S.N. Subrahmanyan vs The State Of Jharkhand
2021 Latest Caselaw 4939 Jhar

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            IN THE HIGH COURT OF JHARKHAND, RANCHI
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Cr.M.P. No. 612 of 2020

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S.N. Subrahmanyan, aged about 60 years, son of late S.S.Narayanan, resident of Ballard Estate, Narottam Morarji Marg, PO and PS Nariman Point, Mumbai (Maharashtra), Working for gain as Managing Director of M/s Larsen & Toubro Ltd., resident of Mount Pooremali Road, Mannpakkam, PO and PS Mannpakkam, Mannpakkam, District Chennai (Tamil Nadu). ..... Petitioner

-- Versus --

1.The State of Jharkhand, through Labour Enforcement Officer, Bokaro, PO and PS Bokaro, District Bokaro

2.The Union of India, through Labour Enforcement Officer (Central), PO and PS Bokaro, District -Bokaro ...... Opposite Parties

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CORAM: HON'BLE MR. JUSTICE SANJAY KUMAR DWIVEDI

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For the Petitioner :- Mr. Ajit Kumar, Senior Advocate Mr. Nitin Kumar Pasari, Advocate Ms. Sidhi Jalan, Advocate For Union of India :- Ms. Shresha Sinha, Advocate

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13/21.12.2021 Heard Mr. Ajit Kumar, the learned Senior counsel assisted by

Mr. Nitin Kumar Pasari, the learned vice counsel appearing on behalf of

the petitioner and Ms. Shresha Sinha, the learned counsel appearing on

behalf of the respondent-Union of India.

2. This petition has been filed for quashing the order dated

20.12.2013 by which cognizance of offence under the Minimum Wages

Act has been taken against the petitioner. Further prayer is made for

quashing the orders dated 20.09.2016, 24.01.2017, 26.07.2018,

27.03.2019 and 27.06.2019 whereby bailable warrant, non-bailable

warrant, processes under section 82 and under section 83 Cr.P.C. and

permanent warrant, respectively, have been issued against the petitioner.

3. The complaint was filed stating therein that:

A. The above named accused person (petitioner) is the

employer as defined under Section 2(e) of the Minimum

Wages Act, 1948 [hereinafter to be referred to as 'the

Act'] and engaged for work Setting up 400 K.V.GIS

Switch Yard from 'A' Plant DVC BTPS PO and PS Bokaro

Thermal, District Bokaro which is a schedule

employment under the Minimum Wages Act, 1948 and

the Minimum rates of Wages fixed vide Notification

No.1285(E) dated 20.05.2009 of the Govt. of India. The

complainant is an Inspector under Section 19 of the

Minimum Wages Act, 1948.

B. Having jurisdiction over the establishment of accused

person(petitioner) and he inspected it on 20.05.2013

and detected the above offences and served the

inspection report cum show cause notice

No.26/46/2013-B dated 24.05.2013 through Regd. A.D.

post wherein the accused person (petitioner) was asked

to comply with the provisions of the Act and Rules

thereunder and report compliance with the stipulated

period direct to the Dy. Chief Labour Commissioner

(Central), Dhanbad endorsing a copy of the same to the

complainant. But the accused person(petitioner) failed

to comply the directive and hence this complaint is filed.

C. That the accused person (petitioner) contravened the

provisions of the Act and Rules rendered himself liable

for prosecution. Therefore, it is prayed that the

cognizance be taken and the accused person be

summoned to stand trial and punished according to Law.

4. Mr. Ajit Kumar, the learned Senior counsel appearing for the

petitioner by way of referring the several orders of the learned trial court

submits that the petitioner has not received the summon order and only

after knowing that order/process under section 82 Cr.P.C has been

issued, they came to know about the pendency of this case and

thereafter this petition has been filed before this Court under section 482

Cr.P.C. He further submits that the petitioner was Director at the time of

occurrence and he further submits that the company is not made

accused and only the petitioner has been made accused and in that view

of the matter, the prosecution is bad in law. To buttress his this

argument, he relied in the case of "Aneeta Hada v. Godfather Travels and

Tours (P) Ltd.", 2012 5 SCC 661. Paragraph nos. 51 and 59 of the said

judgment are quoted herein below:

"51. We have already opined that the decision in Sheoratan Agarwal runs counter to the ratio laid down in C.V. Parekh which is by a larger Bench and hence, is a binding precedent. On the aforesaid ratiocination, the decision in Anil Hada has to be treated as not laying down the correct law as far as it states that the Director or any other officer can be prosecuted without impleadment of the company. Needless to emphasise, the matter would stand on a different footing where there is some legal impediment and the doctrine of lex non cogit ad impossibilia gets attracted.

59. In view of our aforesaid analysis, we arrive at the irresistible conclusion that for maintaining the prosecution under Section 141 of the Act, arraigning of a company as an accused is imperative. The other categories of offenders can only be brought in the drag-net on the touchstone of vicarious liability as the same has been stipulated in the provision itself. We say so on the basis of the ratio laid down in C.V. Parekh which is a three-Judge Bench decision. Thus, the view expressed in Sheoratan Agarwal does not correctly lay down the law and, accordingly, is hereby overruled. The decision in Anil Hada is overruled with the qualifier as stated in para 51. The decision in Modi Distillery has to be treated to be restricted to its own facts as has been explained by us hereinabove."

