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IN THE HIGH COURT OF JUDICATURE AT ALLAHABAD
Syed Aftab Husain Rizvi, J.
Jatinder Pal Singh – Applicant
Versus
M/s Statcon Power Controls Ltd. and Others – Opposite Parties
Application U/s 482 No. 10245 of 2021
Decided On : 08-03-2022
N.I. Act. - Sections 138 r/w 142 and 141 - Companies Act, 1956 - Section 2 (13) - Dishonor of cheque - Exceeds Arrangement - Whether for purposes of Section 141 of Negotiable Instruments Act, 1881, it is sufficient if substance of allegation read as a whole fulfil requirements of said section and it is not necessary to specifically state in complaint that person accused was in charge of, or responsible for, conduct of business of company - Whether a director of a company would be deemed to be in charge of, and responsible to, company for conduct of business of company deemed to be guilty of the offence unless he proves to the contrary - Alleging therein that complainant is engaged in business of manufacturing and trading in signaling equipments, industrial batteries and other equipments - Accused no. 1 is also a public limited company incorporated under Companies Act, 1956 having its registered address at “Techpro Towers” Plot No. 11-A 17, 5th Cross Road, Tamil Nadu and the other accused are Directors/Executive Directors of the company/accused no. 1 and are responsible for the acts and deeds of company/accused no. 1 - Accused no. 1 has placed a purchase on complainant at Administrative Office of complainant at A-34, Sector-59 - Complainant supplied one set of battery bank along with its relevant accessories to the accused at their site as per Purchase Order - Para 8,9.
Finding of the Court:
Merely being a director of a company is not sufficient to make the person liable under Section 141 of the Act - Director in a company cannot be deemed to be in charge of and responsible to the company for conduct of its business - Requirement of Section 141 is that person sought to be made liable should be in charge of and responsible for the conduct of the business of the company at the relevant time - This has to be averred as a fact as there is no deemed liability of a director in such cases - Court has held that for vicarious liability of Director of a company it must be pleaded and shown that Director was responsible for the conduct of the business of the company at the time of commission of offence - Only being a Director is not enough to cast a criminal liability. Vicarious liability must be pleaded and proved and can not be merely inferred - Complaint that there is no specific averment that applicant is involved in day-to-day affairs of the company - There is only general allegation that applicant is a Director of the company - Allegations about the applicant he can not be prosecuted for any offence under section 138 N.I. Act.
Result: Application U/s 482 Cr.P.C. is allowed.
JUDGMENT :
1. Heard, Sri Varun Singh, learned counsel for the applicant, Sri S.K. Mishra, learned counsel for the O.P. No. 2 as well as learned A.G.A. for the State and perused the record.
2. This application U/s 482 Cr.P.C. has been filed for quashing the judgment and order dated 2.1.2021 passed by the Special Judge SC/ST (Prevention of Atrocities) Act, Gautam Budh Nagar in Criminal Revision No. 72 of 2019 and further to quash the summoning order dated 7.1.2014 passed by the learned A.C.J.M. IIIrd, Gautam Budh Nagar in Complaint Case No. 1927 of 2013 (M/s Statcon Power Controls Ltd. Vs. M/s G.E.T. Power Ltd. & others) pending before the Court of Judicial Magistrate Additional Court No. 3, Gautam Budh Nagar, under section 138 r/w 142 of the N.I. Act.
3. The O.P. No. 2 filed a complaint alleging therein that complainant is engaged in business of manufacturing and trading in signaling equipments, industrial batteries and other equipments. The accused no. 1 is also a public limited company incorporated under the Companies Act, 1956 having its registered address at “Techpro Towers” Plot No. 11-A 17, 5th Cross Road, SIPCOT IT Park, Siruseri, Chennai-603103, Tamil Nadu and the other accused are the Directors/Executive Directors of the company/accused no. 1 and are responsible for the acts and deeds of the company/accused no. 1. The accused no. 1 has placed a purchase order bearing no. GET/11-009/12-13/362 dated 4th July, 2012 on the complainant at Administrative Office of the complainant at A-34, Sector-59, Gautam Budh Nagar, Noida-201301 Uttar Pradesh for the supply of two sets of Battery Bank, Charger along with accessories and the total amount of the abovementioned purchase order including taxes and duties was Rs. 4,58,42,880.00 (Rupees Four Crores Fifty Eight Lakhs Forty Two Thousand Eight Hundred Eighty only). The complainant supplied one set of battery bank along with its relevant accessories to the accused at their site on 25.4.2013 as per Purchase Order. The accused issued cheques bearing nos. 404847 and 404848 both dated 16.5.2013 for Rs. 1,00,00,000 each (Rupees One Crore each) drawn on Axis Bank Limited, Chennai in favour of the complainant towards the payment for goods supplied at their site. The complainant presented the said cheques with its Banker State Bank of India, Noida for realization of the amount of the said cheques. On 15th July, 2013 the cheque no. 404847 dated 16th May, 2013 for Rs. One Crore drawn on Axis Bank Ltd. Chennai has been deposited in bank by the complainant and the same has been presented on the banker of accused no. 1 through the complainant’s banker namely State Bank of India, Noida and on presentation for payment the same has been dishonored on 16th July, 2013 with the remarks “Exceeds Arrangement”. On 15th July, 2013 another cheque bearing no. 404848 dated 16th May, 2013 for Rs. One Crore drawn on Axis Bank Ltd. Chennai has been deposited in bank by the complainant and the same has been presented on banker of accused no. 1 through the complainant’s banker namely State Bank of India, Noida and on presentation for payment the same has been dishonored on 16th July, 2013 with the remarks “Exceeds Arrangement”. The complainant issued legal notice dated 24.7.2013 by Registered A.D. post demanding payment of the amount due under the said two cheques. The notices have been served on all the accused on 29.7.2013. Despite receipt of the legal notice they failed to pay the amount of the dishonored cheques within the stipulated time of 15 days. On the aforesaid complaint the learned Magistrate by the impugned order dated 7.1.2014 has summoned the applicant and other accused named in the complaint to face trial for the offence under section 138 N.I. Act. Aggrieved with the aforesaid summoning order the applicant filed a criminal revision no. 72 of 2019 which has been dismissed by Special Judge SC/ST Act vide judgment and order dated 2.1.2021.
4. The contentions of the learned counsel for the applicant are tha
Vicarious liability of Director of a company it must be pleaded and shown that the Director was responsible for the conduct of the business of the company at the time of commission of offence. Only b....
The company must be summoned as an accused in Section 138 N.I. Act cases for proceedings against its Directors to be valid.
Dishonour of cheque – Offence by company – For maintaining prosecution under Section 141 of NI Act, arraigning of company as an accused is imperative and non-impleadment of company would be fatal for....
(1) Dishonour of cheque – Impleadment of all Directors of Accused Company on the basis of a statement that they are in charge of and responsible for conduct of business of company, without anything m....
Vicarious liability under the Negotiable Instruments Act requires proof of a director's active involvement and responsibility in the company's operations, not merely their title.
Specific averments are necessary to establish the liability of a Director under Section 141 of the Negotiable Instruments Act; mere designation is insufficient.
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