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SUPREME COURT OF INDIA
INDIRA BANERJEE, J.K. MAHESHWARI, JJ.
Sunita Palita & Others - Appellants
Versus
M/s Panchami Stone Quarry - Respondents
Criminal Appeal No. of 2022 [Arising out of SLP (Crl.) No. 10396 of 2019]
Decided On : 01-08-2022
(A) Criminal Procedure Code, 1973 – Section 482 – Exercise of inherent jurisdiction – Section 482 of Cr.P.C. protects inherent power of High Court to make such orders as may be necessary to give effect to any order under Cr.P.C or to prevent abuse of process of any Court or otherwise secure ends of justice – While it is true that inherent jurisdiction under Section 482 should be exercised sparingly, carefully and with caution and only when such exercise is justified by tests specially laid down in the Section, Court is duty bound to exercise its jurisdiction under Section 482 of the Cr.P.C. when exercise of such power is justified by tests laid down in said Section – Jurisdiction under Section 482 of Cr.P.C. must be exercised if interest of justice so requires. (Paras 34 and 35)
(B) Negotiable Instruments Act, 1881 – Section 138/141 – Criminal Procedure Code, 1973 – Section 482 – Dishonour of cheque – Offence by company – Every person connected with company does not fall within ambit of Section 141 of NI Act – When accused is Managing Director or a Joint Managing Director of a company, it is not necessary to make an averment in complaint that he is in charge of, and is responsible to company for conduct of business of company – A Director or an Officer of the company who signed cheque renders himself liable in case of dishonour – When a complaint was filed against Director of a company, a specific averment that such person was in charge of and responsible for conduct of business of company was an essential requirement of Section 141 of NI Act – Merely being a Director of company is not sufficient to make person liable under Section 141 of NI Act – Requirement of Section 141 of NI Act was that person sought to be made liable should be in charge of and responsible for conduct of business of company – This has to be averred as a fact – Complaint should also not be read with a pedantically hyper technical approach to deny relief under Section 482 of Cr.P.C. to those impleaded as accused, who do not have any criminal liability in respect of offence alleged in complaint – Provisions of Section 138/141 of NI Act create a statutory presumption of dishonesty against those covered by Section 138/141 of NI Act and expose them to criminal liability, if payment is not made within statutory period, even after issue of notice – Criminal case quashed. (Paras 30, 36, 39, 41 and 49)
(C) Negotiable Instruments Act, 1881 – Section 138/141 – Criminal Procedure Code, 1973 – Section 205 – Dishonour of cheque – Offence by company – Impleadment of all Directors of Accused Company on the basis of a statement that they are in charge of and responsible for conduct of business of company, without anything more, does not fulfil requirements of Section 141 of NI Act – There could be no justification for not dispensing with personal appearance of Appellants, when Company had entered appearance through an authorized officer – Summoning an accused person cannot be resorted to as a matter of course and order must show application of mind – Liability under Section 138/141 of NI Act arises from being in charge of and responsible for conduct of business of company at relevant time when 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 issuance of a cheque or dishonour thereof, such as Director (Personnel), Director (Human Resources Development) etc. into criminal proceedings under NI Act, only because of their designation. (Paras 42, 46 and 47)
Facts of the case:
Present appeal is against a judgment and order dated 11th September 2019 passed by Calcutta High Court dismissing Criminal Revisional Application being C.R.R. No.2835 of 2018 filed by Appellants being the 3rd, 4th and 5th Accused, under Section 482 of Code of Criminal Procedure, 1973, for quashing the proceedings under Section 138/141 of Negotiable Instruments Act, 1881, pending against Appellants.
Findings of Court:
High Court erred in law in not exercising its jurisdiction under Section 482 of the Cr.P.C in facts and circumstances of this case to grant relief to the Appellants.
Result : Appeal allowed.
JUDGMENT :
Indira Banerjee, J.
Leave granted.
2. This appeal is against a judgment and order dated 11th September 2019 passed by the Calcutta High Court dismissing the Criminal Revisional Application being C.R.R. No.2835 of 2018 filed by the Appellants being the 3rd, 4th and 5th Accused, under Section 482 of the Code of Criminal Procedure, 1973, hereinafter referred to as “the Cr.P.C.”, for quashing the proceedings in Case No. AC/121/2017, inter alia, under Section 138/141 of the Negotiable Instruments Act, 1881, hereinafter referred to as “the NI Act”, pending against the Appellants in the Court of the Judicial Magistrate, 2nd Court, Suri, Birbhum, West Bengal.
