TaxTMI 
TaxTMI 
2008 (5) TMI 613
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....es were issued in favour of the appellant herein towards the payment of monthly hire/rental. First Respondent admittedly resigned from the Directorship of the Company on or about 25th May, 1996. It was accepted. One of the said post dated cheques which was issued in April, 1995 was dated 28th January, 1998 amounting to Rs.2,01,298/-, when presented to the bank by the appellant for encashment, was dishonoured. Pursuant thereto a notice for payment was issued. Amount having not been paid despite service of notice, a complaint petition was filed under Section 138 of the Act. It was inter alia averred therein :- "8. That on assurance of the accused persons cheque No.0644739 dated 28th January, 1998 for a sum of Rs.2,01,298/- drawn on Bank of Baroda, Lucknow and delivered/issued by the accused towards payment of hire/lease rentals, were presented for encashment again by complainant company through their bankers and the same was returned unpaid by the bankers of the accused vide memo dated 22.6.1998 with the remarks "Insufficient Funds" to the banker's of complainant company. The complainant received the information only on 21.6.1998. (sic) (Copy of memo of cheque returned and above ref....
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....hen he would be at liberty to make all the person who at any point of time, had been the director of company as accused. 5. I consider in view of the documents placed by the applicant on record showing that applicant had resigned way back in 1996 and his resignation was informed to the Registrar of Companies in October 1996 by filing the statutory Form 32, the plea of complainant that applicant was a director cannot be considered without any affidavit of the Authorized Representative of the complainant that he has verified from the Registrar of Companies and Form No.32 filed by the accused was not genuine. It is not a trivial matter that a person has to face trial as an accused in the court. No person can be asked to face trial in the court without there being a basis of proceedings against him merely at the wishes of a complainant. The court must be satisfied that the persons who has been called as an accused against him there was sufficient grounds to proceed. In this case I consider that complainant has taken vague plea in reply to the application of accused regarding genuineness and non-admission of Form No.32 or about his being responsible for the function of the company. In ....
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....e basis for taking cognizance of an offence by the Magistrate. Application of mind on the averments made in the complaint petition vis-`-vis the order which is required to be passed for summoning the witnesses is imperative. 12. The complaint petition did not disclose as to who had signed the cheque on behalf of the Company. Involvement of the 1st respondent in commission of the offence as signatory was neither averred nor stated by the authorized representative of the complainant. Even the complaint petition proceeded on the basis that the averments contained in the complaint petition were sufficient to enable the learned Magistrate to summon the accused. Even before the High Court such a contention has not been raised, as noticed hereinbefore. We may notice the concession made by Mr. Patwalia in this behalf that such a contention has been raised before us for the first time. This itself indicates the manner in which the complaint proceeded. Fairness on the part of the complainant is also expected in such a matter. It is now not in dispute that the 1st respondent had intimated the complainant as regards his resignation from the Company. 13. Section 138 of the Act reads as under ....
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.... in charge of, or responsible for, the conduct of the business of the company. (b) Whether a director of a company would be deemed to be in charge of, and 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. (c) Even if it is held that specific averments are necessary, whether in the absence of such averments the signatory of the cheque and or the managing directors or joint managing director who admittedly would be in charge of the company and responsible to the company for conduct of its business could be proceeded against." It was opined :- "9. The position of a managing director or a joint managing director in a company may be different. These persons, as the designation of their office suggests, are in charge of a company and are responsible for the conduct of the business of the company. In order to escape liability such persons may have to bring their case within the proviso to Section 141(1), that is, they will have to prove that when the offence was committed they had no knowledge of the offence or that they exercised all due diligence to prevent the commission of the ....
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....e at the relevant time have been subjected to action." 16. We may also notice a decision of this Court in N. Rangachari vs. Bharat Sanchar Nigam Ltd. : (2007) 5 SCC 108 wherein it was held :- "21. A person normally having business or commercial dealings with a company, would satisfy himself about its creditworthiness and reliability by looking at its promoters and Board of Directors and the nature and extent of its business and its memorandum or articles of association. Other than that, he may not be aware of the arrangements within the company in regard to its management, daily routine, etc. Therefore, when a cheque issued to him by the company is dishonoured, he is expected only to be aware generally of who are in charge of the affairs of the company. It is not reasonable to expect him to know whether the person who signed the cheque was instructed to do so or whether he has been deprived of his authority to do so when he actually signed the cheque. Those are matters peculiarly within the knowledge of the company and those in charge of it. So, all that a payee of a cheque that is dishonoured can be expected to allege is that the persons named in the complaint are in charge of i....
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....ys come to a conclusion in facts of each case. But still, in the absence of any averment or specific evidence the net result would be that complaint would not be entertainable." [Emphasis supplied] 20. The cheque in question was admittedly a post dated one. It was signed on 3rd April, 1995. It was presented only sometimes in June, 1998. In the meantime he had resigned from the directorship of the Company. The complaint petition was filed on or about 20th August, 1998. Intimation about his resignation was given to the complainant in writing by the 1st respondent on several occasions. Appellant was, therefore, aware thereof. Despite having the knowledge, the 1st respondent was impleaded one of the accused in the complaint as a Director Incharge of the affairs of the Company on the date of commission of the offence, which he was not. If he was proceeded against as a signatory to the cheques, it should have been disclosed before the learned Judge as also the High Court so as to enable him to apply his mind in that behalf. It was not done. Although, therefore, it may be that as an authorized signatory he will be deemed to be person incharge, in the facts and circumstances of the case,....