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2008(1) Bankmann 573 (Del.)
DELHI HIGH COURT
Pradeep Nandrajog, J.
Anoop Jhalani —Petitioner
versus
State and Anr. —Respondents
Crl. Misc. C. Nos. 2737, 2760, 2894 & 2895 of 2004
Decided on 20.9.2007
For the Petitioner:Mr. Anand Aggarwal, Advocate.
For the State:Mr. U.L. Watwani, Advocate.
For the Respondent:Mr. S.B. Sinha and Mr. Sanjay Mishra, Advocates.
IMPORTANT POINT
An actionable complaint under Sections 138/141 of the Negotiable Instruments Act, 1881 against directors of a Company must contain the averments that the person described as the director of the Company was incharge and was responsible to the Company for the conduct of the business of the Company at the time when the offence was committed.
Headnote:Negotiable Instruments Act, 1881—Sections 138 and 141—Dishonour of cheque issued by company—Prosecution of company accused No. 1, managing director and directors as accused No. 2 to 7—Petition to quash summoning order proceedings against all accused—For holding a person liable vicariously for the act of company complaint must bring out as to on what basis it is being alleged that person concerned as director was responsible for conduct of business of company and was in-charge of affairs of company—Accused Nos. 2 to 7 were stated to be managing director and directors without specifying as to who was managing director and who were the directors—Complaint averment showed that liability on directors was sought to be fastened only on account of they being the directors—Proceedings were liable to be quashed against accused No. 2 to 7. (Paras 7 to 10, 14 and 15)
Result: Petitions allowed accordingly.
Pradeep Nandrajog, J.—Above captioned petitions arise out of the same complaint and the same summoning order hence all the petitions are being decided together.
2. Respondent No.2, M/s. Sabby Builders and Promoters Pvt. Ltd. filed a complaint under Section 138 read with Sections 141 and 142 of the Negotiable Instruments Act, 1881 alleging that M/s. Jhalani Tools (India) Ltd. (impleaded as accused No.1) had instructed the complainant to render services of the settling its dues with banks and financial institutions. That in lieu of services rendered by it, a cheque in sum of Rs. 7,30,50,000/ - dated 24.5.2004 drawn on State Bank of India was issued in the name of the complainant. That when presented for encashment, the cheque was returned dishonoured with the advice ‘account closed’. That in spite of calling upon the accused Company to pay the amount under the cheque none was paid.
3. P.C. Jhalani, Y.C. Jhalani, Pradeep Jhalani, Sandeep Jhalani, Anoop Jhalani and Ashok Jhalani were impleaded as accused Nos. 2 to 7 respectively. In the memo of parties to the complaint they were described as directors.
4. Only allegations against the directors of accused No.1 are as averred in para 2 of the complaint. The same reads as under:
“2. That the accused No.1 is the Limited Company and accused .Nos. 2 to 7 are the Managing Director and Directors of the said accused No.1, therefore, all the accused persons are jointly and severally liable to the acts and deeds of the accused No.1, all the Managing Directors and Directors are supervising the affairs of the accused No.1 actively.”
5. After recording pre-summoning evidence, vide order dated 18.9.2004 learned Metropolitan Magistrate issued summons against all accused.
6. Pradeep Jhalani, accused No.4 seeks quashing of the complaint and summoning order vide Crl. M.C. No. 2760/2004.
Yogesh Jhalani, accused No.3 seeks quashing of the complaint and the summoning order vide Crl. M.C. No. 2894/2004. His co-petitioner is the Company, accused No.1.
Anoop Jhalani, accused No. 6 seeks quashing of the complaint and the summoning order vide Crl. M.C. No.2737/2004.
The Company M/s. Jhalani Tools (India) Ltd., accused No. 1, P.C. Jhalani, accused No.2, Yogesh Jhalani, accused No.3 and Ashok Jalani, accused No.7 have joined as co-petitioners in Crl. M.C. No. 2895/2004 while praying for quashing of the F.I.R. and the summoning order.
I note that Yogesh Jhalani is a petitioner in 2 petitions.
7. From the averments against the directors of the Company as averred in para 2 of the complaint, contents noted in para 4 above it is to be noted that the complainant has stated that accused Nos. 2 to 7 are the managing director and directors of accused No.1. In said para it is thereafter averred that all the managing directors and directors are supervising the affairs of accused No.1. It has not been stated as to who is the managing director and who are the directors. Even in the pre-summoning evidence led by means of an affidavit filed by Sanjay Sabharwal, director of the complainant, accused Nos. 2 to 7 are stated to be the managing director and directors of accused No.1, without specifying as to who is the managing director and who are the directors.
8. It could be urged (an argument not advanced as a matter of fact) that since name of P.C. Jhalani was listed at serial No.2 of the accused persons immediately after the name of the Company, reference to the managing director in the complaint has to be a reference to P.C. Jhalani.
But, it cannot be so, for the reason in the memo of parties in the complaint P.C. Jhalani has been described as a director of the Company.
9. It is settled-law that unless law makes him liable an individual is not vicariously liable for the act of another. Under the Negotiable Instruments Act, 1881 the directors of a Company are made vicariously liable because of Section 141 of the Negotiable Instruments Act, 1881.
A managing director would be vicariously liable because of the ver
