S.C. Gupta vs M/s. Elin Electronics Ltd. and Others

Dr. S. Muralidhar, J.—This is an application u/s 482 of the Code of Criminal Procedure, 1973 (''Cr. PC'') by one of the persons who has been arrayed as an accused in Criminal Complaint No. 1009/1 filed by Respondent No. 1 M/s Elin Electronics Ltd under Sections 138/141 of the Negotiable ? Instruments Act 1881 (''Act''), against M/s Bush India Limited and Others. The averment in the complaint is that between 1st March, 1994 and 13th July, 1994, 38 cheques totaling Rs. 23,68,367.58 drawn on Hongkong and Shanghai Bank Corporation Limited, New Delhi on behalf of M/s. Bush India Limited in favour of the complainant when presented stood dishonored with the remark "Insufficient Funds". Accordingly the aforementioned complaint was filed by Respondent against M/s. Bush India Limited and nine other individuals including the petitioner. The specific averments in the complaint as regards these individuals read as under:

That the accused no. 1 is a company, registered under the provisions of the Companies Act. The No. 2 to 10 are the persons who, at the time the offence was committed, were in charge of and responsible to, for the conduct of business of accused no. 1 and as such are deemed to be guilty of the offence committed, and are liable to be proceeded against and punished, as per the provisions of Section 141 of the Negotiable Instrument Act, 1881 (as amended upto date). Further the accused No. 2 to 10 are the Directors and other officers of accused No. 1, and the accused No. 1 is being managed and controlled by them. The offence has been committed with the consent, connivance, attribution and neglect of accused No. 2 to 10, therefore, these accused are otherwise also liable to be proceeded against and punished along with accused No. 1.

On the basis of the above order, the learned Metropolitan Magistrate (MM) passed an order dated 4th December, 2004 summoning the accused. The petitioner filed an application for recall which of the said order which was dismissed by the learned MM on the ground of non-maintainability. The application for discharge filed subsequently by the petitioner here also stood dismissed on 19th May, 2005 by the learned MM.

Thereafter on 2nd February, 2006 the present application was filed seeking the quashing of the complaint in so far as it concerns the petitioner. Notice of this petition was issued to the respondent by an order dated 24th March, 2006. Despite several adjournments since then no reply has been filed by the respondent No. 1 complainant till date. Learned Counsel for the respondent No. 1 stated that he was prepared to argue the matter without filing a reply. In any event, as already noticed, numerous opportunities have already been given to the respondent No. 1 which have not been availed by it.

The case of the petitioner is that he is not the Executive Director of M/s Bush India Limited as has been described in the complaint. He has enclosed a document which goes to show that upon an inspection of the record of the Registrar of Companies it has been found that petitioner was not, at any point in time, a Director of M/s. Bush India Limited. It is submitted that the cheques in question were issued from the Office of Bush India Limited in Bombay whereas the petitioner was based since 1983 in Delhi. Further it is stated that the petitioner has never been in charge of and/or responsible to M/s Bush India Limited for the conduct of its business, he has never been in the management and/or in control of the affairs of the company. It is stated that nowhere in the complaint has any specific allegation been made against the petitioner. Even otherwise, on a bare reading of the complaint no offence under Sections 138/141 of the Act can be said to be made out against the petitioner.

Learned counsel for the Respondent No. 1 complainant, on the other hand, refers to the averments in an earlier application filed by the petitioner before the learned MM on 4th August, 1999 seeking revocation of the summoning order. In particular, he refers to paragraph 4 therein which reads as under:

That it is humbly submitted that the applicant tendered his resignation on 1st March, 1993 which was duly accepted by the Managing Director and accordingly the applicant was relieved from the services of the company from 30th April, 1993. Copy of the letter written by Sh. J.R. Mulchandani, Director accepting the resignation and relieving the applicant from the services of the company is enclosed herewith. In fact, he ceased to be in the service w.e.f. 30/4/1993.

According to learned Counsel for respondent No. 1 this application was rejected by the learned MM on 4th December, 2004 which order became final.

