TMI Blog2022 (1) TMI 102X X X X Extracts X X X X X X X X Extracts X X X X ..... nsible for the day to day affairs of the company are deemed to have committed the offence - a basic averment has to be made in the complaint, which is an essential requirement under Section 141 of the Negotiable Instruments Act. In the absence of any such specific averment in the complaint merely because the petitioners are being the directors of the company, they cannot be made liable for offence under Section 141 of the Negotiable Instruments Act. There is no specific averment in the complaint to the effect that the petitioners who are all the directors of the company are in charge of and responsible for the conduct of the business of the company. Merely saying that they are directly involved in the affairs of the company is not sufficient. Being a director of the company, he may be involved in the affairs of the company as attending the meeting of the Board of Directors, guiding the company in administrative and policy matters. But, that itself is not sufficient to hold that they are in charge of and responsible to the day to day affairs and the conduct of the business of the company - the Judicial Magistrate is expected to consider all the materials available before him and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of their liability drawn on Indian Overseas Bank, Chennai on 07.05.2015, for a sum of ₹ 3,00,00,000/-. That cheque was presented by the complainant for encashment and the same was returned on 08.05.2015, on the ground of insufficient funds. Thereafter, they issued demand notice to all the accused on 20.05.2015, calling upon them to make payment. After receipt of the notice, they have given a reply stating false and frivolous reasons. Since the accused failed to pay the amount a complaint has been preferred under Section 138 of the Negotiable Instruments Act [hereinafter will be called as the Act ]. It is alleged in the complaint that all the accused persons are directors of the accused company and are directly involved in the affairs of the company and hence they were all deemed to have committed the offence. The learned Judicial Magistrate took cognizance of offence and issued summons. To quash the said complaint, the present criminal original petitions have been filed. 6. Mr. M. Kempraj and Mr. Sai Krishnan, learned counsel appearing for the petitioners herein would contend that the petitioners are only directors of the company and they are not in charge and responsib ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Police Station, Chennai - 600017, dated on 07.05.2015 for a sum of ₹ 3,00,00,000/-(Rupees three crores only). The above cheque was presented in The Lakshmi Vilas Bank, 646, Anna Salai, Chennai for clearance. However, the cheque was again returned on 08.05.2015, with a return memo reasoned as Insufficient Funds . The complainant further submits that all the accused persons are directors of the accused company and all are involved directly in the affairs of the company. [Italic Supplied] 11. Now the question is, whether the averment in the complaint that the petitioners who are the directors of the accused company are directly involved in the affairs of the company is sufficient to make them liable for the offence committed by the company under Section 141 of the Negotiable Instruments Act? 12. It is settled law that there is no vicarious liability in criminal jurisprudence, unless the Statue makes them vicariously liable for the offence committed by the company. When the offence is committed by the company, merely because some persons are directors of the company, they cannot be roped into and make them liable for the offence committed by the company. 13. Sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to have committed the offence. For that, there must be a specific averment in the complaint that those persons who are shown as accused are in charge of and responsible for the conduct of the business of the company at the relevant time. Thus, a basic averment has to be made in the complaint, which is an essential requirement under Section 141 of the Negotiable Instruments Act. In the absence of any such specific averment in the complaint merely because the petitioners are being the directors of the company, they cannot be made liable for offence under Section 141 of the Negotiable Instruments Act. The Hon'ble Supreme Court in S.M.S. Pharmaceuticals Ltd. Vs. Neeta Bhatla reported in (2005) 8 SCC 89, elaborately considering the issue has held as follows: 19.(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. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... question of requirement of averments in a complaint has to be considered on the basis of provisions contained in Section 138 and 141 of the NI Act read in the light of the powers of a Magistrate referred to in Sections 200 to 204 of the Code which recognize the Magistrate's discretion to reject the complaint at the threshold if he finds that there is no sufficient ground for proceeding. Thus, if this basic averment is missing the Magistrate is legally justified in not issuing process ......... 16. Recently, after considering all the above judgments, the Honourable Supreme Court in Ashutosh Ashok Parasrampuriya and others v. Gharrkul Industries Pvt. Ltd. And others, reported in, has held as follows:- 25. We are concerned in this case with Directors who are not signatories to the cheques. So far as Directors who are not the signatories to the cheques or he are not Managing Directors or Joint Managing Directors are concerned, it is clear from the conclusions drawn in the afore-stated judgment that it is necessary to aver in the complaint filed under Section 138 read with Section 141 of the NI Act that at the relevant time when the offence was committed, the Directors w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an opinion is to be formed only after due application of mind that there is sufficient basis for proceeding against the said accused and formation of such an opinion is to be stated in the order itself. The order is liable to be set aside if no reason is given therein while coming to the conclusion that there is prima facie case against accused, though the order need not contain detailed reasons. A fortiori, the order would be bad in law if the reason given turns out to be ex facie incorrect. 20. In such circumstances, I am of the considered view that averment made in the complaint is not sufficient to fix criminal liability against the petitioners and the learned Magistrate without considering the same has taken cognizance of the offence against the petitioners and has issued summons to them. Hence, the proceedings in C.C. No. 3082 of 2015 on the file of the learned XIII Metropolitan Magistrate, Egmore, Chennai is liable to be quashed as against the petitioner herein and accordingly quashed as against the petitioners in Crl.O.P. Nos. 30327, 30326 29698 of 2015. 21. In the result, the criminal original petitions in Crl.O.P. Nos. 30327, 30326 29698 of 2015 and 246 of 20 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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