Bombay High Court
Anil Kumar Singhal And Anr vs The State Of Maharashtra And Anr on 19 August, 2022
Bench: N. J. Jamadar
ca-1353-2019.doc
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
CRIMINAL APPELLATE JURISDICTION
CRIMINAL APPLICATION NO.1353 OF 2019
Anil Kumar Singhal and Another ...Applicants
vs.
State of Maharashtra and Others ...Respondents
VISHAL Mr. Aadil Parsurampuria a/w. Ms. Kejeshri Thakar, Mr. Aalam
SUBHASH
PAREKAR Parsurampuria i/b. Prashant Parsurampuria, for the Applicants.
Mr. Ansh Karnawat a/w. Mr. Nikhil Rajani and Ms. Jyoti Sanap i/b.
Digitally signed
by VISHAL
M/s. V. Deshpande Co., for Respondent No. 2.
SUBHASH
PAREKAR
Mr. A.R. Patil, APP for the State.
Date: 2022.08.19
18:22:00 +0530
CORAM : N. J. JAMADAR, J.
RESERVED ON : 26th APRIL, 2022
PRONOUNCED ON : 19th AUGUST, 2022
----------
JUDGMENT :
1. Rule. Rule made returnable forthwith and, with the consent of
the counsels for the parties, heard finally.
2. This application under section 482 of the Code of Criminal
Procedure, 1973 seeks to quash and set aside the order of issue of
process dated 26th June, 2019 for an offence punishable under
section 138 read with 141 of Negotiable Instruments Act, 1881
passed by the learned Metropolitan Magistrate, 58th Court, Bandra,
Mumbai in CC No. 25/SS/2019, qua the applicants.
3. Shorn of superfluities, the background facts leading to this
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application, can be stated as under:-
a] Gupta Synthetics Limited (accused No.1) is a company
incorporated under the Companies Act, 1956. The applicants
herein, Anil Kumar Singhal (accused No.4) and Meenu Maheshwari
(accused No.5) are the Directors of Gupta Synthetics Limited
(accused No.1), apart from Mohan Gupta (accused No.2) and
Prakash Gupta (accused No.3). Avinash Shah (accused No.6) is the
company secretary.
b] ING Vysya Bank Limited, which merged with Kotak Mahindra
Bank Limited, the complainant herein ("the Bank") had extended
various financial facilities to Gupta Synthetics Limited (accused
No.1). A proceeding, Original Application No. 114 of 2012, was filed
by ING Vysya Bank Limited before Debt Recovery Tribunal, Mumbai
(DRT) for recovery certificate. Post merger of the ING Vysya Bank
with Kotak Mahindra Bank, the complainant Bank instituted a
Company Petition No. 184 of 2016 in this Court for winding up of
Gupta Synthetics Limited (accused No.1).
c] In Original Application No. 114 of 2012 before the DRT consent
terms were executed between the complainant and the defendants
including accused Nos. 1 to 3. It was inter alia aknowledged that
defendants were jointly and severely liable to pay to the
complainant a sum of Rs. 45,01,52,126/-. The defendants No. 1 to 5
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therein also agreed to pay a sum of Rs. 15,11,00,000/- to the
complainant as per the schedule stipulated in paragraph No. 9 of
the consent terms from 31st December, 2016 to 31st March, 2020. In
accordance with the terms of settlement, post dated cheques were
issued under a covering letter dated 21 st December, 2016. DRT
disposed of the proceedings in accordance with the aforesaid
consent terms. Likewise, the Company Petition No. 184 of 2016 also
came to be disposed of by the orders dated 10 th January, 2017 and
18th January, 2017.
d] The accused No. 1 company committed default in payment of
the amounts in accordance with the terms of the settlement. The
complainant asserts as of 31st October, 2017 accused No. 1 and
guarantors had paid the complainant a sum of Rs. 2,17,81,599/-
only. Thereafter, the accused No. 1 made a further payment of Rs.
