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TMI Blog2013 (7) TMI 1113X X X X Extracts X X X X X X X X Extracts X X X X ..... e first accused Company, they cannot be held responsible for the bouncing back of the cheques said to have been issued by the second accused on behalf of other accused persons including the petitioners herein and they are also not liable to be prosecuted under Sections 138, 141 and 142 of Negotiable Instruments Act, 1881 (as amended by Act 2005). 2.2. The respondent Visalatchi Enterprises, a partnership firm, seems to have filed three private complaints dated 30.08.2007, before the learned Judicial Magistrate No.II, Madurai, under Sections 190(1)(A) and 200 Cr.P.C., as against seven accused persons, including the petitioners herein, to deal with them in accordance with law, as envisaged under Sections 138, 141 and 142 of Negotiable Instruments Act, 1881 (Amended Act, 2005) and the same were taken on file in S.T.C.Nos.1290, 1292 and 1293 of 2007. 2.3. As per the complaints, the second accused P.Sivaraman is the Managing Director of the first accused Company. The accused 3 to 7 (including the petitioners herein) are the Directors. 2.4. The complainant has been engaging in the business of sale of consumer goods and is doing distribution of Samsung Electronic consumer durables. Duri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cheques were issued with an intention of cheating the complainant, knowing fully well that they would not be honoured, which is not only punishable under the provisions of the Negotiable Instruments Act, 1881 and also punishable under Sections 406, 417 and 420 I.P.C., 2.10. For the reasons stated above, the complainant has sought the relief of punishing all the accused persons with the maximum sentence and fine and he has also sought for the payment of compensation out of the fine amount under Section 357 Cr.P.C., 3. Heard Mr.S.Subbiah, learned counsel appearing for the petitioners and Mr.D.Sivaraman, learned counsel appearing for the respondent. 4. Mr.S.Subbiah, learned counsel appearing for the petitioners, has fairly advanced his arguments admitting the fact that originally the petitioners, being the accused 4 to 7 in S.T.C.Nos.1290, 1292 and 1293 of 2007, were the directors of the first accused Company viz.,M/s.Balaji Agency Group Pvt., Ltd., a Company incorporated under the provisions of Indian Companies Act 1 of 1956. 5. He has also argued that since the petitioners were not satisfied with the performance of the first accused Company, they had sought for their retirement ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctorship of the first accused company as they had resigned from their respective offices. 10. As discussed herein before, Form No.32 produced by the petitioners are in the form of certified copies. Section 76 of the Indian Evidence Act, 1872 (herein after it may be referred to as 'the Act') defines the expression 'certified copies'. It contemplates that: "76.Every public officer having the custody of a public document, which any person has a right to inspect, shall give that person on demand a copy of it on payment of the legal fees therefor, together with a certificate written at the foot of such copy that it is a true copy of such document or part thereof, as the case may be, and such certificate shall be dated and subscribed by such officer with his name and his official title, and shall be sealed, whenever such officer is authorised by law to make use of a seal, and such copies so certified shall be called certified copies." 11. Section 77 of the Act envisages that: "77.Proof of documents by production of certified copies.-Such certified copies may be produced in proof of the contents of the public documents or parts of the public documents ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .Subbiah, learned counsel appearing for the petitioners, it is palpable from the materials available on record specifically from the certified copies of Form No.32 produced on behalf of the petitioners, this Court is of considered view that the petitioners were not functioning as the directors of the first accused Company at the time of the alleged transaction which took place between the second accused being the managing director of the first accused Company and the respondent, because the petitioners had already resigned their respective offices as detailed herein above. 18. The vicarious liability rendering them to be prosecuted would arise only if the petitioners were responsible to the Company for the conduct of the business of the Company. But, in sofar as the petitioners are concerned, the vicarious liability cannot be fastened on them as they had already resigned from the office of the directorship of the first accused company. In other words, this Court would say that the liability arises from being in-charge of and responsible for the conduct of business of the company at the relevant time when the offence was committed and not on the basis of merely holding a designatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d supra), R.V.Raveendran, J., while speaking on behalf of the Division Bench of the Apex Court, in paragraph No.9, has observed as under: "9.In two subsequent decisions S.M.S.Pharmaceuticals v. Neeta Bhalla, 2007 (2) CTC 86(SC):2007 (4) SCC 70 [for short 'SMS Pharma (II)' and Everest Advertising (P) Ltd. v. State, Govt. of NCT of Delhi, 2007 (5) SCC 54, relating to complaints against Directors of a Company, the very same Two-Judge Bench which decided Saroj Kumar Poddar, clarified that the observations therein that 'the Complaint should contain averments as to how and in what manner the accused was responsible for the conduct of the business of the Company, or otherwise responsible for its functioning' were with reference to the particular facts of that case and should not be considered as a general proposition of law. But latter decisions dealing with liability of Directors N.K.Wahi v. Shekhar Sing, 2007 (9) SCC 481 ; DCM Financial Services Ltd. v. J.N.Sareen, 2008(8) SCC 1, and Ramraj Singh v. State of MP, 2009(5) SCALE 670 (a decision of a Bench of Three Judges), have reiterated the principle laid down in Saroj Kumar Poddar. The prevailing trend appears to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat: "Petitioner was not the Director during the relevant time of issuing the cheques numbering six involved in this case and as such he cannot be held vicariously liable for the offences committed by the company and on this sole ground the proceedings is liable to be quashed. It is clear that Form-32, coupled with the perusal of the 5th Annual Report for the period from 2001-2002, the petitioner was neither the Chairman nor a Director during the relevant period. In the absence of any specific allegation to the effect as to how and in what manner the petitioner,A-1, is in-charge for the day-to-day affairs of the company, the petitioner cannot be held vicariously liable for the offence said to have been committed by the company." 26. In Anitha Malhotra's case (cited supra), while penning down the Judgment on behalf of the Division Bench, P.Sathasivam, J., has observed that: "Though it is not proper for the High Court to consider the defence of the accused or conduct a roving enquiry in respect of merits of the accusation, but if on the face of the document which is beyond suspicion or doubt, placed on record by the accused and if it is considered that the accus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the basis of an unmarked document. This plea was not accepted by the learned single Judge of this Court and held that it was for the petitioners to prove by marking the document in the trial to establish that they were ceased to be the directors of the company on the date of the presentation of the cheque and they were not in charge of the day to day affairs of the company. 31. In Malwa Cotton and Spinning Mills Ltd's case (cited supra), it is held that whether in fact the respondent No.1's claim to have resigned was factually correct would have been established in trial and the High Court could not have passed the impugned judgment while dealing with the application under Section 482 of the Criminal Procedure Code. Further, it is held that in a petition filed under Section 482 of the Code of Criminal Procedure, 1973 to quash the proceedings relating to the complaint filed against an accused/Director of the Company alleging commission of offence punishable under Section 138 of the Negotiable Instructions Act, 1881 the High Court is not justified in quashing the said proceedings on the ground that the accused had resigned from the Directorship before the cheques were iss ..... X X X X Extracts X X X X X X X X Extracts X X X X
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