Ramaiah Konar Navneetha Krishnan, S/o S. Ramaiah Konar v. Athukuri Nagewara Rao, rep. BY P. P. Proprietor of Lakshmi Balaji Cotton Traders
2023-12-01
K.SURESH REDDY
body2023
DigiLaw.ai
ORDER : Since all these criminal petitions, under Section 482 Cr.P.C., arise out of the same calendar case, in which the petitioners herein are arrayed as accused, they are heard together and are being disposed of by this common order. 2. Criminal Petition No. 4067 of 2017 is filed by the petitioner-accused No. 6; Criminal Petition No. 4086 of 2017 is filed by the petitioner-accused No. 4; Criminal Petition No. 4092 of 2017 is filed by the petitioners-accused Nos. 8 to 10 and Criminal Petition No. 4094 of 2017 is filed by the petitioners-accused Nos. 5 and 7 seeking to quash the proceedings against them in C.C.No. 317 of 2016 on the file of the Court of learned IV Additional Junior Civil Judge, Guntur, registered for the offences punishable under Sections 138 to 142 of the Negotiable Instruments Act, 1881 (for short, 'the Act'). 3. In the complaint, respondent No. 1-complainant, Proprietor of Lakshmi Balaji Cotton Traders, Guntur, alleged that accused Nos. 2 to 10 are Directors of accused No. 1 company i.e. M/s. Shri Renuga Textiles Limited and they are responsible for conduct of day-to-day business affairs of accused No. 1 company. Accused No. 1 placed orders on respondent No. 1 for supply of cotton. Pursuant to the aforesaid purchase orders, respondent No. 1 supplied cotton to accused No. 1. In discharge of its liability against the bills raised by respondent No. 1 on accused No. 1, the latter had issued a cheque bearing No. 625460 dated 27-02-2014 for a sum of Rs.24,44,832/- drawn on S.B.I., SME Branch, Theni, Chennai, Tamil Nadu State, in favour of the former. When respondent No. 1 presented the cheque in its bank i.e. Karur Vysya Bank Limited, Service Branch, Guntur, the same was dishonoured with the endorsement 'payment stopped by drawer'. On 27-05-2014, respondent No. 1 received intimation of dishonor of the cheque from its banker. Thereafter, respondent No. 1 got issued a legal notice on 14-06-2014 calling upon the accused to make payment of the amount of the dishonoured cheque as per the provisions of Section 138 of the Act. Alleging that the accused did not pay the amount of the dishonoured cheque i.e. Rs.24,44,832/- to respondent No. 1 within the time stipulated, the latter filed the aforesaid complaint under Sections 138 to 142 of the Act. 4.
Alleging that the accused did not pay the amount of the dishonoured cheque i.e. Rs.24,44,832/- to respondent No. 1 within the time stipulated, the latter filed the aforesaid complaint under Sections 138 to 142 of the Act. 4. Heard Sri D.Vijay Kumar, learned counsel, representing Sri T.S. Anirudh Reddy, learned counsel appearing for the petitioners-accused Nos. 4 to 10, and learned Assistant Public Prosecutor appearing for the respondent-State. None appeared for respondent No. 1-complainant. 5. Sri D.Vijay Kumar, learned counsel, emphatically argues that the petitioners are independent non –executive Directors of the accused company and in no way responsible for the conduct of day-to-day affairs of the accused company; that they are inducted in the company for their expertise or special knowledge in particular discipline and they are not in charge of the management of the company and that except reproduction of the statutory requirements, the complaint did not specify or elaborate the role of the petitioners in the day to day affairs of the accused company and therefore they could not be criminally prosecuted for the dishonour of the cheque in question. 6. Learned Assistant Public Prosecutor appearing for the respondent-State, on the other hand, opposes the criminal petitions and submits that the petitioners being Directors of the accused company are liable to be criminally prosecuted with regard to the dishonour of the cheque in question. 7. This Court has perused the entire material available on record. 8. A Director of a company is liable to be convicted for an offence committed by the company if he/she was in charge of and was responsible to the company for the conduct of its business or if it is proved that the offence was committed with the consent or connivance of, or was attributable to any negligence on the part of the Director concerned. In other words, for making a Director of a company liable for the offences committed by the company under Section 141 of the Act, there must be specific averments against the Director showing as to how and in what manner the Director was responsible for the conduct of the business of the company.
In other words, for making a Director of a company liable for the offences committed by the company under Section 141 of the Act, there must be specific averments against the Director showing as to how and in what manner the Director was responsible for the conduct of the business of the company. A company may have a number of Directors and to make any or all the Directors as accused in 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 of the Act. Section 141 of the Act being a penal provision creating vicarious liability, the same must be strictly construed. Mere statement in the complaint that the accused, being Directors, were in charge of and responsible to the accused company, for the conduct of the business of the accused company without any specific role attributed to the accused, was not sufficient for proceeding against them under Section 141 of the Act. 9. While a Managing Director or a Joint Director of the company would be admittedly in charge of the company and responsible for the conduct of its business, the same yardstick would not apply to a Director. When the accused is the Managing Director or a Joint Managing Director of a company, it is not necessary to make an averment in the complaint that he is in charge of, and is responsible to the company for the conduct of the business of the company. This is because the prefix 'Managing' to the word 'Director' makes it clear that the Director was in charge of and responsible to the company for the conduct of the business of the company. A Director or an Officer of the company who signed the cheque renders himself liable in case of dishonour. Other officers of a company can be made liable only under sub-section (2) of Section 141 of the Act by averring in the complaint their position and duties in the company and their role in regard to the issue and dishonour of the cheque, disclosing consent, connivance or negligence. 10.
Other officers of a company can be made liable only under sub-section (2) of Section 141 of the Act by averring in the complaint their position and duties in the company and their role in regard to the issue and dishonour of the cheque, disclosing consent, connivance or negligence. 10. The liability under Section 138/141 of the Act 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. It would be a travesty of justice to drag Directors who may not even be connected with the issuance of a cheque or dishonour thereof. None of the petitioners in the present case were Managing Director or Joint Managing Director of the accused company nor were they signatories of the cheque which was dishonoured. In the case on hand, particularly, in subparagraph No. (d) of paragraph No. 3 of the complaint, except the mere bald and cursory statement with regard to the petitioners-accused Nos. 4 to 10 that they are Directors having the day-to-day administration and control and supervision over the affairs of the accused company, respondent No. 1-complainant did not specify the role of the petitioners in the day to day affairs of the accused company. This Court has verified the averments as regard to the same and therefore agrees with the contention of learned counsel for the petitioners that except reproduction of the statutory requirements, respondent No. 1-complainant did not specify or elaborate the role of the petitioners-accused Nos. 4 to 10 in the day to day affairs of the accused company. Therefore, the petitioners-accused Nos. 4 to 10 are entitled to succeed. 11. For the reasons discussed above, the proceedings against the petitioners-accused Nos. 4 to 10 in C.C.No. 317 of 2016 on the file of the Court of learned IV Additional Junior Civil Judge, Guntur, are hereby quashed. 12. The criminal petitions are allowed. Pending miscellaneous applications, if any, shall stand disposed of in consequence.