Bombay High Court
Parag Bhikhalal Tejani vs State Of Maharashtra And Another on 17 June, 2011
Author: B.R.Gavai
Bench: B.R.Gavai
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IN THE HIGH COURT OF JUDICATURE AT BOMBAY.
APPELLATE JURISDICTION.
CRIMINAL WRIT PETITION NO. 1342 OF 2010
WITH
CRIMINAL WRIT PETITION NO. 1343 OF 2010
WITH
CRIMINAL WRIT PETITION NO. 1344 OF 2010
WITH
CRIMINAL WRIT PETITION NO. 1345 OF 2010
WITH
CRIMINAL WRIT PETITION NO. 1346 OF 2010
WITH
CRIMINAL WRIT PETITION NO. 1347 OF 2010
WITH
CRIMINAL WRIT PETITION NO. 1348 OF 2010
Parag Bhikhalal Tejani. ... Petitioner.
V/s.
State of Maharashtra and another. ... Respondents.
WITH
CRIMINAL WRIT PETITION NO. 2033 OF 2010
WITH
CRIMINAL WRIT PETITION NO. 2035 OF 2010
WITH
CRIMINAL WRIT PETITION NO. 2036 OF 2010
WITH
CRIMINAL WRIT PETITION NO. 2037 OF 2010
WITH
CRIMINAL WRIT PETITION NO. 2038 OF 2010
WITH
CRIMINAL WRIT PETITION NO. 2039 OF 2010
WITH
CRIMINAL WRIT PETITION NO. 2040 OF 2010
WITH
CRIMINAL WRIT PETITION NO. 2041 OF 2010
WITH
Mr.Rohit Dave. ... Petitioner.
V/s.
State of Maharashtra and another. ... Respondents.
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S.V.Kotwal with K.S.Vardhan, Sapna Rachure i/b.
T.N.Tripathi & Co. for the petitioners.
Mrs.M.R.Tidke, APP for respondent No.1- State.
Yashpal Thakur i/b. Paras Kuhad for respondent No.2.
CORAM: B.R.GAVAI, J.
DATED : 17th June 2011.
ORAL JUDGMENT :
Rule. Rule is made returnable forthwith.
Heard by consent of parties.
2. The respondent No.2- complainant is common in all these cases. In Writ Petition Nos.1342/2010 to 1348/2010, the complaint has been filed by the complainant for the offence punishable under section 138 of the Negotiable Instruments Act ("N.I.Act" for short) against M/s.Elite International Pvt.Ltd. of which the present petitioner is Director, and as such arrayed as accused in the complaint.
3. In Writ Petition No.2033/2010 with Writ Petition Nos.2035 to 2041/2010 the complaint has been filed by the complainant against M/s.Vedic Cotton Limited. It is the allegation of the complainant that the petitioner herein is a Director of accused No.1. However, it is disputed by the petitioner contending that the petitioner had resigned on 11th September 2008. However, in view of the view that I am taking in the present matter, I do not find it necessary to go into that controversy.
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4. The basic contention of the petitioners is that the petitioners are sought to be implicated in the complaint by invoking provision of vicarious liability under section 141 of the N.I.Act. It is contended that the averments necessary for fastening the petitioners with criminal liability under section 141 as mandated by the Apex Court in various pronouncements have not been made in the complaint and, as such, the complaint is liable to be quashed.
5. Shri igKotwal, learned counsel for the petitioners submits that merely alleging that the Director was in-charge of the affairs of the company at the relevant time is not sufficient enough to fasten a vicarious liability upon a Director of the company unless a specific role of such a Director is placed on record of the complaint. Learned counsel relies on the judgment of the Apex Court in the case of S.M.S.Pharmaceuticals Ltd. v. Neeta Bhalla, 2005 (8) SCC 89 : 2005 AIR 3512 (SC); N.K.Wahi v. Shekhar Singh, (2007) 9 SCC 481; Ramrajsingh v. State of M.P., 2009 (6) SCC 729; and National Small Industries Corpn.Ltd. v. Harmeet Singh Paintal, (2010) 3 SCC 330.
