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TMI Blog2007 (3) TMI 671X X X X Extracts X X X X X X X X Extracts X X X X ..... ts 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. 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 such positions in a company become liable under Section 141 of the Act. By virtue of the office they hold as managing director or joint managing director, these persons are in charge of and responsible for the conduct of business of the company. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Section 141 of the Act and as such they should not have been made parties. Learned Metropolitan Magistrate dismissed the application holding that whether the applicants in the aforesaid petitions were Directors at the relevant point of time or not is to be decided on evidence. 4. It was further held that the company is a juristic person and works through persons responsible for carrying out its activities and, therefore, they have been rightly impleaded as parties. Respondents filed applications invoking Section 482 of the Code of Criminal Procedure, 1973 (in short the 'Code'). The High Court held that the preliminary evidence does not establish that the respondents were either incharge or were responsible to the companies for the condu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 due diligence to prevent the commission of such offence." 8. This provision clearly shows that so far as the companies are concerned if any offence is committed by it then every person who is a Director or employee of the company ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ranged to be paid from that account by an arrangement made with that bank, such person shall be deemed to have committed an offence and shall, without prejudice to any other provisions of this Act, be punished with imprisonment for a term which may be extended to two years, or with fine which may extend to twice the amount of the cheque, or with both." 11. In order to bring application of Section 138 the complaint must show: 1. That Cheque was issued; 2. The same was presented; 3. It was dishonored on presentation; 4. A notice in terms of the provisions was served on the person sought to be made liable; 5. Despite service of notice, neither any payment was made nor other obligations ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng the company itself. It is a departure from the rule in criminal law against vicarious liability. A clear case should be spelled out in the complaint against the person sought to be made liable. Section 141of the Act contains the requirements for making a person liable under the said provision. That the respondent falls within the parameters of Section 141 has to be spelled out. A complaint has to be examined by the Magistrate in the first instance on the basis of averments contained therein. If the Magistrate is satisfied that there are averments which bring the case within Section 141, he would issue the process. We have seen that merely being described as a director in a company is not sufficient to satisfy the requirement of Section 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 such positions in a company become liable under Section 141 of the Act. By virtue of the office they hold as managing director or joint managing director, these persons are in charge of and responsible for the conduct of business of the company. Therefore, they get covered under Section 141. So far as the signatory of a cheque which is dishonoured is concerned, he is clearly responsible for the incriminating act and will be covered under sub-section (2) of Section 141". 15. The matter was again considered in Sabitha Ramamurthy and Anr. v. R.B.S. Channabasavaradhya and ..... X X X X Extracts X X X X X X X X Extracts X X X X
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