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TMI Blog2017 (4) TMI 1017X X X X Extracts X X X X X X X X Extracts X X X X ..... d him to trial and it could be argued that his further role could be brought out in the trial. I do not propose to close the doors of the applicants at this stage. It will be still open for the applicants to adduce sufficient and necessary materials in the course of the trial to establish that they, being nonexecutive and independent Directors, had no role to play in the daytoday affairs and management of the company. The Trial Court shall consider such evidence that may be led by the parties in the course of the trial and then take an appropriate decision before fastening vicarious liability under Section 141 of the Negotiable Instruments Act. While deciding or fixing the vicarious liability of the applicants herein, the Trial Court shall not be influenced by any of the observations made by this Court in this judgment, except the position of law. - CRIMINAL MISC.APPLICATION (FOR QUASHING & SET ASIDE FIR/ORDER) NO. 30195 of 2016 With CRIMINAL MISC.APPLICATION NO. 30197 of 2016 - - - Dated:- 19-4-2017 - MR. J.B.PARDIWALA, J. FOR THE APPLICANT : MR IH SYED, ADVOCATE WITH MR AFTABHUSEN ANSARI, ADVOCATE FOR THE RESPONDENT : MR ARJUN R SHETH, ADVOCATE, MS SHRUTI PATHAK, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 16.09.2013, promising to pay ₹ 3,06,809 to the Complainant. That the said arrangement entered into between the Complainant and the Accused No.1 is evidenced by letter dt. 18.07.2013 issued by the Accused No.1 to the Complainant and termed as 'Promissory Note Discounting Facility' therein. Hereto annexed and marked as Annexure A is a copy of the said letter dt. 18.07.2013 issued by the Accused No.1 to the Complainant. Hereto annexed and marked as Annexure B is a copy of the promissory note executed by the Accused no.1 in favour of the Complainant having due date 16.09.2013. 5 That the Accused No.1 in order to make payment as promised under the said promissory note issued cheques to the Complainant from time to time. 6 However, the Accused no.1 knowing that those cheques would bounce, at all times requested the Complainant not to deposit the same during its validity period, and instead, to make good its commitment under the said promissory note, would replace the older cheque with new one. 7 That the Accused no.1, to make payment under the said promissory note issued cheque drawn on ICICI bank, Nariman Point, Mumbai bearing No.030328 dated 31.03.2015 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ous and false reply dt. 17.08.2015, through its advocate, denying knowledge of the transaction with the Complainant due to change of management of the Accused no.1. The Accused no.1 being a public limited company, a perpetual entity and an ongoing concern, it is denied that the said transaction with the Accused no.1 would not be within the knowledge of the Accused no.1 due to change in management of the Accused no.1. Hereto annexed and marked as Annexure G is copy of the reply dt. 17.08.2015 issued by the Accused no.1 to the Complainant. 13 That as a matter of good faith, the Complainant provided to the Accused no.1 copies of the relevant documents in relation to the said transaction entered into between the Complainant and the Accused no.1 vide letter dt. 28.08.2015 issued through its advocate. Hereto annexed and marked as Annexure H is a copy of the letter dt. 28.08.2015 issued by the Complainant to the Accused no.1 through its advocate. 14 However, the Accused no.1 having failed to pay the amount of the said cheque within 15 days of receipt of the said statutory notice, has committed the offence under section 138 of the Act. Further, the Accused nos.2 to 6, being per ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... c Prosecutor has appeared on behalf of the State of Gujarat. 10 Mr. Sheth would submit that the averments made in the complaint are sufficient at this stage to fasten the applicants with the vicarious liability under Section 141 of the Negotiable Instruments Act. Mr. Sheth pointed out that the two applicants herein were members of the audit committee. They were included in the audit committee as members, as they possess financial and accounting knowledge. Mr. Sheth places on record the 30th Annual Report 201213 of the company in this regard. In the report, there is a reference of the audit committee. It reads as under: AUDIT COMMITTEE: The Board of Directors has set up an Audit Committee which presently has four members namely, Dr. J. S. Juneja, Dr. R. Srinivasan, Dr. Sailendra Narain and Mr. Michael Bastian all of whom are nonexecutive and independent Directors having financial and accounting knowledge. Mr. Michael Bastian has been appointed as the Chairman of the Audit Committee from 29th April 2009. The Managing Director, Executive Director, Chief Financial Officer, the statutory Auditors, Cost Auditors and internal auditors are the invitees at the meetings of Aud ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... out the nature and scope of audit as well as postaudit discussion to ascertain any area of concern. 11.To look into the reasons for substantial defaults in the payment to the depositors, debenture holders, shareholders (in case of non payment of declared dividends) and creditors. 12.To review the functioning of the Whistle Blower mechanism, in case the same is existing. 