6. Shri Yashpal Thakur, learned counsel appearing on behalf of respondent No.2, on the contrary, submits that the averments necessary to implicate the Director have been made in the complaint. He submits that the learned single Judge of this Court (Kanade, J.) in the case of Mrs.Pooja Ravinder Devidasani v. State of Maharashtra (Criminal Writ Petition No.614/2010 along ::: Downloaded on - 09/06/2013 17:22:00 ::: 4 1342.10-wp--
with other writ petitions decided on 6th October 2010), who was also the Director of M/s.Elite International Pvt.Ltd., has held that the averments made in the complaint were sufficient enough to fasten the liability upon the Director and to proceed further with the case against the said Director under section 138 of the N.I.Act. He submits that the averments made in the present case are identical with the averments in the said cases. He submits that the learned single Judge of this Court while considering all the judgments of the Apex Court, on the issue, has taken the said view and, therefore, on this short ground the present petitions are also liable to be dismissed. Learned counsel also relies on the judgment of the same learned single Judge in the case of Rajiv Banga v. L & T Finance Company Ltd. (Criminal Writ Petition No.1238/2010 decided on 3rd December 2010) and the recent judgment of the Apex Court in the case of Rallys India Ltd. v. Poduru Vidya Bhusan (Criminal Appeal No.924/2011 decided on 13th April 2011). He submits that the Apex Court in the said case has found that the averments like the one, made in the present complaint, were sufficient enough to proceed against the director or the partner of the company, in view of the provisions of section 141 of the N.I.Act. He, therefore, submits that the said judgment, which is the last word of the Apex Court, would bind this Court and, in view of the said judgment, this Court should dismiss the present petitions.
7. Section 141 of the N.I.Act reads thus:
"141. Offences by companies. - (1) If the person committing an offence under ::: Downloaded on - 09/06/2013 17:22:00 ::: 5 1342.10-wp--
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 any 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:
Provided further that where a person is nominated as a Director of a company by virtue of his holding any office or employment in the Central Government or State Government or a financial corporation owned or controlled by the Central government or the State Government, as the case may be, he shall not be liable for prosecution under this Chapter.
(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 o 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 firm, means a partner in the firm."
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8. The Apex Court in the case of S.M.S.Pharmaceuticals Ltd. (supra) had an occasion to consider the scope of section 141. The Apex Court observed thus in paragraph Nos.9 to 14 :
"9. The officers responsible for conducting affairs of companies are generally referred to as Directors, Managers, Secretaries, Managing Directors etc. What is required to be considered is: is it sufficient to simply state in a complaint that a particular person was a Director of the Company at the time the offence was committed and nothing more is required to be said? For this, it may be worthwhile to notice the role of a director in a company. The word 'director' is defined in Section 2(13) of the Companies Act, 1956 as under:
"director" includes any person occupying the position of director, by whatsoever name called";
10. There is a whole chapter in the Companies Act on Directors, which is Chapter 11. Sections 291 to 293 refer to powers of Board of Directors. A perusal of these provisions shows that what a Board of Directors is empowered to do in relation to a particular company depends upon the role of functions assigned to Directors as per the Memorandum and Articles of Association of the company. There is nothing which suggests that simply by being a Director in a Company, one is supposed to discharge particular functions on behalf of a company. It happens that a person may be a Director in a company but he may not know anything about day-to-day functioning of the company. As a Director he may be attending meetings of the Board of Directors of the company where usually they decide policy matters and guide the course of business of a company. It may be that a board of Directors may appoint sub-
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committees consisting of one or two Directors out of the Board of the company who may be made responsible for day-to-day function of the Company. These are matters which form part of resolutions of Board of Directors of a Company. Nothing is oral. What emerges from this is that the role of a Director in a company is a question of fact depending on the peculiar facts in each case. There is no universal rule that a Director of a company is in charge of its everyday affairs. We have discussed about the position of a Director in a company in order to illustrate the point that there is no magic as such in a particular word, be it Director, Manager or Secretary. It all depends upon respective roles assigned to the offices in a company. A company may have Managers or Secretaries for different departments, which means, it may have more than one Manager or Secretary. These officers may also be authorized to issue cheques under their signatures with respect to affairs of their respective departments. Will it be possible to prosecute a Secretary of Department-B regarding a cheque issued by the Secretary of Department-A which is dishonoured? The Secretary of Department- B may not be knowing anything about issuance of the cheque in question. Therefore, mere use of a particular designation of an officer without more, may not be enough by way of an averment in a complaint. When the requirement in Section 141, which extends the liability to officers of a company, is that such a person should be in charge of and responsible to the company for conduct of business of the company, how can a person be subjected to liability of criminal prosecution without it being averred in the complaint that he satisfies those requirements? Not every person connected with a Company is made liable under Section 141. Liability is cast on persons who may have something to do with the transaction complained of. A persons who is in charge of and responsible for ::: Downloaded on - 09/06/2013 17:22:00 ::: 8 1342.10-wp--
conduct of business of a Company would naturally know why the cheque in question was issued and why it got dishonoured.
