Crl. Misc. No. M-67 of 2009(O&M) (1) IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH Crl. Misc. Nos. 63239-40 of 2009 and Crl. Misc. No. M-67 of 2009 DATE OF DECISION: 21.1.2010 Anurag Mehra ..........Petitioner Versus M/s S.D. Traders through its authorized ..........Respondent signatory Mr. G.S. Rawat, Shop No. 129 R Tikona Park, Faridabad, Haryana. BEFORE:- HON'BLE MRS. JUSTICE DAYA CHAUDHARY Present:- Mr. R.S. Mamli, Advocate for the petitioner. Mr. Shiv Kumar, Advocate for the respondent. **** DAYA CHAUDHARY, J. Crl. Misc. No. 63239 of 2010 Application is allowed. Copies of order dated 10.11.2009 and complaint dated 23.5.2007 annexed with application are placed on record. Crl. Misc. No. 63240 of 2010 Allowed as prayed. Crl. Misc. No. M-67 of 2009 The present petition has been filed for quashing of the complaint dated 23.5.2007 (Annexure P-4) filed by respondent under Section 138 of the Negotiable Instruments Act, 1881 (hereinafter referred to as 'the Act') against the petitioner and order dated 24.5.2007 (Annexure P-8) passed by learned Judicial Magistrate Ist Class, Faridabad, summoning the petitioner as an accused to face prosecution. Crl. Misc. No. M-67 of 2009(O&M) (2) Learned counsel for the petitioner contends that the complaint does not disclose any offence, which would be punishable under the provisions of the Act. He further contends that the cheque was issued by the Company, being signed by Shri Vikram Marwah, partner of the Company. Moreover, the petitioner is not a signatory to the cheque. The account is maintained by the Company and he is not at all having any concern with the Company. Learned counsel also contends that there is no specific allegation about the role of the petitioner in the Company or in issuance of the cheque and there is nothing in the complaint to show relationship between the Company and the petitioner and due to which the petition falls within the realm of Section 141 of the Act. The impugned complaint and the summoning order cannot be sustained. To support his contention, learned counsel for the petitioner relied upon the judgment of Hon'ble the Supreme Court in case of N.K. Wahi Versus Shekhar Singh and others (2007) 9 Supreme Court Cases, 481, as also D.C.M. Financial Services Limited Versus J.N. Sareen and another (2008) 8, Supreme Court Cases, 1. Reply on behalf of the respondent has been filed in Court today and the same is taken on record. Learned counsel for the respondent submits that as per requirement of law, the person who is arrayed as an accused, is to be spelt out in the complaint itself, which is a matter of evidence which is yet to be led before the trial Court and his role would be determined on the basis of evidence by the trial Court. He further contends that the petitioner is stated to be a Liaison Accounts and Consultation Manager of the Partnership firm, which in itself shows that he has an active role to play in the affairs of the Firm. In support of his contention that it is at the stage of evidence that the role of the accused is to be brought out, he relies upon the judgment of Hon'ble the Supreme Court in the case of S.V. Mazumdar and others Crl. Misc. No. M-67 of 2009(O&M) (3) Versus Gujarat State Fertilizer Co. Ltd. and another, 2005 (4) S.C.C. 173, and Karnataka High Court judgment in the case of Chairman M.S. Zahed, M/s HMT Watches Ltd., and another Versus The Cosmos Cooperative Bank Limited, 2006 (3) R.C.R. (Criminal) 911. I have heard counsel for the parties and have also gone through the records of the case as also the judgments relied upon by counsel for the parties. It is an admitted fact that the cheque in question was neither issued nor was signed by the petitioner. The cheque was also not issued from the account, being maintained by the petitioner rather it was issued by Shri Vikram Marwaha, being partner of M/s Varun Udyog. It is also not in dispute that the cheque was issued by the partnership firm. For bringing an offence within the purview of Section 138 of the Act as also under the provisions of Section 141 of the Act, the basic requirement of a person to be an accused is that he should be connected with the day-to-day working of the Company. Every person, who at the time the offence was committed, was incharge of or responsible to the Company for the conduct of the business of the Company, as well as the Company, is deemed to be guilty of the offence and would be liable to be proceeded against and punished in accordance with law and that person would be held to have committed an offence under Section 138 of the Act. Nothing has been said in the complaint to show that the petitioner was responsible for the conduct of the business of the Company, or was in-charge of, and responsible for the conduct of the business of the partnership firm at the relevant time. Hon'ble the Supreme Court, after discussing the provisions with regard to Sections 138 and 141 of the Act, has culled out the following proposition of law, as has been stated in para-19 of the judgment in N.K. Wahi's case (supra), which reads as follows :- “19. In view of the above discussion, our answers to the Crl. Misc. No. M-67 of 2009(O&M) (4) questions posed in the reference are as under :- (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 incharge 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 Crl. Misc. No. M-67 of 2009(O&M) (5) 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 responsible for the incriminating act and will be covered under sub-section (2) of Section 141.” The judgments relied upon by counsel for respondent are not applicable, as in those cases, the allegations were against those persons, who were related to the functioning of the Company, but the specific role was not prescribed therein. In those circumstances, Hon'ble the Supreme Court in the case of S.V. Mazumdar and others (supra), has held that it would be a question of evidence, which has to be led before the Trial Court. In the light of judgment passed by Hon'ble the Supreme Court in the case of N.K. Wahi (supra), the judgment rendered by the Karnataka High Court in the case of Chairman M.S. Zahed (supra), will have no application to the case in hand. Keeping in view the discussion made above, the present petition is allowed. The complaint dated 23.05.2007 (Annexure-P-4) and summoning order dated 24.05.2007 (Annexure-P-8), are hereby quashed qua the petitioner. January 21, 2010 (DAYA CHAUDHARY) pooja JUDGE Note:-Whether this case is to be referred to the Reporter .......Yes/No