$~ * IN THE HIGH COURT OF DELHI AT NEW DELHI Date of Decision:
13. h December, 2013 + CRL.M.C. 2679/2013 & Crl.M.A.10254/2013 ARUN GARG Through: ..... Petitioner Mr. Kshitij Shakhdar, Adv. versus DELHI PAINTS AND OIL TRADERS ..... Respondent Through: Mr. Rakesh Malhotra, Adv. CORAM: HON’BLE MS. JUSTICE SUNITA GUPTA SUNITA GUPTA, J.
(Oral) 1. By virtue of the present petition, petitioner seeks quashing of the summoning order dated 22.08.2005 whereby petitioner has been summoned for an offence u/s 138 of the Negotiable Instruments Act, 1881 (for short “N.I Act”) in Complaint Case No.546/1/13 titled as Delhi Paints and Oil Traders v. M/s Mega Lube India Ltd & Ors.
2. The grievance of the petitioner is that the petitioner had joined the company as a Director in the year 2001 and resigned from the said post on 27.07.2002. Form 32 was signed and submitted with the Registrar of Companies to this effect on 31.07.2002. Since the date of resignation, the petitioner was not involved in any affairs of the company. Crl.M.C.2679/2013 The cheques which were dishonoured were dated Page 1 of 11 18.05.2003, 16.05.2003 and 27.05.2003 which were much later than the time when the petitioner was a Director, therefore, no liability can be accorded against him by the respondent and he has been falsely and maliciously implicated in the matter. Even otherwise, he was not managing the affairs of the company at any point of time. Therefore, no liability can be fastened on him. No notice of dishonour of the cheque was ever sent to the petitioner or was received by him. The petitioner came to know about the complaint case only when nonbailable warrants were issued against him. Immediately he moved the Court for cancellation of the warrant on 21.12.2012. On inspection of Court file, the counsel came to know that some of the other accused persons have also been discharged by this Court, as such it was submitted that the summoning order is bad in law and proceedings qua the petitioner be quashed.
3. I have heard Mr. Kshitij Shakdhar, Advocate for the petitioner and Mr. Rakesh Malhotra, Advocate for the respondent and have perused the record.
4. Learned counsel for the petitioner submits that the petitioner ceased to be Director of the Company much prior to the issuance of the cheque in question, which was allegedly dishonoured. The petitioner even did not receive any legal notice. One of the coaccused Kavita Aggarwal has also challenged the summoning order and the same was quashed by this Court. Copy of the order has been placed on record.
5. Learned counsel for the respondent, on the other hand, contends that the challenge to the impugned order is highly belated inasmuch as, the summons were issued on 22.08.2005 and the petitioner has filed the present petition on 15.07.2013. Thus the petition deserves to be dismissed on this short ground itself. However, it was not disputed that the petition filed by one of the coaccused Kavita Aggarwal was allowed by this Court and the proceedings qua her has been quashed.
6. As regards the delay in approaching the Court, it was submitted by learned counsel for the petitioner that the petitioner came to know about the pendency of the complaint against him only on 21.12.2012 when non-bailable warrants were issued against him and immediately thereafter he has approached the Court, as such, there is no delay on his part in approaching the Court.
7. I have given my considerable thoughts to the respective submissions of learned counsel for the parties.
8. Although it is true that the order of summoning was issued on 22.08.2005 and the present petition for quashing the complaint qua the petitioner has been filed on 15.07.2013 but there is an averment in the petition that the petitioner came to know about the filing of the complaint only on 21.12.2012 when non-bailable warrants was issued against him and thereafter he immediately approached the Court. That being so, it cannot be said that there was any delay on the part of the petitioner in seeking the legal remedy available to him under law.
