TMI Blog2007 (11) TMI 711X X X X Extracts X X X X X X X X Extracts X X X X ..... he Act was filed by the respondent company thereby arraying the petitioner along with other persons as accused and vide the impugned order dated 8.12.2005, all the accused persons including the present petitioners, had been summoned by the learned trial court to face trial before it. 3. It has been contended by the learned Counsel for the petitioner that there is no material on record to connect the petitioner with commission of the alleged offence under Section 138 read with Section 141 of the Act in the absence of any averment in the complaint that the petitioners were In Charge of and responsible for the day-to-day affairs and conduct of the business of the accused company. It is also contended that the fulfillment of requirements of Section 141 of the Act is the condition precedent and is sine-qua-non for summoning of the petitioners, which is manifestly lacking in the complaint. Moreover, no prosecution could have been launched against the present petitioners in the absence of any averment that the petitioners have signed the alleged cheque in question. Even other wise, the petitioners were not the authorized signatory of the company and were merely sleeping Director. No sp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e for the conduct of the business of the company. The description should be clear. It is true that precise words from the provisions of the Act need not be reproduced and the Court can always come to a conclusion in facts of each case. But still in the absence of any averment or specific evidence the net result would be that complaint would not be entertainable 9. Section 138 of the Act reads as under: 138. Dishonour of cheque for insufficiency, etc., of funds in the accounts - Where any cheque drawn by a person on an account maintained by him with a banker for payment of any amount of money to another persons from out of that account for the discharge, in whole or in part, of any debt or other liability, is returned by the bank unpaid, either because of the amount of money standing to the credit of that account is insufficient to honour the cheque or that it exceeds the amount arranged to be paid from that account by an arrangement made with that bank, such person shall be deemed to have committed an offence and shall, without prejudice to any other provisions of this Act, be punished with imprisonment for a term which may be extended to two years, or with fine which may ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 38 of the Act has been committed with the knowledge, consent and connivance of the present petitioners and is attributable to neglect on their part. 10. S.M.S. Pharmaceutical (Supra) has been discussed in N.K. Wahi (Supra) case by the Apex Court, in which, it was, inter alia, held as follows: 18. To sum up, there is almost unanimous judicial opinion that necessary averments ought to be contained in a complaint before a person can be subjected to criminal process. A liability under Section 141 of the Act is sought to be fastened vicariously on a person connected with a company, the principal accused being the company itself. It is a departure from the rule in criminal law against vicarious liability. A clear case should be spelled out in the complaint against the person sought to be made liable. Section 141 of the Act contains the requirements for making a person liable under the said provision. That the respondent falls within the parameters of Section 141 has to be spelled out. A complaint has to be examined by the Magistrate in the first instance on the basis of averments contained therein. If the Magistrate is satisfied that there are averments which bring the case within ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... R.B.S. Channabasavaradhya and Anr. 2006CriLJ4602 and Saroj Kumar Poddar v. State (NCT of Delhi) and Anr. 2007CriLJ1419 . It was, inter alia, held as follows: ...Section 141 raised a legal fiction. By reason of the said provision, a person although is not personally liable for commission of such an offence would be vicariously liable therefore. Such vicarious liability can be inferred so far as a company registered or incorporated under the Companies Act, 1956 is concerned only if the requisite statements, which are required to be averred in the complaint petition, are made so as to make the accused therein vicariously liable for the offence committed by the company. Before a person can be made vicariously liable, strict compliance of the statutory requirements would be insisted.... 11. So, according to these judgments, there has to be an averment that the accused were in charge of or responsible to the company for conduct of the business of the company. 12. As already stated above, these averments have been made by the complainant in the case in hand and the Apex Court had occasion to deal with the provisions of Section 138 and 141 of the Act very recently in N. Rangac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t every person who at the time the offence was committed, was in charge of and was responsible for the conduct of the business of the company. In fact, Section 141 deems such persons to be guilty of such offence, liable to be proceeded against and punished for the offence, leaving it to the person concerned, to prove that the offence was committed by the company without his knowledge or that he has exercised due diligence to prevent the commission of the offence. Sub-section (2) of Section 141 also roped in Directors, Managers, Secretaries or other officers of the company, if it was proved that the offence was committed with their consent or connivance. 13. 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 which provides that subject to the provisions of that Act, the Board of Directors of a Company shall be entitled to exercise all such powers and to do all such acts and things as the Company is authorized to exercise and do. Palmer described the position thus: A company can only act by agents, and usually the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eally the directing mind and will of the corporation, the very ego and centre of the personality of the corporation . Recently, however, such an approach has been castigated by the Privy Council through Lord Hoffmann in the Meridian Global case as a misleading general metaphysic of companies . The true question in each case was who as a matter of construction of the statute in question, or presumably other rule of law, is to be regarded as the controller of the company for the purpose of the identification rule. But as has already been noticed, the decision in S.M.S. Pharmaceuticals Ltd. (supra) binding on us, has postulated that a director in a company cannot be deemed to be in charge of and responsible to the company for the conduct of his business in the context of Section 141 of the Act. Bound as we are by that decision, no further discussion on this aspect appears to be warranted. 14. A person normally having business or commercial dealings with a company, would satisfy himself about its creditworthiness and reliability by looking at its promoters and Board of Directors and the nature and extent of its business and its Memorandum or Articles of Association. Other th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... acts which are absolutely necessary for making out the offence. In Bilakchand Gyanchand Co. v. A Chinnaswami 1999CriLJ3498 , this Court held that a complaint under Section 138 of the Act was not liable to be quashed on the ground that the notice as contemplated by Section 138 of the Act was addressed to the Director of the Company at its office address and not to the Company itself. The view was reiterated in Rajneesh Aggarwal v. Amit J. Bhalla 2001CriLJ708 . These decisions indicate that too technical an approach on the sufficiency of notice and the contents of the complaint is not warranted in the context of the purpose sought to be achieved by the introduction of Sections 138 and 141 of the Act. 18. In the case on hand, reading the complaint as a whole, it is clear that the allegations in the complaint are that at the time at which the two dishonoured cheques were issued by the company, the appellant and another were the Directors of the company and were in charge of the affairs of the company. It is not proper to split hairs in reading the complaint so as to come to a conclusion that the allegations as a whole are not sufficient to show that at the relevant point of t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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