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2011 DIGILAW 487 (BOM)

Aruna Sham Chougule v. Cyrus Soli Nallaseth

2011-04-20

U.D.SALVI

body2011
Judgment :- P.C. Heard. Perused application. 2. The Petitioner is seeking quashing of process issued by the learned Metropolitan Magistrate, 7th Court, Dadar, Mumbai in CC No.7617/SS/2010. 3. According to the Petitioner her prayer is limited to the issuance of process against her as she was not the Director of respondent no.2-accused no.1 Company and was not responsible for day-to-day affairs of the said Company at the material time. 4. In answer, Ms. Kanani, the learned Advocate for respondent no.2. tendered the reply dated 19.4.2911 couple with a list of judgments relied upon by her. She submitted that the averments made in the complaint provided sufficient basis for the issuance of process and there is no abuse of law. According to her, the fact that the accused no.6 was not responsible for day-to-day business of the said Company will have to be decided in the trial after parties lead the evidence. She particularly drew the attention of the court to the judgment in the case of Rallis India Ltd. Vs Poduru Vidya Bhushan & Ors. delivered by the Apex Court on 13.4.2011 in Criminal Appeal No.924 of 2011 (arising out of SLP(Cri) No.1874 of 2008) which struck a note of caution for the High Courts dealing with the similar petitions for quashing criminal proceedings related to the offences committed by the Companies. 5. delivered by the Apex Court on 13.4.2011 in Criminal Appeal No.924 of 2011 (arising out of SLP(Cri) No.1874 of 2008) which struck a note of caution for the High Courts dealing with the similar petitions for quashing criminal proceedings related to the offences committed by the Companies. 5. Section141 of the Negotiable Instruments Act, 1881, which has been invoked in the present case, reads as under:- "Offence 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 punishable accordingly: Provided that nothing contained in this subsection 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 shall also be deemed to be guilty of that offence and shall be liable to be proceeded against and punished accordingly." A Magistrate issuing the process under Section 138 of Negotiable Instruments Act, 1881 in the complaint instituted against the Company is required to see what role the accused named in such complaint as the Director has played in commission of offence punishable under Section 138 of Negotiable Instruments Act, 1881. If it is shown through the averments made in such complaint against the company that a person named as accused was one of the Directors in charge of and was responsible for conducting the business of such company at the time of commission of offence the Magistrate issuing the process against such person cannot be blamed for abuse of the process of law. Even the Director, Manager, Secretary or other officer of the Company can be roped in the net of Section 138 of Negotiable Instruments Act if 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 such director, manager, secretary or other officer. 6. In the instant case, the para-1 of the complaint reveals necessary averments. The said para1 is reproduced hereunder:- "I have been engaged in various businesses including the business of food and beverages. I know all the accused. The accused no.1 is a company incorporated under the provisions of Companies Act 1956. The accused no.2 is chairman and director of accused no.1. The accused no.3 is Vice Chairman and Director of accused no.1. Accused no.4 is the Managing Director and Chief Executive officer of accused no.1. The Accused Nos.5 and 6 are the Directors of the accused no.1. The accused nos.7,8 and 9 are authorized signatory, chief financial officer and secretary and compliance officer respectively of the accused no.1. The accused Nos.2 to 9 are in charge of and responsible for conducting the day to day business of the accused no.1. The accused nos.2 to 9 have been signing/executing various documents for and on behalf of accused no.1. The accused nos.2 to 9 were also in charge of and responsible for conducting the business of the accused no.1, at the time of commission of offence by the accused no.1. The accused nos.2 to 9 have consented and connived with each other in the commission of offence by the accused no.1 The accused nos.2 to 9 have interacted with me on several occasions." 7. It is open for the petitioner-accused no.6 to place her cards before the Magistrate and show how no criminal liability can be cast on her for the reason of she neither being the Director of accused no.1 company nor in charge or not responsible to the company for the conduct of the business of the company. It is open for the petitioner-accused no.6 to place her cards before the Magistrate and show how no criminal liability can be cast on her for the reason of she neither being the Director of accused no.1 company nor in charge or not responsible to the company for the conduct of the business of the company. All such relevant facts can be proved in the trial. 8. This court, therefore, sees no abuse of the process of law at the hands of the learned Metropolitan Magistrate. Petition is, therefore, dismissed in limine. 9. Criminal Application No.10 of 2011 stands disposed off.