IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED: 24.07.2009 CORAM: THE HONOURABLE MRS.JUSTICE ARUNA JAGADEESAN Crl.OP.Nos.8089 & 8090/2002 Cr.MP.Nos.3849 & 3851/2002 V.N.Narayanan Petitioner in both OPS Vs S.Sadhsivan Proprietor of M/s.Layam Advertising Chennai-18 Respondent in both OPS Prayer:- These Criminal Original Petition are filed to call for the records in CC.Nos.5493 & 5494/2001 on the file of the XVIII Metropolitan Magistrate, Saidpaet, Chennai 600015 and quash the same. For Petitioner : Mr.B.Ravi ORDER The Petitioner, who is arrayed as A4, is facing trial for the alleged offence under Sections 138 and 142 of the Negotiable Instruments Act and he has come forward with these petitions to quash the proceedings in CC.Nos.5493 & 5494/2001 on the file of the learned XVIII Metropolitan Magistrate, Chennai-15. 2. According to the Respondent/complainant, A1 is the Private Limited Company by name M/s.Momentum Consultancy Services (P) Limited (herein after referred to as the Company) and A2 to A4 are its Directors and the said Company is carrying on the business of managing, marketing and consultancy services for all products and the Petitioner/A4 is one of the Directors of the said Company and four cheques bearing Nos.336016 to 336019 each for a sum of Rs.15,421/- dated 15.3.2001, 15.12.2000, 15.02.2001 and 15.2.2001 respectively drawn on Bank of Baroda, Chennai-18 in favour of the complainant concern namely M/s.Layam Advertising were issued to discharge the liability and the same were returned with an endorsement "insufficient funds", when they were presented for encashment on 13.6.2001 and the same was intimated by the accused bank on 14.6.2001. 3. According to the complainant, A1 to A4 are liable to https://hcservices.ecourts.gov.in/hcservices/ pay the cheque amounts. Since the accused failed to honour the said cheque in favour of the complainant, the complainant had issued a demand notice dated 30.6.2001 to the accused. The Petitioner sent reply dated 9.7.2001, stating that he had resigned from the Directorship from 13.7.2000. Since the accused failed to pay the amount within fifteen days even after the receipt of the notice, the complaint under Section 138 and 142 of Negotiable Instruments Act has been filed. 6. The learned counsel for the Petitioner has contended that even as per the admitted allegation contained in the complaint, the disputed cheques were signed and issued only by A2 on behalf of the Company. It is contended by the learned counsel that as far as the Petitioner herein is concerned, he has nothing to do with the day to day affairs of the Company, as he has resigned from the Directorship as early as on 13.7.2000, which is evident from the certified copy of Form-32 dated 14.7.2000 filed with the Registrar of Companies. 7. The learned counsel for the Petitioner further pointed out that the disputed cheques in this case were issued on 15.3.2001, 15.12.2000, 15.02.2001 and 15.2.2001 and during the relevant period, the Petitioner herein was nowhere in the picture and he has nothing to do with the day to day affairs of the Company and was not responsible or in charge of the business of the Company at the relevant point of time and as such, the Petitioner cannot be held vicariously liable for the offence committed by the Company and other accused. 8. It is further contended by the learned counsel for the Petitioner that there is no averment in the complaint, except stating that the Petitioner is the Director to implicate him in the commission of the offence. He would point out that there is no allegation that the Petitioner was responsible for the conduct of the business of the Company nor with his connivance the cheques were issued. He would contend that in the absence of any such averment in the complaint, the cognizance taken by the learned Magistrate is illegal. 