5. He drawn the attention of the Court to the complaint

petition and submits that the company is not made accused and the

petitioner in the representative capacity has been made accused. By way

of referring section 22(c) of the Act, he submits that if the occurrence is

committed by the company the person in-charge and responsible to the

company is liable to be punished. He submits that there is no averments

in the complaint as to how this petitioner is involved in discharge of day

to day affairs of the company. To buttress his this argument, he relied on

the judgment of Hon'ble Supreme Court in the case of Ravindranatha

Bajpe v. Mangalore Special Economic Zone Ltd. and Others [Cr.Appeal

No.1047-1048/2021 (Supreme Court)]. Paragraph nos.6.2, 8.0, 8.1, 8.2

and 8.3 of the said judgment are quoted hereinbelow:

"6.2 It is submitted that so far as accused nos. 2 to 5 are concerned, they were arrayed as an accused being Chairman, Managing Director, Deputy General Manager (Civil & Env.) of accused no.1 and accused no.5 is the Planner and executor of the project work and all of them were stationed at Hyderabad at the time of the commission of the alleged offence and there are no allegations that at the time of commission of the alleged offence, they were present. It is submitted that similarly accused nos. 7 & 8 were arrayed as an accused being Chairman and Executive Director of accused no.6 who also were stationed at Hyderabad at the time of commission of the alleged offence and there are no allegations even against them that at the time of commission of the alleged offence, they were present. It is submitted that even accused no.7 was aged 82 years. Therefore, the learned Sessions Court has rightly quashed and set aside the order passed by the learned Magistrate issuing the process against accused nos. 1 to 8 herein for the offences punishable under Sections 427, 447, 506 and 120B read with Section 34 IPC. Heavy reliance is placed on the decisions of this Court in the cases of GHCL Employees Stock Option Trust v. India Infoline Limited, (2013) 4 SCC 505; and Sunil Bharti Mittal v. Central Bureau of Investigation, (2015) 4 SCC 609.

8. In the case of Sunil Bharti Mittal (supra), it is observed by this Court in paragraphs 42 to 44 as under:

(iii) Circumstances when Director/person in charge of the affairs of the company can also be prosecuted, when the company is an accused person

42. No doubt, a corporate entity is an artificial person which acts through its officers, Directors, Managing Director, Chairman, etc. If such a company commits an offence involving mens rea, it would normally be the intent and action of that individual who would act on behalf of the company. It would be more so, when the criminal act is that of conspiracy. However, at the same time, it is the cardinal principle of criminal jurisprudence that there is no vicarious liability unless the statute specifically provides so.

43. Thus, an individual who has perpetrated the commission of an offence on behalf of a company can be made an accused, along with the company, if there is

sufficient evidence of his active role coupled with criminal intent. Second situation in which he can be implicated is in those cases where the statutory regime itself attracts the doctrine of vicarious liability, by specifically incorporating such a provision.

44. When the company is the offender, vicarious liability of the Directors cannot be imputed automatically, in the absence of any statutory provision to this effect. One such example is Section 141 of the Negotiable Instruments Act, 1881. In Aneeta Hada v. Godfather Travels & Tours (P) Ltd., (2012) 5 SCC 661, the Court noted that if a group of persons that guide the business of the company have the criminal intent, that would be imputed to the body corporate and it is in this backdrop, Section 141 of the Negotiable Instruments Act has to be understood. Such a position is, therefore, because of statutory intendment making it a deeming fiction. Here also, the principle of alter ego, was applied only in one direction, namely, where a group of persons that guide the business had criminal intent, that is to be imputed to the body corporate and not the vice versa. Otherwise, there has to be a specific act attributed to the Director or any other person allegedly in control and management of the company, to the effect that such a person was responsible for the acts committed by or on behalf of the company.

8.1 In the case of Maksud Saiyed v. State of Gujarat, (2008) 5 SCC 668, in paragraph 13, it is observed and held as under:

"13. Where a jurisdiction is exercised on a complaint petition filed in terms of Section 156(3) or Section 200 of the Code of Criminal Procedure, the Magistrate is required to apply his mind. The Penal Code does not contain any provision for attaching vicarious liability on the part of the Managing Director or the Directors of the Company when the accused is the company. The learned Magistrate failed to pose unto himself the correct question viz. as to whether the complaint petition, even if given face value and taken to be correct in its entirety, would lead to the conclusion that the respondents herein were personally liable for any offence. The Bank is a body corporate. Vicarious liability of the Managing Director and Director would arise provided any provision exists in that behalf in the statute. Statutes indisputably must contain provision fixing such vicarious liabilities. Even for the said purpose, it is obligatory on the part of the complainant to make requisite allegations which would attract the provisions constituting vicarious liability."

8.2 As observed by this Court in the case of Pepsi Foods Ltd. v. Special Judicial Magistrate, (1998) 5 SCC 749 and even thereafter in catena of decisions, summoning of an accused in a criminal case is a serious matter. Criminal Law cannot be set into motion as a matter of course. In paragraph 28 in Pepsi Foods Limited (supra), it is observed and held as under:

"28. Summoning of an accused in a criminal case is a serious matter. Criminal law cannot be set into motion as a matter of course. It is not that the complainant has to bring only two witnesses to support his allegations in the complaint to have the criminal law set into motion. The order of the Magistrate summoning the accused must reflect that he has applied his mind to the facts of the case and the law applicable thereto. He has to examine the nature of allegations made in the complaint and the evidence both oral and documentary in support thereof and would that be sufficient for the complainant to succeed in bringing charge home to the accused. It is not that the Magistrate is a silent spectator at the time of recording of preliminary evidence before summoning of the accused. The Magistrate has to carefully scrutinise the evidence brought on record and may even himself put questions to the complainant and his witnesses to elicit answers to find out the truthfulness of the allegations or otherwise and then examine if any offence is prima facie committed by all or any of the accused."

