1. The present applications have been filed under Section 482 of the Code of Criminal Procedure, 1973 for the prayer that Criminal Case No.7177/2009 of Criminal Misc. Application No.4649/2011 and Criminal Case No.7178/2009 of Criminal Misc. Application No.4649/2011 pending before the Court of the Metropolitan Magistrate under the Negotiable Instrument Act Court No.7, Ahmedabad may be quashed and set aside on the grounds stated in the applications.
2. Heard learned counsel, Shri A.C. Chokshi for the applicants.
3. Learned counsel, Shri Chokshi has submitted that the cheque is not signed by the applicants and they are not concerned with the affairs of the Company. He has referred to Page No.80 and submitted that the cheques have been handed over as stated in the notice and, therefore, each cheque separately would not constitute any offence. He has also submitted that the application, which is produced at Page No.98, was referred to the State CID Crime and it is evident that the applicants have not been looking after the affairs of the Company regularly and it was Jayant Roy, who was concerned with the daytoday affair of the Company.
4. Learned counsel, Shri Chokshi submitted that if the person is not concerned with the daytoday affairs of the Company nor he has signed the cheque, the provisions of the Negotiable Instrument Act and the liability would not be attracted. In support of his submissions, he has referred to and relied upon the judgment in case of Central Bank of India Vs. Asian Global Limited & Ors., reported in 2010 (11) SCC 203. He has also relied upon the judgment in case of S.M.S. Pharmaceuticals Ltd., 1Vs. Neeta Bhalla & Anr., reported in 2008 (5) SCC 89. He has also referred to the judgment of the Hon'ble Apex Court in case of Pepsico India Holdings Pvt. Ltd. Vs. Food Inspector & Anr., reported in 2011 (1) SCC 176 and pointedly emphasized the observations made in Para No.50 and 52 that “It is now well established that in a complaint against a company and its Directors, the complainant has to indicate in the complaint itself as to whether the Directors concerned were either in charge of or responsible to the Company for its daytoday management, or whether they were responsible to the Company for the conduct of its business. A mere bald statement that a person was the Director of the Company against which certain allegations had been made is not sufficient to make such Director liable in the absence of any specific allegations regarding his role in the management of the Company.”
5. Learned counsel, Shri Chokshi has referred to the papers and submitted that the role of the independent Director in the management and the affairs of the Company has to be pleaded and specifically primafacie established to make him liable. He has also referred to and relied upon the order of the High Court in Criminal Misc. Application Nos.12631 & 12635 of 2010 (Coram : M.R. Shah, J.) dated 15.02.2011. He has also submitted that primary liability is the firm or the Company and in case of any default, the liability of the Director would not be attracted if it is established that they were in charge of daytoday affairs and were handling the dayto day affairs of the Company. Therefore, he submitted that as there was no such evidence suggesting primafaice case, the present application may be allowed.
6. Learned Sr. Counsel, Shri R.R. Marshal appearing with learned counsel, Mr.Adil Mirza submitted that the Company as legal entity would function through the Director or the officers. He submitted that what is required to be considered is whether the applicant was primarily functioning for the Company and if they were actively participating in the affairs of the Company merely because they were residing in Rajasthan would not be sufficient. He submitted that it is a defence, which could be considered at an appropriate stage. It was submitted that as could be seen from the papers, the applicants were handling daytoday affairs of the Company and were actively participating in the aforesaid Company and, therefore, they cannot now run away from the liability. He submitted that the submission that whether they were also victims, is not relevant and the discretion under Section 482 of the Code of Criminal Procedure, 1973 may not be exercised. He submitted that the present petition may not be entertained.
7. In view of these rival submissions, it is required to be considered whether the present petition can be entertained or not.
8. As could be seen from the relevant papers, to which, both sides have referred, the applicants herein were actively associated with the affairs of the Company and accused no.1Advantage Global BPO BPO Pvt. Ltd. The averments in the complaint also clearly suggest that primafacie though they may be residing at Rajasthan, they have been involved in the affair of the accused no.1 Company, therefore, as the accused no.2, Jayanta Roy as a Director of the Advantage Global BPO Pvt. Ltd., may be managing the affairs, it should not be said that the applicants were not at all associated in the affairs of the Company, which should assail them from the liability at the threshold exercising inherent jurisdiction under Section 482 of the Code of Criminal Procedure, 1973.