30 lakhs. Claiming that on account of the default on the part of the
accused No. 1 in discharging the liability incurred under the
consent terms, the entire claim amount became due and payable,
the complainant deposited the cheques bearing No. 000821 drawn
for Rs. 25 lakhs payable on 31 st August, 2018; No.000841 drawn for
Rs.1,40,00,000/- payable on 30th September, 2018; No.000823
drawn for Rs.39 lakhs payable on 31 st October, 2018, with its
banker, on 15th November, 2018, and No.000824 drawn for Rs. 39
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lakhs, on 31st November, 2018. All the cheques were returned un-
encashed on account of insufficiency of funds.
e] A demand notice was addressed on 11th December, 2018. It
was duly served on accused Nos. 1 to 6 in between 12 th October,
2018 to 17th December, 2018. Since the demands therein were not
complied with, the complainant was constrained to lodge the
complaint. By an order dated 26 th June, 2019 the learned
Metropolitan Magistrate was persuaded to issue the process against
the applicants and the co-accused for an offence punishable under
section 138 read with 141 of the Act, 1881.
4. The applicants have invoked the inherent jurisdiction of this
Court asserting that the applicants were neither in-charge of nor
responsible to the company for the conduct of its business at the
time of the commission of the alleged offences. A bare perusal of the
complaint, according to the applicants, indicates that there are no
averments to rope in the applicants by invoking the provisions
contained in section 141 of the Act, 1881. Nor there is any other
material to show that the applicants had played any part in the
commission of the alleged offence or the underlying transactions.
The applicants contend that the learned Magistrate has
mechanically issued the process against the applicants without
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properly appreciating the facts that the applicants were
independent Directors of the applicant No. 1 company and were not
the signatories to either the consent terms or the cheques which
were allegedly dishonored and, in fact, had resigned from the post
of Directors of accused No. 1. Hence, the prosecution of the
applicants is a sheer abuse of the process of the Court.
5. An affidavit in reply is filed on behalf of the respondent No. 2/
complainant to controvert the assertions in the application.
6. I have heard Mr. Aadil Parsurampuria, learned counsel for the
applicants, Mr. Ansh Karnawat, learned counsel for respondent No.
2 and Mr. A.R. Patil, learned APP for the State. With the assistance
of the learned counsels for the parties, I have perused the
averments in the application, contentions in the affidavit in reply
and the material on record including the averments in the
complaint.
7. Mr. Parsurampuria, learned counsel for the applicants
strenuously urged that the prosecution of the applicants is a classic
example of the abuse of the process of the Court. It was urged with a
degree of vehemence that the impugned order suffers from the vice
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of clear non-application of mind bordering on mechanical exercise
of the power to issue the process. Mr. Parsurampuria took pains to
take the Court through the the complaint, to bolster up the
submission that there are no averments to rope in the applicants by
invoking the constructive criminality under section 141 of the Act,
1881. The learned counsel for the applicants took the Court through
the record of the previous proceedings between the complainant
and accused No. 1 company. Laying emphasis on the fact that the
applicants were neither parties to O.A. No.114 of 2012 before DRT
nor signatories to the consent terms, and the cheques, Mr.
