Directors of a company cannot be held liable for an offence under Section 138 of the Negotiable Instruments Act unless it is alleged and proved that they were in charge of and responsible to the company for the conduct of the business of the company.

PALOK BASU, J.

( 1 ) Heard.

( 2 ) THIS is an application under S. 482, Cr. P. C. filed by Smt. Sharda Agarwal, Smt. Kiran Agarwal and Sri M. P. Agarwal who are admittedly Directors of a Company named and styled M/s. Madhu Chandra Techno Chem Complex Private Limited challenging the process issued against them by Chief Metropolitan Magistrate, Kanpur on 17-1-1990 in Complaint Case No. 1116 of 1990 under Section 138 of Indian Negotiable Instruments Act.

( 3 ) THE facts are that M/ s. Karam Chand Thapar and Brothers, a company having registered office at Calcutta and its branch office at Thapar House, Kanpur, has filed the aforesaid complaint through its Deputy Manager Vishalpuri against four accused. Three of the accused are the applicants and the fourth one is Sri. P. K. Agarwal, Managing Director of the aforesaid company M/ s. Madhu Chandra Techno Chem Complex Pvt. Ltd. It is said in para 2 of the complaint that P. K. Agrawal is the Managing Director while the applicants are the Directors and as such all of them are jointly and severally liable for the act of omission and commission of the offence committed by the company. In para 3 it is stated that accused persons had appointed the complainant company as its coal mailing agent on behalf of the company in the year 1989 on the terms and conditions mentioned in the appointment letter dated 2-1-89. In paras 4, 5, 6, 7 and 8 it has been stated that coal was supplied against which cheques were issued by the company which bounced off. Some cheques were again handed over and the result of all this was that out of Rs. five lakhs and odd, four lakhs and odd were paid but Rs. 162512. 87 p. were still outstanding on which the company was entitled to Rs. 48,000/ - and odd as interest. Then in para 9 it is stated that all the accused persons were having mala fides intentions since beginning and had hatched a criminal conspiracy to cheat the complainant company to effect the delivery of the above said quantity of coal valuing Rs. 562512. 87 p. Paras 10, 11 and 12 deal with statement of facts regarding jurisdiction of the court. The prayer in the complaint is that the accused persons be summoned and punished under Section 138, Negotiable Instruments Act and the outstanding dues of Rs. 162512. 87 p. along with interest, and the cost of legal expenses be got paid to the complainant company.

( 4 ) COUNTER and rejoinder affidavits have been exchanged. Sri Amar Nath Srivastava learned counsel for the applicant, Sri Shashikant learned counsel for the complainant and Surendra Singh A. G. A. have been heard. The entire records has been perused.

( 5 ) THE first fact to be noted from the allegations made in the complaint is that out of the total amount of Rs. five lakhs and odd, four lakhs and odd had been paid by the accused. The outstanding amount now remaining as per the complaint is Rs. 162512. 87 and interest payable on that amount. The allegations of the complainant, therefore, that the accused had conspired to cheat the complainant company to the tune of Rs. five lakhs is per se false.

( 6 ) COMING to the question whether the applicants as directors can be prima facie made an accused because of outstanding liability against the accused company it is necessary to look into S. 141 of the Negotiable Instruments Act. It reads as under: 141 - Offences by Companies - (1) If the person committing an offence under S. 138 is a company, every person who, at the time the offence was committed, was incharge 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