11. The position of a Managing Director or a Joint Managing Director in a company may be different. These persons, as the designation of their office suggests, are in charge of a company and are responsible for the conduct of the business of the company. In order to escape liability such persons may have to bring their case within the proviso to Section 141(1), that is, they will have to prove that when the offence was committed they had no knowledge of the offence or that they exercised all due diligence to prevent the commission of the offence.
12. While analysing Section 141 of the Act, it will be seen that it operates in cases where an offence under Section 138 is committed by a company. The key words which occur in the Section are "every person". These are general words and take every person connected with a company within their sweep. Therefore, these words have been rightly qualified by use of the words "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 s the company, shall be deemed to be guilty of the offence etc." What is required is that the persons who are sought to be made criminally liable under Section 141 should be at the time the offence was committed, in charge of and responsible to the company for the conduct of the business of the company. Every person connected with the company shall not fall within the ambit of the provision. It is only those persons who were in charge of and responsible for conduct of business of the company at the time of commission of an offence, who will be liable for criminal action. It follows from this that if a Director of a Company who was not in charge of and was not responsible for the ::: Downloaded on - 09/06/2013 17:22:00 ::: 9 1342.10-wp--
conduct of the business of the company at the relevant time, will not be liable under the provision. The liability arises from being in charge of and responsible for conduct of business of the company at the relevant time when the offence was committed and not on the basis of merely holding a designation of office in a company. Conversely, a person not holding any office or designation in a Company may be liable if he satisfies the main requirement of being in charge of and responsible for conduct of business of a Company at the relevant time. Liability depends on the role one plays in the affairs of a Company and not on designation or status. If being a Director or Manager or Secretary was enough to cast criminal liability, the Section would have said so. Instead of "every person" the section 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 connected with the commission of a crime at the relevant time have been subjected to action.
13. A reference to sub-section (2) of Section 141 fortifies the above reasoning because sub-section (2) envisages direct involvement of any Director, Manager, Secretary or other officer of a company in commission of an offence. This section operates when in a trial it is proved that the offence has been committed with the consent or connivance or is attributable to neglect on the part of any of the holders of these offices in a company. In such a case, such persons are to be held liable. Provision has been made for Director, Managers, Secretaries and other officers of a company to cover them in cases of their proved involvement.
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14. The conclusion is inevitable that the liability arises on account of conduct, act or omission on the part of a person and not merely on account of holding an office or a position in a company.
Therefore, in order to bring a case within Section 141 of the Act the complaint must disclose the necessary fact which make a person liable.
