Ravindranath Umakant Malekar and Another vs Continental Device India Ltd. and Another

Sabina, J.—This petition has been filed u/s 482 of the Code of Criminal Procedure, 1973 for quashing of complaint No. 10847 dated 7.7.2012 (Annexure P-7) u/s 138 of the Negotiable Instruments Act, 1881 (for short- " the Act") as well as summoning order dated 9.7.2012 (Annexure P-8), and all the subsequent proceedings arising therefrom. Learned counsel for the petitioners has submitted that eight complaints had been filed by the complainant with regard to dishonor of different cheques against the petitioners and others. Three complaints were dismissed by the trial Court qua the petitioners. However, in the present complaint, the petitioners had been ordered to be summoned to face the trial along with their co-accused. Admittedly, the petitioners were the directors of the company but there was no averment in the complaint that they were responsible for day to day conduct of the business of the company. The cheques in question had not been issued by the petitioners. In these circumstances, the complaint qua the petitioners was liable to be dismissed. Learned counsel has further submitted that in a similar complaint, this Court vide order dated 8.2.2013 in CRM-M No. 20236 of 2012 had quashed the complaint qua the petitioners. In support of his arguments, learned counsel has placed reliance on S.M.S. Pharmaceuticals Ltd. Vs. Neeta Bhalla and Another, , wherein, it was held as under:-

To sum up, there is almost unanimous judicial opinion that necessary averments ought to be contained in a complaint before a persons 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 liable. Section 141 of the Act contains the requirements for making a person liable under the said provision. That respondent falls within parameters of Section 141 has to be spelled out. A 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 sought 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 question posed in sub-para (b) has to be in 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 in charge of and responsible to the company for conduct of its business. The requirement of Section 141 is that the person sought to be made liable should 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. (c) The answer to question (c) has to be in affirmative. The question notes that the Managing Director or Joint Managing Director would be admittedly in charge of the company and responsible to the company for conduct of its business. When that is so, holders of such positions in a company become liable u/s 141 of the Act. By virtue of the office they hold as Managing Director or Joint Managing Director, these persons are in charge of and responsible for the conduct of business of the company. Therefore, they get covered u/s 141. So far as signatory of a cheque which is dishonoured is concerned, he is clearly responsible for the incriminating act and will be covered under sub-section (2) of Section 141.

Learned counsel for the respondents, on the other hand, has opposed the petition but has failed to controvert the fact that order dated 27.4.2012 (Annexure P-9) had gained finality and has admitted the factum of quashing of the similar complaint by this Court in CRM-M No. 20236 of 2012.

In the present case, admittedly, the petitioners are the directors of the company. It is also admitted that eight complaints were filed against the company with regard to dishonor of cheques in question. Three complaints were dismissed qua the present petitioners. The said order has been placed on record as Annexure P-9. A perusal of the same reveals that the complaint against the present petitioners was dismissed, whereas, the other accused were ordered to be summoned to face the trial as accused. The said order has not been challenged by the respondents and has, thus, gained finality. Admittedly, the petitioners had not signed the cheques in question. A perusal of the complaint (Annexure P-7) reveals that the same was filed by the respondents against the petitioners and others with regard to dishonor of cheques in question. A perusal of the complaint further reveals that the company had placed the various orders in the name of complainant No. 2. The entire proceedings on behalf of the company were carried out by accused Ashutosh Humnabadkar. The cheques in question were issued by the authorised signatories of the company i.e. accused Ashutosh Humnabadkar and Chandrashekhar Raje. From the complaint, it is evident that accused Ashutosh Humnabadkar and Chandrashekhar Raje were dealing with the complainant. Apparently, due to this reason, three similar complaints filed by the complainant qua the petitioners were dismissed. In the complaint, no specific averment has been made with regard to conduct of business carried out by the petitioners vis-�-vis the complainant. Vide order dated 8.2.2013, similar complaint was quashed by this Court in CRM-M No. 20236 of 2012 qua the petitioners. In these circumstances, the petitioners cannot be subjected to criminal process. Accordingly, the present petition is allowed. Summoning order dated 9.7.2012 (Annexure P-8), qua the petitioners, is quashed. Consequently, criminal complaint No. 10847 dated 7.7.2012 (Annexure P-7) u/s 138 of the Act, qua the petitioners, is deemed to have been dismissed.