Vinay Kumar @ Vinay Kumar Kedi vs State and Another

Sanjiv Khanna, J.—Mr. Vinay Kumar the petitioner, has filed the present petition u/s 482 of the Code of Criminal Procedure, 1973 for setting aside the summoning order dated 28th March, 2003 passed by the learned Metropolitan Magistrate, taking cognizance and issuing summons to appear in a complaint filed by the respondent No. 2, International Travel House Limited, u/s 138 of the Negotiable Instruments Act, 1881 (hereinafter referred to as the Act, for short). In the said complaint, it is alleged that M/s Kedia Power Limited, accused No. 1, had issued a cheque for Rs. 5 lacs dated 24th September, 1996 but on presentation the cheque was not honoured and was returned back with the remarks "payment stopped by the drawer vide note dated 25th September, 1996". It is stated in the complaint that the said cheque was issued by accused No. 1 company, i.e., M/s Kedia Power Limited. With regard to the present petitioner, allegations are made in paragraphs 3 and 15 of the said complaint, which for the sake of convenience are reproduced below:

That accused No. 1 is a company incorporated under the Companies Act 1956 and is having its principal office of business in New Delhi at J-66, South Extension I, New Delhi and belongs to The Kedia Group of Companies. Accused Nos. 2 to 4 are the Chairman/Vice-Chairmen of the Kedia Group of Companies. Accused No. 5 is a Director of Accused No. 1.

That the accused No. 2 is the Chairman and Accused No. 3 to 4 are Vice-Chairmen of the Kedia Group of Companies, and accused No. 5 is a Director of accused No. 1 and are responsible and liable for the acts of the accused company. A copy of the legal notice was also served upon each one of them, but they failed to make the payment.

The aforesaid requirements do not meet and satisfy the requirements of Section 141 of the Act, which for the sake of convenience is reproduced below:

141.

(1) Offences by companies. 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: 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) 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.- For the purposes of this Section,-

(a) " company" means any body corporate and includes a firm or other association of individuals; and

(b) " director", in relation to a firm, means a partner in the firm.

It is well settled that a person cannot be prosecuted u/s 141 of the Act merely on the ground that he is a Director of the company. The requirement is that the person, who is made vicariously liable should be in charge and responsible for conduct of business. The allegations in the complaint quoted above do not state and make any allegation against the petitioner that he was in charge of and responsible for conduct of business of the accused No. 1. The allegations made in paragraph 3 of the complaint are that the petitioner, who is accused No. 4 in the complaint, was Chairman/Vice-Chairman of Kedia Group of Companies. The allegation made in paragraph 15 is that the petitioner was Vice-Chairman of Kedia Group of Companies and "are responsible and liable for the acts of the accused company". The aforesaid averments and allegations do not satisfy the need and requirement of Section 141 of the Act. Merely because the petitioner is a Chairman or Vice-Chairman of Kedia Group of Companies, does not show and establish that he was in charge of and responsible for conduct of business of the accused No. 1-Kedia Power Limited. Similarly, the use of the words that the petitioner is "responsible and liable for the acts of accused company" do not meet the need and requirements for vicarious prosecution u/s 141 of the Act. There is no allegation in the complaint that the petitioner was a person, who was incharge of a responsible for looking after conduct of the accused No. 1�Kedia Power Limited. A statement that the said person is liable and responsible for the acts of an accused company, does not make him vicariously liable u/s 141 of the Act. The requirements of Section 141 are different.

In view of the aforesaid, the present petition is allowed and the summoning order dated 28th March, 2003 passed by the learned Metropolitan Magistrate in Complaint Case No. 3243/01/04 titled International Travel House Limited v. Kedia Power Limited and Ors. u/s 138 of the Act against the petitioner herein Mr. Vinay Kumar is set aside/quashed.