9. After considering various earlier judgments, the Apex Court observed thus in paragraph Nos.19 and 20 :
19. To sum up, there is almost unanimous judicial opinion that necessary averments ought to be contained in a complaint before a persons 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 departure from the rule in criminal law against vicarious liability. A clear case should be spelled 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 respondent falls within parameters of Section 141 has to be spelled out. A complaint has to be examined by the Magistrate in the first instance on the basis of averments contained therein. If the Magistrate is satisfied that there are averments which bring the case within Section 141 he would issue the process. We have seen that merely being described as a Director in a company is not sufficient to satisfy the requirement of Section 141. Even a non director can be liable under Section 141 of the Act. The averments in the complaint would also serve the purpose that the person sought ::: Downloaded on - 09/06/2013 17:22:00 ::: 11 1342.10-wp--
to be made liable would know what is the case which is alleged against him. This will enable him to meet the case at the trial.
20. In view of the above discussion, our answers to the questions posed in the Reference are as under:
(a) It is necessary to specifically aver in a complaint under Section 141 that at the time the offence was committed, the person accused was in charge of, and responsible for the conduct of business of the company.
This averment is an essential requirement of Section 141 and has to be made in a complaint. Without this averment being made in a complaint, the requirements of Section 141 cannot be said to be satisfied.
(b) The answer to question posed in sub-para (b) has to be in negative.
Merely being a Director of a company is not sufficient to make the person liable under Section 141 of the Act. A Director in a company cannot be deemed to be in charge of and responsible to the company for conduct of its business. The requirement of Section 141 is that the person sought to be made liable should be in charge of and responsible for the conduct of the business of the company at the relevant time. This has to be averred as a fact as there is no deemed liability of a Director in such cases.
(c) The answer to question (c) has to be in affirmative. The question notes that the Managing Director or Joint Managing Director would be admittedly in charge of the company and responsible to the company for conduct of its business. When that is so, holders of such positions in a company become liable under Section 141 of the Act. By virtue of the office they hold ::: Downloaded on - 09/06/2013 17:22:00 ::: 12 1342.10-wp--
as Managing Director or Joint Managing Director, these persons are in charge of and responsible for the conduct of business of the company. Therefore, they get covered under Section 141. So far as signatory of a cheque which is dishonoured is concerned, he is clearly responsible for the incriminating act and will be covered under sub-section (2) of Section 141.
10. It can, thus, clearly be seen that the Apex Court has clearly distinguished the cases of Managing Director and Joint Managing Director on one hand and the other Directors on the other hand. It has been held that the Managing Director or the Joint Managing Director since are the persons in charge of the business of the company they get covered under section 141. By virtue of their designation or the office, they are in charge of and responsible for the conduct of the business of the company. It has been held that in order to escape liability such persons will have to prove that when the offence was committed they had no knowledge of the said offence. However, so far as other Directors are concerned, the Apex Court found that there is no universal rule that a Director of a company is in charge of its everyday affairs. It has been held that it all depends upon the role assigned to such a Director. It has been further held by the Apex Court that every person connected with the company cannot be made liable under section 141. The liability can be fastened only on such persons who have something to do with the transactions complained of. It has clearly been held by the Apex Court that in order to bring the case within the ambit of section 141 of the N.I.Act the ::: Downloaded on - 09/06/2013 17:22:00 ::: 13 1342.10-wp--
complaint must disclose the necessary facts which make the person liable.
11. The Apex Court in the case of N.K.Wahi v.
Shekhar Singh (supra) also had an occasion to consider the said issue. In the said case also, the High Court had held that there was no clear averment or evidence to show that the respondents therein were in charge of or responsible to the conduct of business of the company and, as such, the proceedings were quashed. An appeal was carried to the Apex Court and in the said appeal, the Apex Court observed thus :
"8. To launch a prosecution, therefore, against the alleged Directors there must be a specific allegation in the complaint as to the part played by them in the transaction. There should be clear and unambiguous allegation as to how the Directors are in-charge and responsible for the conduct of the business of the company. The description should be clear. It is true that precise words from the provisions of the Act need not be reproduced and the court can always come to a conclusion in facts of each case.
But still, in the absence of any averment or specific evidence the net result would be that complaint would not be entertainable.