8.3 As held by this Court in the case of India Infoline Limited (supra), in the order issuing summons, the learned Magistrate has to record his satisfaction about a prima facie case against the accused who are Managing Director, the Company Secretary and the Directors of the Company and the role played by them in their respective capacities which is sine qua non for initiating criminal proceedings against them. Looking to the averments and the allegations in the complaint, there are no specific allegations and/or averments with respect to role played by them in their capacity as Chairman, Managing Director, Executive Director, Deputy General Manager and Planner & Executor. Merely because they are Chairman, Managing Director/Executive Director and/or Deputy General Manager and/or Planner/Supervisor of A1 & A6, without any specific role attributed and the role played by them in their capacity, they cannot be arrayed as an accused, more particularly they cannot be held vicariously liable for the offences committed by A1 & A6.

6. Relying on this judgment, he submits that the petitioner is

Director and he cannot be held liable of the lapses. According to him,

the fixation of liability upon the Director merely saying in the complaint

or making bald and cursory statement in the complaint that the Director

is responsible is not sufficient. He submits that the requirement of law is

that the complainant is required to demonstrate in the complaint as to

how the Director is responsible for such lapses. To buttress his this

argument, he relied in the case of National Small Industries Corporation

Limited v. Harmeet Singh Paintal and Another, (2010) 3 SCC 330.

Paragraph nos. 12, 13, 14 and 15 of the said judgment are quoted

hereinbelow:

"12. It is very clear from the above provision that what is required is that the persons who are sought to be made vicariously liable for a criminal offence under Section 141 should be, 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. Every person connected with the company shall not fall within the ambit of the provision. Only those persons who were in charge of and responsible for the conduct of the business of the company at the time of commission of an offence will be liable for criminal action. It follows from the fact that if a Director of a company who was not in charge of and was not responsible for the conduct of the business of the company at the relevant time, will not be liable for a criminal offence under the provisions. The liability arises from being in charge of and responsible for the conduct of the business of the company at the relevant time when the offence was committed and not on the basis of merely holding a designation or office in a company.

13. Section 141 is a penal provision creating vicarious liability, and which, as per settled law, must be strictly construed. It is therefore, not sufficient to make a bald cursory statement in a complaint that the Director (arrayed as an accused) is in charge of and responsible to the company for the conduct of the business of the company without anything more as to the role of the Director. But the complaint should spell out as to how and in what manner Respondent 1 was in charge of or was responsible to the accused Company for the conduct of its business. This is in consonance with strict interpretation of

penal statutes, especially, where such statutes create vicarious liability.

14. A company may have a number of Directors and to make any or all the Directors as accused in a complaint merely on the basis of a statement that they are in charge of and responsible for the conduct of the business of the company without anything more is not a sufficient or adequate fulfilment of the requirements under Section

141.

15. In a catena of decisions, this Court has held that for making Directors liable for the offences committed by the company under Section 141 of the Act, there must be specific averments against the Directors, showing as to how and in what manner the Directors were responsible for the conduct of the business of the company."

7. By way of referring to Sub-section 2(b) of Section 22(B), he

submits that the complaint is required to be filed within six months of the

date on which the occurrence is alleged to have been committed. By way

of referring the complaint petition, he submits that the occurrence took

place on 20.05.2013 and the complaint was filed on 18.12.2013 and six

months lapsed on 20.11.2013 whereas the cognizance has been taken on

20.12.2013. He submits that in view of these sections the prosecution is

bad in law. He further submits that in the complaint petition, the

limitation petition has been filed, however, in the cognizance order, there

is no conciliation to that condonation petition meaning thereby the

condonation has not been done by the Court. He further elaborated his

argument by way of submitting that there is no provision of condonation

of delay in the Act. He further submits that the cognizance order has not

disclosed as to how prima facie case against the petitioner is made out.

He relied in the case of "Dayle De'souza v. Government of India, through

Deputy Chief Labour Commissioner and Ors.", MANU/SC/1016/2021=

2002 1 SCC Online SC 1012. Paragraph nos.31 and 32 of the said

judgment are quoted hereinbelow:

"31. There are a number of decisions of this Court in which, with reference to the importance of the summoning order, it has been emphasised that the

initiation of prosecution and summoning of an accused to stand trial has serious consequences (See - Pepsi Foods Ltd. and Another v. Special Judicial Magistrate and Others, (1998) 5 SCC 749 ; GHCL Employees Stock Option Trust v.

Indian Infoline Ltd. and Others, (2013) 4 SCC 505 ; Krishna Lal Chawla and Others v. State of Uttar Pradesh and Another, (2021) 5 SCC 435). They extend from monetary loss to humiliation and disrepute in society, sacrifice of time and effort to prepare defence and anxiety of uncertain times. Criminal law should not be set into motion as a matter of course or without adequate and necessary investigation of facts on mere suspicion, or when the violation of law is doubtful. It is the duty and responsibility of the public officer to proceed responsibly and ascertain the true and correct facts. Execution of law without appropriate acquaintance with legal provisions and comprehensive sense of their application may result in an innocent being prosecuted.

