2013 (2) TMI 572 - HC - Companies Law

The complaint was filed against four persons, namely, against the company, its chairman, managing director and another director The complainant filed a petition for amendment to introduce a plea to the effect that accused Nos. 2 to 4 were/are persons in charge of and responsible for the conduct of the business of the company Two cheques in question were signed by the chairman and managing director of the company - Accused Nos. 2 and 3 are not now available, the revision petitioner wanted to rope in the fourth accused and it is for that purpose now the petitioner has come forward with this amendment Held that - there is no specific averment to the effect that the fourth accused was in charge of and responsible to the company for the conduct of its business. The two cheques in question were signed by the chairman and managing director of the company. The first accused is the company itself No conviction can be had against the fourth accused in view of the conspicuous absence of the pleadings required under section 141 of the Act. Even under the provisions of the CPC if there is an admission, it cannot be taken away by the amendment though it may be possible to be clarified by way of amendment, learned counsel for respondent submits. Here, since the particulars required under section 141 of the Act were not incorporated in the complaint, the accused would be entitled to get an order of acquittal. That position cannot be altered by causing amendment to introduce a new plea which was originally not there. It cannot be treated as a correction or a clerical mistake or any such defect that can be cured. The amendment would go to the core of the matter placing the fourth accused in a disadvantageous position which will cause serious prejudice to him. It is a criminal case where the fourth accused can be sentenced to imprisonment also if found guilty Amendment will cause substantial change in the nature and character of the case causing serious prejudice to the fourth accused. That has got fundamental impact on the defence that can be raised by the fourth accused Hence such an amendment cannot be permitted at all This Criminal M.C. is dismissed.

Issues Involved:
1. Amendment of complaint under Section 141 of the Negotiable Instruments Act, 1881.
2. Inherent powers of criminal courts to permit amendments.
3. Distinction between clerical errors and substantive amendments.
4. Prejudice to the accused due to amendments.

Issue-wise Detailed Analysis:

1. Amendment of Complaint under Section 141 of the Negotiable Instruments Act, 1881:
The petitioner sought to amend the complaint to include a plea that accused Nos. 2 to 4 were responsible for the conduct of the company's business. The original complaint did not specify that the fourth accused was in charge of and responsible for the company's conduct. The court noted that the cheques were signed by the chairman and managing director, but there was no specific allegation against the fourth accused in the original complaint. The court emphasized that any amendment to include new pleas must be scrutinized carefully, especially in criminal cases where the liability and potential penalties are severe.

2. Inherent Powers of Criminal Courts to Permit Amendments:
The petitioner argued that even though there is no specific provision in the Code of Criminal Procedure, 1973, for amending complaints, the court has inherent power to rectify mistakes. The court referred to the decision in Madhavi v. Thupran [1987] 1 KLT 488, which held that subordinate criminal courts have auxiliary power to do what is necessary for justice, provided there is no prohibition or miscarriage of justice. However, the court distinguished this case from the present one, noting that the amendment sought was not a mere clerical correction but an introduction of a new plea that could impose criminal liability on the fourth accused.

3. Distinction Between Clerical Errors and Substantive Amendments:
The court discussed various precedents, including Sainulabdeen v. Beena [2004] 1 KLT 859 and the decision of the Karnataka High Court in K. Chandrasekhar v. Mac Charles India Ltd. [2005] Crl. LJ 1120, to highlight that amendments for clerical errors are permissible, but substantive changes that introduce new pleas are not. The court emphasized that the amendment sought by the petitioner was not a correction of a clerical error but a substantive change that would affect the nature of the complaint and the defense available to the accused.

4. Prejudice to the Accused Due to Amendments:
The court considered the potential prejudice to the fourth accused if the amendment were allowed. It referred to the Supreme Court decision in Pepsico India Holdings (P.) Ltd. v. Food Inspector [2011] 161 Comp. Cas. 197, which held that complaints must specifically allege the role of directors in the management of the company. The court found that the original complaint lacked any specific averment regarding the fourth accused's responsibility for the company's conduct. Allowing the amendment would cause substantial prejudice to the fourth accused by introducing a new plea that was not present in the original complaint, thereby altering the nature and character of the case.

Conclusion:
The court concluded that the amendment sought by the petitioner could not be allowed as it would result in a substantial change in the complaint and cause serious prejudice to the fourth accused. The Criminal M.C. was dismissed, affirming that the amendment would unfairly disadvantage the fourth accused and alter the fundamental nature of the defense. The judgment underscores the importance of specific allegations in complaints and the limitations on amending such complaints in criminal proceedings.

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