THE HON'BLE SRI JUSTICE K. SREENIVASA REDDY
CRIMINAL PETITION NOs.11172 of 2015 and
3938 of 2016
COMMON ORDER :
These Criminal Petitions, under Section 482 of the
Code of Criminal Procedure, 1973 (for short "Cr.P.C."), are
filed quash the proceedings in C.C. No.582 of 2015 on the
file of the IV Additional Judicial Magistrate of First Class,
Guntur. Petitioners in Criminal Petition No.11172 of 2015
are A.3 to A.5 respectively, and the petitioners in Criminal
Petition No.3938 of 2016 are A.1, A.2 and A.6 respectively,
in the Calendar Case.
2. 2nd respondent herein/complainant filed a
private complaint against the petitioners/accused for the offences punishable under Sections 138 of the Negotiable Instruments Act, 1881 (for short, 'the Act, 1881') and 409 and 420 IPC. The allegations, in brief, of the complaint may be stated as follows:
Complainant is a limited company registered under the provisions of the Companies Act, 1956. It used to purchase raw cotton /lint and convert the same into yarn in its spinning mill. It used to sell its lint in full pressed bales and cotton yarn/yarn cones bags (packed) each weighing a net weight of 45.36 Kgs to its different customers of different places all over India. On 29.05.2014, the accused purchased 1800 bales/18 lots of Cof cotton lint worth Rs.3,42,51,431/- within 21 days of site from the complainant under 18 different invoices in between 29.05.2014 to 01.06.2014 under the above said katha on credit and received the said goods. The accused, having traded with the said lints, received cost of the lint from their customers, but even after expiry of site period and inspite of repeated requests, the accused did not pay the price of the said 18 lots. Thereafter, A.2, representing A.1, issued a cheque bearing No.107892, dated 18.12.2014 for Rs.1,02,51,431/- drawn on Axis Bank, Naaz Center, Guntur in favour of the complainant towards part payment of the abovesaid legally enforceable debt and with an assurance that balance would be paid in a short time. On 07.03.2015, the complainant presented the said cheque in its account for encashment, but the said cheque was returned with a Memo dated 09.03.2015 due to insufficiency of funds. After complying with the essential conditions under Section 138 of the Act, 1881, the complainant presented the present complaint.
3. Learned counsel for the petitioners contended that on a perusal of the complaint, there is no averment as contemplated under Section 141 of the Act, 1881 that all the accused are incharge of, and responsible to, conduct of day to day affairs of the company. It is further submitted that no specific role has been attributed to each of the accused. The learned counsel relied on a judgment in SMS Pharmaceuticals Limited v. Neeta Bhalla & another. The learned counsel took this Court to various paragraphs of the said judgments and stated that it is essential that specific role has to be attributed in the complaint to each of the accused and merely saying that the accused are incharge of, and responsible to, the day to day affairs of the company would not suffice.
4. Per contra, learned counsel for 2nd respondent contended that there is specific accusation as against the petitioners/accused that they are incharge of, and responsible to, the company for day to day affairs of the company. The learned counsel took this court to certain paragraphs of the complaint wherein there is allegation that A.6, though not a Director, had actively involved on behalf of other accused and is responsible for the transactions to happen, and several dozens of messages were sent on mobile phone to the complainant and on behalf of himself and on behalf of the other accused. Learned counsel relied on a decision in Savithri Radhakrishnan v. State of Andhra Pradesh and another1 in 1 2017 SCC Online Hyd 716 = (2017) 2 ALD (Cri) 122 support of his contention and prayed to dismiss the Criminal Petitions.
5. This Court perused the record. It is an admitted fact that the accused purchased 1800 bales/18 lots of Cof cotton lint worth Rs.3,42,51,431/- within 21 days of site from the complainant under 18 different invoices, and the accused sold the said cotton bales to its customers and received the cost of the lints, and in discharge of the said debt, A.2, representing A.1, issued the subject cheque bearing No.107892, dated 18.12.2014 for Rs.1,02,51,431/- drawn on Axis Bank, Naaz Center, Guntur in favour of the complainant towards part payment of the abovesaid debt, and when the complainant presented the said cheque, it was dishonoured on the ground of 'insufficiency of funds'. There is no dispute with regard to the said fact.
