TMI Blog2012 (10) TMI 1239X X X X Extracts X X X X X X X X Extracts X X X X ..... through its Chairman, the petitioner here, Vice-Chairman, Managing Director, as well as six Directors and Executive Director-cum-Company Secretary, upon a complaint made on behalf of the respondent viz. Madhya Pradesh State Industrial Development Corporation (for brevity MPSIDC ), a Government Company registered under the Companies Act. 2. Common averments made in the complaints may be summarized as under: The petitioner, being the Chairman, was the in-charge of and responsible for the conduct of the business of the company that has taken various loans cumulating to ₹ 11,00,50,000/-. For repayment thereof together with interest as per terms of the agreement, cheques, as detailed above, were issued for or on behalf of the borrower company. However, the cheques were dishonoured by the Bank on ground of Insufficient Funds . Thereafter, despite service of respective demand notice, the amount covered by the corresponding cheques/cheque was not paid by the company. 3. Learned Counsel appearing on behalf of the petitioner have strenuously contended that his prosecution is liable to be quashed as an abuse of the process of the Court on the following grounds: (i) The or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2008) DLT 669 (SC) : I (2009) BC 354 (SC) : AIR 2009 SC 1284, holding that every employee of Government Company is 'Public Servant' entitled to exemption under Clause (a) of the proviso to Section 200 of the Code with regard to a complaint relating to the offence under Section 138 of the Act also. 6. Ground No. (ii) (above) also does not have any merit in view of the well settled position of law, as propounded in Bilakchand Gyanchand Co. v. A. Chinnaswami, IX (1999) SLT 437 : IV (1999) CCR 270 : AIR 1999 SC 2182 and reaffirmed in Rajneesh Aggarwal v. Amit J. Bhalla, I (2001) SLT 288 : I (2001) CCR 61 (SC) : AIR 2001 SC 518, that demand notice under Section 138 sent to the director of the Company, who had signed the cheque on its behalf, amounts to notice to the Company itself. 7. Admittedly, all the cheques in question bearing different future dates were issued on 20.1.2000 only. As explained by a three-Judge Bench in Ashok Yeshwant Badeve v. Surendra Madhavrao Nighojakar, II (2001) SLT 669 : I (2001) CCR 358 (SC) : AIR 2001 SC 1315 and reiterated by a Bench of equal strength in Shri Ishar Alloys Steels Ltd. v. Jayaswals NECO Ltd., II, (2001) SLT 276 : I (2001) CCR 28 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... varadhya, II (2007) BC 210 (SC) : IV (2006) CCR 8 (SC) : VI (2006) SLT 454 : (2006) 10 SCC 581. (ii) Saroj Kumar Poddar v. State of NCT (Delhi), I (2007) SLT 525 : I (2007) CCR 278 (SC) : II (2007) BC 218 (SC) : I (2007) CLT 360 (SC) : (2007) 3 SCC 693. (iii) N.K. Wali v. Shekhar Singh, II (2007) BC 438 (SC) : II (2007) CCR 63 (SC) : III (2007) SLT 543 : 138 (2007) DLT 783 (SC) : II (2007) DLT (Crl.) 86 (SC) : (2007) 3 SCC (Cri) 203. (iv) Ramrajsingh v. State of M.P., III (2009) SLT 479 : (2009) 6 SCC 729 (v) K.K. Ahuja v. V.K. Vora, III (2009) DLT (Crl.) 751 (SC) : III (2009) BC 676 (SC) : III (2009) CCR 326 (SC) : V (2009) SLT 429 : (2009) 10 SCC 48. (vi) National Small Industries Corporation Ltd. v. Harmeet Singh Paintal, I, (2010) CLT 256 (SC) : I (2010) SLT 593 : 167 (2010) DLT 143 (SC) : I (2010) DLT (Crl.) 623 (SC) : I (2010) CCR 344 (SC) : I (2010) BC 674 (SC) : (2010)2 SCC(Cri) 1113 (vii) Anita Malhotra v. Apparel Export Promotion Council, IV (2011) BC 665 (SC) : IV (2011) CCR 174 (SC) : 183 (2011) DLT 488 (SC) : IV (2011) DLT (Crl.) 410 : VIII (2011) SLT 97 : (2012) 1 SCC 520. 12. In S.M.S. Pharmaceuticals's case (supra), the nature and extent of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rtue of their position they are liable to be proceeded with. (iv) Vicarious liability on the part of a person must be pleaded and proved and not inferred. (v) If the accused is a Managing Director or a Joint Managing Director then it is not necessary to make specific averment in the complaint and by virtue of their position they are liable to be proceeded with. (vi) If the accused is a Director or an officer of a company who signed the cheques on behalf of the company then also it is not necessary to make specific averment in the complaint. (vii) 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. This decision was followed in Anita Malhotra's case wherein the Court had to say that- This Court has repeatedly held that in case of a Director, the complaint should specifically spell out how and in what manner the Director was in charge of and was responsible to the accused company for conduct of its business and mere bald statement that he or she was in-charge of and was responsib ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ompany, is accustomed to act; (f) any person charged by the Board with the responsibility