Nijanand Pipes, Fittings Pvt. Ltd. v. State Of Gujarat
2019-01-24
A.S.SUPEHIA
body2019
DigiLaw.ai
JUDGMENT : A.S. SUPEHIA, J. 1. The present application has been filed by the applicants under section 482 of the Code of Criminal Procedure, 1973 (“Code” for short) seeking quashing and setting aside the order dated 24.04.2017, passed by the 11th Additional Senior Civil Judge and Additional Chief Judicial Magistrate, Rajkot in Criminal Case No.4253 of 2017 as well as Criminal Case No.4253 of 2017 pending before the Chief Judicial Magistrate, Rajkot. 2. Rule. Ms.Moxa Thakker, learned APP for the respondent State and Ms.Dhwani Lakhani, learned advocate for the respondent no.2 original complainant waive service of Rule for the respective respondents. 3. In brief, it is alleged in the complaint filed by the respondent no.2 that the respondent no.2 is doing his business in plastic balls and the accused company of the accused is supplying the raw materials to him. During their course of business, an amount of Rs.74,60,425/had become due from the accused. Accordingly, the accused no.7 has issued a cheque of Rs.74,60,425/bearing his signatures which was not hounoured. It is submitted that the act is nothing, but an act of forgery, cheating and criminal breach of trust at the hands of respondent, and therefore, the complaint filed on 25.01.2017. 4. At the outset, Mr.Dagli, the learned advocate for the applicants has stated that he does not press the present application qua the present applicant no.1 original accused no.1 Nijanand Pipes & Fitting Pvt.Ltd. and the applicant no.7 original accused no.7Nirav Ishwarbhai Nondhanvadra 4.1 Learned advocate for the applicants has submitted that in pursuant to the application made before the police authority, inquiry was made and in the meanwhile on 23.12.2016, the cheque of Rs. 74,60,425/was deposited and on return of the same, notice was issued on 10.01.2017, which was replied by the applicants. 4.2 Learned advocate for the applicants has submitted that in fact, impugned complaint is not maintainable against the present applicants except Company i.e. accused no.1 Nijanand Pipes & Fitting Pvt.Ltd. and the applicant no.7 original accused no.7Nirav Ishwarbhai Nondhanvadra. He has submitted that in fact, there is no averment made in the complaint that except applicant no.7 original accused no.7Nirav Ishwarbhai Nondhanvadra that other directors are in fact, involved in the day to day affairs of the Company and are also responsible for the activities of the Company.
He has submitted that in fact, there is no averment made in the complaint that except applicant no.7 original accused no.7Nirav Ishwarbhai Nondhanvadra that other directors are in fact, involved in the day to day affairs of the Company and are also responsible for the activities of the Company. He has submitted that there is no specific allegation in the complaint that other accused are in charge and responsible for the conduct of the Company in its business. 4.3 In support of his submissions, learned advocate for the applicants has placed reliance on the judgment of Apex Court in the case of S.M.S.Pharmaceuticals Ltd. v. Neeta Bhalla [AIR (2005) 0 (SC) 3512]. Thus, he has submitted that the impugned order and the criminal case may be quashed and set aside apropos the applicants except applicant nos.1 & 7. 5. Ms.Dhwani Lakhani, learned advocate for the respondent no.2 - original complainant has submitted that at this stage, no interference of this Court is required in the proceedings pending before the learned Chief Judicial Magistrate, Rajkot since the applicant nos.2 to 9 are the Directors and the applicant no.1 is the Company. 6. Heard learned advocates for the respective parties. 6.1 The only issue which false for consideration of this Court is whether the applicants original accused except accused nos.1 & 7 can be prosecuted under Section 138 and 141 of the Negotiable Instrument Act, 1881 (“the Act” for short) being the Directors of the accused no.1 Company. The Apex Court in the case of S.M.S. Pharmaceuticals Ltd. (supra) while examining the provisions of Section 138 and 141 of the Act has observed thus:- “19. In view of the above discussion, our answers to the questions posed in the reference are as under: (a) It is necessary to specifically aver in a complaint under Section 141 that at the time the offence was committed, the person accused was in charge of, and responsible for the conduct of business of the company. This averment is an essential requirement of Section 141 and has to be made in a complaint. Without this averment being made in a complaint, the requirements of Section 141 cannot be said to be satisfied. (b) The answer to the question posed in subpara (b) has to be in the negative.
This averment is an essential requirement of Section 141 and has to be made in a complaint. Without this averment being made in a complaint, the requirements of Section 141 cannot be said to be satisfied. (b) The answer to the question posed in subpara (b) has to be in the negative. Merely being a director of a company is not sufficient to make the person liable under Section 141 of the Act. A director in a company cannot be deemed to be in charge of and responsible to the company for the conduct of its business. The requirement of Section 141 is that 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. (c) The answer to Question (c) has to be in the affirmative. The question notes that the managing director or joint managing director would be admittedly in charge of the company and responsible to the company for the conduct of its business. When that is so, holders of such positions in a company become liable under Section 141 of the Act. By virtue of the office they hold as managing director or joint managing director, these persons are in charge of and responsible for the conduct of business of the company. Therefore, they get covered under Section 141. So far as the signatory of a cheque which is dishonoured is concerned, he is clearly responsible for the incriminating act and will be covered under subsection (2) of Section 141.” 20. The Reference having been answered, individual cases may be listed before appropriate Bench for disposal in accordance with law. Reference answered.” 6.2 In present case, the cheque in question is issued under the signature of the accused no.7 on behalf of the Company. A perusal of the complaint reveals that except the accused no.1 & 7, it is not alleged against the rest of the accused that the applicants-accused were in fact, responsible for the day to day affairs of the business of the accused no.1 company.
A perusal of the complaint reveals that except the accused no.1 & 7, it is not alleged against the rest of the accused that the applicants-accused were in fact, responsible for the day to day affairs of the business of the accused no.1 company. The contents of Paragraph No.1 of the complaint reveals that it is only averred that accused nos.2 to 9 are working as Directors, whereas accused no.7 is handling all the financial business of the Company. There is no averment made in the complaint against the rest of the Directors i.e. accused nos.2 to 6, 8 and 9 that they are involved in day to day affairs of the Company and are responsible to the Company in the conduct of its business. Such an averment is an essential requirement of Section 141 of the Act and has to be made in a complaint. Without this averment being made in a complaint, the requirements of Section 141 of the Act cannot be said to be satisfied. 7. Thus, in light of law enunciated by the Apex Court in the case of S.M.S. Pharmaceuticals Ltd. (supra) in absence of any averments against the applicants except the applicant nos.1 & 7, the impugned order dated 24.04.2017, passed by the 11th Additional Senior Civil Judge and Additional Chief Judicial Magistrate, Rajkot in Criminal Case No.4253 of 2017 as well as Criminal Case No.4253 of 2017 pending before the Chief Judicial Magistrate, Rajkot are hereby quashed and set aside. Rule is made absolute to the aforesaid extent. Direct service is permitted. 8. Pursuant to the order dated 17.12.2018, the applicants have deposited an amount of Rs.20,55,980/before the trial Court. Since the complainant is not ready and willing to settle the matter, the applicants shall be at liberty to withdraw aforesaid amount from the trial Court. The trial Court shall permit such withdrawal with accrued interest after due verification and the same may be handed over to the concerned applicants.