32. Equally, it is the court's duty not to issue summons in a mechanical and routine manner. If done so, the entire purpose of laying down a detailed procedure under Chapter XV of the 1973 Code gets frustrated. Under the proviso (a) to Section 200 of the 1973 Code, there may lie an exemption from recording pre- summoning evidence when a private complaint is filed by a public servant in discharge of his official duties; however, it is the duty of the Magistrate to apply his mind to see whether on the basis of the allegations made and the evidence, a prima facie case for taking cognizance and summoning the accused is made out or not. This Court explained the reasoning behind this exemption in National Small Industries Corporation Limited v. State (NCT of Delhi) and Others: (2009) 1 SCC 407.

"12. The object of Section 200 of the Code requiring the complainant and the witnesses to be examined, is to find out whether there are sufficient grounds for proceeding against the accused and to prevent issue of process on complaints which are false or vexatious or intended to harass the persons arrayed as accused. (See Nirmaljit Singh Hoon v. State of W.B.) Where the complainant is a public servant or court, clause (a) of the proviso to Section 200 of the Code raises an implied statutory presumption that the complaint has been made responsibly and bona fide and not falsely or vexatiously. On account of such implied presumption, where the complainant is a public servant, the statute exempts examination of the complainant and the witnesses, before issuing process.

The issue of process resulting in summons is a

judicial process that carries with it a sanctity and a promise of legal propriety."

8. By way of referring the different orders of the Court, he

submits that report of execution of summons was not there and in that

view of the matter the N.B.W and proclamation under section 82 Cr.P.C

and permanent warrant against the petitioner is against the mandate of

law.

9. Per contra, Ms. Shresha Sinha, the learned counsel

appearing on behalf of the respondent-Union of India draws the attention

of the Court to page no.16 of the paper book which is the complaint

petition and submits that company is made an accused and the petitioner

is representing the company. She submits that on the technicality of not

arraying the company as one of the accused, the complaint will not

vitiate. To buttress her this argument, she relied in the case of Bhupesh

Rathod v. Dayashankar Prasad Chaurasia and Another, 2021 SCC Only SC

1031 of the Hon'ble Supreme Court [Cr. Appeal No.1105 of 2021].

Paragraph nos.19, 22 and 23 of the said judgment are quoted

hereinbelow:

"19. In the conspectus of the aforesaid principles we have to deal with the plea of the respondent that the complaint was not filed by the competent complainant as it is the case that the loan was advanced by the Company. As to what would be the governing principles in respect of a corporate entity which seeks to file the complaint, an elucidation can be found in the judgment of this Court in Associated Cement Co. Ltd. v. Keshavanand. If a complaint was made in the name of the Company, it is necessary that a natural person represents such juristic person in the court and the court looks upon the natural person for all practical purposes. It is in this context that observations were made that the body corporate is a de jure complainant while the human being is a de facto complainant to represent the former in the court proceedings. Thus, no Magistrate could insist that the particular person whose statement was taken on oath alone can continue to represent the Company till the end of the proceedings. Not only that, even if there was

initially no authority the Company can at any stage rectify that defect by sending a competent person.

22. If we look at the format of the complaint which we have extracted aforesaid, it is quite apparent that the Managing Director has filed the complaint on behalf of the Company. There could be a format where the Company's name is described first, suing through the Managing Director but there cannot be a fundamental defect merely because the name of the Managing Director is stated first followed by the post held in the Company.

23. It is also relevant to note that a copy of the Board Resolution was filed along with the complaint. An affidavit had been brought on record in the trial court by the Company, affirming to the factum of authorisation in favour of the Managing Director. A Manager or a Managing Director ordinarily by the very nomenclature can be taken to be the person in-charge of the affairs Company for its day-to-day management and within the activity would certainly be calling the act of approaching the court either under civil law or criminal law for setting the trial in motion. It would be too technical a view to take to defeat the complaint merely because the body of the complaint does not elaborate upon the authorisation. The artificial person being the Company had to act through a person/official, which logically would include the Chairman or Managing Director. Only the existence of authorisation could be verified."

10. By way of relying on this judgment, she submits that the

contention of the petitioner is fit to be rejected on the point of not

arraying the company as accused. On the point of limitation, she submits

that section 473 Cr.P.C. empowers the Court to condone the delay. She

further submits that along with the complaint the condonation petition

for the delay was filed. She submits that even if the Court has not passed

any order on the limitation petition it will be deemed that condonation

was granted and thereafter the cognizance has been taken. She relied on

the judgment in the case of "S.M.S. Pharmaceuticals Ltd. v. Neeta Bhalla

and Another" reported in (2005)8 SCC 89, and she submits that so far the

question of principles of law is concerned that has been answered in

affirmative by the Hon'ble Supreme Court and it has been held that

Director should be the in-charge of the company and responsible for the

conduct of the company. She relied on paragraph nos. 1 and 19 of the

said judgment which are quoted hereunder:

"1. This matter arises from a reference made by a two-Judge Bench of this Court for determination of the following questions by a larger Bench:

"(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 fulfil the requirements of the said section and it is not necessary to specifically state in the complaint that the person 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."

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 the question posed in sub-para (b) has to be in the 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 the 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.