13.Approval of appointment of CFO (I.e. the whole time Finance Director or any other person heading the finance function or discharging that function) after assessing the qualifications, experience background, etc. of the candidate and recommending to the Board for his appointment. 14.Recommending to the Board the firm / individual for appointment as Cost Auditor. 15.Carrying out any other function as is mentioned in the terms of reference of the Audit Committee. 11 Mr. Sheth submitted that considering the role of the audit committee referred to above and the two applicants being the members of the said audit committee, it cannot be said that they had nothing to do with the affairs of the company. Mr. Sheth, thereafter, invited my attention to the fact that the company used to p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... occurrence of offence of dishonour of cheque nor did they make arrangement of money. The aforesaid cheque issued by accused No.1 company has returned/dishonoured, hence, the accused No.3 to 13 and 17 to 19 in their capacity as directors of accused No.1 have abated the commission of offence. The accused No.3 to 13 and 17 to 19 are in charge of daytoday management of affairs of accused No.1 company. These accused persons had also attended various meetings on behalf of accused No.1 company. If the minutes of meeting Board of Directors dated 1812010 are considered, then it is clear that there is mention therein about the dues of complainant and the cheque given for payment thereof. Therefore, it is clear that the accused No.3 to 13 and 17 to 19 were aware about the issuance of cheque by accused No.1. 79 Two classes of persons are liable to be prosecuted under Section 138. First, those persons who are in charge of and responsible to the company for the conduct of its business. They are per se responsible. In the second category comes those persons with whose consent or connivance the offence can be attributed. When the offence under Section 138 of the Negotiable Instruments Act ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... category within the tentacles of the offence on a par with the offending company. Similarly the words shall also in subsection (2) are capable of bringing the third category persons additionally within the dragnet of the offence on an equal par. The effect of reading Section 141 is that when the company is the drawer of the cheque such company is the principal offender under Section 138 of the Act and the remaining persons are made offenders by virtue of the legal fiction created by the Legislature as per the section. Hence the actual offence should have been committed by the company, and then alone the other two categories of persons would become liable for the offence. Section 141 (1) of the Negotiable Instruments Act would provide that 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. Section 141(2) provides, where any offence has been committed by a company and it is proved that the offence has been committed with the consen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... While liability of persons in the first category arises under subsection (1) of Section 141, the liability of persons mentioned in categories (ii) and (iii) arises under subsection (2). 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 in charge of business of the company is vicariously liable by reason only of his fulfilling the requirements of subsection (1). But if the person responsible to the company for the conduct of business of the company, was not in charge of the conduct of the business of 11 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. 17. The criminal liability for the offence by a company under Section 138, is fastened vicariously on the persons referred to in subsection (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 such constructive criminal liability to others, courts will insist upon s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Companies Act, 1956 which is the law relating to and regulating companies. 20 Section 291 of the said Act provides that subject to the provisions of that Act, the Board of Directors of a company shall be entitled to exercise all such powers, and to do all such acts and things, as the company is authorised to exercise and do. A company though a legal entity can act only through its Board of Directors. The settled position is that a Managing Director is prima facie in charge of and responsible for the company's business and affairs and can be prosecuted for offences by the company. But insofar as other directors are concerned, they can be prosecuted only if they were in charge of and responsible for the conduct of the company's business. 21 A combined reading of Section 5 and 291 of Companies Act, 1956 with the definitions in clauses (24), (26), (30), (31), (45) of section 2 of that Act would show that the following persons are considered to be the persons who are responsible to the company for the conduct of the business of the company : (a) the managing director(s); (b) the wholetime director(s); (c) the manager; (d) the secretary; ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not arise. To put it differently, to be vicariously liable under subsection (1) of Section 141, a person should fulfill the 'legal requirement' of being a person in law (under the statute governing companies) responsible to the company for the conduct of the business of the company and also fulfill the 'factual requirement' of being a person in charge of the business of the company. 