HON’BLE Dr. JUSTICE K.G. SHANKAR
Criminal Petition No.6110 of 2013
Date: 05.08.2014
Between:
Sri Swapnadeep Parida,
S/o. Sarat Kumar Parida. .. Petitioner/ Accused
No.3
AND
State,
Rep.by Public Prosecutor, High Court of Andhra Pradesh, Hyderabad,
and another. .. Respondents
HON’BLE Dr. JUSTICE K.G. SHANKAR
Criminal Petition No.6110 of 2013
ORDER:
The quashment of C.C.No.197 of 2012 on the file of the Additional Judicial Magistrate of First Class, Kurnool by A.3 through the present petitioner is resisted by the second respondent/complainant.
2. The case of the complainant is that A.1 to A.3 allegedly committed the offence under Section 138 of the Negotiable Instruments Act, 1881. The first accused is the Company. The second accused is the Managing Director of the Company. The third accused is the Director of the Company. Sri O. Manohar Reddy, learned counsel for the petitioner/A.3 contended that no case is made out against A.3 and that the case is liable to be quashed so far as A.3 is concerned.
3. Sri P. Veera Reddy, learned senior counsel for the second respondent, on the other hand, contended that A.3 is also involved in the case and quashment of the case against A.3 is not justified at this stage.
4. The basis of the claim of the petitioner is Section 141 of the Negotiable Instruments Act. Section 141 is reproduced for the purpose of clarity.
“141. Offences by companies.—(1) If the person committing an offence under section 138 is a company, every person 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 and shall be liable to be proceeded against and punished accordingly:
Provided that nothing contained in this sub- section shall render any person liable to punishment if he proves that the offence was committed without his knowledge, or that he had exercised all due diligence to prevent the commission of such offence:
Provided further that where a person is nominated as a Director of a company by virtue of his holding any office or employment in the Central Government or State Government or a financial corporation owned or controlled by the Central Government or the State Government, as the case may be, he shall not be liable for prosecution under this Chapter.
(2) Notwithstanding anything contained in sub- section (1), where any offence under this Act has been committed by a company and it is proved that the offence has been committed with the consent or connivance of, or is attributable to, any neglect on the part of, any director, manager, secretary or other officer of the company, such director, manager, secretary or other officer shall also be deemed to be guilty of that offence and shall be liable to be proceeded against and punished accordingly.”
5. Under Section 141 (1) of Negotiable Instruments Act, if the offender for the offence under Section 138 of Negotiable Instruments Act is a Company, every person in-charge of and was responsible to the company for the conduct of its business at the time of the commission of the offence would be guilty. The learned counsel for the petitioner contended that the conditions envisaged u/s.141 of Negotiable Instruments Act were not made against the petitioner, whereas the learned senior counsel for the second respondent submitted that specific allegations were made in the complaint that A.3 also actively participated in the commission of the offence.
6. It would appear that the first accused offered to supply 11,400 metric tones of iron ore fines through M/s. JSW Steel Limited, Vidyanagar. The second respondent allegedly paid Rs.2,65,05,000/- by way of a cheque for the supply of iron ore fines. However, the first accused allegedly failed to supply the same. When the second respondent insisted for the refund of the money, the first accused allegedly issued a cheque on 14.08.2012 for a sum of Rs.2,65,05,000/-. The cheque stood bounced. Statutory notice was issued by the second respondent and case was filed. In paragraph No.7 of the complaint, it was stated that A.3, who is the petitioner herein, was a Director of A.1 company and that A.3 was also in-charge of and was responsible to the company for the conduct of business of the company. The question is whether the petitioner falls within Section 141 of Negotiable Instruments Act or not.
7. In National Small Industries Corporation Limited v.
[1] Harmeet Singh Paintal , the Supreme Court observed that it is not as though every person concerned with the company is vicariously liable u/s.141 of Negotiable Instruments Act and that a Director of the Company, who was not in-charge of or responsible for the conduct of its business at the time of the commission of the offence, was not liable for punishment u/s.138 of Negotiable Instruments Act. It was clarified by the Supreme Court that a mere bald statement that a Director was in-charge of and was responsible to the company for the conduct of its business would not be sufficient to make the Director liable u/s.141 of Negotiable Instruments Act.
Ltd.
8. In A.K. Singhania v. Gujarat State Fertilizer Co.
[2] , the Supreme Court held that in the absence of averment in the complaint that the Directors of the Company were in-charge of and was responsible for the business of the Company, such Directors could not be prosecuted. However, it was noticed in N. Chandrasekhar v. Allwyn, Unit of Voltas Ltd.[3] that in a complaint u/s.138 of Negotiable Instruments Act, the complainant specifically pleaded that all the accused were in-charge of the business of the accused firm and that the cheque was issued with their knowledge. The High Court held that the quashment of the cheque is not permissible.
[4]
9. In Paresh P. Rajda v. State of Maharashtra , the Supreme Court held that there were clear allegations against the accused to the effect that they were officers and were responsible for the affairs of the company.
The chairman of the accused company was impleaded as a co-accused. It was held that there was specific averment against the Chairman of the Company that he was responsible for the day-to-day affairs of the company and that the Chairman, therefore, is liable for prosecution.
10. In Malwa Cotton and Spining Mills Limited v. Virsa [5] Singh Sidhu , there were general allegations that all the Directors were responsible for the affairs of the company. The Supreme Court held that the complaint against any of the Directors could not be quashed u/s.482 Cr.P.C. in view of the general allegations, even if the allegations are sweeping.
11. The learned counsel for the second respondent also placed reliance upon Sundeep Kumar Bafna v. State of [6] Maharashtra , which was later to A.K. Singhania v. Gujarat [7] State Fertilizer Co. Ltd. . The question, therefore, is whether there is an allegation that A.3 who is the petitioner herein was in-charge of the affairs of the company or not. In para-7 of the complaint, specific averments were made that the petitioner was also in-charge of and was responsible to the company. In view of such allegations, I am afraid that the petitioner cannot be discharged, although the petitioner is a Director of the Company. I, therefore, see no merits in this petition.
12. The Criminal Petition is accordingly dismissed. Miscellaneous Petitions, if any pending in this Criminal Petition shall stand closed.
Dr. K.G. Shankar, J.
Date: 05.08.2014
Isn
[1] (2010) 3 SCC 330
[2] AIR 2014 SC 71
[3] 1999 (3) ALD 44
[4] (2008) 7 SCC 442
[5] (2008) 17 SCC 147
[6] 2014 (2) ALT (Crl.) 132 (SC)
[7] AIR 2014 SC 71