Adaikkamai vs K.A.R. Leathers Private Limited

G. Rajasuria, J.—These petitions have been filed to call for the records relating to C.C. Nos. 151, 152 and 153 of 2006 on the file of the

learned Judicial Magistrate No. III, Dindigul and quash the same.

Heard both sides.

Since common question of law is involved in these matters, they have been taken together for disposal.

The background facts absolutely necessary and germane for the disposal of these petitions would run thus:

C.C. Nos. 151, 152 and 153 of 2006 on the file of the learned Judicial Magistrate No. III, Dindigul, emerged out of three complaints filed by the

respondent herein, for the offence punishable u/s 138 of the Negotiable Instruments Act.

The nitty-gritty and the quintessence of the grievance of the petitioner in all the three petitions is to the effect that in the complaints, it is nowhere

found specified that the petitioner was in charge of and was responsible for the conduct of the business of the organisation within the meaning of

Section 141(1) of the Negotiable Instruments Act.

Heard both sides.

The learned Counsel for the petitioner would cite the following decisions:

(i) M. Senthil Kumar v. Delta Carriers reported in 2007 1 L.W. (Cri.) 332.

(ii) Monaben Ketanbhai Shah and Another Vs. State of Gujarat and Others, .

(iii) S.N. Bangur and Ors. v. Klen and Marshalls Mfrs.

The quintessence of the aforesaid decisions is to the effect that for the purpose of fastening one of the partners of the offending company or

partnership, that particular partner should be portrayed and parodied, described and detailed as also a partner who at the relevant time of arising

of the cause of action, was in-charge of the business of the company.

In fact, the dictum of the Honourable Apex Court in Sabitha Ramamurthy and Anr. v. R.B.S. Channabasavaradhya reported in (2007) 1 SCC

(Cri) 621, could fruitfully be cited. An excerpt from it, would run thus:

A bare perusal of the complaint petitions demonstrates that the statutory requirements contained in Section 141 of the Negotiable Instruments

Act had not been complied with. It may be true that it is not necessary for the complainant to specifically reproduce the wrodings of the section but

what is required is a clear statement of fact so as to enable the court to arrive at a prima facie opinion that the accused are vicariously liable.

Section 141 raises a legal fiction. By reason of the said provision, a person although is not personally liable for commission of such an offence

would be vicariously liable therefor. Such vicarious liability can be inferred so far as a company registered or incorporated under the Companies

Act, 1956 is concerned only if the requisite statements, which are required to be averred in the complaint petitione, are made so as to make the

accused therein can be made vicariously liable, strict compliance with the statutory requirements would be insisted. Not only the averments made in

para 7 of the complaint petitions do not meet the said statutory requirements, the sworn statement of the witness made by the son of the

respondent herein, does not contain any statement that the appellants were in charge of the business of the Company. In a case where the Court is

required to issue summons which would put the accused to some sort of harassment, the Court should insist strict compliance with the statutory

requirements. In terms of Section 200 of the Code of Criminal Procedure, the complainant is bound to make statements on oath as to how the

offence has been committed and how the accused persons are responsible therefor. In the event, ultimately, the prosecution is found to be frivolous

or otherwise mala fide, the Court may direct registration of case against the complainant for mala fide prosecution of the accused. The accused

would also be entitled to file a suit for damages. The relevant provisions of the Code of Criminal Procedure are required to be construed from the

aforementioned point of view.

The aforesaid excerpt would warrant the Court to look for such averment to the effect that the petitioner herein was in-charge of and was

responsible for the conduct of the business of the organisation. But, a close perusal of all the three complaints would clearly show that absolutely

there is no averment to that effect. Even though, the general averments in those complaints in C.C. Nos. 151, 152 and 153 of 2006 respectively

would run thus:

In C.C. No. 151 of 2006:

The 3rd and 4th accused as Partners of the No. 1 and No. 2 above mentioned accused company had purchased E.I.Tanned Goat Skins....

In C.C. No. 152 of 2006:

The 3rd and 4th accused as Partners of the No. 1 and No. 2 above mentioned accused company had purchased E.I.Tanned Goat Skins ''GS''....

In C.C. No. 153 of 2006:

The 3rd and 4th accused as Partners of the No. 1 and No. 2 above mentioned accused company had purchased E.I.Tanned Goat Skins ''GS''....

The question arises whether such averments extracted supra in those complaints alone would be sufficient to fasten her with criminal liability

and whether with those averments, the trial could be allowed to be proceeded against the petitioner.

The learned Counsel for the petitioner would submit that in the wake of those decisions, there is no point in allowing the case to proceed as

against her.

However, the learned Counsel for the respondent would cite the following decisions:

(i) D. Philomina Vs. P. Velusamy, .

(ii) Rangachari, N. v. Bharat Sanchar Nigam Ltd. reported in 2007 (3) CTC 495.

Among those decisions, the learned Counsel for the respondent would focus his contention on the decision in D. Philomina Vs. P. Velusamy, .

