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CALCUTTA HIGH COURT
Asim Kumar Ray, J.
Mahendra Kumar Rustagi
and Another —Petitioners
versus
State of West Bengal and
Another —Respondents
C.R.R. No. 866 of 2011
Decided on 14.9.2012
IMPORTANT POINT
Merely being Director of company is not sufficient to make liable under Section 141 of N.I. Act.
Headnote:Negotiable Instruments Act, 1881—Sections 138 and 141—Criminal Procedure Code, 1973—Section 482—Dishonour of cheque—Cognizance—It is necessary to specifically aver in complaint under Section 141 that at the time offence was committed , person accused was in charge of and responsible for conduct of business of company—This averment is an essential requirement of Section 141 and has to be made in a complaint—Merely being a Director of a company is not sufficient to make the person liable under Section 141—Factual details stating as to how petitioners were responsible for commission of offence is nowhere in sight in complaint—They cannot be deemed to be liable merely because they are office bearers of company—Role played by them in affairs of company at relevant time is conspicuously absent in body of complaint—Prosecution quashed. (Paras 16 to 22)
Result: Petition allowed.
Asim Kumar Ray, J.—This revisional application under Section 482 of the Code of Criminal Procedure, 1973 is directed against the continuance of Complaint Case No. C-28696 of 2010 under Sections 138/141 of the Negotiable Instruments Act,1881 pending before learned Metropolitan Magistrate,10th Court, Calcutta to the extent it relate to the petitioners, namely, Mahendra Kumar Rustagi and Vivek Sahay being accused nos. 5 and 7 respectively.
2. Mr. Sekhar Basu, learned counsel appearing on behalf of the petitioners has invited the attention of this Court to the averments made in paragraph 3 of the petition of complaint by the complainant and has contended that in the absence of specific averments that the accused person “was in charge of” as well as ‘responsible for the conduct of the business of the company at the relevant point of time’ , the provisions of Section 141 of the Negotiable Instruments Act (hereinafter referred to the Act) cannot be invoked. The absence of such specific averment strikes at the very root of the prosecution case.
3. He has contended further that merely being in charge of or merely being responsible for the conduct of the business of the company is not sufficient to invoke the rigors of the provisions of Section 141 of the act as amended upto date. The averment must state that the person who is vicariously liable for commission of the offence of the company both was in charge of and was responsible for the conduct of the business of the company. Requirements laid down therein must be read conjointly and not disjunctively.
4. Mr. Basu has contended that the petitioners in the present case were neither directors nor persons who were in charge of and responsible to the company for the conduct of the business the company. In such event, merely stating that they were in charge of the day- to- day management of the company or by stating that they were in charge of and was responsible to the company of the conduct of the business of the company, they cannot be made vicariously liable under Section 141(1) of the act. A person cannot be deemed to be liable merely because he holds a designation for office or in a company. Hence merely being described as Director’ of the company is not sufficient to satisfy the requirements of Section 141 of the act . A director in a company cannot be deemed to be in charge of and responsible to the company for the conduct of its business and there is no deemed liability upon the Director. The requirements of Section 141 of the act was that person who is sought to be made liable should be in charge of and responsible for the conduct of the business of the company and as such being in charge and being responsible has to be at the relevant time when the of- fence was committed . It is’ his further contention that it is mandate of law that a complainant must factually state as to how a director (or any person) who is sought to be made an accused was responsible for the commission of the offence .
5. He has contended that it is a settled law that a penal statute is required to be construed strictly . A penal statute providing constructive vicarious liability should be construed much more strictly since the same puts a citizen into the rigours of the criminal law Mr. Basu has placed the provision of Section 141 of the act and has relied on the following decisions:
1. S.M.S. Pharmaceuticals Ltd. v. Neeta Bhalla.1
2. Sabita Ramamurthy v. R.B.S. Channabasauaradhya.2
3. S.M.S. Pharmaceuticals Ltd. v. Neeta Bhalla and another.3
4. S.K. Poddar v. State (NCT of Delhi).4
5. K. K. Ahuja v. V. K. Vora and another.5
6. Ramraj Singh vs. State of Maharashtra.6
7. Ram Raj Singh v. State of Maharashtra7 and
7. National Small Industries Corporation Limited v. Harmeet Singh Paintal and another8, Mr. Basu has relied on an unreported judgment of CRR No. 1940-1946 of 2010 passed by this Court on 14th July, 2011 wherein this Court has quashed the proceeding relying on the judgments of the
