TaxTMI 
TaxTMI 
2025 (3) TMI 1445
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....ies Energy Limited-present applicant (hereinafter referred to as 'Morries') before the Court of Metropolitan Magistrate, Mumbai. It was filed for commission of an offence under Section 138 read with Section 142 of the Negotiable Instruments Act. It was filed against four accused persons. All were tried. The learned Magistrate disposed of the case vide judgment dated 29/05/2019. The result is as follows:- a) Accused No. 1-M/s. Chamber Constructions Private Limited (hereinafter referred to as 'Chamber') b) Accused No. 2-Anubhav /director c) Accused No. 4-Sumit/VP Finance & Taxation All the three were convicted. d) Accused No. 3-Gokul Aggarwal/director was acquitted. 2. Amongst them two convicted individuals have preferred appeals. Both were allowed and conviction was set aside by the Court of Judge City Civil on 18/06/2021. (Criminal Appeal 529 of 2019 - accused No. 4-Sumit and Criminal Appeal No. 530 of 2019 by Appellant / accused No. 2-Anubhav). On this background, Morries has sought leave to prefer an appeal (ALP 14 of 2022 against accused no. 4 Sumit and ALP No. 15 of 2022 against accused No. 2 - Anubhav). Facts 3. The facts averred in....
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....s moved for grant of proper interest. Morries has also offered their services in that behalf. Both have entered into Memorandum of Understanding on 20.07.2013. As per this MOU, Chamber has agreed to pay 10% of amount of enhanced interest to Morries. 7. Prior to issuance of present 16 cheques, Chamber has also issued earlier slot of cheques. Towards discharge of part of the liability three cheques were issued. It has happened (in between the Parties) few of the cheques were not encashed and Chamber has issued fresh cheques. There was correspondence exchanged in between them. Accused Nos. 2, 3 and 4 have participated at different levels. Even one Anil Agrawal participated later on, he expired. In the year 2014, 16 post dated cheques were issued "prior to realization of those cheques, fresh 16 cheques drawn on Central Bank of India, Churchgate branch were issued on behalf of Chamber". 8. All 16 cheques got dishonoured on presentation, for the reason "funds insufficient". There was statutory notice dated 01/08/2014 sent to all the accused. Chamber did not comply with the notice. That is how complaint was filed. There was oral evidence given by one Hemant Kumar Garg, Director of M....
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....s on both the sides. Even the accused is permitted to rebut the presumption. In that eventuality, the initial presumption applicable in favour of the complainant gets rebutted. The accused can discharge the burden on the basis of admissions brought in cross-examination or even he can adduced evidence. With this view in mind, the issue needs to be decided. 14. In present two matters, both the learned Advocates for the complainant submitted for grant of leave whereas learned advocates for accused Nos. 2 and 4 have vehemently opposed grant of leave. According to them, the appeals need not be entertained. 15. When I have gone through the judgment given by the Appellate court, I find grounds for acquittal for accused No. 2 and grounds for accused No. 4 are different. Accused No. 2-Anubhav was acquitted for the reason "he does not fall within the clutches of section 142 of the Negotiable Instrument Act. He is not that category of person who can be held liable for acts of company Chamber". Whereas accused No. 4- Sumit (who is signatory to all cheques) was acquitted on the ground of "non-proof of the liability of accused Chamber in favour of Complainant-Morries company." The stage of....
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.... 07th December 2013 Sent by Morries to Sumit-accused No. 4 Requesting to issue fresh cheques g) Copy of email dated 07th December 2013 Sent by accused no. 4-Sumit to Morries Assuring to replace old cheques h) Copy of email dated 23rd December 2013 Sent by Morries to accused no. 4-Sumit Requesting to issue fresh cheque 19. According to learned Advocate Mr Niranjan Mundargi, accused No. 4-Sumit has made correspondence and assured to replace the cheque shows his complicity. It shows his knowledge about issuance of cheque. To buttress his submission, he relied upon judgment in case of S. P. Mani and Mohan Dairy Vs. Dr. Snehalatha Elangovan Manu/SC/1189/2022. He criticized the judgment of acquittal. 20. Whereas according to learned Senior Advocate Mr. Ponda, merely signing a correspondence is not enough. According to him, a person should not only be in-charge of affairs, but he must also be responsible to the management. He emphasized on the factual aspects. He made correspondence through email, which is not directly connected to the accused Chamber. He relied upon following judgments:- (i) Siby Thomas Vs. Somany Ceramics Ltd. (2023) S....
