Bikash Chakrborty & Ors. vs Reliance Structures P. Ltd.
2012 Latest Caselaw 1308 Del

*              THE HIGH COURT OF DELHI AT NEW DELHI

+                           Crl.MC No.4110/2011

                                                Date of Decision: 27.02.2012
Bikash Chakrborty & Ors.                                    ......Petitioner
                       Through:           Mr. Rituraj Biswas, Advocate

                                    Versus

Reliance Structures P. Ltd.                          ...... Respondent
                          Through:        Counsel for respondent (presence
                                          not given)

CORAM:
HON'BLE MR. JUSTICE M.L. MEHTA


M.L. MEHTA, J.

1. This is a petition under Section 482 Cr.PC preferred by the petitioners for setting aside the order dated 30.7.2011 passed by learned MM whereby the petitioners herein were summoned in criminal complaint case no.1170/A/2011 filed by respondent under Section 138 of Negotiable Instruments Act (hereinafter referred to as "the Act").

2. Brief facts leading to filing the present petition are that the petitioner no.1 is an employee and petitioners no.2 and 3 are the directors of NEFFS India Pvt. Ltd. Two cheques of Rs.3,35,750/- and Rs.4,18,500/- respectively were issued by the company in favour of respondent allegedly towards discharge of their liability. These cheques on presentation were dishonoured. The said cheques were signed by Mr. Binoy Khandelia, the Managing Director of the company who is also co-accused in the complaint made by the

respondent herein. A legal notice dated 9.2.2011 was issued demanding payment of the aforesaid cheques amounts. Since the amount remained unpaid, the respondent filed a complaint against the company and its functionaries including the petitioners herein under Section 138 of the Act and vide the impugned order, cognizance was taken and summons were issued against all the accused persons including the petitioners herein.

3. The petitioners have assailed the impugned order mainly disputing their liability of the alleged commission of offence. Their case is that petitioner no.1 is the employee whereas petitioners no.2 and 3, though directors of the company, but were not involved in any manner in the conduct of affairs of the company. In other words, the plea of the petitioners is that they are neither incharge or responsible to the conduct of affairs of the company and so they are not liable in terms of provisions of Section 141 of the Act. The petitioners have placed reliance on National Small Industries Corp. Ltd.v Harmeet Singh Paintal and another [(2010) 3 SCC 330].

4. Per contra, the plea of respondent/ complainant is that all the petitioners being employees and directors were incharge and responsible to the conduct of the affairs of the company and were so equally liable along with the company and other co-accused persons. It was submitted that the complainant could not be presumed to have knowledge about the internal affairs of the company to specifically know as to what was the role of each director in the conduct of affairs of company. It was submitted that the complainant could not be presumed to know more than what was stated in the complaint that the petitioners are incharge or responsible for the conduct of affairs of the company.

5. The law with regard to the liability of the company and its functionaries on account of dishonour of cheques is provided in Section 141 of the Act, which reads as under:

"141. (1) Offences by companies. If the person committing an offence under section 138 is a company, every person who, at the time the offence was committed, was in charge of, and was responsible to, the company for the conduct of the business of the company, as well as the company, shall be deemed to be guilty of the offence and shall be liable to be proceeded against and punished accordingly: Provided that nothing contained in this sub- section shall render any person liable to punishment if he proves that the offence Was committed without his knowledge, or that he had exercised all due diligence to prevent the commission of such offence.

(2) Notwithstanding anything contained in sub- section (1), where any offence under this Act has been committed by a company and it is proved that the offence has been committed with the consent or connivance of, or is attributable to, any neglect on the part of, any director, manager, secretary or other officer of the company, such director, manager, secretary or other officer shall also be deemed to be guilty of that offence and shall be liable to be proceeded against and punished accordingly, Explanation.- For the purposes of this section,-

(a) " company" means any body corporate and includes a firm or other association of individuals; and

(b) " director", in relation to a firm, means a partner in the firm".

6. In the aforesaid case of National Small Industries (supra), the Supreme Court after discussing various judgment on the subject in para 25 summarized the discussion as under:

"25) From the above discussion, the following principles emerges :

(i) The primary responsibility is on the complainant to make specific averments as are required under the law in the complaint so as to make the accused vicariously liable. For fastening the criminal liability, there is no 27 presumption that every Director knows about the transaction.

