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TMI Blog2018 (7) TMI 1568X X X X Extracts X X X X X X X X Extracts X X X X ..... 35/2016,3639/2016,3642/2016,3643/2016,3645/2016,3646/2016,3649/2016,3650/2016, - - - Dated:- 23-7-2018 - MR. JUSTICE R.K. GAUBA J. CRL.M.C. 3651/2016, CRL.M.C. 3653/2016, CRL.M.C. 3654/2016, CRL.M.C. 3655/2016, CRL.M.C. 3658/2016, CRL.M.C. 3659/2016, CRL.M.C. 3661/2016, CRL.M.C. 3663/2016, CRL.M.C. 3664-3666/2016, CRL.M.C. 3673/2016, CRL.M.C. 3674/2016 Petitioner Through: Mr. Tanmay Mehta, Advocate with Mr. Rajeev Aggarwal, Mr. M. Mittal, Advocates. Respondent Through: Mr. Sandeep D. Das, Advocate with Ms. Varuna Bhanrale Ms. Vatsala Kumar, Advocate O R D E R 1. On 19.03.2014, eleven criminal complaints were filed in the court of the Metropolitan Magistrate, each seeking prosecution of the parties shown in the array of respondents for offences punishable under Section 138 of the Negotiable Instruments Act, 1881, two of such complaints i.e. the complaint nos.800/1/14 and 802/1/14 having been presented by Jwala Devi Enterprises Pvt. Ltd. through its authorized representative Sat Parkash Bansal and the rest complaint nos.799/1/14, 812/1/14, 813/1/14, 814/1/14, 815/1/14, 839/1/14, 840/1/14, 841/1/14 and 842/1/14 having been presented by Anand Prakash B ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Vs. Anu Mehta and Ors, (2015) 1 SCC 103 and Standard Chartered Bank Vs. State of Maharashtra and Ors., (2016) 6 SCC 62. There can be no quarrel with the proposition, as advanced by the counsel for the respondents, that the ruling of the bench of three Hon ble Judges in SMS Pharmaceuticals (supra), continues to hold the field, the decisions in Gunmala Sales (P) Ltd. (supra) and Standard Chartered Bank (supra) having accepted this position and the said subsequent rulings being in a slightly different context. 5. These matters pertain to the penal clause contained in Section 138 of the Negotiable Instruments Act, 1881, which reads thus :- 138. Dishonour of cheque for insufficiency, etc., of funds in the account - Where any cheque drawn by a person on an account maintained by him with a banker for payment of any amount of money to another person from out of that account for the discharge, in whole or in part, of any debt or other liability, is returned by the bank unpaid, either because of the amount of money standing to the credit of that account is insufficient to honour the cheque or that it exceeds the amount arranged to be paid from that account by an agreement ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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: Provided further that where a person is nominated as a Director of a company by virtue 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 part 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 pu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ically 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 a director in such cases. (c) The answer to Question (c) 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 compa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... averment process is issued the complaint must proceed against the Directors. But, if any Director wants the process to be quashed by filing a petition under Section 482 of the Code on the ground that only a bald averment is made in the complaint and that he is really not concerned with the issuance of the cheque, he must in order to persuade the High Court to quash the process either furnish some sterling incontrovertible 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) 12. The conclusions in Gunmala Sales (P) Ltd. (supra) were summarized t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... action with reference to Section 141; (ii). If the person committing an offence under Section 138 of the Negotiable Instruments Act, 1881 is a company, the person who was signatory to the cheque which is dishonoured is clearly responsible for the incriminating act and would be liable to be proceeded against under Section 141 (2); (iii). By virtue of the office they hold, the persons working in the capacity of the Managing Director or Joint Managing Director are deemed to be in charge of, and responsible for the conduct of the business of, the company and, therefore, can be proceeded against in terms of Section 141; (iv). Merely because a person is a director of the company is not sufficient to make him liable under Section 141, there being no deeming that by holding such position he is in charge of, or responsible for the conduct of the business of, the company within the meaning of Section 141; (v). It is necessary for the complainant to specifically aver in the complaint that at the time the offence was committed, the person sought to be prosecuted was in charge of, or responsible for the conduct of the business of, the company in terms of Section 141, there ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Company, namely M/s. Bush Foods Pvt. Ltd. and are actively engaged and responsible for and in-charge of dayto-day management, business activities and affairs of the Accused No.1 firm. x x x 10. That despite the receipt of the above said Legal Notice dated 05.02.2014, the Accused Persons have failed / refused / neglected to make the payment of the above said Cheques amount to the Complainant and have therefore made themselves liable to be prosecuted under the provisions of Sections 138, 141 and 142 of the Negotiable Instruments Act, 1881. It is further submitted that at the time of issuance of the said cheques, the accused persons have assured, promised and represented to the Complainant that the said cheques would be honored on presentation. However, the said Cheques, which are the subject matter of the present complaint, were dishonored on presentment. The accused persons have no intention to make the said payment to the Complainant. It is submitted that the Accused Persons have been responsible for all the business dealings for and on behalf of their said Accused no.1 firm and also responsible for the circumstances that have lead to the dishonor of the aid cheques issue ..... X X X X Extracts X X X X X X X X Extracts X X X X
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