Parsurampuria would further urge that, the bald averments in the
complaint that the applicants were in-charge of and responsible to
the conduct of the affairs of the company have no leg to stand on. To
buttress the aforesaid submissions, the learned counsel for the
applicants has placed reliance on the judgments of the Supreme
Court and High Courts in the following cases:-
1] S.M.S. Pharmaceuticals Ltd. vs. Neeta Bhalla and Others1
2] Saroj Kumar Poddar vs. State (NCT of Delhi) and Others2
3] N.K. Wahi vs. Shekhar Singh and Others3
4] National Small Industries Corp. Ltd. vs. Harmeet Singh Paintal
1 AIR 2005 SSC 3512.
2 AIR 2007 SC 912.
3 AIR 2007 SC 1454.
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and Others4
5] Central Bank of India vs. Asian Global Ltd. and Others5
6] Parag Bhikhalal Tejani vs. State of Maharashtra and Others6
7] Pooja Ravinder Devidasani vs. State of Maharashtra7
8] Ashoke Mal Bafna vs. Upper India Steel Mfg. & Engg. Co. Ltd.8
9] Rajeev Raj Kumar and Others vs. The State of Maharashtra and
Others9
10] R.L. Steel and Energy Ltd. vs. Rajeev Raj Kumar and Others 10
11] Dayle De'Souza vs. Government of India through Dy. Chief
Labour Commissioner (C) and Others11
12] Pepsi Foods Ltd. And Others vs. Special Judicial Magistrate and
Others12
13] Municipal Corporation of Delhi vs. Purshotam Dass
Jhunjunwala and Others13
14] State of U.P. and Others vs. Synthetics and Chemicals Ltd. and
Others14
15] Jaydeo vs. State of Maharashtra and Others15
4 2010 ALL MR (Cri) 921.
5 AIR 2010 SC 2835.
6 2012 (1) MhLJ 804.
7 AIR 2015 SC 675.
8 AIR 2017 SC 2854.
9 2018 ALL MR (Cri) 4484.
10 MANU/SCOR/78014/2019
11 AIR 2021 SC 5626.
12 AIR 1998 SC 128.
13 AIR 1983 SC 158.
14 (1991) 4 SCC 139.
15 2006(2) MhLj 497.
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16] State of Assam vs. Ripa Sarma16
17] Hyder Consulting (UK) Ltd. vs. Governor, State of Orissa17
18] Ramrajsingh vs. State of M.P. and Others18
19] Yogendra Pratap Singh vs. Savitri Pandey19.
8. Per contra, Mr. Ansh Karnawat, learned counsel for
respondent No. 2 stoutly submitted that the instant application is
itself an abuse of the process of the Court. It was urged that the
applicants have resorted to the device of selective reading of the
averments in the complaint and placing reliance on the documents
which suit the case of the applicants and, in the process,
deliberately suppressed vital facts and documents, which bear upon
controversy. Mr. Karnawat would submit that there are more than
adequate averments in the complaint which make out the
complicity of the applicants. In the face of such averments, in
exercise of the extra-ordinary jurisdiction under section 482 of the
Code, the High Court may not be justified in embarking upon an
inquiry into the factual aspect at this stage, urged Mr. Karnawat.
9. Controverting the submission on behalf of the applicants, Mr.
Karnawat submitted that the claim of the applicants that they had
16 AIR 2013 SC 3588
17 AIR 2015 SC 856.
18 2009 (2) ACR 1650 (SC).
19 AIR 2015 SC 157.
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resigned in October, 2018 is not substantiated by placing on record
documents of unimpeachable character. Therefore, even the case
that at the time of the commission of the offences, the applicants
were not in-charge of and responsible to the conduct of the business
of the applicant No. 1 company is not prima facie made out. Placing
reliance on the very judgments on which the applicants banked
upon, Mr. Karnawat would urge that the principles enunciated
therein do not govern the facts of the case. In addition, the learned
counsel for respondent No. 2 placed reliance on the judgment of the
Supreme Court in the case of Gunmala Sales Private Limited vs.
Anu Mehta20 and the recent pronouncement in the case of Ashutosh
Ashok Parasrampuriya and Others vs. Gharrkul Industries Private
Limited and Others21.
10. I have given anxious consideration to the rival submissions
canvassed across the bar. To begin with, few un-controverted facts.
The parties are not at issue over the fact that ING Vysya Bank
Limited, the entity which merged with the complainant, had
extended financial facilities to accused No. 1. Nor is it in dispute
that ING Vysya Bank Limited had instituted a O.A. No. 114 of 2022
before DRT, Mumbai against defendant Nos. 1 to 5 thereto
20 AIR 2015 SC 1072.
21 AIR 2021 SC 4898.
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(including accused Nos. 1 to 3 herein) for recovery of its dues.
