Neetaben Jayeshbhai Gandhi v. Yogeshkumar Dhirajlal Vashi
2013-03-05
R.M.CHHAYA
body2013
DigiLaw.ai
ORDER : R.M. Chhaya, J. By way of this application under Section 482 of the Code of Criminal Procedure, 1973 ('the Code' for short), the petitioners have prayed for quashing and setting aside the complaint filed by respondent No.1- original complainant under Sections 138 and 141 of the Negotiable Instruments Act, 1881 ('the Act' for short), pending before the JMFC, Surat, being Criminal Case No.5849 of 2010. 2. Heard Ms. Reena Kamani, learned counsel appearing on behalf of Mr. P.H. Pathak, learned counsel for the petitioners, Mr. Kuntal Parikh, learned counsel appearing on behalf of Mr. Paresh Dave, learned counsel for respondent No.1 and Ms. Moxa Thakkar, learned Assistant Public Prosecutor for respondent No.2-State. 3. It appears from the impugned complaint that respondent No.1 has filed a complaint under Sections 138 and 141 of the Act against Suryanarayan Silk Mills Pvt. Ltd. and its Directors, before the JMFC, Surat on 23.02.2011. It further appears from the complaint that except general statement that respondent Nos. 2 to 5 had assigned the work to the complainant regarding the central excise and customs and further that accused Nos.2 to 5, with a view to cheat the original complainant, asked for an advance ofRs.5 Lacs and promised to repay the same. It is alleged that on representation made by the accused persons, original complainant gave an amount of Rs.5,00,000/-. 4. It appears that original accused No.1 gave a cheque bearing No.014946 amounting toRs.5,00,000/- in favour of the original complainant and the same was signed by original accused Nos. 2 and 3 jointly as Directors of the Company. Thereafter, on 26.11.2009, the said cheque was deposited and the same was dishonored. The banker of original complainant i.e. "The Sarvoday Sahkari Bank Ltd.", sent a memo with an endorsement "Due To Insufficient Balance, Payment Freeze, Signature Is Not Matched and The Directors Have Not Signed" on 27.11.2009. Thereafter, the original complainant issued a Notice through his advocate upon the accused on 23.12.2009., which was received by the accused No.1-Company as well as petitioners on 26.12.2009, hence, the impugned complaint is filed on 03.02.2012 against the petitioners. 5. Ms. Kamani, learned counsel for the petitioners relying upon the Form-32 and has submitted that both the petitioners have resigned as Directors of the said Company on 01.06.2004.
5. Ms. Kamani, learned counsel for the petitioners relying upon the Form-32 and has submitted that both the petitioners have resigned as Directors of the said Company on 01.06.2004. It is therefore, contended that both the petitioners were not Directors of the Company-accused No.1, on the date on which the cheque was issued on 22.10.2009. Mr. Kuntal Parikh, learned counsel for respondent No.1 does not dispute with this proposition. 6. It may further be noted that the original complainant-respondent No.1 has sent a communication dated 15.12.2012 to his advocate, wherein the complainant has stated that the petitioners were not Directors on the date on which the cheque was issued. The said communication is also placed on record of this application. 7. At this juncture, it would be appropriate to refer to the judgment of the Apex Court in the case of National Small Industries Corporation Ltd. v. Harmeet Singh reported in 2010 (2) GLH 766 : AIR 2010 SC (Supp) 569 has held as under:- "9. Section 138 of the Act refers about penalty in case of dishonour of cheque for insufficiency of funds in the account. We are more concerned about Section 141 dealing with offences by Companies which reads as under:- "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.
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. Explanation.-- For the purposes of this Section,-- (a) 'Company' means any body corporate and includes a firm or other association of individuals; and (b) 'director', in relation to a firm, means a partner in the firm." It is very clear from the above provision that what is required is that the persons who are sought to be made vicariously liable for a criminal offence under Section 141 should be, 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. Every person connected with the Company shall not fall within the ibit of the provision. Only those persons who were in-charge of and responsible for the conduct of the business of the Company at the time of commission of an offence will be liable for criminal action. It follows from the fact that if a Director of a Company who was not in-charge of and was not responsible for the conduct of the business of the Company at the relevant time, will not be liable for a criminal offence under the provisions. The liability arises from being in-charge of and responsible for the conduct of the 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. 10. Section 141 is a penal provision creating vicarious liability, and which, as per settled law, must be strictly construed.
10. Section 141 is a penal provision creating vicarious liability, and which, as per settled law, must be strictly construed. It is therefore, not sufficient to make a bald cursory statement in a complaint that the Director (arrayed as an accused) is in charge of and responsible to the Company for the conduct of the business of the Company without anything more as to the role of the Director. But the complaint should spell out as to how and in what manner Respondent No.1 was in-charge of or was responsible to the accused Company for the conduct of its business. This is in consonance with strict interpretation of penal statutes, especially, where such statutes create vicarious liability. A Company may have a number of Directors and to make any or all the Directors as accused in a complaint merely on the basis of a statement that they are in-charge of and responsible for the conduct of the business of the Company without anything more is not a sufficient or adequate fulfillment of the requirements under Section 141." Petitioners were not the Directors of the Company, on the date on which the cheque was issued and therefore, the present petitioners cannot be made liable vicariously under Sections 138 and 141 of the Act. 8. It may further be noted that the present petitioners have filed an application being Criminal Case No.5849 of 2010 at Exh:14 before the JMFC, Surat pointing the fact that the petitioners are not Directors when the cheque was issued, and therefore, they may be discharged. However, the JMFC, Surat vide order dated 24.03.2011 rejected the same on the ground that the magistrate has no power or jurisdiction to discharge the petitioners as contemplated under Section 258 of the Code and the only remedy was under Section 482 of the Code. 9. The aforesaid clearly establishes that the petitioners were not Directors of the Company -accused No.1, when cheque was issued by accused No.1-Company, signed by its Directors-accused Nos.2 and 3. 10. Consequently the application deserves to be allowed, as prayed for and hence, the impugned Complaint being Criminal Case No.5849 of 2010 pending before the JMFC, Surat, is hereby quashed and set aside under Section 482 of the Code qua petitioners accused Nos. 4 and 5. It is however made clear that the trial Court shall proceed with the trial qua original accused Nos.
4 and 5. It is however made clear that the trial Court shall proceed with the trial qua original accused Nos. 1 to to 3 on its own merit. Rule is made absolute, accordingly. Application allowed.