P.S. Srinivasan vs State of Maharashtra and Another

D.G. Karnik, J.—This writ petition has been filed by the petitioner for quashing of the criminal proceedings.

The petitioner at all relevant times was the director and chairman of the Board of Directors of a company known as M/s. Shaan Interwel (India) Ltd. (for short "the Company"). The company as well as its directors are being prosecuted for an offence punishable u/s 138 of the Negotiable Instruments Act.

Learned Counsel for the petitioner submitted that the petitioner was not responsible for the conduct of the business of the company which was necessary to bring the case under the provisions of Section 141 of the Negotiable Instruments Act and as such the prosecution against the petitioner is misconceived and is required to be quashed. He further submitted that except for a bald allegation in the complaint that the petitioner along with other directors were in charge of and in control and management of the affairs of the accused company, no specific acts of commission or omission are attributed to the petitioner. A bald averment that the petitioner was in charge of and in control and management of the affairs of the accused company, though mad at more than one places, was not enough to fasten any liability on the petitioner.

In K.K. Ahuja v. V.K. Vora III (2009) DLT (Crl.) 751 (SC) : III (2009) BC 676 (SC) : III (2009) CCR 326 (SC) : 2009 ALL SCR 1524, the Supreme Court has reviewed the position u/s 141 of the Negotiable Instruments Act. The position in relation to the directors is stated in Sub-para (iii) of para 20 of the decision as follows:

(iii) In the case of a director, secretary or manager (as defined in Section 2(24) of the Companies Act) or a person referred to in Clauses (e) and (f) of Section 5 of Companies Act, an averment in the complaint that he was in charge of, and was responsible to the company, for the conduct of the business of the company is necessary to bring the case u/s 141(1). No further averment would be necessary in the complaint, though some particulars will be desirable. They can also be made liable u/s 141(2) by making necessary averments relating to consent and connivance or negligence, in the complaint, to bring the matter under that Sub-section.

The Supreme Court has held that in respect of a director, secretary or manager, as defined u/s 2(24) of the Companies Act, an averment in the complaint that he was in charge of and was responsible to the company for the conduct of the business of the company is necessary to bring the case u/s 141(1) of the Negotiable Instruments Act. However, no further averment would be necessary in the complaint though some particulars are desirable. Thus, where there is an averment to the effect that a director, a secretary or a manager that he was in charge of or was responsible to the company for conduct of its business that is enough, though some particulars would be desirable. Absence of particulars by itself is no ground for quashing the complaint at the inception.

In the present case, there are unequivocal averments that the directors (which include petitioner) were in charge of and responsible to the company for its affairs.

For these reasons, there is no merit in the petition which is hereby dismissed.