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2007(1) Supreme 239
SUPREME COURT OF INDIA
(From Delhi High Court)
S.B. Sinha and Markandey Katju, JJ.
Saroj Kumar Poddar—Appellant
versus
State (NCT of Delhi) & Anr.—Respondents
Criminal Appeal No. 70 of 2007
(Arising out of SLP (Crl.) No. 4645 of 2006)
Decided on 16-1-2007
Counsel for the Parties :
For the Appellant : Sidharth Luthra, Susmit Puskar and Ms. Vanita Bhargava (for M/s. Khaitan & Co.), Advocates.
For the Respondents : B.L. Wali, V.N. Raghupathy and D.S. Mahra, Advocates.
Held : The purported averments which have been made in the complaint petitions so as to make the appellant vicariously liable for the offence committed by the Company read as under:
"That the accused No. 1 is a public limited company incorporated and registered under the Companies Act, 1956, and the accused 2 to 8 are/were its Directors at the relevant time and the said company is managed by the Board of Directors and they are responsible for the incharge of the conduct and business of the company - Accused No. 1. However, cheques referred to in the complaint have been signed by the Accused No. 3 & 8 i.e. Shri K.K. Pilania and Shri N.K. Munjal for and on behalf of the Accused Company No. 1."(Para 13)
Apart from the Company and the appellant, as noticed hereinbefore, the Managing Director and all other Directors were also made accused. The appellant did not issue any cheque. He, as noticed hereinbefore, had resigned from the Directorship of the Company. It may be true that as to exactly on what date the said resignation was accepted by the Company is not known, but, even otherwise, there is no averment in the complaint petitions as to how and in what manner the appellant was responsible for the conduct of the business of the Company or otherwise responsible to it in regard to its functioning. He had not issued any cheque. How he is responsible for dishonour of the cheque has not been stated. The allegations made in paragraph 3, thus, in our opinion do not satisfy the requirements of Section 141 of the Act. (Para 14)
Our attention, however, has been drawn to the averments made in paragraphs 7 and 10 of the complaint petition, but on a perusal thereof, it would appear that therein merely allegations have been made that the cheques in question were presented before the bank and they have been dishonoured. Allegations to satisfy the requirements of Section 138 of the Act might have been made in the complaint petition but the same principally relate to the purported offence made by the Company. With a view to make a Director of a Company vicariously liable for the acts of the Company, it was obligatory on the part of the complainant to make specific allegations as are required in law.(Para 15)
For the reasons aforementioned, we have no other option but to hold that the allegations made in the complaint petitions even if are taken to be correct in their entirety do not disclose any offence as against the appellant herein. The proceedings against him, thus, should have been quashed by the High Court. The impugned judgment, therefore, cannot be sustained which is set aside accordingly.(Para 18)
JUDGMENT
S.B. Sinha, J.—Leave granted.
2. Appellant herein was a Director of a public limited company, incorporated and registered under the Indian Companies Act, known as VHEL Industries Limited (hereinafter referred to as "the Company"). The Company issued three cheques bearing Nos. 138015, 138016 and 138017 for a sum of Rs. 2,50,000/-, Rs. 2,50,000/- and Rs. 3,03,952.60, respectively in favour of Elkay International Private Limited, Respondent No. 2 herein.
3. The complainant - Respondent No. 2 is manufacturer and supplier of chemical compounds of different kinds. It supplied its product to the Company. Allegedly, a sum of Rs. 13,36,923/- was due and payable to the complainant by the Company. The Company issued three cheques, as noticed hereinbefore, in favour of the complainant. The said cheques were deposited in a bank but were dishonoured. A complaint petition came to be filed by the complainant in the Court of Chief Metropolitan Magistrate, Delhi against the appellant as also the said Company. The Managing Director of the said Company as also the other Directors were also arrayed as accused therein. It was alleged that Shri K.K. Pilania - Accused No. 3 and Shri N.K. Munjal - Accused No. 8 signed the said cheques for and on behalf of the Company.
4. Cognizance was taken against the appellant and other accused persons. Inter alia on the premise that the appellant had resigned from the Directorship of the Company before the date of issuance of the cheques and much before the deposit thereof by the drawee with its bank, and thus, he was not liable for the action of the Company, applications for quashing of the orders taking cognizance of the offence in the said complaint petitions were filed by the appellant before the High Court of Delhi which were marked as Crl. M.C. Nos. 4583, 4580 and 4575 of 2003. By reason of the impugned judgment, the said petitions have been dismissed by the High Court stating:
"The learned trial judge while dealing with the recalling order of the petitioner made specific mention of the fact that the cheque in question was post dated cheque issued through letter dated 10th May, 1997. If that be so the matter needs further probe by way of trial and the petitioner cannot claim complete innocence at this stage in view of the letter dated 10th May, 1997 prima facie indicating that the cheque in question was issued on this date and the petitioner was the Director of the Company on 10th May, 1997 as he himself admitted that he resigned from the company with effect from 19th June, 1997."
5. The appellant is, thus, before us.
6. Ms. Vanita Bhargava, learned counsel appearing on behalf of the appellant, would contend that the averments made in complaint petitions even if given face value and taken to be correct in their entirety do not constitute an offence as against the appellant in terms of Section 141 of the Negotiable Instruments Act (for short "the Act").
7. It was further submitted that in any event, the appellant having resigned from the Directorship of the said Company, the complaint petitions as against him were not maintainable.
8. Mr. B.L. Wali, learned counsel appearing on behalf of the respondents, on the other hand, would submit that the appellant had not disclosed as to when the resignation purported to have been submitted by him was accepted by the Company and in that view of the matter the complaint petitions were maintainable.
9. Section 138 of the Act reads as under:
"138. Dishonour of cheque for insufficiency, etc., of funds in the account–
Where any cheque drawn by a persons on an account maintained by him with a banker for payment of any amount of money to another persons from out of that account for the discharge, in whole or in part, of any debt or other liability, is returned by the bank unpaid, either because of the amount of money standing to the credit of that account is insufficient to honour the cheque or that it exceeds the amount arranged to be paid from that account by an agree
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