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2008 DIGILAW 1266 (PNJ)

Tarun Aggarwal v. Vivek Singhal

2008-07-24

VINOD K.SHARMA

body2008
JUDGMENT Vinod K.Sharma, J. (Oral) - Petitioner seeks quashing of complaint titled as Vivek Singhal v. Anil Aggarwal and Anr. bearing No. 502 dated 14.8.2004 pending in the court of Shri P.K. Lal, Judicial Magistrate First Class, Chandigarh. The petitioner also seeks quashing of summoning order dated 21.10.2004 vide which the petitioner has been summoned as an accused under section 138 of the Negotiable Instruments Act, 1881. 2. Respondent Vivek Singhal has filed a complaint under section 138 of the Act as amended up to date. The complainant also sought the prosecution of the petitioner under section 420 Indian Penal Code. The contention of the learned counsel for the petitioner is that bare reading of the complaint does not disclose any offence under section 138 of the Act. The contention of the learned counsel for the petitioner is that the cheques issued by Anil Aggarwal i.e. father of the petitioner were dishonoured on presentation. 3. Learned counsel for the petitioner also made reference to the dishonoured cheques which were signed by Anil Aggarwal in his individual capacity. In spite of the fact that the petitioner has not issued the cheques which are the basis for initiation of proceedings under section 138 of the Act, the petitioner has been wrongly summoned by the learned trial court. 4. Learned counsel appearing on behalf of the respondent has opposed the present petition on the plea that in view of the provisions of Section 141 of the Act any person can be prosecuted. The contention of the learned counsel for the respondent was that both the accused had been carrying on the business and therefore, the proceedings against the petitioner cannot be quashed as notice under section 138 of the Act was also issued to him. 5. In support of his contention learned counsel for the respondent placed reliance on the judgment of Honble Supreme Court in the case of S.M.S. Pharmaceuticals Ltd. v. Neeta Bhalla and Anr., 2005(3) Apex Criminal 229 wherein Honble Supreme Court has been pleased to lay down as under : "13. While analyzing 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. While analyzing 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 incharge 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 of 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 incharge 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 incharge 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 the Company and not on destination 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. Liability depends on the role one plays in the affairs of the Company and not on destination 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." 6. It is also the contention of the learned counsel for the respondent that an FIR also stands registered against the petitioner. However, he has not been arrested so far and has not submitted to the jurisdiction. 7. On consideration of the matter I find force in the contention raised by the learned counsel for the petitioner. It is the person who issued the cheque which stands dishonoured is to be tried under section 138 of the Act and not any person as is sought to be contended by the learned counsel for the respondent. Provisions of section 141 of the Act are applicable when the offence is committed by the company or a firm. In that eventuality any person who is responsible for conduct of business can be convicted as accused. 8. The present complaint has not been filed against the firm or a company but individually against the petitioner Tarun Aggarwal and his father Anil Aggarwal. Once the petitioner has not issued the cheque no offence under section 138 of the Act can be said to have been made out against the petitioner. 9. Thus, the allegations in the complaint as framed even if are taken on their face value no offence under section 138 of the Act is disclosed against the petitioner. The proceedings against the petitioner therefore, are nothing but misuse of the process of the court. 10. Consequently, the petition is allowed. The complaint as well as subsequent proceedings arising therefrom qua the petitioner are ordered to be quashed. It is, however, made clear that the prosecution against Anil Aggarwal would continue as prima facie evidence against him is disclosed due to dishonouring of cheques. Petition allowed.