THE HON’BLE SRI JUSTICE SAMUDRALA GOVINDARAJULU CRIMINAL PETITION No.720 of 2007 Dated: 28th January, 2010 Between: Smt. Matcha Vijaya Kumari …Petitioner / Accused No.3 AND The State rep. by its Public Prosecutor, High Court of A.P., Hyderabad And another …Respondents THE HON’BLE SRI JUSTICE SAMUDRALA GOVINDARAJULU CRIMINAL PETITION No.720 of 2007 ORDER: This petition is filed by the 3rd accused under Section 482 Cr.P.C. for quashing proceedings in C.C.No.553 of 2005 on the file of V Metropolitan Magistrate, Vijayawada, relating to offence punishable under Section 138 of Negotiable Instruments Act, 1881 (in short, the Act). According to the second respondent/complainant, A-1 company borrowed Rs.2,00,000/- on 07.01.2002 for purpose of its business and A-2 in his capacity as Managing Director of A-1 company executed promissory note in his favour for the said amount promising to repay the same with interest at the rate of 24% per annum and when demanded for repayment, A-2 as Managing Director of the A-1 company issued cheque dated 19.10.2003 for Rs.2,00,000/- towards part payment of the debt and the said cheque was bounced when presented for encashment. A-3/petitioner is wife of A-2 and is also Director of A-1 company along with A-2. It is contended by the petitioner’s counsel by placing reliance o n S.M.S. Pharmaceutical Ltd., Vs. Neeta Bhalla[1] and Ramrajsingh Vs. State of M.P.[2] of the Supreme Court that A-3 is only a Director and not Managing Director and that in order to implead A-3 as one of the accused in a case relating to offence punishable under Section 138 of the Act, the complainant has to allege and prove requirements of Section 141 of the Act to the effect that A-3 was also ‘in charge of’ and ‘was responsible’ to the company for conduct of business of the company, as well as the company. In the latter decision, the Supreme Court held: “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 relevant time. This has to be averred as a fact as there is no deemed liability of a director in such cases.” In the former decision also, the Supreme Court observed as follows – “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.” Thus, in order to mulct a director of a company with criminal liability for offence punishable under Section 138 of the Act, there should be averment as well as proof to the effect that the said director was in charge of and was responsible to the company for conduct of its business. In the absence of said averments in the petition, merely impleading a director as one of the accused will not attract criminal liability as against that person. In the case on hand, there is averment to the above effect in para 6 of the complaint to the effect that A-2 and A-3 are in charge of and are responsible to A-1 for conduct of A-1’s business. It is sufficient compliance of necessary pleading under Section 141 of the Act. Further, A-1 company is running educational institution in which A-2 and A-3 are stated to be running the institution. Therefore, this Court does not find any valid or legal reasons for quashing proceedings in criminal case insofar as the petitioner/A-3 is concerned at this stage. In the result, the criminal petition is dismissed. ___________________________________ SAMUDRALA GOVINDARAJULU, J January 28, 2010 Bvv [1] 2007 (TLS) 43694 [2] 2009 (TLS) 48739