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2023 DIGILAW 91 (JHR)

Priyanka Ojha v. State of Jharkhand

2023-01-31

GAUTAM KUMAR CHOUDHARY

body2023
JUDGMENT : Instant petition has been filed for quashing the entire criminal proceeding in connection with Complaint Case No.8521 of 2020 whereby and whereunder the cognizance has been taken under Section 138 of Negotiable Instrument Act. 2. This petition has been preferred on behalf of petitioner No.1- Priyanka Ojha, who is arrayed as accused No.8 and petitioner No.2 (accused No.9). The main plea for quashing the cognizance proceeds on the ground that as per the averments made in the complaint, this petitioner was not Director of the Company as stated in para 2 & 3 of the complaint petition. She had resigned from the Directorship of the Company in September, 2019 and she did not hold any post. The cheque was issued on 28.10.2020 and petitioner No.1 had already resigned on 17.09.2019 as per averment made in complaint petition. Only allegation against her, is that it was on the basis of her direction that the payments were made. 3. It is submitted that she has been roped into this case as she happens to be the wife of petitioner/accused No.9, who was Chief Executive Officer of the Company. She not holding any post in the said Company, it will gross abuse of process of Court to array her as accused in the facts and circumstances of the case. 4. With regard to petitioner No.2, it is submitted that as per the case of the complainant, he was Chief Executive Officer and on this basis alone, cognizance under Section 138 of the N.I. Act, cannot be taken against him. Reliance in this regard has been placed in the case of National Small Industries Corporation Limited Versus Harmeet Singh Paintal & Another reported in (2010) 3 SCC 330 . 5. It is submitted by learned counsel on behalf of complainant that there is specific averment in para 3 of the complaint petition that the cheques were issued and payments were released under the direction of petitioner No.1 although she did not hold any post in the Company but was in active participation. In this view of the matter, prima facie case will be made out in view of ratio decided in the case of S.P. Mani & Mohan Dairy Versus Dr. Snehalatha Elangovan reported in 2022 SCC OnLine SC 1238 wherein the following principles were reiterated: “41. In this view of the matter, prima facie case will be made out in view of ratio decided in the case of S.P. Mani & Mohan Dairy Versus Dr. Snehalatha Elangovan reported in 2022 SCC OnLine SC 1238 wherein the following principles were reiterated: “41. In Gunmala Sales Private Limited (supra), this Court after an exhaustive review of its earlier decisions on Section 141 of the N.I. Act, summarized its conclusion as under:— “a) Once in a complaint filed under Section 138 read with Section 141 of the NI Act the basic averment is made that the Director was in charge of and responsible for the conduct of the business of the company at the relevant time when the offence was committed, the Magistrate can issue process against such Director; b) If a petition is filed under Section 482 of the Code for quashing of such a complaint by the Director, the High Court may, in the facts of a particular case, on an overall reading of the complaint, refuse to quash the complaint because the complaint contains the basic averment which is sufficient to make out a case against the Director; c) In the facts of a given case, on an overall reading of the complaint, the High Court may, despite the presence of the basic averment, quash the complaint because of the absence of more particulars about role of the Director in the complaint. It may do so having come across some unimpeachable, incontrovertible evidence which is beyond suspicion or doubt or totally acceptable circumstances which may clearly indicate that the Director could not have been concerned with the issuance of cheques and asking him to stand the trial would be abuse of the process of the court. Despite the presence of basic averment, it may come to a conclusion that no case is made out against the Director. d) No restriction can be placed on the High Court's powers under Section 482 of the Code. The High Court always uses and must use this power sparingly and with great circumspection to prevent inter alia the abuse of the process of the Court. There are no fixed formulae to be followed by the High Court in this regard and the exercise of this power depends upon the facts and circumstances of each case. The High Court always uses and must use this power sparingly and with great circumspection to prevent inter alia the abuse of the process of the Court. There are no fixed formulae to be followed by the High Court in this regard and the exercise of this power depends upon the facts and circumstances of each case. The High Court at that stage does not conduct a mini trial or roving inquiry, but nothing prevents it from taking unimpeachable evidence or totally acceptable circumstances into account which may lead it to conclude that no trial is necessary qua a particular Director.” 6. In order to appreciate the liability of a person, who not being the drawer of the cheque, is being proceeded against for being In-charge with the affairs of Company on the principles of vicarious liability, it will be desirable to consider the principles governing criminal liability of Officers or Directors of the Company. No doubt, a corporate entity is an artificial person which acts through its Officers, Directors, Managing Director/Chairman etc. It is the Cardinal Principle of Criminal Jurisprudence that where there are allegations of vicarious liability, then there has to be sufficient evidence of the active role of each Director. There has to be a specific act attributed to a Director or the person allegedly in control of management of the Company, to the effect that such a person was responsible for the acts committed by or on behalf of the Company. It has been held in HDFC Securities Ltd. v. State of Maharashtra; (2017) 1 SCC 640 that the Penal Code, 1860, does not provide for vicarious liability for any offence alleged to be committed by a Company. If and when a statute contemplates creation of such a legal fiction, it provides specifically therefore e.g. the Negotiable Instruments Act, 1881. Under Section 141 of the N.I. Act. If and when a statute contemplates creation of such a legal fiction, it provides specifically therefore e.g. the Negotiable Instruments Act, 1881. Under Section 141 of the N.I. Act. (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. It has been held in National Small Industries Corporation Limited v. Harmeet Singh Paintal; (2010) 3 SCC 330 , the following principles have been laid down: (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 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. (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. (iv) Vicarious liability on the part of a person must be pleaded and proved and not inferred. (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.” 7. From the averments made in the complaint petition, it is apparent that petitioner No.1 is neither drawer of the cheque nor Director nor she held any post in the said Company at the time when the cheque was issued. When she was not holding any post of the Company, vicarious criminal liability cannot be fastened on her on mere bald assertion that under her direction, the payments were being released. Under the circumstance, there is manifest infirmity in the order taking cognizance against this petitioner. 8. As far as petitioner No.2 is concerned, he has been arrayed as accused No.9 as the Chief Executive Officer of the Company. No specific role has been attributed to this petitioner except in para 10 of the complaint petition wherein it has been stated that when the relation between the Company/Accused No.1 & the complainant grew, the Company took the complainant into confidence for financial assistance. It is inconceivable that being C.E.O. he was completely unaware about the issuance of the cheque. Under Section 141 of the N.I. Act, 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 liable for the offence under Section 138 of the N.I. Act. Under the circumstance, this Court is of the view that there is no infirmity in the impugned order of finding prima facie case against this petitioner and issuing process against him. Under the aforesaid facts and circumstance the entire criminal proceeding in connection with Complaint Case No.8521 of 2020 whereby and whereunder the cognizance has been taken under Section 138 of Negotiable Instrument Act against petitioner No.1-Prinyanka Ojha, is set aside. There is no infirmity in the impugned order against petitioner No.2. Criminal Miscellaneous Petition, is partly allowed.