6. From a perusal of the complaint, it is clear that it is clearly averred in the complaint that A.6 is husband of A.3; A.2, A.3, A.5 and A.6 are related to each other and A.4 is their close friend, philosopher and guide; A.6 used to represent all other accused A.2 to A.5. It is further averred in the complaint that A.2 to A.6 are actively and physically participating in day to day business transactions of A.1 on their joint/collective/joint and several liability and responsibility in respect of all the matters and affairs of A.1 company and obligations, liabilities, responsibilities and third party claims of A.1.
7. The question that arises for consideration is merely stating the basic averments that a Director was incharge of, and responsible to, the conduct of business of the company, would suffice or else a specific accusation showing as to how such Director is responsible for conduct of business of the company should also be made in the complaint ?
8. In this regard, it is pertinent to extract Section 141 of the Act, 1881.
"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 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.
(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 anybody corporate and includes a firm or other association of individuals; and (b) "director", in relation to a firm, means a partner in the firm."
9. A perusal of Section 141 of the Act, 1881 i.e. offences by the companies, Section 141 (1) specifically contemplates that if the person committing the offence is a company, every person who at the relevant point of time, was incharge of, and was responsible to, the company for conduct of the business of the company, as well as the company, shall be deemed to be guilty of the offence and shall also liable to be proceeded against and punished accordingly. In the case on hand, A.3 to A.5 are the Directors of A.1 company and they are incharge of, and responsible to, the day to day affairs of the company. There is no dispute with regard to the fact that such an averment has been mentioned in the complaint as far as A.3 to A.5 are concerned. It is further averred in the complaint that A2 to A.6 are actively and physically participating in all the day to day business transactions of A.1. It is pertinent to mention here that A.2 issued the subject cheque on behalf of A.1 company, and A.6 was actively participating in the business transactions to happen, and he, on behalf of the other accused, sent several dozens of messages on mobile phone to the complainant and on behalf of himself and on behalf of the other accused. Having regard to the aforesaid specific averments in the complaint, this aspect has to be considered during the course of trial and it is a premature stage where this Court would not be in a position to conduct a roving enquiry to go into the details of the transactions that have taken place. Admittedly, prima facie, the basic ingredients of Section 141 (1) of the Act, 1881 has been satisfied and the ground that the specific role has to be stated in the complaint, is not necessary.
10. A.1 is a company and A.2 is a person who signs cheques on behalf of A.1, and A.3 to A.5 would all come within the purview of Section 141 (1) of the Act, 1881 where the basic averments would suffice to come to a conclusion that they are responsible for conduct of the business of the company. In respect of these accused, it is not necessary that a specific role has to be attributed as against them in view of the complicity of the accused as prima facie case has been made out going by the accusation that contained in the complaint.
11. As far as A.6 is concerned, this Court feels that a specific role is attributed as against A.6. It is essential that a specific role has to be attributed in the complaint as against A.6 is concerned, for the reason that prima facie he comes within the purview of Section 141 (2) of the Act, 1881. A perusal of the complaint and the additional material papers which were filed by 2nd respondent goes to show that there are certain messages which have been issued by A.6 to the complainant and certain letters were written by A.6 to the complainant. On a perusal of the said messages and letters would prima facie go to show that he was actively involved in respect of the transactions that took place in between the complainant and the accused, and he is the main person who saw the transactions to happen. Truth or otherwise of the said accusations that are made in the complaint has to be established in the course of trial, and it is a premature stage where this Court is not inclined to go into the details of the case. This Court cannot conduct a roving enquiry with regard to the truth or otherwise of the allegations made. In view of the same, there are no merits in the present Criminal Petition.
12. The Criminal Petitions are, accordingly, dismissed.
Consequently, miscellaneous applications pending, if any, shall stand closed.
____________________________ K.SREENIVASA REDDY, J .04.2022 DRK THE HON'BLE SRI JUSTICE K. SREENIVASA REDDY COMMON ORDER IN CRIMINAL PETITION NOs.11172 of 2015 and 3938 of 2016 .04.2022 DRK