B. Kanakamma Kunjamma vs State of Kerala

K. Ramakrishnan, J.—This is an application filed by the present 4th accused in C.C. No. 219/2013 on the file of the Judicial First Class Magistrate Court -I. Mavelikkara to quash the proceedings as against her under Section 482 of the Code of Criminal Procedure.

It is alleged in the petition that the second respondent herein filed a private complaint against the petitioner and four others alleging offence under Section 138 of the Negotiable Instruments Act (hereinafter referred to as ''the Act''). The allegation in the complaint was that accused Nos. 2 and 4 as Directors of the first accused company issued the disputed cheque for Rs. 2 lakhs in favour of the second respondent, which on presentation dishonoured and in spite of notice issued, the amount was not paid and thereby all of them, who according to the complainant are the Directors of the first accused company, have committed the above said offence. After enquiry, the learned Magistrate originally took the case on file as C.C. No. 142/2010 under Section 138 of the Act against five accused persons including the present petitioner. But it is seen from Annexure A2 judgment that except the original 4th accused, non entered appearance in that case and after considering the materials available on record, the learned Magistrate by Annexure A2 judgment acquitted the original 4th accused in the complaint alleging that there is no material produced by the complainant to show that he is having any control over the management of the first accused company in the day to day administration as required under Section 141 of the Act and acquitted him under Section 255(1) of the Code of Criminal Procedure. Thereafter the case against the other accused persons including the present petitioner was split up and re-filed as C.C. No. 219/2013. It is alleged in the petition that there is no allegation against the present petitioner also in that complaint. So she is also entitled to get the same benefit. She has also submitted that she had not received any notice in the case. Since there is no allegation in the complaint regarding her, no purpose will be served by allowing the case to continue. So, she has no other remedy except to approach this Court seeking the following relief:

"For these and other grounds to be urged at the time of hearing, this Hon''ble Court be pleased to quash all further proceedings in Annexure 1 and C.C. No. 219/2013 on the file of Judicial First Class Magistrate-I, Mavelikkara."

Though notice was issued to the second respondent and it was served on him, he remained absent.

Heard the counsel for the petitioner and the learned Public Prosecutor, who is appearing for the first respondent.

The counsel for the petitioner submitted that nowhere in the complaint, any allegation has been made that the petitioner has got any role in the day to day affairs of the first accused company or she had any role in the issuance of cheque as well. So under the circumstances, the Magistrate should not have taken cognizance of the case as against the petitioner and the complaint is liable to be quashed as against the petitioner.

Annexure A1 is the complaint filed by the second respondent herein against five accused persons namely first accused company and others were shown as Directors of the company alleging that they have committed the offence punishable under Section 138 of the Act. In paragraphs 1 to 3 of the complaint, it was only mentioned that accused 2 and 4 were managing the affairs of the first accused company and it was they who had issued the disputed cheque. Except in the cause title, nowhere in the complaint it was mentioned regarding the status of the petitioner in the first accused company and her role in the transaction between the first accused company and the complainant and in the issuance of the cheque.

Section 141 of the Act deals with offences committed by the company, which reads as follows:

Offences by companies:--(1) if the person committing an offence under 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 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 association of individuals; and

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

In order to make the Director of the company liable for the offence under Section 138 of the Act, it must be pleaded and proved by the complainant that the said Director is also responsible for the day today management of the company and if he was not the Director engaged in the day today affairs of the company, then it must be alleged and proved that the cheque was issued with his knowledge and connivance. Further in the decision reported in Central Bank of India Vs. Asian Global Ltd. and Others, the Hon''ble Supreme Court has held that in order to make Director of the company liable under this Act, it must be alleged and proved in the complaint that he was the person responsible for the day to day administration of the company and if he is only shown as even director that is not sufficient to rope him in the case to make him liable for the offence under Section 138 of the Act.

In this case also, there is no allegation in the complaint regarding the role played by the present petitioner in the transaction and her capacity in the company in running the business of the company as well. So, under the circumstances, there is some force in the submission made by the counsel for the petitioner that in the absence of any allegation that the petitioner is the Director who has a role in the day today administration of the company and issued the cheque in that capacity, it cannot be said that the petitioner had committed the offence punishable under Section 138 of the Act, merely on the ground that the cheque was issued by the company through some of the Directors, who were responsible for the day today administration of the company and the complaint as against the petitioner is not maintainable and the same is liable to be quashed invoking the power under Section 482 of the Code of Criminal Procedure. So, the petition is allowed and further proceedings in C.C. No. 219/2013-on the file of the Judicial First Class Magistrate Court-I, Mavelikkara as against the petitioner is quashed.

Office is directed to communicate this order to concerned court immediately.

The interim order granted by this Court as per the order in Crl.M.A. No. 1961/2013 extended from time to time is hereby vacated and Crl.M.A. No. 6182/2013 is dismissed.