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Judgment
M. Karpagavinayagam, J.—J.K. Singh, the Petitioner in Crl.O.P. Nos. 16109 to 16111 of 1998, who is the Chairman and authorised
signatory of Mid East (India) Limited, MESCO Towers. New Delhi (A1), is the second accused in C.C. Nos. 729 to 731 of 1997 on the file of
XIV Metropolitan Magistrate, Egmore Chennai.
Mrs. Rita Singh, the Petitioner in Crl.O.P. Nos. 18364 to 18366 of 1998 who is the Managing Director of M/s. Mid East (India) Limited.
MESCO Towers, New Delhi (A1), is the third accused in C.C. Nos. 7379. 7380 and 7378 of 1996 on the file of XIV Metropolitan Magistrate.
Egmore, Chennai.
Natesha Singh and R.K. Gupta, the Petitioners in Crl.O.P. Nos. 4108 and 4109 of 1997. who are the Director and General Manager
respectively of M/s. Mid East (India) Limited. MESCO Towers, New Delhi (A 1), are the fourth and fifth accused in C.C. Nos. 7379 and 7380
of 1996 on the file of XIV Metropolitan Magistrate, Egmore, Chennai.
Since the common question is raised in all these petitions, these could be disposed of by a common order.
All these Petitioners including the Company are all the accused in the private complaints given by the same Company, who is the Respondent
herein. However, some persons alone have filed petitions for quashing the proceedings in some cases, on the ground that there are no specific
averments as against the Petitioners with reference to their role in the conduct of the affairs of the Company on whose behalf the cheque was
issued.
Mrs. Rita Singh, the Petitioner in some of the applications and J.K. Singh, the Petitioner in other applications have not filed quashing applications
in respect of those cases in which they issued cheques on behalf of the Company (A1). In other words, they have filed the applications for
quashing only in the cases where the cheques were issued by somebody else on behalf of the Company. Thus, it is clear that during the relevant
period they have also issued some cheques on behalf of the Company (A1).
But, Mr. Sundaramoorthi, the learned Counsel appearing for the Petitioners J.K. Singh and Mrs. Rita Singh, would contend that in these cases,
the Petitioners have not issued cheques and there is no averments that the Petitioners are incharge and responsible for the conduct of the affairs and
there is also no allegation against the Petitioners connecting them with the alleged offence.
Mr. Raghupathi, the counsel for the Petitioners Natesha Singh and R.K. Gupta (A4 and A5) also made similar submission stating that the
complaint does not reveal that the Petitioners (A4 and A5) are in any way responsible for the conduct of the business of the Company and as such,
the proceedings are not valid as against them.
In support of their contentions, both the counsel for the Petitioners would cite the decisions in. In these decisions, it is held that there is no
allegation with reference to the role placed by the accused in relation to the commission of the offence by the Company.
In reply to the above submissions. Mr. Ilias Ali, the learned Counsel appearing for the Respondent/complainant, would submit that there are
allegations in the complaint with reference to the participation of the Petitioners in the commission of the offence. According to him. though it is not
averred in the complaint that they were incharge and responsible for the conduct and affairs of the Company as contemplated u/s 141(1) of the
Negotiable Instruments Act, it is specifically mentioned that the offence was committed by the Company with the consent and connivance of the
Petitioners, who are the Chairman, Managing Director. Director and General Manager, as provided in Section 141(2) of the Act.
I have heard the submissions and carefully scrutinised the inherent merits of the rival contentions made on either side.
Before appreciating this ground, let me go into the allegations contained in the complaint.
Though different complaints have been filed, the allegations against the Petitioners in each of the complaints are the same. The said allegations
are as follows:
The complainant states that the 1st accused, as the company, and the 2nd accused, as the Chairman and Authorised Signatory of the 1st accused,
the 3rd accused as the Managing Director of the 1st accused, the 4th accused as the Director of the 1st accused, the 4th accused as the Director
of the 1st accused, the 5th accused as the General Manager (Finance) of the 1st accused Company, are responsible for the failure to make
payment of the sums claimed under the notice and are guilty of the commission of an offence u/s 138 of the Negotiable Instruments Act and are
liable to be punished therefor.
