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2015 DIGILAW 3524 (MAD)

Roadways India Ltd. v. Randir Singh Proprietor

2015-10-28

R.MALA

body2015
ORDER The petitioners, who are arrayed as A5 to A10, have come forward with this petition seeking for a direction, to quash the proceedings in respect of the petitioners in C.C.No.385 of 2009 on the file of the learned Judicial Magistrate No.1, Trichy, in respect of an offence under Section 138 of Negotiable Instruments Act, by stating that the first petitioner / A5 is a company incorporated under the Indian Companies Act, 1956, being run in the name and style of M/s. Roadways India Ltd, doing the business throughout India and having branch at Trichy. The petitioners / A5 to A10 are nothing to do with the issuance of cheque and also on day to-day business activities. A5 and A6 are the Directors, who stationed at Delhi; A7 and A8 are the Deputy General Managers, stationed at Secundarabad; A9 and A10 are the Vice Presidents, stationed at New Delhi, and they are not responsible with the day today administrative business of Trichy Branch. It is further stated that there is no specific averment in the complaint against the petitioners/accused A5 to A10 with respect to their involvement in the day today activities with the company's affairs and therefore, the petitioners shall not be prosecuted for the offence under Section 138 of Negotiable Instruments Act. 2. To substantiate the same, learned counsel for the petitioners relied upon the decisions of the Honourable Supreme Court in S.M.S.Pharmaceuticals Ltd. vs. Neeta Bhalla and another reported in (2007) 4 SCC 70 , which was followed in the subsequent decision of the Honourable Supreme Court in A.K.Singhania vs. Gujarat State Fertilizer Co Ltd., and another with Gujarat State Fertilizer Co.Ltd., and another vs. Vikram Prakash and another reported in 2013 AIR SCW 6195. He further submits that the Manager in Trichy, has committed some irregularity and misappropriated the sum, pursuant to which and based on the complaint, a case in Crime No. 1537 of 2014 is pending before the Fort Police Station, Trichy and hence, he prayed for quashing of the proceedings. 3. Resisting the same, the learned Counsel appearing for the respondent submits that whether these petitioners, who are arrayed as A5 and A10, took part on the day today affairs of the business has to be gone into only at the time of trial. 3. Resisting the same, the learned Counsel appearing for the respondent submits that whether these petitioners, who are arrayed as A5 and A10, took part on the day today affairs of the business has to be gone into only at the time of trial. He further submits that the issue raised with regard to the pending complaint against A4, the Manager of Trichy, for the alleged misappropriation and irregularity, can also be decided only at the time of trial. Hence, he prays for dismissal of the petition. 4. Considering the submissions on both sides and perusal of the typed set of papers, it is seen that the respondent herein preferred a private complaint under Section 200 Cr.P.C for the offence under Section 138 of Negotiable Instruments Act, wherein it has been stated that the fourth accused had given a cheque for discharging legally enforceable debt, which, on presentation for encashment, has been returned as " insufficient funds". Therefore, after issuing notice, he preferred the complaint. 5. A perusal of the records shows that the notice of errata was issued to only A1 and A4 and not for A5 to A10. Admittedly, the petitioners / A5 to A10, are not the incharge of Trichy Branch. A5, A6, A9 and A10 are all working in Delhi Branch and A7 and A8, Deputy General Manager, stationed at Secundarabad. So there is no prima facie evidence or material to show that these petitioners were taking active part in the day today business activities of Trichy Branch. It is appropriate to consider the averment in the complaint. In the complaint, the respondent has not stated that how A5 and A10 are necessary parties. 6. It is appropriate to consider the decision of Honourable Supreme Court in S.M.S.Pharmaceuticals Ltd. vs. Neeta Bhalla and another reported in (2007) 4 SCC 70 . 7. In the above decision it was specifically stated in paragraph 16' that what is necessary is that sufficient averments should be made against a person, who is sought to be proceeded against on the premise of his being vicariously liable for commission of an offence on behalf of the Company. So, it is appropriate to incorporate the paragraphs 15 and 16 of the judgment. "15. So, it is appropriate to incorporate the paragraphs 15 and 16 of the judgment. "15. Mr.Ranjit Kumar, learned Senior Counsel appearing on behalf of respondent 1, on the other hand submitted that no allegation has been made as against Respondent 1, herein in the complaint petition which satisfies the requirements of Section 141 of the Act, but as would appear from the facts of the case that she had no role to play in commission of the offence at all. 16. Section 141 of the Act, does not say that a Director of a Company shall automatically be vicariously liable for commission of an offence on behalf by the Company. What is necessary is that sufficient averments should be made to show that the person who is sought to be proceeded against on the premise of his being vicariously liable for commission of an offence by the Company must be in charge and shall also be responsible to the Company for the conduct of its business." 8. The above said principle has also been followed in yet another case in A.K.Singhania vs. Gujarat State Fertilizer Co Ltd., and another with Gujarat State Fertilizer Co.Ltd., and another vs. Vikram Prakash and another reported in 2013 AIR SCW 6195, wherein paragraphs 20 and 21 read as follows. "20. This Court in the case of National Small Industries Corpn. Ltd. v. Harmeet Singh Paintal, (2010) 3 SCC 330 , after reviewing all its earlier judgments summarized the legal position as follows: “39. 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. (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 the accused therein vicariously liable for offence committed by the company along with averments in the petition containing that the 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. (v) If the accused is a Managing Director or a 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 the 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 the complaint. (vii) The person sought to be made liable should be in charge 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.” In Harshendra Kumar D. v. Rebatilata Koley, (2011) 3 SCC 351 , after referring to its earlier decisions in S.M.S. Pharmaceuticals Ltd.(supra), National Small Industries Corpn. Ltd.(supra), N. Rangachari v. Bharat Sanchar Nigam Ltd., (2007) 5 SCC 108 and K.K. Ahuja v. V.K. Vora, (2009) 10 SCC 48 , this Court reiterated the same view." 9. Considering the above citations along with the complaint, it is no doubt true that there is no single word to show as to how these petitioners are necessary parties. Apart from the above, there is also no averment that the petitioners / A5 to A10 herein were incharge and responsible for conduct of the day today business of the Company at the time of commission of the offence. Apart from the above, there is also no averment that the petitioners / A5 to A10 herein were incharge and responsible for conduct of the day today business of the Company at the time of commission of the offence. Hence, there is no prima facie averment in the complaint to connect these petitioners with the alleged offence. So, I am of the view that applying the dictum of the Honourable Apex Court, referred to supra, it is a fit case to quash the proceedings against the petitioners A5 to A10. 10. Accordingly, this Criminal Original Petition is allowed and the proceedings in respect of the petitioners A5 to A10 in C.C.No.385 of 2009 on the file of the Judicial Magistrate No.1, Trichy, is hereby quashed. 11. At this juncture, the learned Counsel appearing for the respondent wants early disposal of the case in respect of other accused. Therefore, the learned Judicial Magistrate No.1, Trichy is directed to dispose of the case in respect of other accused, within a period of four months from the date of receipt of a copy of this order. Consequently, the connected Miscellaneous petition is closed.