11. On the point of summoning of the petitioner, she submits

that there is no illegality in the impugned order and summon was

directed to be issued. The petitioner has evaded the service of summons

and that is why further orders of N.B.W and section 82 Cr.P.C.

proclamation has been issued against the petitioner. She further

elaborated her argument by submitting that the petitioner is the

employer within the meaning of section 2(e) of the Act and the name of

the petitioner is also disclosed in the license issued under the Act. She

submits that at this stage this Court may not interfere under section 482

Cr.P.C. She further submits that onus lies upon the petitioner of proving

as to how he is not liable. She submits that limitation is a mixed question

of the facts and law which can be dealt by the learned trial court in the

proceeding and evaluation has been done of the principle who is

employer in view of the meaning of Section 2 (e) of the Act. She submits

that the complainant is a public servant and he is exempted under

Section 200(a) of the Cr.P.C to appear in the court concerned.

12. In the light of the above facts and the arguments of the

learned counsel for the parties, the Court has perused the complaint

petition and the entire order sheets. In the complaint it has been

disclosed that the inspection was made on 20.05.2013 and the offence

has been described under the Minimum Wages Act, 1948. Sub-setion

2(b) of Section 22(B) reads as under:

"22.B. .... .....

.... .... .....

2(b) under Section 22-A, unless complaint thereof is made within six months of the date on which the offence is alleged to have been committed"

13. On perusal of this section, it is crystal clear that six months

limitation is prescribed from the date of offence. It is admitted fact that

as disclosed in the complaint that it was in the knowledge of the

Inspector on 20.05.2013 and complaint was filed on 18.12.2013 six

months completed on 20.11.2013. In the cognizance order, the trial court

has not dealt that limitation point and cognizance has been taken. When

there is no order on that point, it cannot be held that the condonation

petition filed by the petitioner is deemed to be allowed. This argument of

the learned counsel for the O.P.No.2 is negated so far this point is

concerned. In the complaint, on perusal, it transpires that the petitioner

is arrayed as accused and he has said to be representative of M/s Larsen

& Tubro Limited, thus, it cannot be said that Larsen & Tubro is made an

accused. The cognizance against the petitioner has been taken. There is

no cognizance against the company. In the case of "Bhupesh Rathod v.

Dayashankar Prasad Chaurasia and Another(Supra) relied by learned

counsel for the O.P.No.2, it was contended that the company has not

filed the case and considering the complaint petition wherein the

Managing Director has filed the complaint on behalf of the company and

the name of the Managing Director was stated first followed by post held

by the company, considering that aspect of the matter, the Hon'ble

Supreme Court has come to the conclusion that the case was filed by the

company. In the case in hand, the company has not made an accused

and cognizance has also not taken against the company. Considering the

fact that only the petitioner has been made accused. Thus, the judgment

relied by the learned counsel appearing for the O.P.no.2 is not helping

the O.P.no.2. In the case of S.M.S. Pharmaceuticals Ltd. v. Neeta Bhalla

And Another(supra), position of the Managing Director or Joint Managing

Director has been discussed Paragraph nos. 4 and 9 of the said judgment

are quoted hereinbelow:

"4. In the present case, we are concerned with criminal liability on account of dishonour of a cheque. It primarily falls on the drawer company and is extended to officers of the company. The normal rule in the cases involving criminal liability is against vicarious liability, that is, no one is to be held criminally liable for an act of another. This normal rule is, however, subject to exception on account of specific provision being made in the statutes extending liability to others. Section 141 of the Act is an instance of specific provision which in case an offence under Section 138 is committed by a company, extends criminal liability for dishonour of a cheque to officers of the company. Section 141 contains conditions which have to be satisfied before the liability can be extended to officers of a company. Since the provision creates criminal liability, the conditions have to be strictly complied with. The conditions are intended to ensure that a person who is sought to be made vicariously liable for an offence of which the principal accused is the company, had a role to play in relation to the incriminating act and further that such a person should know what is attributed to him to make him liable. In other words, persons who had nothing to do with the matter need not be roped in. A company being a juristic person, all its deeds and functions are the result of acts of others. Therefore, officers of a company who are responsible for acts done in the name of the company are sought to be made personally liable for acts which result in criminal action being taken against the company. It makes every person who, at the time the offence was committed, was in charge of, and was responsible to the company for the conduct of business of the company, as well as the company, liable for the offence. The proviso to the sub-section contains an escape route for persons who are able to prove that the offence was committed without their knowledge or that they had exercised all due diligence to prevent commission of the offence.

9. The position of a managing director or a joint managing director in a company may be different. These persons, as the designation of their office suggests, are in charge of a company and are responsible for the conduct of the business of the company. In order to escape liability such persons may have to bring their case within the proviso to Section 141(1), that is, they will have to prove that when the offence was committed they had no

knowledge of the offence or that they exercised all due diligence to prevent the commission of the offence."

14. Admittedly, the petitioner had stationed at Chennai which

has been disclosed in the complaint itself and the alleged offence was

allegedly of Bokaro (Jharkhand), thus, it transpired that the petitioner

was stationed at Chennai and the alleged occurrence took place at

Bokaro (Jharkhand). It has not been disclosed in the complaint as to how

this petitioner is looking into the day to day affairs of the company. The

Court has perused the cognizance order dated 20.12.2013. There is no

disclosure of the fact as to how prima facie case against this petitioner

has been made out and the cognizance under section 22(A) of the Act

has been taken. A reference may be made to "Birla Corporation Limited v.

