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TMI Blog2005 (10) TMI 576X X X X Extracts X X X X X X X X Extracts X X X X ..... ndustries Ltd. for the conduct of the business of the company and were liable to make the payment for the cheque in question in that complaint. The subject matter of the complaint were certain cheques mentioned in the annexures to the complaint issued by M/s Dalmia Industries Ltd. towards job done by the complainant for the accused company. The cheques were dishonoured by the respective banks with the endorsement ''payment stopped by the drawer'' or ''exceeds arrangement''. The usual averments of a notice having been issued to the accused and of the failure on the part of the accused to comply with the notice have been made in the complaint. The accused other than the company namely the respondents 2 and 3 as well as other Directors are alleged to have been responsible for the conduct of the business of the company. It is also alleged that the offence is committed by M/s Dalmia Industries Ltd. with the active connivance of accused 1 to 5. By the impugned order, the Metropolitan Magistrate has recalled the summons issued to the respondents 2 and while maintaining the summons against the other respondents who were Director (Technical), Executive Direct ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ue of his holding any office or employment in the Central Government or State Government or a financial corporation owned or controlled by the Central Government or the State Government, as the case may be, he shall not be liable for prosecution under this Chapter. (2) Notwithstanding anything contained in sub-section (1), where any offence under this Act has been committed by a company and it is proved that the offence has been committed with the consent or connivance of, or is attributable to, any neglect on the art of, any director, manager, secretary or other officer of the company, such director, manager, secretary or other officer shall also be deemed to be guilty of that offence and shall be liable to be proceeded against and punished accordingly. Explanation.- For the purposes of this section,- (a) ''company'' means any body corporate and includes a firm or other association of individuals; and (b) ''director'', in relation to a firm, means a partner in the firm.'' 4. The question that arises is whether a person by virtue of his simply being the Director, Chairman or Vice Chairman of a company will become responsible ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to two earlier judgments, namely, those of K.P.J. Nair v. Jindal Menthol India Ltd. reported as (2001)10SCC218 and Anil Hada v. Indian Acrylic Ltd. reported as 2000CriLJ373 . 6. Commenting upon the findings of this judgment, the Supreme Court in the case of Ashok Leyland (Supra) observed as under: ''12. Our attention is, however, drawn to a decision of this Court in the case of Katta Sujatha v. Fertilizers and Chemicals Travancore Ltd., (2002)7SCC655 . In this case reliance was placed on the cases of K.P.G. Nair (supra), State of Karnataka v. Pratap Chand reported in 1981CriLJ595 , and Anil Hada v. Indian Acrylic Ltd., reported in 2000CriLJ373 . It was held that as the complaint did not state that the accused was in charge of and responsible for the conduct of business of the company and as the complaint did not attribute any particular act to the accused the complaint could not be allowed to proceed. This Court quashed the complaint..'' 7. The Supreme Court in the case of Katta Sujatha (Supra) has laid down that not all the Directors of a company will be responsible for the conduct of the business of the company for the purpose of the provisions of Sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... other hand, show that the Director or there officer is responsible for the offence because the offence was committed with his consent or connivance or because the offence is attributable to his commission or omission. 9. In the case of Cdr. Shekhar Singh v. N.K. Wahi reported as 2003 [1] JCC 52 this court expressed the opinion in this language: ''10. To launch a prosecution Therefore, against the alleged Directors there must be a specific allegation in the complaint as to the part played by them in the transaction. There should be clear and unambiguous allegation as to how the Directors are in charge and responsible for the conduct of the business of the company. The description should be clear. It is true that precise words from the provisions of the Act need not be reproduced and the Court can always come to a conclusion in facts of each case. After all while analysing common sense cannot be left in cold storage. But still in the absence of any averment or specific evidence the net result would be that complaint would not be entertainable.'' 10. The Supreme Court in the case of Ashok Leyland (Supra) disagreeing with the proposition of Katta Sujatha (Supr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llegations were sufficient and proceeds to rule whether or not the evidence to be led would establish accusations is a matter of trial. 13. Coming back to the facts of the two cases before me, I find that the allegations in the complaint are far from sufficient to summon respondents 2 and 3 for the offence of the company - accused No.6. Apart from making an omnibus allegation that all the accused were responsible for the conduct of the business of the company and that all of them connived in the offence, there is no specific averment as to how any of the accused 1 and 2 (respondents 2 and 3 herein) were actually involved in the conduct of the business of the company relating to the transaction in question or how and on what basis it can be said that it was with the active connivance of these two accused that the offence was committed by the company. In my opinion, the petitioners could not have been summoned on the basis of the allegations made by the complainant. The Metropolitan Magistrate has not committed any mistake in declining to summon the two accused. The petitioners have no merit and, Therefore, dismissed. 14. I, however, hasten to add that this order will in no way ..... X X X X Extracts X X X X X X X X Extracts X X X X
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