High Court of Judicature at Madras
THE HONOURABLE MR. JUSTICE B. AKBAR BASHA KHADIRI
R. Kannan - Appellant
Versus
Kotak Mahindra Finance Limited - Respondents
Criminal O.P. No. 227 of 1999 and Criminal M.P. Nos. 10794 and 10795 of 1999
Decided On : 03 November 2000
B. AKBAR BASHA KHADIRI, J.
The instant criminal original petition is to quash the proceedings pending in C. C. No. 1476 of 1998 on the file of the XIII Metropolitan Magistrate, Egmore, Madras.
This Crl. O. P. has arisen in this way :
The respondent herein preferred a private complaint alleging that Alsa Constructions and Housing Ltd., a company and its managing director, chairman and directors have committed an offence under section 138 of the Negotiable Instruments Act, 1881. According to the petitioner, the second accused Salim Pasha issued two cheques dated February 26, 1997, for Rs. 10, 00, 000 and June 14, 1997, for Rs.20, 00, 000 towards the liability of the company towards bill discounting facilities given by the complainant to the accused. In the complaint, the complainant had stated that the cheques we reissued by the second accused Salim Pasha in his capacity as managing director of the first accused company as per instructions of accused Nos. 3 to 8 herein, who are the directors and in charge of the day-to-day affairs of the first accused company. The petitioner herein is one of the directors of the company, who is arrayed as the sixth accused. He has come forward with the instant quash proceedings contending that he is not the drawer of the cheque and the complainant does not specify any involvement of the petitioner in the alleged issue of the cheques. According to the petitioner, the complaint is silent about the role of the petitioner with regard to management of the first accused company or its day-today affairs, and thus the essential element required to prosecute the director under section 141(2) of the Negotiable Instruments Act is lacking.
Heard both the sides.
"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 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.
Explanation.-For the purposes of this section, -
(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."
A reading of the section would go to show that (i) the company is liable, (ii) the person who was (a) in charge, (b) responsible to the company, and (c) for the conduct of the business of the company, is liable ; and (iii) other officer of the company including director, manager, secretary or other officer is liable if there had been (a)consent, or (b) connivance, or (c) an act attributable to, or (d) due to negligence on his part.
Admittedly, the petitioner is a director. Admittedly, there is averment in the complaint that he is "in charge of the day-to-day affairs of the first accused" company,
". The only question that arises is whether such averment would be sufficient to satisfy the requirement of section 141(2) of the Negotiable Instruments Act or there should be specific averments as against the petitioner, with respect to his role in the conduct of the affairs of the company on whose behalf the cheque was
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