Sameer Karnani vs The State & Anr.
2009 Latest Caselaw 430 Del

                "REPORTABLE"
*     HIGH COURT OF DELHI AT NEW DELHI

+            Crl.M.C.No. 3524/2007 and
             Crl.M.A. No. 12806/07

                   Date of decision : February 06, 2009

#     SAMEER KARNANI                       ...... Petitioner
!                   Through : Mr. Jaswinder Singh, Adv.

                             Versus

$     THE STATE & ANR.                     ..... Respondents
^                   Through : Mr. M.P. Singh, APP for the
                               State.

%
      CORAM:
      HON'BLE MS. JUSTICE ARUNA SURESH

     (1) Whether reporters of local paper may be
         allowed to see the judgment?

     (2) To be referred to the reporter or not?                Yes

     (3) Whether the judgment should be reported
         in the Digest ?                                       Yes

                          JUDGMENT

ARUNA SURESH, J.

1. Petitioner Sameer Karnani has filed this petition

invoking the jurisdiction of this court under Section

482 Code of Criminal Procedure (hereinafter

referred to as „Cr.P.C.‟), assailing the order of the

trial court dated 4th July, 2007 passed in Complaint

Case No.1667/01 of 2007 under Section 138 of

Negotiable Instruments Act, (hereinafter referred

to as „N.I.Act‟) whereby the trial court was pleased

to summon the petitioner along with other accused

persons for an offence punishable under Section

138 N.I.Act.

2. Complainant (respondent No.2 herein) is a Private

Limited Company and is engaged inter alia in the

business of travel, tourism and ticketing. On 7th

November, 2006 complainant M/s. TSI-Travel

Services International Pvt. Ltd. entered into an

agreement with accused No.1 company „Arunodaya

Travels‟ through accused No.4 Mrs. Rashima.

Accused Nos.2 to 4 were the Directors of accused

No.1 company. Thereafter complainant had been

providing tickets to accused No.1 company during

the course of business dealings.

Complainant/respondent No.2 company had been

maintaining a running account of the accused in its

books of account. During the course of business

dealings a sum of Rs.3,33,861/- had become due

and payable by the accused company and in

discharge of its liability, accused company issued

two cheques (i) Cheque No.166009, dated

22.03.2007 drawn on Citibank for a sum of

Rs.2,00,565/- & (ii) Cheque No.166008, dated

13.4.2007, drawn on Citibank for a sum of

Rs.1,33,296/-.

3. These cheques on presentation were dishonoured

with the remark "Insufficient Funds" and on

subsequent presentation with the remarks

"Payment stopped by drawer". Resultantly,

respondent No.2 issued a legal notice dated 15th

May, 2007, posted on 17-18th May, 2007 to the

accused persons, calling upon them to pay the

cheques amount within the stipulated period of 15

days on receipt of the notice. The legal notice sent

to accused No.1 company was returned with the

remarks "Always locked". Petitioner Sameer

Karnani (accused No.2, in the complaint) did not

send any reply to the legal notice. This notice was

duly replied by accused Nos. 3 and 4 separately.

Since the accused persons failed to make the

payment of the impugned cheques, complainant

filed a complaint under Section 138 of the N.I.Act

which is under challenge in this petition.

4. Mr. Jaswinder Singh, learned counsel for the

petitioner has argued that petitioner had no

knowledge of the issuance of the impugned

cheques nor he had discharged any responsibility

of the company towards business dealings between

the complainant and the accused No.1 company;

the complaint does not disclose commission of any

offence by the petitioner as no specific averments

have been made in the complaint to disclose

commission of any offence by the petitioner to rope

him for vicariously liability for the act of accused

No.1 company. He has further submitted that

petitioner is not a signatory of the cheques nor he

handed over the cheques to the complainant

towards discharge of liability of the company as a

Director as he never participated in the dealings of

the company with the complainant.

5. It is submitted by the learned counsel for the

petitioner that ingredients and requirement of

Section 141 of the N.I. Act are not made out from

the averments in the complaint. The learned M.M.

erroneously summoned the petitioner as an

accused without application of mind and, therefore,

the order of the trial court being illegal deserves to

be quashed.

6. None has appeared and contested this petition on

behalf of respondent No.2 company for the last two

dates of hearing despite service.

