Satish Kumar And Anr. vs State And Ors.
2008 Latest Caselaw 718 Del

ORDER

S. Muralidhar, J.

1. This petition under Section 482 of the Code of Criminal Procedure, 1973 (CrPC) seeks the quashing of Criminal Complaint Case No. 1515/1 of 2006 pending in the Court of the Metropolitan Magistrate (MM) New Delhi titled Indian Airlines Ltd. v. Rao Tours and Travels Pvt. Ltd. And Others under Sections 138 and 141 of the Negotiable Instruments Act, 1881 (`NI Act ) in so far as it concerns the Petitioners here.

2. The aforementioned complaint was filed in respect of a cheque issued in favor of the complainant Indian Airlines Ltd. by M/s. Rao Tours and Travels Pvt. Ltd. (hereafter the Company ). The petitioners Mr. Satish Kumar and Ms. Swatantra were described as directors of the company and arraigned as accused 4 and 5.

3. The averments relevant to the petitioners made in the complaint read as under:

4. That the accused No. 1 is a Private Limited Company running its business in the name and style of M/s. Rao Tours and Travels (P) Ltd. at Subedar Bhawan, E- 249, 1st floor, Nelson Mandela Marg, Opp. Vasant Vihar DTC Depot, Munirka, New Delhi and is engaged inter-alia in the business of sale of passenger air tickets on domestic and international sectors. The accused No. 2 is director/chairman of accused No. 1, accused No. 3 is Managing Director of accused No. 1, accused No. 4 and 5 are Directors of accused No. 1.

5. That the accused No. 1 was appointed and authorised agent for selling the passenger air tickets to passenger for and on behalf of the complainant. The accused No. 2 to 5 are looking after and managing all day to day business affairs of accused No. 1 and are responsible and liable for all acts, deeds and business affairs of accused No. 1.

4. The accused were summoned by the learned MM and an order framing notice was also passed on 23rd October 2007.

5. It is urged by learned Counsel for the petitioners, relying on the judgment of the Supreme Court in S.M.S. Pharmaceuticals Ltd. v. Neeta Bhalla [Neeta Bhalla-I] and N.K. Wahi v. Shekhar Singh that the complaint lacks the minimum specific averments for making the petitioners liable for the offence under Section 138 NI Act.

6. The plea of the petitioners is opposed by learned Counsel appearing for the complainant Company relying on the judgment of the Supreme Court in N. Rangachari v. Bharat Sanchar Nigam Ltd. and the judgment of this Court in Rajesh Gulati v. Dharmender Goel 2008 III AD Vol.243. It is submitted that as long as there is an averment that the petitioners here were directors in charge of the affairs of the company, the complaint cannot be quashed.

7. Learned Counsel appearing on behalf of Respondents 4 and 5 i.e. the Chairman and the Managing Director respectively of the Company also opposes the plea of the petitioners stating that in fact they were the persons in charge of the affairs of the company.

8. The minimum requirement of the law in relation to an averment to be made in a complaint under Section 138 NI Act where the principal accused is a company has been explained by a Bench of three Judges of the Supreme Court in Neeta Bhalla- I. In para 19 of that judgment in Neeta Bhalla-I, the Supreme Court has explained as under:

19. 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.

(c) The answer to Question (c) has to be in the 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 the 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 the 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.

9. A perusal of the above judgment indicates that the minimum averment has to comprise two elements. First, that the person, in addition to the Company, who is sought to be made as an accused should be stated to be in charge of the affairs of the Company and responsible to it for the conduct of its business. The second element is that the averment should be to the effect that such person was in that capacity at the time of commission of the offence. If both elements of the averment are not cumulatively present then the requirement of Section 141 NI Act cannot be held to be satisfied.

10. In neither of the two paragraphs of the complaint in the instant case as extracted hereinabove, has it been stated that at the time the offence was committed the petitioners here were in charge of the affairs of the company or responsible to it for the conduct of its business. In the absence of such averments, as explained in Neeta Bhalla (I), the requirement of Section 141 NI Act cannot be said to be satisfied .

11. A two Judge Bench of the Supreme Court in N. Rangachari observed in para 19 (SCC, p. 117) that a person in the commercial world having a transaction with a company is entitled to presume that the Directors of the company are in charge of the affairs of the company. This observation is inconsistent with the decision of the larger Bench of three Judges in Neeta Bhalla (I) to the effect (in para 19) that merely being a director of the 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 the conduct of its business. Accordingly, the further observation in N. Rangachari that it is not necessary to further aver that the persons were in charge at the time of the commission of the offence is also therefore not consistent with the judgment of the larger Bench in Neeta Bhalla I.

12. As far as the two petitioners here are concerned, the averments in the complaint are insufficient for them to be made liable for the offences under Section 138 NI Act alleged to have been committed by the Company. The petitioners will stand discharged in Criminal Complaint Case No. 1515/1 of 2006 pending in the Court of the Metropolitan Magistrate (MM) New Delhi titled Indian Airlines Ltd. v. Rao Tours and Travels Pvt. Ltd. and Ors. . The complaint case however will continue as regards the other accused persons.

13. The petition and pending application are disposed of.

14. A copy of this order be sent to the learned MM within five days.

15. A copy of this order be given dusty to learned Counsel for the parties.