TMI Blog2013 (7) TMI 1086X X X X Extracts X X X X X X X X Extracts X X X X ..... onour of cheques. (3.) Allegations in the complaint, in nut shell, are the following: Complainant/2nd respondent is a public limited company engaged in the business of foreign exchange transactions. 1st accused is also a public limited company engaged in the same business. 2nd accused is the whole time Director of 1st accused company. Petitioners (accused 3 to 5) are the Directors of the 1st accused company. They are directly responsible for the day today affairs, conduct of business and management of the 1st accused company. 6th accused is the Branch Manager of the 1st accused company. He was in charge and was responsible for the day today affairs and conduct of the business. (4.) As the complainant and the 1st accused companies are engaged in foreign exchange trading, the complainant used to buy and sell foreign currency from the 1st accused company. 1st accused company, in the course of the transaction, incurred a liability payable to the complainant. In discharge of that liability, certain cheques were issued. Those cheques were dishonored on presentment. Hence a statutory notice was issued for which a reply was caused to be sent at the instance of the accused. Even ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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: xxxxxxxxxxx (2) Notwithstanding anything contained in sub-section (1), where any offence 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 xxxxxxxx (10.) In a prosecution launched against a company by invoking Sec. 141(1) of the NI Act, the principal accused will be the company itself. The liability of the person who was in charge of, and was responsible to the company for the conduct of its business is only having a vicarious criminal liability. Sub-sec. (2) of Sec. 141 of the NI A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsidered elaborately. Following quotation from that decision will be useful for our purpose: While analysing S. 141 of the Act, it will be seen that it operates in cases where an offence under S. 138 is committed by a company The key words which occur in the Section are every person . These are general words and take every person connected with a company within their sweep. Therefore, these words have been rightly qualified by use of the words who, at the time the offence was 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 etc. What is required is that the persons who are sought to be made criminally liable under S. 141 should be at the time the offence was committed, in charge of and responsible to the company for the conduct of the business of the company Every person connected with the company shall not fall within the ambit of the provision. It is only those persons who were in charge of and responsible for conduct of business of the company at the time of commission of an offence, who will be liable for criminal action. It follows from this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aint. Attention of this Court is drawn to paragraph 2 of Annexure-A complaint wherein it is mentioned by the complaint/2nd respondent that petitioners are the Directors of the 1st accused company and are directly responsible for the day today affairs and conduct of business. According to the learned counsel for the 2nd respondent, all the requirements regarding pleading have been satisfied in this case. (15.) To answer this contention, learned counsel for the petitioners submitted that the above pleading is without any basis and without ascertaining the true facts. It is submitted that relevant provisions in the Act of 1956 will show the role played by each Director and it is available in public domain. No effort has been made by the complainant to find out whether the petitioners were in charge of and responsible for the conduct of the business of the 1st accused company. Callousness and unmindfulness on the part of the complainant is writ large, if the specific contentions raised in the reply notice sent by the petitioners are considered, contended the learned counsel. Learned counsel for the petitioners drew my attention to Annexure-C reply notice sent in response to Annexure ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ngachari's case . Moreover, the power of this Court, while exercising jurisdiction under Sec. 482 Cr.P.C., to consider materials for preventing abuse of process of the court or doing things to secure the ends of justice is beyond a pale of dispute. (17.) Learned counsel for the complainant/2nd respondent submitted that the Act of 1956 makes no distinction between a full time Director and an independent Director. Sec. 2(13) of the Act of 1956 defines the term Director . It reads as follows: 'director' includes any person occupying the position of director, by whatever name called. Hence it is argued that the theory of designating a Director as independent Director gets no support from the Act of 1956. To meet this argument, learned counsel for the petitioners relied on Sec. 303 of the Act of 1956. It deals with keeping of register of Directors. Annexure-E series are copies of Form 32 maintained pursuant to Sec. 303(2) and other provisions of the Act of 1956. It shows the particulars of appointment of Managing Director, Directors, Manager and Secretary, the changes among them, etc. It is shown in Annexure-E that the petitioners are designated as independent a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... w and in what manner Respondent No. 1 was in-charge of or was responsible to the accused company for the conduct of its business. This is in consonance with strict interpretation of penal statutes, especially, where such statutes create vicarious liability. A company may have a number of Directors and to make any or all the Directors as accused in a complaint merely on the basis of a statement that they are in-charge of and responsible for the conduct of the business of the company without anything more is not a sufficient or adequate fulfillment of the requirements under S. 141. (20.) Even though, there are some averments in the complaint that the petitioners were also involved in the day today management of the company, specific averments in the reply notice coupled with the documents would show that the plea raised in the complaints is without verifying the facts. Hence those averments will not satisfy the legal requirement. 21. Apart from this, learned counsel for the petitioners produced additional documents to reinforce his submissions. Annexure-G is the relevant part of annual report of the company. Annexure-R2(a), produced by the 2nd respondent, is the complete version ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a person be subjected to liability of criminal prosecution without it being averred in the complaint that he satisfies those requirements Not every person connected with a Company is made liable under S. 141. Liability is cast on persons who may have something to do with the transaction complained of. (21.) It is contended on behalf of the petitioners that the 1st accused company is a company listed in the Bombay Stock Exchange. Annexure-H is the model listing agreement. Although it does not show the nature of the 1st accused company, learned counsel for the petitioners argued that all the informations regarding companies listed in the stock exchange are available in public domain. In spite of availability of such information, complainant has not taken care to understand the nature of functions of petitioners. It is also submitted that the 2nd petitioner resigned the directorship of the company before the institution of the complaint and therefore she cannot be prosecuted. But the cheques in question were issued during her stint as Director. Hence the decision relied on by the petitioners in Harshendra Kumar D. v. Rebatilata Koley and others,2011 1 KHC 837 is not of help to the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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