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2002 Supreme(Kar) 305

Karnataka High Court
R.P.Balakrishna - Appellant
Versus
Muthoot Leasing and Finance Ltd., Bangalore - Respondent
Decided On : 05-27-02
CRI.PETN. : 2583 of 2001

Advocates:
JOE JOSEPH, SRIVASTAVA

The judgment establishes that under S. 141 of the Negotiable Instruments Act, every person responsible for the conduct of the business of the company is accountable for the offence under S. 138, regardless of whether they are an employee or a director.

Headnote:

Negotiable Instruments Act - Dishonoured Cheques - S. 138, S. 141 - The judgment discusses the application of S. 141 of the Negotiable Instruments Act, which holds every person responsible for the conduct of the business of the company accountable for the offence under S. 138. The court analyzed the complaint and the petitioner's role in the company, and concluded that the necessary requisites of S. 141 are fulfilled, making the petitioner accountable for the action.

Fact of the Case:

The petitioner filed a petition to quash the proceedings against them in a case involving dishonoured cheques issued on behalf of a company. The petitioner contended that they were only an employee and not involved in the decision-making process of the company, thus not liable for prosecution.

Finding of the Court:

The court found that the petitioner's role in the company, as evidenced by the resolutions and authorizations by the directors, fulfilled the necessary requisites of S. 141 of the Act, making the petitioner accountable for the offence under S. 138.

Issues: The main issue was whether the petitioner, as an employee of the company, could be held accountable for the offence under S. 138 of the Negotiable Instruments Act.

Ratio Decidendi: The court held that the strict rules of pleadings in civil law are not important in criminal proceedings, and the complaint only needs to contain the basic necessary material ingredients of the offence and its commission by the accused.

Final Decision: The court dismissed the petition, concluding that the petitioner's role in the company fulfilled the necessary requisites of S. 141 of the Act, making them accountable for the offence under S. 138.

K. SREEDHAR RAO, J.

( 1 ) PETITION filed under S. 482 of Cr. P. C. for quashing of the proceedings against the petitioners in CC No. 27224/99. The first respondent filed a private complaint against the petitioner and others for committing an offence punishable under Ss. 138 and 142 of the Negotiable Instruments Act (hereinafter referred to as the 'act' ). It is alleged that the impugned dishonoured cheques are issued by the petitioner on behalf of the company. In the cause title of the complaint, the petitioner has been described as the Director of the second respondent-company. The trial Court took cognizance and issued process. Being aggrieved by the said order, the present petition is filed.

( 2 ) THE issuance of the dishonour of cheques is not in dispute in this proceedings. However it is contended by the petitioner that he is not the Director of the second respondent-company and he was only an employee of the company. Further it is contended that the complaint does not contain necessary averments to show that the petitioner was responsible for the conduct of the business of the company. In the absence of such averments, it was strenuously contended by the counsel for the petitioner that the proceedings against the petitioner has to be quashed.

( 3 ) IT is relevant to advert the provisions of S. 141 of the Act which read as follows :141. Offences by companies.- (1) If the person committing an offence under S. 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. (2) Notwithstanding anything contained in sub-section (1), where any offence under this Act has been committed by a company and it is proved that the offence has been committed with the consent or connivance of, or is attributable to, any neglect on the part of, any director, manager, secretary or other officer of the company, such director, manager, secretary or other officer shall also be deemed to be guilty of that offence and shall be liable to be proceeded against and punished accordingly. "

( 4 ) THE counsel for the first respondent with reference to the averments in para 3 of the complaint contended that there is sufficient averment made out in the complaint to show that the accused including the petitioner were aware of the transaction relating to the dishonour cheque and they were effectively dealing on behalf of the company. Therefore, submitted that the requirements of S. 141 of the Act are fulfilled and as such the petitioner also become accountable under S. 141 of the Act. The counsel for the petitioner on the other hand, strenuously contended that the petitioner being only an employee and not being the director is not involved in the decision of the making process of the company therefore not liable for prosecution. The petitioner has produced along with the petition Annexures A to D, the minutes of the company. In the Annexure-A, the directors of the company have resolved and authorised the petitioner who was the manager of finance to sign the agreements on behalf of the company and to do all necessary acts for availing the loan facility from the first respondent. Under Annexure-B, the directors of the company have resolved to indemnify the petitioner and other officers against civil and criminal prosecutions in respect of actions initiated by any of the creditors. Under Annexure C, the company had resolved to approach the BIFR as it was a sick company. Under Annexure-D, in the minutes of the company, the proceedings brought against the company under






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