1 abs IN THE HIGH COURT OF JUDICATURE AT BOMBAY CRIMINAL APPELLATE JURISDICTION CRIMINAL APPLICATION NO. 4118 OF 2009 Udyan S. Bhat .. Applicant V/s 1. Ms. Divya D. Kohli 2. Jagannath Films Private Ltd. 3. State of Maharshtra .. Respondents Mr. K.S. Patil for the applicant. Mr. J.J. Nankani with Mr. Jagdish B. Choudhary i/b Nankani & Associates for respondent no.1. Ms. A.T. Jhaveri, A.P.P. For the State. CORAM: D.G. KARNIK, JJ. DATE : 23RD NOVEMBER 2009 P.C. : 1. By this application under section 482 of the Cr. P.C., the applicant prays for quashing of an order dated 13th May 2009 passed by the Metropolitan Magistrate, 10th Court, Andheri issuing a summons (process) under section 138 of the Negotiable Instruments Act. 2 2. A leave and licence agreement was executed between the respondent no.1 (licensor) and the respondent no.2 company (licensee) on 2nd July 2007. The leave and licence agreement was signed by the applicant on behalf of the respondent no.2 company as its Chief Operating Officer. A cheque was issued by the respondent no.2 company allegedly in discharge of certain obligations arising out of the leave and licence agreement. The cheque when presented for payment was dishonoured whereupon the complainant filed a complaint under section 138 of the Negotiable Instruments Act against the respondent no.2 company, its managing director and the present applicant Chief Operating Officer. After reading the complaint and the averments made therein, the learned Magistrate directed issuance of process. That order is impugned in this application. 3. Learned counsel for the applicant assails the order of issuance of process on two grounds. Firstly, he submitted that the cheque was not signed by the applicant, the applicant was not in charge of the affairs of the respondent no.2 company and the complaint ex-facie does not show how the present applicant was in charge of the affairs of the company. The principal liability was of the respondent no.2 company. The applicant would be made vicariously liable only if the applicant was in charge of the affairs of the company. Since there were no averments indicating that the applicant was in charge of the affairs of the company, the complaint was liable to be 3 dismissed. In support, he relied upon a decision of the Supreme Court in K.K. Ahuja v. V.K. Vora, 2009 (2) Bom. C.R. (Cri.) 749. Secondly, he submitted that though the applicant was working as a Chief Operating Officer of the respondent no.2 company when the leave and licence transaction took place, he resigned from the company on 20th January 2008. His resignation was accepted by the respondent no.2 company vide its letter dated 5th February 2008 prior to the alleged offence and therefore the applicant was not liable. 4. I have perused the complaint. In para 3 of the complaint, the complainant, after averring that the accused no.1 was a company, has stated that the accused no.2 is the managing director and the accused no.3 (present applicant) is the Chief Operating Officer. He has further averred that at all relevant times, the accused nos.2, 3 and 4 were in charge of the day to day affairs in working of the accused no.1 company, the accused nos.2 to 4 had taken part in the discussion regarding the premises to be given on leave and licence, quantum of the deposit, licence fee and the purpose for which the premises were to be taken. They had further discussed the modalities of deposit and licence fee. He has further averred that the accused no.3 (present applicant) had signed the leave and licence agreement. After giving these details, the complainant has further alleged that the accused nos.2 to 4 were thus in charge of the affairs of the respondent no.2 company. 4 5. At the stage of issuance of process, the Magistrate is only required to consider averments in the complaint and whether there was prima facie material in support of the averments. He has only to ascertain whether the averments made in the complaint, if proved, would make out commission of an offence by the accused. Admittedly, the leave and licence agreement, for the obligations of which the cheque was issued, was signed by the present applicant. He was also the Chief Operating Officer of the respondent no.2 company. Thus, there were averments in the complaint of showing how the applicant was in charge of the affairs of the respondent no.2 company. 6. In the case of K.K. Ahuja v. V.K. Vora (supra), the Supreme Court has summarised the position under section 141 of the Negotiable Instruments Act as follows:- (i) If the accused is the Managing Director or a Joint Managing Director, it is not necessary to make an averment in the complaint that he is in charge of, and is responsible to the company, for the conduct of the business of the company. It is sufficient if an averment is made that the accused was the Managing Director or Joint Managing Director at the relevant time. This is because the prefix `Managing' to the word 5 `Director' makes it clear that they were in charge of and are responsible to the company, for the conduct of the business of the company. (ii) In the case of a director or an officer of the company who signed the cheque on behalf of the company, there is no need to make a specific averment that he was in charge of and was responsible to the company, for the conduct of the business of the company or make any specific allegation about consent, connivance or negligence. The very fact that the dishonoured cheque was signed by him on behalf of the company, would give rise to responsibility under sub-section (2) of Section 141. (iii) In the case of a Director, Secretary or Manager (as defined in Sec. 2(24) of the Companies Act) or a person referred to in clauses (e) and (f) of section 5 of Companies Act, an averment in the complaint that he was in charge of, and was responsible to the company, for the conduct of the business of the company is necessary to bring the case under section 141(1). No further averment would be necessary in the complaint, though some particulars will be desirable. They 6 can also be made liable under section 141(2) by making necessary averments relating to consent and connivance or negligence, in the complaint, to bring the matter under that sub-section. (iv) Other Officers of a company can not be made liable under sub-section (1) of section 141. Other officers of a company can be made liable only under sub-section (2) of Section 141, be averring in the complaint their position and duties in the company and their role in regard to the issue and dishonour of the cheque, disclosing consent, connivance or negligence. 7. It can be seen that under sub-para nos. (iii) and (iv) above, a director, secretary or a manager could be made liable if there were averments in the complaint that they were in charge of and responsible for the conduct of the business of the company. As stated by the Supreme Court in sub-para (iv) of para 20, other officers of the company cannot be made liable unless the complainant has averred in the complaint their position and duties in the company and their role in the company. In the present case, the complainant has not only averred the role of the applicant - Chief Operating Officer and that he was in charge of the operations of the company, but he had also 7 taken part in the discussions and played role in the culmination of the leave and licence agreement. The leave and licence agreement was in fact signed by him on behalf of the respondent no.2 company. These averments prima facie show that the applicant was responsible to the company for its affairs. 8. As regards the second contention that the applicant had resigned before the cheque was issued and dishonoured, it may be noted that the burden of proving this fact lies squarely on the applicant. Section 105 of the Evidence Act provides that when a person is accused of any offence, the burden of proving the existence of circumstances bringing the case within any of the general or special exceptions of the Indian Penal Code or in any other part of the same Code or in any law defining the offence, is upon him. Thus, the burden of proving that the applicant had resigned before the cheque was issued and was not in charge of the affairs of the company on the date of the offence, is on the applicant. That is a matter to be decided on evidence at trial. In the circumstances, in my view, the Magistrate did not commit any error in issuing process against the applicant (accused no.3). 9. For these reasons, there is no merit in the application which is hereby dismissed summarily. (D.G. KARNIK, J.)