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TMI Blog2010 (7) TMI 276X X X X Extracts X X X X X X X X Extracts X X X X ..... used No. 4 borrowed a sum of Rs. 5,00,000 from the petitioner for their business purpose on October 31, 2007, in this regard, an on demand promissory note and consideration receipt were executed and further issued a cheque towards part payment of the said amount. Accused Nos. 2 and 3 as authorised signatories of accused No. 1, issued a cheque bearing No. 067812 dated April 30, 2009, for Rs. 50,000 drawn on Syndicate Bank, Dickinson Road Branch, Bangalore. The said cheque was presented to the banker of the complainant and the banker of the complainant returned the cheque with an endorsement dated October 16, 2009, stating "account closed". In this regard, the complainant issued legal notice on November 14, 2009, by RPAD. However, the postal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... complaint. He submitted that, to prosecute the case against the directors of the company, the complainant must state the person who is responsible and in charge of the business of the company. There must be specific averment as against such person who is sought to be prosecuted. Merely being a director of the company, the offence punishable under section 138 of the Negotiable Instruments Act, 1881, does not automatically get attracted. 5. On the other hand, Sri Ramesh Chandra, learned counsel appearing for the complainant submitted that, whether the directors are in charge and responsible for the day-to-day affairs of the company or not, is not a matter, which could be gone into at this stage. It requires to be considered at the trial sta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... esponsible for business of the company. 8. Though averment need not be elaborate or it need not be in the nature of evidence, but what is required is a specific averment constituting an offence against the director or a person showing that he is in charge and responsible for the business of the company at the time of the commission of the offence. The Magistrate who is conferred to take cognisance in case of private complaint, is required to notice as to whether the fact stated in the complaint do constitute an offence for the purpose of taking cognisance. It is not necessary that, taking cognisance means the Magistrate should write an order or give reasons, but complaint must disclose the offence, as such the complaint is required to be c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 956 and the provisions of sections 138 and 141 of the Negotiable Instruments Act, 1881, the apex court has observed that (page 330 of 154 Comp Cas) : "But if the accused is not one of the persons who falls under the category of 'persons who are responsible to the company for the conduct of the business of the company' then merely by stating that 'he was in charge of the business of the company' or by stating that 'he was in charge of the day-to-day management of the company' or by stating that 'he was in charge of, and was responsible to the company for the conduct of the business of the company', he cannot be made vicariously liable under section 141(1) of the Act. To put it clear that for making a person liable under section 141(2), the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the company. It can be said that the managing director by virtue of his office, becomes responsible, if the other directors who have signed the instrument, may also become liable, but other directors, will not automatically become liable. Only because they are directors, section 141 of the Act does not refer to the direction, but refers to the person, the person may be a director or not, but he must be in charge and responsible of the business of the company on the date of the commission of the offence. Complainant prima facie requires to mention in the complaint. 14. Considering the same, I find that, the proceedings in so far as this petitioner is concerned, are required to be quashed. 15. Accordingly, this petition is allowed. Proc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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