(emphasis supplied)
12. It can, thus, clearly be seen that the Apex Court in unequivocal terms has held that to launch a prosecution against the alleged Director there must be a specific allegation in the complaint as to the part played by him in the transaction. It has been held that ::: Downloaded on - 09/06/2013 17:22:00 ::: 14 1342.10-wp--
there should be clear and unambiguous allegation as to how the Director is in charge and responsible for the conduct of the business of the company. It has been held that the description must be clear.
13. A Bench of three Hon'ble Judges of the Apex Court in the case of Ramrajsingh v. State of M.P. (supra) had an occasion to consider these two judgments and the bench of three Hon'ble Judges of the Apex Court reaffirmed the view taken by the earlier two benches in the cases of S.M.S.Pharmaceuticals Ltd. v. Neeta Bhalla, and N.K.Wahi ig v. Shekhar Singh (cited supra) .
14. In the recent judgment in the case of National Small Industries Corpn.Ltd. (supra), the Apex Court had reconsidered the issue and observed thus in paragraphs 10 and 11 :
13. Section 141 is a penal provision creating vicarious liability, and which, as per settled law, must be strictly construed. It is therefore, not sufficient to make a bald cursory statement in a complaint that the Director (arrayed as an accused) is in charge of and responsible to the company for the conduct of the business of the company without anything more as to the role of the Director. But the complaint should spell out as to how and in what manner Respondent No.1 was in-
charge of or was responsible to the accused company for the conduct of its business. This is in consonance with strict interpretation of penal statutes, especially, where such statutes create vicarious liability.
14. A company may have a number of Directors and to make any or all the Directors as accused in a complaint merely ::: Downloaded on - 09/06/2013 17:22:00 ::: 15 1342.10-wp--
on the basis of a statement that they are in-charge of and responsible for the conduct of the business of the company without anything more is not a sufficient or adequate fulfillment of the requirements under Section 141.
15) In a catena of decisions, this Court has held that for making Directors liable for the offences committed by the company under Section 141 of the Act, there must be specific averments against the Directors, showing as to how and in what manner the Directors were responsible for the conduct of the business of the company.
ig (emphasis supplied)
15. The Apex Court, after considering the relevant provisions of the Companies Act, observed thus in paragraphs-36 and 37 :
"36. Section 291 of the Companies Act provides that "291. General powers of Board.-
(1) 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 authorized to exercise and do."
A company, though a legal entity, can act only through its Board of Directors. The settled position is that a Managing Director is prima facie in-charge of and responsible for the company's business and affairs and can be prosecuted for offences by the company. But insofar as other Directors are concerned, they can be prosecuted only if they were in-charge of and responsible for the conduct of the business of the company.
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37. A combined reading of Sections 5 and 291 of Companies Act, 1956 with the definitions in clauses (24), (26), (30), (31) and (45) of Section 2 of that Act would show that the following persons are considered to be the persons who are responsible to the company for the conduct of the business of the company:
(a) the Managing Director(s);
(b) the whole-time Director(s);
(c) the Manager;
(d) the Secretary;
(e) any person in accordance with whose directions or instructions the Board of Directors of the company is accustomed to act;
(f) any person charged by the Board of Directors with the responsibility of complying with that provision;
Provided that the person so charged has given his consent in this behalf to the Board;
(g) where any company does not have any of the officers specified in Clauses
(a) to (c) , any Director or Directors who may be specified by the Board in this behalf or where no Director is so specified, all the Directors:
Provided that where the Board exercises any power under Clause (f) or Clause (g), it shall, within thirty days of the exercise of such powers, file with the Registrar a return in the prescribed form."
The Apex Court in the said case, in paragraph- 39 has laid down following principles :
"(i) The primary responsibility is on the complainant to make specific averments as are required under the law in the complaint so as to make the ::: Downloaded on - 09/06/2013 17:22:00 ::: 17 1342.10-wp--
accused vicariously liable. For fastening the criminal liability, there is no presumption that every Director knows about the transaction.
(ii) Section 141 does not make all the Directors liable for the offence. The criminal liability can be fastened only on those who, at the time of the commission of the offence, were in charge of and were responsible for the conduct of the business of the company.
