WlGti^OUICT^EB<@Wl-la&1@EI^g3^^ PETITIONERS: RESPCLNDENT: CriminalMisc.Petition N0.709 6f 2010 Vijay Kumar Jaiswal andothers Versus B.S. Sponge Private Ltd. Post for pronouncement of order on 21st Januarv. 2011 Sd/- Manindra Mohan Shrivastava Judge \" ? HIGHGOURTOFCHHATnSGARH.BILASPUR PETITIONERS: CriminalMisc.PetitionNo.709 of 2010 1. Vijay Kumar Jaiswal Sonof Shri Chandrajit Jaiswal, aged about 55 Years, 2. VinayKumarJaiswal Son of Shri Chandrajit Jaiswal, aged about 51 Years, 3. Kunat Kumar Jaiswal Son of Shri Vijay Kumar Jaiswal, aged about30 Years, All residents of 31, Light Industrial Area, Bhilai, Distt. Durg (Chhattisgarh) 4. Abhishek Jaiswal, Son of Ajay Kumar 3ajswat aged about 35 Years, 5. Abhitesh Jaiswat, Son of Ajay Kumar Jaiswal aged about 31 Years, Both residents of 85/40, Kuparganj, Urai, kanpur(U.P.) 208003. Versus B.S. Sponge Private Ltd., Through Power of Attorney Shyam Sundar Agrawal,S/o Late Satyanarayan Agrawal, aged about 63 Years, R/o Vrindavan Colony, Raigarh, District Raigarh (Chhattisgarh) {Application under Section 482 of Code of Criminal Procedure, 1973} RESPQN_DENT: Present: Mr. Ashish Shrivastava, counsel for the petitioners. Mr. Santosh Kumar Tiwari, counsel for the respondent. Sinale Bench: Hon'ble Mr. T.P. Sharma. 3 ORDER -rf^' (Passed on 21stJanuary, 2011) 1. By this petition under Section 482 of the Code of Criminal Procedure, 1973, the petitioners have challenged legality and prbpriety of the order dated 15-3-2010 passed by the Sessions Judge, Raigarh in Criminal Revision No.8/2009, affirming the order dated 12-5-2008 passed by the Chief Judicial Magistrate,Raigarh in Criminal Complaint Case No.694/2008, whereby learned Chief .ludicial Magistrate has registered criminal complaint against the petitioners fverein for the offence punishable under Section 138 of:the Negotiable Instruments Act, 1881 (forshort 'the Act'). 2. As per copy of the complaint, order impugned and other documents, the petitioners herein are members of Board of Directors of M/s. Vijay Ispat & Alloys Private Limited, a company registered underthe Companies Act. The respondent Company has sold ironsponge to M/s. Vijay Ispat & Alloys Pvt. Ltd. and paymentwas due againstM/s. Vijay Ispat. Cheque was issued by the petitioners herein and when the cheque was tendered for encashment before UTI Bank, Raigarh same was dishonoured. As per allegation made in the complaint, the petitioners herein have dishonestly and with intent to cheat the respondent herein, issued cheque knowing the fact that the cheque • will not be honoured. On the aforesaid basis, after complying the necessary provisions of the Act complaint against the petitioners was fited by the respondent under Section 138 of the Act. The respondent has examined Shyam SundarAgrawal who has supported the allegation made in the comptaint. 3.As-per reply to the notice filed on behalf of the petitioners herein, M/s. Vijay Ispat &Alloys Pvt. Ltd. and Ajay Kumar'Jaiswal; all the petitioners, M/s. Vijay Ispafc & Atloys Pvt. Ltd.and Ajay Kumar Jaiswal have specifically replied the notice and have stated that they are Board of Directors of the Company and the cheque was issued by the petitioners with precondition that it should not be deposited in the Bank withoutobtaining prior clearance from them, Ajay Kumar Jaiswal and M/s. Vijaylspat & Alloys Pvt. Ltd.. 4. On the basis of aforesaid materiat, the trial Court has registered criminal complaint and proceeded against the petitioners, same' was challenged before the revisional Court and the revisional Court while affirming the order ofthe triat Court has dismissed the revision. 5. I have heard learned counsel for the parties, perused the order impugned, order of the trial Court and copies of other dpcuments, 6. Learned counsel for the petitioners vehementty argued that as per the provisions of Section 141 of the Act, Company is main accused, therefore, without impleading the Company asaccused,complajnt in the present form isnot maintainable.In order to prosecute the Board of Directors, the complainant-is required to show prima facie •^ ^ rnaterial that all tKe BQard of Directors have cQmWittecl^^^^^^a^ offence punishable under Section 138 of theAct. But jn the pres^ case,the respondent has not collected any material prima facie, t6 show the aforesaid involvement of all the petitioners. Learned counsel placed reliance in the matter of K.K. Ahuja v. V.K. Vora and another1 in which the Supreme Court has held that legislative intentioh under Sections 141 & 138 ofthe Act isnot to impleadall andsundry as accused ifrequirements of Sections 138& 141 ofthe Actare not fulfilled, as the trauma, harassment and hardship in such cases is more serious than the ultimate punishment. The Supreme Court has further held that "person in charge of the business of company" is only responsible and not all the Board of Directors. Learned counsel further placed reliance in the matter of S.M.S. Pharmaceuticals Ltd. v. Neeta Bhallaand another2 in which the Supreme Court has dishonour of cheque in case of offence committed by company, complaint is required to be made with averment that accused was at time of offence in charge of and responsible for conduct of bysiness of company. Learned counsel also placed reliance in the matter of K. Srikanth Singh v. North East Securities Ltd. and another3 in which the Supreme Coyrt has held that in orderto prosecute director of a company under Section 141 of the Act, the complainant is required to plead and show that the director was responsible for the conduct of business of the company at the time of commission of the offence, only being a director not enough to cast a criminal liabiiity. Learned cbunsel relied upon the matter of DCM Financial Services Ltd. v. 3.N. Sareen & Anr.4 in which the Supreme Court has held thatrole of accused at one point of time may not by itself sufficient to attract constructive liability under Section 141 of the Act. 7. On the other hand, learned counsel for the respondent opposed the petition and submitted thatin case of offenee committed by the company, every person whowas in charge of and responsible for conduct of business of the company would be responsible for the allegedact. Learned counsel further submitted that company is not neeessary party and in absence of company, complaint is 1 (2009) 10 SCC 48 2AIR2005 SC 3512 3 (2007) 12 SCC 788 4AIR2008SC 2255 £te£"). r\ •*•—''/' '•!»