Case: Ramrajsingh Vs. State Of M.P.

2. Respondent No.2-complainant was dealing in the business of transportation. The appellant was the General Manager of J.K. Utility Division of J.K. Synthetics Ltd. whereas the absconding accused Anup Chaturvedi was the Finance Manager. Both were working under the Managing Director Manoj Kumar Mathur. The non-applicant and the co- accused Anup Chaturvedi placed order No.U/QMR/Coal 96028 dated 7.8.1996 with one Vinayak Coal Corporation. In pursuance of this order, the coal was transported by Maruti Road Carrier, Indore which is owned by the appellant. The transportation charges of Rs.9,45,000/- were paid through four cheques. All the four cheques were given to the appellant by the co- accused.3. As per the information given by the co-accused to the appellant, the appellant placed the cheques before the Bank for encashment but the same were dishonored. All the cheques were issued on Bank of Rajasthan Branch Jhalawad. The cheques were returned dishonoured with the endorsement of `Stop Payment. On 28.11.1996, a registered notice was sent to the Company which was served by "Registered Acknowledgment Due" on 6.12.1996. Even thereafter payments were not made. Therefore, the complaint was filed by respondent No.2 against the appellant and co-accused Anup Chaturvedi and Manoj Mathur and the case was proceeded against the appellant and absconding accused Anup Chaturvedi.4. Respondent No.2 had stated in the complaint that appellant was working in the company. The order of transportation was placed by him, the material was received by him and the cheques were given to him by the appellant and co-accused Anup Chaturvedi. Out of four cheques, the complaint in regard to the cheque amount of Rs.2,00,000/- dated 12.9.1996 was not pressed because a separate complaint was filed for dishonour of this cheque.5. The learned Judicial Magistrate, First Class, Indore, found the appellant guilty and the appeal was dismissed by learned Additional Sessions Judge, Indore. Both the courts found the appellant guilty. The appellants stand was that he was not in charge and responsible for the conduct of the business of the company and, therefore, he should not have been held guilty. The cheques were not signed by him and a notice under Section 138 proviso (b) of the Act was not given in his name. The High Court did not accept the stand and dismissed the revision application.

Court's reasoning:
13. In S.M.S. Pharmaceuticals Ltd. v. Neeta Bhalla and Another (2007 (4) SCC 70 ) it was,18. To sum up, there is almost unanimous judicial opinion that necessary averments ought to be contained in a complaint before a person can be subjected to criminal process. A liability under Section 141 of the Act is sought to be fastened vicariously on a person connected with a company, the principal accused being the company itself. It is a departure from the rule in criminal law against vicarious liability. A clear case should be spelled out in the complaint against the person sought to be made liable. Section 141of the Act contains the requirements for making a person liable under the said provision. That the respondent falls within the parameters of Section 141 has to be spelled out. A complaint has to be examined by the Magistrate in the first instance on the basis of averments contained therein. 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 acan 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.19. In view of the above discussion, our answers to the questions posed in the reference are as under:(a) It is necessary to specifically aver in a 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. This averment is an essential requirement of Section 141 and has to be made in a complaint. Without this averment being made in a complaint, the requirements of Section 141 cannot be said to be satisfied.(b) The answer to the question posed in(b) has to be in the negative. Merely being a director of a company is not sufficient to make the person liable under Section 141 of the Act. A director in a company cannot be deemed to be in charge of and responsible to the company for the conduct of its business. 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 the relevant time. This has to be averred as a fact as there is no deemed liability of a director in such cases.(c) The answer to Question (c) has to be in the affirmative. The question notes that the managing director or joint managing director would be admittedly in charge of the company and responsible to the company for the conduct of its business. When that is so, holders of such positions in a company become liable under Section 141 of the Act. By virtue of the office they hold as managing director or joint managing director, these persons are in charge of and responsible for the conduct of business of the company. Therefore, they get covered under Section 141. So far as the signatory of a cheque which is dishonoured is concerned, he is clearly responsible for the incriminating act and will be covered under(2) of Section 141".14. The matter was again considered in Sabitha Ramamurthy and Anr. v. R.B.S. Channabasavaradhya and Anr. (2006 (9) SCALE 212 ) and Saroj Kumar Poddar v. State (NCT of Delhi) and Anr. (JT 2007 (2) SC 233 ). It was, interalia, held as follows:"....Section 141 raises a legal fiction. By reason of the said provision, a person although is not personally liable for commission of such an offence would be vicariously liable therefor. Such vicarious liability can be inferred so far as a company registered or incorporated under the Companies Act, 1956 is concerned only if the requisite statements, which are required to be averred in the complaint petition, are made so as to make the accused therein vicariously liable for the offence committed by the company. Before a person can be made vicariously liable, strict compliance of the statutory requirements would be insisted...."