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1 - 10 of 21 (0.30 seconds)Section 138 in The Negotiable Instruments Act, 1881 [Entire Act]
The Companies Act, 1956
The Negotiable Instruments Act, 1881
Paresh P.Rajda vs State Of Maharashtra & Anr on 16 May, 2008
In Paresh P. Rajda v. State of Maharashtra and anr.[21], similar
question arose before a two-Judge Bench of this Court. The High Court had
refused to quash the complaint on the ground that an overall reading of the
complaint showed that specific allegations had been levelled against the
appellant that he being a responsible officer of the company was equally
liable and that if it is ultimately found that he had, in fact, no role to
play, he would be entitled to an acquittal. It appears that thereafter
accused 2 and 4, the Chairman and a Director respectively of the company
approached this Court. This Court referred to SMS Pharma-(1) and N.
Rangachari and noted a slight departure in N. Rangachari in favour of the
complainant from the view taken in SMS Pharma-(1) and further noted that
ultimately the entire matter would boil down to an examination of the
nature of averments made in the complaint. The two-Judge Bench quoted the
relevant paragraphs of the complaint in which it was stated that accused 2
was the Chairman of the company and was responsible for the day-to-day
affairs of the company and was, therefore, liable to repay the amounts of
dishonoured cheques. It was further stated in the complaint that accused 3
being Joint Managing Director and accused 4, 5 and 6 being Directors of the
company are responsible officers of the company and, therefore, they are
liable to repay the amounts of the dishonoured cheques. This Court
observed that from the High Court judgment, it appears that the question as
to whether accused 2 was responsible for the business of the company had
not been seriously challenged. This Court observed that there were clear
allegations against both the appellants-accused; that they were officers of
the company and were responsible for the affairs of the company and that at
a stage where the trial had not yet started, it is inappropriate to quash
the proceedings against them.
Section 5 in The Companies Act, 1956 [Entire Act]
S.M.S. Pharmaceuticals Ltd vs Neeta Bhalla And Anr on 20 September, 2005
15. The reference having been answered in SMS Pharma-(1) individual cases
were directed to be listed before an appropriate Bench for disposal
according to law. Pursuant to this order the appeal was placed before a
two-Judge Bench of this Court. The two-Judge Bench of this Court in SMS
Pharmaceuticals Ltd. (2) v. Neeta Bhalla[16] (“SMS Pharma-(2)”) noted
that the High Court had quashed the complaint against respondent 1 holding
that the allegations contained in the complaint as against respondent are
vague and indefinite. The two-Judge Bench observed that on a plain reading
of the averments made in the complaint it was satisfied that the statutory
requirements as contemplated under Section 141 of the NI Act were not
satisfied, and, therefore, the High Court judgment cannot be faulted. It
must be noted that when the attention of this Court was drawn to
observations made in Saroj Kumar Poddar that the complaint must not only
contain averments justifying the requirements of Section 141 of the NI Act
but must also show as to how and in what manner the appellant therein was
responsible for the conduct of the business of the company or otherwise
responsible to it in regard to its functioning, this Court observed that a
plain reading of the said judgment would show that no such general law was
laid down therein and the observations were made in the context of the said
case as it was dealing with the contention that although no direct averment
was made as against the appellant therein fulfilling the requirements of
Section 141 of the NI Act, but, there were other averments which would show
that the appellant therein was liable therefor.
National Small Industries Corp.Ltd vs Harmeet Singh Paintal & Anr on 15 February, 2010
In this connection, reliance is placed on National Small
Industries Corporation Limited v. Harmeet Singh Paintal and anr.[11],
Anita Malhotra v. Apparel Export Promotion Council and anr.[12], N.K.
Wahi v. Shekhar Singh and ors.[13]. These conditions are intended to
ensure that a person who is sought to be made vicariously liable for an
offence of which the principle accused is the Company, had a role to play
in relation to the incriminating act and further that such a person should
know what is attributed to him to make him liable.
K.K. Ahuja vs V.K. Vora & Anr on 6 July, 2009
In the present case, the
appellant has pleaded that “the accused 2, 3, 4 and 5 are the directors of
accused 1 and were at the time when the offence committed in charge of and
were responsible for the conduct and day to day business of the said
accused-company”.” The High Court on a complete misconstruction of legal
position enunciated by this Court in various judgments, quashed the
complaint on the ground that “nothing has been stated as to what part was
played by the Directors petitioners and how they were responsible regarding
the finances of the company, issuance of cheques and control over the funds
of the company.” In this connection, it is necessary to turn to K.K. Ahuja
v. V.K. Arora and anr.[1] where this Court has referred to relevant
provisions of the Companies Act and observed that in case of a Director,
Secretary or Manager [as defined in Section 2(24) of the Companies Act], or
a person referred to in Clauses (e) and (f) of Section 5 of the Companies
Act, an averment in the complaint that he was in charge of and was
responsible to the company, for the conduct of the business of the company
is necessary to bring the case under Section 141(1) of the NI Act and no
further averment would be necessary in the complaint though some
particulars would be desirable.
N.K. Wahi vs Shekhar Singh And Ors on 9 March, 2007
d) The appellants’ plea of Indoor Management is totally misconceived.
This doctrine is limited to protecting outsiders regarding internal
infirmities of Memorandum of Articles. Its real application in a cheques
bouncing case would have been if a plea was taken that the company never
had a power to incur debt and hence there is no legal liability. This
doctrine cannot be invoked to give a carte blanche to an outsider to list
all Directors for prosecution without even giving their “role” or “part
played”. In this connection, reliance is placed on MRF Limited etc. v.
Manohar Parrikar and ors. etc.[14]. The judgment of Delhi High Court in
Shree Raj Travels & Tours is in teeth of the law laid down by this Court
and, hence, does not appear to be correct. Moreover, in commercial world,
whether a person deals with a company at the company’s office or enters
into a commercial transaction by e-mail, in both cases, there is an
awareness of the persons responsible for the act of giving a cheques,
without the intention of honouring it. There is, therefore, complete non-
applicability of the doctrine of Indoor Management in such cases.