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2006 DIGILAW 2198 (PNJ)

Anil Puri v. Makhan Lal Vinod Kumar

2006-05-17

RANJIT SINGH

body2006
Judgment Ranjit Singh, J. 1. Petitioner-Anil Puri, resident of Shastri Nagar, Ludhiana has filed this petition seeking quashing of complaint filed under Section 138-B of the Negotiable Instruments Act, 1881 (for short, the Act) on the ground that no offence under the said Act can be urged against him as he was never the Director of the Company which had allegedly issued the cheque in question leading to the filing of the complaint. 2. A few facts leading to the filing of the complaint and the subsequent proceedings may be noticed : 3. M/s. United Ispat Udyog Limited had issued a cheque to M/s. Makhan Lal Vinod Kumar, Amloh Road, Mandi-respondent No. 1. This cheque was dishonoured when presented. Respondent No. 1 accordingly filed a complaint against M/s. United Ispat Udyog Limited. The petitioner was arrayed as one of the respondents with the allegation that he was one of the Director of the defaulting firm. The petitioner moved an application before the Sub- Divisional Judicial Magistrate under Section 245, Cr.P.C. for dropping the proceedings against him. The same, however, was dismissed. Accordingly, the present petition has been filed seeking quashing of the said order. 4. The learned counsel for the petitioner submits that a perusal of the complaint would show that the petitioner has been arrayed as an accused solely on the basis that he is the Director of the defaulting firm which a Public Limited Company. The counsel then submits that ever since the date of incorporation of this Company and till date the petitioner has never been a Director of the said firm. In support of his contention, the petitioner has made reference to certificate dated 27.8.2001 issued by the Registrar of Companies which is to the effect that the petitioner had never been a Director of this Company. The counsel accordingly submits that this evidence completely demolishes the case set up against him in the complaint. He has also relied upon Memorandum of Articles and Association of the Company to show that the petitioner is not a Director. He has also submitted that merely on account of the petitioner being a shareholder he cannot be fastened with any liability and has further contended that the complaint, as such, discloses no evidence which could reveal commission of offence by the petitioner. 5. None has chosen to appear on behalf of the respondents today. Earlier Mr. He has also submitted that merely on account of the petitioner being a shareholder he cannot be fastened with any liability and has further contended that the complaint, as such, discloses no evidence which could reveal commission of offence by the petitioner. 5. None has chosen to appear on behalf of the respondents today. Earlier Mr. Amit Awasthi was representing respondent No. 1. He, however, had not appeared on a number of dates despite issuance of a notice to the said respondent. Accordingly, he was proceeded ex parte and the case is being decided without awaiting representation from the respondents. 6. Section 141 of the Act makes a provision in cases where the offence under Section 138 is committed by a Company. As per this section, every person, who at the time of commission of offence was in-charge and was responsible to the Company for the conduct of business, has been deemed to be guilty of offence and shall be liable to be proceeded against. The petitioner has been made liable on the ground that he was in-charge and responsible for day-to-day affairs of the said Company. Apart from this, there is no allegation made against the petitioner. According to Section 141 of the Act, the petitioner could be made responsible for the offence under Section 138 if it is either urged or shown that he was in-charge or was responsible to the Company for the conduct of the business. The averments in this regard in the complaint are blissfully vague. Apart from simply sating that respondent Nos. 4 to 7 (which include the petitioner-company respondent No. 6) were in-charge and responsible for day-to-day affairs of the Company, nothing else has been mentioned or averred as to how the petitioner was responsible for the affairs of the company to attract liability under Section 138 of the Act. The petitioner has produced on record various documents, which has been referred to above, to show that ever since the incorporation of this company, he had never remained a Director of the said Company. The petitioner had drawn my attention to Criminal Misc. No., 33360-M of 2001 wherein this Court on identical grounds had granted relief to the same very petitioner for offence under Section 138. This was also in regard to the company now arrayed as accused. It was noticed by this Court in the said criminal misc. The petitioner had drawn my attention to Criminal Misc. No., 33360-M of 2001 wherein this Court on identical grounds had granted relief to the same very petitioner for offence under Section 138. This was also in regard to the company now arrayed as