P K KURIAN Vs. R SANKARA RAMAN

JUDGEMENT

(1.) The question which arises for consideration is whether in a complaint filed in a court alleging that a company committed offence punishable under S.138 of the Negotiable Instruments Act, 1881 (hereinafter referred to as "the Act"), for making the Directors liable for the commission of the offence, is it necessary that there should be averments in the complaint that they were in charge of and were responsible to the company for the conduct of the business of the company at the time when the offence was committed. In the present case, in the three complaints filed before the learned Magistrate, there is no statement that at the time when the offence is alleged to have been committed by the company, the petitioner was in charge of and was responsible to the company for the conduct of the business of the company. The complaints only say about the issuance of the cheque, dishonour of the cheque and also issuance of the notice to the Managing Director as well as the other Directors and non payment of the amount covered by the cheque within the statutory period inspite of receipt of notice.

(2.) S.141(1) of the Act provides that when the person committing an offence under S.138 is a company, every person who, at the time the offence was committed, was in charge of, and was responsible 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 and shall be liable to be proceeded against and punished accordingly. The above Section does not say that when the person committing the offence under S.138 of the Act is a company, all the Directors can be proceeded against for the offence. But what the Section says is that persons who at the time of commission of the offence were in charge of and were responsible to the company for the conduct of the business of the company are liable to be proceeded against and punished accordingly. What has to be gathered from the above provision is that a person cannot be proceeded against for commission of an offence by a company under S.138 of the Act for the mere reason that he happens to be a Director of the company. The question whether there has to be averment in the complaint that the persons who are arrayed as accused in the complaint were in charge of and were responsible to the company for the conduct of the business of the company has to be decided by taking into account the above facts.

(3.) Sub-s.(2) of S.141 of the Act says that notwithstanding anything contained in sub-s.(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. The above sub-section says as to who can be made liable for the offence even though he is not in charge of and is responsible to the company for the conduct of the business of the company. Even if the person is not in charge of and responsible to the company for the conduct of the business of the company, he can be made liable for the commission of an offence under S.138 of the Act, if it is proved that the offence has been committed with the consent and connivance of such person in his capacity as Director, Manager, Secretary or other officer of the company. A reading of S.141(1) of the Act along with sub-s.(2) of the same section would make it clear that it becomes necessary to say how the complainant makes liable a person for commission of an offence by the company. A person can be made liable for commission of an offence under S.138 of the Act by the company either under sub-s.(1) or sub-s.(2) of S.141 of the Act. This is also an important fact which has to be borne in mind while considering the question whether there has to be specific averment as to how the accused is made liable when an offence under S.138 of the Act is stated to have been committed by the company.