9911796707
TMI Blog2024 (7) TMI 178X X X X Extracts X X X X X X X X Extracts X X X X ..... t once it is established that a Director is in charge and responsible for the affairs of the Company, the burden shifts upon the accused to show that there was some restriction on his power. A person dealing with the Company is entitled to presume that he is the Director and in charge for the affairs of the Company and the burden shifts upon the person to prove any restriction. In the present case, the necessary averments that the accused were in charge and responsible for the affairs of the Company have been made and the burden will shift to the accused to show any restriction on their power. There is no infirmity in the order summoning the accused and the same cannot be quashed. Hence, the present petition fails and the same is dismissed - Petition dismissed. - Hon ble Mr Justice Rakesh Kainthla , Judge For the Petitioners : Mr. Deeraj K. Vashisht , Advocate For the Respondent : Mr. Praveen Kumar Chandel , Advocate ORDER Rakesh Kainthla , Judge The petitioners have filed the present petition against the order dated 18.12.2021 passed by learned Judicial Magistrate, First Class (JMFC), Nahan, District Sirmaur, H.P. (learned Trial Court) in case No. 446 of 2021 titled as M/s PELLC ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... changed to Cian Healthcare Limited by the Government of India on 30.11.2018. The complainant failed to mention the name of the authorized signatory of the Company and the person, who was looking after the daily affairs of the Company. The learned Trial Court failed to notice the judgments of the Hon ble Supreme Court dealing with the criminal liability of the Company. Hence, it was prayed that the present petition be allowed and the order passed by the learned Trial Court be set aside. 5. I have heard Mr. Dheeraj K. Vashisht, learned counsel for the petitioners/accused and Mr. Praveen Kumar Chandel, learned counsel for the respondent/complainant. 6. Mr. Dheeraj K. Vashisht, learned counsel for the petitioners/accused submitted that as per Section 141 of the Negotiable Instruments Act, a Company and the person, who was in charge of and was responsible for the conduct of the business of the Company are liable. In the present case, there is no evidence that the petitioners/accused are the persons, who were in charge of and responsible for the conduct of the business of the Company. Therefore, they could not have been summoned for the commission of an offence punishable under Section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and who is in charge of the business of the company is vicariously liable by reason only of his fulfilling the requirements of sub-section (1). But if the person responsible to the company for the conduct of business of the company, was not in charge of the conduct of the business of the company, then he can be made liable only if the offence was committed with his consent or connivance or as a result of his negligence. 17. The criminal liability for the offence by a company under section 138, is fastened vicariously on the persons referred to in sub-section (1) of section 141 by virtue of a legal fiction. Penal statutes are to be construed strictly. Penal statutes providing constructive vicarious liability should be construed much more strictly. When conditions are prescribed for extending such constructive criminal liability to others, courts will insist upon strict literal compliance. There is no question of inferential or implied compliance. Therefore, a specific averment complying with the requirements of section 141 is imperative. As pointed out in K. Srikanth Singh v. North East Securities Ltd. - (2007) 12 SCC 788, the mere fact that at some point of time, an officer of a co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... would have said every Director, Manager or Secretary in a Company is liable ..etc. The legislature is aware that it is a case of criminal liability which means serious consequences so far as the person sought to be made liable is concerned. Therefore, only persons who can be said to be connected with the commission of a crime at the relevant time have been subjected to action 18. To sum up, there is an almost unanimous judicial opinion that necessary averments ought to be contained in a complaint before a person can be subjected to criminal process. A liability under Section 141 of the Act is sought to be fastened vicariously on a person connected with a company, the principal accused being the company itself. It is a departure from the rule in criminal law against vicarious liability. A clear case should be spelt out in the complaint against the person sought to be made liable. Section 141 of the Act contains the requirements for making a person liable under the said provision. That the respondent falls within the parameters of Section 141 has to be spelt out. A complaint has to be examined by the Magistrate in the first instance on the basis of averments contained therein. If th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... omplaint and establishes that fact. 5. A Bench of three learned Judges in S.M.S. Pharmaceuticals Ltd. v. Neeta Bhalla [S.M.S. Pharmaceuticals Ltd. v. Neeta Bhalla, (2005) 8 SCC 89: 2005 SCC (Cri) 1975] observed : (SCC p. 102, para 18) 18. To sum up, there is an almost unanimous judicial opinion that necessary averments ought to be contained in a complaint before a person can be subjected to criminal process. A clear case should be spelt out in the complaint made against the person sought to be made liable. Section 141 of the Act contains the requirements for making a person liable under the said provision. That the respondent falls within the parameters of Section 141 has to be spelt out. 6. We also notice this Court to have observed, in regard to the exercise of the inherent powers under Section 482CrPC, in cases involving negotiable instruments that interference would not be called for, in the absence of some unimpeachable, incontrovertible evidence which is beyond suspicion or doubt or totally acceptable circumstances which may clearly indicate that the Director could not have been concerned with the issuance of cheques and asking him to stand the trial would be abuse of process ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has been dishonoured, 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. In fact, Section 141 deems such persons to be guilty of such an 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 roped in Directors, Managers, Secretaries or other officers of the company, if it was proved that the offence was committed with their consent or connivance. 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 is authorised to exercise and do. Palmer described the position ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation 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 the 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. 20. But as has already been noticed, the decision in S.M.S. Pharmaceuticals Ltd. [(2005) 8 SCC 89: 2005 SCC (Cri) 1975] binding on us, has postulated that a Director in a company cannot be deemed to be in charge of and responsible to the company for the conduct of his business in the context of Section 141 of the Act. Bound as we are by that decision, no further discussion on this aspect appears to be wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing ratio in S.M.S. Pharmaceuticals Ltd. [(2005) 8 SCC 89: 2005 SCC (Cri) 1975] and in view of the position of the Directors in a company as explained above. 24. In Rajesh Bajaj v. State (NCT of Delhi) [(1999) 3 SCC 259: 1999 SCC (Cri) 401: AIR 1999 SC 1216], two learned Judges of this Court stated: (SCC p. 262, para 9) For quashing an FIR (a step which is permitted only in extremely rare cases) the information in the complaint must be so bereft of even the basic facts which are absolutely necessary for making out the offence. 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 Section 138 of the Act was addressed to the Director of the company at its office address and not to the company itself. The view was reiterated in Rajneesh Aggarwal v. Amit J. Bhalla [(2001) 1 SCC 631: 2001 SCC (Cri) 229: AIR 2001 SC 518]. These decisions indicate that too technical an approach on the sufficiency of notice and the contents of the complaint is not warranted in the context of the purpose sought to be ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
