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2024 (7) TMI 178 - HC - Indian LawsDishonour of Cheque - criminal liability if company - issuance of summons to accused - complainant failed to mention the name of the authorized signatory of the Company and the person, who was looking after the daily affairs of the Company - HELD THAT - The Hon ble Supreme Court dealt with the liability of the Company and its Directors in PAWAN KUMAR GOEL VERSUS STATE OF U.P. ANOTHER 2022 (11) TMI 855 - SUPREME COURT and held that a person, who is in charge of and responsible to the Company for its affairs can be summoned and punished under Section 138 read with Section 141 of NI Act. In the present case, the complainant had specifically stated in para No.2 of the complaint that accused No.4 to 8 are its Managing Directors and Directors of accused No.1 to 3 and are fully responsible for all assets, liabilities and daily business affairs of accused No.1 to 3 - It was laid down in N. RANGACHARI VERSUS BHARAT SANCHAR NIGAM LTD 2007 (4) TMI 621 - SUPREME COURT that once it is established that a Director is in charge and responsible for the affairs of the Company, the burden shifts upon the accused to show that there was some restriction on his power. A person dealing with the Company is entitled to presume that he is the Director and in charge for the affairs of the Company and the burden shifts upon the person to prove any restriction. In the present case, the necessary averments that the accused were in charge and responsible for the affairs of the Company have been made and the burden will shift to the accused to show any restriction on their power. There is no infirmity in the order summoning the accused and the same cannot be quashed. Hence, the present petition fails and the same is dismissed - Petition dismissed.
Issues Involved:
1. Legality of the order passed by the Judicial Magistrate, First Class (JMFC), summoning the accused. 2. Applicability of Section 138 read with Section 141 of the Negotiable Instruments Act (NI Act) and Section 420 of the Indian Penal Code (IPC) to the accused. 3. Requirement of specific averments in the complaint to establish the liability of the accused. Detailed Analysis: 1. Legality of the Order Passed by JMFC: The petitioners challenged the order dated 18.12.2021, wherein the learned Trial Court ordered the issuance of summons against them. The petitioners contended that the order was erroneous and contrary to the principles of criminal jurisprudence. They argued that the learned Trial Court failed to consider the judgments of the Hon’ble Supreme Court concerning the criminal liability of a company and its directors. 2. Applicability of Section 138 read with Section 141 of NI Act and Section 420 of IPC: The complainant alleged that the accused issued six postdated cheques which were dishonoured with the remarks "payment stopped by the drawer." The complainant served a notice demanding payment within 15 days, but the accused failed to comply, leading to the filing of the complaint under Section 138 read with Section 142 of the NI Act and Section 420 of the IPC. The learned Trial Court found sufficient reasons to summon the accused based on these allegations. The petitioners argued that there was no evidence showing they were in charge of and responsible for the conduct of the business of the company, as required under Section 141 of the NI Act. They cited the Supreme Court judgments in S.M.S. Pharmaceuticals Ltd. v. Neeta Bhalla and Aneeta Hada v. Godfather Travels & Tours Pvt Ltd., which emphasize that specific averments must be made to establish the liability of directors and officers. 3. Requirement of Specific Averments in the Complaint: The petitioners contended that the complaint lacked specific averments regarding the authorized signatory of the company and the persons responsible for its daily affairs. They relied on the Supreme Court's interpretation in cases like K.K. Ahuja v. V.K. Vora and S.M.S. Pharmaceuticals Ltd. v. Neeta Bhalla, which mandate that only those in charge of and responsible for the conduct of the business of the company at the time of the offence can be held liable. The respondent/complainant argued that the complaint specifically stated that the accused were in charge of and responsible for the company's daily affairs. The Supreme Court in Pawan Kumar Goel v. State of U.P. and other cases reiterated that directors and officers in charge of the company could be held liable under Section 138 read with Section 141 of the NI Act if the necessary averments are made. Conclusion: The court observed that the complaint contained necessary averments stating that the accused were in charge of and responsible for the company's affairs. The burden of proof shifts to the accused to show any restriction on their power. The court cited several Supreme Court judgments to support this position, including N. Rangachari v. BSNL and Paresh P. Rajda v. State of Maharashtra. Final Judgment: The court found no infirmity in the order summoning the accused and dismissed the petition. The observations made are confined to the disposal of the petition and will not affect the merits of the case.
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