TMI Blog2014 (7) TMI 1350X X X X Extracts X X X X X X X X Extracts X X X X ..... knowledge. The applicants, who are Directors of applicant No. 1 Company, can also save themselves from punishment if they prove that they have exercised all due diligence to prevent the commission of such offence and also cheque involved in the prosecution is issued by the applicant No. 2 without their consent. The presumption under Section 139 of the Negotiable Instruments Act is that respondent No. 1 received the said cheque towards discharge of legal liability or debt. The burden to rebut the said presumption is on the applicant No. 1 Company and it can only be rebutted during trial. The criminal applications are dismissed. - CRIMINAL APPLICATION NOS. 767 OF 2012 AND 73 OF 2013 - - - Dated:- 18-7-2014 - P.N. DESHMUKH, J. For the Appellant : A.C. Dharmadhikari and R.P. Jog, Advs. For the Respondent : S.B. Ahirkar, Add. P.P. and Uday Dastane JUDGMENT P.N. Deshmukh, J. 1. Rule. The rule is made returnable forthwith. Heard finally with consent of learned Counsel for the parties. Both these criminal applications are filed by invoking provisions of Section 482 of Code of Criminal Procedure praying to quash and set aside Criminal Complaint No. 2500/201 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 417915 HDFC Bank 5,00,000/- 22/01/08 417916 HDFC Bank 10,00,000/- 23/01/08 417917 HDFC Bank 5,39,831/- 30/01/08 417919 HDFC Bank 7,00,000/- 01/02/08 461840 S.B.I. 3,00,000/- 15/02/08 461840 S.B.I. 5,00,000/- 26/02/08 507485 HDFC Bank 3,00,000/- 01/03/08 507487 HDFC Bank 4,00,000/- 11/03/08 461844 S.B.I. 3,50,000/- 18/03/08 507483 HDFC Bank 80,000/- 24/03/08 507497 HDFC Bank 3,04,000/- 04/04/08 507509 HDFC Bank ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... applicants demanding the said amount of cheque, which was refused to be accepted by the applicants in spite of intimation given by the Postal Authorities and thus, the notice was returned with remark not claimed . 4. In the background of above facts, respondent No. 1 filed complaint against the applicants under Section 138 of the Negotiable Instruments Act as according to the respondent No. 1, the applicants are equally responsible for the offence committed by them by issuing cheque to discharge their legal liability towards respondent No. 1. 5. The learned trial Court issued summons in the name of all the applicants for the offence punishable under Section 138 of the Negotiable Instruments Act against which the applicants have preferred the present criminal applications praying for quashing and setting aside the criminal complaint filed by respondent No. 1 as well as summons issued by the learned trial Court in pursuance of the complaint. 6. It is the case of the applicants that in response to the summons issued, the applicants appeared before the learned Chief Judicial Magistrate where they were served with copies of the complaint and on going through its contents, they ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... plaint by respondent No. 1 is nothing, but gross abuse of process of law and Court and thus, complaint cannot be allowed to progress further and as such, have prayed that both the criminal applications may be allowed by quashing Criminal Complaint No. 2500/2012. In support of their contentions, the learned Counsel for the applicants has relied upon the judgment of the Apex Court in S.M.S. Pharmaceuticals Ltd. v. Neeta Bhalla and another {(2005) 8 SCC 89} : [2005(5) ALL MR 1118 (S.C.)]. 8. The respondent No. 1 has resisted both these criminal applications contending that the applicants have made misleading and mischievous statements that in view of Memorandum of Understanding, permanent investment is made by respondent No. 1 with applicant No. 1 Company and in lieu thereof, respondent No. 1 has become co-owner of applicant No. 1 Company for which share certificates worth ₹ 1,49,94,800/- are issued. According to respondent No. 1, there is a specific averment made in the complaint that the applicants are responsible for conduct of business of the applicant No. 1 Company and Memorandum of Understanding was executed and signed by applicant No. 2 Dilip Shrikrishna Andhare with c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ifically 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 sub-para (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 responsible to the compa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4/6/2012, respondent No. 1 issued legal notice to the applicants on applicant No. 1 Company's address as well as on their residential address by registered post acknowledgment due on 26/6/2012 demanding amount of ₹ 10 lakhs within fifteen days, which is alleged to have been refused by the applicants as per endorsement made by the Postal Department. 13. In the light of the above averments in the complaint and documents filed on record, it is revealed that the legal notice was issued by respondent No. 1 to all the applicants on their address and in spite of intimation given to the applicants by the Postal Department as they were not claiming the notice, the notice was returned to respondent No. 1 with endorsement not claimed . It is further found averred in the complaint that all the applicants are equally responsible for the offence committed by them and they have issued the said cheque to discharge their legal liability towards respondent No. 1. 14. In the background of above contents in the complaint, the law laid down by the Apex Court in the case of Rallis India Limited, [2011 ALL MR (Cri) 1645 (S.C.)l (cited supra) can be directly made applicable. In the said c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e offence. A company, though a legal entity, cannot act by itself, but can only act through its Directors. Normally, the Board of Directors act for and on behalf of the company. This is clear from Section 291 of the Companies Act. Therefore, a person in the commercial world having a transaction with a company is entitled to presume that the Directors of the company are in charge of the affairs of the company. If any restrictions on their powers are placed by the memorandum or articles of the company, it is for the Directors to establish it at the trial. It is in that context that Section 141 of the NI Act provides that when the offender is a company, every person, who at the time when the offence was committed was in charge of and was responsible to the company for the conduct of the business of the company, shall also be deemed to be guilty of the offence along with the company. 16. Considering the facts involved in both these criminal applications together with the legal position as above, I do not find substance in the criminal applications as admittedly the applicants are Directors of applicant No. 1 Company and proviso to Section 141 of the Negotiable Instruments Act c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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