(ii) Section 141 does not make all the Directors liable for the offence. The criminal liability can be fastened only on those who, at the time of the commission of the offence, were in charge of and were responsible for the conduct of the business of the company.

(iii) Vicarious liability can be inferred against a company registered or incorporated under the Companies Act, 1956 only if the requisite statements, which are required to be averred in the complaint/petition, are made so as to make accused therein vicariously liable for offence committed by company along with averments in the petition containing that accused were in-charge of and responsible for the business of the company and by virtue of their position they are liable to be proceeded with.

(iv) Vicarious liability on the part of a person must be pleaded and proved and not inferred.

(v) If accused is Managing Director or Joint Managing Director then it is not necessary to make specific averment in the complaint and by virtue of their position they are liable to be proceeded with.

(vi) If accused is a Director or an Officer of a company who signed the cheques on behalf of the company then also it is not necessary to make specific averment in complaint.

(vii) 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."

7. Now in light of the above legal principles it may be seen that the averments as set out in the complaint against the petitioners are as under:

"To pay/discharge their liability/ debt, accused # 2 to 5, being the Principals as also the responsible officers, in control and managing day to day affairs of Accused # 1 Company and also to deal for and on behalf of their said establishment with the complainant, tendered two (2) cheques of Rs.3,35,750/- & Rs.82,750/- total Rs.4,18,500/- bearing # 207467 & - 70, drawn on the a/c of accused # 1 with Punjab National Bank, payable at par all the branches. While cheques are drawn by only one of the accused but these are tendered on unanimous decision and consent of all the accused who have jointly and severally dealt with complainant. Cheques are though only in part satisfaction of the total liability of the accused to the complainant as on date."

8. Accused no.1 is the company, accused no.2, 4 and 5 are the present petitioners and accused no.3 is the Managing Director, who admittedly had signed the cheques in question on behalf of the company. With regard to the liability of the Managing Director, there was no dispute that he was incharge and responsible to the conduct of affairs of company. There is also no dispute with regard to the fact that petitioner no.1 who was arrayed as accused no.5 was an employee and accused no.2 and 3 are the directors of the company. From the averments as leveled against the petitioners as noted above in the complaint, it cannot be said that the acts committed by them would sufficiently make out the petitioners herein to be vicariously liable. In order to fasten the vicarious liability on the petitioners in accordance with the provisions of Section 141 of the Act, the averments as to the role of the

concerned employees and directors has to be specific. The description should be clear and there should be some unambiguous allegations as to how the concerned employees and directors were alleged to be incharge and responsible for the conduct of the affairs of the company. It is trite that so far as the company is concerned, if any offence is committed by it, then all other persons who are its directors or employees cannot be made vicariously liable. Only such person would be held liable if at the time when the offence is committed, he was incharge and responsible to the conduct of the business and affairs of the company. Merely being a director or employee of the company in absence of above factors will not make them liable. There being no specific averment attributing specific role describing the manner as to how the petitioners were incharge and responsible to the conduct of business affairs of the company, they could not be made liable for the offences alleged to have been committed by the company or the managing director.

9. The plea that the respondent/ complainant was not aware as to the specific role and duties of the petitioners in the company that being their internal affair, was misconceived. Each and every director or employee of the company cannot be made liable vicariously for the offence committed by the company. As noted above, there was to be specific averment attributing liability of each person sought to be made liable for the company. If the respondent intended to make such employee or director of the company to be liable, he need specifically aver as to how and in what matter they were, according to him in charge and responsible to the conduct and affairs of the company. Mere vague allegations can make such a person liable for criminal

acts. Similarly, the plea that it was a unanimous decision of all, is also vague and unfounded in the absence of there being any role attributing to any of the petitioners in the conduct of day to day business of the company. The petitioners cannot be made to suffer the agony of criminal trial without there being any specific role in the involvement of the commission of the offence.

10. Having regard to the above facts and circumstances, I find a fit case to exercise powers under Section 482 Cr.PC to set at rest the criminal proceedings against the petitioners. Consequently, the petition is allowed and order dated 30.7.2011 passed by learned MM whereby the petitioners herein were summoned in criminal complaint case no.1170/A/2011 filed by respondent under Section 138 of Negotiable Instruments Act is hereby quashed.

11. The petition stands disposed of accordingly.

M.L. MEHTA, J.

February 27, 2012 rd