TMI Blog2007 (1) TMI 613X X X X Extracts X X X X X X X X Extracts X X X X ..... hese complaint cases, for the offence punishable under Section 138 of the Act and 420 of the Indian Penal Code. As stated above the complainant had filed these complaints under Section 138 of the Act and 420 of Indian Penal Code alleging that this accused (accused No. 4) along with other accused i.e. Nos. 2, 3 and 5 are the Directors of accused No. 1 company-A. U. Roller Flour Mill Private Limited. They had business dealings with the complainant's firm i.e. M/s Mamata Agency. During the business transaction, they had issued cheque. Three cheques were issued on Allahabad Bank, Nagpur on 28-10-1997 and 21-10-1997. They were dishonoured. After due compliance of the necessary provisions of issuing notices etc. as the amount was not paid, the complainant filed relevant complaints for offence under Section 138 of the Act read with Section 420, Indian Penal Code. 3. During the said proceedings, the learned Magistrate passed an order of issue of process against the accused persons after recording verification statement of the complainant, including this accused. 4. Learned trial Judge vide his order dated 23-8-2005 heard the parties and found that the trial Court had no powers to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... application before the Sessions Court was not because of the fault of the applicant, but it was because of the change in the principle of law as regards the maintainability of an application under Section 482 of Criminal Procedure Code to challenge the order of issue of process. On rejecting the application for recalling the order of issue of process, according to him, this application under Section 482 of Criminal Procedure Code was maintainable as the applicant would be facing the trial though he is not at all liable for the alleged offences. He has relied on certain authorities to contend that the offence under Section 138 of Criminal Procedure Code is not at all made out when the Director has tendered the resignation, which he can tender it even unilaterally and it is necessary for the company to accept the same and form No. 32 and its acceptance by the Registrar of Companies is mere a formality. Therefore, he has contended that when it is prima facie established that the applicant has resigned from the accused company w.e.f. 6-10-1997, he is not liable for any transaction which the company did thereafter including in the present case the liability of dishonour of the cheques i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... omplaint thus: 2. That, the accused No. 1, is a private limited company and accused No. 2 to 5 being its Directors are used to purchase goods i.e., wheat on credit from the complainant firm. In paragraph 3 the complaint it is alleged: 3. ...The accused No. 5 on behalf of all accused had issued two account payee cheques.... In paragraph 4 the complainant has stated: 4. ...Thus one thing is very clear then crystal that the accused No. 5, had issued the above cheques deliberately knowingly and with mala fide intention to cheat and defraud the complainant.... Further in paragraph 5 it is contended: 5. ...The accused Nos. 1 and 4 have received the said notice on 3-11-1997, but accused Nos. 2, 3, 4 have deliberately avoided to receive the same.... 11. On perusal of these contents of the complaint, it would be seen that the allegations against the present applicant is that he was purchasing goods from the complainant as the director of the said accused company. No where it clearly depicts that the accused No. 4 was in active Directorship of the accused-company at the time of issuance of cheque. The complaint only says that the accused No. 5 had issued a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uthorities pressed into service by the learned Counsel for the applicant. In D. P. Jain v. Green Earth Asphalt and Power Pvt. Ltd., this Court has observed in paragraph 11 thus: 11. I have carefully considered the rival submissions. I have also gone through the case law cited at the bar. It may be noted that in order to fasten vicarious liability against the partners of the firm, there must be clear, specific and unambiguous allegations made in the complaint. Every partner of the firm cannot automatically be roped in. The complainant can proceed only against such persons who at the time the offence was committed by the firm, were in-charge and were responsible to the firm for the conduct of its business. Such persons must be in over all control of the day-to-day business of the firm. A complainant based on vague statement that one of the partners signed the cheque on behalf of the partners and the cheque was issued towards the amount due and payable by all the partners is not a complaint in the eye of law. The accusation against each partner must be specific and unambiguous. The role played by each of the accused must be clearly stated in the complaint. No complainant can be p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of his submissions, the learned Counsel for the applicants placed his reliance on the following cases: (i) In K. P.G. Nair v. Jindal Menthol India Ltd., it is held that: In view of Section 141 a person to her than the company can be proceeded against under those provisions only if that person was in charge of and was responsible to the company for the conduct of its business. Though words of Section 141(1) need