24 Therefore, the averment in a complaint that an accused is a director and that he is in charge of and is responsible to the company for the conduct of the business of the company, duly affirmed in the sworn statement, may be sufficient for the purpose of issuing summons to him. 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' (listed in para 14 above), 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 subsection (2) of section 141. (iii) In the case of a Director, Secretary or Manager (as defined in Sec. 2(24) of the Companies Act) or a person referred to in clauses (e) and (f) of section 5 of Companies Act, an averment in the complaint that he was in charge of, and was responsible to the company, for the conduct of the business of the company is necessary to bring the case under section 141(1). No further averment would be necessary in the complaint, though some particulars will be desirable. They can also be made liable under section 141(2) by making necessary averments relating to consent and connivance or negligence, in the complaint, to bring the matter under that subsection. (iv)Other Officers of a company can not be made liable under subsection (1) of section 141. Other officers of a company can be made liable only under subsection (2) of Section 141, be averring in the complaint their position and duties in the company and their role in regard to the issue and dishonour of the cheque, disclosing cons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r doubt, in no circumstance, can be looked into by the High Court in exercise of its jurisdiction under Section 482 or for that matter in exercise of revisional jurisdiction under Section 397 of the Code. It is fairly settled now that while exercising inherent jurisdiction under Section 482 or revisional jurisdiction under Section 397 of the Code in a case where complaint is sought to be quashed, it is not proper for the High Court to consider the defence of the accused or embark upon an enquiry in respect of merits of the accusations. However, in an appropriate case, if on the face of the documents which are beyond suspicion or doubt placed by accused, the accusations against him cannot stand, it would be travesty of justice if accused is relegated to trial and he is asked to prove his defence before the trial court. In such a matter, for promotion of justice or to prevent injustice or abuse of process, the High Court may look into the materials which have significant bearing on the matter at prima facie stage. 22. Criminal prosecution is a serious matter; it affects the liberty of a person. No greater damage can be done to the reputation of a person than dragging him in a c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d on 9th September 2014], while examining the challenge to the legality and validity of a master circular dated 2nd July 2012 issued by the Reserve Bank of India in respect of willful defaulters had an occasion to consider the categories of Directors as classified under the Companies Act. I may quote the following from the judgment referred to above: The circular speaks about director and independent and nominee director. The classification of the directors under the Companies Act is as under : A. Classification under the Companies Act Categories of Directors The Companies Act refers to the following two specific categories of Directors: 1. Managing Directors; and 2. Wholetime Directors. A Managing Director is a Director who has substantial powers of management of the affairs of the company subject to the superintendence, control and direction of the Board in question. A Wholetime Director includes a Director who is in the wholetime employment of the company, devotes his wholetime of working hours to the company in question and has a significant personal interest in the company as his source of income. Every public company ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... default' under the Companies Act. 6. De facto Director: Where a person who is not actually appointed as a Director, but acts as a Director and is held out by the company as such, such person is considered as a de facto Director. Unlike a 'shadow' Director, a de facto Director purports to act, and is seen to the outside world as acting, as a Director of the company. Such a de facto Director is liable as a Director under the Companies Act. 7. Rotational Directors: At least twothirds of the Directors of a public company or of a private company subsidiary of a public company have to retire by rotation and the term rotational Director refers to such Directors who have to retire (and may, subject to the Articles, be eligible for reappointment) at the end of his or her tenure. 