1 IN THE HIGH COURT OF JUDICATURE AT BOMBAY APPELLATE SIDE CRIMINAL WRIT PETITION NO.2741 OF 2008 Mrs.Anita Arun Lahoty : Petitioner (Orig.Accused No.3) V/s. Krishna Lifestyle Technologies Ltd. (formerly known as Shree Krishna Polyester Ltd.) & Anr. : Respondents ... Mr.V.S.Shah for the petitioner. Mr.Laxman P. Kunal for respondent no.1. Mrs.P.P.Bhosale, Addl. Public Prosecutor for the State. ... CORAM : S.A. BOBDE, J. DATE : JULY 30, 2009. P.C.: Rule, returnable forthwith. The learned counsel for the respective respondents waive service. Heard by consent. 2. The petitioner, a Director of the accused-company, has challenged the order of the learned Sessions Judge dismissing the revision filed by her for setting aside the order of issuing process for an offence punishable 2 under section 138 of the Negotiable Instruments Act, 1881. Before the learned Sessions Court, the petitioner submitted that the averments in the complaint are inadeqate and the Court could not have issued process against the petitioner. It was also contended that the learned Magistrate had acted mechanically on the basis of a verification which consisted of a form filled in by the complainant. The learned Sessions Judge has rejected both these contentions. 3. According to the learned counsel for the petitioner, there is no averment in the petition that the petitioner had signed the cheque in question on 18.5.2002. According to the learned counsel, in any case, the petitioner was not liable since she had resigned on 18.2.2002 and the Registrar of Companies has accepted the resignation. Section 141 of the Negotiable Instruments Act reads as follows:- “141. Offences by companies.--(1) If the person committing an offence under section 138 is a company, every person who, at the time 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 3 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. (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. Explanation.--For the purposes of this section,-- (a) “company” means any body corporate and includes a firm or other association of individuals; and (b) “director”, in relation to a firm, means a partner in the firm.” 4. The section, in respect of offences by companies, imposes liability for prosecution and punishment on every person who at the time the offence was committed was incharge and was responsible to the company for the conduct of the business of the company. There is no qualification that the person should have signed the cheque as well. It 4 would, accordingly, be unreasonable to hold that unless there was an averment that the accused has signed the cheque, he is immune from prosecution. The section clearly contemplates joint responsibility and liability on every person who was incharge and responsible to the company and not only the liability of the person who has signed the cheque. Accordingly, it cannot be held that the present complaint cannot be proceeded with on this ground. It may be noticed that the complainant has clearly averred at two places in the complaint that the petitioner was incharge and responsible for the business of the company and also its day- to-day affairs. The learned counsel for the petitioner relied on the decision of the Supreme Court in Ramrajsingh v. State of M.P. (2009 (4) Bom.C.R. 213 where the Supreme Court observed that in that case, the appellant could not be convicted, inter alia, because no specific role was attributed to him in the complaint petition. In that case which had proceeded to a full trial, the question of issuing process did not arise in the present form. Their Lordships approved the earlier decision of the Supreme Court in S.M.S. Pharmaceuticals Ltd. v. Neeta Bhalla and another (2007 (1) Bom.C.R.(Cri.) 642 (S.C.) in which the Supreme Court answered the question in the following manner vide paragraph 19:- “19. In view of the above discussion, our answers to the questions posed in the reference are as under: 5 (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) The answer to the question posed in sub- para (b) has to be in the negative. 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 the 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 answer to Question (c) has to be in the 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 the 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 the signatory of a cheque which is dishonoured is concerned, he is clearly 6 responsible for the incriminating act and will be covered under sub-section (2) of section 141.”. From sub-para. (a) of paragraph 19 above, it is clear that the essential requirement has been held to be the averment that at the time when the offence was committed, the present accused was incharge of the conduct of the business of the company. Their Lordships have not observed that there must be an averment that every person who is liable by virtue of being incharge and responsible for the affairs of the company must be shown to have signed the cheque before he can be proceeded against. Indeed, this requirement is not contemplated by the law because a cheque may have been signed by some employee such as an Accountant authorised to do so, but at the instance of a person responsible for the affairs of the company. It does not appear to be the intention of law that the person who directs that such a cheque be issued is immune from liability. There is thus no merit in the first contention raised on behalf of the petitioner. 5. The second contention raised on behalf of the petitioner, however, deserves acceptance. The verification statement at exh.`C’ is a form with various headings which merely appears to be filled in by the complainant giving details such as cheque numbers, cheque amount, 7 name of Bank, etc. The issue of process on the basis of such a verification has been held to be illegal by this Court in Amarnath Baijnath Gupta & Anr. v. M/s.Mohini Organics Pvt. Ltd. & Anr. (2009 All M.R. (Cri.) 184). The learned single Judge (Oka, J.) relying on earlier decisions of this Court held that recording of a statement on oath under section 200 is not an empty formality and the purpose of verification is the establishment of truth. This Court, therefore, set aside the recording of a statement which was done mechanically by simply filling details such as date of the cheque, name of the Bank, date of intimation of dishonour, etc. It is clear that the present verification suffers from the same defects and the verification and the issue of process is, therefore, liable to be set aside. The matter is remanded back to the Magistrate for proceeding afresh, in accordance with law. All questions are left open. 6. Rule is made absolute in the above terms. S.A. BOBDE, J.