>.'••- maintainable against the Board of Directors for their individual act. Learned counselplaced reliancein the matter of Sheoratan Agarwal and another v. State of Madhya Pradesh in which the Supreme Court has held that in case of offence committed by the company, every person who at the time the contravention was committed, was in charge of and was responsible to the company shall be deemed to be guilty of the contravention and shall be liable to be proceededagainstand punished accordingly. Learned counsel further placed reliance in the matter ofAnil Hada v. Indian Acrylic Ltd. in which the Supreme Court has held that prosecutionagainst Board of Directors and company, thereafter name of company was dropped because ofwinding up ofcompany, then prosecution against Board of Directors is maintainable. Learned counsel also placed reliance in the matter of Kaptan Singh Thakur v. M/s. Betwa Developers Ltd.,Bhopal in which the Madhya Pradesh High Court has held that in case of cheque signed by Director, prosecution agairist him alone without impleading the companyas accused.is maintainable. Learned counsel relied upon the matter of N. Rangachari v. Bharat Sanchar Nigam Limited8 in which the Supreme-Court has held that on the basis of clear allegations in complaint against the Directors, complaint under Section 138 ofthe Act against the Directors is maintainable. Learned counsel further relied upon the matter of Harbhajan Singh and others v. State of U.P. and another9 in which theAllahabad High Court has held that in case of allegation made in the complaint that all partners were in- charge and responsible for conduct Qf business of company, accused cannot plead that only signatory of cheque need to be prosecuted. - 8. In the present case, the respondent has not made thecompanyas accused, but has made the Board of Directors i.e.'the petitioners herein as accused for the offence punishable under Section 138 of the Act. As per allegation made in the complaint, the petitioners are members of Board of Dii-ectors of M/s. Vijay Ispat & Alloys Pvt. Ltd. which isa registered company, cheque has been issued by one ofits Directors, same has been dishonoured on which notice was issued to the petitioners and the Companyincluding one Ajay Kumar Jaiswal, 5 AIR 1984 SC 1824 6 AIR 2000 SC 145 7 2006 Cri. L. J. 2065 8AIR2007SC 1682 9_2005 Cri. L.J. 3029 ^::^^ ' t-a-n'1''^' "? *-:.':^' and reply has been sent on behalf of the petitioners, M/s. Vijay Ispat StAllpys Pvt. Ltd. and Ajay KumarJaiswal to the respondent inwhiGh they have specifically alleged that cheque was issued by the petitioners, M/s. Vijay Ispat& Alloys Pvt. Ltd. and Ajay Kumar Jasiwal with a condition that same will not be presented withoyt obtaining clearance from the petitioners and aforesaid persons. 9. In case of offence by company, as per the provisions of Section 141 of the Act, every person who, at the time the offence was committed,was in charge of, and was responsibte to the company for the conduct of the business of the company, as well as the company, shall be deemed to be guilty of the offence andshall be liable to be proceeded against and punished accordingly. As per the provisionsof Section 141 of the Act, all persons responsible shall be deemed to be guilty along with the company. Provisions of Section 141 of the Act reveal that company is main accusedin case of prosecution against company, but persons responsible for the conductof the business of the companyat the time of offence are also liable for commission ofthe offence. lo.In the light of aforesaid puthorities relied upon by, both the parties, the complainant is required to plead and produce material to show that at the time of commission of offence, the accused/members of Board of Directors were in chargeof, and were responsible to the company for the conduct of the business of the company. Prosecution without impleading the company as accused is competent underthe provisions oflaw. ll.In the present case, only on the ground that the respondent has not made the company as accused, the complaint is not incompetent. As regards allegation made against the petitioners, the respondent has made allegation againstall the petitioners in its complaint and by replying to notice, all the petitioners themselves have admitted issuance of cheque by themand alleged precondition. The allegation made by the petitioners in reply to the notice clearly reveals that they were in charge of and were responsible tothe company for the conduct of the businessof the company, at the time of commission ofoffence. 12.0n the basis of aforesaid material, the trial Court has proceeded against the petitioners by taking cognizance against them and by ^ySK^f?!^1 ^9^SSSSSjiSSK V^Sf'^SgSRS'/'if- ^^s^v "t-a.^.^ Soma proceeding against them. The trial Court as well as the revisiorial Court have not committed any illegality requiring any interferenGe in exerclseof extra ordinary ioherent jurisdiction. l3.Consequently, the petition is liable to be dismissed and it is hereby dismissed. I Sd/- T.P. Sharma judge