Mrs. Aruna Bansal vs State And Anr.
2006 Latest Caselaw 832 Del

JUDGMENT

Badar Durrez Ahmed, J.

1. By an order dated 25.04.2006, I had directed that the trial court record would be necessary because the learned Counsel appearing on behalf of Sanjay Chaudhary submitted that the trial court record be seen to ascertain as to whether there is anything on record to show that the said Sanjay Chaudhary was, in fact, the Managing Director or a Director in charge of the day-to-day affairs of the company and responsible to the company. According to him, it is only then that he could be brought in within the extended liability under Section 141 of the Negotiable Instruments Act, 1881 (hereinafter referred to as 'the said Act'). However, today, the learned Counsel for the petitioner submitted that although the trial court record is not before this court, this revision petition can be disposed of in view of the decision of the Supreme Court in the case of S.M.S. Pharmaceuticals Ltd v. Neeta Bhalla and Anr. 2005 (6) Comp LJ 144 (SC) as well as the decision of the Supreme Court in the case of S.V. Mazumdar and Ors. v. Gujarat State Fertilizer Co. Ltd and Anr. 2005 (4) Comp LJ 493 (SC).

2. He referred to the decision of the Supreme Court in the case of S.M.S. Pharmaceuticals Ltd. (supra) and submitted that three questions came up for determination before a larger Bench on a reference made by a two Judge Bench of the Supreme court. The three questions that were referred to were as under:

(a) Whether for purposes of Section 141 of the Negotiable Instruments Act, 1881, it is sufficient if the substance of the allegation read as a whole fulfillls 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 or 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.?

After considering the provisions of law and the case law on the point, the Supreme Court came to the following conclusion as recorded in para 20 of the said decision as under:

20. 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 for a director in such cases.

(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.

3. The learned Counsel for the petitioner referred to the answer to question (c) and stated that insofar as a signatory of a cheque is concerned, he would be clearly responsible for the incriminating act and would be covered under Sub-section (2) of Section 141 of the said Act. The cheque in question in the present case has admittedly been signed by the said Sanjay Chaudhary and whether he was the managing director or a director in charge of the day-to-day affairs of the company would be an additional point in favor of the petitioner. The mere fact that he was an officer of the company and was a signatory of the cheque would bring him within the ambit of Section 141(2) of the said Act in view of the clear dictum of the Supreme Court as noted above in the case of S.M.S. Pharmaceuticals Ltd (supra).

4. The learned Counsel who appeared on behalf of Sanjay Chaudhary, of course, took a contrary view, but I am of the opinion that the submissions made by the learned Counsel for the petitioner have to be accepted in view of the express declaration of law by the Supreme Court in the aforesaid case of S.M.S. Pharmaceuticals Ltd (supra). In this context, therefore, the impugned order is set aside. The matter be now placed before the learned Metropolitan Magistrate for further proceedings in accordance with law on 27.05.2006, the date which has already been been fixed. The said Sanjay Chaudhary shall appear before that court on that date.