IN THE HIGH COURT OF HIMACHAL PRADESH, SHIMLA Cr.MMO No.125 of 2008 Date of judgment: June 18, 2009 Jeewan Garg …………Petitioner Versus Chuni Lal & another …Respondents. Coram The Hon’ble Mr. Justice Surjit Singh, Judge. Whether approved for reporting?1 For the Petitioner : Mr. K.D.Sood, Advocate, For the Respondent : Mr. Sanjiv Bhushan, Advocate. Surjit Singh, J. (Oral) Petitioner has sought quashing of the order dated 14.10.2003 passed by learned Judicial Magistrate, whereby he has been summoned as an accused alongwith respondent No.2 in a case under Section 138 of the Negotiable Instruments Act, 1881. Allegations which have led to the summoning of the petitioner, may be summed up thus. Respondent No.2 R.K. Siyal, Managing Director of Golden Project Limited, Chandigarh, invited deposits from the public with the offer that a larger amount of money will be paid on expiry of certain fixed period. The present petitioner was allegedly the Manager, in- Whether reporters of the local papers may be allowed to see the judgment? - 2 - charge of the Branch of the Company at Sundernagar. He persuaded respondent No.1 Chuni Lal Dogra, to invest money with the Company sometimes in the year 1986. Respondent No.1 then invested a sum of Rs.30,000/-. On maturity, he was to be paid Rs. 90,000/-. A cheque was issued on 16.4.1996 on the maturity of the deposit for an amount of Rs.90,000/-. The cheque was handed-over to respondent No.1 by the present petitioner, who was in-charge of Sundernagar Branch of the Company. That cheque bounced on account of insufficiency of funds. Respondent No.1 issued notice to the present petitioner, as also Managing Director of the Company, i.e. respondent No.2, calling upon them to pay the amount of cheque within 15 days, failing which, he threatened action, under Section 138 of the Negotiable Instruments Act. Money having not been paid within the period stipulated in the notice, complaint was filed. Preliminary evidence was adduced by respondent No.1. On scanning the preliminary evidence, trial Magistrate, summoned the present petitioner, as also the respondent No.2. Summoning order has been assailed on the ground that offence has been committed by a Company and as per provision of sub-section (1) of Section 141 of the Negotiable Instruments Act, only those persons are liable to be prosecuted along with the Company, who are in-charge of the Company and - 3 - responsible for the conduct of the business of the Company. Petitioner’s contention is that neither he was in-charge of the Company nor responsible for the conduct of its business and hence, he is not liable to be prosecuted. I have heard the learned counsel for the petitioner, as also the learned counsel representing respondent No.1 and gone through the record. Learned counsel for the petitioner placing reliance upon the judgment of Hon’ble Supreme Court in S.M.S. Pharmaceuticals Ltd. v. Neeta Bhalla and another, (2005) 8 SCC 89, has argued that only those persons can be held guilty of offence, under Section 138 of the Negotiable Instruments Act alongwith the Company, who are in-charge of the Company and responsible to the Company for the conduct of its business and that in the present case, there is no averment that the present petitioner was in-charge of the Company or responsible to the Company for the conduct of its business. It is true that there is no averment in the complaint that the petitioner is in-charge of the Company or responsible to the Company for the conduct of its business and, therefore, he is not liable alongwith the Company under sub-section (1) of Section 141 of the Negotiable Instruments Act. However, sub-section (1) of Section 141 of the Negotiable Instruments Act, is not - 4 - absolute in its operation. It is subject to the provision of sub- section (2) of Section 141 of the Negotiable Instruments Act, which reads as follows:- “141. Offences by companies.. (1) xx xx xxx xxx xx xx (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. From a bare reading of sub-section (2) of Section 141 of the Negotiable Instruments Act, it is clear that where any officer of the Company is directly involved in the commission of the offence under Section 138 of the Negotiable Instruments Act, in that situation, the requirements of sub-section (1) viz. his being in-charge of the company and responsible to the Company for the conduct of its business, do not come into play. Where an officer of the Company, irrespective of the fact whether he is in- charge of the company and is responsible to the Company in the conduct of its business is alleged to be directly involved in the commission of the crime, as in the present case, sub-section (1) - 5 - of Section 141, is not come applicable and such a person would be liable by virtue of sub-section (2) of section 141 of the Negotiable Instruments Act. This view finds support from the very judgment of the Hon’ble Supreme Court i.e. S.M.S. Pharmaceuticals Ltd., supra, which has been relied upon by learned counsel for the petitioner. Para 11 of the report, which is reproduced below, makes the things very clear:- “11. A reference to sub-section (2) of Section 141 fortifies the above reasoning because sub-section (2) envisages direct involvement of any director, manager, secretary or other officer of a company in the commission of an offence. This section operates when in a trial it is proved that the offence has been committed with the consent or connivance or is attributable to neglect on the part of any of the holders of these offices in a company. In such a case, such persons are to be held liable. Provision has been made for directors, managers, secretaries and other officers of a company to cover them in cases of their proved involvement. “ In view of the above stated position, I am of the considered view that the petition is without merit. The same is, therefore, dismissed. However, it is made clear that the observations made in this order shall not stand in the way of the petitioner in pleading, during the course of trial, that he is in no way involved - 6 - in the commission of the crime and also that he is not in-charge or responsible to the Company for the conduct of its business and hence, not liable either under sub-section (2) or sub-section (1) of Section 141 of the Negotiable Instruments Act. June 18, 2009 (Surjit Singh), J. s.