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2014 DIGILAW 1269 (BOM)

Kishinbhagwan R. Sharma v. State of Maharashtra

2014-06-17

REVATI MOHITE DERE

body2014
ORAL JUDGMENT Rule. By consent, rule is made returnable forthwith. Respondents waive service of notice. 2. Heard learned counsel for the respective parties. 3. By this petition, the petitioner has challenged the order of issue of process dated 17.03.2012 passed by the learned Metropolitan Magistrate, 33rd Court, Ballard Pier, Mumbai, on a complaint filed by the respondent No.2, alleging an offence punishable under Section 138 of the Negotiable Instruments Act. The said complaint has been filed by the respondent No.2 as against Shreeji Overseas India Pvt. Ltd., Mr.Mohit Sharma and the present petitioner. 4. The learned counsel for the petitioner submits that the original accused No.2 i.e. Mr.Mohit Sharma is the Managing Director of the Company and the signatory to the cheque and that the present petitioner is only a Director of the said Company i.e. Shreeji Overseas India Pvt. Ltd.. He submits that the petitioner is neither responsible for the conduct of the affairs of the Company or the day to day affairs of the Company nor is he a signatory to the said Cheque, which has been dishonoured. In support of his submission he relied on the Judgment of the Apex Court in the case of National Small Industries Corp. Ltd. vs. Harmeet Singh Paintal & Anr., reported in 2010 ALL MR (Cri.) 921 (S.C.). He submits that a perusal of the complaint would reveal that the same does not disclose the exact role of the present petitioner. He further submits that a mere averment made in the complaint by the respondent – complainant, that the present petitioner 'is in-charge of the business of the Company and responsible for the day to day affairs of the Company' as a Director is not sufficient. He submits that as to how and in what manner the petitioner was in-charge of and responsible for the day to day affairs of the Company, has not been spelt out by the respondent No.2 – complainant. The learned counsel also relied on a Judgment of this Court in the case of Parag Bhikhalal Tejani vs. State of Maharashtra and another in Cri.W.P.No.1342 of 2010, where this Court relying on National Small Industries Corp. Ltd. (Supra) had quashed the order of issue of process. He submits that in view of the said Judgments, the order of issue of process as against the petitioner is bad in law and ought to be quashed. 5. Ltd. (Supra) had quashed the order of issue of process. He submits that in view of the said Judgments, the order of issue of process as against the petitioner is bad in law and ought to be quashed. 5. Per contra, the learned counsel for the respondent No.2 contended that the complaint under Section 138 of the Negotiable Instruments Act was filed on 13.09.2011 in the Court of the learned Additional Metropolitan Magistrate, 33rd Court, Ballard Pier, Mumbai, pursuant to which the respondent No.2's – i.e. complainant's verification statement came to be recorded on 19.01.2012 and thereafter the order issuing process came to be passed on 17.03.2012. Thereafter, summons came to be served on the petitioner on 25.05.2012. He submits that the petitioner instead of appearing before the trial Court pursuant to the summons has approached this Court, for quashing the order of issue of process. The learned counsel for the petitioner submits that both in the complaint as well as in the verification statement there is a specific averment which clearly shows that the petitioner was “in charge of and responsible to the accused – Company for the conduct of the day to day business of the Company”. He further submits that on the information received from the Registrar of Companies, the respondent No.2 learnt, that the present petitioner holds 83.27% of the total shares of the Company i.e. of Shreeji Overseas India Pvt. Ltd. and that the Director and original accused No.2 Mr.Mohit Sharma, the signatory to the cheque holds 8.36%. He, therefore, submits that considering the share holding of the petitioner, the petitioner occupies the key position in the day to day activities and affairs of the Company. He submits that despite there being other directors, more particular one Mr.P.K.Sharma, who also holds 8.36% shares in said Company, he has not been arrayed as an accused. The learned counsel for the respondent No.2 states that in fact keeping in mind the ratio in National Small Industries Corp. Ltd., the present petitioner would be liable for prosecution, as the petitioner was “in-charge and responsible for the day to day business of the Company” at the relevant time. He submits that he has specifically made an averment to that effect in the said complaint with regard to the liability of the present petitioner. The learned counsel has filed written submissions in the present case. 6. He submits that he has specifically made an averment to that effect in the said complaint with regard to the liability of the present petitioner. The learned counsel has filed written submissions in the present case. 6. Perused the complaint, verification statement and the Judgments. Para 2 of the complaint reads as under :- “2. The Accused abovenamed are known to the Complainant Company as Accused No.1 is also dealing in Import and Export business. Accused Nos.2 & 3 are directors of Accused No.1 and they are in charge and responsible to the Accused company for the conduct of the day to day business of the company.” It may be noted, that it is not the contention of the petitioner, that he is not the director of the Company. His only contention is that except for the general averment as aforesaid, no details are spelt out in the complaint with regard to the exact role played by the present petitioner in the transaction. In National Small Industries Corp. Ltd. (Supra), the Apex Court has in para 25 set out the principles as under :- “25. From the above discussion, the following principles emerge: (i) The primary responsibility is on the complainant to make specific averments as are required under the law in the complaint so as to make the accused vicariously liable. For fastening the criminal liability, there is no presumption that every Director knows about the transaction. (ii) Section 141 does not make all the Directors liable for the offence. The criminal liability can be fastened only on those who, at the time of the commission of the offence, were in charge of and were responsible for the conduct of the business of the company. (iii) Vicarious liability