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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 ..... 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. - CRIMINAL PETITION NO. 2033 OF 2010 - - - Dated:- 23-7-2010 - SUBHA ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eriod for an offence punishable under section 138 of the Negotiable Instruments Act, 1881. 3. The learned Magistrate considering the averments in the complaint, sworn statement of the complainant and the material produced, by his order dated January 8, 2010, ordered for registration of criminal case and issue of summons against the accused. As against the said proceedings, accused No. 5 has filed this petition. 4. Sri Rohit Kumar B. G., learned counsel appearing for the petitioner submitted that, accused No. 1 being a company, it is primarily liable for the alleged offence, in so far as the directors are concerned, they cannot be made vicariously liable, unless the complaint discloses the requirement of section 141 of the Act. In th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd they are in charge of the day-to-day affairs of the company and in paragraph 9 also, same thing is stated. This averment is sufficient to proceed against the accused. It does not warrant any further details in the complaint. He submitted that, at this stage, only prima facie case has to be looked into and not other materials. 6. The question as to whether the specific averment is necessary, has been considered by the apex court right from the decision in S.M.S. Pharmaceuticals Ltd. v. Neeta Bhalla [2005] 127 Comp Cas 563 ; AIR 2005 SC 3512. 7. If an offence is alleged against the company, it does not automatically make all the persons who are in the company liable for such offence. Section 141 of the Act excludes the liabilit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h Paintal ) considering the scope of the provision of section 141 of the Act and also the provisions of the Companies Act particularly in relation to the offence punishable under section 138 of the 1881 Act alleged against the company, on interpretation of provisions of sections 5 and 291 of the Companies Act and definition clauses of sections 24, 26, 30, 31, 45 and section 2 has held that, persons who are considered to be responsible to the company for conduct of the business of the company are the managing director, the whole-time director, manager, secretary, any other person in accordance with whose directions or instructions the board of directors of the company is accustomed to act or any person charged by the board of directors with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent and connivance or negligence and therefore, responsible under sub-section (2) of section 141 of the Act." 11. The above decision amply clarifies that, to make a person liable under sections 141(1) and 142(2) of the Act, mere repetition of requirement under section 141(1) will be of no assistance, but there should be necessary averments in the complaint as to how and in what manner the accused was guilty of consent and connivance or negligence and therefore, responsible under sub-section (2) of section 141 of the Act. 12. In the case of the director by virtue of his offence, if he is to be made liable, then there must be necessary averment as to his involvement in the day-to-day affairs. Just re-producing the provision by itself ..... X X X X Extracts X X X X X X X X Extracts X X X X
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