Andhra HC (Pre-Telangana)
Shri Rohinton Noria vs Ncc Finance Ltd. And Anr. on 28 March, 2000
Equivalent citations: 2000(1)ALD(CRI)664, 2000CRILJ4117
Author: Vaman Rao
Bench: Vaman Rao
ORDER Vaman Rao, J.
1. Heard both sides.
1. This petition under Section 482 of CrPC seeks quashing of the proceedings in C.C.no.329 of 1998 on the file of the XXIII Metropolitan Magistrate, Hyderabad in which the petitioner as accused no.5 faces a charge under Section 138 of the Negotiable Instruments Act along with four other accused.
2. The respondent no.1-complainant is said to be a company called M/s. NCC Finance Limited. According to the averments in the complaint, the accused no.1 approached the complainant for purchasing computer equipment on hire purchase basis. The accused entered into a hire purchase agreement for an amount of Rs.8,07,921/- with the complainant company on 4.9.1997. The amount was to be repaid in 18 instalments at the rate of Rs.44,876/- per month. The accused paid the first instalment and part of second instalment and thereafter committed defaults. The accused issued cheque no.607682 dated 4.2.1998 for an amount of Rs.44,885/- drawn on State Bank of Hyderabad, Industrial Finance Branch, Hyderabad towards payment of the said instalment. The cheque was signed by accused nos.2 and 3 on behalf of accused no.1 company "with the instructions, knowledge, consent and finance of accused 4 and 5". The cheque was returned for the reason of funds being insufficient to the credit of accused no.1 company. The complainant issued notice as required under Section 138 of the Negotiable Instruments Act demanding payment of the amount covered within 15 days. The notice was served but the accused failed to make the payment within the prescribed time. Hence, this complaint has been filed.
3. The learned counsel for the petitioner Sri D.Madhava Rao contends that the petitioner who is the 5th accused in the above CC has been one of the Directors of the Company and according to him even from that post he has resigned on 6.2.1998 and the same has been communicated to the Registrar of Companies and thus according to the petitioner even at the time of presentation of the cheque, he was not on the Board of Directors. It is further contended by the learned counsel that the accused 2 and 3- the Managing Director and Executive Director who are signatories to the cheque are the persons are the persons who actively participated in the day to day affairs of the company and are in-charge of the affairs of the said company and that the petitioner accused no.5 is not in charge of the company and it is submitted that on these grounds, the criminal proceedings against the petitioner herein are liable to be quashed.
4. The learned counsel for the respondent no.1,Sri B.Viswanadha Reddy on the other hand contends that the fact whether the petitioner has resigned from the Board of Directors and was not a Director at the relevant time is a question of fact which has to be decided during the trial. It is further argued that even the fact whether the petitioner was incharge of and was responsible to the company is also a question of fact which has to be enquired into during the trial and as such it is submitted that the proceedings cannot be quashed at this stage.
5. It would appear that accused no.1 is the company of which accused no.2 is said to be the Managing Director. Accused no.3 , according to the complainant, is said to be the Executive Director and Secretary of the Company. Accused no.4 is said to be another executive director of the company and the petitioner, who is accused no.5 is said to be a Director of the A1 company.
6. Normally, when there is a Managing Director to a company and apart from Managing Director where there is an executive director and secretary and another executive director, it is difficult to conceive that the ordinary director will be incharge of and responsible to the company. But, in this case, the complainant has come forward with a case that the petitioner who is an ordinary director is also incharge of and responsible to the company. The relevant averment in para 1 of the complaint in respect of accused no.5 is "accused 2 to 5 are incharge of, responsible for and looking after the day to day affairs of the company." In para 3 of the complaint, there is a further assertion that the said cheque was signed and issued by accused no.3 on behalf of accused no.1 with the instructions, knowledge, consent and connivance of accused 4 and 5. As observed earlier, it appears rather improbable that in the presence of Managing Director and two Executive Directors , an ordinary director of the company would be incharge of and responsible to the affairs of the company within the meaning of Section 141 of Negotiable Instruments Act.
7. It is being observed that in complaints filed for offence under Section 138 of the Negotiable Instruments Act, all the Directors of the Company are routinely being proceeded against 'by invoking the provision under Section 141 of the Negotiable Instruments Act by glibly repeating the words in the section that certain director "was incharge of and responsible to the company for the conduct of business of the company'. It is necessary to emphasize that Section 141 of the Negotiable Instruments Act where an offence under Section 138 of the Negotiable Instruments Act has been committed by a company, the complainant is required to give a serious thought and make enquiries and ascertain the fact as to whether a particular director was incharge of and responsible to the affairs and conduct of the business of the company. Routinely roping in all the Directors by merely repeating the words used in Section 141 of Negotiable Instruments Act without ascertaining the facts is a serious matter which has to be deprecated. However, it is a question of fact which necessarily has to be decided during the trial.
8. In a petition under Section 482 of CrPC, the matters cannot be decided on the basis of probabilities. When the complainant has made an assertion, it must be presumed that such an assertion has been made with full responsibility and if such an assertion is proved false, the complainant must be prepared to face the consequences.
9. But, as it is not permissible to go into the disputed questions of fact in a petition under Section 482 of CrPC, I have no alternative except to dismiss this ;petition at this stage.
10. Considering the circumstances of the case, it is directed that the personal attendance of the petitioner accused no.5 shall stand dispensed with during the trial and he will be permitted to be represented by his advocate.