Madras High Court
D.Sendilkumar vs M.Sadasivam on 19 March, 2008
Author: P.R.Shivakumar
Bench: P.R.Shivakumar
IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED: 19.03.2008 C O R A M THE HONOURABLE MR.JUSTICE P.R.SHIVAKUMAR Crl.O.P.No.28121 of 2006 and M.P.Nos.1 and 2 of 2006 D.Sendilkumar . . Petitioner Vs. M.Sadasivam . . Respondent The Criminal Original Petition is filed to call for the records and quash the proceedings in C.C.No.151 of 2006 pending on the file of the learned Judicial Magistrate, Rasipuram. For Petitioner : Mr.R.John Sathyan For Respondent : No appearance O R D E R
There is no representation for the Respondent. Hence, upon hearing the arguments advanced by the learned counsel for the Petitioner and after perusing the materials available on record the following order is hereby passed.
2. The 3rd accused in a case instituted on private complaint for an offence punishable under Section 138 read with Section 141 of the Negotiable Instruments Act by the respondent herein/complainant, has come forward with this petition under Section 482 of Criminal Procedure Code for quashing the complaint in so far as it relates to the present petitioner. The respondent herein is the complainant in C.C.No.151 of 2006, now pending on the file of learned Judicial Magistrate, Rasipuram.
3. The averments made in the said complaint in brief are as follows:
The respondent / complainant is a partner of S.A.Manicka Mudaliar & Sons, a partnership firm engaged in the manufacture of high quality fabrics. The first accused is a private company limited, doing the business of exporting textiles to various countries. The other two accused are the directors of the first accused company. In connection with the business dealings the first accused company did have with the partnership firm of which the complainant is a partner, some amount was due from the first accused company. For the discharge of such liability, the accused persons issued a cheque drawn on Punjab National Bank, K.K.Nagar Branch, for a sum of Rs.2,00,000/-. The said cheque bearing no.646113 dated 28.12.2005 was returned unpaid when the same was presented for collection on 18.03.2006. The reason cited by the banker for the dishonour was that the amount exceeded the arrangement made between the Account holder and the banker. The Memo intimating the dishonour of the cheque was received by the respondent/complainant on 20.03.2006. A notice in writing demanding payment of the amount covered by the cheque was issued on 10.04.2006. The notice sent to the address of the company was returned with the endorsement 'gone out'. The notices sent to the directors, namely, the 2nd and 3rd accused were received respectively on 12.04.2006 and 15.04.2006. As they failed to comply with the demand made therein, the respondent/complainant was constrained to institute criminal proceedings following the private complaint procedure.
4. After recording the sworn statement of the complainant, the complaint was taken on file as C.C.No.151 of 2006 and summons were issued against all the three accused. Out of the three persons arrayed as accused 1 to 3 in the said case, the third accused alone has come forward with this petition seeking an order quashing the complaint so far as the petitioner is concerned. The two grounds on which the petitioner seeks the above said relief are :
(a) Necessary averment for prosecuting a director of the company in accordance with the deeming provision found in Section 141 of the Negotiable Instruments Act, has not been made in the complaint;
(b) Long prior to the date of issue of the cheque in question, the petitioner had resigned his directorship in the first accused company, the same was accepted and on intimation to the Registrar of Companies, the same was placed on record.
5. The learned counsel for the petitioner contends that when an offence punishable under Section 138 is alleged to be committed by a company, then as per Section 141 of the Negotiable Instruments Act, a director of such company shall be deemed to be guilty of such offence, provided 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 such director. It is the further contention of the learned counsel for the petitioner that the deeming provision against the director shall not be enough to render the director liable for punishment unless specific averments are made in the complaint to the effect that such a director was in charge of and was responsible to the company for the conduct of its business.
6. According to the submission made by the learned counsel for the petitioner, unless necessary averments to the effect that the director concerned was in-charge of and responsible for the conduct of the management or business of the company are made in the complaint, the director cannot be made to undergo the ordeal of facing a trial and in such cases, the High Court can exercise its power under Section 482 of Criminal Procedure Code to quash the proceedings as against the said director.
