IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE M.SASIDHARAN NAMBIAR THURSDAY, THE 6TH AUGUST 2009 / 15TH SRAVANA 1931 WP(C).No. 30555 of 2006(K) --------------------------------------- CC.180/2004 of JUDL. FIRST CLASS MAGISTRATE COURT-III, KOTTAYAM .................... PETITIONER(S): --------------------- MOHAMMED ASHRAF T., 4-B, LINK HEIGHTS, PANAMBILLY NAGAR, KOCHI-36. BY ADV. MR.P.B.SAHASRANAMAN MR.T.S.HARIKUMAR RESPONDENT(S): ------------------------ 1. STATE OF KERALA, REP. BY ITS DIRECTOR OF PROSECUTIONS, HIGH COURT OF KERALA, ERNAKULAM. 2. JOSEPH CHAVARA, PROPRIETOR, CHAVARA AN ADVERTISING MEDIA, BAKER HILL SHOPPING COMPLEX, KOTTAYAM. R1 BY GOVERNMENT PLEADER MR.AMJAD ALI. R2 BY ADV. MR.M.J.THOMAS. THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 06/08/2009, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: WP(C) NO. 30555/2006-K APPENDIX PETITIONER'S EXHIBITS: EXT.P1: COPY OF THE COMPLAINT FILED BY THE 2ND RESPONDENT, DATED 23RD JANUARY, 2002, PENDING BEFORE THE JUDICIAL FIRST CLASS MAGISTRATE-III, KOTTAYAM, AS C.C. NO.180 OF 2004. RESPONDENT'S EXHIBITS: EXT.R2: COPY OF THE CHEQUE DATED 15/06/2001. EXT.R2(a): COPY OF THE CHEQUE DATED 16/07/2001. //TRUE COPY// P.S. TO JUDGE rs. M.Sasidharan Nambiar, J. -------------------------- W.P.(C)No.30555 of 2006 K -------------------------- JUDGMENT Second accused in C.C.No.180/2004 on the file of Judicial First Class Magistrate's Court-III, Kottayam filed this petition under Articles 226 and 227 of Constitution of India to quash the proceedings initiated by the Magistrate as against him. Second respondent is the complainant. Exhibit P1 complaint was filed by the second respondent, alleging that the four accused, including the petitioner, committed offence under Section 138 of Negotiable Instruments Act. Petitioner/second accused is also shown as the Managing Director representing the first accused Company. Case of the petitioner is that necessary averments as provided under Section 141 of Negotiable Instruments Act are absent in Exhibit P1 complaint and therefore, the Magistrate should not have taken cognizance of the offence as against him. It was contended that there is no allegation in the complaint that petitioner was the Managing Director of the first accused Company, at the time when the cheques were issued or at the time when the cheques were dishonoured WPC 30555/06 2 or at the time when payments were failed to be made as demanded and therefore, on the averments in Exhibit P1 complaint, petitioner cannot be prosecuted. 2. Learned counsel appearing for the petitioner and second respondent were heard. 3. Learned counsel appearing for the petitioner pointed out that though, in paragraph 1 of Exhibit P1 complaint, it is alleged that petitioner is the Managing Director and accused 2 to 4 are in charge and managing the affairs of the first accused Company, in the absence of a specific case that petitioner was the Managing Director and was also in charge of the affairs of the Company at the time when the cheques were issued, at the time when the cheques were dishonoured and at the time when payment was refused on receipt of the notice, petitioner cannot be prosecuted. Reliance was placed on the decisions of the Apex Court in Sabitha Ramamurthy v. R.B.S.Channabasavaradhya (2006 AIR SCW 4582) and in Saroj Kumar Poddar v. State (NCT of Delhi) (2007 (1) KHC 46) as well as the decision of this Court in W.P.(C)No.11521/2005. 4. Learned counsel appearing for the second respondent submitted that Exhibit P1 complaint contains WPC 30555/06 3 specific allegation that petitioner is the Managing Director of the Company and he, along with the Directors, are in charge and managing the affairs of the Company and dishonoured cheques were produced along with the complaint, which should be read as part of the complaint and the cheques show that they were executed by the Managing Director and therefore, petitioner, who issued the cheques as Managing Director, is not entitled to get the complaint quashed. 5. In Sabitha Ramamurhty's case (supra), the Honourable Supreme Court was considering sufficiency of the allegation in that case, in view of Section 141 of Negotiable Instruments Act. Averments considered therein, as is clear from paragraph 2 of the said decision, was whether there was any allegation that either the Managing Director or the Chairman or Directors were in charge and managing the affairs of the Company. It is in the light of the said omissions, Lordships held that necessary averments as provided under Section 141 are absent in the complaint. True,the decision in S.M.S. Pharmaceuticals Ltd. v. Neeta Bhalla ((2005) 8 SCC 89), followed in the decision, lay down the principle that it is necessary to specifically aver WPC 30555/06 4 in the 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 must be there and that averment is an essential requirement of Section 141 and has to be made in the complaint and without that averment, the requirements of Section 141 cannot be said to be satisfied. Similarly, in Saroj Kumar Poddar's case (supra), following the earlier decision, it was held that it is almost an unanimous judicial opinion that necessary averments ought to be contained in the complaint, before a person can be subjected to criminal process and a liability under Section 141 is sought to be fastened vicariously on a person connected with a company, the principal accused being the company itself, the parameters of Section 141 are to be spelled out and the complaint must disclose the averment that the person accused is responsible for the management and affairs of the company at the time when the offence was committed. It was following the said decisions, this Court, in W.P.(C)No.11521/2005, held that in the complaint considered in that case, there is no allegation that respondents 3 to 10, who are the so WPC 30555/06 5 called persons managing the entire day-do-day affairs of the company, were managing the company at the time when the cheque was issued or at the time when the cheque was dishonoured or at the time when payment was not made consequent to the intimation regarding dishonour of the cheque and demanding the amount covered by the cheque and therefore, quashed the complaint as against respondents 2 to 8. 6. Along with the counter affidavit, filed by the second respondent, photocopies of the dishonoured cheques were also produced. Those copies establish that the cheques were signed by the Manging Director for Safa Trading Establishment Private Limited, the first accused in the case. Exhibit P1 complaint contains a specific allegation that petitioner is the Managing Director and is in charge and managing the affairs of the Company. Averment is made in the present tense and not in the past tense. Therefore, as per the complaint, second accused continued to be the Managing Director of the Company even when the complaint was filed. If that be the case, when complaint contains a specific allegation that petitioner is the Managing Director and Managing Director, along with the WPC 30555/06 6 Directors, are in charge and managing the affairs of the company and dishonoured cheques produced along the complaint shows that the Managing Director is the signatory to the cheques, it cannot be said that necessary averments as provided under Section 141 are absent and therefore, the case is to be quashed. 7. The question whether petitioner was the Managing Director on the date when the cheques were issued or continued to be the Managing Director till the cheques were dishonoured and later, when demand for payment was made, are all matters for evidence. Hence, based on the contentions raised in the writ petition, the case cannot be quashed. Petitioner is entitled to raise all the contentions before the Magistrate at the time of trial. Petition is disposed. 6th August, 2009 (M.Sasidharan Nambiar, Judge) tkv