TaxTMI 
TaxTMI 
2007 (2) TMI 311
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....its Managing Director had called for inter-corporate deposit for a short period of 15 days to the extent of rupees two crores and to such a proposal it agreed. The rate of interest for such deposit was stipulated at 25 per annum therefor payable within 15 days. A promissory note was executed by the accused No. 2 on behalf of the Company. The date of maturity of the said deposit was fixed on 15-3-1995. Upon expiry of the period of deposit, the accused-Company represented by its Managing Director allegedly issued a cheque for a sum of rupees two crores as also a cheque for a sum of Rs. 1,58,219 and another cheque for a sum of Rs. 8,33,334 drawn on Canara Bank, Janpath, New Delhi. All the cheques were dated 15-8-1996. The cheques for Rs. 8,33,334 and Rs. 1,58,219 represented the interest part on the deposit of rupees two crores for 15 days. The said cheques up on presentation were dishonoured on the ground of insufficient funds. It stands accepted that a notice dated 21-9-1996 was issued by the appellant asking the accused No. 1-Company to pay the said sum. The said notice was served upon the accused Nos. 2 and 3, viz., the Managing Director and another Director of the Company. Respon....
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.... court shall expeditiously dispose of the matter in accordance with law. The trial court is directed not to grant any unreasonable adjournments to any of the parties to the proceedings." Another discharge application was filed was dismissed on 3-8-2000. The application for quashing of the proceeding was filed thereafter. 5. The High Court by reason of the impugned judgment opining that the allegations contained in the complaint petition as against Respondent No. 1 are vague and indefinite and do not satisfy the requirements of law as contained in section 141 of the Negotiable Instruments Act (for short "the Act"), held that no case had been made out for issuance of any summons against her. As regards the contention raised by the appellant herein that the involvement of Respondent No. 1 in the affairs of the Company is evident from the resolution dated 15-2-1995, the High Court opined that the same by itself did not disclose commission of any offence on the day of commission of the offence. 6. Appellant has filed the appeal aggrieved by the said judgment. 7. Requirements of law for proceeding against the Directors of the Company for their purported constructive liability....
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....mpany at the relevant time. This has to be averred as a fact as there is no deemed liability of a director in such cases. (c )The answer to question (c) has to be in the affirmative. The question notes that the managing director or joint managing director would be admittedly in charge of the company and responsible to the company for the conduct of its business. When that is so, holders of such positions in company become liable under section 141 of the Act. By virtue of the office they hold as managing director or joint managing director, these persons are in charge of and responsible for the conduct of business of the company. Therefore, they get covered under section 141. So far as the signatory of a cheque which is dishonoured is concerned, he is clearly responsible for the incriminating Act and will be covered under sub-section (2) of section 141." (p. 103) 9. The Bench, however, referred the matter back to the Division Bench for determination on merit. The matter is, thus, before us. 10. Mr. P.S. Mishra, learned senior counsel appearing on behalf of the appellant, would submit that the averments made in paragraph 2 of the complaint petition are sufficient to attract ....
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....company. In such a case, such persons are to be held liable. Provision has been made for directors, managers, secretaries and other officers of a company to cover them in cases of their proved involvement. 12. The conclusion is inevitable that the liability arises on account of conduct, act or omission on the part of a person and not merely on account of holding an office or a position in a company. Therefore, in order to bring a case within section 141 of the Act the complaint must disclose the necessary facts which make a person liable." (p. 99) Referring to this Court's earlier decisions in K.P.G. Nair v. Jindal Menthol India Ltd. [2001] 10 SCC 218 and Monaben Ketanbhai Shah v. State of Gujarat [2004] 7 SCC 15^2, it was stated : "18. To sum up, there is almost unanimous judicial opinion that necessary averments ought to be contained in a complaint before a person can be subjected to criminal process. A liability under section 141 of the Act is sought to be fastened vicariously on a person connected with a company, the principal accused being the company itself. It is a departure from the rule in criminal law against vicarious liability. A clear case should be spelled ou....
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.... is read in its entirety, the same would show that the only person who was actively associated in the matter of obtaining loan, signing cheques and other affairs of the company which would lead to commission of the alleged offence was the accused No. 2. By reason of the purported resolution dated 15-2-1995, whereupon strong reliance has been placed by Mr. Mishra, only the accused No. 2 was authorized to do certain acts on behalf of the Company. The cheques were issued on 15-8-1996, i.e., after a period of 17 months from the date of the said resolution. As is evident from the averments made in the complaint petition, the cheques represented the amount of interest payable for a total period of 15 days only calculated at the rate of 25 per cent per annum on the amount of deposit, viz., rupees two crores. 19. The High Court has gone into the matter at some length. The High Court found that the resolution by itself did not constitute an offence even assuming that the same bore the signature of Respondent No. 1 (although the genuineness thereof was disputed). 20. On a plain reading of the averments made in the complaint petition, we are satisfied that the statutory requirements as ....
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....ition not only must contain averments satisfying the requirements of section 141 of the Act but must also show as to how and in what manner the appellant was responsible for the conduct of the business of the company or otherwise responsible to it in regard to its functioning. A plain reading of the said judgment would show that no such general law was laid down therein. The observations were made in the context of the said case as it was dealing with a contention that although no direct averment was made as against the appellant of the said case fulfilling the requirements of section 141 of the Act but there were other averments which would show that the appellant therein was liable therefor. 24. We, therefore, are of the opinion that the judgment of the High Court cannot be faulted. 25. Another submission of Mr. Mishra was that the second application was not maintainable. Such a question had not been raised before the High Court. Even otherwise, the High Court was not denuded from exercising its inherent jurisdiction in a matter of this nature. The principles of res judicata are not attracted. Reliance placed by Mr. Mishra on Simrikhia v. Dolley Mukherjee and Chhabi Mukherj....
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....stions raised in the petition had been referred to a larger Bench for obtaining an authoritative pronouncement. It is, therefore, too late in the day for the appellant to contend that the application under section 482 of the Code of Criminal Procedure was not maintainable. 29. We may, however, notice that this Court in Suptd. Remembrancer of Legal Affairs v. Mohan Singh [1975] SCC 706 held that when there is a changed set of circumstances, a second application under section 561A of the Code of Criminal Procedure would be maintainable stating : "2. The main question debated before us was whether the High Court had jurisdiction to make the order dated April 7, 1970 quashing the proceeding against respondents 1, 2 and 3 when on an earlier application made by the first respondent, the High Court had by its order dated December 12, 1968 refused to quash the proceeding. Mr. Chatterjee on behalf of the State strenuously contended that the High Court was not competent to entertain the subsequent application of respondent Nos. 1 and 2 and make the order dated 7-4-1970 quashing the proceeding, because that was tantamount to a review of its earlier order by the High Court, which was out....