It is settled law that there must be averments in the complaint making accusation constituting the alleged offence to enable the Magistrate to
take cognizance of such offence and to issue process to such of the persons against whom the allegations have been made in the complaint.
In this context, it would be appropriate to quote the provision u/s 141(1) of the Act.
Offences by companies:(l) If the person committing an offence u/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.
The reading of Section 141(1) would make it clear that the company as well as the persons in-charge and responsible for the conduct of the
business of the company at the time of the commission of offence can be proceeded with, as they shall be deemed to be guilty of the offence.
Therefore, the complainant has to necessarily allege in the complaint that the persons who are the accused in the complaint were in-charge and
responsible for the conduct of the business of the company.
Admittedly, this sort of allegations as contained in Section 141 are absent in the instant complaints. But, it has to be seen whether that would
save the Petitioners from the prosecution, especially when it is alleged in the complaint that they are responsible for the failure to make payment of
the sums claims under the statutory notice and as such, they are the parties to the offence.
Section 141(2) of the Negotiable Instruments Act would provide thus-
(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.
As laid down by this Court as well as the Apex Court, mere issuance of cheque and the dishonour would not create cause of action warranting
the prosecution. The nonpayment of the cheque amount despite the receipt of statutory notice alone would give rise to the cause of action, which
would be the subject-matter of the prosecution. Therefore, when it is alleged in the complaint that they are responsible for the failure to make
payment of the sum despite the service of notice, those allegations would certainly cover Section 141(2).
Section 141(2) starts with the non-absentee clause. Under Sub-section (1), the persons in-charge of and responsible to the company shall be
deemed to be guilty of the offence. But, under Sub-section(2), even the persons who are not stated to be in-charge of and responsible to the
company can be prosecuted, if it is alleged and proved that the offence has been committed with the consent or connivance of, or is attributable to,
any neglect on the part of any of those persons prosecuted.
No doubt, it is true that in a case of prosecution of persons under Sub-section (1), presumption of their guilt can be inferred. But, the said
presumption cannot at all be available in Section 141(2) merely by virtue of their positions in the company. If it is merely mentioned in the
complaint that they are director, manager, etc., then the case would have been different. But, in the instant case besides stating about the positions
they hold it is specifically mentioned in the complaint that they were responsible for the non-payment of the cheque amount after receipt of notice
within the statutory period, which alone would create the offence.
In the context of those allegations mentioned in the complaint, it cannot be stated that there is no averment that the offence was committed with
the consent of the Chairman, Managing Director, Director and General Manager respectively.
Section 141(2) clearly provides that director, manager, secretary or other officer of the company shall also be deemed to be guilty of the
offence provided there are averments to the effect that the offence was committed with their consent.
In the light of the said provision, it could be very well concluded that those averments covering Sub-section (2) are very much available in the
complaint.
This view of mine is fortified by the decision of this Court in T.G. Krishnamoorthy and Anr. v. G. Rangasamy (1993 (1) MWN(Crl.)33).
In Municipal Corporation of Delhi Vs. Ram Kishan Rohtagi and Others, , the Apex Court had held as follows:
It is, therefore, manifestly clear that proceedings against an accused in the initial stages can be quashed only if on the face of the complaint or the
papers accompanying the same, no offence is constituted. In other words, the test is that taking the allegations and the complaint as they are,
without adding or subtracting anything, if no offence is made out then the High Court will be justified in quashing the proceedings in exercise of its
powers u/s 482 of the present Code.
Therefore, in the light of the settled legal situation, I am not inclined to quash the proceedings, as, in my view, there are averments in the
complaint as against the Petitioners in relation to the commission of offence.
In the result, the petitions are dismissed Consequently, all connected Crl.M.Ps. are also dismissed.
BAIL SLIP
The Accused was directed to be released on bail as per order of this Court dated 17.4.2000 and made in Crl.M.P. No. 1957 of 2000 in Crl.R.C.
No. 271 of 2000.