9. Coming to the factual matrix of the case, the allegations so far as the petitioner is concerned find mentioned in para 2 of the complaint which is reproduced as under:
“That accused No.1 herein is the Limited Company named as M/s Mega Lube India Ltd., a company incorporated under the Companies Act and having its office at A-46, Hauz Khas, New delhi-110016. The accused No.is Managing Director, accused No.is Authorised Signatory, Accused No.is Chairman, and Accused No and are Directors of the Accused No.is the Vice President and Accused No.is General Manager and Accused No.is Deputy General Manager, and who are directly and actively involved in the financial dealings of the accused company with accused No.2 to 10. Hence all the accused are liable for action under section 138 read with 141 of the Negotiable Instruments Act.”
10. Though the name of the petitioner has been mentioned at serial no.4 in the memo of parties of the Criminal Complaint, however, a perusal of the averment made in para 2 of the complaint which are reproduced above shows that after the word “accused No.”
, blanks have been left, as such, what is the specific role of the petitioner cannot be deciphered.
11. The vicarious liability in case of a company or firm u/s 141 of the N.I Act would arise if the person is in charge and responsible for the conduct of the business of the company or the firm. What necessary averments are required to be made in the complaint to hold any Director or other post holder in the company as vicariously liable for an offence committed u/s 138 of the N.I Act, 1881 by the company has been the subject matter of discussion in a number of cases. The legal position is now well settled with a catena of pronouncements of the Apex Court. Despite that the complainants normally implicate all the Directors, Company Secretaries etc of the accused company, irrespective of whether they are actually involved in the commission of alleged offence or not. Hon’ble Supreme Court in S.M.S.Pharmaceuticals Ltd vs. Neeta Bhalla and Anr., (2005) 8 SCC89observed as follows:
“a) It is necessary to specifically aver in a complaint under Section 141 that at the time the offence was committed, the person accused was in charge of, and responsible for the conduct of business of the company. This averment is an essential requirement of Section 141 and has to be made in a complaint. Without this averment being made in a complaint, the requirements of Section 141 cannot be said to be satisfied. (b)...Merely being a director of a company is not sufficient to make the person liable under Section 141 of the Act. A director in a company cannot be deemed to be in charge of and responsible to the company for conduct of its business. The requirement of Section 141 is that 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. (c)...the Managing Director or Joint Managing Director would be admittedly in charge of the company and responsible to the company for conduct of its business. When that is so, holders of such positions in a company become liable under Section 141 of the Act. By virtue of the office they hold as Managing Director or Joint Managing Director, these persons are in charge of and responsible for the conduct of business of the company. Therefore, they get covered under Section 141. So far as signatory of a cheque which is dishonoured is concerned, he is clearly responsible for the incriminating act and will be covered under Sub-section (2) of Section 141.”
12. This view was reiterated in K.K.Ahuja v. V.K.Vora and Another, V(2009) SLT429 National Small Industries Corpn., Ltd v. Harmeet Singh Paintal, (2010) 3 SCC330 Harshendra Kumar D v. Rebatilata Koley etc. (2011) 3 SCC351 N.K.Wahi v. Shekhar Singh and Ors, (2007) 9 SCC481 13. A bare perusal of the relevant para of the complaint reproduced above goes to show that there is no allegation that the petitioner is the Director and is responsible and in -charge for the day to day affairs of the company by virtue of which vicarious liability could be imposed upon him. As per the guidelines given in the aforesaid legal pronouncements, it is clear that if the accused is Managing Director or Joint Managing Director, then it is not necessary to make specific averments in the complaint and by virtue of their position they are liable to be proceeded with. Similarly if accused is a Director or an officer of a company who signed the cheque on behalf of the company then also it is not necessary to make specific averments in the complaint. However, if any other person is sought to be made liable on the ground that he is in charge and responsible for the conduct of the business of the company at the relevant time then it has to be averred as a fact as there is no deemed liability of a Director in such cases. Problem arises where all the persons holding office in the company are sought to be prosecuted by the complainant, irrespective