Madras High Court
O.P. Mehra vs Mansi Finance (Chennai) Ltd. on 5 February, 2001
Equivalent citations: 2001(2)ALT(CRI)56, [2001]106COMPCAS128(MAD), 2002CRILJ1310
Author: M. Karpagavinayagam
Bench: M. Karpagavinayagam
JUDGMENT Karpagavlnayagam, J.
1. The proceedings initiated under Sections 138 and 141 of the Negotiable Instruments Act, 1881, ('the Act') are sought to be quashed in these petitions filed under Section 482 of the Criminal Procedure Code, 1973, by the petitioners, who are arrayed as A-9, A-7, A-8 and A-6.
2. Mr. Murali, the learned counsel appearing for the petitioners, though would raise several grounds, while seeking to quash the proceedings, I am impressed by one of the grounds, on the basis of which the proceedings can be quashed as against these petitioners.
3. It is settled law that when a complaint has been filed under Sections 138 and 141 of the Act in respect of non-payment of the cheque amount against the company, all the directors or partners in charge of and responsible for the affairs of the company are also liable to be punished and as such, the complaint against all the directors is maintainable.
However, it is laid down by this Court as well as the Apex Court that there shall be necessary averments in the complaint that those directors are in charge of and responsible for the affairs of the company and in the absence of such allegation, the complaint cannot be maintained as against such person, even though he is a director.
4. In that View of the matter, when we look at the complaint, there is no specific averment in the complaint as against these petitioners, as contained in Section 141(1). I find that there is a bald allegation in para 14 of the complaint which is; as follows:.....
"It is submitted tha't accused Nos. 1 to 12 are managing the first accused-company and they are jointly and severally liable for the of fence committed by them."
5. In my view these averments which are vague and bald, cannot be said to have satisfied the requirement of Section 141(1).
It shall be mentioned in the complaint that on the date when the offence was committed, the directors were in charge of and responsible for the conduct of the business of the company. In this context, it shall be appropriate to note Sub-section (1) of Section 141 which is in the following terms:
"Offences by Companies.--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."
6. On a reading of Section 141, it is clear that when the accused-company committed the offence under Section 138, then not only the company, but also every person, at the time when the offence was committed, who was in charge of and responsible for the conduct of the business of the company shall be deemed to be guilty of the offence and liable to be punished.
From this, it is clear that a person other than the company can be proceeded against under this Act only when the person was in charge of and responsible for the conduct of the business of the company.
7. It is true, as pointed out by Mr. Govindaraj, the learned counsel for the respondent, that it is averred in para 14 of the complaint, that accused Nos. 2 to 12 are managing the day-to-day affairs and business of the company and as such, they are jointly and severally liable for the offences committed by them and it would be sufficient to satisfy the basic requirement of Section 141(1).
But in my view, these words would not directly indicate or indirectly reveal that the petitioners who are arrayed as A-9, A-7, A-8 and A-6 were the directors in charge of and responsible for the affairs of the company when the offence was committed:
8. Under those circumstances, when it is clear that the allegation made in the complaint does not, either in express words or with reference to the allegation contained therein, make out a case that at the time of commission of the offence, the petitioners were in charge of and responsible for the conduct of the business of the company, the proceedings are liable to be quashed, in view of the dictum laid down by the Supreme Court in K.P.G. Nair v. Jindal Menthol India Ltd. [2001] 104 Comp. Cas. 290.
9. The learned counsel for the respondent would cite the decisions in Krishna Murari Poddar v. State of Maharashtra [2001] 105 Comp. Cas. 625 and Smt. M. Sivakami v. Bharat Ginning and Oil Mill Factory [2001] 105 Comp. Cas. 925 (Guj.).
Those decisions would not apply to the present facts of the case, as in those cases, there were specific averments in the complaint as against the accused persons as contained in Section 141(1) referred to in those decisions, but in the case on hand, there are no such allegations. Therefore, those decisions would be of no use to the respondent.
10. On the other hand, the decision in K.P. G. Nair's case (supra) rendered by the Supreme Court would squarely apply to the present facts of the case. The relevant portion of the observation made by the Supreme Court is as follows:
"... All the accused persons are also responsible for the dishonourment of the cheques under the Negotiable Instruments Act and all are liable to be punished for the offences committed under Section 138 of the Negotiable Instruments Act. All the accused persons have failed to make the payment of the dishonoured cheques despite the legal notice which was sent by registered post.
From a perusal of the excerpts of the complaint, it is seen that nowhere it is stated that on the date when the offence is alleged to have been committed, the appellant was in charge of or was responsible to the accused-company for the conduct of its business...." (p. 292)
11. The above observation would reveal that the Supreme Court, while quashing the proceedings in so far as one of the directors was concerned, would specifically hold that mere mentioning that all the accused persons are also responsible for the dishonourment of the cheques under the Act and all are liable to be punished for the offences under Section 138 would not suffice to satisfy the requirements of Section 141(1).
Similarly, the words contained in the present plaint that 'accused Nos. 1 to 12 are managing the first accused-company and they are jointly and severally liable for the offence committed by them' would not be held to be sufficient to satisfy the ingredients of Section 141. Furthermore, the petitioners, namely, A-6 to A-9, admittedly, are not the signatories of the cheques in question.
12. Therefore, the proceedings as against these petitioners are liable to be quashed and, accordingly, the same are quashed.
In the result, these petitions are allowed. Consequently, the connected criminal miscellaneous petitions are closed.