- 1 - IN IN IN THE HIGH COURT OF JUDICATURE AT BOMBAY THE HIGH COURT OF JUDICATURE AT BOMBAY THE HIGH COURT OF JUDICATURE AT BOMBAY CRIMINAL CRIMINAL CRIMINAL APPELLATE JURISDICTION APPELLATE JURISDICTION APPELLATE JURISDICTION CRIMINAL CRIMINAL CRIMINAL APPLICATION NO.509 OF 2007 APPLICATION NO.509 OF 2007 APPLICATION NO.509 OF 2007 Ashok Bubna ...Applicant vs. M/s.Vinayaga Marine Petro Ltd. The State of Maharashtra ...Respondents Mr.Rajendra Shirodkar for the applicant. Mr.Y.S.Shinde A.P.P. for State Mr.R.M.Tiwari for Respondent No.1. CORAM: CORAM: CORAM: A.S.OKA,J. A.S.OKA,J. A.S.OKA,J. DATE DATE DATE : AUGUST 6,2008 : AUGUST 6,2008 : AUGUST 6,2008 ORAL JUDGMENT: ORAL JUDGMENT: ORAL JUDGMENT: 1. Heard the learned counsel for the petitioner and the learned counsel for the first Respondent. The first Respondent filed a complaint under section 138 of the Negotiable Instruments Act, 1881 (hereinafter referred to as the said Act). The petitioner has been arraigned as an accused No.5 in the said complaint. Process was issued against the petitioner and other accused persons by the learned Magistrate. A Revision Application was filed by the petitioner before the Sessions Court for challenging the order issuing process. The Revision Application has been dismissed by the Sessions court. Therefore, the Applicant has invoked powers of this court under section 482 of the Code of Criminal Procedure,1973. 2. The learned Counsel for the petitioner submitted that on plain reading of the averments made in the complaint and in - 2 - particular paragraph 2 thereof, the requirements of section 141 (1) of the said Act are not satisfied. He submitted that the averments made in the complaint against the petitioner were not in conformity with what is held by the Apex Court in case of SMS Pharmaceuticals Ltd. vs. Neeta Bhalla & Others [2005 (8) SCC page 89]. He submitted that a clear case is made out for quashing the complaint. 3. The learned counsel for the first respondent submitted that the averments made in the paragraph 2 of the complaint must be read as a whole. He submitted that the averments made in paragraph 2 of the complaint not only show that the petitioner was incharge of and was responsible for the accused No.1-company but he was actually involved in the activities of the company. He placed reliance on the decision of the Apex Court in case of Monaben Ketanbhai Shah Vs. State of Gujrat [(2004) 7 S.C.C page 15] and submitted that it is not necessary for the complainant to reproduce the language of the section verbatim while drafting the complaint. He also placed reliance on the decision of the Apex Court in case of N. Rangachari Vs. Bharat Sanchar Nigam Ltd. [(2007) 5 S.C.C. 108]. He submitted that the averments made in the complaint are more than sufficient to attract sub section 1 of the section 141 of the said Act. 4. I have carefully considered the submissions. The relevant - 3 - part of paragraph 2 of the complaint reads thus : "2...The accused No.1 is the company incorporated under Companies Act,1956. It’s registered office is at 11k Bldg., 1st floor, Opp. Rex Chambers, Walchand Hirachand Marg, Ballard Estate, Mumbai 400 001. Accused No.2, 3 and 4 are Directors of the accused no.1 and are/were incharge of and responsible to the accused no.1 for the conduct of its business during the relevant time. Accused No.5 is an Officer of the company as per representation made by Accused No.2 and himself. Accused No.5 is actively involved in the affairs of the company i.e. Accused No.1 and the transaction in the case was carried out with his active involvement along with accused nos.2,3 and 4. " 5. After considering the decision in the case of Monaben Shah (supra), a larger bench of the Apex Court in case of SMS Pharmaceuticals (supra) held that it is necessary to specifically aver in the complaint under section 141 of the said Code that at the time the when the offence was committed, the person accused was incharge of, and responsible for the conduct of business of the company. The Apex Court also held that this averment is essential requirement of section 141 of the said Act and has to be made in the complaint. The Apex Court further held that without this averment being made in the complaint, requirements of section 141 cannot be said to - 4 - be satisfied. The law laid down by the Apex Court is that a director in a company cannot be deemed to be incharge of and responsible to the company for conduct of its business. The Apex Court held that the aforesaid averments are necessary as there is no deemed liability of the directors in such a case. 6. Turning back to the averments in paragraph 2 of the complaint in this case, the first Respondent has averred that the accused No.2,3 and 4 who are the directors of the accused No.1-company are/were incharge of the company and responsible to the accused No.1-company for the conduct of its business. The next sentence relates only to the petitioner-accused No.5 in which it is clearly stated that as per the representation made by the accused No.2, the petitioner is an Officer of the accused-company. In the next sentence, it is alleged that the petitioner was actively involved in the business of the company and the transaction relating to the cheque was carried out with his active involvement along with accused Nos.2,3 and 4. Therefore, there is no specific assertion against the Applicant that he was in charge of and was responsible to the Company for conduct of its business. 7. Under section 138 of the said Act, the person who has drawn under cheque can be held guilty of the offence. In view of section 141 of the said Act, in case a person committing an offence under section 138 is a company, the every person who - 5 - at the time of offence was incharge of, and was responsible to the company for the conduct of the business of the company as well as the company can be held to be guilty of the offence. Therefore, when the person committing an offence under section 138 is a company, unless the requirements of sub section 1 of section 141 are satisfied, other person cannot be held to be guilty of the offence. That is why the Apex Court has held that the aforesaid averments are condition precedent for proceeding against such persons. The only allegation against the Applicant is that he was actually involved in the affairs of the company. As per the requirement of sub section 1 of section 141, mere active involvement in the company affairs is not sufficient. What is required is that the person has to be incharge of and responsible to the company for the conduct of its business at the relevant time. Mere involvement of a person in the affairs of the company will not be sufficient to proceed against the person by invoking section 141 of the said Act. Admittedly, in the present case, the petitioner is not a director of the company and he is not a signatory to the cheques in question. Reliance placed on the case of N. Rangachary (supra) will not help the petitioner as in the complaint subject matter of the said case, there was a specific averment made against the accused that they were incharge of, and responsible for the conduct of the business of the company. - 6 - 8. In the circumstances, it is obvious that the process could not be issued as against the petitioner. 9. Hence, I pass the following order : (i) The order passed by the learned Magistrate on 10th October 2005 issuing process as against the petitioner is quashed and set aside and the complaint stands dismissed as against the petitioner. (ii) It is made clear that the observations made in this Judgment relate only to the petitioner and the same are made for limited purpose of examining the case made out by the petitioner. JUDGE JUDGE JUDGE