TMI Blog2000 (7) TMI 1012X X X X Extracts X X X X X X X X Extracts X X X X ..... had invited tenders for design, engineering, manufacturing and supply of clarification plant, evaporation and boiling plants, cooling and part of curing equipment for their sugar plant in Nellore district. The first accused company responded to the tender and pursuant to the discussion, the contract has been awarded to the first accused company for the said purpose of designing, engineering, manufacturing, supplying the machinery in terms of the contract. The agreement was entered into on March 15, 1995. In terms of the agreement, the contract price was agreed to be a sum of Rs. 624 lakhs. In addition to the said agreement, the complainant entered into a second agreement with accused No. 1-company on March 15, 1995, relating to procurement of certain items of equipment and machinery required for the establishment of the sugar plant. The contract price as per the said agreement was Rs. 356 lakhs. 4. It is alleged that the complainant gave purchase order dated May 10, 1998, for supply of certain additional equipment at a cost of Rs. 80 lakhs subject to certain terms and conditions. The complainant accordingly entered into a third agreement with Suryapowertromcs Private Limited, a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... allegations and also making false claims against the complainant. 8. It is the case of the complainant that the cheques were issued in lieu of bank guarantee and in discharge of an existing and legally enforceable debt. May be so. 9. In the complaint, it is clearly alleged that the notice dated April 16, 1999, issued to the first accused company was separately sent to accused Nos. 2, 3, 4 and 5. It is alleged that apart from the first accused company, the principal officers who are in charge of the day-to-day functioning of the company are also liable. It is stated that the second accused is the chairman and managing director and also the signatory of the cheques in question. Accused No. 3 is the joint managing director, who was dealing with the complainant at all relevant points of time on behalf of accused No. 1. It may be significant to notice the allegations levelled in so far as the petitioners are concerned, as is evident from the complaint and which are to the following effect : Accused Nos. 4 and 5 are the directors of accused No. 1 and hence are liable under Section 141 of the Negotiable Instruments Act. 10. That is all what is stated against the petitione ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pany. In the complaint it is not alleged that at the relevant time when the cheques were issued by accused No. 1-company these petitioners were also in charge of and were responsible to the company for the conduct of the business of the company. It is not even suggested in the complaint that the cheques were issued by accused No. 1-company with the knowledge of the petitioners herein and with the consent and connivance of the petitioners. Nothing is attributed to these petitioners herein who are the directors of the company. 15. It is pertinent to notice that so far as these petitioner-directors are concerned, there is not even a whisper, nor anything to show that there is any act as such committed by them from which any inference can be drawn and by which they could also be held vicariously liable. 16. It is true that the entire evidence, upon which the complainant may rely to establish its case, need not be disclosed in the complaint itself. But the law requires that there must be clear, unambiguous and specific allegations against the directors of a company who are arrayed as accused and such allegations should reveal that they were responsible to the company for the condu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st, in the case of an offence committed by the company. Therefore, mere fact that a person was a director at the time when the offence was committed by the company cannot be automatically roped in as an accused in a case filed against the company. Persons who are not actually in charge of and were responsible to the company for the conduct of its business when the offence was committed shall also be deemed to be guilty of that offence under Section 138 of the Act, provided the offence has been committed with their consent or connivance or is attributable to any negligence on their part and such persons could be a director, manager, secretary or other officers of the company. It is thus obvious that only such of those directors and officers of the company, such as, secretary, manager shall be deemed to be guilty of the offence punishable under Section 138 of the Act in the case of an offence by a company, provided they have played some part in the commission of an offence by a company. 18. In Jord Engineers India Ltd. v. Nagarjuna Finance Ltd., a learned single judge of this court observed that the prosecution against a director in the absence of a specific allegation as to what ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... responsible to the company, but the question is whether they can apply to a managing director of a company normally, by definition a managing director is supposed to be in charge of managing the company and would obviously be responsible to the Company. 22. It is held (page 160) ... mere absence of an averment in the complaint that the petitioner-accused was in charge of and was responsible to the company does not justify quashing of the proceedings in these cases inasmuch as the petitioner-accused has been shown to be the managing director of the company. This court obviously took the view that in case of a managing director, there need not be an averment in the complaint that he was in charge of and was responsible to the company. The principle cannot be made applicable in the case of a director, as it is common knowledge that some of the directors may not even be knowing as to what is going on day-to-day in the company, they may not do anything in the business of the company. 23. It is thus clear that no person could be prosecuted in the absence of a specific, clear and unambiguous assertion in the complaint against such persons impleaded as accused that they were in c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ny allegation made orally or in writing to a magistrate, with a view to his taking action under this Code, that some person, whether known or unknown, has committed an offence, but it does not include a police report. Section 190 of the Code empowers the magistrate to take cognizance of any offence (a) upon receiving a complaint of facts which constitute such offence; (b) upon a police report of such facts; (c) upon information received from any person other than a police officer. Section 200 of the Code mandates that a magistrate shall examine upon oath the complainant and the witnesses present before taking cognizance of an offence. The Code provides different procedures for different cases arising under Section 190 of the Code and also in relation to the seriousness of the offence. Chapter XVI deals with commencement of proceedings before magistrates. Chapter XVII deals with trial before a Court of Session and Chapter XIX deals with trial of warrant cases by magistrates, where Chapter XX deals with trial of summons cases by magistrate. Section 204(3) of the Code mandates that in a proceeding instituted upon a complaint made in writing, every summons or warrant issued under Sub-s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot be supplied to the accused along with the summons. There is no such requirement in law. The conclusion is thus inescapable that the sworn statement and the statements recorded on oath by a magistrate at the time of taking cognizance of an offence on complaint do not form an integral part of the complaint. The submission made by learned counsel for the respondent-complainant is accordingly rejected. 26. It is thus clear that a complaint filed in writing of an offence punishable under Section 138 of the Act shall stand or fall on its own. The averments and allegations made in the complaint must disclose the cause against each of the persons arrayed as accused in the complaint. The facts stated in the complaint must disclose commission of an offence by each one of the accused. The complaint in clear terms should disclose the liability of each one of such persons arrayed as accused. There must be clear factual foundation laid in the complaint itself attracting the ingredients of Section 138 of the Act against every person arrayed as accused in the complaint and in the case of an offence by a company, the ingredients of Section 141 of the Act have also to be met. Factual foundatio ..... X X X X Extracts X X X X X X X X Extracts X X X X
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