TaxTMI 
TaxTMI 
2007 (4) TMI 621
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....llant herein and respondent No. 2 in the complaint were the Directors of respondent No. 1 Company and they were in charge of and responsible for the conduct of the business of Data Access (India) Limited. The relevant statement in the complaint read: "That accused No. 1 is a company incorporated under the Companies Act. Accused Nos. 2 and 3 are its Directors. They are incharge of and responsible to accused No.1 for conduct of business of accused No. 1 Company. They are jointly and severally liable for the acts of accused No. 1." The complaint also stated that in response to the notice issued by B.S.N.L., a reply had been sent claiming that the appellant was no longer the Chairman or Director of Data Access (India) Limited and accused No. 2 was not aware of the issuance of the cheques. These statements were false and by not keeping sufficient funds in their account and failing to pay the cheque amount on the service of the notice, all the accused committed an offence as contemplated in Section 138 of the Negotiable Instruments Act and they were liable to be proceeded against. The complaint also asserted that all the accused were guilty of the offence in terms of Section 138 of the....
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....aterials to be placed on record by the parties. That could not be decided at the stage of a motion under Section 482 of the Code of Criminal Procedure. 7. The High Court, on going through the complaint in the context of Sections 138 and 141 of the Negotiable Instruments Act, came to the conclusion that the court could not decide the pleas put forward by the appellant in dealing with a petition filed under Section 482 of the Code of Criminal Procedure and that the defences sought to be put forward by the accused had to be established at the trial. Taking the view that the complaint disclosed adequate material for proceeding against the appellant in terms of Section 138 read with Section 141 of the Negotiable Instruments Act, the High Court refused to accede to the prayer of the appellant and dismissed the application filed under Section 482 of the Code of Criminal Procedure. Challenging the said order of the High Court, this appeal is filed by the appellant. 8. Learned Senior Counsel for the appellant brought to our notice a number of decisions of this Court on what should constitute sufficient allegations in a complaint under Section 138 of the Negotiable Instrument Act when a pr....
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....osition and laid down: "It is necessary to specifically aver in a complaint under Section 141 that at the time the offence was committed, the person accused was in charge of, and responsible for the conduct of business of the company. This averment is an essential requirement of Section 141 and has to be made in a complaint. Without this averment being made in a complaint, the requirements of Section 141 cannot be said to be satisfied." Dealing with the question whether a Director of a Company would be deemed to be in charge of, or responsible to, the Company for conduct of the business of the Company and, therefore, deemed to be guilty of the offence unless he proves to the contrary, this Court held: "The answer to question posed in subpara (b) has to be in negative. Merely being a director of a company is not sufficient to make the person liable under Section 141 of the Act. A director in a company cannot be deemed to be in charge of and responsible to the company for conduct of its business. The requirement of Section 141 is that the 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....
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....Criminal Procedure leaving it to the appellant to establish his defence at the trial. Learned counsel relied on S.V. Muzumdar & Ors. Vs. Gujarat State Fertilizer Co. Ltd. & Anr. [(2005) 4 S.C.C 173] in support. In his reply, learned Senior Counsel for the appellant referred to Pepsi Foods Ltd. & Anr. Vs. Special Judicial Magistrate & Ors. [(1998) 5 S.C.C. 749] and submitted that an application of mind was needed before the issuance of process and on the averments in the complaint in this case no process could have been issued against the appellant. He therefore reiterated that the complaint was liable to be quashed. 11. The Law Merchant treated negotiable instruments as instruments that oiled the wheels of commerce and facilitated quick and prompt deals and transactions. This continues to be the position as now recognized by legislation, though possibly a change is taking place with the advent of credit cards, debit cards and so on. It was said that negotiable instruments are merely instruments of credit, readily convertible into money and easily passable from one hand to another. With expanding commerce, growing demand for money could not be met by mere supply of coins and the in....
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.... in S.M.S. Pharmaceuticals Ltd. (supra) binding on us and there is no scope for redefining it in this case. Suffice it to say, that a prosecution could be launched not only against the company on behalf of which the cheque issued has been dishonoured, but it could also be initiated against every person who at the time the offence was committed, was in charge of and was responsible for the conduct of the business of the company. In fact, Section 141 deems such persons to be guilty of such offence, liable to be proceeded against and punished for the offence, leaving it to the person concerned, to prove that the offence was committed by the company without his knowledge or that he has exercised due diligence to prevent the commission of the offence. Sub-section (2) of Section 141 also roped in Directors, Managers, Secretaries or other officers of the company, if it was proved that the offence was committed with their consent or connivance. 13. A Company, though a legal entity, cannot act by itself but can only act through its directors. Normally, the Board of Directors act for and on behalf of the company. This is clear from Section 291 of the Companies Act which provides that subjec....
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....ost recent definitions suggest that the courts are prepared today to give the rule of attribution based on identification a somewhat broader scope. In the original formulation in the Lennard's Carrying Company case Lord Haldane based identification on a person "who is really the directing mind and will of the corporation, the very ego and centre of the personality of the corporation". Recently, however, such an approach has been castigated by the Privy Council through Lord Hoffmann in the Meridian Global case as a misleading "general metaphysic of companies". The true question in each case was who as a matter of construction of the statute in question, or presumably other rule of law, is to be regarded as the controller of the company for the purpose of the identification rule." But as has already been noticed, the decision in S.M.S. Pharmaceuticals Ltd. (supra) binding on us, has postulated that a director in a company cannot be deemed to be incharge of and responsible to the company for the conduct of his business in the context of Section 141 of the Act. Bound as we are by that decision, no further discussion on this aspect appears to be warranted. 14. A person normally having ....
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....jaj Vs. State of NCT of Delhi & Ors. [A.I.R. 1999 S.C. 1216], two learned judges of this Court stated: "For quashing an FIR (a step which is permitted only in extremely rare cases) the information in the complaint must be so bereft of even the basic facts which are absolutely necessary for making out the offence." In M/s Bilakchand Gyanchand Co. Vs. A Chinnaswami [A.I.R. 1999 S.C. 2182], this Court held that a complaint under Section 138 of the Act was not liable to be quashed on the ground that the notice as contemplated by Section 138 of the Act was addressed to the Director of the Company at its office address and not to the Company itself. The view was reiterated in Rajneesh Aggarwal Vs. Amit J. Bhalla [A.I.R. 2001 S.C. 518]. These decisions indicate that too technical an approach on the sufficiency of notice and the contents of the complaint is not warranted in the context of the purpose sought to be achieved by the introduction of Sections 138 and 141 of the Act. 18. In the case on hand, reading the complaint as a whole, it is clear that the allegations in the complaint are that at the time at which the two dishonoured cheques were issued by the company, the appellant and....