(iii) Vicarious liability can be inferred against a company registered or incorporated under the Companies Act, 1956 only if the requisite statements, which are required to be averred in the complaint/petition, are made so as to make the accused therein vicariously liable for offence committed by the company along with averments in the petition containing that the accused were in charge of and responsible for the business of the company and by virtue of their position they are liable to be proceeded with.
(iv) Vicarious liability on the part of a person must be pleaded and proved and not inferred.
(v) If the accused is a Managing Director or a Joint Managing Director then it is not necessary to make specific averment in the complaint and by virtue of their position they are liable to be proceeded with.
(vi) If the accused is a Director or an officer of a company who signed the cheques on behalf of the company then also it is not necessary to make specific averment in the complaint.
(vii) The person sought to be made liable should be in charge of and responsible for the conduct of the business of the company at the relevant ::: Downloaded on - 09/06/2013 17:22:00 ::: 18 1342.10-wp--
time. This has to be averred as a fact as there is no deemed liability of a Director in such cases.
16. It can, thus, be seen that in the said case also the Apex Court has held that in so far as Managing Director and Joint Managing Director or a Director or a Officer who is signatory to the cheque is concerned, it is not necessary to make a specific averment. However, in so far as other persons are concerned, it has been held that such a person can be liable, if he is in charge of andig responsible for the conduct of the business of the company at the relevant time. It has been further held that this has to be averred as a fact as there is no deemed liability of a Director in such cases.
17. The perusal of paragraph-13 of the said judgment in National Small Industries Corpn.Ltd. (supra) would reveal that it has been, in clear terms, spelled out that a bald cursory statement in a complaint that the Director is in charge of an responsible to the company for the conduct of the business of the company without anything more as to the role of the Director is not sufficient enough. It has been further held that the complaint should spell out as to how and in what manner the person who is sought to be fastened with the liability, was in charge of or was responsible to the accused company for the conduct of its business. It has been held that this is in consonance with strict interpretation of penal statutes, especially, where such statues create vicarious liability.
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18. To find out as to what were the averments in the case of National Small Industries Corpn.Ltd. (supra) so as to bring the Directors within the ambit of section 141, it will be necessary to refer to paragraph-5 of the said judgment which reads thus:
5. It is the claim of the appellant that so as to make the Managing Director and the Director of the Company liable to be prosecuted under the provisions of the Act, they had specifically averred in the complaint that all the accused persons approached it for financing of bill integrated market support programme. It was also stated that the accused ig persons had issued cheques which were dishonoured on presentation against which the appellant had filed criminal complaints under the provisions of the Act against all the respondents herein. It is their further case that all the accused persons accepted their liability and delivered various cheques, which are the subject matter of the present appeals.
It can, thus, be seen that in the said case also in addition to the averment that the Directors were in charge and responsible to the affairs of the company it was also averred that all the accused persons approached the complainant for financing of bill integrated market programme. At this stage it will be appropriate to refer to paragraphs- 1, 2 and 4 of the complaint in question which read as under:
1. I say that the accused No.2 to 5, on behalf of accused No.1 have approached us with request for trade finance facility and accordingly the said facility has been granted by us to the accused as per their request and requirement.::: Downloaded on - 09/06/2013 17:22:00 :::
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2. That in discharge of said liability towards repayment of the abovesaid trade finance facility due and payable to us accused had issued us the following cheques:
..... ..... .....
3. ..... ..... .....
4. I say that Accused No.1 is
private limited company of which accused No.2, 3 and 5 are directors and accused No.4 is the director & authorised signatory of accused No.1 M/s.Elite International Pvt.Ltd.-Imprest. At all material time relevant and relating to the complaint Accused No.2 to 5 were and are in charge of and responsible for the conduct of business of Accused No.1 and are also looking after the day to day affairs of Accused No.1. It is further submitted that Accused No.2 to 5 with Accused No.1 are liable to be prosecuted and / or connived in the commission of the present offence, in their capacity as a Directors/signatory of the said private limited company.