of complying with that provision (and who has given his consent in that behalf to the Board); and (g) where any company does not have any of the officers specified in Clauses (a) to (c), any Director or Directors who may be specified by the Board in this behalf or where no Director is so specified, all the Directors. (Emphasis supplied) 16. By reason of the legal fiction introduced by Section 141 of the Act, a person, though, not personally liable for commission of an offence under Section 138 would be vicariously liable therefore. However, it is not necessary to reproduce the language of Section 141 verbatim in the complaint since the complaint is required to be read as; a whole. If the substance of the allegations made in the complaint fulfils the requirements of Section 141, the complaint has to proceed and is required to be tried with. In construing a complaint a hypertechnical approach should not be adopted so as to quash the same. The laudable Object of preventing bouncing of cheques and sustaining the credibility of commercial transactions resulting in enactment of Section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t. So, all that a payee of a cheque that is dishonoured can be expected to allege is that the persons named in the complaint are in-charge of its affairs. 19. A bare perusal of the complaints would reveal that it was specifically pleaded that being the Chairman of the Company, the petitioner was aware of every act as well as of the transaction of the company. Further, in the demand notices, he was referred to as the Chairman of the Company and, admittedly, no reply denying the aforesaid fact was sent on his behalf. Moreover, in the application under Section 245(2) of the Code, he did not prefer to raise the plea that he was not the Chairman. As pointed out already, cheques, as mentioned above, were issued in favour of the Government Company for and on behalf of Geekay Exim (India) Limited, for repayment of the outstanding amounts against the Inter Company Loan termed as ICDs and, therefore, the petitioner as the Chairman of the borrowing Company could not plead ignorance of the entire transaction (Everest Advertising (P) Ltd. v. State Govt. of NCT of Delhi, II (2007) DLT (Crl.) 330 (SC) : II (2007) CCR 191 (SC) : II (2007) CLT 285 (SC) : IV (2007) BC 530 (SC) : IV (2007) SLT 330 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g observations made by the Apex Court in DCM Financial Services Limited v. J.N. Sareen, III (2008) CCR 123 (SC) : III (2008) CCR 123 (SC) : VI (2008) SLT 633 : (2008) 8 SCC 1, may usefully be quoted- When post-dated cheques are issued and the same are accepted, although it may be presumed that the money will be made available in the Bank when the same is presented for encashment, but for that purpose, the harsh provision of constructive liability may not be available except when an appropriate case in that behalf is made out. (Emphasis supplied) 23. While pointing out that proviso to Section 141 of the Act clearly provides that if the accused is able to prove to the satisfaction of the Court that the offence was committed without his knowledge or he had exercised due diligence to prevent the commission of such offence, he will not be liable to punishment, the Supreme Court in a recent decision rendered in Rallis India Limited v. Poduru Vidya Bhushan, II (2011) CCR 197 (SC) : III (2011) SLT 387 : II (2011) DLT (Crl.) 247 (SC) : (2011) 13 SCC 88, has proceeded to struck a note of caution: ... we also take this opportunity to strike a cautionary note with regard to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 6 months from the date of filing of complaint. Most of the preliminary objections as to maintainability of the complaints as against the petitioner were raised in an application under Section 245(2) of the Code for his discharge while ignoring the well settled position of law as laid down in Adalat Prasad v. Rooplal Jindal, III (2004) CCR 176 (SC) : V (2004) SLT 353 : 113 (2004) DLT 356 (SC) : (2004) 7 SCC 338, that the offence, under Section 138 of the Act, is triable by summon procedure that does not contemplate any stage of discharge after taking the cognizance thereof. Accordingly, learned Magistrate instead of considering the objections on merits ought to have rejected the application as not maintainable. Considering the petitioner's strategy to cause unnecessary delay, it is also necessary to impose exemplary costs in the light of guidelines laid down in Mary Angel v. State of T.N., V (1999) SLT 273 : III (1999) CCR 79 (SC) : AIR 1999 SC 2245. Consequently, each one of the petitions is dismissed with costs quantified at ₹ 2,000/-. As an obvious consequence, all the interim stay orders stand vacated. Copy of this order be retained in each one of the connected pe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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