TaxTMI 
TaxTMI 
2021 (6) TMI 548
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....cheques to respondent No. 1/complainant, R.R. Industrial Corporation (I) Private Ltd., towards its liability but the cheque was dishonored against which complaint under Section 138 of the Negotiable Instruments Act, 1881 (hereinafter called as "the N.I. Act") was preferred before the jurisdictional Court. The said Court by order dated 07.08.2013 took cognizance of the offence under Section 138 of the N.I. Act and issued summons to the petitioners and other Directors, who have not challenged the proceedings. 4. The petitioners herein, petitioner No. 1, Company, Petitioner No. 2, Managing Director and Petitioner No. 3, Director, have called in question the registration of criminal complaint under Section 138 of the N.I. Act on the ground that there is no outstanding amount and it is the amount in question which has already been paid to the respondent No. 1/complainant-company and, as such, it is also their case and they have already filed complaint against the respondent/complainant-company for the offence under Section 420 of the IPC. It has also been stated that petitioner No. 2 and petitioner No. 3, are not responsible for day-to-day affairs of the company and in dishonor of cheq....
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....and also went through the records with utmost circumspection. 9. Admittedly, respondent No. 1/complainant has filed complaint under Section 138 of the N.I. Act against arraying petitioner No. 1, company, petitioner No. 2, Managing Director and petitioner No. 3, Director and other directors, in which, on 07.08.2013 learned JMFC has taken cognizance for offence under Section 138 of the N.I. Act and issued process against the petitioners/accused persons on the same day. 10. The question for consideration would be, whether the averments made as noticed hereinabove would constitute the necessary ingredients for offence against company and the petitioners under Section 138 read with Section 141 of the NI Act? 11. Section 138 of the NI Act states as under:- "138. Dishonour of cheque for insufficiency, etc., of funds in the account.--Where any cheque drawn by a person on an account maintained by him with a banker for payment of any amount of money to another person from out of that account for the discharge, in whole or in part, of any debt or other liability, is returned by the bank unpaid, either because of the amount of money standing to the credit of that account is insufficient t....
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....ntained in sub-section (1), where any offence under this Act has been committed by a company and it is proved that the offence has been committed with the consent or connivance of, or is attributable to, any neglect on the part of, any director, manager, secretary or other officer of the company, such director, manager, secretary or other officer shall also be deemed to be guilty of that offence and shall be liable to be proceeded against and punished accordingly. Explanation.--For the purposes of this section,-- (a) "company" means anybody corporate and includes a firm or other association of individuals; and (b) "director", in relation to a firm, means a partner in the firm." 12. The Supreme Court in the matter of S.M.S. Pharmaceuticals Ltd. (supra) referred the following question to the larger Bench qua the liability of the company's officials as under:- "1(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 ....
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....tion they are liable to be proceeded with. (vi) If accused is a Director or an Officer of a company who signed the cheques on behalf of the company then also it is not necessary to make specific averment in the complaint. (vii) 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 has to be averred as a fact as there is no deemed liability of a Director in such cases." 14. Similarly, in the matter of Standard Chartered Bank v. State of Maharashtra & Others 2016 (6) SCC 62 the Supreme Court has held as under:- "32. The aforesaid averments, as we find, clearly meet the requisite test. It is apt to mention here that there are seven accused persons. Accused No. 1 is the Company, accused Nos. 2 and 3 are the Chairman and Managing Director respectively and accused Nos. 6 and 7 were signatory to the cheques. As far as the accused Nos. 4 and 5 were concerned, they were whole-time Directors and the assertion is that they were in charge of day to day business of the Company and all of them had with active connivance, mischievously and intentionally issued the cheques in question. 33. Thus,....
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....r Section 138 of the N.I. Act in case offence committed by the company. It is not necessary to make specific averments in the complaint and by virtue of Section 141 of the N.I. Act they are liable to be proceeded in accordance with law. It is not in dispute that petitioner No. 2 has issued cheque on behalf of the company as Managing Director to the respondent/complainant as stated in para 4 of the complaint and following the principle of law laid down by the Supreme Court in S.M.S. Pharmaceuticals Ltd. (supra), National Small Industries Corporation Limited (supra) and Standard Chartered Bank (supra), it is quite clear that petitioner No. 2 has issued cheque on behalf of the company holding the post of Managing Director and thus, he would fall within the person mentioned under Section 141 of the N.I. Act and cannot avoid its constructive liability for conduct of offence and can be proceeded against. 17. At this stage it would be appropriate to notice para Nos. 2 & 4 of the complaint, which state as under:- "2. That, the Accused No. 1 is a Registered Company having place of business at 4, Neeladari Plaza, 6th Floor, Rajaram Mohan Roy Road, Near Richmond Circle, Bangalore-560025. T....