@JUDGMENTTAG-ORDER
R.N. Biswas, J.@mdashThe petitioners have filed this case u/s 482 of Cr. P. C. to quash the Criminal Proceeding initiated against them in I. C. C.
case No. 150 of 2001 pending before the Court of S. D. J. M., Panposh at Udit Nagar, Rourkela.
2. They have been arraigned as accused Nos. 5 and 6 in the aforesaid complaint filed by M/s. S. L. Agrawala & Co., being represented through
its Director, Shri Pawan Kumar Agrawal. As per the case of the complainant Company it carries on business of manufacturing Iron and Steel re-
rolled products. In usual course of business it sold and supplied raw materials to M/s. Mohatta & Heckel Ltd., accused No. 1, from time to time.
In the process the accused Company owed a sum of Rs. 1,06,65,653/- along with interest to the complainant. On 1-10-2001 the accused
Company, through one of its Directors, namely Anand Kumar Mohatta (Accused No. 4) issued a cheque of Rs. 1 crore in favour of the
complainant drawn on Sector-19, Branch of UCO. Bank, Rourkela. The complainant presented the said cheque on 1-10-2001 through its
Director to Sector-19 Branch of UCO. Bank Rourkela, which was dishonoured on 1-10-2001 with the endorsement ""insufficient funds"". On
receipt of the information about the dishonour of cheque the complainant Company through its Advocate issued notice by Registered Post with A.
D. on 17-10-2001 to the accused persons demanding payment of the cheque-amount within 15 days of receipt of the notice. In response to the
notice, the accused Company individually and accused Nos. 3 and 6 jointly replied to the same through their respective advocate, taking false and
evasive pleas to avoid payment. So, the complainant filed the aforesaid complaint making M/s. Mohatta & Heckel Ltd. and five of its Directors on
accusation of offence u/s 138 of the Negotiable Instruments Act (hereinafter referred as N. I. Act). Accused Nos. 5 and 6 have challenged the
maintainability of the complaint case against them as mentioned earlier.
3. Learned counsel for the petitioners submitted that there is no material whatsoever in the complaint petition to show that the petitioners were in
charge of, and were responsible to the accused Company for conduct of its business so as to be vicariously liable for the act or omission of the
company in terms of Section 141(1) of N. I. Act. So, the proceeding for the offence u/s 138 of the N. I. Act initiated against them deserved to be
quashed. Section 141(1) of the N. I. Act reads as follows :--
141. Offences by companies - (1) If the person committing an offence u/s 138 is a company, every person who, at the time of the offence was
committed, was in charge of, and was responsible to the company for the conduct of the business of the company, as well as the company, shall be
deemed to be guilty of the offence and shall be liable to be proceeded against and punished accordingly:
Provided that nothing contained in this sub-section shall render any person liable to punishment if he proves that the offence was committed without
his knowledge, or that he had exercised all due diligence to prevent the commission of such offence:
Provided further that where a person is nominated as a Director of a company by virtue of his holding any office or employment in the Central
Government or State Government or a financial corporation owned or controlled by the Central Government or the State Government, as the case
may be, he shall not be liable for prosecution under this Chapter"".
4. Learned counsel for the petitioners further submitted that as per this provision, if a company commits an offence u/s 138 of the N. I. Act every
person who, at the time of commission of the offence was in the charge of, and was responsible to the Company for the conduct of its business
shall also be deemed to be guilty of the offence. In the case at hand, admittedly Accused No. 1 is a company. It has not challenged the Criminal
Proceeding initiated against it. To make the petitioners liable for the offence u/s 138 of N. I. Act there must be allegation in the complaint petition
that they were in charge of and were"" responsible to the accused company for the conduct of its business. Learned counsel for the petitioners
further submitted that there is no such allegation in the complaint petition and as such the proceeding against them should be dropped. In support of
his submission he relied upon the decisions in K.P.G. Nair Vs. Jindal Menthol India Ltd., , Smt. Katta Sujatha Vs. Fertilizers and Chem.
Travancore Ltd. and Another, and Monaben Ketanbhai Shah and Another Vs. State of Gujarat and Others,
5. Per contra, learned Counsel for the opposite party Company submitted that it is not required to quote Section 141 of N. I. Act in the complaint
petition. If on reading the complaint petition in whole, it can be inferred that there is a prima facie case against the accused persons for the offence
u/s 138 of N. I. Act the proceeding should continue against them. He further submitted that in Para-8 of the complaint petition it has been
mentioned as follows :--
That the accused Company and other accused persons have failed and neglected to make the payment to the complainant company and did not
discharge their liabilities and have not paid the said sum of Rs. 1,00,000,00/- till date. As such they are jointly and severally liable for the act of the
omission and commission of the offence committed by them u/s 138(c) read with Section 141 of Negotiable Instruments Act.
6. So, as per his submission the accused/petitioners shall be liable for the offence u/s 138 of N. I. Act in terms of Sub-section (2) of Section 141
of the N. I. Act. This sub-section reads as follows :--
(2) Notwithstanding anything contained 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.
7. In the present case as depicted in the complaint petition, the petitioners were Directors, of the accused-company at the time of commission of
the alleged offence. If in fact they were not directors during the relevant period they can establish it at the time of trial, but not at this stage. As per
the case of the complainant/respondent the offence was committed by the accused company. In para 7 of the complaint petition as quoted above it
has been stated that the accused company and other accused persons failed and neglected to make payment to the complainant company. At the
time of trial it can be known whether negligence can be attributed or not to the petitioners, but not at this stage. So, it cannot be said that even if the
entire allegation made in the complaint petition, as it is, held to be true the petitioners cannot be liable for the offence u/s 138 of N. I. Act. As such
the decision (supra) filed on behalf of the petitioners would not be applicable to the present case.
8. Moreover, in a recent Division Bench decision the Apex Court in the case of S.V. Muzumdar and Others Vs. Gujarat State Fertilizer Co. Ltd.
and Another, held as follows :-- (Para 8 of Cri LJ)
We find that the prayers before the Courts below essentially were to drop the proceedings on the ground that the allegations would not constitute
a foundation for action in terms of Section 141 of the Act. These questions have to be adjudicated at the trial. Whether a person is in charge of or
is responsible to the company for conduct of business is to be adjudicated on the basis of materials to be placed by the parties. Sub-section (2) of
Section 141 is a deeming provision which as noted supra operates in certain specified circumstances. Whether the requirements for application of
the deeming provision exist or not is again a matter for adjudication during trial. Similarly, whether the allegations contained are sufficient to attract
culpability is a matter for adjudication at the trial.
This decision would squarely be applicable to the present case. So I am not inclined to exercise the extraordinary power u/s 482 Cr. P. C.,
bestowed on this Court in favour of the petitioners.
Under such circumstances, the CRLMC is dismissed.