8. Nominee Directors: They can be appointed by certain shareholders, third parties through contracts, lending public financial institutions or banks, or by the Central Government in case of oppression or mismanagement. The extent of a nominee Director's rights and the scope of supervision by the shareholders, is contained in the contract that enables such appointments, or (as app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , with not less than fifty percent (50%) of the Board comprising nonexecutive Directors. Where the Chairman of the Board is a nonexecutive Director, at least onethird of the Board should comprise independent Directors and in case he is an executive Director, at least half of the Board should comprise independent Directors. Where the nonexecutive Chairman is a promoter of the company or is related to any promoter or person occupying management positions at the Board level or at one level below the Board, at least onehalf of the Board of the company shall consist of independent Directors. Independent Directors The Agreement defines an Independent Director as a nonexecutive Director of the company who: a. apart from receiving Director's remuneration, does not have material pecuniary relationships or transactions with the company, its promoters, its Directors, its senior management, or its holding company, its subsidiaries, and associates which may affect independence of the Director; b. is not related to promoters or persons occupying management positions at the board level or at one level below the board; c. has not been an executive of the compa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt trend found that in respect of offences under Section 138 of the Negotiable Instruments Act alleged against a company, all the Directors of the company are being routinely roped in as accused with a statement that they are incharge of and responsible to the business of the company as required under Section 141 of the Negotiable Instruments Act. In fact, it has been seen that some times, even the nominee Directors nominated by the financial agencies like IDBI have also been arrayed as accused for the offence committed by the Company on the Board of which they have been nominated. The need to carefully scrutinize the material and if necessary to question the complainant as to the basis for implicating an accused as observed by the Supreme Court in the above cited judgment cannot be ignored. Considering this, it appears necessary that at any rate even if on the basis of formal allegations in the complaint such Directors have been summoned to face the trial, they must be afforded an opportunity at least at the earliest stage to show with reference to the material which may be placed before the Court that they are not incharge of and are not responsible to the business of the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the basic averment which is sufficient to make out a case against the Director; c) In the facts of a given case, on an overall reading of the complaint, the High Court may, despite the presence of the basic averment, quash the complaint because of the absence of more particulars about role of the Director in the complaint. It may do so having come across some unimpeachable, uncontrovertible evidence which is beyond suspicion or doubt or totally acceptable circumstances which may clearly indicate that the Director could not have been concerned with the issuance of cheques and asking him to stand the trial would be abuse of the process of the court. Despite the presence of basic averment, it may come to a conclusion that no case is made out against the Director. Take for instance a case of a Director suffering from a terminal illness who was bedridden at the relevant time or a Director who had resigned long before issuance of cheques. In such cases, if the High Court is convinced that prosecuting such a Director is merely an armtwisting tactics, the High Court may quash the proceedings. It bears repetition to state that to establish such case unimpeachable, uncontrovertible evi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nk within a period of six months from the date on which it is drawn or within the period of its validity, whichever is earlier; (b) the payee or the holder in due course of the cheque, as the case may be, makes a demand for the payment of the said amount of money by giving a notice in writing, to the drawer of the cheque, within thirty days of the receipt of information by him from the bank regarding the return of the cheque as unpaid; and (c) the drawer of such cheque fails to make the payment of the said amount of money to the payee or as the case may be, to the holder in due course of the cheque, within fifteen days of the receipt of the said notice. Explanation.For the purposes of this section, debt or other liability means a legally enforceable debt or other liability. 10 On a studied scrutiny of the aforesaid provision, it is quite limpid that to constitute the criminal liability the complainant is required to show that a cheque was issued; that it was presented in the bank in question; that on due presentation, it was dishonoured; that, as enshrined in the provision, requisite notice was served on the person who was sought to be made liable for crimin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of the offence is deemed to be guilty of the offence. Thus, it creates a constructive liability on the persons responsible for the conduct of the business of the company. 13 At one point of time, an issue had arisen before this Court, whether a complaint could be held to be maintainable without making the company a party. The said controversy has been put to rest by a threeJudge Bench decision in Aneeta Hada v. Godfather Travels and Tours Private Limited6 wherein it has been held that when the company can be prosecuted, then only the persons mentioned in the other categories could be vicariously liable for the offence subject to the averments in the petition and proof thereof. It has been further held therein that there cannot be any vicarious liability unless there is a prosecution against the company. In the case at hand, the company has been arrayed as the accused No. 1 along with the Chairman and other Directors. 