of whether they played any specific role in the incriminating act. Issuing summons to all persons named in the complaint without ascertaining whether they played any actual role causes much harassment to the innocent Directors/employees named in the complaint. With a view to ensure that while issuing summons, the Metropolitan Magistrates dealing with the complaint cases filed u/s 138 read with Section 151 of the N.I Act have a clear and complete picture of the persons arrayed by the complainant so as to hold them vicariously liable for the commission of offence by the accused company, this Court in Sudeep Jain vs. ECE Industries Ltd., 201(2013) DLT461directed that the Magistrates must seek copy of Form 32 from the complainant to prima facie satisfy as to who were the Directors of the accused company at the time of commission of alleged offence and on the date of filing of the complaint case. In addition, the Magistrate must also seek information as given in the following table which is to be annexed by the complainant on a separate sheet accompanying the complaint:a. Name of the accused Company; b. Particulars of the dishonoured cheque/cheques; Person /Company in whose favour the cheque/cheques were issued Drawer of the cheque/cheques Date of issuance of cheque/cheques Name of the drawer bank, its location Name of the drawee bank, its location Cheque No./Nos. Signatory of the cheque/cheques c. Reasons due to which the cheque/cheques were dishonoured; d. Name and Designation of the persons sought to be vicariously liable for the commission of the offence by the accused Company and their exact role as to how and in what manner they were responsible for the commission of the alleged offence; e. Particulars of the legal notice and status of its service; f.
14. Particulars of reply to the legal notice, if any. If these directions are complied with, then the litigation can be curtailed to the maximum extent. Moreover, it is the case of the petitioner that he has joined the company as Director in the year 2001 and resigned from the said position on 27.07.2002. Certified copy of Form 32 has been placed on record to show that it was submitted to the Registrar of Companies on 31.07.2002 and date of resignation is 27.07.2002. The cheques in question were issued in the year 2003 when he ceased to be a Director and ,therefore, ceased to be managing the affairs of the company. Had this fact been disclosed in the complaint itself, there would have been no occasion for issuance of summons to him.
15. Harshendra Kumar (supra) was also a case where the appellant had resigned from the post of Director on 02.03.2004. The dishonoured cheques were issued by the company on 30.04.2004 i.e much after the appellant had resigned from the post of Director of the company. Then in prescribed Form 32 the company informed the Registrar of Companies about the appellant’s resignation. Thus on the date when the offence was committed by the company, the appellant was not the Director; he had nothing to do with the affairs of the company. That being so, it was observed that if the criminal complaints are allowed to be proceeded against the appellant, it would result in gross injustice to the appellant and tantamount to an abuse of the process of the Court. Things are substantially the same in the instant case. Since the complaint itself was lacking in material particulars and in any case the petitioner had already resigned from the post of Director of the company much before the issuance of the cheques in question, which were dishonoured, continuance of criminal proceedings against him would be an abuse of process of Court.
16. One of the co-accused Kavita Aggarwal also had approached this Court and the order dated 22.08.2005 issuing summons against her was also set aside by this Court vide order dated 21.09.2011. Record also reveals that the complainant withdrew the complaint against accused Nos. 9 and 10 as arrayed in the complaint on the ground that the matter has been compromised with them. As per the certified copy of the complaint placed on record, it seems that complaint against three other accused was also dismissed. Under the circumstances, it was all the more required on behalf of the complainant to have disclosed the complete address along with their specific role in the complaint itself for holding them vicariously liable, which was not done, with the result the complaint which was filed in the year 2003, seems to have not proceeded further and is still at the stage of securing the presence of the accused persons.
17. In the facts and circumstances of the case, the petition and the application are allowed. The order dated 22.08.2005 issuing summons against the petitioner for offence u/s 138 of N.I. Act in complaint case titled as M/s Delhi Paints and Oil Traders v. M/s Mega Lube India Ltd. is set aside. SUNITA GUPTA, J DECEMBER13 2013 as