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TMI Blog2009 (11) TMI 513X X X X Extracts X X X X X X X X Extracts X X X X ..... V.K. JAIN, J. Sanjay Gupta for the Petitioner. U.C. Mittal and Ankur Mittal for the Respondent. [ JUDGMENT 1. This is a petition under section 482 of the Code of Criminal Procedure, 1973, for quashing Criminal Complaint Nos. 1367 of 2008 and 1368 of 2008, filed by the respondent against the petitioner and others under section 138 of the Negotiable Instruments Act, 1881. Identical allegations have been made in both the complaints, the only difference being the date and amount of the cheques. 2. Complaints under sections 138 and 141 of the Negotiable Instruments Act, 1881, read with section 420, of the IPC were filed by the respondent Punjab National Bank against Padmini Technologies Ltd., and 30 others including the petitioner V.S. Gupta. It was alleged in the complaint that accused Nos. 2 to 4, namely, Shri Vivek Nagpal, managing director, Shri Mahesh Malhotra, commercial manager, Shri V.S. Gupta, director of accused No. 1 Padmini Technologies Ltd., were carrying on the management and day-to-day affairs of the company and were responsible for everything related to finances of the company. It has been further alleged that accused No. 1 which had a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en recorded by the Debts Recovery Tribunal in various proceedings including the proceeding dated 18-2-2005. It has been stated in the reply that to attract the liability under section 141(1) of the Negotiable Instruments Act, the person concerned need not necessarily be a director of the company and any person, who is incharge of and responsible to the company for conduct of its business will be deemed to be guilty of the offence. It has also been claimed that it is the petitioner who had been approaching the bank for the compromise which was affected in R.C. No. 349 of 2009 pursuant to which the cheque in question was issued by the company. It has also been pointed out that it was the statement of the petitioner which was recorded on behalf of the company at the time of compromise. 6. Section 141(1) of the Negotiable Instruments Act, 1881, reads as under: "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 offe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... learned Single Judge noted that the petitioner had filed a certified copy issued by the Registrar of Companies, authenticity of which could not be disputed and such a document was conclusive of the fact that the petitioner had resigned with effect from the date mentioned in the document. Holding that the petitioner was not in charge or responsible for the day-to-day affairs of the company and could not be so, the petitions were allowed and the complaints were quashed quo the petitioner. I am in full agreement with the view taken in the abovereferred case as regards the authenticity and conclusive nature of the certified copy of Form No. 32. When such an authentic and conclusive document is made available to the Court, it would be an exercise of futility to again go into the same question to find out as to whether the petitioner was a director in the company or not at the time mentioned in the document. Such an exercise, if undertaken, would not serve any useful purpose but would unnecessarily drag the person concerned to a long drawn trial without rendering any fruitful result. 9. Learned counsel for the respondent has referred to the decision of this Court in O.P. Aggarwal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ayment of the cheques which were dishonoured. In the pre-summoning evidence, the appellant "reiterated that accused Nos. 2 to 9 were responsible for the conduct of the day-to-day business of the first accused company at the time of commission of offence". 11. Accused No. 9, who was the first respondent before the Supreme Court, filed two petitions for quashing the proceedings against him on the ground that as deputy general manager, he was not incharge of and responsible to the company for the conduct of the business of the company. He also contended that merely stating that he was directly and actively involved in the financial dealings of the accused or was responsible for the conduct of the day-to-day business would not be sufficient to fasten criminal liability on him. He submitted that neither the complaint nor the sworn statement gave any particulars of the part played by him or part attributed to him in the alleged offence. 12. The High Court having quashed the summoning order of the first respondent on the ground that he was not a signatory to the cheque nor was a party to the decision to allow the cheques to be dishonoured, the appellant approached the Hon ble Supr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that in the case of non-director officers, there is all the more the need to state what his part is with regard to the conduct of business of the company and how and in what manner he is liable." (p. 531) 15. The Hon ble Court further observed as under : "The scheme of the Act, therefore is, that a person who is responsible to the company for the conduct of the business of the company and who is incharge of the business of the company is vicariously liable by reason only of his fulfilling the requirements of sub-section (1). But if the person responsible to the company for the conduct of business of the company, was not incharge of the conduct of the business of the company, then he can be made liable only if the offence was committed with his consent or connivance or as a result of his negligence. 