9. As this Court is not required to appreciate or deal with the material and evidence at length in detail, it could be suffice to say that the submissions, which have been made with regard to the liability of the applicants or that they were not involved in daytoday affairs of the Company as they were residing at Jaipur, Rajasthan, could be a matter of appreciation of evidence at the trial. It is required to be mentioned that in modern world, a person in different part of the country or the globe may have his business affairs managed without actual physical presence but could be at his instance with the help of other Directors, Managers etc. Therefore, it could be a matter of appreciation of evidence at the trial and conclusion cannot be arrived at at this stage. Reference is made to the judgment of the Hon'ble Apex Court reported in case of Central Bank of India Vs. M/s. Asian Global Ltd. & Ors., reported in 2010 (6) Scale as well as 2005 (8) SCC 89, which is the basic principles that no one can be held liable for an act of another. Therefore, while considering the provisions of Sections 138 and 141 of the Negotiable Instrument Act, the observations have been made. However, there is specific reference to Section 141 of the Negotiable Instrument Act that a person in charge and responsible to the Company for conduct of the business of the Company could be made liable and every person connected with the Company may not be fall within the ambit of this provision. At the same time, the person, who is in charge of the responsible for the conduct of the business of the Company certainly be liable as observed in this judgment and in which manner they were in charge of the affairs of the Company would be a matter of appreciation of evidence. The Hon'ble Apex Court in a judgment in case of S.M.S. Pharmaceuticals Ltd., (supra) has made observations as under: “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.”
10. Thereafter, the Hon'ble Apex Court has considered various situations with regard to the reference and the underlying scheme of the Act is that the person cannot be made liable for the Act of another. However in case of Company, merely because one is Director may not be made liable vicariously because he is a Director. In other words, in order to make a person liable for the Company in his capacity as a Director or the officer or executive, it has to be established with evidence that he had been involved in the affairs of the Company, meaning thereby, he was one of the persons in charge of the affairs of the Company and, therefore, the submissions, which have been made learned counsel Shri Choksi cannot be readily accepted.
11. A useful reference can be made to the judgment of the Hon'ble Apex Court in case of K.K. Ahuja V/s V.K. Vora & Anr., reported in (2009) 10 SCC 48, wherein it has been observed that the persons who are in charge and responsible for the conduct of the affairs of the Company would be vicariously liable for the offences committed by the Company. Again in a subsequent judgment, in case of National Small Industries Corporation Limited V/s. Harmeet Singh Paintal and Another, reported in (2010) 3 S.C.C. 330, it has been observed that if a person is in charge and involved in the affairs of the Company, he would be liable. In the said aforesaid judgment the Hon'ble Apex Court has made observations in Para Nos.12, 22 and 29 and the observations made in Para Nos.12 and 22 reads as under: “12. It is very clear from the above provision that what is required is that the persons who are sought to be made vicariously liable for a criminal offence under Section 141 should be, 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. Every person connected with the company shall not fall within the ambit of the provision. Only those persons who were in charge of and responsible for the conduct of the business of the company at the time of commission of an offence will be liable for criminal action. It follows from the fact 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 for a criminal offence under the provisions. The liability arises from being in charge of and responsible for the conduct of the business of the company at the relevant time when the offence was committed and not on the basis of merely holding a designation or offence in a company.
22. Therefore, This Court has distinguished the case of persons who are in charge of and responsible for the conduct of the business of the company at the relevant time of the offence and the persons who are merely holding the post in a company and are not in charge of and responsible for the conduct of the business of the company. Further, in order to fasten the vicarious liability in accordance with Section 141, the averments as to the role of the Directors concerned should be specific. The description should be clear and there should be some unambiguous allegations as to how the Directors concerned were alleged to be in charge of and were responsible for the conduct and affairs of the company.”
12. Further, it is well accepted that the exercise of direction under Section 482 of the Code of Criminal Procedure, 1973 has to be exercised with care and circumspection and it has been exercised only in a cases to do the complete justice between the parties. When there is specific procedure provided under the statute like Code of Criminal Procedure, 1973 and on the basis of the complaint which has been registered like in the facts of the present case pending before the Metropolitan Magistrate, same cannot be interfered with or thwarted or stifle at this stage. In fact, the Hon'ble Apex Court has made observations that legitimate prosecution should not be stifled while exercising the jurisdiction under Section 482 of the Code of Criminal Procedure, 1973. The Hon'ble Apex Court has expressed the word of caution in such situation and has clearly observed in a judgment in the case of Inder Mohan Goswami & Anr.
v. State of Uttaranchal & Ors., reported in (2007) 12 SCC 1 as under: “The powers possessed by the High Court under Section 482 of the Code are very wide and the very plenitude of the power requires great caution in its exercise. The Court must be careful to see that its decision in exercise of this power is based on sound principles. The inherent power should not be exercised to stifle a legitimate prosecution. The High Court should normally refrain from giving a prima facie decision in a case where all the facts are incomplete and hazy, more so, when the evidence has not been collected and produced before the Court and the issues involved, whether factual or legal, are of such magnitude that they cannot be seen in their true perspective without sufficient material. Of course, no hardandfast rule can be laid down in regard to cases in which the High Court will exercise its extraordinary jurisdiction of quashing the proceedings at any stage.”
13. Therefore, considering the aforesaid facts and rival submissions, the present petition cannot be
Sd/
(RAJESH H.SHUKLA, J.)
/patil