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TMI Blog2020 (3) TMI 993X X X X Extracts X X X X X X X X Extracts X X X X ..... MALL INDUSTRIES CORPN. LTD. VERSUS HARMEET SINGH PAINTAL [ 2010 (2) TMI 590 - SUPREME COURT] the Hon'ble Apex Court has interpreted on the aforesaid lines that requirement in terms of pleading has to be construed not only to the extent of mentioning the Director to be incharge of and responsible to the company for doing its business, but strictly spell out as to how and in what manner, he was incharge and responsible for the conduct of its business. The provisions of Section 141 of the Negotiable Instruments Act are pari materia with the provisions of Insecticide Act. In the absence of specific averments in the complaint, no Director can be proceeded against. No Director is required to prove his innocence by leading evidence in the trial, once the averments to this effect are not incorporated in the complaint. The averments made in the present complaint are fell short of statutory requirement. The prosecution against Director cannot be held sustainable in the absence of mandatory requirement in the pleadings. Petition allowed. - CRM-M No.16269 of 2018(O&M) - - - Dated:- 18-3-2020 - HON'BLE MR. JUSTICE RAJ MOHAN SINGH Mr. P. S. Ahluwalia, Advocate for the pet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mplainant were not in a position to pay the amount to the accused. For this reason, the accused asked the father of the complainant to mortgage his house and stood as personal guarantee to secure loan for his company. Due to good relations with the accused and allurement given by the accused, the father of the complainant has mortgaged his house No.7L, Green View, Rajbaha Road, Patiala and stood as personal guarantee to raise funds for the company of the accused. In the year 2012, the accused again contacted the brother of the complainant and asked him to bring the company out of financial crunch. The accused asked for money, but the complainant showed his inability. Due to persistence and the assurance given by the accused that the amount will be the loan towards the company and the reasonable interest will be paid thereupon, the complainant transferred an amount of ₹ 1,04,50,000/- on 14.09.2012 and 15.09.2012 to the company of the accused. It came to the knowledge of the complainant that the accused have allotted 55,000 shares at the rate of ₹ 100/- each in the name of the complainant, whereas complainant never asked for the same, rather the amount was a loan towards ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... No.17 of the complaint in the following manner:- 17. That by means of aforesaid act, the accused has rendered themselves liable to be prosecuted under Section 138 of Negotiable Instruments Act, 1881 as amended. [5]. Bare perusal of the aforesaid complaint would show that the complainant has not pleaded that the petitioner is incharge and responsible for day to day conduct of the business of the company. [6]. Judicial Magistrate Ist Class, Patiala vide order dated 31.01.2017, summoned the accused to face trial under Section 138 of the Negotiable Instruments Act. [7]. Perusal of the aforesaid order dated 31.01.2017 passed by the trial Court would show that the order of summoning is not related to offence under Section 141(2) of the Negotiable Instruments Act. The offence under Section 138 of the Negotiable Instruments Act is relatable to signatory of the cheque only. The cheque in question was signed by Manoj Kumar as authorized signatory. [8]. Learned counsel for the petitioner contended that the cheque in question was not signed by the petitioner and the complaint is silent about the status of the petitioner. The complainant has not pleaded that the petitioner i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tiable Instruments Act contains the requirements for making a person liable under the said provision. 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 of the Negotiable Instruments Act, then he would issue the process. Merely describing a person as Director in the company is not sufficient to satisfy the requirement of Section 141 of the Negotiable Instruments Act. Even a non- director can be liable under Section 141 of the Negotiable Instruments 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/her. It is necessary to specifically aver in a complaint under Section 141 of the Negotiable Instruments Act that when the offence was committed, the accused person was incharge of, and responsible for the conduct of business of the company. This averment is a necessary requirement of Section 141 of the Negotiable Instruments Act and has to be made in a complaint. In the absence of such averment being made in the compla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he section would have said so. Instead of every person the section would have said every director, manager or secretary in a company is liable . In this context, the law laid down by the Hon'ble Apex Court in Standard Chartered Bank's case (supra) can be relied. [12]. Although, no particular form for making such an allegation is prescribed, but wholesome reading of the complaint would show that the substance of the accusation discloses that the accused person was incharge of and responsible for the conduct of the business of the company at the relevant time. The law laid down by the Hon'ble Apex Court in A.K.Singhania Vs. Gujarat State Fertilizer Company Ltd., 2013(4) RCR (Criminal) 777 and Manalal Chamaria and another's case (supra) can be relied in this context. [13]. Learned counsel further submitted that under vicarious liability on dishonouring of cheque issued by a company, a non- executive Director of a company could not be prosecuted. Non- executive Director is no doubt a custodian of the governance of the company, but does not involve in the day-to-day affairs of the running of its business and only monitors the executive activity. Simply because ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evant time, will not be liable for an offence under Section 141 of the N.I. Act. In National Small Industries Corporation (supra) this Court observed: Section 141 is a penal provision creating vicarious liability, and which, as per settled law, must be strictly construed. It is therefore, not sufficient to make a bald cursory statement in a complaint that the Director (arrayed as an accused) is in charge of and responsible to the company for the conduct of the business of the company without anything more as to the role of the Director. But the complaint should spell out as to how and in what manner Respondent 1 was in charge of or was responsible to the accused Company for the conduct of its business. This is in consonance with strict interpretation of penal statutes, especially, where such statutes create vicarious liability. A company may have a number of Directors and to make any or all the Directors as accused in a complaint merely on the basis of a statement that they are in charge of and responsible for the conduct of the business of the company without anything more is not a sufficient or adequate fulfillment of the requirements under Section 141. [14]. L ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er on other documents of the company, would advance the case of the respondent in the absence of any averment to that effect made in the complaint in addition to the averment in respect of the petitioner being incharge and responsible to the company. [18]. Perusal of the order dated 31.01.2017 passed by the trial Court, summoning the petitioner would also show that the summoning order is only under Section 138 of the Negotiable Instruments Act. The order does not show that the petitioner has been summoned under Section 141(2) of the Negotiable Instruments Act. The offence under Section 138 of the Negotiable Instruments Act is relatable to the signatory of the cheque. Sonu Gupta's case (supra) and Dev Raj Garg's case (supra) relates to order of summoning under Section 204 of Cr.P.C. Those cases are related to penal offences, where no such averments are required to be made in the context of Section 141 of the Negotiable Instruments Act. The requirement of Section 141 of the Negotiable Instruments Act is somewhat different being of vicarious liability, therefore, requirement of summoning in penal offences is not just at par with that of summoning under Section 141 of the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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