not be incorporated in a complaint as magic words but substance of the allegations read as a whole should answer and fulfil the requirements of the ingredients of the said provisions (for being proceeded against for an offence which he alleged to have committed). On the above premise, it is clear that the allegations made in the complaint do not either in express words or with reference to the allegations contained therein make out a case that at the time of commission of the offence the appellant was in-charge of and was responsible, to the Company for the conduct of its business. Therefore, in this case the High Court has misdirected itself and committed an error in coming to the conclusion that the requirements of Section 141 are prima facie satisfied insofar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... knowledge or that he had exercised all due diligence. The burden in this regard has to be discharged by the accused persons during trial. Thus the complaint is not liable to be quashed as urged on behalf of the applicant. In support of his submissions, the learned Counsel for non-applicant No. 1/complainant placed his reliance on the following cases: (i) Orient Syntex Ltd. and Ors. v. Besant Capital Tech. Ltd. 1999 (3) Mh.L.J. 413 : 2000 Cri.L.J. 210 (Bombay) (ii) S.V. Muzumdar and Ors. v. Gujarat State Fertilizer Co. Ltd., and Anr. . 14. In, S.M.S. Pharmaceuticals Ltd. v. Neeta Bhalla and Anr., the Apex Court in paragraph 20 has observed thus: 20. ...(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 question posed in sub-para (b) has to be in negative. Merely being a directo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the company, may be ordinary meeting or may be extra-ordinary or special meeting, as the case may be, and the Board of Directors have to take a decision whether the Board is accepting his resignation or not. An intimation should be sent to such director and after such resolution is passed, the Company Secretary is under the obligation to comply with the legal formalities for giving a finishing touch to the resolution which has been passed in the said meeting of the Board of Directors. It is for the Company Secretary to fill in the forms as prescribed and to give due information and intimation to the Registrar of Companies, as the law requires. Thereafter, it has to be so mentioned in all prescribed registers of the Company, accounts and balance sheet of the company and thereafter the said fact is to be brought to the notice of the members of the Company as early as possible and at the latest in annual general meeting. 7. When a Director has tendered his resignation and the Board of Directors has accepted it and has acted on it, such director cannot be held liable for the liability incurred by the said company after the date of acceptance of his resignation except the liabi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not sufficient. Accordingly, this petition is allowed. The impugned judgment is set aside with the directions to the trial Court to proceed with the trial in accordance with law uninfluenced by any observations made in the impugned judgment or for that matter in the present order. 19. It clearly seems that in this case the basis on which the Sessions Judge had allowed the revision application of the accused was because of the Form No. 32 to substantiate his plea that he was not Director of the accused-company at the relevant time and no other aspect was considered in the said judgment by the leaned Sessions Judge. 20. Further in, Dushyant D. Anjira v. Wall Street Finance Ltd. and Anr., it has been held that, when there was no reason to disbelieve the Form No. 32, it would liable to be accepted for the purposes of showing that the said Director was not responsible for the business of the company after the resignation. 21. Here is the case where the applicant has produced the document of Form No. 32 which was accepted by the Registrar of the Companies at later date. The said change appears to have been accepted in December, 1997, but it clearly seems to have been accepted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... F.I.R. or the complaint and that the extraordinary or inherent powers do not confer an arbitrary jurisdiction on the Court to act according to its whim and caprice. 24. Here is the case where there is no sufficient material in the complaint or otherwise to show that the accused applicant was acting in the affairs of the company after 6-10-1997. It is also not shown that there is reason to believe that he must have concocted the resignation of 6-10-1997 to avoid liability and responsibility arising out of the transactions referred in the complaint. This is not an inquiry as to whether the factum of resignation of the applicant is established or not. Here is case where applicant says that he has resigned on 6-10-1997 from the affairs of the company as well as Directorship of the accused-company. The complainant himself says that accused No. 5 on behalf of the company issued cheque and only allegation against accused No, 4 is that he was purchasing articles from the complainant. When there is certified copy of the Form No. 32 and its acceptance by Registrar of Companies on record, it has to be held that the accused No. 4-applicant had no responsibility in the affairs of the comp ..... X X X X Extracts X X X X X X X X Extracts X X X X
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