HIGH COURT OF JUDICATURE AT ALLAHABAD ?Court No. - 49 AFR Case :- APPLICATION U/S 482 No. - 3471 of 2011 Petitioner :- V.P.Agarwal And Others Respondent :- State Of U.P.And Another Petitioner Counsel :- Amit Daga Respondent Counsel :- Govt.Advocate Hon'ble Shri Kant Tripathi,J.
1. Heard Mr. Amit Daga for the applicants and the learned AGA for the State and perused the record.
2. Mr. Amit Daga submitted that the offences disclosed in the complaint filed by the respondent no. 2 are alleged to have been committed by Ms. Dynamic Infra Developers Pvt. Ltd., a company incorporated in the Companies Act, and all the applicants are the Directors of the said company, therefore, the applicants cannot be prosecuted only on the ground that they are the Directors of the company. Mr. Daga further submitted that the learned Magistrate should have kept in mind the provisions of section 141 of the Negotiable Instruments Act (in short ?the Act?) while proceeding against the aforesaid company, therefore, he was not justified in issuing processes to the applicants. In support of the aforesaid submissions Mr. Daga placed reliance on the cases of K.K. Ahuja v V.K. Arora & another (2010)2SCC (Cri) 1181 and National Small Industries Corporation Limited v Harmeet Singh Paintal & another (2010) 2 SCC (Cri) 1113.
3. In the case of K.K. Ahuja (supra) the Apex Court after referring to various decisions of the Apex Court made the following observations in para 15:
"15. The prevailing trend appears to require the complainant to state how a Director who is sought to be made an accused, was in charge of the business of the company, as every Director need not be and is not in charge of the business of the company. If that is the position in regard to a Director, it is needless to emphasise that in the case of non-Director officers, there is all the more the need to state what his part is with regard to conduct of business of the company and how and in what manner he is liable."
4. In the case of National Small Industries (supra) the Apex Court has reiterated the aforesaid principles after placing reliance on various decisions and propounded the following principles in para 39:
"39. From the above discussion, the following principles emerge :
(i) The primary responsibility is on the complainant to make specific averments as are required under the law in the complaint so as to make the accused vicariously liable. For fastening the criminal liability, there is no presumption that every Director knows about the transaction.
(ii) Section 141 does not make all the Directors liable for the offence. The criminal liability can be fastened only on those who, at the time of the commission of the offence, were in charge of and were responsible for the conduct of the business of the company.
(iii) Vicarious liability can be inferred against a company registered or incorporated under the Companies Act, 1956 only if the requisite statements, which are required to be averred in the complaint/petition, are made so as to make the accused therein vicariously liable for offence committed by company along with averments in the petition containing that accused were in-charge of and responsible for the business of the company and by virtue of their position they are liable to be proceeded with.
(iv) Vicarious liability on the part of a person must be pleaded and proved and not inferred.
(v) If the accused is Managing Director or Joint Managing Director then it is not necessary to make specific averment in the complaint and by virtue of their position they are liable to be proceeded with.
(vi) If the accused is a Director or an Officer of a company who signed the cheques on behalf of the company then also it is not necessary to make specific averment in the complaint.
(vii) 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."
5. In the case of S.M.S. Pharmaceuticals Ltd. v Neeta Bhalla 2005 (53) ACC 503 the Apex Court held as under:
?19 (b) ?........Merely being a director of a company is not sufficient to make the person liable under Section 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.?
6. A copy of the complaint has been filed as annexure 2 to the petition, a perusal whereof clearly reveals that the cheque was issued for and on behalf of the aforesaid company, therefore, according to the complaint allegations, the main liability is of the company, and the applicants, who are the Directors of the company, are alleged to be liable for the company, therefore, so far as the complaint against the company is concerned, it should be proceeded against the relevant persons in terms of section 141 of the Act. This proposition will not be applicable if besides the company, any complicity of the applicants in their individual capacity has also been alleged in the complaint. It may not be out of context to mention that the relevant materials to consider the controversy in terms of section 141 of the Act are not available before this Court, therefore, it would be just and expedient to direct the learned trial court to decide the question as to who is to be proceeded against for and on behalf of the company in terms of section 141 of the Act. As such, it would not be proper for this Court to express any opinion.
7. Mr. Daga next submitted that the amount disclosed in the cheque, has already been paid to the respondent no. 2, therefore, the offence under section 138 of the Act is not made out. However, Mr. Daga conceded that the payment was made not before the expiry of the statutory period of the notice but thereafter and as such the payment, after expiry of the statutory period, cannot be taken as a ground to quash the proceeding of the complaint case.
8. The summoning order seems to have been passed on the basis of the materials brought on record under sections 200 and 202 of the Code of Criminal Procedure and the learned Magistrate has very categorically arrived at the conclusion on those materials that a prima facie case under section 138 of the Act and sections 420 and 120-B IPC was made out against the accused persons. In view of this specific finding of the learned Magistrate, I do not consider it proper to interfere with the summoning order.
9. With the aforesaid observations, the petition is diposed of finally.
Order Date :- 7.3.2011 shailesh