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Andhra Pradesh High Court
S.P.Subramaniam - Appellant
Versus
Vasavi Cotton Traders - RESPONDENT
Decided On: 10-31-01
The liability of directors of a company under S. 138 and S. 141 of the Negotiable Instruments Act is determined based on the accusation against them in the complaint, and the question of filing of authorization is a matter of fact to be determined during the trial.
Headnote:
Negotiable Instruments Act - Criminal Liability of Directors - Section 138 - Section 141 - Summary of Acts and Sections: S. 138, S. 141 - The court discussed the liability of the directors of a company under S. 138 of the Negotiable Instruments Act and the interpretation of S. 141. The court referred to various judgments to establish that the accusation against the directors in the complaint prima facie discloses their liability under S. 138 and S. 141. The court held that the question of filing of authorization is a question of fact to be determined during the trial. The court rejected the contentions that the complaints were not maintainable and that the proceedings against the directors should be quashed.
Fact of the Case:
The petitioners, who were directors of a company, were involved in business transactions where cheques issued by the company were dishonored. The complainants filed complaints under S. 138 of the Negotiable Instruments Act. The petitioners filed petitions alleging that the complaints were an abuse of the process of the court.
Finding of the Court:
The court rejected the contentions that the complaints were not maintainable and that the proceedings against the directors should be quashed. The court held that the accusation against the directors in the complaint prima facie discloses their liability under S. 138 and S. 141.
Issues: Maintainability of the complaints under S. 138, Liability of the directors under S. 141
Ratio Decidendi: The question of filing of authorization is a question of fact to be determined during the trial. The accusation against the directors in the complaint prima facie discloses their liability under S. 138 and S. 141.
Final Decision: The criminal petitions are dismissed.
( 1 ) CRIMINAL Petitions Nos. 2234 and 2235 of 1999 are filed by the petitioner who is arrayed as A-5 in C. C. Nos. 1 of 1999 and 288 of 1998 on the file of the Judicial Ist Class Magistrate, Proddatur, respectively. Criminal Petitions Nos. 2241 and 2242 of 1999 are filed by A-3, A-4 and A-6 in the said cases.
( 2 ) AS the point involved in all these petitions is one and the same, all the petitions are disposed of by common order.
( 3 ) THE facts are that Vetri Spinning Mills (P) Limited is a private limited company and the petitioners herein are the Directors of the said company registered under the Companies Act, of which Sri S. Ramamoorthy (A-2) is the Managing Director and the petitioners herein are the Directors. The 1st accused-company is having business dealings with (1) Vasavi Cotton Traders, complainant in C. C. No. 1 of 1999 and (2) Sri Vijaya Krishna Ginning Mill, complainant in C. C. No. 288 of 1998 and in their business transaction, cheques were issued by the 1st accused-company, signed by the Managing Director i. e. , A-2. When the cheques were presented, they were dishonoured and returned to the complainant with an endorsement "insufficient funds. " After complying with the provisions as contemplated under S. 138 of the Negotiable Instruments Act, i. e. , issuance of notice etc. , the complainants filed the complaints under S. 138 of the said Act. Questioning the said complaints, the present petitions are filed under S. 482 of the Criminal Procedure Code alleging that maintenance of the complaints is nothing but an abuse of the process of the Court.
( 4 ) SRI K. Ramesh, representing Mr. Vijaya Bhaskar, learned Advocate, strenuously contended before this Court that (1) the complaints are filed by Vasavi Cotton Traders and Vijaya Krishna Ginning Mills are not maintainable as the partners of the respective firms have not filed any authorisation into Court to establish that they are the authorised persons to maintain the complaint. (2) A-5 in the above cases had resigned from the directorship on 7-12-1996 and by the date the cheques were issued, he was not in the office and as such the criminal proceeding against him are liable to be quashed. (3) A reading of the complaint does not show any offence so far as the petitioners are concerned as nothing is alleged against them. It is, therefore, contended that the complaints filed are liable to be quashed.
( 5 ) HEARD the learned Public Prosecutor.
( 6 ) COMING to the first contention advanced by the learned counsel for the petitioners, in Criminal Petition No. 1354 of 1999 dated 14-9-2001, this Court had an occasion to deal with similar contention and after perusing various judgments of this Court, this Court came to a conclusion that the question of filing of authorisation is purely a question of fact and the said question can be gone into only by the trial Court during the course of trial. The relevant portion of the said judgment reads as under : "section 141 of the Negotiable Instruments Act, 1881 deals with offences by companies and the Explanation to the said section is as follows : (a) company means any body corporate and includes a firm or other association of individuals; and (b) director in relation to a firm, means a partner in the firm. it is needless to say that a company is a juristic person, a legal entity. A company, though is a legal entity, does not have soul, mind, body and limbs to walk to Court for preference of a complaint. The dictates of commonsense, practical wisdom, prudence and expedience impel the Courts in such a situation to allow a company to be represented by some person concerned with the affairs of the company. Similarly, in case of a firm also, though strictly not a legal entity for all purposes, but a legal entity for the purpose of this Act, has to act through some human agency connected with the affairs of the firm. In the normal course, such legal entities are managed by manager, partner, managing p