9. It is seen that the Petitioner has been arrayed as A4 and he is facing the trial for the offence under Sections 138 and 142 of the Negotiable Instruments Act. A perusal of the complaint discloses that it is merely stated that the Petitioner/A4 is one of the Directors and no specific allegation is made against him that he was in charge and responsible for the day today affairs of the Company at the relevant point of time. 10. It has been held by the Honourable Supreme Court in the case of Ashok Muthanna, Managing Director, M/s.Fidelity Industries Limited and three others Vs. Wipra Finance Limited by Area Manager, Chennai-18 [2001-1-LW-Crl-603], relying on another decision of the Honourable Supreme Court rendered in the case of https://hcservices.ecourts.gov.in/hcservices/ Satish Mehra V. Delhi Administration and another (1996-93-Crimes- 85-SC) that the court is within its powers to consider even materials which the accused may produce even before the commencement of trial for the purpose of deciding whether the accused could be discharged, when those documents are not in dispute. 11. In the case on hand, as discussed above, the document viz. Form-32, a certified copy of which is filed by the Petitioner, would reveal that the Petitioner was not the Director who was in charge and responsible for the day to day affairs of the Company during the relevant period when the cheque was issued. The Honourable Supreme Court even in the earlier decision rendered in the case of SMS Pharmaceutical Limited Vs. Neeta Bhalla andanother [2006-1-LW-Crl-1=2005-8-SCC-89) has held as under:- "with a view to make a Director of a Company vicariously liable for the acts of the Company, it was obligatory on the part of the complainant to make specific allegations as are required in law." 12. In another decision rendered in the case of N.K.Wahi Vs. Shekahr Singh and others (2007-2-SC-811), the Honourable Supreme Court has held as under: "To launch a prosecution therefore, against the alleged Directors must be a specific allegation in the complaint as to the part played by them in the transaction . There should be clear and unambiguous allegation." 13. The Honourable Supreme Court has also held in another decision rendered in the case of Saroj Kumar Poddar Vs. State (NCT of Delhi)(2007-1-CTC-529) as under:- "13. The purported averments which have been made in the complaint petitions so as to make the appellant vicariously liable for the offence committed by the Company read as under:- "That the accused No.1 is a public Limited Company incorporated and registered under the Companies Act, 1956 and the accused 2 to 8 are/were its Directors at the relevant time and the said Company is managed by the Board of Directors and they are responsible for the in charge of the conduct and business of the Company accused No.1. However, cheques referred to in the complaint have been signed by the accused NO.3 and 8 i.e. Shri K.K.Pilania and Shri N.K.Munjal for and on behalf of the accused Company No.1" 14. .... there is no averment in the complaint petition https://hcservices.ecourts.gov.in/hcservices/ as to how and in what manner the appellant was responsible for the conduct of the business of the Company or otherwise responsible for it in regard to its functioning. He had not issued any cheque. How he is responsible for dishonour of the cheque has not been stated. The allegations made in paragraph 3, thus in our opinion do not satisfy the requirements of Section 141 of the Act." 14. The well settled principle laid down by the Honourable Supreme Court, in a catena of decisions cited supra is squarely applicable to the facts of the case on hand, as in this case also there is only a bald and vague allegations made against the Petitioner and such bald and vague allegations itself is not sufficient without making any specific averment as to as to how and in what manner the Petitioner was responsible for the conduct of the business of the Company. That too when he has resigned from the Directorship as early as on 13.7.2000, it cannot be said that he is vicariously liable. 16. In view of the said reasons and in the light of the principles laid down by the Honourable Supreme Court, the cognizance taken by the learned Judicial Magistrate is not sustainable and hence, the criminal proceedings in so far as the Petitioner/A4 is concerned on the file of the XVIII Metropolitan Magistrate, Saidpaet, Chennai 600015 is liable to be quashed and accordingly, it is quashed and this Criminal Original Petitions are allowed. Consequently, the connected MPs are closed. Sd/ Asst.Registrar /true copy/ Sub Asst.Registrar Srcm To: 1.The XVIII Metropolitan Magistrate, Chennai 600015 2.-do- Thro'The Chief Judicial Magistrate,Egmore, Chennai. 3.The Public Prosecutor, High Court, Madras +2cc to Mr.R.Subramanian, AdvocateSr34529 KGK(CO) km/4.8. Crl.OP.Nos.8089 & 8090/2002 https://hcservices.ecourts.gov.in/hcservices/