9911796707
TMI Blog2007 (4) TMI 625X X X X Extracts X X X X X X X X Extracts X X X X ..... unless he proves to the contrary? - Held that:- Answer to this question is in negative. Merely being a director of a company is not sufficient to make the person liable under Section 141 of the Act. A director in a company cannot be deemed to be in charge of and responsible to the company for the conduct of its business. The requirement of Section 141 is that the person sought to be made liable should be in charge of and responsible for the conduct of the business of the company at the relevant time. This has to be averred as a fact as there is no deemed liability of a director in such cases. Even if it is held that specific averments are necessary, whether in the absence of such averments the signatory of the cheque and or the Managing Directors of Joint Managing Director who admittedly would be in charge of the company and responsible to the company for conduct of its business could be proceeded against? - Held that:- The answer to Question has to be in the affirmative. The question notes that the managing director or joint managing director would be admittedly in charge of the company and responsible to the company for the conduct of its business. When that is so, holders of su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... w Delhi, which have been returned back to the complainant company on 28.3.1998 by the Banker with the endorsement dated 27.3.1998 of the State Bank of Bikaner and Jaipur D 72 Connaught Circus, New Delhi to the bank of the accused company "payment stopped by the drawer". One of the cheque bearing No. 588184 dated 6.11.1997 drawn on the State Bank of Bikaner and Jaipur, D-72 Connaught Circus, New Delhi returned with the endorsement of the accused Bank "exceeds arrangement". This Bank Memo along with the cheque was sent by the Banker of the complainant company vide Memo dated 28.3.1998. Subsequently, the accused gave pay order in lieu of the cheque. *** *** *** 11. That these post dated cheques as per Annexure 'B' were given after the accused No. 1 to 5 had various meetings with the complainant company and it is only after persuasion that the complainant company owes money to various Media Concessionais and unless they are being paid, the releases of the accused company shall not be entertained by the Media Concessionais. *** *** *** 13. That accused No. 1 to 5 are Incharge and responsible for the conduct of the business and the offence is committed by the accused company with the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f a section and, thus, without making any allegation that Respondent Nos. 2 and 3 had any role to play in the matter of issuance of cheque or the dishonour thereof, no order issuing summons as against the said Respondents could have been passed. A distinction, according to the learned counsel, must be made between a Chairman of a Company and a Managing Director or a Deputy Managing Director thereof inasmuch whereas a Managing Director or a Deputy Managing Director is presumed to be involved in the day to day affairs of the Company, the Chairman of a Company may not even have any knowledge in relation thereto. Provisions of the Negotiable Instruments Act, it was submitted, are being misused and this Court, therefore, should strike a balance between the interest of a complainant and interest of an accused who is alleged to be vicariously liable for the offences committed by the Company. Summons were issued by the learned Magistrate by reason of an order dated 24.07.1999. He recalled the said order. He did not have any jurisdiction in that behalf. A Magistrate does not have and, thus, cannot exercise any inherent jurisdiction. In Adalat Prasad v. Rooplal Jindal and Others [(2004) 7 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he said ratio has been reiterated by another 3-Judge Bench of this Court in Subramanium Sethuraman v. State of Maharashtra and Anr. [JT 2004 (8) SC 220 and N.K. Sharma v. Abhimanyu (2005)13 SCC 213]. Unfortunately, this aspect of the matter was not considered by the High Court despite the aforementioned binding precedents. The High Court, however, for all intent and purport upheld the order passed by the learned Magistrate on the premise that allegations made in the complaint petition do not satisfy the requirements of Section 141 of the Negotiable Instruments Act. The said provision reads thus : ''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 offence and shall be liable to be proceeded against and punished accordingly: Provided that nothing contained in this sub-section shall render any person liable to punishment if he proves that the offence was committed without his knowledge, or that he had exercised all ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ny for conduct of its business could be proceeded against." They were answered in the following terms : "19. In view of the above discussion, our answers to the questions posed in the reference are as under: (a) It is necessary to specifically aver in a complaint under Section 141 that at the time the offence was committed, the person accused was in charge of, and responsible for the conduct of business of the company. This averment is an essential requirement of Section 141 and has to be made in a complaint. Without this averment being made in a complaint, the requirements of Section 141 cannot be said to be satisfied. (b) The answer to the question posed in sub-para (b) has to be in the negative. Merely being a director of a company is not sufficient to make the person liable under Section 141 of the Act. A director in a company cannot be deemed to be in charge of and responsible to the company for the conduct of its business. The requirement of Section 141 is that the person sought to be made liable should be in charge of and responsible for the conduct of the business of the company at the relevant time. This has to be averred as a fact as there is no deemed liability of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly because Respondent No. 1 herein was a party to a purported resolution dated 15.02.1995 by itself does not lead to an inference that she was actively associated with the management of the affairs of the Company. This Court in this case has categorically held that there may be a large number of Directors but some of them may not associate themselves in the management of the day to day affairs of the Company and, thus, are not responsible for conduct of the business of the Company. The averments must state that the person who is vicariously liable for commission of the offence of the Company both was incharge of and was responsible for the conduct of the business of the Company. Requirements laid down therein must be read conjointly and not disjunctively. When a legal fiction is raised, the ingredients therefor must be satisfied. If the complaint petition is read in its entirety, the same would show that the only person who was actively associated in the matter of obtaining loan, signing cheques and other affairs of the company which would lead to commission of the alleged offence was the accused No. 2. By reason of the purported resolution dated 15.02.1995, whereupon strong reli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tween the representative of the Company and Accused Nos. 1 to 5 which would include Respondent Nos. 2 and 3. It is, therefore, not a case where having regard to the position held by the said respondents in the Company, they could plead ignorance of the entire transaction. Not only cheques were issued having regard to the huge amount payable by Accused No. 6 to the Company but also as a result of fall out of non-payment thereof, negotiations were held between the parties wherein Respondent Nos. 2 and 3 took part, and, thus, in our opinion, there cannot be any doubt that the ingredients of the provisions of Section 141 of the Act stand satisfied. Reliance placed by Mr. Tulsi on a decision of a Division Bench of this Court in Pepsi Foods Ltd. and Another v. Special Judicial Magistrate and Others [(1998) 5 SCC 749], in our opinion, is not apposite. One of the questions which fell for consideration therein was as to whether the order of the Magistrate summoning the accused reflected that he had applied the mind to the fact of the case and the law applicable thereto. In that case, the Company was proceeded against under Section 7/16 of the Prevention of Food Adulteration Act, 1954. T ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
