Mrs. P. Meena vs Nikon Forex Private Limited

S. Palanivelu, J.—This Criminal Original Petition has been filed u/s 482 Cr.P.C., praying this Court to call for the records in C.C. No. 3511

of 2004 on the file of the learned VII Metropolitan Magistrate, George Town, Chennai and quash the entire proceedings.

The petitioner is the 4th accused in C.C. No. 3511 of 2004 pending on the file of the VII Metropolitan Magistrate, George Town, Chennai,

which was taken up on a private complaint laid by the respondent herein. It is the allegation in the complaint that the first respondent-Company has

issued two cheques on 5.12.2003 each for Rs. 9,66,000/= in its favour. Later, they were dishonoured.

The learned Counsel for the petitioner would submit that the petitioner is in no way connected with the affairs of the first accused business, nor is

she a Director in the said establishment and her arraying as an accused in the above said case is not legally sustainable. In support of his contention,

he draws attention of this Court to the allegations set out in the complaint which goes to the effect that the second accused is monitoring the entire

business of the first accused who is also Managing Director of the first accused and third and fourth accused are the Directors of first accused and

all of them know day to day business affairs and activities of first accused and they shall be deemed to be guilty of the offence and all are liable to

be proceeded and punished under Sections 138 to 142 of the Negotiable Instruments Act. Learned Counsel would further contend that the

petitioner is not at all a Director to the first Accused-Company, which is evident from Form No. 32, registered with the Registrar of Companies

under the Companies Act. He has produced a certified copy of the said Form No. 32 in which it is stated that A.2 and A.3 alone are Directors.

So prima facie it shows that the petitioner is not at all a Director of the first accused-company.

Learned Counsel for the petitioner further submits that in view of the settled principles of law, if any person who is not at all in charge of the

affairs of the company, no criminal liability or vicarious liability could be fastened against the said person and the ingredients in Section 141 of the

Negotiable Instruments Act have to be fulfilled. He further argues that she is not at an authorised signatory, whose signature is not found in the

cheques and hence she is not at all responsible for the claim. In support of his contention, he gathered support from a decision of the Hon''ble

Supreme Court of India, in N.K. Wahi v. Shekhar Singh and Ors. reported in 2007 (2) Supreme, 811, in which Their Lordhips have referred to

an earlier decision of the said court in S.M.S. Pharmaceuticals Ltd. Vs. Neeta Bhalla and Another, and formulated the principles as follows:

In S.M.S. Pharmaceuticals Ltd. Vs. Neeta Bhalla and Another, it was, inter alia, held as follows:

To sum up, there is almost unanimous judicial opinion that necessary averments ought to be contained in a complaint before a person can be

subjected to criminal process. A liability u/s 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 a 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 labile. Section 141 of the Act contain the requirements for making a person liable under

the said provision. That the respondent falls within the parameters of Section 141 has to be spelled out. The 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 u/s 141 of the Act. The averments in the complaint would also serve the

purpose that the person should 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.

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 u/s 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 the question posed in sub-para (b) has to be in the negative. Merely being a director of a company is not sufficient to make the

person liable u/s 141 of the Act. A director in a company cannot be deemed to be a charge of and responsible to the company for the conduct of

its business. The requirement of Section 141 is that the person sought to be made liable shoud 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.

Following the dictum laid down by the Apex Court, wile the facts of the present case are considered, it could very well be held that since the

petitioner is neither a Director, nor a person in-charge of the business of the first accused-company, she could not be held to be responsible for the

cheque amount.

Learned Counsel for the respondent would strenuously contend that before filing of the complaint, statutory notice was issued to all the accused

and the present petitioner received the notices in four addresses where the business activities of the first accused-company are going on and the

receipt of the notice and failure to send any reply to the same itself is enough to hold that she is in charge of the business. In the above

circumstances, by no stretch of imagination it could be stated that she is connected to the business. He further submits that the attitude on the part

of the petitioner would attract the ingredients of Section 141 of the Negotiable Instruments Act. Section 141(a) of the Negotiable Instruments Act

reads thus:

Offences by companies--(a) If the person committing an offence u/s 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.

Based upon the above said provision, he further argued that as mentioned in the provision since she is in charge of the business, she is fully

responsible for the company affairs and conduct of the business. So she shall be deemed to be guilty of the offence.

The contention of the learned Counsel for the respondent could not be countenanced in view of the proposition of law laid down by the Hon''ble

Supreme Court of India. It has been consistently held that if a person is not a Director, nor connected to the affairs of the business, no liability

could be fastened on him. In the legal background of this mater, it has to be necessarily held that the petitioner is not at all liable for the cheque

amount.

In fine, the Criminal original Petition is allowed quashing the proceedings in C.C. No. 3511 of 2004 on the file of the learned VII Metropolitan

Magistrate, George Gown, Chennai, with respect to this petitioner alone.