Adventz Investments and Holdings Limited and Others", (2019) 16 SCC

610. Paragraph nos.33, 34 and 35 of the said judgment are quoted

hereinbelow:

"33. The order of the Magistrate summoning the accused must reflect that he has applied his mind to the facts of the case and the law applicable thereto. The application of mind has to be indicated by disclosure of mind on the satisfaction. Considering the duties on the part of the Magistrate for issuance of summons to the accused in a complaint case and that there must be sufficient indication as to the application of mind and observing that the Magistrate is not to act as a post office in taking cognizance of the complaint, in Mehmood Ul Rehman, this Court held as under: (SCC p. 430, para 22) "22. ... The Code of Criminal Procedure requires speaking order to be passed under Section 203 CrPC when the complaint is dismissed and that too the reasons need to be stated only briefly. In other words, the Magistrate is not to act as a post office in taking cognizance of each and every complaint filed before him and issue process as a matter of course. There must be sufficient indication in the order passed by the Magistrate that he is satisfied that the allegations in the complaint constitute an offence and when considered along with the statements recorded and the result of inquiry or report of investigation under Section 202 CrPC, if any, the accused is answerable before the criminal court, there is ground for proceeding against the accused under Section 204 CrPC, by issuing process for

appearance. The application of mind is best demonstrated by disclosure of mind on the satisfaction. If there is no such indication in a case where the Magistrate proceeds under Sections 190/204 CrPC, the High Court under Section 482 CrPC is bound to invoke its inherent power in order to prevent abuse of the power of the criminal court.

To be called to appear before the criminal court as an accused is serious matter affecting one's dignity, self- respect and image in society. Hence, the process of criminal court shall not be made a weapon of harassment."

(emphasis supplied)

34. In Pepsi Foods Ltd. v. Judicial Magistrate, the Supreme Court has held that summoning of an accused in a criminal case is a serious matter and that the order of the Magistrate summoning the accused must reflect that he has applied his mind to the facts of the case and law governing the issue. In para 28, it was held as under: (SCC p. 760) "28. Summoning of an accused in a criminal case is a serious matter. Criminal law cannot be set into motion as a matter of course. It is not that the complainant has to bring only two witnesses to support his allegations in the complaint to have the criminal law set into motion. The order of the Magistrate summoning the accused must reflect that he has applied his mind to the facts of the case and the law applicable thereto. He has to examine the nature of allegations made in the complaint and the evidence, both oral and documentary, in support thereof and would that be sufficient for the complainant to succeed in bringing charge home to the accused. It is not that the Magistrate is a silent spectator at the time of recording of preliminary evidence before summoning of the accused. The Magistrate has to carefully scrutinise the evidence brought on record and may even himself put questions to the complainant and his witnesses to elicit answers to find out the truthfulness of the allegations or otherwise and then examine if any offence is prima facie committed by all or any of the accused."

The principle that summoning an accused in a criminal case is a serious matter and that as a matter of course, the criminal case against a person cannot be set into motion was reiterated in GHCL Employees Stock Option Trust v. India Infoline Ltd.

35. To be summoned/to appear before the criminal court as an accused is a serious matter affecting one's dignity and reputation in the society. In taking recourse to such a serious matter in summoning the accused in a case filed on a complaint otherwise than on a police report, there has to be application of mind as to whether the

allegations in the complaint constitute essential ingredients of the offence and whether there are sufficient grounds for proceeding against the accused. In Punjab National Bank v. Surendra Prasad Sinha, it was held that the issuance of process should not be mechanical nor should be made an instrument of oppression or needless harassment."

15. A reference may also be made to the case of "Sunil Bharti

Mittal v. C.B.I", (2015) 4 SCC 609. Paragraph no.48 of the said judgment

is quoted as under:

"48. Sine qua non for taking cognizance of the offence is the application of mind by the Magistrate and his satisfaction that the allegations, if proved, would constitute an offence. It is, therefore, imperative that on a complaint or on a police report, the Magistrate is bound to consider the question as to whether the same discloses commission of an offence and is required to form such an opinion in this respect. When he does so and decides to issue process, he shall be said to have taken cognizance. At the stage of taking cognizance, the only consideration before the court remains to consider judiciously whether the material on which the prosecution proposes to prosecute the accused brings out a prima facie case or not."

16. Even assuming that this petitioner was employer as defined

under section 2(e) of the Act and the license was in the name of this

petitioner, the illegality on the point of limitation and non-erring the

company in the complaint cannot be ignored.

17. So far section 200 of Cr.P.C is concerned, that is meant for

that if a complaint is being filed by a public servant that the complaint

has been made responsibly and bona fide and not falsely or vexatiously.

A reference is made to the case of "National Small Industries Corporation

Limited v. State (NCT of Delhi) and Ors.", MANU/SC/4845/2008:(2009) 1

SCC 407. Paragraph no.12 of the said judgment is quoted hereinbelow:

"12. The object of Section 200 of the Code requiring the complainant and the witnesss to be examined, is to find out whether there are sufficient grounds for proceeding against the Accused and to prevent issue of process on complaints which are false

or vexatious or intended to harass the persons arrayed as Accused. (See Nirmaljit Singh Hoon v. State of W.B.). Where the complainant is a public servant or court, Clause (a) of the proviso to Section 200 of the Code raises an implied statutory presumption that the complaint has been made responsibly and bona fide and not falsely or vexatiously. On account of such implied presumption, where the complainant is a public servant, the stature exempts examination of the complainant and the witnesses, before issuing process."