Execution of the consent terms on 22 nd December, 2016, in the said
proceedings, is incontrovertible. Indisputably, the applicants were
neither parties to the said O.A. No.114 of 2012 nor executed the
consent terms. The delivery of the cheques under the covering
letter dated 21st December, 2016 also appears rather incontestible.
11. The applicants do not profess to controvert the assertion of
the complainant that accused No. 2 had signed the cheques on
behalf of the accused No.1 company. Likewise, the compliance of all
the statutory requirements, in the nature of the presentment of the
cheques, dishonour of the cheques, issue and service of demand
notice and non-payment of the amount covered by the cheques
within the statutory period, are not much in contest.
12. What was sought to be put in contest on behalf of the
applicants was the claim of the complainant that the applicants
were in-charge of and responsible to the conduct of the business of
accused No. 1 company at the time of commission of the alleged
offences. Laying emphasis on the execution of the consent terms
(to which the applicants were not parties), the learned counsel for
the applicants urged with tenacity that the commission of the
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alleged offences in respect of the cheques which were issued
pursuant to the said settlement cannot be attributed to the
applicants even remotely.
13. The legal position as regards the nature of the liability of the
persons who are sought to be prosecuted by invoking the provisions
contained in section 141 of the Act, 1881 is fairly crystallized.
Under section 141 of the Act, 1881 when an offence is committed by
the company, apart from the company, every person who at the
time of the commission of the offence was in-charge of and
responsible to the conduct of the business of the company shall also
be deemed to be guilty of the offence. There are a plethora of
judgments governing the aspect of the liability of the Directors and/
or officers of the company who are impleaded by invoking section
141 of the Act, 1881. It would be superfluous to make a reference to
all the judgments relied upon by the learned counsel for the
applicants as the field is substantially covered by two
pronouncements of Supreme Court.
14. In the case of S.M.S. Pharmaceuticals (supra) a three Judge
Bench of the Supreme court considered the following questions :-
"(a) whether for purposes of Section 141 of the
Negotiable Instruments Act, 1881, it is sufficient if the
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substance of the allegation read as a whole fulfill the
requirements of the said section and it is not
necessary to specifically state in the complaint that
the persons accused was in charge of, or responsible
for, the conduct of the business of the company.
(b) whether a director of a company would be deemed
to be in charge of, and responsible to, the company for
conduct of the business of the company and, therefore,
deemed to be guilty of the offence unless he proves to
the contrary.
(c) even if it is held that specific averments are
necessary, whether in the absence of such averments
the signatory of the cheque and or the Managing
Directors of Joint Managing Director who admittedly
would be in charge of the company and responsible to
the company for conduct of its business could be
proceeded against."
15. After an elaborate analysis, the Supreme Court answered the
aforesaid questions in the following terms:-
16. In view of the above discussion, our answers to
the questions posed in the Reference are as under:
(a) It is necessary to specifically aver in a complaint
under Section 141 that at the time the offence was
committed, the person accused was in charge of, and
responsible for the conduct 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 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.
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(c) The answer to question (c) has to be in affirmative.
The question notes that the Managing Director or
Joint Managing Director would be admittedly in
charge of the company and responsible to the
company for conduct of its business. When that is so,
holders of such positions in a company become liable
under Section 141 of the Act. By virtue of the office
they hold as Managing Director or Joint Managing
Director, these persons are in charge of and
responsible for the conduct of business of the
company. Therefore, they get covered under Section
141. So far as signatory of a cheque which is
dishonoured is concerned, he is clearly responsible for
the incriminating act and will be covered under sub-
section (2) of Section 141.
16. While arriving at the aforesaid conclusion the Supreme Court
had observed in paragraph 10 as under:
10. The conclusion is inevitable that the liability
arises on account of conduct , act or omission on the
part of a person and not merely on account of holding
an office or a position in a company. Therefore, in
order to bring a case within Section 141 of the Act the
complaint must disclose the necessary facts which
make a person liable.
