Crl. Misc. No.M-25190 of 2009 1 IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH. Crl. Misc. No.M-25190 of 2009 Date of Decision: 16.12.2010 Dr. R.K. Karkara and others ....Petitioners Versus Bhushan Aggarwal and another ...Respondents CORAM : Hon'ble Ms. Justice Nirmaljit Kaur Present:- Mr. G.B.S. Dhillon, Advocate for the petitioners. None for respondent No.1. Mr. P.S. Bajwa, D.A.G., Punjab for the respondent-State. ***** 1. Whether Reporters of Local Newspapers may be allowed to see the judgment ? 2. To be referred to the Reporters or not ? 3. Whether the judgment should be reported in the Digest ? ** NIRMALJIT KAUR, J. This is a petition under Section 482 Cr.P.C for quashing the criminal complaint No.325 dated 05.12.2003 under Section 138 of the Negotiable Instrument Act read with Section 420 IPC and summoning order dated 10.02.2004 under Section 138 of the Negotiable Instrument Act passed by Judicial Magistrate Ist Class, Ludhiana and subsequent proceeding arising therefrom qua the petitioners. Brief facts of the case are that Bhushan Aggarwal filed complaint under Section 138 of the Negotiable Instrument Act read with Section 420 IPC in the Court of Illaqa Magistrate on 05.12.2003 against Crl. Misc. No.M-25190 of 2009 2 Sigma Diagnostics Limited through its Managing Director Dr. Amardeep Singh, Dr. Sumita Singh, Dr. R.K. Karkara-petitioner No.1, Dr. B.S. Sekhon-petitioner No.2, Dr. Bhupinder Singh-petitioner No.3 and Manjit Singh-petitioner No.4. It was contended that the petitioners have not issued the cheque to the complainant nor they are directors of Sigma Diagnostics Limited. They have nothing to do with the said Company. It was further contended that the said cheque was neither signed by them nor issued by them. They are neither directors nor partners nor employees of the said firm. It was further stated that the cheque was only issued by one Dr. Amardeep Singh, who was one of the Director of Sigma Diagnostics Limited. Notice of motion was issued. The respondents were served. However, no one has put in appearance on behalf of respondent No.1, despite service. Hon'ble the Supreme Court in the case titled as K.K. Ahuja vs. V.K. Vora and another reported as 2009(10) Supreme Court Cases 48 held that it is necessary to specifically aver in a complaint under Sections 138 and 141 of the Act that at the time when the offence was committed, the person accused was in charge of and responsible for the conduct of business of the company and that in the absence of such averment, Section 141 cannot be invoked. The same was held on by relying on the judgment in the case of S.M.S. Pharmaceuticals Ltd. vs. Neeta Bhalla reported as 2005(8) SCC 89 in para 9 as under :- “9. A three-Judge Bench of this Court considered the scope of Section 141 of the Act in SMS Pharma and held that it is necessary to specifically aver in a complaint under Sections 138 and 141 of the Act, that at the time when the offence was committed, the person accused was in charge of, and responsible for the Crl. Misc. No.M-25190 of 2009 3 conduct of business of the company and that in the absence of such averment, Section 141 cannot be invoked. This Court held: (SCC pp.98-99 & 102-03, para 18). “ 18. To sum up, there is almost unanimous judicial opinion that necessary averments ought to be contained in a complaint before a person can be subjected to criminal process. A liability under Section 141 of the Act is sought to be fastened vicariously on a person connected with a company, the principal accused being the company itself. It is a departure from the rule in criminal law against vicarious liability. A clear case should be spelled out in the complaint against the person sought to be made liable. Section 141 of the Act contains the requirements for making a person liable under the said provision. That the respondent falls within the parameters of Section 141 has to be spelled out. A complaint has to be examined by the Magistrate in the first instance on the basis of averments contained therein. If the Magistrate is satisfied that there are averments which bring the case within Section 141, he would issue the process. We have seen that merely being described as a Director in a company is not sufficient to satisfy the requirement of Section 141. Even a non-Director can be liable under Section 141 of the Act. The averments in the complaint would also serve the purpose that the person sought to be made liable would know what is the case which is alleged against him. This will enable him to meet the case at the trial.” The issue before Hon'ble the Supreme Court in the case of K.K. Ahuja (supra) was decided as under :- “23. Therefore, if a person does not meet the first requirement, that is, being a person who is responsible to the company for the conduct of the business of the company, neither the question of his meeting the second requirement (being a person in Crl. Misc. No.M-25190 of 2009 4 charge of the business of the company), nor the question of such person being liable under sub-section (1) of Section 141 arises. To put it differently, to be vicariously liable under sub-section (1) of Section 141, a person should fulfill the “legal requirement” of being a person in law (under the statute governing companies) responsible to the company for the conduct of the business of the company and also fulfil the “factual requirement” of being a person in charge of the business of the company. 24. Therefore, the averment in a complaint that an accused is a Director and that he is in charge of and is responsible to the company for the conduct of the business of the company, duly affirmed in the sworn statement, may be sufficient for the purpose of issuing summons to him. But if the accused is not one of the persons who falls under the category of “persons who are responsible to the company for the conduct of the business of the company”, then merely by stating that “he was in charge of the business of the company” or by stating that “he was in charge of the day-to-day management of the company” or by stating that “he was in charge of the day-to-day management of the company” or by stating that “he was in charge of, and was responsible to the company for the conduct of the business of the company”, he cannot be made vicariously liable under Section 141(1) of the Act. 25. It should, however, be kept in view that even an officer who was not in charge of and was responsible to the company for the conduct of the business of the company can be made liable under sub-section (2) of Section 141. For making a person liable under Section 141(2), the mechanical repetition of the requirements under Section 141(1) will be of no assistance, but there should be necessary averments in the complaint as to how and in what manner the accused was guilty of consent and connivance or negligence and therefore, responsible under sub- Crl. Misc. No.M-25190 of 2009 5 section (2) of Section 141 of the Act.” Thus, taking into account the fact that even a person, who is not responsible for the conduct of the business, can be summoned as held in para 25 of the abovesaid judgment, the fact remains that such a person can be made liable only if necessary averments in the complaint are made to that effect. The complaint is absolutely silent on the same. Applying the said test in the present case, there is no averment in the complaint that the present petitioners are, in any way, responsible or incharge of the company or for the conduct of business of the company. They are not even directors. They are not even stated to be employees of the said Company. There is absolutely no averment at all. Moreover, even the respondent has not come forward to contest the present petition. Crl. Misc. No.M-52738 of 2007 filed by Mrs. Sumita Singh, who was, in fact, one of the director, was allowed vide order dated 27.03.2009 and the criminal proceedings emanating therefrom were quashed as it was held that she was not liable for the cheque which was alleged to have been issued by her husband-Dr. Amardeep Singh. Accordingly, the present petition is allowed and the criminal complaint No.325 dated 05.12.2003 under Section 138 of the Negotiable Instrument Act read with Section 420 IPC and summoning order dated 10.02.2004 under Section 138 of the Negotiable Instrument Act passed by Judicial Magistrate Ist Class, Ludhiana and subsequent proceeding arising therefrom qua the petitioners are hereby quashed. (NIRMALJIT KAUR) 16.12.2010 JUDGE gurpreet