TaxTMI 
TaxTMI 
2007 (4) TMI 744
X X X X Extracts X X X X
X X X X Extracts X X X X
....38 of the NI Act implicating 10 accused in this case and the case is pending on the file of the IX Metropolitan Magistrate, Saidapet, Chennai in C.C. No. 3022 of 2000. 2. Mr. N. Sudharshan, learned Counsel appearing for the petitioner submits that the fifth accused, the petitioner in Crl.O.P. No. 1222 of 2007 has come forward with this petition seeking for the relief of quashing the proceedings initiated against the petitioner and other accused for the offence under Section 138 of the NI Act. It is submitted by the learned Counsel for the petitioner that the petitioner is the Ship Captain employed with Eurasia Shipping and Management Company Limited, Quarry, Hongkong. It is also submitted by the learned Counsel for the petitioner that the petitioner was also conferred with the Honour of Masters(Foreign Going) by Ministry of Transport, Government of India and as a Captain of the Ship, he travels all over the world. 2 (a) The learned Counsel for the petitioner mainly contended that the petitioner has been implicated in this case by the respondent only on the ground that the petitioner is one of the Directors of the Company. It is contended by the learned Counsel for the petitioner ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....etitioners have been arrayed as A4, A6 and A7. It is also contended by the learned Counsel for the petitioners that these petitioners who are the Directors of A1, the Company and has nothing to do with the conduct of the business of the company, also stand on the same footing as that of the petitioner in Crl.O.P. No. 1222 of 2007. In this matter also, the learned Counsel for the petitioners pointed out that in the complaint there is only a vague and general allegation to the effect that the accused A3 to A8 were also in charge of the conduct of the business of A1, the Company and as such they are liable for the offence committed by the first accused under Section 138 of the NI Act. Therefore, it is contended by the learned Counsel for the petitioner that by making such a bald and vague allegation without specifying the role said to have been played by the petitioners herein the petitioners cannot be held vicariously liable for the offence said to have been committed by A1, the company. 5. Per contra, the learned Counsel appearing for the respondent in both the petitions vehemently contended that there are sufficient allegations contained in the complaint against the petitioners in....
X X X X Extracts X X X X
X X X X Extracts X X X X
....1) TNLR 87 (cited supra) to the effect that the complaint should contain averments to the effect as to how and in what manner the accused was responsible for the conduct of the business of the Company. 6. I have carefully considered the rival contentions put forth on either side and also perused the impugned complaint. At the outset it is relevant to incorporate the exact allegations contained in the complaint in Paragraph No. 9 of the complaint in respect of the petitioners in both the petitions which reads as follows: 9. The complainant states that the second accused, representing the first accused has signed the said Cheque. To the knowledge of the complainant, the third to nineth accused and accused are involved and in charge of the day-to-day business of the first accused and as such all the accused are jointly and severally liable to be prosecuted and punished as envisaged under the provisions of Sections 138 & 141(1) of the Negotiable Instruments Act, 1881. 7. A perusal of the complaint reveals that the respondent-complainant implicated as many as 10 number of accused. A1 is the company; A2 is the Managing Director; A3 is the Executive Director; A4 to A9 are the Director....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ght to be contained in a complaint before a person can be subjected to criminal process. A liability under Section 141 of the NI 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 out in the complaint against the person sought to be made liable. Under Section 141 what is required is that the persons who are sought to be made criminally liable 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. 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. It was further held that, Therefore, in order to bring a case within Section 141 of the Ac....
X X X X Extracts X X X X
X X X X Extracts X X X X
....cals ltd. v. Neeta Bhalla and Anr. reported in (supra) is unacceptable as the same is not applicable to the facts of the instant case. The Apex Court has only pointed out that the decision is only made on the basis of the context of the said case. I have already pointed out the specific allegations contained in respect of certain Directors in the said case. It is also pertinent to note the specific allegations contained in respect of the Directors in S.M.S. Pharmaceutical Ltd., v. Neeta Bhalla and Anr. reported in 2007 (2) Supreme 459: 3. In the complaint petition the allegations made inter alia are as under: The Accused No. 1 is a duly incorporated Company, having its registered office at the address mentioned above, represented by the Director, Accused No. 2. The accused No. 3 and 4 are also the Directors of the Accused No. 1 company and the accused 2 to 4 are actively involved in the management of the affairs of the Accused No. 1 Company. The Hon'ble Apex Court held that the above said allegation is not sufficient to fasten one of the Directors with vicarious liability for the offence said to have been committed by a Company and ultimately, confirmed the quashing order ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the complaint to that effect, which should be clear and unambiguous in respect of the specific role played by such Director indicating as to how and in what manner such Director was responsible for the conduct of the business of the company or otherwise responsible with regard to its functioning. 14. In the instant case also, as already pointed out, there is absolutely no specific, clear and unambiguous allegations as to how and in what manner the petitioners were responsible for the conduct of the business and there is absolutely no specific role assigned to the petitioners in respect of the conduct of the business of the first accused company. 15. Mr. N. Sudharshan, learned Counsel also placed reliance on a decision of this Court in V. Kathikeyan and Anr. v. The Registrar of Companies, etc. reported in 2001 2 L.W. (Cri) 656 to the effect that benefit should be extended to the similarly placed other accused though they have not preferred any petitions for quashing. This Court in that decision after allowing the quashing petition held as follows: 31. Under the circumstances, the entire proceedings in pursuance of the wrong cognizance taken in E.O.C.C. No. 177 of 1998 on the fil....