(emphasis supplied)
17. The aforesaid pronouncement was further explained by a two
Judge Bench of the Supreme Court in the case of Gunmala Sales
Private Limited (supra). After adverting to the aforesaid
pronouncement and the judgment preceding and subsequent
thereto, the Supreme Court culled out the propositions as under:-
33. We may summarize our conclusions as follows:
a) Once in a complaint filed under Section 138 read
with Section 141 of the NI Act the basic averment is
made that the Director was in charge of and
responsible for the conduct of the business of the
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company at the relevant time when the offence was
committed, the Magistrate can issue process against
such Director;
b) If a petition is filed under Section 482 of the Code
for quashing of such a complaint by the Director, the
High Court may, in the facts of a particular case, on an
overall reading of the complaint, refuse to quash the
complaint because the complaint contains the basic
averment which is sufficient to make out a case
against the Director.
c) In the facts of a given case, on an overall reading of
the complaint, the High Court may, despite the
presence of the basic averment, quash the complaint
because of the absence of more particulars about role
of the Director in the complaint. It may do so having
come across some unimpeachable, uncontrovertible
evidence which is beyond suspicion or doubt or totally
acceptable circumstances which may clearly indicate
that the Director could not have been concerned with
the issuance of cheques and asking him to stand the
trial would be abuse of the process of the court.
Despite the presence of basic averment, it may come
to a conclusion that no case is made out against the
Director. Take for instance a case of a Director
suffering from a terminal illness who was bedridden
at the relevant time or a Director who had resigned
long before issuance of cheques. In such cases, if the
High Court is convinced that prosecuting such a
Director is merely an arm-twisting tactics, the High
Court may quash the proceedings. It bears repetition
to state that to establish such case unimpeachable,
incontrovertible evidence which is beyond suspicion
or doubt or some totally acceptable circumstances will
have to be brought to the notice of the High Court.
Such cases may be few and far between but the
possibility of such a case being there cannot be ruled
out. In the absence of such evidence or circumstances,
complaint cannot be quashed;
d) No restriction can be placed on the High Court's
powers under Section 482 of the Code. The High Court
always uses and must use this power sparingly and
with great circumspection to prevent inter alia the
abuse of the process of the Court. There are no fixed
formulae to be followed by the High Court in this
regard and the exercise of this power depends upon
the facts and circumstances of each case. The High
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Court at that stage does not conduct a mini trial or
roving inquiry, but, nothing prevents it from taking
unimpeachable evidence or totally acceptable
circumstances into account which may lead it to
conclude that no trial is necessary qua a particular
Director.
(emphasis supplied)
18. In the light of the aforesaid exposition of law, in exercise of
inherent jurisdiction under section 482 of the Code, the High Court
is required to approach the issue in two stages. First, whether there
are basic averments in the complaint to demonstrate that the
applicant was in-charge of and responsible for the conduct of the
business of the company at the time of commission of the offences.
If, at this first stage, the High Court is satisfied about the existence
of adequate averments to make out the liability under section 141 of
the Act, 1881, it would be within its right in refusing to embark
upon further inquiry and exercise the discretion. Second, in a given
case, the High Court may proceed to probe further and examine
whether despite the existence of basic averments, the complaint
qua the applicants/Director or other officers of the company
deserves to be quashed on account of peculiar circumstances. In
cases where the High Court is called upon to enter the second stage
of inquiry if material of unimpeachable or incontrovertible
character is brought on record which would indicate that in no case
the applicants could have been in-charge of and responsible to the
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conduct of the business of the company at the time of commission of
the offence, the High Court may quash the proceedings
notwithstanding existence of the averments which prima facie
satisfy the requirements of section 141 of the Act, 1881 in the
complaint.
19. On the aforesaid touchstone, reverting to the facts of the case,
I find it rather difficult to accede to the submission on behalf of the
applicants that there are no averments in the complaint to show the
nexus between the applicants and commission of the alleged
offences. In paragraph 4 of the complaint, the complainant has
averred, inter alia, as under:-
4] The complainant company had sanctioned and
advanced various credit facilities to the accused No. 1
company. The said credit facilities extended to
accused No. 1 company were inter alia, secured by
way of guarantees of accused No. 2 and 3 who have
guaranteed the due repayment of the amounts
payable by the accused No.1 company. Accused Nos. 2
to 5 are the Directors and authorized representatives
of the accused No. 1. Accused No. 2 has signed the
cheques that form part of this complaint, on behalf of
the accused No. 1.