18. This section is only for that purpose and for rest of the statutory provisions are required to be followed. There is no provision of condonation of delay in the Act. It is admitted fact that the petitioner was Director at the time of occurrence which has been stated in the complaint case itself and in the case of S.M.S. Pharmaceuticals Ltd. v. Neeta Bhalla And Another(supra), the Hon'ble Supreme Court has held that if the Managing Director or Joint Managing Director are there, then they are deemed to be responsible, which is not the case in hand. Thus, judgment relied by Ms. Shresha Sinha, the learned counsel for the Opposite Party No.2 is not helping the O.P.no.2. Moreover, the order of N.B.W and proclamation under section 82 Cr.P.C has been directed to be issued are also not in accordance with the law and in the order by which process under section 82 Cr.P.C has been directed to be issued, there is no satisfaction of the concerned court recorded. There is non-compliance of Form-IV Cr.P.C which is statutory in nature. The proclamation order under section 82 Cr.P.C is also bad in law in view of the fact that there is no satisfaction recorded in the said order by which proclamation under section 82 Cr.P.C has been issued and the subsequent order under section 83 Cr.P.C and permanent warrant of arrest in view of these findings shall also not survive. This case is arising out of Minimum Wages Act which was recently the subject matter before the Hon'ble Supreme Court in the case of "Dayle De'souza v. Government Of India, through Deputy Chief Labour Commissioner (c) And Another" [CRIMINAL APPEAL NO. OF 2021 (ARISING OUT OF SPECIAL LEAVE PETITION (CRL.) NO. 3913 OF 2020). Paragraph nos.19, 22, 23, 24, 25 and 27 of the said judgment are quoted hereinbelow:

"19. There is yet another difficulty for the prosecution in the present case as the Company has not been made an accused or even summoned to be tried for the offence. The position of law as propounded in State of Madras v. C.V. Parekh and Another: (1970) 3 SCC 491. , reads:

"3. Learned Counsel for the appellant, however, sought conviction of the two respondents on the basis of Section 10 of the Essential Commodities Act under which, if the person contravening an order made under Section 3 (which covers an order under the Iron and Steel Control Order, 1956), is a company, every person who, at the time the contravention 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 contravention and shall be liable to be proceeded against and punished accordingly. It was urged that the two respondents were in charge of, and were responsible to, the Company for the conduct of the business of the Company and, consequently, they must be held responsible for the sale and for thus contravening the provisions of clause (5) of the Iron and Steel Control Order. This argument cannot be accepted, because it ignores the first condition for the applicability of Section 10 to the effect that the person contravening the order must be a company itself. In the present case, there is no finding either by the Magistrate or by the High Court that the sale in contravention of clause (5) of the Iron and Steel Control Order was made by the Company. In fact, the Company was not charged with the offence at all. The liability of the persons in charge of the Company only arises when the contravention is by the Company itself. Since, in this case, there is no evidence and no finding that the Company contravened clause (5) of the Iron and Steel Control Order, the two respondents could not be held responsible. The actual contravention was by Kamdar and Vallabhdas Thacker and any contravention by them would not fasten responsibility on the respondents. The acquittal of the respondents is, therefore, fully justified. The appeal fails and is dismissed."

22. However, subsequent decisions of this Court have emphasised that the provision imposes vicarious liability by way of deeming fiction which presupposes and requires the commission of the offence by the company itself as it is a separate juristic entity. Therefore, unless the company as a principal accused has committed the offence, the persons mentioned in sub-section (1) would not be liable and cannot be prosecuted. Section 141(1) of the Negotiable Instruments Act, extends vicarious criminal liability to the officers of a company by deeming fiction, which arises only when the offence is committed by the company itself and not otherwise. Overruling Sheoratan Agarwal and Anil Hada, in Aneeta Hada v. Godfather Travels and Tours Private Limited, (2012) 5 SCC 661. a 3- judge bench of this court expounding on the vicarious liability under Section 141 of the Negotiable Instruments

Act, has held:

"51. We have already opined that the decision in Sheoratan Agarwal runs counter to the ratio laid down in C.V. Parekh which is by a larger Bench and hence, is a binding precedent. On the aforesaid ratiocination, the decision in Anil Hada has to be treated as not laying down the correct law as far as it states that the Director or any other officer can be prosecuted without impleadment of the company. Needless to emphasise, the matter would stand on a different footing where there is some legal impediment and the doctrine of lex non cogit ad impossibilia gets attracted.

59. In view of our aforesaid analysis, we arrive at the irresistible conclusion that for maintaining the prosecution under Section 141 of the Act, arraigning of a company as an accused is imperative. The other categories of offenders can only be brought in the drag-net on the touchstone of vicarious liability as the same has been stipulated in the provision itself. We say so on the basis of the ratio laid down in C.V. Parekh which is a three-Judge Bench decision. Thus, the view expressed in Sheoratan Agarwal does not correctly lay down the law and, accordingly, is hereby overruled. The decision in Anil Hada is overruled with the qualifier as stated in para 51. The decision in Modi Distillery has to be treated to be restricted to its own facts as has been explained by us hereinabove."

