TaxTMI 
TaxTMI 
2007 (7) TMI 405
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.... vicarious in nature, the following statement has been made in paragraph 2 of the complaint petition which reads as under : "2. That the accused is a Company doing their business in the name and style of M/s. Rishab Alchem India Ltd., having its Registered Office at E2, Shantinivas Apartments, Mettuguda, Secunderabad and represented by accused No. 2 in the capacity of Managing Director of the first accused company and accused Nos. 3 and 6 are the directors of the company. All the accused persons after negotiation with the Complainant firm had agreed to take financial assistance from the Complainant firm. After executing comprehensive loan documentation they have taken financial assistance to the tune of Rs. 10 lakhs from the Complainant ....
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....ection 141 of the Act, it must be shown that every person, who at the time of the offence, is responsible to the company for conduct of its business and day-to-day affairs. It is alleged that all the accused persons after negotiations with the Complainant firm agreed to take financial assistance from the Complainant and after executing comprehensive loan documentation, they have taken financial assistance to a tune of Rs. 10 lakhs from the complainant firm. Since it is alleged that all the Directors-accused participated in the negotiations with regard to the financial help to be taken by the A.1 company from the Complainant firm, it can be inferred that all the Directors were responsible for day-to- day transactions of A.1 Company. Therefor....
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....ho are sought to be made criminally liable under section 141 should be, at the time the offence was committed, in charge of and responsible to the company for the conduct of the business of the company. Every person connected with the company shall not fall within the ambit of the provision. It is only those persons who were in charge of and responsible for the conduct of business of the company at the time of commission of an offence, who will be liable for criminal action. It follows from this that if a director of a company who was not in charge of and was not responsible for the conduct of the business of the company at the relevant time, will not be liable under the provision. The liability arises from being in charge of and responsibl....
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.... "7. A bare perusal of the complaint petitions demonstrates that the statutory requirements contained in section 141 of the Negotiable Instruments Act had not been complied with. It may be true that it is not necessary for the complainant to specifically reproduce the wordings of the section but what is required is a clear statement of fact so as to enable the Court to arrive at a prima facie opinion that the accused are vicariously liable. Section 141 raises a legal fiction. By reason of the said provision, a person although is not personally liable for commission of such an offence would be vicariously liable therefor. Such vicarious liability can be inferred so far as a company registered or incorporated under the Companies Act, 1956 is ....