TMI Blog2007 (1) TMI 257X X X X Extracts X X X X X X X X Extracts X X X X ..... s. 138015, 138016 and 138017 for a sum of Rs. 2,50,000, Rs. 2,50,000 and Rs. 3,03,952.60, respectively in favour of Elkay International Private Limited, Respondent No. 2 herein. 3. The complainant - Respondent No. 2 is manufacturer and supplier of chemical compounds of different kinds. It supplied its product to the Company. Allegedly, a sum of Rs. 13,36,923 was due and payable to the complainant by the Company. The Company issued three cheques, as noticed hereinbefore, in favour of the complainant. The said cheques were deposited in a bank but were dishonoured. A complaint petition came to be filed by the complainant in the Court of Chief Metropolitan Magistrate, Delhi against the appellant as also the said Company. The Managing Director of the said Company as also the other Directors were also arrayed as accused therein. It was alleged that Shri K.K. Pilania Accused No. 3 and Shri N.K. Munjal Accused No. 8 signed the said cheques for and on behalf of the Company. 4. Cognizance was taken against the appellant and other accused persons. Inter alia on the premise that the appellant had resigned from the Directorship of the Company before the date of issuance of the cheques ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e credit of that account is insufficient to honour the cheque or that it exceeds the amount arranged to be paid from that account by an agreement made with that bank, such person shall be deemed to have committed an offence and shall, without prejudice to any other provisions of this Act, be punished with imprisonment for a term which may be extended to two years, or with fine which may extend to twice the amount of the cheque, or with both:" 9. For creating a criminal liability in terms of the said section, the complainant must show: ( i )that 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. 10. Section 141 of the Act postulates constructive liability on the part of the Directors of the Company or other persons responsible for its conduct of the business of the company. It reads as under: " Offences by companies. (1) If the person committing an offence under s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed Company No. 1." 13. 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 not satisfy the requirements of section 141 of the Act. 14. Our attention, however, has been drawn to the averments made in paragraphs 7 and 10 of the complaint petition, but on a perusal thereof, it would appear that therein merely allegations have been made that the cheques in question were presented before the bank and they have been dishonoured. Allegations to satisfy the requirements of section 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y and not on designation or status. If being a Director or Manager or Secretary was enough to cast criminal liability, the section would have said so. Instead of every person the section would have said every Director, Manager or Secretary in a Company is liable ....etc. The legislature is aware that it is a case of criminal liability which means serious consequences so far as the person sought to be made liable is concerned. Therefore, only persons who can be said to be connected with the commission of a crime at the relevant time have been subjected to action. 12. A reference to sub-section (2) of section 141 fortifies the above reasoning because sub-section (2) envisages direct involvement of any Director, Manager, Secretary or other officer of a company in commission of an offence. This section operates when in a trial it is proved that the offence has been committed with the consent or connivance or is attributable to neglect on the part of any of the holders of these offices in a company. In such a case, such persons are to be held liable. Provision has been made for Directors, Managers, Secretaries and other officers of a company to cover them in cases of their proved i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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