accused. It was noticed by this Court in the said criminal misc. petition that the petitioner was never the Director but merely was a subscriber. Referring to the provisions of Section 141 of the Act, the Court found that the offence when committed by a company, then every person in-charge or responsible for the conduct of the company, can be held guilty and that mere allegations against the persons are not enough to warrant prosecution of the petitioner. Accordingly, the proceedings against the petitioner were quashed. While deciding the said criminal misc. petition, this Court relied upon a number of judgments which are as follows :- 1. M/s. Jord Engineers India Ltd. v. M/s. Nagarjuna Finance Ltd., 2000(3) Recent Criminal Cases 476 (A.P.); 2. State of Haryana v. Brij Lal Mittal, 1998(2) Recent Criminal Cases 547 (SC); 3. G.L. Modi v. Xedd Finance and Investment Pvt. Ltd., 2000(1) All India Criminal Law Reporter 355 (A.P.); 4. Modern Denim Ltd. v. Lucas TVS Ltd., 1999(4) Recent Criminal Cases 685 (Madras); 5. M/s. Prakash Industries Ltd. v. M/s. Bajaj Auto Finance Ltd., 1999(4) RCR(Crl.) 432 : 2000(1) All India Criminal Law Reporter 138 (Delhi); 6. Mahendra Pratap Singh Ratra v. M/s. N.K. Metals, 1999(1) RCR(Crl.) 329 : 1998(4) All India Criminal Law Reporter 368 (Delhi) and 7. P. Ravinder Reddy v. M/s. NCC Finance Limited, 1999(4) RCR(Crl.) 326 : 1999(4) All India Criminal Law Reporter 764 (A.P.). 7. In these judgments, it was held that the presence of specific allegation of an accused being in-charge and responsible for the conduct of the business, the proceedings against him were liable to quashed. It was also held in M/s. Jord Engineers India Ltd. (supra) that the requirement was not for using the words that the accused was in-charge and responsible but a specific role had to be pleaded. It was also held in M/s. Jord Engineers India Ltd. (supra) that the requirement was not for using the words that the accused was in-charge and responsible but a specific role had to be pleaded. This Court also relied upon the case of State of Haryana v. Brij Lal Mittal (supra) to hold that the proceedings against a Director could not be continued on bald assertion that they were Directors unless there was further allegation to indicate prima facie that that were in-charge of the Company and also responsible to the Company for the conduct of its business. 8. Taking the law laid down in the judgments aforementioned, it can be said that the allegations read as a whole should answer and fulfill the ingredient of provisions of Section 141 and mere incorporation of the words of the section would not fulfil the requirement of law. Seen in the context of the factual and legal position, as mentioned above, it can be said that the averments in the complaint so far as the petitioner is concerned, are not sufficient to attract the offence under Section 138-B of the Act against the petitioner. The allegations are baldly made repeating the words of Section 141 to say that the petitioner was in-charge and responsible for the conduct of the business of the Company without indicating in any manner as to how this was the position. This, when seen in the light of the fact that the petitioner had never been a Director of this Company ever since its inception, would further strengthen the submission of the petitioner that he cannot be held responsible for any vicarious liability merely on averments as contained in the petition. As I can understand that the other persons who had issued the cheque to the Company are facing proceedings in this case and it is the petitioner alone who has come forward to seek end of his agony on the ground that he cannot be held liable in view of the legal position, as mentioned above. 9. Having regard to the facts and circumstances of the case, I am of the view that continuing the proceedings against the petitioner on the basis of these bald averments contained in the complaint, would be an abuse of the process of the Court and hence the complaint qua the petitioner deserves to be set aside. I order accordingly. 9. Having regard to the facts and circumstances of the case, I am of the view that continuing the proceedings against the petitioner on the basis of these bald averments contained in the complaint, would be an abuse of the process of the Court and hence the complaint qua the petitioner deserves to be set aside. I order accordingly. The complaint qua the petitioner and the subsequent proceedings taken thereunder are hereby quashed. 10. It is made clear that this order would not stand in the way of the Court to summon the petitioner to face trial under the provisions of Section 319, Cr.P.C. if during the course of proceedings it is found that the petitioner had, in fact, been in-charge and responsible for running the affairs of the Company. 11. It is further made clear that any observation made here-in-above or direction given in the present case would not have any effect on the remaining accused persons including the company against whom the proceedings are in progress. The petition is accordingly disposed of in the above terms.