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TMI Blog2021 (2) TMI 114X X X X Extracts X X X X X X X X Extracts X X X X ..... ible or irrefutable and the semantic difference apart, the ratio is that the material which is brought to the Court s notice by the accused, must be incontrovertible as would persuade the Court to believe that continuation of the proceedings shall be an abuse of the process of the law. I have already held that a private document like the partnership deed, which is not in public domain, which is not on the record of any statutory authority, and which is specifically disputed, cannot be an indubitable or incontrovertible material. No case is made out for interfering in exercise of inherent powers or in extraordinary jurisdiction. Application dismissed. - CRIMINAL APPLICATION (APL) 326 OF 2019 - - - Dated:- 28-1-2021 - ROHIT B. DEO, J. Mrs. R.P. Jog, counsel for applicant. Mr. R.P. Goenka, counsel for non-applicant 1. Mr. M.K. Pathan, APP for non-applicant 2. ORAL JUDGMENT: Heard Mrs. R.P. Jog, the learned counsel for the applicant and Mr. R.P. Goenka, counsel for respondent 1 and Mr. M.K. Pathan, the learned APP for respondent 2. 2. The applicant, who is arraigned as accused 5 in Summary Criminal Case 5363/2017, which is instituted by respondent 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onsidered, in the factual matrix, as an incontrovertible material. 6. Adverting to the averments in the complaint, paragraphs 1, 2 and 7 read thus: 1. The complainant is permanent resident of Akola. That the accused no. 1 is a partnership firm and accused no. 2 and 5 are its partners. That the accused no. 2 to 5 are looking after the day to day affairs of the business of the accused no.1 firm. That the accused no. 2 to 5 were in charge of and were responsible to the accused no.1 firm for he conduct of the business affairs of the firm as well as the firm, when the offence was committed. That the accused no. 2 to5 are having complete knowledge and information about all the business transactions of the accused no. 1 firm. That the accused no. 2 to 5 are jointly and severally responsible and liable for all the affairs and transactions of the accused no. 1 firm. That all the accused no. 2 to 5 were doing the business under the name of the accused no. 1 and they used to attend the customers. That all the accused used to look after the banking affairs of the accused no. 1 firm. That accused no. 2 to 5 were sitting at the business place of the accused no. 1 firm. The accused no. 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The law is too well settled to burden this judgment with reference to the plethora of the decisions which hold the field. Suffice it to refer to the decision of the Apex Court in S.M.S. Pharmaceuticals Ltd ..vs.. Neeta Bhalla, (2005)8 SCC 89 ( SMS Pharmaceuticals ), which is consistently followed. Tested on the anvil of the law articulated by the Apex Court, it is evident that the necessary averments made in the complaint, if accepted at face value, make out a case to proceed against the accused. With reference to the submission in the alternative canvased by Mr. R.P. Goenka that the offence is committed with the consent or connivance of the accused, the averments in paragraph 7 which are reproduced supra, are sufficient to impel the learned Magistrate to consider the submission on merits and to record an appropriate finding after the parties avail the opportunity of adducing evidence. 8. The only question which needs an answer, is whether the accused is justified in the contention that the partnership deed dated 9.1.2013 is an incontrovertible material as would render the proceedings an abuse of the process of law and the answer must be an emphatic no. 9. An incontrove ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecessary to specifically state in the complaint that the person accused was in charge of, or responsible for, the conduct of the business of the company?. (b) Whether a director of a company would be deemed to be in charge of, and responsible to, the company for conduct of the business of the company and, therefore, deemed to be guilty of the offence unless he proves to the contrary?. (c) Even if it is held that specific averments are necessary, whether in the absence of such averments the signatory of the cheque and or the managing directors or joint managing director who admittedly would be in charge of the company and responsible to the company for conduct of its business could be proceeded against. 14. The questions formulated were answered by the Apex Court, thus: (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 sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t those provisions show that what a Board of Directors is empowered to do in relation to a particular company depends upon the roles and functions assigned to Directors as per the memorandum and articles of association of the company. There is nothing which suggests that simply by being a Director in a company, one is supposed to discharge particular functions on behalf of a company. As a Director he may be attending meetings of the Board of Directors of the company where usually they decide policy matters and guide the course of business of a company. It may be that a Board of Directors may appoint sub-committees consisting of one or two Directors out of the Board of the company who may be made responsible for the day-to-day functions of the company. This Court further observed that what emerges from this is that the role of a Director in a company is a question of fact depending on the peculiar facts in each case and that there is no universal rule that a Director of a company is in charge of its everyday affairs. What follows from this is that it cannot be concluded from SMS Pharma-(1) that the basic requirement stated therein is sufficient in all cases and whenever such an aver ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... verment that the director or partner is in charge of the affairs of the company / firm is sufficient to issue process. Indeed, Gunmala Sales articulates that the further role of the director or the partner can be brought out in the trial. However, Gunmala Sales further articulates, that notwithstanding that the basic averment is made, the High Court is not bound to dismiss the petition. Notwithstanding that the complaint incorporates the basic averment, the High Court may come across some unimpeachable evidence or acceptable circumstances which may in its opinion lead to the conclusion that the director or partner could not have been in charge of the affairs of the company or the firm. The observations in Gunmala Sales are quoted with approval in the two Judges Bench decision of the Apex Court in Standard Chartered Bank vs. State of Maharashtra, 2016 Law Suit (SC) 344. 18. A learned Single Judge of this court does take a view that the role of the accused must be specifically spelt out in the complaint and that the averments must be supported with linkage of corresponding documents which bring to the fore the personal involvement of the accused. This view in Mr. Rajeev Khandelw ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cord that except the statement that the accused were directors and were responsible and liable for the acts of the company, no specific allegation is made against them. The Apex Court then observes that the question of proving a fact not mentioned in the complaint did not, therefore, arise in the facts of this case. It is then observed that admittedly except for the statement, no other material has been disclosed in the complaint (emphasis supplied) to make out a case against the respondents that they had been in charge of the affairs of the company. Considering the averments in the complaint, it cannot be said that there is no material averred, in contradistinction with evidentiary material which is a matter of trial, in the complaint, as would satisfy the test of the pleadings. 22. Mrs. R.P. Jog then relies on the decision of the Apex Court in N.K. Wahi vs. Shekhar Singh and Ors, [(2007)9 SCC 481] and in particular, the observations in paragraphs 2, 3, 4 and 8 thereof, which read thus: 2. Background facts in nutshell are as under: Appellant presented a criminal complaint under Section 138 read with Section 141 of the Negotiable Instruments Act, 1881 (in short the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he order of the High Court . 8. 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. But still in the absence of any averment or specific evidence the net result would be that complaint would not be entertainable. 23. The decision in N.K. Wahi vs. Shekhar Singh and Ors, and in particular, the observations in paragraph reproduced supra, is clearly misunderstood by the learned counsel Mrs. R.P. Jog. The Apex Court notes in paragraph 4 that the High Court found that preliminary evidence had been recorded. It is in this context that in paragraph 8, the Apex Court declares that in the absence of any averment or specific evidence, the net result would be that complaint would not be entertainable. It is obvious from the use of the ..... 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