23. The proposition of law laid down in Aneeta Hada (supra) was relied upon by this Court in Anil Gupta v. Star India Private Limited and Another (2014) 10 SCC 373. "13. In the present case, the High Court by the impugned judgment dated 13-8-2007 [Visionaries Media Network v. Star India (P) Ltd., Criminal Misc. Case No. 2380 of 2004, decided on 13-8-2007 (Del)] held that the complaint against Respondent 2 Company was not maintainable and quashed the summons issued by the trial court against Respondent 2 Company. Thereby, the Company being not a party to the proceedings under Section 138 read with Section 141 of the Act and in view of the fact that part of the judgment referred to by the High Court in Anil Hada has been overruled by a three-Judge Bench of this Court in Aneeta Hada, we have no other option but to set aside the rest part of the impugned judgment [Visionaries Media Network v. Star India (P) Ltd., Criminal Misc. Case No. 2380 of 2004, decided on 13- 8-2007 (Del)] whereby the High Court held that the proceedings against the appellant can be continued even in absence of the Company. We, accordingly, set aside that part of the impugned judgment dated 13-8- 2007 [Visionaries Media Network v. Star India (P) Ltd., Criminal Misc. Case No.

2380 of 2004, decided on 13- 8-2007 (Del)] passed by the High Court so far as it relates to the appellant and quash the summons and proceeding pursuant to Complaint Case No. 698 of 2001 qua the appellant."

24. In Sharad Kumar Sanghi v. Sangita Rane (2015) 12 SCC 781 , this Court observed that:

"11. In the case at hand as the complainant's initial statement would reflect, the allegations are against the Company, the Company has not been made a party and, therefore, the allegations are restricted to the Managing Director. As we have noted earlier, allegations are vague and in fact, principally the allegations are against the Company. There is no specific allegation against the Managing Director. When a company has not been arrayed as a party, no proceeding can be initiated against it even where vicarious liability is fastened under certain statutes. It has been so held by a three-Judge Bench in Aneeta Hada v. Godfather Travels and Tours (P) Ltd. in the context of the Negotiable Instruments Act, 1881. xx xx xx

13. When the company has not been arraigned as an accused, such an order could not have been passed. We have said so for the sake of completeness. In the ultimate analysis, we are of the considered opinion that the High Court should have been well advised to quash the criminal proceedings initiated against the appellant and that having not been done, the order is sensitively vulnerable and accordingly we set aside the same and quash the criminal proceedings initiated by the respondent against the appellant."

25. This position was again clarified and reiterated by this Court in Himanshu v. B. Shivamurthy and Another. (2019) 3 SCC 797 The relevant portion of the judgment reads thus:

"6. The judgment of the High Court has been questioned on two grounds. The learned counsel appearing on behalf of the appellant submits that firstly, the appellant could not be prosecuted without the company being named as an accused. The cheque was issued by the company and was signed by the appellant as its Director. Secondly, it was urged that the observation of the High Court that the company can now be proceeded against in the complaint is misconceived. The learned counsel submitted that the offence under Section 138 is complete only upon the issuance of a notice of demand and the failure of payment within the prescribed period. In absence of compliance with the requirements of Section 138, it is asserted, the direction of the High Court that the company could be impleaded/arraigned at this stage is erroneous.

7. The first submission on behalf of the appellant is no

longer res integra. A decision of a three-Judge Bench of this Court in Aneeta Hada v. Godfather Travels & Tours (P) Ltd. governs the area of dispute. The issue which fell for consideration was whether an authorised signatory of a company would be liable for prosecution under Section 138 of the Negotiable Instruments Act, 1881 without the company being arraigned as an accused. The three-Judge Bench held thus: (SCC p. 688, para 58) "58. Applying the doctrine of strict construction, we are of the considered opinion that commission of offence by the company is an express condition precedent to attract the vicarious liability of others. Thus, the words "as well as the company" appearing in the section make it absolutely unmistakably clear that when the company can be prosecuted, then only the persons mentioned in the other categories could be vicariously liable for the offence subject to the averments in the petition and proof thereof. One cannot be oblivious of the fact that the company is a juristic person and it has its own respectability. If a finding is recorded against it, it would create a concavity in its reputation. There can be situations when the corporate reputation is affected when a Director is indicted." In similar terms, the Court further held: (SCC p. 688, para

59) "59. In view of our aforesaid analysis, we arrive at the irresistible conclusion that for maintaining the prosecution under Section 141 of the Act, arraigning of a company as an accused is imperative. The other categories of offenders can only be brought in the drag-net on the touchstone of vicarious liability as the same has been stipulated in the provision itself."

xx xx xx

12. The provisions of Section 141 postulate that if the person committing an offence under Section 138 is a company, every person, who at the time when the offence was committed was in charge of or 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.

13. In the absence of the company being arraigned as an accused, a complaint against the appellant was therefore not maintainable. The appellant had signed the cheque as a Director of the company and for and on its behalf. Moreover, in the absence of a notice of demand being served on the company and without compliance with the proviso to Section 138, the High Court was in error in holding that the company could now be arraigned as an accused."

27. In terms of the ratio above, a company being a

juristic person cannot be imprisoned, but it can be subjected to a fine, which in itself is a punishment. Every punishment has adverse consequences, and therefore, prosecution of the company is mandatory. The exception would possibly be when the company itself has ceased to exist or cannot be prosecuted due to a statutory bar. However, such exceptions are of no relevance in the present case. Thus, the present prosecution must fail for this reason as well.

19. In view of the cumulative effect of the above discussion, this petition succeeds. The entire criminal proceeding including the orders dated 20.12.2013, 20.09.2016, 24.01.2017, 26.07.2018, 27.03.2019 and 27.06.2019 in connection with Complaint (LEO) Case No.117 of 2013, pending in the court of learned Sub-Divisional Judicial Magistrate, Bermo at Tenughat, Bokaro are hereby quashed.

20. Cr.M.P.No.612 of 2020 stands allowed and disposed of.

( Sanjay Kumar Dwivedi, J) SI/,