TMI Blog2007 (2) TMI 311X X X X Extracts X X X X X X X X Extracts X X X X ..... length. The High Court found that the resolution by itself did not constitute an offence even assuming that the same bore the signature of Respondent No. 1 (although the genuineness thereof was disputed). Thus on a plain reading of the averments made in the complaint petition, we are satisfied that the statutory requirements as contemplated under section 141 of the Act were not satisfied. - CRL. APPEAL NO. 664 OF 2002 - - - Dated:- 20-2-2007 - S.B. SINHA AND MARKANDEY KATJU, JJ. P.S. Mishra, Uday Umesh Lalit, S. Chandra Shekhar, Thatghat Harshvardhan, Upendra Mishra, Dhruv Kumar Jha, Ravi Chandra Prakash, Arvind Kumar, Mahesh Agarwal, Rishi Agrawala and Gaurav Goel for the Appellant. Ranjit Kumar, Ms. Meenakshi Arora, Ms. Poli Kataki, Suvrajyati Gupta, Guntur Prabhakar and Rajesh Srivastava for the Respondent. JUDGMENT S.B. Sinha, J. - Appellant herein is a company registered and incorporated under the Companies Act. Respondent No. 1 was a Director of a company known as M/s. Direct Finance and Investment Ltd., New Delhi. She allogedly submitted her resignation on 15-4-1994. 2. Against the said company, the Managing Director thereof, Respondent N ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Company to avail a Inter-Corporate Deposit of Rs. 2 Crores (Rupees Two Crores only) for 15 days @ 25 per cent p.a. from Reddy Nagar, Hyderabad and that Mr. Rajiv Anand, Director be and is hereby authorized to sign and execute Demand Promissory Note, Post Dated Cheques and other documents as may be required by M/s. SMS Pharmaceuticals Ltd. on behalf of the Company and deliver the same to M/s. SMS Pharmaceuticals Ltd. Resolved further that Mr. Rajiv Anand, Director of the Company be and is hereby authorized to affix common seal of the Company on such documents and papers as may be required in this connection pursuant to the Articles of Association of the Company." In the said proceedings, a petition for discharge was filed by Respondent No. 1 which was rejected by the learned Trial Judge. A revision petition filed thereagainst was also dismissed by he learned Sessions Judge. An application under section 482 of the Code of Criminal procedure was filed questioning the said orders which, however, was permitted to be withdrawn by the High Court stating : "The learned counsel for the petitioner seeks leave of the Court to withdraw this application. The same shall, accordingly, sta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the importance of the questions, the matter was referred to a 3-Judge Bench of this Court. Upon noticing the rival contentions of the parties as also the precedents operating in the field, the questions were answered by the Larger Bench - S.M.S. Pharmaceuticals Ltd. v. Neeta Bhalla [2005] 8 SCC 89 1 in the following terms : "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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en made as against Respondent No. 1 herein in the complaint petition which satisfies the requirements of section 141 of the Act but as would appear from the facts of the case that she had no role to play in commission of the offence at all. 14. Section 141 of the Act does not say that a Director of a Company shall automatically be vicariously liable for commission of an offence on behalf of the Company. What is necessary is that sufficient averments should be made to show that the person who is sought to be proceeded against on the premise of his being vicariously liable for commission of an offence by the Company must be incharge and shall also be responsible to the Company for the conduct of its business. 15. By reason of the said provision, a legal fiction has been created. The larger Bench in this case S.M.S. Pharmaceuticals Ltd. v. Neeta Bhalla [2005] 8 SCC 89 1 categorically held : "11. A reference to sub-section (2) of section 141 fortifies the above reasoning because sub-section (2) envisages director involvement of any director, manager, secretary or other officer of a company in the commission of an offence. This section operates when in a trial it is prove ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... edients exist that: ( i )a cheque was issued; ( ii )the same was presented; ( iii )but, it was dishonoured; ( iv )a notice in terms of the said provision was served on the person sought to be made liable; and ( v )despite service of notice, neither any payment was made nor other obligations, if any, were complied with within fifteen days from the date of receipt of the notice. 17. The liability of a Director must be determined on the date on which the offence is committed. Only because Respondent No. 1 herein was a party to a purported resolution dated 15-2-1995 by itself does not lead to an inference that she was actively associated with the management of the affairs of the Company. This Court in this case has categorically held that there may be a large number of Directors but some of them may not associate themselves in the management of the day to day affairs of the Company and, thus, are not responsible for conduct of the business of the Company. The averments must state that the person who is vicariously liable for commission of the offence of the Company both was incharge of and was responsible for the conduct of the business of the Company. Requirements laid d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ments, which are required to be averred in the complaint petition, are made so as to make the accused therein vicariously liable for the offence committed by the company. Before a person can be made vicariously liable, strict compliance of the statutory requirements would be insisted. . ." 22. Yet again in Saroj Kumar Poddar v. State (NCT of Delhi) [2007] (2) SCALE 36 1 , the said legal principle was reiterated stating : "Apart from the Company and the appellant, as noticed hereinbefore, the Managing Director and all other Directors were also made accused. The appellant did not issue any cheque. He, as noticed hereinbefore, had resigned from the Directorship of the Company. It may be true that as to exactly on what date the said resignation was accepted by the Company is not known, but, even otherwise, there is no averment in the complaint petitions as to how and in what manner the appellant was responsible for the conduct of the business of the Company or otherwise responsible to it in regard to its functioning. He had not issued any cheque. How he is responsible for dishonour of the cheque has not been stated. The allegations made in paragraph 3, thus, in our opinion do ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r order on a reconsideration of the same materials. The High Court has grievously erred in doing so. Even on merits, we do not find any compelling reasons to quash the proceedings at that stage." (p. 440) 26. We have noticed the previous order passed by the High Court. The High Court gave liberty to Respondent No. 1 to agitate the matter once again. Respondent No. 1 merely took recourse thereto. Equally misplaced is the judgment of this Court in Rajinder Prasad v. Bashir [2001] 8 SCC 522. Although therein it was held that when an earlier revision application under section 397 of the Code of Criminal Procedure has been dismissed, as not pressed, a second application under section 482 thereof for grant of same relief should not have been entertained, this Court opined : "8. We are of the opinion that no special circumstances were spelt out in the subsequent application for invoking the jurisdiction of the High Court under section 482 of the Code and the impugned order is liable to be set aside on this ground alone." 27. It is, therefore, an authority for the proposition that the High Court is not completely denuded of its power to exercise inherent jurisdiction for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her in exercise of its appellate or its revisional jurisdiction, no review or revision can be entertained against that judgment and there is no provision in the Criminal Procedure Code which would enable the High Court to review the same or to exercise revisional jurisdiction over the same. These observations were sought to be explained by Mr. Mukherjee on behalf of the first respondent by saying that they should not be read as laying down any general proposition excluding the applicability of section 561A in respect of an order made by the High Court in exercise of its appellate or revisional jurisdiction even if the conditions attracting the applicability of that section were satisfied in respect of such order, because that was not the question before the Court in that case and the Court was not concerned to inquire whether the High Court can in exercise of its inherent power under section 561A review an earlier order made by it in exercise of its appellate or revisional jurisdiction...." (p. 708) 30. For the reasons aforementioned, we do not find any error whatsoever in the impugned judgment. The appeal is dismissed with costs. Counsel s fee assessed at Rs. 10,000. - - Ta ..... X X X X Extracts X X X X X X X X Extracts X X X X
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