Counsel for the Respondent No. 1 then refers to the following averments made by the petitioner in a subsequent application dated 3rd May, 2005 filed before the learned MM seeking discharge:

That the applicant was never involved in the business between Elin Electronics Ltd. and Bush India Limited. Elin Business with Bush India Ltd. from Bombay for supply of components for manufacture of tape-recorders, and at Delhi where applicant/accused was posted had no role to play in business between Elin and Bush India Ltd. (except may be role of courier), since sometimes Bush India Ltd. Bombay office sent cheques for Elin to Delhi officer for delivering to Elin in Delhi.

That it is humbly submitted that the applicant has tendered his resignation on 1.3.1993 which was duly accepted by the Managing Director and accordingly the applicant was relieved from the services of the company from 30.4.1993. Copy of the letter written by Sh. J.R. Moolchandani, Director accepting the resignation and relieving from the services of the company is enclosed herewith. It is submitted that applicant was never involved whatsoever in the business between Elin Electronics Ltd., and Bush India Ltd. and, therefore, has no role to play in the same since the applicant was posted in Delhi. Accordingly during the period of March 1994 to July 1994 in which the cheques in question are alleged to have been issued, the applicant was not in the service of the company.

According to the learned Counsel for the respondent No. 1, this application was also rejected on 19th May, 2005 which order became final. He submits that no documents have been placed on record by the petitioner in support of the averments in the present petition and, therefore, it should not be entertained.

In the first instance it requires to be noticed that in the present petition the petitioner has, in fact, challenged both the orders dated 4th December, 2004 and 19th May, 2005 and, therefore, it is futile to contend that those orders have become final or that the averments in the application in which the orders of dismissal were passed by the learned MM cannot now be raised. On the other hand, the averments in the present petition appear to be consistent with what has been contended by the petitioner in the extracted paragraphs of the abovementioned applications. The petitioner has been repeatedly contending that he is neither the Director nor the Executive Director of M/s. Bush India Limited as has been described in the complaint.

A perusal of the complaint shows that apart from reproducing the wording of Section 141 of the Act to the effect that accused Nos. 2 to 10 "were incharge of and responsible for the conduct of the business of accused No. 1" company nothing has been averred specific to the petitioner that he was in fact an employee with M/s Bush India Limited on the relevant dates when the cheques in question were issued. The petitioner has 1st repeatedly asserted that he resigned on March 1993; that he was relieved from the services of the company on 30th April, 1993, and that when the cheques were issued from 1st March, 1994 onwards he was not associated in any capacity with M/s Bush India Ltd. In these circumstances, the onus was on the complainant to show that the petitioner was a person in charge of the affairs of the company at the relevant time in terms of Section 141 of the Act in order to make him vicariously liable for the offence committed by the accused No. 1 company. Apart from describing the petitioner here in the cause title of the complaint as "Executive Director", there is not even an averment to that effect in the body of the complaint. In this regard a reference may be made to the conclusions arrived at by the Supreme Court in the decision in S.M.S. Pharmaceuticals Ltd. Vs. Neeta Bhalla and Another,

(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 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.

In response to query, if there is any document available with the complainant, and placed on record of the trial court, to show that the petitioner was a person in charge of the affairs of M/s. Bush India Limited at the relevant point in time when the cheques were issued, learned counsel for the complainant sought to rely upon a letter dated 18th August, 1994 written to the complainant by one of the accused. However, a perusal of the said letter reveals that the contents thereof do not answer the question. In the said letter apart from exculpating himself, the author, who is one of the co-accused Shri P.R. Mulchandani, asks the complainant to talk to the petitioner here for settling the matter. This letter can hardly be construed as a document which goes to show that the petitioner was in charge of the affairs of the company or responsible for the conduct of its business at the relevant point in time when the cheques in question were issued.

On a reading of the complaint as a whole it cannot be said that there is even a prima facie case made out that the petitioner was a person who, at the time of the alleged commission of the offence, was "in charge of, and was responsible to the company for the conduct of the business". The mere reproduction of the wording of the provision without anything more cannot justify the prosecution of the petitioner for the offence under Sections 138/141 of the Act. Criminal Complaint No. 1009/1 filed by M/s Elin Electronics Ltd u/s 138/141 of the Act is hereby quashed in so far as the present petitioner is concerned. The petition is accordingly allowed and disposed of with no orders as to costs.