14 Now, we must go back in time to appreciate what has been stated in S.M.S. Pharma I (supra), wherein a threeJudge Bench answered a reference on three issues. The answers on two issues which are relevant for the present purpose are as follows: (a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted with the company shall not fall within the ambit of the provision. It is only those persons who were in charge of and responsible for the conduct of business of the company at the time of commission of an offence, who will be liable for criminal action. It follows from this that if a director of a company who was not in charge of and was not responsible for the conduct of the business of the company at the relevant time, will not be liable under the provision. The liability arises from being in charge of and responsible for the conduct of business of the company at the relevant time when the offence was committed and not on the basis of merely holding a designation or office in a company. Conversely, a person not holding any office or designation in a company may be liable if he satisfies the main requirement of being in charge of and responsible for the conduct of business of a company at the relevant time. Liability depends on the role one plays in the affairs of a company and not on designation or status. If being a director or manager or secretary was enough to cast criminal liability, the section would have said so. Instead of every person the section would have said every ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... us:- A liability under Section 141 of the Act is sought to be fastened vicariously on a person connected with a company, the principal accused being 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 141 of 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 141. Even a nondirector can be liable under Section 141 of the Act. The averments in the complaint would also serve the purpose that the person sought to be made liable would know what is the case which is alleged against him. This will enable him to meet the case at the trial. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from the directorship of the Company. It may be true that as to exactly on what date the said resignation was accepted by the Company is not known, but, even otherwise, there is no averment in the complaint petitions as to how and in what manner the appellant was responsible for the conduct of the business of the Company or otherwise responsible to it in regard to its functioning. He had not issued any cheque. How he is responsible for dishonour of the cheque has not been stated. The allegations made in para 3, thus, in our opinion do not satisfy the requirements of Section 141 of the Act. 21. The said observations were clarified by stating that:- 26. A faint suggestion was made that this Court in Saroj Kumar Poddar (supra) has laid down the law that the complaint petition not only must contain averments satisfying the requirements of Section 141 of the Act but must also show as to how and in what manner the appellant was responsible for the conduct of the business of the company or otherwise responsible to it in regard to its functioning. A plain reading of the said judgment would show that no such general law was laid down therein. The observations were made in the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... harge of, and was responsible to the company, for the conduct of the business of the company is necessary to bring the case under Section 141(1) of the Act. No further averment would be necessary in the complaint, though some particulars will be desirable. They can also be made liable under Section 141(2) by making necessary averments relating to consent and connivance or negligence, in the complaint, to bring the matter under that subsection. (iv) Other officers of a company cannot be made liable under subsection (1) of Section 141. Other officers of a company can be made liable only under subsection (2) of Section 141, by averring in the complaint their position and duties in the company and their role in regard to the issue and dishonour of the cheque, disclosing consent, connivance or negligence. 25 In Harmeet Singh Paintal (supra), a twoJudge Bench did not agree with the stand of the appellant, emphasized on the averments and found that in the complaint petition there were no specific averments and, accordingly, dismissed the appeal filed by the appellantCorporation therein. The Court in paragraphs 17 and 18 of the judgment reproduced the part of the complaint. We ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntrovertible material or acceptable circumstances to substantiate his contention. He must make out a case that making him stand the trial would be an abuse of process of court. He cannot get the complaint quashed merely on the ground that apart from the basic averment no particulars are given in the complaint about his role, because ordinarily the basic averment would be sufficient to send him to trial and it could be argued that his further role could be brought out in the trial. Quashing of a complaint is a serious matter. Complaint cannot be quashed for the asking. For quashing of a complaint it must be shown that no offence is made out at all against the Director. [Emphasis supplied] 28 After so stating, the Court proceeded to summarise