7. In support of the above contention, the learned counsel for the petitioner relied on several judgements of the Apex Court as well as this Court. It is unnecessary to refer to all those judgements in this case, as by now, it is well settled that unless necessary averments are made in the complaint bringing the case against the particular accused within the ambit of Section 141, the prosecution launched against him on the mere ground that he happens to be a director of the company for the offence committed by such company under Section 138 of the Negotiable Instruments Act, cannot be sustained. This has been held so by the Hon'ble Apex court in S.M.S.Pharmaceuticals Limited v. Neeta Bhalla reported in 2005 SCC (Crl) 1983. The same has been followed in several cases by the Apex Court as well as the High Courts. Of course, in N.Raghavachari v. Bharat Sanchar Nigam Limited, reported in 2007 (3) CTC, 495, the Hon'ble Apex Court, while approving the law laid down in S.M.S.Pharmaceuticals Limited v. Neeta Bhalla, has made a further observation that the minute details of participation of a director in the management or business of the company, need not be pleaded in the complaint. It was observed therein that it would be sufficient for the complainant to state that the accused was a director as on the date on which the cause of action arose and he was actually taking part in the management and was responsible for the management or business of the company. The Hon'ble Apex Court has also observed that when such an averment is made in the complaint, it is for the director, who is being prosecuted, to come forward with the plea of defence and prove that he was not directly involved in the management or responsible for the business of the company. The said observation shall not be applicable to the case on hand for the simple reason that there is not even an averment in the complaint that the petitioner was either actually taking part in the management of the company or was responsible directly for the business of the company. This court also perused the contents of the complaint and upon such a perusal, is satisfied with the substance in the above said submission made by the learned counsel for the Petitioner. Therefore, on the said ground alone, the complaint against the petitioner herein/ 3rd accused in C.C.No.151 of 2006 on the file of the Judicial Magistrate, Rasipuram is liable to be quashed.
11. The Petitioner / 3rd accused has raised another ground in support of his prayer for quashing the complaint against him. According to him, though he was a director of the first accused company prior to 20.09.2004, he resigned from the directorship, the resignation was accepted and the same was intimated to the Registrar of Companies under Form 32. The petitioner has also obtained a certified extract from the Registrar of Companies and produced it in support of his contention that the complaint cannot be maintained in view of the fact that he ceased to be a director of the first accused company. In this regard, the learned counsel for the petitioner relied on the judgement of the Hon'ble Apex Court in State of Orissa v. Debendra Nath Padhi, reported in 2005 SCC Crl.415. Of course it has been held that any document which unequivocally prove that the accused was not a director of the company as on the date on which the cause of action arose can be looked into by the court, even while dealing with a petition under Section 482 of Criminal Procedure Code for quashing the complaint. But, the document produced by the petitioner in this case was obtained on 24.01.2005. The earliest date on which the cause of action arose was on 28.12.2005. The document produced by the petitioner shows that he resigned as a director of the company in 2004 and he was not again inducted as a director till 24.01.2005. The same is not enough to make an inference that he could not have become a director subsequently before the date of issue of cheque. The view expressed by the Supreme Court in the above said case cited by the petitioner is that a document which clinchingly proves that the accused was not a director as the date on which the cause of action arose alone could be relied on for quashing the complaint. The present document produced by the petitioner herein does not satisfy the above said requirement of clinchingly proving the case of the petitioner. Therefore, the challenge made to the complaint based on the above said ground is bound to fail.
12. However, this Court has already taken a view that the complaint cannot be maintained in view of the fact that necessary averments to bring the case against the petitioner herein within the ambit of Section 141 sub clause (1) has not been made in the complaint in C.C.No.151/2006 in so far as it relates to the petitioner, has got to be quashed. Ultimately, the Petition succeeds on the first ground alone and not on the second ground. Accordingly, the Criminal Original Petition is allowed and the criminal proceedings in C.C.No.151/2006 pending on the file of Judicial Magistrate, Rasipuram, in so far as the petitioner / 3rd accused is concerned is hereby quashed. Consequently, the connected miscellaneous petitions are closed.
asr To
1. The Judicial Magistrate, Rasipuram