An excerpt from it, would run thus:

The above referred to decision squarely applies to the facts of this case. Normally, in the complaint filed against the company and its directors u/s

138 and 141 of Negotiable Instruments Act, there should be a specific pleading that the directors of the company were in charge of the affairs of

the company or its management, maintain and responsible for the conduct of the business of the company. There may be several directors in a

company. The complainant who has lent money and supplied goods cannot know what is the role played by the different directors in the company.

It is also impossible for the complainant to verify the activities of each director in the management and responsibility in the conduct of the business

of the company and on whose behalf the cheque is issued. The complainant may not be in a position to fish out information from the officers of the

company and nevertheless from the directors themselves. Therefore, it may be practically impossible for the complainant to describe the

responsibility of each director of the company in the complaint itself. Who are all the directors of the company, the role played by them in the

affairs of the company or the management of the company and in the conduct of the company can be established only at the time of trial. As far as

this case is concerned, a specific notice has been issued to all the directors including this petitioner. This petitioner has not sent a reply stating that

she is only sleeping director or dormant director and not in charge of management, control or conduct of the business or having any responsibility in

the management and administration of the company. On the other hand, the reply has been sent by all the directors through their counsel admitting

their liability and promising to settle the same within a reasonable time. After sending such a reply notice, it is unfair on the part of the petitioner

now to turn around and say that she is not responsible for the affairs, administration and management of the company.

No doubt, this particular decision would contemplate that while replying, the accused concerned should have taken pre-caution to raise the

plea that he or she was not at all responsible for the conduct of business and was not in charge of it etc., in the event of he having failed to do so, it

would be too late on the part of the accused to invoke the jurisdiction of the High Court u/s 482 Cr.P.C., to get the complaints quashed as against

him or her.

The decision of the Honourable Madras High Court in D. Philomina Vs. P. Velusamy, is relating to the case wherein the petitioner/accused

therein, sought for deletion from the criminal case, was served with individual notice, but she had not taken the plea that she was not responsible

for the conduct of the business, but on behalf of all Directors, a common reply notice was given. Here, in this case, personally the petitioner was

not served with notice, but the petitioner''s husband A.3 in the case, received it and gave a reply and furthermore, the High Court in that particular

case, at paragraph No. 4 of its judgment, clearly stated that the learned Magistrate was satisfied that there were specific allegation in the complaint

that the Directors were in-charge of the day-to-day affairs of the Company and managed the business of the company. But, here, there is no such

averment in the complaint. Accordingly, the aforesaid decision relied on by the learned Counsel for the respondent cannot be pressed into service

as against the decisions cited by the learned Counsel for the petitioner.

The decision of the Honourable Apex Court in N. Rangachari Vs. Bharat Sanchar Nigam Ltd., , in no way comes to the rescue of the

respondent herein, for the reason that the said judgment highlights the proposition that there should be averments conveying the idea that the

Director concerned was responsible for the conduct of the partnership firm, but here, it is not so.

However, to the risk of repetition, without being tautologous, I once again refer to the said decision in Sabitha Ramamurthy and Anr. v. R.B.S.

Channabasavaradhya reported in (2007) 1 SCC (Cri) 621, which clearly explains that the complainant should point out that the particular

Director/accused, if it is a Company, was in-charge of the business of the Company. The dictum of the Honourable Apex Court observation made

mutatis mutandis relating to the company is also applicable to the partnership. In Crl. O.P. No. 670 of 2007, it is also pointed out that even pre-

litigation notice was received only by the husband of the petitioner herein and not by herself and that also would add strength to the plea of the

petitioner.

Considering the facts and circumstances of the case, I would like to quash the complaints in C.C. Nos. 151, 152 and 153 of 2006 on the file

of the learned Judicial Magistrate No. III, Dindigul, a as against the petitioner herein. Accordingly, the criminal proceedings as against the petitioner

herein, in C.C. Nos. 151, 152 and 153 of 2006 on the file of the learned Judicial Magistrate No. III, Dindigul, are quashed and in respect of

others, the criminal prosecution shall proceed in accordance with law.

At this juncture, the learned Counsel for the petitioner made an extemporary submission that already the complaints are pending for pretty long

time and he would pray for fixing a time limit for disposal. There is considerable force in the submission made by the learned Counsel for the

petitioner and hence, both sides are directed to co-operate with the Court for speedy disposal of the case and the learned Magistrate shall do well

to see that he disposes the matter within a period of two months from the date of receipt of a copy of this order as per law. Accordingly, these

Criminal Original Petitions are disposed of. Consequently, connected M.P.(MD) Nos. 1 of 2007 in Crl. O.P (MD). No. 827 of 2007, M.P. (MD)

Nos. 2 and 3 of 2007 in Crl. O.P. (MD) No. 670 of 2007 and M.P (MD) No. 1 of 2007 in Crl.O.P (MD). No. 824 of 2007, are closed.