The Single Bench of the Delhi High Court in the case of Shri Hari Shamsher Kaushik vs Shri Jasbir Singh, Managing Director, M/S Accura Care Pharmaceuticals Pvt. Ltd. consisting of Justice Asha Menon while dismissing a petition observed that it is only when the Company is found to have committed an offence u/s 141 of Negotiable Instruments Act, 1881 (‘N.I. Act’) that vicarious liability would attach to the Director.
Facts
The petitioner had filed a complaint case u/s 138 of the N.I. Act against the respondent. It was stated in the complaint that the commercial space owned by the petitioner in Punjabi Bagh (West) had been let out upon terms and conditions incorporated in the registered Rent Agreement. This was executed between the petitioner (landlord) and the respondent’s company, through its Managing Director (respondent). In March-April 2013 the respondent is alleged to have issued five cheques across the company duly signed by him as Managing Director to discharge the company’s liability to pay the rent aggregating to Rs.16,95,000. These bounced. As a result of which, the complaint was filed.
Contentions Made
Petitioner: The learned Trial Court dismissed the complaint observing that since the company had not been impleaded as an accused, the liability of the respondent as its Managing Director could not be attached u/s 141 of the N.I. Act. Reliance was placed on Aneeta Hada v. Godfather Travels & Tours (P) Ltd. This reliance was misplaced and instead of rectifying the error, the learned Appellate Court also concluded that the dismissal of the complaint was proper, as the Trial Court had followed the decision of the Supreme Court which had held that for maintaining the prosecution u/s 141 of the N.I. Act, the Company had to be arrayed mandatorily as an accused. Reliance was also placed on S.R. Sukumar v. S. Sunaad Raghuram, Rajneesh Aggarwal v. Amit J. Bhalla, Bilakchand Gyanchand Co. v. A. Chinnaswami, U.P. Pollution Control Board vs Modi Distillery & Ors and Manish Kalani & Another v. Housing & Urban Development Corporation Ltd. (Hudco) & Anr, to contend that when the lacuna was only of a technical nature, then the Trial Court ought to have allowed amendment of the complaint, rather than dismissing it. Thus, it was prayed that impugned order be set aside and the complaint be restored, granting an opportunity to the petitioner to amend his plaint to, ipso the respondent company. The judgment in Aneeta Hada (supra) was a per incuriam judgment, as the Supreme Court in other cases had held that mis-description of the company or the non-inclusion of the company in a complaint case was only a curable defect which could be rectified by way of amendment.
Observations of the Court
The Bench, relying on the relied judgments, observed that it was held by the Supreme Court that on a reading of the provisions of Section 141 of the N.I. Act “it is plain as day” that where the offence has been committed by a Company, the Company as well as every person in charge and responsible for the conduct of its business at the time of commission of the offence, is “deemed” to be guilty of the offence. It was further held that the word “deemed” used in Section 141 of the N.I. Act applied to the company and the persons responsible for the acts of the company, as it crystalized the criminal liability and vicarious liability of the person who oversees the company. Thus, it was noted that it is the Company upon which the primary liability rests and a person who is sought to be made vicariously liable for an offence of which the principal accused is a company, would need to have a role to play in relation to the incriminating act. Section 141 of the N.I. Act operates only when the offence u/s 138 of the N.I. Act is committed by a company.
Judgment
Applying the doctrine of strict construction, the Supreme Court had held that the commission of offence by the company is an express condition precedent to attract the vicarious liability of others. It was also observed that amendments of simple technical infirmities alone can be allowed but not the filing of a fresh complaint with improved pleadings, in the garb of amendment. Thus, the Court found it inappropriate to grant such permission to amend the complaint. The petition, being devoid of merit, was dismissed.
Case: Shri Hari Shamsher Kaushik vs Shri Jasbir Singh, Managing Director, M/S Accura Care Pharmaceuticals Pvt. Ltd.
Citation: CRL.M.C. 1382/2022
Bench: Justice Asha Menon
Decided on: 9th May 2022
Read Judgment @Latestlaws.com
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