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Judgment
The present petition under Section 482 of CrPC has been filed for quashment of the order dated 03/05/2016, by which cognizance has been taken by
the Court below, as well as the order dated 18/05/2016, by which the trial Magistrate has issued summons against the applicants.
The Office has pointed out that the respondents No. 2 and 3 have not been served.
It is submitted by the counsel for the applicants that the respondents No.2 and 3 are not the necessary party and by mistake, they were made
respondents because they are the co-accused persons along with the present applicant in the criminal complaint filed by the respondent No.1 under
Section 138 of the Negotiable Instruments Act (in short ''NI Act'').
Since the respondents No. 2 and 3 are the co-accused persons, therefore, it is not essential to hear them. Accordingly, the non-service on the
respondents no. 2 and 3 is ignored.
The necessary facts for the disposal of the present petition in short are that the respondent No.1 has filed a criminal complaint under Section 138 of
the NI Act against the applicants as well as the respondents No.2 and 3. By referring to the complaint filed by the respondent No.1, it is submitted by
the counsel for the applicants that except mentioning that the applicants are the ''Karta Dharta'' and authorized signatories of the respondent No.2, no
other allegation has been made against the applicants to the effect that they are the persons, who are responsible for the day-to-day business of the
respondent No.1. By referring to the judgments of Supreme Court in the cases of K. K. Ahuja vs. V. K. Vora & Another reported in (2009) 10 SCC
48, Sabitha Ramamurthy & Another vs. R.B.S. Channabasavaradhya reported in (2006) 10 SCC 581, Jugesh Sehgal vs. Shamsher Singh Gogi,
reported in (2009) 14 SCC 683 and the judgment passed by the Supreme issued the cheque on behalf of the Company. It is further submitted that
without verifying that whether the applicants are the Directors or are having some say in the matter of the Company, the trial Court has taken
cognizance of the complaint under Section 138 of the NI Act in a mechanical manner and, therefore, the orders under challenge i.e. dated 3/5/2016
and 18/05/2016 passed by Additional Chief Judicial Magistrate, Indore are liable to be set aside. It is further submitted that the applicants have placed
the copy of the Memorandum of Association of M/s. Mayuri Herbal Care Private Limited on record and from the said Court in the case of Ajay
Agrawal vs. M/s. Integrated Memorandum of Association, it is clear that the applicants are not Directors of M/s.Mayuri Herbal Care Private Limited.
Considered the submissions made by the counsel for the applicants.
The complainant/ respondent No.1 in its complaint has mentioned as under:-
''1-  ;g fd] vkjksih Øekad 1 izk;osV fyfeVsM dEiuh gksdj] vkjksih Øekad 2] 3 ,oa 4 dEiuh ds drkZ/krkZ o vf/kÃ'r
gLrk{kjdrkZ gSA 2 -;g fd] vkjksihx.k ds }kjk ifjoknh nSfud HkkLdj dks foKkiu izdk'ku ds Hkqxrku isVs dEiuh ds [kkrsÂ
;wdks cSad U;w iykfl;k bUnkSj 'kk[kk dk pSd Øeakd 521355 fnukad 17-07-2015 :i;sÂ10 ,53,500/- ¼v{kjh ,d yk[k frj;klh
gtkj nks lkS l=g :i;s½ dk gLrk{kj;qDr bl fo'okl ,oa vk'oklu ds lkFk iznku fd;k x;k fd lnj pSd dk Hkqxrku ifjoknh dks izkIr gks tkosxkA ''
Thus, it is clear that the complainant has mentioned that the applicants and other co-accused persons are ''Karta Dharta'' of the Company and they
are authorized signatories and they had given the cheque in question to the complainant/respondent No.1 with an assurance and belief that such
cheque would get encashed. Thus, the basic allegations in the complaint which have been made by the respondent No.1/complainant against the
applicants are that they are the ''Karta Dharta'' of the Company and the cheque was also given by them with an assurance and belief that the said
cheque would be encashed by the Bank, however, the cheque was returned on the ground of ''insufficient funds''.
The question for consideration is that whether the averments made in the complaint that the applicants are ''Karta Dharta'' and authorized signatories
of the Company, is sufficient to make them vicariously liable for offence under Section 138 of the NI Act or not ? The said question is no more res
integra.
Section 141 of Negotiable Instruments Act, 1881 reads as under :
Offences by companies.â€"(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:
2“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.â€
(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.â€"For the purposes of this section,â€
(a) “company†means any body corporate and includes a firm or other association of individuals; and
(b) “directorâ€, in relation to a firm, means a partner in the firm.''
From plain reading of the aforesaid provision, it is clear that where the offence has been committed by a Company, then not only the Company, but
every person who is in charge of or responsible for the day-to-day business of the Company at the time of commission of offence, shall be vicariously
liable. Thus, Section 141 creates vicarious/constructive liability on the person responsible for the business of the Company. However, in view of the
judgment passed by the Supreme Court in the case of S.M.S. Pharmaceuticals Ltd. vs. Neeta Bhalla and another, reported in (2005) 8 SCC 89, it is
essential for the complainant to allege in the complaint that the persons who have been arrayed as accused, are responsible for the day-to-day
business of the Company. Thus, the complainant is under obligation to allege in the complaint that the persons who had been arrayed as accused, are
responsible for the day-to-day business of the Company.
