all the necessary ingredients and the averments made therein prima facie make out a case for the offence punishable under Section 138 of the Act.

Result :

For the foregoing reasons and conclusions, the present petition merits dismissal and the same is accordingly dismissed.

24. The parties through their counsel are directed to appear before the learned trial court, that is, the Chief Judicial Magistrate, Shimla, on July 13, 1998. Record of the trial court be returned forthwith so as to reach well before the date fixed.