...... .........
Accused Nos. 2 to 6 are all jointly and severally
responsible and liable for the day-to-day operations
and management of the accused No. 1 and were at all
relevant times the persons involved in routine,
business, taking all strategic decisions and were
overall in charge of and responsible for conducting the
day-to-day affairs and managing the activities and
functioning of accused No. 1, thereby the acts, things,
matters, business done by any of accused Nos. 2 to 6
for and on behalf of accused No. 1 is binding on all
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accused including accused No.1 and they are
responsible, liable for the any acts, things, matters,
business done by any of them, all of them for and on
behalf of accused No. 1, at the relevant time.
20. In paragraph 11, the complainant asserts as under:-
11] ... ..... The accused Nos. 2 to 6 were all
actively involved in the entire transaction of
settlement with the complainant company.
21. In the context of the consent terms, the complainant avers as
under:-
14] ... ...... I say that accused Nos. 1 to 6 were all
aware of the said terms and conditions and in fact the
accused No. 1 also made payments of part of the
installments of the consent terms to the complainant
company. The accused No. 1 has also disclosed the fact
of the said consent terms in its annual report for the
year 2016-17 with the balance sheet and profit and
loss account. The said balance sheet and profit and
loss account has been signed by the accused Nos. 2, 3
and 6. The complainant company craves leave to refer
to and rely upon the annual report for the year 2016-
22. Lastly, in paragraph 34, the complainant avers as under:-
34] I state that the accused Nos. 1 to 6 have
knowingly entered into the consent terms dated 22 nd
December, 2016 and submitted the post dated cheques
in compliance of the same. Even though the accused
No. 1 had already defaulted earlier, the complainant
company accepted by accused No. 1 under the consent
terms on the assurance and understanding that the
same would be honoured on presentment. The
accused No. 1 has admitted the execution of the
consent terms in its annual report which is a public
document. The said annual report is signed by
accused Nos. 2, 3 and 6. The accused Nos. 1 to 6 were
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aware that the said cheques would be presented on the
due dates and they were bound to arrange for funds in
the said account to ensure that the cheques were
honoured but have failed to do so.
23. The aforesaid allegations in the complaint are prima facie
sufficient to satisfy the requirement of basic averments in the
complaint to make out the liability of the applicant Nos. 4 and 5.
Moreover, the complainant has made categorical averments to the
effect that the applicant Nos. 4 and 5 were also privy to the decision
to settle the dispute with the complainant, execution of the consent
terms and acknowledgment of the liability by defendant No. 1
company, which emanated from the execution of the consent terms.
In the circumstances, I am unable to persuade myself to accede to
the submission on behalf of the applicants that the complaint lacks
basic averments. On the contrary, prima facie, the complainant has
adverted to the alleged role of the applicants. In this view of the
matter, the applicants cannot draw much mileage from the fact that
they were neither the signatories to the consent terms nor to the
dishonored cheques.
24. A profitable reference in this context can be made to the case
of Ashutosh Parasrampuriya (supra). In the said case, these were
averments in the complaint to the effect that all the Directors of the
company were responsible to the business of the company and they
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were involved in the business of the company and responsible for all
the affairs of the company. In the backdrop of such averments, the
Supreme court declined to interfere with the order of High Court
dismissing the application under section 482 of the Code. The
Supreme Court adverted to the previous pronouncement in the case
of S.M.S. Pharmaceuticals (supra) and the later judgments and
reiterated the law as under:-
23. In the light of the ratio in S.M.S. Pharmaceuticals
Ltd. (supra) and later judgments of which a reference
has been made what is to be looked into is whether in
the complaint, in addition to asserting that the
appellants are the Directors of the Company and they
are incharge of and responsible to the Company for
the conduct of the business of the Company and if
statutory compliance of Section 141 of the NI Act has
been made, it may not open for the High Court to
interfere under Section 482 CrPC unless it comes
across some unimpeachable, incontrovertible
evidence which is beyond suspicion or doubt or totally
acceptable circumstances which may clearly indicate
that the Director could not have been concerned with
the issuance of cheques and asking him to stand the
trial would be abuse of process of Court. Despite the
presence of basic averment, it may come to a
conclusion that no case is made out against the
particular Director for which there could be various
reasons.
