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DELHI HIGH COURT
M.S.A. Siddiqui, J.
FMI Investments Pvt. Ltd. - Petitioner
versus
State & Ors. - Respondents
Crl. M. (M) No. 2220 of 1997
Decided on 29-10-1999
Counsel for the parties:
For the Petitioner: Mr. Gulshan Chawla, Advocate.
For the State: Mr. M.S. Butalla, Advocate.
For the Respondent Nos. 2 to 13(b): Mr. Ghanshyam Sharma, Advocate.
IMPORTANT POINT
Where offence under Section 138 of Negotiable Instruments Act is committed by Company, its Director in absence of any material that they could be held vicariously liable, they could not be summoned only on a plea in complaint that they were incharge of and responsible to Company for its business.
Headnote:Negotiable Instruments Act, 1881 - Sections 138 and 141 – Dishonour of cheque - Offence by Company Respondents 14 and 15 officers and authorised signatories of cheques besides Company summoned for offence - Rest of accused the Managing Director and other Directors of Company not summoned Revision - Complaint pleaded that all respondents 2 to 15 were in charge and responsible for conduct of business of Company - From very nature of duties it could be inferred that Managing Director would be vicariously liable for offence – As for remaining respondents who were the Directors there was nothing on record to show that there was any act committed by them whereby inference that they could be vicariously liable for offence could be drawn - Prosecution would be at liberty to get them summoned under Section 319. Cr. P.C.
(Paras 8 & 9)
Result: Petition allowed partly.
M.SA Siddiqui, J. - Briefly stated, the facts giving rise to the petition filed under Section 482, Cr. P.C. are that the petitioner-Company filed a complaint under Sections 138/141 of the Negotiable Instruments Act (for short the Act) against the respondents on the allegations that two cheques dated 30-9-1995 were issued by the Montari Industries Ltd. (hereinafter to be referred to as the Company) in favour of the petitioner-Company. When the cheques presented for payment they were dishonoured on the ground that sufficient funds, were not available. A notice was then sent by the petitioner calling upon the Company to pay the amount but it failed to make the payment. This was followed by a complaint under Sections 138/141 of the Act. On the complaint being filed, process was issued against Ms. Ruchi Puri arid Mr. Pradeep Narula alongwith the Company. The learned Magistrate did not take cognizance of the offence against the respondents. Feeling aggrieved by the said order dated 18-2- 1997, the petitioner has come up before this Court under Section 482, Cr. P.C.
2. Learned Counsel for the petitioner contended that the respondent Bhai Manjit Singh is the Managing Director of the Company, respondents Bhai Mohan Singh is the Chairman, Bhai Mohan Singh Nagar, Gurpreet Singh, Vineet Virmani, Rajeev Sawhney, Prem Pandhi, Mantosh Sondhi, Ranjeetmal Bhandari, S.S. Grewal and Sirichand are Directors of the Company and A.S. Khosla is Group Executive Vice President - Finance of the Company and as such they are liable to be tried for violating the provisions of Section 138 read with Section 141 of the Act. According to the learned Counsel for the petitioner, the learned Magistrate has committed an illegality in not taking cognizance of the offence against the said persons.
3. Learned Counsel for the respondents submitted that there is nothing on record to show that at the relevant time, the respondents were incharge of and were also responsible to the Company for the conduct of its business or that the offence complained of was committed with their consent or connivance and thus the learned Magistrate was perfectly justified in not taking cognizance of the offence against the said persons. Reliance is placed on the decisions of the Supreme Court in M.C.D. v. Ram Kishan Rohtagi and Ors.1; State of Haryana v. Brij Lal Mittal and Ors.2 and a decision of this Court in Mahendra Pratap Singh Ratra and Anr. v. M/s. N.K. Metals and Anr.3, in support of the said contention.
4. At this stage, it would be appropriate to notice Station 141 of the Act, which is as under:
"141. Offences by Companies -
(1) If the person committing an offence under Section 138 is a Company, every person who, at the time the offence was committed was incharge 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."
5. The law on the question as to under what circumstances every person who at the time the offence was committed by the Company could be held liable for the offence is no longer resintegra. In M.C.D. v. Ram Kishan Rohtagi and Ors. (supra), while dealing with the p
