9911796707
TMI Blog2019 (2) TMI 544X X X X Extracts X X X X X X X X Extracts X X X X ..... R.P. Joshi, the learned counsel would urge that a bald averment that the applicants are partners and were in charge of the affairs of the firm, would not clothe the Magistrate with the jurisdiction to take cognizance in the absence of averments spelling out the specific role played by the partners qua the transaction. The other submission is that even if it is assumed, arguendo, that the complaint incorporates the basic averments, in the teeth of irrefutable and incontrovertible material on record indicating that the applicants - partners could not have been concerned with the issuance of the cheques, compelling the applicants to undergo the agony and trauma of trial would be an abuse of process of law. 4. Shri A.H. Lohiya, the learned counsel for the respondent would in rebuttal submit that if the complaint is read and understood holistically, the ingredients of section 138 read with section 141 of the Act stand established, at least prima facie, and the order of issuance of process is unexceptionable. Shri A.H. Lohia, the learned counsel would further submit that it is not necessary to spell out or elaborate the specific role of the partners in the transaction and it woul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ngly: Provided that nothing contained in this subsection 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: [Provided further that where a person is nominated as a Director of a company by virtue of his holding any office or employment in the Central Government or State Government or a financial corporation owned or controlled by the Central Government or the State Government, as the case may be, he shall not be liable for prosecution under this Chapter.] (2) Notwithstanding anything contained in subsection (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. Explanation. - For the purposes of this section,- (a) "company" means any body corp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) 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 the question posed in subpara (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 of and responsible to the company for the conduct of its business. The requirement of Section 141 is that the person sought to be made liable should be in charge 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. (c) The answer to Question (c) has to be in the affirmative. The question notes that the managing director or joint managing director would be admittedly in charge of the company and r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isions of the Companies Act it is observed that those provisions show that what a Board of Directors is empowered to do in relation to a particular company depends upon the roles and functions assigned to Directors as per the memorandum and articles of association of the company. There is nothing which suggests that simply by being a Director in a company, one is supposed to discharge particular functions on behalf of a company. As a Director he may be attending meetings of the Board of Directors of the company where usually they decide policy matters and guide the course of business of a company. It may be that a Board of Directors may appoint subcommittees consisting of one or two Directors out of the Board of the company who may be made responsible for the daytoday functions of the company. This Court further observed that what emerges from this is that the role of a Director in a company is a question of fact depending on the peculiar facts in each case and that there is no universal rule that a Director of a company is in charge of its everyday affairs. What follows from this is that it cannot be concluded from SMS Pharma(1) that the basic requirement state ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be legally impermissible for the Magistrate to take a cognizance in the absence of the basic averments in the complaint, even if the complaint incorporates the basic averments, the inherent power under section 482 of the Code to prevent the abuse of process of law, can not be fettered and the High Court is not as a rule obligated to dismiss the petition under section 482 of the Code. Notwithstanding that the complaint incorporates the basic averments, this Court is not precluded from quashing the order of issuance of process if there is unimpeachable and incontrovertible evidence or acceptable circumstances which would rule out the role of the named accused in the transaction. However, ordinarily if the complaint incorporates the basic averments, this Court would be slow to interfere and nip the trial in the bud. It would be in rare and exceptional circumstances that despite the basic averments, recourse to inherent power would be taken to quash the complaint if the role of the director or partner named as accused is excluded by unimpeachable and incontrovertible material or circumstances. 12. In Standard Chartered Bank vs. State of Maharashtra, 2016 Law Suit (SC ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s to be shouldered by the petitioner is too broad a statement and is not consistent with the authoritative enunciation of law by the Hon'ble Apex Court, including the observation in Gunmala Sales Private Limited and Others ..vs.. Navkar Infra Projects Private Limited and others which reads thus: "30. When a petition is filed for quashing the process, in a given case, on an overall reading of the complaint, the high Court may find that the basic averment is sufficient, that it makes out a case against the Director; that there is nothing to suggest that the substratum of the allegation against the Director is destroyed rendering the basic averment insufficient and that since offence is made out against him, his further role can be brought out in the trial". (emphasis supplied) A bald cursory statement in a complaint that the director is incharge and responsible to the company for the conduct of the business of the company without anything more as to the role of the director may not suffice as is observed by the Hon'ble Apex Court in paragraphs 13 to 15 in National Small Industries Corporation Limited ..vs.. Harmeet Singh Paintal and another. However, the o ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
