Court No. - 74
Case :- APPLICATION U/S 482 No. - 2598 of 2011 Applicant :- Abhinandan Kumar Jain And Another Opposite Party :- State of U.P. and Another Counsel for Applicant :- Anurag Sharma Counsel for Opposite Party :- Govt.Advocate,R.K.Mishra
Hon'ble Om Prakash-VII,J.
1. List revised. None present for the opposite party no. 2.
2. Heard Shri Anurag Sharma, learned counsel for the applicants and learned AGA for the State.
3. The present application u/s 482 Cr.P.C. has been filed by the applicants with the prayer to quash the entire proceeding of Complaint Case No. 403 of 2010 (M/s Chiranjilal Vs. M/s Hiltop Rubber Pvt. Ltd. and others), under Section 138 Negotiable Instruments Act, Police Station Delhi Gate, District Meerut, pending in the court of Additional Chief Judicial Magistrate-VIII, Meerut.
4. It is submitted by learned counsel for the applicants that summoning order passed in the matter against the applicants is illegal and without application of judicial mind. Criminal prosecution for the offence under Section 138 Negotiable Instruments Act cannot continue against the applicants. Neither the applicants are Director of the firm/company concerned nor they were involved in day to day affairs of the company. They have also not issued the cheque in question. Referring to the aforesaid argument, learned counsel for the applicants submitted that continuation of the proceedings of the aforesaid complaint case against the applicants is an abuse of process of law. Learned counsel for the applicants has also placed reliance on the law laid down by the Hon'ble Supreme Court in the case of S.M.S. Pharmaceuticals Ltd. Vs. Neeta Bhalla and another, AIR 2005 SC 3512.
5. On the other hand, learned AGA has opposed the prayer and argued that since applicants are also partner in the firm/company concerned and were involved in day to day affairs of the company, therefore, there is no illegality, infirmity or perversity in the summoning order.
6. I have considered the rival submissions advanced by learned counsel for the parties and have gone through the entire record carefully.
7. Before dealing with the submissions raised across the Bar, I find it necessary to quote the paragraph nos. 12, 13, 14 & 19 of the S.M.S. Pharmaceuticals case (supra).
"12. While analysing Section 141 of the Act, it will be seen that it operates in cases where an offence under Section 138 is committed by a company. The key words which occur in the Section are "every person". These are general words and take every person connected with a company within their sweep. Therefore, these words have been rightly qualified by use of the words " who, at the time the offence was committed, was in charge of, and was responsible to the company for the conduct of the business of the company, as well as the company, shall be deemed to be guilty of the offence etc." What is required is that the persons who are sought to be made criminally liable under Section 141 should be at the time the offence was committed, in charge of and responsible to the company for the conduct of the business of the company. Every person connected with the company shall not fall within the ambit of the provision. It is only those persons who were in charge of and responsible for conduct of business of the company at the time of commission of an offence, who will be liable for criminal action. It follows from this that if a director of a Company who was not in charge of and was not responsible for the conduct of the business of the company at the relevant time, will not be liable under the provision. The liability arises from being in charge of and responsible for conduct of business of the company at the relevant time when the offence was committed and not on the basis of merely holding a designation or office in a company. Conversely, a person not holding any office or designation in a Company may be liable if he satisfies the main requirement of being in charge of and responsible for conduct of business of a Company at the relevant time. Liability depends on the role one plays in the affairs of a Company and not on designation or status. If being a Director or Manager or Secretary was enough to cast criminal liability, the Section would have said so. Instead of "every person" the section would have said "every Director, Manager or Secretary in a Company is liable"..etc. The legislature is aware that it is a case of criminal liability which means serious consequences so far as the person sought to be made liable is concerned. Therefore, only persons who can be said to be connected with the commission of a crime at the relevant time have been subjected to action.
13. A reference to sub-section (2) of Section 141 fortifies the above reasoning because sub-section (2) envisages direct involvement of any Director, Manager, Secretary or other officer of a company in commission of an offence. This section operates when in a trial it is proved that the offence has been committed with the consent or connivance or is attributable to neglect on the part of any of the holders of these offices in a company. In such a case, such persons are to be held liable. Provision has been made for Directors, Managers, Secretaries and other officers of a company to cover them in cases of their proved involvement.
14. The conclusion is inevitable that the liability arises on account of conduct , act or omission on the part of a person and not merely on account of holding an office or a position in a company. Therefore, in order to bring a case within Section 141 of the Act the complaint must disclose the necessary facts which make a person liable.
19. To sum up, there is almost unanimous judicial opinion that necessary averments ought to be contained in a complaint before a persons 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 respondent falls within 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 Section 141 he would issue the process. We have seen that merely being described as a director in a company is not sufficient to satisfy the requirement of Section 141. Even a non director can be liable under Section 141 of the Act. The averments in the complaint would also serve the purpose that the person sought to be made liable would know what is the case which is alleged against him. This will enable him to meet the case at the trial."
8. In this matter, as is evident from the record, complaint was filed by the opposite party no. 2 against the company/firm concerned and present applicants as also against the signatory namely, Anil Kumar Jain, who has been shown in the complaint as Director of the company. If the submission raised on behalf of applicants is taken into consideration in consonance with the law laid down by the Hon'ble Supreme Court in the case of S.M.S. Pharmaceuticals case (supra), certainly nothing was disclosed in the complaint to demonstrate the role of the applicants in the firm/company concerned regarding day to day affairs. If such is the position, then submission raised across the Bar is acceptable. Hon'ble Supreme Court in the case of S.M.S. Pharmaceuticals (supra) has clearly held that merely being described as Director in a company is not sufficient to fulfil the requirement of Section 141 Negotiable Instruments Act. Since nothing has been disclosed in the statement recorded under Section 200 Cr.P.C. on the complaint or in the complaint itself about the involvement of the applicants in day to day affairs of the company and cheque in question was issued by the co- accused Anil Kumar Jain, thus, summoning order passed in the matter against the present applicants, in the opinion of Court, is not sustainable. Application, having substance, is liable to be allowed.
9. Accordingly, the present application u/s 482 Cr.P.C. is
allowed.
10. Entire proceedings of the Complaint Case No. 403 of 2010 (M/s Chiranjilal Vs. M/s Hiltop Rubber Pvt. Ltd. and others), under Section 138 Negotiable Instruments Act, Police Station Delhi Gate, District Meerut are quashed as against the applicants.
Order Date :- 18.12.2019 Sanjeet