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TMI Blog2011 (5) TMI 1071X X X X Extracts X X X X X X X X Extracts X X X X ..... and same was dishonoured by the Banker of the accused with remarks Exceeds arrangement on 29.07.2009. 4. Another cheque bearing no. 288713 dated 26.08.2009 for ₹ 3,48,206 drawn on Noble Cooperative Bank Limited, NOIDA, UP was alleged to be issued in lieu of cheque no. 414842. The said cheque was deposited with the Banker of the Complainant at the Axis Bank, Chittaranjan Park, New Delhi and the same was dishonoured by the Banker of accused with the remarks Exceeds arrangement on 28.08.2009. 5. On 17.09.2009, respondent issued legal notice against the accused persons demanding the amount of cheque no. 288713. The said legal notice was alleged to be sent through Speed Post and Courier Service on 23.09.2009. 6. The cause of action arose in favour of the respondent to file the complaint on 10.10.2009, since there was no payment against the dishonoured cheque as alleged by the respondent. 7. The respondent has filed 2 separate criminal complaint arising out of same alleged transaction i.e. alleged refund for booking of one plot, one such complaint for cheque bearing no. 414843 dated 22.08.2009 for ₹ 3,50,000/- and another complaint was filed in respect of dis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld as under:- 20. The position under section 141 of the Act can be summarized thus: (iv) Other Officers of a company cannot be made liable under sub-section (1) of section 141. Other officers of a company can be made liable only under sub-section (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 consent, connivance or negligence. 21. If a mere reproduction of the wording of section 141(1) in the complaint is sufficient to make a person liable to face prosecution, virtually every officer/employee of a company without exception could be impleaded as accused by merely making an averment that at the time when the offence was committed they were in charge of and were responsible to the company for the conduct and business of the company. This would mean that if a company had 100 branches and the cheque issued from one branch was dishonoured, the officers of all the 100 branches could be made accused by simply making an allegation that they were in charge of and were responsible to the company for the conduct of the business of the company. That would be absurd ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me of allegations respondent has simply reproduced the language of Section 141 N.I. Act in the complaint. There is no allegation in the complaint to show as to how and in what manner the petitioner directors were in-charge and responsible for the day to day affairs and business of the company. In absence of specific allegation in this regard, in my considered view, the requirement of Section 141 N.I. Act to hold the petitioners vicariously liable for the offence committed by the company is not fulfilled. Even in the affidavit evidence given by the respondent before the Magistrate, there is no mention as to how and in what manner the petitioner directors were in-charge of or were responsible to the company for its day to day affairs and conduct of business. Thus, I am of the considered view that the impugned order of learned M.M. dated 05.05.2010 summoning the petitioners Vikram Mittal, Jagdish Kumar Gupta, Om Dutt Sharma and Satyapal Talwar for the offence under Section 138 N.I.Act committed by the company with the aid of Section 141 N.I.Act is not sustainable in law as there is neither a specific allegation nor prima facie evidence on record to show that the petitioners were Incha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce issued on 19.09.2009 and complaint filed on 22.10.2009. The Court took cognizance on 21.10.2009. 17. Further submitted that the petitioner cheated the respondent persons and an amount of ₹ 7 Lacs is involved in both the cases. The accused company admitted to settle the matter with the respondent, but the same was declined by the respondent. 18. Ld. Counsel for the respondent has referred the memo of parties at page B that everyone has given the address of the company. Everyone has given the name. None has signed the addresses. 19. Ld. Counsel has submitted that the application moved before the ld. MM, Saket Court by Mr. Kanti Lal Jain for disposal of the complaint under Section 138 of NI Act on account of tendering the payment of bounced cheque by DD as per the judgment of Rajesh Aggarwal vs. State, Crl. M.C. 1996/2010. 20. Ld. Counsel for the respondent has pointed out that this application filed without ticket and proforma. Ld. Counsel has referred the following orders: 12.08.2010 Present: Complainant with Counsel. Sh. Brijesh Jha, Adv. Counsel for accused no. 1 to 4, 9 and 10. Other accused are absent despite B/W. Today I am also working as Link ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ext date of hearing. Necessary Robkar be issued accordingly. B/W issued against the accused no. 5 to 8 11 received back unserved. Issue fresh B/W against accused no. 5 to 8 11 in the sum of ₹ 25,000/- for the next date of hearing. NBWs issued against accused no. 9 also received back unexecuted. Issue fresh NBW against accused no. 9 for the date fixed. Put up on 17.02.2011 for reply to the application moved on behalf of the accused persons and arguments on the above said application and further proceedings. (Dheeraj Mittal) MM-02(N.I.ACT)/South-East New Delhi/15.12.2010 Vide this order, I shall dispose off application moved on behalf of the accused for disposal of the present complaint case on account of tendering the payment of the bounced cheques by way of DD as per the judgment of Hon'ble High Court of Delhi in Rajesh Aggarwal vs. State delivered in Crl. M.C. No. 1996/2010. Vide this application, it is submitted by the accused that they are ready to pay the cheque amount in question by way of DD through their counsel to the complainant. It is further submitted that in view of the judgment of High Court o Delhi in Rajesh Aggarwal Vs. State delivered in Crl. