TaxTMI 
TaxTMI 
2002 (3) TMI 880
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....he company"), of which the petitioner and others are directors, were dishonoured and that even after issuing of notice of demand after dishonour, the amount covered by the dishonoured cheques was not paid. 2. The main contention of learned counsel for the petitioner is that as the complaint does not disclose the specific duties of the petitioner in the company and his role in the issuing of the cheques, that were dishonoured, and as there is a broad and bold averment that he as one of the directors of the company is in charge of the day-to-day affairs of the company the petitioner cannot be made liable for an offence under section 138 of the Act, by placing strong reliance on Smt. Neeta Bhalla v. S.M.S. Pharmaceuticals Ltd. [2002] 111 Comp....
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....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." Therefore it is clear from the above section that every person, who, at the time when the offence was comm....
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.... the company in which they are directors. 4. The averments in the complaint show that for the cotton bales supplied by the complainant to the company only part payment was made and for the remaining amount due, with the consent and knowledge of the petitioner and other directors, payment was made through cheques drawn on Bharat Overseas Bank Ltd., and those cheques were dishonoured. The board of directors of the company are under a legal obligation to make provision for payment of amount due to the complainant. Therefore, the petitioner also, by virtue of his being a director of the company, by virtue of section 141 of the Act can be proceeded against by the complainant for an offence under section 138 of the Act. The petitioner, if during....
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....as 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. Provided that nothing contained in this sub-section shall render any such person liable to any punishment provided in this Act if he proves that the offence was committed without his knowledge or that he exercised all due diligence to prevent th....
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....ces are by companies. Hence, the ratio in U.P. Pollution Control Board's case (supra ) equally applies to the proceeding under section 138 read with section 141 of the Act, against a company and its directors. Therefore, the burden of proof would be on the petitioner to establish that he is not responsible for the offence alleged against him. It is not necessary for the complainant to specifically allege what role the petitioner played in preparing and issuing the cheque for the amount due to it from the company. A complainant in a case of section 138 of the Act need not to go to the company and verify what role each director had played in the preparation and issuance of the cheque for and on behalf of the company for the amount due to it f....