Specific averments showing how and in what manner the accused was responsible for the conduct of the business are required to establish vicarious liability under Section 141 of the Negotiable Instruments Act.

ORDER :

PRAYER : Criminal Original Petition filed under Section 482 of Cr.P.C., to call for the records in C.C.No.2225 of 2019 on the file of the Fast Track Court-IV/Metropolitan Magistrate at George Town and quash the same as against the petitioner/Accused No.3.

This Criminal Original Petition is filed under Section 482 Cr.P.C. to call for the records in C.C.No.2225 of 2019, for the offence under Section 138 and 141 of Negotiable Instruments Act, 1881, on the file of the Fast Track Court-IV/Metropolitan Magistrate at George Town and quash the proceedings initiated against the petitioner.

2. The crux of the complaint is that the complainant has supplied materials to the 1st accused company and the 2nd accused is the Managing Director and the 3rd accused is another director. Towards the commercial transactions, a cheque was issued for a sum of Rs.30,07,057.23. When the said cheque was presented through the banker of the complainant, the same was dishonoured for the reasons “insufficient funds”. Therefore, after issuing statutory notice, a prosecution has been launched.

3. Learned counsel for the petitioner would contend that though the petitioner was a director, there is no specific averment made in the complaint as to how and what manner he was in charge of the affairs of the company. Hence for fastening the vicarious liability on the petitioner, there must be specific averment as to the act in affairs of the company. Further, it is stated that bald allegations in the complaint itself is not sufficient to fasten the liability against the other accused. Hence, he relied upon the judgment of the Hon'ble Supreme Court reported in (2018) 14, SCC 202 (Ashoke Mal Bafna V. Upper India Steel Manufacturing and Engineering Company Limited) in Crl.A.No.529 of 2017.

4. Learned counsel for the respondent would submit that he has made necessary averment in the complaint to the effect that the accused 2 and 3 are in charge and responsible for the day to day affairs of the management and operation of the 1st accused company. It is the contention that, legal notice has not been replied and whether the petitioner was in charge of the company or not is the matter for evidence. Accordingly opposed the petition filed by the petitioner.

5. Heard the learned counsel on either side.

6. This Court perused the complaint. Normally to fasten the vicarious liability under Section 141 of Negotiable Instruments Act, there must be necessary averment in the complaint as against the directors. Merely making bald allegations and general allegations will not be sufficient to prosecute a person and fastening a criminal liability on him. The same has been settled in various judgments of the Hon'ble Apex Court. In the complaint, except in paragraph 4 stating that the 2nd and 3rd accused are also responsible for the day to day affairs, management and operations of the 1st accused, there is no other averment specifically stated as to how and what manner he was responsible and in charge of the said company.

7. Therefore, it is relevant to refer to the decision of the Hon'ble Supreme Court reported in (2018) 14, SCC 202 (Ashoke Mal Bafna V. Upper India Steel Manufacturing and Engineering Company Limited) in Crl.A.No.529 of 2017. The relevant portion reads as follow:

“9. To fasten vicarious liability under Section 141 of the Act on a person, the law is well settled by this Court in a catena of cases that the complainant should specifically show as to how and in what manner the accused was responsible. Simply because a person is a Director of a defaulter Company, does not make him liable under the Act. Time and again, it has been asserted by this Court that only the person who was at the helm of affairs of the Company and in charge of and responsible for the conduct of the business at the time of commission of an offence will be liable for criminal action.

10. In other words, the law laid down by this Court is that for making a Director of a Company liable for the offences committ