Andhra HC (Pre-Telangana)
Jord Engineers India Limited And Ors. vs Nagarjuna Finance Limited And Anr. on 4 February, 2000
Equivalent citations: 2000(1)ALD(CRI)582, 2000(1)ALT(CRI)379, [2000]100COMPCAS691(AP), 2000CRILJ4933
Author: Ramesh Madhav Bapat
Bench: Ramesh Madhav Bapat
JUDGMENT Ramesh Madhav Bapat, J.
1. The petitioners herein have filed the present petitions under Section 482 of the Criminal Procedure Code for quashing the criminal complaints lodged against them under Section 200 of the Criminal Procedure Code, and Sections 138 and 142 of the Negotiable Instruments Act, 1881. The petitioners herein were the accused in the criminal complaints. The first respondent herein was the complainant in all the petitions. It was averred in the complaints that the complainant-company is incorporated under the Companies Act, 1956 having its registered office at Nagarjuna Hills, Panjagutta, Hyderabad, engaged in the business of finance under hire purchase and leasing and the complainant is represented by its legal officer authorised signatory.
2. It is further stated by the complainant in its complaints that the accused executed hire purchase agreements in favour of the complainant and the amounts are payable as per the agreements. Some amounts were due to the complainant-company, and, therefore, the accused issued cheques in favour of the complainant. When they were presented for honour, they were returned with an endorsement "refer to drawer". Thereafter, the complainant issued legal notices under Section 138 of the Negotiable Instruments Act. The notices were not claimed and they were refused by the accused. The complainant waited for 15 days and thereafter filed the complaints'.
3. On presentation of the complaints, cognizance was taken by the learned Magistrate and summons were issued to the accused. On receipt of summons, the accused petitioners herein have filed the petition under Section 482 of the Criminal Procedure Code, for quashing the same.
4. Learned counsel Mr. M.V.S. Suresh Kumar appearing on behalf of the petitioners herein submitted at the Bar that while drafting the complaints under Section 138 of the Negotiable Instruments Act, the complainant did not comply with the legal requirements as enumerated in Section 141 of the Negotiable Instruments Act, and, therefore, it was submitted that the complainant has to make a specific averment as to how all the directors of the company are liable to be prosecuted under Section 141 of the Negotiable Instruments Act. Section 141 of the said Act reads as under :
"141. Offences by companies.--(1) If the person committing an offence under Section 138 is a company, every person who, at the time the offence was committed, was in charge of, and was responsible to the company for the conduct of the business of the company, as well as the company, shall be deemed to be guilty of the offence and shall be liable to be proceeded against and punished accordingly :
Provided that nothing" contained in this sub-section shall render a person liable to punishment if he proves that the offence was committed without his knowledge, or that he had exercised all due diligence to prevent the commission of such offence.
(2) Notwithstanding anything contained in Sub-section (1), where any offence under this Act has been committed by a company and it is proved that the offence has been committed with the consent 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.
Explanation.--For the purposes of this section,--
(a) 'company', means any body corporate and includes a firm or other association of individuals ; and
(b) 'director' in relation to a firm, means a partner in the firm."
Learned counsel Mr. M.V.S. Suresh Kumar drew my attention to the averments made by the complainant in para. (5) of the complaints, which reads as under :
"5. The accused No. 1 is the firm and the accused No. 2 is CMD and signatory, accused No. 3 is director and authorised signatory, accused No. 4 is director and accused No. 5 is finance controller of A-1 firm as such they are also responsible for the conduct of the businesses of A-1 firm, as such they are also liable to be punished."
5. Learned counsel, Mr. M.V.S. Suresh Kumar submitted at the Bar that there is a bald averment made by the complainant that all the directors are liable for prosecution and such averment is not tenable in law. In support of his contention, learned counsel relied upon a ruling reported in Secunderabad Health Cure Ltd. v. Secunderabad Hospitals Pvt. Ltd. [1998] 2 ALD (Crl.) 206 ; [1999] 96 Comp Cas 106 (AP). It is a judgment of the learned single judge of this court. While deciding the above matter, the learned single judge has taken into consideration many judgments of other High Courts and also the judgment of the apex court and on the given facts before the learned single judge, the learned single judge ruled that the said complaint before him is not maintainable and quashed the same. Learned counsel, Mr. M.V.S. Suresh Kumar also invited my attention to the ruling of the Karnataka High Court in Nucor Wires Ltd. v. H.M.T. International Ltd. [1998] 91 Comp Cas 850. A similar point was considered by the learned single judge of the Karnataka High Court and ruled that there must be a specific averment regarding the role played by each of the directors and if there is a specific averment regarding the role played by each of the directors, they will be liable for prosecution under Section 138 of the Negotiable Instruments Act.
6. In the complaint there is a specific averment made by the complainant that A-1 is a firm. There is no doubt that A-1 firm is liable for prosecution. A-2 is the chief managing director and signatory. A-2 is liable for prosecution. A-3 is the director and authorised signatory. Therefore, A-3 is liable for prosecution. A-4 is a director. The prosecution against A-4 may not be maintainable because no qualification is attached to A-4 as to what role he had played in the commission of the offence under Section 138 of the Negotiable Instruments Act. Therefore, A-4 will not be liable to be prosecuted under Section 138 of the Negotiable Instruments Act. Whereas A-5 is a financial controller. He has a definite role to play in the working of the company. Therefore, A-5 is liable for prosecution.
7. Under these circumstances, taking into consideration the legal aspect this court holds that all the accused except A-4 are liable to be prosecution under Section 138 of the Negotiable Instruments Act. Therefore, the complaints filed against A-4 are only quashed and the other accused have to face the trial.
Thus, the criminal petitions are partly allowed.