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TMI Blog2020 (9) TMI 594X X X X Extracts X X X X X X X X Extracts X X X X ..... iction under Section 482 of Cr.P.C. These Criminal Original Petitions are allowed. - Crl.OP.Nos.5, 8 & 11 of 2020 And Crl.MP.Nos.5,7,8,10,14 & 15 of 2020 - - - Dated:- 18-8-2020 - Mr. Justice G. K. Ilanthiraiyan For the Petitioner : Mr.Nithyaesh Natraj For the Respondent : Mr.R.Prasanna Vineeth Durai COMMON ORDER These criminal original petitions have been filed to quash the proceedings in CC.No.1706 of 2019 on the file of the Metropolitan Magistrate, George Town, Chennai, CC.No.5827 of 2019 and CC.No.5828 of 2019 on the file of the Fast Track Court-II, Metropolitan Magistrate, George Town, Chennai. 2. The learned counsel for the petitioner would submit that the petitioner is arrayed as A3 on the complaint lodged by the respondent for the offences punishable under Section 138 of Negotiable Instruments Act. The learned Magistrate had taken cognizance mechanically as against the petitioner when there is absolutely no specific allegation as against the petitioner to attract the offences under Section 141 of NI Act and issued summon without application of mind. He further submitted that to attract the offences under Section 141 of NI Act as against the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssuance of statutory notice to all the accused as contemplated under Section 138 of NI Act, the respondent lodged complaint as against the accused persons for the offence punishable under Sections 138 and 141 of NI Act. 3.1 He further submitted that in the complaint there is specific allegation as against all the accused persons, in which the second accused being Managing Director, and the third accused being one of the Directors who respectively in charge of the managing all such business activities of the first accused company and also running day to day affairs naturally aware about their liability. Insofar as the fourth accused is concerned, he is the authorised signatory of the said cheques. Therefore, all the accused persons are jointly liable and all are punishable under Sections 138 and 141 of NI Act. He further submitted that every Director of such company who is in charge and responsible to that company for conducting of business shall also be deemed to be guilty. Thus, the accused have committed very serious offence punishable under Sections 138 and 141 of NI Act. He further submitted that all the points raised by the petitioner are question of fact and those groun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sent 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 punished accordingly. Section 141 does not make all the Directors liable for the offence. The criminal liability can be fastened at the time only on those commission of offence, they are in charge and were responsible for the conduct of the business of the company. The person sought to be made liable should be in charge and responsible for the conduct of the business of the company at the relevant time. It has to be averred as a fact as there is no deemed liability of the Director in such case. In this regard, the learned counsel for the petitioner relied upon the judgment in the case of National Small Industries Corporation Limited Vs. Harmit Singh Panital and another reported in (2010) 3 SCC 330, wherein it is held as follows: Section 141 of the Act has been interpreted by this Court in various decisions. As to the scope of Section 141 of the Act, a three-Judge Bench of this Cour ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o be made liable would know what is the case which is alleged against him. This will enable him to meet the case at the trial. (a) It is necessary to specifically 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. But still in the absence of any averment or specific evidence the net result would be that complaint would not be entertainable. The said issue again came up for consideration before a three-judge Bench of this Court recently in Ramraj Singh Vs. State of M.P. Anr. (2009) 6 SCC 729. In this case, the earlier decisions were also considered in detail and held that it is necessary to specifically 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. Furthermore, it held that vicarious liability can be attributed only if the requisite statements, which are required to be averred in the complaint petition, are made so as to make the accused / Director therein vicariously liable for the offence committed by the company. It was further held that before a person can be made vicariously liable, strict compliance of the statutory requirements would be insisted. Thus, the issue in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as are required under the law in the complaint so as to make the accused vicariously liable. For fastening the criminal liability, there is no presumption that every Director knows about the transaction. (ii) Section 141 does not make all the Directors liable for the offence. The criminal liability can be fastened only on those who, at the time of the commission of the offence, were in charge of and were responsible for the conduct of the business of the company. (iii) Vicarious liability can be inferred against a company registered or incorporated under the Companies Act, 1956 only if the requisite statements, which are required to be averred in the complaint/petition, are made so as to make accused therein vicariously liable for offence committed by company along with averments in the petition containing that accused were in-charge of and responsible for the business of the company and by virtue of their position they are liable to be proceeded with. (iv) Vicarious liability on the part of a person must be pleaded and proved and not inferred. (v) If accused is Managing Director or Joint Managing Director then it is not necessary to make specific averment in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cted with the Company will not fall into the ambit of the provision. Time and again, it has been asserted by this Court that only those persons who were in charge of and responsible for the conduct of the business of the Company at the time of commission of an offence will be liable for criminal action. A Director, who was not in charge of and was not responsible for the conduct of the business of the Company at the relevant 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 s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e. Simply because a person is a Director of defaulter Company, does not make him liable under the Act. Time and again, it has been asserted by this Court that only the person who was at the helm of affairs of the Company and in charge of and responsible for the conduct of the business at the time of commission of an offence will be liable for criminal action [See : Pooja Ravinder Devidasani v. State of Maharashtra Ors. AIR 2015 SC 675]. The law laid down by this Court is that for making a Director of a Company liable for the offences committed by the Company under Section 141 of the Act, there must be specific averments against the Director showing as to how and in what manner the Director was responsible for the conduct of the business of the Company. In the above judgments, the Hon ble Supreme Court of India repeatedly held that the complaint has to specifically say as to how and in what manner Director was responsible for the conduct of the business of the company. Unfortunately in the impugned complaint, the allegations did not satisfy the requirements of Section 141 of NI Act. That apart, the petitioner is being implicated as third accused who is inducted as Non Exe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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