14. The criminal liability for the offence by a company under section 138, is fastened vicariously on the persons referred to in sub-section (1) of section 141 by virtue of a legal fiction. Penal statutes are to be construed strictly. Penal statutes providing constructive vicarious liability should be construed much more strictly. When conditions are prescribed for extending suc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the business of the company . It is evident that a person who can be made vicariously liable under sub section (1) of section 141 is a person who is responsible to the company for the conduct of the business of the company and in addition is also incharge of the business of the company. There may be many directors and secretaries who are not incharge of the business of the company at all. The meaning of the words person incharge of the business of the company was considered by this Court in Girdhari Lal Gupta v. D.H. Mehta [1971] 3 SCC 189, followed in State of Karnataka v. Pratap Chand [1981] 2 SCC 335 and Smt. Katta Sujatha v. Fertilizers and Chem . Travancore Ltd. [2002] 7 SCC 655; [2003] 114 Comp. Cas. 27. This Court held that the words refer to a person who is in overall control of the day-to-day business of the company. This Court pointed out that a person may be a director and, thus, belongs to the group of persons making the policy followed by the company, but yet may not be incharge of the business of the company; that a person may be a manager who is incharge of the business but may not be in overall charge of the business; and that a person may be an off ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 141 of the Negotiable Instruments Act was summarised as under : "( i )If the accused is the managing director or a joint managing director, it is not necessary to make an averment in the complaint that he is in charge of, and is responsible to the company, for the conduct of the business of the company. It is sufficient if an averment is made that the accused was the managing director or joint managing director at the relevant time. This is because the prefix managing to the word director makes it clear that they were incharge of and are responsible to the company, for the conduct of the business of the company. ( ii )In the case of a director or an officer of the company who signed the cheque on behalf of the company, there is no need to make a specific averment that he was incharge of and was responsible to the company, for the conduct of the business of the company or make any specific allegation about consent, connivance or negligence. The very fact that the dishonoured cheque was signed by him on behalf of the company, would give rise to responsibility under sub-section (2) of section 141. ( iii )In the case of a director, secretary or manager (as defined in sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s ( a ) to ( g ) listed in section 5 of the Companies Act, the question whether he was incharge of the business of the company or not is irrelevant and he can be made liable only under section 141(2) for which necessary averments relating to consent/connivance/negligence should have been made. Finding no such averment, the appeal filed by the complainant was dismissed. 21. Coming to the present case, as noted earlier, certified copy of Form No. 32 shows that the petitioner was not a director of the company on the date the cheques in question were issued. Though it was alleged in the complaint, accused No. 4, V.S. Gupta was a director of the company, that averment is obviously incorrect as he had already resigned from directorship on 30-4-2003. 22. Though it has been alleged in paragraph 3 of the complaint that accused Nos. 2 to 4, which includes the petitioner, he being accused No. 4 in the complaint, were carrying on the management and the day-to-day affairs of the company and were responsible for everything related to finances of the company and it is further alleged that they had every knowledge of transaction in question and were also aware of the final order/subsequen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n if that be so, that does not make the petitioner a person incharge of and responsible to the company for the conduct of the business of the company. Any employee can represent the company before a judicial forum, as its authorised representative. To appoint someone as authorised representative of a company only a power of attorney/authorisation needs to be given to him. Merely from appearing on behalf of the company, as its authorised representative, one does not become a person incharge of and responsible to the company for conduct of the business of the company. The position would be much weaker in the case of a person who is not even an employee of the company. It has also been alleged in the complaint that the petitioner as well as accused Nos. 2 and 3 had submitted a compromise proposal to the bank pursuant to which the settlement was arrived at and the cheques were issued. Paragraph 8 of the complaint shows that the compromise proposal was approved on 28-8-2007. The proposal must have been given earlier than that date. The cheques in question were issued in July, 2008. Since the petitioner had ceased to be a director of the company more than four years before that, it is ob ..... X X X X Extracts X X X X X X X X Extracts X X X X
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