TaxTMI 
TaxTMI 
2010 (10) TMI 1229
X X X X Extracts X X X X
X X X X Extracts X X X X
....laint has been filed by the first Respondent/complainant against the petitioner and Respondents 2 and 3 in Crl.O.P. No. 434 of 2005 under Section 138 of the Act before the XIII Metropolitan Magistrate, Chennai, and the same has been taken on file as C.C. No. 6358 of 1997. The said complaint has been filed in respect of the dishonour of the following cheques, after satisfying the statutory requirements: 4. In both the Criminal Original Petitions, the petitioner contends that the learned Magistrate ought not to have taken cognizance of the complaints, in the absence of service of statutory notice under Section 138(b) of the Act, on the petitioner. It is contended that even in the complaints, there is no averment to the effect that the individual statutory notice was sent to the petitioner herein demanding payment of the amounts covered by the dishonoured cheques. 5. Heard the learned Counsel on either side. 6. In support of the aforesaid contentions, the learned Counsel for the petitioner submitted that unless a statutory notice is served, as contemplated in the Act, no cause of action will arise for filing the complaint under Section 138 of the Act. In support of the said c....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the absence of individual notice under Section 138(b) of the Negotiable Instruments Act, to be served on the director of a company, can the said director be prosecuted for the offence, committed by the company, under Section 138 of the Act? Since there was two divergent views in the decisions reported in (2001) M.L.J. 519 (referred to supra), wherein Mr. Justice D. Murugesan held that prosecution against the Director, who has not been served with the statutory notice, is not maintainable. In another decision rendered by Mr. Justice Malai Subramanian, as he then was, in Sarvaraya Textiles Limited v. Integrated Finance Ltd. reported in 2001 (1) CTC 725, wherein, it is held that the prosecution is maintainable, even though, notice has not been served on the Director, who is sought to be prosecuted, since notice served on the company amounts to service of notice to all the Directors arrayed as accused, along with the company. While considering the said question, a Division Bench of this Court, in paragraph 37, has laid down as under: 37. In the light of what is stated above, the answer to the question is, statutory notice to every person, including the director, who ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....f Section 141. (ii) In (2007) 2 SCC (Cri) 444 (Everest Advertising (P) Ltd. v. State, Govt. of NCT of Delhi), in paragraph 23, it is laid down as follows: 23. ...A Chairman of a large Company may or may not be aware of the actual transaction. If in a given situation, cheques are issued in ordinary course of business. The Managing Director or a Deputy Managing Director, in view of S.M.S. Pharmaceuticals Ltd. (supra) would be deemed to be aware thereof. A Chairman or a Director of a Company need not be.... (iii) In AIR 1999 SC 2182 (Milakchand Gyanchand Co. v. A. Chinnaswami), the Apex Court, has held as under: In our opinion, the High Court erred in quashing the complaint. It is evident that proceedings were initiated by the Appellant against A. Chinnaswami who happened to be the Managing Director of Shakti Spinners Ltd. The cheques in question which were dishonoured were signed by him. The process was issued by the Judicial Magistrate in his name. We see no infirmity in the notice issued under Section 138 addressed to A. Chinnaswami, who was a signatory of the said cheques. The High Court, in our opinion, clearly fell in error in allowing the pet....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d Counsel for the first Respondent. Similarly, the contention of the learned Counsel based on (2007) 2 SCC (Cri) 444 (referred to supra) also not applicable to the facts of this case, as the facts of that case are totally different and the issue that arose for consideration before the Apex Court in that case is also totally different. 12. Now it has to be seen as to whether the contentions put forth by the learned Counsel for the petitioner on the basis of the decisions relied upon by him are sustainable. 13. At the outset it has to be pointed out that in the complaints, it has not been stated that the statutory notice was sent to the petitioner. Therefore, the question of his complying with the demand within 15 days from the date of receipt of the summons from the Court does not arise. The contention that notice to the company will amount to notice to the petitioner, who happens to be the Chairman cum Managing Director of the Company, cannot be countenanced for the following reasons: (i) In (2006) II M.L.J. 134 (referred to supra), a learned Single Judge of this Court has held that no prosecution under Section 138 of the Act, can be launched without issuance of the ....