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2007 DIGILAW 238 (DEL)

A. G. GAGGAR v. STATE

2007-02-05

S.RAVINDRA BHAT

body2007
ORDER 1. The present petition under Section 482 of the Code of Criminal Procedure seeks quashing of criminal proceedings initiated by the respondent complainant. The complaint alleged that the petitioner in his capacity as Director of M/s. Viniyoga Clothex Ltd. (hereinafter referred to as "the company") was guilty of the offences under Sections 138/141 of the Negotiable Instruments Act (hereinafter referred to as "the Act"). 2. The summoning order in this case was issued on 1.12.1998. It is claimed that the petitioner had moved an earlier application when the law declared by the Supreme Court in K.M. Mathew v. State of Kerala, I (1992) CCR 316 (SC)=( 1992) I SCC 217, about review the summoning order held the field. However, after the judgment in Adalat Prasad v. Rooplal Jindal and Others, 113 (2004) DLT 356 (SC)=V (2004) SLT 353=III (2004) CCR 176 (SC)= (2004) 7 SCC 338 , the said application was rejected. 3. The essential ground on which the petition is premised is that the complainant/respondent had unnecessarily impleaded the present petitioner. Learned Counsel contended that the petitioner was not issued with any notice under Section 138, he relied upon the averments in the complaint to state that there was no whisper about the petitioner being incharge of, or in control of the affairs of the company as mandated by Section 141 (1) of the Act. Counsel contended that in order to create vicarious liability the complainant had to necessarily and also specifically urge as to what was the role played by the accused/petitioner. 4. Learned Counsel for the respondent submitted that the complaint so far it pel1ains to the petitioner cannot be characterized as illegal and that the Trial Court justly issued the summoning order. It was contended by placing reliance upon the Minutes of Annual Meeting of 1995-96 that the petitioner was disclosed as a whole time director. 5. Learned Counsel for the complainant relied upon the judgment of the Supreme Court in Anil Hada v. Indian Acrylic Ltd., X (1999) SLT 1=IV (1999) CCR 285 (SC)=I (2006) BC 143 (SC)=2000 (1) JCC (SC) 1. It was contended on the strength of that ruling that the director of a company is empowered to act on its behalf and therefore liable as per Section 141. 6. It was contended on the strength of that ruling that the director of a company is empowered to act on its behalf and therefore liable as per Section 141. 6. The narrow question, as is evident from the above facts is whether the petitioner could have been properly impleaded as an accused/respondent in the criminal proceedings pending before the Trial Court. The complaint in this case is absolutely silent as to the role played by the petitioner. In S.M.S. Pharmaceutical Ltd. v. Neeta Bhalla and Anr., VII (2005) SLT 113=IV (2005) BC 425 (SC)=IV (2005) CCR 12 (SC)=2005 (3) JCC (NI) 203, a three-Judge Bench of the Supreme Court after considering the previous judgments on the issue ruled that simple status of a person as director of a company, would be no justification to automatically implead him in proceedings for violation of Section 138. The conclusion at para 19(a) of the judgment was that the complainant had to necessarily aver, with particulars, that at the time when the offence was committed, the accused was incharge of the company. It was also concluded in para 19(b) that merely directorship of a company would not be sufficient to saddle someone with vicarious liabilities under an Act. 7. The decision of the Supreme Court in my opinion concludes the issue in favour of the petitioner. He is, therefore, entitled to relief. The petition is accordingly allowed. The complaint proceedings pending before the Additional Chief Metropolitan Magistrate entitled Mis. Word Portfolio Finance and Leasing Ltd. v. Viniyoga Clothex Ltd., are hereby quashed. No costs. Order Dasti. Petition allowed.