TaxTMI 
TaxTMI 
2021 (11) TMI 279
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....g No. 002334 for a sum of Rs. 1,25,00,000/- drawn on Karur Vysya Bank Ltd., T. Nagar Branch, as authorised signatory of BKR Hotels & Resorts Pvt. Ltd. However, on presentation of the cheques at Dena Bank, Thandalam, the respondent's banker on 10.1.17, the same were returned dishonoured citing the reason "insufficient funds". Due to the dishonour of the cheques, the complaint has been given by the respondent for proceeding against the petitioner u/s. 138 of the Negotiable Instruments Act, which has been entertained by the court below leading to the registration of the case. Aggrieved by the same, the present petition is filed for quashment. 3. Learned counsel appearing for the petitioner submits that though the cheques were issued on behalf of the two companies by the authorised signatory, however, the complaint is bereft of any particulars as to the role of the petitioner in the two companies. Without establishing the direct control of the petitioner in the two companies and the involvement in the day to-day affairs of the companies, making the petitioner liable personally is wholly unsustainable and in the absence of the companies being made as a party to the complaint, the c....
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....s of the cheques, which are available in the typed set of documents speaks for itself. The cheques have been signed by the authorised signatory, which have been returned dishonoured citing "insufficient funds", which has resulted in the filing of the present complaint. 12. A perusal of the said complaint filed by the respondent herein reveals that the said complaint has been made u/s. 138 and 142 of the Negotiable Instruments Act only against the petitioner herein. The companies have not been made as party to the complaint, though the cheques have been issued by the authorised signatory on behalf of the companies. 13. In this regard, useful reference can be had to the decision of the Hon'ble Apex Court in Aneeta Hada's case (supra), where a three Judge Bench of the Apex Court "22. On a reading of the said provision, it is plain as day that if a person who commits the offence under Section 138 of the Act is a company, the company as well as every person in charge of and responsible to the company for the conduct of business of the company at the time of commission of offence is deemed to be guilty of the offence. The first proviso carves out under what circumstances the ....
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.... mere servants and agents who are nothing more than hands to do the work and cannot be said to represent the mind or will. Others are Directors and managers who represent the directing mind and will of the company, and control what it does. The state of mind of these managers is the state of mind of the company and is treated by the law as such." In certain cases, where the law requires personal fault as a condition of liability in tort, the fault of the manager will be the personal fault of the company. The learned Law Lord referred to Lord Haldane's speech in Lenard's Carrying Co. Ltd. v. Asiatic Petroleum Co. Ltd. [1915 AC 705: (1914-15) All ER Rep 280: 31 TLR 294 (HL)], AC at pp. 713-14. Elaborating further, he has observed that: "... in criminal law, in cases where the law requires a guilty mind as a condition of a criminal offence, the guilty mind of the Directors or the managers will render the company itself guilty." 28. It may be appropriate at this stage to notice the observations made by MacNaghten, J. in Director of Public Prosecutions v. Kent and Sussex Contractors Ltd. [1944 KB 146: (1944) 1 All ER 119 (DC)]: (All ER p. 124) "... A body corporate is a ....
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....tation. There can be situations when the corporate reputation is affected when a director is indicted. 59. In view of our aforesaid analysis, we arrive at the irresistible conclusion that for maintaining the prosecution under Section 141 of the Act, arraigning of a company as an accused is imperative. The other categories of offenders can only be brought in the dragnet on the touchstone of vicarious liability as the same has been stipulated in the provision itself. We say so on the basis of the ratio laid down in C.V. Parekh (supra) which is a three-Judge Bench decision. Thus, the view expressed in Sheoratan Agarwal (supra) does not correctly lay down the law and, accordingly, is hereby overruled. The decision in Anil Hada (supra) is overruled with the qualifier as stated in paragraph 37. The decision in Modi Distilleries (supra) has to be treated to be restricted to its own facts as has been explained by us hereinabove." (Emphasis Supplied) 14. A careful perusal of the aforesaid decision of the Hon'ble Apex Court leaves this Court with no doubt that to fasten criminal liability on the individual, be it a partner or director of a company, necessity for arraying the company....