Whether there is any specific allegation that the persons who have been arrayed as accused, are the persons in charge of the day-to-day business of
the Company and whether the same is sufficient to make out a prima facie offence against the applicants or not, is the moot question for
consideration.
The Supreme Court in the case of Standard Chartered Bank vs. State of Maharashtra and others reported in (2016) 6 SCC 62 has held as under
:
''31. Now, is the time to scan the complaint. Mr Divan, learned Senior Counsel appearing for the appellant Bank, has drawn our attention to Paras 2, 4
and 10 of the complaint petition. They read as follows:
“2. I further say that I know the accused abovenamed. Accused 1 is a company incorporated under the Companies Act, 1956 having its registered
address as mentioned in the cause-title. Accused 2 to 7 are the Chairman, Managing Director, Executive Director and whole-time Director and
authorised signatories of Accused 1, respectively. As such being the Chairman, Managing Director, Executive Director and whole-time Director were
and are the persons responsible and in charge of day-to-day business of Accused 1 viz. when the offence was committed. Accused 6 and 7 being
signatories of the cheque are aware of the transaction and therefore Accused 2 to 7 are liable to be prosecuted jointly or severally for having
consented and/or connived in the commission of present offence in their capacity as the Chairman, Managing Director, Executive Director, whole-
time Director and authorised signatories of Accused 1, further the offence is attributable to Accused 2 to 7 on account of their neglect to ensure and
make adequate arrangements to honour the cheque issued by Accused 1 and further on account of the neglect of Accused 1 to 7 to comply with the
requisition made in the demand notice issued under the provisions of Section 138( c) of the Negotiable Instruments Act within the stipulated period.
The accused are therefore liable to be proceeded.
* * *
I say that Accused 1 through Accused 2 and 3 approached the complainant Bank at its branch situated at Mumbai for a short-term loan facility for
a sum of Rs 200 crores to meet the expenditure of four ORV vessels being built at ABG Shipyard. After verifying the documents submitted the
complainant Bank vide its sanction letter dated 28-4-2012 sanctioned the said facility for the purpose mentioned therein. The said terms and conditions
mentioned in the sanction letter dated 28-4-2012 were duly accepted by Accused 1 by signing the same. Accused 1 also agreed to pay interest at the
negotiated rate by the complainant Bank. Hereto annexed the marked as
Ext. ‘B’ is a copy of the said sanction letter dated 28-4-2012.
* * *
I say that Accused 1 to 7 were aware that the aforesaid cheque would be dishonoured for being “account blocked†and all the accused, in
active connivance mischievously and intentionally issued the aforesaid cheques in favour of the complainant Bank.â€
The aforesaid averments, as we find, clearly meet the requisite test. It is apt to mention here that there are seven accused persons. Accused 1 is
the Company, Accused 2 and 3 are the Chairman and Managing Director respectively and Accused 6 and 7 were signatory to the cheques. As far as
Accused 4 and 5 were concerned, they were whole-time Directors and the assertion is that they were in charge of day-to-day business of the
Company and all of them had with active connivance, mischievously and intentionally issued the cheques in question.''
In the said case, the averments made against the persons who were arrayed as accused were that the said persons are the Managing Director,
Executive Director and Whole-time Director, and were responsible and in charge of day-to-day business of accused Company when the offence was
committed.
Although in the present case, the words used ''Karta Dharta'' in paragraph 1 of complaint cannot be said to be happily-worded complaint but if the
meaning of words ''Karta Dharta'' is considered, then it would mean that the applicants along with other co-accused persons are managing the day-to-
day business of the Company, as general meaning of ''Karta Dharta'' is the person who is enjoying all the powers. Whether the allegations that the
persons, who have been arrayed as accused in a complaint under Section 138 of the NI Act, are really responsible for the day-to-day business of the
Company or not, cannot be adjudicated by the Trial Court at the time of taking cognizance. The basic averment is necessary and there is no reason to
disbelieve the basic averment to the effect that the persons who have been arrayed as accused, are responsible/ in charge of the day-to-day business
of the Company. Whether a person is responsible for the day-to-day business of the Company or not, is a disputed question, which has to be decided
by the trial Court only after considering the evidence led by the parties in this regard.
It is submitted by the counsel for the applicants that in the case of Ajay Agrawal (supra), the Supreme Court has quashed the proceedings against the
appellant therein on the ground that he had already submitted his resignation prior to issuance of the cheque in question and the said aspect of
resignation was already communicated to the Registrar of Companies much prior to presentation of the cheque. In the present case, the applicant has
relied upon the Memorandum of Association to show that the applicants are not the Directors of the Company. Whether the list of Directors in the
Memorandum of Association relied upon by the applicants was in existence when the cheque was issued or there was any modification or alteration in
the list of Directors, whether the applicants were in charge/ responsible for the day-to-day business of the Company or not, whether the applicants
were the authorized signatories of the Company or not, and whether the applicants are vicariously liable for the cheque issued on behalf of the
Company or not, are some of the questions which can be decided only after recording of the evidence.
Under these circumstances, this Court is of the considered opinion that the trial Court after considering the allegations made against the applicants in
paragraphs 1 and 2 of the complaint, did not commit any mistake in taking cognizance against the applicants and issuing summons to the applicants.
Accordingly, the order dated 03/05/2016 and the order dated 18/05/2016 passed by Additional Chief Judicial Magistrate, Indore in Criminal Case
No.13659/2016 are hereby affirmed.
This petition fails and is hereby dismissed.