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the company is carried on or superintended are termed directors. It is further stated in Palmer that: Directors are, in the eye of the law, agents of the company for which they act, and the general principles of the law of principal and agent regulate in most respects the relationship of the company and its directors. Therefore, a person in the commercial world having a transaction with a company is entitled to presume that the directors of the company are incharge of the affairs of the company. If any restrictions on their powers are placed by the memorandum or articles of the company, it is for the directors to establish it at the trial. It is in that context that Section 141 of the Negotiable Instruments Act provides that when the offender is a company, every person, who at the time when the offence was committed was incharge of and was responsible to the company for the conduct of the business of the company, shall also be deemed to be guilty of the offence along with the company. It appears to us that an allegation in the complaint that the named accused are directors of the company itself would usher in the element of their acting for and on behalf of the company ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll 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. A combined reading of Sections 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 whole-time director/s; (c) the manager; (d) the secretary; (e) any person in accordance with whose directions or instructions the Board of directors of the company is accustomed to act; (f) any person charged by the Board with the responsibility of complying with that provision (and who has given his cons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 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 consent, connivance or negligence. 23. Ld. Counsel has further relied upon a judgment of Shree Raj Travels Tours Ltd. Ors. Vs. Destination of the World (Subcontinent) Private Limited 2010 (4) JCC 9NI) 313, wherein it is held as under: 7. It is a matter of common knowledge that when companies are floated and public issues are brought, big advertisements are issued giving big names as Directors and promoters of the company. These names are the names of successful CEOs, or Directors who have achieved success in other fields. Due to these names at the very inception and formation of company, when there is no wealth or property of the company, the share of the company is sold at a premium promising big business and success. Once money is mopped up from the public, in all those cases where the companies were created only for the purpose of mopping up hard earned money of public or to befool them, it is found that those big names disappear and in almost every litigation those Directors who formed part of the core of the comp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vacancies in the office of Directors (Section 262), power to constitute Audit Committee and specify terms of reference thereof (Section 292A), power to make donation to political parties [Section 293A(2)], power to accord sanction for specified contracts in which one or more Directors are interested [Section 297(4)], power to receive notice of disclosure of Director‟s interest [Section 299(3)(c)], power to appoint or employ a person as Managing Director or Manager [Section 316(2)], power to invest in shares or debentures of any other body corporate (Section 372A), power to appoint or employ a person as its Manager [Section 386(2)], power to make a declaration of solvency, where it is proposed to wind up the company voluntarily [Section 488(1)], power to approve the text of advertising for inviting public deposits [Section 58A r/w Rule 4(4)]. Some of the powers can only be exercised by resolution passed at the meeting with consent of the Directors present at the meeting. 24. I have heard learned counsels for the parties. 25. The petitioners / accused persons could not fulfill their commitment and the so called upcoming project of the accused no.1, never materialized. Ul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lling to compromise the present complaint, NBWs issued against accused No.1,3,4 10 were stayed till next date of hearing by the learned M.M.. The application of the accused persons for disposal of the complaint case on account of tendering the payment of the bounced cheque by DD as per judgment of this Court in Rajesh Aggarwal v. State, Crl.M.C.No.1996/2010, learned counsel for complaint did not file any written reply to the application; however, he argued that the Court cannot force the complainant to compound the offence on payment of the cheque amount in question. He further submitted that the complainant was not ready to accept the cheque amount. 31. After hearing learned counsels for parties, learned Magistrate recorded that the consent of the complainant was very much required for compounding of the offence, as law has been settled in High Tech Industry (Bihar) Ltd Ors v. State of Delhi Anr : 173 (2010) DLT 172 wherein it has been held that the Court cannot force the complainant to compromise on deposit of the cheque amount or penalty by the accused. Accordingly, said application was dismissed by the learned MM. 32. It has been held in Rangachari (supra) that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... signed the cheque on behalf of the company, as is in the present case, there is no need to make a specific averment that he was in-charge and was responsible to the company, for the conduct of the business of the company or make any specific allegations 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 NI Act. For the conduct of the business of the company is necessary to bring the case under section 141(1) NI 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) NI Act by making necessary averments relating to consent and connivance or negligence, in the complaint, to bring the matter under that sub-section. 36. When companies are floated and public issues are brought, big advertisements are issued giving big names as directors and promoters of the company. These names are the names of successful CEOs, or Directors who have achieved success in other fields. Due to these names at the very inception and formation of company, when there ..... X X X X Extracts X X X X X X X X Extracts X X X X
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