3. The Respondent M/s Panchami Stone Quarry, hereinafter referred to as “PSQ” filed a petition of complaint, inter alia, against the Appellants under Section 138/141 of the NI Act which was registered as Case No.AC/121/2017.
4. In the petition of complaint, PSQ impleaded M/s MBL Infrastructure Limited, a public limited company, within the meaning of the Companies Act 2013 (hereinafter referred to as “the Accused Company”), as Accused No.1. One Mr. Anjanee Kumar Lakhotia, Managing Director of the Accused Company was impleaded as the Accused No.2 and the Appellants were impleaded as Accused Nos. 3, 4 and 5. The Appellant No.1 was the fourth accused, Appellant No.2 was the fifth accused and Appellant No.3 was the third accused.
5. In the said petition of complaint, PSQ alleged “Accused Nos.2, 3, 4 and 5 are the Directors of Accused No.1. i.e., M/s MBL Infrastructures Ltd. respectively [and] are responsible to conduct the day-to-day business affairs of the Accused No.1.”
6. The Accused Company placed orders on PSQ on different dates for purchase, inter alia, of Stone Dust and Stone Aggregate. Purchase Orders dated 24.12.2015, 25.05.2016, 07.01.2016 and 09.04.2016 were issued by the Accused Company, specifying the materials required to be supplied, along with the rates and quantity thereof.
7. Pursuant to the aforesaid purchase orders, PSQ supplied materials to the Accused Company, and raised bills totalling Rs.2,31,60,674/- (Rupees Two Crore, Thirty One Lakhs, Sixty Thousand, Six Hundred and Seventy Four only) on the Accused Company.
8. In discharge of its liability against the bills raised by PSQ on the Accused Company, the Accused Company had issued an Account Payee Cheque being No.001174 dated 15th March 2017 for a sum of Rs.1,71,08,512/- (Rupees One Crore, Seventy One Lakhs, Eight Thousand, Five Hundred and Twelve only) drawn on the Park Street Branch of Kotak Mahindra Bank at Kolkata, in favour of PSQ.
9. It is not in dispute that the Accused No.2-Anjanee Kumar Lakhotia is the Managing Director and authorised signatory of the Accused Company. The said Accused No.2, Anjanee Kumar Lakhotia signed the said cheque.
10. In the Petition of Complaint there is a bald averment that the Appellants being the Accused Nos. 3, 4 and 5 were Directors of the Accused Company and responsible for the day-to-day affairs of the Accused Company. This averment is devoid of any particulars.
11. On 10th April 2017, PSQ deposited the cheque in its bank for encashment, but the cheque was dishonoured, with the endorsement ‘account closed’. On 3rd May 2017, PSQ received intimation of dishonour of the cheque from its banker. Thereafter, PSQ sent a demand notice dated 29th May 2017 by speed post, calling upon the Accused to make payment of the amount of the dishonoured cheque, as per the provisions of Section 138 of the NI Act.
12. Alleging that the Accused Company had not paid the amount of the dishonoured cheque, that is, Rs.1,71,08,512/- (Rupees One Crore, Seventy One Lakhs, Eight Thousand, Five Hundred and Twelve only) to PSQ within the time stipulated, PSQ filed the aforesaid complaint under Section 138 read with Section 141 of the NI Act, through its proprietor.
13. By an order dated 13th July 2017, the Additional Chief Judicial Magistrate, 2nd Court, Suri, Birbhum registered the petition as a complaint ca
(1) Dishonour of cheque – Impleadment of all Directors of Accused Company on the basis of a statement that they are in charge of and responsible for conduct of business of company, without anything m....
The main legal point established in the judgment is the requirement for specific averments and unimpeachable evidence to establish vicarious liability of directors in cases of cheque bounce under Sec....
Liability under Section 141 of NI Act depends on the role in the conduct of the company's affairs, not just the designation, and the burden of proof lies on the accused to establish lack of knowledge....
Vicarious liability under the Negotiable Instruments Act requires proof of a director's active involvement and responsibility in the company's operations, not merely their title.
The legal principle established is that a director, even if designated as an independent Non-Executive Director, can be held vicariously liable for the dishonor of a cheque under section 138 of the N....
Non-Executive Directors cannot be held liable under Section 141 of the Negotiable Instruments Act without specific averments demonstrating their involvement in the company's day-to-day affairs.
Vicarious liability under Section 141(1) of the NI Act must be strictly construed, and the complaint should provide specific averments to establish the accused's responsibility for the company's cond....
Dishonour of cheque – Offence by company – It may not be proper to split while reading complaint so as to come to a conclusion that allegations as a whole are not sufficient to fulfil requirement of ....
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