7. Mr. M.P.Singh, learned counsel for the

respondent/State while refuting the submissions of

the learned counsel for the petitioner has urged

that it is specifically averred in para 5 of the

complaint that petitioner was a Director of the

accused No.1 company and was responsible for its

day to day business and, therefore, was liable for

the acts committed for and on behalf of accused

No.1 company and in view of Section 141 of the

N.I.Act, has committed an offence within the

meaning of Section 138 of the N.I.Act and therefore

has been rightly summoned by the trial court.

8. It is a common case of the parties that petitioner is

one of the Directors of accused No.1 company. As

per the averments in the complaint, the agreement

was executed between the complainant and

accused No.1 company on 7.11.2006 through Mrs.

Rashima, who is Director and accused No.4 in the

instant complaint. From the complaint, it is not

known as to which of the Directors had issued

impugned cheques in favour of the

complainant/respondent No.2. The fact remains,

petitioner is not the signatory of the impugned

cheques. To fasten the liability on the petitioner

for offence under Section 138 of the N.I.Act, it is

necessary for this court of see the averments

contained in the complaint qua the petitioner. The

only relevant paragraph wherein the petitioner

features is para 5 of the complaint which reads as

follows:-

"That in the regular course of business, the complainant was providing tickets to the accused No.1, i.e. Arunodaya Travels (Division of Bradbury SPG and WVG Mills Limited), C-3, LSC-1, Paschimi Marg, Vasant Vihar,

New Delhi-110 057. That the accused No.2 to 4 are the directors of the accused No.1 company engaged in to day to day affairs and management of the accused company, and are jointly and severally liable for the offence complained of.

Mrs. Rashima, the accused No.4 had entered in to the agreement with the complainant on 7-11-2006."

9. Thus, it is clear that allegations against the

petitioner and other accused persons being

Directors of accused No.1 company are that they

are engaged in the day to day affairs and

management of the accused company and are

jointly and severally liable for the offence

complained of. It is only accused No.4 Mrs.

Rashima, who has been specifically named in this

paragraph having entered into agreement with the

complainant on 7.11.2006.

10. From perusal of the entire complaint it is obvious

that nowhere the complainant has specifically

assigned any role to the petitioner to indicate that

petitioner was engaged in the day to day affairs

and management of the company and therefore

was jointly and severally liable for the offence

under Section 138 of the N.I.Act. Prima facie there

is nothing on record to suggest that petitioner was

actively involved in execution of the agreement

dated 7.11.2006 or otherwise was actively involved

in the company in company‟s day to day business.

11. For purposes of Section 141 of the N.I.Act, it was

necessary for the complainant to have specifically

averred in the complaint that at the time when

offence was committed, the person/accused was

incharge of and responsible for the conduct of the

business of the company. Without this averment

being made in the complaint, the requirement of

Section 141 of the N.I.Act cannot be said to be

satisfied. Merely being a Director of a company is

not sufficient to make a person liable under Section

141 of the N.I. Act. It is not necessary that

Director of a company is the incharge of and

responsible to the company for the conduct of its

day to day business. A person is incharge of and

responsible for the conduct of the business of the

company has to be averred as a fact because, there

is no deemed liability of a Director in such cases.

12. True that a Managing Director or a Joint Managing

Director are incharge of the company and,

therefore, are responsible to the company in the

conduct of its day to day business. A person

holding such position in a company becomes liable

under Section 141 of the N.I.Act. Similarly, a

signatory of a dishonoured cheuqe, may be a

Director or a responsible officer of the company is

responsible for the incriminating act within the

meaning of Section 141 sub-Section 2 of the N.I.

Act.

13. In the absence of incriminating circumstances, a

Director of a company cannot be deemed to be

incharge of and responsible to the company for the

conduct of its day to day business under Section

141 of the N.I. Act.

14. In the present case, since there are no specific

averments in the complaint that petitioner was

incharge of and responsible for the conduct of

business of accused No.1 company at the relevant

time, no vicarious liability can be fastened upon

him in the context of Section 141 of the N.I. Act for

offence under Section 138 of the N.I. Act.

15. Hence, petition is allowed. Complaint filed under

Section 138 of the N.I. Act being Complaint Case

No.1667/01 of 2007 and the consequent

summoning order dated 4.07.2007 passed therein

by the trial court are hereby quashed qua the

petitioner only. The trial court shall continue to

proceed with the trial of the case against the other

accused persons.

Attested copy of the order be sent to the trial court

through special messenger.

ARUNA SURESH (JUDGE) February 06, 2009 vk