TMI Blog2008 (5) TMI 420X X X X Extracts X X X X X X X X Extracts X X X X ..... f the offence unless he proves to the contrary? 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? Held that:- Appeal dismissed. Accused No. 2 is Paresh Rajda, the Chairman of the Company, and as per the impugned judgment of the High Court, the question of his responsibility for the business of the Company has not been seriously challenged. We, nonetheless, find clear allegations against both the accused/appellants to the effect that they were officers and responsible fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... however, vide its order dated 9-6-2004 directed that the application under section 395 of the Code of Criminal Procedure, 1974 which had already been made before the Metropolitan Magistrate be decided at the first instance. The Magistrate, however, rejected the application on 18-10-2004 holding that he had no jurisdiction in the matter, as process under section 395 of the Code had already been issued. It is in this circumstance that the accused once again moved the High Court. The High Court in its order dated 20-12-2005 held that the argument that the accused had been arrayed as such merely because he was a Director of the Company was wrong inasmuch as an overall reading of the complaint showed that specific allegations had been levelled ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ft to trial, as had been observed by the High Court. The learned counsel has also drawn our attention to paragraphs 2 and 8 of the complaint to contend that the allegations that the accused were, in fact, responsible officers of the Company and were also conducting its day-to-day activities, had been specifically made. It has also been pointed out that a great deal of material had been put on record to show that the accused company and its officers had issued several cheques to other organizations as well, which too had bounced, and that huge sums were due from the Company on that account and, they being habitual offenders, were not entitled to any relief. The learned counsel has relied upon S.M.S. Pharmaceuticals Ltd. v. Neeta Bhalla [ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gainst." (p. 76) The above questions were answered in the following terms : ( a )It is necessary to specifically aver in a complaint under section 141 that at the time 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 141 of the Act. The appeal filed by the company was accordingly dismissed. This matter once again came up for consideration in N. Rangachari s case ( supra ) and in paragraph 21 it was observed: "A person normally having business or commercial dealings with a company, would satisfy himself about its creditworthiness and reliability by looking at its promoters and Board of Directors and the nature and extent of its business and its memorandum or articles of association. Other than that, he may not be aware of the arrangements within the company in regard to its management, daily routine, etc. Therefore, when a cheque issued to him by the company is dishonoured, he is expected only to be aware general of who are in charge of the affairs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... though we observe a slight digression in the judgment in N. Rangachari s case ( supra ). It is in this background, that the complaint needs to be examined. Paragraphs 2 and 8 are reproduced below : "(2) I know all the accused. The accused No. 1 is company registered under the Companies Act, 1956. Accused No. 2 is the Chairman of the accused No. 1. Accused No. 3 is the Joint Managing Director of the accused No. 1 and accused Nos. 4, 5 and 6 are the Directors of the accused No. 1. (8) The accused No. 2 is the Chairman of accused No. 1 and is responsible for the day-to-day affairs of accused No. 1 and therefore he is liable to repay amount of dishonoured cheques. Accused No. 3 being Joint Managing Director and accused Nos. 4, 5 and 6 b ..... X X X X Extracts X X X X X X X X Extracts X X X X
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