its conclusions, appreciated the averments made in the complaint petition and opined thus:- Pertinently, in the application filed by the respondents, no clear case was made out that at the material time, the Directors were not in charge of and were not responsible for the conduct of the business of the Company by referring to or producing any incontrovertible or unimpeachable evidence which is beyond suspicion or doubt or any totall ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rt while exercising the power of quashing regard being had to the averments made in the complaint petition to attract the vicarious liability of the persons responsible under Section 141 of the Act. 32 Now, is the time to scan the complaint. Mr. Divan, learned senior counsel appearing for the appellantbank, has drawn our attention to paragraphs 2, 4 and 10 of the complaint petition. They read as follows:- 2. I further say that I know the accused above named. The accused No.1 is a Company incorporated under the Companies Act, 1956 having its registered address as mentioned in the cause title. The accused Nos.2 to 7 are the Chairman, Managing Director, Executive Director and whole time Director and authorized signatories of accused No.1 respectively. As such being the Chairman, Managing Director, Executive Director and Whole Time Director were and are the persons responsible and in charge of day to day business of the accused No.1 viz. When the offence was committed. The accused Nos.6 and 7 being signatories of the cheque are aware of the transaction and therefore the accused Nos.2 to 7 are liable to be prosecuted jointly or severally for having consented and/or con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orth relating to the respondent Nos. 2 and 3 herein that they are wholetime Director and Executive Director and they were in charge of day to day affairs of the Company, we are of the considered opinion that the High Court has fallen into grave error by coming to the conclusion that there are no specific averments in the complaint for issuance of summons against the said accused persons. We unhesitatingly hold so as the asseverations made in the complaint meet the test laid down in Gunmala Sales Pvt. Ltd. (supra). 16 In the complaint, there are specific averments that the applicants herein were incharge and responsible for the conduct of the business of the company. Over and above the averments made in the complaints, it is brought out that both the applicants were members of the audit committee. The role and functions of the members of the audit committee have also been noted above. Apart from the same, they were also being paid remuneration by the company. In such circumstances, it is difficult for me to take the view that the applicants herein were absolutely alien to the company. 17 In case of offence by company for the dishonour of cheque, the culpability of the Direc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hall be necessary to allege that they were incharge of and responsible to the conduct of the business of the Company. It is necessary ingredient which would be sufficient to proceed against such Directors. However, I may add that as no particular form is prescribed, it may not be necessary to reproduce exact the words of the section. If reading of the complaint shows and substance of accusation discloses the necessary averments, that would be sufficient to proceed against such of the Directors and no particular form is necessary. However, it may not be necessary to allege and prove that, in fact, such of the Directors have any specific role in respect of the transaction leading to the issuance of cheque. Section 141 of the Act makes the Directors incharge and responsible to Company for the conduct of the business of the Company within the mischief of Section 138 of the Act and not particular business for which the cheque was issued. One should not read more than what has been mandated in Section 141 of the Act. [See: A.K. Singhani vs. GSFC , 2014 Cri. L.J. 340]. 19 In Mannalal Chmaria and another vs. State of West Bengal [2014 Cri. L.J. 2160], the Supreme Court, on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... id Act in all the aforesaid criminal revisions. In the case of SMS Pharmaceutical Ltd. vsNeeta Bhalla reported in (2005) 8 SCC 89, the Apex Court while as laid down what should be an essential requirement to be afford for an offence punishable under section 138 of the Negotiable Instruments Act with the aid of section 141 of the said Act. In clause (a) of the said decision, the Apex court observed as follows: (a) Whether for purposes of Section 141 of the Negotiable Instruments Act, 1881, it is sufficient if the substance of the allegation read as a whole fulfil the requirements of the said section and it is not necessary to specifically state in the complaint that the person accused was in charge of, or responsible for, the conduct of the business of the company. Here in this case, there is specific averments that the present petitioner was in charge of and responsible for the conduct of the day to day affairs of the accused No. 1, the Company during the material time when the offence was committed. 21 What is important are the observations of the Supreme Court in the case of Gunmala Sales Private Ltd vs. Anu Mehta [(2015) 1 SCC 103] as contained in p ..... X X X X Extracts X X X X X X X X Extracts X X X X
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