TaxTMI 
TaxTMI 
2013 (7) TMI 1113
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....saction between the respondent and the first accused Company, they cannot be held responsible for the bouncing back of the cheques said to have been issued by the second accused on behalf of other accused persons including the petitioners herein and they are also not liable to be prosecuted under Sections 138, 141 and 142 of Negotiable Instruments Act, 1881 (as amended by Act 2005). 2.2. The respondent Visalatchi Enterprises, a partnership firm, seems to have filed three private complaints dated 30.08.2007, before the learned Judicial Magistrate No.II, Madurai, under Sections 190(1)(A) and 200 Cr.P.C., as against seven accused persons, including the petitioners herein, to deal with them in accordance with law, as envisaged under Sections 138, 141 and 142 of Negotiable Instruments Act, 1881 (Amended Act, 2005) and the same were taken on file in S.T.C.Nos.1290, 1292 and 1293 of 2007. 2.3. As per the complaints, the second accused P.Sivaraman is the Managing Director of the first accused Company. The accused 3 to 7 (including the petitioners herein) are the Directors. 2.4. The complainant has been engaging in the business of sale of consumer goods and is doing distribution of....
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....had re-presented the cheques on 12.07.2007 before their banker for encashment. Even this time also all the cheques were returned with the same endorsement 'exceeds arrangement' on 13.07.2007 and the same was also intimated to the complainant by their banker on 14.07.2007. 2.9. The attitude of the accused would go to show that the cheques were issued with an intention of cheating the complainant, knowing fully well that they would not be honoured, which is not only punishable under the provisions of the Negotiable Instruments Act, 1881 and also punishable under Sections 406, 417 and 420 I.P.C., 2.10. For the reasons stated above, the complainant has sought the relief of punishing all the accused persons with the maximum sentence and fine and he has also sought for the payment of compensation out of the fine amount under Section 357 Cr.P.C., 3. Heard Mr.S.Subbiah, learned counsel appearing for the petitioners and Mr.D.Sivaraman, learned counsel appearing for the respondent. 4. Mr.S.Subbiah, learned counsel appearing for the petitioners, has fairly advanced his arguments admitting the fact that originally the petitioners, being the accused 4 to 7 in S.T.C.Nos.1290, 12....
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....documents would go to disclose the fact that at the crucial time i.e., at the time of the alleged transaction said to have been taken place between the second accused, on behalf of the first accused Company and the respondent Company and also at the time of issuance of the alleged cheques on various dates viz., 22.05.2007, 23.05.2007, 24.05.2007 and 30.05.2007 respectively, the petitioners were not stick on to the office of the directorship of the first accused company as they had resigned from their respective offices. 10. As discussed herein before, Form No.32 produced by the petitioners are in the form of certified copies. Section 76 of the Indian Evidence Act, 1872 (herein after it may be referred to as 'the Act') defines the expression 'certified copies'. It contemplates that: "76.Every public officer having the custody of a public document, which any person has a right to inspect, shall give that person on demand a copy of it on payment of the legal fees therefor, together with a certificate written at the foot of such copy that it is a true copy of such document or part thereof, as the case may be, and such certificate shall be dated and subscribe....
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....o were in charge of and responsible for the conduct of the business of the company at the time of commission of an offence, who will be liable for criminal action. The word 'person' employed in section 141 means that every person, who was in charge of and was responsible for the conduct of the business of the company, shall be deemed to be guilty, along with the company. 17. In the instant case on hand, as rightly argued by Mr.S.Subbiah, learned counsel appearing for the petitioners, it is palpable from the materials available on record specifically from the certified copies of Form No.32 produced on behalf of the petitioners, this Court is of considered view that the petitioners were not functioning as the directors of the first accused Company at the time of the alleged transaction which took place between the second accused being the managing director of the first accused Company and the respondent, because the petitioners had already resigned their respective offices as detailed herein above. 18. The vicarious liability rendering them to be prosecuted would arise only if the petitioners were responsible to the Company for the conduct of the business of the Company....
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....f or where no director is so specified, all the directors. 22. In support of his contention, Mr.S.Subbiah, learned counsel appearing for the petitioners has also placed reliance upon the following decisions: i. K.K.Ahuja vs. V.K.Vora and another, reported in 2009(5) CTC 81; ii. Ronaldo Colaco vs. M/s.Nelsun Paper Mills Limited, reported in 2009-1- L.W.(Crl.) 175; and iii. Anita Malhotra vs. Apparel Export Promotion Council and another, reported in (2012) 1 SCC 520. 23. In K.K.Ahuja's case (cited supra), R.V.Raveendran, J., while speaking on behalf of the Division Bench of the Apex Court, in paragraph No.9, has observed as under: "9.In two subsequent decisions S.M.S.Pharmaceuticals v. Neeta Bhalla, 2007 (2) CTC 86(SC):2007 (4) SCC 70 [for short 'SMS Pharma (II)' and Everest Advertising (P) Ltd. v. State, Govt. of NCT of Delhi, 2007 (5) SCC 54, relating to complaints against Directors of a Company, the very same Two-Judge Bench which decided Saroj Kumar Poddar, clarified that the observations therein that 'the Complaint should contain averments as to how and in what manner the accused was responsible for the conduct of the business of the Compa....
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....iness of the Company and who is in charge of business of the Company is vicariously liable by reason only of his fulfilling the requirements of sub-section (1). But, if the person responsible to the Company for the conduct of business of the Company, was not in charge of the conduct of the business of the Company, then he can be made liable only if the offence was committed with his consent or connivance or as a result of his negligence." 25. In Ronaldo Colaco's case, (cited supra), the learned single Judge of this Court has held that: "Petitioner was not the Director during the relevant time of issuing the cheques numbering six involved in this case and as such he cannot be held vicariously liable for the offences committed by the company and on this sole ground the proceedings is liable to be quashed. It is clear that Form-32, coupled with the perusal of the 5th Annual Report for the period from 2001-2002, the petitioner was neither the Chairman nor a Director during the relevant period. In the absence of any specific allegation to the effect as to how and in what manner the petitioner,A-1, is in-charge for the day-to-day affairs of the company, the petitioner can....
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....in (2004) MLJ (Crl.) 315; ii. Malwa Cotton and Spinning Mills Ltd., v. Virsa Singh Sidhu and Others, reported in (2008) 3 MLJ (Crl) 1084 (SC); iii. D.Sendilkumar v. M.Sadasivam, reported in CDJ 2008 MHC 1714; and iv. Abdul Salam and another v. Taj Trading Corporation, reported in (2010) 1 MLJ (Crl) 1084. 30. In Rajkumar Menon's case (cited supra), a plea was taken by the petitioners therein that they were ceased to be the directors of the company on whose behalf the cheque was signed, on the date of the presentation of the cheque, on the basis of an unmarked document. This plea was not accepted by the learned single Judge of this Court and held that it was for the petitioners to prove by marking the document in the trial to establish that they were ceased to be the directors of the company on the date of the presentation of the cheque and they were not in charge of the day to day affairs of the company. 31. In Malwa Cotton and Spinning Mills Ltd's case (cited supra), it is held that whether in fact the respondent No.1's claim to have resigned was factually correct would have been established in trial and the High Court could not have passed the i....