Saroj Jain vs Mahaveer Medicare Kamala Keshava

K.N. Phaneendra, J.—In all the Criminal Petitions, the petitioners'' counsel present and submitted the arguments. The respondent served and un-represented.

It is seen from the records that in all the above said three cases, M/s. Mahaveer Medicare, the respondent herein has filed Private Complaints u/s. 200 of Cr. P.C. read with Section 142 of the Negotiable Instruments Act, making allegations that the first accused is a private limited company and the petitioners are the Directors of the first accused Company. It is contended that during the course of business transaction between first accused Company and the complainant, some cheques have been issued on behalf of the company signed by A2 and those cheques, on presentation to the Bank by the complainant came to be dishonoured and after issuance of notice and after complying the requirements u/s. 138 of the Negotiable Instruments Act, he has filed Private Complaints before the Trial Court.

The legal question that is raised by the learned counsel for the petitioners is that though the petitioners herein are the Directors, they are ladies and they never participated in the day to day affairs of the first accused company and they never became in-charge of any administration and management of the first accused Company. The learned counsel for the petitioners also relied upon an un-reported Order of this court passed in Crl. P. No. 1184/2009 dated 4.4.2013 between Mrs. Stella Faria Vs. P.V. Alexander, wherein this court has categorically held that-

"The petitioners was not the signatory to the cheque, nor was she an active Director engaged in the affairs of the Company at the time when the cheque was issued. It is further observed that it is necessary for the complainant to plead the essential facts as to how the petitioner is managing the affairs of the said Company or participating in the day today affairs of the Company. As there were no materials found, the court relied upon the decision of the Hon''ble Apex Court in National Small Industries Corp. Ltd. Vs. Harmeet Singh Paintal and Another, for quashing the said proceedings against the other Directors, but ordered to continue the proceedings against the Managing Director."

Similar was the view taken up by this Court in Crl. P. N. 3499/2006 dated 7.10.2009 between Dilip M. Yusuf Khan Vs. Kirloskar Investment and Finance Ltd.,

In this regard, I would like to refer Section 141 of the Negotiable Instruments Act, which reads thus-

"141. 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 Stated 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."

On plain reading of the above said provision of law, it clearly discloses that the complainant has specifically pleaded as to what is the conduct and business of the Company and how the Directors are responsible to the conduct and business of the Company, then only the proceedings can be continued against the Directors. Merely using of the words that they are also responsible to the conduct and business of the Company is not sufficient, but it should be very specifically spelt out as to what exactly the role of the Director in the day today affairs of the business of the Company. Even u/s. 141(2) of Negotiable Instruments Act, if it is shown to the court that the other Directors are also with the consent or connivance, have committed the offences and there was any negligence attributable to the Director, Manager, Secretary, then such a person is also liable.

Coming back to the averments made in the Complaint, as I have narrated, at paragraph 1 of the complaint, it is simply taken out the words from Section 141 and stated that A2 to A5 are the directors of the first accused Company and in that capacity they are in-charge and responsible for the day to day administration and management of the first accused Company. It is only stated that in the capacity of Directors, they are in-charge and responsible for the day to day administration of the Company, but it is not specifically spelt out as to what exactly the role of A4 and A5 who are the petitioners herein and how exactly they were indulged in the business and day today affairs of the Company. In the absence of such elucidation of factual matrix of the Company in the complaint averments, in my opinion, the complaint cannot be proceeded against whom no specific allegations have been made. Hence, the proceedings so far as these petitioners who are arrayed as A4 and A5 are concerned, are liable to be quashed.

Accordingly, the petitions are allowed. Consequently, the proceedings in CC Nos. 30764/11, 30765/11 and 30766/11 pending on the file of the XV Addl. C.M.M., Bangalore, are hereby quashed so far it relates to petitioners are concerned.