Amrit Rani vs Malhotra Industrial Corporation

G.S. Chahal, J.—Smt. Amrit Rani has come up with the criminal miscellaneous u/s 482 Code of Criminal Procedure for quashing of the complaint, Annexure P1 and the summoning order, Annexure P2.

The impugned complaint has been filed by respondent firm for an offence u/s 138 Negotiable Instruments Act, as amended by the Banking Public Financial Institutions and Negotiable Instruments Laws (Amendment) Act, 1981, on the allegations that firm M/s. Ambey Enterprises, Mandi Gobindgarh, District Patiala, accused, constituted by its partners, Ashok Kumar and Smt. Amrit Rani, had business dealings with the respondent-firm. A sum of Rs. 2,52,097.85 paise was due to the respondent-firm with respect to the iron goods purchased by the accused firm. Details thereof are given in Paragraph 2 of the impugned complaint. A cheque dated 28.12.1990 was issued by the firm for a sum of Rs. 1,15,332.60 paise as part payment towards the amount due. It was presented twice, but was returned with the remarks "Refer to drawer". After receiving intimation of dishonour dated 2.1.1991, a notice was issued making a demand for payment within 15 days. The accused firm avoided service of notice and the same was received back on 11.1.1991. The complaint was, thus, instituted on 31.1.1991.

The petitioner claims that she was a "Parda Nashin Lady" and was a sleeping partner in the respondent firm. She was not incharge or responsible for the conduct of the affairs of the firm. No notice had been issued to her.

With respect of the offence against a Company, Section 141 of the Act provides as under:

Offences by companies:

(1) If the person committing an offence u/s 138 is a company, every person, who, at the time the offence was committed, was incharge 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.

(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 to be proceeded against and punished accordingly.

Explanation: For the purposes of this Section

(a) "Company" means anybody corporate and includes a firm or other associations of individuals; and

(b) "Director", in relation to a firm, means a partner in the firm.

A similar provision is contained in Section 278B of the Income Tax Act and in the two judgments referred to as Puran Devi and Ors. v. ZS. Klar, Income Tax Officer 1988 ITO (P&H) 608 and Bansal Tool Co. and Ors. v. Income Tax Officer, District II(I) Patiala (1987) ITR 2, this provision has been interpreted that only the person who is incharge of the affairs or responsible to the company for the conduct of the business of that company and the company are liable for the offence.

In Ess Bee Food Specialities and Ors. v. Kapur Brothers and Ors. 1991 PAP 203, relying on these authorities, this Bench held that to make person liable, it has to be shown that he was incharge or responsible to the company for the conduct of the affairs of the company or liable to the company.

In the impugned complaint, as well as in the evidence produced before the summoning, there is no allegations that Smt. Amrit Rani was incharge of the affairs of the firm or liable to the firm for its affairs as such, there was no material before the learned Magistrate to summon her u/s 138-B of the Negotiable Instruments Act. The impugned summoning order is hereby quashed.

This order will, however, not stand in the way of the learned Magistrate of the resummon Smt. Amrit Rani under the provisions of Section 319 Code of Criminal Procedure If evidence comes on the record about her being incharge of the affairs of the firm or being liable for its business.