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TMI Blog2015 (9) TMI 1706X X X X Extracts X X X X X X X X Extracts X X X X ..... are no way responsible for the day to day affairs of the Company which is a statutory requirement under Section 141 of the N.I. Act with specific allegations in the complaint for taking cognizance and the private complaint case without even such averments and without proper application of mind on the said requirement taken cognizance for the offence by the learned Magistrate from a stray sentence at para No. 7 of the Complaint 'that all the accused persons are looking after the business affairs of the Company and being responsible for the business affairs of the Company, having committed the offence under Section 138 of the N.I. Act ---------- for the cheque dishonoured ---------- for funds insufficient --- hence they are liable to be punished for the said offence', which is not sufficient in the absence of clearly making a mention in the complaint as an averment as to the specific and categorical role played by any of the directors to make them liable particularly for A-3 to A-5 to make them vicariously liable, that without which the criminal liability cannot be fastened so casually, that of A-4 and A-5 are even ladies and homemakers unnecessarily lugged in to exert undue ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sumptions against them to adduce any defence evidence to rebut under the reverse onus clause if at all there is no any legally enforceable debt or other liability to subsist and hence to dismiss the quash petitions. 4 . Heard both sides as referred supra and at length and perused the material on record. 5 . From the above rival contentions to answer in so far as liability of a Company concerned, law is very clear on the principle of alterego. The Constitutional bench in Standard Chartered Bank V. Directorate of Enforcement (2005)4 SCC 530 held that Company can be prosecuted and convicted for an offence which requires a minimum sentence of imprisonment. Though it was held that it is not expressing any opinion on the question whether a Corporation could be attributed with requisite Mensrea to prove the guilt the same is later clarified by the subsequent expression of the Apex Court in Iridium India Telecom Ltd. V. Motorola Inc. (2011)1 SCC 74 referring to the several expressions of the American and England Courts in paras 59 to 64 of the expression page Nos. 98 to 100 in nutshell that a Company in many ways be like a human body they have a brain and nerve centre which controls what ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... example at para No. 44 of Sunil Bharti Mittal supra and the expression of the Apex Court in Aneeta Hada (II) V. Godfather Travels & Tours (P) Ltd. (2012)5 SCC 661 held that the group of persons that guide the business of the company if the criminal intent that would be imputed to the body corporate and in this back drop Section 141 of the N.I. Act has to be understood. Such a position is therefore because of statutory intendment making it a deemed fiction. In Sunil Bharti Mittal supra it also referred the three Judge bench expression of the Apex Court in S.M.S. Pharmaceuticals Ltd. V. Neeta Bhalla (2005)8 SCC 89. In S.M.S. Pharma supra at para No. 8 it is observed that there is no universal rule that a Director of a Company is in-charge of its every day affairs. It all depends upon the respective roles assigned. A company have managers or secretaries for different Departments and may have more than one Manager or Secretary. In Aneeta Hada supra it is observed with reference to Section 141 of N.I. Act that the deeming fiction makes the functionaries of the Companies to be liable as its own signification. In fact before Aneeta Hada, S.M.S. Pharmaceuticals, Standard Chartered Bank an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o be restricted to its own facts. In S.M.S Pharmaceuticals (three Judge bench) supra also it is made clear with reference to section 141 of the N.I. Act that it is necessary to aver that at the time the offence was committed, the person accused was in-charge of and responsible for conduct of business of the Company and without this averment being made in the complaint, the requirements of Section 141 of the N.I. Act cannot be said to be satisfied. A clear case should be spelled out in the complaint against the persons sought to be made liable to show as incharge of and responsible to the Company for the conduct of its business. Every person connected with the Company thereby shall not fall within the ambit of Section 141 of the N.I. Act but of those persons who were incharge of and responsible for the conduct of business of the Company at the time of commission of the offence. The liability arises on account of conduct or act or omission on the part of a person and not merely on account of holding an offence or a position in a Company. The complaint therefore must disclose the necessary facts which make a person liable, specifically aver that at the time of offence committed, the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... harmaceuticals and those were followed by a single Judge expression of this Court in Arrakuntal V. Ganeshan V. Sai Rama Cotton Syndicate 2013(2) ALD (Crl.) 331 (AP). Even other latest expression in Poojari Ravinder Devi Dasani V. State of Maharashtra AIR 2015 SC 675 reiterates the same reliance upon National Small Industries Corporation supra. 6 . Having regard to the above propositions which are in one line speak that a bald averment in complaint is not even sufficient but for a specific allegation as to how a Director of a company who stands in a different footing to the Managing Director by his status liable or to be made liable for the offences punishable under Section 138 of the N.I. Act. 7 . Here a perusal of the very complaint relevant portion extracted supra, but for a bald statement, there is no material averment as to how A-3 to A-5 are liable. It is not even the case from perusal of the cheque of any of them are signatories, along with A-2 on behalf of A-1 entity. The mere serving of notice and their silence even with no reply, no way make them liable thereby, but for to draw adverse inference so far as A-1 and A-2 concerned as to but for no defence they could have rep ..... X X X X Extracts X X X X X X X X Extracts X X X X
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