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TMI Blog2018 (11) TMI 930X X X X Extracts X X X X X X X X Extracts X X X X ..... ned by Mr. M.S. Narula, who is stated to be the Managing Director of the petitioner company. 5. It is an admitted position that statutory notice under Section 138 of the N.I. Act dated 19.01.2013 was addressed only to "Mr. M.S. Narula, Director, DSC Ltd." No notice was sent in the name of "DSC Ltd". Subject complaint has been filed only against "DSC Ltd. Through its Director - M.S. Narula". 6. Learned counsel for the petitioner contends that since statutory notice was only addressed to Mr. M.S. Narula and not to DSC Ltd., the complaint filed only against DSC Ltd. through Mr. M.S. Narula is not maintainable. He contends that the holder of the account on which the cheque was drawn was not put to notice and the noticee to whom the statutory notice was issued has not been arrayed as an accused, thus the proceedings are not maintainable and are liable to be quashed. 7. Per contra, the contention of learned counsel for the respondent is that DSC Ltd. being a legal entity and the cheque having been signed by Mr. M.S. Narula who is admittedly the Manager Director, as is evident from the affidavit filed in support of the petition, the notice was to the company and the complaint in the na ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xpounded in their natural and ordinary sense. When the language is plain and unambiguous and admits of only one meaning, no question of construction of statute arises, for the Act speaks for itself. Courts are not concerned with the policy involved or that the results are injurious or otherwise, which may follow from giving effect to the language used. If the words used are capable of one construction only then it would not be open to the courts to adopt any other hypothetical construction on the ground that such construction is more consistent with the alleged object and policy of the Act. In considering whether there is ambiguity, the court must look at the statute as a whole and consider the appropriateness of the meaning in a particular context avoiding absurdity and inconsistencies or unreasonableness which may render the statute unconstitutional." 15. With these principles in mind, we now consider the provisions in question. According to Section 138, where any cheque drawn by a person on an account maintained by him is returned by the bank unpaid for reasons mentioned in the said section such person shall be deemed to have committed an offence. The proviso to the section sti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under Section 138. 17. If the requirement that such individual notices to the Directors must additionally be given is read into the provisions concerned, it will not only be against the plain meaning and construction of the provision but will make the remedy under Section 138 wholly cumbersome. In a given case the ordinary lapse or negligence on part of the company could easily be rectified and amends could be made upon receipt of a notice under Section 138 by the company. It would be unnecessary at that point to issue notices to all the Directors, whose names the payee may not even be aware of at that stage. Under second proviso to Section 138, the notice of demand has to be made within 30 days of the dishonour of cheque and the third proviso gives 15 days' time to the drawer to make the payment of the amount and escape the penal consequences. Under clause (b) of Section 142, the complaint must be filed within one month of the date on which the cause of action arises under the third proviso to Section 138. Thus, a complaint can be filed within the aggregate period of seventy-five days from the dishonour, by which time a complainant can gather requisite information as regards nam ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat is the reason that no notice is additionally contemplated to be given to such Directors. 14. The opportunity to the "drawer" company is considered good enough for those who are in charge of the affairs of such company. Lapse or negligence on part of the company could easily be rectified and amends could be made upon receipt of a notice under Section 138 by the company. There is no requirement that the Directors of the Company in question must also be issued individual notices under Section 138 of the Act. Such Directors who are in charge of affairs of the Company and responsible for the affairs of the Company would be aware of the receipt of notice by the Company under Section 138 and would be liable without even being issued individual notices. 15. Applying the principles as laid down in Krishna Texport (supra) to the facts of the present case we see that a similar situation arises in the present case. The accused is a company which is run by its directors. Admittedly Mr M.S. Narula is the Managing Director of the company. He is also the signatory on the subject cheque which has been issued by the company. Though it is disputed by counsel for the petitioner that Mr M.S. Naru ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , but it could also be initiated against every person who at the time the offence was committed, was in charge of and was responsible for the conduct of the business of the company. It further held that Section 141 deems such persons to be guilty of such offence, liable to be proceeded against and punished for the offence, leaving it to the person concerned, to prove that the offence was committed by the company without his knowledge or that he has exercised due diligence to prevent the commission of the offence. Sub-section (2) of Section 141 also ropes in Directors, Managers, Secretaries or other officers of the company, if it was proved that the offence was committed with their consent or connivance. 20. In N. Rangachari (supra) the Supreme Court further held as under: "17. A company, though a legal entity, cannot act by itself but can only act through its Directors. Normally, the Board of Directors act for and on behalf of the company. This is clear from Section 291 of the Companies Act which 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 i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ution based on identification a somewhat broader scope. In the original formulation in Lennard's Carrying Company case [Lennard's Carrying Co. Ltd. v. Asiatic Petroleum Co. Ltd., [1915] AC 705 (HL)] Lord Haldane based identification on a person 'who is really the directing mind and will of the corporation, the very ego and centre of the personality of the corporation'. Recently, however, such an approach has been castigated by the Privy Council through Lord Hoffmann in Meridian Global case [Meridian Global Funds Management Asia Ltd. v. Securities Commission, (1995) 2 AC 500 (PC)] as a misleading 'general metaphysic of companies'. The true question in each case was who as a matter of construction of the statute in question, or presumably other rule of law, is to be regarded as the controller of the company for the purpose of the identification rule." ***** ***** ***** 25. In Bilakchand Gyanchand Co. v. A. Chinnaswami [(1999) 5 SCC 693 : 1999 SCC (Cri) 1034 : AIR 1999 SC 2182] this Court held that a complaint under Section 138 of the Act was not liable to be quashed on the ground that the notice as contemplated by Sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n any certificate of share or to direct registration of transfer of any share, shall not be deemed to be included within the substantial powers of management; 25. As defined by the Companies act the Managing Director is a person who is entrusted with substantial powers of management of the affairs of the company. Notice served on the Managing Director would thus imply that the Company is made aware of the dishonour of the cheque and of the demand for payment of the dishonoured cheque. 26. In the present case subject cheque was signed by Mr. M.S. Narula as the Managing Director of the company. Subject cheque belongs to an account maintained by the Company. Statutory notice was served on Mr. M.S. Narula in the capacity of the Managing Director of the Petitioner Company. The complaint was filed against the company through its Managing Director Mr. M.S. Narula. Present petition has been filed in the name of the company but has been signed by Mr. M.S. Narula as the Managing Director of the Company. 27. Accordingly, applying the ratio of the above referred judgments to the facts of the present case, it is thus to be seen that the there is sufficient compliance of the statutory require ..... X X X X Extracts X X X X X X X X Extracts X X X X
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