IN THE HIGH COURT OF JUDICATURE OF ANDHRAPRADESH AT HYDERABAD HONOURABLE SRI JUSTICE SAMUDRALA GOVINDARAJULU CRIMINAL PETITION Nos.5091, 5100 & 5101 of 2009 DATE: 17.02.2011 CRL.P.No.5091 of 2009 Between: Suvarna Rekha Exports (P) Ltd and another …… Petitioners And Gadamsetty Sree Ramulu and another …..Respondents CRL.P.No.5100 of 2009 Between: Suvarna Rekha Exports (P) Ltd and another …… Petitioners And Gadamsetty Sree Ramulu and another …..Respondents CRL.P.No.5101 of 2009 Between: Suvarna Rekha Exports (P) Ltd and another …… Petitioners And Gadamsetty Sree Ramulu and another …..Respondents HONOURABLE SRI JUSTICE SAMUDRALA GOVINDARAJULU CRIMINAL PETITION Nos.5091, 5100 & 5101 of 2009 COMMON ORDER : Common questions of fact of law arise for consideration in these three criminal petitions. The petitioners 1 and 2/A-1 and A- 3 are accused of offences punishable under Section 138 of the Negotiable Instruments Act (in short, the Act) along with 4 others in C.C. Nos.39 of 2005, 40 of 2005 and 41 of 2005 on the file of II Additional Judicial Magistrate of the First Class, Nellore filed by the 1st respondents herein respectively. A-1 is M/s.Suvarna Rekha Exports (P) Limited represented by its Managing Director Thota Raghunadha Reddy. A-3 is Thota Raghunadha Reddy himself in his individual capacity as Managing Director of the Company. A-2 is again shown as M/s.Suvarna Rekha Exports (P) Limited represented by its authorised signatory D.Srinivasulu. A-4 is shown as D.Srinivasulu in his individual capacity. In fact, A-1 and A-2 are one and the same company. A-1’s address is given as Visakhapatnam whereas A-2’s address is given as Nellore. According to the complainants, the company has its head office at Visakhapatnam and branch office at Nellore. According to the complainants, the branch office at Nellore represented by D.Srinivasulu purchased aqua products from the respective complainants and issued the respective cheques towards their value and those cheques when presented for encashment were dishonoured for want of sufficient funds. The cheques in question were drawn by the company represented by the authorised signatory A-4 viz., D.Srinivasulu. 2) It is contended by the senior counsel appearing for the petitioners that even as per allegations in the respective complaints, day to day affairs of the company at Nellore branch were looked into by A-4 only and that A-3 as Managing Director of the company has been at the head office at Visakhapatnam. Therefore, it is contended that A-2 represented by A-4 is the only appropriate person to be prosecuted in these cases and not A-3 represented by A-1. The complainants should not have named the company as A-1 and A-2. There is only one company by name M/s.Suvarna Rekha Exports (P) Limited, whether its head office is located at Visakhapatnam and branch offices are located at several places including Nellore. No doubt, A-3 who is the Managing Director of the company is not a signatory to the cheques issued on behalf of the company. A-4 may be the authorised signatory or authorised person to look after the affairs relating to the company’s branch office at Nellore. At the same time, A-3 as Managing Director of the company cannot disown his functioning as such and running the day to day affairs of the company at its head office. 3) In S.M.S.Pharmaceuticals V. Neeta Bhalla[1], three Judges Bench of the Supreme Court held that a Managing Director or Joint Managing Director of a company by virtue of their position in the company cannot avoid their liability under Section 141 of the Act. The relevant finding of the Supreme Court is as follows: “(c) The answer to question (c) has to be in affirmative. The question notes that 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.” In that view of the matter, A-3 cannot avoid liability for the offence under Section 138 of the Negotiable Instruments Act for dishonour of the cheques said to have been given by the company represented by its authorised signatory. I do not find any valid or legal reasons to quash the proceedings in these cases in so far as A-1 and A-3 are concerned. 4) In the result, the Criminal Petitions are dismissed. _______________________________ SAMUDRALA GOVINDARAJULU, J February 17, 2011 ksh [1] (2005)8 SCC 89