It can, thus, be seen that like the averments in the case of National Small Industries Corpn.Ltd. (supra) in the present cases also there is averment that accused Nos.2 to 5 on behalf of accused No.1 have approached the complainant with a request for trade finance facility and, accordingly, the said facility was granted by the complainant. A general averment that all the accused Nos.2 to 5 were in charge of and responsible for the conduct of the business of accused No.1 and that they were looking after the day to day affairs of the Company has been made in the complaint. However, no specific role has been attributed to the Directors as to ::: Downloaded on - 09/06/2013 17:22:00 ::: 21 1342.10-wp--
what part they take in day to day management of the company and as to how they were personally involved in the transactions in question. I find that the averments in the present case and in the case of National Small Industries Corpn.Ltd. (supra) are almost similar.
19. The learned counsel for respondent No.2 has relied on the judgment of the learned single Judge in the case of Mrs.Pooja Ravinder Devidasani (supra) who is also a co-accused in the complaint filed against M/s.Elite International Pvt.Ltd. No doubt, that the learned single Judge in the said case has held that the averments made in the complaint were sufficient enough to satisfy requirement of section 141 of the N.I.Act.
From the judgment of the learned single Judge in the case of Mrs.Pooja Ravinder Devidasani (supra), it would reveal that though the learned single Judge has referred to the judgments of the Apex Court in the case S.M.S.Pharmaceuticals Ltd. and National Small Industries Corpn.Ltd. (supra), it appears that paragraphs-5, 10 and 11 were not brought to the notice of the learned single Judge. At the cost of repetition it can be seen that the averments so as to fasten the liability on the Directors in the case of National Small Industries Corpn.Ltd. and in the present case are almost similar. In my considered view, the view taken by the learned single Judge is not in consonance with the view taken by the Apex Court in the cases of S.M.S.Pharmaceuticals Ltd.; N.K.Wahi; Ramrajsingh; and National Small Industries Corpn.Ltd. (cited supra). For the same reason I am unable to agree with the view taken by learned single Judge in the case of Rajiv Banga (supra).
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20. In so far as the judgment of the Apex Court in the case of Rallys India Ltd. (supra) is concerned, it can be seen that in the said case the accused was a partnership firm and not a company. The Apex Court in the cases of S.M.S.Pharmaceuticals Ltd. and National Small Industries Corpn.Ltd. (supra), in detail, after considering the provisions of the Companies Act has discussed as to what would be the requirement in law to fasten the liability on the Director of the company which is a juristic person.
ig In that view of the matter, in my view, the said judgment would not be applicable to the facts of the present case. In any way, the view of the Apex Court in the case of S.M.S.Pharmaceuticals Ltd. and National Small Industries Corpn.Ltd. (supra) has been reaffirmed by the bench of the Apex Court having strength of three Hon'ble Judges in the case of Ramrajsingh (supra). Firstly, I do not see any conflict in the judgments of the Apex Court in the cases of S.M.S.Pharmaceuticals Ltd.; National Small Industries Corpn.Ltd.; N.K.Wahi; and Ramrajsingh on one hand and the judgment of the Apex Court in the case of Rallys India Ltd. on the other hand. In any case, since the judgment in Rallys India Ltd. is of two judges bench whereas judgment in Ramrajsingh is of the bench having strength of three judges, the judgment rendered by the larger bench will have to be followed by this Court.
21. At this stage, it is made clear that the present petitions are only at the behest of the Directors of the company and not at the behest of the Company, Managing Director, Joint Managing Director or ::: Downloaded on - 09/06/2013 17:22:00 ::: 23 1342.10-wp--
the signatory of the cheque. In that view of the matter, I find that all these petitions deserve to be allowed. Rule in all these petitions is, therefore, made absolute in terms of prayer clause (a).
22. Needless to mention that the proceedings in so far as other accused are concerned, the same shall proceed in accordance with law.
(B.R.GAVAI, J.) ::: Downloaded on - 09/06/2013 17:22:00 :::