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....". The director/officer of the company if falls in either of these two tests, then only he can be held responsible and not otherwise. When I have read all the judgments, in nutshell three parameters are laid down. They are :-- a. meaning of the phrase "in charge of and responsible to the company for conduct of business of the company". b. necessary averment in the complaint. c. when it can be said there is consent, connivance or neglect. Meaning of phrase "in charge of and responsible" 22. There is discussion of the phrase 'in charge of and responsible' in para nos. 19, 20 and 21 of K.K. Ahuja's case. This phrase is not defined either in the Negotiable Instruments Act or even in the Companies Act. There are certain other Acts which holds Company responsible or guilty. The list of few of the Acts given in para no. 19 of the said judgment. Such as the Prevention of Food Adulteration Act, the Drugs and Cosmetics Act, the Employees Provident Fund Act, Payment of Gratuity Act and so on. But for understanding the meaning of the phrase, we have to bank on the provisions of Companies Act. There is reference of the provisions of Sections 5, 291 a....
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....nce 24. If we read the provisions of sub-section (1) and sub-section (2) of section 141, we will find every attempt is made to fasten liability on certain directors and officers of the company. Even if particular officer is not falling under the category of sub-section (1), still he may fall under the category of sub-section (2) if the requirements of that sub-section are fulfilled. In case of K.K.Ahuja (supra), these two provisions are discussed. Sub-section (1) lays down a legal fiction of vicarious liability. Whereas the liability fastened under sub-section (2) is not on the basis of legal fiction but on account of specific part played that is consent, connivance or neglect (para no. 17 and 18). In case of S.P.Mani (supra), the functioning of any Company is explained and how it is correlated to the provisions of section 141 is elaborated. An offence means an aggregate of facts or omissions which are punishable by law and therefore can consist of several parts, each part being committed at different time and place involving different persons (para no.34). This is explained with the help of an example. 'A' might be in charge of the company at the time of drawing of cheque. 'B' ....
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....ansaction in either of the capacity. The Accused no. 4 is described as Vice President of Finance and Taxation. The correspondence which is referred above was in between the accused no. 4 and Morries. This correspondence relates to the previous cheques and not to the present 16 cheques. On the basis of that correspondence, it can certainly be said that accused no. 4 is aware about some transaction. But this is not enough, to hold him vicariously liable. Something more is required. The Complainant ought to have adduced certain evidence to show his complicity in the manner laid down under Sections 141 (1) and 141 (2) of the Negotiable Instruments Act. The learned Additional District Judge has correctly appreciated the evidence, and he rightly acquitted the accused no. 4. So, no case for grant of leave is made out. This is such type of acts, wherein the detailed scrutiny is not required. But at the threshold, we can decide the issue of vicarious liability. On doing the same exercise, I had come to conclusion not to grant leave in this application, hence Criminal Application (ALP) No. 14 of 2022 is dismissed. IN CRIMINAL APPLICATION (ALP) NO. 15 OF 2022 29. As said above accused n....
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....) 38. (iii) Smt Tasneem Murshedkar Mazhar Vs. Shri Ramesh s/o. Dhanraj Mahajan Trimurti Medical and Gen. And Anr. 2020 ALL MR (Cri) 1182. (iv) Jay Gramgita Gramin Bigarsheti Sahakari Pat Sanstha Maryadit Donduda Vs. Mohammad Latif s/o. Mohammad Ibrahim 2019 ALL MR (Cri.) 1155. 34. Even though he filed various judgments, during his arguments, he referred few judgments only. The judgments are on the point of non proof of liability. Any observations made in the judgment is on the basis of the facts of those cases and slight variation in the fact may lead to different result. The accused can rely upon those observations when evidence will be finally appreciated. It is true once the cheques are issued, there is presumption in favour of passing of the consideration. This is rebuttable presumption. The Accused can rebut it by cross-examining the witness or by adducing evidence. 35. Now in order to determine the legally enforceable debt, we have got cheques signed by accused no. 2 and the agreement . He has not denied the issuance of the cheque. As against this, it is true there are no documents showing incurring of expenses by Morries on account of professional exp....
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....e of Rajaram Vs. Maruthachalam (supra) and Prakash Madhukarrao Desai Vs. Dattatraya Sheshrao Desai (supra) (DB for the reference) to buttress his submission that the amount recoverable ought to be reflected in the income tax returns and then only it can be considered as legally recoverable debt. 40. Whereas according to learned Advocate Shri Niranjan Mundargi, the Division bench in case of Prakash Madhukarrao Desai (supra) has categorically observed not mentioning in the income tax returns does not invalidate the debt. 41. Prima-facie, I find the observations of the Appellate Court as erroneous. Any business carried out by the Company which is not incorporated in object clause cannot be ipso facto becomes unlawful, atleast, an outsider cannot make that complaint. 42. I feel this Court is required to ascertain the correctness of the findings by the Appellate Court while acquitting the accused no. 2. It needs to be seen whether the findings on the point non proof of the liability is correct or not. The documents which are already on record are to be given weightage or documents which are not produced are to be given weightage. This has to be considered in totality of the evi....