can be inferred against a company registered or incorporated under the Companies Act, 1956 only if the requisite statements, which are required to be averred in the complaint/petition, are made so as to make accused therein vicariously liable for offence committed by company along with averments in the petition containing that accused were in-charge of and responsible for the business of the company and by virtue of their position they are liable to be proceeded with. (iv) Vicarious liability on the part of a person must be pleaded and proved and not inferred. (iv) Vicarious liability on the part of a person must be pleaded and proved and not inferred. (v) If accused is Managing Director or Joint Managing Director then it is not necessary to make specific averment in the complaint and by virtue of their position they are liable to be proceeded with. (vi) If accused is a Director or an Officer of a company who signed the cheques on behalf of the company then also it is not necessary to make specific averment in complaint. (vii) The person sought to be made liable should be incharge of and responsible for the conduct of the business of the company at the relevant time. This has to be averred as a fact as there is no deemed liability of a Director in such cases.” The Apex Court considering the legal position with regard to compliance of Section 141 of the Negotiable Instrument Act, had while dismissing the Appeals of the National Small Industries Corp. Ltd., had also considered that the respondent therein i.e. Harmeet Singh Paintal was no more a director of the Company when the cheques were signed and that the same was evidenced from the 6th Annual Report of the Company of that year. Accordingly, in paras 26 & 27 of the said Judgment, the Apex Court concluded as under :- “26. Apart from the legal position with regard to compliance of Section 141 of the Act, in the appeals of National Small Industries Corporation, respondent No.1 – Harmeet Singh Paintal was no more a Director of the Company when the cheques alleged in the complaint were signed and the same is evidenced from the Sixth Annual Report for the year 1996-97 of the accused company. The said report is of dated 30.08.1997 and the same was submitted with the Registrar of Companies on 05.12.1997 and assigned as document No.42 dated 09.03.1998 by the Department. Those documents have been placed before this Court by respondent No.1 as an additional document. In view of these particulars and in addition to the interpretation relating to Section 141 which we arrived at, no liability could be fastened on respondent No.1. Further, it was pointed out that though he was an authorized signatory in the earlier transactions, after settlement and in respect of the present cause of action, admittedly fresh cheques were not signed by the first respondent. Further, it was pointed out that though he was an authorized signatory in the earlier transactions, after settlement and in respect of the present cause of action, admittedly fresh cheques were not signed by the first respondent. In the same way, in the appeal of the DCM Financial Services, the respondent therein, namely, Dev Sarin also filed additional documents to show that on the relevant date, namely the date of issuance of cheque he had no connection with the affairs of the company. 27. In the light of the above discussion and legal principles, we are in agreement with the conclusion arrived at by the High Court and in the absence of specific averment as to the role of the respondents and particularly in view of the acceptable materials that at the relevant time they were in no way connected with the affairs of the company, we reject all the contentions raised by learned Counsel for the appellants. Consequently, all the appeals fail and are accordingly dismissed.” (underline supplied) 7. The Apex Court in a recent Judgment in Mannalal Chamaria And Anr. vs. State of West Bengal And Anr., reported in 2014(4)Scale 55 has observed in para 9 as under :- “The law on the subject is now very well-settled by a series of decisions rendered by this Court and it is not necessary to repeat the views expressed time and again. Suffice it to say, that the law has once again been stated in A.K. Singhania v. Gujarat State Fertilizer Co. Ltd. to the effect that it is necessary for a complainant to state in the complaint that the person accused was in charge of and responsible for the conduct of the business of the company. Although, no particular form for making such an allegation is prescribed, and it may not be necessary to reproduce the language of Section 138 of the Negotiable Instruments Act, 1881, but a reading of the complaint should show that the substance of the accusation discloses that the accused person was in charge of and responsible for the conduct of the business of the company at the relevant time. From the averment made in the complaint, which is reproduced above, it can safely be said that there is no specific or even a general allegation made against the Appellants.” 8. From the averment made in the complaint, which is reproduced above, it can safely be said that there is no specific or even a general allegation made against the Appellants.” 8. In the present case, it is averred as a fact that the petitioner was 'in charge of and responsible for the conduct of the day to day business of the Company'. It is not the petitioner's contention that he had resigned from the Company or was not a director of the Company at the relevant time. In fact, the petitioner admittedly was and continues to be the Director of the Company. According to the respondent No.2 – complainant, there are five directors in the Company, however, out of the five directors, only two directors have been arrayed as accused i.e. the present petitioner as he has 83% share holding in the said Company and the other co-accused Mr.Mohit Sharma, the Director and signatory to the said cheque. 9. It appears that there is a specific averment in the said complaint, more particularly in para 2 of the said complaint that the present petitioner along with accused No.2 are in-charge and responsible to the Company, for the conduct of the day to day business of the accused No.1 – Company. Admittedly, the present petitioner is the Director of the said Company and does not claim to have resigned from the Company at any point of time. 10. Considering the aforesaid facts, the petition being devoid of merits is dismissed. No interference is warranted in the order issuing process. Accordingly, rule is discharged.