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TMI Blog2013 (5) TMI 951X X X X Extracts X X X X X X X X Extracts X X X X ..... itled as M/s. ECE Industries Ltd. vs. GEI Industrial Systems Ltd. and Ors. 2. Grievance raised by Mr. Krishan Kumar, Advocate appearing for the petitioner, is that the petitioner is a Company Secretary in the accused company M/s. GEI Industrial Systems Ltd., Bhopal and his duty is restricted to ensure the proper observance and compliances made by the said company in terms of various statutory requirements laid down under the Companies Act. He further submits that the petitioner is neither obliged nor is actually instrumental in the day to day functioning of the said company and in fact has no knowledge or any role in the issuance of any cheque on behalf of the said company in favour of the complainant company. It is further the case of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... incorporated in the Negotiable Instruments Act, 1881 by the Banking Public Financial Institutions and Negotiable Instruments Laws (Amendment) Act, 1998 with effect from 1.4.1989 for the purpose of imposing penalties in case of dishonor of cheque due to insufficiency of funds in the account of drawer of the cheque, in addition to the remedy of filing a recovery suit already available to the aggrieved under the civil law. Finding the punishment contained in this chapter inadequate and the procedure to deal with such matters cumbersome, this chapter was further amended by the Negotiable Instruments (Amendment and Miscellaneous Provisions) Act, 2002 for the purpose of early disposal of the cases related to dishonor of cheques as well as for en ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of the earliest case, S.M.S. Pharmaceuticals Ltd. v. Neeta Bhalla and Anr., 2005 (7) SCALE 397, which threw light on the averments required to be made in the complaint under Section 138 r/w 141 of Negotiable Instruments Act, observed as follows in paragraph 16:- (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) Merely being a director of a company is not sufficient to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ness of the company" or by stating that "he was incharge of the day-to-day management of the company" or by stating that "he was in-charge of, and was responsible to the company for the conduct of the business of the company", he cannot be made vicariously liable under Section 141(1) of the Act. To put it clear that for making a person liable under Section 141(2), the mechanical repetition of the requirements under Section 141(1) will be of no assistance, but there should be necessary averments in the complaint as to how and in what manner the accused was guilty of consent and connivance or negligence and therefore, responsible under Sub-section (2) of Section 141 of the Act. Summarizing the legal position, The Apex court further laid down ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot necessary to make specific averment in complaint. (vii) The person sought to be made liable should be incharge 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. 8. The recent judgments of the Apex Court namely, Anita Malhotra v. Apparel export Promotion Council and Anr., (2011) 1 SCC 520 and Laxmi Dyechem v. State of Gujrat and Ors., 2012 (11) SCALE 365, have again reiterated the said legal position. 9. The prime objective of this Court is to remind all the Metropolitan Magistrates in Delhi to carefully scrutinize all the complaint cases being filed under Section 138 r/w 141 of the Negotiable Instruments ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Apex Court in Adalat Prasad v. Rooplal Jindal and Ors., (2004) 7 SCC 338. One can also not lose sight of the fact that once such innocent persons are summoned, they have no choice but to seek bail and face the ordeal of trial. Many of such persons also approach the High Court under Section 482 Cr.P.C. to seek quashing of the summoning order and the complaint filed against them and this further increases the burden on the already overburdened Courts. 10. With a view to ensure that the Metropolitan Magistrates dealing with the complaint cases filed under Section 138 r/w Section 141 of the Negotiable Instruments Act have a clear and complete picture of the persons arrayed by the complainant so as to hold them vicariously liable for the comm ..... X X X X Extracts X X X X X X X X Extracts X X X X
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