24. The issue for determination before us is whether
the role of the appellants in the capacity of the
Director of the defaulter company makes them
vicariously liable for the activities of the defaulter
Company as defined under Section 141 of the NI Act?
In that perception, whether the appellant had
committed the offence chargeable under Section 138
of the NI Act ?
25. We are concerned in this case with Directors who
are not signatories to the cheques. So far as Directors
who are not the signatories to the cheques or who are
not Managing Directors or Joint Managing Directors
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are concerned, it is clear from the conclusions drawn
in the aforestated judgment that it is necessary to
aver in the complaint filed under Section 138 read
with Section 141 of the NI Act that at the relevant
time when the offence was committed, the Directors
were in charge of and were responsible for the conduct
of the business of the company.
26. This averment assumes importance because it is
the basic and essential averment which persuades the
Magistrate to issue process against the Director. That
is why this Court in S.M.S. Pharmaceuticals Ltd.
(supra) observed that the question of requirement of
averments in a complaint has to be considered on the
basis of provisions contained in Sections 138 and 141
of the NI Act read in the light of the powers of a
Magistrate referred to in Sections 200 to 204 CrPC
which recognise the Magistrate's discretion to take
action in accordance with law. Thus, it is imperative
that if this basic averment is missing, the Magistrate
is legally justified in not issuing process.
27. In the case on hand, reading the complaint as a
whole, it is clear that the allegations in the complaint
are that at the time at which the cheques were issued
by the Company and dishonoured by Bank, the
appellants were the Directors of the Company and
were responsible for its business and all appellants
were involved in the business of the Company and
were responsible for all the affairs of the Company. It
may not be proper to split while reading the complaint
so as to come to a conclusion that the allegations as a
whole are not sufficient to fulfill the requirement of
Section 141 of NI Act. The complaint specifically refers
to the point of time when the cheques were issued,
their presentment, dishonour and failure to pay in
spite of notice of dishonour. In given circumstances,
we have no hesitation in overruling the argument
made by the learned counsel for the appellants.
25. The aforesaid pronouncement, in my view, governs the facts
of the case at hand with full force as the averments in the
complaint, in the case at hand, are far more categorical and
elaborate.
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26. I find substance in the submission on behalf of the respondent
No. 2 that the claim of the applicants that they had resigned from
the position of the Directors of the Gupta Synthetics Limited
(accused No.1) was not sought to be substantiated by documents of
unimpeachable character. On the contrary, the Court finds that in
the reply dated 25th December, 2018 to the statutory notice
addressed on behalf of the applicants as well, the said stand of
resignation as of October, 2018 is conspicuous by its absence. In
contrast, an effort was made to contest the enforceability of the
liability on the merits of the matter. The applicants, it prima facie
seems, chose not to raise the ground that they were not in-charge of
and responsible to the conduct of the affairs of Gupta Synthetics
Limited (accused No.1) though in paragraph Nos. 7 to 9 of the
statutory notice, categorical averments to that effect were made by
the complainant.
27. For the foregoing reasons, in my view, the applicants have not
succeeded in making out a case that despite existence of the basic
averments in the complaint, there are peculiar circumstances,
supported by material of unimpeachable character to demonstrate
that they were not in-charge of or responsible to the conduct of the
business of company at the time of the commission of the offences.
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Thus, the application deserves to be dismissed.
Hence, the following order.
ORDER
1] The application stands dismissed.
2] No costs.
3] Rule discharged.
(N. J. JAMADAR, J.)
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